Too Far, Too Fast?

I love the fast lane! When I was younger, I actually lost my license for a short while for too many speeding tickets. Anyway, experience is causing me to slow down on the road (kids also do that). I also think that the market is saying the same thing - slow down.

I keep preaching about the 1490 mark on the S&P as being a critical support/resistance point. The market took off today and snuggled right up to that point and fell off. I realize that moving through 1490 today may be a "bridge too far" considering that the index is up more than 1% (as of this writing), but without breaking through and holding 1490, we are just now in a trading range with 1490 being the top of that range.

I therefore sold half my calls shortly after open this morning. I sold everything that had a December expiration (AAPL and GRMN). I still hold APPL, GRMN, and PCP January calls, but those positions are lighter at the moment than usual. I am playing this a little more conservative than I usually do.

I realize that the market this week has been event driven and that you have to take advantage of what the market tape gives you, but sustainable rallies are not built on rocket launches.

Like a Moth to Light

I have been ZOLT'ed. Like a moth to light, I can't seem to get away from losing money on ZOLT once again. The company reported better than expected earnings of $0.24 EPS, a penny better than expected, despite a huge hit to their P/L because of derivative accounting and the huge $20 million conversion that hit the books this quarter.

Gross Margins are still below where the company needs to be to make a go at things long term (currently 29% and they need 35%), but once again, investors seem to be willing to get the company a pass this quarter. There are some true believers in the carbon fiber story that don't want facts to get in the way.

Today, I quickly covered my ZOLT puts and moved on.

I also covered my XLF and TIE puts as well. The tape is holding up very well. I had expected a sell off today due to profit taking that didn't happen. No thesis to keep them, so I covered expecting a another bounce from our Fed Chairman after his speech tonight.

Trick or Treat?

Nice kitty. Is this a good looking cat having a bad hair moment or something sinister? That is the question for the markets at this point. Today really doesn't matter. All eyes will be on the Fed Chairman tonight to see if he confirms the words spoken by the Fed Vice Chairman yesterday that basically got the market all excited that a rate cut is probable.

We have clocked 550 points to the upside on a relief rally. Tomorrow is the follow through day. Positive comments probably mean the bottom is in. If he disappoints, then we may retest the lows again.

The indexes are bumping up against buyer exhaustion after the run, so I would expect profit taking today. Everything is about 1490 on the S&P. If we close above that number on volume with the intent of holding it, then we may have a Christmas rally. If not, then hedge your bets - we may be in a trading range for some time.

Protecting the Portfolio

I'm really glad to see the run that the market is having. It was about time. All my bottoming indicators were screaming oversold, but the ship is hard to turn around and we are not out of the woods yet.

It is time to add a little protection. The tape is up more than 450 points without a breather. I picked up some XLF puts this afternoon as insurance for the Fed Beige Book to be released at 2 pm. I am thinking that there may be a little selling prior to 2 pm.

I also bought some TIE puts as well. The stock hit $29.00 on a huge run and I am looking for a little daytrade action there.

I also bought some more Garmin calls at open (Jan180's). It is my intent to roll over the Jan95's if this rocket continues to move higher.

Adding ZOLT Puts

I love the carbon fiber story, but do not believe that ZOLT is the firm that is going to break through and be a good stock to hold. Their technology is awesome, but their execution is terrible and the ROI and Gross Margins are not there at the moment for me to want to invest in the company.

However, I have done so much research on the company that I do trade around events with ZOLT. This week, ZOLT is expecting to issue Q4 results. I think that, once again, investors will be disappointed.

I am not willing to bet a lot on my thesis, however, and I have only just nibbled at the trade today buying a few ZOLT Dec35 puts. I am buying put options because I believe that the retail investment community really doesn't understand all the stock dilutions that have occurred over the last 18 months with ZOLT and will be shocked when they see the P/L.

In ZOLT's defense, they have announced the large convertible debt package and have been using derivative accounting for years, but a huge GAAP quarterly loss is in the works and I am not sure that folks are ready for it. At least $20 million in convertible debt is due to be converted this quarter resulting in a $17 million charge to the P/L.

In addition, ZOLT has a number of lawsuit judgements against them in which they have not adequately set aside enough reserve to pay these judgements. Now they could announce a settlement with Gurit resulting in a lower judgement this quarter that negates this issue (and may even bump the stock) and this adds risk to my trade, but I think that ZOLT just played fast and loose with their reserve and may have to take an additional hit to the P/L to get these lawsuits behind them.

I may add to this trade tomorrow by either financing the puts I bought by selling Dec30 puts to pay for them (assuming therefore that the stock will be above $30 by options expiration) or by buying some cheap calls to hedge my puts and put a strangle in place.

Making some Changes

I have a busy day, but I lightened up a little into this strength this morning and got a little more defensive. I sold ETFC. I had a portion of my long position on a trailing stop that was taken, but I then decided to sell the rest as well. I had to stick to the discipline of my thesis and that was that any buyout announcement would happen fast and not slow. I walked with only a 20% profit, but that is still not bad for one weeks work.

I used this cash to buy more ROCM and started a position with SIRO. The dental supply company reports next Friday and I think that all the bad news is mostly priced in.

I also lightened up by selling my AAPL Dec185 calls on this mornings pop for a loss. Time premium is killing me and holding instead of rolling looked like more risk. I solidly believe in AAPL, but I am not willing to risk a losing position on betting that AAPL will take off in the next 10 days (which is what a profit would require). I will add at-the-money calls on a dip and roll the money into January options.

I also took a profit on some GRMN calls. I took half off the table. I see GRMN taking off, but I am also tired of watching the market fall off each afternoon, so I will re-enter on a dip.

Finally, I bought some ZOLT Puts. Just a nibble. I will explain this further in a more detailed post later this afternoon.

AAPL's Technicals Worth Watching

Apple's technicals showed some precision over the last two weeks. It appears to have bottomed exactly at the 61.8% Fib retracement point just below 154 and has been forming a symmetrical triangle until today when it broke through the pattern and its 15-day moving average (which was tracking the down sloping leg of the triangle) on decent volume.

I would have preferred it if it had built a better base before moving higher, but I think that this stock wants to move again now. I need a confirmation of follow through for me to feel comfortable that we are on-track for a re-test of the highs, but I am selling nothing at the moment hoping for more upside this week.

http://stockcharts.com/h-sc/ui?s=AAPL&p=D&b=5&g=0&id=p33882970236&a=114964461

Wall Street Realized That Christmas is Coming

I guess that the "invisible hand" today decided that, yes, Garmin GPS receivers will indeed be a hot Christmas item this year. Where have they been? The stock is up more than 8% after Black Friday news that favorably mentioned Garmin items. The stock also received an upgrade this morning from Canaccord Adams, adding more fuel to the fire.

