TIE/ GG strong run up yesterday- will take it given a positive metal/gold call but appears rather exuberant? Not sure but felt like a month-end run up. Perhaps a myth but a note worth contemplating.Continuing on the basic materials themes - there are small cap names that stood out: ANR, IPSU, ROCK and CENX.
From WSJ-
- China’s companies are importing more scrap copper as a cheaper source of the metal for cathode production as prices rise. China’s copper-cathode output in the first nine months this year reached 2.2 million metric tons, of which 27% was made from scrap. In the same period in 2005, 16% came from scrap. Refineries and makers of semi-fabricated cable and wire are also using more scrap. China’s imports of copper concentrate have plunged 46% over the last 12 months.
Sector/Themes: Tech calls have been sluggish and seeking direction on the financial shorts.
TK : AMD facing subpoena from department of justice and can have a negative impact.
Other tech ideas can correct but given month-start most sell off should not be a surprise.
HRB - reported weakness regarding its mortgage business which might be a catalyst for a downside move for sub prime lender. Specifically, looking for a downside move in FED.
Friday, December 01, 2006
Tuesday, November 28, 2006
FED - "lets try again" Short Idea
Actionable short -idea: FED: Exit level 66.95 using recent highs. A key
Market Thoughts and Themes
Market Outlook :
Broad Market Behavior:
Early signs of market decline as the S&P ended a 94 consecutive day without a 1% decline on Monday. Falling dollar continues to causing concern along with rising oil. Plenty of print and electronic media connecting both factors as the quick summary to market decline. In addition, VIX showed signs of spiking which can be a risk for a complacent market recovery. Important to note, that fear in the market can boost further downside momentum. Panic might settle in following recent run up which has lifted various groups.
Perspective to keep in mind, first day back from holiday weekend, month-end approaching and year-end sell-off.
Commodity Observations:
Throughout Q3, was looking for crude to hold a key support of $58 and now the basing continues around $60 level. Stabilizing at current levels and holding above $56 suggesting recovery strength remains intact. USO – watch near-term support of 50.20 to see a settling process following a 32% decline from summer highs. Although not a big bull here would not add to short position.
Gold looks attractive from an intermediate-term stand point and continue to favor gold stocks. GG – adding to position on any weakness. Support on Gold remains around 600 as momentum continues to bottom. This favors further upside move. In addition, headline noise about the declining dollar, gold appears positive and at less risk of a sharp correction.
Worth looking for additional timely ideas in that space..../ osx/ hui/ and other metal related themes.
Financial Weakness:
The inverse play to gold strength appears to be declining financials. Signs of weakness remain among the banks with BKX falling below key resistance level of 114. Near-term support of 112 being challenged as index fell below 50 / 15 day mva. A weak broad market can be influenced by weakness in financial but too early to claim a top on recent correction.
Actionable short -idea: FED: Exit level 66.95 using recent highs. A key resistance level recently around 65-66 range...looking for a decline closer to 60 followed by long-term support at 50.
Connecting dots between consumer and financials names notably RLX/BKX Indexes - A theme related to spending / lending / Approaching ideas from a sector inter-relationship view stemming from overall US consumer .... Net/Net: Banks/Retailers are extended and might be at higher risk on any market correction. Targeting these themes as potential short candidates.
Investment ideas
Continue to like technology, telecommunication and media as longer-term working themes from an investment prespective. Numerous names are subject to a price decline. Plenty of ideas mentioned in the past month.
Media stocks - newspapers overdone but offer timely entry points .
Healthcare: Plenty of names in small cap that remain attractive. And Large Cap pharama, not loved today but a better bet looking ahead.
Broad Market Behavior:
Early signs of market decline as the S&P ended a 94 consecutive day without a 1% decline on Monday. Falling dollar continues to causing concern along with rising oil. Plenty of print and electronic media connecting both factors as the quick summary to market decline. In addition, VIX showed signs of spiking which can be a risk for a complacent market recovery. Important to note, that fear in the market can boost further downside momentum. Panic might settle in following recent run up which has lifted various groups.
