Video Games Revisited

Source: Sterne Agree

Above are some analyst price targets and opinions on various video game makers. These are good to use for price exits. THQI is getting a lot of buzz from the new UFC video game, so if it's a huge success it could run higher. ATVI is still a great stock. GME is also a good retailer with good margins. SNE is another one to watch. SNE is projecting Playstation 3 hardware growth of 29% YOY and analysts believe a price cut is coming for the PS units. This could be a good thing, if they can double volume. The image above highlights some of the SNE estimates.

I will take a stake in one of these names soon but the market is in a stage of:

1) buy high, sell higher - feeding off momentum OR

2) sharp 5-15% retracement due to sudden valuation spikes

I will cling to cash and research until the tape is more clear...

Is AMZN a short?

The technicals look weak for AMZN. I took a short position today but couldn't post due to the software issues. AMZN is a high momentum stock that can snap back quick, so tight stops are a must. However, it looks like it will pullback a few points, possibly to the 200 day. Risky bet but it's looking interesting...

RF Position Update - Part I

ATHR – Great semiconductor with an amazing balance sheet. It’s currently selling at $15.29 and has about $4.25 in cash per share, with no debt. I believe the company is worth about $18-20; however, I believe it can do well in the short-term because it’s been a laggard in the group and ATHR possesses the most significant rate of change in Q2-Q3 guidance. Inventory days are low using upward revised June revenue estimates suggesting that this concern is misplace. Therefore, I think they will guide higher revenue on the next few quarters, which will raise estimates. It’s also a great 802.11 play. Currently I am down 10% but may average cost down in time. I think the upside won’t begin until July for this stock but if I had to do it over again, I would’ve bought XLNX instead.

BEE – A stupid momentum/technical play that failed terribly. I failed to cut this early and am holding in case we go higher. It’s a damn REIT that is overlevered, although most analysts believe it will go to $2 but I just don’t know. I will sell soon because it’s too risky and the chart failed.

DELL – Love the stock, great balance sheet and I believe management will stay focused on managing margins. With that being said, I am bullish on the PC market and believe Michael Dell will surprise people over the long-term. I will not sell this one, ONLY if I feel the market will head lower and I will sell it, just to buy it back cheaper.

DXO – Double long ETF on crude oil. I think oil will creep up to $70 this year as investors will start betting on inflation and commodities in general will run with the “reflation” trade. It’s levered, so I will scale into more in time.

EXM – Great dry bulk shipper. Bought at $6.80 and will figure what I will do, since earnings come this week. I believe the quarter will be good. I own a nice chunk of Excel.

F – Bought the dip and will ride it out higher. Below $5, I will add more. I think it can go to $7+ but will hold for the long-term. One of my favorite longs right now, which is already up 12%.

FAZ – Short the financials, via triple leverage. Risky but it’s a hedge.

FMCN – Chinese media. Rather dead action but again, a killer balance sheet. Nearly $3 of cash per share, no debt, and it sells at $7. Media/Advertising has NOT bottomed but there are supposed to announce a possible deal with SINA that is pending approval from the Chinese government.

FTK – A house of pain. I got the trade right at $2.40 to the $3. Then go back in at $2.60 and got the baseball bat to the groin. Now I am “jammed” but I don’t want to cut it at $1.90, ya know? Fundamentally, it’s a mixed bag. The firm has way too much debt BUT I am a oil bull. Let’s face it, the USA doesn’t have a REAL energy plan. Solar will take 10 years minimum and the gov’t believes oil will stay low because of low consumption. Well, obviously they know nothing about hedge funds. The blowup in oil wasn’t a fundamental story, it was because the big money flew into oil, with high leverage. You only need a 5% minimum maintenance margin for crude futures, compared to 50% for stocks. You can lever 20:1 and play big. It will happen again, $100 oil, probably by end of 2010. Anyways, back to FTK, it has a high debt load and a monster short interest due to this. However, if oil starts going, oil exploration will get back and get going. FTK was a $60 stock in 2007, keep that in mind. I mean their last quarter was TERRIBLE because oil was $40 a bar. so there was no need to explore. Ultimately, it comes down to oil prices are your take on it. Always have cash bullets to average down in case it gets nasty but I am down big on this one (however, it’s a tiny, tiny position) .

