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We are horribly oversold, but we've been oversold for weeks and we
get "oversolder" so to speak. This could certainly happen again. But
some of the charts show a reversal in the money centers as likely.
Look at the chart of Lehman. LEH is down 20 dollars from the March
highs. It looks like it wants to reverse and bounce here. So, we are
going to consider it as a "long/short" idea. We'll try it long above
$70, short below $69. But in either case, we might have to be quite
nimble. It's not a leap of faith to think that if nothing happens in
Boston, nothing blows up, we could see a tremendous bounce. But if
something were to happen, we could get crushed. Be wary if you open
any position this week, long or short.
http://clix.to/wallmann
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If OSIP can get to about 57.80, they might build up a head of steam
and crack over 58, which is resistance. Keep an eye of them.
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Heading into Friday we had SINA and SOHU long and then the day
started to get ugly on us. We were smart enough to bail out of SINA
with about a 60 cent gain, but we let SOHU ride, hoping it wouldn't
lose our entry price. Luckily it bounced above it and we took it
home, although well off its recent high. So, do we look for a long or
a short here in net land? We are afraid to do either actually. EBAY
could gain 3 more dollars, or fall like a rock. YHOO could reclaim
30, or fail 28 and plunge like a rock. Like the techs and telecom, we
are sitting tight here.
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The retailers have been trying their best to hold up, as evidenced by
the action in URBN Friday. We set a buy over 28, they blasted past
that and ran to 28.75. But like most things they rolled over and we
had to jump back out, taking a 29 cent profit with us. That's been
the case lately, headfake high, trap you in a trade and then roll.
Well we've been wising up and bailing out fast, which is a lot of
work for pennies. For the beginning of this week, we are passing on
the retailers.
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Nextel could fall Monday after Barrons ran negative article about the
company and how it's earnings and price may have topped. They
finished off the article saying maybe you should follow the CEO's
lead, he happens to have sold 20 million worth of it.
http://clix.to/wallmann
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The biotechs really looked like they wanted to make a stand on
Friday, but they got beaten back down. We had to do a fast trade on
the BH because it ran up nicely, clicked off our buy in target, ran
another 30 cents and rolled over. We got back out with a 19 cent
loss, which was stupid, we had a lot of time to get out flat or with
a small gain. But some did remain green, giving us hope that maybe
the biotechs can march to their own tune on Monday, and if they do,
we are watching BIIB. With earnings on Wed, maybe they can make a
short term move here. We'll give them a try on a move over $55.75.
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The Scudder Gold and Precious Metals Fund (SCGDX) that we have held
in our retiree and IRA portfolios is now closed to new investors. A
suitable substitute, for our money, is another Scudder fund--SGDCX.
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Lehman is sitting at $69.56, a move above $70 should say "buy me"
while a move below $69 says "short me". What about shorting FNM, and
CFC and WM and the other mortgage lenders? It's probably the best
longer term idea out there folks, but in the short term, you're going
to need a strong stomach. We wouldn't be against taking longer term
puts on all of them and letting the dice roll, we "think" you'll be
rewarded.
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We've been carrying VSL in telecom for a long time and it's not done
much. But at least it hasn't fallen apart either and since the
telecoms are all over the map lately, we are going to pass for the
first few days of the Democratic convention and just watch the
action.
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We've sold off hard and we've lost some important levels. On Monday
they either have to pull us up or we should see something of a
capitulation drop. We are guessing that we see some more downside
first and then an attempt at reclaiming DOW 10K and NASDAQ 1865. But
even from there we'd think we'd be stuck until a few days into the
Democratic Convention with no terror news. If we pull that off, and
nothing goes boom, we think that finally we can put in the oversold
bounce.
For Monday watch for a downdraft and then a reversal. We "could" be
weak all day and see the bounce on Tuesday, but it will probably
depend on how hard we fall. If we fall really hard, we'll probably
bottom and bounce all in one day, if the fall is more gradual, we'll
probably not see the bounce till Tuesday. What if they just bounce us
right off the start? Then we think we'll get to those levels
mentioned and "hover" there, trading in a range, and worrying about a
terror event.
http://clix.to/wallmann
---------
The drugs have been holding up as well or better than most other
sectors lately, almost luring us in for a trade there last week, but
we are not much into doing anything for the start of this week, it's
just too iffy for either direction. That sounds like the easy way out
but the fact is that if you don't see a trade and you start putting
them out just to have something to do, you find yourself wasting
money and we don't need that.
---------
For years, easy money, historically low interest rates and creative
financing have allowed more and more Americans to buy their dream
homes no matter how high the price or how limited their ability to
pay.
Now we see some hairline cracks in the booming housing market, and
we'll get key signals on the sector in reports this week. Existing
and new home sales figures arrive Monday and Tuesday followed by
durable goods orders Wednesday. If home sales are slowing, so will
sales of durable goods like refrigerators and stoves that tend to
accompany a home purchase. Declining durable goods orders will suck
some of the oxygen out of the economic recovery, in our view.
Also coming are two reports on consumer confidence. Consumers--led by
home buyers--have kept the economy going for the better part of five
years, and any pullback in their willingness to spend will damage
many business segments. Fortunately, interest rates have moderated
after their springtime run-up; this allows more house hunters to
qualify for a mortgage.
By the end of the week we expect to have a clear picture about
housing--whether recent weakness is merely a bump in the road or the
beginning of a long-anticipated reversal.
http://clix.to/wallmann
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