Now if the subprime story could just get off the front page, then we could all breathe easier. The traders are selling the strength, making it hard to ever get a rally going. I know, don't fight the tape.

Just sitting tight and enjoying the view.

Greed, for Lack of a Better Word, is Good!

Still holding ETFC as it seems to be selling off a little this morning after a huge run-up on Friday. It definitely sounds as if ETrade is for sale and that a deal will get done. The question is at what price?

The latest media reports are that both AMTD and SCHW are looking under the hood and that the hold up is all about finding a fair value for those mortgage-backed securities that got ETrade in trouble in the first place. At this point, I am still up 30% and looking for more.

I think that the deal gets done this week and it will be for more than the value the market is placing on the stock at the moment. Greed, yes, greed is keeping me involved with this very speculative play at the moment.

Random Thoughts on AAPL

I have never attempted to post on this blog about why I am long AAPL because this company has been the most talked about story in the business world over the last year and I thought I couldn't possibly add more to the internet discussion. Well, today I am going to break this rule.

Doing this helps me to check my thesis why I think AAPL is such a good buy at this moment in time. If the story doesn't make sense to me, then I ditch the stock. AAPL just consistently exceeds my expectations.

I am not sure that anything that I discuss is "original" considering that I have probably read thousands of posts and articles about the company over the last year, but I will try to briefly paraphrase what I have retained with regards to the "big picture" about this company's success and why I think that 2008 will be even better. Hopefully, a condensed version (like this) will provide us all some prospective about AAPL and I apologize in advance for not crediting any authors below that may have put some orginal thoughts of reasoning about AAPL into my little brain over the last year.

First, some history. I have had a fondness with this company for the last 22 years. I bought a Mac in 1985 to help finish college. I simply loved it. It was so much better than it's competition and took programming to a whole new level. It was an engineering achievement. The mainframe world was ending (at least temporarily) and the "green screens" where being replaced with a compact and very sleek computer with a simple, easy-to-use interface.

Apple was taking off. They had a killer platform, but they had the wrong market. They focused on the educational and creative market while not really competing effectively in the business market. I ended up having to leave my Mac after college to learn the world of DOS and Windows because that is what the business world expected.

Apple suffered because they picked the wrong market and Microsoft (software and OS) and Dell (hardware) overcame Apple's original engineering advantages by mass producing their products at price points that Apple couldn't compete with. Trying to find another niche, Apple bombed with the Newton. Not because handhelds weren't going to be popular, but because the Newton did not really have a killer application that folks HAD to have. It did a lot of stuff well, but didn't compete with the Palm (at the time) that did a few things very well. Simplicity won and the Newton's fanfare ended quickly. Apple tried to do everything and the Newton ended up being too big, running too slow, with too little power.

With the iPod, however, it all came together. They offered a gadget that does one core job well - it plays music. They developed a slick looking interface inside a tightly engineered package. They combined the four things that they learned over the years: 1) simplicity - make it useful, 2) Have a killer platform or application, 3) engineer a product that is better than anything that currently exists, and 4) market this to a wider market and appeal to a broader base.

They accomplished all four of these themes by also creating iTunes to be integrated with the iPod. This on-line music and video store made it simple for iPod users to purchase, download, and play music and video. Apple convinced music labels to sell content on iTunes using FairPlay and avoided the DRM (digital rights management) controvery that has been holding back music downloading since Napster. Rather than clamping down music in an impossible effort to prevent all theft, Apple suggested that the labels profit by providing honest customers a superior product to buy. The combination of the iPod with iTunes, while MicroSoft failed to understand the market, gave Apple a huge lead and a huge core user base before another player tried to compete.

The iPhone and the iTouch is just an extension of these basic concepts. Develop a brand and awesome marketing with simplicity, wide market acceptance, and engineering advantages while using a killer application as the base. The iPhone is bringing mobile computing and the internet to millions of people because it's combining key mass-market adopted technologies such as digital music, email, instant messaging and the cell phone in an impressive way that no one has done before.

They have positioned themselves to have an outstanding Christmas season that should roll right into a huge 2008. They have also done this by leveraging their brand and popularity back to their roots - building Macs. The "coolness" factor is causing consumers to take another look at the Mac, a technology and a platform that Apple continued to develop, allowing AAPL to increase its PC market share in a very tough and competitive industry.

The iPod continues to exceed expectations. Loyal customers are buying them like computers (every couple of years) to get the upgrades (I have two iPods). AAPL's iTunes store has now taken over as the "preferred" place to buy music and video and is now one of the largest music distributors with on-line downloads growing while CD purchases are declining.

The iPhone is also being released in other countries as we speak. Their strong margins on the iPhone continues to astound the critics as they negotiate revenue sharing agreements with mobile phone service providers.

I expect applications to be developed for the iPhone that will be downloaded and purchased on iTunes. I expect iTunes and the convergence of technologies on the iPhone to lead to an effective iTV. I already play my music through my soundsystem using my iPod (who needs CD's or a CD player?). Why can't I get all my TV content through iTunes? Well, I probably will in the future.

The iPhone turns a profit at the point of sale. But it also makes money off the service providers and drives consumers back to iTunes for music and other content now that they have internet on their iPhone. When applications are made for the iPhone, AAPL will also generate revenue through revenue sharing agreements with these developers.

Critics keep looking for an "iPod killer", but the reality is that all of Apple's products are linked, one built upon another. Why would anyone mix and match?

So how can AAPL slip up? Is this is a sure thing? Well, Alexis W. Cabot, an investor based in Rome identified the following red flags and roadblocks for Apple (http://www.macobserver.com/forums/viewtopic.php?p=377733#377733). I have paraphrased them below:

1. Steve Jobs continued leadership of the company is still essential. We all know how his idea of what works and what doesn’t permeates the decision thinking process at Apple, but Apple must learn to do without him, otherwise it will not be a great company. General Electric has done a great job at creating internal leaders that are excellent managers and have kept the company at the top of corporate America for a century. Apple must have it’s own management creation process in place.
2. Corporate hubris. Signs that the company starts believing it can do no wrong and that customers will buy anything they produce will be when the company has peaked. Apple went through this phase in the late 1980’s and we all know how that ended. Apple’s insistence on revenue sharing with the networks just to sell a Jesus Phone would be nice for us shareholders, but there is a wider world out there that has laws against such restrictions on trade. I hope that Apple/Steve Jobs doesn’t shoot itself in the foot if it insists too much on these revenue sharing deals.
3. Inability to build lasting partnerships. As Steve Jobs himself said at "All Things Digital" that Apple has to learn how to make better partnerships. Never has Apple needed more content and networking partners than before. It needs to work with music and movie companies, with it’s own set of histrionics, and then with the highly regulated and staid cell-phone networks.
4. Souring US relations with China and the rest of the world. A trade war between the incumbent superpower and the aspiring one are likely to derail Apple’s (and most of corporate America) growth. It will be more expensive to outsource and then sell to China, which has one of the most rapidly growing and homogeneous middle classes of the world. Given the poor job the US has done in managing its international relations, this is a growing possibility.

