Tuesday, October 27, 2009

BAGAKOAA Oct 27, 2009 The cool aide tastes a little funny


Oct 27, 2009 The cool aide tastes a little funny

Ouch.  The stops are hittin and now we must think what to do next.  In the last few days I have been stopped out of PBS, a media ETF up 3.6%.  I will re-evaluate and get back in shortly.  I have been stopped out of CMN, a health care stock after an 8% whack.  I have been stopped out of FCG the Nat gas ETF after a 6.9% gain.  I have been stopped out of GILD because of an ugly bear option spread close and had to take a 9.4% hit.  I still think the stock has an upside, but I will wait for Nov Option Chains to clear.  Come on you big money guys, am I reading this right?  I pulled out of ADTN because I could not remember why I bought it.  That usually means it was a Cramerism I acted upon before doing the homework.  I took a 2.8% loss on that little thing.  I got stopped out of Aeropostel today because of the low consumer confidence report.  It whacked all of the retail stocks.  I took a 4% hit on that today.  I got stopped out of a huge position on MDRX,  Allscripts, my third largest holding.  I got out with a 29 % gain.  I will be back in on this very soon.   I also got stopped out of APC Andarko petroleum because of the weekness in Nat gas.  I enjoyed a 3.9% gain.  I will get back into both APC and FCG to play on what will be 6-7 Nat gas next spring.

So what is going on in this market?  I was drinking the cool aide a couple of weeks ago.  I think I still am, but it tastes a little funny.  Flashback 1978, Georgetown, Guyanna.  NOT.  There is so much money headed into the bond market either in bonds and mutual funds which will make it to equities that the market still has an upside.  My Jan 09  prediction of a 9527 Dow by year end will be low.  This earning season is soft but everything is soft compared to last year. 

Here is my guess, all the money managers who have been hesitant to get back into equities will see this latest down turn as an opportunity to get their portfolios in tip top shape by years end.  Most are going to want to expand their risk, maybe not for the 09 numbers, but for the 2010 potential.

In the last few day I have picked up some Jan 55 BP call options, some Jan HAS call options, increased my position in CHU on the recent weakness, picked up some dec 2009 CR call options, added to my FLIR by picking up some Jan 25 call options, added to my GLW positions with some Jan 12 dollar call options, initiated some PCLN Jan 165 call options, and initiated some Jan 15 call options on EBAY.

Tonight I am going to buy into the weakness of AAPL and GOOG.  I will also pick up some more SQM on the weakness.  A recent downgrade was the result of someone at JPM thinking that the lithium price decrease will have a significant impact on SQM.  I don’t see it as Lith is only about 7-8 % of their revenue.  I like the stock.  Keep a close eye on the dance taking place between POT, BHP and SQM.  I will also bump up my position in TGT.  This is a no loose proposition for me because of my wife’s aggressive reinvestment program.

Please remember your stops.  I has let me take a lot of green off the table in the last few days. Before you ask, my realized gains YTD are now at 4.1% and unrealized gains are down to 12.2%.

Salve Lucrum   



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