JUST TO EAGER?

3/19/08 6:30 PM - To pat myself on the back, I really like what I have been writing since I relaunched the site. Most of the stuff has been ahead of the curve by at least a few days.

It just seems too obvious that after these one day pops people quickly forget what has caused us to drop 2000 DOW points and be down 11% or more depending on index on the year.

A bottom is never cured by a one day bounce. When the fed cuts interest rates 75bp in one chunk and 300bp in a matter of months, that doesn't signal all clear, it should signal trouble is still in the system. They aren't cutting rates because the economy is booming or because they want the dollar to be worthless. They aren't coming up with never before used techniques to spur lending or prevent capital market failures because they are mad scientist. They are trying to keep our economy somewhat afloat.

There are just a bunch of land mines out there and it is very tough to find anywhere safe to hide. Why else are people piling into the short end of the yield curve? Why would you be jumping at the opportunity to get a 1-2% yield in bonds? You are just trying to preserve capital is the only reason. But with the inflation rate and taxes you are getting a negative return on your money. But you will at least have your money, I guess.

The yield curve is so steep the banks should normally be able to mint money under this kind of yield curve. But they are holding the cash and withdrawing credit and leverage.  People are tightening the purse strings everywhere.

Look at the blood letting in gold and other commodities today.  I am glad I sold out of our wrote calls against the majority of my gold holdings over the last few days. At this time yesterday with Gold at 990, I said it could unwind quickly. It closed today at 940.

 I will continue to write this, we are going to continue to chop. The action has been a little better but don't become complacent. I will continue to add to my favorite positions as I did today, but realize there is likely some major pain ahead. Don't miss the opportunities like yesterday to at least build some cash.

The last few days have been very tough for me. I had been up in my trading accounts for the entire year until today.

I had been hiding in commodities, metals, ag, infrastructure and oil. Today those areas got crushed with 5 to 10% down moves TODAY alone. At 11:00 this morning I kept saying this smells like a massive margin call. Only to see NYSE floor traders interviewed at 2:30 on CNBC saying that they felt all the brokers where reeling in credit by forcing clients to reduce margin. If it is truly a margin reduction the sell off will be painful but brief.

I still believe in my favorite names long term and added to my two Brazilian favorites today, RIO and PBR.

RIO already negotiated and signed a 70% price increase for their iron ore. That pricing goes into effect April 1 if I recall. PBR had one of the largest oil finds in history. The world didn't stop growing today. It doesn't mean they are guaranteed to go up but I like their positions in any economic cycle.

EVERYBODY IS EAGER TO CALL A BOTTOM

3/19/08 8:40 AM - Boy is everybody eager to be the first one out there to call this a bottom. Tread very lightly is my mantra. We have a lot of rebuilding to do and we don't just do it over night. Remember I said I thought we were building a bottom last week, but I am still very cautious.

This is a perfect time for the market to really catch everybody leaning the wrong way. I will be doing more trimming than buying into this rally. I want the market to prove to me it is not going to head fake everyone first. To do that it is going to have to clear the 12700 level and hold it. Any sell off from there will have to hold the 12400-12500 level.

I personally think the market is in no man's land right here. Not strong enough to buy into and acting better as to prevent shorting.

People sure got complacent again very quickly. Every one is programmed to expect the market to go straight up that at the first sign of good news, they think the hiccups are done. There are still many boogie men hiding in the market's closets. Just wait until the next one jumps out and see how the market reacts. It will tell you how strong or weak the market really is. I get the feeling that it is the cowardly lion right now.

Only add to your favorites and don't take on too much risk in doing so.

TAKING SOME PROFITS

3/18/08 5:30 PM -  My pick from below for today EWZ was up 5% today.

Took some profits as I said I would on a big rally. I just mainly sold some of my gold and ag today. Completely closed out my second favorite palladium play, SWC for a double. Also closed out my speculative gold miner NXG. Took off 25% of DBA and GLD today. I was up 50% or more on each of those positions.

Also sold calls against my AUY position. Didn't want to get rid of the position but wanted to lock in some of the huge profits I had. Basically if the stock bounces in the next couple of days I will get called out for a 50% gain. If it doesn't bounce I get to keep the premiums on the options and keep the stock too.

The dollar showed some/marginal strength because the fed "only" cut 75 bp. That is an hilarious statement. How big of a POS does the US dollar have to be that it can rally on one of the largest rate cuts ever? Traders had baked in 100 bp cut and had to cover on the "smaller" move.  If the US dollar can get any momentum at all you could see gold unwind really quickly to 850 or so an oz. At that point gold would be a buy again. Heck it might be a buy on a pull back below 950 but I want to see if we get a change in the dollar's direction first.

