The New Era of OBAMANOMICS

Freeport McMoran Mines Major Cash Lode

2011-06-30T21:35:00.000-04:00

March 28, 2011

Freeport McMoran had record profits and cash flow for 2010 as a result of the multi year highs of copper and gold prices. Should the new investor jump in now?

Amazon Hits $200 if Free Cash Flow Creeps up to 10% of revenue

2011-06-14T11:03:00.000-04:00

Published on Forbes.com

January 18, 2011

The stock price of Amazon.com reached another historic high, past the levels seen in the 1999 dot.com bubble. Should we sell this stock or is there a justification for the price tag on shares of the online giant?http://blogs.forbes.com/greatspeculations/2011/01/18/amazon-hits-200-if-free-cash-flow-creeps-up-to-10-of-revenue/

The Alchemy of Gold

2011-06-10T15:57:00.000-04:00

The Alchemy of Gold

Throughout the centuries, man has sought to change base metals into gold via the science and art of alchemy. The use of the GLD EFT and the various other gold backed ETFs has in recent years transmuted gold into riches for ordinary investors. However this new found wealth is not without risks.

Read entire article at http://blogs.forbes.com/greatspeculations/2010/12/28/the-alchemy-of-gold/

Ford Goes Motoring

2010-11-15T11:50:00.003-05:00

Yes! Ford will benefit from this retail sales.

80% of the US is still gainfully employed. And being human, those with net disposable income will succumb to the need to spend a little more, after being in the saving mode and uncertainty since the fearful days of September 2008 when Lehman Brothers collapsed and triggered a worldwide recession. Now, the fear has receded and increasingly more economic numbers suggest that the GDP will grow between 1.5-3.5%. So spenders are slowly coming out of their shells to spend, abetted by good marketing and bargains galore. That is what the stronger than expected 1.2% October retail numbers imply.

However, ex auto sales, the core retail number was up only 0.4%. A total of 12.25 million cars were sold for the first ten months of 2010, the highest level since August 2009 when the car sales were boosted by the "cash for clunkers" program. This 12.25 million units, achieved in October is a significant event because the industry expected only 12 million unit sales for the full year of 2010. We still have two months left in the year!

Who will be the main beneficiary of this higher auto sales? I would suggest that it is Ford Motor Company (symbol "F"), currently trading at $17.09, its highest level since December 2003!

For a more detailed analysis of Ford Motors, please read my article at www.forbes.com The link below will lead you directly to the article:

http://blogs.forbes.com/greatspeculations/2010/11/08/ford-the-remake-of-an-american-icon/

Spotting A Bargain And Taking It With Cisco Systems

2010-08-18T10:40:00.005-04:00

Cisco is a good candidate for investors seeking safety and yield.
Just click on the title above and it will lead you directly to the article at www.Forbes.com

Happy trading!

Summer Doldrum for the S&P 500

2010-08-13T15:11:00.005-04:00

Greetings again!
Bored with the same old news, and the short market attention span (ahem that is mine, not yours), the S&P 500 is really not helping with its dyslexic behaviour. Or is it? Well, it appears to be beating to the inner rhythm of the Elliot Wave Theory's of the A-B-C correction wave.

Here: a picture is worth a thousand words. See the Chart above? It is the S&P 500. As you can see we have completed an A-B- movement, and now I think we are in the C movement. The target for this C is at 950.

However, with momentum players a major force in these markets, the initial take profit target for short positions is at 1010. Wait for a subsequent rally to 1110 to start another short position again.

One can short the S&P 500 index via the Exchange Traded Funds; “SH" is the direct inverse of the S&P500, meaning as the value of the S&P 500 index falls, the value of the SH ETF will increase in value. And of course, vice versa.

For the more aggressive traders who want to leverage the sell off in the S&P, they can choose the SDS exchange traded fund which is 2 times the movement of the S&P500. It is important to know that the ETFs have their own peculiarities and hidden characteristics and one must understand the risks involved. Nevertheless, it is another tradable instrument. Just be careful and use stop loss!

Happy Trading!

Three Articles Written for Forbes.com

2010-07-16T17:08:00.004-04:00

Greetings:

Since May 2010, I have had the pleasure of writing three articles for www.Forbes.com
Below is a little flavor of what each article is about.

