Friday, December 31, 2004

12/31/2004 morning

Happy New Year! As expected the market drifted around the flatline yesterday with the S&P and nasdaq up slightly, I expect the same today. Volume is at holiday levels and will probably head lower today as investors take time off. In general the tone is one of light stock buying, but I think that we will end up flat by day's end. See my website www.thesmartmoneyinvestor.com for details on what my buy and sell targets are and specific details on the stocks in my universe.

Again, I am making network and software modifications to my website and apologize for some of the missing data or non-current data. I am planning some new features, some of which I have not seen anywhere but are very useful to me. Check the site often to see what is happening.

Investors will start to set their sites on 2006. In my intrinsic value (IV) calculation I use one year ahead (in this case 2006) to base the valuation, I am not the only one. Shortly, speculation will start in earnest and investors will move money accordingly. It is evident that the process has already started as a rotation into capital equipment and healthcare stocks has begun and is likely to continue. Some fear about a recession in 2006 is popping up as some believe that is when the current bullish cycle will end. You can bet that the market will discount the event 6-12 months in advance. At some point during the year uncertainty about the issue will strengthen and speculation about its nature will drive trading. Stay tuned and watch me as I navigate the issues and maintain my high level of profitability.

Below are news releases that are likely to drive trading next week. Expect some early words about earnings as companies posture for the up coming release of 4th quarter numbers.

  • Monday, January 3, 2004 10a.m. December ISM Mfg Business Index. Consensus: 58.2. Previous: 57.8. 10a.m. November Construction Spending. Consensus: 0.5%. Previous: Unch.
  • Tuesday, January 4, 2004 8:55a.m. Redbook Retail Sales Index For Dec 25 Wk. 10a.m. November Factory Orders. Previous: +0.5%.
  • Wednesday, January 5, 2004 10a.m. December Challenger Job Cuts. Previous: +2.6%. 10a.m. December ISM Non-Mfg Business Index. Previous: 61.3
  • Thursday, January 6, 2004 8:30a.m. Initial Jobless Claims. For Jan 1 Wk.
  • Friday, January 7, 2004 8:30a.m. December Nonfarm Payrolls. Previous: +112K. 8:30a.m. December Unemployment Rate. Previous: 5.4%. 3p.m. November Consumer Credit. Previous: +$7.7Bln.

Again, Happy New Year! I wish everyone a happy healthy profitable future!

Thursday, December 30, 2004

12/30/2004 mid morning

One short that did not work out was Aeropostale (ARO). I was stopped out today as the stock hit my number. In the course of making money in the market I have had losers, that is for sure, the key is to cut your losses short and hold on to and build profitable positions. When my target is hit I make the move. I have learned that second guessing yourself in general costs you money. Shortly after ARO hit my number, like exactly after I closed the position it fell almost a point; oh well that is the way it goes. A 10-200% gains in other positions more than compensates for the 7-10% losses I have taken.

I have to apologize for the lack of pricing updates on the website www.thesmartmoneyinvestor.com. I am in the middle of updating equipment and networks thus I am yet to update the software that links it all together. I have some new items coming on so in the end I think that it will be worth the wait.

12/30/2004 morning

The major indices rested yesterday dropping to about Friday's close then bouncing about half way back. The S&P500 and nasdaq remain on solid footing during this week's holiday trading. My expectation is that we will close around the current level for the end of the year, unless news steps in the way. See my website www.thesmartmoneyinvestor.com for details on the 13 stocks in my universe.

I compiled the short interest (SI) figures for December and they were interesting. It seemed that SI for the majority of stocks in the BoomBoom13 only fell about 2.8% from the previous month's level. That tells me that although investors are a hair more bullish they are not that much more bullish than they were a month ago. In other words, sediment has not changed that much from when the market made a good move higher. Shanda Interactive Ent. (SNDA) was the exception. In November SNDA saw SI jump 200%+, in December it jumped 12%+ higher from November's elevated level. Expect some squeezes in that stock.

Another interesting observation was Ixia (XXIA). The telecom test equipment maker made a 3 year high this week. This group tends to lead tech rallies as developers buy Ixia's equipment to test new products. Expect a wave of capital spending in 2005 and a rally in telecom equipment and semiconductor stocks.
  • SNDA - Shanda continues to show strength in recent days. The now global stock based in the $39 range and has shown some solid technical power. A high level of short interest does not hurt as the stock is likely to see some technical volatility. I am staying the course in SNDA.
  • RIMM - Research in Motion has been unable to move higher in recent days and remains below its 50 dma. A prolong bout below the 50 day level is a negative for the stock especially if it falters. SI has not grown as I expected to see and sediment for the stock remains positive. I am sticking with my short position and current targets.