AAPL is on-sale now. Ask your broker and do your own due diligence.

ETF's Gone Wild

While doing some reading this weekend, I realized that I had no idea that a major ETF existed for tracking Consumer Staples. I then noticed that this ETF also had options trading. I guess everyone can call me "slow", but it seems that new ETFs are coming on board all the time and it is very difficult to keep track of it all.

I have extensively used SPY, QQQQ, QLD, and QID to hedge positions over the years (mostly SPY than anything else). I have also held country ETFs (like EWA) to play the international markets when I either wanted a hedge or wanted to play a general theme (such as the power of emerging markets or the commodities bull run), but I have not really used sector-based ETFs because of two reasons.

The first reason was because I confidently believed that I can "pick" stocks within a sector and get better performance than the sector index (that may, admittedly, sound pretty arrogant). The second reason is that I wanted to use sector indexes to hedge long positions for certain stocks within the sector but the sector ETFs didn't offer options.

Well the second reason has now been completely addressed in many heavily traded sector ETFs and this opens up a whole new world of options trading for me.

Not all ETFs are created equal and I caution everyone to fully understand what the ETF invests its money in. Liquidity is also very important, and unless there is a compelling reason to invest in a low volume ETF, I only focus on ETFs that have an average daily volume of more than 500K shares traded.

Some of the ETFs worth considering that I plan to use in the future are listed below. There are hundreds more than this (so this list doesn't try to be all inclusive) and I didn't focus on any of the international ETFs plays.

General Indexes

• SPY (tracks the S&P 500 and trades options)
• QQQQ (tracks the Nasdaq 100 and has options)
• IWM (tracks the Russell 2000 index and has options)
• QLD (attempts to track twice the Nasdaq 100 index and now has options)
• QID (attempts to track the inverse or short the Nasdaq 100 index and now has options)
• SDS (attempts to track the inverse or short the S&P 500 index and now has options)
• DIA (attempts to track the DJIA and has options)
  

Sector Plays

Financials

• XLF (tracks with the financials and has options)
• UYG (attempts to return twice the financials)
• IAI (attempts to track with the Investment Bankers and Brokers and has options

Homebuilders

• ITB (attempts to track with the home construction players)
• XHB (attempts to track the S&P Homebuilders index and has options)

Energy

• USO (attempts to track futures related oil prices and has options)
• XLE (tracks with oil and gas stocks and has options)
• PBW (attempts to track with clean energy stocks and has options)

Retail

• RTH (attempts to track stocks of 20 companies in the retail sector and has options)
• XRT (attempts to track the S&P Retail index and has options)

Materials

• XLB (tracks the S&P Materials sector and has options)

Technology/Semiconductors

• SMH (tracks some of the largest semi stocks and has options)
• XLK (tracks the technology sector including Internet and has options)

Consumer Staples

• XLP (attempts to track major consumer staples companies stock and has options)
  

Weekly Recap

Finally, it looks like some light at the end of the tunnel (and it may not be an oncoming train). Yes, the market lost ground this week, but Wednesday felt like a bottom. For the 1st time during this correction, the market experienced real fear on Wednesday. The pain has been there, but the fear has been lacking.

Today's short session proves nothing so I will couch any optimism with the need for the bulls to really step in early next week and take back the field. Only then will we know if the bottom is in.

Regardless, a lot of stocks are now broken and it will take a few weeks for leaders to regain the beginning of an upward trend again. Next week will say a lot about whether the market finishes strong and positive for the year or not.

This week has been highlighted by a very speculative purchase I made on Tuesday afternoon - ETrade (ETFC). Seeing that the stock had tested its bottom and held and understanding how oversold the stock was on legitimate credit concerns, I dumped in a bid that was taken at $3.80. Analysts have valued ETrade's brokerage accounts at $10 per share (more than $4 billion), so the mortgage-backed securities make up the delta between what the market is pricing in and the value of its core business. The negative value that the market is pricing in for the company's impaired assets is about liquidity concerns and the need for a potential mark-to-market write down of more than $1 billion. I am up 38% on this trade over two sessions. I plan to start peeling some profits off the position above $6.00.

AAPL also held its own and looks poised to recover nicely. GRMN, while down, is showing a nice looking bull flag. ROCM is lower and and the price action is worrisome, but that should be expected with thinly traded stocks. Finally, PCP also had a better second half to the week.

I made very few trades this week. Trying to guess the trend on the short term charts is not my style so I just need to be patient and wait for opportunities.

In Need of a Root Canal

Sirona Dental has just received a root canal. Patterson, a pretty lousy dental supply company just warned for 2008, citing general economic conditions as the reason for the warning. For Patterson, this is just a new excuse for a poorly run company, but the pin action from this warning is putting SIRO on sale.

In fact, SIRO has broken through its 200-ma and looking for a bottom. I think that bottom may be $23 so I am holding off for today, but any bounce that looks like it will hold and I am a buyer. Nothing is wrong with the dental supply market and SIRO is doing fine. Patterson is what is wrong and they ought to blame themselves.

A Very Speculative Purchase

Taking a little off the table for a very speculative home run attempt. That is what this purchase is about. Today, I bought E*Trade (ETFC) on its implosion over the last few months as the online broker has moved from a high of $25.79 in June to a low of $3.46 this week.

This is all because the company has a large number of mortgage losses due to marking to the current market. They are marking assets that basically have no market and taking huge losses as a result. I am betting that the market comes back and those assets get "re-marked" to a more liquid market once some sense is made of the credit crunch.

This is a poor man's "Buffett Play" on distressed assets and is very speculative. Every dollar that I have on this trade, I am prepared to lose. This is not for the feint of heart and not for IRA accounts.

Here is the chart that shows a multi-year look at the stock:

ROCM's Future Earnings

I saw a blog post by Rocco Fenton on Seeking Alpha (http://seekingalpha.com/article/54810-rochester-medical-facts-and-emotions-collide?source=yahoo), and while I enjoyed the post, I was struck by the writer's analysis of a "fair value" for ROCM. He built a future earnings model for 2008 and 2009 and came up with $0.38 EPS in 2008 and $0.58 EPS for 2009.

