Friday, April 30, 2010

Random Stuff

OCLR's strength is good for FNSR, which has stalled out after a 5 bagger off its lows. On a multi-year chart this name is still in a low trading range and that Optimum merger is just getting better.....

WFR's report was way better than the stock reaction, but that has been the way of the quarter. As for the quarter, I predicted that we would not see the blanket sell the news reaction of last quarter, and that has played out roughly correct. However, it's interesting to note what sorts of reports are causing more strength. And they have been all over the board. In some cases fairly benign reports have generated huge upside, AKAM a case in point. I've seen that stock fall on reports better than they just had.

V is lower today and I hope it goes under $90, so I can get into the name.

SIGM is a sleeper chip name that may awaken. The former flyer has fallen on hard times on competitive concerns. That can happen when BRCM is playing in your yard. However, I'm getting an inkling on this name, as a huge market for disruptive change is the world of set top boxes.....

Added More AAPL

Just like I did earlier this week, I doubled my position in AAPL today using calls. I may be a bit early, but I'm giving myself time.

The 3G version of the ipad is on the shelves, so we'll truly see how potent the sales potential for this product is. This also should portend to more activity from AAPL related to iTunes product differentiation (video and book explosion), robust app activity (especially paid apps) and overall zeal from Enterprise users and developers. Moreover, the next release of the iPhone OS 4.0 should spur additional sales of the whole iPhone lineup, while also possibly providing another revenue stream for AAPL.

long AAPL

What A Nasty Day...

Despite the market hitting a new annual high on Monday and a strong bounce on Thursday, the bears ended up with the victory this week. We had some of the worst action in a while on Tuesday, and then after a decent bounce on Wednesday and Thursday, we rolled over again today. It is only two days of selling, which isn't a massive breakdown, but it is a slight change of character for this market, and we need to pay attention and make sure we tighten up our defense.

Of course the dilemma of this market is that for over a year now, every time it looks like we are about to accelerate to the downside, we find support and then head straight back up. The action at the end of January looked much like what we saw this week, but after only one more poor day the following week, we had straight-up rally that has lasted for nearly three months.

Given the patterns in this market over the past year, we certainly can't be very confident that the market won't pull off another quick reversal and a move back to the highs. In view of the technical setup, I sure didn't think we'd see new highs so fast after the January breakdown, but that has been the norm and not the exception.

The possibility of criminal charges being brought against GS, the European sovereign debt problems and the oil spill in the Gulf of Mexico are all sharing some of the blame for the poor action this week, but I think we would have found excuses for profit-taking regardless. It is the market that drives the news and not the other way around. In a different environment, the market would shrug off the things that it is using as a selling excuse today.

In view of how powerful this rally has been, how quickly we seem to bounce back and how aggressive the dip-buyers have stayed, I don't want to be too quick to be aggressively bearish, but there are some definite negatives this week, and as seasonality turns negative, the bears are going to press harder.....

Thursday, April 29, 2010

Random Tech Stuff

The ridiculous:

BIDU - No change of opinion on BIDU. For clarity, I'm not in it; (sure am glad I'm not short it!) Still don't think it should be this high.

V - For being down at all after that number. I've previously pegged this to par. I'm now at $125 and looking to get in the name...

NVDA shouldn't be trading this low. Given the backdrop, I'm thinking it is at least $5 too cheap and the netbook/tablet revolution is just emerging.....

The Sublime:

FSLR's report and guidance. I continue to lean in the bull camp for now and could see the stock between $175-200 again. Long term it loses to silicon as I've fully laid out previously.

AAPL execution.

CIEN's analyst action of late. The analysts are fully moving my way, though I think most targets are still magnitudes low.

TSRA's report. It finally hit one and I think this could portend to better things to come.

The Nasdaq. Again, all paths lead to 2800: Jobs tsunami, cash fueled M&A, and key secular growth drivers.


Earnings Have Obviously Trumped Europe's And Goldman's Woes

Doug Kass from often describes the market as being without a memory from day to day. This market has a memory, but it only remembers the good news and immediately forgets anything negative. The GS fraud case and the European sovereign debt issues that plagued the market on Tuesday were completely forgotten today as the market focused on good earnings news.

What is most surprising about this action is that it is no surprise at all that we immediately turn back up after a good bout of selling. Quite a few technicians were ready to proclaim the action on Tuesday as being an important turning point, but as has so often happened, we quickly negated the negatives with a fast bounce.

It can be very tempting o keep trying to call a top in this market. It is just good old-fashioned common sense that sooner or later we are going to have a significant correction. Who doesn't want to be the hero who calls the exact turning point?

Unfortunately, it can be a very costly game to play. The best approach for most market players is to just stick with the trend while it lasts. It helps to focus on the action in individual stocks and to take gains as things become extended, but if you stay disciplined, you'll be better off than if you endlessly try to call a top....

Wednesday, April 28, 2010

The Coming VZ/AAPL Deal

A VZ/AAPL deal will happen and it's incredibly not in the price of AAPL stock yet. Timing is a bit tricky in that VZ may be waiting for the 4G phone. Interestingly, this should be a boon for QCOM as well, but the market hasn't been that anticipatory for a number of years now. Instead, the market is waiting for firm news in many cases before unleashing large pent-up moves.

Another case in point is GOOG with Chrome. Chrome has a huge amount of the browser market already and is truly a stunning piece of software. My view is it is the next major OS for computing globally. But until people see it in a Dell sans Windows, or Lenovo/Acer/HP, etc.....they don't see how transformative that will be.

Anyway, back to AAPL, I've always thought it's an instant $15-25 for the shares once the deal comes to fruition; though now I think we could see a short period of sell the news (like what's happened the past 2 days...) and then see the price action catapult.....

long AAPL

Good News And Bad News As The Dip-Buyers Are Cooling Their Heels....

The good news: The bears failed to build on yesterday's selloff. The bad news: The bulls didn't manage much of a rebound.

For the past few months, this market has typically bounced back immediately from any selling, but today there wasn't any big rush to buy the dip. We didn't even have much buying interest in the final hour, which is also a bit of a change. It wasn't bad action, but it wasn't the lively dip-buying we'd grown used to.

