Asia didn’t like what they saw over here yesterday (see, it’s not just me) and pulled back a bit today.
Europe is down as well and our futures don’t look so hot. I wish I could take delight in being right when I’m bearish but I am never happy when the markets go down and I hate to bet on good companies sliding. It’s important to know that about me as it colors what I do to some extent.
Make sure you check out the below Google Watch. As I said yesterday, I have a hard time recommending a short (even though it screams short) as the stock is still being manipulated but I thought yesterday’s action was a strong indication that gravity (and problem after problem)may be finally taking its toll on the company.
As I said on the weekend, without a Nasdaq rally there can be no market rally and without MSFT, INTC and the Semis it’s just not going to happen. I’m not ready to talk about a breakdown yet as my optimistic side still wants to see a flag consolidation in the Nasdaq weeklies but that can take weeks to resolve!
http://stockcharts.com/gallery/?%24comp
It’s Big Oil testimony day again. Last time they got called up before Congress it was a real lovefest, this time expect electoneering Congressmen to take a tougher line with the oil execs. As a one-two punch, the IEA lowered it’s global demand forecasts for the year which would make an unmanipulated commodity go down but we will have to wait and see what happens here. I’m expecting oil (which only trades $5Bn a day) to be manipulated up while companies like XOM (which trades $1Bn a day by itself) to be sold off to suckers who think oil is scarce or that Iran is willing to stop getting paid for a few months.
Let me clear this up – Iran’s choices are to:
A: Compromise and keep collecting $100M a day in crude exports.
B: Block the Gulf and go to war with all industrialized nations and their own neighbors.
C: Make a back-door deal to keep selling to Russia or China during sanctions but that will have no net effect on supply since they simply won’t be buying oil they would have bought from someone else.
This is just simply not good enough to justify the rise in oil! I’m waiting but some of our old put plays are getting very tempting again!
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Today’s market mover should be the GS. Earnings were through the roof today, beating estimates by 50%! As I said yesterday, expectations were far too low at $3.29 but they came in at $5 which beat anyone’s highest target. Of course the bottom line there is that analysts don’t even understand the companies they work for – how can 17 analysts miss a quarter by 50% in their own industry? The high target was $3.65 (gold star for that guy!) while the low was $2.94 so they were pretty darn sure of the range…
Look for the whole group to do well to day, slightly tempered by a rotten market. GS should rock right over their recent high of $147 but I don’t think we are going to get any great entry points. I was looking at MER as being a bit pricey for the group and I will like a $80 put on them if they break over $80 today. I’m not saying they will disappoint (Apr ?), I’m saying that the potential reward of buying the Jul $80 puts for, say, $2 outweighs the risk of them running further up.
I’m not even going to bring up BRKA and BRKB anymore except on the weekends but you should really consider it, especially if they pull back a bit.
One of the things that’s been giving Apple headaches is recent questions regarding Mac OS security. Here’s a good article summing up the situation:
http://yahoo.businessweek.com/technology/content/mar2006/tc20060308_032391.htm
My semi-final Google decision is to take my put money at $329 (half out as soon as it hits, the rest if it turns up past $330) as that is the bottom rung of the daily Bollinger band and has proven a tough barrier on several occasions. I think that will flush out enough calls to allow for a nice run up into expiration. Last time I did this I left 50% additional profits on the table but maybe this time I’ll be glad I did it – we’ll see!
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No trades today, cash is king. 1/20 TOTD BUD is finally getting its due with a nice upgrade that should bring it over the 200 dma of $43.25 which is what it has needed to get a good run together.
Back then I said: “While I like owning the shares straight up, I also like the Jan ’08 $45s for $3.70. If this stock hit’s $45 anytime this year, it will be a double and if the stock drops below $40 you can get out with a 25% loss.”
The stock never got lower than $40.17 and, as of yesterday the leap was sitting at $4 (up 10%) so we’ll check back later and see how much it is helped by today’s action.
