Thursday Morning

OK, say this with me: It is not my job to save the market. It is not my job to save the market. It is not my job to save the market. Really, it’s not! While they really appreciate your contributions, they really aren’t going to matter much in the grand scheme of things so let the big boys fight it out and we can side with the winner. It may not be brave but it’s smart! Asia got hit hard last night with the Nikkei giving up 220 pts and the Hang Seng dropping 349 points (how sick would you be?) bringing both indexes back to 16,000 ish. If I lived in Japan I would spend much of my time writing about how ridiculous it is to slavishly follow the lead of the Amercian markets but what can you do… The European markets took a very sharp turn after a bad open with the FTSE 100 (the EU Dow) dropping 2%, then gaining 1% and is currently looking flat: http://uk.finance.yahoo.com/q/bc?s=%5EFTSE&t=1d So BEWARE!!! This could happen to us. Just sit back and watch today, catch up on your reading, have a nice lunch out, enjoy the Spring… Cash, cash, cash!!! Oil is making a modest recovery but let’s keep an eye on that $68.50 number, where it will probably open. I will be very surprised if we don’t get a bounce in that sector, however artificial as we are down 7% from last option expiration and about 2.5% below “max pain,” the point at which the majority of options expire worthless. We are also sitting on many critical moving averages and, tempting though it may be to play, I would rather watch and see what happens as I really have no idea at the moment. The same can be said for gold although I feel that gold is being manipulated down the same way I was sure that oil was being manipulated up last week. As with oil, there will be hell to pay on the other side. As with oil, we need to subtract 7% for dollar weakness (see weekend blog) and we find ourselves below the magic $650 level in real money so we are looking for support from the adjusted 50 dma of $665 (from $620). A move below that could trigger a $100 drop. Of course, if we apply a 7% adjustment to gold, then gold is currently at $640 after topping out at $690 (in a stable currency) and is probably just consolidating for another run at $700 ($750 in our deflated currency). In general, there are so many exciting looking things but until the Dow goes back over 11,300 and the Nasdaq retakes 2,230 and the S&P gets serious about staying off 1,260 I am not buying much of anything. The S&P is 30 points below its 50 dma and another 30 points from retaking its high and my itty bitty pile of money isn’t going to get it there so I will wait for the big boys to place their bets before I throw my chips in the pot. Watch the markets get all surprised that jobless claims are way up just 2 days after they announced that housing starts are off 18%. Who do they think builds these houses? After making fun of Muslims for being upset about cartoons depicting their prophet it will be interesting to see how Catholics react to the Da Vinci Code this weekend… ===================================== Late payments on mortgage fees are on the rise and, in a perverse sort of way, that is good for banks as they get to charge lots of late fees and interest at this early stage of a catastrophe. In the next stage people will start going bankrupt and lose their homes which the banks will sell and collapse the housing market but that’s getting a little ahead of ourselves so for now we can look to C to have a nice bounce off $49 but I’m not making this goulish play. http://online.wsj.com/article/SB114791579478456175.html?mod=home_whats_news_us Today’s belwether stock is BA, if they can’t avoid the 50 dma at $82 then no one can. CAT is another one to watch as they are sitting on the 50 at $76 so any move down is a big thumbs down to the durables. MER made an air turn above the 200 dma of68.50 so if they stay above $70 there is hope for the financials. AAPL at $65 is the obvious one to watch in tech (I’ve given up on Intel) and, of course, if MOT can’t get it in gear then Teclo is dead. Don’t forget it was my prediction that oil would collapse the market coming true yesterday that really killed us so we are still looking for leadership and I still say it has to come from the Nasdaq which cannot do it without its SOX so that is the battle I will really have my eye on. http://stockcharts.com/gallery/?%24sox ===================================== Speaking of SOX, SNDK has been amazing during this mess and if anyone is going to explode on a turn I think they will, but probably not until the quarter is announced in July. I’d rather buy it on a pullback but it’s on my watch list. SHLD knocked the cover off the ball and should blow through the 5% rule today – if it doesn’t then bad bad bad market… You will hear Eddie Lampert’s name all weekend as the analysts who are paid big money to track this $22Bn (make that $25Bn) company had predicted .64 per share and Uncle Eddie came in at $1.14 per share after just 1 year at the wheel. Best of all, cash on hand incresed from $1.9Bn to $3.2Bn – this is why you need to follow this guy wherever he goes!!! Mo SHOULD take this well past it’s July high of $163 but I’m not even comfortable with this one in this market and that is just sad! QCOM should get a good bounce today and, if it sustains it, I will be moving into the MOT Jul $22.50s for .55. I like watching QCOM because BRCM is in a nasty patent suit with them so that’s a great indicator for a stock overcoming negative sentiment. GM finally brought in some outside help to overhaul accounting so look for them to give us another shorting opportunity as people say “ah – that will turn them around.” Until they bring in a new everything and hire the Toyota design team I will remain skeptical. An accounting overhaul is worse than rearranging deck chairs on the Titanic as accountants do nothing to the business itself, this is like repainting the Titanic on the way down! UNH got an expected subpoena regarding stock options along with a pre-audit request from the IRS regarding the matter. There will be a knee-jerk drop that will be a buying opportunity if the market is on a roll that might make the Jun $45s an attractive play because THE COMPANY STILL MAKES $3 BILLION A YEAR! HD said if you don’t want their stock then they sure do as the Board announces another $4Bn buy back (5%). Since $2Bn of that is labeled as “immediate” it will be shocking if this stock doesn’t tack on $1 today (2.5%). If for some reason I can get the $37.50s for $1 or less I will paly this one for a day trade. If you’re one of those people who actually buys a stock and keeps it (ewww!) then I really endorse SIRI for 2010. $4 brings them down to a $5Bn market cap vs. DISH at $13Bn. We are back around the 1994 IPO price on this one! This stock may have gotten ahead of itself when it hit $50 back in 2000 but somewhere between there and $4 lies the true value… I would buy a1/2 position at $4, no more if it goes up but another 1/2 if it goes to $3, which is possible but insane. GME had great earnings (very surprising) on very strong XBox sales so MSFT should be an easy momentum play with the $22.50s having virtually no premium at .35. Remember to have fun today, let the timing be someone else’s problem! – Phil