Monday, July 19, 2010

Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 50

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Year 3, Week 50 Major Position Changes

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 77.9% (v 70.6% last week)
19 long bias: 18.2% (v 27.8% last week)
2 short bias: 3.9% (v 1.5% last week)

21 positions (vs 20 last week)

Weekly thoughts
After a holiday shortened week of oversold rally, this past week was much tougher sledding for the market.  I opined coming into the week that the 'easy trade' (to S&P 1040 and then 1070) on the long side was over - and that came to fruition.  Monday was good, Tuesday was better, Wed/Thu the market did not give up the big gains which looks promising, and then it all fell apart Friday.   The question coming into earnings season was if the "good" earnings would be sold off, and from Intel forward the answer was yes.  The economic reports that are coming out are showing such dramatic signs of slowdown it seems to simply be overshadowing earnings - thus far.  This, despite 3 key pieces of uncertainty alleviates (BP, Goldman, Financial Regulation)

As for the charts, the S&P 500 was rejected 3 days at S&P 1100 and Friday gave up the ghost.  We are now once more stuck in this tiring range of S&P 1040 to 1100 where the index has been trading for much of the past few months.   Further, with the failure to match or exceed the previous high of S&P 1130, we appear to have made yet another new "lower high" - continuing a recent pattern.



Last week, I posted a series of charts and said they were approaching "make it or break it" after their (mostly) oversold bounces.  Almost without fail all these charts failed this week:

XLF (financial ETF) - rejected at 200 day moving average
XRT (retail ETF) - rejected at 50 day moving average, then crossing below 200 day Friday
Copper - rejected at 200 day moving average
Gold - rejected at 50 day moving average
China - rejected at 20 day moving average

In the currency markets - after some consolidation of recent big moves the prior week, the Euro continued up and dollar down.   In fact after hitting lows of $1.19, the Euro touched $1.30.  The US Dollar index has broken down so quickly it is now scraping the 200 day moving average.



Indeed it now appears the yen has taken over the mantle of the 'safety trade' as fears of the future of the U.S. economy swamp the dollar's previous safe haven status.



And the 10 year bond went back BELOW 3.0% - either signaling coming recession or deflation; neither of which is a goal of U.S. policy.



All in all, it does not paint a great picture.

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Earnings season accelerates this week [A Look Ahead at Earnings Next Week] so we'll continue the battle of economic data, and 'risk indicators' rolling over versus company earnings and CEO's guidance.  Keep in mnd many (most? all!) of these good folk failed to guide to any coming reality check back in summer/fall 2007.   As for the economic data, it's housing centric.

Monday - NAHB Housing Market Index (a lesser report)
Tuesday - Housing Starts
Wednesday - Ben Bernanke testifies to Congress
Thursday - Existing Home Sales (big one), and Leading Indicators

Keep in mind the weekly jobless claims will continue to be affected by lack of seasonal shutdown of some auto plants, a fact that was actually mentioned in most analysis last week of the claims; frankly that shocked me.  Good job media.

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For the fund portfolio, our game plan as we were buying a few weeks ago in the selling frenzy below S&P 1130 was to let go of this exposure "higher" whether than meant S&P 1040 or 1070.  I did not think we'd reach all the way to 1100 within a week and a half, but this bipolar market has been putting on moves you'd get in a year (8-10%) in 2 week increments lately.  That provides a lot of opportunity for adapt traders but it's just a mess out there.  Whatever the case, I had been layering out of long exposure late in the previous week as well as throughout last week.  While I did add some new names, they were generally smaller positions with stronger charts - and they only offset a portion of the large amount of sales I did.  We were waiting to see if S&P 1100 would be surpassed after teasing market watchers Tue, Wed, Thu.  When this failed the time to become more cautious, "small" (less exposure), and more hedged was back in the game plan.  Late Friday as S&P 1070 was broken we did add some index short exposure.   Overall we're stuck again - hard to be bullish for anything other than a quick trade until S&P 1100 (and then 1130) is breached to the upside, and a break of S&P 1040 brings out the short broom.  In between 1040 and 1100 is this nasty 60 point range that has become repetitive; essentially we've been here since mid May.

On the long side:

  • Tuesday, with a 10% gain in just over a week, I took 1/3rd of F5 Networks (FFIV) off the table.
  • As the S&P 500 rallied into the 200 day exponential moving average (1094) Tuesday, I sold 60% of my TNA position (I had put a 7% allocation on the previous Friday) 
  • I continued a round of profit taking to lock in profits: 30% of Acme Packet (APKT), 40% of Tibco Software (TIBX), 33% of Polypore International (PPO), and 50% of Mercadolibre (MELI)
  • I started a trader position in Citigroup (C) ahead of earnings as the stock looked like it finally broke out over the 200 day moving average; Thursday I cut the position in half as JPMorgan (JPM) earnings did not impress the Street, and I sold out the other half Friday when earnings did not provide any boost and the chart degraded. 
  • Wednesday, I sold the other 40% of my TNA long on the "non" Intel bounce - I was hoping for some fireworks and gap up to sell into, but nothing. 
  • I cut BorgWarner (BWA) in half as it was up 20% in 6-7 days. 
  • Thursday, sold a third of what remained of Acme Packet (APKT), and almost all of VMWare (VMW). 
  • Thursday I restarted Monsanto (MON), and Priceline.com (PCLN); two positions from the past.
  • I began a position in a new name, Rovi (ROVI). 
  • Late Thursday when the market rallied on Goldman, BP I threw on some modest TNA long but dumped it first thing Friday morning when there was no follow through. 
  • Friday, I closed Chinese small cap semi name Spreadtrum Communications (SPRD) reluctantly as a 'non performer'. 
  • I added back some Acme Packed (APKT) at a nearly double digit discount to where I had sold the previous day. 


On the short side:

  • Amazon.com (AMZN) had cleared its 200 day moving average so I took a 5% loss on a small short (1%).  Later in the week it reversed down but with earnings coming this week, I would not have a position either way. 
  • Added some TNA short late in the week on the break of S&P 1070.

.

Sunday, July 18, 2010

Updated Position Sheet

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Cash: 77.9% (v 70.6% last week)
Long:
18.2% (v 27.8%)
Short:
3.9% (v 1.5%)


This data is updated weekly and can be found on 'Performance/Portfolio' menu tab on the website. As always the total gain/loss (both dollars and percentages) only apply to the open portion of the position; it is does not apply to portions of the position sold earlier.

