The Sentiment Tide

(Kirkreport)After yesterday’s gap reversal, the market struggled to find its footing today.

While we started the day off strong, S&P 1,090 proved to be very strong overhead resistance. News that China is reviewing its Euro holdings certainly didn’t help matters. Yet, we now will get to see if that possible right shoulder of the inverse H&S pattern can form over the next couple of trading sessions as we close out May.
For what it is worth, most of the traders who I spent a lot of time with today are convinced that if the market doesn’t hold Tuesday’s lows at S&P 1,040 then all long bets are off. Indeed, we have a nervous market out there at the moment with traders unwilling to give long positions much rope if any. In fact when you see these intraday reversals, it is a clear sign that traders aren’t willing to even hold overnight for fear of being caught in a negative gap the following morning.

As Good As Paper?

Our turnaround yesterday inspired strength in world equity markets, especially in Europe, which had gained about 3%. That buoyancy helped fuel a rally of about 1.5% in the first hour here, but the next hour saw those gains nearly evaporate. Another rally was attempted. It fizzled, and with an hour to go the market was just fractionally higher for the session. The last hour saw lots of selling and the indices lost 0.75% or so, closing on the lows.

If . . .
Today's action was pathetic, as the market just couldn't hold a bid. So, while yesterday's reversal looked okay, it meant little. Now we'll need to see if those lows from yesterday get taken out. If they do, it's gonna get pretty ugly pretty fast.
If not, and the market lows have been seen for now (which could still be the case), then the next order of business is to find out how far the rally can carry and what it looks like. My expectation is that the rally will fail (below the April highs) at some point down the road and there may be an attractive opportunity to set up shorts, but I don't want to get too far ahead of myself.
Away from stocks: The dollar was mixed, with the euro the worst major currency on the planet as it sank against essentially everything. Piggys were lower, oil gained about 3%, and silver added 2% to gold's 1%.
On the subject of gold, I would like to make a few points. It's really interesting to me that there is so much angst concerning gold, given that it has been the longest-surviving monetary asset by a factor of almost 100, versus the short lifespan of the average paper-currency regime.
It is also interesting that the lexicon is riddled with references to gold as being a very desirable asset to possess. People talk about such-and-such being "as good as gold" (never "as good as colored paper"); or they'll describe some great business as "a gold mine"; or, they'll talk about "the golden rule" as though it's an ironclad law. Yet, most people continue to treat gold like dirt, or worse.

Gold has been an asset that's helped protect and deliver gains vs. paper money for the last 10 years running, yet the popular press heaps nothing but scorn on it. Even people who own gold seem to suffer angst regularly, based on the questions I continually receive in Ask Fleck. Meanwhile, Bubblevision and other media outlets persist in telling you how great stocks are, although this asset class has cost people money for a decade.

The current level of skepticism is nicely illustrated by the recent short-interest surge in the GLD exchange-traded fund. It's now doubled, standing at about 30 million shares (around 3 million ounces). Meanwhile, when the gold market recently fell out of bed, ETF holders at the margin liquidated no ounces; and in the last couple days, they added a whopping 50 tons (a phenomenon occurring in other places around the planet as well). Thus, as a wise commodity-trading friend said many years ago, you can be with the trend and still contrary.
While I don't believe that gold is a totally contrary concept, it is contrary from the standpoint of there being so few avid believers though the list of high-quality investors who now hold gold has become quite impressive.
I keep waiting for the day when folks realize that if you invest in the shares of a goldmining company, you basically own a piece of "the money-creation machine." It's sort of like owning a central bank that isn't staffed by losers. In any case, at some point I expect to see the masses rabidly bullish about gold and goldmining companies, though obviously we're a long ways from there.
Index Close % Change
Dow 9974.45 -0.69
S&P 500 1067.95 -0.57
Nasdaq 2195.88 -0.68
Nasdaq 100 1796.47 -1.06
Russell 2000 642.62 +0.41
Sox Index 343.78 -0.21
Bank Index 49.13 -0.2
Dow Transports 4247.28 +1.14
Dow Utilities 354.59 -0.39
Nikkei 225 9522.66 +0.66
Gold - Front Month 1213.6 +1.15
Silver - Front Month 18.08 +1.68
Crude Oil 70.69 +2.82
Dollar Index 87.22 +1.01
Euro Spot 1.22 -1.4
Long Bond 20-year 124.78 -0.37
FOTM - Yen Spot 89.93 +0.33
5/26/2010 4:15 PM

AONE at these levels is a steal

This stock has been beaten into a sad pulp since its ipo levels.