The FOMC announcement did nothing to liven up the action. There weren't any notable changes in interest-rate policy. Usually we have some sort of reaction, but today we barely had a pulse on the news.

We have a few earnings reports after the close: BIDU, V, GMCR and FSLR will likely garner the most attention, but they probably won't influence the broad market very much.

The sovereign-debt issues in Europe are likely to continue to bubble up. If market players start looking harder for reasons to sell, those issues will offer good excuses. It is a mistake to just dismiss them out of hand, with the justification that the earnings reports are quite good. The market is trying to figure out its next move, and it will decide which of these news items will be the most relevant. Let the price action be your guide. The market will tell us what news is the most important, not the other way around.

The bulls still have the edge, but there are cracks in this uptrend.

Tuesday, April 27, 2010

Random Stuff

In my previous post, I disclosed that I loaded up on short-term AAPL calls; I sold almost all of my C calls for a nice short-term profit to pay for the AAPL calls. I intend to re-buy the C leap calls very shortly, probably at a lower price, to hold for the double-digits, which I think is coming within a year or 2 years....

As for HIG, the Greece noise and rating cut is giving a great entry on those who have no HIG yet. I'm already in at higher prices. I think HIG is a primary benefactor of the global economic rebound and what will become an amazing job growth engine in the coming months.

All paths lead to Nasdaq 2800 -- but not in a straight line......

TXN reported a very solid quarter and it guided strongly. Historically strong guides from TXN usually result in an even stronger pipeline for QCOM. Back to TXN, as the early entrant smartphones become the new standard for cellphones, this likely helps TXN as it tends to capitalize on big commoditization trends.

BRCM reports tonight and look for a gangbuster quarter. By no means does that portend to a higher price (post report), but if there is another stock that might pull an AAPL type explosion it's BRCM. I still think the stock trades in the $50's within months/quarters. I'm not playing myself, as I have my eye on several new positions that I'm going to focus on in the coming weeks.


What I'm Doing

You can do what you like; here's what I'm doing. I think the selling in AAPL was way, way overdone. (Shocker) So I loaded up on as many May and June 270 AAPL calls as I could afford - I think managers who have wanted in on AAPL for some time will now pull the trigger....

long AAPL

The Selling Today Had Alot To Do With Profit-Taking; It Wasn't Just GS And Greece And Portugal And......

Although the most likely cause of the market weakness today was locking in gains, there was also a downgrade of debt issued by Greece and Portugal, and the GS hearing, which aired most of the day, did not help the mood. It seemed like the vast majority of market players were shaking their heads in disgust and making disparaging comments about the thrust of this hearing.

Many of the senators seemed to have limited knowledge about how a market for complex instruments operates and were more interested in trying to paint a negative image than in really understanding what happened. They acted appalled at the idea that Goldman wasn't 100% sure what was going to happen to housing a few years ago and that it even made bets that prices might fall. Traders who traded! How shocking! Actually, I don't think the politicians really are that dumb -- they just are being intentionally obtuse as they pander to voters and demonize Wall Street....Maybe (they are that stupid).

The Goldman hearing is just a sideshow, but it is important in that it makes it clear that the politicians want to find some villains, and the witch hunt is likely to go beyond just Goldman and will have some impact longer term. It isn't going to be easy to trade, but it is something we need to be aware of.

Technically it was a clear day of distribution and the worst selling since this rally began back in early February. It isn't necessary the end of the recent uptrend, but it could be the start of the topping process. It is the second big red distribution bar in the last two weeks, and that is a warning sign of some institutional selling pressure.

Tops are usually a process that take some time to play out. We'll usually have a few bounce attempts before we really roll over and start to trend. What we have to do now is watch how we act on a bounce and whether the dip-buyers stay aggressive. If the dip-buyers are finally starting to feel fearful and not rushing to buy every little pullback, that is going to be a major change in market character.

Campaign Contributions And The GS Hearings

The Democrats will destroy themselves down the road with a scorched earth policy towards Wall Street. The securities industry gave 63%-37% Democratic-Republican campaign contributions in the current cycle.

That's going to shift violently toward the Republicans this year. Add in the Supreme Court decision that takes limits off contributions. Massive advantage for Republicans in 2010-12.

And why do the GS guys think the senate knows what "on a principal basis" means? How can they be this tone deaf? They don't even understand the concept of an inventory full of car parts! And they're using terms like "value at risk"? You have to explain to them the most obvious points....Unbelievable!

Monday, April 26, 2010

GS And More

I opined a couple weeks back that I thought GS would be fine but would wait for better prices. However, at this point I am rethinking a number of things.

1. The problems GS are experiencing are akin to accounting problems, and those issues have to be respected.

2. The C issuance and its timing. At the very least C is the much easier trade and at this point I think C has much better risk reward than GS. MS is also the firm doing the C offering -- this fact should not be under-stated either.

3. You can't fight city hall. Or can you? Just as many bears are fighting the Fed and my highly variant economic strength back drop, staying long GS here might be like staying long MSFT back in the day when the DOJ really went after them for the monopoly on Windows. MSFT really hasn't been the same since. GS is trying to fight this case and some of the merits for them look good. However, I remember all the firms paying fines on tech research. In some cases the SEC didn't have a great case (against certain firms) but firms paid anyway.

4. City hall part deux. By the way, if the SEC does not bring multiple suits against multiple Wall Street firms this is really bad for GS.

5. How much will the exploding new issuance calendar be moved from GS to other firms? If you were Facebook or another hot tech IPO would you want GS to lead or co-lead your coming out party?

6. I say all this feeling that my EPS numbers (for GS) crafted many moons back (which were just massively bullish), will likely still be proved largely correct. Though at this point I am moving some of that future GS EPS to other firms.

7. So for me this has become a total "steer clear" proposition on any fundamental metric as they are essentially meaningless for the time being. Until we know any form of resolution I would play GS purely on the TA's and those TA's are now looking very bearish.

long C

The Market Actually Struggled Today

After a mildly positive morning of trading, the action turned even more sluggish, and we ended with some minor selling pressure. Breadth was slightly negative, with regional banks, biotechnology and oil leading to the downside. There also was some minor strength in semiconductors as market players anticipate earnings tonight from TXN and a number of other small chip plays.