[click to enlarge]


LONG (1 photo file)



SHORT



OPTIONS


N/A


Friday, July 16, 2010

Bookkeeping: Ending Affair with Citigroup (C), Added some TNA Short

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We had a very quick fling that started Tuesday with Citigroup (C) that I am now breaking off.  Needless to say, it was unsatisfying.  I bought on the "breakout" earlier this week, hoping the JPMorgan (JPM) report would propel it, as well as Citi's report this morning.  Neither caught the market's fancy.  Yesterday morning when the JPM reaction was "meh" I sold half the position... I thought perhaps I would be proven wrong with the late day Goldman Sachs (GS) news, but financials stink again today.  Therefore, the other half goes today (-7%).


Let it be known if you use simple moving averages rather than exponential you can still make a case for support around $3.94.  I am going with what works for me, and since we added other stocks with far more relative strength yesterday I'd rather focus on those than this name, especially because the reason for the trade (a breakout) is not working.

(this is how Citi looks with simple moving averages)



I also threw on some TNA short as a hedge

Short TNA in fund; no personal position

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Bookkeeping: Buying Back Some Acme Packet (APKT)

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On the last flush down in the market a few weeks ago, I made Acme Packet (APKT) my largest position.  It took a few days to wake up but it eventually worked out very well, with a 20% type of gain in 2 weeks.  I sold it off in increments, including a sale yesterday in the $32.70s.  The stock is already down over 9% from that price point and near the 20 day moving average.  Just as I incrementally sold off exposure, I shall do the same with purchases.   I will start slow and essentially get back what I sold off yesterday with about a 0.7% addition in the $29.70s area.   If the market continues to drop I'll be interested in larger purchases down there near $27.  The force is strong with this one.



Long Acme Packet in fund; no personal position

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Stick Save or White Flag?

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Should be an interesting closing 70 minutes.  On one hand we have a disaster of a day with horrid breadth; usually the market does not reverse in the closing hour after such a performance (either upwards or downwards).  On the other hand S&P 1070 is a key level, and bears fear the 'invisible hand' that has often come to snap their necks the past year and a half. 

Bigger picture one can make a case either way as well - we were overbought and if there is more upside the market needed to consolidate and shake out the weak longs before a true assault on S&P 1100 happened.  (the S&P was rejected 3 times intraday this week at that level).   Or the far simpler case lies with the bears - the light volume, oversold dead cat bounce went to a key resistance level... and now is complete; that's all she's got captain.

While 1070 is a pivot point here, remember we've been in this trading range for months on end.  1040 to 1100 especially, with the 2 sub ranges of 1040 to 1070, and 1070 to 1100.  I am a broken record here.  Bigger picture I feel more comfortable placing shorts below 1040 because that has only been punctured once, whereas we've been flipping around in the 1040 to 1100 range for months.

Whatever the case, a high degree of cash and/or remaining hedged is the best course of action.  It remains impossible to build intermediate term positions and everything is simply a "trade". I do stand in amazement at the continued bipolar, Ritalin induced changes of mood.  The type of mood swings (greed, fear) that used to take months or even quarters to evolve, now are happening every 2 weeks.  Very strangely we seem to be in some sort of 9-10 day patterns of student body left lemming runs ...followed by student body right.  [The Bipolar Market in 1 Chart]

A Look Ahead at Earnings Next Week

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With the S&P 500 grasping at 1070, and yet another "90% day" as the student body has run back to the left ("risk off" stampede), let's take a look ahead at the key reports next week; both for the greater market and what we have our eyes on.  The next 3 weeks are the heart of the earnings season, and some of our holdings begin to pop up next week.


Names the market will focus on

  • Monday - IBM (IBM), Texas Instruments (TXN)
  • Tuesday - Apple (AAPL) [the normal huge beat, and massive lowball for the following quarter], Goldman Sachs (GS) [trading revenue has been bad for Citi and JPMorgan as Q2 2010 actually was so bad it even hurt the investment banks, Meredith Whitney thinks even Goldman had trouble trading this quarter], Yahoo (YHOO) [I have no idea why the CNBC crew devotes so much attention to this dinosaur ... shall we analyze Lycos and Excite while we are at it?]
  • Wednesday - Baidu (BIDU) [should continue to benefit from Google's neutering in China, but are expectations/valuation too high?], EMC Corp (EMC) [fantastic performance of late - is to storage what Cisco is to networking], Freeport McMoran Copper & Gold (FCX) [hedge fund favorite], Morgan Stanley (MS) [see Goldman Sachs], Qualcomm (QCOM) [cell phone world, been a disaster of late - should have low expectations], Wells Fargo (WFC) [probably not as important now that we have results for JPM and BAC - should be very similar]
  • Thursday - 3M (MMM) [slow and steady multinational], Amazon.com (AMZN) [chart has been weak of late, still a rich valuation], American Express (AXP), BB&T (BBT) & PNC Financial (PNC) [two of the huge regional banks just below the "big 4" oligarchs], Caterpillar (CAT) [top dog - pun intended - in construction equipment], Microsoft (MSFT) [yawn], Nucor (NUE) [steel, which shows a lot of signs of weakening of late], United Parcel Service (UPS)
  • Friday - McDonald's (MCD)

Names of specific interest

  • Monday - fund holding HDFC Bank (HDB),  Atheros Communications (ATHR) [I remain befuddled on this one, if it can report anything close to what is promised it should bounce - so cheap]
  • Tuesday - fund holding VMWare (VMW[we've cut back almost the entire position to lock in profits as this is a high valuation, high beta name],  Harley Davidson (HOG) [I like to view this one through the prism of the over spending American consumer; thus far HOG business has really not bounced back much despite "green shoots"], Juniper Networks (JNPR) [poor man's Cisco], Peabody Energy (BTU) [the big fish in coal space]
  • Wednesday - fund holding F5 Networks (FFIV), fund holding Netflix (NFLX) [high valuation, high beta like VMWare]  Eaton (ETN) [always like to keep an eye on this decent sized pure play international industrial], Intuitive Surgical (ISRG), Manpower (MAN) & Robert Half (RHI) [view for comments on temporary employment marketplace]
  • Thursday - fund holding Dr Reddy's  Labs (RDY)Bucyrus (BUCY) [always a good read on the global commodity picture, any comments on China slowdown would be interesting], Chipotle Mexican Grill (CMG) [the "Apple" of restaurants], Riverbed Technology (RVBD), Skyworks (SWKS), Mosaic (MOS)
  • Friday - Ford (F) 

Get Your Wheat On

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Monsanto (MON) continues to impress today, clearing $56... and the fertilizer stocks are showing the first signs of life in a few quarters.  (but still mostly have bad charts)  It appears wheat it rallying circa 2008. [Feb 12, 2008: Wheat is Being Ruined by ... what else... Hedge Funds and Speculators]





If interested the easiest way to get some exposure is either Powershares DB Agriculture Fund (DBA) or iPath DJ Grains ETF (JJG) [whew, it has been ages since we've mentioned those ETFs] but neither is a pure play - they mix in things like corn, soybeans, sugar, etc.


