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Wednesday, August 31, 2011

Market Thought... i'm good :)

Just kidding.

Intra-day, the market found resistance at the 1230 level near the weekly SMAs, as highlighted in the 'stability?' post.

IMO, the extra push to that level came from the added certainty that the EFSF will be amended. (An amended EFSF is a major pillar to the restructuring of Europe's financial cracks.)

With all the actions taken to seal up the Europe's financial cracks, at least for the mid-term, the market maybe able to consolidate here, without crazy market volatility. The leaders (via IBM and AAPL) seem to have started their bit of consolidation.  I would like to see the market trade between 1200-1230, while consolidating.

Preferably I would really like to see the SP500 stay above 1215 because if it can stay near 1215-1220, a shit load of doubt will seep into all the negative-Nancies out there.  For instance, this bullshit assessment coming out of SocGen making a claim regarding US GDP with respect to corporate profits. This type of assessment may have worked before 2002, but with the majority of SP500 companies are linked to GLOBAL GDP, the SocGen assessment is totally wrong. (With SocGen producing these kind of assessments I am not surprised they are on the verge of bringing down France and Europe. How so-called professionals are able to get away with blatant ignorance is beyond me.)

As I have highlighted on this blog time-and-time again, SP500 is linked to global performance.

If we can consolidate, with some reduced volatility near 1215-1220, the long-term trend of the 320-360SMA will be re-established, and the market will push higher. (Hopefully the EU doesn't fuck shit up, again.)

(PS: To my mother-in-law, may you rest in peace.)

Tuesday, August 30, 2011

Market Thought... stability?

Internet finally came on, and since I have not been able to sleep due to all the personal stuff going on, below is the post that was intended.

While Time Warner Cable keeps sucking the big one, the SP500 looks to want to test 1220-1230. The 1220 is from the daily chart. The 1230 area is from the weekly.

This is supported by the Franc approaching weekly support.  (Franc bouncing off support, suggest equities would retreat.) Although the daily chart of the Franc looks to a breakdown.

But the most important factor here is when the SP500 breaches 1220, it’s long-term upward trend will be re-established. (And we will begin hearing the pundits cheerleading again, and traders taking a positive slant on the data.) This is also supported by multiple names (ie AAPL, IBM) becoming leaders in the market, and stocks that have room to run before seeing real resistance. (For instance, QCOM needs to see near 53 before it achieves real resistance.)

The bounce we got today was facilitated by the developments over the weekend, as highlighted in my tumblr post 'EU positives'. First, Bernanke talks confidently at Jackson Hole while extending a Sept Fed meeting, adding to the speculation that Bernanke is coordinating a global response to macro events.  The next day Lagarde speaks to the fact that EU banks need to consolidate with mandatory substantial recapitalization. She also said she discussed her views with President Obama. (This is global leaders communicating. Next step is action.) After her talk at Jackson Hole two large Greek banks announce that they will merge with Qatar Investment Authority providing re-capitalization (and taking 15% of the new entity).

With EU bank consolidation taking place, an amended EFSF and an ECB facilitating sovereign debt there may be no cracks left for the hedgies to attack for a few months.  Allowing markets to continue to rise, especially after the EFSF vote.  We should still see some choppiness until the EFSF is officially amended, as this is a key aspect for the EU to regain stability.  The vote on the amended EFSF takes place in late Sept as the target date. Although it is expected to pass, the choppiness should not allow a re-test of the lows (unless it does not pass). And with the EU banks merging and re-capitalizing at any potential moment, these -5% moves due to bank concerns, should also be limited.

I am actively trimming the additional long positions I entered as the market collapsed. Around 1230 I will look to play and re-position my protection to the SPY Oct 122 puts. 

Thursday, August 25, 2011

Market Thought... on you, EU

The shadow boys decided to pounce.  Before I talk about today, lets just recap.  On August 1st, there was very weird action on 08/01/2011 on the DAX that caused extra weakness on equity markets in the US. (I mentioned it that day.)

At the time, it was a 100pt move in about 2 minutes.  This day started the awesome decline in the DAX in August.

Today, was no different than the 1st of August, however today, the decline was more severe intra-day around 3:45 despite relative stability through out most of the day.

These type of declines are rooted in the EU inspired credit freeze threat, and today we got plenty of chatter about EU banking stress: 

-There was a WSJ article about the lending increase via the EU banks from the ECB.  EU bank(s) increased lending to 2.82B Euros from 555M Euros a day earlier.

-Greek's central bank activated an emergency liquidity program for Greek banks.

-$500M was used from the Fed's emergency liquidity window.

-Merkel cancels a trip to Russia to ensure the Euro Financial Stability Fund amendments get approved.  The article highlights that the new amendments, which should provide a few months of stability, should pass. But articles like this cause uncertainty, none-the-less.

The markets will continue to have these crazy swings until real plans are put in place (and actively executed) to cause stability. If the EFSF is amended to increase the fund, bailout the banks and add more funding for the sovereign market, then that will cause a few months of stability. (There will be too much money in the fund for any manipulators to try to fuck with, at least for a few months.) This should allow markets to rise as per economic data and individual company/stock merit, at least for a limited time.

a really rough couple of days

Its just amazing how life can just kick you in the nuts sometimes.  My mother-in-law passed away tonight.  She bravely battled cancer for many years. With the her husband, she raised three beautiful daughters, and was able to experience three wonderful grandchildren.  (Her third grandchild, a baby boy, was born just two days ago.)

