Thursday, December 04, 2003

Its the last month of an up year, the first up year in three. Money managers want their bonuses. So December is playing out this way--The biggest winners of the year, are getting hammered with profit taking. Look at the Chinese stocks (CYD for example) also stocks like, SNDK, LEXR, CECO, UPOX are getting slammed while the losers and small stocks are rallying. Sort of the "January effect" in December this year. Sell the winners and pick up some dreck like AWE, AETC, for last few weeks of the year.

Monday, October 27, 2003

$32 Billion flowed into equity mutual funds in the past 15 days, the greatest increase since February 2000, one month prior to the all time high of the stock market. Flow of funds are always the largest at the end of the move. Be very, very careful.

Wednesday, October 15, 2003

The next big mania in stocks—China. In the next few years, hundreds if not thousands of new IPO’s will come to the market as Chinese ADR’s. At first, the supply of available companies will be small, causing the stocks to shoot straight up. Mutual funds that invest in China will become the hot funds. Chinese stocks will have internet like valuations as analysts try to justify the run-up using “new era” analysis.

Then sometime in late 2006 Time Magazine will declare some Chinese entrepreneur as its Person of the Year. Months later the bubble will burst when the greedy discover that the “emperor has no clothes”; that the valuations were based upon fuzzy Chinese accounting; that there really weren’t any earnings. Sound familiar? The more things change, the more they stay the same

Thursday, October 09, 2003

The risk reward ratio for Eastman Kodak (EK) is now 6 to 1 in favor of those willing to go long. In the next 18-36 months there is 5 to 6 points risk on the downside, and the potential of up to 30 points or more on the upside. I believe this is a risk well taken. And the stock still pays a 2% dividend.

Wednesday, August 06, 2003

9000 on the Dow is the last important support area, if this level is breached on a closing basis, Look out below! Interest rate update---- the 10 yr. bond yield has gone to 4.5% since our last commentary in July when it was 4.17%. The rate trend has reversed from down to up. Obviously the rate has gone up too much too fast, but the on balance trend in interest rates is now up. Homebuyers beware.
We landed on S&P 965 yesterday! This is support. But we got there on just the third trading day of the month. Therefore, one can only conclude, there is no juice in this market. The players are at the beach and they have taken their money with them. Be very careful. You can cover some of your shorts here and nibble on the long side, but doing nothing is probably the best advice in the month of August.

Monday, July 21, 2003

Follow up on COCO- we never got our short off as the stock never did break down at 44. It is still on our short radar list, but we do not invent trades! We let the market come to us. Not trading is a decision too, just as buy and sell are.
The mortgage refinance boom is over. If you did not refinance your mortgage its too late. The housing and mortgage companies will start to roll over and die. Look out below! Since our lst post on this subject on June 21, the 10 T-Bill (which mortgage rates are based) has gone up over 1% from a low of 3.09 to over 4.17% today. This is a tremendous move in a one month period of time. People dont even realize this and they will be shocked when they find out they did not lock in the rate at the time of their application.

Back to the stock market correction---Key support on the S&P exists in the 965 to 975 area. The Nasdaq can fall to 1600. Once we are there it will be the moment of truth, ie. is this a pullback with a great buying opportunity, or is it the next leg of the bear market. We are watching this very closely and once the evidence points overwhelmingly to one side of this argument, we will let everyone know.

Thursday, June 26, 2003

We are in a correction as we have previously pointed out. The S&P has come in to the 975 level. Because we are near the end of the month, now is a good time to cover some shorts for profit taking, in anticipation of a month ending rally.

Saturday, June 21, 2003

Mortgage rates made 46 year lows last week, I believe that is the end of the low mortgage rate cycle for now. Stay away from all real estate related stocks, Homebuilders, Mortgage Lenders and Title Insurance Companies. Look to establish short positions in these sectors. The stock market correction/pullback/reversal is upon us. There may be end of the quarter strength but this is fake, and unsustainable. Look to sell into strength. There will be better prices ahead to buy. Dont turn profits into losses.

Monday, June 16, 2003

Nice article this weekend on security stocks in Barron's. Portfolio pick KROL was mentioned favorably.

Friday, June 13, 2003

The market failed miserably today to follow through. This suggests that there will be a pullback to price levels that are worth waiting for. Wait until the S&P gets back to the 965-970 support area. This is a good area to buy stocks and cover any shorts. This is a good area to be long for the end of the month, end of the quarter rally later this month.

Thursday, June 12, 2003

The S&P Level was surpassed today on a closing basis; same for the Nasdaq, almost for the Dow but not quite. Friday the 13th will tell all. A strong Friday and the market will stay strong until the end of the month which is also the end of the quarter. At the end of the quarter, the funds mark up the stocks to pad their results.

