Tuesday, June 30, 2009

Bought Some Natural Gas (Finally)

After being extremely patient with this (I think it will pay off), I bought back into natural gas (UNG). I've talked at length about my thought process here (just click the Natural Gas tag to read my posts about it). This could take some time, but I feel this will pay off. There is a lot of excess supply of natural gas, but production is being shut off to balance out supply vs. demand, and that will take a little time.

But the bottom line here is natural gas is a viable resource and gaining more traction with Washington all the time. It is going to play a major role in our energy plan moving forward, and I feel investors can make some money here.

Before today, I had no shares, so this is just a beginning purchase at 13.97. I feel anything under 14 is a good buy. If it falls further, I will pick up more shares. As I've said before, I'd like to hold a core position in this which I plan to hold for some time (until prices move substantially higher), but also some trading shares to buy and sell while it just bounces within its current range.

Disclosure: UNG

Monday, June 29, 2009

Quarter-End Mark Up/Looking Ahead

I'm not surprised to see the market moving higher this morning. The funds are going to try and get those quarterly returns a couple of percentage points higher. Its easier to do in a market like this with little conviction and light volume. There will likely be a tailwind because of this, but it obviously won't last long.

So while I do believe we could move a bit higher, I still expect some type of correction during the summer months. I've written at length about this, and still feel this is what is likely to happen...

As far as stocks, I'm not chasing anything, but I am actively looking to buy some stocks. Whether or not the economy strengthens, its probably going to be profitable to have exposure to equities. If we see a good amount of inflation, as many are predicting, stocks will probably follow, at least to some extent. There aren't a lot of great alternatives right now either. You can't get much of a return on cash, and investors will be getting antsy with their money. I expect money to gradually flow back into the market (I'll keep an eye on fund flows and report some results).

It will be a short, but interesting week.

Friday, June 26, 2009

What to Expect Ahead/Quarter-End Mark Up

I'm fully expecting the funds to engage in the usual quarter-ending mark up, which means through the end of the month, I wouldn't be surprised if stocks run a bit. It can easily happen, and likely will. To begin with, volume has been relatively light and usually gets that way in the summer. Bottom line is, the funds like to make their numbers look good. Don't get in their way by trying to go short.

I'm still hoping to buy at some better prices, and that will take a little more time. I'm fully expecting this quarter-end markup to take place as funds are trying desperately to attract that money that's currently sitting on the sidelines.

Have a great weekend!

Interesting Reading-Friday

Does geothermal and/or gas-oil drilling cause earthquakes?

Buy and hold dead? Not exactly, writes Todd Sullivan. Excellent piece by one of my favorite bloggers/market analysts.

First Solar trying to become viable independent of subsidies and tax credits. Good move.

Americans are finally waking up and beginning to live within their means.

Thursday, June 25, 2009

Its a Strange Market...

All we needed to get the market going again was some...Bad news? Initial unemployment claims came in higher than expected at 627k. Maybe the market was just getting so used to rallying on bad news that it took some to break the cycle. Who knows.

Days like this are very boring to me as I rarely buy anything when everything I'm looking at is moving higher.

A couple of updates:

-Looks like it may be a little while before I can add to my GGWPQ position as it jumped a quick 15% after I bought it. I will not trade out of this stock because the position I took is quite small.

-There has been plenty of strength in rails lately, and they just haven't sold off enough for me to buy yet. There seems to be plenty of people who see value in the rail industry like I do.

-Almost bought some UNG late yesterday, but my order wasn't filled. I'll look to pick up some shares if it gets back to around 14.00, and obviously add shares if it drops lower after that.

Unless we get a big reversal, I don't anticipate doing any trading today.

Looking forward to watching the NBA draft and trying to figure out what the T-Wolves (yes, they're my team) are going to do.

