Tomorrow's Gameplan

Make no mistake that this market is OB, but guess what? It doesn't matter. With Europe looking "solved" (yeah right), and earnings season kicking off with a Google-sized bang, the bulls are in control. This rally could go another week, but when we're OB like this my research tends to lead me more towards finding good stocks to short, not buy. I may snag some Apple (AAPL) and Qualcomm (QCOM) to play Wednesday's earnings report but only if I see a good entry. Also, one of my screens shows that Nabors Industries (NBR) and CVR Energy (CVI) have historically run on avg 8%-9% from where they closed Friday, over 95% of the time! Not bad odds right? I'll be picking some up early in the AM. But on the short side, another one of my screens turned up three names that historically have fallen, on avg, at least 5% over 70% of the time they became OB. It's not time to short since they're not quite OB yet, but I'll be watching Rio Tinto (RIO), DineEquity (DIN) and Rubicon (RBCN) very closely. Harbin Electric (HRBN) is already flashing "Tech OB" so I shorted some on Friday. Last time Harbin Electric (HRBN) registered "Tech OB" in my screen it fell over 12%. Chinese stocks are getting killed anyway recently so if the market turns, this one could test it's 200d MA. Harbin Electric (HRBN) closed at $22.09 on Friday and it's 200 day MA is $18.10.

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

I was too damn early

My technical indicators have been flashing OB since Friday and now are even in the upper end of the OB range, but it doesn't matter. Stock fundamentals have been too low for a while, and with Europe looking solved for the time being and the good companies are playing "catch-up" with fair value. Damn the technicals. It's dumb to get in front of this upwards momentum. Call me dumb. I had to cover all my shorts and sell my $VXX and $EDZ today. I got aggressive with some $TZOO and still have some $AAPl, $ARCO, and $ALXN but remain almost 80% in cash. I know I'm probably going to miss a few days of upside but 20% long exposure when we're this OB is fine with me. Remember the motto: Perserve capital.

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

Slovakia!! God bless you....

Slovakia’s Prime Minister Iveta Radicova

Tonight, after much speculation they would vote it down, the Slovakian government voted on the EFSF package to save Greece and did just that. This is just political posturing by the Slovakian opposition party to sway voters, as Slovakia, just like Germany and France, have presidential elections coming up next year. I'm 100% sure they will pass it eventually, but not until they've thrown the current president, Iveta Radicova, under the bus. The fact that all this bullshit fell on an election year in the three most important countries on the planet has just added to the boondoggle. Alcoa $AA reported a stinker of a number after the bell and while everyone expected a disappoint, no one (except the options risk pricing) expected this crapola. The stock is plunging more than 5% after-hours. Between $AA and Slovakia, we're set up for some pretty rough action for the bulls tomorrow. Today I added to my $VXX and shorted some $CRM. I unloaded most of my longs save for a little Apple $AAPL, Alexion Pharma $ALXN and Arcos Dorados Holding $ARCO, only cause I think I can buy everything back cheaper later this week or next. I bought some Activision (ATVI) based on the chart, it looks like it's ready for a break.

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

Yay Socialism...Yay Beer

So the first European bank falls prey to the debt crisis. We're down 400 right? Wrong, face-melting rally actually. Dexia sold itself to the Belgium government for $4B (something you would have known hours before it actually happened if you follow me @freemrktcptlst) and instantly futures responded positively. Add to that the "promise" (ha!) by Merkozy that the whole thing we'll be handled in 3 weeks and it's off to the races, right? Well, yes this is very good news, but the algo's are still showing me we're much closer to OB (overbought) than OS (oversold) so I'd be using these rallies for taking profits and quick trades. I'm in about 48% cash and will be using today and tomorrow to lessen my exposure to ARM Holding (ARMH), Netflix (NFLX), and yes, even Apple (AAPL) because I see a 5%-7% correction in our not so distant future. I just want to raise cash so I can position myself well for the next leg up. Let's talk about Apple (AAPL) and Netflix (NFLX) for a second. Both are rallying today for different reasons. Apple (AAPL) reported that they shattered previous presale records with their new handset the iPhone 4S, selling over 1M in the first 24 hours of availability. Netflix (NFLX) (a FMC takeover target) is up over 6% on word the board has decided against spinning the DVD-by-mail business off into 'Qwikster', which has investors hopping. I bought Netflix (NFLX) around $110 and it's hovering around $126 today so I have to take profits, but I reiterate this stock is cheap and primed to be bought by, oh let's say Amazon (AMZN).