While I would dispute some of Mr. Fenton's numbers (I think they are a little low), I am willing to accept his numbers for the purposes of discussion about what is a fair value for ROCM. He derived his revenue numbers outlook based on an 8% quarter over quarter growth estimate, which gives the company an annualized revenue growth rate of 36% for 2008.

So the question is what should the market pay for 36% yearly growth, accelerated earnings growth, new major contracts coming on line, a huge quarterly gross margin range of 50-55%, no debt, significant cash and equivalents on hand, and the potential of a lawsuit settlement with Covidien?

Well, right now, the market is giving ROCM a forward 2008 P/E of just over 30. Rocco Fenton seems to be focused on the past for a valuation estimate. He won't pay more than 30 times trailing earnings. Sorry, but this is a growth stock, not an insurance company. Looking at trailing earnings with growth stocks is looking out the rear view mirror - you miss the move.

Growth stocks with solid outlooks and solid fundamentals usually command 2 times growth and investors are now looking at 2008 earnings to determine this fair value. Let's discount this to 1 times the growth (this is a Micro Cap) and we are talking about a fair value of $36.

The market is just not paying attention and Rocco is a value investor trying to make sense of a growth stock.

The Silent Scream

Those in cash look smartest at the moment. The market is too oversold to be short and the longs are ready to jump out of a window. This is painful. It is the point where my positions look really foolish.

Time will tell. Nothing really to say about my positions today. I was crushed again today and the wounds are deep.

So let's look at the charts. We retested the low again on the correction and the support failed today. We are searching for that new low and the moment of truth is upon us. Why? Because we are coming up on major trend lines.

The S&P 500 (which I still believe is the chart to watch) is coming on support at 1430 as well as the major March trendline at about the same point. The market pulled up to this point, suggesting that some buy programs kicked in at this support area today. Hopefully the after hours retail news and HP earnings will jump start us in the morning, allowing the area to hold.

If not, then the 20-month average is just below 1410. This is where the March and August lows held. A repeat to that area (and a bounce) and we may recover really well into the end of the year. Without it, then we are heading to uncharted territory with a break of 1370 breaking a 5-year bull market. One more day like today and we are staring into the Big Bear's eyes.

The bulls have to rally. Without institutional money playing to win, then this market is toast.

Here is the S&P Daily. It is my focus.

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=4&g=0&id=p14473809506&a=116688257

Weekly Recap

The week was ugly and the market took no prisoners. My portfolio took a severe hit this week. All of my stocks are now technically broken and it will take some work to reestablish an uptrend.

Monday was brutal to the technology and metals sectors and I was forced to sell some AAPL options to avoid a margin call this week after the Veteran's Day massacre.

Tuesday gave us a dead cat bounce, but we were unable to hold critical support levels and break through the 1490 area on the S&P. I spent much of the week fretting about GRMN and expecting an announcement everyday. That announcement finally came on Friday and investors cheered GRMN walking away from the Tom Tom bidding war.

The lack of good news or important announcements kept me from making many trades this week. PCP continued to disappoint and fall lower, while ROCM's earnings announcement failed to energize the stock.

I finished the week a lot poorer than when I started it and look forward to what will hopefully be a turnaround week coming up.

Let the Good Times Roll!

GRMN withdrew from the Tele Atlas bidding war with Tom Tom and they did it with a drum roll, disco lights, and a retro band by extending their existing LTA with Navteq by another six years (through 2015) with an option for another four years. I think that management deserves a MAJOR Golf clap for this move.

Tom Tom not only ended up paying up for Tele Atlas (taking cash and earnings away from the competition), but they worked out a mechanism to continue reaping their current Gross Margins without the headache of a distracting integration process with a non-profitable mapping operation. Sure, they may have some downside because they lose synergy with timely map data/hardware integration, but I personally think that this issue is overrated.

GRMN is up 20% in pre-market. Let the good times roll.

1492

In 1492, he sailed to the New World. Right now, the S&P needs a new world as well. One that has the confidence to bid the price of stocks higher. Unfortunately, that won't happen until we close above 1492.

Sell the news is in play until the market has reason to move higher. This technical level is every thing at the moment. Boy, am I glad that I bought those GRMN puts. I should have collared more on my stocks. Regardless, I need to sell those puts in the morning - they expire on Saturday.

Not much news here as I am making less trades waiting on news.

Putting a Collar on GRMN

I couldn't stand it. I was too exposed on GRMN and put a collar on my long position. The Nov80 puts were just too cheap to pass on. I have no idea if GRMN will offer a higher bid for Tele Atlas or not and I would be a fool in not hedging.

Nothing like waiting until the last minute, but it has worked out for me. If the stock takes off tomorrow on good news, then I wasted a few bucks. Otherwise, my protection will actually pay off handsomely.

You can buy a lot of puts for $0.30 per contract and the reward is outstanding.

Coming up on Resistance

Every trader knows that an area of support for the S&P since the March sell-off has been the area around 1490-1492. What was once support is now going to be resistance and it may stall this snapback.

Good news is what it is going to take to move through this "sell point". I am seriously considering taking a little off the table for the possibility that we can't get through this resistance on the 1st try.

Here is the chart:

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=4&g=0&id=p14473809506&a=116688257

Will this Dead Cat More Than Bounce?

I made no trades today. I just sat on my positions and reaped the reward of a strong bounceback. So where are we? Is this just a dead cat bounce?

Well, I personally don't think we know yet. In this recent world of volatility, momentum is everything. The up channel was broken and the bulls need follow through or we are retesting the lows. Follow through doesn't need to happen tomorrow. In fact, the best rallies happen when the follow through is done 3-5 trading days from now.

With momentum the name of the volatility game, we await the PPI and CPI due this week. Economic data will now move this market from day to day.

So I await the PPI in the morning and news from Garmin. Eventually, I will be wanting to raise some cash to protect against another slide. This time, I swear that I will use a little more discipline and especially pay better attention to the VIX. The Nasdaq really showed the fear. The S&P didn't. The S&P however flashed a bounce and the market reacted.

My timing was only off a day for this bounce, but that day cost me a lot of cash. Not worth trying to predict the top or bottom, only the trend.

GRMN Update

GRMN's stock price held up pretty well today until news was released by an analyst from American Technology Research this afternoon that the company will up its bid to as high as $60 per share for Tele Atlas and try to wrestle the company away from Tom Tom. There are not complete details yet on this, but here is the link:

http://biz.yahoo.com/ap/071112/movers_roundup_goldman_sachs.html?.v=1

Not sure how this guy knows this and the public doesn't, but he has a following. This is the same guy that downgraded the stock about a month ago.

Slaughtered!

Sorry to be so graphic here, but today's action is ugly. Technology and metals are getting killed, while financials are up. What gives? Aren't financials the problem? We all know the answers to these questions are not that simple. Market psychology is everything and certain leadership technology companies are experiencing panic selling at the moment.

