Looking ahead to next week

Today's economic data wasn't all that bad, but China and Europe are driving the action. We'd be down a lot more but America is actually getting healthier, and our companies have strong fundamentals, unlike Europe. On the other hand, if you're company even knows where China is on the map, it's selling off today. Anything related to China is getting swept up in talk of what could be the hardest "hard landing" in history. Throw in an SEC investigation into the balance sheets of Chinese ADR's, most of which are traded on the Nasdaq, and you have a real problem. I forever the optimist don't think it will unfold like this, but it's not the time to be buying anything Chinese. Next week we get a slew of economic data, starting the week with the ISM Index, then construction spending, auto sales, truck sales, and factory orders. At the end of the week we get the big ones, Nonfarm payrolls and Unemployment. We'll see if the US data moves the market, or if it's still all about China and Europe. My guess is on the latter with one caveat, Apple (AAPL). If you read my blog you know next Tuesday, Tim Cook will release the much anticipated iPhone 5 and iPhone 4S. It's hard for me to say whether the market will like the phone or not until it's unveiled, but if Apple (AAPL) gives us a positive surprise or two, I think it can take the tech sector up along with it. ARM Holdings (ARMH) and Broadcom (BRCM), both of which are down close to 2% today, will be great ancillary plays off any good Apple (AAPL) news.

This is not a recommendation to buy or sell any securities. DAK was long AAPL, BRCM, and ARMH at time of publication but positions can change at anytime.

Me thinks this market be crazy

If you invest in momentum stocks like I do, you're not really sure what rally the lame-stream media is talking about today. Up 140? The Dow once again masks the ugly, underlying action that, at least for the time being, is the true tale of this market. I have about 100 companies I watch on a regular basis, and five had green arrows today. Five. This looks like a big move away from risk, or as the kids are saying "Risk Off." But, I did do some shopping today. I bought some Alexion Pharma (ALXN) as it was down 4%. I had been looking for this one to pullback for a while and today gave me the opportunity to add to my position. Also, I am now speculating on a Netflix (NFLX) takeover with the NOV 135 calls. I covered some of my shorts in Fossil (FOSL) only because by mid-day the stock was down almost 12%! It ended the day down 7% so I'm already happy with the move. I still think there is plenty of downside risk out there, so I'll be leaving the rest of my Fossil (FOSL) shorts on until I see some better data points out of Europe and China. China took center stage today as fears of a hard landing have accelerated. If it's not Europe, it's China. We can't get a break! Add to that the SEC is now probing Chinese companies to make sure their balance sheets aren't air, and that made for an all-out sell-off in the Chinese ADR's. Baidu (BIDU) and New Oriental Education and Tech (EDU) were down huge but parred their losses going into the close. At one point New Oriental Education and Tech (EDU) was down over 18%! I had to literally leave the office so I wouldn't buy these names, but it looks like I would have already made a handy profit had I just listened to my instincts. I wouldn't have held anything overnight, but it would have been one boss of a day trade. 

This is not a recommendation to buy or sell any securities. DAK was long ALXN and NFLX, and short FOSL at time of publication but positions can change at anytime.

I'm still not buying it...

I seem to be a very torn individual these days. Many of the things I predicted would happen have begun to come true. The market is up 150+ points as Germany passed the TARP-like measure seen as necessary to save the Euro Zone, and jobless claims and GDP came in better than expected so it seems the economy isn't quite as bad as we all thought. All seems rosy right?? Wrong. There are some ominous signs out there that have me raising cash and only picking at a few select names on weakness. We'll start with copper, probably the best indicator of economic growth out there, has fallen like a stone. China, the gasoline keeping this global economy running, is drastically reducing how much copper it's consuming. Then a poll taken by Bloomberg showed 59% of respondents believe China will fall to sub-5% GDP growth by 2016. A "hard landing" of less than 5 percent growth for the world's most populous nation would be "disastrous" for the world economy, said Qu Hongbin, an economist with HSBC in Hong Kong. The nation wouldn't be able to create enough jobs for those entering the workforce, sparking a "serious social problem," he said. "I'd rather bet that it's the end of the world in five years than to bet on China's growth falling below 5%." This puts into perspective just how dire this situation is. If China goes, we all go. Your iPhone goes from costing $250 to $1000. Not good. Hopefully China would have the foresight to change their model to accommodate the lower growth by shifting to a strategy of household spending- led expansion, softening what global investors anticipate will be a hard landing. We should stay away from BRIC stocks such as Baidu (BIDU), New Oriental Education and Tech (EDU) and Arcos Dorados Holding (ARCO) until we get a clearer picture of what's going on in the land of Mao. Another ominous sign is which stocks are actually leading this market. I truly believe as goes Apple (AAPL), goes the market, and recently Apple's (AAPL) RS line has been falling. I talk about Apple (AAPL) a lot as the leader of this market but it's not just Apple (AAPL). All the mo-mo names like Green Mountain Coffee Roasters (GMCR), Decker's Outdoor (DECK) and Wynn Resorts (WYNN) need to lead the way. Right now that just isn't happening. Almost every stock I watch is down today in an up 160 market. Gold and silver are up a bit here but I won't be adding to my shorts today unless we go dramatically higher. The precious metals have fallen so much you'd think there would be a little consolidation before we move another leg down. The only move I'm contemplating right now is adding to my euro shorts. The euro is up about a penny today versus the dollar off the Germany vote, but I see many bumps in the road ahead for Europe. My year-end price target for the euro is $1.28.