Sunday, June 08, 2003

We took a 20% profit in SNE, and a 40% profit in GLW. So our model portfolio now consists of Short COCO-to be initiated this week; Long KROL@23.75, current price $23.89-hold; Long AETC@$2, current price $2.20; Long LEXR@$6.50, current price $7.97-Hold. Everything else in cash on the sidelines waiting for the market to come to us.
We are adding a new short to our list COCO- Corinthian Colleges, an online educational service, a stellar performer that looks tired. Sell short below 44.

Saturday, June 07, 2003

If Fridays action was a rallying ending reversal day as I think it was, then the following highs reached intraday on June 6, 2003 should hold as the high for the move. Do not buy anything until these highs are surpassed or until we have a 10% pullback whichever comes first. The highs are: DOW 9215.88; S&P 500 990.14; NASDAQ 1646.01

Friday, June 06, 2003

Today might have been the end of the rally, or at least an excellent time to take profits on a 20% plus move in the averages. We sold SNE and, GLW from our model portfolio. As for the Dow, these stocks have lost their MOJO (to Quote Austin Powers) and did not even participate in this tremendous rally--- MSFT, IBM, JNJ, MMM--they are the true Dogs of the Dow. Avoid these like the plague.

Wednesday, June 04, 2003

Todays action looks like this rally is for real. After pulling back to the 965 support area, the S&P 500 reasserted its climb to the 986 level. If your stocks have not taken out Mondays highs, do not buy them, watch them very closely. Take profits on underperforming stocks, look to add to those stocks making new highs.

Monday, June 02, 2003

Fakeout or Breakout? The S&P vaulted over the 965 area this morning like a hot knife through butter, and closed in the 967 area. However the Dow as we told you catapulted to the 9000 area and sold off sharply at the close. Many stocks were a lot higher at 11 a.m. than where they closed. The highs for your stocks today must be used as a bench mark. Do not buy anymore stock or add to any position unless todays highs are surpassed sometime in the month of June. If they are not, than this is it for the rally! We can always buy a big pullback, do not chase anything at these levels.

Sunday, June 01, 2003

Model Portfolio Update- Long AETC@$2; current price $2.06 HOLD; Long GLW@5.50; current price $7.31-Hold, too late now to add to position; Long SNE@24.63; current price 27.34-Sell half of position and hold the rest; Long KROL@23.75; current price 23.22-Hold and look to sell below 22.90-this has been lagging in the rally; Long LEXR @$6.50- current price $7.40--Hold or add to position.
On Friday 5/30 the S&P 500 traded as high as 965.38 before settling at 963.59; A close above 965 and the Dow could easily run to the 9000-9100 area; a failure at 965 and the Dow could trade down to the 8400 level. Look for strength at the beginning of the month.... The closing prices at the end of June are crucial for the rest of the year in my opinion.

Friday, May 30, 2003

Intraday May 29, 2003, the S&P 500 Index got to 962, within 3 points of the resistance target mentioned previously. Something very big is going to happen in the market--UP or DOWN we are knocking at the the point of no return.....Watch how this plays out in the coming trading days.

Thursday, May 29, 2003

We were stopped out of our short on MTG at 50 which is further evidence of the pain that the short sellers are having in this market, even on down days as this one was for the NYSE.

Tuesday, May 27, 2003

Model Portfolio Update- Long AETC@$2; current price $2 HOLD; Short MTG @ 47.05; current price 45.05 sell more below 45; Long GLW@5.50; current price $6.02-Hold or add to position; Long SNE@24.63; current price 26.01-Hold or add to position above $26.63; Long KROL@23.75; current price 23.53-Hold; new purchase LEXR @$6.50- a play on digital photography.
More evidence that the Japanese stock market is at or close to the bottom: A number of suicide web sites have popped up in Japan where people contemplating suicide can meet others who are also contemplating suicide. The two meet at a roof top and jump together. Experts blame this behavior on more than a decade of economic malaise.

Sunday, May 18, 2003

Model Portfolio Update- Long AETC@$2; current price $1.95-HOLD; Short MTG @ 47.05; current price 45.96 sell more below 45; Long GLW@5.50; current price $6.29-Hold or add to position; Long SNE@24.63; current price 25.10-Hold; Long KROL@23.75; current price 23.25-Hold.
My horse racing picks suck. I will stick to things I know. Funny Cide won by 10 lengths, but Foufas Warrior came in 7th

Saturday, May 17, 2003

To honor the dumbest kid I grew up with, lets go with Foufas Warrior in todays Preakness. At 20-1 you can do several things to bet him. For $10 you can bet him to Win, Place, and Show ($6 bet) and box him in the exacta with Kentucky Derby winner Funny Cide ($4 bet).

