Woo Hoo! Rally time! Woo Hoo! Rally time! – wash rinse repeat, we’ve done this before!
George Bush gave me a quote for this morning (we had lunch this weekend): http://bushwillnotbefooled.ytmnd.com/
Now when I say we had lunch, I am of course saying that I absolutely for a fact did have lunch and I am reasonably certain the President did the same…
The Asian markets made a lunch of the bears with the Nikkei punching right back through the 50 dma of 16,120 and finishing at 16,361 giving many traders there an excuse to have a nice dinner too! The rest of Asia was very excited about this and Europe seems happy too so it will be up to us to poop this global party.
The NABE (National Association for Business Economics) decided today is the day to declare that terrorism is the single biggest threat to our economy (as opposed to self-important organizations spouting off at the mouth) and again I can turn to our fearless leader who told us (when he signed the Defense bill last August): “Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.”
As I’ve said before, if I made this stuff up I could not come up with funnier lines!
Once again the pundits are talking about the death of the American consumer and they will be looking to place the blame for this week’s drop (what? It didn’t happen yet, sorry – cut this part out and do not open until Wednesday) on Tuesday’s retail sales figures which led to Wednesday’s precipitous drop in oil despite the UN moving forward in steps to sanction Iran and Iran’s threats to disrupt oil in the region. Excuse me but I have to go back to the future now – see you Wednesday night!
I’m going to be looking to place the blame on GS if they disappoint with earnings tomorrow. The expectations are actually pretty reasonable at $3.29, just a 10% increase over last year after Q4 was a 40% beat of the prior year. Expectations are so low, in fact, that I don’t think in-line will do it but I’m not playing this one, just watching it to guage the market direction.
After a relatively quiet weekend in Oil Land, crude prices are bravely holding on to $60 bit gasoline futures are down .5% already (6am) and that does not bode well for the sector today but let’s be very careful here as this will be a hotly contested price point.
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Gold traded up in Europe as the dollar rose unexpectedly but it’s already pulling back as the consensus is that Iran has no teeth and has decided not to antagonize Condi any further as she steps up the “Central Banker for Terrorism” charges in her speeches. Make no mistake, this is an IOB (Iranian Oil Bourse) driven attack as the whole concept of Iran going nuclear in the near future is not possible (see the weekly wrap-up for details).
If you can get past the religious theme, here is a very well-written article that sums up the Iran Oil Exchange situation but it may not exactly make your morning brighter. Like I said, there are shockingly few American news stories about this:
http://www.prophezinenews.com/0202articles/iranvsamerica.htm
For a more technical read theres:
http://www.europe2020.org/en/section_global/150206.htm
Makes you kind of appreciate the summary doesn’t it?
Remember that GLD is the best way to get into gold quickly if (and only if) it really does hit the fan. You are not playing around with mining stocks, just trading on the commodity without all that messy leverage. NEM doesn’t hedge and will go up (or down) directly with POG while GG is the best of the Miners but BVN is safely foreign (Peru) which could be a good thing. AAUK is british based but pumped by Cramerites to ridiculous levels but I would still consider it if the dollar tanks.
Sorry to start the week off like this and it all may come to nothing but I’d hate to not mention it when 7 days from now we could all be saying “What the heck happened?”
BTW – no crisis may = rally of biblical proportions!
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You can’t buy it here but relating to the above story expect a lot of bidding for the London Stock Exchange as the American Exchanges are looking to get into what is looking to be a very hot market. They are not hot to be bought by a US company due to what Europeans consider insane levels of regulations (this is why so few European companies trade here) that may begin to apply if a US company takes over the exchange.
Do not short housing until you really read (not skim) this:
http://danskeresearch.danskebank.com/link/FocusUKUS20022006/$file/housingboomdoom.pdf
Speaking of 200 dmas, SNDK may be visiting theirs at $47.50 but I don’t like the play going into options as it is already off 10% for the month.
You might think mad cow scares hurt MCD but actually it reduces the price of beef for months while people stop eating hamburgers for about 72 hours! Let’s hope for a pullback so we can get the Jun $35s for $1 or less.
What Microsoft and Sony have done to the gaming industry, Microsoft and Intel are doing to the PC industry. Without a new platform there is no pressing reason to buy hardware and the thin client web aps mean that desktop horsepower is no longer a top priority. With DELL and HPQ it is all about the margins and they may get sqeezed all year, even if Wintel comes out with the latest and greatest in Q4. Short on HPQ seems to be a better play but you can go long on Dell for cheap insurance!
http://finance.yahoo.com/q/bc?t=6m&s=HPQ&l=on&z=m&q=l&c=dell
PD split today which will give shareholders a good opportunity to lighten up their positions after taking a beating since early February. Watch PCU for genuine sector direction but I like the Apr $65 puts for $2.
Can XOM continue to outperform the other majors by 10%? If not the Apr $60 puts make a nice play for $1.50 or less (hoping for some manipulation up this week).
Disney’s big meeting on Friday sans Jobs may have given APPL shareholders a reason to hope he won’t totally abandon them but it’s hard to get right back into a relationship when you know your CEO is still seeing another company… Still I say VPod in Q2, just in time for summer driving season so I’m taking the PLAY Apr $22.50s for $2.30 because they don’t care where Apple’s CEO wakes up in the morning as long as the company sells more IPods!
Speaking of people who just don’t care, our old selection of TOPT is on fire for the exact same reason we picked it in the first place way down at $12 – they are now making round trips filled with oil as we send surplus oil and gas to Europe and Asia where they may turn back around again as prices continue to fluctuate! Now they are declaring a huge $7.50 dividend (70% of our buy-in!) but this is an owner enrichment program I don’t approve of so I’m out!
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I’m sticking with my spread on GOOG at the moment as I am sure it will be pushed up during the day but I think buying additional March contracts is suicide. Although painful, June spreads are the way to go but let’s keep our eye on the insiders as they seem to have great timing:
http://www.smartmoney.com/eqsnaps/index.cfm?story=insiders&symbol=GOOG
I like buying the stock and taking (1.5x) Jun $330 puts at $25.50 for each share as you will gain more than you lose on the way down and have many profitable opportunities to exit if it goes up.
On the flip side I like shorting the stock against (2x) Jun $380 calls at $16.80. We will monitor both of these trades going forward.
It is also possible, but more risky, to take the Jan $320 calls for $62 against the Jun puts or the Jan $350 puts for $52.50 against the Jun calls.
I would enter this position with a 1/10 goal trade and will be adjusting based on the movement this week and next.
In the pre market today someone had to have 5,000 shares so badly they paid $4 extra to get them! This sort of obvious manipulation means desperation has set in and anything can happen so the best play is probably to let this one play out – treat any investment in this stock as a crap shoot with worse odds!
Microsoft, who usually hit their numbers, says that 20M people will be using their “Live” web site by June, which will include search and, of course, advertising. If Google has a 50% market share, that means they will be losing 3M users a month to this young upstart…
