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The Intelligent Trader's - Long and Short of It
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From: Robert A. Christy Editor/Publisher, ‘The Intelligent Trader’ http://www.intelligent-trader.com http://www.christyinvestments.com
Date: September 8, 2008
This weeks’ ‘Long and Short of It’
Bullish Percent numbers:
BPNYSE Os @ 50% DEFENSE BPOTC Xs @ 42% OFFENSE BPSP500 Os @ 54% DEFENSE
Note: The action last week was pretty rough. So much so, our Bullish Percent indicators flipped on Friday into the Capital Preservation phase. This means that the Defense is on the field and it’s time to take some action to protect profits where we have them and our principal. For now, just tighten your stops and be alert that we have a change in sentiment taking place.
I’ll publish the Defensive Playbook in a couple of days in the event; you don’t have an earlier version handy.
Stocks The Dow Jones Industrial average closed the week on a weak note finishing Friday up just 32.73 points or 11,220.96. The S&P 500 followed suit closing at 1242.31, up 5.48. The NASDAQ finished off 3.16 to close at 2255.88. Crude oil slipped 1.66 to 106.23 and the dollar finished mixed (up against the yen and down versus the Euro)
The major news was the nonfarm payroll number which showed a loss of 84,000 jobs. The unemployment rate now stands at 6.1%, the highest level since 2003. The number was called “disheartening” by a few economists and the negative surprise is not what this market needs.
The question now before us is whether or not the deterioration in the economy is accelerating.
What I know is this, the market is extremely oversold and for the first time, fear is settling in on market participants.
I don’t want to read much into what is going on – I am going to remain true to what got me to this point and that is follow the indicators and take my marching orders from them.
If recent events lend some credence, we can expect the jobs number to be revised as it was a few months ago. Most of the job losses are coming from the public sector (government) and not the private sector. This is really something that is not bad.
The other thing to note is that the slowing economy is becoming a self-fulfilling prophecy. Cramer did his show the other day with a bear on his shoulder and I have to believe that if you hear from enough people that the economy is really bad, then at some point you are going to start acting that way yourself and pull in the reigns.
If we all were to reduce our spending 10% or so, the economy would in fact slide into a recession.
The Election On the political front, everyone seems to be reeling from the Palin VP pick. Nobody really knows what to do with it. Liberals are up in arms because she isn’t one of theirs and conservatives are all tied up with “who is she” and “where’s she been all my life”?
From my perch, she walks talks and acts a lot more like the people that I know than any politician that I ever met. And I’d be willing to bet that she’s probably the most qualified of any of the four candidates in the mix simply because she has an abundance of common sense.
Palin aside, both sides are offering up stimulus packages for the meandering economy. Obama’s plan calls for the stimulus to be directed that the state and local government levels specifically healthcare and education. This is not a stimulus package in any sense of the word. It’s a redistribution of income plan. The only jobs created are government jobs.
McCain’s plan, which is taking heavy fire, is aimed at small businesses and contains a bevy of tax incentives that encourage growth and expansion. This one makes a little more sense because it puts the incentives in the private sector which is where the real jobs are created.
Microsoft Have you seen the new Microsoft commercial? If I had a say, I’d fire the people that put this thing together – the agency and corporate poobahs that approved it. It makes Bill Gates look like a jerk and Jerry Seinfeld look like an over the hill comic.
Microsoft is in trouble. The say that Vista’s problems are fixed, but the damage has been done. Vista was an ill conceived idea that was rushed to market with more than just a few bugs in it. That said - it really tarnished the company’s image.
Vista is the 2nd or 3rd product that Microsoft put on the market that was really flawed and people are taking notice.
Google (GOOG) introduced the beta version of Chrome (Google’s new internet browser) last week and confirms what I have known for a long time. We are about to go through a cosmic shift in the computer sector. In the next few years, computers as we know them will go the way of the dinosaur. We need computers today to (1) hold our software and (2) to get us onto the internet.
The shift that is coming is that software no longer needs to be contained in a box. It will be on the web. In the future, you’ll boot up your computer (which will start with the flick of a switch - like a lamp) and head for the internet. There you will find all of the software that you need – in one easy to find place – like your browser’s home page. Just click and pronto – word processor, spreadsheet, pics, videos, you name it just a click away.
The question is – who will get there first – Google or Apple? Microsoft is so far behind and so layered with bureaucracy that is may never catch up.
If the commercial is any indication, the battle is already lost.
(Note: I am long Apple (AAPL) in the Long/Short Equity Portfolio)
Currencies The currency trading continues to be our money maker. We closed our short trade in the CADJPY last week and actually made a successful trade from the long side on Friday. The dollar should stay strong against the yen and we’ll look at trading the USD/JPY pair if the situation gives us a low risk trade. For now, I am content trading the CAD/JPY because it is mirroring the price of oil better than usual.
This week will be an interesting one. I am looking to go long a number of names in the banking, paper, and retail sector. Intelligent Trader subscribers should check the daily notes for the recommendations that I am going to post around noon today.
Virus I got clipped by a Trojan virus that slipped through Norton this weekend and am spending the day getting the little bugger out of my trading platform computer. I have no idea how long I’ll be out of commission. I will say this – I got the thing from the Notre Dame Athletics (football) website.
That’s about it for now. Let me here from you if you have any questions.
Robert Christy
P.S. Are you interested in trading along side me? There are 2 ways to do so. The first way is through my stock trading service, The Intelligent Trader. For just $249 you get a front row seat and the chance to get up close and personal with the market. Just click to learn more. The other way is through my dynamic forex trading service. If you have an interest in trading and/or learning about forex, just send me an email. In your email, please let me know when would the best time to get in touch with you.
P.S.S. Please fee free to forward this to your peers, friends and associates you think would benefit from its contents. They will thank you for it - and so will I!
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Robert Christy is a professional stock trader, money manager, author and speaker. Mr. Christy is the President CEO of Christy Investment Group, Ltd., a registered investment advisory firm. He is also the Managing Partner and Portfolio Manager of Crabapple Capital Group, LLC and the editor/publisher of The Intelligent Trader, a subscription based long/short trading service. At the time of publication, Mr. Christy may from time to time write about stocks in which he, Christy Investment Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a position. In such cases, appropriate disclosure is made. Under no circumstances does the information in this column represent a specific recommendation to buy or sell stocks. Mr. Christy appreciates your feedback and invites you to send it to rac@intelligent-trader.com .
Robert Christy The Intelligent Trader c/o The Christy Investment Group P.O. Box 625 Alpharetta, GA 30009-0625
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© Copyright 2008 Robert A. Christy
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