The first article written on May 28 2010 is about Gold. The whole world wants this yellow metal. The predominant reason for this demand is that it is a hedge against the fast depreciating paper currencies of the major nations. However, the Elliot Waves seen from a 25 year gold chart suggest that the phenomenal rally for GOLD may soon end. The technical targets to sell, and take profit is at this the website:

http://blogs.forbes.com/greatspeculations/2010/05/28/the-trade-to-make-when-gold-hits-its-peak/

In my second article of June 23rd, the price action of June 21 and 22 was so bearish that I had to write and share my view on the S&P 500. The strategy was to sell the S&P 500 on the rallies. Thus far, the S&P 500 has been tracking the technicals and Elliot Wave theory very well. So much so, I still expect the S&P 500 to test the major support at 950.

http://blogs.forbes.com/greatspeculations/2010/06/23/shorting-the-sp-500/

Finally, I made a case for BP (British Petroleum) on July 2nd, when its stock was trading at $29.39. Based on conservative estimates of discounted future cash flows, the fair values of the stock can range from $42 to $70. Today (July 16), the stock closed at $37.10 after shooting to a intra day high of $39.81 yesterday when the test of the oil well cap proved positive news. There may be some profit taking at the $40-$44 levels but for the long term investor, buying the dips may be a worthy strategy.

http://blogs.forbes.com/greatspeculations/2010/07/02/drill-down-and-disover-bp-could-be-a-70-stock/

This is it for now. Until my next muse, be well!

Let's Get Even!

2010-07-13T00:20:00.004-04:00

How many times have we been frustrated at the impenetrable corporate barrier, namely the automated phone answering system? Well, the following passage may give you some ideas, heart and balance! If you want to get even with those automatic systems of the corporate world, read on:

86-year Old Lady's Letter to Bank

Apparently, the letter below was written and sent to a bank by an 86 year old woman. The bank manager thought it amusing enough to have it published in the New York Times. I did not verify with the New York Times, but here it is.

Dear Sir:

I am writing to thank you for bouncing my check with which I endeavored to pay my plumber last month. By my calculations, three nanoseconds must have elapsed between his presenting the check and the arrival in my account of the funds needed to honor it. I refer, of course, to the automatic monthly deposit of my entire pension, an arrangement which, I admit, has been in place for only eight years. You are to be commended for seizing that brief window of opportunity, and also for debiting my account $30 by way of penalty for the inconvenience caused to your bank.

My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways. I noticed that whereas I personally answer your telephone calls and letters, --- when I try to contact you, I am confronted by the impersonal, overcharging, pre-recorded, faceless entity which your bank has become.

From now on, I, like you, choose only to deal with a flesh-and-blood person. My mortgage and loan repayments will therefore and hereafter no longer be automatic, but will arrive at your bank, by check,addressed personally and confidentially to an employee at your bank whom you must nominate. Be aware that it is an offense under the Postal Act for any other person to open such an envelope.

Please find attached an Application Contact which I require your chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative. Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof.

In due course, at MY convenience, I will issue your employee with a PIN number which he/she must quote in dealings with me. I regret that it cannot be shorter than 28 digits but, again, I have modeled it on the number of button presses required of me to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery. Let me level the playing field even further. When you call me, press buttons as follows:

IMMEDIATELY AFTER DIALING, PRESS THE STAR (*) BUTTON FOR ENGLISH
#1. To make an appointment to see me
#2. To query a missing payment.
#3. To transfer the call to my living room in case I am there.
#4 To transfer the call to my bedroom in case I am sleeping
#5. To transfer the call to my toilet in case I am attending to nature.
#6.. To transfer the call to my mobile phone if I am not at home
#7. To leave a message on my computer, a password to access my computer is required. Password will be communicated to you at a later date to that Authorized Contact mentioned earlier.
8. To return to the main menu and to listen to options 1 through 7.
#9. To make a general complaint or inquiry. The contact will then be put on hold, pending the attention of my automated answering service.
#10. This is a second reminder to press* for English.

While this may, on occasion, involve a lengthy wait, uplifting music will play for the duration of the call.

Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement.

May I wish you a happy, if ever so slightly less prosperous New Year?

Your Humble Client
And remember: Don't make old People mad. We don't like being old in the first place, so it doesn't take much to p*** us off.

The New Era of OBAMANOMICS: 1060 held on Friday, We lived!

2010-05-24T13:54:00.000-04:00

The New Era of OBAMANOMICS: 1060 held on Friday, We lived!

1060 held on Friday, We lived!

2010-05-24T13:49:00.002-04:00

Good day!
On Thursday May 20th, we said to that the SPX will retest the 1094 recent low, as well as the spiked low at 1060 seen on Thursday May 13th.

And we will use these lows to go long the SPX in anticipation of the counter rally. YEAH, the trading Gods were with us, for we did see 1056 low on Friday and the SPX closed at 1088.

Given the behavior of Friday’s price action and this morning’s rally off the lows in the futures market, we still expect a counter rally to 1150-1170.
The trading strategy remains, if you want to add to more positions, buy at the market now, 1086, with a stop loss at 1047.
Take profit at 1150/ 1170. Depending on news flow, there is a possible free ride to 1220, the recent high.

Happy Trading!

Some Respite for the Bulls

2010-05-20T08:14:00.002-04:00

Okay!
we the sellers have had some fun from our last trade on May 13th. Now the SPX is in the process of completing the fifth wave. Cover the shorts at 1060/1095. Establish fresh long positions at these same supports, stop loss at 1035 and take profit at
1140/1150/1170. And if 1170 gets taken out, we get a ride to 1220...but we shall let the market be our guide.

Happy Trading!!!

Dust has somewhat Settled, for now

2010-05-13T21:05:00.006-04:00

Okay!!

I am really sticking my neck out. Me thinks that we should still sell into this rally given the technical price action of the last 4 days since Eurozone dropped a USD 960 billion package to bail the sovereign nations under the PIIGS acronym, but apparently more to save the European banks which have rather large exposures to these countries. OK, forget the fine print. I expected the market to be so euphoric with the package that it will blow away the recent highs. Instead we have this seesaw action which bespeake uncertianty. So my trading stratgy is to sell the rallies with tight stops

................SPX...........NASDAQ
SELL Levels...1120-1160......2300-2400
TARGETS.......1010-875.......2050-1920

Important Note: short term take profit targets are shallower, so please TP at 1010.2050 or the recent lows 1060 and 2190.

Happy Trading.

And on the 8th Day

2010-05-07T11:06:00.004-04:00

Goodness, I posted my thoughts of a medium term top yesterday at 9 am. The High Priestess of Electronic Trading handed a 8-9% trophy to me at one point. Never in my years in currency & equity trading (except for the start of Kuwait war), have I witnessed a 1000 point drop in the DOW Jones Industrial Average, a 37% ($22) drop in Procter and Gamble, and a 99.9% drop in Accenture, from $42 to 1 cent. All in the space of 20 minutes, from 2.40 pm to 3.00 pm New York Time.

It was surrreal.
Then the market spiked back up, but still closed the day with heavy casualties - down around 3.3% across the Dow, S&P, Nasdaq.

Today is the 8th day.
What should be expected?
Technically, we are now in the middle of a wave three to the downside. Sell the rallies.

................SPX...........NASDAQ
SELL Levels...1120-1160......2300-2400
TARGETS.......1010-875.......2050-1920

Fundamentally:
There are good reasons for this sell off.

1) US markets were priced to perfection and more.

2) Even with the Greece bailout, the deep austerity measures will mean that their GDP would be minus 3 to 5%. Similarly for other PIIGS. They need fiscal discipline, which translates to lower economic growth.

3) China the savior, has already initiated steps to cool its property markets.

4) USA with this morning's robust job numbers created by the private sector is tentative as there is a second wave of mortgage foreclosures coming. Whitney Tilson gave a great presentation on CNBC's 60 minutes:
http://www.youtube.com/watch?v=Pui-VWSyMHQ&feature=related
The government stimulus of $8K and $6.5k is over, Federal Reserve has stopped buying the mortgage backed securities and in fact is looking to sell them when the time is ripe. Banking capital ratio poised to increased significantly. Proprietary trading curbs. Already the retail numbers in the April shows weakness

So, we will not retest the 2009 lows. But a healthy correction is a great time to buy for long term.