NFLX gets an upgrade

NEW YORK (AP) -- Rivals' shuttered rental stores and its new application for streaming-enabled mobile devices puts Netflix Inc. in "the sweet spot of its growth phase," an analyst said Tuesday, raising his price target and profit estimates for the online movie rental company.
The success of Netflix's application to stream video on Apple Inc.'s new iPad tablet computers will continue to drive subscriber growth, FBR Capital Markets analyst Heath Terry wrote in a note to investors. The application will eventually be available for the iPhone and iPod Touch.
Meanwhile, Movie Gallery, the nation's second-largest movie rental chain, is in the process of closing its 1,050 remaining stores after filing for Chapter 11 bankruptcy protection.
"As fewer neighborhoods are able to support retail stores, renters will be increasingly pushed to other options: kiosks, (video-on-demand) and Netflix," Terry said, lifting his price target on Netflix's stock to $130 from $100 and maintaining an "outperform" rating on the stock. Terry also raised his estimate for 2011 earnings to $2.7 billion from $2.6 billion.
The company will offset the price of adding and improving content by streaming video, which costs about 5 cents per film compared with 90 cents to $1 for DVD fulfillment, Terry said.

Auriga upgrades FSLR to buy

WE ARE UPGRADING SHARES of First Solar (ticker: FSLR) to Buy from Hold.
The recent selloff has created an attractive entry point, and even with our reduced estimates, we forecast 21% upside to our current price target of $138. We attribute the recent decline in share price to the depreciation of the euro relative to the dollar, and not because of fundamental change with regard to supply/demand within the solar industry. With the recent announcement of First Solar pushing project business into 2011, our model recognizes that more module sales will be denominated in euros in 2010.

That said, we also recognize and credit First Solar's aggressive currency hedging activities and about 15% natural hedge from manufacturing in Germany to buffer the effect of a weakened Euro. Our new price target of $138 is 20 times our 2011 earnings-per-share estimate of $6.89. Our old price target of $147 was 19 times our prior 2011 EPS of $7.74.
In our recent initiation report, we highlighted that First Solar's business model is highly sensitive to the euro/dollar exchange rate. We recognize that the rapid depreciation of the euro will limit profitability despite the company's hedging efforts. The recent strategy shift to sell more modules in 2010, rather than projects, will likely result in roughly 85% euro denominated revenues compared to the 66% that we originally estimated. We are now modeling a euro/dollar exchange rate of 1.25 for both second-half 2010 and 2011, and are providing a sensitivity analysis to 1.15. Our previous model assumed a 1.35 exchange rate.
In addition to the lower euro/dollar exchange rate, we made one material change to 2011. With the push-out of the project business into next year, we have increased our dollar-denominated revenue to 30%; this change slightly offsets some of the effect of the weaker euro. We note that First Solar has hedged out 52% of its 2010 euro-denominated sales at a rate of 1.39.
-- Mark W. Bachman

Gold Stocks Are "Golden"

Last week's rout around the world continued yesterday and last night, with many markets declining 3% plus or minus. U.S. indices, after having opened almost 3% lower, were off "merely" 2% or so an hour into the day (and by midday had trimmed the losses almost in half), with only gold stocks bucking the undertow, along with gold.
So, for all the times that gold stocks have served as whipping boys, they were the port in the storm today (until the last hour). Also, for what it's worth, gold stocks currently have a triple "threat" working in their favor: oil prices aggressively lower; plus both the dollar and gold higher -- the sum of which benefits their earnings, cash flow, etc.
A Greenspan Thesis Is Shredded Though many people read the recent weakness as a sign that we must crash soon, I see it somewhat differently. (Which doesn't mean we couldn't . . . it's just not my view.) Markets collectively have demonstrated that they are in fact bigger than the central banks -- a message that Alan Greenspan tried to prove wrong for 20 years. He and other charlatan central bankers everywhere have wreaked massive havoc on the world for two decades. The sooner they're seen for the clueless incompetents that they were/are, the sooner the world can start thinking about how best to pursue sounder policies, including a new gold standard. But in the meantime, in some ways world stock markets are now on their own, as central banks have used up a considerable amount of their ammo in the last two years, with rates still nearly zero almost everywhere.
And, even if quantitative easing is restarted (or, should I say when), it's not clear to me how that will boost psychology as it did in 2008/2009, when QE was part and parcel of lowering rates. Now, there's no real ability to lower rates in the Western world (though the potential outcome of more moneyprinting has not been lost on gold).

