Bud's Poem Page

31 January 2006 Daily Comment Daily Comment

Thoughts

Beginning today we are going to skip the play by play (the market is up the market is down stuff) during the day since it is dated information by the time it is read and just provide our observations on occurrences during the t trading day. Many readers have said they skip that part and since we have had many pearls of wisdom interspersed in those comments we are making the change so all readers can garner the pearls.

Hong Kong is still celebrating Chinese New year. Japan was fractionally higher and Europe is mixed. Gold is up another $5 and oil is down pennies.
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Greenspan is history after today. Actually he looks like walking history today.

The Fed makes its interest rate announcement with accompanying verbiage at 1:15pm and until then it should be a snooze fest.
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And for our evening’s enjoyment there is The State of the Union Address by Dubya followed by News from Comedy Central and Jon Stewart. We’ll probably only watch the latter since we don’t think we can stomach hearing how great our health insurance is from folks who have Government provided Health Insurance for life as all the members of Congress and the Executive Branch including Dubya and Cheney do. Just let us buy into their program is all we ask.
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Kraft will lay off 8,000 more workers on top of the 5,000 let go last year.
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Gold jumped $6 before the opening but is now only up $1 at 10:30am. Gold is in the hands of the hedge fund boys and girls and that is why it is at a 25 year high. The hedgies like anything that is moving whether up or down.
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Only three times after the last seventeen Fed meetings has the overall stock market been higher (lower) three days later if it closed higher (lower) on Fed meeting day. According to Jason Goepfert who is a very good technician at www.minyanville.com this pattern holds true for the last ten years.

So whatever happens today the odds are that three days form now the markets will have reversed the initial reaction.
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We added SGP to accounts at $19.48. We bought it to own for a while.
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The Fed raised the Fed Funds Rate to 4.50% and dropped the need for measured action to maybe action in the language and Treasuries yawned and stocks sneezed. This was the 14th consecutive rate increase.
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Iran is hoping to open an Oil trading exchange that deals in euros instead of dollars. If they are successful the new exchange will eliminate the need for European countries to buy dollars to trade oil in the New York markets. Of course Iran is Iran but if the settlements are done in a European country the new exchange could change the dollar/euro relationship.
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One new trading rule that hasn’t been tested yet is the SEC change that allows selling on downticks in all stocks now. By tested we mean that the stock markets have been in a bull phase since that rule went into effect. That was true of stock futures insurance in the 1985 to 1987 bull market.
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The DJIA closed down 35 points at 10865 after trading in neutral territory for much of the day. The S&P 500 was down 5 points at 1280 and the NAZZ lost 1 point to 2305. Breadth was negative during most of the day but turned in the last half hour and at the close it was slightly positive. Volume was moderate and new highs contracted to a still respectable 430.

Treasuries closed lower on the short end with two-year at 4.53% and the ten-year unchanged at 4.53%.

Gold gained $5 to finish at $575 and oil was down 43 pennies at $67.92.

And there are three more casino days left this week before the huge Super Bowl Gambling Extravaganza.
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30 January 2006 Daily Comment Daily Comment

Thoughts

In our larger accounts ($500,000 and above) we are going to put half or more of our money in two-year Treasuries yielding 4.50%. This is more than 1% above what we are earning on cash right now and we think there might be a trade in them if the Fed is dovish tomorrow or in March. And if not the yield is attractive with the two-year rate at a five year high. Would that we had earned 4.5% on our money last year.

In our other accounts we want to keep the cash on hand for trading opportunities and maybe higher rates ahead.
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Exxon earned $10.7 billion in the quarter and $38 billion for the year. Quarterly revenues were $99 billion. And Congress granted tax breaks to Exxon in the last tax relief bill.
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Wal-Mart says that January’s sales will be up 4.7% which is better than the up 3% to 45 they had been forecasting. That has put a bid in other retailers.
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Personal Income was up 0.4% in December and Personal Spending was up 0.9%. Merry Christmas.

Year over year core inflation for the 12 months December 2005 was guessed at plus 2.8%.
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Japan was up but many Asian markets were closed for Chinese New Year which is the Year of the Dog.
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Iraq issued 22 year bonds at a 9.25% interest rate. General Motors long bonds are trading at and 11.85% interest rate.
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Monday’s markets January 30, 2006

10:11am and after being higher for the first hour the major measures are mixed on the day in moderate trading. Breadth is flat. Treasuries are a tad higher in yield and Gold is up $4 at $563 and oil is a few pennies lower at $67.60.

We repurchased shares of SGP at $19.80 in our trading accounts after earnings were released this morning and disappointed traders causing the share price to drop below $20. We are also adding more shares of SUNW to trading accounts at $4.25.
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The Commerce Department reported that in 2005 the U.S. had a negative 0.5% savings rate. That is the first time there has been a negative savings rate since 1932 and 1933.
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2:28pm and we sold our SUNW holdings at $4.36. We made a scratch profit in many accounts and a loss of a few pennies in a few larger accounts. SUNW has been too volatile the last two weeks for us to get a handle on it.
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3:02pm and the DJIA closed down 7 points at 10900. The S&P 500 rose 2 points to 1285 and the NAZZ gained 3 points to 2306. Volume was moderate and breadth was negative at eh bell. There were over 500 new highs.

Treasuries closed a tad weaker with the two-year at 4.51% and the ten-year at 4.53%. Gold finished higher at $567 and oil end higher at $68.35. OPEC left production quotas unchanged.

And tomorrow is Alan’s last day as a government employee at the casino so it should be interesting. On Wednesday he crosses the street and rakes in millions in fees from every major corporation in the country.
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27 January 2006 Daily Comment Daily Comment

Thoughts

The S&P 500 finished right at its 20 day moving average last night at 1274 and will take out 1275 on the opening this morning. 1275 had been resistance after the S&P broke down through that number last week when it was support.

Overnight Japan was up 3.5%, Hong Kong end up 1.4% and most of Europe is up over 1%. Oil and Gold are also higher. Treasuries are flat

It looks like the bulls are going to take control at the opening and then we’ll see how the day goes. A strong finish today will set up two strong days next week as the month ends and Lord Greenspan takes his leave of his job on January 31.
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Friday’s Markets January 27, 2006

The volatility of the markets has been increasing notably this year and if Japan is any indication it may be a wild ride for those who are fully invested. We don’t plan to be among those folks. We would rather pick our trading situations and place some money in short Treasuries. We are awaiting the Fed meeting on Tuesday to see the wording of the statement accompanying the 25 basis point raise to 4.50% and how the markets react before making any commitments. Since we are going to buy short dated paper we don’t think we are risking anything by waiting. That’s because if the Fed decides to go the extra mile and raise one or two times more after Tuesday the principal loss in the two year would be more than the yield we are sacrificing waiting to commit.
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Final GDP for the 3rd Quarter was plus 4.1%. But Advance GDP for the 4th Quarter was 1.1% while economists had been expecting 3% which had bonds rallying on the news. Treasury Secretary Snow says not to worry the Treasury Department will massage the numbers for the next look at 4th Quarter GDP which is called Preliminary GDP and it will be better. Remember the treasury Department gets four tries on this number.
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December new home sales were down 3%.
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11:16am and the DJIA is up 100 points and the S&P 500 is comfortably above 1275. Breadth is over 2/1 positive and the bulls are happy while the bears are licking their wounds. Next resistance level on the S&P is 1290

Treasuries are flat to a bit better and gold is down $1 while oil is up 75 pennies.
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12:54pm and with the DJIA acting well the stocks we purchased yesterday for trades are not. We are selling the Yahoo for a small profit and the SYMC for a scratch loss. We are holding the NOK and also the SUNW that we bought in large/aggressive accounts. In fact we added more shares of Sun to some accounts that already own it.
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3:02pm and the DJIA closed up 98 points at 10905. The S&P 500 gained 10 points to 1284 and the NAZZ rose 20 points to 2301. Breadth was 2/1 plus on the NYSE and 5/4 positive on the NAZZ. Volume was active and new highs reached over 700. Bulls win the week!

