Market Wrapup - March 23rd

Tiny Tim came through today with a monster plan, leading the the S&P up 7.07%. The material in the plan was rather vague, not really giving interest rates for the purchasing of the toxic assets; however, from I am gathering, the funds buying the debt can lever up 6:1 and make bids for the toxic assets. The assets are advertised as "cheap" but it really depends on the bids for the particular assets, to see if the assets are necessarily cheap. Bond players, like PIMCO and private equity guys like, BX, like this leverage and funding, so they will be big participants in the plan.

As for the market, I believe we are going higher, maybe not tomorrow but in the next month, I believe we have a good chance of printing 900 on the S&P. Am a bullish? Not really but technicals are strong and it's a possible, but keep in mind 740 is strong support and bears may try to test it. 805 is current support and is a nice stop if you want to play this rally. Wall street wants clarity and today they got a piece and the market erupted. Obama has a public address Tuesday, if he continues to provide more clarity, we could move higher from these levels by the end of the week. Just stay selective and if you are trying to get short, piece in over time into vulnerable areas, like Commercial Real Estate.

As for my holdings, I bought some NTGR, CAL, JNPR, and COH. My strategy remains the same: selective and balance sheet friendly. I like NTGR because its a nice tech play with a beautiful balance sheet. It carries $5.75ish in cash per share and is in a strong tech sector. Juniper is another strong tech, with a solid balance. The net cash per share ratio relative to current stock price is around 25% so I like it. COH is a more speculative play but has a great balance sheet, high margins, growth areas overseas, and is not terribly expensive, compared to Louis Vinton, etc. Lastly is my favorite spec is CAL. Stifel Nicholas downgraded the sector, trying to take me out, but we rallied toward the end. These firms have fair balance sheets but the EPS isn't great. However, with crude at low levels, it is possible that they can make a profit.

As for TTWO, my feelings remain the same. Even at these levels the stock is very cheap, with about $2.50 of cash per share, relative to a stock price of $8.60. However, 2009 will not be a great year for the firm and the big bet is 2010. This year they will probably have a loss or I am hoping they breakeven. Next year, analyst estimates project a $125 million net income, however, $128 of that coming in 4Q10 (meaning a loss for the first 3 quarters of 2010). This year, I believe all the quarters have estimates that represent negative EPS. I am holding the name for the long-term, not necessarily a trade, unless I change my mind (I do that often). It's been up 35% since I've been in but I still think its a good play.

Lastly, I am tempted to short crude here, going into some of the numbers this week. I think $55 is a little toppy here (for short term); however, if you know crude, it undersshoots on the downside and overshoots on the upside. I will study it a little more and post if I make the trade.

Update I: A few points on AAPL for some. Ibelieve the stock looks really good here, despite being above $100, but with the few iphone platforms and netbooks, the stock could print higher, like $115-$125, if this market continues to move.

Update II: A few questions regarding the market and stock ownership. From my calculations and measures, this market is NOT overbought. I look at some calculated hybrids that take in effect price performance, volume, accumulation/dist, fundamentals, (etc) and the market triggers are not a "buy". When it becomes a "buy", it shows me that the market is overbought, and I will sell. I will post when this comes up; however, if I forced to predict a trading pattern, I would look at these scenarios:
1) go straight hard again tomorrow and go straight to 850. I would look at this indicator to determine profit taking.
2) have a dip, look at the indicator (but it shouldn't go to buy) then I would buy the dip, and use the 805 on the S&P as a stop loss range
3) the market may trade sideways, so I would have to take another look.