I got the news of Steve Jobs leaving the CEO position while at the hospital. Obviously I had more important things on my mind, and didn't quite care much.  Any money manager who was not expecting this does not deserve to manage money.

The timing of the move was really really good, but I expect nothing less from Apple.  The stock is already discounting a ton (w/respect to its organic growth) thanks to the EU debt induced fear of a credit crunch.  This leave little potential damage to the down side.  Then there is the new product cycle kicking in with the iPhone 5, iCloud and MacAir.  On top of this, we should also hear about iPhone 5 availability on the China Mobile network, along with Sprint's.  This is a lot of wind at Apple's back.

Investors will react however they want to react, with all that is going on right now, I just don't care. But I will look to add to my AAPL position tomorrow (if I have a chance).

The 360 level is solid support here.  But if the general market starts acting crazy again, I can see it going to the 330 level.  Although that would suggest an ex-cash trailing PE of 10 or a trailing PE of 13.

Considering the product growth trends (and I have all the links to the current trends, just don't have the patience to post them right now) are still very much intact, I seriously doubt the market will allow it to go that low.

Wednesday, August 24, 2011

Market Thought... short-term TA

The bears are going to be fucked if they can not stand their ground here. If the 14SMA is broken upward, next stop is around 1200.

This is not a Bernanke story, this is a EU bank/sovereign debt story. The move is on the whims of the shadow money boys attacking the EU financial structural cracks. If they hold back this week, we make 1200. If they do not, we go down.

There are few indicators that work here because a lot of them are shot to hell as everyone is already expecting the worst. Although the fact that everyone is expecting the worst is an indicator itself to do the opposite. If these shadow boys are that good, they will allow the market to rally because the fucking the bears is where they can make the most money right now.

(I sound like a conspiracy guy right now, and I hate it, but I gotta call it like I see it.)

Tuesday, August 23, 2011

Looking at QCOM

I caught this segment on Fast Money, and it got to take a closer look at QCOM.

The thesis of the video was that QCOM will benefit from the iPhone 5. That is a winner on its own, but the more I look into the production numbers of the iPhone 4 and 5, the wider my eyes become.  The article itself is very good news for Apple, and the ramp-up of iPhone 5 will be good for QCOM (and sets the trend for the iPhone 5).  What I think is more relevant to the iPhone 5 build is the fact that China Mobile is in talks to bring the phone to their network, which greatly expands the reach on the iPhone 5. QCOM will be a beneficiary to this.

Historically, looking at QCOM's current trailing PE (high 18) over the last two years, it is near its low. Its minimum was around 16-17.

Basically, QCOM is a company (and stock) with the wind at its back, while trading at the low end of its multiple range. Not to mention, it is sitting on longer-term support. (Although the trends are shot to hell, like the rest of the market.)

QCOM looks really interesting at current levels. I will probably make an initial entry, and keep a closer eye on QCOM in general.

heads up

With all the technical destruction, and the threat of a credit freeze, (and the +/-4% market moves it gives) I am not going to feel good about this market until the EU and global leaders take action to make progress with the sovereign debt issues and their potential bank runs. (Although, Spain was confident it did not need the ECB to buy its bond via a bloomberg article.)

I am holding back actively trading with this market until I see indications of 'EU action', and increased protection with today's rise.

I am confident, with Bernanke and Lagarde leading efforts, global leaders will not allow for a credit freeze to take place. (Hence, plenty of great opportunities out there.)  But without a plan in place the markets will be susceptible to the whims of those attacking the EU financial structural cracks.

There are just so many cracks at this point, I do not know what the EU can do without creating a short-term shock to the system.  If Italy can be attacked, France and Germany will be able to get attached if they are forced to nationalize the banks.  If that happens, I do not see how the EU can get out of this without a re-structuring.  (Unless China gets seriously involved and agrees to back-stop sovereign debt with their massive liquidity.)

Monday, August 22, 2011

Market Thought... pricing a credit crunch

Fundamentally, the market is waiting for the EU leaders (and even the global leaders) to get off their asses and properly address Europe's debt and banks, as highlighted in the post 'listen to the thunder'. 

Credit crunches should be few and far between, if ever, and since I have no data from the 1920s, I took a closer look at psychology of the 2008-9 crunch.

The freeze kicked in when Lehman defaulted in September. At the time, the SP500 started its collapse, but the 10yr treasury had a delayed reaction.  Yields did not start collapsing until mid November.

They bottomed near 2%, as safe haven was sought.  The bounce off 2% in 2009 was fairly quick, however the SP500 lagged its bottoming process.  The SP500 did not bottom until 2-3months after the treasury hit bottom.

The current EU fear has once again driven 10yr treasury yields to the 2008-9 levels. However, we are left to wonder,  how long will the SP500 bottom out after the treasuries bottom?

That is a loaded question because it assumes the 2% yield on the treasuries will be the low, and the differences between then and now must be normalized.

In 2008-9 few knew of the real credit disruption that would happen with a Lehman type bank failure hence the delay into treasuries. (Even Chairman Bernanke delayed on lowering rates.) But traders were entering the dollar once Lehman went under and was seen as the safe haven first.

Once treasuries started to rally, this eased the upward pressure (some what) on the dollar as a safe haven.  In today's threat, by no means are we seeing upward pressure on the dollar. Instead, the pressure is spread to the Swiss Franc, Yen and (most obviously) Gold.

Same effect, just different currencies.

