Bud's Poem Page

29 July 2005 Daily Comment

Thoughts

It looks as if the markets are going to put in a big day on the back of yesterday’s strong close. Last week we were happy to be all cash, this week we wish we were fully invested so that we could sell everything again today at higher prices.

And that is the reality of our attitude toward stocks right now. If we hadn’t sold last week we would have sold yesterday and if we hadn’t sold yesterday we have sold today. That is because we have become more averse to risking capital than desirous of seeking gain. And we think that in the current markets the risk reward ratio has shifted more to risk than reward...

After the current push higher there will be a reaction down and there will be a chance for us to get back in if we care to do so. But until that time in September or October we will be biding our time but not relaxing. And we may trade one or two stocks at a time to hold our interest.

Our basic aim after surviving the collapse of the 2000 to 2003 period is to preserve the capital we accumulated during the great bull market of the 1980s and 1990s and added to during the downturn while others were losing their shirts.

We’ve missed a good part of the recovery bull market even though we’ve been fully invested most of the last nine months. That’s because the risk of losing our hard earned capital has overweighed our desire for big gains. That does cause some angst for us in managing a few accounts that take out more money for living than we have been producing the last two years. But we built up a reserve for such an occurrence and we hope our feel for stocks returns or that interest rates get back to that magic 6% number within the next year so we can generate current income for them.

Our fears of principal erosion are fueled by the high price of oil, the budget deficits, the continued overseas out sourcing of good paying jobs at low paying prices and the fact that the real estate boom is the main driver of today’s economy. Higher and higher home prices have increased the consumer’s borrowing and thus spending ability and that funny money has been the stuff of the economic recovery. Presumably the every rising price spiral will end and then some other stimulant will be needed.

The stock market fueled the economic boom in the 1990s and home prices are doing the same now. No longer does manufacturing and good paying jobs play a major part in expanding the economy’s engine.

Moreover the markets are being dominated by hedge fund money that is chimerical in its attitude and movement. There are so many interrelated investing activities of these entities that a collapse in one obscure area can greatly affect many others. That too is scary.

Finally our age and the easy loss of 6% of our assets in the first two week of this year scarred us and scared us. And we have no desire to endure a repeat performance.
*****

The Bush administration is going to change the fuel efficiency standards for Trucks and SUVs in a move that will help Ford and GM and hurt Toyota. And of course it will lead to the consumption of more fuel. Can anyone say $70 oil in September or before when the rule rewrite is released?
*****

Advance Quarter 2 GDP is 3.4% versus 3.8% for final Quarter 1 GDP.
*****

Friday’s Markets July 29, 2005

9:09am and out of the gate stocks opened lower on the less than expected GDP number and the move higher in Treasury rates. So much for our up and away scenario.
*****

10:20am and with stocks lower we are buying Yahoo at $33.80 for a trade. Yahoo sold off on their earnings announcement last week while EBay and Amazon both rose 20%. YHOO is the type of stock the hot money will return if the rally continues since there really aren’t any parameters on Internet stocks yet. It is all feel. The lower 30s has been a good support level.

In our trading we are going to do it one stock at a time because we don’t want to get overly exposed.

All the major measures are lower as profit taking rules the morning session but we will be very surprised if the afternoon hours don’t see a rise. Crude oil is up 60 pennies to $60.50. Breadth is 5/4 negative but there are over 400 new highs already. Treasuries continue lower with the ten-year back up to 4.26% and the two-year right at 3.99%.
*****

Bear Stearns placed Wild Oats on its focus list today and it traded at $14. We have been trading the stock for years. The reason that we don’t hold it is that we sometimes shop at their store in Chicago. And we also shop at Whole Foods. There is no comparison. OATS is not delivering the goods.

Last night Whole Foods reported blow away numbers and today the share price is up 10%. The value on WFMI at this price is $8 billion on $4 billion in sales or a share price of 2X sales.

Wild Oats will do $1.2 billion in sales this year and is priced at $300 million and if we add in the debt close to $500 million or a little less than ½ of sales. We remember ten or more years ago when OATS and WFMI had the same sales.

This year OATS dropped to $5 in March on lousy earnings. Earnings this quarter to be announced on August 4 will still be lousy. The reason the shares are higher in price is because a fellow who has run and sold two grocery chains took a ten percent position in OATS. And two fellows who worked at Fred Myers which was sold to Kroger by this guy have gone to work for OATS.

So the conflict we have in owing as opposed to trading the shares is that the share price and we would guess Bear Stearns focus list recommend are not based on what the company is doing in its business but what is happening to the company in the stock takeover world. And we hate to own or buy companies on takeover speculation.
*****

The Senate passed the energy bill with $14 billion in tax breaks for energy companies and sent it to the President for signature. It’s good to see energy companies getting tax breaks since they are having such a hard time making money with oil over $60 per barrel and gasoline at all time highs. Say What?
*****

3:02pm and there was no rally to close the month. The DJIA closed down 65 points at 10641. The S&P 500 lost 10 points to end at 1234 and the NAZZ dropped 14 points to 2184. Oil closed up 65 pennies at $60.57. Treasuries gave ground with the ten-year at 4.28%, the five-year at 4.12% and the two-year at 4.02%. Breadth was over 5/3 negative on the NYSE and 5/4 negative on the NAZZ and volume was summer light.

And tomorrow is Saturday so enjoy.
*****

 

28 July 2005 Daily Comment

Thoughts

We are in a vacation mode with our grandchildren here and some work being done on our valley spring.

We are looking for some Treasuries to buy but we will probably wait a few weeks. We want to see the two year over 4% before we do anything and it is at 3.95% now.
*****

Thursday’s Markets July 28, 2005

10:41am and stocks opened higher and remain higher in light trading. Oil is up a few pennies and the ten-year in a few bps better. Breadth is 2/1 positive on the NYSE and flat on the NAZZ. Earnings reports remain good and since it is month end tomorrow we would expect stocks to remain higher through then.
*****

Looking at our screens the big techs are down today while the staid blue chips are higher. Maybe some hedgies are beginning to play defense. It won’t do them any good when stocks move lower but the monthly statements may be comforting.
*****

1:14pm stocks are higher across the board. Oil too is approaching $60 and Treasuries are better. Goldilocks is alive and well and trading on Wall Street.
*****

3:02pm and the DJIA closed up 70 points at 10707. The S&P 500 gained 8 points to 1244 and the NAZZ rose 12 points to end at 2098. Oil ended at $59.95 up 84 pennies and Treasuries were firmer with the five-year at 4.04% and the ten-year at 4.20%. Breadth was 2/1 positive and volume was summer Thursday moderate. New highs exceeded 600.

And tomorrow is tomorrow so let the games begin.
*****

 

27 July 2005 Daily Comment

Thoughts

With the liquidation of most of our holdings we are in a comfortable position of not having our assets at risk. The time of year and length of the bull run suggest that a pullback might be forthcoming.

