Saturday, August 28, 2010

Weekend Market Thoughts

The mid week rally we were looking for materialized. Fridays action came on strong volume and the price action on former leader INTC was impressive in light of bearish views. Im still a believer that rallies must be sold but on the same note we must not let our opinions form our investing views. Let the market action (technicals) dictate on how we trade. Although we are still in correction mode always keep a watch list ready to use when price action warrants it. Look for stocks that show unusual strength in this recent corrections to possibly buy if the market does turnaround.

Can copper be breaking out? The chart of its ETF is making a strong case for it. JJC is forming a cup with handle. Not recommending a buy on it, (illiquid) but if it can break out could be foreshadowing a nice move for the commodities and possibly some economic growth ahead. Perhaps forecasting some interesting pro-business changes come November. MOO forming same type of bullish pattern. (Ag ETF)

Shorts that can be initiated into strength are: NETL @27.50 VLTR @23 CRUS @18 DLB @58 CAVM @25 SNDK @36 SBUX @24.50 CSX @51 KSU @35.50. Short stop on WFMI below 34.30.

Buy stops can be entered for: NVDA thru 10.45 ORLY thru 48.25 PXD thru 60.50 EBAY thru 24 KSS thru 48.25 MTL thru 24.25 DRQ thru 56 and VZ thru 30.48 exhibiting a nice double bottom w/handle formation. MRX forming a nice cup w/ handle formation as well. Buy stop thru 28.25 there. NZ gapped up (all time high, recent IPO in 8/07) on good earnings and can be bought near 19.

Stocks that have shown wonderful relative strength during this correction and behaved well near moving averages are. Winners holding and rebounding off their 50 day MA are: BIDU AAP SWKS CTSH IT CNQR RHT TIBX AN RIG EXPD ARUN DE VMED LVS ROVI ALV BWA TEN CIB. Stocks holding there 200 day MA are AAPL UNP RSG STRI. These are where youll find your winners IF this market turns itself around. Remember John Maynard Keynes famous line when the facts change, I change my mind. What do you do sir? If this market, and that is an IF, changes its mind and wants to go higher we will take the ride with it.

Good luck. Remember keep losses small and your emotions at home.

Author owns FCX, AVGO, AMT, AKAM

Wednesday, August 25, 2010

Mid Day Thoughts

Market now must be looked at negatively after yesterdays late day selloff. Classic bear market action. A bounce can happen til end of the week but that should be looked at as a shorting opportunity. However lets try to find some strength that might hold up in the short term for a trade. Look for RBCN to sniff out its 200 day at find support near 23.50. AMT has held its 50 day. I think some decent risk reward plays are buying RIG and putting stop in at yesterdays 49.74 low and HAS can be bought against its 40.15 low today. ROVI held its 50 day today and can be played against its 41.00 low today. ISLN and IT holding up well today. INTU near 41.50 looks buyable. EXPD VMED VRSN are holding their 50 day.

Stocks that can be shorted as they move back to their 200MA include BRCM SBUX NETL VLTR CAVM CAKE

Good luck.

The author holds positions in FCX, AVGO, AMT, AKAM

To Privatize, or not to Privatize

As Social Security enjoys its 75th birthday, a debate is in the works. At stake is privatization of the United States' largest government program. The left rejoices and celebrates its longevity, while some on the right look to reform the plan which has existed since FDR signed it into law in 1935. Let's scrutinize the possible benefits of privatizing a bill that basically hasn't changed, much in the U.S. has.

When Social Security was created, the staying power of the program wasn't in doubt. At its inception, 17 employees were providing benefits for one retiree. The ratio is now a disturbing 3 to 1. The numbers in the future cast even more doubt as the U.S. population (in the 65 yr. old category) is expected to grow from today's 40.2 million to 81.2 million in 2040. Recent polls indicate that less than 40% of Americans believe Social Security will be here for them when it comes time to retire. Change is on the minds of many. But why are our politicians not listening to their citizens when more than half are voicing concern?

