Friday, March 13, 2009

Yahoo Tech Ticker: Jon Najarian of OptionMonster.com, Todd Harrison of Minyanville, and Barry Ritholtz All Bullish (for now)

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Let's respect both sides of the ledger - I have no idea where the market will be a week, a month, or in a year. The economy is far easier to predict (at least for me versus most of the punditry who have been drinking Kool Aid for years), but the stock market can detach from the economy for periods of time and as we'll continue to say 2009 will be a period where we ping pong between hope and reality. We've just gone through 2+ straight months of reality so certainly we are overdue for some hope. If it's nothing more than accounting rule changes or faith that the 78,125th government intervention will be "the one!" - it really does not matter "why" to me, it just matters "what". Play the field in front of you.

Now that we've broken over S&P 741 I want to see that once support, then resistance, turn back into support for this leg upward to continue. I can be relatively bullish between S&P 740 and 780 (or even 800) but then we come to the same problem we had in early January 2009 when the market was up on Obamamania. It's a damn expensive market - and with no rebound imminent in the economy (or earnings) I think that limits our upside (on a relative basis). But that does not mean we cannot jump more, and/or trade sideways in a relatively calm manner as we did all of December 2008 (one of our best months) as good stocks separate from bad. What is so difficult for me is stock picking means nothing; it is what I call student body trading (student body left! sell everything! or student body right! buy everything!) Thats mob behavior and has little to do with picking good or bad stocks to invest in; but that's the market we've been left with since summer 2008. This is why I loved December 2008 so much; the long positions went up as good companies were rewarded and the short positions went down as bad companies were punished - while the overall market was flattish. We were in between political teams so there were not "news leaks" on CNBC that moved the market 4-5% every 3rd day. But we have had one month like that in nearly 3/4 of a year. Hence we're stuck following the horde around, flipping things left and right and trying to avoid the jaws of the bear.

We remain in a bear market and more money will be made on the short side than long, but the sharpest rallies occur within the context of a bear (as we've seen MULTIPLE times the past 15 months). My belief is so no bull rally begins without a retest of previous lows so we're going to see S&P 666 (oooh aahhhh) at some point in the future. Whether that is weeks or months - we'll take it day by day. Personally, I am hoping for some upside so some of the "worst of" companies jump to areas I am more comfortable shorting them instead of risking a 40% 2 day rally like many have done the past few days. As of the close yesterday we've fought back to "zero percent" gain for the year - the hardest I've ever worked for zero percent. Zero percent is the new +40%. The next round trip my goal is to make a lot more profit on the short side ...

Since we are all about presenting the bullish case here, (ahem) below are three near term bullish takes from people I respect - the first from Jon Najarian of OptionMonster.com (this was filmed after the close yesterday) the next group from Todd Harrison over at Minyanville.com (those were taped Wednesday) and last group is Barry Ritholz from Fusion IQ (and the "godfather" of financial blogs) at the front end of the week. The videos are 4-6 minute types.



Dow Back Above 7000 as Win-Streak Hits Three: More Upside Likely, Jon Najarian Says

Stocks jumped Thursday, pushing their winning streak to three days, the first time that's happened since late January.

The Dow rose 3.5% to 7170, while the S&P and Nasdaq each gained 4%. The S&P has now risen 11% since March 9, its best three days since November, Bloomberg reports.

Jon Najarian, co-founder of optionMONSTER.com, says the gains are likely to continue, at least in the short term for several reasons, including:

Najarian also discounted the idea -- expressed here earlier today by Gary Shilling -- that excitement over a "bottom" means sentiment is too optimistic, suggesting most investors remain very dour about the potential for sustainable gains.

That said, the option trader and "Fast Money" regular isn't discounting the potential for a retest of recent lows. In fact, he's expecting it at some point down the road, but for now is betting on more short-term upside.



Short Term Trader Todd Harrison Isn't Putting Long Term Cash to Work Just Yet

Even as he still sees the potential for the S&P 500 at 600, Todd Harrison, CEO of Minyanville.com, has grown cautiously optimistic about the market's short-term outlook, as detailed here.

But that's a trading call. What about Harrison's long-term investment account, the one that's been 100% in cash as discussed here several times in 2008?

The account is still 100% in cash, but Harrison is preparing to deploy 25% of that capital if/when the S&P hits 600 and the dollar reverses its recent rally. "While the dollar and asset classes both can trade lower, a weaker greenback is a necessary precursor to higher asset classes for as long as it is the world reserve currency," Harrison writes.