Wednesday, December 29, 2004

12/29/2004 morning

Indices moved higher yesterday on frictionless buying in the S&P and nasdaq. Tax loss selling has been done for a while and global investors are reluctant to take taxable profits before the end of the year. Notwithstanding any tax gyrations the market is still in its upward trend and fresh money does seem to be coming into stocks. There is however change in the making as investors are rotating. See the website www.thesmartmoneyinvestor.com for the details of my rotations, look in the chart on the home page. If you visit it regularly you will see when I add new positions. Recently, I added RIO and NIKU, which are both up over 15% over the past 4-5 weeks.

  • RIO - Comp Vale Do Rio has moved higher as Chinese State Officials look to South America to feed China's growing economy. In addition, as the dollar falls RIO's materials become a store of value. I have intrinsic value (IV) peg above $90 for RIO. I am likely to move its buy target up to around $30.
  • RIMM - Large investors in Research and Motion started selling on litigation fears prior to the company's recent earnings release. Technically the stock has been weak even though earnings continue to grow and fundamentals are good. RIMM reported solid earnings and yet the stock has gone nowhere, in fact it is down a bit allowing me to take a small short term profit in part of my short position. Technicals remain weak as the LIBM trend (see my website for the definitions) is negative 14-4. I am sticking to my targets but feel that investors are moving away from RIMM at the moment.
  • PLAY - Portalplayer has bounced recently and the quiet period is over. I expect that the stock will move higher on upgrades and news. That said, the company will have to prove itself as techincals are relatively weak and fundamentals are yet to be proven. I am on the side lines for now but may dip in a bit (small investment) if either (technicals or fundamentals) show signs of firmness. Stay tuned for my entry point.
  • EBAY - Ebay is going great and I continue to hold. I am staying to my target of $136.
  • VLCCF - Knightsbridge Tankers is selling off again today with the rest of the group. I have looked at the numbers and December was great, however, there was a softening in the January futures. I am keeping my eye on the situation to see if there is an entry point in the picture. Stay tuned while I sort this out.
    For the most part I am staying the course. The economy is doing well however, I expect there to be a bout of profit taking sooner than later. Large investors continue to accumulate select stocks in the healthcare sector.

Tuesday, December 28, 2004

12/28/2004 midday

I sold off some Genentech (DNA) to take 10% in short term profits as planned. See my website www.thesmartmoneyinvestor.com for details on my targets. Investors continue to rotate into the sector. I am holding my remaining shares for longer term profits. I may add to positions as the year evolves, stay tuned to see what I do.

12/28/2004 before the bell

The day started out like any other down day, up. The S&P500 futures were up 4 points when the nikkei opened, which is somewhat unusual given the only news was a tsunami disaster. As expected volatility played and traders skimmed profits from day traders working from home this weekend, in what seems to be a holiday tradition market makers indulge themselves in. The nasdaq comp did best as it rolled over from its rest, while the charging DOW took most the heat. After all was said and done the major market indices managed to stay within their recent trend channel (RTC) a positive sign. Expect more volatility this week as trading will be light UNLESS news dictates otherwise. See yesterday's post for the news du jour. See my website www.thesmartmoneyinvestor.com for specific details about my stock universe and learn what I am doing.
  • VLCCF - Knightsbridge Tankers took the plunge today with the rest of the group. If you follow my blog you know I sold out of a 200%+ gain a few weeks back. I have been watching the stock for new opportunities. I looked at the numbers for Dec 28 and they indeed were a little softer than in the past. That said, Dec fixtures were up over 30% and the stocks price trades below its IV. Stay tuned as I continue to watch for new opportunities in this sector.
  • NIKU - Niku is still being accumulated as it rose yesterday on higher volume. Large investors are picking up stocks that are perceived to do well during the next wave of capital spending by corporations and NIKU fits the build. I may move targets higher when trading gets back to normal, for now I am staying the course. See the website if you want to see my specific targets.


Please be patient when visiting the website as daily stock prices, pe, volume and other information is not being updated on the individual stock pages. I am in the mist of updating the site and some features are turned off as I make mods. Stay tuned as I get the new features up.