Under the surface, we had some aggressive speculation in low-priced banks and good reaction to earnings from CAT and WHR, but big-cap technology was mixed with GOOG weak, AAPL finally taking a break from its run and strength in PCLN and AMZN. RIMM also reversed hard to the upside following news of new products.

Overall, it was a slight victory for the bears, but it has been so long since they have put any points on the board, it is actually sort of quaint to see a little red. It is a rare negative Monday, but the small losses do little to change the big picture.

We have quite a few earnings reports coming up, but TXN is the only one of notable size. The chip sector will be particularly busy, and it is going to be interesting. INTC helped to get the sector running, and it will be interesting to see if it now follows through.

It was a very interesting day, but a little profit-taking is healthy. In fact, we could use a few more days of it and some consolidation. Sooner or later, it has to happen, but so many people are anxious for it that it just never seems like its going to occur.

long AAPL

Friday, April 23, 2010

Tech Stuff

Huge quarter out of RMBS. The stock is acting like AAPL did in the mid - $140's-150's and look at AAPL now. A similar move out of RMBS would get the stock to the $50-60 area which I expect.

Speaking of AAPL, no, I'm not surprised by the move. At $245 the stock had a forward PE of 13 if you stripped out cash which I've highlighted numerous times. That, along with a forward PEG of .35, made it one of the cheapest growth stocks on the planet. I'll reiterate that I think the $245 level would be the new gift level, though I may have to raise that price point.

I added more QCOM yesterday. I think the move lower is preposterous! They always offer low guides. Even so, QCOM did actually raise FY guidance, something they rarely do. While not the best chip stock on the planet, it's in the lexicon and it's becoming the cheapest as very few people look at balance sheets anymore. Bottom line: QCOM is trading at 3 times cash and that again is ludicrous, given the future catalysts as well as consistency of cash generation.

PMCS is another name with a good report that I expect will move materially higher. They are starting to look like MRVL did about 3-4 quarters ago. The same is setting up for PMCS and this is just the environment where it could find itself with bidders at the door if the stock stays this cheap......



I don't believe in charts; in 'technical analysis.' In fact, I think it's hooey. But that doesn't mean I'm right. As they say, if enough people believe in it....So, for those old school technicians, one may want to look at the looming $27-27.50 area on RMBS. From my perch RMBS may be about ready to really liven up. 2006 highs are much higher and the balance sheet and earnings power today are a whole lot better than that time frame. I'm going to try to add at $26.50 and most likely again at $28......

Don't Fight The Tape....

We started off this week with a little volatility caused by the GS fraud charges and some short-lived sell-the-news pressure, but it didn't last for long. By the end of the week, were right back to slow but extremely consistent move higher. Anyone who tried to anticipate a turning point just ended up as short-squeeze fuel.

What is so amazing about this market is how unchanging the action has been for so long. It has been a steady trek upward, and any hesitation at all has been a buying opportunity. The dips have been so shallow and so infrequent that many of the dip-buyers have turned into chasers because they are so tired of not being able to put money to work.

Although I'd like to offer some dramatic new advice about this market, there really is nothing else to do but to respect the power of this trend. The momentum is crushing any and all opposing viewpoints. If you have a bearish argument, it is wrong, no matter how eloquent, insightful or penetrating it might be.

There is a great temptation to keep on looking for a turning point, but if you are dwelling on that, then you are missing out. That doesn't make it any easier to keep on riding this runaway market, but until conditions change, there aren't any good alternatives.

We have a deluge of earnings reports next week to add more drama, but it sure would make for a more interesting battle if we had bears shake things up a bit.

Thursday, April 22, 2010

Still Going Strong....

We didn't have particularly large gains today, but it was quite impressive how aggressively we bounced back. This morning, it looked like we were going to have a fairly aggressive sell-the-news reaction to earnings, but the dip buyers gained momentum as the day progressed and before we knew it, we had another positive day. Volume was quite heavy and breadth had reversed to 2-to-1 positive by the close. Retail and oil led the way, while drugs and gold were the laggards.

It is difficult to keep trying to convey how amazingly resilient this market has been. We have not had more than a half a day of aggressive selling in months. We had a little more volatility over the last week since the GS fraud charges hit, but the bears have not been able to dig their claws into this market for longer than a few hours.

AMZN earnings are out, and it doesn't look like a sufficient blow-out to keep it running. The stock is up dramatically and expectations were high, so a beat of 10% and so-so guidance isn't good enough. MSFT is the other big report tonight and it is down initially on the release.

This market has shrugged off all the negatives thrown at it for months now, but at some point, poor reactions to earnings reports will matter. However, given how this market keeps coming back, you have to be a least a little hesitant when it comes to trying to call a top.

Like last night, we are seeing a good amount of selling as these earnings reports hit, but you can bet the dip buyers are going to be prowling around tomorrow morning. This is a market that hasn't seen a dip that it hasn't loved for over a year. Only a fool would keep on saying that this time it's different after being wrong the last 50 times they made such a prediction.....

Wednesday, April 21, 2010

Thoughts Going Through My Head - Lots Going On!

SNDK should be extremely good but they might sandbag again as has been the case with them of late. I'm hoping they do and get more than a $2.50 peel.....

I'm keeping all of my QCOM - and gonna add more - Snapdragon is about to take flight.....

All paths lead to my low $400's target on AAPL; $245 is the new dream buy price should the market ever decide to correct enough for that to happen...

GOOG reported a fine quarter; AAPL getting into mobile ads is concerning though - Catalysts are coming over the next 2-3 quarters; this stock's going $150 to $200 higher....

ATHR just blew out the numbers two days ago....Ditto VMW last night. I do feel that the name got away from me this year. Alas, you can't own them all.

long AAPL

A Late-Day Buying Spree....

Just in case the bears were starting to feel that the market momentum might slow down, we had a good old fashioned late-day buying spree. It felt like someone big jumped in and said "Let's squeeze this sucker!"

The late-day surge put some lipstick on what was starting to look a little ugly. There was nothing really dramatically weak, but there was some troubling action in chips, natural resources and even small banks, which reversed hard. However, the bulls had some good action in homebuilders, which may have been caused in part by reports that John Paulson is now bullish on housing, and for some reason small-caps exhibited unusually strong relative strength.