Disclosure: Long GGWPQ

Wednesday, June 24, 2009

Made a Trade...More to Come

I picked up a small position in General Growth Properties (GGWPQ) yesterday. I watched this stock climb from below $1.00 to $3.00 in a short time period on hype due to Bill Ackman's speech saying the stock will be worth $20-$30/share when the company exits bankruptcy. I would like a few more shares, and will add more at better prices if I can. Overall, this will remain a very small position due to the inherent risks of a company in Chapter 11, no matter how good the outlook for the future of GGP may be . So the typical disclaimer goes out on this one. Only spend as much on this stock as you're willing to lose, because there is the potential to lose it all. I've read up and studied a lot on this (Todd Sullivan has some great stuff on it), and do believe there is plenty of money to be made here.

Elsewhere, I'm just waiting and looking for stocks I like to fall to better prices. UNG is back near 14, and I'll likely pick up some shares soon.

I can't always do a blog post each time I purchase something, but I try to update it right away on Twitter, so if you're interested in what I trade pretty much real time, you may want to follow me on Twitter. Click here to do so.

Disclosure: Long GGWPQ

Tuesday, June 23, 2009

Insiders Continuing to Unload Shares

In another sign that this rally may be overdone, Insiders have continued to sell their own stock at a swift rate.

  • Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show.
  • Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.
  • “If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

You can keep track of recent insider moves here.

I also keep an eye on money flow data. As of late, large amounts of money have been moving out of the big banks and large oil companies, and flowing into (you guessed it) more defensive names.

Monday, June 22, 2009

Rails Likely to Play Larger Role

I've been writing about my interest in railroads for a couple of months now. Energy efficiency is likely going to play a major role in future modes of transportation, and Washington is going play a big role with this.

I don't have a lot of new info to add, but Todd Sullivan did a piece on this with a report on energy efficiency and rails.

I'm interested specifically in BNI, ARII, and maybe UNP.

Disclosure: None.

Friday, June 19, 2009

What is Holding Back Natural Gas?

Natural Gas has been a hot trade as the whole commodity complex has be semi-re-inflated (the cause is still up for debate). But while crude oil prices have moved significantly off their earlier lows, Natural Gas prices haven't done much. Everyone knows the positives: 1) Its domestic; 2) Its cleaner than many other fossil fuels; and for traders 3)Its still relatively cheap and could spike due to an uptick in demand and/or a strong storm season.

While Natural Gas (and when I speak of natural gas, assume I'm talking about UNG the vehicle most use to trade gas) has been a popular trade and has seen massive volume, it hasn't really gone anywhere. The problem is supply.

The amount of natural gas available for production in the U.S. has soared 58% in the past four years, driven by a drilling boom and the discovery of huge new gas fields in Texas, Louisiana and Pennsylvania, a new study says.

The report, due to be released Thursday by the nonprofit Potential Gas Committee, concludes that the U.S. has 2,074 trillion cubic feet of natural gas still in the ground, or nearly a century's worth of production at current rates. That's a 35.4% jump over the committee's previous estimate, in 2007, of 1,532 trillion cubic feet, the biggest increase in the committee's 44-year history.

Gas drillers have been shutting off wells at a swift pace after a record amount in 2008, but it still hasn't done enough to slow supply enough.

Long term, this is good for our energy plan though. Natural gas can be used to generate electricity and power vehicles. Our current means of doing this are much dirtier and will likely come under scrutiny from Washington.

For investors, it means that demand is likely going to rise, but not until the economy is stronger. Other countries are relying on natural gas and learning how to find it as well, which has only added to the increased supply. I keep hearing how people want to be "loading up" on UNG because its going much higher soon. I don't disagree, but the timing is the key. It may take a couple of years before prices move much higher. Even though your investment will likely be in good shape, it could be "dead money" for awhile.

That's my take on this debate. I do want to own UNG as I believe in the whole thesis, but this is why I haven't been rushing into it. For now, I'm content to pick up shares when they trade on the low end of their current range, and sell when they appreciate a few percent.

