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
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?
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
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
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.
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.
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
And tomorrow is tomorrow so let
the games begin.
27 July 2005 Daily Comment
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
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
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
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
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
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
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
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
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.
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
And tomorrow is tomorrow so let
the games begin.
20 July 2005 Daily Comment
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
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
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
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.
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
We repurchased our trading
position in CMCSAat $29.93 and we are buying or adding Ford at $10.60 to a goodly number of
9:52am and oil is now lower on the day.
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?
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
And tomorrow is tomorrow so let the
19 July 2005 Daily Comment
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.
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
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
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
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
BSX is up $1 on news that it is
suggesting higher earnings than forecast by analysts.
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.
still a few pennies lower and the five-year is back under 4%.
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
the close Intel, Novellus,Motorola,Yahoo, and Amgen all reported better than and traded
up which sets up a higher opening tomorrow.
the games begin.
18 July 2005 Daily Comment
We have none except it surely is
hot and summery like we remember from childhood. Thankfully we have now air
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
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.
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.
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.
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
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
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
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.
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.
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.
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
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
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
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
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
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.
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.
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 andbuy 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.
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%.
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
Upon further review, as they say
in NFL football, we are going to sell
half ourDreamWorks 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
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.
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. *****
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.
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
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
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
And tomorrow is tomorrow so let
the games begin.
11 July 2005 Daily Comment
Today was beginning in a beautiful
manner until DreamWorksAnimation 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
On a positive note Schering Plough was upgraded to
outperform by CFSB.
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
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.
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.
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
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.
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
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
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
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%.
Arabia says it won’t be able to meet oil
demand in ten to fifteen years.
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
Jobless claims were up 7,000 to
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
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.
and the day was
interesting to say the least. At the close the DJIAwas 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
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
For an interesting point of view
on this subject go to:
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.combecause 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
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
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
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%.
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
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
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 onBoston
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.
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.
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.
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
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
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
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.
and we are heading
out a bit early. It looks like the major measures are heading back to even for
Our next post will be on the
evening of July 5.
And tomorrow is the first day of
the holiday so enjoy.
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