Quick Long Thoughts-- (if any)

Stocks of Interest:

AMT/CCI: any upcoming catalyst for these names following recent run. Positive daily momentum remains in tact for these names.

Both above 50 and 200 day showing signs of leadership but attractive buys on pullbacks.

GPRO: consolidating in the $50-54 range. Momentum upturn.

DNA: trying to form a bottom within the range of $78-80. A better buy closer to 78 a longer-term buy idea worth waiting for a breakout with exit slightly below $78.

ATRS: clearly a strong run recently, a name worth revisiting on pullbacks. Bottoming intermediate-term any pullbacks near 18 level can offer a buying opportunity.

GOLD YEILD and MARKETS

10 year Yield: after peaking on jun 28 further declines continue, while next support remains at 4.94.

Gold: 600 supports – appears extended versus other moving averages.

SPX: 1240-1280 range remains key following sell off from May highs. 1280 can continue to serve as a resistance level

One question:

One question:

A. Mkt rally starts now and continues further into labor day.
B. Mkt rally fails now and then recovers in 2.5 weeks
C. Mkt rally works now and then fails 2.5 weeks later.
D. Sideways...sideways....up/down...sideways.- just sideways.
E. None of the above too volatile.
F. I don't care leave me the F*** alone.

Strategy Summary:

Expect continued market volatility as the rest of earnings and FOMC meeting 2.5 weeks from now

Near-term momentum becoming oversold creating a high-risk trading opportunity of higher beta names—(with a cautious approach to news sensitive names).
OSX , HUI and XBD- areas to explore.

Shelter for uncertainty: Attempt to accumulate defensive leadership stocks on any near-term pullbacks.

AES, AYE, TXU, OKE, PPL, FE, CVS, KR, SWY, CBP, AZN, MRK, SGP, BMY, INTU, CMI and UTX--- few names to watch for on pullbacks.

Looking beyond two weeks: Position out of speculative trading names and take a defensive / cash stance on portfolio especially ahead of FOMC meeting.

market outlook: last week of july 06

Market Outlook:

• Earnings will create a boom/bust response adding to volatility but already a negative start but heavily stock specific.
• Markets are becoming oversold making shorts here not as timely....but macro effects here can create distracting noise.
  
• Rather trade in near-term here than making investments....use pending strength to trim out of long positions.

CBH: a short worth revisiting following a recovery around 200 day mva. Overall, short on any strength despite oversold levels.

AFL/AIG: appear to be a similar theme like HMO's where attempted recovery from weakness YTD: performance.

AFL reporting on tuesday- oversold here to be shorted heavily but a negative bias market is a tough call here.



The defensive themes:

DJ: decline back to 35 level, monthly key support worth taking a shot.Still awaiting to consider the value bet in traditional media names.

PPH - worth a revisit and run all names in the index. Again BMY/SGP of interst here before earnings. Plenty of pharma names.

utilities strength continues along with staples as the defensive relative leadership remains in tact. Not convinced to jump on this train as a long idea. But curious on pharma as the defensive theme.

10 year yield: correcting in the near-term while weekly suggest further downside....perhaps around 5%.
Gold: appears to be extended in the near-tem, further downside potntial with support around 600 level.
DXY: attempting to bottom
Crude: looking for correction closer to 70 level. following recent highs of 77. momentum suggesting

currency notes and things to watch for:

The upside risks to inflation are clear but at the same time, so are the risks that the economy faces. The next FOMC meeting is scheduled for August 8th, which is only 2.5 weeks away. This means that the short list of economic releases between now and then will not only be even more important for traders to watch, but could also bring about more volatility. This includes the personal consumption expenditures index and the Q2 employment cost index, which will shed more light on the inflation outlook along with consumer confidence, durable goods, advance Q2 GDP, ISM and Non-Farm payrolls.

week ahead : last week of July 06

There are several economic reports of note and a number of significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note

Tues. - Consumer Confidence, Existing Home Sales, Richmond Fed Index

Wed. - Fed’s Beige Book

Thur. - Durable Goods Orders, Initial Jobless Claims, New Home Sales

Fri. - Advance 2Q GDP, Advance 2Q GDP Price Index, Advance 2Q Personal Consumption, Advance 2Q PCE Core, 2Q Employment Cost Index, Univ. of Mich. Consumer Confidence

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. - Alcon(ACL), Altera Corp.(ALTR), American Express(AXP), Avaya(AV), BellSouth(BLS), Hasbro(HAS), Kraft Foods(KFT), Merck(MRK), Pitney Bowes(PBI), Quest Diagnostics(DGX), SanDisk(SNDK), Schering-Plough(SGP), Texas Instuments(TXN), 3M Co.(MMM)