Disclosure: none

Wednesday, June 17, 2009

Shift in Sentiment

We've seen a slight shift in market sentiment in the past couple of days. The market isn't responding very well to much of anything, which is quite a contrast to the past few weeks when the market took anything as a positive.

What could be some causes? Well, for one the market isn't particularly oversold anymore. In some areas its actually overbought in my opinion. Speculative stocks (solar, commodity, global growth and/or China etc.) all have been bought up too far. I have spotted this and was going to go ahead and short Mosaic (MOS) yesterday, but hesitated (must be recency bias; everything goes up etc.). Anyway, missed about 3% yesterday, and its down 9% today. Not that important as there are a million of those types of trades.

Buying the 2x short S&P (SDS) has paid off so far, and I will probably move up my stops to protect some profits.

Keep in mind we could easily turn back into full bull mode as the funds could move in heavy to buy this dip. That's why I've been hesitant to go to heavy into shorting anything right now.

Disclosure: Long SDS

Tuesday, June 16, 2009

Still Waiting...

The market has followed up yesterday's sell off with a pretty weak attempt to move higher, and stocks have dropped again this afternoon. I picked up some shares of the double short S&P 500 fund (SDS). I've been unsuccessful before with this (in April and May), but wanted a little downside exposure in case this continues. Although I don't have a lot of long exposure, I expect to add significant long positions if we see better prices. This may be wishful thinking, but I'm going with my gut on this one. Until then, I may add some more shorts if we get more days like this (weak attempts to move higher, etc.)

Monday, June 15, 2009

Some Action For American Railcar

I've been following American Railcar (ARII) for awhile now. It likely showed up on some screen I ran for companies sitting on lots of cash. And cash they have. $13.74/share in cash (the stock trades around $7.40 today). Typical deep value play; half of book value etc. They are also sitting on $275M in debt and a business that is hurting in a difficult economy, but there is some value here. Apparently Carl Icahn also thinks so. He's held shares in American Railcar for a couple of years, but recently raised his stake by a lot in the last quarter (he now owns 54% of the company). It appears he's looking to take some action as well.

  • Stockholders of American Railcar Industries Inc., a St. Charles, Mo.-based company, voted on Wednesday to change the company's incorporation from Delaware to North Dakota. It will be the first business to take advantage of a North Dakota law, approved by the state Legislature two years ago, that requires companies to make it easier for shareholders to challenge management.
  • Icahn is a controlling shareholder in American Railcar, which manufactures and repairs railroad tanker and hopper cars. Aside from American Railcar, Icahn has unsuccessfully lobbied shareholders of two drug companies, Amylin Pharmaceuticals Inc. and Biogen Idec Inc., to endorse reincorporating in North Dakota.
  • Icahn was among a group of activist investors who hired William H. Clark Jr., a Philadelphia attorney and specialist in corporate law, to write the original legislation. Icahn did not respond to requests for comment.
Ichan has been fighting to get more control for shareholders for years, but has recently really stepped up his efforts. Following Icahn is usually profitable for investors, and it looks like he plans to squeeze some value out of American Railcar shares. As someone who likes the viablity of the railroads, this stock is also interesting to me. I may pick up some shares in the coming days/weeks.

Dislcosure: None

More Weakness Ahead?

We're seeing healthy pullback today on around average volume. Few stocks are being spared, but nothing is tanking either. It will be interesting to watch the action in the last hour of the day, as that typically seen strength and heavy volume.

Crude oil is finally pulling back a little, while natural gas is climbing. Interesting shift. Will it continue? A lot of people have been saying it will, or at least for the spread between the two to close. I didn't get into UNG under 14 again like I'd hoped; I was probably a little picky. Ideally (and I've said this before), I'd like to establish a good sized position in UNG with two goals. 1) A core position that I will hold for a good length of time (ideally when gas prices move back to earlier highs), and 2) Trading shares. UNG has been fairly easy to trade between around 13.50 to 15.50 give or take a little. There is some risk in not being in UNG at this point, and that is that we're finally making a solid move higher, but I think that line of thinking is still premature. I'll continue to monitor that situation and report when I do make a move.