It is earnings season, so that means we quickly turn our attention to the next batch of reports. The most important is probably QCOM, which is trading down on lowered guidance. AMGN is also down on its numbers due to health care reform costs, and FFIV, CTXS and NFLX are taking hits on their numbers. So far I'm not seeing too much positive earnings action other than SBUX.

We continue to have a very high degree of sell-the-news risk here, but the dip-buyers are staying very active, and that is keeping the selling pressure contained. Tomorrow we won't have the big boost from AAPL, and so far I'm not seeing any fantastic reports, so it will be a more challenging test for the bulls. The battle is heating up, and that should make for better trading - for all you traders, that is.


Tuesday, April 20, 2010

AAPL Earnings

AAPL reported a blowout second-quarter earnings release, and shares are indicated up 5% to 7% in the after-hours market. Considering that the stock is up 105% over the last year and that expectations were high headed into the print, it's quite impressive that the company was able to beat on every metric.

Earnings came in at $3.33 vs. $2.45 expectations, revenue at $13.5 billion vs. $12.04 billion consensus, with margins expanding to 41.7%, from 39.9% last year and 40% by consensus.

The product sales results were also stunning: The iPhone, its most profitable product, posted 8.75 million units, beating the 7.5 million whisper number. Mac units increased to 2.94 million vs. 2.9 million, and iPod units sold were 10.89 million vs. 10 million expectations.

Guidance was strong (although typically conservative) and will lead to higher earnings revisions for 2010 and 2011. For the third quarter, Apple sees $13 billion to $13.4 billion in revenue and $2.28 to $2.39 a share in earnings, vs. $2.65 consensus. International revenue as a percentage of the total grew to 60% from 50%, and total cash grew to $40 billion.

The accelerating growth in the quarter is quite an accomplishment, given the company's huge $224 billion market capitalization. With the iPad launch upcoming, further penetration of the Mac (only 10% share worldwide) and new product refreshes for iPhone and iPod and an increased mix of international revenue, the story and the stock have many more legs for growth. On a price-to- growth basis, the stock trades at 1.37 times forward, and my target implies 1.65 times growth -- very conservative (typical large growth companies trade north of 2 times) for a long-term quality growth story like this.....

long AAPL

Big-Time Earnings

Stocks with key earnings reports acted poorly today, but it didn't matter very much.

IBM, GS, EAT, NTRS, JNJ and several others traded down, despite generally good numbers, though it didn't seem to bother the bulls at all. We had lighter volume, but breadth was almost 4-to-1 positive. A weaker dollar helped quite a bit, as oil, coal and steel performed well.

None of that matters much, as market players turn their attention to the most important earnings night of the quarter. AAPL is the big kahuna, but there are other important reports from the likes of CREE, MS, YHOO, WFC and MCD.

If the bears are finally going to see the "sell the news" reaction they keep hoping for, it should come after these key reports are out and digested by the market. Expectations are high and prices extended, so we will quickly find out how much of the good news is already priced in.

Despite the good action today, I noticed quite a few smaller caps that haven't recouped recent losses as quickly as the broad market. There was a bit of non-confirmation, which tends to make me worry about topping action, but we have barely managed more than a half day of any real selling pressure.

The trend is still up, and the action today reflected little worry or concern, but it is the reaction to earnings that will tell the tale. So far CREE is a disappointment, and YHOO quickly reversed down after what looked like some good headline numbers.

long AAPL

Monday, April 19, 2010

Random Monday Thoughts

With the GS news, I really need to get into MS again. I think MS is on a "harmonic convergence" path to much higher EPS results. Trading, net interest margins, new issues and secondaries and a massive catch-up trade all make this name one of my favorites in the finance space.

GS will eventually trade at a lower level. I'll wait for at least $5-10 more downside.

The NAZ is down almost a full percent versus minor selling in the other indices. This is just the opposite that should be happening and the more people sell the Naz beta the better eventual returns become....

On JPM, I'm out currently but this is approaching crazy cheap levels again. My view is more SEC actions are coming and the more that come the less of an effect on the market they will have.

SOHU should not be dropping with BIDU; I'll continue to don the bull suit on this one opportunistically.

I'm close to using the weakness to get back into CIEN, but I want to see how we play out for a few days. I'm not going to get to anxious on a couple dimes here when I'm positioning for many dollars. This continues to be my optical goto name though I've also put OCLR front and center on my screens while noting that they have a reverse split coming.

Earnings Are Pouring In Now....

We had a pretty good recovery this afternoon, which was probably due to the bears' hesitancy to press short positions in front of key earnings reports.

Before Friday, the big issue was whether we'd see a "sell the news" reaction to earnings. Now that the GS news is being digested, we are moving back to a focus on earnings. However, we aren't quite as extended, so the "sell the news" danger is somewhat decreased. The IBM earnings tonight and AAPL tomorrow night are going to be very good tests of the market mood.

Although we have had two days of selling, so far, it is still a fairly minor correction in the major indexes. Under the surface, the damage has been much more severe, especially to various small caps; many of them barely bounced back with the market this afternoon. Breadth is certainly much weaker than the indexes indicated.

The dip-buyers aren't showing the level of confidence they did over the past few weeks, but I still am not inclined to believe they are going to give up quickly or easily. Normally, it takes more than just one decent pullback to instill a fear of the bear in the hearts of dip-buyers, but this isn't the same sort of vigorous bounce we've seen recently.

This market was so "technically extended" going into earnings that there was a good chance of some "sell the news" pressure. While we are a little less extended now, the surprise Goldman news probably gives the sellers a little more reason to sell into big moves on good earnings news.

long AAPL

Friday, April 16, 2010

The Market Slides After The GS News

After going virtually straight up for weeks, the market was well set up for a sell-the-news reaction to first-quarter earnings reports, but news that GS was being charged with fraud finally produced a selling catalyst. Many market players were looking for INTC's report to be a selling catalyst, but instead it turned out to be the spark for a final flurry of frothy bullishness.

The market already looked like it was inclined to sell off as decent reports from GOOG, GE and BAC were sold this morning, but just as the dip-buyers started to do their thing once again, the Goldman news hit, and there was a rush for the exits.