This is not a recommendation to buy or sell any securities. DAK was long AAPL and ARCO at time of publication but positions can change at anytime.

Chink in Apple's Armor?

This morning, in a rather off-putting note to investors, JP Morgan reported that Apple (AAPL) has cut orders for parts of it's iPad 2 by 25% for the 4Q, the first such cut JP Morgan has ever seen. This seems like a glaring blow to Apple (AAPL) which has been invincible up to this point. I do believe this report is disturbing but not because Apple (AAPL) is faltering. Apple (AAPL) is far from off its game as this latest report shows they are still gaining market share in a market they created and dominate. This report is much more telling of the global economic picture, specifically Europe, and continues to make me think I've underestimated the global slowdown. When a "recession proof" company like Apple (AAPL) has to cut it's orders, it's an ominous sign. Let me also stress that report has not been substantiated. Also, Apple (AAPL) could just be diversifying it's supply chain as numerous reports have stated the last few weeks. I'm betting on the latter.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime. 

Risk Off

So jobless claims we're basically in-line with estimates coming in at 423,000, a fall of 9,000 offering us no help. FedEx was even worse news coming out and saying they're feeling the global slowdown even in China. Futures are falling of a cliff and suggest a market open right near the lows of the year. So in 1 1/4 sessions we're giving back the entire rally off the lows that took us a month and a half to accomplish. It looks like those that suggested the entire rally was built on anticipation of QE3 were dead on. I didn't see it that way. I'm still having a hard time believing its a bad out there as the numbers suggest. July was horrendous and August was pretty rough too but it already feels better to me. I guess I'm crazy. With all this selling you'd think total "risk off" situation, right? So what's the "risk off" trade doing this morning? Down over $70 to $1735 per troy ounce. You'd think if people are selling stocks the money would go into gold. So where's the money going? That juicy 1.8% yield you get in the Ten-Year? I doubt it. Oil is coming off 5% and the Euro has fallen to $1.345. Calmer heads could prevail by day end so I would caution against panic selling and getting short, but watch 1120 cause if we breach it could get ugly.

Thursday Preview: Jobs and Fedex

After today's violent decline this market will need some major help to escape further losses tomorrow. We have jobless claims at 8:35 AM which are expected to be 425,000 after rising to 428,000 last week. If we can get below 425,00 it should be positive, but we'll probably need a pretty big beat to reverse the direction of this market. For the last month the market has shrugged off weaker economic data in anticipation of QE3 coming today, but since the policy decision today wasn't enough to satisfy the traders, I feel bad economic data will be a big weight on the market going forward. Economic bellwether FedEx, announces before the bell and that should give us a pretty good view of the health of the (corporate) economy. The selling may have been a bit over blown today and I wouldn't go shorting much if we open up lower tomorrow. Things may not seem so dire by the end of the day....

Ouch!

That was one ugly close. The Fed's policy decision was not well received by this market which seems to be losing confidence the Fed can do anything to save the fledgling economy. Even the momo names like Apple (AAPL) that had been doing so well the last few weeks reversed in the last 30 minutes of trading and ended the day lower. Earlier I said that I had a bad feeling and thought we could sell-off, but I didn't think it would be that violent. The S&P closed right on it's uptrend line and when we breakthrough that line tomorrow it could spark even more selling. The next test is 1150 and then 1130 on the S&P. If we test 1120, we're going to breakthrough the lows for the year and the pain will be felt by every stock and every sector. There were two major breakdowns in stocks I own today. Arcos Dorados Holding (ARCO) and New Oriental Education (EDU) were off by 8.8% and 9.3% respectively. These charts have completely broken down and we need to stay away from these names for the time being. My long term prospects for each company have not changed so if you already own the stock don't sell it. I can't find a reason for the selling in either name other than fear of a BRIC slowdown. Gold fell by almost 2% to $1780 and I expect it to fall further over the next few weeks.

