Thursday, January 31, 2008

V

Phew, I'm glad that my APP is doing well right now, people are starting to finally look into this stock. I've noticed that there are a few more bulls in this market thanks to the 50bps cut...that's nice, but I still believe that the correction is not over yet. I would consider myself one of these bulls right now, but since the market direction is still unknown I only have 50% of my portfolio invested, the rest is in cash. The S&P should test the 1400 mark within the next week...but if it's unable to break through that support we will be testing new lows.

Now you know I'm bullish on American Apparel (APP), but Visa (V) is another company I may be interested in.

I'm sure you've heard the buzz over their new IPO, but is this company worth investing in? Now there's tons of positive comments surrounding Visa but let me list you some of the negatives first. One thing's for certain, with all these credit issues surrounding financials, Visa will not mirror Mastercard's past performance. Further, do we all remember the hype surrounding Tim Hortons? THI was up for a few weeks but dropped shortly after. The hype surrounding this IPO is something that I would be scared of. I still plan to play the hype as I have done with several Chinese IPOs, but my plan is to get in and out quickly...if that fails, I would consider holding the stock long-term. All in all, before buying into the hype do some research to see why they are going public and why they need to raise $10B from this initial public offering. Don't be fooled by all this excitement surrounding this IPO and Mastercard's great return, Visa is certain to crank up their IPO price and it may be too overvalued by the time average buyers can buy the IPO.

Monday, January 28, 2008

WEDNESDAY IS A NEW DAY

By the looks of it, Wall Street expects the Fed to cut 50bps this week (2.15 EST on 1/30/08). Investors took the news of a big drop in new home sales as a sign that the Fed must lower interest rates again. But will they? And how big of a rally will we get if they do? It's hard to say...today's volume was ridiculously low and I fear that the market is going into Wednesday over bloated. Also, the markets have been up three of the last four trading days, and people don't seem to be as worried as they were last week...so there is a possibility that they may do nothing or just cut .25. No matter what they do this week, I'm hoping you all have cash on hand for the big news. As a trader, you should be ready to react and pounce on any given opportunities. If the markets drop I will look to short to hedge my long position in APP.

Here is what I did today, I said over the weekend that I had mixed feelings going into Monday, but I decided to look into SDS anyways seeing as the Asian markets were in ruin and the U.S. pre-market was negative. I bought SDS in the morning...I got kinda worried 30 minutes into the opening so I decided to set a sell stop just incase the market decided to swing the other way as it has been doing for the past month.

Friday, January 25, 2008

SORRY TO SAY IT

Just as I predicted, today's rally was short-lived. By midday we lost all our morning gains and by the afternoon we headed towards negative territory. My prediction was spot on, so I hope you got out of any long positions in time and used that money to buy QID. I find it rather immature that some investors including Jim Cramer are calling bottoms in the market already. This correction is far from being over, the bull mentality Cramer has needs to change before anything gets fixed. Just see how wrong Cramer is, and has been in this video.

So...we may get short-term bottoms along the way, but we have yet to test the 2004 lows, and if the Fed doesn't cut 50bps come Tuesday we will be testing those lows this week. Technically, it looks like we're heading down on Monday in the S&P500, the NASDAQ has a similar pattern but is showing a bullish divergence. Has tech been oversold? Perhaps, but picking up some QID on Monday shouldn't hurt you. I'm thinking of getting into some SDS though. Anyways, have a good weekend...and I'm sorry to say it, but I'm bearish in this market.

1/27/08 UPDATE: I'm starting to get mixed feelings about Monday. With so many earning reports coming out tomorrow, you need to be careful when picking a side...you don't want to be on the wrong side of the fence. The markets can turn on you at any moment, you're probably better off just holding cash going into Tuesday. Remember, holding cash is a position too!