When stocks like Yahoo and Infospace drop 12% and 30% on worse than earnings and stocks like Amazon and EBay  rise 12% and 20% on better than earnings it is obvious that the big boys and girls are having some fun. But such movement coupled with the 55% bulls in Investors Intelligence surveys gives us pause. And cash is the pause that refreshes us best.

Moreover there has not been a second testing turndown of the rally that ensued after the collapse from 2000 to 2003.
*****

Wednesday’s Markets July 27, 2005

11:41am and stocks have been mixed all day with the DJIA mostly on the plus side and the NAZZ on the negative. Breadth is flat on the NYSE and 5/4 negative on the NAZZ.

Oil is down 10 pennies and the Treasury five-year is at 4.09% and the ten-year is at 4.28%. Volume is summer light.
*****

3:02pm and stocks rallied in the last hour after the Fed Beige Book was released and suggested that the economy continued to expand in the month of June. At the bell the DJIA was up 57 points at 10637. The S&P 500 rose 6 to 1136 and the NAZZ gained 9 points to end at 2185. Treasury yields flattened a bit more with the ten-year at 4.24% and the five-year at 4.09%. Oil lost 10 pennies to $59.11 and breadth was 2/1 positive on the day with 380 new highs.

And tomorrow is tomorrow so let the games begin.
*****

 

26 July 2005 Daily Comment

2:17pm and we have returned from our sojourn in the Windy City. The markets today are higher after being off on Monday. TLAB reported “better than” earnings and jumped 10% in price and we used the increase in price as an opportunity to eliminate our position in the shares at a profit. That leaves us with Time Warner in most accounts although a few also have GE and Coke which we will probably hold.

For now we are going to hold the cash and watch. As is obvious from our actions of the past two weeks we don’t have a good feel for nor a good feeling towards the present markets and as we have in the past we have moved to cash while deciding on a course of action.

We will have a more complete post tomorrow.
*****

 

22 July 2005 Daily Comment

Thoughts

Enough has been said on financial television about the yuan to last two lifetimes. Any further mention of the yuan will bring a yawn.

Today is Friday. There will be no Monday post because we will be in Chicago on business.

We want more cash in accounts.

Microsoft met expectations and roped in price. Google exceeded expectations and dropped in price. Motorola exceeded expectation and dropped in price. Lucent did the same. Is there a pattern here?

We want more cash in accounts.
*****

Friday’s Markets June 22, 2005

11:07am and stocks have been trading lower all morning. There is no real selling pressure; rather it seems to be more an absence of buyers. We sold Ford, Sara Lee, Motorola, Boston Scientific, Comcast, Gap, Tribune and one half our Time Warner position. We now own only TWX and TLAB in most accounts

We said we wanted to be all cash by the end of July and this is about as close as we will get unless TLAB runs over $9 in the next week on earnings.

We did want to recover all of our losses for the year before going to cash but unfortunately our choices and market circumstances didn’t allow.

Most accounts that we have managed for any period of time are well above where they were in 2000. The same is not true of the DJIA and S&P 500. For the few accounts taken on since 2003 our record is not as good. But we fore warned that we had done so well for five years that our luck and the law of averages was bound to catch up to us. That is why we stopped taking accounts. The pendulum swings in all of nature including money management.
*****

One year ago on July 23, 2004 the value of the Model Portfolio was $521,000. Today it is valued at about $538,000.
*****

We are probably early going to cash but then we usually are.
*****

The Model Portfolio and most accounts are now about 95% cash. We will be that way for a while. We await higher interest rates and/or a market correction.
*****

Halliburton is making a new high today at $54. That says it all.
*****

3:02pm and oil closed up $1.52 at $58.65. Treasuries gained in price and were lower in yield today with the five-year at 4.04% and the ten-year at 4.23%. The DJIA gained 23 points to end at 10650. The S&P 500 rose 7 points to 1233 and the NAZZ was up 1 point to end at 2180. Breadth was 2/1 positives on the NYSE and 5/4 positive on the NAZZ and volume was moderate.

And tomorrow is tomorrow and it is Saturday so relax. We will.

Next post will be Tuesday evening 7/26/05.
*****

 

21 July 2005 Daily Comment

Thoughts

China has revalued its yuan and pegged it to a basket of currencies. The means the yuan will no longer be marked to the dollar and amounts to a currency devaluation of about 2% according to one talking head. We are in the fog on this stuff but bonds didn’t like it and stocks did.

Unfortunately and sadly there were a few more incidents in London on their transportation system and the waxing rally that stock futures enjoyed on the yuan news waned on the London news.

EBay blew away the numbers expected and the share price jumped 20% overnight. That is a very big ouch if you were short the shares.

Jobless claims were 303,000 for the last week and that is a new low for the past few years.

And we just had one heck of a rain storm. The rain was badly needed so the corn crop is now probably safe with the two inches we received and the gentle showers we are now having. But the garden is a mess with the tomatoes and sunflowers almost on the ground.
*****

Thursday’s Markets July 21, 2005

9:11am and the major measures are lower on the London news but we don’t expect that to last all day. Treasuries are higher in yield with the five-year at 4.06% and the ten-year at 4.25% and oil is down 14 pennies.
*****

10:14am and Greenspan says that the Fed does not concern itself with an inverted yield curve. That is when short rates are higher than long rates and usually suggests recession although the Greenspan would seem to be saying it doesn’t.
*****

11:12am and all these folks on CNBC talking about the yuan devaluation remind of all the folks who were talking about the euro when it first was issued and immediately went below 88 cents on the dollar. Back then the euro was never going to rally …blah blah blah.

Stocks remain lower. We will find out in a few days whether this is the pause that refreshes or the turn of the screw. Till then we are watching. We would like to raise more cash but we’ll hopefully await better prices.
*****

3:02pm and the rally we expected never came. That is about par for the course this year. At the bell the DJIA was down 60 points at 10628. The S&P 500 lost 9 points to 1226 and the NAZZ dropped 12 points to 2176. Oil ended down 89 pennies at $57.13 and Treasuries closed on their high yield lowest prices with the ten-year at 4.28% and the five-year at 4.08%. Breadth was 2/1 negative at the close. There were over 350 new highs on the day.

And tomorrow is tomorrow so let the games begin.
*****

 

20 July 2005 Daily Comment

Thoughts

Motorola delivered the goods last night. Unfortunately, Intel and Yahoo disappointed and they will be a drag on the market this morning. We’ll see whether the big boys and girls can walk and chew gum at the same time.
*****

It seems the Chinese are no longer interested in Maytag. Since they were the ones who wanted to buy it when it had been abandoned by all in the States their withdrawal is interesting. We think Whirlpool, a bidder, has antitrust problems so MYG really has only Ripplewood Holdings, a buyout firm bidding $14.
*****

Tellabs earnings come tonight and it is acting well in front of them. But as with Intel last night, guessing at results is not always the way to co.

If CMCSA gets below $30 and the markets are acting OK we may buy a few shares for another trade.
*****

Wednesday’s Markets, June 20, 2005

Pre-opening Treasuries are slightly weaker ahead of Greeenspan’s testimony and U.S. futures are down. Oil is up 70 pennies with a $58 handle.