This is not a recommendation to buy or sell any securities. DAK was long ARCO, EDU and AAPL at time of publication but positions can change at anytime.

I have to urge caution

If you didn't build any positions in this market yet I would suggest waiting. This type of frothy day spurs irrational buying and I have to warn against it. Don't get me wrong, I think all the stocks mentioned on this blog are undervalued and should be bought over time. I mean when you break it down, that's the game; identifying undervalued assets, and that's what I've done. I just think there is too much short-term downside risk coming out of the Fed tomorrow if Bernanke doesn't give us more QE. The lame-stream media would have you believe the entire rally off the August 8th lows has been in anticipation of more stimulus from the Fed. They would have you believe that if we don't get an announcement of QE tomorrow we're headed back to the lows or worse. There is some truth to that, but the stocks that have led this rally (high-beta) should continue to thrive regardless of the overall macro environment. It's true that if Big Ben doesn't announce more stimulus tomorrow we will sell-off, but it should provide an opportunity in the quality names I talk about regularly, especially tech. So raise some cash today and let's just watch what happens tomorrow. Worst case scenario we miss a little upside. If you learn one thing from this blog, learn this: The game is NOT about catching upside, but preserving capital. I can't stress this enough! We get too caught up in "missing" a big move one way or the other. Remember, there will always be another opportunity as long as you have the capital to invest. 

Geithner: Europe Committed to Avoid a ‘Lehman’ - Bloomberg

Geithner: Europe Committed to Avoid a ‘Lehman’ - Bloomberg:

Jim Cramer Interviews Tim Geithner

OK...this one caught me off guard.

I didn't see this rally coming. But, it's here, and I'm not doing much with it. None of our problems have been solved, but the question is: What has already been priced in to this market? I'm not panicking, covering my shorts and getting fully invested, but I am very encouraged by this action. Rumors that Beijing will come to the rescue in Europe, something this pundit has predicted before, have seemed to have lifted us up. Let's not get crazy and just wait and see what happens. I think we could see the market move sideways, being taken down by financials and cyclicals, and being lifted up by quality names with solid earnings and fast growth. I didn't get a chance to pick at Acros Dorados Holding (ARCO), as I mentioned earlier in the day, because it never hit my limit price so my order didn't go through. athenaHealth (ATHN) took back the critical $60 level and closed close almost a percent above it. Green Mountain Coffee Roasters (GMCR) showed good strength today as well. All these names should be on your shopping list and you should be waiting for the opportune time to strike. If we're up huge tomorrow don't panic and buy these names at a premium. I can all but promise that you'll be able to pick them up cheaper when we get some half-baked, negative headline out of the PIIGS.

This is not a recommendation to buy or sell any securities. DAK was long ARCO, ATHN and GMCR at time of publication but positions can change at anytime.

Yeah Ok....I guess

He's a brilliant orator, that's for sure. He basically announced more stimulus without saying the word stimulus. Futures were up during the speech then fell immediately after. I make nothing of the speech. Lower Taxes. OK. Infrastructure building. OK. Whatever. The real question is are you ready for some Football!!!!!!

I'm not buying it....

Today was a very strange day for me. The market was down on the Bernanke non-event, but every stock I own was up. Two of the companies I own had huge breakouts, athenaHealth (ATHN) and Arcos Dorados (ARCO) were up 7% and 4% respectively. Hansen Natural (HANS) was up big too at 2.5%. We could see Hansen Natural (HANS) testing the $90 level again very soon. But for some reason I just don't feel good about this market right now. I'm not so negative as to get short, though many of my fellow traders have done just that, but a few things here worry me. Europe is the obvious one as the world waits with bated breath for the proverbial "other shoe to drop". My other problem is the fact that this market is sure that QE3 is coming on September 21st and I'm not so convinced. While I don't believe QE3 is necessary for the companies I watch to thrive in the coming months, they will get taken down with the rest of the market if we correct. I have raised some cash by selling some Spyder Gold Trust ETF (GLD) puts and Oil Service Holders ETF (OIH) calls yesterday and today and will be ready to put that cash to work.

This is not a recommendation to buy or sell any securities. DAK was long ATHN, ARCO and HANS, and short GLD at time of publication but positions can change at anytime.

Nothing new

We got nothing new for Bernanke and when he started speaking the market moved lower and has remained there. While the markets may be down, every stock on my list is up. When the high betas are bucking the trend it's a good thing.