AAPL hasn't done anything to deserve the pounding it is getting, but it is a consumer oriented stock and it is time to sell the sector. I thought that Veteran's Day would result in a thin trade potentially prolonging the down turn until later in the week. It seems like traders want it over with today.

While I have not yet really been wrong about the timing of this downturn, I have definitely been wrong about the severity of it. GRMN is the one stock that has some really concerned (M&A Bidding war), but it is holding its own today. It is PCP and AAPL (market leaders) that are being led to the slaughterhouse.

I had to sell some options (AAPL) at a loss to keep away from the margin man today and tomorrow. With AAPL, we are about 10 points from significant support (148). With PCP, we just hit it below 140.

Weekly ReCap

I waited until today to recap the week. I was too depressed yesterday to relive the week. It started out so well. That is because I am heavy technology and they held up to the negative tape early in the week.

The week started with me buying ANSS and UA (again). It also had me defending GRMN by adding more calls as the stock broke down through $95. I also sold the last of my NVDA. It was a great run, but time to rotate out.

Tuesday saw ROCM continue to free fall and I added shares like crazy. GRMN also looked like it had bottomed (it turned out wrong). Tuesday also saw me dumping UA for a loss again. Holding a retailer has been ugly and it broke through my support line again.

Wednesday was a perfect trading day for me. The day started with an ROCM upgrade that saw the stock move up 12%. I had to take profits on that move and reduced by 20%. I was also able to turn really bad news into only a minor disaster. GRMN was outbid by TomTom causing the stock to dive again. I was able to put a collar on my positions, however, and rode the stock down completely hedged, selling my collar (puts) for a 25% profit at the end of the day. At this point, even though Wednesday's close was ugly, I felt pretty lucky considering the damage I was seeing to other sectors and stocks - I was still in decent shape.

What I didn't realize is that technology was getting taken out and shot. I did buy some SPY puts to hedge at the close when I saw that the shorts were not covering, but it would not be enough to hold back the bear.

Thursday was a bad day. I traded badly. I made no money on those SPY puts because I got head faked out of them. GRMN was tanking and it forced me to roll over out-of-the-money calls into closer at-the-money calls to maximize the delta. It was time to get simple and focus on only a few core positions. I sold ANSS to raise cash (I had to to maximize my call position) and peeled off more ROCM. The day was ugly giving me my biggest loss since August by a long shot (we are talking 10% here).

Friday morning saw me putting all my remaining cash to work by buying AAPL calls - this stock has now been in a 3-day free fall. Another ugly day. The bulls looked like they would turn it going into 3 pm, but the selling was too much and they covered.

I am now cheer leading and watching those charts.

The Crisis

"These are the times that try men's souls..." [December 23, 1776]

"Truly may we say, that never did men grow old in so short a time! We have crowded the business of an age into the compass of a few...[days], and have been driven through such a rapid succession of things, that for the want of leisure to think, we unavoidably wasted knowledge as we came, and have left nearly as much behind us as we brought with us: but the road is yet rich with the fragments, and, before we finally lose sight of them, will repay us for the trouble of stopping to pick them up..." [April 19, 1777]

"But to pass from the extremes of danger to safety, ... though sweet in contemplation, requires a gradual composure of the senses to receive it. Even calmness has the power of stunning, when it opens too instantly upon us. The long and raging hurricane that should cease in a moment, would leave us in a state rather of wonder than enjoyment; and some moments of recollection must pass, before we could be capable of tasting the felicity of repose. There are but few instances, in which the mind is fitted for sudden transitions: it takes in its pleasures by reflection and comparison and those must have time to act, before the relish for new scenes is complete..." [April 19, 1783].

A completely different time about a much more serious matter at hand, but I was thinking of Thomas Paine this morning and his famous quotes from "The Crisis" (a series of open letters during the Revolution) intended to strengthen the resolve of the warring public. It is I this weekend (and other longs) that need a little "bucking up".

Friday was ugly. An attempted rally from 2:30 pm to 3:30 pm yesterday was on with traders covering and trying to reverse the intraday trend, but the selling pressure was too much and they re-established their short positions near the close sending us to the lows of the day.

Monday is another day and another opportunity to find a bottom. I can only sit on the sidelines and cheer at this point with my chips already in the pot. This morning, I needed a little Thomas Paine to find courage in my conviction.

iPhone Launch in UK is a Mob Scene

I consciously try not to pump the stocks that I own, letting their merits and why I bought them speak for themselves, but the image to the left tells an unbelievable story. It is a picture of the London mob scene from today's iPhone launch in the U.K.

The Apple story is about new ideas and revenue that isn't in last year's trailing PE. Their forward 2008 PE is only 30 for a company that has spent the last year growing by 30%. Folks are not willing yet to pay the traditional 2x growth rate because the law of large numbers suggest that this 30% growth isn't sustainable. We shall see. I think that it is certainly worth more than 30 times 2008 earnings.

AAPL is about a brand and a buzz that will have a number of good years ahead. It is about technology that will change the industry and about a company that is creating "must have" gadgets.

It is a stock on sale today.

Why I Think the Market will Bounce Now

Technically, the market is oversold. What is interesting this time around is that I see parts of the NYSE bottoming earlier than others. Infact, on an intraday basis, the XLF bottomed yesterday afternoon just below $29.30 and retested that low shortly after open (low of $29.45). As of this writing, it is only down $0.12 for the day and the market seems fairly orderly.

In other places, however, areas that held up initially are now getting taken out and shot. Technology continues to struggle today, now down 7% in the last three days. The sectors that fall first usually come back first and I expect financials will lead us back and my eye is on the S&P 500.

Calling a bottom is nearly impossible, but here is my thinking about why I think we are close. The McClellan Oscillator is the one measure (above others) that I use to figure out when to deploy my spare cash during downturns. Anything below a ratio of zero is an initial sell signal until it gets really oversold and right now the oscillator showed a low of -64 and it is up a little today. It could still go lower, but it tells me that we are close. You will note that the August bottom read -77, which gives us all some perspective.



Secondly, I pay attention to the CBOE put/call ratio. Options players often reflect sediment and this ratio is a fairly reliable contrary indicator. When everyone is buying puts, I want to be buying calls. You can see from this chart what August looked like and notice that we haven't reached the point in the ratio that we did in August, but we are close.



Finally, I focus on the index chart. The SPX is trying to hold my Plan B line.

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=4&g=0&id=p14473809506&a=116688257

The only thing that I am concerned about with where we are in this sell off is that the fear doesn't yet seem to be there. Usually, when we see panic selling, the bottom is in. The selling is orderly still, meaning that we may have another day or two to go.

