Wednesday, July 7, 2010

Things I'm Thinking

I bet many more people are selling the strength than buying recent weakness.

At some point people will be forced to buy strength as there will be little weakness to buy.

I wonder how much real distribution has taken place versus futures-manipulated selling?

I still don't like the blame being placed on the algo's -- it's the trading rules, not the players, which are to blame. Then again; there is a lot of debate whether it's the gun or the person who pulls the trigger. Given that, I'm sure this debate will rage on for some time. Is it the high frequency trading; or elimination of so many rules that provided so much balance to the markets previously?

It seems many notable bears have been growling loudly of late. Also, many who were proclaiming victory in the form of a V shaped recovery have already admitted that stance was wrong. Personally, I think it's way too early to say that anyone can be certain of either a V shaped recovery or a double dip. I'm in the variant growth camp still, and I fully realize that we will need to see at least 3-4 more quarters of data to proclaim a forecast was indeed correct.

Did I see chip sales were up 48% year over year in May? So people weren't buying houses, but companies were buying a ton of semi's. Again, great case in point about what is happening in the economy. We don't need increased home sales for solid growth. My guess is the real underlying housing demand will surface within weeks to months; and the first time credit will be much like cash for clunkers was to car sales.

Back to the semi's: the strength was broad based but especially notable in networking and connectivity. Hence BRCM is flying today and MRVL is holding even, as it caught a downgrade. At current levels I'm favoring MRVL but like them both.

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