If you were not around in 2007, 2008 - things go so hot in the commodity markets they were introducing levered ETFs even in the soft commodities!.   [Apr 17: Four New Agriculture ETNs]  And that marked the top within a few months ... the rest is history. [Jun 16, 2008: Corn Rocks - Best Performing Commodity ETF/ETNs Year to Date]


Via Bloomberg:
  • Before today, wheat surged 24% this month, rising 11% in the previous three sessions alone on reports that a drought in Russia, the fourth-biggest exporter of the grain, will curb production. Investors may be selling on concern that rain may fall this weekend in Russia and the European Union, which also has been parched.
  • “It looks like we’re pricing in some Russian weather,” said Dan Kuechenmeister, the manager of the commodities department at RBC Dain Rauscher in Minneapolis. “When you see headlines that say ‘The worst drought in 130 years,’ that gets people’s attention.”
  • Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay.
Long Monsanto in fund; no personal position


Bookkeeping: Closing Spreadtrum Communications (SPRD)

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Despite looking amazingly cheap, it is difficult to be a small cap Chinese stock at this moment.  Not only is the mother country's stock market taking a hammering for months on end, Chinese small caps are not part of the HFT EFT "risk on" "risk off" universe so they seem mostly in the hands of the retail investor who for the most part has abandoned the stock market, or only plays when the market is straight up 3-4 months in a row.  Put another way - these names are out of favor.

While a cyclical semiconductor stock, Spreadtrum Communications (SPRD) now trades below 10x 2010 estimates.  That said, it doesn't matter right now and after giving this one a lot of leeway I am worried about the chart set up further breaking down.  If the S&P 500 breaks 1070 or 1040 and starts a new selloff this one could be headed to that green line (200 day) right quick. Hence, I am going to close the 0.8% exposure in the name but keep it on my radar.  It might be one that pops strongly on earnings in the future.



[May 27, 2010: Bookkeeping - Beginning Spreadtrum Communications]


No position

Bookkeeping: Sold Direxion Small Cap Bull 3x (TNA)

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With a break of yesterday's intraday lows I am selling the TNA I put on late yesterday after I got a vampire squid contact high.  Thankfully it was a modest position put on, realizing the market has no memory from day to day and the glee that happens one day at 3:57 PM means nothing by 9:37 AM the next.  My loss will be roughly 7%.

The market is back to its old tricks the past 24 hours and I respect that.  Short term bears pointing at "death crosses" and a rejection at S&P 1100 were booted out of positions late yesterday as traders got contact highs from a combo of oil wells being plugged and squid taken off of a roasting fire.  Eager bulls took their place with visions of S&P 2000+, and those folks were promptly face planted today.  I love a market where everyone is made a fool of!

Thus far earnings season has been a case where almost every company ("shockingly") beats (lowball) estimates, but in most cases it has been a sell the news reaction.  Nothing earth shattering there.  What has been interesting is this has come despite a lack of weaker guidance.  Guidance was going to be the key this earnings season and thus far companies seem to believe everything will be ok.  That said, company CEOs almost always tell a good tale and completely missed the coming slowdown in summer and fall 2007, as they told us great tales of future victory.

You have 2 forces facing off - very good multinational profits versus a quickly degrading economic future.  One is forward looking, one is backwards looking ... the market seems to focusing on macro events the past 3-4 days even in the heart of earnings season.

Technically, we are still in the range of S&P 1070 to 1100.  I will focus more on hedging/shorting on a break of 1070.  Until then it is far too easy to get whipsawed as the past 24 hours has shown.  That said, the chart below certainly looks like a 'rejection' at resistance.



As I said coming into the week, the "easy trade" has been made on the long side.  Now it gets more tricky which is why directional bets have been pulled back (no option plays this week) as I expected it to get choppy.  It has.  Per the game plan we took a lot of profits as the market ran into resistance, and now we await the next major intermediate move.

No positions


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Thursday, July 15, 2010

Market Jumps on SEC Announcement Coming After Market Close - Rumors of Settlement with Goldman Sachs (GS)

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Looks like the market did a U-turn on news of SEC announcement post close.  Goldman Sachs (GS) surging, and XLF ETF of course reversed.
  • Shares of Goldman Sachs (GS) have picked up speed this afternoon, currently up $5.88, or 4%, at $144.94, as headlines have spread the Securities & Exchange Commission is going to make a “significant” announcement at 4:45 pm, Eastern, this afternoon.

I threw some modest TNA ETF on the grill as I sip Kool Aid ...




Bookkeeping: Beginning Rovi (ROVI)

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Rovi?

That's what I said when I saw this name show up on one of my screens.  I'm quite familiar with probably 1000+ stocks but Rovi?  As a stock researcher at heart (although that art has been made obsolete by HAL9000) I wondered how a $4B+ market cap company in the "tech" space eluded my notice.  Then I did some digging.... and some of you old school vets out there from the late 90s/early 00s will recognize it.  It used to be called Macrovision.  Which absorbed Gemstar (infamous for VCR plus technology and the first on screen TV guides).  But with the emergence of an internet arm this is a more interesting company than it was 6-7 years ago.

Let's start with the technicals because that is what caught my eye.  Rovi (ROVI) has just emerged from a 4 month hibernation; a quite nice base between $35 and $40.  I like long bases because it usually leads to big moves; at least in a benign market.  The stock finally cleared this range when the S&P 500 burst off that 1010 low two weeks ago.  So the story is easy from here; either this is the beginning of a potentially serious breakout or if the market breaks down the stock will soon fall back into the $35 to $40 range and the trade is over from a "breakout" perspective.