At the bottom of this thread you will read that I wrote last week that I thought we were forming a bottom. That is why you will notice I had been adding to my favorite names and taking off my inverse ETFs. We still have some big hurdles to cross. It is going to be tough to get to far past DOW 12,700 without a nice size pull back.

My game plan is to continue to lighten up the long side as we climb. I will also be looking to add back to the inverse ETF hedges I let go last week. But I want to keep 30% or more in cash right now. It is not all flowers going forward. There is going to be piles of manure along the way. We are at one of those points where it is tough to be a bull or a bear. That is usually symbolic of a bear market.

PICK TO CLICK

3/18/08 8:05 AM - Really like the Brazilian ETF EWZ. It closed at 77.00 yesterday which put it 13% off of its recent highs. Brazil is in a bull market and you are getting it at a double digit discount. I think it is due for a bounce. I really like PBR and RIO my two favorite Brazilian stocks and will continue to add to those on pull backs.

GS didn't disappoint and the market is all giddy on the fact that GS and LEH didn't announce they were crumbling. Look GS is by far the one and only financial stock that is attractive. I do own a little bit with an avg. cost of 180 but I haven't been adding to that position here. I just like other areas much better. GS is the best stock in a very poor neighborhood.

I am a seller into a big rally today. I will add back some of the ultra inverse ETFs I have taken off recently too. I have spent the majority of the recent down turn getting longer. I am looking to lock in some of those profits now on any big run up. That way I can put the positions back on when not if we get another big sell off. 

FUTURES

3/17/08 2:25 PM - The market has made a big rebound. It will be interesting to see if this can hold through the end of day on Tuesday.

To bad I don't still trade commodities futures. Sugar under 12 and OJ under 117 sure look mighty tempting.

STILL THINK THE WORSE IS YET TO COME

3/17/08 11:30 AM - Added to my FWLT position. The unbelievable rebound this morning that took us into positive territory was short lived as it should have been.

WHERE TO GO TODAY?

3/17/08 -  Mostly sitting on my hands today. I did buy some PBR at 104 this morning. The market has also rebounded some 150 points from the lows at the open. Overnight the market was much worse than where we opened. I still think there is more blood to be spilled, so I am just going to pick away at my favorite names. PBR is my most favorite, after that the stocks I have been buying for the last week is the group I am looking at adding to.

Someone could have had GS (Goldman Sachs) for 141 this morning. WOW

WHERE DO YOU GO NOW THAT THE BEAR IS REALLY GROWLING?

3/15/08 -Here is an obvious statement, it is a rough market these days. The market action should be proof that we are in a bear market. But no one wants to hear or believe that. However, the VIX is starting to say people are really getting scared. I think we are in the process of building a tradable bottom in the next week.

As indicated above, I have been adding to some of my favorite positions slowly but surely. To finance these purchases I have been taking off some of my inverse Ultra ETF positions. I know that this might be early but that is why I am staying with very specific stocks. I am still 30% in cash and hedged another 10% with the inverse ETFs. So I am not backing up the truck here, just slowly picking away at a specific group of stocks.

The stocks I am buying have to either make stuff, mine stuff or provide the infrastructure to make the world go. I am not interested in tech, financials or retail. I think you have to stay focused on specific sectors, no matter how tempting the other sectors might be.

It is a time to be invested in hard asset companies.  That time will change, but until the US dollar finds a bottom and starts to strengthen, everything commodity priced in US dollars will continue to rise. That means that oil, gold and all other commodities are going to continue to rise. The value of the dollar controls those values and why it is so important for the dollar to strengthen.

I am sure there are great deals in techland right here. I like AAPL, EMC, ORCL. I still think the financials are toxic and have more bad news to come. The only one I like is GS. I don't even look a retail and would be scared to put any money there. But my point is why go to the bloodiest areas of the battlegrounds when there are less apocalyptic areas that provide better long term opportunity?

The hyper growth countries of the world are growing their infrastructure. That requires manufacturing and metals and the heavy stuff that require heavy duty equipment. We, the US, are a services based economy, these booming economies are not even close to that point. They are just in their infancy and that means they will build stuff and build it for many years to come. Once the build out is complete, then they will transition to the advanced services economy like we have. But that won't be for decades.

The world is going to need fresh water, food, and earth minerals for as long as I continue to be alive.  I plan on living another 60 years. Why not take advantage of these life long trend for many of us.?

ek