Treasuries closed mixed with the two-year at 4.49% and the ten-year at 4.52%.

Oil ended up $1.50 at $67.76 and Gold finished at $558.

And the casino is closed for the week-end for rest. Next week should be a barn burner.
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26 January 2006 Daily Comment Daily Comment

Thoughts

Good news on the job front as jobless claims for the last week were 283,000 following on last weeks revised 272,000. Over 300,000 claims had been expected. Durable Goods orders were up 1.3% versus 1% expected.

Japan was up 1.4% overnight while Hong Kong was flat and Europe is flying. That’s probably because of all the rich folks meeting in Davos Switzerland spending oodles of Euros.

 U.S. futures are also stronger and bonds are weaker as are gold and oil.
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Thursday’s markets January 26, 2006

The markets are at an inflection point where they have to hold current levels. If they do then they may rally into March as they did last year. Historically the last few days of January are bullish. If the market don’t hold these levels then its look out below—but then that’s always the case.

Nokia reported phone sales up 26% versus the up 16% that Motorola reported last week. But traders don’t like that the average selling price dropped to $99 euros although earnings were in line. NOK strategy on lower prices is to push out smaller competitors and that seems to be working. We are going to take a trading position in the shares since they are down 2% on a morning when the major measures are going to open well.
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9:59am and the major measures are higher in active trading. Breadth was 2/1 positive for most of the first hour and remains 3/2 positive.

Treasuries are weaker with the two-year at 4.48% and the ten-year at 4.52%, this morning’s economic numbers implied that the Fed may go another raise after next Tuesday’s supposedly baked in the cake raise.

Oil is 15 pennies lower at $65.79 and gold is down $3 at $559.
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We bought Nokia at $18.17 in many accounts for a trade. The new manager at Fidelity Magellan has made Nokia his largest position and we presume he is buying more today.

"The unit growth is extremely strong, and the market share trend is very strong, but they are still not converting that into profit growth," said JP Morgan analyst Mark Davies-Jones.  "They are doing an awful lot of very good things in terms of product repositioning, in terms of their marketing efforts and so forth, but to remain competitive it's costing them margin."

We are also buying Symantec at $17.90 for our aggressive accounts. We traded it profitably from these levels at year end. Earnings come on Tuesday night so we may be out by then if we get a pop. There has been negative news on the stock with the Vice Chairman, who led the software division and will not be replaced, quitting and two brokerage downgrades. This is one of Magellan’s top ten positions and here again we think Magellan will be buying stock. This company is cash rich and the CEO quitting may be merger shakeout from the Veritas acquisition (he was CEO of Veritas).
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1:57pm and entering the final hour the DJIA has popped up 100 points. Breadth is back to 2/1 positive and volume is brisk. We bought back Sun Micro at $4.48 in some of our larger accounts after their earnings report of yesterday and we also have a re-established a trading position in Yahoo at $34.74 in a few larger/aggressive accounts.
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Microsoft reports earnings after the close tonight.
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3:02pm and the DJIA closed up 100 points at 10810. The S&P 500 closed at 127 up 10 points and the NAZZ gained 21 points to 2281. Breadth was 2/1 positive at the close and there were 500 new highs to 65 new lows. Volume was active.

Treasuries closed above their lows but down for the day with the two-year at 4.48%, the five-year at 4.44% and the ten-year at 4.52%.

Oil was up 41 pennies to $66.26 and gold ended at $560.

The casino is open tomorrow and then closed for the week-end. And there are no football games so hard core traders better catch a flight to Las Vegas.
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25 January 2006 Daily Comment Daily Comment

Thoughts

There are no market moving releases scheduled today. Oil inventories are scheduled and so the big boys and girls will trade around that number. Asia was mixed with no large movers and Europe is higher as are U.S. Futures.

Oil is off and gold is up $5 heading into the Wednesday session.

We remain comfortably in cash as the two-year Treasury has returned to 4.40%.

Wednesday’s markets January 25, 2006

In the ongoing soap opera Guidant has chosen Boston Scientific over J&J. at least for the next hour.
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Google is in China and allowing itself to be censored. Yahoo is in the same boat.
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10:24am and the major measures are higher in a mirror image of yesterdays’ trading. Breadth is not quite as positive as yesterday.

Gold remains up $3 at $561 and oil is off $1 to $66 on higher gasoline and heating oil inventories.

Treasuries are weaker with the ten-year at 4.44%.

1:21pm and as the Dalai Lama says: “when you lose, don’t lose the lesson”.

And our lesson is that cash seems the right place to be right now.
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And the markets were higher most of the morning but are losing steam in the contra hour which is the hour before the hour before the close.

Investors Intelligence had 53.7% Bulls versus 57.3% last week and 25.3% Bears ursus 22.9% last week.

The oil inventories were lower than expected but gasoline and heating oil inventories were higher and spot oil is now trading lower.
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3:02pm and the DJIA closed down 2 points at 10710. The S&P 500 lost 2 points to 1264 and the NAZZ dropped 5 points to 2260.

Breadth was 5/4 negative at the close but new highs exceeded 400 again and new lows expanded to 75. Volume was brisk.

Treasuries tanked with the two-year ending at 4.45% and the ten-year making a low at 4.48%. Gold ended at $563 and Oil at $65.80.

Only two casino days left this week for the Bulls to pull out a win.
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24 January 2006 Daily Comment Daily Comment

Thoughts

Texas Instruments reported last night and under whelmed traders and is off 50 pennies this morning in early trading. DuPont and MMM both were light on revenue but exceeded their earnings numbers. DuPont lowered expectations going forward.

Overseas Japan was up 1.8% and Hong Kong was higher while Europe is mixed and U. S. futures are higher. Oil and Gold are lower and Treasuries are also weaker.

Ford announced layoffs yesterday and now the big three U.S. makers have announced that 60,000 high paying manufacturing jobs will disappear in the next three years. In an economy with 100 million jobs that job loss isn’t much unless you happen to be the person or town affected by the layoffs. Capitalism isn’t fair.