Thursday, May 15, 2003

Disney sold the World Champion Anaheim Angels for $185 million today. The entire team = $185 million. Ten years of Alex Rodriguez costs $255 million. The Texas Rangers I am told are worth less than the Angels. So who is better off Alex Rodriguez or the owner of the Texas franchise? A-Rod has a risk free deal--his owner can't say the same. But as in any mania---Stocks, gold, tulips the ridiculousness always comes out, and this my friends is no exception!

Wednesday, May 14, 2003

As SNE has moved up so has our sell stop. We have increased it to $23.90 from $22.90. Always move your sell stop up to lock in profits, never move it down. If people did this in the bull market, there would be no lawsuits.

Tuesday, May 13, 2003

A good point to take profits from this powerful rally off the lows is the 960-965 area in the S&P 500. There seems to be long term resistance in this area. And it is also a good reference point to start loading up on some shorts.

Monday, May 12, 2003

Our Model Portfolio to Date:

Long AETC @ $2; current price $1.91- Hold
Short IGT @86; covered at $89.05 for a $3.05 loss
Short MTG @47.05; current price $46.68-Hold; sell more below $45
Long GLW @$5.50; current price $5.90-Hold
Long SNE @$24.50 and $24.75; current price$24.53-Hold/Sell stop below $23
Long KROL@$23.75;current price $24.25-Hold

Friday, May 09, 2003

IGT has relieved us of our misery, teaching us the classic lesson-- dont short strong stocks in strong markets.... Gabelli nets $37 million last year as his funds returned -30% to investors...... Nobody wants to tap the Settlement Fund for research. The researches say its not enough to justify their work. Heads of research firms are saying, "Free research is garbage" Didnt investors know this??? Or did they just take dumb pills?

Thursday, May 08, 2003

This weekend we will detail our model portfolio to date. Kohls (KSS) Dept Stores is on our stocks to short radar list. Have you ever been to one? Its overrated dreck. And so is the stock. We are short MTG at 47.05 and still short IGT (barely) We picked up a long position in KROL on a nasty pullback today. The full list will be out this weekend.

Wednesday, May 07, 2003

Here is a novel theory, Wall Street analysts just wrote glowing reports about the airline industry to show the government that they are not all bad. After all, propping up a potentially bankrupt industry, relieves the U.S. government of another potential headache that it must deal with. Maybe this was part of the recent Settlement made in the poverbial smoke filled room?

Tuesday, May 06, 2003

LABL a commercial products labeling company in some of the very same businesses as AETC, broke out to a new high today above $19 share on improved earnings. So, fundamentally the labelling business for products such as chewing gum, soda and cleaning products is sound. Now the company AETC must get their story out.
The new hot tech product is Satellite Radio. Several new car companies have signed contracts with XMSR and SIRI. Taking a page out of the cable TV concept, subscribers pay $10-$12 per month for programming signals which can be picked up anywhere in the country. XMSR has been a rocket ship, up 250% in the past 45 days. SIRI just broke above $1 today for the first time in ages. Will the concept work? Who cares! There are only two ways to play and the small cap funds are chasing a limited supply of stock.

Monday, May 05, 2003

More evidence that the internal technical conditions of the stock market are improving.... There were no new lows on the NYSE today and only 15 new lows on the NASDAQ. And the advance decline line of all issues is outpacing the underlying averages.
We have instituted a new short on Mortgage Insurer MTG. Sell short below 47 and add to your position below 45. This is a pure play on the bursting of the real estate bubble.
We are still holding on for dear life on our IGT short, which we will cover on any close above 88. Ironically, the stock ITG, is down over 10% one of the biggest losers on the NYSE. Sometimes it pays to be dyslexic.
Slightly positive article in yesterdays Sunday Times Business section on the Corning (GLW) turnaround story..... We are recommending a low price speculation AETC @ $2 per share. They make the wrappers for candy and the 2 litre Soda bottles. There is value there. Its just laying there waiting to be noticed by someone.

Sunday, May 04, 2003

In todays Help Wanted: North Fork Bank is looking for Mortgage Default Specialists. Need I say more?
Our horse went off at 9 to 1 odds. He had the #3 position, started poorly, could not keep up with the fast early pace, found himself 12th at the half mile mark. He kicked into another gear as he passed horse after horse in the stretch to finish 4th. Not bad, but nobody gets paid for 4th place if you are a bettor. Lets see if he is entered in the Preakness.

Saturday, May 03, 2003

In honor of Denzel Washington in his role as the estranged father of Jesus Shuttlesworth (Ray Allen) in the movie "He Got Game" We Pick the horse Atswhatimtalknbout in todays Kentucky Derby. If this long shot should win, instead of telling you "I told you so" I will say, "Thats What I'm Talking About, Son"!