Sunday, December 26, 2004

12/27/2004 before the bell

Sediment going into this week looks optimistic with the VIX at a low level (about 11.5). Also, I did hear a "talking head" mention the technical strength of the S&P500 over the weekend, something I have discussed in my posts over the last couple of months. This scenario has been know by the smart money for some time, I don't like hearing it in the main stream. All the indices including the nasdaq and DOW are pressed up against upper RTC channel limits, reaching new highs. This week is likely to be volatile under muted volume unless there is a catalyst. News flow will be shallow (see below) with consumer confidence, existing home sales, initial jobless claims and Chicago PMI on the marquee. I do not like all the optimism, but given that we are at year end I think that the market will drift higher, again, unless there is a catalyst.

The initial short interest releases I have seen show a steady decline, which is a negative for the market. See my website www.thesmartmoneyinvestor.com for short interest (SI) details (I am creating an SI trend monitor which will be shown on the website in the near future). Couple that with the positive sediment and the market may be poised for a short term correction. I have noticed that growth is some of the leaders has been muted and a rotation into other sectors is taking place. I have also made some short sells that have had some success (see the previous posts) as past leaders correct during this rotation.

All that said I am staying the course as interest rates are low and future returns in bonds are likely to benefit the equity investor. I continue to add to my long positions so long as my buy prices are met and I am selling at a profit when my sell targets are reached. The rotation into healthcare seems to be continuing without much attention being paid to it, beyond the goings on in the large drug makers. Genentech has risen in the short term as fundamentals have improved and large investors have bid up volume. The healthcare sector has a 3 year return of -8.8%. As the population ages many healthcare companies are going to grow their businesses. We may have started a basing period that will make for some good buys in this group. Stay tuned as I find the best ones.
  • Tuesday, December 28, 20048:55a.m. Redbook Retail Sales Index For Dec 25 Wk. Previous: -0.7%.10a.m. December Conf. Board Consumer Confidence. Consensus: 94.6. Previous: 90.5.6:30p.m. ABC/Money Consumer Conference For Dec 25 Wk. Previous: +1.
  • Wednesday, December 29, 20047a.m. MBA Refinancing Index. Previous: +5.7%.10a.m. November Existing Home Sales. Previous: -0.1%.
  • Thursday, December 30, 20048:30a.m. Initial Jobless Claims. For Dec 25 Wk. Previous: +17K.10a.m. November Help-Wanted Index. Consensus: 37.0. Previous: 37.0.10a.m. December Chicago PMI. Consensus: 63.0. Previous: 65.2.


See my website www.thesmartmoneyinvestor.com for details on my universe of 13 stocks that I call the BoomBoom13.

Monday, December 20, 2004

12/20/2004 before the bell

I really hate when the market starts out gung ho and then falters, in general it is a bad sign. Volume was a little lower on Monday than Friday, however, that is not surprising given it was options expiration and owners of PFE woke up to selling news. The S&P500 index is resting on its support level of 1195 and the nasdaq composite has broken below its support level of 2135. The nasdaq has shown weakness for more than several sessions. In addition, previous leaders have broken down a bit and I have noticed (as I posted a few days ago) LIBM trending down in several issues. See my website www.thesmartmoneyinvestor.com for the details.

A near term correction would be healthy for the market and given the usual uncertainty brought on by earnings season make soon a likely time. I am not however, ready to throw in the towel on this rally as I have see a rotation into several new sectors and energy remains strong (although this could be the catalyst for a correction). Healthcare has seen some limited buying and I have started to accumulate AMHC and DNA. Both stocks have good fundamentals, however, I do have a tight stops in place on both of them as negative market performance could drag them down as well. Also, capital equipment and material plays are are getting some attention. NIKU has weathered its secondary offering pretty well and has moved up on solid volume the last several sessions. RIO has been a slow but steady climber.

I am also looking at some short selling. Shorting is very tricky as it seems to garner a pack mentality and market makers, who have access to short sell information on a daily basis, like to put the cabash on most parties, at least in the short term. I have the same basic rules for short selling as I do for long investing, but I tend to take profits faster and pay more attention to the technical details. Check out the website and watch what I am doing.
  • ARO - Aeropostale has exhibited weak fundamentals as its chart has broken down. It was sold off a couple of weeks ago and had a dead cat bounce. It is trending lower and its price performance is sub-par. I am shorting above $29 with a near term down side target of $27. It could go lower, especially if holiday shopping continues to show weakness but I feel a 7-10% return on the associated risk is worth it. My stop is $30.85.
  • RIMM - A short of RIMM is not for the faint of heart. You can get butchered or you can make a bundle, there seem to be no in between. Market makers and larger investors move this stock around as 7-10% price swings are not uncommon. Technically, the stock has broken down and LIBM is trending lower (11-4) sitting at the lowest level in a while. I have a small short position in RIMM ahead of earnings, which may be the kiss of death, but the technicals are attractive to short selling and I am taking the risk. There is also the lingering NTP litigation that has begun to weigh on the minds of investors and I have seen some large block trades moving to the exit. My guess is that if large investors do indeed want to take profits they will run the stock up tomorrow ahead of earnings, bounce it higher on earnings announcement, then sell off for a few days to buyers who want to play the latest news. I do not expect RIMM to miss estimates. My target is short above $86 with a stop at $89, but I will play it by ear during the earnings release, which is scheduled for after the bell tomorrow. You can see my website www.thesmartmoneyinvestor.com for details.

