Exxon's big news

Exxon announced today that they are pursuing 20 new projects.

Behind this announcement is geopolitics. XOM is losing a 41% stake in Venezuela's big oil company. It has another major stake in Sakhalin Island, Russia. Gazprom is not playing fairly with Shell on another bog Sakhlain Island project.

In other words, XOM is being pushed out of markets and needs to speed up investments in extraction. That means more exploration, drilling, & extraction.
Those are my favorite stocks: DO, ESV, IO, CLB, ATW, etc.

Look for some big announcements for these companies. The cash is flowing their way.

Housing woes deepen and spread

I took this off the MSN Money site:
The chief executive of home builder D.R. Horton said at an analysts' conference that the current year for his company was "going to suck," spurring worries about weakness in housing.

"The housing market, which is the weak spot in the economy ... is the main fear of a recession, and the main fear on earnings" growth

But it's dangerous to bet against housing. Even after sayingthis, DR's price was unchanged. Or Fremont bank, a nearly bankrupt subprime lender, saw its stock price zip up 25% on takeover rumors.

Taking the temperature of stocks

Is the blowoff over? Mostly yes. That doesn't mean that I see a run up. It means that the overselling is over.


STILL SUFFERING FROM THE BLOWOFF
AMX – Flatlining. Still seems undervalued, especially given the substantial customer base growth.
DO – Call me crazy, but I’ll buy 60% growth at a forward P/E of 5. At some point, the market will respect the earnings
ILMN – Interesting. They went into a freefall and stopped at $30, an 8 month low. Time to buy, especially because they are growing AND they bounced off a clear bottom
MDR – BUY BUY BUY. The TXU cancellation of investment in coal burning power plants hit MDR because they are an industry leader in many of the technologies associated with coal plants. But it’s overblown. There are plenty of other opportunities out there for MDR.
NUAN – Clear bottom. Time to buy back in
TRID – Trading between $20~$22. Just a matter of time.
STX – With flash memory prices dropping, that pressures hard drive prices.
INFY – This stock is showing severe collapse. Not sure why.
DIGE – Collapsed after a Roche filing, which had been expected. The reaction is probably overdone: Roche has had the process in Europe for 3 years and DIGE still beats them. On the other hand, I am not sure that we have hit bottom.
CSH – Some states are concerned that payroll loans charge customers too much and are threatening to mandate fees. This of course would drastically harm CSH. CSH is down 15% in 1 month. I think the regulation will go nowhere, but I also don’t think CSH has bottomed.


BACK IN THE SADDLE
ESV – Like the selloff never happened.
GRP – Announced as takeover target.
KSU – Bounced back. Again, the premise with KSU is that they are driving LA/Long Beach port competition. They have nothing to worry about Detroit slowdowns – Toyota is building plants. Coal slowdowns are an issue, as are materials for housing, but KSU was never in the heart of that.
Watch this video.
http://www.wallstrip.com/theshow/2007/03/05/3-5-07-kansas-city-southern-railway-company-ksu/
Try not to throw up at the woman presenter (she’s annoying).
TIE – It has pulled back because takeover rumors seem to be unfounded. Analysts in yahoo predict flat growth, but there are only 2 analysts. And they are idiots. TIE beat expectations by 100% this last quarter. Flat growth?
UCTT – Sigh. I got greedy again and waited.
T – reliable company stealing Sprint’s customers.
PCP – Seriously, I hate myself. BUY BUY BUY
CLB – Like nothing ever happened.
ATW – Like nothing ever happened
HOLX – Not sure what is going on here.
IMA – heading back up
CTSH – Heading back up. I don’t understand why CTSH is up and INFY is down.




OTHER
MRVL – After spiking it’s now slipping. No growth here. Trading stock – buy below $19, sell around 420.
OCN – Freefalling for some time. I’m actually confused here. OCN makes money helping to service defaulting or troubled loans. The more loan defaults, the more business they do. Unless I am entirely mistaken about their business and they have exposure to real estate. I am forced to conclude that either they are getting painted with the same finance brush as subprime lenders or this is a missing opportunity. I am holding off for now. (I do own this btw)
MVL – Down down. The story about MVL is future potential. Today they are cash strapped and heavily dependent on merchandising & licensing. They had to give away movie rights to Sony & Fox in order to stay alive: they get only 5% royalties for XMen & Spiderman. (That changes going forward, but again – that’s future) Some argue that Marvel is a 2 franchise company, despite the stable of 4000 comic book characters. They point to flops: Daredevil, Electra, The Hulk, Ghost Rider, The Punisher. I say those arguments are wrong. Those movies sucked, not the characters. Blade was a minor Marvel hero and that has had a very successful 3 movie run. Moreover, the next Hulk and Fantastic Four are supposed to have learned from the mistakes of the first ones. Other releases (Iron man) show much promise. Bottom line – they can start rolling out tons of these movies and make money.
But it’s all future.
If today’s lifeblood is merchandising/licensing, that too is problematic. FF toys didn’t do well. I’ll assume the same for Ghost Rider. So MVL is actually in a bad place for at least 1 more year when Iron Man releases.
So what do I like? That Sony/Fox have to keep the franchise going. These are billion dollar franchises and Sony will gladly pay $100M plus to keep it going.
So why did it run so high? Over the Summer rumors were started that MVL might be bought by Paramount. Maybe, maybe not.
I think MVL can get a little weaker and then it’s a buy

WFMI – back to the price before Wild Oats.

