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31 August 2004 Daily Comment

          Yesterday’s markets

7:32am and summer is fleeting in a wave of cool weather. We will probably have summer in late September when our systems are ready for the cool we are currently experiencing. Nature and the markets can not be controlled. We can only react to them.

Personal Income in July was up 0.1%. Personal spending was up 0.8%. Personal Income was expected to be up 0.6%. The WSJ headlines this story as consumers spent with renewed vigor in July even as person income grew at the slowest rate since August 2002.

Chiron is down 75 cents per share this morning so our exit on Friday saved us a difficult decision this morning.

Overnight Asia was mixed and Europe and U.S. futures are lower. One guru is suggesting that the thin trading may lead to more volatility.

7:52am and attacks in southern Iraq have halted oil exports for at least a week. Oil is up a few pennies this morning. We imagine traders are trying to digest the volatility of the last two weeks in oil prices.

9:09am and stocks have opened lower. Treasuries are stronger today and the rally in Treasuries the last few weeks is saying that bond traders see a slowdown continuing in which case stocks need to come down some more.

Folks are looking for a Bush bounce and we may have already had it. Entering September we presume the economic numbers for August are going to be punk. With the end of the 3rd Quarter approaching and an uncertain election in the near future, coupled with the chaos in Iraq and the tendency of the Homeland Security folks to protect their rear ends by the continual issuing of warnings we think the ‘wall of worry’ is higher than non market participants want to climb at this time.

10:41am and oil is down $1.70 per barrel as the big boys and girls slog it out on the Merc. The DJIA has rallied a bit on the oil drop but that is old news by now and so the DJIA remains lower. The NAZZ which led the markets higher the last three weeks remains down 1%. Trading is light, breadth is negative and the weather is lousy.

12:26pm and the DJIA is now down 26 points with the NAZZ off 18 points. Oil remains over $1 per barrel lower. The skies have cleared and we are off to get a load of hay for our horses.

3:02pm and stocks closed lower on the day with the DJIA down 72 points at 10122. The S&P 500 lost 8 points to end at 1100 and the NAZZ dropped 26 points to 1836. We don’t expect the sell off to continue this week. We are inclined to think that some of the boys and girls are having a little fun with everyone away for the week. By the end of the week we expect that the ups and downs will even out. There were less than 900 million shares traded on the NYSE and less than 1 billion on the NAZZ.

Friday’s employment gain for August number is the important number of the week.

3:04pm and with the start of the Republican convention we are going to take the next three days off so that our loyal readers may watch the convention if they are so inclined or visit the beach or woods as we plan to do. The next post will be on Tuesday Morning September 7, 2004.


30 August 2004 - Daily Comment

Friday’s Markets
7:32am and Preliminary 2nd Quarter GDP was up 2.8%. The Price Deflator (inflation) was 3.2%. Both those numbers are annualized. Business Investment was up 12.1%. Stock futures are mute and Treasuries are stronger. 2.8% GDP growth isn’t going to do the job and the 3rd Quarter numbers are going to be even worse. The drop in Treasury yields is forecasting a slowdown.

The Chairman speaks this morning in Jackson Hole, Wyoming.

7:34am and a plane has been hijacked in the Sudan and explosives have been found on one of the Russian planes.

8:01am and Japan continues to have trouble emerging from stagnation and recession in the fifteenth year since their bubble burst.

8:55am and the Sudanese highjackers have surrendered and the relative of the Saudi Defense Minister has been released.

Stocks are a bit higher in light trading and even breadth.

10:34am and breadth is positive and the DJIA is up about 17 points. The Michigan Sentiment Index dropped to 95.9 from 96.7. Yawn.

We are trading Chiron in 1000 plus share amounts off the $43.30 level in a few of our very aggressive large accounts. The share price of CHIR is off $4 on news of a recall of several batches of flu vaccine that might be not sterile and we think the shares will act like EL did last week and allow us to make a few dollars over the next few days or $1 today if we get a strong market close.

Starbucks is down the same amount ($4) in the last two days on higher but less than expected sales. The difference is that CHIR is near its low for the year and had just begun to rally off it while SBUX is coming off its high. We know buying stocks on their lows is not the way traders do it but we think that big caps that drop precipitously in neutral or slightly positive overall markets have been recovering about half their losses over the week after the drop.

3:02pm and the DJIA closed up 21 points at 10195. The S&P 500 gained 3 points to 1107 and the NAZZ rose 9 points to 182. We decided on discretion and when the CHIR didn’t rally late in the day we closed the position for a scratch $100 profit per account. We didn’t want to carry over the weekend.

This morning

6:53am and Friday was rather disjointed for us because our old horse Sylvia who we have been keeping in retirement for a friend and client came down with ‘colic’. Colic is a stomach ache in horses that is very dangerous since a horse’s life revolves around eating and digesting its food. When it has colic something goes wrong in the digestive process and the horse suffer terrible gas pains. The Vet came three time in two days but we weren’t able to save her. She was 27 years old and had a great life except for her last three days. Hope we all can say the same.

The markets on Friday did nothing and we would expect this week will be slow. There are a lot of statistics to be released this week beginning with Personal Income and Personal Spending at 7:30am today. Individual store retail sales and the week jobless numbers will be announced on Thursday. The Labor Department will provide the Employment report on the number of jobs created in August on Friday that may cause some trading if anyone is around.

There are good groups of statistics that will give indication of August economic activity. We will be in and out this week and there will be a daily post each day.

So let the games begin.

27 August 2004 - Daily Comment

Yesterday’s markets

6:32am and the Model Portfolio is 99% cash and up 1.6% for the year. At the end of June the Model had a value of $534,000. At the end of July the value of the Model was $521,000. Now at the end of August the value is again $533,000. That certainly isn’t the $550,000 we reached in February but our failure to follow our plan in that month is spilled milk. Not all accounts are to the plus side for the year but the ones that are negative are mainly aggressive or smaller accounts that performed better last year than our average account which showed of about a 10% gain. Those 10% plus accounts are to the plus side by a small margin after our recent market foray.

We know it is not good to over concentrate on the short term but we feel satisfied that we have extricated ourselves from a losing situation and now are ready to face the uncertainties of the next few months with a clean slate. Sometimes just getting back to even is a win and in the current market environment that is how we view our summer travails and eventual recovery.

The downside risk has been and remains greater than any upside potential. As we said yesterday we always sell too soon but we don’t think the stock markets have more than a few percentage points of gain in them before they roll over in September/October.

Last Monday Wal-Mart suggested that same store sales would be flat to up 2% for August. That is their lowest projection of the year. Hurricane Charlie was given as one reason but other statistics being released for July suggest that the rollover in the economy that began in June continued in July. With punk retail sales numbers for August in the cards, with the Hurricane and the Olympics and the Republican Convention all keeping folks away from stores coupled with vacation time on Wall Street we don’t see any August recovery. Since August numbers will be released in September the first potentially good numbers will be available in October.

Those are our reasons for heading to the sidelines and awaiting events.

6:40am and Starbucks disappointed with same store sales up 8% instead of the expected double digit gains. SBUX lost 10% of its market value in after hours trading.

Krispy Kreme announced lower sales than expected and also lowered projections going forward. KKD is one of those stocks where we were correct about the fundamentals but which blazed a trail of profits and now grief for those folks who traded the stock over the past few years. Our difficulty in trading these issues is that we have seen too many crash and burn and when we were younger we crashed with a few and that has soured us on that type of catching knives trading exercise.

Merck has a problem on its hands with the very large study that shows that Vioxx, an arthritis drug, is three times as likely to cause heart attacks as Pfizer’s Celebrex. Vioxx is a multi billion dollar seller for MRK and that news isn’t good.

7:12am and some pipelines have been destroyed in Iraq causing the reduction of about 600,000 barrels of crude a day from export. The changing of the margin rules yesterday was a major cause of the drop in oil prices yesterday since most of the run up had been caused by speculators. We noticed at our gas station that the price of premium never budged during the entire three week period. Moreover gasoline stocks while high have been stable and that too suggests that the oil rise is the result of hedge fund and other large players piling on a momentum play in a commodity where there was enough liquidity to handle the large numbers these folks throw aground.

7:32am and first time claims for unemployment rose 10,000 to 343,000 in the week of August 21. Continuing claims were unchanged. The effect of Florida on those numbers is not indicated.

11:20am and stocks are going nowhere in light trading. From www.miyanville.com we learn that Chairman Greenspan visited the White House 47 times last year while during the Clinton years he visited four times a year. Given how the economy has performed maybe less visits to the White House by Greenspan would be helpful.

1:14pm and as we enter the contra hour breadth on the NYSE is 5/4 positive while it is 5/3 negative on the NAZZ. The major measures are slightly lower. Volume is light and will get lighter next week as folks leave NYC for vacation and to get out of the way of conventioneers and protestors.

We are watching the goings on with one eye but don’t have any bright ideas and will rest on our meager but hard earned profits of the past two weeks.

3:02pm and in what must be the lightest volume of the year the DJIA closed down 4 points at 10177. The S&P 500 gained 1 point to 1105 and the NAZZ lost 8 points to finish at 1852. Our computer showed a tad over 1 billion shares traded on the NYSE and 1.1 billion on the NAZZ. Crude lost 43 cents to close at $43.05 and Treasuries were higher in price lower in yield.

This morning

6:35am and preliminary 2nd Quarter GDP and the Deflator come this morning at 7:30pm. Michigan Sentiment comes at 9am. For GDP the number expected is 2.7%, the Deflator (inflation annualized) is 3.2% and Michigan number is 94.

