GTW - Gateway

GTW: Generally not a good idea to chase stocks under $5. At the same time a true seeker of turnaround stories.

Perhaps speculation but this overdone, beaten up, but yet liquid name offers something on the table.

Defined exit persist around $1.5 – but an attractive chart given a positive tech sector outlook.

A high beta name, with potential surprise move. Early signs of management changes pending as the market reacted to newsflow.

Ahead of analyst estimates – attractive technicals- insider buying – and a long bias in tech.

Worth a high risk shot here especially after a 6 year downtrend. Cycle turn can benefit the name.

Step Back : Macro Levels

US10 Year yield : Attempting to bottom w/ support level at 4.40 ; previous yearly lows stood at 4.28 in January. Looking to see if rising rate has impact on consumer related stocks.

DXY: Recent bottom on Dec 1 as well, at 82.36/ with momentum attempting to bottom.

Crude: Holding the lows of Nov 16, at $56.15 - and $60 remains key support level. Although, near-term pullbacks might persist, weekly remains oversold.

S&P Energy and Gold Bugs Index - suggest a bottoming weekly profile. At the same time, daily appears stretched from recent run.

Mkt view - Previous idea review

General Market thoughts:

At this point of the year, US stocks have made a strong run since the summer lows. Recent months have seen managers chase performance while others are ready to close the books. It is worth monitoring rising market volatility, as a gauge for turbulence with a downside bias. And the US 10 year yield pending recovery seems like an appealing bet. Weak dollar continues to dominate the press. Gold holding in and crude attempting to bottom above $60 level. All that said, plenty of ideas to revisit – especially the ones that have not worked. Entry points are going to be difficult to measure but need to develop and get fixated on a game plan.

Revisiting ideas which have yet to make a significant move

DTV: Remains an attractive stock in the media theme another watch list candidate. Clearly, media headline of a. being sued by TWX and b. Merger talks c. Liberty media.

Noise building recently, but a very positive long-term view. Just pointing out that near-term newsflow, should not get in the way of a long-term bet.

CVS: Revisiting this defensive ideas which recently blew up. But showing recovery around the $30 level. Given a positive outlook in healthcare – this fits the prescription drug and consumer staples theme. In addition, offers large cap exposure from extreme levels.

PALM

- Clearly, the marketplace has acknowledged PALM’s weakness accepting RIMM as the front runner in the group.

- RIMM extended at these levels, with high investor expectations – early sings this weak that

- Very positive analyst ratings across the board on the street for RIMM – becoming overdone.

- Slowly, building position in PALM – as a rotational play from oversold conditions.

GG: Looking to exit/trim around the 28 level. Full exit below 26.

ANR- Alpha Natural

Among small cap Basic Materials, ANR – Alpha Natural Recourses is worth a look. ANR provides equity to coal via equity markets. Also, can serve as an alternative play for BTU – the more liquid name in the space.

Manage downside risk with an exit at $15 and be ware of its close ties to commodity related themes.

Stock is attractive at current levels as near-term consolidation continues.

MKT UPDATE DEC 1, 2006

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.

FED - "lets try again" Short Idea

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.

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.

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.

CC: worth a look

CC:

Holiday Season upon us again.... Plenty of excitement in the gaming and electronic industry. Not my favorite area to follow but an attractive extreme always catches my attention. Here is CC, looking oversold and even down 2% following my am observation. But, chart is attractive and many have plenty of fundamental data points.

While stocks remains beaten up at these levels worth taking a shot. Looking at an exit for near-term traders at $23.40 upside potential closer to $26.

I do acknowledge reading the following : Circuit City has been holding meetings with the Street recently in which it is warning that average selling prices for flat-panel televisions are falling faster than the company had expected.

Despite those facts or presumed facts – I like the risk/reward. Closer to risk at current levels than reward – for those that see my point.

Nature of trade: Low conviction relative to gold’s/ metals, semi’s and other tech.

Next quest: Sustainable Media company.

- Turkey - Week - 2006

Actionable Long Ideas: DD, QCOM, PALM, AV, MRVL, AMD; and recently GLW, FLSH and SNDK.