Regardless, I believe that the problems within the financial are much better known than they were in August, the Fed has lowered rates 75 basis points which will help growth, everybody still has jobs - meaning the consumer will come back, and the dollar only helps GDP in the short term.

Doubling Down

Never in the history of the stock market has a sell off not reversed itself. I know that is stating the obvious, but long term, we all know the market will rebound. To borrow a Kudlow phrase, it truly is "the greatest story never told."

So this morning, I doubled down. I am "all in" as they say in Vegas. Buying the dip is a time honored tradition and I have confidence in the stocks I own that their future outlook will be bright. It really is that simple. Stocks are on sale and the only thing worth debating is not whether they will go up (they will), it is when.

And there is the rub. When you are buying options, timing is critical. So yesterday, feeling that the market would continue to move south, I bought SPY puts and AAPL puts and planned to daytrade the trend. While it all sounds really smart of me a day later, the problem is that yesterday confirmed that I am much better at the long side than the short side.

I get "happy feet" when I am short. The discipline and conviction that I have when long disappears when I am short. Two head fakes to the long side later and my trading results for the day are underwater. I was a "weak hand" with my puts and whenever a reversal looked imminent, I bailed. With heavy volume and cross currents going on, it is impossible (at least for me) to effectively follow the ball and see the trend.

Even this morning, I shorted TIE and bought SPY puts again. The TIE trade worked, but I jumped off again for only a scalp and the SPY puts ended with a small loss. It is time for me to quit pretending that I can daytrade this kind of market and commit to the long side at this point.

The last of my cash went into AAPL calls. I bought more AAPL Dec180 calls. It was between AAPL and PCP for my last amount of cash and I chose AAPL. We shall see. I see the market turning today or Monday. Regardless, I have conviction that this dip is less of an issue than last August. The uncertainty is bullish after a while.

Hey Buddy, Can you Spare a Dime?

I never quite get it right. Only partially right or sometimes very wrong. I sold my SPY puts too early and missed most of this downside while still exposed with my long position. I have also been faked out twice with dead cat bounces, each time dropping more money down for the dip that hasn't yet bounced.

Oh well, here we go again. I have been selling stock to raise cash to buy more calls when the market turns. I also gave up on some of my GRMN calls to preserve capital. The way I have been handling GRMN has been a rookie mistake. Yesterday, I played it well. Today has been a disaster.

I sold my GRMN Jan110's and bought some Jan95's. That roll over was ugly and I took huge losses. It is just when calls get too far out-of-the-money, that the bounces in the stock don't bounce those calls. I want to keep the delta maxed, if possible. Deep in-the-money is the way to go, but the capital needed there keeps me from mixing it up with other stocks.

PCP is a rock. What downturn? The damn thing is still up. This is a huge tell.

I still have cash now (after selling some stock at less than desirable exits) to plow into options. That cash will be applied tomorrow - there is still a lot of time to get positions in place here. This is not a strategy I would recommend to anyone, but it works really well for me.

I still think we hit new highs again this year.

On the Roller Coaster

Here we go again. Yesterday's horrible close caused me to buy some SPY puts. It is a little late in the process (after what was over 300 points down before I bought puts), but the close told me that the bears plan to push it further this morning.

At open, I bought more puts, but I have my finger on the trigger to cover because I think this run down is still short lived. The negativity is huge and this sets ups for a rally into Christmas.

I am holding me fire, but the market is again giving us some values and those with cash will be putting that money to work shortly.

Whiplash

GRMN is reminding me of that old Monty Python movie where the English actor keeps getting his limbs chopped off with him screaming "I'm not dead...yet!" Well that is where GRMN is right about now. A run to $100 with the stock closing near its highs yesterday to be followed today by a 10% plunge.

TomTom caused the GRMN plunge today by upping their offer to buy Tele Atlas for $4.2 billion (30 euros a share). They also effectively made deals to buy 28% of the stock from other investors, thereby putting a lot of pressure on Garmin's chances of success (I believe that just over 33% of the stock is enough to kill a GRMN merger).

Instead of celebrating in the streets because GRMN won't have to hock everything to swallow Tele Atlas, investors have sold off again today hating the uncertainty. It got so bad today that I bought GRMN puts (Nov90's) to put a collar on my long position for a few hours to ride the wave down.

I have since sold those puts for a 25% profit, but there in no real guarantee that the bottom is in just below $90. If GRMN walks away (which I think they should) and tells the Street that everything will work out (and here is why....), then this stock will take off again. I am willing to bet that it will.

On another note, ROCM got an upgrade today with a new price target of $19. A nice 12% bump in a horrible tape. It allowed me to take a little off the table and buy some more AAPL calls - a stock that doesn't want to go down.

Eating Crow with UA

UA needs to start "Protecting their House". Talk about a falling knife. Well, I tried to catch it yesterday and was cut badly. The price action turned ugly and I sold my position this morning and I'm looking for a re-entry as soon as it bottoms.

The retailers are hugely oversold at this point and their balance sheets or earnings don't deserve it. Oh well, the market is often irrational.

By the way, still holding ANSS. It looks to me like an after earnings sell-off and nothing to worry about. I would add here if I had any cash left.

I am also glad that I used my head with GB and didn't nibble yet. They fell after earnings. I need to listen to the Conference Call this weekend to understand what is going on there. They announced an acquisition as well. This needs to be researched. Looking for a bottom with this stock as well. Also, looking for a bottom with SIRO to re-enter. How did I become a bottom feeder?

Almost Peeing my Pants

Sorry to go "down market" with this photo (yes, they really have this in Amsterdam), but I now understand fear with respect to ROCM. There is some serious shorting going on with this thinly held stock and I have now thrown in all my available cash (and almost max margin) into this stock.

How is that for throwing caution to the wind (pardon the pun)? ROCM is due to report on November 15th and I think the numbers will be fine. Their Gross Margins are outstanding and their future is bright. They got ahead of themselves with their stock price earlier in the year, but their products are gaining share and their lawsuit wins are gaining them access to big customers. ROCM is now, once again, my biggest holding.

On another note, it looks like GRMN is catching a bid. You have to love traders. The herd is moving the stock up now.

What to do with Apple?

I think that Apple has one good run left in it before Christmas. After that, I plan to write covered calls by selling out-of-the-money calls into the Spring. If the stock gets exercised, then so be it - I will have made what could be a double. If the calls expire worthless, then I pocket the premium. I think AAPL has another good year ahead of itself, but will suffer from the traditional sector rotation that comes after Christmas.

Instead of suffering through a 3-month flat period, I will be spending the premium.