I will post the rest later…….

Market Wrapup

First off, I am sorry for not posting anything today. I am having difficultly with this software at work but it will be fixed by the weekend. As for today, I did nothing but add some more SDS. For the day, I was up 2%, mainly from big gainers in shippers via, EXM and GNK, as well as monster gains in F. Goldman upgraded Ford and raised the PT to $7.50. I am long and will add more on dips.

As for the market, I will be honest, I am NOT optimistic. I don't care which side your on in terms of party views and I won't project my views but the market is HATING the fact that the government is trying to run companies. The government is now controling advertising budgets for automakers (GM and Chrysler) and many firms are scared to death and are doing tons of secondary offerings to get liquidity. This dilutes ownership and decreases stock prices; however, they gotta do it. This is scaring many bond investors, which is terrifying because without bondholders, that market will collaspe. Think about it, why would you want to be a bondholder? The bondholders got nothing from the Chrysler deal and the UAW got 30%, what is up with that?

As for the SPY we closed right above the 26% fib. retracement level but I don't see where we will get momentum to go higher in the short-term.

Lastly, I see that Carl Ichan quadrupled his stake in TTWO. Him and RF think alot, maybe he read the stock under $10 post (lol) but when he has his hand in the cards, a deal gets done 70% of the time. BEAS was a great example. He is failing in BIIB, BBI, and YHOO but I think a deal will get done in YHOO and maybe TTWO. TTWO's management rejected a deal at $27, they are not smart; however, it's worth a shot, soon. The story is developing.......

I'll be back over the weekend, discusses various topics, as well as some ideas/picks.

Market Outlook

Finally, today needs a brutal week. I added some short exposure yesterday, to move more of a "market netural" position. CPI numbers and empire state numbers will be key for the market today. CPI - will it be deflation or inflation? I really don't know if CPI will be negative or positive, but for my oil stake, I hope it's positive.

I see that insurers just got the invitation for TARP, boy are they digging a whole. I mean don't they see the hell the banks are going through? But I guess if your desperate, your desperate.

As for buys/sells, I will probably kick my little stocks, like GMO and BEE; but hold everything else, regardless. Like I was saying yesterday, I think it's a great opportunity to make a shopping list and do research in this environment. I'll be back later.

XOMA

Someone find me the next XOMA? The biotech lotto is back!

AMZN

Been looking to get long this stock but read some dishearting information. Bezos has dumped over 1,000,000 shares since May 1st. Interesting fact!

Market Wrapup

Sorry for the late delay today, my computer is having major issues. As for the market, I anticipated a up day but the big day comes tomorrow. We have critical CPI data coming out in the morning, so who knows what will happen.

For the day, I bought MPEL. The city of dreams project will be finished in June (image above) and will be a big hit, in my view. I like the stock for the short-term and the long-term and am unsure which I am holding it for but I am holding it. I like it under $5.25 but it's had a monster run.

I also added FAZ, for a hedge, in case we fall of a cliff. In my view, Financials are not "cheap" at these levels. I look at the leader, JPM at $35, and believe it will come back to $27. Until then I will be patient, hope for a pullback, and then buy long-term options and common stock of select finanicals. Banks still have some issues near-term with Commercial Real Estate and consumer credit card deliquencies; however, I think they will earn their way out of it in time.

Lastly, I am holding onto cash and it's painful. I made 2 trades today and it about killed me because I wanted to buy like a maniac. I still think technology is where the growth will be, for the rest of the year, regardless of the grids or CNBC "know it alls" and I will get long tech in SERIOUS SIZE in due time. Don't forget about the old RF favorites that brought us to the game, like NTGR and LOGI, they will be down soon and it'll be time to jump back on em!