Gold Stocks Get an Upgrade
On the subject of gold, an important development occurred today: Finally, a dead fish (pulling a page from past cycles in other industries) raised his target on gold for 2011/2012 and upped his opinion on a handful of large gold stocks -- which is a potentially meaningful change in psychology that I expect to see prospectively. I have repeatedly said that part of what has held back gold stocks has been folks' angst that the price of gold is ultimately (or sooner) headed way back below $1000; and that when that view changed, gold stocks might "perform" better.
I don't want to make too much out of a single data point. But I believe that today's dead-fish upgrade (the firm was UBS -- not a small bucket shop) may be a harbinger of future action, as the naysayers embrace gold at some point. That will be a sight to behold.
Back to the action: The last 90 minutes saw the market drive higher and recover essentially all its losses. If we don't see a big collapse tomorrow, my guess would be that we see a decent rally attempt from these levels.
Away from stocks: The dollar was on fire once again (ex the yen). Oil lost 1.5%. The piggys were predictably higher. Silver lost a fraction while gold gained 0.5%.
Index Close % Change
Dow 10043.75 -0.23
S&P 500 1074.03 +0.04
Nasdaq 2210.95 -0.12
Nasdaq 100 1815.68 +0.02
Russell 2000 640.02 -0.19
Sox Index 344.51 +0.58
Bank Index 49.23 +1.03
Dow Transports 4199.57 +0
Dow Utilities 355.99 -0.7
Nikkei 225 9459.89 -3.06
Gold - Front Month 1198 +0.34
Silver - Front Month 17.78 -0.78
Crude Oil 68.75 -2.08
Dollar Index 86.46 +0.3
Euro Spot 1.24 +0.27
Long Bond 20-year 125.25 +0.7
FOTM - Yen Spot 90.39 -0.18
5/25/2010 4:31:38 PM

Promising Chinese Medical Stock

When markets are dealing out losses left and right, as they are now, it’s a good idea to pull in your horns and keep lots of cash in your account. But that doesn’t mean you can just put your feet up and enjoy a refreshing beverage.
The construction of a Watch List of likely stocks is, itself, a dividend-paying investment.
My candidate for further observation is a small (market cap of $328 million), thinly traded (130,000 shares per day, on average) Chinese biopharmaceutical company called China Biologic Products (CBPO). The stock uplisted to the Nasdaq exchange just last November, and it has been performing well despite a challenging market environment.
The company’s lead product is human albumin, a blood protein that accounted for half of 2009 revenues, and various forms of immunoglobulin. Albumin is vital during medical emergencies and immunoglobulin can prevent and treat many diseases.
The company’s 2009 sales were up 155% over 2008, and Q1 results showed a 27% gain in earnings on a 28% jump in revenues, with a 27.1% after-tax profit margin. Expansion is coming via both M&A activity and construction of new plasma collection stations.

This is a great stock for your watch list, and when the market turns up again it may provide your portfolio with a real shot in the arm.

Stocks Hammered In Final Minutes Of The Day

On Friday, things were looking mixed until the final moments of the day, and then stocks surged. Today, it was the reverse. After only being down modestly, stocks really got hit hard in the final 15 minutes of trading.
But first, the scoreboard:
Dow: -126 (-1.24%)
S&P 500: -14 (-1.29%)
NASDAQ: -15.49 (-0.7%)

And now to the day's top stories:
* Today's markets were characterized by calm selling, which is a departure from last week's panic selling, but also indicative of a new mindset that when there's no major news, the default is to sell. And then of course, the markets dove in the final minutes. See Deutsche Bank's cause for bullishness here >
* Financial stocks were hit the hardest, as banking fears grow, and questions about financial reform linger. Losers included Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) Click here to see the hedge fund managers getting hammered >
* An issues that's been of concern for some time -- Spanish debt and the health of its banking system -- is starting to come into the fore. This weekend Spain seized one bank, and today investors were unnerved by an organized merger of four weaker institutions. For more on the Spanish banking crisis see here >
* The oil leak in the Gulf continues to spew unabated. Towns in Louisiana are already seeing a major hit to real estate. See what Grand Isle Louisiana, arguably ground zero, looks like now >
* One notable winner today was gold which, after selling off last week, rebounded nicely today.
Index Close % Change
Dow 10193.84 +1.25
S&P 500 1087.72 +1.51
Nasdaq 2229.04 +1.14
Nasdaq 100 1822.77 +1.26
Russell 2000 649.49 +1.48
Sox Index 349.12 +2.5
Bank Index 50.39 +3.98
Dow Transports 4241.59 +1.95
Dow Utilities 361.8 +0.55
Nikkei 225 9784.54 -2.45
Gold - Front Month 1176.8 -0.99
Silver - Front Month 17.66 -0.28
Crude Oil 70.16 -0.9
Dollar Index 85.33 -0.8
Euro Spot 1.26 +0.76
Long Bond 20-year 124.59 +0.45
FOTM - Yen Spot 89.99 -0.34
5/21/2010 4:02 PM