Walking the Wall of Worry

Are we having fun yet? The tape is down again today with more credit crunch news (Citibank this time) dominating the news cycle. Folks that are long the market can hardly breathe.

GRMN is giving me fits. I really was planning on $95.27 holding (the last bottom from the sell off a few weeks ago), but the bears pushed the issue. I added GRMN calls today and I feel very like the guy in the photo hanging on with my fingernails. I added Jan110 calls and sold Jan120 calls after readjusting my expectations given the time decay. I just wanted to maximize the delta there.

I also added ANSS like I mentioned I would yesterday. It is a stock that is up against this down market. I sold TIE at open (believing that it is not the best time to implement my pairs trade with RTI - waiting a week for things to settle) and I also sold the last of my NVDA soon after 10 AM when it moved green to finance the ANSS purchase. NVDA is a great company and has been a great stock, but I was planning to sell it by the end of the month anyway and figured GRMN and AAPL had better upside of the three technology plays.

I used NVDA cash to also purchase back into UA. I mistakenly thought that UA would be able to hold the previous low of $53.07, and I am now underwater after buying this morning. But after seeing just about every six year old on the soccer field this weekend wearing a UA turtleneck under their jersey (first cold weekend), I realized that this stock will definitely have upside. Therefore, I am treating this like an investment and not a trade and I will continue to add during this downturn.

It Just Might Save Your Life

I have been tracking GreatBatch (GB) since late September after a InvestorVillage poster friend of mine (Denis Cowley) turned me on the the chart. His technicals were sending him signals, but mine were not so we decided to watch and wait, looking for a signal that the stock would turn. Maybe Denis's batteries were not working......

Anyway, I joke with friends that if I don't get serious about exercise that I may be one steak dinner away from a heart attack. This is where GB comes in. Greatbatch is a developer and manufacturer of power sources, wet tantalum capacitors and precision engineered components used in implantable medical devices.

They basically make things that power devices that doctors implant. How is that for technical? On the positive side, they have clients such as Boston Scientific, Medtronic, and St. Jude that have shown great earnings growth recently that I am hoping their sucess will flow through to GB. On the negative side, GB warned in late September about a 2007 earnings shortfall and the stock received a number of downgrades after the warning.

They had a few upgrades last week on valuation, but these announcements came on Thursday during the 300+ point DJI decline. They also bought two small companies last week (both asset purchases) and they report earnings for Q3 on Monday night. They have a lot going on!

Technically, the stock is very oversold and I believe that most of the bad news is already out there. They gave a range for earnings guidance and I think that their numbers may be in the upper part of the range providing a little bounce and a bottom to the six week slide in their stock price. Here is their chart:



The smart move is to continue to research this stock and wait for earnings and the conference call, looking for the confirmation in the stock price on Tuesday. The gambler in me is also telling me to buy a marker ahead of earnings tomorrow. I don't know which way I will go at this point, but this stock is now at least on my watch list.

I also figure, with my lifestyle, that I ought to bone up on these devices. It just might save my life some day.

Sailing will Never be the Same

When I first heard of Ansys (ANSS), a major software provider of engineering simulation software and services used by engineers and designers in the aerospace, automotive, manufacturing, electronics, biomedical, and defense industries, I was just thinking about egghead-like, boring CAD/CAE software that only 5 PhDs in the world know how to use. Well the PhD part may be fairly true, but the boring part is not.

It can possibly be said that Ansys simulation software was critical to winning the America's Cup. The yacht designs of both finalists used "finite element analysis" modeling to most efficiently determine the stiffness distribution design of the yacht and mast and "computational fluid dynamics" modeling to increase the boat's speed. The company and winning design team claimed that more than 150,000 labor hours went into analysing the power generated by the sails, the drag produced by the boat's hull and the air resistance of the deck.

By using Ansys software, very small changes in these areas can make the difference between winning and placing second. Multiphysics simulation has shown that hulls, masts and keels clearly are not rigid and behave differently under varying and extreme hydrodynamic conditions.

But it is not just about yachts. This software has basically evolved to the point where it can offer "full virtual prototyping," whereby the costly steps of designing, building and testing physical prototypes can be eliminated. The software can simulate thermal and electromagnetic conditions as well as mechanical stress and fluid dynamics (combined functionality the company calls "multiphysics"). It has been used for the Space Shuttle and for designing stents for opening closed arteries and in modeling the respiratory system for developing new methods to treat asthma. The company really does have a lot of ideas where their software can be used.

The only things holding them back is execution and distribution. Although the applications are exciting, the company is not selling iPods. This is complex software being sold to a very conservative engineering crowd, so I don't expect this stock to be a rocket.

The good news is that they give quarterly and yearly guidance and consistently produce results. Earnings are expected to grow at a 20% clip over the next five years and I think those numbers are conservative.

Analysts are expecting the company to deliver on an EPS of $1.12 on $376 million in revenue for 2007. This are estimates that were just upwardly revised after good Q3 results. Next year, analysts expect an EPS of $1.38 on $436 million in revenue. This 16% organic revenue growth should continue to improve gross margins. This gives the stock a forward 2008 PE of 29 and a PEG of 1.45 (not bad for a software company).

Technically, the chart looks great, as the stock is resting in a range between $41.50 and $38. Any move above $41.50 on good volume and I plan to buy in force. At this point, I may also nibble right here to have a marker because things on my watch list sometimes get missed during the heat of a busy trading day.

Which Dog will get the Chew Toy?

Just to settle the argument up front, I think the Golden Retriever wins this race, but what I have been studying this weekend is a race between two other dogs - TIE and RTI. As we enter 2008, the race to the bottom is on!

Titanium prices have begun dropping and expansions are coming on line to meet any demand that is there. Each firm puts it's best face forward and talks about the 787 or the A380 and the upcoming demand as they scramble to expand and hope that volume makes up for the lack of pricing leverage. It is truly a dog-eat-dog competition and I think the entire sector is bracing for some further stock price weakness.

TIE just blew earnings and I have just completed some back of the envelope numbers for 2008 (now revised for the dismal Q3 information just received). I am coming up with a 2008 EPS of $1.74, which gives TIE a forward 2008 PE of 18. The problem is that they also have a trailing PE of 18. This tells me that TIE's stock price will be stuck in the same gear for the next year.

RTI has a similar issue. I am expecting 2008 earnings to be no more than $4.00 (and I think this is generous). This give RTI a forward 2008 PE of just less than 18. Their trailing PE is just over 18 as well. They will also be in the same gear as TIE for a year.

Or will they? The market seems to want to price both companies the same, but I think that 2008 will give TIE some real advantages over RTI for the following five reasons. First, when TIE burns through their inventory, their accounting procedures for tracking inventory (FIFO) will help them as cheap scrap replaces previously expensive scrap.