Perspective to keep in mind, first day back from holiday weekend, month-end approaching and year-end sell-off.
Commodity Observations:
Throughout Q3, was looking for crude to hold a key support of $58 and now the basing continues around $60 level. Stabilizing at current levels and holding above $56 suggesting recovery strength remains intact. USO – watch near-term support of 50.20 to see a settling process following a 32% decline from summer highs. Although not a big bull here would not add to short position.
Gold looks attractive from an intermediate-term stand point and continue to favor gold stocks. GG – adding to position on any weakness. Support on Gold remains around 600 as momentum continues to bottom. This favors further upside move. In addition, headline noise about the declining dollar, gold appears positive and at less risk of a sharp correction.
Worth looking for additional timely ideas in that space..../ osx/ hui/ and other metal related themes.
Financial Weakness:
The inverse play to gold strength appears to be declining financials. Signs of weakness remain among the banks with BKX falling below key resistance level of 114. Near-term support of 112 being challenged as index fell below 50 / 15 day mva. A weak broad market can be influenced by weakness in financial but too early to claim a top on recent correction.
Actionable short -idea: FED: Exit level 66.95 using recent highs. A key resistance level recently around 65-66 range...looking for a decline closer to 60 followed by long-term support at 50.
Connecting dots between consumer and financials names notably RLX/BKX Indexes - A theme related to spending / lending / Approaching ideas from a sector inter-relationship view stemming from overall US consumer .... Net/Net: Banks/Retailers are extended and might be at higher risk on any market correction. Targeting these themes as potential short candidates.
Investment ideas
Continue to like technology, telecommunication and media as longer-term working themes from an investment prespective. Numerous names are subject to a price decline. Plenty of ideas mentioned in the past month.
Media stocks - newspapers overdone but offer timely entry points .
Healthcare: Plenty of names in small cap that remain attractive. And Large Cap pharama, not loved today but a better bet looking ahead.
Sunday, November 26, 2006
Back to Biz:
GLW: Street argument for stock appreciation includes : “ Corning’s first quarter demand could benefit from a number of factors, including strong Chinese demand, higher LCD TV unit demand per household, larger average screen sizes and LCD TV price declines driven more by retail margin concessions, as well as PC demand.”
ESRX-an oversold name –poised for recovery.
MNST attractive basing set-up and strong support around $36 level. Despite recent run-up, add on anyweakness. to MNST. It offers a global play on labor growth especially in emerging markets. Regulation noise pending on the stock but investor better pay attention.
Takeout/ buyouts: Remain a key trend clearly as stated by Barron’s and other in the market place.
Last week, when at least $52 billion of mergers were announced, options trading failed to reveal any of them, extending a losing streak that has dealers reacting to news rather than anticipating events.
Key implication on sector/stock analysis, in conjunction with a recent strong run up and year-end fully approaching. Most notably, the takeover game is played in both cash and option markets. Plenty of rumors in the marketplace driving price direction add to an existing laundry list of variables.
Bottom-line: know your stock story and the key players in that space.
ESRX-an oversold name –poised for recovery.
MNST attractive basing set-up and strong support around $36 level. Despite recent run-up, add on anyweakness. to MNST. It offers a global play on labor growth especially in emerging markets. Regulation noise pending on the stock but investor better pay attention.
Takeout/ buyouts: Remain a key trend clearly as stated by Barron’s and other in the market place.
Last week, when at least $52 billion of mergers were announced, options trading failed to reveal any of them, extending a losing streak that has dealers reacting to news rather than anticipating events.
Key implication on sector/stock analysis, in conjunction with a recent strong run up and year-end fully approaching. Most notably, the takeover game is played in both cash and option markets. Plenty of rumors in the marketplace driving price direction add to an existing laundry list of variables.
Bottom-line: know your stock story and the key players in that space.
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