Tues. - Aflac Inc.(AFL), Altria Group(MO), Amazon.com(AMZN), AmerisourceBergen(ABC), AT&T(T), BJ Services(BJS), Boyd Gaming(BYD), Burlington Northern(BNI), Chicago Merc(CME), Chubb Corp.(CB), Colgate-Palmolive(CL), Corning Inc.(GLW), Countrywide Financial(CFC), Diebold(DBD), Energen(EGN), ENSCO(ESV), Flextronics(FLEX), Legg Mason(LM), Lexmark(LXK), Lincare(LNCR), Liner Tech(LLTC), Lockheed Martin(LMT), McDonald’s(MCD), Nabors Industries(NBR), Murphy Oil(MUR), Omnicom Group(OMC), Panera Bread(PNRA), QLogic(QLGC), Smith Intl.(SII), Stanley Works(SWK), United Parcel(UPS), Weyerhaeuser(WY), Whirlpool(WHR), Xilinx(XLNX)

Wed. - Allegheny Tech(ATI), Anheuser-Busch(BUD), Baidu.com(BIDU), Biogen Idec(BIIB), Black & Decker(BDK), Boeing(BA), Cadence Design(CDN), ConocoPhillips(COP), Diamond Offshore(DO), Express Scripts(ESRX), General Motors(GM), Intuitive Surgical(ISRG), Kimberly-Clark(KMB), Lucent Tech(LU), Norfolk Southern(NSC), PF Chang’s(PFCB), Phelps Dodge(PD), Pulte Homes(PHM), Ruth’s Chris(RUTH), Symantec(SYMC), Terex Corp.(TEX), Under Armour(UARM), Wellpoint(WLP), Zimmer Holdings(ZMH)

Thur. - Aetna(AET), American Power(APCC), Andarko Petroleum(APC), Apache Corp.(APA), Beazer Homes(BZH), Boston Scientific(BSX), Bowater(BOW), Bristol-Myers(BMY), CB Richard Ellis(CBG), Celgene(CELG), Chesapeake Energy(CHK), Cleveland-Cliffs(CLF), Comcast(CMCSA), Cummins(CMI), Deckers Outdoor(DECK), Dow Chemical(DOW), Ethan Allen(ETH), Exxon Mobil(XOM), F5 Networks(FFIV), Fortune Brands(FO), Garmin Ltd.(GRMN), Harrah’s(HET), Kellogg(K), Kerr-McGee(KMG), L-3 Communications(LLL), Lear Corp.(LEA), Massey Energy(MEE), MBIA Inc.(MBI), McAfee(MFE), McKesson Corp.(MCK), Monster Worldwide(MNST), Newmont Mining(NEM), Northrop Grumman(NOC), OfficeMax(OMX), OSI Pharma(OSIP), Rackable Systems(RACK), Raytheon(RTN), Royal Caribbean(RCL), Sohu.com(SOHU), Starwood Hotels(HOT), THQ Inc.(THQI), Tidewater(TDW), XM Satellite(XMSR)

Fri. - American Tower(AMT), Baker Hughes(BHI), Centex(CTX), Chevron(CVX), Dolby Labs(DLB), Ingersoll-Rand(IR), Ingram Micro(IM), Multimedia Games(MGAM), Office Depot, Western Digital(WDC), Whole Foods(WFMI)

Other events that have market-moving potential this week include:

Mon. - None of note

Tue. - None of note

Wed. - None of note

Thur. - None of note

Fri. - None of note

BA-OSX- trade 7-18

Market View:

Additional noise war speculation on Oil Services but rather watch the 200 day mva—as a support level.

Like this short to be continued but would like to avoid the war noise that can be distracting.

Regardless…watch the OIH closer to 200 day mva of 138

BA: a daily buy on technical signals watch for trading pullbacks before adding to accumulate and build on strength. – News helps the case but a substance trade based on indicators as well.

Deeply oversold near-term, 50 day at 83 as resistance level. Accumulate close to 74 level.

BTU: further short for a quarterly play…extended and quick entry. Exit on shorts.

Thoughts

Brokers and Metals as short candidates here? - Following up on yesterdays daily observations... Continue to press the short or modestly suggest to
Staples like WAG, CVS, K -- strong recent run...do you add to long here or that was a short lived recovery. Or utilities which continue to appear as buy....

Markets appear to be back to 50 day mva. (SPX, RUT, RMC and EFAE) with a overbought daily. Perhaps setting up for a downtrend/consolidation towards 200 day.

