Friday, August 27, 2010

Finally, Not A Shitty Day As Bulls Press Their Bets After Bernanke

I did a complete remake of my portfolio today; selling almost all of my vastly underperforming AAPL options in order to purchase a large chunk of LNC options. LNC is the subject of buyout rumors, which I think are credible, in spite of what one reads. I've had a placeholder position in LNC for some time; and following it quite closely for a long time. Even after today's 10% jump, it is still severely undervalued, as it trades at $24 with a book value of $40. The rumor is for a cash buyout of $32.50 a share. We'll see.

It turned out to be an interesting end to a rather dreary week. The better-than-expected GDP news was quickly sold, but then news of reduced guidance from INTC and the text of a speech by Ben Bernanke hit almost simultaneously. At first there was some panic selling, but we quickly found support and it was straight up into the close.

Volume increased nicely and breadth was excellent. All major sectors were in the green, with oil, small-caps and regional banks leading. Overall it was an excellent day for the bulls, but it doesn't do a whole lot to change the technical picture. We are still below where we closed Monday, and there is plenty of overhead to deal with -- particularly the 50-day simple moving average at 1084 of the S&P 500.

We had oversold conditions to begin with, and now with a little better mood in the air, the bulls have some momentum and are in good shape for more of a bounce.

long AAPL; LNC

No comments: