Friday, June 4, 2010
moves
lightened up on aapl today; still a major position though. opened a decent-sized position in mtg - cheap; great risk/reward. am now into c in a huge way; very large position for me - i see it as incredibly cheap = tangible book = at least 4.15 - and the shares trade at 3.80 = book is probably over 5.......i think it's a screaming, table-pounding buy right here at 3.80 = by end of the year i think it SHOULD trade at least at 6 to 7; but where it actually does trade is of course anyone's guess at this point..........
Thursday, June 3, 2010
Random Stuff
I lightened up on AAPL today and got back into C in a big way. Also got into DRIV and a little VRSN, which is too cheap not to own at this point. I may lighten up on AAPL again soon, not because there's anything wrong with AAPL, but I need to get back into GOOG. The break off $492 was playable and the stock has responded nicely. I see GOOG to the $700/800 area now, much like I saw AAPL to the low to mid $200's when the stock broke was still in the $128-144 range.
I still want to see a unified response from the ECB on their efforts to thwart market rules. Until then I may have to trade quicker than normal and take smaller gains.
I still like the networkers more and more of late -- with an eye to CTV again -- but closer to $25/26.
Time for the jobs number again, tomorrow. It looks like the bears are trying to jam the whisper number crazy high so that a really good number can be sold. If we get a solid number (anything north of 480), and the market sells off hard on this - then we may find out something about the market's mood.
From my perch, my jobs tsunami thesis is in full force. The forecast is 500k and that would be stellar. I also expect to see big jobs gains over time; and also am expecting we might see the unemployment rate rise a bit more....
long AAPL, VRSN, C, DRIV
I still want to see a unified response from the ECB on their efforts to thwart market rules. Until then I may have to trade quicker than normal and take smaller gains.
I still like the networkers more and more of late -- with an eye to CTV again -- but closer to $25/26.
Time for the jobs number again, tomorrow. It looks like the bears are trying to jam the whisper number crazy high so that a really good number can be sold. If we get a solid number (anything north of 480), and the market sells off hard on this - then we may find out something about the market's mood.
From my perch, my jobs tsunami thesis is in full force. The forecast is 500k and that would be stellar. I also expect to see big jobs gains over time; and also am expecting we might see the unemployment rate rise a bit more....
long AAPL, VRSN, C, DRIV
Hopefully It'll Be A Strong Jobs Report; And Hopefully It'll Give Us A Lift
Many experts threw up their hands today and declared that they did not understand the market action; I don't either, really. It wasn't a big up day, but we did finally manage two consequence positive closes for the first time since April 29. The action was chaotic and messy, particularly in oil-related stocks, but breadth improved nicely; by the finish we were moving toward 2-to-1 positive.
I suspect that the anticipation of a strong jobs report due tomorrow propelled the positive action. We are expecting the first positive report in a long time, and the numbers should be quite big due to hiring for the census. The key question is whether market players will embrace the potentially strong headlines, or dig deeper and look for reasons to pan the report.
Technically, for those that care, the S&P 500 remains right at key overhead resistance, and the reaction to the jobs report in the morning will determine where we go. We need a strong finish over 1106 to make things more appealing to the trend-following crowd. Over the past couple weeks, we have churning and consolidating action, which could provide a foundation for more upside. So far, there is little evidence of a major turn occurring.
The action tomorrow following the jobs report will tell us quite a bit about the market mood. If the bears can't convince the market that the numbers are flawed, then the bulls should have some running room. If they aren't able to run on positive headlines, we may need to make some fast defensive moves.
I suspect that the anticipation of a strong jobs report due tomorrow propelled the positive action. We are expecting the first positive report in a long time, and the numbers should be quite big due to hiring for the census. The key question is whether market players will embrace the potentially strong headlines, or dig deeper and look for reasons to pan the report.
Technically, for those that care, the S&P 500 remains right at key overhead resistance, and the reaction to the jobs report in the morning will determine where we go. We need a strong finish over 1106 to make things more appealing to the trend-following crowd. Over the past couple weeks, we have churning and consolidating action, which could provide a foundation for more upside. So far, there is little evidence of a major turn occurring.