[click to enlarge]



On a fundamental basis, Investors Business Daily does its normal excellent "Company XYZ for Dummies" in this story from mid June:  Tech Company Guides the Way as Entertainment Goes Digital
  • .... radio, movies, television, DVD players, game consoles, desktops, laptops, MP3s, handhelds, iPads, e-readers.  There are so many choices now that some companies make their living simply helping folks connect their electronic devices to TV shows, movies and music. Rovi (ROVI) is one of those companies.
  • Rovi provides digital entertainment technology for the discovery and management of entertainment content. Its lineup includes home network connection, content protection and media recognition technologiesIt also provides extensive metadata on movies, music, games, television and books.
  • Cable firms and other carriers use its program-guide technology, while from manufacturers of consumer electronics license its technology.
  • That technology is under heavy guard. Rovi has 4,400 issued or pending patents worldwide.
  • Just over half the company's revenue comes from service providers. Most of the rest comes equipment makers.
  • "The conversion from analog to digital is driving most of Rovi's growth — that and the increased usage of rich metadata," said Andy Hargreaves, analyst at Pacific Growth Equities. "Rather than having just textual listings, a lot of service providers are using pictures and videos to show content. Rovi is one of the leaders in that business."



Much like Tibco Software (TIBX) this is a solid growth story if not spectacular; roughly 15-20% annual.  On a full year forward basis for 2010, it's a decent valuation at 21x.  Most importantly it is not a name that is a hedge fund plaything full of 8% fluctuations due to "risk on", "risk off" decisions made each day by the bipolar PhD community and their computers.  In that sense its like Polypore (PPO) ...sort of doing its own thing... like the good old days when individual metrics mattered.

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Last earnings report was in early May - found here.  Hence we should expect the next in 3 weeks or so.
  •  Rovi Corporation (Nasdaq:ROVI - News) announced today, first quarter 2010 revenues of $130.1 million, compared to $111.2 million for the first quarter of 2009. 
  • On a non-GAAP Adjusted Pro Forma basis, Adjusted Pro Forma Income was $48.1 million in the first quarter of 2010, compared to $31.2 million in the first quarter of 2009. Adjusted Pro Forma Income Per Common Share for the first quarter of 2010 was $0.45, compared to $0.31 for the first quarter of 2009.
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I've begun a 1% exposure in the name only because I have never owned "Rovi" and like to get my feet wet slowly with new names. (I played Gemstar back in the day, but we're probably talking 10 years ago).  If the stock can break over intraday highs of the past 2 days, I'll most likely add more.  Gun to head, if the S&P 500 can just stay steady and not fall over, this is the type of chart you salivate for.  However, if S&P 1100 is the best we can do, and we're facing the next selloff in the coming weeks, Rovi will surely be taken down as another hostage to the greater market.

Remember, all individual company metrics no longer mean a thing in the new age stock market (EFT + HFT = GLEE) - it's either "risk on" or "risk off" with no memory from day to day; every stock is either Ultra S&P 500 ETF or QQQQ.  Everything else is just details for humans who cling to the past, and still believe they add value. (hand raised)

Rovi Corporation provides digital entertainment technology solutions for the discovery and management of entertainment content. It offers guidance, home network connection, content protection, and media recognition technologies, as well as extensive metadata on movies, music, games, television, and books.

Long all equities mentioned in fund; no personal position

Bookkeeping: Restarting Priceline.com (PCLN)

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Like John Kerry during a presidential campaign I'm flip flopping on Priceline.com (PCLN).  I tried a very quick and dirty short last week just under the 50 and 200 day moving averages which I exited for a 2% loss as the stock broke above (around $200).  The stock has continued to roll since (+10!) and as I said when I shorted it, I actually like the company's fundamentals.  So now we have a much stronger technical outlook to go along with the growth story.  Its drop in May was so steep there is really no resistance until $270s.... assuming the S&P 500 can stay benign.  Therefore, we are back in - last exit was February 2010.

Since the company reports in an "off" month there is no earnings risk until August.  I've started with a 1.6% exposure.



[Feb 23, 2010: IBD - Could Priceline.com and Expedia Hit Headwinds?]
[Feb 18, 2010: Priceline.com - Another Stellar Earnings Report]
[Nov 10, 2009: Priceline.com Hits an Earnings Home Run]
[Aug 10, 2009: Priceline.com - Recession Recsmession! Continued Impressive Results]
[May 14, 2009: Priceline.com in Investors Business Daily]
[May 11, 2009: Priceline.com Continues to Execute Well]
[Feb 19, 2009: Priceline.com Impresses on Earnings]
[Aug 6, 2008: Priceline.com - Down 17% on Good Earnings?]
[May 8, 2008: 2 Earnings Reports of Note: AIG (AIG) and Priceline (PCLN)]

Long Priceline.com in fund; no personal position 

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Bookkeeping: Restarting Monsanto (MON)

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I mentioned the action in Monsanto (MON) yesterday being appealing; the stock continues to impress today ... rallying during the market selloff.  I thought a move over $56 would lead to the potential to mid $60s and we are now here at $56.  I am going to restart an exposure in this name with a 1.65% stake but since we are generally hostage to the greater market I'd like to see the S&P 500 clear 1100 before adding more. It's had a heck of a move without a rest so the main worry is it needs to consolidate a bit and I might be chasing a bit.

This is our first time back to the Bad Boy of Seeds since April 2009.


Long Monsanto in fund; no personal position


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WSJ: Correlation Soars on S&P 500 Shares

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Hmmm... this sounds *vaguely* familiar to a certain blog writer's complaints the past few years.  [Jun 30, 2009: Bloomberg - Correlation Among Asset Classes Highest Ever]  [Jun 29, 2010: Correlations Among Asset Classes Reach Ever Higher Extremes as HAL9000 Algos Dominate Life]  Instead of carbon based lemmings, we now are dominated by the silicon variety.  EFTs and HFTs - a great combo if you hate stock selection.