With Yahoo having less than numbers the talk today is all about Google which dropped $10 in sympathy with Yahoo’s miss last night.

Sandy Weill want out of his contract with Citigroup do go do other things like start a multi billion hedge fund and make more billions of dollars. No he doesn’t ant to go do missionary work in Africa. His contract which pays him humongous dollars and benefits calls for him to stay through 2006. He wants out and he wants his benefits too. Sounds like a lot of star athletes that the business community roundly condemns for their ingratitude. Is the man larger than the moment?

GM reported a loss for the quarter versus and expected 3 penny profit. The shares are lower on the news.

Eastman Kodak missed again and is going to fire another 10,000 pour souls on top of the 15,000 already announced. How the mighty have fallen. Buy and Hold?? No Ed, we aren’t going to try this one again, twice burned and all that stuff.

JP Morgan’s earnings were in line with reduced estimates and they have increased their litigation reserve to almost $2 billion. Why aren’t the top guys and the board of directors gone from this place after presiding over mistakes and illegal actions that are costing the company $5 billion?

Sara Lee announced charges of $472 million for the restructuring it has been forecasting to unwind the mess that John Bryan made. We are going to own this one for a while since a woman runs this company. When IP announced its restructuring charges yesterday it jumped $3 and HPQ has won plaudits for its restructuring. We think there is value in SLE and in any case we aren’t inclined to take our losses in the shares yet since we think there is more to go on the Bull Run.
*****

9:34pm and Greenspan is testifying. We read today that 11 of the last 12 times he has testified before Congress for two days, the markets have been lower 11 times the first day.

After the first hour the major measures seem to have absorbed the selling well. The measures are lower but it certainly is not a full fledged sell off. Treasuries are higher in yield on Al’s remarks.

We repurchased our trading position in CMCSA at $29.93 and we are buying or adding Ford at $10.60 to a goodly number of accounts.
*****

9:52am and oil is now lower on the day.
*****

12:15pm and advancing issues now outnumber declining issues. The major measures have worked their way back to almost even. With oil down and Treasuries adding yield we would guess that stocks are going to try the upside for a while. EBay comes tonight and its report may wash out the down feeling the markets took on over the Yahoo and Intel reports.
*****

Chevron raised its bid for Unocal from $60 to $63.01. What is this, The Price is Right?
*****

3:02pm and the DJIA closed up 40 points at 10687. The S&P 500 gained 6 points to 1235 and the NAZZ rose 15 points to 2187. Oil closed lower by 74 pennies at $56.72 and Treasuries gained with the five-year at 3.98% and the ten-year at 4.16%. Breadth was 2/1 positive on the day and volume was moderate. New highs again exceeded 500.

And tomorrow is tomorrow so let the games begin.
*****

 

19 July 2005 Daily Comment

Thoughts

The first analyst on CNBC this morning said that Motorola’s expected good results tonight are already priced into the stock. MOT announces earnings tonight after the close. Thanks a lot.

IBM announced earnings last night and they were ‘better than’ expected and IBM is trading up $4 in the early going. That has given a more positive tone to the markets this morning and Citigroup has been forgotten.

The dollar is strong versus the yen and euro and oil is off a few pennies.
*****

Yesterday in a letter to the Joint Economic Committee of Congress Fed Chief Greenspan (we think) basically said high oil prices are not going destroy the recovery although they will negatively affect GDP to the tune of 0.75%. How those guys can figure that stuff out has always been beyond us and we got our only A in college in that course. Treasuries didn’t like that comment since it suggests that the tightening will continue and yields moved up. We read on www.minyanville.com that the spread between the two-year (highest yield in 2 years at 3.88%) and the ten-year is now only 34 bps which is the tightest spread in 4 years. A flat yield curve usually suggests recession but Uncle Alan says no.
*****

The Heard on the Street column in the WSJ has a story about hedge funds that arbitrage convertible bonds versus the underlying stock. These funds have been having a tough time of it recently and folks are withdrawing their poker money from them.

Back in 1987 we hedged our portfolios as the markets moved higher by buying convertible bonds instead of stock with the idea that the 5% plus coupons would save us in any downturn.  In fact, the bonds went down more than the underlying stocks in the Crash because the markets for the bonds were much thinner. By that we mean that there were fewer folks who wanted to buy bonds than stocks. And back then convertibles had 4% to 6% yields. Today their yields are 1% and 2 % which offers no yield protection at all.
*****

Hewlett Packard announced today that it will lay off 14,500 folks over the next year and one half and take a $1.1 billion charge spread over 6 quarters. That is even a better way to mange earnings than a one time charge. That’ why CEO’s make big bucks we guess.

Ford announced earnings of 47 cents which were lower than last year but above the consensus estimate for the quarter of 33 cents. F sees full year of $1 to $1.25. Sales were $44 billion for the second quarter versus $36 billion last year. We would guess they aren’t going broke in the next month.

Boston Scientific reported 48 pennies versus expected 48 pennies. After charges it was 24 pennies versus 36 pennies last year. Revenues were $1.62 billion versus $1.6 billion consensus estimate. Taxus sales were up 11% year over year to $700 million

Motorola earnings come tonight with TLAB earnings tomorrow night. Time Warner earnings are scheduled for August 3 and Sara Lee for August 4. The Gap ends our short list on August 18.
*****

Housing Starts were about 50,000 less than expected at a 2 million annual rate while Building Permits were higher at a 2.111 million annual rate.
*****

Tuesday’s Markets July 19, 2005

9:13am and International Paper has announced its zillionth restructuring and the shares are up $3 on the news. For the last ten years IP has been acquiring paper companies and not making a dime and now it is time to begin divesting them. And the investment banks are happy because that means another round of fees. The same thing is going to happen at the house that Carli built at HPQ.

On the IBM and IP news stocks are higher with the DJIA up 80 points and breadth 2/1 positive. Oil is up 7 pennies and Treasuries are a few bps better than yesterday’s close.
*****

Not for the faint of heart, we repurchased plus a few shares at $11.40 the EYET shares we sold at $13.09 yesterday. Unfortunately we held half our position but we think that Macugen will make EYET worth more than $500 million which is the current valuation on the company.
*****

11:19am and stocks are continuing to trade at higher levels but there is no push or pull. Volume is light and since there are more earnings from big names in store for the rest of the week it looks like folks want to see those numbers before committing or removing any big dollars.

BSX is up $1 on news that it is suggesting higher earnings than forecast by analysts.
*****

1:45pm and the major measures are holding their gains with the NAZZ up 25 points. After the close Intel, Novellus, Amgen, Yahoo and Motorola report earnings. There may be more action then than there is now.

Oil is still a few pennies lower and the five-year is back under 4%.
*****

3:02 pm and the DJIA closed up 71 points at 10646. The S&P 500 gained 8 points to finish at 1229 and the NAZZ rose 28 points to 2173. Breadth was better than 2/1 positive on the day and new highs exceeded 350. Oil closed up 14 pennies and Treasuries were a bit better at the close with the five-year t 4.00% and the ten-year at 4.20%.