Pullbacks are always nice too in that its easier to buy. I hate chasing stocks. I've outlined the stocks in my radar, and will likely make a few purchases if we see even better prices.

I've been positoning for a pullback in stocks for a week or two now. I'm mostly in cash and pleased with that so far. I do feel we have to make some sort of test of those March lows, but it remains to be seen how close we'll actually get (or when that may even happen).

Disclosure: none

Saturday, June 13, 2009

Insider Transactions Continue at Bullish Levels

In April I discussed how insider transactions were at bearish levels as insiders didn't appear to be sold on this rally. Now it appears their sentiment has changed as insider transaction levels have moved toward bullish levels and have stayed there for a few weeks straight.

This is a natural progression. The longer the rally in stocks progresses, the more sentiment improves. Not just with individual investors and fund managers, but corporate insiders. I would attribute the spike of selling in April to some pent up demand. Insiders needed to sell some stock but were waiting for better prices. We're now back to a more normal level, which now makes this indicator less useful. I view insider transactions as a useful indicator only when it spikes one way or the other.

Thursday, June 11, 2009

IEA Raises 2009 Demand Estimates...More Green Shoots?

The debate for the past couple of weeks in regard to oil has been is there any real return in demand? Well, we're getting some answers. The IEA raised their 2009 demand estimates today in a move that helped firm bulls belief in "green shoots."

  • Oil firmed to $72 a barrel on Thursday after the International Energy Agency raised its estimate for 2009 oil demand, adding to signs the fall in consumption may have bottomed out.
  • World oil demand will contract by less than previously expected this year, the International Energy Agency (IEA) said as it raised its 2009 forecast for the first time since August 2008.
  • Olivier Jakob, oil analyst at Petromatrix, said markets were now in a phase of identifying green shoots of economic recovery. The IEA report "will likely be taken as an additional green shoot," he said.
Now as tempting as it may be to run out and buy stocks like the mainstream media is suggesting, lets look at what they are actually saying.

"Consumption may have bottomed." "World oil demand will contract by less than previously expected."

Sure this is a positive, but it shouldn't be misinterpreted as some kind of strong resurgence of demand. Last year, when prices ran up to around $150/barrel, there was much more demand, and the economy was much stronger. Even then there was a ton of speculation, as well as the weak dollar contributing. Right now we have speculation, the weak dollar, and maybe a bottom in demand.

Yesterday, I was reading Todd Sullivan's blog, and he had a link to a video about this same discussion. The analyst pointed out there is an "endless bid" for oil which started last year. Everyone wants oil to be a part of their portfolio, and this contributes to prices rising. If you look at the oil etfs (USO, DXO etc.) they have seen major inflows of funds. Strong economy or not, most people believe that oil prices are going higher, and want to be a part of that. Anyway, its worth a look.

Disclosure: None.

Tuesday, June 9, 2009

Stocks I'm Looking to Buy

I like to provide an update of my watch list from time to time, with some detail about where I'd like to enter various names. So here's what I'm looking at right now:

US Natural Gas (UNG). Anyone who has been reading the blog knows I've been in this before and watch it closely. In the short term, this is being driven by speculators and hasn't moved due to still weak fundamentals. In the coming 6 months to couple of years, I think this has major upside potential. You can trade it short term, or just buy it and hold it. I'd like to get it back near 13.50, and the chart is still pointing that way.

News Corp. (NWSA). Followed Todd Sullivan into this trade. I like the thesis on this stock has they are doing well in the face of tough times for most media. I sold it due to the 20% gain it took, but I'd love to buy at back if it falls back to around 9.00. Seth Klarman's largest holding too, I believe.