Via WSJ:
  • Stocks are trading in lock-step more than at any time since the 1987 crash, and the trend has some analysts concerned.  In recent weeks, stocks in the Standard & Poor's 500-stock index have shown an increasing tendency to move in the same direction at the same time. Last week, those stocks' tendency to move in the same direction as the index hit an extreme not seen since October 1987.
  • The market's flock-like behavior is one more reflection of the growing influence of investors using broad-based strategies to buy and sell large blocks of stocks. Instead of picking individual stocks to hold over a period of time, they trade in and out of the market using broad indexes. Often, these investors use exchange-traded funds, which trade as easily as a single stock but contain many different stocks that may belong to the S&P 500, the Nasdaq 100 or another index.
  • Heavy trading in exchange-traded funds means more stocks are likely to move in the same direction on any given day. Analysts call that correlation, a mathematical term meaning similarity of behavior. Correlation is on the rise, to the frustration of investors who are trying to analyze stocks based on their underlying strengths and weaknesses.  (amen brother
  • "It is an indexing market and not a market for stocks. On good days everything goes up, and on bad days everything goes down. Everyone talks about baskets or sectors," says Jeffrey Yale Rubin, research director at Birinyi Associates. "It is harder for individual investors and even for mutual-fund managers to distinguish themselves by doing individual stock picks. They might get the product right and the earnings right, but the market goes down and the stock is going to go down as well."  (student body left.... student body right)
  • Every day, Birinyi measures the 50-day average correlation between the direction of the S&P 500 and that of its member stocks. In this case, correlation is a measure of the degree to which one stock tracks the movement of the index. A correlation of 50% means half the index's component stocks are moving in the same direction as the index. A perfect correlation would be 100%, with all stocks tracking the index. The average correlation since 1980 has been 44%.
  • Last week it surpassed its 2008 high of 79% and hit 81%, the highest level since the 1987 crash, when it touched 83% for one day.
  • The tendency of stocks to rise and fall together may help explain why some conservative, dividend-paying stocks have been turning in disappointing results lately, while some riskier stocks, such as computer-chip makers, are holding up better than expected.
  • "Stocks aren't moving because of the sector they are in, but because the overall market is down" since late April, Mr. Rubin says.
  • Exchange-traded funds, high-tech trading strategies and quick shifts to cash permit investors to react quickly to market moves without analyzing individual stocks, but they also mean professional investors have less need to use traditional defensive stocks as havens.


    Bookkeeping: Cutting Back Citigroup (C) by Half

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    I have never owned Citigroup (C) before and as with any stock the first time you buy, you have to get a feel for how it trades.  As I anticipated Citigroup is a fancy name for "Ultra S&P 500 ETF" as deemed by HAL9000.  More or less it will give you double the beta of the market... and is hostage to the XLF ETF.

    I was a bit disappointed by the JPMorgan (JPM) numbers today, all the "good news" simply came on a change on loss provisions.  The market doesn't seem to like it much either.  Citi reports tomorrow but the more important thing is in the stock market gone wild, where every stock is a 1:1 correlation to the S&P 500 and indeed almost every stock within a sector is treated the same - the JPM reversal has hit Citi.   So what looked like a potential breakout over the 200 day moving average is (for now) a fake out.  Hence I am going to cut the position in half at small loss and we'll see how it goes tomorrow.  If the financial ETF cannot breakout, you can pretty much mail it in in terms of owning any larger banking stock.

    Just another great example of brainless trading when every stock within an ETF is the same to HAL.  See below - no difference among all 3 charts, if I erased the symbols you'd think this was all the same company:





    Long Citigroup in fund; no personal position


    x

    Bookkeeping: Another Round of Profits on Acme Packet (APKT) and VMWare (VMW)

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    As mentioned yesterday you never know when these stocks that are on tears will pull back and can leave good money on the table, but there are bigger problems to be faced with.  I am not huge on secondary technical indicators (I try to K.I.S.S.) but Acme Packet (APKT) is now above the top Bollinger Band and its RSI is near the top end of its range, where it usually tops out (70ish).  Hence I will take a third off of what remains here in the low to mid $32s.



    I already cut my VMWare (VMW) pretty sharply, hence since my position size is small I am going to sell 90%+ of what is remaining and hope to buy back lower.  Same technical theme as Acme Packet.



    In a generally sloping upward market one wants to rebuy these type of names at their 10 day, or if possible 20 day moving averages.  That was a market we saw for much of 2009 and Feb-April 2010.  Right now we are in more of a bipolar market where we are seeing huge moves in 2-4 week increments in completely different directions so its much trickier knowing when to pile back in.  What looks like a smart purchase on a pullback to the 20 day moving average can look poor if the market is in a violent selloff a week later.

    Long Acme Packet, VMWare in fund; no personal position


    x

    Chinese Q2 GDP Slows Slightly to 10.3%, Singapore's Surges to 19.3%

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    Please take all government data with many grains of salt but...

    #1 - China says it is engineering a slowdown 'perfectly' (it was reported earlier this week that property prices actually fell last month for the first time in over a year after some breakneck increases), and Q2 GDP fell to 10.3% from the wicked 11.9% gain in the previous quarter.  Inflation is back down below 3%. 

    Via Bloomberg
    • China’s economic expansion eased to 10.3% in the second quarter and industrial production cooled more than forecast in June, signaling a deeper second- half slowdown that may add to risks for the global economy.
    • Second-quarter growth was less than the median 10.5% estimate. The moderation follows the government’s success in tempering credit expansion, investment spending and property speculation.
    • The gain in gross domestic product was less than an 11.9% increase in January-March from a year earlier.
    • Inflation cooled to 2.9% in June.
    • Industrial output rose 13.7%..
    • Analysts’ forecasts had indicated June inflation of 3.3% and industrial production growth of 15.1%.  
    • Urban fixed-asset investment gained 25.5% in the first six months of 2010 from a year earlier. The pace compares with a 33.6% increase in the first half of 2009, when a 4 trillion yuan fiscal stimulus program was kicking in.  [Feb 16 2009: Is China Pulling an Alan Greenspan?]
    • A clampdown on speculative real-estate purchases, via rules for buyers, developers and lenders, triggered the first month- on-month fall in property prices in more than a year in June.
    • The government may by year-end move to bolster spending by loosening quotas limiting bank lending, according to Nomura Holdings Inc. and Morgan Stanley.

    As always, we like to hear from companies rather than governments - more telling than anything above:
    • Baoshan Iron & Steel Co., the biggest publicly traded Chinese steelmaker, cut prices this week, highlighting the weakness in industrial output that Credit Suisse AG. economist Tao Dong described as the “biggest worry” from today’s numbers.
    Rather than show you the suffering chart of the Chinese stock market, a better check on the economy would be to have an electricity usage chart for the country.  In lieu of that, let me show you the chart of doctor copper.


    [Translation - despite the rally in 'risk assets' the past week and a half, copper is stagnant... and China loves its copper when it is growing.]

