LiveRocket Week 3 Performance - Down 0.38%

The oil stocks did great this week but TRID and ILMN pulled us down.

I talked about a pullback and sat on the sidelines for 3 weeks. The DOW & NASDAQ surged 5% while I waited. We had a Monday that was awful and a Friday that was awful. The Dow was down over 100 points before rallying back. NASDAQ was down 42 points before rallying back. No doubt about it - things are turning. I don't think that we are past further pullbacks.

Given the potential for downward momentum, why did I back back in?

Partly because of strong market sentiment. The market is shrugging off a lot of negative news that point to a declerating economy (housing, construction, manufacturing, unemployment). The market is determined to go up, and I want to be a part of that. To protect ourselves from a sucker's rally, I will be setting STOPs

Another reason for getting in is our stock focus. Oil equipment and services are set to rage and the market is finally taking notice. Other stocks are less exposed to a downturn in the broader economy. That is, the corporate profits will continue although the stock price is unpredictable.

Third, we are now heading back into earnings season. In the next 2 weeks companies will begin to pre-announce warnings or re-confirm expectations.

Last but not least are the M&A activities. There are mergers all around and many of our companies are part of the rumor mill. Specifically, TIE and ESV/DO. Seadrill, for example, has taken out a $6B+ line of credit to purchase an oil driller. Whether or not ESV or DO are the targets, signs of consolidation tend to raise the value of sister companies.

OIL- Oil has risen nearly 5%, due to shrinking inventories and a cheaper dollar. After falling out of favor 6 months ago, oil services/equipment stocks are now being looked at again (can you say sector rotation?).

ESV - Up 6% for the week.

MDR - Up 4% for the week.

ATW - Up almost 8% for the week. Earnings are next week (de7th). There must be some extra special good news here that is leaking.

CLB - Up 4.5% for the week.

TELECOM

AMX - Ended the week down 1% and just shy of its 52 week high. The ongoing turmoil of Mexico's election has not helped the Mexican stock market. AMX specific news is that they completed its purchase of Latin American Verizon assets (picking up 2.7M customers in the process). A weakening dollar could make them more valuable, even though they are not ADRs. Level of exposure to US market downturn: moderate because Mexico's market is linked.

BIOTECH

ILMN - Down 3% for the week. I think that we will be drifting until the next earnings release. For the short term, I think that I might have bought too high. But for a longer term (4+ months) I think that we are fine. Level of exposure to US market downturn: Moderate but mainly driven by actual earnings which are themselves immune from broader economy slowdowns.

HOLX - Up 2% for the week.

IMA - Flat.

DIGE - Up 2%. They were added to the S&P 600 on Friday. With clear correlation between HPV and cervical cancer, I expect a recommendation for regular screening for HPV. Currently the testing is considered an option and not standard care.

HIGH TECH

TRID - Down 8% for the week, 3% alone on Friday. Quick reality check. Everywhere I go, people are buying flat panel TVs. Even the news reports show strong sales of these TVs. TRID hsa no debt, tons of cash. It is beating competitors everywhere. Its customers are growing by leaps and bounds. High growth, high margins. This stock really tries my patience.

UCTT - Down 7% for the week. It had a major run-up the last 3 months and some pullback is expected.

NUAN - Down 2%. Fundamentals are weaker than I normally like, but the tie-up with Intuit and LG are too compelling to ignore. Not to mention the Dubai stock market.

IT SERVICES - The reason that I have avoided Indian outsourcing until now was that I saw upper limits. The wave of outsourcing telephone held desks is over. And big companies can access the Indian tech worker by setting up their own teams. Same Indian tech DNA, but no middleman.

INFY - Flat for the week. With INFY I see something else. INFY is going upmarket, taking on IBM and Accenture. market. Additionally, I like ADRs in the face of a weakening dollar.

CTSH - Flat.

METALS

PCP - Flat. Get excited here. Boeing continues to garner more business (60 orders this week). PCP is integral to Boeing's manufacturing. I continue to be surprised that Boeing hasn't started expanding production. Perhaps vendors like PCP are still not able to scale. They make complex metal parts and can charge a premium. Demand continues to increase and with Ford firing workers, perhaps some new talent is available for PCP.

TIE -Up 6%. I love this company and continue to be amazed at how underpriced they remain. Looks like others have the same impression that TIE is now on the block.

FINANCIAL

OCN - Down 4%. I think that I understand OCN's business correctly - they help banks recover on housing loans. Which should be propelling their business into the stratosphere (foreclosures are up 300% YoY).

CSH - Down 3%.