I'm outta here - take it easy

RF Buy FAZ

Bought 300 at $5.69

Market

I knew figured we would bounce today but I think we are going lower in the term. I could be wrong and I hope I am but I am just not feeling the tape. CPI numbers tomorrow could be great, so it's hard to short this market. I own a big chunk of SDS and might add more or buy back the QID. It's a tough call...patience is key, combined with high cash levels.

F

Love it here, will add more around $5 (if it gets that low)

POT

Great trade "IMAKEALOTOF$$" - as grains run, these will run....it's going to $115+

ICE

Winner in CDS mandate, remember that call in March? up 30 pts since call

RF Sell GKK

Sold rest at $2.42 - breakeven

RF Buy MPEL

Sorry for delayed posted, bought 200 this AM at $5.25.......plan on holding for a while

Market Outlook

This market is unpredictable. Best advice is to keep high cash levels and keep a buy list. I want to own big tech but at the same time am limiting purchases in case we retrace hard.

Oil is Back....

There are 3 newsworthy factors that I see that will and have began impacting crude oil prices. I haven't seen these factors in months, so if this continues, I believe oil will hit $7o a barrel by mid-Summer.

1. First increase in consumer mileage consumer - This will increase with the summer coming.

2. OPEC Production Cuts - First production cuts that are occuring ahead of summer driving season.

3. Big money playing again - The CEO of the Merc said for the first time 6 months, big money is back in the trade and NYMEX volume has been through the roof over the past 2 weeks.

CPI numbers come out Friday but I believe the reflation trade is back, as mentioned last week, and I'm adjusting my PT to $70.

Ways to play crude oil:
DXO - 2x the crude future (roughly) If the futures are up 1%, this fund is up 2% and vice-versa.
UGA - etf that tracks gasoline futures
USO - US oil fund - buys 2-6 out crude futures
USL - 12 month average of oil futures

I own the DXO.

S&P

Above is a chart of the SPY, the index fund of the S&P 500. As shown, we closed at 883 and we have several levels of support below. The first support level is the 20 day at 880. The second level is 875 and the third level is 800. Alot of the hardcore bears say we are going to 650 but I doubt it. My personal view is that WORST CASE we will retrace to 770. I'm not calling it but it's in the cards. As for tomorrow, I wouldn't be surprised to see us bounce higher but the " rf voices" are on vacation until further notice.

Positions I forgot to add

FTK
EWZ
FCS

I still own all of them and plan on holding them. FTK is a big concerning but with oil hot, I will keep it. I wish I owned Russia, via RSX, but overlooked the upside potential when I had it at $15.

RF BUY FRO

BOUGHT 75 MORE AT $21.07

NOTE: I OWN THIS AND FORGOT TO POST, LONG 150 SHARES IN TOTAL AND LOVE IT AT THESE LEVELS. WILL ADD MORE BELOW 19 $$

Market Wrapup

The grid above explains it all. Red everyone except for the conservative stuff, via consumer goods and heatlhcare. PFE has had a nice run in the past few days, good stuff. Today was a disaster, nothing can explain it better. In the past two days my trading account has tanked 16%; however, RF remains up a stagger 210% ytd. I saw these small caps that recorded 20% day gains daily, totally exploded in my face. I gave back alot of monster gains in them and I'm pissed. I totally kicked them (most) and brought back my cash position to 40%. The charts are telling me that the small cap fun is about over and the market was to go lower. We busted through 900 support on the S&P and closed right at the next support level at 883. When I look at the financials (aka the market leader) the group seems "cheaper" but not "cheap". This makes me think we can guide lower. We might retrace to 800 but I think this rally can continue. I wouldn't bet the farm on it but I think many managers are underowned, so they might start buying. I would keep high cash levels, 40%+, rather than short now. I should have kept the next short position from last Wednesday, so I guess my market barameter is off a week. In conclusion, I would get a shopping list ready and buy in scale on this dip. We might bounce tomorrow but I the market is leaning to the down side.

Lastly, I see that Obama read my post from 2 days ago. He is now regulating the CDS market...smart move! but I would abolish it! and after that, make sure Doug Kass doesn't host Squwak Box anymore!