Sunday, December 19, 2004

12/20/2005 in the market

The S&P500 and Nasdaq composite have managed to stay above their current support levels, albeit just. Friday must have been a nightmare for market makers as the normally begin options expiration day was interrupted by negative news from Pfizer. The large cap DOW and S&P stock dropped 11% (21% at one point) skewing ETFs and Indies options pricing and leading to more volatility than they bargained for as the market makers tried to deal with sudden imbalance. My guess is that PFE will end down next week.

Even though the market was up for the week (and month thus far) it felt like it was down a bit as large investors continue to rotate positions. LIBM (large investor buying momentum) started to trend down for many of the nasdaq stocks. See the website www.thesmartmoneyinvestor.com for the details, look at the "BoomBoom13 fundamentals and Technical Characteristics..*special*" page. The key now is to get into positions ahead of large investors and ride the trend. At this point I see fresh money moving into selected healthcare, tech and natural resource issues.

Fundamentally companies are in good shape. As a whole they have cash and sales, the two most important ingredients for business. The question will be can they drive earnings at a rate above the somewhat muted expectations of Wall Street; obviously, some will others will not. Technically, the market looks poised to move higher. There is buying on the dips and volume has returned to the market. I believe overseas investors are putting capital to work in the US as assets are on sale (due to the dollar decline) at a time when the US economy is doing better than most on a global basis. I believe that this scenario will persist through the intermediate term. My observation is that most money managers view 2005 as a fair year for stocks with the market gaining about 6%. Given that consensus it is likely the market will either drive much higher or much lower on a contrarian basis. I think that some industries will out perform while others will falter; stock picking will be key. I think that one surprise for 2005 will be low interest rates, at least through the beginning of the year. Not only is there wide spread shorting of bonds, I see increased productivity, wobbly global markets and cheap overseas labor contributing to the cause. The question will be when will the growing deficit counterbalance the effects of the economic protagonists. Stay tune and see as I navigate my way profitably through these issues.

  • NIKU - Niku Corp. is making its way through its secondary offering. Investors did line up to buy shares driving the price above $20 and ending the day around $19.3, still above the $18.75 offering price. I believe that NIKU will be the beneficiary of capital spending next year as companies invest in their software to comply with Sarbanes-Oxley requirements. Further, as customers adopt their suite of productivity enhancing database and business management tools NIKU will be able to sell more products into the growing installed base. I started to accumulate NIKU below $15 and have a target of $24. I may change targets upward as the story for NIKU unfolds, for now I am staying the course.
  • AMHC - American Healthways continues to be bid up as investors are accumulating this profitable and growing healthcare issue. AMHC seems to be a beneficiary to the rotation into the health care sector. Health care services stocks have done better than most other medical sector companies.
  • VLCCF - I have been out of Knightsbridge Tankers for a few weeks after logging an over 200% profit. I still like the group, however, I sold because it became technically weak and I did not want to lose my gains. There may be a time in the future to buy back Knightsbridge as my current intrinsic value is based on very conservative 2005 numbers. If I see those numbers growing I may get back into this stock.

Wednesday, December 15, 2004

12/15/2004 before the bell in the market, nasdaq and global stocks

I am still waiting for a rash of volatility this week, as of yet it has not come. Remember last week I said that Friday seemed like the options expiration date, it seems that scenario is playing out, we will see as there are two days left. RIMM was volatile this week even with a 100K contract imbalance in the Dec puts; see my website www.thesmartmoneyinvestor.com for details.

I speculated that a large investor bought out of the money puts as insurance against a negative reaction to the NTP appeals court decision. If that was the case they were right on. That is one of the reasons it pays to watch what large investors are doing. The market, nasdaq and S&P500 are holding above support levels as they moved slightly higher today on solid volume. Both indices are breaking out to higher levels. Technically speaking the market is showing the characteristics of one which will move much higher. However, price and volume action today may signal a respite as the market may take a breather. I am holding my positions and targets both buying and selling.

