Friday, July 17, 2009

The Spin on Dr. Death

Did anyone catch the spin machines churning on the Nouriel Roubini comments today? I found it fascinating. Just before 2pm, CNBC reported that Roubini said the worst is behind us and we will have a recovery this year. The market clearly reacted to this news as it tracked up steadily into the close after the report.

And CNBC continued to bring up this news every 10 or 15 minutes. They could not let it go, using it as a catalyst for pumping the market.

But, around 5:20pm, CNBC had a breaking news story where they reported Roubini claims he did not say what was being reported and it was taken out of context. He continues to believe we will have a struggling economy and if there is a recovery, it will be slow and small.

What I found fascinating was all the CNBC talking heads who just a few minutes before were claiming how important Roubini's comments were, were now saying Roubini's comments/thoughts are insignificant. Kind of funny to watch the bulltard reporters back track everything they had said all day.

Now, to be fair, when Roubini's comments were reported just before 2pm, the bears were coming out and saying Roubini's comments were not important. And when the retractment report came out after 5pm, the bears came out in droves to say, Roubini really knows his stuff.

It's all a manipulation game and you have to expect the unexpected. The market will always lean toward optimism so spinning news to the optimistic side is an easy way to move the market up.


And speaking of that, after the bell GOOG reported earnings and things were not as good as expected. But notice Jim Goldman's report on GOOG went through 4 minutes of positive comments and then mentioned in the last 10 seconds that they numbers were below expectation causing the stock to move down after hours. Goldman did his best being a spin master but it didn't work. Perhaps investors (even after-hours investors) are brighter than I give them.

AXP is defying gravity. I got stopped out early today and I was surprised it happened. But you gotta set stops and take your loses when you know you are beat.

I have not been reporting on the VIX lately because... well, not much to report other than it is retesting its recent lows. It could be a sign of stability in the market. I still think this is a head fake and when bulls start to really jump in, all hell will break loose.

Tech could save the day but eventually the housing price crash, commercial RE, unemployment and dismal retail will catch up and be reflected in stock prices across the board. Regional banks will crash before the end of the year. The big guys will survive due to gov't aid, but CIT Group shows us that the gov't is not interested in saving all of the banks.

Thursday, July 16, 2009

Housing Costs are Higher???

First, sorry for not posting as much. Very busy with projects at the house and determining my next career move which may be rejoining my old company who needs me back. A few options so its no sweat. I never even had to stand in an unemployment line.

Anyways, the market is really showing signs of strength based on earnings and ... economic data? Yes, it is gaining on economic data showing that the economy is improving, or so we are told. Lets take one piece of data. CPI. This gives an indication of weather we are moving into inflationary or deflationary territory or if things are stabilizing. This is a number that the government calculates based on a wide range of data points. One of them is housing or rent costs. Basically, how much does it cost you to live where you live. And according to the CPI data, housing costs went up in Q2 relative to Q2 2008??? Say what? Yep, even with house prices plummeting and everyone and their brothers are refi'ing, in order to reduce monthly payments, the government is telling us we are paying more for housing now than we were last year.

Talk about totally discrediting this once thought of important data point. This proves you can not trust any of the numbers coming from the government. This is nothing more than trying to stimulate the economy by cooking the books. It may work, but how can we trust anything that the government is telling us.

Another piece of data. The Fed released it's meeting notes and in them, it said they expect unemployment to reach 9.7% this year and 8.8% next year. Are they all living in a cave? we will hit 9.7% within a month and 10% by October. Next year, unemployment is not going down unless they stop counting those who have been unemployed for more than 6 months and are no longer eligible for unemployment.

So, let the market run. Tech is doing well and big banks should do well. Healthcare may do well. Outside of that, retail, real estate, consumer discretionary, are all going to get hit hard once the real data comes out. It may not be until August until that happens.

Remember, just a few days ago the market was in the 870 range and all the TV analysts who were targeting a move to 850 or lower are now saying 950 or higher. It all changes quickly in an environment like this. don't fall in love with a trend. In this market, the trend may be your enemy, not your friend.


As pointed out TBT was a steal. Should continue to climb to the 55-56 range.

UNG is starting to look tasty again at these levels for a long term play. I like Oct and Dec calls. Nat Gas is at historic lows and could easily double by end of year.

I like AXP as a short position big time once this rally looses momentum. AXP is a dog and they can continue to cut jobs to offset loses and fool the investor but sooner or later, that will bite them.

Wow, look at SRS. I bought at 20.30, sold at 23.10 and bought back in today right at 19.00. Its a great play to swing with this one. Don't fall in love with it though as we have learned in the past. Take that 15% gain and be happy.

Tuesday, July 14, 2009

American Express Presents Opportunity

I have not played AXP in awhile but was surprised to see yesterdays jump based on data/information that is, sketchy at best. AXP has presented a great opportunity here, technically, with the chart showing a clear sign that AXP needs to go down from here.

First, the 20 day MA is below the 50 day MA and the stock jumped past the 20 MA and touched the 50 MA. Stocks do not do this and maintain the gain. Especially stocks whose business relies on a sector that is unstable at best.

AXP should bounce off that 50 MA and back below the 20 MA within the next two days and continue its downward trend. In fact, it should steadily fall until it hits or goes below the lower Bollinger band line which is around 22 before it bounces back (if it does bounce back).

Bottom line... AXP. A great short right now.

Monday, July 13, 2009

Clarity Clouded by Caution

As noted the last couple of weeks, this drop in the market is as expected, is needed and makes perfect fundamentally as well as technical sense. There is a breakdown in technicals which clearly show the market has a fault line which could crack at any moment. Even if it doesn't, the market should see the lower 800's soon enough.

Sure it all seems clear when you look at the charts for SPX, NYSE, SSO, SKF, SRS, etc. etc. etc. But whenever things become complacent and seems too easy, you should be cautious. This is a game and the game makers always try to make it as difficult as possible. So we may see a bit of a jump in the market coming up especially this week with bank earnings coming out this week and next. Good reports from banks could lift the market (a.k.a. prop it up again) with false hope. This could cause a short squeeze and thus a higher market going into August.

So use some caution here. I have to stay leaning short but with plenty of leverage and money on the side to take advantage of any significant move up. We will see the low 800's but it is up to the game makers and PPT to decide how long they can keep things propped up.

Some Thoughts....

GOOG could be a great short if the market makes another grand move up. Keep an eye on it. More competition coming into the search and online ad business.

BTW, has anyone noticed TBT? Wow. Go figure. Talk about a great buy for a longer term hold (3 months).

I did my part this week in helping the economy. I went to Best Buy to price out some home theater equipment. These on-floor sales guys are hurting. They really are becoming aggressive. Once I told them I would not be buying today, they tried to get me to talk with their manager. Sorry guys. First, this is not a car dealership. Second, I don't buy retail. I just shop at retail locations and then find it online for a lot less.

Anyway, after leaving, I did my online shopping and found a couple of killer deals on a Yamaha receiver and on some Klipsch speakers. Well, I thought I would go back to Best Buy and give them one shot at matching these deals. After about 10-15 minutes and some time from the manager, they not only met the prices, the slightly beat them. Their point... They have to move inventory and they want me and my friends coming back.

So, kudos to the bad economy in letting me get the home theater sound system I wanted for a lot less than I thought. Everyone should be looking for killer deals right now, not only to benefit themselves, but to help jump-start the economy because God only knows Obama's stimulus is not going to do it.