We are cash and content for now to watch and trade support and resistance levels in our aggressive accounts.1250 is support on the S&P 500 and 1275 and 1290 are resistance.
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Tuesday’s markets January 24, 2006

Johnson& Johnson also just announced revenue figures that were light.
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A down 100 point opening would go a long way to stetting up a rally but it doesn’t look like that is in the cards.
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8:56am and the major measures are higher in moderate trading. Tech stocks are rallying with the NAZZ up 20 points but trading tech stocks right now is like juggling sharp knives.

Breadth is 2/1postive.
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11:56am and the major measures have remained on the plus side all morning but can’t seem to break out higher. Breadth is good and volume is moderate. New highs exceed 400 and Oil and Gold are both lower.  Treasuries are slightly lower in price.
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3:02pm and the DJIA closed up 28 points at 10716. The S&P 500 gained 4 points to end at 1268 and the NAZZ jumped 15 points to 2265. Volume was moderate and breadth was 2/1 positive at the bell. There were 400 new highs and 70 new lows.

Treasuries ended higher in yield with the two-year at 4.37% and the ten-year at 4.39%.

Gold closed at $558 and Oil dropped $1.17 to finish at $66.93.

The casino is open for three more days this week.
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23 January 2006 Daily Comment Daily Comment

Thoughts

We spent the week-end reviewing our trading on Friday. The trades we attempted made sense since the DJIA was down 150 points and testing support when we purchased. With Witching Expiration as the Wild Card there was some risk in initiating the trades but we though the risk was definable. That the markets didn’t bounce was not good and so we closed two of the positions and held two in our large/aggressive trading accounts and the one position in our other accounts with the hope that a Monday morning bounce would rescue us.

The Fed meeting isn’t until January 31 so there is no chance for it to rescues the markets next week.  

The Google contretemps over disclosure is just that with posturing and nothing to come of it and the Iran brouhaha is an election year event similar to North Korea since there is little but jawbone the U.S. can do unless Israel decides to do the bombing run. And the rise of the price of oil over Nigeria is also discovering an event that has been ongoing and the rebels have been paid off before and will again.

On a short term basis coupled with normal not extraordinary earnings reports traders decided to sell. Hedge funds don’t care which way the markets go, they just want them to go. And they can turn on a dime and so when the S&P 500 broke support bulls became bears in an instant and the sell off continued.

We are uncertain on how the markets will react. New highs did not contract, and volume was brisk but not conclusively washout. Breadth was negative but not too negative. And so with the Alan Greenspan card yet to be played the possibility of move back up to 1270 on the S&P 500 is a real possibility.

Our trading guru did not like Friday’s action and we didn’t either but we think we would be doing a little buying if we have an early Monday sell off if we hadn’t done it on Friday. And as we hoped above, if there is an early rally we will probably sell our positions and watch the action.
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You read about this first on this website:

From the AP:

Israel’s defense minister hinted Saturday that the Jewish state is preparing for military action to stop Iran’s nuclear program, but said international diplomacy must be the first course of action. Israel will not be able to accept an Iranian nuclear capability and it must have the capability to defend itself, with all that that implies, and this we are preparing," Shaul Mofaz said.
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Monday’s markets January 23, 2006

Japan was down 336 points (2.1%) and Hong Kong 1.2% overnight and Europe is lower. Treasuries are a tad higher in yield. Gold is $3 higher, oil is lower and stocks look to open a bit higher.
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The NYT reports that the Treasury is collecting little more in royalty payments from oil companies for gas and oil extracted from public lands in the U.S. than it did five years ago. Since the amount of oil extracted amounts to $60 billions of dollars one would think that with a double on the price of oil that maybe the royalty payments should have doubled. Wrong! The royalty payments are about the same.
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Support for now for the S&P 500 is now 1245 with 1275 resistance.
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8:48am and the major measures opened higher but are already surrendering their gains. We used the strong opening to sell the rest of our Yahoo position for a 20 pennies profit and we also sold Ford for a 20 pennies gain and Intel for a 60 pennies loss. We are back to cash and content.
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The Dollar is down sharply this morning and Natural Gas is breaking down through an $8.60 double bottom.
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Gambling comes to beautiful downtown Pittsburg:

 (Reuters) - Forest City Enterprises FCEA said on Monday that it plans to spend more than $1 billion on a mixed-use residential and entertainment development in Pittsburgh, Pennsylvania. The development, at the city's Station Square, would include a $512 million casino managed by Harrah's Entertainment Inc. HET with 3,000 slot machines, the companies said in a statement.
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Sport’s Authority, the retailer is being taken private for $1.8 billion. This continues the trend of buyout funds buying retailers for the cash flow and the leasehold and property interests. We have a feeling that this idea, which was made famous and popular by Eddie Lampert’s buyout of Sears by K-Mart, is going be a bust. Retailing isn’t gold, it is retailing. But the earliest take private folks may be able to sell the companies to the public again before the bloom is off the rose.
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12:06pm and the major measures remain higher with breadth 5/4 positive. Volume is active and there are 200 new highs to 50 new lows.

Treasuries are weaker with the two-year at 4.37% and the ten-year at 4.37%. Gold is up $4 and oil is pennies lower.
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3:02pm and the DJIA closed up 20 points at 10688. The S&P 500 gained 2 points to end at 1263 and the NAZZ was up 2 points at 2250. Breadth was 2/1 positive on the NYSE and 5/4 positive on the NAZZ. There were 262 new highs and 80 new lows.

Treasuries closed unchanged with the two-year at 4.35% and the ten-year at 4.36%. Oil ended at $68.10 down 38 pennies and gold at $558.

And the casino is now open for the week with four more days to go.
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20 January 2006 Daily Comment Daily Comment

Thoughts

It’s been a long week even though there have only been four trading days. Overseas markets were mixed overnight and oil is higher.

Iran and Russia are making some sort of arrangement about uranium enrichment and the Homeland Security terror alert level is not being raised because there are no elections scheduled. That’s good because the dogs really don’t want to have to go on perimeter patrol.
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Friday’s markets January 20, 2006

Motorola missed on its revenue number and that event has set a negative tone for the opening. GE also didn’t thrill traders.

10:13am and the DJIA is down over 100 points on what the talking heads are calling earnings disappointments because they have no other reason. We don’t either.

Breadth is slightly negative so the Major measures are being affected by Citigroup down $1.50 and GE down almost $1 and a few other large cap stocks. Volume is moderate.
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11:31am and the major measures are over 1% lower with the S&P 500 below the 1270 line in the sand that it must close above or all bets are off. Breadth is now 2/1 negative. Today is an expiration day so anything can happen.

We have taken trading positions in GE at 33.50, DuPont at $39.75 and Intel at $22.36 in our larger/aggressive accounts. DuPont is down $3 this month, GE is down $2 this week and INTC is down $4.

This is why Intel is down. Earnings rose 16% to $2.45 billion or 40 cents per share missing estimates by 3 cents. Revenue rose 6% to $10.2 billion missing street estimates of $10.5 billion. Intel says growth in 2006 will be in single digits. For those reason the shares lost $30 billion in market value and the share price is now 15 times earnings.

And we bought Yahoo at $33.88 for most of our accounts. The share price is down $10 in the last two weeks with most of the drop in the last few days. We don’t think stocks are ready to roll over just yet and we are willing to trade YHOO on this belief.