After the close Intel, Novellus, Motorola, Yahoo, and Amgen all reported better than and traded up which sets up a higher opening tomorrow.

So let the games begin.
*****

 

18 July 2005 Daily Comment

Thoughts

We have none except it surely is hot and summery like we remember from childhood. Thankfully we have now air conditioning.
*****

Monday’s Markets July 18, 2005

9:08am and stocks are selling off with the Monday morning blahs. Gurus and talking heads are suggesting a rest from the advance with a few gurus suggesting the end to the run. At 60% cash we would like to have more but we think that after a drop that the rally will resume for a few more days at least.

Treasuries are unchanged, Asia was and foreign markets are slightly lower and even oil is down. It is vacation time on Wall Street.
*****

Citigroup began a week of heavy earnings reports form the Blue Chips with lousy numbers saying it is being squeezed by the shape of the yield curve and the shares are trading about $1 lower in the early going. That bad news is going to have to be countered by some big time good reports to get the boys and girls interested in taking the bull side of the argument.

There are trader types who are suggesting that lousy bank earnings will encourage folks to move to tech and oil and other areas and that may be the case. Time will tell.
*****

9:17am and crude oil is down $1 to $57 as Emily the hurricane didn’t disrupt the Gulf of Mexico. Lower crude prices may stem the sell off but any stimulus for a further rally will have to come from earnings or takeover related news, he said less than confidently.
*****

Folks have been saying that stocks prices are trading off the price of Oil. Maybe it is the other way around.
*****

12:05pm and it is a summer Monday in July. The major measures are all lower but there is no discernable rush to sell--- or buy for that matter. Treasuries are a tick or two higher in yield. And oil is above $57 but still lower in price by 90 pennies.
*****

As we said he would today we learn that Carl Icahn the green mailer from another age abandoned Mylan by tendering his shares and is moving on. Those who follow Icahn’s buys are going to be left by him holding the bag.
*****

2:22pm and this morning we sold one half our Eyetech position (which is less than 1% of aggressive accounts) at $13.09 because Genentech was going to be releasing data on its Macular drug Lucentis. Of course what they released was “super” on their terms and EYET is now down at $12.25. We aren’t buying any more shares at this time but we still think that Genentech is trying to use its PR power to gain market share and we are betting that EYET has a worthwhile product. We just aren’t going to bet the ranch.
*****

3:02pm and the DJIA closed down 62 points at 10578. The S&P 500 lost 6 points to 1221 and the NAZZ dropped 10 points to 2146.  Treasuries weakened during the day and the five-year went out at 4.01% and the ten-year at 4.22%. Oil closed down 77 pennies at $57.32. Breadth was 2/1 negative and volume was light.

And tomorrow is tomorrow so let the games begin.
*****

 

15 July 2005 Daily Comment

Thoughts

CS First Boston dropped its price target on Eyetech to $30 from $40. The share price of the stock was under $13 at the time and the stock is now trading at $13.50 since traders are taking that as a backhanded upgrade.
*****

The economic numbers this morning were positive for the economy and Treasuries are trading higher in yield with the ten-year at 4.20% and the five-year at 4.00%.
*****

Rumors are that the new management at Hewlett Packard is going to fire 15,000 workers. Then they will be able to take a special charge and manage earnings for a few years. And they will probably hire 15,000 workers in India.
*****

The Russell 2000 was down yesterday when the other major measures were higher in part because that index gives a greater weighting than the others measures to Real Estate Investment Trusts (REIT). That is why the Russell has outperformed over the past few years as REIT have risen in value as the stock way to play the real estate price boom and that is why it the Russell is underperforming now. And all the institutional money that was moved from the S&P 500 to the Russell 2000 for better diversification and more representative of the economy performance helped the rise in the Russell and REIT as folks had to buy the underlying stocks including the Real Estate Investment Trusts to mirror the Russell.
*****

Friday’s Markets July 15, 2005

8:48am and stocks have opened mixed. Today is a double witching day and there is a lot of noise at the opening. Oil is back above $58.
*****

Bristol Myers sold its OTC (over the counter) drug business to Novartis for $600 million. That pays the penalties for the sham financial reporting of five years ago. And management still has their jobs. But the sale may be a cleaning up for possible sale to a larger drug company. At least that is the speculation. We have been trading the stock off and on but we are so disgusted with management and the Board of Directors for not firing the CEO that we don’t want to won it as a longer term investment in most accounts. The only reason to won BMY is for a trade or a buyout.
*****

11:45am and the major measure are lower while Treasuries have moved back to unchanged. Breadth is 5/3 negative. Oil is up 55 pennies and volume is slow. A summer Friday in which with the heat we may all melt away.
*****

12:41pm and with the markets drifting along we reduced the size of our Motorola shares in many accounts. It has been an oversized position and we had hoped that it would move higher more quickly but we think the correct posture is to sell it down to a more prudent size in accounts. In most cases we are realizing a profit of $1 to $2 per share.

New highs have contracted sharply today and tech stocks look tire. For this reason we would like to punt Cisco and reduce our TLAB holdings in many accounts before the day is over.
*****

1:48pm and as contra hour ends we sold our CSCO at $19.90 and TLAB at $9 for nice trading profits on both stocks. We have plenty of MOT and TLAB left so the sales today are the kind where we hope we are wrong.

CSCO has had trouble at $20 three times this year and we have been using it as a trading stock. If it breaks through $20 and runs we think the MOT and TLAB will also and we will benefit.
*****

With today’s sales the Model Portfolio is 40% invested and 60% cash earning interest at 3% plus.
*****

3:02pm and Oil was down most of the day but moved higher in the last hour to close at $58.09 up 29 pennies. Treasuries closed unchanged with the two-year at 3.85%, the five-year at 3.98% and the ten-year at 4.17%. The DJIA ended at 10638 up 9 points. The S&P 500 gained 2 points to 1228 and the NAZZ tacked on 4 points to 2156. Breadth was flat on the NYSE and 5/4 positives on the NAZZ for the day. Volume was summer Friday light.

$20 per share on SLE, it must be a bull market.

And tomorrow is tomorrow and promises to be a very hot Saturday in the land of warm milk and liquid honey.
*****

 

14 July 2005 Bastille Day 2005 Daily Comment

Thoughts

CPI was unchanged, Core CPI (ex food and energy and all the things necessary for every day living) up 0.1%. Retail Sales were up 1.7%, ex autos sales were up 0.7%. Jobless claims rose 16,000 to 330,000.

Treasuries have rallied a bit on the news and overnight Europe is higher, Asia closed higher and U.S. futures are indicating a higher opening on the back of Apple’s and AMD’s ‘better than’ earnings. Oil is a tad under $60.
*****

The guru we like who was indicating the rally would end next week is now hedging his bets. He had been saying that next week would be a turning point (implying down) and he continues to say that next week will be a turning point. But now he is saying the turning point will involve an acceleration of the movement of stock prices. He just doesn’t know which way.

