Will it Happen Wednesday?

The Asian markets took off (Hang Seng up 200, now that’s a rally!) and the European markets are looking good so we have no excuse not to break our technicals other than finding out that it is a rock-solid ceiling that will not go away. The Dow is just 8 pts away from it’s break point of 11,1160, NASDAQ still has a way to go for a high but anything over 2,300 would be positive today while the S&P does need to make that 1,300 mark. If we are in a real rally, look for them to either break out today or consolidate right around these levels. Oil is even looking like it will give us a break today but we need to see what kind of build we get (looking for barrels up in crude and no more than 2M down in distillates). Last week a big build did not cause prices to drop so I’m not sure about making a play in the face of rampant manipulation. We simply have more oil than we can use but I think they can prime the fear pump one more time before reality takes hold. CNBC is contributing today by holding a poll on what you fear most: Avian Flu, Mad Cow, Iran’s Nuclear Threat or Ambien Zombies. Come on! This is what we call the press? Again we have the Orwellian vision of a populace kept in a constant state of fear being easier to control… As another example of how Google leads all of corporate America, now they’ve got Exxon invoking the “Law of Large Numbers” in Congress! “The energy industry follows what I call the law of large numbers,” said Rex Tillerson, chairman and chief executive of Exxon Mobil Corp. He said that tightening antitrust laws would make it more difficult for his firm to be a reliable national supplier of gasoline. Boy, that phrase works for everything! Today we have GS upgrades, great Sears earnings, an HP conference, lower oil prices and a booming global market – how bad would it be if we go down today? Let’s be careful out there for just one more day (or at least until oil firmly trends downward after inventory) and then we can go bottom fishing. I am not alone at least, Merrill Lynch’s monthly global manager survey, released today, showed a big uptick in fund managers’ cash positions. Corporations are also sitting on a record $1,000,000,000,000 in cash waiting to be deployed. I loves my cash! ===================================== LEH reports today but expectations are higher for them than they were for Goldman. Anything less than a beat will be a big disappointment. SHLD should be on fire today with Q4 earnings doubling to $4.03/share on $16Bn in sales vs. analyst estimates (why do they even bother) of $3.62/share. This is not a penny beat folks, these analysts do not have a clue about what a business does! I’m not betting this one as it will rocket up to around $126 at the open but the reality is that the company is still in transition and, unlike Google, Sears knows how to manage investor expectations and will probably make a statement that 2006 will still be a transitional year. $126.75 was the top of the range recently and the 50 dma is $120.50 so the question is how well will it hold that? SNE owned up to another 6 month delay on the new PlayStation, now this one we can play as GME was just starting to recover some momentum and this should suck it right out of them. The $40 puts are just .35 and good for a day trade. ERTS and TTWO will also be interesting to watch but TTWO has earnings so I wouldn’t touch them. If the market reacts badly, SNE may challenge the very cheap $45 puts for .20. You know it’s a rally when OSTK goes up. You remember the guy who claimed a grand conspiracy was taking down his stock and is suing analysts etc? The company is coming out with a video rental system to challenge Netflix but other than that, no reason for it (perhaps THEY are trying to invalidate the company’s legal claims that THEY are keeping it down). Oh no, I just realized that me and the looney Overstock guy both believe in THEM! NFLX may suffer from this but I’d rather be a buyer if they hit the 200 dma at $23.75. UNP raised guidance significantly (we talked about this sector a month ago!) so the rail sector should be moving again. I was waiting for BNI to bottom out anyway so I’m really liking the Apr $75s for $3.50. CSX was already rallying on a UBS upgrade (good call by them!) yesterday and this should be just want the need for the next leg up. No one believes in the Apr $60s for just .40 but I do! VMC raised guidance by 70% so let’s take a look at the chemical sector! DD should be good, I like the Apr $42.50s for .80. DOW should be good with the Apr $45s at just .40. The hits just keep on coming for ESLR as they knock out another $125M contract (the company only has $40M in sales) so I am pretty confident in the Jun $15s for $2.80. This could finally be MSFT’s month. Taking on Google (see below), kicking Sony’s butt, new operating system in Q3… I want to get ahead of our possible rally and take this slow mover with the Oct $27.50s for $1.55. Never underestimate the power of SNDK to make a comeback! LEXR’s earnings indicate, not only are they doing no harm to SNDK but that they are in no position to wage the price war that everyone has been predicting, driving Sandisk down from $63 on the 1st to $52 yesterday. Look for it to settle around $57.50 on Friday. Too manipulated to play… I don’t know what people buying RIMM are thinking! PALM got downgraded by JPM which is likely to boost rimm further but, just in case it drops into expiration, I’m going to pick up just a few Apr $80 puts for $2.50 or less. ********** Trade of the Day – Stay Away from Oil! ********** If it were a real oil rally then BTU should be up more than .19. They are not part of the group that is gamed so they sometimes go off on a tangent which is very telling. Yesterday, when even the slow moving XOM gained 2%, BTU just sat and sat. Also, as above, Chemical companies are going up – more evidence we are in Bizarro World. This reinforces my US/Iran back door deal theory (don’t forget George Sr. was the VP (and ex head of the CIA) when Reagan “wasn’t involved” in arms for hostages deals so don’t think our President could never do it! The problem is that, even if I’m right, it doesn’t mean oil will go down because what is this really about? Money! Why does Iran want nuclear reactors? Not to make bombs, this is a ridiculous concept. Dirty bombs yes, nukes – no way – can’t do it this decade. No very simply Iran wants to save on oil consumption just like we do. Why does a country that produces 3.5M barrels of oil a day want to conserve? Because they are a very young, growing country that already consumes 1M barrels of oil a day. Since the entire GDP of Iran is oil (ok, maybe some weapons sales but I hear terrorists are notoriously slow payers) to the tune of $150M per day, it would obviously be very attractive to them, financially, to use less and pick up another $10 or $20 Million a day for walking around money. So maybe the US says to them, we can’t let you have uranium right now but for the moment we’ll have a fake hearing on price fixing and keep oil over $60 a barrel to make sure you have good cash flow… Of course all this would be contingent on the Bourse going on the back burner. So there will be no sanctions this week. At worst a letter from the UN saying they would consider sanctions IF Iran decides to produce nuclear weapons but leaving the door open for nuclear reactors (this will let the Ayatolla give a wink wink to his people regarding THE BOMB) while keeping (just barely) on the good side of those psycho Americans and their European attack dogs (oh wait, that’s us!).