  • NIKU - Niku is expected to price its secondary today. The stock has risen on heavy volume the last couple of days. See yesterday's post for more details. The stock is up over 15% since I have added it to my BoomBoom13 a couple/few of weeks ago.
  • RIO - Comp Vale Do Rio moved 1% higher today on greater volume. The company is benefiting from a lower dollar and commoditiy growth in Asia. Its large float makes for slower movements but I believe it is positioned for good gains. IV is 300% higher than market value.
    I am working on expanding the website www.thesmartmoneyinvestor.com. I adding more of that which helps me make good decisions. Stay tuned for its next phase debut.

Tuesday, December 14, 2004

12/14/2004 after the bell

The market did well given today's FOMC meeting. The S&P and now the nasdaq are above their previous resistance levels and are poised to move stocks higher. The rest of the week will be dominated by new and earnings pre-announcements. I still expect some volatility as announcements will play into the hands of options expiration. Below is the news to come this week. Please see my website for specifics regarding the stocks in my universe www.thesmartmoneyinvestor.com.
  • Wednesday, December 15, 2004 8:30a.m. Empire State Fed Mfg Survey. Consensus: 20.5 Previous: 19.8. 1p.m. December Housing Market Index. Previous: 71.
  • Thursday, December 16, 2004 8:30a.m. Initial Jobless Claims. For Dec 11 Wk. Consensus: +342K. Previous: +357K. 8:30a.m. New Housing Starts. Previous: +6.4%.
  • Friday, December 17, 2004 8:30a.m. October Consumer Price Index. Consensus: +0.2%. Previous: +0.6%. 8:30a.m. October Consumer Price Index Ex-Food & Energy. Consensus: +0.2%. Previous: +0.2%.

  • RIMM - I started to accumulate Research in Motion yesterday and today, buying only a small amount of shares below my target. The company's fundamentals have not met my buy targets for a long time due the low intrinsic value relative to its market price. However, the technical characteristics of the stock became so compelling I started to buy it yesterday in baby steps (now I remember why I stick to my rules). I was aware of the company's pending litigation with NTP but felt that the price of any outcome was in the shares. About mid day an alert went off and the stock was up over 10 points. Such a fast move is unusual and usually short lived I sold 1/2 my position even though it was below my target of $115 (too lucky but I was worried about not meeting my IV rule). Then the news came out and the stock was halted. I dumped my remaining shares on the re-open as I was stopped out. In the end I made a pretty good profit. I am sure that I was one of the lucky ones. Again, this was a "kind" reminder that you need to stay to your game plan if you plan on being successful. Bulls and Bears make money, pigs get slaughtered.
  • NIKU - Niku has made a 13%+ move since I started accumulating it over the last few weeks. The company is doing a secondary offering to raise almost $6M to fund growth. The underwriter is Deutsche Banc. Niku's CEO, Josh Pickus, seems to have control of the company and has it doing what he wants. It is not a bombshell like a TASR or RIMM, but moves steadily up and/or down even when large spreads in the bid and ask exist (which is often). I am maintaining my targets on this stock and look a little longer term as cash rich companies invest in Sarbanes-Oxley compliant software from Niku.
  • AMHC - American Healthways, Inc. had shown strength over the past few sessions and I started to accumulate it yesterday. See my website www.thesmartmoneyinvestor.com for specific targets. AMHC meets my criteria for growth and technically looks strong. The healthcare sector has been out of favor for the last 3 years losing 8.8% during that time. I wanted to have a healthcare issue in my universe and AMHC fit the bill.
  • EBAY - Ebay continues to move higher. I have done well with Ebay and have recently accumulated more shares as the holiday season for online retailers look bright. But that's not all for Ebay. PayPal is gaining acceptance as the financial transaction service of choice and Ebay is finding a paradigm shift toward its business model as consumers, both business and retail become more comfortable with the site.


Stay tuned for more of my thoughts and insights as I increase the value of my portfolio, which is currently up over 40% for the year.

Sunday, December 12, 2004

12/13/2004 before the bell in the market

See my website www.thesmartmoneyinvestor.com as it contains updated information on my Recent Trend Channels (RTC) buy and sell points and Large Investor Buying Momentum (LIBM) trends for the individual stocks in my BoomBoom13 universe.

This week will be driven to a certain extent by options expiration on Friday. I am publishing an in/out of the money options chart on my website for the stocks in my universe. It will be interesting to watch how the week starts and ends based on Friday's imbalances, check it out.