We don’t know whether anyone will be around to trade off the numbers but with the light volume yesterday we would guess it will be lighter today.

So let the games begin.


25 August 2004 Special Comment

7:32am and Durable Good orders for July were up 1.7% and ex transport 0.1%. Bulls and Republicans have been hoping that July data would show that the June swoon was a one month affair. Non-Defense Capital Goods orders were up 0.6% which the Media talking heads say is a disappointment.

8:45am and it is interesting that Tom Mix Ridge is on CNBC making positive comments about the precautions for the Republican Convention. Maybe the tone of Homeland Security pronouncements is going to change which will be a positive. The crash of the Russian planes is also being discussed.

Stocks opened higher but are now moving to the negative.

9:29am and breadth is negative, volume is light and the major measures are minus a tad.

New home sales were down 6% for July and the June number was revised to down 8% from down 1% while the markets were expecting and up 8% number for July. So far the data for July is not suggesting a reversal of the June swoon. The failure of the July numbers to confirm a rebound means that rebound numbers won’t come until October at the earliest since we are guessing that August is going to be slow as the Wal-Mart projections of 0% to 2% growth for August suggested on Monday. That adds a bit more urgency to our selling since it confirms our economy rolling over belief.

11:45am and we sold TLAB at $9 for a 70 cents gain. We don’t know what will happen when and if they readjust the takeover terms with AFCI. Also TLAB has stopped at the $9.20 three times in the past four months. We sold ANDW for a quick $1.25 profit and we let HPQ go for 80 cents per share gain. We are in a cash raising mood and are selling when the bids are there today which they weren’t yesterday.

The DJIA is up 40 points and the NAZZ is up 12 points. Breadth is positive and volume remains muted although there seems to be more of a bid in the markets.

12:04pm and go to http://www.debka.com/article.php?aid=895

We are selling the stocks we own except CBB in part because of the coincidental terrorist events that have occurred around the world today and yesterday. Also we couldn’t sell anything yesterday and there are bids today. We wanted to be out by the the lead up to the Republican convention or the end of August and we are.

The Model Portfolio is up about 1.5% and many accounts are again positive for the year. The Model Portfolio is up about 3% in the last two weeks with less than 40% average invested assets which equates to a 6% plus move in the S&P 500. At the end of June our accounts had the same kind of move and we decided to wait until July to sell only to give our gains and more back in July. We are going to stick with our game plan this time.

We sold TWX at $16.65 (70 cents gain), XLK at $18.80 (50 cents gain), SEBL at $7.75 (50 cents gain), LU (10cents gain) and RFMD (25 cents gain). We sold BRCD for a scratch and SNPS for a 10 cents loss.

Remember, we always sell too soon. That’s how we have managed to double our money while the S&P 500 is up 10% over the last six years. Past performance is no indicator of future performance.

2:10pm and the Mercantile Exchange has raised margin requirements on oil positions as of the close of business today. The locals must all have gotten short. Next might come the prohibition on buying except to close positions which is the trick the commodities folks played on the Hunt Brothers back in the late 1970s which broke the back of the gold surge and also broke the Hunts.

Oil is down $1.74 at $43.50. Hedge Funds forget at their peril that in commodities the rules of the game can change on a moment’s notice. The drop in oil prices has fueled the short covering stock rally.

The DJIA is up 90 points and the NAZZ is up 22 points. Breadth is over 2/1 positive but the bull bummer is that volume remains lethargic.

3:02pm and the DJHIA closed up 84 points at 10182. The S&P 500 gained 9 points to end at 1104 and the NAZZ rose 24 points to 1860. Breadth was strong at the close and the volume for the day was light.

We are posting tonight to inform readers of our sales today.

The next post will be on Friday Morning in our regular daily comment.

25 August 2004 - Daily Comment

Yesterday’s markets
8:49am and stocks are higher and Treasuries lower in light trading.

9:35am and existing home sales were down 2.9% in July. We’ve been trying to take some profits this morning but the markets can’t handle any size. The summer doldrums are here.

10:33am and breadth is positive and the DJIA is up 21 points while the NAZZ is down 7 points. We are having no luck selling because there is no one around to buy.

12:27pm and we sold JPM at $38.56 for a $1.60 per share profit. As with HD, JPM has had trouble for the last two months as it approaches the $38.80 level.

We sold Nokia at $11.64 for a scratch profit. We have purchased RFMD which makes the chips for NOK and MOT and we think that is a more volatile play.

We sold Fifth Third at $49.74 for a $2.25 per share profit and we sold Schwab for a scratch profit as it approached its three month resistance level in the upper $9 range.

Finally, we bought a few shares of TLAB at $8.75 for our larger aggressive accounts.

1:02pm and as we enter the contra hour the DJIA is higher and the NAZZ is attempting a rally. We raised a good chunk of cash today. We are trying to stick with our theory of an August month end rally that carries over into September. We plan to continue selling as the markets rise. Today we sold some of the larger cap names because they were easier although not easy to sell. The more volatile lower priced techs will give us more bang for our buck as they did in June and we plan on selling them into any strength that develops in the next few weeks.

2:07pm and entering the final hour stocks are mixed and trading is light. We were able to sell the HAIN at $17.15. We don’t want to own the stock ahead of earnings and we made a nice $1.25 per share profit.

3:02pm and the DJIA finished up 25 points at 10098. The S&P 500 was up12 point at 1096 and the NAZZ dropped 2 points to 1836. Volume was light and breadth was flat at the close. Crude oil lost 77 cents to end at $45.28. Treasuries rallied towards their close to end unchanged.

This morning

6:32am and Crude oil is up 25cents, U.S. futures are slightly higher as is Europe. The Nikkei and Hong Kong were both up over 1%.

At 7:30am we get durable goods orders for July and that number will set the tine for early trading. A gain of 1% to 1.5% is expected versus 0.9% last month. Then at 9am new home sales for July are announced and a slight drop is expected.

We raised a good chunk of cash yesterday and locked in some profits in the process and we are looking for more opportunities to do the same over the next weeks.

Markets are ignoring the unexplained crash of two airliners in Russia which sounds like terrorist activity. It’s interesting that unless the terrorist acts occur in the U.S. the markets have no cares.

So let the games begin.

24 August 2004 - Daily Comment

Yesterday’s markets
7:32am and Wal-Mart says back to school sales are running below plan and sees flat to 2% growth for the month of August. WMT say Hurricane Charlie hurt sales.

8:36am and stocks are opening slightly higher with crude oil up 2 cents at $46.74. There is no strong buying interest and stocks are trading thinly and that is discouraging to folks trying to buy or sell positions. The thin trading should last through Labor Day and make for volatile markets.

11:05am and we bought more RFMD at $5.36 for accounts. Both Motorola and Nokia use RFMD chips and Motorola says its new cell phones are selling well and Nokia can’t meet demand on one of its new phones. RFMD is near its low for the year.

We also added a few more shares of Seibel to some accounts at $7.90.

The large cap tech stocks seem to have a bid.

The major measures are floating in light trading. With oil lower the gurus are castigating the stock markets for not moving higher while we think the lack of liquidity is to blame. Treasuries are lower and breadth is negative.

1:34pm and we sold the Estee Lauder at $43.10. It was an anchovy to us and we bought it to trade because it dropped $4 in one day and no blue chip of its quality should do that. But markets are thin and there is buying interest today so we sold our position for a $2.60 per share five day profit.

Stocks are in the contra hour and crude oil is lower while the major measures are mixed in summer Monday light trading. Any moderate buying or selling interest moves stocks and inordinate amount and we think the lack of interested buyers or sellers may continue into Labor Day.

Prognosticators are making a big deal of disruptions at the Republican Convention and terrorists etc. and these are the same foretellers who saw trouble at the Olympics. Those predictions of trouble may be affecting the markets but we think the snooze atmosphere is much more a result of absent traders.

On this note Reuters just reported that Lehman Bros advised cautious investing for the next two to three weeks because of terrorist warnings, high oil prices and the absence of traders on Wall Street. They must be reading our stuff.

Greenspan and other banker types are at Jackson Hole Wyoming at taxpayer expense to have a conference and vacation. Uncle Alan is going to give a speech on Friday.

Durable Goods Orders for July will be released on Wednesday and Second Quarter GDP numbers will be released on Friday.

2:30pm and in the final hour breadth is negative, volume is light and the major measures are lower.

Europe closed higher on the drop in oil prices but it looks like U.S. markets are going to take at least one day of rest.

Again today, we were able to sell only a few shares of HAIN and we reduced larger positions in our selling.

At the bell the DJIA was down 35 points at 10075. The S&P 500 dropped 3 points to end at 1095 and the NAZZ gave rose 1 point finishing at 1838.

This morning

6:54am and U.S. futures are higher as oil is again off in early trading. Europe is higher for a second day and Asia was mixed but Japan and Hong Kong were higher.

We would guess we’ll have another slow day. With no news to move stocks and folks on vacation trading is difficult and the oil markets are seeing much of the action.

So let the games begin.

23 August 2004 - Daily Comment

Friday’s markets
6:25am and Lehman has upgraded oil service stocks to positive from neutral.

7:44am and Google is trading over $100 per share. The talking heads on CNBC are debating the relative merits of whether an investment bank could have done better. We don’t’ think so. The deal worked and the pop after the opening is the proof. It is overpriced but then so are Yahoo and EBAY.