Front and center in the argument is the government role in the retirement process. Government now routinely uses surpluses from the Social Security Trust Fund to finance other non-related spending projects. Your tax dollars, which are supposed to be put away for your retirement, are being spent by power hungry Congressman and will have to be reimbursed through higher taxes. The government also, under law, has the right at anytime to collect the money you put into the system, essentially revoking your rights. Private property in the hands of government bureaucrats never sounds like a good idea.

The advantages of privatization are numerous. It empowers individuals (who, if they choose, can stay in the traditional Social Security plan) to make the decisions they feel are necessary about THEIR retirement. As, let's face it, it is their money. Opponents on the left voice unease about stock market volatility and being held at the mercy of Wall Street traders. Fact is, these accounts would allow investors only the opportunity to invest in diversified fixed income securities or mutual funds and not individual equities. Adding money into American capital markets would strengthen our financial system and boost stock indexes. Employees and their employers now pay a 6.2% payroll tax (seen our your work pay stub as FICA tax) into Social Security. Privatizing, and at the same time eliminating the combined 12.4% tax, would be a shot in the arm for individuals and corporations while at the same time limiting the reach of the Washington spending machine.

More than 30 countries around the world have recently adopted a privatized Social Security reform. Let's make it clear that here in the U.S., when the right speaks about privatizing it's only partial privatizing as about 1/3 of your FICA tax would go into your own personal account. Additionally, 3 counties in Texas opted out of Social Security before Congress enacted rules in 1983 preventing that choice (under FDR's New Deal, municipalities were permitted to leave Social Security). The results in the county of Galveston, Texas have been and continue to be encouraging. Returns outperformed what Social Security would have provided. Benefits are more valuable, while at the same time reducing the government's need for taxpayer funds. The finances in this county remain stellar and look strong going forward. Noteworthy in this case is this fragile economy, but most importantly is the Galveston residents' ability to control their own retirement destiny.

The argument surrounding privatization will continue for years to come. Wisconsin Senator Paul Ryan is the lone voice in the Republican party trying to tackle this eventual disaster. Political will is in short supply with the November elections looming, but the major issue in this controversy is government intrusion into our personal property. The guarantee-free confiscation of our hard earned money seems like a real crummy deal to me.

Monday, August 23, 2010


Todays market action left a lot to be desired. Lots of Nasdaq leaders reversed and closed upon the lows. Forget about the old tech leaders like MSFT, CSCO, DELL, HPQ. They are yesterdays news. But when I look at an AAPL chart concern starts to set in. To boot the action in DE and CAT made the market action even more ominous. The only silver lining was that volume was extremely slow indicative of the summer doldrums.

One needs to always be on the lookout for strength on a weak tape. Some recent IPOs continue to show strong action. Watch OPEN JKS STRI and now a software IPO QLIK.

A pair trade I have is long STRI, short TSL. TSL had a bearish outside reversal day today, while STRI continues its uptrend.

INFA continued its winning ways. CHKP finished above its 35.09 buy point on decent volume today on a weak tape. CIB continues to rebound after its low volume descent to its 50 day MA.

Stocks setting up for specific buy points are: LXK with a 39.48 double bottom with handle. TSCO with a 72.49 cup with handle.

Stocks that can be bought at certain prices on weakness are: CTSH 57, HAS 41.25, ISLN 19, ADTN 29.70, IT 27.30, SWN here, INTU 41.50, VMED 19.

Shorts that can be put on are: CRUS 17, CAKE 23.50, ORLY 48, GES 39.50, and a short stop can be placed on FAST at 46.50. BA is losing its battle with the 200 day MA. Short into weakness.

Good luck.

The author holds positions in FCX, AVGO, AMT, AKAM

Saturday, August 21, 2010


A soft week for the stock market exposed some resilient groups. Most significant was the software group. Led by INTC $7.7B offer for MFE, and an earnings romp by CRM, the batch shined. Others in the sector that warrant purchases on pullbacks include VMW, CTXS, INFA, INTU, RHT, ROVI, TIBX, VRSN. Specific spots can be ADSK @27.50, CNQR @45.50.