Avoiding The Stock Market

In the wake of the stock market’s “flash crash” on May 6, there have been an increasing number of reports that retail investors (“Ma and Pa”) are pulling their money out of stocks. Beyond that, some commentators have stepped forward to speak out and advise retail investors to steer clear of the stock market, due to the volatility caused by “high-frequency trading” or HFT. One recent example of this was Felix Salmon’s video message, which appeared at The Huffington Post.



HFT involves a practice wherein firms are paid a small “rebate” (approximately one-half cent per trade) by the exchanges themselves when the firms buy and sell stocks. The purpose of paying firms to make such trades (often selling a stock for the same price they paid for it) is to provide liquidity for the markets. As a result, retail investors would not have to worry about getting stuck in a “roach motel” – not being able to get out once they got in – after buying a stock. Many firms involved in high-frequency trading (Goldman Sachs, RGM Advisors, Tradebot Systems and others) have their computer servers “co-located” in the same building as the exchange, in order to get each of their orders processed a few nanoseconds faster than orders coming from further distances (albeit at the speed of light). The Zero Hedge website has been critical of HFT for quite a while. They recently published this informative piece on the subject, pointing out how HFT firms caused the catastrophe on May 6:

.. . when the selling in size commences they all just shut down. So much for providing liquidity when it is needed.

At The Market Ticker website, Karl Denninger explained how HFT platforms often use “predatory algorithms” to drive a stock’s price up to the full extent of a customer’s limit order (a practice called “frontrunning”):

Let's say that there is a buyer willing to buy 100,000 shares of BRCM with a limit price of $26.40. That is, the buyer will accept any price up to $26.40.

But the market at this particular moment in time is at $26.10, or thirty cents lower.

So the computers, having detected via their "flash orders" (which ought to be illegal) that there is a desire for Broadcom shares, start to issue tiny (typically 100 share lots) "immediate or cancel" orders - IOCs - to sell at $26.20. If that order is "eaten" the computer then issues an order at $26.25, then $26.30, then $26.35, then $26.40. When it tries $26.45 it gets no bite and the order is immediately canceled.

Now the flush of supply comes at, big coincidence, $26.39, and the claim is made that the market has become "more efficient."

Nonsense; there was no "real seller" at any of these prices! This pattern of offering was intended to do one and only one thing - manipulate the market by discovering what is supposed to be a hidden piece of information - the other side's limit price!

The extent to which frontrunning takes place was the subject of a recent conversation between Larry Tabb of Tabb Group and Erin Burnett on CNBC. The Zero Hedge website provided this analysis of the video clip:

The funniest bit of the exchange occurs at 3:35 into the clip, when Tabb publicly discloses that front-running is not only legal but occurs all the time on open exchanges. When Erin Burnett, who unfortunately still thinks that the Deutsche Mark is used in Germany, asks who is doing the front running, Tabb says "It could be anyone."

A recent piece by Josh Lipton at the Minyanville website focused on the activity of retail investors since the recent “flash crash”:

Specifically, during the past week through May 12, your friends and neighbors pulled $2.8 billion out of US stock funds, according to the latest data from the professional number crunchers at Lipper FMI.

To put that stat in context, we called up Robert Adler, the head of Lipper FMI Americas, for a chat this morning. He tells us that’s the most investors have pulled out, in fact, since March 11, 2009.

At the same time, says Adler, investors plowed $16.6 billion into money-market funds. “That’s the first inflows money market funds have seen in the last 16 weeks,” he says.

* * *

“There was an about-face this past week by investors,” Adler says, noting that such outflows from both equity and bond funds, and a sharp reversal in money market funds, demonstrate a clear and dramatic shift in sentiment.

The analyst is quick to emphasize, however, that one week doesn’t make a trend. “We have to wait another week to see whether this was simply event driven or if this is the beginning of a new trend,” he says.

The current risk-aversion experienced by retail investors is compounded by the ugly truth that stocks are currently overvalued. Shawn Tully of Fortune made this very clear in a May 17 commentary, wherein he provided us with a sage bit of prognostication:

Here's how I see the odds. The chances are about one in three that we suffer a huge, wrenching correction in the next year or two similar to the one in 1987. That possibility is so high because stocks are so startlingly expensive. Another high probability event is that markets go on a long sideways grind, with smaller drops along the way. What's extremely unlikely is that the market rises substantially from current levels and stays there for any extended period.

