Tuesday, January 18, 2011

18 January 2011 Where have all the sellers gone?


18 January 2011 Where have all the sellers gone?

We called a 6-10% dip in Apple and the tech sector today and we were right. If you blinked at 6:31 am PST today you missed it. AAPL did start out 6.7% down at the open. It soon corrected upward. We used the opportunity to pick up more May 16 330 call at 22 dollars a call. That lowered our cost to about 24 dollars and change ($24.55 to be exact). Those calls closed the day at $26.60. I love it when a plan comes together.

We also bought more TGT Target April 60 dollar calls at 64 cents making our average cost 65 cents.

In late November we pimped some TITN Titan Machine March calls which we picked up at 90 cents each. We got a double on early this morning and happily took the profit.

OK I'll Admit it a reach VIX?
We continued to add to our January 2012 40 dollar VXX option, picking up a bunch more at 15 cents each. That will bring our average cost down to 22 cents a call. When we get the correction (as long as it is before January2012) we will be way in the money.

The drop in the call option for SEED Origin Agri May 15 dollar call convinced us to get more at a nickel a piece.

We took a 95% loss on our Jan 22 call option on SIGA. We just did a quick forensic on that one and would have done it again. The market was right the chart was sexy, the fundamentals were and still are acceptable. Just one of them things. They can’t all be winners. (Watch it pop tomorrow.)

In the market today

The grabber line explains it all. There were very few buying opportunities today because people are still accumulating.

The market seemed to ignore the miss of the Empire State Survey consensus of 14. We were thinking 16 but the number came in at 11.92. The promising side of the report came from new orders and a slow but gradual employment improvement. The Philly Fed report later this week should tell us more. So we missed that one. The BOC, (Bank of Canada) did leave rates alone as expected. No news is good news.

Speaking of no news, the stability in the Eurozone was expanded today as some of the rank and file members were more supportive of bailouts. There was also an investor survey out of Germany indicating a strong shift toward confidence. In one of my many inbound notes, this one from our buddy Tim of UBS fame, there is a reference to sector block, TIME. I have a feeling you’ll be hearing this a lot so here comes another acronym; Tech, Industrials, Materials and Energy. It MITE be the sector to play in 2011. (By the way, I have been looking at the dangerous arena of municipal bonds and there are yields there that are times 2 of the 10 year treasury on AA and better notes. While there are some munies that might be toxic, there are some very attractive gems out there. Let me know if you are interested via e-mail and I will point you in the right direction.

On the earnings front, AAPL beat as we expected but we also expected the stock to be held in check by Jobs absence. Schwab did miss but it was technicality because of a one time charge so we can’t call that win. We’ll take the call on IBM as it was a big beat like we said last night. C Citigroup missed and we thought it would beat. Strike two. And we will have to wait until tomorrow to see how we did on the rest of our guesses.

Hu’s on First

A few days ago, in one of my darker moments, (Not that I have even been dark. I can’t even tan worth a damn. In fact I an so fair skinned I get moonburns, but I digress) we were expressing concern about the dollar loosing its reign as the global currency. Well, if you read page 12 in the WSJ today you would have seen an interview with President Hu Jintao and while the mechanics of an interview of a Chinese figure head is much different that most other world leaders, when confronted with questions about the dollar RMB (renminbi) relationship, he answers by saying it will take a long time for the Chinese currency to achieve global recognition. Subtle but insightful.


Ben, one of our dear friends and regular readers (he has to since he get tired of me asking “Did you see in my blog. . . .?) was just in Canada and point out a goof in my post about Target in Canada. Target did buy 220 of the Zeller Store locations, but is only converting 140-150 into Target facilities over the next 2 years. My post implied they bought 220 and were also adding another 150 locations. Since ben was in Toronto at the time he spotted the goof, "Merci beaucoup Ben. Merci de me tenir honnête."

Salve Lucrum


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