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Just because things are fraying at the edges, it doesn't mean they
won't have a good time for a while in finance land. On Friday our CFC
moved up over a dollar which makes as much sense as driving a nail
thorough your head, but hey, that's the way the market works. Common
sense always comes "later". We are happy enough just carrying this
flying pig for now, but we'll keep an eye on Fannie too just in case
the lunacy spreads.
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We don't have any retailers on the long side, in fact on Friday we
shorted JCP, and covered a bit of it on the first plunge. It might
reverse higher if the overall market does, so we need to watch it
closely, but we aren't interested in going long any retailers at the
moment.
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We have EBAY on the long side, which might raise some eyebrows from
those wondering why we didn't get stopped out of it. Well, like the
QQQ's in technology, we were willing to hold past our stop since we
thought that maybe later in he day they were going to bring the
market back up. Well, they didn't bring the whole market back, but
EBAY started running and we hung onto it. It actually ended the day
green. Do we need another net right now? Probably not, considering
Barrons had some negative comments about EBAY and YHOO concerning
expensing options. We're going to sit tight.
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In tech land we had a bad day Friday. We came into Friday with no
technology and wanted to try something "safe" so we looked at the
Q's. Ha! We bought the very high of the day and sold for a 20 cent
loss. Duh. We were willing to hold it a bit into the red because we
felt the end of the day might bring some buying, but we really didn't
see enough action so we dumped it. But, we still like the Q's if the
market is going to move higher, so we'll try them again above $37.
Our view is that we are going to see something of an earnings run and
the techs will participate. So, if that's true, we'd like to be in
some of it. But then again, we could be nuts, the market rolls over
and we'd be sitting here with no shorts. So we will play the
long/short game on the SMH basket. if the chips bounce, we'll go
long, if not, we'll go short.
----
We know the market doesn't look healthy right now, we know that it's
almost twisted that we think we are going to face a `real" recession
in the next year, but yet we think the market runs higher in the
short term. We know it sounds silly, but "they" (whomever you wish to
call they) have a very vested interest in keeping this market alive
this year. We are just betting they find enough rabbits to do it for
a while.
On that note, we suspect that if nothing blows up, we are going to
see a stronger market come Tuesday. We think we'll see them push us
higher and we should be able to capture some long side gains. If we
are wrong, we'll surely know by Thursday, and then maybe we'll have
to rethink all this, but lets see how it shakes out.
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We got involved with AMGN on Friday as it crossed our buy in area and
luckily it moved up for us, but not by very much. Overall the
biotechs look pretty healthy, and we still have our eye on OSIP. If
they can move above $70, we'll give them another try.
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Do we want to make a play in drug land right now? Not really. For
this week we are just going to watch. We've still got ELN on the long
side and it's doing quite well for us. We are sitting pat with it.
------------------------
Barron's did a piece about Nanosys the IPO that should come out this
summer, and with all the hype about nano technology, this one would
be the 800 pound gorilla in the sector. But it's not all roses,
because frankly Nanosys has no product to sell. In their application
they state quite firmly that they have no product, and may never have
one. This is going to IPO on the hopes and dreams of Nano, and it
should be fun to watch it play out.
---
Right now we only have VSL in telecom and this little Indian telecom
is doing nicely for us. Now, if we get an earnings run, we'd like to
try latching onto QCOM for a couple days. We'd try them long above
$72.85.
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Options expensing was a topic in Barrons and this is going to be
quite interesting. It has been said many times that if accounting for
options was mandated, some tech companies would then have
virtually "Zero" earnings. Therefore their shares should collapse.
This is still true. But the accounting board that proposed making
expensing of options mandatory in 05, is already saying they might be
willing to delay to 06. Now isn't that something?? Why would they do
that? Politics. If it was written in stone that expensing would be
mandatory in 05, Wall Street would have to start adjusting for it
this year. Do you think any administration is going to sit by and
watch then price Broadcom to "Zero" over options? Don't bet on it.
They will make enough noise that it doesn't have to happen until 06,
to keep the market happy. It's just more of the grand charade folks.
Anyway Barrons says the companies that would get hit hardest is :
YHOO, SEBL, BRCM, MEDINVDA, MU, MERQ, AMCC. You might also add MXIM
to that list.
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"Peak Plays" are very short term in nature and you have to be
prepared to get in and get out very quickly. There are several
reasons for Peak Plays, some of which are: rumors, earnings forecasts
or reports, mergers, upgrades, merger speculation, stock splits and
sometimes they occur for no noticable reason at all. There are
basically two ways to play a peak.
http://clix.to/wallmann
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