As i mentioned in my last post, we had rallied too far, too fast. It was time to take profits. I reiterate: WE ARE STILL IN A MASSIVE BEAR MARKET! I sold my last long SNE the same day at 49.50 to lock in a 18% profit. Its sold off $2 since then while the DOW has sold off 300 points since wednesday's post. If you have any profits on the long side better make sure you cash them in fast since this market can turn at the drop of a hat.
My only positions now are all shorts. I'm short MON, FSLR, RTH, RIMM. Oh, i did add DUG to my account yesterday (Its a short oil etf) so i'm short crude oil through that.
Happy Trading...i'm out for 2 weeks.
Friday, February 29, 2008
Wednesday, February 27, 2008
No Light an the End of the Tunnel?
So we have rallied 600 points in the DOW straight in the last 4 trading sessions. I think its time to take a breather. We are bumping into overhead resistance now. As i said earlier, i still firmly believe we are in a strong downtreanding bear market. But you will get intermediate rallies like the one that just happened, to take advantage of. I think at this point all the good news have been priced in the market (Ambac, MBIA ratings held steady).
As for my positions, I got out of all my FWLT on Monday since it was reporting Tuesday morning before open. As i predicted, any company that puts out bad numbers/guidance in a bear market is taken out to the woodshed. Same thing happened to FWLT. The stock is down 25% since it reported earnings.
Also took off my GS long position for a very small loss(4%). I still love the company's long-term prospects but there just doesnt seem to be an institutional money flowing into this stock. The DOW's had a very strong rally and GS has essentially just traded in a range around its pivot point. Imagine what will happen to GS if the DOW drops 300 points in a day. It will be slaughtered! If big money isnt buying, there is no reason for you to jump the gun and get long here.
Only long i own here is Sony(SNE). Have a 18% gain in the stock so far but am willing to jump ship quickly to protect my profits if the market turns hard. I think with HD-DVD out of the picture, the lagging 2007 Playstation 3 sales will see a huge boost in 2008. People will be buying the PS3 eagerly bcause you get the Blu-Ray player (now that the format wars are over) and video game system bundled into a nice $400 package. I just bought myself one earlier this week for the same reasons and i believe many others will follow suit!
I'm am also mostly closing out my positions since i'll be travelling out of the country for the next 2 weeks. It's hard enough sleeping everynight with big positions on, let alone travel without access to instant quotes :)
As for my positions, I got out of all my FWLT on Monday since it was reporting Tuesday morning before open. As i predicted, any company that puts out bad numbers/guidance in a bear market is taken out to the woodshed. Same thing happened to FWLT. The stock is down 25% since it reported earnings.
Also took off my GS long position for a very small loss(4%). I still love the company's long-term prospects but there just doesnt seem to be an institutional money flowing into this stock. The DOW's had a very strong rally and GS has essentially just traded in a range around its pivot point. Imagine what will happen to GS if the DOW drops 300 points in a day. It will be slaughtered! If big money isnt buying, there is no reason for you to jump the gun and get long here.
Only long i own here is Sony(SNE). Have a 18% gain in the stock so far but am willing to jump ship quickly to protect my profits if the market turns hard. I think with HD-DVD out of the picture, the lagging 2007 Playstation 3 sales will see a huge boost in 2008. People will be buying the PS3 eagerly bcause you get the Blu-Ray player (now that the format wars are over) and video game system bundled into a nice $400 package. I just bought myself one earlier this week for the same reasons and i believe many others will follow suit!
I'm am also mostly closing out my positions since i'll be travelling out of the country for the next 2 weeks. It's hard enough sleeping everynight with big positions on, let alone travel without access to instant quotes :)
Monday, February 25, 2008
Its Rally Time!
So we ended up getting our rally (200 point in the Dow) that i talked about on Friday. In the last 2 days we have rallied about 450 points in the DOW which is a monstrous rally by any standards. We were down 150 on Friday when we got the AMBAC news and ended up +100 for the day (250 point rally) and another 200 points today.
Unfortunately this doesnt change a thing and we still are in a major, downtrending bear market. You will get significant rallies within the bear market that if you are fast enough to play will help you next a little extra on the side. But by no means am i turning wildly bullish on the markets..yet.