RF Buys LUV

BOUGHT250 at 6.87

RF Buy GNK

BOUGHT 75 at 17.05

RF Position Update

Raising high cash levels, so I can buy stocks cheaper. The other option is to allocate at least 20% of your portfolio either in SDS or QID (or both). Or shorting the SPY.

This in my view is no market to play with, the SPY is below 90 and we will probably close in that range. I raised my cash levels to at least 30%. On dips, I will buy financials, REITS, tech, and energy.

ATHR - holding but it's a piece. Great balance sheet tho
BEE - in debate, may kick it
DELL - will hold
DXO - will hold
EXM - will hold
F - will hold
FMCN - dunno, may kick
GIGM - will hold
GKK - will hold for a sec
GMO - will kick soon
GNK - will hold
RFMD - will hold
SDS - will hold
SFE - will hold
YHOO - will hold

So in conclusion, I am holding all but: GKK, GMO, FMCN, BEE, and ATHR are on the tight walk.

RF sell NXG

sold all at $1.86 for +18% gain

RF SELLS

Sold half of my GKK at $2.32 - for 3% loss
Sold all of SPRD for 10% loss
sold all EMKR for 15% loss
Sold all of PWAV at $1.08 for a 8% loss


I hate loss but the next support level is 883 on the S&P. If we break that we can go to 830 or 800

Market Outlook

Futures are taking a pretty big hit, thanks to Doug Kass and his BS co-hosting on Squak Box. He is preaching how "the market is ahead of itself" and "he is net-short for the first time since January". Of course Dougie is pulling this mess, while RF has minimal cash positions. The INTC news is also weighing in on futures, as it is being hit with a $1.5 BILLION fine from the EU. I thought we'd be running higher today but maybe not. 75% of the technical players say the market is heading lower and of course, I am one of the 25%. My view is the for the short-term, like the for the next week or so but my time machine may be broken, so I might need to raise some cash. As long as the SPY stays above 90 (and closes above 90) I will stay bullish. When that ends, I'll pack up and leave. Options expiration week (this week)always has unusual volume and volatility because many contracts were written naked and they will be covered within the next few days.

I will continue to hunt for tiny small caps, for day trades, to fight this pain I am in. XING is a good looker but I will wait before I decided what I want to do.

Special Request by Dennis: FEED

LOL. I have honestly had it with this damn stock but fine, if you e-mail me, I will respond because RF believes in 100% customer satisfaction (well it's free, so I dunno why I believe in it). FEED was a great play that many doubted RF for at the beginning (Dennis and others) because I picked it at $2.40 and it stayed there for 7 days and everyone began getting angry and saying "RF, what is up with FEED?" or "RF, do you still like FEED?". As you know RF is filled with a swagger, he chuckled this off, and said "it's coming". Then boom, it went from $2.40 to $3.10 in a day and everyone and there brother started buying it at $3.10 and talking about it on the yahoo message boards. Where were they at $2.30? The message boards for FEED may have had 2 people there and that was for the past 3 years! Now there are probably 200 people a day (and for the record, RF is too "cool" to post on a message board, so I just read them).

Well, I personally own calls and scalp the common because it's easy but here is the bottom line.

The chart above highlights the play, regardless if you own it or if you don't, you can try it. I brought in the 20 day MA and highlighted that as well (in green). FEED has a big fight going on here between the bears/bulls and the winner should get paid handsomely, especially the shorts. FEED has always held the 20 day and has NEVER broke it. On the same note, it can't break the 200 day and today, of all days, it should have (and it didn't). The MA's are narrowing, so basically it's "do or die" for the stock. The shorts are piling in here, trying to take it down near the 20 day at $3.88. They know if they can do that or get around that, the stock will dive to $3 in a matter of seconds (literally) and make a easy 25% gain. The bulls want to take it to the 200 day and break it, sending it higher (to $5 - $5.20). I believe the FEED trade will end by next Friday, one way or the other, period. If you don't own it, you got a chance to get in here at $4.34 and use a $3.90ish stop. Frankly, if the bears get ahold of this thing, and it nears $4, there is a chance people will fold, sending it to the 20 day and it will fall off a cliff. Before, when it was at $4, the 20 Day was at $3 (a big gap), now there is no room for error.