Whatever happens in the next couple of years, the odds are overwhelming that investors who buy stocks today will reap puny returns for 10 years. For example, if you'd purchased shares at today's PE of 22 in early 2003, you would have gotten a return of around 3% a year, barely enough to compensate for inflation, let alone buy the blood pressure medication you'd need to survive the scary ride of stock ownership.

Now let's look out a decade or two. The evidence is extremely strong that price matters, and matters a lot: except in rare cases, buying stocks when they are pricey -- when the Shiller PE exceeds 20 -- leads to puny returns ten years later.

Not that you'd ever know that from the happy talk from Wall Street. So screen the noise out, and follow the numbers. They'll eventually get better for investors. But to get back there, we may revisit October of 1987.

Considering the unlimited number of awful news events unfolding in America and around the world right now, we could be headed for a market crash much worse that that of October, 1987. Cheers!

The Fund of a Magyar Says Yes to Some Miners

It turns out that George Soros's fund now owns about nine smaller gold stocks. Obviously, he sees the potential for the gold bull market to do something exciting and thinks that these junior miners may be a good place to have some exposure. Since I agree with him about that, I hope he's right.

As for the stock market itself and what to expect, Jason Goepfert and Mr. Skin have similar ideas: For the time being, the 1100 level on the S&P may be tough to break through on the downside, so we could be in for a period of rangy action between that and 1180 before getting some resolution of what the market wants to do. They seem to feel like the market's got a decent shot at attempting something higher, after going through a period of digestion first, even if that rally turns out to be a failing rally down the road and we ultimately break 1100 on the downside. But now I'm getting too many steps ahead of myself. Personally, I am choosing to do nothing about stocks generically. I would prefer to continue with my idea of attempting to capitalize on moneyprinting and its consequences.
Index Close % Change
Dow 10510.95 -1.08
S&P 500 1120.8 -1.42
Nasdaq 2317.26 -1.57
Nasdaq 100 1887.06 -1.48
Russell 2000 682.75 -1.86
Sox Index 348.85 -2.93
Bank Index 51.24 -3.72
Dow Transports 4420.38 -1.31
Dow Utilities 375.49 -1.05
Nikkei 225 10242.64 +0.07
Gold - Front Month 1221.7 -0.52
Silver - Front Month 19.04 +0.93
Crude Oil 69.19 -1.27
Dollar Index 87.09 +1.08
Euro Spot 1.22 -1.51
Long Bond 20-year 122.91 +1.21
FOTM - Yen Spot 92.22 +0.4
5/18/2010 1:15 PM

Germany Shoots the Messenger

Overnight markets were higher as the world appeared to take a deep breath after the recent bashing of global equities. The Spooz loved that and the market opened almost 1% higher, before giving up the entire rally in the first hour. From there the market kept grinding lower all day and closed with a loss of about 1.5% (though the Dow fared a bit better).

Today's big story (which created the major undertow for stocks and euros) was the move by Germany to ban the short-selling of the stocks of bankers and insurers, as well as CDSs on government bonds. Speculation as to the reasons why they did that centered on a potential breakdown in the recent bailout accord due to Germany's inability to pass the required legislation.

Inquiring minds want to know, what's next? Capital controls? The problem is not the market -- the problem is the flawed constructs and bad ideas that are now being exposed.

Away from stocks: The dollar was strong and the euro fell out of bed again, losing 1.5% and tanking to a new low. Oil dropped 1%. Bonds were higher, even when stocks were, too (just the opposite of what we saw yesterday), and they surged when stocks sank. As for the metals, silver was a bit higher and gold lost 0.5%.

