Thursday, January 07, 2010

BAGAKOAA January 7, 2010 Let’s get a little SIDEWAYS


January 7, 2010 Let’s get a little SIDEWAYS

The market is definitely moving sideways in anticipation of the Friday job’s report. It seems to be split as to whether we will see a small jobless claim or an actual job gain. All the big money (based upon volume number, in other words in the Dow an average day is 200 million shares and the S & P is 4 billion shares. In recent days the market is at or below its average. You and I can “get in the game” all day long and not really impact the inertia of a sluggish market.) Make no mistake tomorrow’s job number will dictate the market for the next week or so.

The portfolio got clobbered today with GOOG down 14 dollars a share. There is no good reason for this unless people think it was getting too rich. I see this as a buying opportunity, and put a limit buy of a few more shares at 590.00 I doubt it will strike as there is HUGE technical resistance at 594. (But there was quite a bit of resistance at 601 as well.) We’ll see. The new Nexus phone was selling well enough (I bought one), that there is now worries about the impact on 3G and 4G bandwidth. MMMMM time to add more AMT. If you got in with us at 36.92 you’re enjoying a 19% bump. Look for that to expand as this phone, the new Prix and iPhone get’s wider distribution. Look for more demand for cell towers.

There was some interesting upgrade/downgrade news today. Remember RPM mentioned here December 12, 2009. They are the parent company of DAP. I was suggesting the the Obama home energy improvement stimulus is a “Cash for Caulking” program and I suggested RPM as a play. Credit Suisse must have agreed as today they raised their target price from 15 to 21 it jumped to 20.75 today and is throwing a nice 4% yield. Based upon its current forward looking PE of 13.4, 2011 estimates make it a 22 dollar stock. This is not an exciting stock, but should be a steady Eddie.

UBS is betting that Ford is a 13 dollar stock. Not that tough a bet if you ask me. Alan Mulally seems to be doing everything right at Ford. He was a great leader at Boeing and he must be admired for what he has gone through at Ford without bail out dollars. Look for more market share gains.

Analysts had mixed reviews about VZ, Jeffries raised their target to 37 and Goldman lowered their target to 36. It closed today at 31.73 so both number make ya feel good about owning the high yielding (5.95%) equity.

A few of you have B of A and B of A Preferred so it should be noted that Credit Suisse consider B of A the cheapest of the large cap stocks (remember that has NOTHING to do with share price it has to with the multiple). They have moved their price target to 21. BAC closed today at about $16.94.

Remember we need two things to kick the market in gear this year. They would be consumers spending and housing to settle. BBBY was a great tell for consumer spending. Their revenue was UP 11 %. It was up 7% today, but there is still room in the pool. More than half of the analysts following the stock have this stock rated hold or less. They will be jumping in the pool shortly and this stock should see 45 before you know it. That would be another 10% from where it ended today. More importantly, consumers are spending.

To keep you enthusiasm in check, I joined AAII in October. No Ben, that has nothing to do with Alcohol consumption, it is the American Association of Individual Investors. They have some great publications, interesting educational offerings, and some great screening tools. They do a survey of their huge membership (150,000+) and get sentiment readings. In recent weeks, the bearish numbers has been drifting downward to a point that statistically is an anomaly. (It is actually two standard deviations below its one year average.) The bullish sentiment is at an uncomfortable high. This all sound positive BUT (Behold the Underlying Truth) it is hard to argue with mathematical algorithms. It could be due for a correction. Make sure your stops are in place.

If it looks like a stimulus and smells like a stimulus. . . . The US House of Representatives will be helping is again. They won’t call it a stimulus, but they want to spend another 100 billion. It should be called the 10 by 10 giveaway. 10 percent unemployment and 10 months to election. But before I digress into a political diatribe, let’s look for a way to make some money. The key element of this vague giveaway is 50 Billion on infrastructure. Think water projects, highways, and airports. Take a look at GVA, GWW, and FLR. Cramer has been pimping FLR lately. I like GVA, but got stopped out earlier this year (pre-blog) when the last stimulus 770 billion was supposed to be spent on infrastructure.

OK get out the gambling money. This is scary speculative! Don’t try this at home kids. You know I’ve been looking for a pure lithium play. Thanks to one of my very expensive newsletters, I may have found one. The Company is called Western Lithium Canada Incorporated. WLCDF. It is a $2.00 a share stock. It is debt free and have a market cap of 70 million US. Now the stock is up about 50% since I first read about it so it could be getting pushed by some viral marketing and I am falling into a trap. Only put into this what you can afford to completely loose. Count on loosing this money. You will loose this money. There I have done my due diligence. I am out at a dollar and will re-evaluate it at 3 dollars. Have fun.

Salve Lucrum


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