Sunday, March 13, 2011

13 March 2011 A Moment Of Silence


13 March 2011 A Moment Of Silence

The fact we are publishing this post is evidence we made a prudent decision not to head to Tokyo. While we (our President and a Board of Director’s member and my self) were concerned about the challenging issues regarding “face” in the Japanese Culture, we wanted to allow our office in Tokyo and their parent company focus on their urgent needs both personal and professional. So we write this from the comfort of our partially restored home while thinking of the thousands who do not have homes to restore. Our thoughts and prayers go out to them. Having had an office in the country for more than 25 years and facing several catastrophies over the years in Japan, we can endorse the efforts and fiscal responsibility of the Int’l Red Cross organization in that country. If you have been lucky enough to see a gain this year or last, we can assure you any benevolence toward this catastrophe managed by the IRC, should serve the victims well.

A Picture Is Worth A Thousand Words

We did not keep on top of our “Cronastics” Chart for a couple of weeks because as we indicated, we did not see any forward looking value in the chart. Over the weekend, we charted the data points from February 28th till this last Friday and it is actually quite illuminating. Keep in mind that we and others pegged this rally as reaching a climax on February 18. Look at the chart on the 18th.

The chart only carries a little momentum (2 days worth) and then begins as slight adjustment down ward. On the 22 the chart peaks with a value of 6.828. Then we see a series of gradual drops averaging .7% for 4 days. By March 1 those drop are escalating to 5.5% drops for the course of the week. If this chart holds any forward looking value (yet to be told) the 6.5 value has a significant role in measuring top end value of the market. Time will tell if that value is relevant to any and all rally’s but it does seem interesting. As this sell off continues, it will also be interesting to see of the data points define a statistical bottom range. Time will tell.

Barron’s This Week

Interesting flavor to the magazine this week as we expected to see a lot of doom and gloom with Lybia, Saudi, Spain, Wisconsin concerns floating about then coupled with the disaster in Japan. Most of the articles did not mention Japan telling us their “bed” time was prior to the incident. Many of the articles addressed the recent market down turn as an opportunity to be a contrarian player and take advantage of many “correcting strategies”. These included currency plays, “healthy” munis (That would be Municipal Bonds for the new players.), gold, silver, and a lot discussions about ETFs that play nice in a declining market. This implies we are having an orderly correction in the market. The VIX data point would support that observation. The VIX is a measure of volatility as determined by the Chicago Board of Options Exchange and measure the difference between Puts and Calls (options) in the market. Since January the fluctuation have been mild with a low of 14.89 and a high of 21. When we were going through the turmoil of 2007-2009, it reached into the 70s. Many investors hedge against the unexpected by putting a portion of our accounts in ETFs that mimic the action of the VIX. Ours is VXX and we buy call options out 12+ months just a hedge in case the unaccepted happens. Because this is an orderly correction, we are loosing our hiney (Financial Term For Capital) on our VXX calls, but they do not expire until January 2012. Even the unrest in Egypt, Lybia, and possibly Saudi and the Tsunami in Japan have not moved the needle much. That can be an indicator that there is a lot of confidence in the underlying economies driving the market. That reminds me has Congress and the Senate come to a permanent fix for the debt ceiling? I guess not. President Obama addressed the critical issue of women’s pay rights in his weekly radio address. (No mention of Japan and even CNN found that a bit strange.) Harry Reid in was talking about the oh so important issue of legal or illegal brothels in Nevada. And Newt was talking about former wives and his disappointing roles as a father and husband being the compelling reason to run for office in 2012. (I’m thinking he is tired of writing a new book every 8 weeks.) Come on folks, we are yet another week away from the government shutting down and those are the important issues? But I digress. Speaking of digressing. I have an app on my new iPhone that is basically 29 versions of the Bible. They have reading programs that let you finish the bible in a year. Anyway at breakfast today I noticed one of my app store updates was this Bible App. It kind a hit me as funny. They are updating the Bible?

Will I see the Gospel according to Bob? Or perhaps an excerpt from St Luke’s letter to the Cambodians? If they really are updating the bible I am going to request they eliminate all reference to gluttony. That one is going to bite me in the butt when I hit the pearly gates. But I digress some more.

Back to Barron’s, Sandra Ward writes a great piece about the 4 trillion dollar a day hairy scary market of foreign exchange. I have played in this sand box quite a few times and ended up with sand in my pockets instead of money. I will admit I am not bright enough to play in that game. This is a great article that might encourage you to give it a try.