As for where he'll be putting that money to work, Harrison is "weighing potential vehicles including" Ultra S&P500 ProShares (SSO) or S&P SPDR Trust (SPY) -- "I'm leaning towards the latter as I don't trust leveraged ETF's for anything more than a trade," he says. Gold "preferably after the devil of deflation has its way" and the Japanese yen via the CurrencyShares Japanese Yen Trust (FXY).


Short Term Upside Likely, But Harrison Sees S&P 600 Sometime in 2009

Stocks moved modestly higher Wednesday morning as traders weighed the odds Tuesday's big rally was anything more than another "one-day wonder" amid an ongoing bear market.

Financials were rallying again ahead of Thursday's House hearing on mark-to-market accounting and after Treasury Secretary Tim Geithner on PBS last night reiterated plans to spur private investors to buy distressed assets.

Still, all rallies are of the "bear market" variety until proven otherwise, says Todd Harrison, CEO of Minyanville.com.

Harrison is sticking to his view that 2009 will be characterized by a series of "monster moves," including sharp 20%-25% rallies, but that the bear market won't bottom before the S&P 500 hits the 600 level. Short-term, however, he sees the potential for more upside.

Given that outlook, he's trading more from the long side currently but maintaining very tight stops and focused on "risk management vs. reward chasing."


Get Long Torches and Pitchforks: Bailouts "Absolutely Asinine" Ritholtz Says

With Ben Bernanke testifying about the need for regulatory overhaul while the government is reportedly considering yet another bailout package for Citigroup, one question remains front and center: What to do with ailing banks?

Barry Ritholtz, CEO of Fusion IQ, says the current bailout bonanza is "absolutely asinine" and believes there's no good reason the U.S. government should be rescuing the debt holders and counterparties of firms like AIG and Citigroup.

"Why do you and I as taxpayers have to make good some bet that Goldman or Deutsche Bank [or Pimco] made?," he asks. "When you lend money to an insolvent institution, you're not supposed to be made whole."

Ritholtz, author of The Big Picture Blog and the forthcoming Bailout Nation, believes the answer lies in good old-fashioned FDIC mandated receivership, which is another way of saying (fully) nationalize insolvent banks. (Full disclosure: I am collaborating with Ritholtz on his book and being paid for my efforts.)

While painful at the onset - for debt and shareholders alike - such a process would ultimately result in "a reboot - a fresh start" for companies like Citigroup, AIG and Bank of America, says Ritholtz. "Just get them out from under all of the horrific decisions their inept and incompetent management has made over the past decade."

From Nouriel Roubini to Paul Krugman, Alan Greenspan and a rising number of Republican Senators, momentum appears to be swinging toward that outcome.

Ritholtz predicts Treasury Secretary Tim Geithner will eventually abandon his current strategy of trying to keep zombie banks alive by any means possible.

If not, "I wan to get long torches and pitchforks because eventually the taxpayer is going to figure out how badly they're getting screwed," he says - only half-jokingly.




"Big Bear Market Rally Coming" Says Noted Bear Barry Ritholtz

Stocks jumped early Tuesday with the Dow recently up about 3.5% while the S&P and Nasdaq were each up more than 3.8%. The gains are being widely attributed to a leaked memo revealing Citigroup had operated at a profit during the first two months of the year. But the reality is the market was due for at least a short-term technical bounce after its recent rout, as discussed in the accompanying video, taped Monday afternoon.

Earlier: Despite a confirmed deal in pharma and rumors of a second, the stock market slumped to yet another round of multi-year lows Monday.

Still, the cadre of formerly steadfast bears who are turning bullish, like Doug Kass and Steve Leuthold, continues to add members. On Monday, newsletter writer Mark Faber, of the Gloom, Boom & Doom Report, made a bull call on Bloomberg TV, while veteran technician Richard Suttmeier of ValueEngine.com declared "the next 50% for [the S&P 500] is up, not down."

"There's a big bear market rally coming," agrees Barry Ritholtz, CEO of Fusion IQ, who's certainly earned his place in the pantheon of bears during this recent cycle. Ritholtz sees "more upside vs. downside" potential for major averages from current levels, and definitely believes it's "too late to sell."

Fusion IQ has covered its shorts but Ritholtz, author of The Big Picture blog and the forthcoming "Bailout Nation", isn't a rip-roaring bull. He's advising investors to "prepare a wish list" of stocks they'd like to own for long-term investments, but stresses the importance of scaling into positions vs. making a big one-time bet that a major "bottom" has indeed occurred.


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