The action tomorrow following the jobs report will tell us quite a bit about the market mood. If the bears can't convince the market that the numbers are flawed, then the bulls should have some running room. If they aren't able to run on positive headlines, we may need to make some fast defensive moves.
Wednesday, June 2, 2010
The Markets Are Still Broken, But Staying Patient
I'm currently staying very patient with what I view as broken markets. Yesterday's close was a good case in point.
I need to get back into CIEN again; CIEN should be seeing business materially improve shortly, and the shares have fallen more than twice the market of late.
A market where only one or two stocks act rationally - AAPL and BP - isn't a good market. I mentioned BP because I'm intrigued by it; I'm not touching BP here though. If one has to chase knives in this space I would turn to WFT or NBR.
On the tech front, there are 2-3 tech conferences this week which might bring some short term action. One name that I like and which could see some positive news is DRIV. I think DRIV could be a primary M&A target in the months ahead. Tech stocks in this market cap range (like CIEN) have fallen much harder than the market averages in the last 2-3 weeks. Moreover, many of these smaller domestic tech's have less real exposure to the Euro region or the Euro itself so they are simply beta victims.
long AAPL
I need to get back into CIEN again; CIEN should be seeing business materially improve shortly, and the shares have fallen more than twice the market of late.
A market where only one or two stocks act rationally - AAPL and BP - isn't a good market. I mentioned BP because I'm intrigued by it; I'm not touching BP here though. If one has to chase knives in this space I would turn to WFT or NBR.
On the tech front, there are 2-3 tech conferences this week which might bring some short term action. One name that I like and which could see some positive news is DRIV. I think DRIV could be a primary M&A target in the months ahead. Tech stocks in this market cap range (like CIEN) have fallen much harder than the market averages in the last 2-3 weeks. Moreover, many of these smaller domestic tech's have less real exposure to the Euro region or the Euro itself so they are simply beta victims.
long AAPL
Chaos
We prefer to assign reason. Or blame. It is a coping mechanism. People are rational beings -- though even that can be argued -- but people want reasons. People want answers. And when things don't go the way people believe they should go, they want something or someone to blame.
Truth is, markets are chaotic. There is an old saying, which comes in various versions, that if a butterfly flaps its wings, it can cause a tornado half way around the world. While the butterfly does not "cause" the tornado in the true sense of generating the energy of the tornado, it does "cause" it in the sense that a flap of its wings is an essential link in the chain of conditions that result in a tornado, and without this flap, this particular tornado would not have existed. This is a simplified adaptation of Chaos Theory. Some in the media would have you believe that leveraged ETFs are the butterflies. Then again, if you think about it, the media could be the butterfly.
Traders hear over and over how ultras influence the close, whether it be higher or lower. Traders then decide that they, too, are going to "game" the system and get in front of a move. Seeing the market fall, they sell or short something they ordinarily would not have done had they not heard about the impact of the ultras. This single sale is just enough to tick down a stock that otherwise would not have ticked down. This tick triggers some stops, further pressuring the stock. Not only that, but it also causes a small tick down in an index. This tick down in the index triggers more stops, which, in turn, catch the attention of technical traders, as this latest tick triggered a shorting or selling opportunity. And this technical indicator is independent of the ultras. However, this technical indicator causes more selling and/or shorting. And then... well, you get the point. Pure chaos ensues.
The market rallied on the heels of energy and a hint at a strong jobs report this week. Energy was overdue for a bounce and did so in strong fashion today. The momentum is clearly in the natural gas camp, and this is an area to focus on should there be any pullbacks. Oil may continue to struggle, and rallies here are still better for reducing exposure until the landscape changes.
The S&P 500 finds itself battling resistance once again, but this time, it has some momentum on its side. Volume was still disappointing today, but that only matters to some. I expect we will see some follow-through from today, however, I don't think we are out of the volatility woods just yet.
Truth is, markets are chaotic. There is an old saying, which comes in various versions, that if a butterfly flaps its wings, it can cause a tornado half way around the world. While the butterfly does not "cause" the tornado in the true sense of generating the energy of the tornado, it does "cause" it in the sense that a flap of its wings is an essential link in the chain of conditions that result in a tornado, and without this flap, this particular tornado would not have existed. This is a simplified adaptation of Chaos Theory. Some in the media would have you believe that leveraged ETFs are the butterflies. Then again, if you think about it, the media could be the butterfly.
