LiveRocket Week 20 Performance - Up 0.3%

In a complete reverse of last week, the Dow/S&P moved significantly higher while we eked out a small gain.
TIE drove this week’s LiveRocket retreat as a slight pullback reduced gains by 2%

More interestingly is the NASDAQ divergence. NASDAQ fell this week while the Dow surged 1.7%. My gut says that we are returning yet again to the High Tech game of summer slow down in stock price (sell in May, go away)

I have been saying for a few months that the global economy is strong in the face of a weakening US economy. However, US based analysts tend to wear blinders and think only in terms of the US market. That means some positive surprises are in the cards.

HIGH TECH
I am just not getting what I want here. Our only negative performers are in this area. But to be frank, that is a more recent phenomenon – UCTT has gone from a 20% achiever to a -28% drag in just a few weeks. I think it’s a combination of the wrong stocks and the sector as a whole is underperforming.

AMX – Up 6.6% and another 52 week high.

CTSH – Down 2.3%. After crashing to <$77 it bounced back pretty hard yesterday. I think a bottom is here. They also got an upgrade. The sector is getting sold (INFY got hit hard this week as well) and that means a solid bounce back. One thing about CTSH is that I am not seeing the margin improvements that I want to see.

Something to consider is that Indian service companies are changing a critical aspect of their offering. Their initial asset was a labor pool that was somewhat educated, low cost and – most importantly – English speaking. Call centers were a first hit, but not so useful for non-English markets. However, they have added excellent service skills that are much more universal like network support and software development. That transformation is helping them make the next leap as the US outsourcing wave slows. That’s why I think we can get to $95 and walk away with some profit here.

NUAN – Up 6%. NUAN bought Voicesignal, another voice recognition company that centered on cell phones (my Samsung uses Voicesignal for automated address book retrieval). This gives them incredible access to the mobile market.
Understand that the future of mobile-to-internet is still unfolding. Voice recognition can play a monumental role in making that future powerful, and NUAN is going to own it.

PWR – Flat. They hit a 52 week high earlier in the week.

TRID– Up 0.6%. Interestingly enough, TRID hit $20 3 times Wednesday and each time came off. Technically speaking, that’s a positive sign of sorts.
Of more importance is the NASDAQ notice that TRID needs to resolve its options issue by October. No more game playing for TRID.

Since I believe that this is the only thing holding TRID’s stock price back, I am glad to see it. I do suspect that TRID’s management is guilty of criminal behavior and I do believe that they are working hard to delay the reality from coming to light. But I also believe that they have a powerful product in the right market.

UCTT – Down 6%. This was due to AMAT discussing a temporary softness in the market. I am going to start adding at this level.

OIL SERVICES/EQUIPMENT
Oil is up to $65. It is adding to US inflation levels but folks are driving just as much

ATW – Up 2%. They missed estimates and paid the price, but now logic has returned – the markets know that they are making big money

CLB – Up 2.4%.
ESV – Up 3.4% and they hit a new 52 week high.
MDR – Up 2.9%. They won a major contract in Saudi Arabia and got an upgrade.

BIOTECH
Poor results here, but I want to diversify somewhat. Maybe i need to revisit our selection.
DIGE – Up 1%
HOLX – Down 3.8%. They have fallen to a 1 month low AND are below the pre-earnings price. They did this last quarter as well: run-up, earnings release, drop. And then a few weeks later they move higher.
IMA – Down 3%. They are the successful bidder for Biosite.
Of greater interest is Proctor and Gamble’s $325M investment in a joint venture with IMA. They will make and sell IMA’s pregnancy tests.

OTHER
KSU – Up 3.3%. And they hit a new 52 week high. I think the Ethanol craze makes KSU temporarily exciting for investors – they serve the mid-west corn belt.
OCN – Down 3.4% but on low volume. This is an unknown player today, but it will begin to stand out and get noticed. Foreclosures and defaults are accelerating. Our position is also small (2% of total portfolio value)
PCP – Up 3%. Still no split and no Boeing announcement of new production lines.
TIE – Down 5.4%. just a pullback from last week’s takeover rumor excitement

Waiting for today

Today is options expiration and I've been waiting for a short squeeze to push up some stocks.
I am ok with some slight post-earnings pullback, like ATW and HOLX.

I am not happy with a wholesale collapse (CTSH, UCTT, DIGE). The dilemna I face is that they are undervalued imho so it is only a matter of time before they perk up. The question is whether we wait (didn't work with TRID, worked with NTRI, JLG) or sell and come back. With UCTT the pain is so sharp that waiting feels best because the damage is done.

Back for more later today