8:35am and in order to survive United Airlines is going to get rid of its pension plans and replace them with less. The rape of that airline by investment bankers and company executives over the last 15 years will be complete when that occurs. And union leadership can also share the blame.

8:59am and HAIN has jumped 10% today on an upgrade from sell to buy by Smith Barney. We are trying to sell stock because earnings haven’t come and are due this month. The Smith Barney upgrade ahead of earnings would suggest earnings are going to be good but a bird in the hand etc.

10:47am and boring is the word of the day. Breadth is 2/1 positive but the major measures are floating just above even in summer light trading. We weren’t able to sell the HAIN for our price and so we are waiting for an afternoon rally to move the shares at a higher price.

12:02pm and The DJIA is up 40 points in desultory trading. Cisco is lower on news that John Chambers is going to sell 17.6 million shares beginning in November from options that expire by April of next year. He just has to do it. It’s a tough life for some.

1:16pm and as oil drops a bit the major measures move up a bit. The NAZZ is up 1% and the DJIA is up .5%. Breadth remains 2/1 positive and volume remains light. CSCO is trading lower but since Chamber’s sale isn’t occurring until November we wonder why the flight. This is the contra hour and the real test is the final hour. The close on oil at 2pm will give and indication.

3:02pm and oil closed off $1.10 and that was all stocks needed to get a boost. We were reading that the majority of option expiration rallies in the last few years have been followed by Monday’s that were down. We’ll enjoy today’s gains for the weekend and worry about Monday on Monday.

We weren’t able to sell all the HAIN although we did manage to sell partial positions for various large accounts. We held stock in the smaller accounts because we think we’ll be able to sell next week a little higher.

At the bell the DJIA was up 68 points at 10110. The S&P 500 was up 7 points at 1098 and the NAZZ gained 18 points to end at 1838.

This morning

6:30am and as we begin today the DJIA is down 3.2% for the year, the S&P 500 is off 1.3% and the NAZZ is down 8%. Most of our accounts are doing better than the S&P 500 although a few smaller/or aggressive accounts have suffered and are off a bit more. The Model Portfolio is up 2%.

Overnight gold is down $2 to $402, Europe and Asia are and were fractionally higher and U.S. futures indicate a slightly up open. A higher opening will probably be followed by a pullback and another test of the strength of the rally.

The October Oil contract begins trading today at the $47 level. OPEC says there is nothing they can do to increase production. The WSJ has a story about speculators on the oil markets- no big surprise there- and oil needs to break for the rally to get another leg. We don’t know whether that will happen before month end but the markets climbed the wall of worry last week and we think the markets will at least hold their own this week.

So let the games begin.

20 August 2004 - Daily Comment

Yesterday’s markets
7:32am and first time claims for unemployment for the latest week were down 3,000 to 331,000. Continuing claims were up a bit to 2.9 million. The four week moving average fell from 339,000 to 337,000. As we near the election we have the feeling that adjustments are going to get the jobless claims number under 300,000. It should and will be mentioned that data for the employment report for August that will be reported the first Friday in September was being collected or non collected during the week that Hurricane Charlie moved over Florida and up the East coast and must have affected the numbers. That claim will be made if the numbers are bad.

The Model Portfolio is now 48% invested and 52% cash and up 1.1% for the year. That represents a 6% move higher in the stocks we own since Monday a week ago.

9:23am and front month crude is now over $48 per barrel on its way to $50 by week end. When commodities start moving like this the big boys and girls pile on and follow the trend. Many of them are lagging this year and they will try anything to make their fee. They are playing with OPM (other people’s money) and the only way they win is to beat the averages and collect their 20% of the over performance. The fee schedule is skewed to encourage risk taking.

The DJIA is down 40 points in the face of the oil rise and the recent move in stock prices. The NAZZ is down 10 points.

9:45am and we are pressing our bet in our aggressive accounts buying Synopsis which is off $6 today because of a miss in revenues and earnings. SNPS sells design software to semiconductor manufacturers. We bought it for a trade with room to buy more if the share price moves lower. It is an almost billion dollar revenue company with no debt and over $3 per share in cash. SNPS is 6 points below it 2001 low and 2 points below it 2002 low. Many of the analysts with buys went to neutral or sell saying they had been blindsided by management. Revenues for next year are expected to be about $900 million when revenue for this year will be $1 billion. Wall Street is mad but we think the valuation is compelling although this is a falling knife and that is why we only bought in larger and/or aggressive accounts.

9:50am and we doubled our holding in Lucent buying shares at $3.16. That raises our cost price to $3.05.

We are trying to reenter BRCD which jumped on better earnings and then backed off under $5. It fits with the other low priced tech we purchased. We know we are going back into a stock we sold a month ago but that is the nature of trading. There are times to be in cash if we need a new approach and there are times to get back in. The NAZZ has been leading the rally higher and we are not extending ourselves much by repositioning a few shares of a $4 stocks. But the percentage gain potential is good in these issues if the rally grabs. If not, oops.

10:37am and July’s Index of Leading Economic Indicators was down 0.3% which is a negative. $48 oil is a larger negative.

In yesterday’s post we mentioned that NT had fired 7 employees. The actually fired seven executives and let 3500 employees go.

10:44am and Google is printing on the tape at $ 97 per share so the dopes who bought it at $85 on the IPO really look stupid now. Not. But one minute does not make a day of trading.

1:16pm and in the contra hour the DJIA has moved to its low for the day down 75 points. The NAZZ is off 16 points. Breadth is 5/4 negative on the NYSE and slightly worse on the NAZZ. We bought the BRCD at $4.88.

The gurus have been calling for a pull back in the rally to test conviction and so now we are getting it and we will see how conviction does.

2:06pm and entering the final hour with crude up $1.50 to $48.75 it looks like the rally is going to take a break. How big of a break will be the story of the last hour of trading. With the drop on Wall Street, European markets couldn’t hold their early gains but most closed slightly higher on the day.

2:29pm and with our initiation of the SNPS holding which looks like it will be a wild ride we are selling the VRTS at $17.67 that we bought yesterday at $17.30. One unloved software stock outside of our Seibel holding is enough exposure to that area of the tech market.

3:02pm and at the bell the DJIA recovered a bit to finish down 42 points at 10040. The S&P 500 lost 4 points to end at 1091 and the NAZZ dropped 12 points to 1819. It was fun while it lasted. We like what we own and we own what we like. The markets needed a breather and we hope that is all today was. Unfortunately tomorrow is feeble Friday and it will be difficult to mount a recovery from today’s pullback.

This morning

6:21am and on our evening walk we reflected that yesterday’s stock market action was perfect. The markets had a bit of a pullback after a few big days, volume was lighter on the pullback than on the up moves and there was a last hour pull back toward even that exhibited buying interest. For today, since it is a Friday, we think the most we can hope for is a flimmy day with the major measures moving above and below even with no trend and closing about 0.5%higher for the day.

Overnight Asia and Europe gave a slight amount back and this morning oil is over $49 a barrel. As during the Hunt Gold Rush of 1978-9 (?) the up move in oil will have to play out but we think its days are numbered. The screwy thing is that when it sells off to $40 per barrel the markets will breathe a sigh of relief. $40 oil as a good level is ridiculous for the long term health of the U.S. economy but we are only looking for a catalyst to rally the markets in the short term and a sell off in oil is what is needed.

As crass as it may sound Iraq is not important to the markets over the next few weeks, the price of oil is.

So let the games begin.

19 August 2004 - Daily Comment

Yesterday’s markets
7:32am and Investor’s Intelligence is reporting that bulls have dropped to 43% while bears have risen to 28%. The wall of worry is building.

8:27am and we are now at 60% cash 40% invested in the Model Portfolio. That’s a bit high but we are in a trading situation right now.

BankAmerica weighs in with a buy recommendation for Estee Lauder.

9:10am and the major measures have moved to positive although breadth remains negative.

We sold HD at $35.55 for a nice two day $2 gain. We bought because of the hurricane and were rewarded with good earnings and a strong market. The share price has paused at the $36 level for the last three months and so we are going to take our profit.

10:41am and we are adding Comcast to accounts. Comcast is a major cable company and we have been watching it for a while since Jim Cramer has been recommending it. It made and withdrew a bid for Disney. It is within $1 of it low for the year and Cramer mentioned over the week-end that Warren Buffet had taken a position in the stock. Buffet only bought $150 million of stock which is like a dime to us but we are looking for a 10% move and with those two names involved we think it is worth the gamble during the rally. And CMCSA is the cable company in Chicago that gets all our money so hopefully we’ll make some of it back owning the stock.

Breadth has turned 2/1 positive.

12:31pm and the major measures are stuck. All are fractionally higher and volume is summer light. Many gurus are positing that this is just an oversold bounce and we tend to agree. But if a few things go right over the short term the rally may continue and force the shorts to cover some stocks which will give our stocks the push we need to extract a decent profit from the move and head to the sidelines at the end of August. We are doing some wishful thinking but if Sadr can be controlled without killing him, and oil breaks $5 on the downside then with the era of good feeling beginning with the Republican convention the stage may be set for the spike higher. That is a lot for which to wish, but…

We added a few more shares of RFMD before it crossed the $5 mark. We doubled our position in Nokia at $11.65 and we added Veritas, a software company on its low at $17.23, to our aggressive accounts.

1:38pm and breadth is 3/1psotive on the NYSE and almost that on the NAZZ. The major measures have moved higher with the DJIA up 60 points and the NAZZ up 25 points. Since this is the contra hour (hour ahead of the last hour of trading) we have to wait for another hour to see if this jump higher is for real.