Teradata Corp. (TDC). A stock I picked up on about a month ago. Interesting data storage company that has traded at a lower multiple than many quality tech companies. Is a spin-off from a couple of years ago (click here to read my piece on why spin-offs often out-perform). It jumped following a postive earnings report, and has since had a lot of strength. I'd like to buy it near the 20 day ema of just under 22 if I can. Large holding of David Einhorn's Greenlight Capital.

Silver (SLV). I still like the case for silver. I held this fund breifly and sold for a small profit. I'd buy it back at a lower price if I can. It did recently bounce off its 20 day ema around 14.60. Click here to read my piece on silver.

RHI Entertainment (RHIE). Deep value play. Another Todd Sullivan/Seth Klarman stock. Trading for less than half of book value. This company has wide moats in the made for tv movie and miniseries industry. I'd look to buy it under 3.00.

Burlington Northern (BNI). In my opinon, the best of the rails. I like the thesis for rails in the medium to long term. Click here to read my post on rails. Warren Buffett owns 22% of the stock, and its always nice to have him behind you. Rails have jumped recently due to Washington backing of some anti-trust regulation on rails, and the prospect of "green shoots." I'd like to get BNI back around 60.

General Growth Properties (GGWPQ). Bankruptcy stock. I've been following Todd Sullivan's excellent analysis of this. I almost bought it twice around 1.00 and then William Ackman made his speech saying it is likely worth $20-30/share. Major volume poured into the stock and it jumped to around $3.00. It is slowing now at around $2.70, but I'm still conflicted here. I may buy in, and will update if I do. Keep in mind, there is the potential of total loss of the value of common shares as this stock is in chapter 11.

There are always a few others, but these are the main few I'm watching right now. Questions and/or feedback always welcome.

No current positions in names mentioned.

Monday, June 8, 2009

Bloomberg: Natural Gas Cheapest to Oil Since 1992

I've written a ton about this, and I'd expect to write more as this is one of the most popular trades out there. Money is flowing swiftly into commodity funds and speculators are back into oil and gas. Oil has moved, and gas really hasn't. Here's some commentary via Bloomberg on the situation:

  • This year’s 31 percent decline in natural gas made it the worst performing commodity and the cheapest next to oil since the fall of the Soviet Union. That’s about to change, if history is any guide.
  • Natural gas lost 72 percent in 11 months as the U.S. fell into the deepest recession in 50 years and drillers failed to idle rigs fast enough to control inventories. Stockpiles are 22 percent larger than the five-year average, the Energy Department said. Oil costs 18 times more than gas, the biggest gap since 1992, when the collapse of communism cut supplies from Russia, according to data compiled by Bloomberg.
  • Now, gas drillers are tightening their grip on production just as the economy shows signs of improving. The number of U.S. rigs plunged 56 percent in nine months, the steepest drop in two decades, Baker Hughes Inc. said. Gas may rise 38 percent in the second half, while oil will gain 22 percent, according to Bloomberg analyst surveys.
The article has a variety of sources, with most predicting natural gas prices climbing through the rest of the year. I've been in agreement on this, but the supply-demand numbers are not adding up and that is why UNG hasn't made a move. Once the supply drops enough (and it will with the amount of wells being shut off) evens with demand (should come back with some recovery), UNG will run.

On the technical side, UNG continues to make lower highs which still represents a bearish trend. Volume has exploded and I'd attribute that more to the popularity of the commodity trade than a confirmed move. If you're a trader, you can move in and out of this for quick profits. If you're a value guy, you have to figure that anywhere in here is a good buying point as natural gas won't stay at these levels forever.

Another look at the chart.

No Positions, but that could change soon.