Mark my words: IF IT GETS NEAR THE 20 DAY WITH STEAM, IT WILL FALL OFF A CLIFF, PROBABLY TO THE 50 DAY.

However, if she can get some juice, it can go to $5, maybe $5.20 but probably not much more.

Position Update: YHOO

MSFT had their first ever bond issuance today....they can deny it but it's definetly for an acqusitions. The question is who? Here are the options in my view:

1. Yahoo (YHOO)
2. SAP (SAP)
3. Research in Motion (RIMM)

Update: FEED

Good Article By Eric Jackson from theStreet.com

Even though revenue came in slightly light at $33.4 million instead of the $37.2 million expected, AgFeed's shares rallied as much as 15% before dropping back to about a 10% gain for the day in late trading. On a mostly red day across the board, AgFeed's results were encouraging.
Despite concerns about the HIN1 flu virus, which is still active globally, management sought to comfort nerves by pointing out the steps the Chinese government had taken to insulate the country from any risk.
Investors seemed to focus particularly on the comments from AgFeed's chairman pointing out the hog prices would rise in the second half of the year.
AgFeed has been on a tear since the start of the year, rising 170% year to date. Yet, currently, even after today's positive news on the latest quarter, the stock trades at an enterprise-value-to-EBITDA ratio of less than 5.
The primary risk facing the company is how the H1N1 virus continues to play out across the world. It has yet to really affect China, and pork remains one of the country's most popular dishes. In some ways, the H1N1 virus could benefit a vendor like AgFeed, which is selling nutrients to better protect that industry. Earlier in April, for example, AgFeed announced a partnership with the swine genetics provider Hypor. AgFeed is positioning itself as a must-have nutrient provider to any pork farmer in China.
However, in the short term, AgFeed's stock price will rise and fall with earnings expectations. Investors are presumably taking comfort from the company's announcement on Monday that first-quarter earnings were solid and that prices look set to rise at a healthy pace in the second half of the year, despite the current swine flu concerns.
The second major factor holding back the company is the "China discount." We see this in stocks such as Fushi Copperweld or any smaller-cap China stock. Many U.S. investors are concerned about AgFeed's governance and transparency.
To answer this, FEED is taking steps that are common to many other companies in their situation. It has opened a "corporate office" in the U.S. and also selected an American, Gerard Daignault, as chief operating officer. The company has also done its best to assemble a board of directors that shows that it is familiar with U.S.- and European-style governance standards. However, it's difficult to meaningfully differentiate AgFeed on this dimension in comparison with any other Chinese peer - at least not yet. For the time being, an investor is left to weigh the upside of pricing, broad interest in agricultural stocks, Chinese demand for pork and the continued recovery of that country's domestic economy. When you weigh those against AgFeed's current valuation, I find it inexpensive and will continue to hold it for likely the rest of the year.


For the record - I own calls and will scalp the common until it gets its act together. The one analyst says it's worth $4.

PALM and S

Keep an eye on S and PALM because the Palm Pre has alot of buzz and will be out VERY SOON. I mean VERY SOON! One of the smartest people in the game says that he has owned PALM since $8 and believes it will hit $20 in 18 months. I don't know if he is right or not but he is a pretty smart guy, so take it for what it's worth. I don't own PALM but I know it has a 40% short interest, so the shorts hate the stock. However, if they can deliever, the shorts will squeeze it way higher. The short interest scares me a little bit because these guys believe PALM is going to $0. Sprint is the provider, so keep an eye on them as well. It's up a buck since my buy but it can run higher if this thing is big! All in all, it's worth some research but all I can say is that the phone will be out REAL SOON.

RF AH Buy - F

Bought 250 F at $5.01

Market Wrapup

(click to enlarge)

As you can see that market was very in red in financials and tech. If you notice the bright green, you will see it's in names with big SIZE, like XOM, PFE, PM, KO, and MSFT.