Europe closed mixed and Treasuries are lower. Crude remains over $47 and its rally has to break down for the stock rally to get legs.

3:02pm and the DJIA closed up 110 points at 10084. The S&P 500 gained 14 points to end at 1095 and the NAZZ rose 35 points to finish at 1830. Friday is a witching day and that may have something to do with the strength into the close.

This morning

Ya Ya's on the move

6:31am and we are happy to report the Katie and her good friend and nursing colleague Lisa Schnepper, a name we love to pronounce, have ridden 220 miles in their first three days on their bicycle tour from Soldiers Grove to Grafton Illinois, the birthplace of Katie’s mother. They spent a little time site seeing and so today they have to buckle down and ride at least 100 miles. And we will be sitting at our desk watching the weather for them. Guess who is thinner?

Lisa is the best medical provider in the Kickapoo Valley and also is a professor at Winona State University in Rochester Minn where Katie taught for a year. We keep trying to convince the two of them to open a Women’s Clinic for the Valley but they aren’t yet ready to do so. As you know Katie has a PhD in Nursing Science and Lisa is working on hers. And in their spare time they take care of their families although they will admit that home cooked meals are not their specialty. Go you Ya Ya girls!

Google was priced at $85 per share. We would guess that since it will trade OTC beginning at 7am that the trading today will be wild and will range between $75 and $100 with a lot of unhappy buyers and sellers. That’s the nature of the OTC market and also will be a fitting conclusion to an IPO process that tried to break the Wall Street strangle hold on initial public offerings. It didn’t work because the big boys and girls control all the money. But we do think that $85 is much higher that where Wall Street would have priced the offering and allowed their friends and clients to make the killing that Google in its audacity said it wanted to keep for the company and owners. Can you imagine so heretical an idea?

Nortel has fired 7 more employees and announced that it thinks it made about 2 cents a share in the first 6 months. Revenues were about $10 billion. NT must have been keeping its books on the back of napkins. It is a wonder that it shipped any product. Maybe they will discover that they didn’t sell any product.

The markets gave all we could have asked for yesterday except they were light on volume. This morning U.S. futures are slightly lower while Asia and Europe were higher overnight.

The Model Portfolio has punched back into positive territory. The next test for this rally begins today to discover whether it can hold its gains and put another two up days on the books going into the weekend. Participants have become attuned to the late week swoon and in order to confirm the rally we think the markets have to hold their gains and tack on some more.

Oil is up again this morning so there is a slippery wall of worry that stocks are climbing and the footing is not yet firm.

Our guess is lower early on profit taking and then a mildly higher close. Tomorrow is options expiration and that and the jobless number at 7:30am this morning must be added to the mix.

So let the games begin.

18 August 2004 - Daily Comment

Yesterday’s markets
7:32 and CPI (Consumer Price Index) was down 0.1%, with core CPI up 0.1%. Housing Starts were better at 1.98 million and Building Permits were at 2.055 million up 5.7%. The housing boom lives as those numbers are above expectations and the CPI numbers are below expectations. The yearly CPI was 3% versus 3.2% expected. The core CPI was 1.8%. There is no inflation and those higher prices we are all paying are because the quality of the milk and bread and gasoline is better not because the prices have risen on the same old products. These numbers are a good start to move stocks higher today.

Stock futures are higher on the housing news and Treasuries are higher in price lower in yield also because reported CPI was tame.

7:45am and Google may end its IPO stock auction tonight (Tuesday).

8:15am and industrial production was up 0.4% in July and capacity utilization was 77.1%. The Industrial Production number is light.

8:44am and stocks opened higher and are now beginning their pull back. Crude oil is under $47 per barrel and the DJIA is up 35 points with the NAZZ up 15.

We are buying a bit more RFMD well below where we last sold it because both Motorola and Nokia have said that certain cell phones are selling like hotcakes and RFMD is the chip supplier for some of these phones.

9:10am and we are buying Estee Lauder for our larger and aggressive accounts. The shares are off $3.20 at $40.30 after Prudential downgraded the stock from overweight to neutral. Back in April the same Prudential analyst had upgraded the stock to overweight when the shares were at $44.

EL announced sales up 9% and earnings up 17% for the year and predicted continued good results.

10:08am and breadth remains strong but stocks are stalled at slightly higher levels.

11:05am and crude oil has reversed its drop and is now moving higher which has caused stocks to pull back. Breadth remains positive but is less than 2/1 positives on the NYSE at this time. Every time stocks pull back the bears become bolder and the bulls scarcer.

1:04pm and we have Merrill Lynch on our side. They are saying that the sell off in EL is overdone and are recommending purchase. So far Prudential’s sale recommendation is holding sway. The Lauder clan owns half the outstanding stock so we don’t think the sell off will last more than a day and if the shares go lower tomorrow we will be buyers.

We repurchased HAIN at $15.75 that we sold above $17. HAIN hasn’t released earnings but we don’t think the few folks who own it expect much since they have already warned. We are leaving room to buy more a lower prices in case we are wrong which we sometimes are..

2:18pm and www.buzzflash.com just reminded us of the idiotic SEC plan to suspend the downtick requirements on selling short a selected list of stocks. We don’t plan on owning any of the smaller names when that ruling takes effect and in big downturns even the big cap stocks will be affected. It is a nutty idea. Happily the test plan doean’t atke effect until January.

3:02pm and at the close breadth was 5/4 positive on the NYSE and NAZZ. The DJIA closed up 25 points at 9975. The S&P 500 gained 3 points to end at 1082 and the NAZZ gained 13 points to finish at 1795. Volume was light and Treasuries finished strong. The 1082 finish was a positive but tomorrow needs to be an up day.

This morning

6:31am and Google has lowered the price of its IPO to the $85 range. Europe is lower and Asia was mixed. U.S. futures are also lower on higher oil prices. There are no big economic numbers today so the markets will have to find their own way. It will be interesting to see how far the morning sell off will go.

The S&P 500 inched above 1080 yesterday and Applied Materials earnings report was received well. We would guess down early and up later since it is still only Wednesday.

So let the games begin.

17 August 2004 - Daily Comment

Yesterday’s trading

6:40am and before we take a few hours off to drive the bike riders to their start off point we note that U.S. futures are mixed and Asia was mostly lower with Japan down ½% and Hong Kong off 1%. Europe is mixed. The Olympics have begun on a good note with no untoward occurrences and the press is filled with stories of the Florida Hurricane Charlie. Since all of us know folks in the affected areas it is sad to see the pictures and hear the stories. The power of nature is awesome and a cliché but at times like this humbling.

We wondered why HD didn’t move more on Friday when we were buying it and we realize now that it was because their earnings come tomorrow and folks are leery of buying ahead of earnings these days. Lowe’s announced earnings this morning and they were very strong but a bit light of forecasts but LOW forecast higher than consensus earnings going forward. It looks like the stock will open higher.

Oil is off a bit in early trading as is gold. Oil seems intent on hitting $50 or higher. Chavez won in Venezuela with 58% of the vote and that should be enough to call the dogs at the CIA and in the U.S. State Department off from their campaign to overthrow him. That size victory should also calm the oil markets for a few minutes or at least take away one reason for the spike.

11:52am and stocks are higher as we return from getting the bikers on their way. The DJIA is up 100 points and the NAZZ is 24 points higher.

We are adding the Technology Exchange Traded Fund (XLK) to accounts at $18.25. This fund gives us exposure to MSFT, CSCO, VZN, INTC and other large cap tech stocks and we have used it before to trade techs.

We are buying back the HPQ at $16.75 that we sold last month at $19.66. As we mentioned in our weekend post we think the financials justify ownership at these levels.

Finally we are repurchasing RF Micro at $4.81 that we sold much higher.

That pretty much completes our purchases for now and has raised the exposure to equities of the Model Portfolio to over 33% and the exposure of some of our smaller accounts to 50%.

As we said last week we thought August 13 would be the low for August and that we expected a rally into the end of August and today is beginning on a good note. We are not counting our chickens yet since the eggs have just been layed.

1:09pm and breadth remains 2/1 positive and volume is OK for a summer Monday. The DJIA has maintained it’s above 100 point gain for most of the day and the NAZZ continues to creep higher with it up 29 points at this time. The S&P 500 is at 1079 and if it can close above 1080 that would be a positive.

The final hour will be the first measure of this validity of this push and then if stocks can maintain the gain tomorrow will be the real test.

Treasuries have been weak all day which is probably because the world didn’t end over the weekend and there may be some asset allocation occurring selling bonds to buy stocks.

Mobile home share prices are higher today. With the way those ‘homes’ were torn apart in the hurricane that’s curious. We guess the old lightning never strikes in the same place saying applies to mobile homes and hurricanes.

2:28pm and Krispy Kreme has announced that its COO has left to pursue other interests. That kind of announcement is often presages the announcement of a restatement of earnings. This saga reminds us of the Boston Chicken fiasco of years ago.

3:02pm and the DJIA closed up 130 points at 9955. The S&P 500 gained 14 points to finish at 1079 and the NAZZ rose 25 points to close at 1783.

This morning

5:25am and this morning the markets get CPI and core CPI plus housing starts, capacity utilization and industrial production to trade off. Since these are all July numbers the latter three numbers will give an indication of whether the slowdown in June continued into July. These numbers will move the markets today. For the bulls a carry through of yesterday’s pop would be nice. The bears of course wish for the opposite.