The stark difference between 2008-9 versus today, we have been seeing moves into currencies, treasuries and decline in equity markets before the freeze.  The safe haven markets are preempting the potential credit freeze.  (In 2008-9 the moves to the havens and severe declines in markets took place after the freeze.) And if the moves are anticipating a freeze, its likely the 10yr treasury yield has bottomed and we are closer to a market bottom than the mode would suggest.

So we are left to wonder, with 2008-9 credit freeze etched into investors memory, as told from the eyes of the safe havens, have the markets already anticipated the worst?

If the EU and global leaders actually show leadership, and get in front of this thing, then I say yes. However, if we get another credit freeze, all bets are obviously off.  If the EU allows a credit freeze to happen, it will destroy the European Euro experiment. There will be no recovery for the Euro. It will cost too much to fix, and no country in the EU (not even Germany) will be able to pay for it.

Who knows, maybe the powers-that-be want this to happen, for whatever reason that will become obvious many years from now.  All I know is big-boy money is already anticipating nasty stuff.

Sunday, August 21, 2011

Market Thought... listen to the thunder

EU leaders, Listen to the Thunder.

I have been combing the web to see if there has been any chatter about progress with the situation in Europe.  Disappointingly there was SocGen's CEO who tried to give more rhetoric of health, and that the bank will show they are healthy during their 3rd Q results.  Unfortunately for Mr. Oudea his bank probably will not have until the end of the month to prove this.  Make no mistake, a run on his bank is happening, and the only thing masking it right now are the heavy reserves.

Then, we had Merkel who came out and said 'we will not hold policy based on markets'. Well, if she is going to say this, then they better have a plan to take care of the bank run that is happening.  The ECB is acting as temporary stability with respect to the sovereign debt market, but they will need to do more when SocGen gets nationalized.

IMO, the above is the most immediate concern for the market.  The culmination of the US debt downgrade, slowing global GDP and European bank run happening all at the same time (literally within days of each other over the last week and a half), has caused this market to collapse. Its just too much negativity to handle.  Lets take a closer look at three major issues.

1. US debt downgrade. IMO, this was and is bullshit. The US will never default on its debts.  The US has a very organized financial structure that will not allow for this to happen. The market fully understands and appreciates this, regardless of what one private company (that has already proven to be inept via their mortgage ratings) thinks. (Pushing down of the 10yr treasury yield proves this.) Also, local/state governments are acting responsible (with respect to fiscal concerns) by making cuts and paying their obligations.  The Federal Gov. is no different. Decomcracy is about debate, and finding an equilibrium. Although, the debate is hard to watch.

2. Slow global GDP. This should not have surprised anyone, and it sure was not surprising the market. Since mid-Feb the market was consolidating.  Two quarterly reports were seen, and market multiples compressed. The BRIC countries were actively taking steps to cool their over heating economies. I was active in highlighting these steps via my tumblr link 'shit happens'.   However, the global austerity by the developed countries is helping this effort, and the BRIC countries are over shooting to the downside. (most recently highlighted via Brazil's growth estimates)

Because the cooling down was successful, we will see a reversal of these efforts. (This was highlighted via China last week.) (However, it should be noted that growth is still happening. This is why the earnings of companies with secular growth trends will not be hit as severely as their multiples are suggesting.)

There has been chatter last week that emerging markets are great buying opportunities right now, but if anyone feels that way, they must also believe the US market is a buy as well, as the SP500 and BRICs are closely tied.

3. Europe. Before the potential bank run, there was sovereign debt concerns. The ECB was successful at calming the market, for the time being, by buying Spanish and Italian debt in the open market.  But once their was an indication that an Asian bank stopped overnight lending to a French bank, a real risk of a credit freeze started to spook the market.  Since then, we have seen evidence of a run, as highlighted above.  This is why the VIX has been staying elevated at such levels.

The top two concerns merit a full blown market correction, but the third is a systemic risk.  Hence the complete structural trend breakdown in the market.

To give credit to where credit is due, Europe has been acting on their sovereign debt concerns. Every country has been cutting spending, Italy even passed added cuts and tax increases to their wealthy. But obviously they are not out of the woods.

The concerning aspect of this EU bank run is that the banks will not be able to restructure sovereign debt as more capital exits the bank.  A bloomberg article over the weekend highlighted the EU banks need $600B to comply with Basel III, let alone get more capital to swallow a debt restructuring.

Europe is at a precipice to save their banks. Before this August, they were doing a good job at delaying and allowing their banks to store up capital, but that plan now is shot to hell.  Anyone willing to put money into equity markets right now is assuming the EU will not allow their banks to cause a credit freeze.  That is a big uncertainty, and causing HUGE discounts.

After seeing the damage a credit disruption can do after Lehman, I think political leaders will prevent it at any cost. (IMO, America's way of apologizing to the world for letting Lehman go under, was to pay out 100% to counter parties from AIG, not to save Goldman.)

How they handle it is up to them. Whether they infuse capital from the stability fund or nationalize the troubled banks. But the market will force action over the next two weeks.