The market reversed and closed above 900, so I am very bullish here. Again, that can change on a dime but I am long in SIZE, with only about a 10% cash position. I made some buys in USD to day around high $15's, as well as in energy via DXO (double long crude) and QID (double long energy index). I took some positions in UYG and FAS, via call as well. The bears want to take this market down but I just don't think they can now. Money managers have so much cash on the sidelines, they are forced to buy. The bottom seems to be in natural gas, I remember seeing the UNG at $13 10 days ago and now its above $17. I still own a good piece of APC since $44.50 and will hold until it's north of $50 again. As for F, it's a SCREAMING BUY. F at $5 is ridiculous and needs to be bought. If I wasn't overextended in junk stocks, I would buy F at $5 or under.

Lastly, Gold and Silver miners are beyond HOT. I bought SLW last Novmeber at $3.30 and sold it at $6.60, thinking I did something. Now, it's north of $9. If Silver can get over $14+ an oz, I believe SLW can print over $12. For gold, I own a spec play via NXG but NGD can work too. If you want a bigger gold miner, go with ABX.

I'm off to dinner

RF option buys

Bot FAS 11 calls at .15. May month for a casino play


Bot uyg calls jan 2011 at 4 and 5 strike

oil

Its hot people. The one that is catching my eye is BP. Over 179000 calls traded today at the 45 strike! For May contracts! All I can say is wow

NXG

Two dollar bills yall!

RF Sell FLOW

Sold all above 2.40

30% gain

RF Buys

Bought 500 DxO at 3.53

Bought 500 SFE at 1.08

RF Buys

300 FTK at 2.30

100 dig at 29.10

UYG

Buying Jan 2011 calls at 4 strike for 1.68

FLOW

Yes sir, breakout!

Market Update

This is a brutal selloff. I am starting to worry now that the S&P is below 900. If we close below, the new support level is 880 - 875, while new thin resistance seems to be the 20 day. Banks like USB and GS are getting smoked. As sad as it sounds, the market really can't go up, unless the financials reverse and turn up.

All you can do is really sit back and let the bulls and bears fight. Bears want to take us down another 25-50 pts, were the bulls want to take us up another 25-50 pts.

I cut my BZ position for a big gain but the rest of the small cap "junk" stocks are manic. I mean GKK went from $3.20 to $2.40 in 2 seconds...talk about a heart attack? I am still holding but am not a happy camper.

RF Sell TOPS

Sold all at breakeven
Market at key support level, 900

RF Sell BZ

Sold at 269

69% gain

Outlook

Futures seem fair today, however, there is still a lot of fear in the market considering financials. I would watch FEED today. Its up 93% since my call but its approaching the 200 day at 4.67 and if it breaks, it can roll to 5. It might not run to hard because uy lacks short interest but that is the level to watch. I'm still long tons of junk stocks and love it. I might buy more lol. Best idea is to stay small and have cash because the bears want us lower.

Special Message from Razor Ramor

"Hey Chico...Who does this Meredith Whitney think she is man? I mean she thinks she can take the Dow down 30 points in the last half an hour man? I mean was she long 1,000,000 shares of FAZ man? Seriously man, what is that man? Some degenerate analyst man? Does she know who she is messing with man? There is only one bad guy besides RF man.....that is me, Razor Ramooooooooon"

(see video below of what Razor is referring to)

http://www.cnbc.com/id/30687770

Determining Size for Trades

Well, as I see some of the small caps melt in AH (due to bad earnings), I want to discuss portfolio allocation, mainly position sizing. I believe one position should account for no more than 10% of a portfolio. So, if you have $20,000 to invest, no position should exceed $2,000. Now, in certain circumstances, I believe that rule should slide. The main scenario is if a person's trading account is less than $5,000. If you have say $2,000; I recommend 2-4 stocks. You could do 2 large or mid caps or 1/2 mid/large caps and 2 small caps. If you have say $5,000, I would do 4-5 stocks.