Rally runs out of gas

On the back of our strength yesterday, Asia was higher last night, as was Europe for the most part. As for our equity market, the early going was spent flopping around unchanged, with no particular theme. At midday the market drifted a bit lower, led by the Nasdaq, and with about an hour to go when I had to leave, the indices had lost about 0.5% and looked to be headed lower, still.
All in all, there just wasn't a whole heck of a lot to say about today. However, the next handful of sessions may be informative as we see whether or not the market "fails" around these levels, and if so, what the next decline looks like.
Away from stocks: The dollar was mixed but the euro closed at a new low for the year. Oil declined 1.5%. The piggys were lower. The metals lost 1%-ish.
Index Close % Change
Dow 10780.91 -1.06
S&P 500 1157.25 -1.23
Nasdaq 2394.36 -1.26
Nasdaq 100 1945.52 -1.52
Russell 2000 709.58 -0.91
Sox Index 364.94 -2.7
Bank Index 55.03 -1.54
Dow Transports 4571.43 -1.86
Dow Utilities 382.62 -0.58
Nikkei 225 10620.55 +2.18
Gold - Front Month 1232.2 -0.88
Silver - Front Month 19.42 -1.24
Crude Oil 73.93 -2.27
Dollar Index 85.36 +0.62
Euro Spot 1.25 -0.63
Long Bond 20-year 120.78 +0.39
FOTM - Yen Spot 92.75 +0.53
5/13/2010 4:05 PM

IBM charge

IBM Chief Executive Officer Sam Palmisano said operating earnings at the world’s largest provider of computer services will increase to at least $20 a share by 2015 from $11.35 or more this year, helped by cost savings and software demand.
Guy Adami said on CNBC's "Fast Money" TV show said the trade going forward is in tech, especially IBM(IBM), which he said stood for "Investors Buying More." He said the company, whose CEO is projecting $15 in earnings per share in 2015, is doing "everything right."
Cisco Systems, the biggest maker of networking equipment, reported third-quarter profit that topped analysts’ estimates after corporate customers added gear to handle surging video and Internet traffic.
Index Close % Change
Dow 10896.91 +1.38
S&P 500 1171.67 +1.37
Nasdaq 2425.02 +2.09
Nasdaq 100 1975.58 +1.81
Russell 2000 716.1 +2.96
Sox Index 375.08 +2.84
Bank Index 55.89 +1.47
Dow Transports 4657.86 +2.12
Dow Utilities 384.86 +0.64
Nikkei 225 10394.03 -0.16
Gold - Front Month 1239.1 +1.54
Silver - Front Month 19.52 +1.2
Crude Oil 75.39 -1.28
Dollar Index 84.84 +0.44
Euro Spot 1.26 -0.27
Long Bond 20-year 120.16 -0.52
FOTM - Yen Spot 93.17 -0.56
5/12/2010 4:05 PM

A secular bull market in precious metals

This sector, especially gold, has been on a tear the last couple of years and is showing no signs of slowdown.
As you know, since I think the stock market is headed to new lifetime highs and that the US Dollar will remain strong there hasn't been a need or interest for me to get into precious metals.
It's not like I see more people use more gold or buy more gold (other than transferring the asset back and forth at a higher and higher premium, sort of like comic books).
Rather, gold is an inflation and currency hedge (counter to the declining dollar) and runs on perceived value.
Buying gold is like buying insurance to me, as insurance is also a form of hedging.
So I don't really see gold as a true investment but as a hedge.
With that said, you can still make money, potentially lots of it in the years ahead if Jim Rogers is correct, by "investing" in gold and silver.
Take a look at the gold etf GLD:

The silver etf SLV is also bullish, though it hasn't been quite as bullish as gold:

Here are some specific companies.
Goldcorp Inc. (GG):

Silver Wheaton Corp (SLW):

INTC set for double digit growth

SANTA CLARA (MarketWatch) -- Intel Corp. Chief Executive Paul Otellini offered an upbeat view of the chip giant's future to a crowd of Wall Street analysts on Tuesday, saying the company is poised for major growth in earnings and sales over the next few years.

Otellini said Intel /quotes/comstock/15*!intc/quotes/nls/intc (INTC 22.32, +0.04, +0.18%) sees its revenue and earnings growth rates improving from single digits per year to low double digits in the next few years on average, amid continued growth in its core personal computer market and in other arenas, such as smart phones and smart TVs.
"We're on top of a growth engine and we intend to deliver," Otellini said during the company's analyst day at the chip giant's headquarters in Santa Clara, Calif.
The company did not formally raise its guidance for the current quarter. Shares of Intel were last trading up 0.6% at $22.69.

Otellini said PCs continues to be "a growth industry," especially with the rapid expansion of computing and the Internet in emerging markets, led by China, India and Brazil.

The laptop market is bound to continue its growth, he said. "We see nothing on the horizon that is going to change that," Otellini said.
Meanwhile, the netbook market, a space Intel helped to pioneer with its Atom chip, remains a key new arena for the company.
Otellini also noted the rise of the tablet PC arena, underscored by the success of Apple Inc.'s /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 255.20, -1.32, -0.52%) iPad. But he downplayed speculation that tablets may hurt other markets, particularly notebooks and netbooks.

