Purchased NVDA in my very protected account. It has become oversold recently, and IMO it is the best positioned via the graphic chip makers as more and more computer are using more graphic chips. (search NVDA in the blog’s search box as my thesis has not changed)
Just an FYI… here is an article indicating copper inventory. (article)
(although i’m a chart guy, i secretly pay attention to fundamentals… so long as my charts don’t find out, i’ll have no problems 
)
I simply find it funny. I find it funny when a company is told it will need approximately 1/2 its market capitalization in funding, yet rises (fairly massively) on the day.
BAC at the time of the $34B leak had a market cap of about 75B, yet it kept rising through out the day.
That to me is amazing.
More particularly at the fundamental (aka earnings) level. At the moment consensus is that BAC will earn in eps 1.28 for 2010. With a stock at 12 its PE is roughly 9-10. IMO, deserves the lower premium from its peers because its a crappier company. (JPM and WFC have 2010 PEs that are around 14.) But, what is going to happen when the added equity comes into play? DILUTION.
Obtaining half of its market cap in new equity will most definately affect its EPS, yet the stock rallies on the news. (here I will argue in favor of stock price manipulation)
If JPM is the gold standard to value banks, via future PEs, we must take a discounted look at BAC’s diluted earnings power. If BAC is going to be diluted by 30-40%, its 2010 estimated PE will be below 1.00. Which would put a future PE of 10 with a stock price of 10. Unless the consumer headwinds simply disappear with all this ‘amazing’positive sentiment, I am scratching my head trying to find a fundamental reason as to why it was so strong today.
PS… not short any banks at the moment… but am waiting to short the hell out of GS at 160, if it should make its way there.
I stress caution.
Look, I am a bull, everyone reading this blog knows it, but beating the market is not just about being a bull/bear… its about timing too. Look at how the market acted in the last recession. How many times it bounced around during a mild recession compared to this one. See what the SP500 did when it was approaching the 200SMA.
A closer look at the market now reveals how overbought and how close we are…
The economy lost almost 500,000 jobs this month. That is huge. The market is ignoring it because it did not surpass the 600K that was expected. Despite the fact that the job market number is loosely issued and revised later.
I stress caution because I see a lot of careless buying. And the Naz (a leader) is showing head winds.
I am bullish on PBR, FCX, FXI, JPM, WFC, PG, BNI, T, GOOG, AAPL (and own some as my core holdings)… etc… but they will go down… sooner-rather-than-later.
FCX has moved 30% in 5 days… thats 30% in 5 days… that is 6% a day.
The price of copper has moved about 8% in that 5 day period.
I never knew FCX has the earnings power to amplify copper’s price by over 3x. Fucking amazing. (all this with a huge build in copper inventories… but its moves are reflecting a world running through the stuff like it was 2003.)
The moves in FCX are currently unsustainable. Becareful. (and yes, I am still short as my money is usually where my mouth is.)
Overbought is the key word, and as I watch CNBC (via the on-demand web tools) complacency is a very close runner up. (Don’t these mofo’s realize they are the popular sentiment.)
Anyway… across the board everything is overbought. Some few indices can creep upward some, but for the most part everything I look at is overbought… even at the individual level.
I already called this current upward move a few days ago when most on CNBC were calling for a pull back. (the fast money crew were not the only ones) Except now, everyone is ignoring the real top end resistance.
I am still bullish, but we need to consolidate this move… the fundamentals demand it, and the technicals are now strongly suggesting it.
1. Added to my market protection. Still waiting to go heavy short, and I will when the SPY approaches low 900s (at around 910-920… I will be really heavy short). Playing it via SPY 92 put options.
2. Purchased PWR in the AM.
Looking to…
1. Sell 75 July calls on my BNI position. (ideally want to sell them when at 73-74)
2. short GOOG via 410 June Puts. (will probably get it today, as a limit order is in)
3. reposition and increase a short position I took on FCX on Friday.
I fear a ’sell-the-news’ is coming with the stress test. Also valuations are getting strechy here w/respect to economic conditions. Do not get complacent.
PWR looks interesting here, especially with the longterm SMA crossing that are taking place. The bullish set up is taking place with the SMA acting as support while the stock is consolidated.
If the stock bounces, it will continue its march upward. If it breaks, it should find support at 20-22 level, and there will be a second entry point. Earnings are coming out on Wed, and it can be a catalyst.
I will mostlikely enter a position on monday.
It always amazes me as to how much people so desperately want an explanation for every little thing, instead of simply looking at the obvious.
For instance, I read this article on Seeking Alpha which pretty much explains the recent rally as pure manipulation and fancied up the ‘buyer/seller’ arguement with mechanisms as ‘quants’-vs-long term holders. (Its easy to see people get sucked into it, and actually believe it, especially with the fancy talk… a lipstick on a pig, does not change the pig.)
The article blatantly ignores the stabalization of the economy as an obvious reason. It instead uses lagging data to show how the economy still sucks. (GDP is a lagging set point, and everything else used in the article.)
But if you actually look at real economic data, that facilitate good trading, you will see a different picture.
Baltic Dry Index… clearly more stable that the last few months.
Or the price of Copper (as I indicated in previous posts, however I do feel more of a pull back coming). Or stability in Oil prices.
Anyone with the right amount of financial resources can manipulate anything, but GS can not manipulate the BDI or freight rates or true consumption.
Whatever the case, anyone reading this blog already knows I am cautious here and why.
We are not in another bull market just yet… so lets all calm down, and stop listening to Cramer. (Don’t buy ‘just because things are going up’.)
Do not forget what this rally is… its a rally due to stabalization, and that will only take us so far. We will have to consolidate this rally, which means we will be range bound for a bit.
Use caution here, seriously.
I took on a GOOG short, and some market protection. We are getting too overbought. Will add to these positions if we continue to go up.
