Happy Holidays Everyone

Well it was a pretty quite week on the street - which is to be expected at this time of year.

It was not without its share of continued bad news however. It is getting to be a bit of a broken record with continued layoffs, decreasing earnings or increasing losses, reduced spending, etc etc.
A GUYS GOT TO DO WHAT A GUYS GOT TO DO - did you see that Apple has caved and is now selling iPhones through Walmart. Now that is a sign of the times! It is easy to sell the latest and greatest technology at premium prices and through exclusive shops when the money is flowing, but competition has grabbed a chunk of share and Apple is going to try and get it back by selling out to Walmart. With the stock off over 50% in the last year they needed to do something. They are only allowing a 1% discount at the moment. I doubt this will hold for long.
My short picks from last week for the most part came off as expected and are now set up nicely to get on board with sell fractals in place for a lot of them. Here is the charts for Dupont (DD) as an example. We can look at shorting at the $24.25 area. The same setup exists for a number of the Dow stocks.
For those looking for something on the long side: GMCR, DLTR and EBS. That EBS just keeps on motoring. It helps to have a monopoly on an anthrax vacine.

Hopefully the volume will pick up a bit next week.

All the best

As Expected $17.4 Billion in Aid

Just in time for Christmas, GM and Chrysler get loans to bide some time. The dollars come from the TARP funds. I guess Bush didn't want to leave office with GM bankrupt. I am sure he must be ready for Obama to take over.

For those that like to bash the Big 3 for creating their own troubles please note that Toyota will be posting its first ever loss for the year ending Mar 09. The recession is hurting all companies.

I also noticed that Paulson has asked for the remaining $350 billion after already commiting the first $350 billion. A billion here and a billion there pretty soon we are taking some serious change. Those printing presses must be running full time!!

Similar to lkast week, this week the markets remained relatively flat. This is the calm before the storm as the bulls and bears continue to circle each other waiting to see who will make the first move. I assume we will probably see more of the same over the holidays with renewed activity in the new year. Still waiting for the indication of which way things will go before commiting serious funds to the markets.

In the mean time continue with straddles and playing a few nice set ups. Unlike the indices we have seen some nice rallies off the bottom on some individual stocks and there is more and more talk of a bottom in place. One of our picks a couple of weeks ago was RMBS. This is the type of rally you want to be on. (It would be nice if the market did that wouldn't it??)

One other thing I have noticed this week is people using the D word. The D word is the new R word. The fear mongers will use Depression shamelessly, but you can really hardly blame them can you. Every day we continue to hear of more and more layoffs. It is going to be a difficult Christmas for a lot of individuals. Below is the commodities index. It makes you realize why the D word has surfaced.

I have warned before about getting sucked into stocks for their high dividend yields. Those yields can't get trashed if dividends are cut. Case in point Weyerhaeuser (WY) cut its dividend by 58% this week. Things don't look so great any more.

For this week I will continue straddling with an expected move in the New Year. My gut is still saying new lows and I see a very common pattern that I will highlight this weeks in my list of potential shorts from the Dow:

DD, DIS, IBM, IP

Others outside the Dow:

APH, ARO, CVD, GES, AMAT, EBAY, HON.

Its Just a Matter of Time

The big news this week was the debate over automakers aid. Thursday's Senate stale followed by the White House on Friday signalling it will come to the rescue after all by maybe using the TARP program.

Lets face it this industry and its political position will get bailed out. There is just to much at risk. It sure is a hot button though and expect to see fireworks flying once the details are ironed out.

There is a lot of pent up anger out there just waiting to be released.

In the meantime ongoing reports of layoffs, earnings misses, foreclosures and bankrupcies. There is blood in the streets and it is getting worse by the day.

Just a few more weeks before the changing of the guard at the White House. People wanted change. I just hope they have a lot of patience. This is one pair of shoes I wouldn't want to be walking a mile in.
As far as the markets are concerned, as expected we had a gap open on Monday, but no follow through. In fact the rest of the week saw selling just to end the week with things looking a lot like it did last weekend.

There are a lot of people out there saying that a bottom is in place now, but there is just as many not willing to put their money, (or what is left of their money) where there mouth is. The bulls and bears are circling each other with no winner yet. Without a trend in place we continue to play with only a small portion of our funds.

It looks like we may see some upside on Monday for those that want to test the waters again. Otherwise trading the hourlies.

Be careful.

1 in 10

Well as expected there was more bad news last week, ending with Friday's announcement of the worst employment data in 30 years. Oil maked new lows with the inevitable reduction in demand from the continued recession.

One statistic I read however really put this crisis into perspective and keeps me bearish long term. 1 in 10 American housholds with a mortgage is over due on payments or in foreclosure. For subprime loans 1 in 3!!!

BUT the market shrugged it off with a rally at the close. In fact when we reviewed the charts we can't help but feel we are in for some positive action (in the short term).

The Q's made a bullish divergent bar a couple of weeks ago and it looks like there will be a continued up move here. I believe, from an Elliott wave perspective, that we saw the completion of the major 3rd wave at that time and are now in the 1st move of the major 4th wave. Given the volitility this is one 4th wave that we may be able to play in, although cautiously.

Fridays rally has created a number of bullish set ups to test the waters with.

Even the financials XLF.

So for Monday consider:
DIA
QQQQ
XLY
XLF
XLV
XLI
XLB
XLK

Still short the commodities. GSG

Be careful out there. These are definately counter trend trades. (We are in a BEAR market)