"I don't think they will take away market share away from other devices," he said, adding that tablets and netbooks offer additional usage models to consumers, but will not likely replace such devices as notebooks. Intel's chips are not currently in the iPad.

Otellini said the company is also eyeing opportunities in the consumer electronics market, citing new products that are geared to more sophisticated televisions, dubbed smart TVs. "TVs starting this year will get smart," he said.

Index Close % Change
Dow 10748.26 -0.34
S&P 500 1155.79 -0.34
Nasdaq 2375.31 +0.03
Nasdaq 100 1940.48 -0.11
Russell 2000 695.48 +0.85
Sox Index 364.73 -0.75
Bank Index 55.08 +0.31
Dow Transports 4561.05 +0.56
Dow Utilities 382.4 +0.2
Nikkei 225 10411.1 -1.14
Gold - Front Month 1233.2 +2.7
Silver - Front Month 19.36 +4.36
Crude Oil 75.9 -1.17
Dollar Index 84.48 +0.39
Euro Spot 1.27 -0.84
Long Bond 20-year 120.69 -0.13
FOTM - Yen Spot 92.73 +0.6
5/11/2010 4:07 PM

BIDU splits 10:1 on Wednesday

This company is growing phenomenally and is now virtually a monopoly in China.
So if I'm interested in China, this is the stock I would definitely own.
I've been calling this stock to $1,000 for several years now and booyah it's almost there.

Big gap up

The market was due for a bounce Monday because the internals had fallen to extremely low levels. There are only 27 stocks within the S&P 1500 above their 10-day MA and only 51 above their 20-day – I can’t remember seeing readings that low…especially considering just a week before there were over 1000 stocks above their 10-day. On Friday, only 3 stocks made a new 52-week high and only 7 made a new 10-day high. And 3 of the last 4 trading days saw decliners out-number advancers by at least 10-to-1. Then I logged on to check the futures and saw they were up 40 – wow. I’ve see big gap downs when bad news hit, but I can’t remember such a gap up. Right now S&P futures are up almost 50 and Dow futures are up 370.
The reason for the gap up –>> Europe agreed to a nearly $1 trillion rescue plan and the US Federal Reserve said it would provide loans overseas. So what else is new – capitalize the gains, socialize the losses. Whether it’s AIG headed for bankruptcy or Greece following the same path, if they do well, they get to keep the money; if they don’t do well, the losses are spread out to everyone. Bad behavior continues to get rewarded, so there’s no sense following the rules or being responsible. I wonder what is being taught in top business schools.
The news of Helicopter Ben flying over Europe isn’t small and insignificant. Here’s the S&P daily. There’s no sense drawing trendlines. That blue line is where the index will open today (as of the futures indications right now).

Buying the Dips' a Fallacy?

Karl Denninger, a bear of bears, goes on a rant about how "buying on dips" is a bad strategy.
Basically, what it comes down to is... this guy is challenging the highly successful methods of folks like Warren Buffett.
It's a foolish endeavor but it doesn't stop occasional chestnuts from trying.
source:

One of the common "chestnuts" is that when one is in a "bull market" one should simply "buy all dips."
Really?
Let's look at a simple table, assuming you had $60,000 to invest in March of 2009. We will examine two possibilities:

1. We put the entire $60,000 in at the low, all at once.
2. We "buy the dips" in equal $10,000 increments.

Now I'm going to pick on a weekly chart and use approximate prices for each buy, because (1) you're never going to get the top or bottom tick, and (2) we're assuming you actually go to work and thus can't be watching every second of every day.
So these results look reasonably typical versus the so-called "top-ticking" and "bottom-ticking," which are usually employed by the pump monkeys.
For simplicity we will just use the S&P 500, and only from the March lows to now.
Here's the table.
Date

SPY

Dollars In

Shares

Owned

Value
3/1/2009 66.6 10000 150.15 150.15 $10,000.00
5/9/2009 87.9 10000 113.77 263.92 $23,198.20
7/6/2009 87.6 10000 114.16 378.07 $33,119.02
9/28/2010 102.6 10000 97.47 475.54 $48,790.09
10/26/2009 103.3 10000 96.81 572.34 $59,122.96
2/6/2010 103.9 10000 96.25 668.59 $69,466.37