In the same vein, CFSB upped its price target on MOT to $23 from $21 since MOT is already over $19 this step was necessary. And as we said yesterday even our dogs will get some recommendations as the markets move higher and today Prudential upped its rating on Time Warner to not so bad from horrid or words to that effect. With the way TWX has been acting we’ll take any words of encouragement. In fact the brokerage set a price target of $23. We’ll be happy with half that move.
*****

Thursday’s Markets July 14, 2005

8:50am and there was an unsustainable short busters rally right out of the gate with the DJIA up 100 points in the first 15 minutes. Breadth is strong, oil is down a few pennies and the bulls are in control for now.

This type of surge won’t be sustained and we will have to see how the bulls react on the pullback later today.

We sold our Comcast trading position for a $1 gain.
*****

9:44am and stocks are holding their own. Breadth has pulled in from the 4/1 positive reading of the first half hour but remains 2/1 positive. Volume could be better. And a lot of folks are joining the bull camp.

The S&P500 is well above the 1225 mark at 1228 and it would be technically significant if it held that gain. Treasuries are backing up in yield with the five-year now at 3.97% and the ten-year at 4.17%. Oil remains lower at $59.50.

We are using the CMCSA money to buy and equal amount of shares of CSCO which is off 25 pennies on a downgrade. If the tech rally is to continue into next week CSCO is going to participate and so we think it is a good trade for the aggressive accounts.
*****

11:50am and it is an interesting day. Breadth is negative yet the big three measures are higher. The Russell is getting hit as are the oils stocks with crude breaking support at $58 now trading at $57.90. But the day is young. Tech stocks are higher.
*****

Oil is lower by $2.31 at $57.70 and we would guess that the drop has something to do with the rise in tech stocks and drop in oil stocks. Hedge funds that were long oil and oil stocks and short the major measures may have to reverse those positions. That’s because a 5% move in the DJIA may be a 15% or more move in the value of a hedge fund portfolio because of leverage. And if the price of oil begins to go against the fund at the same time it can become a nightmare.
*****

12:54pm and we sold SGP for a quick $1 trading profit. Raising cash at this juncture of the five day rally is our aim while we are also keeping the tech stocks that have led the rally, for now.
*****

1:51pm and in the contra hour MOT reversed and after having been 24 pennies higher on the day it is now trading 10 pennies lower. Early in this hour we decided to raise more cash and so we sold our AMAT and SEBL holdings for scratch profits. We remain interested in AMAT but it hasn’t been participating in the tech rally and sold off yesterday after the CEO had made a presentation at a Tech Conference. We think it is up today on the AMD earnings numbers of last night and so we are using this pop to get out ahead which we haven’t been since we bought the stock. We also bought a few shares of TLAB at $8.95 which is off 26 pennies from last nights close. We bought shares equal to what we sold of CMCSA.
*****

2:20pm and we have to leave early to take Happy Cat (who was named Rosie by our granddaughter Abby until we found out he was a Roosevelt and so his name was changed entirely) to the vet.

Oil finished down $2.21 at $57.80. The Treasury ten-year went out at 4.18% and the five-year ended at 3.98%.

As we depart the DJIA is up 77 points at 10635, the S&P 500 is up over 1225 and the NAZZ is nine points higher at 2152. The Russell is down 4 points and breadth is 5/4 negative. Oil stocks are lower and some of the smaller cap stocks are lower on profit taking. Volume is moderate and if this is the correction it is interesting as a rotation is occurring which suggests folks want to keep money in stocks. We are happy to have raised cash.

And tomorrow is tomorrow so let the games begin.
*****

 

13 July 2005 Daily Comment

Thoughts

We would first like to mourn the death of Yehudi, our Morgan horse, who was euthanized last night after being seized by colic and not being able to pass the obstruction. One minute he was fine and the next he was in terrible pain. Yehudi was a part of our family for 20 years. We acquired him as a six month old colt and walked him home three miles in a snowstorm. He was always a gentle and affable for a horse. We will miss him. He was buried in the pasture so he may nourish his friends.


        Smokey

Every morning as we watch
the horses graze where Smokey lays
a smile comes to our face
as horses moving through the haze
remind us of the sunny days.

We put Smokey down this year
and buried him on a crest.
No mourning as his friends move past
where he rests in fulsome grass
feeding freely without strife
those he traveled with in life.

How happy would we parents be
to so well nourish our progeny
as Smokey does so easily.
Of course we do but seldom know
because we let our children go.
                    BL 9/03

*****

Stocks held their own yesterday and look to open a little higher today. The guru we have been following who has been spot on gives the rally till next week to run. We are agnostic on the subject. We are going to react rather than predict. We will continue to raise money as the rally rises and see where we are at its conclusion whenever that occurs.
*****

Wednesday’s Markets July 13, 2005

The WSJ has a front page article on difficulties with Boston Scientific stents. The story was known by some yesterday and explains why the share price was lower most of the day. No recalls of stents are contemplated and the numbers quoted of deaths and complications seem to be within acceptable parameters for a device that obviates the need for bypass surgery.
*****

We are going to sell the balance of DreamWorks today and buy Gap Stores with the proceeds. GPS seems to be turning the corner and it is the type of stock that can really fly when the big boys and girls decide that GPS is hot again.

We are comfortable buying GPS lower and we can’t say the same about DWA, hence the switch. The upside on GPS in the near term is also more probable. And life goes on.
*****

Legg Mason is recommending Yahoo and suggesting that Microsoft might be interested in acquiring Yahoo to compete with Google. And so the bull market goes.
*****

10:11am and the major measure are mixed. Oil is up 18 pennies and Treasuries are higher in yield. Breadth is almost 2/1 negative after being 5/3 positive in the early going.

Since many gurus are saying stocks are overbought they are calling for a pause. We think this market is new in an old way and the rally in the summer of 1987 wouldn’t quit even though it should have. As bond rates move higher on the long end we think the pain of capital loss is going to move money to stocks in a catch up play.
*****

1:29pm and in the contra hour the major measures are mixed. Breadth ahs improved to 5/4 negative and it would be nice to see all the measures higher at the close. The gurus would just call for a larger unwinding though. Treasuries are higher in yield lower in price with the five-year at 3.96% and the ten-year at 4.16%.
*****

3:02pm and the DJIA closed up 45 points at 10557. The S&P 500 gained 1 point to 1123 which is still below the old 1225 high of March. The NAZZ finished up 1 point at 2144. Oil ended at $60.01 down 61 pennies. Breadth was 5/4 negative at the bell and volume was light.

And tomorrow is tomorrow so let the games begin.
*****

 

12 July 2005 Daily Comment

Thoughts

Upon further review, as they say in NFL football, we are going to sell half our DreamWorks position. Accounts are back to as high as they have been in a few months even with the sell off in DWA yesterday. Sell your losers or part of your losers and let your winners run is an old axiom.

Catching a summer rally involves buying stocks that the big boys and girls currently like. It does not involve buying stocks that they may like in six months. We know that, we just were too myopic to understand our mistake until it was too late. Oh well, spilt milk, barn doors, and stitches in time have all passed us buy.