Friday, May 02, 2003

One only needs to look at a chart of Tyco symbol TYC and notice that the market does not want to go down in the face of accounting fraud news. Its an old story and all the sellers have sold.
We told you so-KROL has left the building. Its close above 26 make this a pure breakout. CAJ is about to leave the building closing above 41. We are close to being stopped out of our IGT short as it heads to 88. MTG is on our radar for a potential short play on the real estate bubble. More on this at a later date.

Thursday, May 01, 2003

Stocks to watch KROL- over 25 its a multi year breakout. Also a buy on any pullback to the 23 area. Cannon Corp. symbol-CAJ is the latest and strongest Japanese stock we are adding to our list. The Cannon products are actually selling well and the stock on a relative strength basis is holding up well in this vicious Japanese bear market.
Government Prosecutors' Enron Strategy--"Blame It On The Jews"
Seizing upon a climate of growing anti-semitism, the prosecution brilliantly indicted Lea Weingarten Fastow today. After all, what rich Jewish father would not do everything in his power to ensure that "Daddys Little Girl" doesn't go to jail? Including but not limited to advising his daughter to rat out the bigger fish!
According to the Stock Traders Almanac today starts the worst 6 months of stock market returns. Returns over a 51 yr period from November to April are 41 times better than the period May to October! Question--Has anybody done a study on Austrailian stocks? Their seasons are opposite to ours so maybe its the start of the best 6 months for Austrailian stocks.

Wednesday, April 30, 2003

More signs that the real estate bubble is starting to burst in the NYC Metropolitan Area:
People on the periphery of real estate such as associate brokers, title examiners, etc. are speculating in Manhattan apartments by buying every unsold sponsor unit they can find, hoping to “flip” the unit for a quick profit.

FYI-the Japanese Bank MTF was up 16% today. We added to our SNE long position at 24.75.
Some signs of a real estate top: Todays CBS Marketwatch has an article about people pulling money out of the stock market to buy second homes as a "savings technique". The theory is that real estate appreciation now is the cure all for their losses on other investments. These are the same people who pulled their money out of bonds to place them in index mutual stock funds at the top of the stock market. The other signs to look for are the proliferation of gimmick mortgages-- adjustable rate loans with negative amortization. These loans have 'teaser rates" which allow the borrower to borrow for a small period of time, usually less than one year at below market rates. Borrowers get sucked in and are subsequently trapped as the rate adjusts upward and at the same time the value of their property declines.

Prediction---More people will lose their homes as the result of low interest rates than any other time in U.S. history. More on this at a later time.
Editorial—Crybaby Investors Create Bull Market in Lawsuits

The recent Billion Dollar Settlement Raises Some Interesting Questions:

When the fix was in on the upside did anybody complain? Was anybody kidnapped, blindfolded and tied up in a room and precluded from taking profits? Did anyone realize that the peak 2000 market value of Yahoo, AOL and Amazon (total employment 11,000) was greater than the market value of Boeing, General Motors and Disney (total employment 400,000)? Did most investors discover the stock market in 1999? What happened to the other 200 years?

Did employees really believe that they could show up at work, turn on their computer and watch their company stock rise day after day without selling the product?

How can day traders and those who trade electronically (without a broker) put in a settlement claim, alleging some analyst defrauded them? Just watch their creative revisionist history!

The Nikkei Average in Japan was up 3% last night---Don't make me say, "I told you so"
Our Model Portfolio to date: Short IGT@85; Long SNE@24.50; Long GLW@5.75. The portfolio will be updated whenever it changes.

Tuesday, April 29, 2003

They say volitility comes at the end of the move (up or down). Well if that is true, check out a chart of IGT- International Game Technology, the slot machine company. If that isnt a triple top I dont know what one is. Fundamentally all the hotels are crying that travel is off. Check out todays news on Starwood Hotels, for example. So how could the gambling take be showing any growth? This stock is way overpriced.
Dumbest Corporate Finance Department Award goes to Corning (GLW) who announced last night they are selling 50 million shares at $5.43 to raise cash presumably to pay down debt. A couple of years ago, they had the same debt and the stock was over $100/share. The same 50 million shares would have raised $5 billion and paid off the debt completely twice. What did these MBA's do with the money their parents gave them for graduate school? Note- I have a long position in GLW
Take advantage of the SARS scare to buy the oversold Japanese stocks such as SNE, HIT, JOF and MTF. These stocks are so oversold at the end of a 21 year sell off. They dont ring a bell at the bottom, but they are certainly blowing their noses and coughing at the bottom. Note--In the interest of full disclosure, I do put my money (what little I have) where my mouth is; I bought SNE today at 24.50.
Disclaimer--I am not a financial analyst. The opinions expressed herein are solely mine. I will add to my disclaimer as I see fit. I think all financial planning is bullshit. Financial planners work for commissions. The posts herein are free and for information only.