If a credit freeze does not happen, and with the global economy chugging along (as indicated by SAP CEO and corporate spending still taking place), we are at some interesting entry points.  I took a look at a few stocks I trade, and applied current trailing multiples and their usually discounted multiples to see where they should be trading two quarters out. (look at 'sheet 2' under 'target price by end of year')

- IBM keeps a trailing PE of 12.7, its target price will be 168.4 (If a PE of 14 is allowed, its price will be 185.)
- AAPL keeps a trailing PE of 14, its target price will be 418. (If a PE of 16 is allowed, its price will be 477.)
- AXP keeps a trailing PE of 11.5, its target price will be 45.85. (If a PE of 14 is allowed, its price will be 55.58.)
- GOOG keeps a trailing PE of 16, its target price will be 528. (If a PE of 19 is allowed, its price will be 627.)

Hopefully, over the next few weeks, the world can flush out the fear of a credit freeze.

Friday, August 19, 2011

Market Thought... technicals

Without clarity from the Europeans, any rally here should be taken with a grain of salt. (Without question I see awesome opportunities here, but also see continued volatility with strong EU action.)

The market may very well rally to the 5 or 14SMA on the daily, then find resistance.

On the bright side, regardless of what people think (how valuations do not matter) and what volatility the EU is allowing to take place, the truth is, valuations do matter. There is always a level to which people will step in as too much is discounted. (Google's level was below $500, money came in quick this morning as it opened below 500.)

The only thing that will ease the volatility and give equity markets a sustained and stable move from current levels is if clarity from the EU is given. IMO, I would like to see something drastic, maybe devalue the Euro or get the Euro-bond in place by the end of the year.  At this point, I will take anything, even if it gives the markets a short-term shock, to get this crap out of the way.

Because I am expecting some level of 'shock' from the EU action that needs to get done, I will always have a small level of SPY protection in play.


Press release after press release from ORCL, DELL to HPQ, there is one glaring obviousness. All these companies want to be like IBM.

But there is only one IBM, and they are years ahead of the game, with a corporate structure maximizing their innovation, product offerings and cash-flows. Not only that, but IBM is taking share away from the smaller companies the other players purchased (to become like IBM).

I have no idea why any investor would buy DELL or HPQ when they can get IBM at these inexpensive levels. (As for Oracle, I can see a solid argument to be made, but after its last quarter I would be uneasy with its hardware line.)

The only company that competes (or maybe exceeds IBM on their data analysis side) is SaaS.  (But IBM and SaaS are the Coke and Pepsi of the business analytic world.)

IBM is also so much more investor friendly, consistently buying back shares and increasing their dividend, while the others do not even come close.

trades... repositioning

I will be repositioning to the strikes I wanted to originally get on Monday of last week.

Current price action on individual stocks are just too low.  I touched base on it with the previous post. (However, I will not reposition AXP.)

Current positions include, fort he Jan expiration:

AAPL 380 strike (repositioning to the 360)
GOOG 550 strike (repositioning to the 500)
IBM 165 and 170 strike (repositioning to the 165)
AXP 45 strike (not repositioning)
POT 55 strike (repositioning to the 52.5)
SU 32 strike (repositioning to the 30)

Thursday, August 18, 2011

Market Thought... ultimate question

At the end of the day, when all things are said and done, under the current conditions, I must ask myself, what is the result of a failed Euro experiment?

There are forces at work here, seemingly hell-bent on destroying the Euro. (Although we can definitely say the EU countries did it to themselves after years of BS accounting and running up of huge debts.)

Regardless of emotions, stocks represent a very real and tangible value.  They are a pieces of a company that actually produces and do something for society. And since a company's service or product is important to society, the level of importance is measured in value.

The world maybe at an inflection point, preparing for the shock of removing or drastically devaluing of the Euro. The EU can do many things to try to save this 'make-believe' unifying currency. Some action will be of heavy consequence to banks.

I am just tired of watching this tit-for-tat, day-after-day. The EU leaders must do SOMETHING!  But something legitimate.  Maybe force a devaluation of the Euro? Maybe remove the weaker economies and focus only on the strong ones (even though I think that is bullshit)? Maybe hasten the Eurobond, making it the highest priority, to implement in a matter of months, not two years? Maybe end the experiment altogether, and be done with this bullshit drama.  JUST DO SOMETHING STRONG that will bring back stability!

In the mean time, AAPL is trading with a trailing PE of 14, with an untapped revenue potential of $70B in China via China Mobile alone. Or Google with next years PE at 11 with a revenue growth rate of +25% yr-over-yr. Or AXP trading at a trailing PE of 11.5 with delinquencies at their lowest level in years (at 2.7%), while despite potentially entering a recession consumers are saving far more and paying off credit card debt first. (Not to mention the cash-to-plastic transition and the fact that they are knee deep in social.)

Whatever rational thought I have to say about this matter is irrelevant because fear will always trump sanity.  But don't lose sight of the importance to which society places on the products of these companies, because that is what ultimately places value on these companies and their stocks.  Fear be damned.

Regulators are on top of any systemic risk

When I first read that the NY Fed has inquired about funding for some EU banks I obviously got concerned, just like the rest of the market. Then, this article caught my eye, regarding the level of reserve draw downs.  At first it made me concerned even more. But after re-reading it, and re-thinking how important financial institutions are to the EU system, there is no way the powers-that-be will allow for a Lehman style credit disruption. (Remember that scene in "To Big to Fail" when Christine Lagarde yelled at Paulson over the phone for allowing Lehman to go under. I keep thinking of that scene.)
The more I think about how this may play out, the more I come to the conclusion that the risk will fall back to the sovereign debt as governments take on more of the burden. We will be left back to where we are, with the ECB acting as stability for the time being. That is until the EU leaders get their shit together, and come up with a viable plan to squash debt concerns. 
(If that requires 50% debt restructuring, so be it.  EU is at the point where they will have to bail out their banks now.  The market doesn't give a fuck what their leaders say.)