Our all cash (now mostly) position is comforting and we are in cash because we don’t have any stocks we want to own on a longer term basis. But corrections are tradable and we do think that YHOO has at least a couple of points in it from this level in any rally. If there is no rally we have plenty of cash.
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12:04pm and Treasuries are not rallying during this downdraft in stocks. The two-year is at 4.38% and the ten-year is 4.37%. Gold is $557 and oil is up $1.32 at $68.25 but oil company shares are lower.
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12:59pm and the DJIA is down 170 points at the S&P 500 is off 20 points and the NAZZ is down 50 points.
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1:58pm and there are no signs of a rally with the DJIA down 176 points. The final hour should be interesting.
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2:12pm DJIA is down 182 points.
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Oil closed at $68 up $1.17 after touching $69 earlier in the day. Gold ended at $554.

Treasuries finished unchanged to a bit better with the two-year at 4.36% and the ten-year at 4.36%.
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2:23pm and the DJIA is down 193 points.
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2:42pm and the DJIA is down 212 points. We haven’t seen this kind of a drop for a while.

Discretion being the better part of valor and with no rally coming we sold our trading position in DuPont for a 25 penny loss and GE for a 20 penny loss.

2:54pm and buying the market at support for a trade made sense but with the rally failure reducing our trading exposure also made sense. In some of our larger/aggressive trading accounts we reduced/eliminated our YHOO exposure but we kept it in most accounts.

3:02pm and the DJIA closed down 213 points at 10667. The S&P 500 lost 24 points to end at 1261. And the NAZZ dropped 54 points to 2247.

Breadth was over 2/1 negative at the bell and volume was brisk.

New highs were over 400 while new lows were 75.

The casino is closed for the week-end and we can all use the rest.
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19 January 2006 Daily Comment Daily Comment

Thoughts

Jobless claims fell to 270,000 lasts week which is a good number, except for those who lost their jobs. They are real people with real families. Housing starts in December were down but that may be weather related.

Overseas Japan rebounded over 2% and Hong Kong was higher. Europe is also higher and U.S. futures suggest a higher opening.

The WSJ says Disney is going to buy Pixar.

Apple delivered but traders sold the news.

EBay was OK and the stock is unchanged.

Our trading guru suggests that if the S&P 500 can rally off this level that 1310 to 1350 is in the cards.
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Thursday’s markets January 18, 2006

UAL is going to emerge from bankruptcy in the next month and the 400 top executives of UAL are going to receive shares or options on 10 million shares of stock. These are the folks that placed UAL in bankruptcy and received nice salaries all during the bankruptcy and will receive nice salaries and bonuses after the bankruptcy. Following are a few paragraphs from a WSJ story on the stock vesting:

A federal bankruptcy judge overseeing the 37-month reorganization of United Airlines parent UAL Corp. overruled union and retiree objections to an equity incentive plan that will award 8% of the 125 million new UAL shares to 400 top managers of the airline.

During the first day of a hearing in Chicago to confirm UAL's reorganization plan, U.S. Bankruptcy Court Judge Eugene Wedoff listened to union complaints that the proposal is "excessive" at a time when other employees have made concessions to help the airline rebound financially. But he said the U.S. Bankruptcy Code doesn't expressly call for a review of management compensation, so the only reasonable basis for a decision is if the plan is "what's done in the marketplace."

"It may be we have a culture in this country that overcompensates management," the judge said. "But United is just one enterprise that operates in that general environment," and therefore it can't be expected to stand against the tide and be uncompetitive. "The marketplace indicates this is a reasonable plan."

In the good old days shareholders and bondholders had a chance to recover something but in this case debt will get 10 cents on the dollar in new shares and of course pre-bankruptcy shareholders get nothing.

This is the reason we are avoiding GM. It is profitable for management to go through bankruptcy when a company gets in trouble. And bankruptcy would give GM a leg up on voiding or changing union contracts. We don’t think Ford will contemplate bankruptcy because the Ford family owns the controlling shares and receives a nice living from the dividend paid. It is not in the best interests of the controlling Ford Family shareholders of Ford to go through bankruptcy and have their ownership interest erased.

We do think that is why AMR never went the Airline bankruptcy way because ex CEO Crandall and a bunch of Texas folks owned a large chunk (9%) of the shares.
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9:09am and the major measures were higher out of the gate. In initial buying surge has tapered and the DJIA is almost back to even. Breadth is 2/1 positive and volume is moderate.

Gold is up the $10 it lost yesterday and Oil is a few pennies lower. Treasuries are higher in yield with the two-year at 4.36% and the ten-year at 4.37%.
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According to a story in USA Today 40% of first time home buyers purchased their homes with no money down.
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10:42am and oil inventories were higher than expected in the weekly report. That is the umpteenth time this year that inventories were greater than expected. By the by, Goldman Sachs sees $70 oil by the fall. With oil at $66 now we could have $70 oil tomorrow.
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Osama is on TV threatening an attack in the U.S. or a truce. The markets are yawning.
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3:02pm at the bell the DJIA was up 25 points at 10880. The S&P 500 gained 7 points to 1284 and the NAZZ rose 22 points to 2301.

Breadth was over 2/1 positive and new highs expanded to over 400. Volume was brisk.

Oil finished up 97 pennies at $66.70 and Gold gained $12 to $558. Treasuries lost ground with the two-year at 4.37% and the ten-year at 4.38%.

And there is one more day of casino play left so join us for the fun as the January Witches expire.
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18 January 2006 Daily Comment Daily Comment

Thoughts

CPI was down 0.1% and up 0.2% ex food and energy. Treasuries are lower in yield with the five-year trading under Fed Funds which is nuts. The price rise in oil, Japan’s market tanking and U.S. stocks opening lower may be reasons for the move to Treasuries.

Intel missed big time and is trading down 10% and taking all the other tech stocks with it. Also, Japan closed its stock market early because of a massive sell off triggered by the investigation of an internet stock. Japan was down 2.8% when trading was halted on top of a 2.8% drop on Tuesday. Japan was up 40% last year so there are gains to protect and panic in the air.
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Wednesday’s markets January 18, 2006

1270 on the S&P 500 is probably the line in the sand for bulls today.
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Yahoo’s earnings were higher but not enough and the share price is down 15%.
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IBM reported good earnings but lower revenues. The share price is up in a down market most probably on short covering but the failure of revenues to grow is a big negative.
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JPM is off about 50 pennies after reporting seemingly OK earnings. Their credit card earnings were down 40%.
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10:14am and the major measures are lower in active trading. stocks opened lower, rallied a bit, but never made it back to even and now have turned down with breadth over 2/1 negative. New highs have contracted but new lows remain constant and there is no discernable trend for the rest of the day’s action. Some trader talk implied that the rally off the down opening was short covering and now that that is completed the bulls will have to show their stuff.