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

Do you believe them?

Here's the info, it's up to you if want to believe it or not. I really don't know. No one does, hence the issue.

Kicking myself...

I let go of my precious metal shorts a little early today (which is annoying), but I'm happy with the move. I'm not quite ready to get long yet since I've been calling for gold to hit $1500 for a few months now, but it's time to start watching for the opp. I actually prefer investing in gold in euro terms which I mentioned yesterday. It's a more advanced trade because you have to both short the euro via a currency market trade, and get long gold in dollar terms, but this trade will be well worth it if you can swing it.

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

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.

Stocks & Commodities Fall as German Parliamentary Vote Takes Front Stage

These late day fades are killing the bulls. You wonder how much longer they can take it before they just throw in the towel. We were dancing between gains and losses all day, opening up 100 points only to give it all back and then some by 3PM. Then, as usual, the fast selling started and took us another 100 points lower in the last 15 minutes of trading. I'll reiterate my view that you shouldn't be buying anything in this market except Apple (AAPL) and Alexion Pharma (ALXN). Overnight or early tomorrow morning there is a vote in the German Parliament to decide on Greece's bailout package. If it fails, you can bet we'll be taken down hard. Remember, when TARP was first introduced to Congress it was shot down, then the market plummeted and forced Congress' hand. TARP was finally passed, eventually saving us from a total collapse. You have to think, over in Europe they have a bunch of lefties in office who are anti-capitalist to begin with. You think they want to bailout the "fat-cat" bourgeoisie bankers that got them into this mess in the first place? Talk about moral hazard. They hate the bankers over there more than we do. Then, even it passes, it has to be the right plan. How did we react when the Fed didn't give us the stimulus we wanted last week? Down 700 in the blink of an eye. Gold and silver resumed their drop Wednesday but expect and bounce back up to the $1700 level if the vote fails. I'll be adding to my Proshares Ultrashort Silver ETF (ZLV) and Proshares Ultrashort Gold ETF (GLL) positions if we do bounce on a failed German vote, but if it passes, look out below.

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

Europe still driving the car...

We've rallied off the lows of the year, again, on the idea of a German TARP-like plan that will save Greece from a classic default, and bring the entire Euro Zone back from disaster. If we had some sort of solution over there it would be huge positive for this market, but what about Operation Twist? Didn't we get a little more stimulus than we expected from the Fed? What happened after that? Down 700 points in two days. Maybe it doesn't happen this time, but until this market breaks out of the 1120-1220 range it's been trading in, I'm a very selective buyer. This may be your last chance to get in on the Apple (AAPL) train before the next big leg up. Amazon (AMZN) is debuting it's iPad competitor dubbed the "Kindle Fire" or some nonsense like that. I think the Kindle Fire is DOA like all the other "serious competitors" that have come and gone (I'm looking at you Xoom, Galaxy, and Playbook!), and if it brings Apple (AAPL) down today and/or tomorrow, I'll be adding to my position. I actually like Amazon (AMZN) a lot, but this tablet is NOT an iPad competitor. It may take share from the Nook. Gold is basically unchanged and silver is down a percent. I bought back some Proshares Ultrashort Gold ETF (GGL) a little cheaper than I sold it on Monday for, and I started a position in the Proshares Ultrashort Silver ETF (ZSL). I think both precious metals have 10%-15% downside form here. Yesterday's rally fading hard into the close is disconcerting, but right now it looks like today may be a non-event. With all the different investment vehicles I watch, I'm stressed to find one that's even moving by a percent either way. Europe is basically unchanged right now down about 30 points on the DAX.

