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.

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.

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.

Takeover Specs: Netflix

After announcing a rate hike that has subscribers jumping ship, Starz pulling it's content over a contract dispute, and the final death knell, the cutting of subscriber forecasts by the company itself, Netflix's (NFLX) stock has been more than cut in half. But is there any value left there? Jump past the break to find out.

Shopping List: Post-Euro Collapse

I've had to sit on my hands the last few days with so many of my favorite names selling at huge discounts to what they're worth. This is not the time to buy stocks, but the next time we're taken down by some European misstep these will be the names on my shopping list. I've put a daily chart for each stock beginning the day before the Fed added the word "significant" before the phrase "downside risk", until today. Some names have already come back a bit, but like I said, I wouldn't start buying here. Check out the names after the break.

Amazon's Kindle 'Fire' vs. Apple's iPad----Fight!

So this isn't going to be a "bash Amazon (AMZN)" post even though they seem to have their sites set on my favorite growth story, Apple (AAPL). First off, I mentioned earlier that I don't consider this competition for the iPad, but for Barnes and Noble's (BKS) Nook (which Wall St. seems to agree with since BKN is down 4.5%) so I'm not worried about it eating iPad market share. The Kindle 'Fire' actually looks pretty cool and it's hard to beat the price. I really like Amazon (AMZN) long-term and think they are where Walmart was 20 years ago. This is great company with rising margins and mo-mo like growth so they would be a nice add for any portfolio. Apple (AAPL) didn't really dip off the news and has remained flat all day, shifting between slight gains and losses. I think Apple (AAPL) needs to be bought hand over fist here since it's grossly undervalued, but there is one thing I'd like to point out. If the reports out of Asia are true and iPad demand is slowing, this will be reflected in the Q3 results slated to be reported next month. This could whack Apple (AAPL) even if they beat EPS estimates, but as I mentioned yesterday, I believe the 25% reduction in iPad orders out of China was actually just a shift in production to the new Brazilian plants opened by Foxconn. You know how these rumors start, some low-level managers at Hon Hai Precision (TPE:2317) and Foxconn (HKG:2038) (if you didn't know this already, stocks symbols in China are comprised of numbers, not letters) saw that orders were being yanked from their plants and extrapolated from that that Apple (AAPL) is reducing orders. These managers wouldn't be high up enough in the company to be privy to the fact that those orders were moved to Brazil. So what happens, JPMorgan bribes these guys for the info and voila, rumor started. I'm not saying this is exactly what happened but I disagree whole-heartedly with JPMorgan's report.

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.

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.

Rally 276 points? Obviously ;p

This market is confusing as hell but there's one thing you can bet your mortgage on, whatever happens is happening in the last hour of trading. I mean it's like the whole day we're just gearing up for 3PM so the HFT's can drag us one way or the other. We ended the day up 270+ on the DOW and even the NASDAQ got dragged kicking and screaming into the green. Does this rally mean the worst is over? Maybe,but it's too soon to tell and I'm not devoting a bunch of capital until I know for sure. Apple (AAPL) was the story today after JPMorgan reported that the gang in Cupertino has cut it's iPad parts orders by 25% for Q4, the first time JPMorgan has ever observed such a cut by Apple (AAPL). After being down over 3% in the first hour of trading, Apple (AAPL) recovered and only closed down about a buck to $403. I stated earlier that if this is true, it's more telling of the economy, Europe especially, than Apple (AAPL) itself. I shorted some Fossil (FOSL) today based on it's chart and it had already started working, but the big reversal upwards at the end of the day erased those gains. I'll leave them on until I see clear direction and bail if we really start gapping up.  Gold dipped below $1590 early in trading and settled in around $1597. I sold 75% of my short position in gold this morning since I had been short since $1900. I think gold sees $1500 before $1800, but it could bounce around here for a while. I'm seeing a lot of things on sale out there like Wynn Resorts (WYNN) and Baidu (BIDU) but all the technicians are saying "stay away". Admittedly all I see are broken charts, but I'm a contrarian investor, I like to buy when sentiment is most bearish and charts are most broken.

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

Two iPhone Models to be Released Oct. 4th

When I posted the above picture a few days ago, I speculated that Apple (AAPL) would not be releasing a major upgrade to it's next-gen handset and would instead release the iPhone 4S which would be a major blow to the stock. Apparently I was half right. Today the word is that Apple (AAPL) will release two versions of the iPhone on Oct. 4th, the redesigned iPhone 5, and, an updated iPhone 4 dubbed the "4S" that will serve as the companies low-end offering. 

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.

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. 

Boys, keep your powder dry.

If we do open higher as futures are indicating I'll be using it as an opportunity to lighten up on all my positions except for Apple (AAPL). I think this rally fades by end of day so I'm going to move pretty quick. Maybe I miss some upside but I don't think it's worth the risk. I still have some Spyder S&P 500 ETF (SPY) calls from last week that I'll close out right after the open and I'll be taking some more profits on my gold shorts. No need to be greedy ;) The Euro is up slightly so I'll be using this strength to add to my Proshares Ultrashort Euro ETF (EUO) positions. I think we still have to work out the European debt crisis before any big moves are made to the upside in this market. I'll also be shoring up any loose positions I wanted to bail on last week but was waiting for an up day to do so. This is why I stress not panicking. Had you closed your book on Thursday when we were down 520 points, you'd be kicking yourself this morning as you could have sold much higher. Never panic! Right now I'm just trying to raise cash and keep my powder dry so when we get some clarity on the direction of this economy, the soft landing in China and the sovereign debt problems in the Euro zone, I'm ready to strike. I'll continue to buy Alexion Pharma. (ALXN) and Apple (AAPL) on any weakness regardless of market conditions.