Gold is down $7 and oil is 30 pennies higher. Treasuries are flat to a bit better.
*****

11:20am and breadth has improved a tad but he major measures are lower with the S&P 500 stuck at first support of 1275. The bulls are pinning their hopes on Apple and EBay and AMD all three of which report earnings tonight.
*****

3:02pm and stocks traded lower during the day but refused to break support. At the bell the DJIA was down 40 points at 10857. The S&P 500 lost 5 points to 1278 after trading as low as 1272. The NAZZ dropped 22 points to 2280.

Breadth was 5/4 negative as buyers stepped up to mitigate the decline and volume was active. There were 200 new highs and 60 new lows.

Gold lost $10 to end at $545 and Oil also finished lower at $65.75.

Treasuries were basically unchanged wit the two-year at 4.33% and the ten-year at 4.34%.

There are two more casino days this Witching week and with the earnings lottery calling EBay’s and Apple’s numbers tonight there should be more fun tomorrow.
*****

 

17 January 2006 Daily Comment Daily Comment

Thoughts

Earnings begin in earnest this week and Yahoo, Intel and IBM are two of the big tech stocks that will release their reports after the close.

Fifth Third reported this morning and the shares are trading about $1 lower so we presume the street didn’t’ approve. Wells Fargo earnings were higher but a penny under estimates.

Alcoa knocks out its pension plan for new employees.

Earnings reports today and this week will set the tone. 1275 remains support on the S&P 500 and break of that number would set off a bit of real selling.

We are cash and Time Warner and are content unless we see one or two big cap stocks for a trade. One we continue to watch is DuPont which closed just above $40.
*****

Crude oil is higher again today at $65.23 and gold is lower at $555. Treasuries are flat.
*****

Japan was down 2.8%which was its biggest one day loss in two years and Hong Kong down 1.2% overnight. Europe is lower across the board.
*****

Tuesday’s markets Januarys 17, 2006

National City’s net falls and the stock rises. Go figure! How were we to know that Archie McAllister would recommend the stock in Barron’s over the week-end.
*****

Bank earnings are coming in less than expected with larger writoffs. These aren’t the money center banks but the lager national lending banks.
*****

10:37am and we sold our TWX holdings up on the day but for a loss. That sale gets us back to all cash and the resolve to leave TWX to Carl Icahn and Steve Case. It has never been a winner for us. We seem to buy high and sell low with that stock which is a sure road to not making money.

The major measures are lower this morning and the bulls are happy to see the downturn ahead of earnings since that means that expectations are low. The bears are happy to see a downturn ahead of earnings because that means that folks are getting out while the getting is good. We are happy to see the downturn because we are all cash and it makes us look smart at least for a day.

Oil is higher on trouble in Nigeria (when is there not?) and the Iran contremps which is a lot of windy talk about nothing. But it is good excuse for the oil and gold bulls to run their commodities higher and gold is up at $558.

Treasuries are a bit weaker with the two-year and ten-year both at 4.35%. The five-year is at 4.29%. Some folks are betting Alan and the gang of seven are finished.

Breadth is 2/1 negative and volume light.
*****

1:37pm and Crude Oil ended the day up over $2 at $66.30.
*****

Tomorrow’s earnings include JP Morgan before the opening and Apple and EBay after the bell.
*****

3:02 pm and the DJIA closed down 61 points at 10898. The S&P 500 ended the day at 1283 down 5 points. The NAZZ lost 15 points to 2302.

Breadth was about 2/1 negative into the close and volume was moderate.

Treasuries closed slightly higher in yield.

After the bell Intel, IBM, and Yahoo will report. Those earnings will set the tone for tomorrow’s lottery.

And the casino will be open for business as usual.
*****

 

13 January 2006 Daily Comment Daily Comment

Thoughts

Welcome to Friday the 13th, the casino game not the movie. The Producer Price Index for December was up 0.9% but ex all the essentials of life it was up only 0.1%. Advance retail sales for December were up 0.7% but ex autos they were up 0.2%. Treasuries like the disappointing retail sales and have rallied while stocks are basically ignoring the news.

The talking heads are obsessed by Iran and that is the topic of the day.

IBM is being investigated on options pricings; and Tyco said it plans to split into three units next year and oh, by the way, they are also going to miss their numbers this quarter. The share price is down a few dollars on the news since the immediate shortfall is more important to traders than the potential that one to three will equal five on the split up.
*****

Friday the 13th markets January 13, 2006

10:19am and the major measures rose in the first hour only to turn negative in the second hour. Breadth is positive and the bulls may try to rally stocks going into the weekend to create buying interest for next week

Natural Gas is back below $8 after trading as high at $15 a month ago when the east coast was frigid. The big boys and girls were having fun on the backs of heating customers. The fluctuations must be causing havoc with the actual consumers of natural gas. We would guess that a couple of utilities are going to have some serious write downs if gas stays at this level because they over hedged at higher prices. And how smart does the Conoco Phillips deal to pay $34 billion for Burlington Resources gas supplies look now.
*****

12:10pm and the selling continues with breadth turning negative. Treasuries are strong with the two-year back down to 4.33% and the ten-year to 4.35%. Oil is unchanged but gold is up $7 as the big boys and girls have their fun. GE broke $35 on the downside. We view that as a negative.

There was a little pop in National City and we sold the rest of our holding at $34.07. With the dividend we will be receiving we are plus scratching. We also sold our SGP holding for a loss.

That leaves us with Time Warner which we will eventually eliminate but don’t have the urge to do so now.

We are not calling a market turn. We just don’t like the markets and want to see how stocks react to earnings season which begins in earnest next week. And with the mid-term elections coming on the radar screen after first quarter earnings are finished we would rather be on the sidelines watching. We must admit that making most of our money back in the October 2005 to January 2006 move and with accounts at or near all time highs there is a strong incentive for us to take a respite from owning stocks. Stocks are not cheap and the seasonal trading pattern that has treated us well over the years really only is comfortably tradable for us between October and January.

We are interested to see what the Fed does at the end of the month and may place some dollars in 18 month Treasuries but we will react not anticipate since we think time is on our side.
*****

3:02pm and the DJIA closed down 2points at 10960. The S&P 500 gained 1 point to end at 1287 and the NAZZ was unchanged at 2116. Breadth was positive and new highs exceeded new lows but contracted again to 250.

Treasuries closed firm with the two-year at 4.33% and the ten-year at 4.35%.

Oil ended at $63.92 and Gold at $557.

And the casino is closed until Tuesday morning.
*****

 

12 January 2006 Daily Comment Daily Comment

Thoughts

Jobless claims for the last week were back over 300,000 at 309,000.

We read that 10% corrections in the stock markets occur about once every 19 months and there hasn’t been such a correction in 4 years.

That thought coincides with our mention of cheap stocks moving up 10% after a mention by Jim Cramer the new Guru of the six-pack crowd. We would guess that the new money coming into the market is from these folks that don’t remember or weren’t around for the 2000 to 2003 debacle.

We are now around 10% invested in our larger accounts.
*****

Thursday’s markets January 12, 2006

After seven up days in a row a pullback today may be in the cards.
*****

10:29am and all the bulls are happy that the major measures are lower. And the bears are also happy. The DJIA is down 45 points and the NAZZ is down 5 points as profit taking reigns.

