Retailers on the rise

Finally Retailers got their day to shine and maybe attracting capital after 0.75 pt rate cut. The following chart shows, top 4 sectors in todays market are retail related groups.


Finally stocks like Lowe's and Home Depot (HD) are seeing some investors liking the stocks, lots of these names dropped 50% from their 52 weeks high. Unlike other FED's cuts, this one is coming with concerns about slowing economies World Wide so growth stories of 2007 are on hold. Apple result will pull the whole sector down, so I would stay away from tech. names and tune my searches to look for stocks down 50% or so in sectors which where out of favor for long. Maybe Financial sector or even home builders. it was just few days back that Insurance worries over bad loans sent MBIA (MBI) down to $5, its up heavily in the past two sessions, its up 46% today ($12.53). So there might be some quick trades in that sector. Personally did not trade for about a week now, and could not trade today at all, still not confident about the direction of the over all market and stay 50% cash.

A MACWorld Trade and an Educational Trade

MACWorld starts off on Monday, Who knows what Apple has in his hat for investors but one would expect more of the same innovation and growth. I am not advocating or pretending that I figured out the economic land scape in the next few months, but I am willing to go long on Apple for the short time, and see if Apple stock gets a boost from the MACWorld. Looking at the Apple chart, One without knowing which company it belongs to, would be very tempted to SELL and stay away, however I believe the catalyst is strong enough to speculate on the future of this stock at least for the short term. Another stock on my radar is New Oriental Edu. (EDU) They announce their numbers on Tuesday. School sector has been a great performer and delivered good earning in the past one year. Apollo Group (Apol) announce last week and its stock got a huge boost after their announcement. I believe the same could happen here for EDU. In particular the Triangle formation on the chart suggests a drastic move in the direction of the previous trend is more likely. On the Short side I am short AXP and AB, Also Long MRK and BIIB and HUM.

On my radar screen: Robbins & Meyers (RBN)

Robbins & Meyers (RBN) rose 13%, or 8.62, to 77.12 on 4 1/2-times typical volume. The industrial manufacturer beat earnings expectations and lifted guidance for the current quarter. It also raised its quarterly dividend by 15% and set a 2-for-1 stock split. (source: eIBD) .

Top-Down Market Research

I was looking into the market sectors landscape, to spot money flow acceleration and sector ranking improvement. The following sectors caught my eyes, And I used these market ranking improvement as my starting point.






My second step is looking into the individual sectors in these groups and check their simple financial (fundamental) ratios and numbers. Among these stocks pick the ones with better growth prospects, lower forward looking PE and lower PE to Growth (PEG) ratios.
update on 1/7/08: Added ATW [Look at awesome growth and incredibly low PEG for ATW, As well as recent strength in the whole sector, Stock was down over $4 on Monday perhaps we can buy here or couple of points lower]






On the SHORT Side:
There are many candidates, We need to have some SHORT candidates and SHORT position in this market. Using the same 3 step approach in spotting bull-sectors, I looked at the sector in which money is flowing out. Gaming Stocks are out of favor these days, Look in to the following numbers and images, telling me that I should be able to find another SHORT candidate in this sector (I stay with my SHORT position on KLAC for now as well)

Long VIP Short KLAC

VIP (Vimpel Communication) is a solid Russian Cellular play , 08 EPS expected growth 39%, PEG=1.13, and KLAC (KLA-Tencor) is making new 52 weeks lw after bank of america downgrading many semiconductor stocks like INTC and AMD, If semi-demand drys up (or slows down) Semi-Equipment makers will suffer as well, Wait for a bounce from its 52 weeks low to buy puts.

Happy New Year and best wishes for 2008

Its maybe the time to look back and see how we all did in 2007, Here are some numbers to measure our performance vs. major markets. If we are actively managing our portfolios I would say we should expect greater returns than over-all indices'. Maybe we need to chance something, maybe we can find out what we did right and what we did wrong as well.

Dow up 6.4%, NASD up 9.8% and S&P500 up 3.5%, When Gold was up 31% and Oil up 57%. Energy sector was also the biggest gainer by going up 34%, Materials up 21%, Tech. up 16.9%, Utilities up 16.8%, and Consumer Staples up 12.7%.