The trick is to buy the stocks the big boys and girls like or will like soon and that we can live with on a value basis. Motorola, TLAB and AMAT fit that bill. Time Warner is in the dog house for the same reason as DreamWorks in that they are a media company. But TWX is also a large cable company and we think that AOL is an overlooked asset that will eventually be recognized. TWX has been pilloried for years after being the darling of the momentum crowd in the late 1990s. The ‘street’ may revisit this stock before the rally ends.
*****

Tuesday’s Markets July 12, 2005

Asia was mixed overnight and Europe is lower as are U.S. futures. Oil is up 58 pennies at $59.48. New highs yesterday were over 700 with over 500 on the NYSE. That is the highest we have seen for along time. Treasuries are unchanged this morning with no important economic numbers expected until tomorrow.
*****

As a first step to the spin off of its branded apparel unit in 2006 as an independent entity, Sara Lee is cutting 750 jobs. The branded apparel unit comprises Champion, L’eggs, Bali and Playtex.
*****

9:22am and we sold half or thereabouts of our DWA holdings for $23.41. It is currently trading at $23.20 and we haven’t sold the remainder because we think we will get a better price. BankAmerica raise their rating on the stock to buy and Bear Stearns went from under perform to peer perform. Since DWA’s peers are underperforming we don’t know whether that is an upgrade or not but we’ll take it as such. Most of the folks who downgraded the stock this morning had placed buys on the stock when it was in the high $30s while both BAC and Bear Stearns were avoiding the stock. Also neither BAC nor Bear Stearns were underwriters. We are interested to see whether Mother Merrill changes its rating from neutral which it has had since the IPO last December.

We are going to place the proceeds from the half position sale into Ford which is only $1 above its low for the year at $10.70 and we will continue to monitor the DWA.
*****

10:15am and after opening lower with 2/1 downside breadth the major measures are floating just in negative territory. There is some profit taking coming into the tech stocks but breadth is improving to almost even. Treasuries are a few bps lower and oil is back over $60 as a large rig in the Gulf is listing and may be out of service for a while.
*****

1:31pm and the major measures have rallied to the plus side with tech stocks strong. Oil is also strong up $2 per barrel and that may come into play in the last hour. Treasuries are higher in yield lower in price and breadth is now 5/3 positive with over 500 total new highs. Low volume remains the only negative for the bulls. The final hour will be a good test of the bull case.

We sold the balance of our HAIN holdings at $20.45 for a nice profit.
*****

3:02pm and Oil closed up $1.70 at $60.62. Treasuries gave ground with the five-year at 3.93% and the ten-year at 4.14%. Two weeks ago the ten-year was at 3.90%. Ouch!

The last hour was a battle and the DJIA lost 5 points to close at 10515. The S&P 500 gained 3 to 1222 just short of the 1225 March high and the NAZZ rose 8 points to 2142. Breadth was 2/1 positive.

And tomorrow is tomorrow so let the games begin.
*****

 

11 July 2005 Daily Comment

Thoughts

Today was beginning in a beautiful manner until DreamWorks Animation announced information that has the share price down $2 in early trading. Then we made the mistake of not backing up our daily post and so that was lost by a click of the wrong button and we are now attempting to recreate the mellow feeling we had when we entered the office this morning. We don’t think it will come soon.

DreamWorks Animation is now predicting a loss of 8 cents for the quarter instead of earlier break even. Earnings for the year are now projected at 80 to 90 cents versus earlier over a dollar. DWA also announced that the SEC is probing trading in DWA shares on May 10, 2005 when the company announced negative news. Our guess is that some options market makers lost some money on puts on that day and asked for a probe. The company says it is cooperating. The good news is that it has pulled a secondary offering of $500 million of shares. The proposed $500 million secondary offering has been overhanging the markets. The withdrawal of the proposed offering is a positive. Unfortunately all the rest of the news is negative that the markets will have to digest for a couple of days before DWA can try to join the rally or rather join the recovery in its case. We are earning our gray hairs on this one.

On a positive note Schering Plough was upgraded to outperform by CFSB.

Overnight Asia was higher and Europe is also higher. U.S. futures are showing a plus opening. The best thing that could happen would be an early in the day sell off and then rally.

We have been predicting a summer rally and since summer is getting longer in the tooth the rally is going to have to occur soon. The move on Thursday and Friday has set the S&P 500 up to break though the 1212 resistance and it does the S&P 500 may be able to tack on anther 2% before running into more resistance.

In the land of milk and honey the haying is finished and the baby birds are fledged and the weather is hot.

Monday’s Markets 7/11/05

Hopefully 7/11 and our luck number 1212 will work for us today even with the lousy start occasioned by DWA. Don always used to say that the stocks that test your mettle at the start are the ones that offer the greatest reward. In 1984 we bought Gap at $30 and watched it go to $22 and listened to the howls of clients. We eventually sold the stock at $80. We aren’t looking for that performance from DWA (we weren’t from Gap either) but we are hoping for a move back to the $40 level by year end. Until today we were hoping for a move to the $30 level in the current rally but that hope is dust with today’s news. The question now is whether to ride it out and our inclination at the moment is yes. Time and the actions of our other stocks may change that opinion.
*****

Treasuries are lower this morning with the ten-year at a 4.14% yield and the five-year at a 3.91%.
*****

10:03am and in the first hour and one half the major measures rose settled back and now are on the rise again. Except for DWA we are having a good day.

Oil is down $1.03 at $58.65 and breadth is 2/1 positive.
*****

12:52pm and we lost our DSL connection and so we are using our AOL dialup connection to get to the web but it is slower. But we now remember why we keep our AOL subscription.

The major measures remain higher but trading has slowed and so has the buying pressure. We sold our OATS holdings and we are beginning to sell our HAIN. Both are profitable and they are the type of stocks that only have liquidity in bullish environments.

Breadth remains better than 2/1 positive and new highs are over 700 total. DWA continues to ruin our day and we are tempted to eliminate the position and go on with our lives but we haven’t pulled the trigger… yet.
*****

3:02pm and crude oil ended down 72 pennies at $58.93. Treasuries were higher in yield, lower in price for the day with the ten-year at 4.10% and the five-year at 3.90%. At the bell the DJIA at its best levels of the day up 70 points at 10520. The S&P 500 rose 7 points to 1218 and the NAZZ closed well above the 2100 mark at 2135 up 22 points. Breadth was over 2/1 positive at the close. Volume was Monday summer light.