Home Depot beat street estimates by 6 cents per share and sales for the quarter exceeded $20 billion. They are raising guidance for the year.

Europe was higher overnight and U.S. futures are slightly above fair value. The best scenario for the bulls would be a slight sell off this morning and then a power higher on big volume. The ideal hasn’t been occurring in this market but folks can hope

The expectations on the numbers this morning are:

CPI plus 0.2%, core CPI 0.2%, Housing Starts 1.9 million to 1.935 million, Building Permits the same, Capacity Utilization 77.6%, Industrial Production plus 0.5% to plus 0.7%.

So that is the scorecard and we’ll see how it all works out. The markets need to break the up one day, down the next pattern if a rally is to take hold.

So let the games begin.

16 August 2004 - Daily Comment

Friday's markets

7:32pm and the Producer Price Index (PPI), now that it has been properly adjusted to meet the need of the Fed, was up a tame 0.1% and the core rate was up the same 0.1%. The trade deficit was $55.8 billion in June versus $46.8 billion in May. Gurus explain that exports dropped as a result of the slowdown in the rest of the world.

Stocks futures are higher on the news. We will still bet on not much action or action to the downside later today.

Japan’s economy grew at a 1.7% rate which was about half of what was expected and the cause of the 2% drop in the stock market earlier today.

8:12am and Google was going to begin pricing its shares this morning in its initial public offering (IPO). But the SEC is now investigating because the boys at Google couldn’t keep quiet during the “quiet period” when they weren’t’ supposed to talk about their company so as not to unduly influence folks making the decision to buy the stock. Yes, there is such a period and the SEC takes that period very seriously, unlike Enron screwing electricity consumers in California, or Tyco paying executives ridiculous sums for lavish parties.

Anyway, the Google boys gave an interview to Playboy and now the SEC is all atwitter and may hold up the offering. As we said last week we think the main problem is that “the street” is mad that Google is doing it a different way and not giving them the chance to let favorite clients make a bundle at Google’s expense.

8:39am and stocks are opening higher but Treasuries are also higher in price and lower in yield and this is one time when we don’t think the two can rise in tandem. That’s because the Treasury rise is suggesting a slowing in the economy and the stock rise is suggesting the opposite.

11:20am and stocks have finally turned negative as Treasury Secretary Snow says the world economy seems to be slowing and oil moves toward $46 per barrel. That stocks haven’t crashed on the $46 number is really quite amazing.

We repurchased a position in TLAB at $8.20 with room to buy more and we are adding Fifth Third Bank to accounts for the longer term. We are also attempting to establish a holding in ANDW at the $9.80 level which is about $5 cheaper than we began buying it last year. Andrew visited $21 on the upside earlier this year before disappointing analysts last month with a reduced outlook.

12:25pm and the median national housing price rose 9% in the last year according to the Nat’l Assoc of Realtors. Among the largest gains were 52% in Las Vegas, 38% in Orange County California and 30% in Sarasota Florida. Of course we sold our father in laws home in Florida two years ago before the spurt.

12:30pm and Reuters is saying that Hurricane Charlie could cost insurers $10 billion if it hits the Tampa area. That’s a lot of rebuilding, time to buy Home Depot. We are buying a few shares in our larger and aggressive accounts. HD is selling at the same price it did back in 1998 and in between it has sold as high as $60 and as low as $22. We bought the shares at $33.33.

We completed the purchase of Andrew at $9.80 and Fifth Third at $47.10.

We have one more stock on our shopping list and that is JP Morgan, Chase, Bank One, First Chicago, American National, First National Bank of Evanston, Lake Shore Bank etc. but it is higher today and we are going to hold off for now.

Our theme in the recent purchases is to buy large higher quality stocks while at the same time keeping our finger in the speculative pot with a few stocks that we have traded and watched over the years that are financially sound.

With today’s purchases we have increased quality and broadened our exposure to the markets while keeping a good chunk of change on the sidelines. The stocks we own will be added to if they drop and participate in the rally we think is coming before the late September rollover.

1:15pm and as we trade through the contra hour the major measures have moved to positive with breadth also positive. Volume is light. Hurricane Charlie is picking up steam and there are a lot of folks up north worried about their condos in Florida. Hopefully the damage won’t be too bad.

1:40pm and oil is $46.40 a barrel. When oil breaks the markets will rally and until then the rise is too much for the markets to bear.

2:22pm and we were reading about HPQ’s problems which caused the share price to drop 25% this week. Even with all the problems earnings almost doubled form last year and revenues rose. We remain interested but presume we have till the end of the quarter in September to step up to the plate.

For the three months ended July 31, HPQ earned $586 million, or 19 cents per share. That's nearly double the $297 million, or 10 cents per share, in the same period last year.

Sales grew to $18.9 billion in the third quarter, compared with $17.3 billion last year.

Wall Street analysts were expecting third-quarter earnings of 31 cents per share on sales of $19 billion, according to a survey by Thomson First Call.

HPQ also said per-share earnings in the current quarter will be between 35 cents and 39 cents with sales expected to be between $21 billion and $21.5 billion.

Analysts were expecting a per-share profit of 43 cents per share on sales of $21.3 billion in the fourth quarter.

Year-to-date, the company has earned $2.41 billion, or 78 cents per share, on revenues of $58.52 billion. At the same time a year ago, HPQ earned $1.68 billion, or 55 cents per share, on revenues of $53.21 billion.

HPQ is capitalized at $44 billion net of debt and has almost $3 per share in cash net of debt. Sales will be almost $80 billion this year.

2:45pm and Schwab reported that client assets had reached $975 billion. The name of the game is gathering assets and SCH is doing a great job. One of these days Charlie is going to sell out to JP Morgan. Banks are paying 15% and more of deposits to buy other banks. If Schwab has $200 billion of Money market funds and cash deposits that would be a market value of $30 billion or three times the present price. The banks then use computer software and finesse to convert the money market funds to insured deposits. The customer benefits and the acquiring bank would have a huge deposit base increase, plus the brokerage business for free.

3:02pm and at the bell the DJIA closed up 12 points at 9830. The S&P 500 rose 2 points to 1075 and the NAZZ gained 5 points to 1758. Breadth was positive at close on the NYSE and slightly negative on the NAZZ.

Saturday morning

We are going to be late Monday because Katie, our better half, is beginning a 500 mile bicycle ride from Wisconsin to Grafton, Illinois across the river from St Louis. Grafton is her mother’s birthplace and she has wanted to make this ride to celebrate her 60th year. We will be driving her to the drop of point at Prairie du Chien, Wisconsin early Monday and we will then return to mission control here in the corn field in Soldiers Grove to provide weather reports as needed.

We think that the markets are in the process of putting in a trading bottom. The economy is not as robust as many gurus had forecast but we don’t think it is rolling over into recession again. Pockets of strength in housing and oil coupled with social security and pension payments will keep things growing. But stocks were way ahead of where the economy is and the pull back this year has reduced last year’s big gains.

Luckily we have been able to avoid a lot of the carnage but we have given up the gains we had early in the year and then again as late as June 30. It is only coincidence that the drop in account values occurred in conjunction with the move to the new clearing broker Mesirow Financial.

For comparison, the DJIA is down 6%, the S&P 500 is down 4.4% and the NAZZ is off 12%. The Model Portfolio is now down 1% and is 25% invested. We have one more purchase to make this week and that is the repurchase of a portion of the HPQ we sold last month. We have taken losses on HPQ twice this year but the losses helped save the greater loss of the drop in price that occurred in the last week. At the $16 level HPQ is an attractive long term investment. We are still Carli believers and she took decisive action when the bad news was announced by firing the three people she felt were responsible for the mix-ups.

Back in 1990 there was a time when Don came into the office and said it is too late to sell; it is now time to buy. That month was August and the markets had experienced a similar disappointment in the run-up to the First gulf War.

This time our accounts are in much better shape because of our large cash holdings and with our recent readjustment purchases most of our accounts are about 20% to 30% invested and we have restructured them with more quality issues incase the next two months are more turbulent than we envision.

We do see a trading rally in the next month and then another rollover into a bottom the first two weeks in October. We know that the rollover in October has happened the last few years and with all the scary talk and the price of oil on the rise such a retrenchment seems likely to occur again. If the markets or individual stocks put in a bottom earlier than then and confound the experts we want to have some good quality chips on our corner.

If the price of oil breaks in the next few weeks there will be a rally and we will make decisions accordingly. If oil keeps moving higher then stocks will move lower we will maintain our cash reserves with the knowledge that the stocks we own are good quality and should eventually perform well for us and the cash reserves offer the opportunity to buy at lower prices.

As markets move lower we always become more aggressive because we have made our money over the past many years buying when the smart folks are selling and selling when the smart folks are buying. We call it our ‘dumb luck’ trading philosophy.

So let the games begin.

13 August 2004 - Daily Comment

Yesterday's markets

7:32am and First time claims for unemployment were 333,000 which was 10,000 below expectations and a positive. July retail sales were up 0.7% which was in line when last months positive revisions are taken into account. Ex autos sales were up 0.2% which was a tad shy of expectations but again June was revised up. Those numbers reverse the drop in retail sales in June and may give the bulls some hope.

Wal-Mart earnings were inline and HPQ is trading $2 lower in OTC trading this morning.

8:40am and with the markets opening lower we took our QQQ trade off at a scratch profit. HPQ is interesting at $16.50 but we think techs are going to be under pressure till quarter end in September at least, since good news will be hard to come by.

