Week 35 LiveRocket Performance - Down 3.29%
Week 35 (versus previous week)
Dow -0.53%
S&P -0.39%
NASDAQ -1.93%
LiveRocket -3.29%
YTD
Dow 3.49%
S&P 1.36%
NASDAQ -3.4%
LiveRocket 23.48%
Since Inception (Nov 4, 2005)
Dow 5.4%
S&P 3.8%
NASDAQ -1.8%
LiveRocket 35.23%
We were stopped out of ZRAN - again. It had been up quite a bit, so that's a shame. We now have a cash position of $11,636.02
Some important trends that are driving my investment view:
1. World economy is super strong. Japan has a 3.8% GDP. China is also growing at nearly 10%. US is also >3%. The idea that a recession is around the corner is not on my 6 month radar. Only a massive external shock would change my view.
2. Market hysteria continues. One day it is fear that interest rates need to increase to counter inflationary pressures from oil and employment. The next day it is fear of the opposite as housing prices deflate and consumer spending dries up. I reviewed the Dow's volatility back in February (http://liverocket.blogspot.com/2006_02_05_liverocket_archive.html). In my analysis, I noted that the volatility we were seeing was always followed by large stock moves - generally down. We have been experiencing a similar wave of volatility the past 8 weeks.
Ultimately, I think that once the market regains clarity about where the Fed is taking interest rates, then the storms will move on and we will get some calm.
There are some obvious problem areas:
* Housing: supply companies (Lowes, Home Depot, etc), home builders, paint companies, furniture makers, durables (washing machines, dishwashers, etc). Short term spikes in business will disguise the storm under the waters.
* PCs & Consumer electronics: PC sales are slowing and INTC and AMD are in a price war. That will extend to PC companies. I do think that Apple will gain PC share, but they will continue as a niche PC - too expensive to be taken seriously by business or K-12 schools. They offer an attractive bundle, but it costs $1000 more than the comparable high end Dell. That's a problem when you want to win over penny pinchers. iPod is also slowing down. A big fear is that the rising cost of home financing coupled with gas prices will lead to general belt tightening which in turn tends to lead to electronics not being snapped up.
This is hard to see. The Semiconductor Sales report shows booming sales. The market has made assumptions that the housing market and higher interest rates and gas prices will inevitably lead to lower spending. The signs are that it has not, but nevermind.
In general, the signs on Friday are that indiscriminate selling is back. That generally spells buying opportunities. I will stick with cash for now.
LATIN AMERICAN TELECOMMUNICATIONS
AMX Up 4%. This stock suffers from the combination of Mexico's election and the US market. The election issue is going away this week.
EMT Down 3%. Waiting for Telmex to come through on its offer. I'd like to unwind the position around $16
ENERGY STOCKS
Oil hit $75 and oil stocks barely moved. In fact, oil service companies turned down. I call that a great buy opportunity. My approach to the oil sector is to consider the 1849 gold rush. As miners chased this valuable commodity and tore up the mountainsides, the equipment vendors are the ones who made the fortunes. For example, Levis started then.
That has been my fundamental reason for being in this space.
ESV - Down 3%. But it came back 7% last week. One concern with ESV is that they have 2 rigs out of service for repairs (one in Vietnam, a 2nd also in Asia). This will affect earnings this quarter but I think the focus will be in forward-looking statements. And as long as oil runs high, exploration will continue and companies will pay top dollar for exploration rigs.
GRP - Down 2%. Down 5% on Friday. It actually was fine for the morning and then tanked. I blame the ETFs and indiscriminate selling.
MDR - Down 2%. Actually up Friday, which I liked seeing.
TTI - Down 3% after a week when it was up 13%.
HIGH TECH
Nothing but continued weakness. The market shot down all semiconductor stocks.
ISIL Down 2%.
VARIOUS
DIS Down 0.5%. Early buzz on PIRATES was mixed, but over the weekend the word is strong. While the film may not rival the first for storytelling, it is good enough to maintain the franchise and bring in the money. As of today, the word is a new record high $132M for 1 weekend. I expect the market to reward Disney quite favorably. Considering that last week was a holiday week, I expect many to see the movie when they return. I believe that it will beat expectations and send the stock up, especially considering that the 3rd installment is ready for next Summer.
ET - Down 3%
JLG - Down 7%. Wait for earnings and then run.
JBLU - Flat. Signs are mixed. We have high oil prices. Also, seat availibility increased from 12% to 18%. But traffic is up. In other words, JetBlue is flying more often and pulling in more passengers, but there are more empty seats. that could be either because of newer flights getting established (not a big problem) orfewer overall passengers. I favor the former view.