Maybe further consolidation can give the oversold weekly a timely entry point...for another recovery.RIMM- looks like a short to 61 before being a buy. CFC- looks weak.

Beta Custom Index : Click to enlarge

Market Outlook

Markets have recovered from mid -June lows as most indices are at or approach their 50 day mva. Appling the 50-day mva as resistance level.

Near-term momentum is becoming overbought

Not a timely entry point to trade long. Would rather trim long positions and favor short trades at these levels.

I was watching from the beta related index as key indicators approaching 50-day mva.-

Custom beta index composed of : OSX HUI, XBD and SOX illustrates a better picture for the markets.

In addition, Mid, Small and emerging market indices share a similar pattern of approaching 50-day mva from June recovery lows.

Risk/Reward: appears to be stuck in the middle: May Highs vs. June lows.


In broader terms adding to long ideas is not timely
Can place short using the 200 day as a targe exit point

THE BIG PICTURE: (secular trend review)

http://www.pring.com/articles/return.pdf

• Average bear market last on average 18 months with a price loss of an average 28%.
• A projected 28% loss = SPX at 940.
• S&P has not broke below its 12 month MVA- which should confirm the end of leadership intact.
• Market should play catch up on the downside.

Basically, Pring argues that the multi-decade peak in optimism that occurred in 2000 has not yet been worked off. He writes: "These types of secular market turning points have always been followed by massive bear markets like the one that developed in 1929, or multi-year trading ranges as witnessed in the 1900/ 1921 and 1966/81 periods."

But Pring does add this caveat: "It's important to understand that while the position of the long-term indicators looks extremely ominous from a primary trend point of view, they have not been confirmed with a negative 12-month moving average crossover by the S&P [500]. And until that happened, assume the primary uptrend is intact."

Pring looks monthly closing prices, and right now he calculates the 12-month moving average will be about 1255 at month's end.

Graham was a value investor. He looked for well-run companies with low-priced stocks. Among his selection criteria:

* The company must not be a financial or technology concern. Graham favored more basic industry-type companies. Followers of Buffett, who know of his aversion to technology companies, now see where that aversion originated.

* The company needs annual revenue of at least $340 million. He wanted the predictability of developed companies, not young, developing ones.

* A current ratio (current assets divided by current liabilities) of 2 or more. This is a measure of liquidity. The more liquid a company is, the less likely it is to get into financial trouble.

* For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). This too is a measure of liquidity.

* Companies must increase their earnings per share by at least 30% over a ten-year period, and EPS must not have been negative for any year within the last five years. These are companies that have proved themselves over time.

* The P/E ratio, based on the greater of the current P/E or the P/E using average earnings over the last three fiscal years, must not exceed 15. Stocks with moderate P/Es are more defensive investments by nature.

* The price-to-book ratio multiplied by the P/E cannot be greater than 22. Graham liked tangible assets, and this is a measure of them balanced against the stock price

2nd quarter close

Looking for gold related and brokers offering some trading oppertunities here.

Semi and Biotech might be themes worth revisiting down the road.

Upcomming Fed meeting and quarter end for funds can send mixed messages.

Stock specfic themes are critical given uncertaintiy of market direction and lack of trend.

Interested to see how to postion portfolios for First 2 weeks in July.

Quick Market Summary

More correction to continue with support closer to October lows
Various daily momentum signals that can be misleading to the general theme despite trading opportunity.
Earnings can trigger or shift the general trend but from technical standpoint correction should continue.
Shorting opportunities persist on strength until a significant signs of a recovery.

Spikes and Turnarounds

Very violtile day as seen by the spikes in the VIX - highest reading in this sell off. High around 20. A shift in the market appearing to
Argument remains weather a low vs the low.-- but regardless a rollercoster of a ride on June 8th. A guideness for resitance level: 50 day avg as for most names in the market.
Plenty of trading oppertunites especially in names which have significantly corrected in this cycle. OSX and HUI. Near-term buy cycles beging to
Commodity related themes and other cyclical places. Also other higher beta related themes that can see a bounce include biotech, semis and brokers.
Maintain tight stops, to manage violitily by narrowing timeframe.

Growth areas in future

Areas and groups to explore in next easing cycle:

alternative energy, water purification, genomics, nanotechnology, voice recognition, homeland security, China, emerging markets and pandemic treatments.

Gold vs S&P relative performance chart mirrors closely the US 10 Year trasury yeild performance.

Therefore, higher gold = higher rates = lower spx returns.

Plenty of Noise

A weak open despite the weak econ #'s which were assumed to drive markets higher.

Tough read here since most shorts have declined significantly. And shorting when the odds are not stack with you is rather a ballzy bet.
Semi's have declined about 18% avg. in line with the may corrections. And obsiouly commdity related names.