There was quite a bit of talk about the SEC's case against Goldman being weak, but this was a market ready to correct, and it was a great excuse. The big question now is whether we'll gain some downside momentum. We have made such a big move and have had such little consolidation that there isn't a lot of good underlying support. However, the biggest positive that the bulls have going is that the focus is going to quickly shift back to big earnings reports from the likes of AAPL, IBM and even GS.

The dip-buyers were scared away today by this Goldman news surprise, but I don't expect them to disappear that quickly or easily, especially as they focus on earnings reports once again.

If you were holding too many longs you probably suffered some pain today, but the good news is that this spike in volatility should give us more interesting trade opportunities next week. Good entry points were becoming almost impossible to find, so today's action helps in that regard.

I continue to feel that it is very unlikely that the market is going to suddenly collapse. At worst, I'm looking for choppier action over the next week or two, which actually will be a refreshing change from the complacent, one-way action we had for so long.....

long AAPL

GS, The Market, And Tech Stuff

I'll not re-do the whole GS story; it's all over the place for all to see. I'll just make some (in my mind) salient comments on the situation. Basically, the complaint brought by the SEC hinges on the supposed fact that Goldman didn't tell ACA that the mortgages were selected by Paulson's hedge fund to sell, not buy. It does not indicate that ACA did any due dilligence, but it did say ACA endorsed the porfolio. So one obvious question: Does it matter that Paulson got involved if ACA was actually doing its job? The complaint alleges that the Goldman structure guy clearly hid that the mortgages were almost certainly terrible - because they were selected by Paulson - but regardless of who selected them ACA did endorse them as okay, so I think Goldman throws the structured guy to the wolves, pays the fine, and says it won't do it again.

Many folks who are still very angry about the just-passed financial crisis don't "get" that GS is not a "main street" kind of firm; its customers are institutions; so-called "sophisticated" clients. The allegations are ugly; the headlines and upcoming "revelations" are more than likely to get uglier. Over at Rolling Stone, Taibi I'm sure is revving up the word processor.....Obviously GS' role in the whole thing; their behavior - violates the sense of fair play, of decency, held by many. I'm just not sure they actually broke any laws. But sleazy? Sure, probably so.

But, at first glance, the government's case doesn't look like a good one because of caveat emptor.....and the fact that you could have shorted it, too....You could have shorted it, you could have gone long. There is no gun to a client's head. The mortgages were there for all to see. Unfortunately for all the GS haters, GS will have a very good case....

And I don't buy the other other shoe/falling dominoes theory either with today's Goldman news; it just so happens Congress is bringing the financial reform bill to the floor next week. The Obama Admininstration wanted a poster child for 2008 and timed the enforcement action to coincide with the bill.....

Remember how Madoff was supposed to trigger a wave of hedge fund arrests? Yeah, right......

So how to play the sell-off induced by the GS news? I think it's crystal clear. Here's how I would play it:

1. Buy GOOG
2. Absolutely buy more AAPL in the $230s
3. Buy GOOG
4. Buy MS another 10% lower than currently. This could really ignite soon.
5. Review all the communication chip plays mid next week.
6. Review all regional bank plays mid next week.
7. Buy GOOG

Corrections come out of left field on unforeseen events. Many have been calling for a correction and been wrong for about 3-5% on the broad market. As for GS stock itself, I briefly looked at buying some OTM puts but they were too juiced already. Also, I have been a GS bull; I would view this news as something similar to an accounting problem - and I generally steer clear of that sort of issue no matter the company.

In fact, the only way I would enter a long on GS in the near term would be a bull put spread with defined downside. If the stock were to get to $135 or lower, I would possibly consider going long the common. Make no mistake - this is certainly disturbing news.

However, the biggest winner here may be MS. I may have to start a position on any material selling in sympathy with GS. This stock is already insanely cheap on a relative basis and it is getting even cheaper on this news.

The gift today is clearly GOOG; I need to figure out a way to get long GOOG again down about 40 or so. I see good support in the low $550's and then more in the $535 area. My view on GOOG is even better after last night’s report and I see it to new all time highs in the months to quarters to come. GOOG is set to monetize amazing amounts of money from mobile search and other forms of mobile technology leadership. In fact, we could see in the not too distant future GOOG making as much money from mobile as the desktop. Frankly, it's stunning you can buy one of the premiere growth companies on the planet at a forward PE of 14 (that is after stripping out the cash). That puts GOOG nearly as cheap as AAPL on a forward PEG basis.....

BIDU is down and I do find it ironic that GS was one of the last firms to put a big new price target on the stock. I'm really looking at shorting it on a break of the $630-635 area, which could happen today. I see still see BIDU back to the $520's - if not much lower...

long AAPL

Thursday, April 15, 2010

Random Tech Stuff

Now Gene Munster is almost at $300 on AAPL. Again, no change to my thesis and I'm sticking with my 7.5mm iNetbookkiller call (for first 12 months), and my now longstanding call that the iPhone platform will generate multiple industry leading devices and revenue streams - which I've thought since the release of the first 2.5G iPhone. I think just now investors are seeing the potential of the iPhone device platform and AAPL's patented touchscreen technology. Just wait until AAPL releases a fully functional high powered desktop or interactive touchpad for a desktop. This would be a huge leap in computing productivity and also would have implications for home/business control units for everything from security to inventory management to power efficiency and all sorts of entertainment, etc.

AMSC is surging nicely off an upgrade. I feel it is a good value in both tech and the alternative energy land.

Solars, solars and more solars. I need not say anything more as I feel this is the last dirt cheap area of technology. The catch up trade might simply be huge here. I need to add some solar "exposure."

Frankly, I continue to be a bit shocked that RMBS is still trading at just 3 times its recent settlement with Samsung. It is seeing stronger traditional demand and a huge paradigm shift in the memory space. Not to mention a pretty substantial short interest that could unhinge on one more settlement or piece of good news.

How did I not have a stake in GE, given my banking earn out, FAS 157 unwind, net interest margin, and highly variant economic strength thesis? It will likely report a very nice quarter. That said, you can't catch them all and I don't like to chase. My view is I've missed the easy and best trade on this one.

long AAPL

More Of The Same

The action wasn't as manic as yesterday, but the bulls managed yet another positive day.