The main point is to identifity the market cap size of your positions in your portfolio. In my view, you need atleast 20-40% of your portfolio with names that have $1B+ in market cap. For example, a big Top 2 position of mine is DELL. It's a large cap that is over $1B and carries less risk than say a small cap. Small caps, like GKK, CPE, FEED, etc. are microcaps and have extreme risk. Therefore, I normally buy some size in them, like 200-500 shares because I know they run hard BUT I also know they can fall hard, so I want to be careful (hence why I normally don't buy more than 500 shares of one).

Another factor I look at is Short Interest. If a firm is heavily shorted, it's probably for a good reason. Shorts do their homework. Therefore, I would want to study the stock hard, to understand their story before making a investment decision. However, in some cases where I see a turn in market internals, I will buy heavily shorted stocks for a "trade" not an "investment" in order to make a quick dollar on a short squeeze.

Summing up things, the small cap rally has been a blast. I think there have been 6 doubles, 1 or 2 triples and even a quadruple with some names but in a more serious matter, they carry more risk. You can't go broke by taking a profit, so keep that in mind and trade accordingly. I look to give back some serious gains (will still have profits but smaller) in some of the names because I just played it too risky, as the stocks reported earnings. I made a mistake and learning from this, I know next time that I will either: 1) sell half of all positions that report that day or 2) take 2 of the positions totally off the table and let the other 2 roll.


Bottom line: Small caps are fun because they offer great returns. However, they also carry alot of risk and there is no need to gamble and go all in on them.

Update: ABK and MBI (Bond Insurers)

MBIA just posted a 1Q profit! Shares up 28% in AH...ABK can run with it. Great trade, nailed that one!


Earnings Results - MBI:
MBIA Inc beats by $3.67 Reports Q1 (Mar) earnings of $3.34 per share, includes $1.6 bln in pre-tax unrealized net gains (mark-to-market) on insured credit derivatives, $3.67 better than the First Call consensus of ($0.33). Results also included $693.7 mln in pre-tax loss and loss adjustment expenses on insured exposures, primarily on second-lien mortgage exposures and $169.0 million in pre-tax realized losses in the co's Asset-Liability Management (ALM) asset portfolio reflecting the continued deterioration and stress in the credit market. Although no new business was written in the U.S. Public Finance Insurance segment in the first quarter, the existing book of business generated scheduled premiums earned of $113.7 million, up 84 percent from $61.9 mln in Q1 of 2008. The growth was the result of the previously announced reinsurance transaction with Financial Guaranty Insurance Corp. (FGIC) in 2008. Refunded premiums earned totaled $36.1 million in the first three months of 2009, up 470% from $6.3 million in the first quarter of 2008. The increase was driven by greater refunding activity by issuers seeking to restructure floating rate debt. While there was no new business written in the Structured Finance and International Insurance segment in the first quarter of 2009, the existing book of business generated $119.0 million in scheduled premiums earned, an increase of $24.9 million from $94.1 million in scheduled premiums earned in the first quarter of 2008.

As Requested: RF Position Update

Core Positions:
ATHR, DELL, EXM, EWZ, FCS, FTK, FMCN, FRO, GIGM, GMO, GNK, NXG, RFMD, YHOO, TOPS

Speculative Poppers:
BEE, BZ, EMKR (will sell for a loss tomorrow, FLOW, GKK, PLLL, PWAV, SPRD

Shorts:
Long SDS

Options:
FEED calls, LUV calls, CAL calls

(Anotherwards, I own a bunch of junk and I love it)

Market Wrapup

(Click to enlarge)

As you see, there was alot of red across the board today; however, tech stood out strong. For the day, I ended up 2% which is good but some of the technical plays are falling apart because of earnings. I think I am adding a new rule to my list: never play technical trades when earnings are due. Sounds elementary but I need to follow this one.

Energy and Financials really got kicked today and believe it can continue (well at least for energy). I will look to buy oil service firms very soon and add to my FRO position. As for finanicals, I will probably stay away long and/or short for now. Call me crazy but I am liking REITs. I made 40% in the month of January shorting REITs; however, I refuse to short them here and have covered my shorts for months now. VNO or BXP seem to be solid REITs but have had huge runs, plus I don't like the dividend polices (where they can issue stock for dividends, which is dilutive to shareholders). A broad way to play it is the IYR or the double bull URE.

