All Rook Same

Jeff Macke IS Charlie Runkle.

Today's outlook

The market is very likely to have a rare rally day. I just put a stop loss order on all my shorts and I am ready to start locking in some profits on my longs depending on the size of the rally today. There are key economic data coming out tomorrow which are likely to be horrendous but Obama is doing everything he can to calm the market down including a possible stimulus package announcement. Its not going to be stupid this time either like just giving straight cash back to the tax payers(what the Bush admin did). I think the market has discounted horrendous economoic data already anyway. Plus Citi was re-rescued by the government over the weekend, lol that company is a joke, thank God Rubin is not the new secretary of treasury because he is one of the guys responsible for the Citi group mess.   

Interesting video

http://www.cnbc.com/id/27834889

good news vs bad news

Although its going to be a short trading week, next week is going to be very interesting as significant economic datas are released. I am going to assume that the data are horrendous, maybe slightly worse than expected. However, there were couple good news over the weekend. Believe it or not, Friday's rally was because Obama appointed Tim Geithner as the new secretary of Treasury. Obama also gave a nice little speech about his new recovery plan. http://www.nytimes.com/2008/11/23/us/politics/23otext.html?ref=politics

I personally think market will rally just because we have been so oversold and any good news should trigger a rally. I also think if the rally comes, its a good sell point locking in some profit. I am personally going to short if there is a strong rally because this market is just so unpredictable and one must implement the long short strategy. 

Be patient...

especially with commodity stocks. When a sector is this oversold it always has a huge correction. The problem right now is that people still think cash is king in the short run. I do not know when the money will flow back to the market but when it does it will be a wild one. I am also going to guess that energy stocks and basic materials stocks will rally the hardest. So just get to the best cost basis possible now while the market is allowing and be patient with it.  

Recovery- Then Big Inflation

Recovery--Then Big Inflation

Brian Wesbury, chief economist at first trust advisors, sees a quick V-shaped recovery. The economy "fell off a cliff" in September, which will likely lead to a 3% contraction in the fourth quarter, he says. If so, that would be the worst quarter since 1982, a recession year that produced 10.8% unemployment at the peak.

The current awful fourth quarter is hitting Main Street especially hard. One anecdote, among millions: The guy who cuts my hair, for a price more than that at Supercuts but less than that which John Edwards pays, said that since mid-September his male clientele has bailed to Supercuts. His female clients have stretched their MTBC (mean time between colorings). I visit the snipper once a month. His shop was full in mid-September, nearly empty in mid-October.

Sounds grim, and it is. Why, then, does Wesbury's prediction of a quick V-shaped recovery have any merit? Most economists, after all, see a long L-shaped recovery--two years or more of recession or punky growth. And the pessimists have been right of late.

Here is Wesbury's argument. Individuals and corporate investors, he writes, are hoarding cash. "The velocity of money--the speed with which money moves through the economy--fell rapidly [in September]. If there is a slowdown in the turnover of money--say, a 5% decline--the impact on nominal GDP growth is no different than if the money supply itself shrinks by 5%."

The Federal Reserve, of course, is wildly injecting money into the economy. At some point pretty soon, Wesbury says, the liquidity will loosen credit flows. The cash hoards will come off the sidelines and be put back into the economy.

Wesbury thinks that by mid-2009 the economy will be back to 3% growth. Sounds plausible, but beware: Not long after things pick up, inflation will, too. And when it does, inflation could reach late-1970s levels of 10% or more.

This is pretty much my view of the economic outlook. Everyone get ready for inflation.

Great Read

The End (Portfolio.com)

Michael Lewis, writer of Sam's favorite how-to manual (Liar's Poker), writes a recap of what went wrong since his book. It's a great read: easy and entertaining.

On a personal side note: fuck the Big Three. What the fuck are they doing hiring Nelly to introduce a new piece of shit SUV as they're begging taxpayers to save their failed existences.

Financials are finally cheap enough...

For me at least. It is truly impossible to value stocks right now especially the financials because of all the economic uncertainties. However I am going to finally starting buying financials heavily because I know the long term fundamentals are fine for this sector and many bank stocks are making new lows. Financials are not going away anytime soon especially with Uncle Sam backing them. They might not be able to profit as much anymore but they are definitely intrinsically worth more than what it is valued at now. 

Watch

On November 17th, ctrp stock price will fly after they report Q3 earnings. I am pretty sure they are going to beat the earnings. Even if they are just in line, my bet is that they are going to guide higher than the analyst estimates. Chinese economy is for sure slowing down but it is still growing at 9%. The gigantic stimulus package will not hurt them and with inflation easing in China, the fundamentals of Chinese economy is sound. All these facts will not hurt but only benefit Ctrip's business. Plus 17% of its float shares are shorts. The massive amount of shorts will cover if ctrip reports better than expected which they have done for the past 9 quarters. As the shorts cover and the buyers come back, the stock price is going to rocket just like what happend last time they reported. After ctrp reported better than expected Q2 earnings, the stock shot up 22% in one day. Most of that was because of short covering and for people like Andrew lo and Tiffany's mom who bought ctrp before Q2 earning, they made a 20%+ return trade.   

Of course if they miss and guide lower the stock is pretty doomed in the short run so if you don't think you can take a 20% blow don't make this trade. 

Don't buy for now

Don't buy anything yet unless the market retests the lows. I think the big rallies will come whenever the news about the new stimulus package is announced. The rally will probably be very big enough to cover up recent buys if you have been buying on the dips like me. I am pausing the buying for now unless we retest the low. I will also start buying again if a nice support is built. I think pretty much any good news can trigger a rally considering how deprived the market is of it but there is no way to know when the good news will come and that is why I have been consistently buying on the dips. Of course when the big rallies come, its sell time.      

GOOG

goog just reached my technical add point. Goog @ 320 and p/e:20 is a screaming buy. The stock is dipping because of an analyst price cut. He cut the traget price to 490 from 540 

Expect commodity stocks to run

China unveils a $586 billion stimulus package which i know will trigger a commodities rally. 

sorry guys

I have been literally working 12-14 hours a day so i don't really have the time to post and it doesn't help that I have millions of thoughts in my mind. Feel free to call though with any questions or if you just wanna discuss something. I also welcome insights and insider info. my # 512-363-0868.

One thing, its a traders market right now(its not a day traders market, its a position traders market. Position traders are traders that often hold their positions for a week or maybe even months. Most position traders have a full time job) and you wouldn't believe the returns you will get within couple weeks or months. How? its so simple you wouldn't believe, buy on the dip sell on the rally. Its really important for one to have a "big picture" view of the market and personally I think market is trending up and to add some credibility to this theory,  Warren Buffet thinks its trending up too. Because of all the uncertainty in the market(there is nothing market hates more than uncertainty), the dips will come and rallies will happen. Take advantage. Look into basic materials and energy stocks because they are the momentum stocks right now. The money is so easy it should be illegal.   

portfolio

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This is how its looking so far in my long porfolio. I have invested 28% of my capital so far and will continue to buy on the dips. I am holding very little short positions and don't plan to add to it because I think the market might have already discounted next 6-9 months of sluggish economy. 

AAPL CHK CTRP FDO GOOG POT UYM WFC XOM MVL JNJ 

P.S. feel free to call me whenever if you have any questions or if you just wanna chat investing. 

AAPL,