The uptrend tenuously remains intact. It remains suspect however. But as always we will let the charts determine the future direction of the rally. Stocks that can be bought and prices are:

HAS @42
CXO @58
FTI @59
RBCN @24
FAST @47.50
CMCSA here
FNSR here
ARUN here
CHRW @65
BUCY @59
BWA @44
PCAR @41

Chips remain weak and should be shorted into strength. NETL, CRUS @18, CAVM @25, ATHR @28 and retailer BBBY @39.50. BA holding onto to its 200 day MA. Its found support there numerous times. If it fails watch out. Short stop BA@ 63.25.

Buy stops can be entered on the following:

DRQ thru 55.50
NVDA thru 10.50
ORLY thru 48.60
TJX thru 43.25

WYNN 94.08, in a nice cup with handle formation
TIF 44.67, in a nice double bottom with handle formation

Good luck.

The author holds positions in FCX, AVGO, AMT, AKAM

Tuesday, August 17, 2010


Place Buy Stops for the following:
NEM 59
DRQ 55.50
CHKP 35.09
DTV 39.99
MTL 24
NUE 40.25

SWKS here
VMED here
WLT 76
UPL 41
APA 91.50
SWN 34
HAL 28

NTAP 40.50

Good luck.

Author holds positions in FCX, AVGO, AMT

Misconceptions of a Movement

When a "party" that's still in its infancy collects this much attention from the mainstream media, its time to investigate. The tea party movement, barely 2 years old, is one that's generally misunderstood. Being so young, it seems logical that there's confusion. The organization is portrayed as being right wing and associated with the GOP. But let's dig a little deeper and try to analyze the group's true ambitions.

With Obama's massive $786 billion stimulus bill came the start of the Tea Party movement. Disillusioned Americans worried about their liberties and their wallets and their government spoke out. Concerned with Washington's expanding power - seen as an assault upon almost all aspects of life - the group created a doctrine. Here are some of the most important beliefs that capture the essence of the party's primary focus (for further detail, look at the Tea Party Movement website: 1.) Protect the Constitution. 2.) Reject cap and trade. 3.) Demand a balanced budget. 4.) Enact fundamental tax reform. 5.) Restore fiscal responsibility and Constitutionally limited government in Washington. 6.) End runaway government spending. 7.) Defund, repeal, and replace government-run health care. 8.) Pass an "all of the above" energy policy (yes that means all alternative energy sources). 9.) Stop the Pork (reduce earmarks). 10.) Stop the tax hikes. As you can see, it's not as radical an agenda as the popular media would have you believe. In fact it seems like a fair, reasonable and responsible way any decent nation should function.

The Tea Party's philosophy almost has a Reagan-esque feel to it. Reduce taxes, diminish government and curb spending. The grassroots organization is already making its presence felt on the political stage. Benefiting from the wave of popularity are these Senate hopefuls running on the Republican ticket - Sharon Angle of Nevada, Nikki Haley of South Carolina (a 38 year old Indian-American), and Scott Brown of Massachusetts (who had a shocking victory for the Senate seat held by the late Ted Kennedy), just to name a few. However, the party has maintained its independence, as Democrats aim to co-mingle Tea Partiers with the Republican party for political purposes. Recent polls find that 40% of Tea Party members are either Democrat or Independent. Fact is, most Tea party members are political novices - volunteers who just want their country restored to the economic and social integrity it was once known for.

As the important November mid-term elections draw near, the Democrats will paint close comparisons between the Tea Party and several Republican candidates; especially those that are close in pivotal states. Colorado, Nevada, Kentucky and California can all expect a Tea Party-Republican love affair to dominate the headlines. So far the connection, rightly or wrongly asserted, has not hurt Republicans (or Democrats either, for that matter). To the average Tea Party member, that's a good thing. To have their own autonomous voice, free from the noise of both parties, and to deliver a message similar to the one our founding fathers did when they created this great nation is a great accomplishment. Seems to me, they are on exactly the right path.

Sunday, August 15, 2010


This weeks action put a damper on recent rally hopes. We lost two of the leading groups, which can never be considered a good sign. Energy and chips acted softly for the week. However lets give the fledgling rally the benefit of the doubt. A small one at that. Stocks that can be bought include:

SWKS @17
NTAP @35
CRM @94
STRI @20.50
INTU @37
EXPD @39
CHRW @63
DE @65
BWA @42

The consumer stocks continue to look real weak. Try to short into strength such names as JCG, BIG, CAKE, ARO, JWN, DBRN.