    ---------------------------------

    #2 - Singapore's Q2 GDP shot up to nearly 20%, and raised forecasts for the year to 13-15% growth.  (keep in mind all year over year comparisons are versus a rotten 2009)

    Via AP:
    • Gross domestic product in Singapore for April through June grew 19.3% from a year earlier when the economy was shrinking because of the global recession, the Trade and Industry Ministry said Wednesday. The growth was the fastest since the government began releasing quarterly GDP figures in 1975.
    • The ministry raised its forecast for the city-state's economic growth this year to a range of 13 to 15% from the previous forecast of 7 to 9%. It also raised its forecast for export growth as global demand has stayed strong amid Europe's debt and fiscal crisis.
    • Manufacturing in the April-June quarter recorded explosive growth of 45.5% compared with a year earlier.
    • Construction grew 13.5% while services expanded 11.4%. The opening of two casino resorts this year by Las Vegas Sands and Malaysia's Genting have helped attract record visitors.
    • Tourists and locals alike are buying more. Mastercard said its cardholders spent 23% more last month from a year earlier amid the start of an annual nationwide retail sale.
    • Citigroup said it expects Singapore's economy to grow 15.5% this year and 4.6% next year.
    • The tiny island nation is often seen as a barometer of world demand because its economy -- built on manufacturing and services like finance -- is one of the most export-reliant in Asia.


    No positions

    Weekly Jobless Claims Likely to be Skewed by Auto Workers Next Few Weeks

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    With each new data point now a referendum on the future of the U.S. economy, and employment in particular unable to show meaningful improvement, the weekly jobless claims have taken on much more importance than normal the past few months.  As a coincident indicator rather than leading or lagging, a significant drop below 400,000 claims a week has been elusive for the bull case.  That said there is a lot of noise in these figures, as multiple layers of emergency federal benefits have been added on, and seasonal adjustments are also found within the numbers.  These next few weeks have a particularly interesting situation so we'll see if there is some sort of large change today or in the next few weeks.  Why?

    Normally mid summer the auto plants shut down for a few weeks for retooling; hence auto workers traditionally file for claims these weeks.  That is seasonally adjusted since it happens year in and year out.  Except for this year.  Both General Motors and Chrysler have decided not to do shutdowns.  Hence the weekly jobless claims will be seasonally adjusted for something that is not happening.

    Bottom line?  A clean report on weekly claims won't be available to us until August so ignore any mass hysteria caused by this quirk.

    (As an aside, with census workers being liquidated, some portion - who knows what percent - will be able to file new claims, so this once in a decade situation may skew numbers in the other direction as well.)

    x

    Wednesday, July 14, 2010

    What Correction? Multiple Stocks Blowing Out to 52 Week Highs

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    Quite amazing to see this group surge so quickly to 52 week highs.  This is almost one third of our long portfolio. Another reason to buy "relative strength" on dips.... but certainly one would not expect this type of action a week and a half after the market was being crushed.







    Now the tough question is when do you take the next round of profits, knowing you can leave quite a bit on the table if the market continues a "V" shape, low volume bounce so popular from summer 09 to spring 10. There are worse decisions to be faced with of course.

    (as an aside, it appears Acme Packet is up due to a 2nd derivative "competitor's" earnings report)

    Long all names mentioned in fund; no personal positions


    x

    Bookkeeping: Cutting BorgWarner (BWA) in Half

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    Auto supplier BorgWarner (BWA) has jumped from its 200 day moving average near $36 to as high as $43 this morning - like a bevy of other stocks I own or have on my watch lists, about a 20% move in 6 or 7 days.  I am going to sell off half the position and see if I can rebuy lower.  As with all sales at this point the same caveat - if the S&P 500 runs over 1100 all sales will look foolish as 99.8% of all stocks will run en masse.   Near term upside for the name would be 52 week high of mid $44s.

     

    Long BorgWarner in fund; no personal position

    x

    Bloomberg: Rio Gains on Sao Paulo

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    Moving on the floor now babe you're a bird of paradise
    Cherry ice cream smile I suppose it's very nice
    With a step to your left and a flick to the right you catch that mirror way out west
    You know you're something special and you look like you're the best



    It appears Duran Duran was about 3 decades early, but Rio is making strides and with the 2016 Olympics ahead (not to mention a part of the 2014 World Cup) things are looking up.  Some interesting granular information in this article from Bloomberg for those of you interested in the Brazilian story.

    • Gartmore Investment Management Ltd.’s Christopher Palmer needed only a day in Rio de Janeiro to scout for investment opportunities while visiting Brazil six years ago. Now half a week in the city isn’t enough.   A half a century after losing its status as Brazil’s capital, Rio is becoming an engine of Latin America’s largest economy.
    • “It’s in the midst of a major transformation,” said Palmer, Gartmore’s head of global developing markets overseeing about $5 billion in London. “Rio has come back into the fold because of the Olympics and the development of the oil and gas industry.”
    • The city lured at least two dozen hedge funds in the past decade as well as the nation’s leading oil producers, the 2014 World Cup and the 2016 summer Olympics.  (technically the World Cup goes to a nation, not a city)
    • Governor Sergio Cabral forecasts the state of Rio will need as much as $90 billion in investment through 2013 for the expansion of the shipbuilding, iron, steel and nuclear power industries, led by projects from billionaire Eike Batista. Oil producers and mining companies helped double state exports in the first five months of the year, a growth rate three times faster than the nation as a whole.
    • Exports in the state more than doubled to $7.9 billion this year through May, compared with the same period a year ago, according to the Trade Ministry.