Market Thought... by the balls

Negativity is just so pervasive. Its got the market by the balls.  On Monday I posted a 'heads up' post about the rumor mongers attacking the EU banks for their leverage. Today we are seeing that pan out with the NY Fed requested funding data, yesterday getting news about an EU bank borrowing $500M in 7day emergency liquidity and of course the issues that happened prior to the shorting ban.

The only positive note is that the ECB has calmed the sovereign debt market, for now. But it seems there is a group of hedgies hell bent on causing trouble.  If they can't do it via sovereign debt, they will do it some other way.  The way to take care of these characters is to provide a real solution.  At what point will the EU get their heads out of their ass, and act? (Its not a question of if they will act, they will act, its just a matter of how much damage they are willing to see.)

Outside of the obvious frustration, internals look interesting. Some stocks have reached their bottoms from last week, others are really close. This could become relevant, so I am paying close attention.

As for the market, from a pure technical perspective, it could test its 1120 level.

I think there is tremendous opportunity here for companies in secular growth trends (AAPL, GOOG, IBM, AXP, POT, SU and plenty of others), but no one will care with negativity running so high.

oh baby... AAPL, IBM

Covered all the protection, and am waiting patiently. (Although I did add a bit to IBM, the 165 Jan Calls.)

Food for thought...  We got confirmation today from China Mobile that the rumored talks are real. With the iPhone available on China Mobile's network (legitimately), it is a $70 potential opportunity. But macro-fears has AAPL trading down $12.

That is called an opportunity.

so much for subtlety

Futures are getting knocked. So much for the subtlety. Will look to close out the remaining protection in the AM.

Wednesday, August 17, 2011

trade... OPEN

OPEN looks to want to test the 57 area .  If their is continued equity weakness, that support maybe broken.

I am looking to enter Oct 60 OPEN Puts tomorrow, hopefully into equity strength.  (If it pushed toward the 20SMA, I will use the 65 strike.)

Market Thought... interesting subtlety

The market tested its 5SMA today, and while uncertainty still reign supreme, I see subtle signs we will test the 1220 level (near the 320-360SMA on the daily) over the next few days.

The SP500 chart gives the subtlety via the CCI (if the formation holds), but also on a qualitative basis via many individual stocks.  I plan on adding to the 122 SPY Puts when we are testing the level to take advantage of the high probability initial retreat.

I entered a few short-term trading positions (via GOOG and BGCP) to take advantage of this move (during the day), along with my already established positions and very light protection. (Surprisingly enough, BGCP even with its really high yield, is a really nice day-trading stock, at least for me.)

ITRI and the Smart Grid

I make it no secret that I really like ITRI here. (Search the blog via 'ITRI' and you can see all my posts.) In fact I loved it higher, near 46 and double downed on it after they took the high from earnings. The market negativity has now taken it to financial crisis levels, which is simply ridiculous.

The smart grid build out is just getting started! The only countries in Europe that actually installed meters are Sweden and Italy, the rest will be installing now through 2016.

(the pic is from GTM research)

And I am not even factoring in Asia (Japan and China) or the US (Which I think needs to see standards before utilities start implementing rapidly. Although California is taking a lead regardless of standards.)

I own it, and will not consider actively trading this stock until it approaches its daily 200SMA. (It is just being discounted extremely inefficiently by the market right now.)

wifey not letting me work!

Point of record, so when she yells at me for "not doing anything", I can show here this post :)

IBM realization

I wonder how long it will take for the market to realize IBM is taking market share from DELL, HP and ORCL on the hardware side, and when will it reward it with an appropriate multiple, say a trailing PE of 16-17?

Oh, I forgot to mention they are perfectly positioned for the Web 3.0 phase (that's the data analysis side), which has just gotten started.

Tuesday, August 16, 2011

few thoughts... like emerging markets? and GOOG

EM - Well if you love emerging markets, then you should also love the SP500. (As I pointed out  before, US corporations are into the emerging markets enough that there is a clear correlation.)

GOOG - The Standard and Poor's does it again. They place a 'sell' rating on a stock that is seeing tremendous growth within all areas of cultural mega-trends from search, social, mobile and online video. (I just do not know how the Standard and Poor's is a respected institution. Seriously, I just don't get it.)  Google retraced its entire move from the last quarter. The market has effectively discounted the tremendous growth it is seeing.

Google's attempted MMI purchase is interesting, but what is more interesting is that all of Google's major partners publicly approved of the deal. Which indicates Google talked to them before pursuing MMI for its patents.  MMI also has about $3Billion in cash, which brings the deal cost to about $9Billion.  Seems like the market sees this purchase for what it is, protection. And with all major of Android's major partners giving the thumbs up, why should Google be valued differently?  Or is S&P going to upgrade it when it gets back to 600?

From a purely technical perspective, Google is at a critical support. Given that Google has basically gone nowhere for over a year and a half, with proof of breath-taking performance, I like it here as an entry.

Market Thought... head in sand

Well, Sarkosy and Merkel meeting was built-up, and obviously disappointed. To make matters worse, with comments like "Euro bond is a last resort", they sounded like people with their heads in the sand. I guess they do not care to see the market effect of what is going on.

Anyway, with the lack of leadership, we got our pull back. The SP500 may see 1170s via the 5SMA.