Traders hear over and over how ultras influence the close, whether it be higher or lower. Traders then decide that they, too, are going to "game" the system and get in front of a move. Seeing the market fall, they sell or short something they ordinarily would not have done had they not heard about the impact of the ultras. This single sale is just enough to tick down a stock that otherwise would not have ticked down. This tick triggers some stops, further pressuring the stock. Not only that, but it also causes a small tick down in an index. This tick down in the index triggers more stops, which, in turn, catch the attention of technical traders, as this latest tick triggered a shorting or selling opportunity. And this technical indicator is independent of the ultras. However, this technical indicator causes more selling and/or shorting. And then... well, you get the point. Pure chaos ensues.
The market rallied on the heels of energy and a hint at a strong jobs report this week. Energy was overdue for a bounce and did so in strong fashion today. The momentum is clearly in the natural gas camp, and this is an area to focus on should there be any pullbacks. Oil may continue to struggle, and rallies here are still better for reducing exposure until the landscape changes.
The S&P 500 finds itself battling resistance once again, but this time, it has some momentum on its side. Volume was still disappointing today, but that only matters to some. I expect we will see some follow-through from today, however, I don't think we are out of the volatility woods just yet.
Nothing's Wrong With C; The Feds Are Really Pushing It Down...
It looks like the government won't let C lift.
The news continues to be terrific, with the rationalizing of the finance unit and preparations for a sale. We aren't hearing anything other than good things about the core business, and we know that it is unlikely to be harmed too much by more financial regulation, since it has been hewing to the toughest line in terms of what should be done, and has had to check with the government on many of its businesses.
Qatar said it was seeking to buy a big chunk. John Paulson, the hedge-fund genius who shorted housing, is buying. Bill Ackman may not be done buying, as he mentioned it at the Ira Sohn Research Conference of hedge-fund bigwigs last week.
To me, this one is still the single best option on America's banking renaissance. It also is an attractive candidate to buy some of the assets of the ne'er-do-well banks overseas, where it already has a presence, as it improves its balance sheet. It will be the most solvent bank in the PIIGS (Portugal, Italy, Ireland, Greece, and Spain), and it has a major presence in Latin American and African growth markets. It can buy the U.S. properties of STD!
While it was recommended by a bunch of research houses these past two weeks, it is very clear that the government is laying all over the thing, and it simply isn't letting the stock lift. There is nothing else wrong with the stock. Nothing at all.
long C
The news continues to be terrific, with the rationalizing of the finance unit and preparations for a sale. We aren't hearing anything other than good things about the core business, and we know that it is unlikely to be harmed too much by more financial regulation, since it has been hewing to the toughest line in terms of what should be done, and has had to check with the government on many of its businesses.
Qatar said it was seeking to buy a big chunk. John Paulson, the hedge-fund genius who shorted housing, is buying. Bill Ackman may not be done buying, as he mentioned it at the Ira Sohn Research Conference of hedge-fund bigwigs last week.
To me, this one is still the single best option on America's banking renaissance. It also is an attractive candidate to buy some of the assets of the ne'er-do-well banks overseas, where it already has a presence, as it improves its balance sheet. It will be the most solvent bank in the PIIGS (Portugal, Italy, Ireland, Greece, and Spain), and it has a major presence in Latin American and African growth markets. It can buy the U.S. properties of STD!
While it was recommended by a bunch of research houses these past two weeks, it is very clear that the government is laying all over the thing, and it simply isn't letting the stock lift. There is nothing else wrong with the stock. Nothing at all.
long C
Tuesday, June 1, 2010
Just A Damn Mess Of A Market
It is more difficult to argue that we are still in a bear market, much more difficult than it was 14 or 16 months ago. But there is one big thing that seems to trouble some of the technical people out there, the charts. The charts almost look the same - not identical - but very similar.