AMD - Game over. Stay away.

NVDA - Just collapsing. With PCs flatlining, NVDA has no growth. It was up only because AMD bought ATI, and folks expected Intel to buy NVDA.

AAPL - Postpones iTV. iPhone not ready yet. Earnings not quite what will be expected. One positive idea: Apple could license it's new touch screen technology to Sony for various games. Except that Apple doesn't do that. How about an Apple game box?

Game back on?

Today was a surprise, frankly. I expected a few more days of malaise. I haven't fully caught up, but this was a big vote of confidence today. Th ebottom was reached, even if there is a bad day ahead.

Events for the week that may move things up or down
Tomorrow is the petroleum inventory report, bankruptcy filings report (mainly ignored but hints at things to come), & the January Consumer Credit report. The latter is a key indicator of future economic activity and could move the market.

Thursday is jobless claims. This is a variable that gets interpreted as affecting interest rates. Given that factory orders are down, productivity is going down as well. That is inflationary. An increase in jobless claims counters that trend. Conversely, if jobless claims don't drop or stay flat, that moves out any interest rate decrease.
friday is undemployment for February.
My view: The trend is towards higher unemployment, mainly due to housing. However, January may not show much drop in employment. It was such a mild month weather-wise that construction continued at full blast.
February, tho, will show the pick up in unemployment.

I don't see any specific variable moving the market, but you never know.

Searching for the bottom

Monday started out fairly promising with the markets moving up. But they couldn't maintain. The markets rallied twice but pulled back.

The money flowed - as it typically does - away from riskier small cap stocks and towards more solid large cap stocks. Which means small cap stocks will rise once the market decides to bottom.

Right now, signs are that the bottom is in. In all likelihood it is.
The Dow fell 730 points or 6% in just a tad over 1 week. NASDAQ fell 7%.

This volatility is indicative of a turning economy and the reactions. I personally think that the housing industry misled everyone as long as possible. That plus the idiocy of most analysts meant that only when it was obvious that the sky was falling did these clowns admit it. That creates panic in the system.

Buying TIE TRID

300 shares TIE 31.98
500 shares TRID 21.05

LiveRocket Performance Week 9: Down 5.8%

We got hit hard this week. The most frustrating part is that the STOPs protected us but I didn’t act in time to buy back in order to take advantage. I expected a pullback and deliberately set the STOPs pretty tight precisely for this opportunity but was unable to move.

While we are still beating the market for the year, it is not much of a consolation: we are down ~6% this week (about the same as the broader market).

What to do next?
It really depends on which camp you fall into:

• Minor blip – In which case, jumping in now is the way to go because stocks will rebound hard
• Short term adjustment – Like the post Katrina thing. Expect some short term malaise followed by return to bullishness
• Game over – It’s Midnight at the Party and Cinderella is about to turn into a pumpkin. Cash out and buy CDs

The non-event camp assumes that there was a one-time panic. That is, that the recent pullback was just the fallout of a Chinese government attempt to slow down their economy and stock market. I’m not entirely sure that is why the market crashed – after all, in January the Chinese government forced pullbacks of similar size.

The game over camp assumes that the pullback was a response to the recognition that the US economy is hurtling towards a recession: credit problems, the related housing problems, the related consumer spending problems, and a slowing US economy are finally. Indeed, Greenspan said as much the day before the crash. While I agree that the US is heading to a recession simply because the housing market is crumbling, I think the global economy is still plugging along.

I think that this was more somewhere in the middle.

* Overdue pullback – In some ways the pullback was partly self-fulfilling (lots of chatter for the last 6 weeks suggesting a healthy pullback was overdue given the rapid rise). Indeed, a lot of the first day was exacerbated by automatic trading. A lock-in-profits mentality.
* Uncertainty and fear – The last time uncertainty and fear hit the market was last April/May. The market crashed and stayed down for 4 months only to zip up to new highs. The uncertainty is tied to the same issues: where is the economy going and where are interest rates going. The answers are more clear this time, and folks may not like the answers because it means a slowing economy. Slowing is never good for the stockmarket.

* Global economy is still strong – While we in the US are on the down slope, the rest of the world is till charging ahead. The former Soviet bloc is starting to fire on all cylinders, as are several Asian countries.

I remain positive but cautious about the year. I do think that the housing issue will drag us into a recession and that it is a problem mainly for how widely ignored and understated it the depth of it is. Just a few weeks ago, for example, most analysts saw no problems with the home builders. Now we see the #2 sub-prime lender is under criminal investigation and may declare bankruptcy shortly.

Right now, I see some malaise and tentative first steps. Tax season is coming up and that could play as a wild card. However, earnings season is coming up and I expect some solid hits for our current (and recent) stocks.

For the next few days, I see buying back in. Selectively. That means
1. Buy on down days
2. Buy according to business cycle (avoid housing, construction, consumer durables, materials) Assume that a recession is forthcoming and that healthcare and select stocks are immune