We still have the ECB stepping in and stabilizing things for the time being. I closed out some protection with the acceleration to the down side after the meeting.  Will close out the rest when the SP500 is near the 5SMA.

With IBM and Google's decline today, they look really interesting.

AXPW.ob notes

Axion issued their quarterly results. Here are what I found noteworthy (the bold words are mine):

1. Work also continues on our PbC solution for the emerging hybrid vehicle market, and testing continues with European OEMs. We are also working with a large US vehicle manufacturer and, this month, we will be shipping our latest PbC batteries to them for continued testing in the hybrid vehicle program. (I knew they were working with BMW, but this statement indicates multiple OEMs and a US vehicle manufacture for their PbC is news to me.)

2. "We believe that 2011 will see our first significant PbC commercial order, and that is likely to be from Norfolk Southern if we and they adhere to the timeline they have communicated to us..." (I always figured the stop-start segment would be their first commercial order by the end of 2011.)

3. "we will need working capital to fund our anticipated continued growth of sales in traditional batteries and PbC products. Consequently, we initiated prudent and proactive steps in the second quarter to explore funding strategies that will ensure that we have the flexibility to access capital resources when they are needed to meet our business goals. We believe that currently available funds at June 30, 2011, along with internally generated funds, will provide sufficient financial resources for ongoing operations, working capital and capital expenditures through the second quarter of 2012" (This shouldn't surprise anyone, and is one of the reasons I felt they went public way too soon. There is a reason this is a $0.61 stock. I am still under the belief if product demand exists funding should not be a problem. But this is a real risk, hence the very speculative nature of the stock.)

All-and-all, I just want to see commercial PbC production for the sizable micro-hybrid vehicles (MHV) or stop-start market.  Originally my time line for such commercialization was by the end of 2011, as BMW is just about there. (BMW is their biggest supporter. If they don't have BMW as a customer, they pretty much don't have a business in MHW.)

I don't plan on selling. (But if I was big money, I would invest but take a more activist role and ensure they keep BMW and as many automakers they can in the PbC corner.  Because with the autos in their corner, raising funding will be easier, and maybe even sell the company for a sizable premium.) Just have to wait and see what develops over the next few months.

trading DNDN

Anyone reading this blog, or knows me for some time, knows my story with DNDN.  Since its huge decline, I have been paying really close attention. Basically, I think as payment fear ease, this will be a $30 stock again. Today is an interesting day, technically.

Its entering its 'gap' area.

Thinks its good enough for an initial entry.

Monday, August 15, 2011

a heads up

I saw this article a few minutes ago, and wanted to share it. It highlights a 50:1 leverage by SocGen. I do not know the validity of this argument, and I am not changing my current strategy around it (because I am not a banking expert). 

I always intended on taking an SPY Put trade as the SP500 approached 1220, but due to this leverage argument (that can be seriously exploited by the rumor mongers), I took on small protection near 1200 (what I think is very light resistance). The current level already acted as an intra-day resistance, and barring any developments tomorrow, it should be breached.  But CNBC has pretty much set up a potential sell off tomorrow by constantly emphasizing a meeting tomorrow between Sarkozy and Merkel (which was planned weeks ago, and seems not to be as big of a deal as CNBC is making it).

I should note: I did enter more Apple during its intra-day weakness, and SU as well. I will plan on entering IBM and GOOG if we see weakness tomorrow.

If the EU banks are really a concern, the EU leadership must come to an agreement on a solution very quickly.

entered SU

I entered a position in SU. Its a direct play on oil, as I think Oil is trading at its lower end range. The oil play caught my eye over the weekend with this Baron's article highlighting the reduced production the majors are doing

The reductions will cause the over supply facing this country to go away, and back to higher oil we go. (I think it sucks, and hate it, but the opportunity to play it is now.)

The chart is nasty, like many other names, especially commodity names. But this is a play on what we will see in the oil market a month or two out.  I would like to see a move toward 40-41. (But will be actively trading it as the technical damage may cause a rock march toward 41.)

interesting... AAPL

AAPL has just breached its aura of negativity, breaking away (or leading) the rest of the market.

This has got the hairs on my ears perky. It further supports the thesis of my 'structure' post, big money will find itself chasing.

Market Thought... structure

Before I go into my thought, first things first, I had my last day at Pfizer on August 12th. I now consider myself to be a full time trader. (If I had to give myself a title it would be "chief market psychologist" :)  Over the next few days I'll be finishing up my office, and hopefully make progress on the 'investment pool' partnership.

Without a European debt induced credit freeze the market decline will evaporate sooner-rather-than-later as economic data and company results prove the global economy is churning.  There is a ton of technical damage that needs to be repaired.  Slowly, the repair is taking place.

The negative momentum on the SP500 guided by the 5SMA was broken on Friday.  Also, the spike in the VIX via the VIX-SP500 (as the vix touches the high of the market rally) overlay suggests a market bottom may have been achieved.

The chart above is from one leg of the rally. However, a bottom is further suggested when looking at the VIX spike from the start of the rally (March 2009).

I believe we will start seeing a shift in negative chatter once the SP500 breaches the 360SMA, as the SP500 will regain its structural trend. (There is a higher probability that the SP500 sees resistance near the 1200-1220 level, then breaches.)

There is no big mystery that the emerging markets have been tightening over the past few months due to inflation concerns.  The tightening has caused the markets to go nowhere in 8-9months, and consolidate the last two quarters. (The tightening has now eased, and easing, Australia being the most recent example.) But has the tightening been so severe that the global economy will be in a recession? This interview with CAT's CEO does not suggest it.