Happy Trading.

Around the world in Seven Days

2010-05-06T08:57:00.005-04:00

First, the risk aversion was a thing of the past, as the major US equities grind towards levels close to Oct 2008 highs. The PIIGS' sovereign debt crisis have been broiling for months, yet the market cheerfully ignored it. And now Risk Aversion is back.

In the last seven days, the DOW, S&P and the NASDAQ had one of their choppiest sessions ever, as bullish sentiment grappled with front page news. The price action of this past week feels like the market is making a medium term top. Which makes behavioral sense as we had no significant pullback from the steep and +70% climb out of the lows in March 2009.

2010 --------------SPX ------NASDAQ
Thurs April 29----+1.3%------+1.6%
Fri April 30......-1.7%......-2.0%
Mon May 3.........+1.3%......+1.5%
Tue May 4.........-2.3%......-3.0%
Wed May 5.........-0.7%......-0.9%

For Short Term trades:

SPX: Sell the rallies up to 1180, with downside targets at 1150-1110
NASDAQ: Sell the rallies up to 2450, take profit targets at 2365, 2320, 2270

By the way, if you are interested in macro views and there are two great articles for you:

You can read Mohamed El- Erian's article HOW TO HANDLE THE SOVEREIGN DEBT EXPLOSION at http://www.pimco.com/LeftNav/Viewpoints/2010/El-Erian+Sovereign+Debt+Explosion+3-10-10.htm,

and a very good Barron's article by Randall W Forsythe, WHO ARE THE REAL BENEFICIARIES OF THE GREEK BAILOUT, http://online.barrons.com/article/SB127314126101987423.html

Happy trading

My 2 cents worth of thoughts re SEC, Goldman Sachs, Financial Regulation

2010-04-22T12:10:00.003-04:00

Greetings all:

I am sure the whole world is now aware and familiar with the “facts” of the SEC vs. Fabrice "FAB" Tourre of Goldman Sachs. Pencil April 27th: Fabrice Fab will testify before the Senate Permanent Subcommittee.

Points of note:

1) CDOs. CDS. Such derivatives have been created and sold by all major banks for many years. They contribute huge amounts of money to the bottom line. Simply because they are not transparent. And simply because the law allows speculators with no invested interest in the underlying company or security to bet for or against them. And when a greedy unit of AIG based in London kept on selling “insurance” on these derivatives, without the capital to back them up, we have a great derivatives market which became a weapon of mass destruction (concept originally created by Warren Buffet in his Berkshire Hathaway letter to shareholders for the 2002 annual report). Oh, not to forget the rating agencies which worked closely with the creators of these derivatives to give the ratings to these derivatives!

2) In this case, Goldman and Paulson (the hedge fund manager, not the ex treasurer of state) claimed that ACA picked the underlying bonds. Simple: get ACA to testify whether this is true or false.

3) Any financial reform should close all loopholes for investment banks to manifest themselves as natural hedgers of commodities ( that was how oil went to $147 in 2008).
Additionally financial reform should not allow parties with no direct interest in the underlying security to be able to buy “protection” against that security. In plain English: the $64 trillion credit default swaps market essentially allow anyone with sufficient capital to bet against the failure, say of General Motors, even though they do not own any shares , bonds or securities of General Motors. Of course, the counter argument is that this will stifle the creative process that is the hall mark of the US major financial leaders and rob the hedge fund from an avenue to become the “canaries in the mine”

You guys be the judge.

You Gotta Love the US Treasury.

2010-03-29T15:09:00.002-04:00

The US Treasury will detail its timetable of sales of CITI shares over the next 48 hours.
The 7.7 billion shares will be sold over 2010, putting a temporary ceiling on the stock price.
Expect 3.00- 4.60 trading range.
Longer term 2-3 year investors can buy on dips to take profit at $9

US Treasury's cost was $3.25 per CITI share - not bad!

Cheers for the taxpayer!

Happy Trading.