We are trying to initiate a position in Fifth Third Bank which is located in Cincinnati and is buying a Florida banking chain to expand there. The share price is down from the mid $60 range to $47.75 and because it as an arbitrage situation wee are being afforded an opportunity to pick up shares. Earning estimates are at $3.30 so the stock is at 15 times earnings. With the rollover in the economy that may occur the banks are going to be able to keep the very profitable interest rate spread going for a while longer or at least that is the guru thinking. For folks who have to own stocks we think the banks will be an area to which many return

9:21am and business inventories for June were up 0.9% while 0.6% was consensus. Again that is June and so not as important.

Breadth is 2/1 negative and stocks are going down a lot easier than they go up. The DJIA is down 85 points and the NAZZ is off 22 points. It looks like we are going to make the $29 mark on the QQQ that was our original choice.

Some retailers are being demolished today. Pep Boys is down $5 per share to $14. Of course we never could figure why it ran up to $28. And Tiffany is off $3 on a double barrel downgrade by Goldman Sachs and Bank of America.

11:31am and the DJIA is off 80 points with the NAZZ down 22 points. Breadth remains 2/1 negative and trading is light. The contra hour and final hour today will be the tell although with tomorrow being Friday and the Venezuelan recall election on Sunday we think the odds of a strong week ending rally are zero. A collapsing sell off is a possibility with one or two more pieces of bad news. Dell's report tonight needs to be good for the bulls to hold on.

2:31pm and with Dell tonight and PPI tomorrow morning the bulls are taking a wait and see attitude. Given that tomorrow (today) is Friday the 13th doesn’t help. The DJIA is down 100 points and heading lower and the NAZZ is off 23 points. It’s funny that the one stock we are trying to buy, Andrew, is up a few pennies. We are not going to chase it.

Tellabs is reviewing its merger with AFCI which is a good thing since AFCI’s results were not good. There is talk that the deal may be restructured. Both TLAB and AFCI are lower. We want to repurchase but with the markets in the doldrums we will play for a lower price.

3:02pm and the DJIA closed down 125 points at 9814. The S&P 500 dropped 12 points to 1063. The NAZZ lost 30 points to end at 1752.

This morning

6:30am and Dell had positive earnings and comments last night and moved up a $1 per share after the conference call. This morning we get PPI and if that number is OK for traders then the markets may want to rally. U.S. futures are higher when it would be better from a rally view if they were lower, Europe is lower on the back of yesterday’s dismal U.S. markets and Japan dropped 2% and Hong Kong 1% overnight.

We would guess there will be an up move then a pullback and then… it is Friday the 13th, the hurricane is set to invade Florida and anything can happen.

1063 on the S&P 500 is an important number but then they all have been important on the way down.

So let the games begin.

12 August 2004 - Daily Comment

Yesterday's markets

8:37am and stocks are opening lower with the NAZZ already off 34 points or its gain of yesterday because of the disappointing CSCO conference call plus some negative news from National Semiconductor and Kulicke & Soffa.

Treasuries are higher in yield and lower in price and gold has dropped $5 per ounce in early trading.

9:09am and breadth is 3/1 negative and the DJIA is off 95 points with the NAZZ down 45 points. There is going to be a rally from this sell off within the hour and then we’ll see how much strength the bulls can muster.

10:17am and the markets are rallying on the news that the Saudis are going to raise crude output which has moved oil down under $44. We think a rally is in the cards and so in our large accounts we purchased QQQ at $32.68 for a trade. We remain bearish over the mediate term but the two day collapse last week and rally yesterday coupled with today’s sell off and now attempted rally justifies a bit of risk taking.

12:36pm and we put a bit more money to work. We repurchased TWX at $15.82 that we sold at $17.20. We also did the same with SEBL at $7.25 (sold at $7.65) and Nokia (sold at $14.12Z) at $11.18 and JP Morgan at $36.78 in accounts where we sold earlier this month.

We will probably close the QQQ holding out today no matter what. The shares we repurchased we are content to hold for a while or at least a few days. We still think that Friday may be the bottom before the rally and that is why we are picking at a few stocks. We are going to stay away from Techs except through the QQQ except that we did buy SEBL which has $4.20 plus per share in cash and sells at 1.2 times sales ex the cash. Nokia may be a tech but it is selling at one times sales ex its cash holdings which amount to over $3.20 per share.

The DJIA is down 50 points and the NAZZ remains off 36 points with 2/1 negative breadth on the NYSE and on the NAZZ. While those numbers are better than they were this morning we would like to see those numbers improve this afternoon to enable us to hold the QQQ.

Cisco is over 10% of the volume on the NAZZ and is weighing on the SPY and QQQ because of its large market cap.

1:42pm and we sold one half the QQQ position for a scratch profit. We thought there would be a better contra hour rally than there has been. We are inclined to hold the balance of the QQQ for tomorrow. We don’t think CSCO is going down another 15%. The QQQ ownership gives us all the big Techs and Biotech without having to choose one or two.

2:33pm and stocks rallied to positive but have turned negative again. European stocks closed lower. We think today’s action has been positive from a trading stand point and so we are going to maintain our remaining QQQ holding. Oil closed up 30 cents at $44.82. Breadth improved during the day but never made it to positive.

3:02pm and The DJIA closed down 7 points at 9938. The S&P 500 dropped 3 points to 1075 and the NAZZ lost 26 points to end at 1782.

This morning

6:47am and as oil gushes through $45, two hurricanes approaching Florida, (Is God trying to tell the Bushies something?), potential oil disruptions are all around and Hewlett Packard warns big time and we are happy we took our loss in that one.

Overseas markets were and are mixed to lower and U.S. futures are indicating a lower opening. And so goes our guess that bargain buyers in CSCO would move the markets higher in this morning.

The HPQ news is unexpected since Carli just a while ago suggested 15% growth for the next three years. The question now becomes is the news company specific or do you add that news to the Cisco and Veritas and other tech failure news and deduce that tech is a minefield. The answer is easy.

But then again with the futures below fair value maybe the washout that everyone is looking for is coming and right on time for our Friday the 13th party. The hurricanes are set to hit on Friday the 13th.

For today we are open for anything. We don’t regret our purchases of yesterday and continue to think that a temporary bottom is being formed. We have two more techs we want to own and they are Tellabs and Cabot Micro but we want them at lower prices and with today’s news we presume we will have our chance.

This is a dicey market and we think the fear factor is rising and that discretion is the better part of valor, whatever that means.

So let the games begin.

11 August 2004 - Daily Comment

Yesterday's trading

7:24am and it occurred to us that the bear market of the early 1980s ended on Friday August 13, 1982. This Friday is again an August 13 and with the way trading has been going it may mark the bottom of the range for this move. Time and a few days will tell.

Yukos has frozen production in Siberia, the pumping stations in Basra, Iraq are shut down and the Venezuelan Recall Election is Sunday. All three events have a direct effect on oil prices.

7:32am and preliminary non farm productivity for the second Quarter increased 2.9%, unit labor costs rose 1.9%. Good stuff for Alan Greenspan to consider as he meets with his merry men today.

8:45am and stocks are higher in early trading. The markets are awaiting the wording with the Fed action at 1:15pm so we don’t expect much till then.

Redbook chain store sales were down 0.5% versus down 0.2% in the prior period.

9:29am and stocks are up with the DJIA up 45 points and breadths 2/1 positive on both the NAZZ and NYSE.

We know of no reason for the rise.

11:30am and we are flummoxed by the up move in stocks ahead of the Fed meeting. Oil remains over $44 per barrel, gold is $402 and the major measures are higher with very strong breadth. Volume is summer light and there is little market moving news. Cisco earnings come tonight and that may have some influence on tomorrow’s trading. For now we await Uncle Alan’s words of wisdom.

Trump’s Hotel in Atlantic City is filing for bankruptcy today. On another subject the Google IPO is to be priced within the next week. We misunderstood CNBC last week when we said the offering had been pulled.

1:16pm and the Fed raises rates 25 basis points and says the economy is growing at a moderated rate and interest rates will be dealt with at a measured pace. The Fed says that the improvement in the labor market has slowed. Treasuries are a bit weaker in price higher in yield.

The full Fed Comment:

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 1-1/2 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. In recent months, output growth has moderated and the pace of improvement in labor market conditions has slowed.

This softness likely owes importantly to the substantial rise in energy prices. The economy nevertheless appears poised to resume a stronger pace of expansion going forward. Inflation has been somewhat elevated this year, though a portion of the rise in prices seems to reflect transitory factors.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. With underlying inflation still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

3:02pm and stocks continued their day long rally to close on their highs. The DJIA gained 130 points to end at 9945. The S&P 500 rose 14 points to 1178 and the NAZZ jumped 34 points to 1808. Breadth was 2.5/1 on both the NYSE and NAZZ.

This morning

6:34am and last night Cisco reported good numbers but the stocks sold off to under $19.80 in heavy trading. The conference call was cautious going forward.

Overseas markets except Japan are lower and U.S. futures are suggesting that stocks will open lower. Gold and oil are higher.

So let the games begin.

10 August 2004 - Daily Comment

Yesterday's trading

7:32am and McDonalds’ same store sales were up 6% and Wal-Mart is suggesting 2% to 4% same store sales growth for August which is as usual.

9:09am and breadth is positive but the major measures are turning negative after being higher for the first half hour.

Wholesale inventories for June were up 1.1% which was a higher rise than expected and last months figures were revised to up 1.4% from up 1.2%. Those numbers reflect inventory build which means manufacturing increases are not selling through. But they are June numbers and July numbers are what traders want for confirming or debunking the slowdown.