Second, TIE also has a melt expansion (on top of a new sponge expansion) coming on line (while RTI will have to wait for expansions coming on-line in 2009). While I have factored this into the numbers, I really gave little or no credit for any potential upside for TIE as demand improves during the 2nd half of 2008 (due to aerospace ramps).

Third, management for each firm is not stellar but anyone would have to give TIE the edge there. RTI demonstrates on Conference Calls that they really don't have a good handle on the company. In addition, the relationship between management and labor is still not great with RTI and they really have not integrated the company well since acquisitions in the late 1990's. While TIE has a very major owner that supports the stock (Harold Simmons). Harold is also getting up in age and may sell the company someday (like in 2008) - a bonus for TIE.

Fourth, RTI typically has a pricing lag with its mill product that may affect their next quarter and 1st quarter of 2008 more severely than TIE. They also still have a customs investigation hanging over their earnings.

Finally, does S&P inclusion count for anything? TIE was just added to the S&P 500 and commanded a PE premium before the earnings miss, while RTI beat earnings. This suggests to me that TIE may rebound relative to RTI's current value.

Determining that TIE is a better buy than RTI is fairly easy. Heck, I knew that more than two years ago when it was pretty easy to make money with any titanium stock. The problem now is that both stocks may go lower from here over the next year as the cycle matures and PE's contract.

So should we short the sector? Not with Harold Simmons betting against you with TIE.

So at this point, most folks would just walk away and trade somewhere else, but this is a sector I know and I still think that there is money to be made if the trade is set up correctly. I have posted previously about doing a pairs trade (shorting RTI and going long TIE). This chart suggests the trade is solid when you look at data from 2007:






With a pairs trade, if both stocks go up or down, you don't care (it takes the market tape out of the equation). You are only interested in the difference between TIE and RTI and, to me, it is pretty clear that TIE will do better (relatively) than RTI. They are both high beta stocks, which gives the trade enough juice to make it very profitable.

If I where to tell you that TIE will finish 2008 20% higher than RTI, would a 20% return be good enough to apply the trade? What if I told you that, at certain times, either stock will most definitely deviate from their sector relationship due to earnings events or press releases that could allow you to goose your returns? The chart I attached show multiple occasions in the same year where one stock deviated from the other by 12% or more in a predictable manner and then quickly came back into balance. I plan to take advantage of these differences.

For those that are just long either of these stocks, I think both TIE and RTI are now dead money for the year. In fact, I think that six months from now it is possible that they are both lower. Therefore, for me, the only trade worth doing is a relative (or pairs) trade.

Therefore, TIE is the better looking and faster dog and it gets the chew toy. Of course, Sneakdoggiedog has always been a little biased towards other Golden Retrievers.

Weekly Recap

My head hurts. What a week. Nothing seemed easy this week. Considering that the market took a hit this week, I guess that I should be happy that I broke about even for the week, however, I do have the feeling that some of my stocks are getting a little tired.

After being stressed out most of the week about a huge oversize option put position in TIE, I covered so that I could sleep figuring that I still had a few days before the company reported. Just a few hours after I covered, the company reported a huge miss. I missed a five bagger. It is still killing me.

Anyway, I am now long TIE with a small position. Huh? Yeah, I know, they just miss and I jump in! I did this because I really liked the support and price action and I can't help but think that a number of institutions knew Q3 was going to be a miss and it was partially baked in. TIE didn't fall as much as ATI when it warned and TIE's miss was much bigger. This long position may be taken off the table after research this weekend, but I wanted to establish a marker and that is really all I have done for now.

Now on to some disappointment. ROCM is going to be the death of me. This week, I added again and again (yesterday and today) and sometimes felt that I was alone defending this pup. Earnings are expected on November 15th and past history suggests that a run-up happens prior to earnings. This is now a huge position for my portfolio and it has put me well into margin.

Then there is GRMN. Waiting to dip my toe for more has paid off as GRMN sold off this week after reporting great earnings, but also announcing a potential acquisition of Tele Atlas. The Street is worried about a price war for Tele Atlas with Tom Tom and the potential for debt load. They hate uncertainty and the stock price is suffering. I expect this to all happen pretty fast and Tom Tom will have to counter Garmin's offer by early next week so we should know fairly quickly. I finally bought some more calls today (I also bought a little on Wednesday and then held off for a bottom) and the stock tests an old low set a month ago. A nice double bottom would do very nicely.

Finally, there are some odds and ends. I exited CYT. I wasn't committed to this stock and it was time to get serious when the market fell out of bed yesterday morning. I also sold my NVDA calls and half my NVDA stock this week. It has had a good run and I wanted the cash for ROCM.

More this weekend. Hope everybody gets well rested for Monday.

Ahhhhhhhhhhhhh!

TIE reported! It is killing me! I called this and got too cute with the trade. I covered my puts today to daytrade it again tomorrow after a potential snapback rally. I guess the good thing is that I didn't lose money.

TIE reported an EPS of $0.29, which is even worse than what I thought possible. A couple of days from now, I may even be long this stock in sympathy(while short RTI).

Oh well, you don't get them all.

Now onto another. Check out the chart on PCP. The pattern suggests that PCP is another buy sooner rather than later on a price over $152 on volume.

No Panic Here

Some folks may call what happened today in the market a tornado. I call it a "weather anomaly". Two sectors are getting crushed - financials and consumer discretionary. A third sector is trading down in sympathy - commodities (despite gold and oil). But the third sector will recover soon. The first two need a wide berth. They, like housing, are in the part of the economy that are basically out of favor by the market.

Fortunately, I am not invested in any of those sectors. Why I think that today was a weather anomaly is that sectors like technology held up (and were in fact UP until the last hour of trading). Traders are shooting down the stocks that deserve to be dead, but rewarding growth. There is no panic out there.

So, for me, today was a busy day! I covered my TIE puts for a small profit. The market gave me a chance to cover after setting up a trade that was too early. The thesis for the puts are still in place, but I am looking for a better entry point.

I also sold my NVDA calls when NVDA took off on a 2:30 pm rally against the tape. The market again allowed me to cover for a scalp on an options position that I averaged down previously. NVDA is a great stock, but I have three weeks left in the stock before I rotate out of my long position and there are no events to hold my calls for.

I also sold CYT about the same time to raise cash. I admit defeat. I thought that CYT would be a better mover than it was this week. I am too young and aggressive for watching paint dry and settled for a tiny loss to have the cash available to pour money into GRMN and ROCM.

GRMN may have bottomed today and I bought into calls looking for a bounce. I also injected another ten thousand shares into my ROCM position expecting a move up going into earnings on November 15th.

Happy twister chasing tomorrow.