Volume was quite heavy once again, but breadth was mixed. The semiconductors did manage some follow-through, but it was mostly a one-man show, with INTC displaying the kind of momentum it seldom sees after an earnings report. Oil and gold led, while steel and biotechs faltered. Overall, there weren't many strong themes in play.

All eyes are on the next batch of earnings reports, and GOOG was fine, but the stock's not looking too hot. They posted slightly better-than-expected numbers. It isn't enough of a beat, especially with the stock trading up strongly into the news. The stock is down about $20, as I write, but the momentum money has quickly moved into ISRG, which is up around $10, following its report. ISRG has run up far more than Google into its report, but it is a better beat and a thinner stock, which are holding it up so far.

We continue to have all sorts of overbought indicators hitting new highs. So far, they are no match for the momentum of this market. The air is awfully thin up here, and conditions for a flurry of profit-taking are building, but we have yet to see any cracks in the uptrend.

We'll see how Google looks in the morning, when we also have GE and BAC reporting in the morning, so there exists some potential catalysts for profit-taking. However, I don't expect any sustained downside move at this point, because the dip-buyers have been so successful. They will be quick to jump in on the first bout of weakness, so don't be in a hurry to embrace the dark side.....

Wednesday, April 14, 2010

More INTC And Tech Stuff

Again, a great report from INTC - I've been an unabashed tech bull (since FAS 157 was relaxed) and previously buzzed that we would not see the "sell the news" reaction to good reports this quarter like last. But this INTC report surpassed my expectations by a wide margin. This is mainly because I see much more strength in the network/broadband, data storage and wireless segments than traditional computing.

Anyway, all this has me looking at NVDA, QCOM and MSFT with even more rigor. And the more I think about this INTC quarter, the more I think that NVDA could be really spectacular and likely the only rub may be that they didn't ship everything that they could have.

GOOG - Do we see $600-620 before the report? More importantly how long until we see new all time highs?

ADTN - very good report which portends to more strength in the group. From my perch I'll stick with other names in this space as I think they are cheaper on normalized EPS, have faster growth and ultimately more upside (like CIEN)).

MU - I still feel this stock is in launch position. Sometimes quiet traders can move the most once key levels are broken....

Most Everyone Looks Good In A Bull Market

Although INTC gapped up, then churned after its strong earnings report, the broader market kept on going.

We saw some of the best action since this rally began more than two months ago. Breadth was around 3-to-1 positive, and we had more than 3 billion shares traded on the Nasdaq, which is the highest since the big Jan. 29 selloff, and the highest on a positive day since last September. There has been a lot of talk on the site lately about the lackluster volume during this rally. Will today's surge end up a contrary indicator?

The one word that sums up this market right now is "momentum." The buyers are scrambling to jump in, and this market isn't making it easy. The overbought conditions have been irrelevant. The folks on CNBC simply laugh at anyone who dares to say something bearish.

After a while, it sounds trite to say, "Don't fight the trend." But that's all you really need to know to navigate this market. One thing to watch out for now: An awful lot of folks believe in their own genius just because they were bullish. Riding the momentum train has been the way to go, but be sure to stay vigilant for a shift. There are no signs of it yet, but the one certainly about the market is that conditions will eventually change....

Tuesday, April 13, 2010

INTC And Other Stuff

They say expectations are high for INTC, but that stock has sure been stalled for one with such supposed lofty hopes.

I think INTC will start the quarter off solidly for tech in general, though I think many companies are going to continue to play the sandbag game. So we might need to see a couple reports and analyst/trader reaction to get a good gauge of how post-guidance reactions will unfold.

My take is we will get a better read off GOOG than INTC. If the report from the search king is good to great I don't think we will see the sell the news reaction this quarter.....

GS is another name that could get some upside legs on a report like it posted last quarter. Is JPM going to be a really good report or just a monster of a good one?

Is QCOM the best big cap tech stock yet to move? I also think this quarter is going to get MSFT out of wallflower status -- at least for a while. And this is my preferred play off a good INTC quarter....

Probably Better Not Disappoint!

After a bout of selling this morning, it was another day of chugging higher. Breadth improved to a bit better than flat, and the gains in the indexes weren't anything dramatic, but anyone who has been looking for a dip sure isn't get much.

We were well set for a "sell the news" reaction to earnings reports, and today's action raises those expectations even more. The danger of a straight-up market is that it prices in all the possible positives and doesn't take much to disappoint. This market won't be forgiving if a company doesn't post strong numbers and issue good guidance.

INTC reported tonight and both earnings and revenues are solidly ahead of estimates. The stock has traded up some 90 cents. The big test: Can it continue to run, or will traders start taking some gains into strength?

I'm not particularly surprised at the initial positive reaction. This is a market that needs to spin all news as exceptional to keep on running. There is no room for negatives. As long as expectations are exceeded, the bears will be kept at bay.

The analysts should celebrate this report tomorrow and raise their estimates, and we'll have a good test to see if this market can keep on chugging along without a pause.....

Monday, April 12, 2010

Things I Think I Think About Tech

I need to buy CIEN back.....I also need to buy AKAM; some see a similar chart pattern here to CIEN though the velocity isn't as potent - if you believe that stuff. That said, AKAM above $33 looks like it has the $43-45 level in sight....

I wonder if anyone else is thinking about the iPad and the coming netbook wars and 3/4G always-on networks and all those electronic payments that are going to be passing through Visa's (V) payment processing system.....

VMW is at my projected buyout price (from many months back). Looks like they are either staying solo or any deal getting done on this stock would now have it over $75.....

Do we see a mega-priced tech merger this year? Is VMW the name to command the premium?

Are optics stocks overvalued? I find that contention incredulous. For point of reference, at current levels JDSU and its ilk are still at levels below the 2002 lows in most cases. I think a good proxy for where some of these names eventually go is the 2006 highs. From that point we'll have to see.....

long AAPL

Another Good Monday

It looked like we were going to have a late-day fade, but the bulls managed just enough buying to keep the trend of positive Mondays going. Breadth was slightly positive, but volume was light and the action very choppy. Regional banks and chips led the show, while precious metals lagged.