Outlook: From a Long-term standpoint, wise to seek bargains in late 1990’s theme of technology, telecom and media. (TMT) Although, a strong run since July’s low, there are investment opportunities. A rotation out of energy and into TMT – is a call I am watching for in 2007. Macro picture is unclear with steady complacency, relatively low volatility and clear message from the FED. Important to stay humble in recent run and potential continuing run

Key Themes:

• Favoring tech versus other groups in the market SOX VS OSX.
• Specific areas in Tech: Semi’s and Disk Drives .Continue to favor SNDK and FLSH as top names in that group.
• Healthcare timely investment to consider especially in small cap. Despite post election noise, a worthwhile early one should explore .
• Shorts to consider due to high p/s – and extended charts Focusing on financials as 2007 short candidates: CFFN: S&L name w/ P/S, Also follow up on mortgage shorts for names like ACF and CNO. Earlier in the year, continued to address the fundamental call of sub-prime lenders as overvalued themes.
• Media long-term bets and investments to consider given cycle opportunities emerging in the sector.

Recap of stock calls.

Posted JBLU long - $9 based on inverse oil play and turned out to be a profitable call. Although, I sold early with a $10-12 target, market momentum continues to pick up steam.

GG: at $21 level on oversold commodity related theme worked as well. Plenty of vilotility but got ahead of the game here.

CVS: Around $30 remains a value bet but no major stock moment but use opportunities to add. Overreaction on headline news w/ solid foundation and critical support levels.

My weekend Read’s :

http://www.aaii.com/commentary/articles/200608_stockstrategies.cfm

According to O’Shaughnessy, his new Small-Cap Growth and Value screen focuses on “cheap stocks on the mend.” The first criterion is an inflation-adjusted market capitalization between $200 million and $2 billion. O’Shaughnessy uses an average annual inflation rate of 3%, meaning that going forward he would increase the market capitalization criterion by 3% each year.

The additional criteria are:

• Price-to-sales ratio less than 1.5;
• Earnings higher than the previous year;
• Above-average three- and six-month price appreciation.

SNDK

SNDK: Remains attractive with the rest of names in the diskdirves group. Other name also inculdes FLSH.

Key support level with exit level at $45
A potential upside move closer to $55 ...

Worth noteing is the stregth of DDX: Amex Disk Drive Index remains above 50/200 day mva. with solid performance.

From SeekingAlpha.com
http://ce.seekingalpha.com/article/19748

The explosive growth in the use of digital cameras and MP3 players combined with the demise of the floppy drive has been a boom for companies that make flash cards and Universal Serial Bus [USB] drives. Milpitas, California based SanDisk (SNDK) makes flash memory cards for digital cameras, MP3 players, the Cruzer line of USB drives and gaming cards for use in Sony's PlayStation Portable [PSP].

So what attracted me to this well known company that I felt was overvalued just a few months ago? While the stock has retreated from a high of almost $80 in January to the current $48.10, the company has released an exciting new line of MP3 players, acquired a key competitor and is well positioned to benefit from the launch of Microsoft's new operating system Windows Vista in 2007.

GLW: Corning

GLW: Appealing pattern of near-term consolidation following a significant sell off since may highs and failure in recent attempted recovery.

Oversold conditions offer an attractive risk/reward with defined exit levels.

Similar behavior is exhibited in other technology names like AMD and SNDK.

Clearly, three tech names are in different groups and fundamentals suggest stock specific stories to justify recent declines. Regardless, I view these names as quality, high-beta tech names that are neglected by the street.

Market appears satisfied with current levels but thinking ahead suggests that current levels should offer a recovery bounce within trading range. And a pending profit taking in big winners like CSCO and ORCL can lead to rotation into non-extended names. Rather long bottoming tech names than short leadership at today's level.
Given an upward sector bias in technology combined with current extreme mispricing - like this bet!

Commodity related names on the watch list VLO, PEIX and CCJ.

Mkt Thoughts: Post Election 2006

Mkt Thoughts:

I continue to favour commodity related stocks as gold remains an attractive bet at current levels. Many Technology names are worth a look especially in dissecting the better relative values in the market place.

Despite, extended charts of broad indices, the general market does not fully describe the emerging themes across various sectors.

Looking to make bets in ADM and PEIX – as a neglected corn themes. A macro structure in place but recently neglected value following May’s decline.

Concerned about market compliancy at these levels given the positive and uniform upside moves in most areas in the marketplace. OSX watched closely here as commodity related names take a pause.

