Session of 03/08/2007

[David Randolph]

Good morning

It seems the bulls have the upper hand this morning. I'm opening my mind to the possibility of being wrong when I made that bear market call. Anyway, most stocks that I've sold are trading at lower prices now (some of them are 20% below my selling point), and I'm buying back 3 of them, the ones I'm more confident in their independence from the US business cycle.

This market downturn has led me to learn more about China and its economy. I particularly appreciated realcoolhead's posts, I wish he wrote them sooner, they put things into perspective. I also have learned interesting stuff about China on Morgan Stanley Stephen Roach's articles, namely:

China Squeeze
The Heavy Lifting of Chinese Rebalancing

They show I shouldn't be worried about China's banking system, Chinese Consumption or China going down due to lack of exports, because the composition of the Chinese GDP is quite unique. 45% is Investment, 35% is Consumption and 20% is Exports - Imports. So, what China needs now is to re balance its economy, slowing down Investment and taking measures to increase internal demand.

But I'm still worried about the US consumer. No doubt there won't be strong growth in the US going forward. But isn't that at least partially discounted in the share prices? Housing related stocks are trading at very cheap multiples. Banks too.

So I have doubts. I will let the market talk and respect its decision.

As I look to the 3 Stocks on Fire Portfolio holdings, I guess those two options, because they are so near to maturity, are really a gamble. I believe GOOG and FMNC are very overvalued and they should go down, but I have no idea if that is going to happen in a week's time or not. I'll think of an exit strategy for those puts (fortunately I didn't put a normal position in them, position size is very important).

As for FRPT, I believe it will go down regardless of what the market does. Their revenues are not recurring and the company has no earnings to show. It sure isn't worth more than $1 B.

Considering QID, I'm interested in seeing the market's reaction towards the close today. I wonder if people that bought the dips won't take profits right away. If we bring up people holding but with doubts, they might sell on this second opportunity.

As for the future of the 3 Stocks on Fire Portfolio and the right path so it can achieve its objectives, I'll write another post in a moment.

Have a nice day

[rudynostalgia]

March 6 David wrote about SVNT: "I guess probably you have your motives to enjoy this stock Rudy, but I couldn't find them on this quick analysis."  It's up close to a buck since then. My motive was to make money as a long, which I always am.  David, can you check MBLX, another of my weird choices (like DSTI, COR)

[gwfox]

Good morning, everyone.

Per the post yesterday on RPTN: It''s down sharply this morning (~8%), however it has a wonderful 3-year weekly chart.

Also ICAD and OSTE look like longs with great promise.

Regards,
gwfox

[tokyopua]

Anybody know a good link or way to track realtime volume of the major averages for Nasdaq, S&P, and Dow Jones?  I have Power Etrade, but pulling up charts doesnt usually seem to show the volume.  I know I can get somewhat delayed volume from stockcharts.com, anyone know other sources?

[KCScott]

David,

Hope you don't waiver in your bear market call. I believe you are spot on. Last year you were early with your call - then came the May Dive. This market will whipsaw until it's drained everything $$$ of retail.

One of the traders I follow is making his initial buys of MZZ (Mid Cap Ultrashort)  today. He's been calling this market top since early January.

Best,

KC Scott

[David Randolph]

March 6 David wrote about SVNT: "I guess probably you have your motives to enjoy this stock Rudy, but I couldn't find them on this quick analysis."  It's up close to a buck since then. My motive was to make money as a long, which I always am.  David, can you check MBLX, another of my weird choices (like DSTI, COR)

Hi Rudy, nice to see you and thank you for your hindsights

I'm sorry, but "I want to make money as a long" isn't a valid motive to buy/hold a stock. You either don't have a valid motive, and therefore you were lucky, or you have a motive, but can't explain what that motive is, or as a third hypothesis, you have a motive but you don't want to disclose it.

Perhaps you just don't have time to write a post explaining why you pick stocks the way you do, but since I know you're retired (stop what you're doing for www.nostalgia.com right now ), I challenge you to write a bit about your strategy.

Thanks

[anvilring]

David, about your bear market call...
I was surprised when you shifted your market views in what was virtually an overnight decision. I must say that for the first time in a while, I didn't follow along with the recommendations. I don't think any of us here expect you to have an answer to any market move/correction within a matter of hours. Theres nothing wrong with going to cash in the portfolio for days or even weeks if thats what it takes for you to make an important decision.
 
On a different note. I'd like to talk a little about our website. I note that today, this morning, you sent out emails to the effect that we're adding back some old favorites: MSI, SILC and WCG. However on the "main portfolio" link in the selection bar at left, it doesn't show yet.  So, if you didn't get an email, as in the case of a member being out of town/ limited computer access, you would have to search the boards and sort out what to do and that takes time....