First Casualty of the New Health Care Reform Law

2010-03-26T14:42:00.002-04:00

In the good old days, US companies recieve Federal Subsidy of $665 per retiree to help them buy drugs. As of today, AT&T announced it has to take a $1 billion charge this year because this subsidy is no longer tax exempt! The total impact of this segment is only $14 billion so it is not that material, but the earnings of various companies will be negatively impacted: other examples Caterpillar writes off $100 million, Deere & Co $150 million. Happy trading.

CITI

2010-03-26T14:09:00.002-04:00

mar 26th 2:11 pm
Ok Traders
Sell Citi here at 4.30/4.40 stop at 4.65, and take profit at 3.80-3.60
why? finished the minor 5 waves up--- take profit on your longs for will have chance to buy back at lower price. Confirm by the sell signal in JPM daily chart!
happy trading!

Wading Into Waters

2010-03-26T12:07:00.004-04:00

Ahoy there!
I m back - started another business while waiting for the market to tell us what it wants to do after the spectacular sell off and the equally violent rally in 2008 & 2009 respectively.

SPX met all the technical targets of 1150. It is currently at 1170 march 26th 2010.
Now what?
Short term the market will grind towards 1250/1320. The sell off corrections will be shallow:
1100 /980 is a good floor. Buy at these lower levels 1100, take profit at 1250/1320; just range trade for the next three months as the market is supported by the US Treasury, Federal Reserve and Obamanomics.

Longer term players, just buy near the 1100 spx level and wait for the market to grind higher for the rest of 2010.

Why? All the bad news are on the table. Need performance. Get back to the stock game. Attracts the vast amount of money in US paper.

Side note for the long term bond investors ; Long bond yields will increase as the supply of the US treasuries keep on coming to finance the growing deficit. If Fed Funds is around zero now, the only direction is UP. So get out of long bonds!!

Happy trading!

Buy the Rumors, Sell the Facts

2009-09-01T14:26:00.007-04:00

I love these markets. Human psychology never fails. Buy the rumors, sell the facts.

We have priced the equity markets higher with expected good news of economic recovery since March 2009.

Now when we actually get a 50 number in the Manufacturing Index, the market sells off. Have not changed my strategy as mentioned in early Aug .. sell SPX between 990-1050, stop at 1110. Now, even the market leaders such as IBM, JPM, HPQ, WFMI are rolling over to the downside in their daily charts. So maybe the world is finally taking off its rose color tinted glasses to hear some facts:

Year on Year sales comparison for Aug 2009 car sales is not great despite for the Cash for Clunkers program:
GM down 20%
Chrysler down 15%
Nissan down 3%
Ford Up 17%
Except for Hyundai which is doing a terrific job in building market share.

So strategy remains for short term traders, sell the rallies. Especially if the SPX close below 1015 today ( it is currently at 999). First target to take profit is 900/880 in the SPX.
Happy Trading.

Hurry up NOW!

2009-08-21T10:24:00.003-04:00

The New York Times just reported that the program CASH for CLUNKERS will be terminated this Monday, Aug 24th 2009, way ahead of the Nov dateline.

Reason: the program is so popular that it has ran out of money $1.9 billion.

Trade: Take profit on your longs in car stocks or if you are more aggressive, short the car stocks through the use of options!

Full article: http://www.nytimes.com/2009/08/21/business/21clunkers.html?src=linkedin

Gently Gently Now

2009-08-19T08:59:00.002-04:00

Did anyone notice that the Chinese stock market CSI300 has fallen 788 points from its high of 3803 on Aug 4th 2009 to last night's close?

That is a retracement drop of 37% between the low on Nov 7 2008, of 1678 and the high at 3803.

Or if you look at it another way, it has just fallen 20% from its recent high of 3803 of Aug 4 2009!

Rather Substantial, is it not? In fact 20% is considered an entry into the bear market!

