El Paso Agrees to be Bought by Kinder Morgan for $21.1B

Earlier today El Paso (EP) agreed to be bought by Kinder Morgan Inc. for a 40% premium to Friday's close, creating North America's largest Nat-Gas pipeline operator. I see plenty of M&A's in the pipeline industries future so I put together a screen of the companies similar to El Paso (EP) that I think are most likely to be snatched up next.

Check out the screen after the break:

Thanks Salida, you made my year...or did you???

If you read my blog you know I had been calling for a correction in gold based on two factors. First, the chart was forming a textbook double-top that should have put fear in the heart of any investor, and second, the precious metal was simply overbought and due for a pullback. Even good ideas get ahead of themselves. Long-term I actually think gold is a buy. But what's the exact reason for gold's $300 pullback which actually helped me get back to even and then ahead for the year? For weeks there have been rumors that Salida, a Toronto based hedge fund that invests primarily in metals and energy, was giving up the ghost. Them along with Paulson we're rumored to be liquidating their holdings on the open market fueling the massive declines (it has been the the common thinking that losing hedge funds have been raising cash by selling their gold positions to cover margin calls or redemption's). They've denied these rumors of liquidation and I tend to believe them. I've attached their monthly performance letter which explains their massive fuck-up, causing them to be down almost 50% on the year. It looks like they continued to load up on precious metals and oil stocks into $1900 gold and $100 Western Texas Intermediate. Oops. Check out the letter for yourself.

Today's Game Plan

Two days ago I outlined my short term strategy of getting long, and yesterday I covered all my shorts early into the dip. I picked up Decker's Outdoor (DECK), Spyder S&P 500 ETF (SPY), Russel 2000 ETF (IWM), Apple (AAPL), and, believe it or not, a nat. resources company Cliff's Natural Resources (CLF). I also started a position in the Powershares DB US Dollar Index Bullish ETF (UUP) as a play on the strengthening US Dollar. This is one of my favorite Q4 themes. Tomorrow I'll be looking to add to my Euro shorts via the (EUO) since I think this rally continues on more "good" news out of Europe which should bring up the struggling currency. With the exception of my FOREX moves, all my other trades are very short term. I'll look to start selling all my other trades in 5% or so except for Apple (AAPL), because it's P/E is too low, Netflix (NFLX), because it's oversold and a prime takeover target, and Alexion Pharma (ALXN) because approval of it's drug could come as early as Q4. I wouldn't buy any commodities here except copper for a quick bounce.

-Good Luck, let's make some money.

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

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.

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.

Bear Trap

The bears got trapped here as the bulls have taken firm control. We're up 12 points to 1184 on the S&P and the Nasdaq is up 29 points to 2561. I've bought some Oil Service Holders (OIH) and ARM Holdings (ARMH). It's the season for tech and my favorite play is ARM Holdings (ARMH) as they make the chips inside iProducts. With analysts yesterday raising iPhone shipment forecasts I believe the Apple (AAPL) machine should keep churning out juicy profits.  I'm still holding a good amount of cash and haven't covered any of my shorts as Europe will be coming to ahead in the next few weeks. We may finally see some resolution over there thanks to China and this should be a boon for the stock market.

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

House of Pain

It's ugly and getting worse. We're flirting with down 300 and selling could accelerate as the day moves forward. I sold 2/3's of my Spyder Gold Trust ETF (GLD) SEPT calls when gold was about $1904 an ounce. I'm holding onto my Oil Service Holders ETF (OIH) even though I'm taking a big hit with them today. I don't feel like doing much shopping yet though I bought some Verizon for the Free Market Capitalist Portfolio. I may buy some more Arcos Dorados (ARCO) today as it's down over 4% but I feel like we could have a few bad days like this so it's probably better to just hold off. Hansen Natural (HANS) is holding up nicely in this decline bucking the trend by only falling .5%.

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

Holding off...

Personally I think prices are cheap, but I'm holding off on anymore buying for now as things may get a little worse on Tuesday. I may pick at a little more Oil Service Holders (OIH) before the end of the day but that's about it. My Spyder Gold Trust (ETF) calls are working out nicely and I intend to hold them until gold reaches $1900 which I think happens Tuesday.

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

Oil Service Holders

Bought (OIH) SEPT 128 calls for $5.05

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