Breadth is 5/4 negative and oil is up 90 pennies at $64.85 with gold down $4. Treasuries are flat.

We are watching.
*****

11:35am and the trader talk today is about nuclear jitters over Iran. Hello! Oil traders need something to pump the price up since the weather is certainly no help.

The Iran scenario is simple. The U.S. can’t go to war so when Netanyahu wins Israel will bomb their facilities just like they did to Iraq in June 1981. Then Al Qeda will launch attacks in Iraq on American troops in retaliation as Hezbollah did to the marines in Lebanon in 1983 when they blew up the barracks killing 241 servicemen.

By the by we mentioned the Iran situation several weeks ago.
*****

1:08pm and the major measures continue to drift lower. Breadth remains only 5/4 negative but a rally late in the day will be a surprise. The Monday holiday suggests that traders will want to be flat over the long week-end.
*****

We sold the partial position of the NCC that we missed selling yesterday. That reduces the NCC holding in the accounts in which we sold. With the dividend we will receive we break even on the trade. And that’s a sale where we hope we are wrong because we have plenty of shares left to benefit form a run up in the share price.

If DuPont breaks below $40 in the next few days we are going to place the money raised from this sale into it.
*****

3:02PM and the DJIA closed down 80 points at 10962. The S&P 500 lost 8 points to end at 1285 and the NAZZ dropped 14 points to 2317. Some traders must have heard that Lemley sold yesterday.

Breadth was 2/1 negative and new highs contracted but were still close to 400 with only 45 new lows. Volume was brisk but not excessive.

Treasuries firmed a bit with the two-year finishing at 4.37% and the ten-year at 4.41%.

Oil ended at $63.94 and gold at $547.

And tomorrow is Friday the 13th and the last casino day before the three day holiday week-end. The action should be interesting.
*****

 

11 January 2006 Daily Comment Daily Comment

Thoughts

Overseas markets were higher overnight. Oil is off a few pennies as the trading day begins and Gold is down a bit over $1.

DuPont lowered guidance and the shares are down a point in early trading. CFSB lowered its guidance on Fifth Third Bank and Bear Stearns likes The Gap and sees downside to only $16. Our number is $15 on the shares for buying.

Investors Intelligence has 56.8% bulls versus 55.7% last week and 22.1% bears versus 23.7% last week.
*****

Wednesday’ markets January 11, 2006

We get e-mail:

            Bud;

I feel this tremendous urge to start buying right now to not miss out on the current run-up. That is why I haven’t done it. I notice you and some others are selling into this. This implies the inevitable correction. When and how much? If you buy now, what do you buy? Classic problem, classic questions………… Do the bears eat the bulls or do the bulls trample the bears? I find this an intolerable situation and will probably just do nothing!

What do you think?
*****

We respond:

            Bill;

            We bought October and December. Our time table says sell. We don't care what the markets do. Next major buying for us will be in October 2006, unless there is a major sell off. We don’t anticipate one and wouldn’t be surprised to see the markets move higher. With dividends accrued but not yet payable we are at or within 1% of all time highs in most accounts and it was a hard road back. Moreover our accounts are up 6% to 8% since October and that is as good a move as we expected so we want to step aside and rest for a while.
*****

10:23am and stocks have been meandering this morning. We have take the opportunity to sell VZ, PFE, T, CMCSA and RAD all for small to $1 plus profits. We also received nice dividends on VZ and T. with our profit taking we are also selling BMY for a scratch loss. We want to keep our Drug stock exposure equal and SCP has a better story and management than BMY. We are taking a 30 pennies loss.

As we said in our e-mail response we are in a cash raising frame of mind. It is because we are back to all time highs and we have no great feel for where the markets are heading this year. In cash we will make 3% plus while we wait for short rates to hit 4.75% to 5%. Then we will put a good chunk of cash to work in two year or less maturity Treasuries.

Breadth is negative this morning and volume is moderate. Treasuries are flat and oil is off 50 pennies at $62.85 and gold is $545.
*****

11:28am and we sold our NOK trading buy of yesterday for a 15 pennies loss. Deutsche Securities downgraded the stock this morning and we’ll get out and look at it after January 25 earnings.
*****

Fifth Third Bank was downgraded ahead of earnings by CFSB and we are selling it for a scratch profit plus the 38 pennies dividend we will receive for holding though the x-dividend.
*****

12:55pm and in order to balance the exposure of the three stocks that remain in our larger portfolios we are going to reduce holdings in NCC where we are over weighted. We will be scratching but are entitled to the 38 pennies dividend since the stock is x-dividend today.
*****

This is the kind of news that signifies the little guy and gal are back:

BOSTON - Conexant Systems Inc. CNXT shares surged 14 percent in heavy trading on Wednesday after columnist James Cramer recommended investing in the Designer of computer chips on his 'Mad Money' TV program.
*****

3:02pm and NCC didn’t rally with the other bank stocks today and so we held off on our partial sell in the hopes of a better price tomorrow.

The DJIA closed up 30 points at 11041. The S&P 500 gained 5 points to end at 1294 and the NAZZ jumped 10 points to 2330. Breadth was positive on the NYSE and negative on the NAZZ. New highs were a tad under 500 while there were 55 new lows.

Treasuries were higher in yield with the two-year going out at 4.42% and the ten-year at 4.46%. Oil closed higher at $64 and gold was up a bit at $550.

There are only two more casino days before the three day holiday.
*****

 

10 January 2006 Daily Comment Daily Comment

Thoughts

Five days does not a year make but they were a much better beginning for us than last year’s first five trading days. Traders are looking for a pull back today and overseas Japan was down 1.8% while Europe is lower across the board.

Oil is up 40 pennies and gold is down $3 in the early going. Treasuries are a tad weaker.

Bears Stearns upped Verizon to outperform from peer perform.
*****

Tuesday’s markets January 9, 2006

Michael Eisner the former head of Disney is going to host a new CNBC show called Conversations with Michael Eisner. What is it with these ex CEOs? Do they really think folks care about what they think? And it is interesting that it is NBC not ABC that is giving him his forum.
*****

10:02am and stocks have been trading lower all morning. It seems to be more profit taking than ‘get me out’ selling. Oil is up s few pennies at $63.90 and gold is down $7 at $543. Gold made a 25 year high yesterday.

The two-year Treasury has crept back up to 4.38% and the ten-year is at 4.40%.

Breadth is 5/4 negative and trading volume is the lowest it has been this year. All in all this morning’s action is bullish.

We repurchased Nokia in our large/aggressive trading accounts at $19.12.
*****

1:54pm and going into the final hour the stocks markets are tentative. We are using the pop in Disney today to sell our position at $25.25.  We are also selling large lots of the RAD for a 15 to 20 pennies profit. All stocks are anchovies.

By the by, all markets are closed next Monday in observance of the Martin Luther King Holiday.
*****

3:02pm and the DJIA closed down 1 points at 11011. The S&P 500 was down 1 at 1289 and the NAZZ gained 1 point to end at 2320. Breadth was positive at the bell and volume was moderate. There were 420 new highs and 40 new lows. It was a good rest day for the bulls. They may try and get something going again tomorrow.