Thursday, January 24, 2008

A LONG TERM INVESTMENT IS A FAILED SHORT TERM INVESTMENT

A long term investment is a short term investment that has failed. Keep that in mind these next few days if you are going long. Be very careful, tomorrow should start off green with all this good news and the futures up tonight but in these volatile markets anything can happen. We didn't get much volume today, an indication that this rally is not very strong. Remember, we are still bearish...Fridays in a bear market are not the best, they have the ability to sell hard in the afternoons, so keep that in mind when you're trading tomorrow. Also, as of today, we have retraced up to 50%...this is a dangerous mark, because those who got hurt are looking to take some shares off the table. I see the markets moving sideways towards Tuesday's Fed meeting; from there we could move sharply up, or sharply down from this 50% retracement.

Wednesday, January 23, 2008

AFTER HOURS

"There are volatile markets and then there are volatile markets. Wednesday's session was the latter variety, which is to say it was truly volatile." (YAHOO! Finance)

Well put...we went from losing 300 points by midday to gaining 300 points by the end of the day, that's a 600 point swing my friends! So I must say, this is a bullish move, one that I've been waiting for wayyyyyy too long. Will we be getting a dead-cat bounce tomorrow? Now that's anyone's guess, but this afterhours site or premarket site indicates that the markets should stay in the green tomorrow. Great, but remember...tomorrow could be another "truly volatile" day. Tomorrow's jobless claims, existing home sales figures, and even POT's earnings could turn this market upside down again.

Monday, January 21, 2008

AFTER A WILD WEEK ON WALLSTREET THE WORLD IS DIFFERENT

Indices around the world dropped to a new low today. The Toronto Stock Exchange crashed today after falling 4.75%, marking its biggest one day plunge since 2001. The S&P 500 should follow this same pattern, so the bounce I was hoping for might not happen until hobo Ben cuts rates by a huge margin. Since last week, the S&P has erased all gains made in 2007 and rumor has it that a live S&P chart shows that in one day, all gains made in 2006 have also been erased.

Tips: In times like these, look into ultrashort ETFs like QID, DXD, and SDS to hedge your long positions...or even short emerging markets with EEV. Also, by studying the chart below you will have a better understanding of where this market is heading.

Saturday, January 19, 2008

NO ORDINARY BEAR MARKET

As of today, the markets are oversold short term. There were signs of a bounce early Friday morning, but this light bounce was met with heavy resistence going into president Bush`s speech. His speech left the markets in a blood bath once again. Yes, the overall trend in this market is down, but Friday`s close has left us with a huge support level, so again, I am expecting a significant bounce either on Tuesday or Wednesday. However, due to the human factor and fear in the economy, oversold conditions can last much longer in a bear market than a bull market. One has to be immensely tough in a market like this. This will be no ordinary bear market, this will be more like Japan's in the late 80's early 90's which is still unfolding...

Thursday, January 17, 2008

FED YOU!

I may not agree with everything Cramer says but whenever he yells "the Fed knows nothing!" I nod in agreement. Look at this mess we're in right now...the United States' economy is in the shits right now. It's obvious that inflation isn't as high as we all thought it'll be...so come on Bernanke, step up and do something! My initial intention was to vent about Bernanke but I'll let this video do that for me. So let us talk about Apple a bit...I got hurt on Macworld day? Ouch, eh? Like I said from the beginning "2008 might be the year of exceptions" and "being long in todays market CAN hurt you"...this reminder woke me up as I forced myself to take a $363.90 loss. To me, Steve Jobs' announcement of a superthin MacBook Air laptop computer was good news. The markets are so messed up now that people take this news as bad news...come on, there's nothing wrong with this company, they sold 4 million iphones thus far and this laptop is still better than just about anything being introduced by any other company in the electronics world.

Now on to the market. Indexes are showing a bullish pattern right now. Ha, nothing has changed, I'm still waiting for a bounce. Using candle stick technical analysis, you can see that pattern developing. You must remember that the best rallies to the upside happen in a bear market, but these rallies don't last long, so be careful, remember, our economy is still in the shits as I speak.

