Wednesday, January 14, 2009

Couple of Thoughts

Readers know that I think CNBC's Fast Money is one of the better if not THE best market show on television. Hosted by one of the few pretty faces on CNBC who is finally "gettting it", Mr. Dylan Ratigan, the show gets some excellent guests and have some lively discussions worthy of your time.

What prompted this post was the news early this evening that Steve Jobs, CEO of Apple is taking a medical leave of absence. I want to wish Mr. Jobs well in his battle with cancer for we all know too well the toll this disease takes on not only the affected but the surrounding family. That said, I want to touch on the discussion the Fast Money regulars are having regarding Apple's stock.

Back on Nov 17 I posted a chart on AAPL in which I remarked; "is AAPL headed for $50, the broken trendline suggests so." I bring this up because the Fast Money regulars are recommending buying AAPL 'for a trade' based on the weakness following the Steve Jobs health leave news. So, let me make sure I understand this... they want me to buy a stock that, having closed at $85.33
and is trading down afters and unless something changes drastically before the open tomorrow, stands poised to take out not only its recent reaction low ($84.55), but its recent absolute low ($79.14) which is it's 52 week low. See chart above and sorry for the run on sentence.

Now I don't have all the answers but one guy who sure did was Jesse Livermore and he tended to buy that which was making news highs and sell that which was making new lows. My friend Dennis Gartman, often remarks that he always like to put his rocks in the wettest paper bags for they break most easily.

I bring this up because Fast Money is a "TRADERS" show, geared towards the active speculator. Now call me crazy but Jesse Livermore, might be shorting AAPL here, or might be adding to his short, or might just be sitting tight but I would bet dollars to doughnuts he would NOT be buying it.

I just thought I would throw this out because, and call me crazy for saying this, but maybe, just maybe buying a consumer discretionary stock in the midst of the worst recession and consumer retrenchment many alive will see and many pundits are still loathe to admit, might just be silly.

And if the Apple news wasn't enough for you there's more. To many this will come as a real shocker, I mean out of left field type stuff. That is, that Bank America (BAC) is coming back to the all-you-can-take buffet that is the Fed and Treasury for more taxpayer money to stay afloat.

Just as subprime borrowers went to Countrywide, IndyMac and Golden West for their no doc NINJA (no income, no job, no assets) loans, we are witnesses a perverse form of deja vu where Citi, Bank America, Morgan Stanley are the new subprime borrowers and the Fed and Treasury play the role of Countrywide and IndyMac.

Sadly and ominously, we know how Countrywide and IndyMac turned out and most assuredly Wachovia knows how Golden West fared.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61


Mike said...

I gotta hand it to you man.

You've made some great calls on your Ultrashorts. Congrats.

Harleydog said...


thx, sometimes its nice to have a little luck on your side.
thx for reading and taking time to drop me a note.