Oil is at $44.75.

9:22am and as soon as we finished writing the above the major measures got a bid and moved higher.

2:35pm and we have been busy with book keeping matters all day. The major measures have remained in positive territory most of the day but can’t seem to get a head of steam. With oil flirting with $45 and tomorrow’s Fed meeting most folks seem to be observers.

There was a brief rally when oil sold off near 2pm but breadth is negative. New lows exceed 600 on the NAZZ and 500 on the NYSE so we are getting more capitulation which is necessary for a tradable bottom.

2:43pm and Fay Wray died at the age of 96.

3:02pm and Treasuries rose a few basis points ahead of the Fed meeting tomorrow. The DJIA closed off 2 points at 9815. The S&P 500 gained 2 points to 1065 and the NAZZ lost 2 points to 1775. Total new lows exceeded 1200. When that number approaches 1600 the markets should be at a tradable low.

This morning

6:32am and gold is $402, oil is $44 and Europe is higher while Asia was mixed. U.S. futures have a bid and stocks will open higher.

Folks like us continue to await the wash-out and if it doesn’t come it is unlikely we will play. Lehman lowered its opinion on semi conductor stocks this morning and as brokerages continue to pull back on their recommendations we think the stage is being set for a rally. We would like to catch it but we don’t want to catch more of the sharp edge of the knife and so we think patience is the watch word.

When we do reenter we will use some of the index products like the SPY, QQQ (largest 100 OTC stocks), XLK (tech) and XLF (financial) that we have owned before. We will also use a select group of larger cap stocks and one or two tech cheapies. We continue to believe that there may 10% more downside before a true buying opportunity arises and we may start edging in at QQQ at $30, and SPY at $101.

For now we are spectators.

So let the games begin.

9 August 2004 - Daily Comment

Friday's trading

8:33am and the major measures all opened lower with the DJIA down 75 points 5 minutes into the trading day. Our screen was red and breadth was bad.

We are looking for 980 on the S&P 500 (currently at 1060) and $29 on the QQQ (currently at $33.25) as trading entry points. Both those points are 50% retrenchments of the up move from the bottom in 2002. We don’t think we will be there any time soon.

Treasuries are strong with the ten year up 2 points. Fed fund futures are suggesting that there will be no Fed rate increase next Tuesday. A lot of hedge funds were short Treasuries and that may add to the selling in stocks as the funds cover their Treasury losses and try to save their stock profits and/or mitigate their stock losses.

8:47am and Greg Mankiw, the White House economist has the reason for U.S. economic problems. Clinton. Higher oil prices? Clinton. The answer, more tax cuts. Same old same old. By the by, Mankiw said he would suggest that investors continue to hold stocks as he is doing in his own account. Either he is breaking the law or he is fibbing. In his Government position we are sure he is not allowed to run his own stock account.

8:51am and NAZZ breadth is 4/1 negative but NYSE breadth is only 3/2 negative. There is buying in some bank stocks and home builders and mortgage folks on the theory that there are still some fools out there who will borrow at lower rates to spend.

10:50am and stocks are not rallying but they aren’t moving lower. Breadth remains 3/2 negative on the NYSE and 4/1 negative on the NYSE. Up volume exceeds down volumes on both markets.

12:01pm and the DJIA is down an even 100 points. It will be interesting to see what happens in the last hour. The markets have been focusing on the employment number for a month now and that number was so bad that it will take the week-end to digest.

We are off for the week-end so we’ll finish this post Monday morning.

This morning

6:27am and stocks ended the week badly with the DJIA losing 140 points the NAZZ over 40 points and the S&P 500 down 17 points. All these closes are new lows for the year.

Overnight Asia was lower and Europe also is 1% lower this morning across the board. After a week like last week, a rally at the opening could be expected as week end bottom fishers make their presence felt. We are going to watch because such a rally would need a pullback and then a rally into the close to confirm at least a temporary bottom.

Oil is a bit lower as is gold. For today we would guess a rally, pullback and then...

We think we will be on the sidelines unless the pullback is severe.

So let the games begin.

6 August 2004 Update

7:32am and the chickens have come home to roost as the employment number for July was up a measly 32,000 and the June numbers were adjusted to up 72,000 from the previous up 112,000. If there had been no adjustment to the June number the July number would have been negative.

Bonds are through the roof and stocks are lower. We don’t know what will happen today but we doubt it will be good. We have been consistent in our belief that the economy was not recovering.

Today’s action if it is down strong will set up a Black Monday Scenario. Cash is king today

6 August 2004 - Daily Comment

Yesterday's markets

6:52am and Bloomberg is reporting that Yukos and the Russian Government have reached an accommodation which will allow no interruption in oil production.

7:32am and first time claims for unemployment for the week of 7/31 dropped 11,000 to 336,000. Continuing claims for unemployment dropped by 10,000 to 2,911,000.

Louie Navalier who runs a group of mutual funds with terrible performance is on CNBC talking with the Mark Talking Head about the fact that with ‘only’ 335,000 jobless claims a week the U.S. is now at full employment. Navalier cites a fruit grower in the west that he knows who can’t find anyone to pick apples in his orchard as proof of full employment. Yes that really was the conversation. We don’t understand why Navalier is given a forum on CNBC on a regular basis. He has to be related to some honcho or honcha there.

Gap sales were down 3% and same store sales were down 5%. Wal-Mart same store sales were up 3.5%.

8:26am and Yukos says that it can’t access its bank accounts which makes our 6:52am post void. We guess Putin shorted the Russian market after it rallied on the earlier news.

9:10am and the Monster Worldwide Employment Index fell 2 points in July from 136 to 134. That is the first drop this year. It may presage tomorrow’s employment report but then again it may not.

The major market measures are now lower after opening mixed. Breadth is flat and volume is light. Retailers like The Gap with lousy numbers are lower and those with better are higher. That is logical.

10:33am and with stocks lower in light trading we are off to make hay while the sun shines.

11:23am and after dropping 100 points the DJIA has stabilized and volume on the sell down has dried up.

3:01pm and disaster struck in the afternoon. Oil went back above $44 and The DJIA closed down 163 and under 10000 at 9963. The S&P lost 17 points to finish at 1080 which is support and the NAZZ dropped 33 points.

This morning

6:49am and Google cancelled its public offering. The Dutch auction they had arranged was a flop. If Wall Street can’t make their millions and Wall Street’s friends can’t get first dibs at under priced stock, Wall Street doesn’t want to play. There was only a fifteen day lock up on insider stock instead of the usual six months. Wall Street likes to be able to sell immediately on the run-up but doesn’t like insiders to be able to do the same.

The shares were going to be sold at about 100 times earnings so the cancellation is probably a benefit to those who were going to buy.

The big event this morning is the employment number. 244,000 new jobs are the consensus but numbers are all over the board. And we really don’t know what a higher or lower or in line number will do. A higher number would mean that for sure the Fed will tighten next Tuesday, a lower number like around 100,000 jobs will mean that the Fed probably shouldn’t tighten but will anyway and an in line number will be in line.

We will watch the number and the reaction and then head off to a Menominee Pow Wow at their Wisconsin Reservation for the week-end. Our younger daughter Kelle is studying the Menominee language fro her doctoral dissertation.

Asia was lower overnight and so is Europe. U.S. futures are a tad higher but the opening will be dependent on the 7:30am employment report. Oil is over $44.50.

So let the games begin.

5 August 2004 - Daily Comment

Yesterday's trading
7:40am and oops we saw same store sales numbers for Polo and forgot it was Wednesday and not Thursday. The individual retail numbers come tomorrow which is today since you are reading this tomorrow.

9:02am and stocks opened lower but are now moving back towards even. Breadth is 3/1 negative but improving.

Janes Defense Weekly is reporting that the North Koreans are deploying anti ballistic missiles with nuclear warheads. Jane’s also reports that the North Koreans are using old Soviet subs that the Russians supposedly sold them for scrap. We know Putin our good friend and ex KGB agent wouldn’t be trying to destabilize that part of the world.

Oil is making new highs although the Saudis our other good friends of ours say they are opening new oil fields ahead of schedule. At $40 plus a barrel we presume the Saudis would like to sell more oil.

9:43am and factory orders rose 0.7% in June which market mavens are taking as a positive. When they get negative June numbers the market mavens dismiss those numbers as an aberration.

10:13am and breadth remains 2/1 negative with down volume exceeding up volume 3/1. Margin debt as reported by the NASD and NYSE is down for the second month in a row. That actually is a contrary indicator in that increased margin debt implies a willingness to assume risk by buying stocks. We were reading a website this morning and a trader remarked that one of his friends with whom he was thinking of buying real estate was frustrated with the difficulty of trading this market. If stock traders are buying real estate…?

11:49 and according to Fast Food Nation as reported on CNBC thirteen billion hamburgers are eaten every year in the U.S. which works out to 47 hamburgers per person.

Stocks continue lower with breadth remaining 2/1 negative and the DJIA down 40 points. The last hour of trading today will be the tell.

1:59pm and as we walked into the office from a hike with the dogs we saw a headline on CNBC that said “Oil Price Plunges” and we thought “ah that is the reason the markets are higher. Then we read the news that oil had dropped below $43 per barrel and we blinked. Plunge in our mind conjured $38 or less. It is slow out there in financial news land. Oil is at $42.83 down $1.32. The Saudis are saying again they will pump more and the Yukos imbroglio in Russia is supposedly being resolved. We see no mention of the August 15 Venezuelan recall election but then that is a week and one half away.