The Chinese market has special significance because China is now supposed to be the engine of growth that will help the rest of the world economy recover. Since the Chinese markets recovered from its lows in Nov 2008, 4 months earlier than the US recovery in Mar 2009, then perhaps it is a precursor of what is about to happen to our markets? It has received $580 billion stimulus for its $5 trillion sized GDP within the first half of 2009. The USA has a planned $780 billion stimulus for its $15 Trillion economy, 80-85 % is still unspent, mired in bureaucracy. And if the Chinese stock market stalls, perhaps the SPX bulls here in USA should take some profits, and tread gently gently on the long positions! Remember: all good news are priced in. Pick your favorite market pundits from Thomas Lee of JPM to Abby Cohen of GS to Blackrock. We have reached the SPX's targets of 1050-1150, which I wrote about back in Mar 16 2009 article:

"Technical Perspective:
Elliot Wave theory suggests that the S&P500 (SPX) is about to make a bottom. Tonight, the SPX closed at 754. In the next few weeks, the SPX is expected to test the lower targets of 670-600. However, at these levels, the longer term investor (12 -24 month duration) should scale into the market, i.e. buy stocks in the market, because the downside risk is at 560, based on a valuation of S&P at $40 with a PE of 14, while the upside minimum target is at 1000."

In Short: I will sell the SPX here from 990-1050, with a view to take profit at initial supports 960-920. Maybe lower, depending on market moods. Stop loss at 1110.

Remember we are human: ruled by greed and fear. Now the greed is that we are not putting enough money into the market versus the March 2009 lows when we were fearful of putting money into the market! And the 10 year Treasury just rallied about a full point this morning - this is flight to safety again. Crazy people, but that is what drive markets!! Oh, and momentum players of course!

Happy Trading!

My Thougths on The Fed's Exit Strategy

2009-08-02T15:35:00.008-04:00

The Fed’s Exit Strategy

By BEN BERNANKE

Source: WSJ July 21 2009

http://online.wsj.com/article/SB10001424052970203946904574300050657897992.html

I applaud Fed Chairman Bernanke for taking this unusual initiative to explain to the general public of the Fed’s exit strategies in relation to the huge monetary stimulus it has offered to the financial system. A stimulus that is designed to resuscitate the US & global economies from the burst of the 2007/2008 asset bubbles. Below are my thoughts with regards to his WSJ article.

Bernanke: “The exit strategy is closely tied to the management of the Federal Reserve balance sheet. When the Fed makes loans or acquires securities, the funds enter the banking system and ultimately appear in the reserve accounts held at the Fed by banks and other depository institutions. These reserve balances now total about $800 billion, much more than normal. And given the current economic conditions, banks have generally held their reserves as balances at the Fed.”

Sherli’s comments: So the stimulus is locked in the Fed’s vault currently because the banks have grown conservative and will lend to only to Credit Worthy clients, a much smaller number now. The actual multiplier effect of this stimulus on the broader economy is much more muted than intended.

However, Bernanke is hopeful that the multiplier effect will increase with an improvement in the overall economy. And when this economic improvement reaches the degree where the Fed perceives signs of possible inflation, then Bernanke & his colleagues will use the tools outlined in his op ed to drain money supply from the system. Bernanke seems confident that they will be able to judge this inflexion point in a timely manner and thereby promote price stability and “full employment”

Sherli’s Conclusion:

Given the confidence of Bernanke to manage the Fed's balance sheet in a timely manner, then inflation risk is much lower in the next 12-24 months. Also, a projected 10-13% unemployment rate will mean that excess capacity will remain with us until possibly until end of 2011. Thus, there is no need to rush into TIPs at this moment but perhaps later in Q1 of 2011?

However, the current interest rate environment is very low, compared to historical norm. See Table 1 below. July 2009 has the lowest yields over a 5 point time frame comparison; from 1996 to 2009. Fed Funds at 0-0.25%, and 10 year Treasury yields at the 3.72%. Now, even if there is no inflation threat in the next 12 month horizon, the longer dated Treasury yields are expected to be remain relatively high because of one major difference: the USA has to borrow in total about $3 to $4 trillion to help cure the current economic malaise. This unprecedented borrowing by the USA will increase the risk premium demanded especially by the foreign creditors. A falling USD will further reduce the investment return for a foreign creditor. But should the USD fall? Elementary: the US printing press. How else can the US repay its titanic debt? Tax receipts? From a shrinking workforce? Tax the rich? Is that sustainable? You get my drift. And since the US debt has largely been supported by foreign creditors in the past, the two factors mentioned above would likely reduce their participation for these longer dated treasuries, unless there is higher yield compensation. Hence this is Not the time to invest in Treasuries greater than the 2 year duration. Yes, it will be safe if one holds on to it till maturity but there will be significant opportunity cost. Far better to invest in the emerging stock markets for the next 12 months rather than treasuries. Buy the emerging stock markets on dips.