Treasuries closed higher in yield with the two-year at 4.39% and the ten-year at 4.43%. Gold ended at 543 and oil at $63.37.

The casino is open for three more days this week and we’ll be around for the action.
*****

 

9 January 2006 Daily Comment Daily Comment

Thoughts

The week begins with hopes high for the continuation of the rally. The bulls are full of themselves and the bears are belligerent. We are agnostic.

There wasn’t much news over the week-end to affect the markets and so we don’t have any idea of what the week will bring except interesting happenings.
*****

Monday’s markets January 9, 2006

9:12am and the major measures have opened slightly lower with breadth positive and volume moderate.

IBM was downgraded by JP Morgan but is trading lower although many other tech stocks are higher on the day. Our stodgy stocks are marking time.

Oil is off a few pennies and gold is down $3. Treasuries are inching higher in yield.
*****

12:38pm and the major measures have absorbed the selling and many stocks are now higher on the day. The buying is concentrated in the momentum stocks though and so we are not participating.

We read a figure the other day that 20% of the trading in the markets these days is related to the purchases and sale of individual stocks while 80% is index related. We don’t doubt those figures and those figures confirm our belief that stock trading has become the worlds’ largest casino.
*****

3:02pm and after popping above 11,000 at mid day the DJIA sold off but rallied in the last hour to close at 11011 up 52 points. The S&P 500 gained 5 points to 1290 and the NAZZ rose 13 points to 2318.

Breadth was 2/1 positive at the bell and there were 600 new highs and 50 new lows in moderately active trading. Volume has been slipping as the rally has continued.

Oil ended at $63.40 and Gold was $550. Treasuries were plus flat across the board.

The push higher today was strained but marked the first five trading days of the year as up. That is supposed to be a good sign.

The casino will be open again tomorrow for all fellow travelers.
*****

 

6 January 2006 Daily Comment Daily Comment

Thoughts

7:32am and according to the Government 108,000 new jobs were created in December. That is about 100,000 less than expected. November job creation numbers were revised to 305,000 versus a reported 215,000 jobs.

Stocks are higher because the numbers suggest that the January Fed meeting will be the last tightening and even that assumption is becoming less of a lock.

The Treasury market is also lower in yield higher in price on the news.
*****

Verizon and MCI have merged. No more arbitrage.
*****

Friday’s markets January 6, 2006

From our 6 January 2005 Daily Comment
10:49am and this week we have re-learned again why unrealized gains are called unrealized.
*****

With the above in mind and with the knowledge that since October 1 our Model Portfolio has gained 7% we are raising cash today from winners and losers.

We sold AMAT and CSCO and SYMC for nice gains and KO for scratch to a loss in our larger accounts and SCHL for a too much loss.

Our theme is to hold the dividend payers like VZ, T, BMY, PFE, FITB and a few interesting situations in DIS, and TWX.

We are holding Disney to see what new management can do and Time Warner for the sum of its parts.

We are undecided on Comcast but will hold for now. Lower interest rate will help this company. Rite Aid Drug Stores is our only speculative play and lower interest rates or at least not higher rates are a plus for RAD too.
*****

10:02am and stocks zoomed out of the gate only to be met by selling. One battleground is S&P 500 at 1275 which it is above right now and has been all morning on a gap up opening. The selling is to be expected and how the bulls handle it today will be ‘the tell’ for next week. Our guess is higher but we are also content having raised a good deal of cash today.

Breadth is 5/4 positive and volume is brisk.

Treasuries are now higher in yield with the two-year at 4.35% and the ten-year at 4.38%.

Oil is $63.80 and Gold is up $10 on a weak dollar, Venezuela raising oil prices, and on Sharon’s illness. The Iranian president wished him dead and that really wasn’t a positive development.

The stock markets are ignoring the eventual change in Israel.

2:19pm and we had to go out for a few hours an when we retuned the major market measures had all moved to plus side. Looks like the bulls have decided to assert themselves. We sold too soon –as always- but are holding good stocks that should move higher as the rally develops.
*****

3:02pm and the major measures backed off a little near the close on profit taking but still managed to scare the bears by closing much higher on the day. The DJIA gained 77 points to end at 10960. The S&P 500 put 1275 behind by gaining 12 points to finish at 1285. And the NAZZ jumped 28 point to 2305.

Breadth was better than 2/1 positive and volume was active. New highs jumped to 550 with 40 new lows.

The bulls controlled the day.

Treasuries closed lower in price with the two-year at 4.35% and the ten-year at 4.37%.

Oil ended at $64.21 and Gold at $541

The casino is closed for the week-end but there are plenty of playoff football games and college basketball for continued action. Viva Las Vegas.
*****

 

5 January 2006 Daily Comment Daily Comment

Thoughts

The Game lived up to the hype.
*****

The illness of Sharon is not so much a surprise as is our surprise that folks are surprised he had a stroke. Our surprise is that he lived as long as he did without one.
*****

The media seems much more interested in playing the blame game in West Virginia coal fields where a Hatfield is in big trouble. All that tragedy needs is a prosecutor named Mc Coy to make the picture complete as Nancy Grace et al spend the next month on mindless cable ranting about nonsense.

We ourselves think the story of the day is the upheaval in Israeli politics and the potential for Netanyahu to come back and win and then bomb Iran to satisfy his hardliner followers. Be very afraid.
*****

We have had a nice little pop in account values which is a wonderful contrast to last year. we are going to continue our exorable move to cash since we don’t think the second coming is at hand at that is what is needed to keep the markets moving.
*****

Thursday’s markets January 5, 2006

7:32am and the 291,000 first times jobless claims this morning is the first below 300,000 numbers in many months (since September 23, 2000). Tomorrow’s payroll report is expected to be again of about 230,000.

9:57am and the reduction in crude oil inventories was less than expected. Also natural gas is down today a down 30% in the last few weeks. That should eventually be a positive for stocks.
*****

At year end when we take on a lot of different companies our idea is to hold into the New Year and to see which stocks will act well. Then we sell those stocks that aren’t working for us and try and let the ones that are acting well move higher as the markets do. With that in mind we are going to sell the ANDW for a plus scratch. In that same thought we are letting Scholastic go at a loss because it is not bouncing. It may take a few days to sell our small SCHL position entirely without crashing the stock price.

With the ANDW money we are adding more SGP to larger and aggressive accounts because drug stocks are acting OK and SGP is a perennial take-over mention along with BMY. To us it is an anchovy but if the S&P 500 can make it through 1275 soon the momentum folks may join the fray with a nice push higher next week in the stocks we still hold.
*****

3:02pm and the DJIA was in negative territory all day while the NAZZ was positive. That is a reversal from recent action. At the close the DJIA managed to move to the plus side up 1 point at 10880. The S&P 500 lost 1 point to 1272 and the NAZZ gained 13 points to end at 2276.

Breadth was 5/4 positive and volume was moderate. There were over 350 new highs and about 60 new lows.

Treasuries were flat on the day and oil ended at $62.75 while gold dropped to $526.