I sold all my Foster Wheeler (FWLT) calls i bought on Friday right at the close today for a 30% profit over 2 days. That is a very nice profit specially for holding the position just for 2 days. FWLT also reports tomorrow morning and though i believe it will blow away the numbers both on the top as well as bottom line (specially because of the 7.2 billion infrastructure contract it got from Qatar last november), anything less than the most optimistic guidance going forward will crush the stock price in this bear market. So i'm sitting fat and happy on my 30% gains.
Over the weekend, Fox Street Journal printed a negetive article about the brokers especially GS saying the recessionary environment will lead to less M&A activity for these guys in 2008. No Shit Sherlock! Why else do you think GS is off 35% from its highs? Because its trading arm isnt making money? The GS traders were the only ones on the street shorting the hell out of the subprime CDO market last Fall when the rest were still infatuated with the *guaranteed* cash flows these instruments provided every month. I still believe in GS, after all these are the same guys that personify the "Masters of the Universe" phrase.
"In Goldman Sachs We Trust"
Unfortunately this doesnt change a thing and we still are in a major, downtrending bear market. You will get significant rallies within the bear market that if you are fast enough to play will help you next a little extra on the side. But by no means am i turning wildly bullish on the markets..yet.
I sold all my Foster Wheeler (FWLT) calls i bought on Friday right at the close today for a 30% profit over 2 days. That is a very nice profit specially for holding the position just for 2 days. FWLT also reports tomorrow morning and though i believe it will blow away the numbers both on the top as well as bottom line (specially because of the 7.2 billion infrastructure contract it got from Qatar last november), anything less than the most optimistic guidance going forward will crush the stock price in this bear market. So i'm sitting fat and happy on my 30% gains.
Over the weekend, Fox Street Journal printed a negetive article about the brokers especially GS saying the recessionary environment will lead to less M&A activity for these guys in 2008. No Shit Sherlock! Why else do you think GS is off 35% from its highs? Because its trading arm isnt making money? The GS traders were the only ones on the street shorting the hell out of the subprime CDO market last Fall when the rest were still infatuated with the *guaranteed* cash flows these instruments provided every month. I still believe in GS, after all these are the same guys that personify the "Masters of the Universe" phrase.
"In Goldman Sachs We Trust"
Sunday, February 24, 2008
Panera Bread's "Community Friendly" Business Model
I was over at Panera Bread this afternoon grabbing lunch and noticed something really strange. All the tables at the restaurant (around 20) were occupied. Under normal circumstances, this would seem as a picture perfect scenario exept around 17-18 of these tables were occupied by "campers", people who ordered their 1 sandwich meal and hover around for another hour or so typing away on their laptop using Panera Bread's free wireless Internet acess.
The wireless internet model has worked great for Starbucks which is primarily a "stop-n-go" location where the majority of the customers just want to get their coffee and leave. But the same successful model doesnt seem to translate well in a "sit-down" type of establishment.
Since i live just half a block away from this Panera Bread location, noticing the lack of empty tables, i decided to take my lunch to-go. But i wonder how many potential customers were turned away after noticing the lack of seating. I understand that this free wireless internet policy will defiantely foster some brand loyalty. The next time i want to eat and get some work done on my laptop, my first choice will be Panera Bread. I also understand the potential for marginal purchases, after clicking away on my laptop for an hour i might buy another drink or a cookie/brownie. But for practical purposes i will assume these incremental purchases to be very minimal for Panera Bread's revenue after purchasing their initial meal.
I really doubt that the pro's (brand loyalty, incremental purchses) outweigh the loss of revenues from turning away potential customers in that hour or two. Panera Bread's (PNRA) stock price is also hovering around its 52-week low. Ofcourse, i have no real figues to back up this observation (qoq same store sales, etc.) but it certainly seems that Panera's community friendly approach is biting them in the ass.
If anyone else sees the other side of the coin, please comment.
The wireless internet model has worked great for Starbucks which is primarily a "stop-n-go" location where the majority of the customers just want to get their coffee and leave. But the same successful model doesnt seem to translate well in a "sit-down" type of establishment.