    • On June 30, the government inaugurated a 65-meter (213 feet) elevator to connect residents of a cluster of hillside shantytowns, known as favelas, to the city’s newest subway stop as part of a campaign to improve security and transportation for the poor.  
    • “It’s becoming a virtuous cycle,” said Carlos Langoni, a former central bank president and finance chief of the organizing committee for the 2014 World Cup soccer games. “They’ve pacified favelas you would’ve thought were impossible to occupy. Real estate prices have surged, Rio’s seeing more royalties from oil production and it finally has good politicians.”
    • Higher production has helped the unemployment rate in Rio state drop to 5.9% in April from 10.5% in the same month in 2002, according to the country’s statistics agency. The jobless rate was 7.7 percent in Sao Paulo state in April and 7.3 percent for Brazil, the data show. 
    • State-run oil producer Petroleo Brasileiro SA (PBR), Brazil’s biggest company, has hired 22,000 employees in the past six years, mostly in Rio, and plans to add 6,000 more by 2013 as part of a $224 billion investment plan, the biggest in the global oil industry.
    • Economic strides may not be enough for Rio to supplant Sao Paulo as a corporate center, Langoni said. Four hundred kilometers (250 miles) to the southwest, Sao Paulo is the nation’s hub for the banking, automobile and agriculture industries. And its 902.8 billion reais in gross domestic product is three times bigger than the state of Rio’s.
    • While Rio may not be luring banks, the city is becoming synonymous with the nation’s hedge fund industry. Ipanema, whose beach was named the “world’s sexiest” by the Travel Channel in 2008, and Leblon have lured more than a dozen hedge funds. Of the more than 70 independent asset management firms in Brazil, about 60% are based in Rio, half of which are less than 10 years old.
    • Arminio Fraga, former central bank director and one-time fund manager for billionaire George Soros’s Soros Fund Management LLC, said he started his hedge fund in Leblon eight years ago because its economic universities provide a talented pool of traders and he can also work and live near the beach.
    • Rio property values have risen as much as 47% percent in a year (wow). Homicides have fallen 31% in May from a year earlier to a record low of 363. Vehicle theft is down 30% and robberies of pedestrians fell 12%, according to data from Rio’s institute of public safety.
    • Rio’s revival can be traced to the 2006 election of Governor Cabral, said Andre Urani, an economics professor at the city’s federal university. Urani said he isn’t affiliated with any political party.  “The priority has been cleaning up the house,” said Cabral. “Rio is no longer the ugly duckling of the republic. We developed a new partnership politics in our state. I have no doubt that the changes made in our government will keep showing results in the medium and long term.”
    • For decades before Cabral, Rio politicians shunned private enterprise and drug-related violence led entrepreneurs and educated Cariocas to flee to Sao Paulo, Urani said. “The city had lost its identity: It was no longer the capital, the industries left, the financial sector left and a lot of the state-owned companies left once they were privatized,” “The most important thing Cabral did above all was the inauguration of a new politics, molding together various parts of the government with the private sector.” (this is where Americans shudder)

    I was actually shocked by these prices, considering the average wage in Brazil...
    • In Ipanema, a two-bedroom apartment costs an average of 672,438 reais ($381,439), while in Copacabana it sells for 471,723 reais ($267,584), the data shows. 
    • “There are waiting lists and, basically, if you want to buy something there you’re going to pay a very high price or no one is going to sell it,” said Marcus Vinicius, director of Julio Bogoricin, a real-estate agency that focuses on luxury real estate in these neighborhoods.
    • “Rio is becoming an interesting mixture of Boston with Houston.”








    [Jun 9, 2010: Brazil GDP Grows at "China Like" 9% in First Quarter]
    [May 21, 2010: The Economist - Brazil: Too Much Government Spending?]
    [Oct 20, 2009: Ben Bernanke's Money Printing Parade Forces Brazil to Slap a Tax on Outside Investors]
    [Oct 27, 2009: Goldman Sachs - "Hazardous" to Underweight Brazil]
    [Sep 23, 2009: Brazil's Credit Rating Raised to Investment Grade]
    [Aug 11, 2009: BW - Brazil's Coming Rebound]
    [May 16, 2008: Brazil is Sexy]

    Monsanto (MON) Finally Shows Signs of Life

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    One of the country's least loved companies - Monsanto (MON) has suffered through a horrific 2010, missing all rallies as it was sold off relentlessly.  In fact, today's movement is the first time the stock has been over the 50 day exponential moving average since January.  Most of the year it has not even been able to clear the weaker 20 day moving average.

    [click to enlarge]



    Indeed, the chart above does not look very much different from BP!

    It appears news of the CEO and CFO buying shares might be the driver of today's big move, about $3.5 million between the two.  Earnings expectations have been dragged down enough (in the past 60 days EPS for 2010 down from $3.16 to $2.49) that the company might finally have found a bottom in terms of expectations.

    If the stock can clear the $56 level, there appears little standing in the way to a run to the mid $65s.  One to keep an eye on.

    Monsanto Company, together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. It has two segments, Seeds and Genomics, and Agricultural Productivity. 

    No position

    Anyone Know What is Going on With Acme Packet (APKT)?

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    Ladies and gentlemen, we have liftoff.  Volume in the first 75 minutes has exceeded the normal day.  Hmmm....



    Long Acme Packet in fund; no personal position

    Bookkeeping: Closing Remaining Direxion Small Cap Bull 3x (TNA)

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    Yesterday I sold 60% of the Direxion Small Cap Bull 3x (TNA) that I put on last Friday; I was hoping the Intel news would create a gap up so I could dump the rest into the greedy paws hooves of giddy bulls but alas, those darn economic facts keep getting in the way.  Instead I will be selling here as the market has trailed back to S&P 1094ish.  This will give us about a 7% gain on this batch, so I am still pleased with the result.

    It's been a hearty past few weeks in terms of trading and dancing around the market, and our (4 week) "period" comes to an end Friday so I want to coast here into the end of the week.  As per our game plan, we bought low and sold into the rally, and what a rally it was.  Some weeks you have easier trades, and some weeks harder ones and from here the setups are more tricky, so I'll leave it to other folks to figure out in the immediate term.  Over S&P 1100 we can make a case to 1120 and then 1130, but it the risk profile increases for those 20-30 S&P points.  A break below S&P 1070 and we can make some downside plays.  In between the two points (1070 to 1100)... not an area to take much risk in terms of directional movement.  We'll wait and see which way the market wants to go next.

    No position

    x

    Economic Data (Lucy) Pulls Football Away from Stock Market (Charlie Brown)

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    I don't want to blame today's early selling that much on this morning's economic data, because frankly weaker economic data has been ignored for much of the past week and a half as the market wanted to go up, no matter what the facts were.  The market was overdue for some sort of catching of breath after this hectic "risk on" move, and some of the data this morning was just as good of an excuse as any.  However, it did come at a very important moment on the charts of course as a clearance of S&P 1100 would have had Kool Aid running in the streets (I was hoping for it, so I could dump a lot of long exposure into said Kool Aid).

    Just fyi - an interesting development; just a few days ago the simple and moving 50 day moving averages were at 1100 and 1094 respectively.  They seem to have converged at 1094.  Which is also where the 200 day exponential moving average is.



    Bigger picture, it is more wait and see for now to see if the market ramps right back up in anticipation of Google and the banks later in the week.  The time to be aggressive long was a week and a half ago.  The next time will be on a movement over S&P 1130.  To the downside anything down to 1070 is fine as consolidation of this big move should not be unexpected.  For now I expect more churn as expectations for earnings season have quickly been raised - an identical pattern to the last few periods.  The dichotomy between the economic data and the earnings prowess of the masters of the universe (U.S. multinationals) is fascinating actually.



    x

    Tuesday, July 13, 2010

    Intel (INTC) Does Its Part - Beat, Good Guidance, Record Margins. All Systems Go for Gap Up Wednesday

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    Perhaps we are setting up for a repeat of summer 2009? [Are We Setting Up for a Repeat of Summer 2009?]  All that is missing is a Goldman Sachs report Thursday with Meredith Whitney showing up on CNBC tomorrow morning saying she is bullish on banks.

