Sunday, November 22, 2009

BAGAKOAA November 22, 2009 Homework and funny tasting Kool-Aide

November 22, 2009

Homework and funny tasting Kool-Aide

Well, no one sent me e-mails asking me where my posts were so I guess you didn’t miss me that much. I’d be worried about you if you did.

Devin and I have been busy doing homework, not stock homework, 7th grade homework. I am refreshing my algebra skills, Devin has been helping Jack understanding the days of the Medici’s, (he has actually learned more from Assassins Creed in the last week), I have new understanding of cell theory, and my favorite, name the twelve Apostles left to right in the Last Supper. Did anyone stop to consider that these guys did not really look like they do in the picture so why do we need to know them left to right in the picture. But I digress.

The last week the market closed a hair up. Tuesday HD beast estimates but then said it was going to be a tough fourth quarter. This with some less than optimistic comments by TGT and Pacific Sunwear kind put a damper on things. On Wednesday, Gymboree jumped on the pity party and forecasted a poor fourth quarter. That was also the day that the CPI went up a bit more than some had expected. Jobless claims on Thursday was still headed in the right direction, but we did not get down as much as hoped.

I was reading in Baron’s (Oh yeah by the way Baron’s is now available on the Kindle-Life is good), that there are still bullish trends but the Beadth, a spread between puts and call is not quite as robust as in weeks past. There is a concern that the S & P PE ratio, now around 18 is getting a bit too hot. I would have to agree.

My prognostication about a 9500 DOW by years end did get blown away, but it could be difficult to maintain this hot rally with in a rally. My suggestion would be to go back and check all of you holdings based upon their latest earnings report. If you still like your stocks, make sure your stops are where they belong, consider taking some profit off the table if you are up more than 15 or 20%, and look for these weak days to buy into the stocks you like.

Here is a good example. I have pimped ARMH for a couple of months. They are manufacturer and licensor of micro processors and embedded chips based in Cambridge, England. Intel has their eye on them real close now that they are done fencing with AMD. People in the industry who I respect speak highly of the Cambridge based innovative chip house. When Goldman downgraded Intel this week the whole sector went down on the mat. It was good day to to pick up an 8.50 stock for 7.50. (This is a 12.00 stock around Q 1 2010).

Other than that, my cash position has not allowed me to do much trading. That is a good thing as one of my “followers” got a peak at my primary account and said, “You got too many stocks.” They are correct. Between now and year end it will be pruning season.

Salve Lucrum


Blogger Budd Riker said...

Great report. I need to make some adjustments and this should help. Thanks.

November 22, 2009 at 9:59 PM  

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