For complete article with the table & yield curve, please go to:

docs.google.com/View?id=dchhdxbf_18gk5j63gb

Earnings Season: Strategy - Rapid Trades

2009-07-14T09:11:00.002-04:00

Rapid Trades for Earnings Season:
This idea is for the short term traders only . Play the range, due to the volatility of the earnings season. Sell when the SPX trades to 905/910. Take profit at 880-850. Stop loss at 917. Note that JPM, BAC and GE are reporting this week. Happy trading.

Longer term investment idea: Buy Goldman.
Goldman Sachs just released record earnings based on their competitive advantages:
1) Strong IT / proprietary trading systems (A rapid fire trading system is so good that an ex employee tried to steal its code recently!)
2) An alert and visionary management (they caught the guy who tried to steal the code & sidestepped many credit issues)
3) It has become the survivor of the fittest &
4) Increasing its stronghold on customer franchise.
Their Q2 EPS is $5.71, but including the one time dividend paid to TARP funds, (which they have repaid) then the EPS is $4.93

Based on a conservative estimate of $5 EPS per quarter and a 10 PE, this stock should be valued at $200.00. Buy GS on dips $147-142 range. Downside risk: $135.Risk reward: 36% appreciation versus a 8% loss.

Note to ShortTerm Traders: Take profit on Shorts Now

2009-07-06T10:50:00.002-04:00

Thanks to the job numbers of last Thursday, the short positions established at 900-950 in the SPX is working profitably, and we are en route to the major supports of 845, 810 and 777.

However price actions do not travel in a straight line, and for the very short term traders, the strategy would be to take profits on half the shorts here at 888, and reestablish them at the resistances of 905-915.

For the longer term traders, keep the short positions but put a stop loss at 919.

IF the SPX closes below 880 today, then we will see 845 soon. Good luck and happy trading.

S&P 500: Slippery Road Ahead

2009-07-01T16:25:00.004-04:00

The SPX just closed the month of June with a candle stick chart pattern which traditionally warns of indecision and trend reversal. This is not an encouraging sign for the long only investor. As discussed in my June 17th 2009 article “To Buy Or Not to Buy the SPX” there are several significant reasons as to why the SPX is making a medium term top in the 900-950 zone. The SPX is then expected to test the lower supports at 845, 810, 777 and 667. Again, as mentioned in that article, use these levels to re-establish long positions again.

The trading strategy remains the same. First, sell at least 50% of the long positions when the SPX trades between 900-950. Then, allocate and buy the balance at the above mentioned supports. The take profit target for these long positions is in the 1000-1150 zone. Expected time duration: a few months.

Happy Trading

SPX at 930. To Buy or Not to Buy?

2009-07-01T11:47:00.000-04:00

The SPX reached the high of 956 on June 11th 2009, a 43% rally from the lows of 667 on March 16th 2009. It is currently trading at 930. Should we buy 100% into the SPX at this level? The disciplined answer is “NO”, based on the following arguments:

The estimated fair values of the SPX for 2009 is 840, and for 2010, 1260. These projections are based on Standard & Poor’s earnings estimates of $56 and $74 , and the PE multiples of 15 and 17 for 2009 & 2010 respectively. The PE estimates are my own, given the general expectation that the global and U.S. economies will not experience a V shape recovery. To borrow the term from Jeremy Grantham, the cofounder of GMO, it will more likely be a VL recovery, meaning a “very long” period of subpar growth. This is the natural order of events: we have lived on borrowed time and money and created asset bubbles. Now deleveraging and demand for normal risk premiums are back in vogue. At 950, the SPX is more than fairly valued, and the global and U.S. governmental stimuli are already priced into the market.

For the complete article, please go to: http://docs.google.com/View?id=dchhdxbf_5cmntpxdf