10/1/2010 66.6 668.59 $44,528.01
Note that 10/1/2010 is a possibility, of course - a return to the lows. Let's analyze.
At today's prices, you would own 668.59 shares of SPY, which right now are worth $79,324.21. Not bad you say, in that you spent $60,000 and have an asset worth nearly $80,000, for a gain of 32%.
But the index is up 78%, which means you have underperformed by more than half ... That's not very good.
What's much worse, however, is what happens if the price collapses back to the 666 low. In that case, You lose 25% of your money.
If, instead, you simply "stuck it all in" at 666, convinced that we had a new bull market, you would have the entire retrace back down to 666 to change your mind before you lost a single penny, and right now you would be up 78% on your investment.
Before listening to the "useful idiots" on the Internet talking about "accumulation" strategies for what they claim is a "new bull market," get out EXCEL and run some of their BS cock-and-bull games through the hard truth of mathematics.
Here's reality:

The only winning strategy "for the long haul" is to be fully committed to the market when it is rising and economic fundamentals support that direction, and to be entirely out at all other times.
Such a strategy also allows you to make wrong calls on re-committing to the market at bottoms and not get materially hurt. If you instead try to "scale in" or "accumulate" and are wrong you are going to get destroyed.

You will quickly understand why I sneer at the "useful idiots'" so-called "advice" and why, if you listen to them, you're staring at an account statement that have a number at the bottom that is a lot smaller than it should be.
By the way, Jack Bogle of Vanguard sees this much the same as I do, less the advice of trying to match economics and markets. I think he's got the right general idea, but you cannot divorce your investing from an analysis of the fundamentals, or you will eventually find yourself investing in a market that is rising on crappy and deteriorating fundamentals (such as in 2006 and 2007) and see half or more of your money disappear.

What Business is Wallstreet In?

Mark Cuban is always a great read, and he is right on target when questioning the direction of WallStreet.

My last two posts were designed to stimulate discussion. But lets talk the real problem that regulators, public companies, investor/shareholders and traders face. The problem is that Wall Street doesn’t know what business it is in. Regulators don’t know what the business of Wall Street is. Investor/shareholders don’t know what business Wall Street is in.
The only people who know what business Wall Street is in are the traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It’s a platform to be exploited by every technological and intellectual means possible.
The best analogy for traders ? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade because they provide liquidity to the market.
I recognize that one is illegal, the other is not. That isn’t the important issue.
The important issue is recognizing that Wall Street is no longer what it was designed to be. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days ?
I started actively trading stocks in 1992. I traded a lot. Over the years I’ve written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.
Over just the past 3 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game than I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.
The Pimco (who I think are the smartest guys on the Street) guys talk about a new normal as it applies to today’s state of the world economy. I think just as important is the new normal as it applies to Wall Street. Wall Street is now a huge mathematical game of chess where individual companies are just pawns. This is money in the bank for the big players like Goldman, Morgan, etc. Why ? Because the game of chess is far too complicated for 99pct of the institutions out there investing money. So to keep up, they turn to Goldman, Morgan and the like to invent products for them. “You don’t know how to play the housing boom, let us show you”. “You think the housing boom is about to crash, let us show you how to play that”. “You think that PIIGS are in trouble because they can’t print money to pay debt holders, let us create a product to allow you to play that game” The big houses have the best hackers in the business and they put together the games and sell them to the many, many institutions managing Billions and Billions of dollars. They are the ultimate Hackers selling their attacks to the highest bidder, regardless of which side they are on. That is a new normal.
Again, I’m not passing judgement one or the other. I’m just recognizing what is going on in the financial world today.
It’s rare for companies to go public these days. Just as rare for secondary offerings. The only thing that keeps me in the market is that most of the stocks (not all) pay dividends or some other sort of cash payout. For the first time in my life, I bought outside the United States. I bought Australia in a big way because it is becoming increasingly hard to find new domestic investments that are not influenced by the “hackers” and the games being played on a macro level. It’s hard to believe, but evaluating countries as an investment is now easier than evaluating companies . Even with all the unrest in Europe. Or maybe because of it.
So back to the original question. What business is Wall Street in ?
Its primary business is no longer creating capital for business. Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which i think are always a mistake), then flows into companies in the form of equity.
My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether its through a use of taxes on trades, or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 5 years or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won’t come from traders trying to hack the financial system for a few pennies per trade.
And solutions won’t come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.
Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks they make will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the US and World Economy nearly enough for the risk of collapse they introduce into the system.
Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The Government needs to create incentives for this business and extract compensation from the traders/hackers for the systemic failure level of risk they introduce.
There will be another crash, because there are too many players looking for the trillion dollar score. They can’t all win, yet how many do you think wouldn’t risk everything, even what is not theirs, for that remote chance to score big ? Put another way, there is zero moral hazard attached to any trade. So why wouldn’t traders take the biggest risk possible ?