Since i live just half a block away from this Panera Bread location, noticing the lack of empty tables, i decided to take my lunch to-go. But i wonder how many potential customers were turned away after noticing the lack of seating. I understand that this free wireless internet policy will defiantely foster some brand loyalty. The next time i want to eat and get some work done on my laptop, my first choice will be Panera Bread. I also understand the potential for marginal purchases, after clicking away on my laptop for an hour i might buy another drink or a cookie/brownie. But for practical purposes i will assume these incremental purchases to be very minimal for Panera Bread's revenue after purchasing their initial meal.
I really doubt that the pro's (brand loyalty, incremental purchses) outweigh the loss of revenues from turning away potential customers in that hour or two. Panera Bread's (PNRA) stock price is also hovering around its 52-week low. Ofcourse, i have no real figues to back up this observation (qoq same store sales, etc.) but it certainly seems that Panera's community friendly approach is biting them in the ass.
If anyone else sees the other side of the coin, please comment.
Friday, February 22, 2008
Change of market sentiment???
The last half hour of the trading day proved to be the shorts worst nighmare. Feeling giddy from tearing the longs a new one all week, they were all set to end the week on a high note.....until Charlie Gasparino from CNBC burst their bubble.
Hopefully Ambac should get some much needed capital infusion this weekend and be able to keep its triple-A rating. Ofcourse, the masters of the universe(I-bankers, PE) who will be providing the much needed capital to Ambac will have throughly scanned all of ABK's assets, balances, debts, etc. I want to say the market is gonna view this very favorably next week. Hey, if its good enough for the masters of the universe, its good enough for me...atleast for the next week.
I did a little bit of buying today. Bought some FWLT calls early morning. The Contruction and Engineering/Oil Drillers/Commodity sector has been looking really good last week. I believe $100 oil will really spur some big construction projects. 75% of FWLT's business is international, so the growth is already in place. I also bought some Goldman Sachs(GS) calls into the closing rally. The momentum in the financuials should be strong next week, provided the deal completes without problems this weekend.
Covered half of my Monsanto(MON) puts today into the rally. The Agriculture(AG) sector has been acting like the Tech sector in late 1990's. Its where the momentum players have been having their day in the sun. Shorting the AG sector looked like a great idea early last week after the market's bounce back from the Jan 22 lows, specially since that bounce actually just felt like a short covering rally. But now, if we get a substantial rally off the Ambac news specially with soooo much money just sitting on the sidelines and people itching to get back into some of their favorite stocks after they have been beaten down mercilessley this year(AAPL, GOOG, MA, GS, POT, MON), being short MON would feel like standing in front of the freight train!
Current positions:
Long GS, FWLT, ALJ, SNE, MSFT
Short MON, FSLR, RIMM, RTH
Looking forward to seeing how the market acts next week.
Hopefully Ambac should get some much needed capital infusion this weekend and be able to keep its triple-A rating. Ofcourse, the masters of the universe(I-bankers, PE) who will be providing the much needed capital to Ambac will have throughly scanned all of ABK's assets, balances, debts, etc. I want to say the market is gonna view this very favorably next week. Hey, if its good enough for the masters of the universe, its good enough for me...atleast for the next week.
I did a little bit of buying today. Bought some FWLT calls early morning. The Contruction and Engineering/Oil Drillers/Commodity sector has been looking really good last week. I believe $100 oil will really spur some big construction projects. 75% of FWLT's business is international, so the growth is already in place. I also bought some Goldman Sachs(GS) calls into the closing rally. The momentum in the financuials should be strong next week, provided the deal completes without problems this weekend.
Covered half of my Monsanto(MON) puts today into the rally. The Agriculture(AG) sector has been acting like the Tech sector in late 1990's. Its where the momentum players have been having their day in the sun. Shorting the AG sector looked like a great idea early last week after the market's bounce back from the Jan 22 lows, specially since that bounce actually just felt like a short covering rally. But now, if we get a substantial rally off the Ambac news specially with soooo much money just sitting on the sidelines and people itching to get back into some of their favorite stocks after they have been beaten down mercilessley this year(AAPL, GOOG, MA, GS, POT, MON), being short MON would feel like standing in front of the freight train!
Current positions:
Long GS, FWLT, ALJ, SNE, MSFT
Short MON, FSLR, RIMM, RTH
Looking forward to seeing how the market acts next week.
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