The S&P500 closed above the 1177 level, the support point of its recent breakout. I see signs of rotation but the market has not broken down. The nasdaq has broken below its support level of 2150, closing at 2128 a level that it has held for several sessions. From a long term perspective the market is still in an up trend and chart configurations especially for the S&P500 are extremely positive on a relatively long term basis. I am still waiting for a closing break out of 1193 on the S&P500 before I make changes to targets. For now I am staying the course. If you would like to see my positions see my website www.thesmartmoneyinvestor.com to get information on the global and nasdaq stocks in my universe.

  • RIMM - I noticed a large imbalance when doing my options analysis in Research In Motion. About 100K contracts are out of the money in the near term puts verses 10K that are in the money. SI is about normal for RIMM and I speculate that investors are buying insurance should a decision on the NTP litigation come. It will be interesting to see how this imbalance plays out this week. Stay tuned.
  • SNDA - Shanda came under fire last week at first moving down on higher volume then moving up on better volume. I did not like to see that following sessions the stock ran up from $38-44 then turned south again to end at $39.65. I view this as a negative and I am minding my targets closely. I may move my targets if technical characteristics remain weak.
  • NIKU - Niku continues on track although there were bumps last week. A quick fall to its 50 dma and quicker bounce show strength. I think that Niku will benefit from current and future cap-ex spending.
  • BRCM - As I noted last week Broadcom came with in $0.02 of stopping me out. The semis have been sold off recently and are on the negative side of a rotation. That said, I the future looks good as telecoms update equipment and expand broadband capabilities. Networks are being expanded to accommodate new video (hdtv and web) and music services. I am accumulating at my targets.

12/13/2004 thoughts before the bell

This time of year analysts come out with their yearly projections of where the market will end up next year. I wonder how they come up with just one number, for example DOW30 - 11K or S&P500 - 1276. Even if these people had sophisticated number crunching devices that take into account all the possible factors of business and economy, which they do; they would still have to guess all the possible combinations of inputs correctly. To me that is unlikely. I would find a bit more validity in a range of values given the analysts' if, then, else scenarios, even then I would not solely base my investment strategies on them. I have achieved 40%+ annual returns by finding fundamentally sound companies that are supported by technically strong characteristics. My hope is that by watching me in my work viewers will take control of their own investments and make smarter investment decisions. See my website www.thesmartmoneyinvestor.com and go to the Philosophy strategy page for more on my criteria.

12/10/2004 the market and stocks before the bell

The S&P500 continues to hold above the 1175 level and the nasdaq remains below its support level of 2150. The market signaled strength today as the leaders bounced and stocks moved higher on solid volume. There is evidence that large investors are rotating positions and taking year end profits. I would be more sanguine about the market if the nasdaq moved above 2150, however, its 24% rise since August is likely going to correct more than that of the S&P in the near term. Macro economics favor the US in the short term as global stock growth may be damped as the more competitive dollar slows some global economies. For details on the stocks that I am currently holding or buying see my website www.thesmartmoneyinvestor.com.

I am taking a wait and see position right now as the market has a strong under current and the US economy is growing ahead of others. I continue to hold my positions and will accumulate more if I hit buy targets as defined on my website (www.thesmartmoneyinvestor.com). If the S&P500 breaks and holds this week above 1190 I will probably change some buy targets; like wise if it closes below 1175 I will probably reduce some positions and adjust accordingly. The nasdaq is subject to more of a correction as it has risen far fast. There is likely to be more of a shake out in these stocks over the next few weeks. If the S&P500 ends up between the previously mentioned levels I will stay pat.

  • BRCM - Broadcom came within $0.02 of stopping me out today before bouncing higher. I know that the semis are sending mixed messages (XLNX and ALTR warned yesterday, NSM increased its outlook today). Being very familiar with this industry I am bullish on stocks that will help build out the next wave of bandwidth expansion. The internet is growing as ecomerce, hdtv/digital tv and other network centric services grow. The infrastructure will have to be expanded, a process that is starting for some telecom service companies. BRCM will be a beneficiary of this trend. The fact that investors are buying hard on the dips may support this thesis. I may raise my buy target for the company as well as rotate in another name.
  • SNDA - Shanda recovered sharply yesterday on higher volume. My research shows that SNDA has strong fundamental and technical characteristics including a rise in short interest this month of 212%. I would love to buy more at $35 as my website reports; I may move this target higher in the near term.
  • NIKU - NIKU is being quietly accumulated as investors realize that companies hold tons of cash and need to invest in Sarbanes-Oxley compliant software like Niku offers.
    I am making changes to the website getting it ready for prime time. I am sorry that it is not happening faster but I need to spend more time doing research lately and not web development. I want to present my opinions on investment for the coming year. Stay tuned to learn what my positions are.