And tomorrow is tomorrow so let the games begin.
*****

 

8 July 2005 Daily Comment

Thoughts

Tomorrow July 9 is our 39th anniversary. Our marriage has survived trials and travails because of our love for one another and our true friendship and because of the love and understanding and joy offered to us by 2 wonderful children and one great son-in-law and 2 marvelous grandchildren plus numerous ex-boyfriends and girlfriends who became family. And relatives, in-laws, and friends both in the land of milk and honey and Chicago and around the world that we have met through our and our daughters’ travels and our business relationships have enhanced our lives immeasurably.  We have been truly blessed and while it has never been dull we wouldn’t have done it any other way.
*****

The Job Creation report for June is the item of the day and will be announced in about 10 minutes. The number being bandied is 175,000 new jobs created and over or under will be the mover of the markets today.
*****

Overseas Europe is higher, gaining back most of what it lost yesterday. The reality in now that bus bombing at various intervals in large metropolitan areas is going to become a way of life. All we can do is sigh and say so sad.
*****

We today are heading to the big city for meeting with a client and then a week-end of beach going and movie seeing.
*****

Flash! Payrolls were 146,000. Not to hot, not to cold, just right and Treasuries are a bit higher in yield and stock futures are firm. The dollar is higher and the poor hedgies are suffering as the “can’t lose short the dollar strategy” of this year has lost a lot. The household employment number was plus 156,000. Revisions to the last two months added 44,000 jobs and raised the average job creation numbers for the last three months.
*****

We are heading out early today so all are on their own. Hopefully the markets will give us a nice pop to end the turmoil of the week. If not there is always tomorrow. The Model Portfolio will be posted tonight and we’ll be back her bright eyed and bush tailed on Monday 7/11. That certainly will have to be a luck day for all.
*****

And tomorrow is Saturday so enjoy the summer day.
*****

 

7 July 2005 Daily Comment

Thoughts

6:02am and as we begin the day we learn of the 7 explosions on the London subway and bus system that have left folks dead and injured. Oil is lower, Treasuries are higher, and stock measures and stock futures around the globe are lower by 1% to 3%.

There is some question as to why oil futures would be off by $2 and our thoughts are that hedge funds have such intricate strategies than long oil, short Treasuries and short the U.S. dollar would force sale of oil to offset potential losses in the short positions in the dollar (which actually is lower against the euro right now) and Treasuries. Hedge funds rule the day to day trading and we all are going to have to get used to the volatility created by their strategies.

We don’t think that means that investing is a losing proportion going forward, but it does mean that to be an investor there is a need to ignore daily fluctuations and take a longer view. Now we have never been accused of being long term investors but we do take multi month trading/investing positions and those are affected by the day to day movement of stocks. We too have to learn to live with the increased volatility.

The London explosions as tragic as they are will fade from memory rather quickly in the U.S. if there are not similar occurrences here today or in the next few days. The U.S. remains an insular society capable of great myopia when it comes to the rest of the world. ‘If it isn’t happening to me here and now, it isn’t my worry,’ is the motto.
*****

6:27am and Germany, France, and England are all down about 3% overnight and U.S. futures are down about 1.5%.
*****

Saudi Arabia says it won’t be able to meet oil demand in ten to fifteen years.
*****

7:17am and the fifty day moving average on the S&P 500 is 1188 and it is currently trading in the futures market at 1184. That is a big negative. It doesn’t matter that an outside event precipitated the down move.  All that matters from a technical view is that it occurred. Of course because the S&P 500 is trading there now does not mean that it will be trading there at the close which is the important number and time.
*****

Jobless claims were up 7,000 to 319,000.
*****

In these times when our own and client accounts are underperforming we often do ‘what if’ scenarios. Back in August 2004 when our performance and the markets were unchanged for the year and our accounts were all in cash we seriously considered buying 2 year Treasuries with a 1.2% yield and sitting out the turmoil. Had we done that we our return would be less than it has been even with our erratic performance of the last 11 months. Sometimes perspective helps.
*****

Thursday’s Crazy Markets July 7, 2005

9:49am and stocks have been all over the board. Schwab has been up as much as $1.75 on takeover rumors and GPS is up 70 pennies on better than expected same store sales. Since we think Schwab will eventually be acquired we are taking no action although our trigger finger is very itchy. The major measures are obviously in the tank with the DJIA down 70 points and breadth after running 4/1 negative in the early going is now about 3/1 negative. Every drop is met with buying and every rise is met with shorting so the day will be interesting.

We are buying Cisco in any accounts at $18.60 and Comcast at $29.80 in larger and aggressive accounts. We are also adding a few shares of Tellabs at $8.50 to larger accounts.
*****

11:15am and its easy come easy go. Schwab says it wants to stay independent and so our happy gain of this morning has disappeared and we would guess that yesterday’s gain will also vaporize. When we trade out on takeover rumors they are true and when we hold on takeover rumors they are false. Such is life. Insiders own 20% of the shares so we presume there will be no takeover. We sold the shares at $12 for a small profit. The reason we owned it was for a sell out by Charlie and if he wants to hold on we want to bail.
*****

12:39am and breadth is now down to 2/1 negative and the major measures are almost back to even. Oil remains lower at $60.35. Treasuries are about 7 bps lower in yield across the board on a flight to safety. Volume is active. The S&P 500 has rallied from down 10 points to even on the day but there are still two hours of trading left and the bears want to force the market lower. Most gurus are suggesting that this is not a buying opportunity. We’ve done some buying but the sale of Schwab makes the day a net cash raiser for most accounts.
*****

3:02pm and the day was interesting to say the least. At the close the DJIA was up 32 points at 10302. The S&P 500 rose 3 points to 1197 and the NAZZ gained 7 points to 2075. Treasuries were better with the ten-year ending at 4.04% and oil finished down 55 pennies at $60.73. Breadth was about even at the bell. Volume was moderate.

And tomorrow is tomorrow so let he games begin.
*****

 

6 July 2005 Daily Comment

Thoughts

This morning we were listening to the talking heads on CNBC discuss how the folks who run big media like Time Warner and Tribune don’t know what they are doing and that Google is the wonder company that has future media all wrapped up.

Change is always difficult for many older folks (like us) to accept and wrap their arms and minds around and we are sure that the Googles and Yahoos of the world have changed the way things are done. And we do know that folks don’t read newspapers like they used to. But our view is that if the companies are diversified enough that they will figure out how to participate for the advertising and content dollar. The folks who run these companies are not dummies and they are paid big bucks to make prescient decisions.

For an interesting point of view on this subject go to:

http://mccd.udc.es/orihuela/epic/ols-master.html

Meanwhile the continual erosion in prices of these issues has presented a longer term buying opportunity. In fact the only reason we don’t own the NY Times is that we think the $500 million the nepotism appointed CEO spent to buy www.about.com  because he used it was a waste of money. Those talking heads on CNBC should be at least suggesting that the buy was a tremendous strategic move. Instead most analysts were less than smitten by the price and content and forward dollar producing value of the buy.

Tribune owns the Cubs and many TV stations and so has diversified and will again come back into favor. We don’t think the share price is going to move substantially before the potential October melt and so we are waiting until the fourth quarter to take a further look at thee issues.

Time Warner share price places zero value on its AOL holding that we think is worth $20 billion and that thus the company’s shares are undervalued by at least 25% without considering the other valuable assets. We know that pay for and dial up are becoming dinosaurs but even 10 million daily hits is worth some money. And TWX is actively working to change the dynamics of the website.

Univision which has the Spanish speaking TV market in the U.S. tied up is another interesting stock that we have traded. It is on its low and is in a disagreement with Telemundo over programming that accounts for 50% of its daily content. We presume that for a price the disagreements will be settled and we are watching that stock.