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

Cautiously Optimistic

It's amazing how quickly things go from the "end-of-the-world" to "Paradise Island" nowadays. This is one broad rally with all but 2 of the stocks I watch rising over 1%. Volume is pretty normal out of the gate, but will see how the day unfolds. As much as I'd love to jump into the names that are rebounding like Baidu (BIDU), Arcos Dorados (ARCO), and Wynn Resorts (WYNN), I think it's best to continue to be cautious here. We've been following the pattern of pricing in a "smooth" default in Greece before it actually happens, and then at any sign we were wrong we sell of, and we sell off violently, hence my caution. The lows of the year held again, the best contrarian investor out their, Doug Kass, has called a bottom, and investor sentiment is almost as bearish as the 09' bottom. These are all very positive signs, but any bad news out of Europe will take precedent over anything else. I'm still buying Apple (AAPL) and Alexion Pharma (ALXN) as I continue to believe these companies will buck any macro trends. In fact, I'd like to talk about the report form JPMorgan yesterday citing parts suppliers, that Apple (AAPL) cut iPad orders for Q4 by 25%. My sources are confirming something I suspected the minute the report dropped and mentioned twice twice yesterday. Not only is Apple diversifying it's supply chain in Asia, it is moving an unknown amount of production to Brazil. How much you want to bet that "unknown" amount is 25% ;) Even if we do continue this rally, we should take a breather the next couple days because we've come up so quickly. I'd lighten up on your aggressive longs and add to any solid shorts as I think tomorrow we could see a pullback. If you have any shorts not working out, like the Fossil (FOSL) puts I bought before the big rally yesterday, than don't sell them for a loss, wait for tomorrow to unload. If you don't have a short position in gold or silver, I like starting one right here. Both precious metals are rising hard today and I think they have a good 10%-15% downside form here. Put on half what you'd like to short today and wait to see what happens. We could see $1700 before $1500, but I expect $1700 to act as resistance if we do get there. The Euro is also rising today and I'll probably add to my shorts via the Proshares Ultrashort Euro ETF (EUO) by day end. Regardless of how the European debt crisis unfolds, I belive the Euro comes out the other end much cheaper than today. I'll be using days like this to add to my position and look to start covering around $1.28-$1.30. Don't forget you can always check the twitter feed to see my trades live.

This is not a recommendation to buy or sell any securities. DAK was long AAPL, ARCO, BIDU, ALXN and EUO, and short FOSL 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. 

Fighting for control

The markets are shifting between gains and losses this morning after Italy's credit rating was downgraded overnight. In the coming days Ben Bernanke will be the story as the Fed meets on policy decision and we see if more QE is in the cards. Jazz Pharmaceuticals (JAZZ) is on the rise this morning after announcing a take-over of Azur Pharma. Autozone (AZO) beat estimates but is selling off this morning as investors were expecting more. I'm holding on to my Autozone (AZO) calls regardless. Hansen Natural (HANS) continues to breakout and reaches another new all-time high of $93.47. Apple (AAPL) is also continuing it's winning ways, rising by more than a percent to $417. I'm not doing much except taking some profits on my winners like Apple (AAPL) and anthenaHealth (ATHN) before the Fed meeting since I have no idea what to expect. Gold is rising in anticipation that we'll get more stimulus and the "print-happy" central bank will show no sign of abating. In my opinion QE3, or "Operation Twist", or whatever you want to call it isn't necessarily coming, and many traders believe this market has already priced it in. Disappointment could mean a big sell-off.

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

Closing out strong....