Overall, it was an insignificant day and the limited intraday volatility just made it worse. Basically, we are on hold as we await the rollout of major earnings reports. AA is tonight, but of limited importance. It is INTC tomorrow night that is going to set the tone for this market. So often we see strength in the chips just as the market tops, so it is particularly interesting that the SMH broke to a new high today.

The slow upward drift on light volume continues to offer a limited number of opportunities to put capital to work, but you can knock out some gains if you stick with short-term longs. Unfortunately, there isn't anything new or profound that can be said about this environment. There are few worries, but little passion and few signs that a turn is about to occur. Earnings will be the key, but we'll have to wait for one more day before we'll have some sense of the mood.....

Saturday, April 10, 2010

Next Week Starts The Earnings Blizzard

It was another day of slowly grinding higher on lighter volume. Usually we have strong breadth to go along with that sort of action, and it was around 2 to 1 positive on the NYSE but just a bit better than even on the Nasdaq. All major sectors were positive, so I'm not sure what exactly was lagging.

I suspect part of the reason for the surge at the close was that market players are anticipating the typical strength on Monday, plus DJIA 11,000 was in the crosshairs and they were anxious to hit it. They did breach 11,000 for a few minutes but couldn't hold it into the close.

With earnings kicking off next week, we have a very interesting setup. We are technically extended and have not had a pullback of more than 1% in something like 45 sessions now, so you have to be thinking about a possible sell-the-news reaction, but the one thing we can say about this market is that it continues to act in unusual fashion. Nonetheless, the stage is set for some strong reactions to earnings.

When the market was grinding lower day after day a little over a year ago, I would often write that the market tends to wear you out rather than scare you out. I think that is exactly what is happening now, but only in the other direction.

Thursday, April 8, 2010

AAPL's iPhone 4.0 OS And Some Tech Stuff

Did anyone think AAPL wouldn't have multi-tasking functionality?

Maybe there will be no more free upgrades on mobility software major releases. If this happens, that's good for AAPL and customers as this will be another incremental revenue generator while also being likely very fair to consumers. Remember the Snow Leopard upgrade was only $29.99. My prognostication is that mobility upgrades could be in the $5.99-19.99 range.

Looks like a lot of tools (and underlying architecture) to further assist in enterprise penetration for the iPhone platform. As I have stated earlier the iPad is going to be widely adopted in the business world and the iPhone is accelerating its share grab as well.....

As for other tech, CML missed by a couple million and is getting the woodshed treatment. I think CML is providing a great precursor to what the quarter is going to look like – if a company misses, that is not expected to miss, it will get smoked. On the other hand, I do not expect to see as severe selling of the news on solid to great reports.

Anyway, with respect to CML, I'm going to start looking at this one. I think the stock is cheap, and well positioned. Small tech companies just don't beat numbers every quarter and earnings and revenue volatility should be expected even during strong growth cycles.

I'm looking for GOOG to start trading materially better, even if the market gets choppier. Many companies of similar quality and growth have broken through to new 52 week highs, if not multi-year or all time highs. This positions GOOG for the mother of all catch up trades......

long AAPL

Buy C

So now that C has been raked over the coals, what do we do?

Why, we buy Citigroup stock!

Here's what I think is happening with Citigroup. It has now fallen way behind the other banks, in terms of its relationship to book value. You are getting an undeserved discount, given the government's ring fence around the Citi Holdings portion of the company. Also, there's the fact that it is starting to win. Just this morning, for example, Reuters reported C is advising in the airline-merger talks.

I also believe Citigroup isn't getting much credit for keeping Mexico during the great peso surge, or for continuing to expand in East Asia, unlike almost all other American banks, allowing it to participate in the strongest part of the world economy.

All I ever read about regarding C is that they will wait until the government does its offering; then they will pick it up. I wonder whether the government isn't savvier than that, and won't take its sweet, old time, just as it did with Chrysler in the 1980s. Those people tried to game the government, and they left gobs and gobs on the table, as the government let the stock run and run after it had done its bailout. I believe Tim Geithner has seen that movie, too, and wants to get the maximum gains.

Many were critical of the government for not registering stock when Citigroup was at $5, but that was before the bank had paid back its TARP money and when it looked like Sheila Bair wanted to run the company. Those days are gone, and the strong performance of Citigroup executives in front of various investigators helped to put them behind us.

very long C leaps

More Volatility To Come?

I didn't expect the buyers to be as aggressive as we saw this afternoon, but it is an indication of just how hungry dip buyers are for some pullbacks. So many market players have been miserable as they watched this market run away without them, that they refused to let it happen to them once again and bought aggressively once we turned up again.

The obvious star of the show today was retailers. Keep in mind that earnings start next week with AA on Monday night and then INTC on Tuesday after the close, followed by JPM, BAC and GOOG later in the week.

This market is probably well setup for a sell-the-news reaction to earnings if they aren't stellar, but I'll be looking for volatility to pick up no matter what.

Wednesday, April 7, 2010

Things I Think I Think

While many, including myself, are raving on the AAPL iPad, I would say that a ton of the EPS upside in the last year has come from operating system sales and those monster margins on software. The iPad, combined with the new iPhone 4.0 OS, will be one more reason to keep adding Mac's with the new OS. Moreover, on the mobility side, the iPhone/Touch/Pad OS is a primary driver of superior functionality and increasing sales.....

Was that a double top today on BIDU?

CIEN and AOL are at new 52 week highs, and I still see AOL to the high $40's if not a lot more than that. CIEN I won't even say.

I'm still eyeing BX, but I’m not doing anything yet.

long AAPL

Gee, Some Selling...

The buyers showed some unusual patience today and actually let the market sell off for about 90 minutes before they did a little buying before the close and took us off the lows. The S&P 500 still hasn't pulled back more than 1% for the 43rd day in a row, but breadth was weaker, volume was heavier, and we had a technical distribution day.

Just no volatility lately. Strong trends make for great trading, but many traders out there have never seen a market that has provided so few "entry points" along the way. Even back in the bubble days of 1999-2000, we had more downside action on some days than we've seen in this market.