Just an idea. Two link bars at  the bottom of the two portfolios that read "todays instructions". They would take you to just that; what you've done, if anything, (no new instructions) and eliminate searching for what's up for either portfolio. I realize you must have advertisement on the site but I get lost in all the subterfuge sometimes.

          as always, thanks for the great work!
                                                  mitch

[nullzero]

I would take todays upside with a grain of salt  . We will be much lower by the end of the day. Whats the reason we gapped up so much today? The foriegn markets? The foriegn markets usually follow the U.S. market not the other way around. If I had to take a guess I say we close the gap up today and even may see red. Excellent time to enter the short side. As for the long case today and last few days is just smoke and mirrors in my opinion low volume and nothing really showing strength. Wait for some important economic data to come out to show what direction the economy is heading.

[David Randolph]

David,

Hope you don't waiver in your bear market call. I believe you are spot on. Last year you were early with your call - then came the May Dive. This market will whipsaw until it's drained everything $$$ of retail.

One of the traders I follow is making his initial buys of MZZ (Mid Cap Ultrashort)  today. He's been calling this market top since early January.

Best,

KC Scott

I'm a bear for as long as the market closes below $141.69 on the SPY. If it closes above that level I'm not necessarily a bull, but not a bear either. I will look for specific stories then.

I have doubts. I'll let the market be the judge.

[KCScott]

I would take todays upside with a grain of salt  . We will be much lower by the end of the day. Whats the reason we gapped up so much today? The foriegn markets? The foriegn markets usually follow the U.S. market not the other way around. If I had to take a guess I say we close the gap up today and even may see red. Excellent time to enter the short side. As for the long case today and last few days is just smoke and mirrors in my opinion low volume and nothing really showing strength. Wait for some important economic data to come out to show what direction the economy is heading.

Absolutely Correct - Applaud

We call it GAP & CRAP - and the QQQQ's are already tanking downward.
Institiutional can't wait to sell into any strength right now.

[nullzero]

Market is starting to show weakness, I would short here its easy money.

[rudynostalgia]

My strategy is very simple: I spend hours trolling the web for information. For example, Paul Tharp in the NY Post wrote a very favorable item about MBLX. I was sure it was going to jump. I bought 5000 shares  at !8.51 and sold at 19. That was enough to pay for the caviar on my morning bagel. As for SVNT, that one's easy: Cramer. When he recommends an overlooked stock, I jump on it. I've made a huge amount of money buying his picks -- not the big cap stuff, but the little guys.  As for COR: I picked up on it based on an aritcle in Time Magtazine that mentioned it.  Hillary Clinton visited the DayStar (DSTI) outside Albany and I knew that news would move the stock.  I did this before I was retired. I use to read 5 or 6 papers a day plus tons of mags. Now I read the Times, WSJ and for the rest of my news, I use the web. The only time I use a white candle is to read a paper when the electriicty goes out. Regards, rudy

[nullzero]

David what do you think of FSLR? Cramer was pumping it last night, however it does look attractive it uses non silicon materials to make solar panels (which I believe is the future for the solar industry and oviously the most cost effective way of doing it).

[David Randolph]

My strategy is very simple: I spend hours trolling the web for information. For example, Paul Tharp in the NY Post wrote a very favorable item about MBLX. I was sure it was going to jump. I bought 5000 shares  at !8.51 and sold at 19. That was enough to pay for the caviar on my morning bagel. As for SVNT, that one's easy: Cramer. When he recommends an overlooked stock, I jump on it. I've made a huge amount of money buying his picks -- not the big cap stuff, but the little guys.  As for COR: I picked up on it based on an aritcle in Time Magtazine that mentioned it.  Hillary Clinton visited the DayStar (DSTI) outside Albany and I knew that news would move the stock.  I did this before I was retired. I use to read 5 or 6 papers a day plus tons of mags. Now I read the Times, WSJ and for the rest of my news, I use the web. The only time I use a white candle is to read a paper when the electriicty goes out. Regards, rudy

hmm, that's a good idea for short term trading, at least that. I should subscribe to the online editions of those newspapers and magazines. I'll take care of that during the weekend, thanks for the tip

[TraderStar]

Chiming in, I think the market will close green today but there will be another major drop soon.  It is going to do what it did last May .. after a further drop, it will rise again & everything will seem rosy.
Then .. maybe later this year will come the 'real' setback & if we are prepared, this will be a major opportunity to make money, especially with option puts.

The trick now will be to ride the next month or two as the mm's chop it around & try to scare us out both ways...

My 2 cents