Must be many out there making dinner reservations according to the relative strength of OPEN.

Semis probably can be shorted into strength as well too. Charts looking weak include BRCM, XLNX, CREE, BRCM. My AVGO got hit this week on a secondary offering announcement. Only good thing is it seems to have found support at the all important 200 day MA.

Good luck and keep losses minimal.

The author owns positions in FCX, AVGO, AMT

Thursday, August 12, 2010

Reflections on an Oil Spill

Since April 20th, when the Deepwater Horizon oil well exploded, roughly 4.9 million barrels of petroleum have flooded the Gulf of Mexico. It's the largest oil spill on record with only .8 million barrels recovered. This disaster has gotten lots of media attention, but I'd like to zero in further on the path of recover over the past few months.

First and foremost, I would like to recognize that BP (a company notorious for lax safety standards) deserves no acclaim. I can and will not condone anything that led up to the spill. However, the BP engineers and the companies that cooperated with them must be congratulated. The tireless effort they demonstrated during a relentless media bashing has to be commended. The technology needed to plug the well was nothing short of miraculous. The feat of probing the faulty Macondo well alone (which is a mere 10" in diameter, almost 4 miles below the surface of the Gulf and then another 15,000ft beneath the Gulf's floor) is astonishing. On top of that, the pumping of mud followed by cement to permanently seal the damaged well, all underwater, is amazing. A round of applause please.

Let's now examine Obama's grade concerning the crisis. The Republicans who tried to label this disaster Obama's "Katrina" were unjust. It was a game of dirty politics. But his actions did leave a lot to be desired. He was slow to acknowledge that a possible catastrophe was in the making. Why was he so hesitant to suspend the Jones Act, an action that would have allowed international help in the Gulf waters? Offers of aid from 17 nations went ignored. His "wanting to know whose ass to kick" and Interior Secretary Ken Salazar's wish of "keeping a boot on the neck of BP" showed poor judgment and lack of leadership.

The way legal matters were handled was murky, no pun intended, at best. The administration continues to challenge 6 month drilling moratoriums to restrict offshore drilling. Upon losing an appeal, Ken Salazar stated he would announce a new order to thwart drilling, ignoring the court's decision. To blatantly defy a courts finding is a dangerous, power-hungry government at work. The real losers here would be the Gulf Coast residents. A recent study found that "the 6 month drilling moratorium will cost the Gulf region $2.1 billion in economic output, almost 8,200 jobs, half a billion in wage income and almost $100 million in tax revenues."

The question of where all the oil went is left unaddressed. Mother nature, responsible for more than half the cleanup, always provides a speedier rehabilitation than most want to admit. Record high temperatures in the Gulf combined with bacteria-infested waters appears to be just what the doctor ordered. The microbes seem to have a healthy appetite for the crude. Good portions of the leaked oil simply evaporated naturally. Some oil was skimmed. More was dispersed. The good news is that fisherman are going back to work and the waters are testing fine. A date of August 16th was set for the fall shrimp season to begin in Louisiana. All Mississippi waters are open for recreational and commercial fin and shrimp fishing as of August 6th (to be fair, crabbing and oyster fishing remain closed). Florida panhandle regions are opening up which begs the question, why the $20 billion compensation fund? Now before the hate mail pours in, I am all for the workers of the Gulf to be compensated. But with fisherman heading back to the seas, is the fund premature? How is it determined that a certain shrimper deserves more than an oyster man? Are larger commercial fleets offered more for recent start ups? With real estate agents already lining up at BP offices for claims, it sounds like a recipe ripe for fraud. Government manipulation of a private company to reward claimants with out due process is illegal. Let's put all those affected by the disaster on full unemployment with health care benefits until each case can be reviewed and ruled upon.