And the casino is open one more day this week and we’ll be here.
*****

 

4 January 2006 Daily Comment Daily Comment

Thoughts

Yesterday’s gain was a nice contrast to the market action one year ago. Hopefully yesterday will pull more sideline money and help move the markets higher.
*****

Bear Stearns raised its price target on Google from $350 to $560 and also raised its rating on GOOG to outperform. We wonder what they think the stock has been doing for the last year.
*****

Estee Lauder is going to be added to the S&P 500 and is trading $2 a share higher this morning. We are tempted to take our profit but have a few hours to decide. The shares are relatively cheap and since we are not going to replace any of our buys on this rally we are going to be a little slower on the trigger than usual. But the specialist in this stock stinks and lets the shares trade all over the place and we are uncertain about the first quarter numbers.
*****

Russia and Ukraine made a gas deal and so oil is a bit lower this morning. But it is going to get colder in the Midwest this week so there is hope for trapped bulls.
*****

Wednesday’s trading January 4, 2006

10:32am and the major measures were higher out of the gate. But the bullishness has been underwhelming and breadth is good but not stellar.

Treasuries are better with the two-year at 4.31% and the ten-year at 4.36%. Oil is $62.90 and gold is $531.10.

We sold the EL at $35.23 for a $1.50 to $2.50 profit in accounts. We are also selling NYT and TRB for a scratch to continue raising cash. Both are up over 8% from the year end even though we are breaking even.
*****

Next Friday is Friday the 13th. We don’t like Friday the 13ths.
*****

Investors Intelligence has 56% Bulls down form 60% bullish last week. Bears are at 23% up from 20% last week.
*****

Kraft is not acting well. There is an arbitrage situation with Altria’s proposed spin off of Kraft and the hedge folks are getting ahead of the curve on this by shorting the shares of Kraft which they think will be sold when received. We are going to take our minor loss in the stock and move on to Bristol Myers with the money. Bristol Myers is a dog and we have a love/hate relationship with it but we don’t think the drug stocks have made their move for the year yet and the dividend yield should support the stock. Management stinks and hopefully the Board of Directors will decide to sell out.
*****

Six Years ago the DJIA closed at 10997 (10880 today), the S&P 500 at 1399 (1274 today), and the NAZZ at 3900 (2262 today).
*****

Tomorrow Thursday we get retail sales and oil inventories and retail stocks are down in anticipation of not so good numbers and oil is up because traders expect inventories to be down. The casino is a grand place.
*****

3:02pm and the DJIA closed up 44 points at 10891. The S&P 500 gained 5 points to 1274 but couldn’t close above 1275 resistance. And the NAZZ rose 20 points to 2264.

Breath was 2/1 positive at the bell and new highs exceeded 400 issues while new lows were 50 issues.

Volume was active but not super.

Treasuries closed better with the two-year at 4.30%, the five-year at 4.28% and the ten-year at 4.35%.

Oil ended at $63.42 and Gold finished at $535.

Tonight all the bets are on football and tomorrow the casino opens again for business.
*****

 

3 January 2006 Daily Comment Daily Comment

Thoughts

We are back at the casino, a little worse for the wear but ready for the New Year and better times ahead.

Our Model Portfolio ended the year down 2.5% which was our first down year since 1991. The S&P 500 gained 3%, while the DJIA was down 0.6% and the NAZZ was up 1.4%. Goodbye to 2005.
*****

Treasuries are a bit lower this morning with the two-year and ten-year at 4.40%.
*****

Our week end was restful and not thought provoking and so we are in a let’s see what happens frame of mind.
*****

Tuesday’s Markets January 3, 2005

11:29am and the major measures were higher at the opening but have given back their gains plus. Breadth is 5/4 positive on the NYSE and the reverse on the NAZZ. The action is the same as the last few weeks of last year so nothing has changed, yet. With the S&P 500 breaking 1253 on the downside last Friday there may be more correcting coming.
*****

Treasuries have rallied with the two-year at 4.35% and oil and gold are having fun with oil up $1.91 to $62.95 and gold up $12 to $531. Those actions are not helping stocks.
*****

12:36pm and with discretion and cash being the better part of being bullish we sold Vodaphone and Nokia for scratch profits. We do want to give the markets and our stocks a little time to work this year since we hold much better stocks than we did last year but all stocks remain anchovies. We are not going to be buying any stocks so we need to give positions time to work. Nevertheless, the break of 1252 did give us pause and suggested some sales.
*****

Oil is now over $63 as Russia using oil and natural gas as a political tool with the Ukraine is disrupting the oil markets and giving traders an excuse to mark up the price of oil. Traders can’t really be surprised that oil is a political tool.
*****

1:05pm and the FED Beige Book release says some members inflation worries are easing and that rates may be near equilibrium. Stocks are a bit higher on the news.
*****

The dollar is weaker on the Fed minutes and gold continues to boom now at $532.
*****

Stocks rally on news the Fed may soon end its rate raising. Why would the Fed end? One reason would be that the economy was slowing. But if the economy is slowing is that good for stocks? Ah there is no logic or long term in today’s casino only the next spin of the wheel.
*****

3:02pm and the bulls were wild about the Fed minutes sending the DJIA up 130 points into the final hour of trading. At the close the DJIA had gained 130 points to end at 10848. The S&P 500 gained 20 points to finish at 1268 and the NAZZ rose 38 points to close at 2243. A few more days like this and we’ll have a good year.

Breadth improved into the close ending at better than 3/1 positive on the NYSE and almost 2/1 on the NAZZ and the new highs exceeded new lows by a 3/1 margin.

Treasuries rallied on the short end and the two-year ended at 4.34% while the ten-year finished at 4.37%.

Oil spiked to $63.10 and Gold was $534.

And the casino will be open again tomorrow as the momentum players flood through the doors.
*****

 

 

 

 

 

 

 

 

 

 


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Website Information

For those folks who have accounts with us, you may now go to: https://eview.mesirowfinancial.com and fill out the account information and view your accounts online. If you have trouble filling out the form, or in getting online, call and we will help you with the process. NASD regulations require the eview site to be secure. Thus your password must be changed every ninety days. You will be prompted to make this change when needed.

For information on Mesirow SIPC and Excess SIPC protection SIPCmesirow.pdf.

For those clients of LY& Co and other interested persons the Quarterly Report on the routing of customer orders under SEC Rule11Ac1-6.
For Quarter Ending 09/30/2002 For Quarter Ending 12/31/2002 For Quarter Ending 03/31/2003
For Quarter Ending 06/30/2003 For Quarter Ending 09/30/2003 For Quarter Ending 12/31/2003
For Quarter Ending 03/31/2004
All future SEC Rule11Ac1-6 Quarterly reports may be found by visiting the diclosures at LY& Co Clearing Broker Mesirow Financial at: http://www.marketsystems.com/reports/1-6/msro/.


Annual offer to present clients of Lemley Yarling Management Co. Under Rule 204-3 of the SEC Advisors Act, we are pleased to offer to send to you our updated Form ADV, Part II for your perusal. If any present client would like a copy, please don't hesitate to write, e-mail, or call us.


Summary of Business Continuity Plan


The factual statements herein have been taken from sources we believe to be reliable but such statements are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.