Nor do other statements from other companies.

The market decline has been so severe, that it has already discounted far more than a global recession.  And the chatter over this weekend (that Italy is doing more to get their house in order and the speculation that Germany is easing to the concept of the 'euro bond' idea) may suggest Europe is finally getting serious about squashing their debt issues.

Saturday, August 13, 2011

to all politicians

I noticed the chatter about Dylan Ratigan's rant while on vacation, but did not get to see in until I returned. All our politicians need to see this video, then go watch Mr Smith Goes to Washington.

Visit for breaking news, world news, and news about the economy

Now watch the fight for the lost cause...

Now go watch the entire movie, and remember why you went into politics.

Friday, August 12, 2011


Doing all the re-positioning enforces the fact that I need to set up one organized account for trading. (That is in the works, but I need to iron a few things out.)

Anyway, I am repositioned, and purchased more BGCP. (BGCP is now yielding 10% with trading volumes spiking with all-time-high volumes. BGCP benefits from this.)

Also want to point out, in my opinion, the 8-10% market move from the SP downgrade I think is BS as the fundies have not changed.

Market Thought... a very expensive vacation

Every time I know I will have limited access to info and trading I try to prepare as much as I can to anticipate a realistic market scenario.  I was fully expecting a market decline to the 360SMA (maybe even chilling there for a bit), but bounce from the 1200 level.  I was expecting further European BS to continue the market negativity, and cause the testing of major trend support.

Unfortunately for me, the Standard and Poor's (SP) decided to add to the financial crisis they greatly contributed to with their bullshit triple A ratings on mortgages by downgrading a legitimate triple A (even when their math was wrong).  This forced the hundreds of billions of dollars managed by 'idiots' or contractual obligations to force a knee jerk reaction and sell.

The SP again caused trillions of dollars worth of damages to the financial markets, and caused severe trend damages to the markets.

I know the difference between a bullshit trend destruction and a legitimate one, unfortunately there are many people in meaningful positions that can not. The sheer negativity this trend is promoting, I think, is causing some seriously wrong decision making by some of the banks. (A tail waging the dog.)

First, the market starts to get annihilated thanks to some douche bags with clout, then negativity consumes every one with rumors swirling faster than an high school girls locker room.  Today it was revealed that ECB overnight lending spiked on Wednesday to 4.058B Euro, from 2M Euro on TuesdayThis was likely from some Asian banks withdrawing credit lines probably because they got consumed by the overall negativity.

Hopefully the chain of events causes the EU to actually do something that works, and the super congress acts with teeth. In the mean time, Europe should keep chugging along and without a real credit issue within the credit markets.  With no credit issue, the equity markets will re-gain its longer-term tend and this negativity will get washed out.  There will obviously be resistance along the way with all the SMAs now acting as potential resistance.

Weekly and monthly structural trends are still intact, fortunately.

I was itching to be in front of a computer to trade this volatility.  I lost on missed opportunities and the positions I am currently holding, making this my most expensive vacation.  But being on vacation was nice.  I have a bunch of re-positioning to do tomorrow. (I do not plan on exiting the positions I have on, and still think within the next 6months IBM will be at 190, AAPL will be at 420, DIS will be north of 42, GOOG will be near 600, POT will be north of 61. I can keep going, but think my point is made.)

Wednesday, August 3, 2011

fyi... holiday, Oil and DNDN

1. I'll be on holiday until 08/12. I will bring my phone, and hopefully will continue to post via tumblr (shit happens link). (So long as the wifey lets me :)

2. Cramer mentioned the decline in Oil today for the reason we rallied.

If he can sit there, and lecture about a one-day move in oil prices and how significant it is, then why in the world is no one talking more about the stimulus effect of the new MPG (miles per gallon) requirements?!? There is basically going to be a stimulus of over $1.7T due to this measure, and it is basically ignored. If we were to assume this to be annualized evenly over the course of the 14years, its about $120B a year back to the consumer and the economy. That's huge, and completely ignored by the Doomsday schmucks.

3. DNDN - ouch. The stock is down over 60% because of tempered expectations.  They missed Revenue estimates by $10M, and guided fairly poorly. For a $93,000 treatment, I can see how reimbursement confusion can cause slow adoption, but that is why they have a marketing/sales team. To remove that confusion.

But to add to the confusion, there are mixed signals. Lower revenue expectations, yet "strong physician interest in Provenge" with an increased number of accounts (more than 300 by end of July) infusing Provenge.

I do not know what to believe right now, but if this is just a temporary hick-up the lay-offs should not be necessary.  These contradictions have caused the market to be very harsh with the stock.

Listening to the conference call, management answered the questions with solid patient numbers, and management's story seems to 'stick'.  Looks like they just handled this pretty poorly. They wanted to seem tough on expenses, but just created more confusion which beat the hell out of the stock.

Management should have just said they are removing guidance as payment confusion has caused low visibility toward Provenge.  Why include all the harsh language? Management needs to get their shit together, and their marketing/sales team in line.

Seems like an opportunity here, but its now a 'show me' story.

a note on ITRI

For anyone that doesn't know, I have a 'timeless portfolio'. (I keep track of it under Links, 'timeless portfolio'.) The portfolio is designed to needed limited homework, and heavily dependent on dividends.

The stocks include: KMP, BKE, BGCP, IBM and F.