Obama: "A Long Way to Go to Recovery"

I've been trying to track stimulus related projects and what impact they are going to have on the economy. In doing some digging at recovery.gov, and other various sites, the stimulus money allocated so far has been in 3 areas:

1) Increased Medicaid Funding

2) Highway Infrastructure Investment

3) State Fiscal Stabilization Fund

Today we got a little more commentary by the President on the employment situation:

  • President Barack Obama said on Monday he expected to create or save 600,000 jobs over the next 100 days by expediting 10 major projects funded by a huge stimulus package that Congress passed in February.
  • "We have a long way to go on our road to recovery, but we are going the right way," Obama said. His statement came three days after a Labor Department report showed the U.S. unemployment rate rose to 9.4 percent in May, even though the pace of monthly job losses slowed to 345,000.
The concept of "create of save" xx amount of jobs is an abstract concept. There is no way to measure saved jobs, but it gives the government an out in a difficult job market. When I look at the major investments the stimulus has made so far, only highway infrastructure investment carries the potential to create jobs. The other funds are allocated to social programs and play more into that "saved jobs" grey area.

Don't get me wrong, many states are in serious trouble. The lack of fiscal discipline has been a problem on the national, state, and individual level. I'm just skeptical in sweeping, federal government programs and their potential to address the problem. There are states that have avoided crisis by being more conservative. Fund My Mutual Fund picked up this story today.

In my opinion, the only way to fix these fiscal problems is to face some tough realities. We need to take our medicine and cut expenditures so we can be functional again in the future. If we don't do this, we will have a society completely at the mercy of a ever-increasing federal government which is only printing money for a short-term fix. This trend will only escalate without an shift in policy.

Update: What I Read

Just wanted to pass along a list of what I like to read daily for my market news and commentary. I'll try to update the blog roll a bit more frequently, but here's my current list:

News Sites:

Bloomberg (The best there is, in my opinion)

Reuters (Wide variety; good international news)

Wall Street Journal (Specifically blogs, which are free to read)

Barrons (Subscription required, but some blogs free)

Economic Commentary:

Mish's Global Economic Trend Analysis

Zero Hedge (Tons of info; updated very frequently)

Mises.Org (Economic theory, Austrian Economics, etc)

Naked Capitalism (Good Stuff)

Market Commentary:

Fund My Mutual Fund (Good combo economic/market news/occasional humor)

Value Plays (Great place to find investing ideas)

There are others I follow, but this is my everyday reading, and these sites put out consistent, solid stuff.

Friday, June 5, 2009

Commodity Rally...Is it For Real?

Commodities, particularly oil and gas have continued to run. Crude oil has now reached nearly $70/barrel. Is it the dollar weakening? An economic rebound? Or is it speculation? I'd say its a little of all three.

1) The dollar has weakened, and this has helped as it typically has a negative correlation to oil prices. Not a huge factor yet.

2) There have been signs the economy is stabilizing, but to me, you cannot say we've seen a return to growth. We have massive efforts by the Fed, Treasury, and Washington (stimulus) to make this economy turn. Job numbers have improved, but we're still looking at 9.4% unemployment. This economy will not strengthen without the consumer.

3) Speculation is rampant. Traders love commodities and particularly oil. Zero Hedge had a post about this yesterday. If you look at natural gas (UNG) which everyone is trading, we're seeing massive volume. Yesterday reached 70+ million shares on fund with an average of 15 million shares traded daily. UNG is a separate story as supply numbers continue to outpace demand, but the long term outlook remains good. So although natural gas hasn't rallied that much, UNG has been profitable to trade.

Bottom line here is that the rug could be pulled out from this, and rather quickly. But in order for that to happen, you need the same three factors to reverse. Most likely scenario is oil prices don't see their previous lows, but establish a new trading range between $50 to $75 barrel. I believe this mostly because the economy is stabilized and the major fear is gone. This will bring more confidence to buyers of oil and related stocks.

Missed my opportunity to buy UNG yesterday when it dipped in the morning. I'll get in eventually, and will post when I do.

Disclosure: No Positions.