In momentum markets stocks that are dropping in price fall farther and farther out of favor as they fall farther and farther in price. It ahs always been so but seems to be more pronounced these days because of the tendency of the big boys and girls to glom onto once or two concepts or ideas and run them to the sky until someone calls abandon ship.

But the old way of buying out of favor stocks does work. Where we went wrong at year end is that we bought junk stocks for a move that we got but didn’t get off the train fast enough. We are chastened and have returned to our tried and true buying of value at attractive prices.
*****

Wednesday’s Markets July 6, 2005

9:02am and the ISM (Institute of Supply Management) Manufacturing Index for June was 62.2 versus 58.5 for May. Maybe the Fed knows the economy better than traders. Since the Fed meeting last Thursday the Treasury ten-year has backed up from 3.91% to 4.10%. That is a good piece of change and almost a 2% loss in principal for traders who didn’t believe.

The major measures are mixed as is breadth. Oil is up 82 pennies to $60.35 on closures of operations in the Gulf of Mexico.
*****

11:51am and in light trading the major measures are unable to hold their gains and stocks are selling off. We sold the balance of our BLS for a 20 penny loss and bought a few shares of GPS at $20.10 for aggressive accounts that already own stock. We also bought SGP for many accounts at $18.83.

Investor’s Intelligence has bulls at 53% and bears at 21%.
*****

3:02pm and stocks rolled over this afternoon and gave back all of yesterday’s gains and more. Oil closed at $61.28 up $1.69 cents. Treasuries closed lower in yield with the ten-year at 4.08%. The DJIA ended down 100 points at 10270. The S&P 500 dropped 10 points to 1195 and the NAZZ lost 10 points to 2068. Breadth was only 5/4 negative at the bell and volume was greater than yesterday but still moderate. Those last two figures offer a sliver of hope for the bulls.

And tomorrow is tomorrow so let the games begin.
*****

 

5 July 2005 Daily Comment

Thoughts

According to the gurus this is the week that decides whether stocks move higher or lower. Well, that is always the case but with 55% bulls and less than 20% bears in the latest figures and sideways movement for the last six months it seems that time for a choice may be approaching.
*****

Early morning trade had has oil back over $59 on storms in the Gulf of Mexico or worries about having enough heating oil for next winter six months from now. Both of those are reason enough for the momentum boys and girls to have their fun with stocks and bonds and currencies moving off the oil price movement. It makes for interesting trading which is of course the whole purpose of this game.
*****

Friday, after the close, it was reported that a jury found that Johnson & Johnson had infringed on Boston Scientific’s eluded stents patent. So the score is now BSX 2, JNJ 1 for recent trials; and the more important victories have come for BSX since the coated stents still have patent protection while the ordinary stent patent that BSX was found to have violated expires at the end of 2005.
*****

Asian and European markets were and are lower and Treasuries continue to give ground as yield increases. So let the games begin.
*****

Tuesday’s Markets July 5, 2005

This morning looks to begin on a lower note and we would guess that trading will be a bit slow as folks struggle back to work. A down opening is not bad as long as...
*****

9:28am and stocks opened lower but the major measures have now moved to the plus side in light trading. There is no trend. Breadth is negative, oil is higher and Treasuries are weaker.

We added odds and ends of various stocks to accounts after reviewing all of the accounts over the holiday. BSX opened $2 higher and is holding most of that gain.
*****

12:06pm and the major measures are higher but breadth is 2/1 positive but volume is light. The volume suggests that there is not much conviction in today’s action but we would rather have stocks higher than lower.
*****

1:17pm and entering the contra hour stocks are giving back some of their gains but breadth remains at 2/1 to the good. The Gulf of Mexico storm is causing some oil rigs to shut down which is aiding the rise in oil. The five-year Treasury is at 3.88% and the ten-year 4.09%. We added trading positions in SGP in accounts at $18.80. We sold stock at $20.20 a few weeks ago and have had decent luck trading the shares off a buy at this level.
*****

3:02pm and Oil ended at $59.60 up 85 pennies. The DJIA closed up 71 points at 10375. The S&P 500 was up 10 points at 1205 and held the 1190 level. The NAZZ rose 20 points to 2077. Treasuries closed lower with the ten-year at 4.11% and the dollar was higher against the euro. Breadth was over 2/1 positive but volume was too light to give any credence to today’s rally.

And tomorrow is tomorrow so let the games begin.
*****

 

1 July 2005 Daily Comment and Rabbit, Rabbit

Thoughts

It is obvious that we were not in synch with market in the first two weeks of the year. We had a lot of company but that doesn’t lessen the pain of the 6% loss we endured. But since that time we have matched the markets and hopefully going forward our new approach will be rewarding. The great truth about investing in and trading stocks is that every day is a new day with opportunities and we believe we are set up to catch the lucky star in the second half of the year.

The Fed implied yesterday that the economy is fine and that it needs to keep raising rates to slow things down. Gurus are attributing the rate increase to the need for the Fed to cool off the housing market but since mortgages are priced off the Treasury ten-year yield, which is at its low for the year, the rising short rates are not having any effect.

The Fed also insists that inflation is running at a 2% rate as oil jumps $2 per day. Bond traders say that the low yield on the ten-year is not saying that the economy is slowing. Rather the low yield is a function of Japan and China and the Middle East needing a place to park their dollars while they get ready to invest in American assets.

We have been looking for a summer rally and sold interest rate sensitive stocks when we became convinced the Fed would continue to raise rates. We want cash in the accounts if we are wrong on our rally theory. Since we are approaching the midpoint of seasonal summer and also earnings season we will give the rally a few more weeks to develop. Until then we will be trading on the edges and looking for opportunities to raise more cash.

Friday’s Markets July 1, 2005

9:35am and the major measures are higher in light trading. The S&P 500 is holding the important 1992 area and is well above the 50 day moving average at 1985. Breadth is positive. Treasuries are moving higher in yield with the ten-year back above 4% as the reality of the Fed move yesterday and the light trading day sink in. And oil is back up 80 pennies at $57.30.
*****

1:05pm and the major measures are mixed with the NAZZ lower and the DJIA and S&P 500 higher. GM had fantastic sales numbers for June, and the economic numbers released this morning showed a stronger economy than expected. As a result, in thin trading, Treasuries are tanking with the ten-year at 4.04% up from 3.92% yesterday. That is a drop in price of one full point. Oil is $2.25 higher to begin the month at $58.75. The boys and girls must play. Breadth is positive on the NYSE and negative on the NAZZ. The dollar is at new highs against the euro for the year.

We are selling our last interest rate stock BLS at $26.68 for a scratch to 30 pennies per share loss to raise more cash. We are leaving a few shares in larger accounts.
*****

2:13pm and we are heading out a bit early. It looks like the major measures are heading back to even for the day.

Our next post will be on the evening of July 5.

And tomorrow is the first day of the holiday so enjoy.
*****

 

 

 

 

 


FAIR USE NOTICE

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.


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.