Financials: Banks have retraced from overbought levels and would trim on shorts with a wait- and –see approach. Brokers continue to work and suggest an early short but a tough lesson learned before and a great rule not to call tops in the marketplace.

Consumer: Stock-specific for the most part….weakness in homebuilders remains a concern but not a fresh ideas and Media is a group of high interest.

Healthcare: Pharmacuticals responding to post-election speculation but a downside move can offer for early recovery and watching for overreaction of sellers.

Finally, looking for semi’s to recover here and lead a charge in technology. Despite bearish street sentiment risk/reward remains positive.

Semi -

MRVL and AMD: Consolidating at current levels -

Two semi names that offer attractive charts. I see these names on the watchlist since the mispricing is not clearly defined. In additon, market condition might not defend this call. But a tiemly place to add




AMD: looks attractive at current levels...Closer to $20 range ....Looking for an upside move closer to $24.

Investments -

Longer term charts provide valuable perspective on the state of Large Cap Technology. Areas of interest : DELL, IBM, QCOM, and YHOO. Charts of these names demonstrate a consistent behavior of oversold patterns.

Since technology is an emerging sector, even a market correction should not amplify the risk on these names.
Financials: Continuing on a negative bias in the sector, Banks remain area of concern. Examples include : WB, WFC and BK. Other areas in financials don't present definitive messages. Taking an early interest in SLM and MMC as potential longs.

In Basic Materials, DD, DOW, AA, NEM. Oversold and offer attractive timely entry.

These extremes are rather appealing in Technology and Materials.

Continue to favor gold here - very glad the commodity is working along w/ GG - a personal favorite name.
Election noise might cause turbulence but I do like SLM on the long side.

Few ideas to consider:
Banks : PNC - long at attractive levels, Short CMA closer to 200 day, with weak momentumCOF: short failed resistance at 80 short closer to 77.SLM: holding $48 attractive bottoming level.Staples: CBP - attractive entry point for an investable idea TSN: closer to $14 worth a look.Healthcare: CAH at 64. SEPR and IMCL - extreme levels opening up long opportunities.Consumer: DG, FL -long at these levels, HD - part of home related overdone extreme for late year rally.Media: An emerging theme w/ following names appearing to turn: gmst, emms, siri, xmsrTechnology: stx, brcm, altr, adi mxim, mu mrvl, cien, tlab, wdc, and elnk.Short: perIndustrials: swft, yrcw,Bm: aa- of course additional gold on pullbacks.

Homebuilders -

Although not a big fan of mortgage lenders - there is an equity oppertunity in homebuilders.

HGX Homebuilder Index remains attractive based on the bottoming action in the group. Following support level 210 followed by 200.

Analyst on the street remain net/negative on estimates in this group. Certainly, contrarians have placed their bets since July. Moving the index from its lows.


Although, a call that might not be way ahead of the street, current levels still offer attractive upside potential.

Clearly aware that value guys have recognized these oversold condition even in mid- Summer.
Check out the following Analyst ranking on the street:
Buy/hold analyst rating on the street: Still net/negative -allowing for a recovery bounce as a trade.
TOL 5/7
PHM 4/9
HOV 3/6
KBH 3/8

mkt view--

I would also note if a shift in feds message from thr previous meeting than it might have a loud effect - I am sure monday/tuesday- many will shuffle in/out poistions and attempt to decipher beyond fed's action. While equities await for clarity from the 3/5 of companies yet to report earnings.

Based on recent upward move - any confusing or tone change should lead to a favorable oppertunity to short equities and long bond price. (Near-term trade)

What is the current tone that led this revival in markets and defeat on shorts? It is assumed to be soft- landing and low oil and end of geopolotical turbulance. All led to recovery from summer rally and rejected talks of four year cycle.

But steady rides and trends need more substance to justify these overbought levels. A prolonged run from here appeases shorts

QCOM-

Worth a closer look at these levels - attempting to bottom with attractive risk/reward.

QCOM Remains attractive - looking at the following trading ranges.

GG (gold play via equity)

GG: gold is oversold following a commodity decline – GG –several stock specific news drove stock lower

20.35- October 4^th lows remain a key trading support .

Looking for recovery both in Gold and GG – an equity play based on macro extreme. At the same time a high beta play in a overdone negative name.

Since May correction, and following a heavy correction, there is a solid trading opportunity here –with defined exit.