Wow, that was surprising!
I had no idea homebuilders were that ready to rally – I had a whole bunch I was going to look at next week but this caught me really flat footed as I was certain we had another day or so down.
Telco had a bad day as did Health Care thanks to MDT and oil ended up weak despit putting on a brave face most of the day. I got my commodity sell off but the SOX caught me by surprise with a 1.5% run and big tech came back in favor led by Apple, Google, Yahoo and Ebay, all of which I picked but gave up on for the week.
Am I getting impatient or just too pessimistic? I need to think about this very carefully…
I’m going to check in with Monday Me – he seemed like a rational fellow. MM says war is dragging on the markets and keeping oil prices high. More importantly MM says the Fed has already overtightened and the markets seem to think that they already know this but I also said their hands are tied and they have to keep raising because all the world banks a raising too.
All the world banks raised this week, the next move goes to Uncle Ben.
Most important, Monday Me said he would spend cash if the Dow breaks 11,200 (check), the S&P breaks 1,280 (check), the NYSE breaks 8,300 (oops) and the Nasdaq hits 2,100 (nope) led by the SOX at 415 (exactly) but 420 would be better.
So I guess that’s our answer, Monday Me says we need to look for 420 on the SOX, 2100 on the Nasdaq and anything but down on the S&P and we can buy with abandon tomorrow – sounds like a plan! Today’s me is still a little skeptical though…
Oil came back from a big drop in the morning as the Iranian Oil Minister threatened $200 oil if the US doesn’t back off on sanctions. Oil traders were thrilled with any excuse to goose the prices and oil made a comeback to hold $75.50.
http://today.reuters.com/News/newsArticle.aspx?type=topNews&storyID=2006-08-03T145855Z_01_N03290309_RTRUKOC_0_US-ENERGY-IRAN-PRICES.xml&WTmodLoc=NewsHome-C1-topNews-5
Gold was down a touch on a slight improvement in the dollar. We could be looking at a 3-4% jump in the dollar (and a 3-4% drop in oil and gold) if the Fed hits us up with another hike next week. If the Fed fails to tighten, well let’s just say you’d better buy that Toyota while you can still afford it…
Tomorrow’s job expectation is a very low bar at 140,000 jobs and I think a number over 200,000 jobs bumps the Fed right back on tightening and will still kill this “rally” but, after today’s action, I certainly feel like no expert!
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I followed the Valero rule and bought in around 11:30 when all our indices took a nice dip:
http://finance.yahoo.com/q/bc?t=1d&s=VLO&l=on&z=m&q=l&c=xom+oih+uso
But Valero took a sharp turn up just a half hour later which I arrogantly chose to ignore, refusing to believe people are still dumb enough to keep buying oil after that very disappointing (for oil bulls) 19M build in natural gas (total shocker with all the heat). This indicates that price has indeed been altering behavior and much quicker than people thought possible.
I had a clue this was the case on Tuesday when SUV sales came in at half of last year’s levels (despite huge discounts) and I see nothing in this week’s inventory reports that changes my mind so I am standing by today’s oil puts, even though they got off to a pretty poor start.
I also added to my XOM puts in comments when the $67.50 puts fell to .60. This averaged my position down to .75 as I added at $1 but had some already at .65 from Wednesday and I was finally rewarded near the close but I decided to hang on for another day of torture.
AAPL had a nice low open but never got low enough for me and once again takes off like a rocket and leaves me in the dust. This is just a phenominal stock that must be owned into the end of the year but I still wish it would pull back some.
Cramer made an excellent point today that Apple can hurt Sirius as people may feel they don’t need satellite radio when they can carry 1,000 CDs in their car.
Both MGM and LVS gave lowered guidance and sent that whole sector down today. HET got hammered for no good reason.
S got slammed today as merger costs trashed earnings. I have to go contrarian here and take the $17.50s for .60 (a .45 premium) but wait a bit to see what tomorrow bring and even then only 1/2 and I will save the rest to buy leaps on a further downturn.
http://finance.yahoo.com/q/bc?s=S&t=5d
Do we buy SBUX’s excuse that the Frappuccino’s slow them down and hurt sales? Same store sales are off but growth is still monstrous and I will really be keeping my eye on this one if the economy improves but I think a sustained bout of $75 oil will make long-term changes in coffee habits of the suburban customers that Starbucks is chasing. Between Dunkin Donuts and 7-11 (mine has a really nice coffee area with all sorts of things to put in) pushing really hard at half the price, SBUX may have trouble getting back the clients they need to feed the new stores once they get used to $1.49 vs. $4.
There is a very bad attack video on Al Gore at Youtube.com which has now been traced back to Exxon. There is apparently a huge evil PR campaign underway by big oil to try to tell you that all this global warming has nothing to do with them and that people like Al Gore are just cry babys ’cause they can’t ski in March anymore. Youtube has a lot of good stuff but I can’t figure out how to link a specific video. Hopefully this is a Bill Clinton one that’s very funny:
http://www.youtube.com/watch?v=bUDxDESKs20
TYC gave us no confidence as it looks like it’s plan to spin off units will yeild 2 losing companies and one that hopefully breaks even.