The little bit of selling we had this afternoon relieves some of the overbought pressure and helps give the traders some better opportunities, but in the bigger scheme of things, this selling doesn't even qualify as a pullback. It is nice that we have some variety in the action, but it is too early to conclude that it is foreshadowing what is yet to come.

The danger in a market that hasn't had a pullback in such a long time is that we'll be tempted to be overly bearish when we finally do have some selling. If a significant top is forming, and it is premature to say so, then we're going to see a pretty good battle between the dip-buyers and the bears before we roll over. Too many people missed this move, and they are going to be inclined to buy weakness here. It is going to take a while to scare the underinvested bulls away, and with earnings season rapidly approaching there will be some new catalysts at work as well.

Playing defense at this point wouldn't be a bad thing.

Many Are Missing The Boat On C.....

Many people, I think, are overthinking C. The company is getting rid of bad businesses and keeping good ones. It has branches all over the world.

It has already been through the investigation mill, with no consequences. It does have a plan to get rid of bad loans and investments -- the one that is Citi Holdings -- and hardly a day goes by without it dumping something, such as that hotel chain mentioned today.

The overhang? You buy before the overhang lifts. Everyone knows about it. The government has proven to be a savvy seller. You think it will price its stake at $3.95? OK, you can wait, but not for too long.....

Every time you read about a thaw in hard-to-understand bonds, such as collateralized debt, you should think Citigroup. If it can get out of that holding-company structure and make a lot of money on its deposit base, you're going to be asking yourself: "How in heck did I miss that 10-point move for 48 cents?"

very long C leaps

Tuesday, April 6, 2010

Things I Think I Think

My "jobs tsunami" notion is looking more likely. From my perch, it'll take at least 6 months for economic forecasters to catch up with the turn in jobs creation numbers close to what will transpire.....

All paths lead to Naz 2800? But even though all paths lead to Naz 2800, don't we have to have a correction to actually move higher this year or next? Or did that correction occur from December to January when we almost declined 10%?

We did have two near 10% corrections in 2009 after the run started off the March nadir......Is a really strong quarter of reports really priced into the market?

If so, then why is AAPL's forward PEG ratio still hovering below .5? Or around .35 less cash. And that's just one of hundreds of similar examples.

At $29.20 is MSFT close to the steal AAPL was in the $170's, 150's, or 120's?

I'm reminded I need to look at CHK again....The best chip company on the planet is now acting like it......

long AAPL

Just Don't Trade....

Although the Dow industrial average was slightly negative, the other major indexes gained slightly, and overall breadth remained quite good, with about 3,200 gainers to 2,450 decliners. Regional banks, retail and oil led, while biotechnology, chips and home builders lagged.

Once again, the dip-buyers provided very strong underlying support and prevented any real selling pressure. The bears are totally incapable of digging a claw into this market. At some point, we are going to be hit with some severe selling, but many market players have been expecting that for weeks now and are just becoming increasingly frustrated as we keep on ticking up.

Little is changing from day to day. We have good breadth, light volume, a high level of complacency and no volatility. It is a great market to sit and hold, but very challenging to trade, since there is little to do but chase strength and hope the momentum continues.

Keep in mind: Earnings season starts soon. That will be the main market driver for the next few weeks. Clearly, this rally over the past two months has raised expectations, increasing the danger of a "sell the news" reaction. But, as we all know, it isn't a smart move to anticipate any weakness in this market. Nonetheless, the traders are hoping to see some better volatility as the earnings reports roll in.....

Monday, April 5, 2010

AAPL iPad Launch

Once folks get a full taste of the 3G version and that anytime, anywhere, always on type functionality I think the total sales (especially explosive in the enterprise) will be where the biggest positive push ultimately comes from.

Moreover, Apple has 3000 apps at iPad (iNetbookkiller's) launch as well. I don't think this fact should be understated and puts all competition in the rear view mirror for many quarter’s if not years to come. No Office. No problem. Use GOOG Doc's or give OpenOfficeOrg a few weeks and you have a workable solution for the time being. Combine all this with reports of various netbook producers delaying or stopping shipments of products (see Acer, Dell and others) and the writing is on the wall for anyone who wants to read it. The iPad has category killer written all over it.

long AAPL

The Unloved Rally Continues

This market continues to run over the skeptics and bears. If you aren't wildly bullish and happy to buy, then you are on the wrong side of the action. After weeks of a straight-up rally, you might think that the buyers would be a little more cautious, but on the contrary, they are sick and tired of missing out and are going to put more money to work, because obviously the technicians who keep talking about things being overbought just don't have a clue.

What is most interesting about this market action is the lack of emotion to accompany what looks like euphoric action. Breadth was quite good, but volume was quite light. If it weren't for the CNBC anchors who act like they will receive a bonus when the DJIA hits 11,000, you sure don't get the sense that many folks are loving this rally. As I've been saying for about six months now, it is one of the most hated bull markets I've ever seen.

The dilemma for traders at this point remains what it has been for some time now. Many say we are too extended to justify aggressive bullishness but the momentum is too strong to fight. The only viable approach from my standpoint is short term bullishness. Be fast to take gains when you have them, keep stops tight, and keep on doing it until the trend changes. Although it is extremely tempting, the worst thing you can do is to keep on trying to anticipate a top......

Thursday, April 1, 2010

A Positive Week.....

Once again, it was a positive week, but the action was a bit more mixed as we closed out the first quarter and started a new one. We still aren't seeing any real selling, but the momentum has slowed down and we aren't racking up the new highs as readily.

Volume was actually pretty good today, despite some thinning in the ranks for the holiday, and breadth was very solid yet again, at better than 2:1. It was oil, gold, coal, steel and the 'weak dollar' plays that led, but all the major sectors were up.

The end-of-the-quarter games and new money on the first day of the new quarter helped to maintain some upward pressure. Next week, after we digest the payroll report that comes out tomorrow, we should have a little more normal action, but we will quickly start focusing on first-quarter earnings reports.

The amazing resilience of this market is causing tremendous anxiety for traders, who would like to see a little more aggressive selling now and then, just to provide some interesting volatility. Until we are jerked around a bit and have stirred up some emotions, it just isn't going to be a very interesting trading atmosphere. Maybe earnings season will help solve that "problem"......