12/9/2004 the market and stocks before the bell

The market acted as expected yesterday, stocks bounced after Tuesday's steep and deep fall. It seems to me that investors, while contemplating the brave new world of macroeconomics, are taking year end profits. Over the past few trading days the market has signaled weakness. Check out my last few posts for details. The nasdaq broke below its RTCl of 2150 on Tuesday and failed to close above that level on the bounce today closing at 2126. The nasdaq is up 24% since August and it is normal that share prices correct. On the other hand the S&P500 has stayed above its RTCl closing above 1182. Perhaps investors are rotating into new sectors as they loose interest in energy and tech. Healthcare has held up during the market’s recent fall. Oil is cooperating falling in price and effectively reducing its tax on a global basis. I will be interested to see the correlation between the fall in oil prices and the fall in the dollar on a percentage basis. (for definitions about RTCh(l) or other terms please see www.thesmartmoneyinvestor.com).

In one of my recent posts I referred to this time as “speculation time”. The long term charts for the nasdaq and S&P500 show strength, although the last few days of trade are pressuring that bullish case. The economy is still growing and company fundamentals are good (lots of cash and sales). China and India are investing and fueling growth globally. Oil has come down in price, the dollar has stopped its free fall for the moment and Snow is staying on as Secretary of the Treasury. Holiday sales look good and my wife assures me that discounts are at a premium. Compare all that against uncertainty of the ultimate effects of the dollar on world economies, the real condition of China’s banking system, where are interest rates likely to settle and what will earnings pre-announcements bring (semiconductors are looking mixed with INTC good and ALTR, XLNX suspect). I have sold many shares as I took profits when my targets were hit and/or was stopped out. I lean on the side of caution and am minding my targets and stops. Stay tuned to see how I handle the churn in the recent market and work out the trend from the noise.

  • BRCM - Broadcom closed just above support of $31.7 at $32.07. I am cautious and am moving my stop to $30.5.

12/8/2004 the market and stocks before the bell

After Tuesday's close it is now clear large investors were heavy sellers of stocks. As I mentioned in my previous post, many warning signs have cropped up in the market and especially in the leaders of the nasdaq (see my previous post). If you notice my position table on the website home page(BoomBoom13) www.thesmartmoneyinvestor.com many stocks have dropped off as targets on the upside or the stop side has been met. I am holding some stocks but have significantly reduced my shares over the last several weeks as I locked in gains (over 200% on VLCCF) or had been stopped out (-10% on PLAY). The table is looking the most bare it has in a while. This typically happens when the market runs out of steam. I am not ready to say the current rally is over, but I am reducing risk. Stay tuned to watch any changes that I may make in the short term.

Monday, December 06, 2004

12/6/2004 the market nasdaq and global stocks

The market continues to base in this area (S&P500 - 1190 and nasdaq composite- 2150). Given this year's technical data history, basing like this tends to be positive. This week's market moving activity will be news and data driven. Below is a list of important economic data releases that are likely to move the market. News around the recent terror attacks, changes in the price of oil, rumblings about the Iraqi election and the unforeseen may also be a factor in moving global markets.

  • Tuesday, December 7, 2004.8:30a.m. 3Q Revised Productivity and Costs. Previous: +1.9%.8:55a.m. Redbook Retail Sales Index For Dec 4 Wk. Previous: -0.5%.10a.m. November Challenger Layoffs. Previous: -5.6%.3p.m. October Consumer Credit. Previous: +$9.8 Bln.
  • Wednesday, December 8, 2004No major economic data events for Wednesday
  • Thursday, December 9, 20048:30a.m. Initial Jobless Claims. For Dec 4 Wk. Previous: +25K.8:30a.m. November Import Prices. Previous: +1.5%.10a.m. November Wholesale Trade. Previous: +0.5%.
  • Friday, December 10, 20048:30a.m. October Producer Price Index. Previous: +1.7%.8:30a.m. October Producer Price Index Ex-Food & Energy. Previous: +0.3%.9:45a.m. December Preliminary Univ. of Michigan Sentiment. Previous: 95.5

Sunday, December 05, 2004

12/6/2004 morning the market, nasdaq and global stocks

The S&P500 and Nasdaq composite closed the week at levels consistent with a breakout. There is a healthy dose of market optimism that makes me nervous, however the market closed at 2 1/2 year highs on Friday and the technical configuration of each chart supports the bullish condition. Companies are flush with cash and are in a position to invest. The msft dividend and cingular cash buy out are behind us adding to market liquidity, infusing 3-4 months of mutual fund inflows into one. Of course there are negatives as the dollar falls and employment wasn't reported at the expected elevated levels (is this really a problem at this time?). Some investors are taking profits and there is a noticeable rotation taking place as oil prices correct. I imagine there will be some pre-earnings announcements in the near term and the worry over the Iraqi elections will start to come to the for front.