    Intel did its part (guidance being the key since it is almost "in the bag" these companies will crush earnings), and key resistance on the S&P 500, rather than being fought during normal market hours, should be danced over in the premarket.  Already we saw a big reaction at 4:15 PM.  All systems go - the next key resistance area is S&P 1120, and then the highs of last month of 1130.  A move over that level is key for bulls as it would mark the first new high in a while.   I shall be selling long exposure tomorrow morning into the jubilee.  The next level of interest for me on the long side is a clearance of S&P 1130.

    • Intel has posted its biggest profit in a decade as the company benefits from a strengthening computer market and more sophisticated factories.  (translation: less need for humans = lower costs)  Intel Corp. reported after the market closed Tuesday that net income was $2.89 billion, or 51 cents per share, in the quarter ended June 26. That compares with a loss of $398 million, or 7 cents per share, a year ago.  Analysts have expected a profit of 43 cents per share.
    • Revenue was $10.77 billion in the latest period. Analysts surveyed by Thomson Reuters expected $10.25 billion.
    • Gross margin was 67%, well above the guidance range of 62%-66%. (key key key measure)
    • Intel's revenue forecast of $11.20 billion to $12 billion for the third quarter is higher than analysts' projections for $10.92 billion.
    • In a statement, CEO Paul Otellini said that strong demand from corporate customers drove “the best quarter in the company’s 42-year history.”

    No position

    Useless Prediction of the Day

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    Gun to head this feels like one of those days (we've had countless the past year and a half) where the market surges in the opening moments, we trade sideways in a range bound manner for 4-5 hours, and then a magical flurry of buying happens in the closing 20-30 minutes.  In today's case it would be a great time to push us over and through S&P 1100.

    That also feels like the "pain trade" because apparently the "death cross" head faked a lot of hedgies who completely missed this move from S&P 1010.  A break over very obvious resistance would bring those guys in from the sidelines as they become very frustrated by the bipolar market that is now making moves that used to take an entire year in 2 week increments.   Of course, they would be jumping in after a near 9% move from the intraday low of 1010 - doh.

    EDIT 3:20 PM - if this scenario plays out and the Intel (INTC) "better than expected" earnings (wink wink) gaps the market up tomorrow morning, I'll be a heavy seller tomorrow AM as the momo boys finally show up happy to buy a market 10% higher than they could of bought 7 days ago when no one wanted to buy equities.

    If I am wrong, this post never happened and will self destruct in 52 minutes.

    x


    The Bipolar Market in One Chart

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    Perhaps better than the words I constantly use, the bipolar action of late is best represented by this chart below.  5 weeks ago everything was fine, 3 weeks ago the world was ending, now everything is fine again.

    "Risk on, risk off"
    "Student body left, student body right"
    "Lemmings jump off the cliff, lemmings run in glee through forest of green"

    I guess a generation raised on Ritalin which grew up on video games and bathed in instant gratification but with an attention span of the average 2nd grader, has now created the perfect market... for themselves at least.

    [click to enlarge]



    Below, a conversation overheard with one institutional desk trader (unfortunately the conversation was with himself)

    "I want risk on!"
    "No, I don't!"
    "Yes I do!"
    "I can't take the risk!"
    "I'm all in!"
    "Get me into cash now!"
    "I need long exposure, immediately!"

    Bookkeeping: Starting Citigroup (C)

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    If you are a cynic like I am, and view Wall Street as a place where insider information rules and the SEC is busy viewing porn on their computers while ignoring Bernie Madoff tipoffs for a decade, the "action" today in Citigroup (C) says Friday's earning report should be quite good


    I'm not normally one to buy ahead of earnings (usually I "de-risk" ahead of them in fact) but since the past few months have been so good, our NAV is flying, and I have a big cash load I am going to take a flier with this stock with a modest position as Citi breaks over the 200 day moving average for the first time since April.  I also like the long base (over 2 months) - usually stocks that break out of long bases can make big moves (either up or down).   The obvious caveat is that every stock is essentially a tracking stock for the S&P 500 in some form, so if the general market is rejected at 1100 then Citigroup will fall with it.  I should place that disclaimer on each trade go forward since individual metrics mean little in a world dominated by ETFs.

    We'll start with 1.6% allocation, on top of my (and your) personal investment as a U.S. taxpayer.

    Long Citigroup in fund; no personal position

    x

    Bookkeeping: Another Round of Profit Taking in Individual Equities

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    I continue to pare down risk exposure, much of which was put on some 70 S&P points ago, as we approach the make it or break it 1100 area.  Obviously if the market is off to another V shaped bounce circa early 2009 through spring 2010, we'll be underweight but in the market with no memory from day to day, or week to week the only "risk" we're taking with that is leaving some appreciation on the table.

    Some sales today:

    Acme Packet (APKT) became my largest position in a splurge of buying during the "puke out" session a week ago Thursday.  I took 30% off the table late last week, and sold another third (of what remains).  This batch went for a 14% gain in just over a week.  Speaking of make it or break it, the chart should tell you the very obvious reason for the sale - we're at 52 week highs, reached twice before. 



    Took 40% off the Tibco Software (TIBX) position - a very similar setup to Acme Packet as it approaches 52 week highs.



    Polypore International (PPO) is "thankfully" not part of the risk on, risk off HFT dominated trading and sort of dances to its own drummer (I doubt it is found in any ETFs), quite independent of the market.  What a refreshing condition.  It is up 10% from where I bought it, and was the 2nd largest long position so I sold a third to lock in that gain with at least part of the position. 


    With Mercadolibre (MELI) I was a bit early to the party, hence my cost basis is too high (I bought at the 20 day moving average and obviously it fell lower), so no huge gain here - just under 4%.  But the stock is up 20% from its intraday lows during the worst of the selloff so I want to take some off the table (half of a modest position) and try to buy back lower if the general market pulls back.  This type of stock is the center of the "risk on, risk off" trade; after being pummeled during the latest selloff it is now quickly approaching its 52 week high near $62.  Bipolar action at its best.



    Long all names mentioned in fund; no personal position


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