To the administration's defense, this was THE worst oil spill in history. But US relations with Britain, our strongest ally, remain strained. And lost in the media flood is the fact that eleven men perished that fateful day. This whole ordeal poses the alternative of alternative energies (in which I'm a strong believer) but we can't dismiss the stark reality that oil, gas and coal will be the primary sources of energy for decades to come. Hopefully lessons will be learned and strict safety guidelines put into place to help make a disaster of this magnitude almost impossible in the future.

Monday, August 9, 2010


Retail looks weak with the consumer hoarding money as evidenced by the high savings rate. The charts look weak too. The following can be shorted: ARO @26, BBBY@ 41, DBRN @25, JWN @37, URBN @ 35. Small cap semis have been taking it on the chin post earnings. Be careful here. VLTR can be shorted on strength near 22 (200 day MA). RBCN can be shorted on strength up near 29.75.

Recent solar IPO's continue to work. STRI, JKS look attractive.

I like APA with a buy stop thru 99. The third time testing the 200 day MA could prove to be the charm. SLB with a buy stop thru 64, similar circumstances. Buy stop on NUE thru 40.75, buy stop on ACN thru 41. Buy stops can be placed also on GS thru 158, FCX thru 76.50, NEM thru 58.40.

Lets buy some MTL back toward 22.60, CIB @ 54, and FNSR @ 15.

Again once entering following positions place your stop losses accordingly. No more than 7% should be compromised. Capital preservation. Good luck.

The author owns positions in FCX, AVGO, AMT

Saturday, August 7, 2010


Stocks that broke thru their 200 day moving average that can be bought back toward that line include: VALE at 28.50, HAL at 29.50, FDX at 84, ANR at 43, CAAS at 19.50. Important tests of their 200 day avg. this week include FCX at 75.50 and GS at 157.

Strong stocks that can be bought on slight weakness moving back to their 50 day moving averages include CNQR at 45, SWKS at 17.25, OVTI at 22, AVGO at 22, NTAP at 41.

Equities associated with the auto sector did well this week. Before I go any further please stay away from TSLA. In fact I will give you a pair trade here. Buy TTM, short TSLA. However, BWA can be bought back toward 45, TRW at 35, TEN AT 27. PCAR has formed a nice cup with handle formation and can be bought with a buy stop past 47.68 on strong volume.

Gap ups that continue to hold include CTXS INFA CHRW CTSH.

Individual names I like are FFIV with a buy stop past 90.93 on strong volume. ADTN back toward 30, and ALK back toward 50. A beautiful airline chart even with oil at $80. I like the way AGP is stubbornly holding strength after a breakout.

RIG made a healthy move thru its 50 day mov. avg. at $50 on a nice earnings beat. For the long run that stock could prove to be a bargain as long as it holds that mov. avg.

The author holds positions in FCX, AVGO, AMT

Friday, August 6, 2010

Tectonic Shift out West?

Women take center stage this November in probably the most important and anticipated election in recent memory. From Nikki Haley in South Carolina to Sharon Angle in Nevada and Blanche Lincoln in Arkansas, the ladies look to make their presence felt in the world of politics. But California promises to steal the spotlight later this year. The matchups between Meg Whitman and Jerry Brown, and Carly Fiorina and Barbara Boxer guarantee to garner the most attention. Two former tech titans face off against two savvy, lifetime legislators.

Can California be a state in transition? It sports a 12.5% unemployment rate, well ahead of the national 10%, and its residents are battling one of the worst state budget deficits in the country. Suprisingly, CA residents favor offshore drilling (46%-41%), a majority favors repealing the national healthcare bill (52%), and most Californians oppose the Department of Justice challenging the Arizona Immigration Law (47%-45%). In a state that tradtionally votes deep blue, can change be in the air?

At stake for the new Governorship is an exciting contest between Meg Whitman and CA Attorney General Jerry Brown. Whitman honed her craft as a corporate leader with Disney, Hasbro and Proctor & Gamble. Another Harvard Graduate School alumni, her finest success came with Ebay: She became CEO when the company had a mere 30 employees and, under her leadership, it grew to a staff of 15,000 while turning "Ebay" into a household name. On the political front, she served as National co-chair for John McCain's 2008 presidential campaign. Had he defeated Obama, she would have been on a very short list for Treasury Secretary. Her main focus is job origination through smaller government and cutting or eliminating taxes. With her business acumen, she understands that the reduction of taxes can incentivize people to take more risk and invest their proceeds into small startups that ultimately lead to hiring in the private sector.