Right now its speculation time. As I discuss on the philosophy/strategy page of my website www.thesmartmoneyinvestor.com there is a point where an investor puts his/her faith into the investment and speculates on the outcome, especially if good profits are to be realized. The key is to be in a position where there is an enhance probability of success and if failure is eminent there is a plan to cut losses to a minimum. Time to make investments in areas where opportunity has a high probability of becoming profitability. Such investments are presented on the pages of my website. Using my formula where strong company fundamentals are coupled with strong technical characteristics I believe I have an increased chance for investment success far beyond what the market or global hedge funds offer. Stay tuned and watch me as I express my ideas on the web.

  • SNDA - There was some late stage buying in SNDA on Friday moving the stock prices higher. Technically, the stock look ready to move higher and fundamentals are bullish. I am going to accumulate an additional position in the stock below $41. I will have a stop of $38 on these new shares and a target of $60. My original numbers are still valid. I originally bought shares in SNDA this year at $15, however, for the purpose of this blog I am using $28. SNDA has had a strong rise recently, at current levels there is risk and a double digit correction is always a possibility.
  • NIKU - I have noticed some late stage buying in Niku on Friday. This again is a company which offers a strong technical and fundamental case. I have been a buyer below $16 and will continue to maintain my stance. I have a target of $24 near term and $30 longer term. The stock was up on higher volume Friday.
  • BRCM - Broadcom moved beyond its resistance level of $31.9 and looks to be basing in the $33 area. My near term target is $36.
  • RIO - Comp Vale Do Rio moved higher on slightly higher volume in concert with a lower dollar. IV=$90 making this a strong fundamental investment. The stock will be subject to dollar value movement. I expect it to move higher, albeit a bit slower than most my other investments. My nearer term target is $40 but I can see this stock above $60 longer term.
  • PLAY - Portalplayer has broken down lately realizing a good/bad bout of profit taking. The stock has leveled off at $27.9 over the previous three sessions. I like the story, fundamentals and future, but the technicals are not supporting a bullish follow through in the near term. I have reduced my holdings as technicals have broken down, but this a thinly traded new issue that will experience more volatility in the short term. I will continue to reduce shares to zero if we drop below $27.

Thursday, December 02, 2004

12/2/2004 afternoon for the market, nasdaq and global stocks

Visit my website www.thesmartmoneyinvestor.com for details on the 13 stocks that I have in my universe.

The market is holding well given yesterday's rise. Profit taking is to a minimum and there is a bid under the leaders with large investors still buying the best names. Oil is helping and anticipation over tomorrow's payroll numbers has money managers scrambling to rotate positions.

To me the oil sell off has a different feel than the previous ones. The dumping of energy stocks is pressing up against maximum levels with out getting totally ridiculous. The S&P500 is holding at its extended level, which bodes well for the future of the market's run. That said, a miss in the number (payroll) or a good number and a strong bout of profit taking could mean the market has more work to do. I am reluctant to get heavily margined as a good payroll number likely signals higher interest rates. I am staying the course and sticking to my numbers.

  • EBAY - EBAY continues higher. If you follow this blog you know that I bought EBAY hard at the $73-75 level and took 30%+ profits at $105. I did buy more shares at $88-91 and below $107. My near term target is $136 but EBAY can go much higher. Please see www.thesmartmoneyinvestor.com for my point of view on EBAY. It is more than just an ecommerce play.
  • VLCCF - I sold the last few shares of Knightsbridge Tankers that I owned. My original investment was made in January 04 (actually I have owned this stock for about 4 yrs but since I have created this blog I bought more share in Jan 04) at $13/shr. It was a great run and an over 200% return counting the dividends. As much as I would like to stay at the party I am not going to be rude; just taking my parting gift, saying good "buy" and waiting for the next invitation. So long good friend.
  • PLAY-Portalplayer has lost ground recently as some investors have taken profits. It is likely that the underwriters are still balancing out positions. Volume has not been too high through its decline. I am staying the course. Insiders are restricted from selling 180 days from mid November.

Wednesday, December 01, 2004

12/1/2004

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