The DJIA is up 35 points and the NAZZ is up 3 points as we enter the final hour of trading. Breadth has improved to even on both the NYSE and NAZZ. European markets closed lower and Treasuries also gave up a bit.

3:02pm and the DJIA closed up 6 points, the S&P was down 1 point at 1098 and the NAZZ lost 4 points to end at 1855. Breadth was positive on the NYSE and negative on the NAZZ.

This morning

6:33am and Hong Kong gained 2% while Japan was fractionally higher overnight. Europe is higher and U.S. futures are indicating a slightly higher opening.

This morning jobless claims for last week are announced. That number is the only real number among the myriad of numbers and percentages and indexes the government releases since there are actual countable claims on the government. And they don’t always get the jobless number correct the first time. But the gurus have chosen to ignore this stubbornly negative number because the current wisdom is that the economy is on the road to recovery.

We also get individual store retail sales this morning. Gold is a tad higher and oil is back above $43 per barrel.

Tomorrow’s employment report is the one on which the markets are focusing so today may be a non event. Then again, it seems most times we say that the markets have had volatile moves one way or the other.

So let the games begin

4 August 2004 - Daily Comment

Yesterday's trading
7:32am and Personal Income for June was up 0.2%, the PCE deflator (Fed’s inflation measure) was 2.4%, the core deflator was 1.5%, and Personal Spending was down 0.7% when unchanged was expected. Treasuries were a bit stronger on the news. This is June data and so the traders are dismissing the news.

1107.30 is the 200 day moving average on the S&P 500 and it needs to get above that number to keep the rally going.

9:01am and stocks are lower with breadth negative. Challenger Gray & Christmas reports that announced job layoffs were up 8% in July and announced hiring was 30% lower in July. The announced hiring number is not as meaningful as the layoff number because business often doesn’t announce hiring whereas they must give notice of layoffs.

Bloomberg reports that GM is increasing rebates to move inventory. Car sales rebounded in July with the increased rebates.

With the low volume on the NYSE and the NAZZ it should be noted that trading volume on the Chicago Mercantile Exchange was a record. So the big boys and girls are trading indexes instead of investing in stocks. That information fits in nicely with our thesis that investing has given way to gambling in the stock markets of the world. And the rapid futures’ trading is what leads to the random movement of individual stock prices as they are flipped around as part of some larger program.

Wild Oats, a stock we have traded off and on over the years is off $2 today to $9.50 on lousy earnings which is not a surprise to us. OATS surprises with lousy numbers at least once a year. We were surprised when we read that the company had raised $125 million in June by selling 3.25% convertible debentures due in 2034 in a private placement. The debentures convert at $17.70 per share. That was quite a feat. It shows how many sheep there are in the bond market. At lower prices we may be interested in the shares since the debenture sale gave them a chunk of money for the next thirty years. They surely will get the stock to $20 per share sometime in that period at which time they will force conversion.

10:49am and strength in Verizon and SBC is helping the DJIA although it is down 21 points. Prudential removed MSFT from its focus list.

4:02pm and we had to haul a load of hay home so we missed the final hour when the rally attempt failed and the major measures rolled over. Down 50 points on the DJIA is not a calamity and the NAZZ was of about 2%. Some low priced tech stocks got hit. The S&P 500 closed at 1099 in terms of “where to?” today was a non event.

This morning

6:36am and there are no big macro economic numbers (except individual same store retail sales) to be released this morning and the big boys and girls will be on their own. Overnight Japan was down over 1% and is approaching a 2 month low at 11000 and Hong Kong was fractionally lower. Europe is off about 1% across the board. U.S. futures indicate a lower opening and then the bulls will have to get to work to keep the bears from pressing their case. Oil touched $44.28 this morning a new high and yet by massaging the numbers the Labor Department tells us there is no inflation. Believe that fiction at your own peril.

We will be in and out most of the day so Kathy will have the phones but we will be watching the market. We are taking a day off from moving hay. Unfortunately we won’t be making hay in the markets but then we won’t be rained on either.

So let the games begin.

3 August 2004 - Daily Comment

Yesterday's trading

7:11am and stocks traded lower on the opening yesterday in response to the raised terror warnings but rallied to positive within the first hour of trading. Cable stocks were stronger on the Cox cable take out bid at $32 which will have to be raised to win and PG also showed strength on better than expected earrings.

Treasuries rallied on the flight to safety theory and oil was firm.

The Institute of Supply Management Index of industrial activity was announced as 62 which was as expected. Construction spending fell 0.3% in June when 0.1% was expected.

At 9:10am breadth was 3/2 negative and volume was summer light. 1080 remains S&P support and 1111 is the upside breakout number for today.

Oil has backed off a little this morning at 11:20am and the major measures are mixed. We were going to move some hay but it is raining and so we will watch the markets for a while.

Steve Jobs has pancreatic cancer, which is not a good one if any are and AAPL is off a bit on the news. We think it should be off a bit more than it is.

How does one become an NBC terrorism expert?

This morning

6:13am and gold is $372, Oil is over $44 per barrel and stock futures are lower. European Bourses are higher and Asia was mixed over night with Japan lower and Hong Kong higher.

As with the previous four days the major measures rallied in the last hour yesterday to close higher for five in a row. The DJIA and S&P 500 are fractionally lower for the year and a rally today will get them to plus territory. The NAZZ needs a bit more of a charge to get to the plus side.

Breadth was 2/1 negative at the close on the NAZZ and 5/3 negative on the NYSE. Also volume was light but that has been true both up and down for the past few months.

The terror warnings are again old news with security services the main beneficiaries. Without any more warnings the focus should return to economic matters. This morning personal income for July will be reported.

The rally yesterday afternoon was helped by positive manufacturing data for July which traders took to mean that the slowdown in June was an aberration and that everything may be back on course with the July numbers to be released in the coming weeks.

We sense a desire to see stocks higher and so higher they may go. We missed sensing the pullback in July and because we did we decided that sitting on the sidelines is the best course for now. A definitive break lower would interest us. A move higher would not be a surprise, we just don’t know what to own to participate and so we aren’t. Also such a move would not negate the idea of a move lower later this year which causes us greater concern than a move higher. That’s where we are which is not very exciting but ….

So let the games begin.

2 August 2004 - Daily Comment

7:11am and in the news over the week-end we learned that one investor is going to pull $5 billion out of Janus Funds by year-end. That represents about 4% of the total funds under management in the funds. When you miss in this business you usually suffer the consequences.

We were thinking about the relative weakness in MSFT as the market rallies and our only conclusion was that folks who have a loss in MSFT in owning it don’t want to get the extra dividend and pay tax on it. And folks who want to buy the stock who are taxpaying accounts may be waiting for the dividend to be paid so that they too may avoid the tax.

Advance 2nd quarter GDP was announced at 3.0% for the second Quarter. Expectations ranged from 3.4% to 3.8%. Final first quarter GDP was 4.5% and so the worry now is whether the slowdown in June which lowered the GDP number has reversed in July. The GDP Price Deflator was 3.2% versus an expected 3% and personal consumption was up 1%.

Early Friday morning there were explosions at the American and Israeli Embassies in Uzbekistan. That lowered futures before the opening but the markets quickly recovered.

It is interesting to us that large retail outfits like May and Target are now being valued on the value of their real estate. All of this is a result of the stellar price performance of Kmart since it emerged from bankruptcy. It seems the folks holding the bonds or their lawyers and the bankruptcy court underestimated the value of the real estate and now the new equity holders are benefiting.

We are among the folks who have been crying wolf about real estate for the past few years. We did the same about the stock markets in the late 1990s and in 1987 also and about Japan in 1988 and 1989. We have always been early in our assessment and not greedy enough.

Target selling Marshal Field and Mervyn’s for more than ‘the street’ expected is another manifestation of the real estate boom.

The University of Michigan Sentiment Survey for July was 96.7 versus 95.6 for June. The Chicago Purchasing Managers Index was 64.7 versus consensus 61. Anything above 50 indicates expansion of business activity. Both these were announced on Friday morning.

For July the NAZZ was down 7%, the S&P 500 3% and the DJIA 2%. That’s how our gains at the end of June disappeared. Where did the rally go? Was it just delayed? Time will tell.

On Friday the breadth was positive on the NYSE by an almost 2/1 margin and was also positive on the NAZZ but by less of a margin. Trading was moderate for a summer Friday. As with the previous three days the big boys and girls moved the DJIA to the plus side in the last few minutes of trading but with less of a gain than on any of the other days.

This week of August 2 is the week that will make or break the climb higher. In order to confirm a significant rally the markets need a big up day within the next few.

Several select financial targets are now on high alert. The Orange category had been ordered and in keeping with the orders of the Department of Homeland Security we have deployed Pooper and Luna to patrol the financial headquarters of Lemley, Yarling Management Company on the farm on 24 hours need to know basis.

Our only comment is that all this stuff is dumb and reminds us of high school. Unless they have specific information they should just do their duty and keep quiet. The only thing the alerts do is give mindless media’s pseudo experts hours of employment. Maybe that is the plan.

Asia was lower overnight and so is Europe. U.S. stocks are slightly below fair value. The terror alerts and the high price of oil will have a negative effect but we think it will wear off quickly.

We will be in and out today since we have to begin moving hay and the first Monday in August is usually a slow time.

The important number this week is the employment report on Friday morning.

For today down early then a rally and then snooze land.

So let the games begin.

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