Here are short ideas from few weeks back outlined with ranges. Again ballzy to step in as a short.


BEN: short in tact between 90-80 range. Asset Manager have had a huge surge in the last 3+ year and near-term have shown weakness....would trade around this short. (recent range $104-90)
TEVA: a short worth adding to on any strength. Strong volume break down ...setting up for intermediate-term weakness. Further correction to continue. (45-37)
WDC: short: 21.43 resistance using support around 18. and Add to short if breakdown below 18. ($24-18 range).
BRCM: A short worth coming back to as it is reaching overdone levels. Add to short on any strength. ($50-36 range correction).
RIMM: $90-70 range offered a great short opportunity. watch closer to $70 for potential bounce but intermediate-term momentum slowing.
not timely here but watch and add.

Resourceful web links

http://www.nytimes.com/packages/khtml/2006/04/02/business/20060402_SECTOR_GRAPHIC.html?adxnnl=1&adxnnlx=1147725071-Slhe5YiMo/fiDD3uxFl4cQ
http://insider.thomsonfn.com/tfn/stocks.asp?imodule=seasonality&ticker=wpp&ttype=A
http://news.morningstar.com/fundReturns/CategoryReturns.html
http://www.adrbny.com/adr_index_landing.jsp
http://biz.yahoo.com/p/fam/fidelity_group.html
http://www.digitimes.com/

June 1, 2006

May is over! Data anticipation awaits. Early bets and tough read here.
Stradegy: will follow up. Pharma, Telco and Energy might be sectors of interest. Revisiting retail in the next 2 quarters.


Retail. Good #'s sector showing some life today

....OSX making a run after sluggish start.....Tech some sort of a recovery at this point to stock specific at this point not much actiobable.
Wondering about the metals/golds if a major buying oppertunity here sensing too much fear but strggling to justify other side of the trade. Not impressed by gold action.

Pharma: showing some life today maybe month start bets. A long-term theme that might be failry valued and oversold enought to take the risk. Biotech is very mixed. but index net is negative. Healthcare underperforamnce being examined.

Resourses:

http://www.nytimes.com/packages/khtml/2006/04/02/business/20060402_SECTOR_GRAPHIC.html?adxnnl=1&adxnnlx=1147725071-Slhe5YiMo/fiDD3uxFl4cQ
http://insider.thomsonfn.com/tfn/stocks.asp?imodule=seasonality&ticker=wpp&ttype=A
http://news.morningstar.com/fundReturns/CategoryReturns.html
http://www.adrbny.com/adr_index_landing.jsp
http://biz.yahoo.com/p/fam/fidelity_group.html
http://www.digitimes.com/

Portfolio Breakdown....

Holiday weekend appraoches while a close the month of may Econ Noise behind us.

I am sure longs are clearly fed up with the action and rather allocate energy in non-market realted activities.

Consider adding to shorts if the S&P breaks below its 200 day mva, setting off a panic. (more points on this attached below) Seeing a lot of oversold stocks once again, -- a usual behaviour following a signifigant sell off.

I continue to notice the stregth of low beta names especially in Meda/Adevertisment and Consumer Staples area.

Some names include OMC,TKLC, NCR , TKLC, INTU, CKR, and WMT --just to name a few.

Now high beta names remain oversold once again but no compllenig reason to rush to short or even accumulate at this point.


Stradegy: Slice the market in half between high and low beta. Trade high beta ; Invest in low beta.

Trade around beta postions with shorter-time frame by identifing quick exit/entry points. Mostly, trading bias on the short-side but avoid building intermidate-term postions in high beta names without fundemental catalyst.

Build long postions in attractive names in low beta areas. From 6-7 low beta groups indetify groups that are working and find the leader in that space.


50% trading, 50 % investing portfolio. short trades and long investments. As beta names become extremly oversold intermidate-term then we can change current stradegy.

Four questions to ask for portfolio postioning:

Long High Beta: 25%
Short High Beta: 25%
Long Low Beta: 50%
Short High Beta: 0%

Long Trade in Tech and Deep Cyclics:

Long Trade in Tech and Deep Cyclics:

Tech:
NVDA : THQI, QSII, PALM- 200 day avg. (late recovery attempt)
Basic Materials.
FCX, at 200, NX-around 38 , GGB, around 200, TXI around 50 day...NUE-showing some life already.

Industrials:

EXP; IVAX around 20 support, ROK, HON, USG-towards 90.

Energy:
MVK, EOG at support of 60, SUN sp. 65, VLO abv 200 day.RDC around 200 day.