VOL - Up o.5%.
Dow -0.53%
S&P -0.39%
NASDAQ -1.93%
LiveRocket -3.29%
YTD
Dow 3.49%
S&P 1.36%
NASDAQ -3.4%
LiveRocket 23.48%
Since Inception (Nov 4, 2005)
Dow 5.4%
S&P 3.8%
NASDAQ -1.8%
LiveRocket 35.23%
We were stopped out of ZRAN - again. It had been up quite a bit, so that's a shame. We now have a cash position of $11,636.02
Some important trends that are driving my investment view:
1. World economy is super strong. Japan has a 3.8% GDP. China is also growing at nearly 10%. US is also >3%. The idea that a recession is around the corner is not on my 6 month radar. Only a massive external shock would change my view.
2. Market hysteria continues. One day it is fear that interest rates need to increase to counter inflationary pressures from oil and employment. The next day it is fear of the opposite as housing prices deflate and consumer spending dries up. I reviewed the Dow's volatility back in February (http://liverocket.blogspot.com/2006_02_05_liverocket_archive.html). In my analysis, I noted that the volatility we were seeing was always followed by large stock moves - generally down. We have been experiencing a similar wave of volatility the past 8 weeks.
Ultimately, I think that once the market regains clarity about where the Fed is taking interest rates, then the storms will move on and we will get some calm.
There are some obvious problem areas:
* Housing: supply companies (Lowes, Home Depot, etc), home builders, paint companies, furniture makers, durables (washing machines, dishwashers, etc). Short term spikes in business will disguise the storm under the waters.
* PCs & Consumer electronics: PC sales are slowing and INTC and AMD are in a price war. That will extend to PC companies. I do think that Apple will gain PC share, but they will continue as a niche PC - too expensive to be taken seriously by business or K-12 schools. They offer an attractive bundle, but it costs $1000 more than the comparable high end Dell. That's a problem when you want to win over penny pinchers. iPod is also slowing down. A big fear is that the rising cost of home financing coupled with gas prices will lead to general belt tightening which in turn tends to lead to electronics not being snapped up.
This is hard to see. The Semiconductor Sales report shows booming sales. The market has made assumptions that the housing market and higher interest rates and gas prices will inevitably lead to lower spending. The signs are that it has not, but nevermind.
In general, the signs on Friday are that indiscriminate selling is back. That generally spells buying opportunities. I will stick with cash for now.
LATIN AMERICAN TELECOMMUNICATIONS
AMX Up 4%. This stock suffers from the combination of Mexico's election and the US market. The election issue is going away this week.
EMT Down 3%. Waiting for Telmex to come through on its offer. I'd like to unwind the position around $16
ENERGY STOCKS
Oil hit $75 and oil stocks barely moved. In fact, oil service companies turned down. I call that a great buy opportunity. My approach to the oil sector is to consider the 1849 gold rush. As miners chased this valuable commodity and tore up the mountainsides, the equipment vendors are the ones who made the fortunes. For example, Levis started then.
That has been my fundamental reason for being in this space.
ESV - Down 3%. But it came back 7% last week. One concern with ESV is that they have 2 rigs out of service for repairs (one in Vietnam, a 2nd also in Asia). This will affect earnings this quarter but I think the focus will be in forward-looking statements. And as long as oil runs high, exploration will continue and companies will pay top dollar for exploration rigs.
GRP - Down 2%. Down 5% on Friday. It actually was fine for the morning and then tanked. I blame the ETFs and indiscriminate selling.
MDR - Down 2%. Actually up Friday, which I liked seeing.
TTI - Down 3% after a week when it was up 13%.
HIGH TECH
Nothing but continued weakness. The market shot down all semiconductor stocks.
ISIL Down 2%.
VARIOUS
DIS Down 0.5%. Early buzz on PIRATES was mixed, but over the weekend the word is strong. While the film may not rival the first for storytelling, it is good enough to maintain the franchise and bring in the money. As of today, the word is a new record high $132M for 1 weekend. I expect the market to reward Disney quite favorably. Considering that last week was a holiday week, I expect many to see the movie when they return. I believe that it will beat expectations and send the stock up, especially considering that the 3rd installment is ready for next Summer.
ET - Down 3%
JLG - Down 7%. Wait for earnings and then run.
JBLU - Flat. Signs are mixed. We have high oil prices. Also, seat availibility increased from 12% to 18%. But traffic is up. In other words, JetBlue is flying more often and pulling in more passengers, but there are more empty seats. that could be either because of newer flights getting established (not a big problem) orfewer overall passengers. I favor the former view.
VOL - Up o.5%.
posted by Andrew at
2:27 PM
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