I am as esoteric as the next guy, but I read the first page of Abelson’s article this week and I only have on thing to say. “What the heck was he talking about?” I guess the line grab they used as the anchor clears it all up: “Central Bankers-wherever their based-wouldn’t be central bankers if they knew what to worry about.” So there ya go clear as a Koi Pond in North Eastern Japan this week. Santoli had a good article about ETF plays in the wayward correction. I’ll give you a teaser FOL. Andrew Bary did a side piece about how good they were calling WDC Western Digital a year ago May in a bullish article. This one might be worth putting on the watch list, but again let’s wait until the overall market settles a bit with a few strong accumulation days. Sorry, Friday does not count as an accumulation day as volume was weaker than Popeye during the great spinach famine. (Don’t Google it, I just made it up.)

Then the Ward article was a great dissection of all the relevant foreign exchange plays out there via ETFs. From the British to the Swiss franc, they are all here. Give it a read. Here is my teaser, UUP which goes up as the dollar improves, hint hint, consider buying puts or shorting. Theresa Cary and the team do a great job of analyzing 22 on line brokerage firs and score them on a 5 star basis. Good article, and worth the cover price if you trade more than 20 trades a month. Tiernan Ray does a great job kickin the tires on about eight solar companies. We don’t like the sector because it is too early to play it. Even companies that make money do not have reliable stock performance. The technical term is goosey. Good article none the less. Gadget of the week is the iPad2. They love Love Love it. Mark Veverka does a very positive article about HPQ Hewlett Packard. We believe everything he wrote, but don’t have the patience for 12-18 months to see it come to fruition. It is on our kinda watch list. James Anderson does a good piece about Mututal Funds Zzzzzzz. You all know how we feel about MFs. Jacqueline Doherty who we love to read (Her and Santoli are our favorites) does a great article about BAC Bank of America, but we are having a hard time believing all the positive forward looking statements. Sorry Jacqi, this one does not make it to the watch list, but we welcome you to reads the article and draw you own conclusions. It’s a 10 dollar stock dressed up with a 14.00 current price and with a little luck might actually be worth 14 in a year or so. Sandra Ward score another great article due to an informative interview with Ray Dalio founder and hedge fund manager at Bridgewater and Associates. He manages 90 Billion in assets for high income individuals and other governments central banks. This is a great read. Hint here long gold and commodities. Short bonds and careful with equities. If you want anymore, go buy the magazine. If anyone is disappointed, I send you the cover price.

The Week Ahead.

Ok we lost an hour here some where so you will get a day ahead and we will catch up the rest later this week. The real good news is we have no economic data points tomorrow. As far as earnings tomorrow we only have one we are watching because it is one of the few equities we have left after our sell off. Ebix, which we thought reported, last week reports tomorrow and we will be disappointed if it does not blow away the 33 cents a share.

Pick of The Day

For your watch lists, we would not recommend buying anything right now as we are in and evident correction. Do your homework and study your books and check out JAZZ Jazz Pharmaceuticals, Inc., a specialty pharmaceutical company, develops and commercializes products for neurology and psychiatry primarily in the United States. The company's marketed products include Xyrem, a sodium oxybate oral solution for the treatment of excessive daytime sleepiness and cataplexy in patients with narcolepsy; and Luvox CR for obsessive compulsive disorder and social anxiety disorder. The company's late-stage product candidate comprises JZP-6, which has completed two Phase III pivotal clinical trials, for the treatment of fibromyalgia. Its other product candidates in clinical development consist of JZP-8, an intranasal formulation of clonazepam for the treatment of recurrent acute repetitive seizures in epilepsy patients who continue to have seizures while on stable anti-epileptic regimens; JZP-4, a controlled release formulation of an anticonvulsant for the treatment of epilepsy and bipolar disorder; and JZP-7, a transdermal gel formulation of ropinirole for the treatment of restless legs syndrome. In addition, the company is developing oral tablet forms for sodium oxybate. Jazz Pharmaceuticals, Inc. was founded in 2003 and is headquartered in Palo Alto, California.

Fundamentally, price to book is a little rich, but other than that a little too much debt, we liked what we saw. Some are talking about a doub le from its 52 week recent high of 27 and change. Keep this on the watch list and look for the first break in the weather. (That would mean at least a drop to 4-5 distribution days.)

Again, hope you had a great weekend and please consider taking some of your gains and send a couple bucks to the IRC for those that need it in Japan. Good Karma has way of making its way around.
You're telling me an earhtquake and tsunami is more important than me?
Salve Lucrum


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