Lastly, I see that firms are offering alot of secondaries. Firms like APC and F, announced after hours that they will re-issuing new shares. This is concerning, in my view, because it's dilutive but also it may signal that firm's believe their shares are overvalued or in anotherwards "this is the high of stock, because if we thought it was going higher, we'd issue the shares higher because we could issue fewer shares". Another negative that I see is that CDS in Europe are going up.

Frankly, if I was Obama, I would abolish the CDS market. Follow this analogy: Imagine if Life Insurers issued "Life Default Swaps" where a insurance company would sell me a LDS on you and if you died, I was granted money for your death. Do you think people would try to hire people to kill each other to get money? Well, isn't that kind of going on now, with hedge funds spreading rumors and shorting firms into the ground? And now taxpayers have to pay for bets that AIG made? Interesting thought....but in my view, the CDS market needs to end because the bears can raid a stock through the CDS market.

RF Sell MR

Should have never played this because of earnings....sold in AH for a 7% loss

GKK MR and EMKR

All report tonight, extreme risk

Financials

I'm looking into some cheap financials, betting that the run isn't over yet

Bought 500 bee at 1.35

Bought 200 kcap at 4.05

Be careful with these

RF Sell VXX

Sold for 8% loss

GKK

Yeaaaaaaaaaaaaaaaaaaaaaaaaah boy!

FAZ

I don't own it and don't plan on buying it here but it's a market indicator that I watch, along with the URE. REITs and Financials seem to be market leaders.

BZ

Another proud member of the RF 50% 4 day gainer club

XTEX

Looks good here at 3.80 and below

RF Buy FMCN

Bought 200 at 7.61

RF Buy PLLL

RF Buy MR

Bought 100 at 25.15

RF Buy EMKR

Bought 500 at 1.35

ABK - simply RF wins again

CNO- 100% week gain

BZ still holding and up 40+% day gain

Market Outlook

The outlook looks rather dim as financials are sluggish and many are reissuing new stock, like USB and BBT.

I plan on taking it on the chin today, unless we rebound which is quite possible. I might add to longs, so I would get the shopping list out and get ready to build some exposure. Tech normally stays dead for the summer but comes back in Sept. So if you are looking for quick money, tech will probably be in a corrective stage, so it may require some patience. Needless to say, that may be different this year but that's how its been for the past few years.

Market Outlook

The outlook looks rather dim as financials are sluggish and many are reissuing new stock, like USB and BBT.

I plan on taking it on the chin today, unless we rebound which is quite possible. I might add to longs, so I would get the shopping list out and get ready to build some exposure. Tech normally stays dead for the summer but comes back in Sept. So if you are looking for quick money, tech will probably be in a corrective stage, so it may require some patience. Needless to say, that may be different this year but that's how its been for the past few years.

Money Managers Repositioning?

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This is a highlight on Friday and it clearly shows that money managers are taking profits in Tech and rolling over funds in to Financials (bottom left) and Energy (top right). I am a big believer in tech, particularly PC's and Semiconductors, so this profit taking can provide great buying opportunity in those names. As stated earlier, semiconductor orders are great and believe earnings for the next few quarters will be outstanding. If you want to follow the money, your guide is above.

Is fear leaving the market?

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Indeed, it looks as if fear is leaving the market, hence the reason my short-term VIX futures are getting smoked. But the question remains, is this a trader "fix"? or is investor confidence back in the market?

Reviewing Last Week

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Interesting week but look at Exhibit #9 - any names ring a bell?

Perhaps ODP? TIE? or S?

FEED

Update on the almighty FEED:

* To sell about 2.3 mln shares at $4.2925 per share

* To use proceeds for development of genetic program

May 7 (Reuters) - Animal feed and pork company AgFeed Industries Inc. said it agreed to sell about 2.3 million shares to several institutional investors at $4.2925 per share to raise nearly $10 million. The company plans to use the net proceeds for the development of its genetic program and other growth initiatives. The transaction would include warrants to purchase an additional 1.2 million shares at an exercise price of $4.50 per share, the company said.