Okay, so, to make it easy, let's say the SPY is blue, the XLF is green, the XLE is black, the QQQQ is purple, well, you get the idea. Kind of like that Tarantino movie I guess. These charts are still highly correlated and that scares them. Correlations tend to run towards 1 in a bear market. And even though we've been climbing for the past year, it has been an all-round climb. Yes, there have been some slight laggards, but nothing more than the bird at the back of the flock that may turn just a bit later than those up front, but still turns in the same direction pretty quickly.
With the confluence of ETFs and algorithmic trading, I'm not sure we'll ever see a separation in the equities markets between countries or sectors as we used to, although that would be the preference of many. Until then, this feels like a difficult market to own.
We are coming into my favorite stage in the options expiration cycle. We have about two-and-a-half weeks until expiration, and this is a time where butterflies, skip-strike butterflies and other combinations become compelling alternatives to simple calls, puts, or equities. Given that we've seen volatility remain elevated, even if it is off its highest levels, it gives us the chance to use that volatility to our advantage. Given the large amount of uncertainty in the energy area, this will be a good week to search for both bullish and bearish plays.
The attractive part of using a combination trade here is the limited use of capital, paired with limited liability. I will not limit my search to the energy sector, as there are attractive names in the technology field, including AAPL, GOOG and possibly even MSFT. The easiest area to go hunting in is the ETF space, as stock-specific news should be less cumbersome. As there are only 12 trading days, we can consider both single and leveraged ETFs, as volatility decay in leveraged ETFs can be more than offset by time decay in a combination-style options trade.
Many of the technical people have mentioned the technical damage on the daily charts, but the weekly charts are now starting to look very vulnerable. I still worry that a weekly close on the SPY below $105 will put $95 into play. We looked like we were going to leave $105 behind, but today's action very much brings it back. Unfortunately, the EFA looks like it is already headed lower, perhaps to as much as $43, while the EEM makes me believe that a break of $37 will bring a test of $35. It is just hanging on here. From a weekly standpoint, the QQQQ and IWM seem like the strongest two of the majors right now, but honestly, it is becoming more difficult to get long anything with conviction and without a hedge.
long AAPL
Okay, so, to make it easy, let's say the SPY is blue, the XLF is green, the XLE is black, the QQQQ is purple, well, you get the idea. Kind of like that Tarantino movie I guess. These charts are still highly correlated and that scares them. Correlations tend to run towards 1 in a bear market. And even though we've been climbing for the past year, it has been an all-round climb. Yes, there have been some slight laggards, but nothing more than the bird at the back of the flock that may turn just a bit later than those up front, but still turns in the same direction pretty quickly.
With the confluence of ETFs and algorithmic trading, I'm not sure we'll ever see a separation in the equities markets between countries or sectors as we used to, although that would be the preference of many. Until then, this feels like a difficult market to own.
We are coming into my favorite stage in the options expiration cycle. We have about two-and-a-half weeks until expiration, and this is a time where butterflies, skip-strike butterflies and other combinations become compelling alternatives to simple calls, puts, or equities. Given that we've seen volatility remain elevated, even if it is off its highest levels, it gives us the chance to use that volatility to our advantage. Given the large amount of uncertainty in the energy area, this will be a good week to search for both bullish and bearish plays.
The attractive part of using a combination trade here is the limited use of capital, paired with limited liability. I will not limit my search to the energy sector, as there are attractive names in the technology field, including AAPL, GOOG and possibly even MSFT. The easiest area to go hunting in is the ETF space, as stock-specific news should be less cumbersome. As there are only 12 trading days, we can consider both single and leveraged ETFs, as volatility decay in leveraged ETFs can be more than offset by time decay in a combination-style options trade.
Many of the technical people have mentioned the technical damage on the daily charts, but the weekly charts are now starting to look very vulnerable. I still worry that a weekly close on the SPY below $105 will put $95 into play. We looked like we were going to leave $105 behind, but today's action very much brings it back. Unfortunately, the EFA looks like it is already headed lower, perhaps to as much as $43, while the EEM makes me believe that a break of $37 will bring a test of $35. It is just hanging on here. From a weekly standpoint, the QQQQ and IWM seem like the strongest two of the majors right now, but honestly, it is becoming more difficult to get long anything with conviction and without a hedge.
long AAPL
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