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

Not much action as the smoke clears...

Sorry about the lack of posts today but I was out of the office. The Dow and the S&P managed modest gains after some of the worst selling we've seen since the 08' collapse. The NASDAQ actually managed a respectable 1.1% move up, albeit on light volume. I bought some SPY OCT 114 calls yesterday when we're down over 450 points cause I saw a bounce coming but quickly sold them today for a small gain as I don't think anyone wants to be long over the weekend. Alexion Pharmaceuticals (ALXN) continued it's breakout in this down market and to me remains the only stock along with Apple (AAPL) that can be bought in this environment. Both are true Q4 stories that should unfold regardless of the overall market conditions. I remain bearish on all other stocks in the short-term. We must get some answers on Europe and a see soft-landing in China. Both things I think will happen, but this market needs to see it. The real story today was gold which continued its collapse falling almost 5% to $1656.20. I've been bearish on gold since it looked like it was forming a double-top the last month and have been predicting a pullback to it's 200 day MA which is a little over $1500. I've been using Proshares Ultrashort Gold ETF (GLL) OCT calls to play the decline. It's a good time to keep your powder dry and wait for this period of unrest to subside.

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

Did anyone get the license plate of that truck??

There isn't a lot to say after a day like this. I didn't expect us to react this badly to the Fed decision, but we did. Let's accept it and move on. I'm actually disappointed we didn't fall more here at the end. We need to capitulate and get the wholesale buyers in, and we need cheaper prices to do so. I really believe we're better off than we were on August 8th (the last time the market was at these levels), so I'm a bit perplexed by the overwhelmingly negative action. I would be in cash or even short this market until we work out the macro issues that are looming over us. The worse thing you can do hear though is panic and close book. If you panicked the week of August 8th and closed your book, you would have missed the last month of upside. Even if you believed we'd eventually hit these lows again or worse, you would have had an opportunity to get out at a higher price than if you just followed the lemmings off a cliff. So even if you want to sell be patient and you'll get a better price to do so in the coming days and weeks. The only issue I'd even touch right now is Apple (AAPL). Why? Let's do some math. Apple (AAPL) has about $72 per share in cash on it's balance sheet right now. If we back that out of today's closing price that would put the stock at $330. Apple (AAPL) will make (conservatively) $45 per share next year. That means Apple is selling at 7.34X next years earnings. The average stock in the S&P 500 sells for 13X next years earnings. Growth stocks tend to get valuations that are 1:1 with their growth rate but I'm not saying Apple (AAPL) will ever sell at a 25X P/E again. It probably won't, but even if it sold at an average valuation the stock would be $585. The best run company on earth is extremely undervalued.

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.

Autozone (AZO) and O'Reilly Automotive (ORLY)

In a fledgling economy, people start to cut back, and naturally they start with biggest ticket items first. So when your car starts to breakdown you don't buy a new one, you repair the car you have. With new car dealerships turning into empty parking lots and people turning to independent mechanics or DIY for their repairs, companies like Autozone (AZO) and O'Reilly Automotive (ORLY) end up the big winners. Autozone (AZO) and O'Reilly Automotive (ORLY) should grow at 17% and 20% respectively in an industry estimated to grow at 3% next year. With slowing economic growth and high unemployment set to continue over the next few years, I expect these two to continue delivering stellar numbers.  Autozone (AZO) reports before the bell tomorrow. I bought some OCT 330 and JAN 320 calls as I think they should beat handily.

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.

Jack be nimble, Jack be quick

Today ended positive but as we know this means nothing when the PIIGS over in the Euro Zone wake up everyday before we do and have their way with the markets. The rumor-mill is in full force and what takes us down one minute, brings us back up the next. With Greece only 3 weeks away from not being able to pay their bills, and the Fed meeting next week, we may finally find some direction for this market whether it's up or down. I bought some Randgold Resources Ltd. (GOLD) and Wynn resorts Limited (WYNN) today as I intend to build a position in both over the next few weeks. Except for Baidu, Wynn (WYNN) is my favorite play on China. I like Las Vegas Sands (LVS) as well, but I think Steve Wynn is brilliant and I like having him at the helm. Whatever you do have an exit plan, cause if you're not nimble you'll burn your ass on a candle, or something like that.

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

To Greece or Not to Greece

That is the question. After being down huge at 7AM on rumors about Euro bank solvency, the futures rallied back as Merkel came out and says "it's all good". The truth is we really don't know and until we do we will trade in this range of 1130-1205. We'll break either way when we get some definitive news. I have raised some cash and there are a few stocks I'm watching that I'm ready to buy on any weakness. CF Industries (CF), Rangold Mining (GOLD) and Wynn Casino (WYNN). All these companies are in the sweet spot right now. Wynn (WYNN) gives you Chinese exposure so watch for a soft landing in China if you like this name. CF Industries (CF) is benefiting from the world wide food shortage but is susceptible to rising Nat Gas prices. Rangold (GOLD) is my favorite miner and can give you a much better return than the precious metal itself, but I'm not buying until we get a pullback in gold to under the $1800 level.

This is not a recommendation to buy or sell any securities. DAK had no positions in the companies in this article at time of publication but positions can change at anytime.