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Bud's Poem Page Bud's Prairie Populist Sunni/Shiite/Iraq/Iran Katie's Coast2Coast Blog |
September 3, 2010We are taking the next few days off from regular posting. As in the past there may be some random posts and the Model Portfolio value will be posted daily. The markets are the markets and the big boys and girls will have their HFT fun whether we are sitting here or away. We own good stocks at good prices and have cash on the sidelines if the markets continue their black swan dive. We will return on Tuesday September 7.
Thoughts The Employment Report was better
than on Friday and the previous two months were revised positively and those
numbers led to an early morning rally that held. The U.S. lost 54,000 nonfarm jobs in
August, the Labor Department said. The decline was smaller than the 105,000
loss expected. Excluding census workers and other government employees, nonfarm
payrolls expanded by 67,000 in August, higher than the 30,000 gain expected.
The unemployment rate ticked higher to 9.6% in August from 9.5% in the previous
month and was in line with expectations. Both June and July payroll
employment were revised up. June was revised from -221,000 to -175,000, and the
change for July was revised from -131,000 to -54,000. Guess the
market drop when the July numbers were reported shouldn’t have been Oh well.
Walgreen said comparable-store sales for August rose 2.1%. That
included a 0.7% increase in non-pharmacy sales and a 2.9% gain in pharmacy
sales. Total sales rose 8.6% to $5.66 billion, including contribution from its
April purchase of former rival Duane Reade.
We sold KBE, KRE, Alcoa, and J Crew. After the four day 5% rally we
want to take a few dollars off the table. We use the bank ETFs (KBE, KRE) as
market substitutes and are trading out on the rally in the markets. There are
no specialists anymore (in name only) and with HFT (high frequency computer
trading) controlling the markets the daily share price moves in individual
companies are outsized and tradable. We will continue to trade around core
positions. We did add shares of Intel
to accounts. It is cheap at less than 10 times forward earnings and with a
3.5% yield
September 2, 2010We are taking the next few days off from regular posting. As in the past there may be some random posts and the Model Portfolio value will be posted daily. The markets are the markets and the big boys and girls will have their HFT fun whether we are sitting here or away. We own good stocks at good prices and have cash on the sidelines if the markets continue their black swan dive. We will return on Tuesday September 7.
Thoughts There have been fourteen 90% down days since April and thirteen 90% up days since April
including yesterday. 90% upside/downside
days used to be a rare occurrence until the advent of HFT trading. A 90% Upside Day means that the NYSE Upside
Volume / (NYSE Upside Volume + NYSE Downside Volume) is greater than 90% AND the Points Gained / (Points Gained +
Points Lost) is greater than 90%.
90% days used to signal turns in the markets. Now they just signal that
the computer jockeys are controlling day to day trading.
Dell and Hewlett
Packard are engaged in a bidding war for 3Par which is a ‘cloud computing’ company ( http://en.wikipedia.org/wiki/Cloud_computing . The bid price has now risen to almost $3
billion. We think HPQ will win the bidding war. HPQ is down because CEO Hurd left by request
and analysts think the company will suffer. We have never been enamored of CEOs
being indispensable and we view the price drop as a buying opportunity with the
shares trading at 10X earnings. HPQ can well afford $3 billion and since cash
is earning nothing these days the cost of 3Par while high will provide HPQ with
and area of storage that it is lacking.
Dell made an initial $1.5 billion bid to enter a new area of computing and lessen its dependence on hardware. They too have enough cash to fund a high offer. If they lose Dell will receive a $75 million breakup fee which should pay the lawyers with some left over for candy. At 10AM Dell said it wouldn’t raise its offer to match HPQ. Both stocks
rallied.
We are adding Chico’s to some accounts. This article
gives a good rundown on the pluses: http://seekingalpha.com/article/222728-chico-s-fas-another-chance-to-invest-in-new-management?source=yahoo
American Eagle news: http://blogs.barrons.com/stockstowatchtoday/2010/09/02/aeo-rises-as-august-sales-q3-forecast-meet-estimates/?mod=yahoobarrons
.
September 1, 2010
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