Fighting it out for the senate seat she's held since 1992, ultra-liberal Barbara Boxer is pitted against the fiery conservative Carly Fiorina. This race, too, will embrace the growing divide between public perception of economic liberties (lower taxes, decreased spending) vs. government largasse (lavish entitlements, red tape). Fiorina - a confident breast cancer survivor rose to corporate stardom with AT&T, Lucent, and Hewlett Packard (where she eventually became CEO). She's taken heat for her performance at HPQ, cutting some 30,000 jobs during her tenure. But responding to the criticism, she stated that she was just doing the responsible thing any company or family would do during a time of economic hardship. She believes in fiscal restraint. Like her Republican counterpart, Whitman, she feels the private sector and not government is where real, long lasting, sustainable jobs emanate.

Thanks to a depressed attitude concerning the economy, the spirit this November screams "anti-incumbent." Boxer, 69 and seeking a fourth consecutive term, and Brown, a career politican who succeeded Ronald Reagan as California Governor 35 years ago, perhaps seem a little long in the tooth. At the very least, Whitman and Fiorina offer voters fresh faces and new opportunities. In an era of fiscal irresponsibility, two bright entrepreneurs might be just the antidote to California's recent financial ills.

Sunday, August 1, 2010


Long SWKS at 17
EOG here
STRI at 21
OVTI at 21
BRCM at 35
SNDK buy stop thru 44.60
DBRN buy stop thru 25.50
VALE buy stop thru 28.60
CTXS, INFA can buy here and hold as long as the gap up remains intact.

Remember to keep losses small. Live to trade another day.

The author holds positions in FCX, AMT, AVGO

Free Trade Makes the Grade

Last week we took a look at inspiring Colombia. Now, we focus on another South American economic success story: Chile. Located on the western side of the continent, it is a prosperous nation with a wealth of resources and a bright future. Two recent developments have really put the nation on the map: A presidential election and inclusion into a very exclusive club...

A shocking election took place on January 17th of this year. For the last two decades following the end of the Pinochet dictatorship, the center-left Concertation Party ruled. In spite of an incumbent party approval rating of 80%, a Chilean electorate voted for change and ushered in a self-made billionaire: Sebastian Pinera. A Harvard graduate, the pro free-market Pinera became wealthy primarily from two sources. First, bringing credit cards to the Chileans in the late 1970's and second, turning around the nation's beleaguered state airline (LAN) and transforming it to South America's largest carrier.

Earlier this year, Chile was invited to join the OECD (Organization for Economic Co-Operation and Development) - aligning itself with the elite and productive economic juggernauts of the world. Only the 32nd nation to be inducted, it is South America's first inclusion. To realize just how meaningful the revolution has been, in 1975, the Cato Institute Economic Freedom of the World Report had Chile ranked 71st of 72 countries. Today it ranks third. The about-face was centered on expanding free trade, tax cuts, and respect for property rights. Three decades ago, a depleted Chile had a per capita GDP of $1300. Today that number has ballooned to $15,000.

On a down note, this February 27th, a massive earthquake rattled Chile. An enormous sum of $30 billion is required to aid reconstruction. The logical response would have been stress on the stock market. To the contrary, the country and its financial markets held strong. Not at all a coincidence, in my opinion. ECH, Chile's Exchange Traded Fund, has been remarkably resilient. Other stocks to be watched are: LFL (Pinera's turnaround story) and SQM, a producer 0f plant nutrients and chemicals.

Like Colombia, Chile has demonstrated that free trade and market-friendly policies can really represent a prosperous, secular growth story. Chile recently signed more than 20 free trade pacts with 56 nations. Still, after four years, we in the U.S. are waiting for trade pacts with countries like Colombia, Panama and Korea. The benefits of open trade agreements not only improve economies, but bolster job growth. With an unemployment rate still hovering near 10%, perhaps American Congressmen can start crossing the t's and dotting the i's.

The author holds positions in FCX, AMT, AVGO