If you bought the dip with me this morning you made some money. After being down 250 points early in the day we came roaring back on a report that after the Greek Finance Ministry said the conference call today between Minister of Finance Evangelos Venizelos and the ECB was 'productive ans substantive'. In fact at one point the Nasdaq even went positive. We closed a bit off the highs of the session, but the story today was "high growth". Free Market Capitalist faves Chipotle Mexican Grill (CMG) and Lululemon Athletica (LULU) were up over 5%. Whole Foods Market (WFM), Wynn Resorts (WYNN) and Green Mountain Coffee Roasters (GMCR) were all up over 3%. Apple (AAPL) closed at an all-time high today of $411.63 and is red hot with a new product cycle ready to roll out in a matter of weeks. athenaHealth (ATHN) was up over 5% before fading but still closed .8% higher. I took some more of my position in athenaHealth (ATHN) off the table as it's up over 40% since I bought it. I've recouped my capital plus a little profit so I'm letting the rest ride. I bought some Broadcom (BRCM) as the semi's were getting hit hard this morning and you know I love semi's right now. With Broadcom (BRCM) you're also getting a sideways play on Apple (AAPL) since they make the chips that run iProducts. Arcos Dorados Holding (ARCO) bounced back above the $26.60 support level at the bottom of its $26-$29 trading range. I see this as bullish and think the stock should be bought right here. Gold fell hard down over 1.5%. My short-term view on gold hasn't changed and I expect it to test its 50 day MA of $1726.40 and then the head to the $1600 level. Oil was hit hard today and I'll be looking to add to my Oil Service Holders ETF (OIH) on anymore weakness.

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

Buying the sell-off

As usual Europe is giving us a bloody Monday on a fresh batch of Greek worries, but I'm using it as an opportunity to do some buying. I think we could go lower here over the next few days but I want to be building my positions in the names that can run in the coming months. The general market will have it's hurdles, but there are certain companies with stellar earnings that are undervalued here. As we suss out the European crisis over the next few weeks, I believe these names will lead the way. Today I picked up some Autozone (AZO), which I'll be profiling later, Baidu (BIDU), and Broadcom (BRCM), another play on semi's with Apple (AAPL) exposure. Gold and the Euro are falling today and as you know I've been playing both with the Proshares Ultrashort Gold ETF (GLL), and the Proshares Ultrashort Euro ETF (EUO). I think both trades continue to play out over the next month as Europe capitulates, and gold seeks support at it's 200 day MA.

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

ECB to Lend Dollars to Euro-Area Banks

The ECB announced this morning that it will lend dollars to euro-area banks in a series of three-month loans to ensure they have enough U.S. currency through the end of the year. This is very good news and the markets rallied hard off it this morning, but we're now off the highs on Christine LaGarde's comments. I'm in 35% cash and waiting for a dip to put the rest to work. CF  Industries (CF), Baidu (BIDU), Arcos Dorados (ARCO), Wynn Resorts (WYNN) , Randgold (GOLD) are all on my watch list. One of the stocks in the Free Market Capitalist Portfolio, Alexion Pharma (ALXN) is rallying over 4% today off an analyst upgrade. I think we're in a "buy the dip, sell the rip" situation today so if I see the bids get pulled midday and we start to drift lower, I'd be a buyer, than as we rally towards day-end I'd unload.

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

Stocks Gain as Germany, France Support Greece - Bloomberg

So this is why we're rallying? I'm all for the rally, but let's not pretend the problems are over. I'm still keeping about 35% cash so I can double down on my favorite names if we dip, but I've covered my shorts for a loss as we'll be seeing 1210 before 1150.

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

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

Breaking News: China Willing to Buy Bonds from Debt-Crisis Nations

Zhang Xiaoqiang

Breaking: China Willing to Buy Binds from Debt-Crisis Nations

Reiterating what Wen Jiabao said last night in Dailan, National Development and Reform Commission Vice Chairman Zhang Xiaoqiang, said China is willing to buy more Euro Zone sovereign debt. I already expressed my concerns with this development last night, though it looks like a positive in the short term. He also believes any further QE by the Fed will cause more inflation in China. CPI is expected to rise 4% this year.