Swiss Franc collapses!!

Anyone who went to sleep long the Swiss Franc is being talked off a ledge this morning. Currency markets have been a thrown for a loop this morning as just before 9 GMT, the news that the SCB has pegged the country's exchange rate at 1.20 Swiss Francs per Euro. When I went to bed last night it was 1.10 Swiss Francs per Euro! The SCB suggested it would purchase an unlimited amount of euros regardless of the risk to maintain that value. This sent the gold market haywire. The minute the news dropped, after being at a record $1921 per ounce, gold fell to $1862 before quickly recovering to $1912. Citing "the current massive overvaluation of the Swiss Franc", the SCB said it will "no longer tolerate" an exchange rate below 1.20 (which they say is still high). Gold is currently $1892 an ounce.

Vacation's over and the world is still ending!

I hope you had a nice vacation because it's time to confront some pretty ugly realities facing this globe's economy. The Euro's finally got back from their month long hiatus and the finger was on the sell button. The DAX fell over 5% and the Eurostoxx 600 was down over 3%. I warned you to "Hold Off" Friday because we'd have lower prices Tuesday and futures are down over 2% as of midnight. I also predicted gold would be $1900 and right now gold is $1910. I hope you heeded my warning to raise cash and insulate yourself with some gold! If we go back and test the lows set in early August of 1120-1130 on the S&P, most analysts believe we will breach them and breach them hard. I say forget the technicals, if we get more panic selling courtesy of HFT and and a shell-shocked public giving us some more "flash-crash" action, it could turn very, very ugly. I actually don't think governments will allow it to get much worse before intervening Ala "fiscal stimulus". You'll hear the bears tell you that a QE3 or some sort of European "TARP' is impossible and won't fix anything anyway. You can certainly argue about the longevity and effectiveness of more stimulus or "debt to pay off debt" which is perfectly valid, but saying that these print-happy governments won't print more money is ridiculous. That's why I'm bullish for at least the next 6 months as I see no reason to suggest the idiots who got us into this mess won't just keep prolonging the inevitable with more failed monetary policy.

I hope you didn't panic!

I hope you didn't panic today. Today's action, as ugly as it was, was a necassary distribution day.I know, I know, it's easy to get caught up in the "end of the world" stuff but let's take a moment and think about why we were down today. The most obvious reason is the negative jobs report number, which on the headline seems to show stagnation when in reality there was contraction. Let's do the math:

0 (jobs created) + 45K (Verizon Strike) - 87K (birth/death number) = -42K jobs

Add to that the fact that we haven't taken a break from the rally off the lows, and you have a situation where it would have been more dangerous if we had gone up the last two sessions. Keep your head. DOn't PaNiC!!

Have a great Labor Day (ironic!) weekend and don't think about the market. Enjoy yourself! I'll do enough worrying for all of us ;)

Tomorrow should be telling...

I think we can find out a lot tomorrow. Is the economy adding jobs? Is the slowdown priced in to the market? The market can spin tomorrow's number any way it wants. If we come in ahead of estimates, we could rally cause the economy isn't as bad as we thought. If we miss, we could rally because a slowing economy increases the chances of QE3. The opposite is true as well. If we beat, QE3 ain't coming and we have to live with slow growth so we sell off. If we miss, the economy's worse than we thought and world is ending so we sell off. If I had to guess, since we are so overbought, I think we're selling off no matter what tomorrow. Plus, I'm sure the bears will slip in some rumor on Tuesday about European Sovereignty and we'll be right back around the 1170 level in a flash (bad choice of words, I know). Anyway, I hope you raised cash like I advised cause it should be time to start putting it to work tomorrow.

Good Trading!

Ron Paul, you read my blog?

Preaching my gospel to the word, Ron Paul dropped the knowledge on those clowns at CNBC laying out why gold prices are really going up. Check out the interview below.

The Free Market Capitalist supports Ron Paul for President in 2012

Sitting on my hands

Today's action has me sitting on my hands. Gold is down so I'm not adding to my shorts and the market is decidedly up. I don't see a play here. We're at 1203 on the S&P and we're supposed to see resistance at the 1205-1210 level but I don't feel like shorting anything here. I don't want to play the pullbacks because I think they'll be less pronounced then the rallies and I don't want to get caught in a short squeeze. If we have a pull back tomorrow or the day after I'll be buying. Why? I think we get a surprise out of the non farm payroll numbers on Friday. The market expects 75K jobs created, I see more like 90K.

This is not a recommendation to buy or sell any securities. DAK was short GLD and long GLL at time of publication but positions can change at anytime.