Wednesday, June 3, 2009

Volatility in Oil and Gas Continues

This rally in oil and gas has been mostly speculation, and although it was oversold a month ago, is probably now too high for the current economic outlook. There has been massive speculation in the US natural gas fund, as everyone seems to be trading it. I've discussed the reasons why I think natural gas will be much higher in the next few years, but in the near term, this is a trade only. We keep seeing these "false starts", and then come back to reality, but money can be made on these moves. Below 14 UNG is a good buy for a trade or long term hold. It dipped below 13 just briefly earlier this spring but has twice rallied to 16 or higher. Volume has been massive, and with no clear pattern and high volume, this says lots of traders and lots of speculation to me. That's okay, but as long as we know that going in. I will be buying back into UNG soon, and will post when I do.
Disclosure: No Position

Stimulus Money Still Slow to Arrive

I've been reading plenty of reports that the stimulus money has been trickling out slowly. My largest criticism of this plan has been that it won't take effect quickly, and the economy is likely to stabilize on its own, thus leaving us paying the bill for something that may not have been needed. I'm aware there are certain items discussed in this bill that are important (updating power grid, some infrastructure projects etc.), but they aren't going to be completed yet. My opinion is that they used the crisis to pass a bill that was labeled "economic stimulus", and just delayed most of the spending until a later date. It would be better to categorize this as a spending bill disguised as a stimulus bill. Remember the Rahm Emmanuel quote of "never let a good crisis go to waste." This sort of activity normally could be tolerated, but now is about the worst time to add more debt to our balance sheet.

Bloomberg had some info on this today that I wanted to pass on:

  • “It seems like the federal stimulus is trickling down very slowly,” says Beaumont, chief assistant director of public works for Marin County, north of San Francisco. “My feeling is it’s not finding its way into the economy as quickly as it should.”
  • The $787 billion package Congress passed in February is having less impact than economists expected in pulling the U.S. out of the worst recession in at least 50 years. About $111 billion in planned infrastructure spending is arriving so slowly that recovery in the final six months of 2009 may be weak.
  • “Most of the stimulus still hasn’t yet reached the real economy,” says Robert Solow, professor emeritus at the Massachusetts Institute of Technology in Cambridge, who won the 1987 Nobel Prize for economics. “It will help us a lot in the second half of the year. But given the collapse in consumer spending, business investment and state and local government spending, I think it’s premature to be getting optimistic.”
Some positive news came from Caterpillar, but appears to be more anticipation than anything concrete:

  • Jim Owens, chief executive officer of Peoria, Illinois- based Caterpillar Inc., said his dealers are seeing some benefit.
  • “People are starting to bid work again,” Owens, whose company is the world’s largest maker of bulldozers and earth- moving equipment, said on NBC’s “Meet the Press” program May 31. “It’ll have a positive impact and I think we’ll start to see that kick in through the summer and into the fall.”

Tuesday, June 2, 2009

I've Been Selling Into This Strength

I've been taking advantage of this wild strength in the market to lock in some nice gains. I sold out of News Corp yesterday (NWSA), as well as the double oil fund (DXO), and some mutual funds I've held for awhile and have been wanting to get out of. I also sold my position in the silver ETF (SLV) for a small gain. I do like the thesis on silver, and will likely own it again. I just got a little spooked when I looked at the chart again and saw it trading well above support levels. There was a good indicator by the way around May 11, when the 50 day ema crossed over the 200 day ema, as it hasn't looked back since.

I continue to be more bullish, but again feel we have to make some sort of test of the March lows. Right now that 666 level on the S&P seems worlds away, but I think we're going to have to see a test that gets lower than about 880 which is really all we've seen so far. We have pushed through the 200 day ma, which could be a sign this rally has more to go. One thing is for sure, I am not short anything and don't plan to be until something major changes in this trend.

Disclosure: No current positions in stocks mentioned.