Now my cousin asked me this earlier today, hope he doesn't mind me sharing...anyways he wrote: "I see you bought American Apparel. Is that a bargain, you think?"

YES! Let me explain, but first you must keep in mind that I am a bit biased on American Apparel because I've fallen in love with this stock overtime (never do that lol). Anyways, here are some notes I wrote down about this company back in December: Endeavor Acquisition (EDA) merged with American Apparel (APP) on the 13th of Dec. This was when the stock shot up, now APP should earn around 450M in revenues in 2008 and trade at 2X EV/sales. Once APP reports their 1st quarter as the new company in mid-Feb I see a dramatical revaluing of its stock price. In Q2 they made 95M in sales, in Q3 they made 106.5M. Now analysts are projecting 110M in Q4. But wait, weren't they able to already increase sales 11.5M from Q2 to Q3? Q4 is X-mas holidays where sales typically rise 20%, I expect at least 125M in sales. Ok, but please remember that these were my thoughts back in 2007...we know now that consumer spending ended up lower than expected this year. This should have an affect on this stock, but I would believe that its already been priced in. As expected, people don't care much for this stock right now. But lets just put it like this...its the next Lululemon. People will start talking about APP and Cramer will start telling you to "BUY BUY BUY" and those who phone in during the lightning round asking about APP will hear his "HOUSE OF PLEASURRRRE" buzzer...so why not buy now? It's a great buying opportunity going into Feb.

Sunday, January 13, 2008

BAD+0=GOOD

By the looks of it, I was wrong last week. We did not get the short rally I was hoping for; as a result, I'm still stuck in my long positions. Nevertheless, I remain optimistic going into next week. Why? Well, while others expect the markets to tumble further this week from more sour news I believe that these poor expected earnings have already been priced in. Everything has been oversold to the extent that any good news or even NO news could potentially rally the markets. I strongly believe in this because people already expect CitiFinancial (C) to have poor earnings this quarter, we have such low expectations right now that as long as C doesn't surprise us with even worse reports the market will stay afloat. Now I wouldn't be surprised if the markets crash lower Monday morning, but we could easily rally back up in the afternoon because of Apple (AAPL). People have overlooked the tech sector these past weeks, but AAPL should catch people's attention again with their Macworld conference and expo starting Tuesday. To sum it up, people are going into next week with such low expectations that NO news could=GOOD news and GOOD news=GREAT news!

Monday, January 7, 2008

MCD ATTACKS COFFEE MARKET

News of McDonald's introduction of its own specialty coffees more than a year ago caught my attention. Finally, after eyeing McD's for some time now, and having a significant position in it, a video has been released talking about McD's jump into the $8.9B coffee market. Lets hope this move will be as successful as McD's introduction of its breakfast menu in the 70s. MCD is adding lattes, mochas and an ice-blended frappé to its menus, plus a broader range of "grab and go" beverages such as iced tea, smoothies and bottled drinks...I am long on MCDs. Cramer believes McDonald's stock should not have gone down because of Wendy`s poor fourth-quarter numbers, noting that big overseas business should shield McDonald's from a downturn. True...but seriously, who cares what Cramer thinks!

Saturday, January 5, 2008

2008 MIGHT BE THE YEAR OF EXCEPTIONS

From a technical position, we see that the NASDAQ is on the edge of breaking support. This is bad news...if we break 2504, expect the market to drop to 2450. We are in a bearish market which will get even more bearish if the Fed doesn't step in. I am hoping for a short 3-4 day bounce this coming Monday before this market drops. I will have a short position once the market breaks 2504...being long in todays market CAN hurt you. Unfortunately I myself am long on a few stocks, not sure if I'll be able to get out in time.

Google

Add my blog to your website

Author

Edmonton, Alberta, Canada
powered by website statistics program
Powered by website analytics software.