I would love to include ITRI into this mix, especially at current levels, but I specifically want to keep this number of stocks to 5 for the portfolio.  So I will not add or replace any of the stocks because I am happy with them. (But if I was to replace one, it would be with ITRI.)

ITRI right now presents one awesome value proposition. I already own it, and talked about it for some time.  I want to mark down and put on record, at current price (41.97) I will be keeping a record of its performance via the timeless portfolio link.

Value is always a relative term, and while growth is lacking right now, ITRI will start on a path of tremendous growth a few months out that will last a few years (at least 3-5yrs).  Grid standardization is taking place, along with a ton of behind the scenes activities by the utilities for Smart Grid implementation.  Once the standardization takes place, growth will start. It is a matter of time, and that time is shrinking rapidly.

(Something to keep in mind, ITRI reached mid 60s with relatively small stimulus funds. Correlate the stock price with a Smart Grid build out almost 5-10x the size of the stimulus funds. This is why I really like ITRI now, before everyone realizes the inevitable.)

Tuesday, August 2, 2011

Market Thought... no catalyst left

The reasons I posted earlier via the 'curious' post I believe still stand, except I also think there is a lack of positive catalysts in the short-term. Anyone of the 4 reasons pretty much acted as an excuse to sell.

The 'ace-in-the-whole positive catalyst the market had was earnings. The reports were/are strong, and most stocks acted accordingly. But now the reports are started to fade, and its back to the assumed 'top-down' economic affect to the market.  I think the top-down approach is complete and utter bullshit because so many market players use it incorrectly. (Does anyone really think they can do an accurate top-down economic assessment of the US, EU, BRIC and RoW, with a combined total of some +30trillion GDP? If anyone thinks they can, I will know who is a bullshitter :)

US economic data matters, but what really matters is global economic data and GLOBAL GDP growth because so many of our companies get their revenue and earnings abroad.

The fact remains the BRIC countries are trying to slow down due to inflation, but their affect is not at all pressing.  The BRIC index has been pretty flat. (Notice how much our markets correlate to the BRIC markets, adds to the above comment about Global GDP that matters.)

With today's decline, the SP500 has been consolidating for 7-8 months. Think about what that means for a second. The market has absorbed 2 strong earning seasons, and has gone no where.

The good news, its at relatively strong support at 1250 support. The better news, if it breaks the support, there is super support (yes, I used the word super :) at the 360SMA not too far below.

There are definitely some indications within certain indexes that merit reason for concern. The retail, materials, aerospace, defense and semis that have acted like crap. (The canary in the coal mine being the semis which was in a negative trend for some time, and something I highlighted.)

Throughout this decline, I think opportunities have emerged, and I have been using the heavy cash position I have built. The market multiple is not over-extended by any means, especially with two quarters worth of earnings under its belt. I have purchased DIS, AXP, IBM and AAPL. And am patiently waiting to trade GOOG, POT, ATI, more IBM, AXP and re-adjust the DIS options to my equivalent number but via the Jan 2012 37 strike.

POT - Looks really good here, and almost over sold. Looking for an initial entry, and adding more between 54-55.

GOOG - I was tempted to day-trade this one off of its daily 14SMA, good thing I didn't :). But I will most likely enter near the 20 SMA or high 580s.

AXP - Already added a second position at its daily 76SMA, and am looking to add a third position around its weekly 28SMA. Also, its trading with a really low trailing PE. Considering more consumers are saving, their delinquency rates should be declining further.

ATI - It saw the decline I was concerned about, and now am tempted to re-enter. I am probably going to wait for the market to hit the 360SMA to play this one.

Also, a side note on the FED and QE2. They have made/making a nice gain.  The $600B purchase of treasuries started on Nov 12th 2010 and ended June 30 2011. Look at the treasury yield from that time period, while keeping in mind the yield is now near 2.6%. The vast majority of the Fed's purchases were north of 3%.  It would be cool if they captured the profits by pushing what they purchased to market.

Market Thought... curious

Trying to figure out why the market is taking such a big hit this morning. Combing the chatter, a few things pop out:

1. The obvious, US economic data, slower personal income growth and a decline in consumer spending.

2. China stops Yuan borrowing from Hong Kong. This should curb cheaper Yuan to re-enter the main land, and facilitate in curbing inflation (and some economic growth).

3. Italy and Spain bond yields continue to raise.  Italian authorities will meet today about this.

4. Birmingham maybe further a head to declare bankruptcy. (This one is not in the media as much this week, but may be playing a role behind the scenes.)

As of now, the decline in equities is correlated to weak economic data. Although, I would like to point out that the jobless claims last week were nice, and the market did not move.

From a purely technical perspective, the SP500 may want to test the 1250 area. That is some pretty heavy support via the Daily and 14-monthly-SMA.

Monday, August 1, 2011

DAX weakness

The DAX saw an atypical declined. It went down approximately 100 point from 3:59pm to 4:03pm (local time). Not a lot of press on it at all. No major outlet picked it up, despite Goldman given their 'fat-finger' opinion on the matter.

Intraday SP500 showed the index collapsed near 10am (NYC time), around the same (local) time the DAX collapsed.

Trades... IBM, AAPL

I was active in the AM, selling some trading positions around AAPL. But looking to re-enter those positions. (Still long the core position, and will not sell that core position until 420.)  Also, started buying IBM again. As indicated last week, I entered IBM and was actively trading it. With today's decline I rebuilt a position.