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Sept 7 2013 Weekend Market Comment

Sept 7 2013 – Well last week I pulled out all my basic broad market indicators and showed you that we were near a bottom and it looks like a bounce is coming but it is too soon to go “hog wild” . Well all of that advice is true this week too. There is not much point showing those graphs again, it’s the same story only a little better. However you might, like my little friend here, start to nibble a bit here.

So for this week I thought we would look at some “secondary” signs to see if this impending upturn is for real. Well the first thing you can do is compare conservative and speculative parts of the market. Both Real Estate RIETS and Utilities are under-performing in the current market. On the flip-side highly speculative areas like consumer discretionary and Semiconductors (computer chips), are doing very well. In fact the NASDAQ is leading the market and that has not been true for a while.

(as always, click any image to enlarge)

Chinese Fire Drill
Speaking of chips, for many years memory chip manufacturing has been a place for money to die, there are only three manufactures left in the game, Samsung in Korea, Hynix in China and Micron Technology in the USA. Now supply is getting really tight due to a major fire at Hynix. A panel of spokesmen for Hynix, including Vice President Li Ying Ting and  Production manager Sum Ting Wong said the fire raged for more than an hour. After an initial assessment, the world's No. 2 maker of dynamic random access memory (DRAM) chips said it found no "material" damage to fabrication gear in its clean room at the plant, which produces around 12 to 15 percent of global computer memory chips. “No Material Damage” is how Chinese PR people say, OK we lost the whole stinking plant, the sprinklers were not connected, the staff has no emergency training so ran away shrieking like scared school girls and the fire department got lost on the two hour drive to here.  Demand for 2-gigabyte Dynamic Random Access Memory (DRAM) up 19% to a three-year high. Chip prices rising? Amazing!  Micron (ticker MU) has almost tripled in value in 2013.

ISM data for both Manufacturing and service sector is doing very well. For example just look a Ford, imagine how huge this firm is and their stock price has almost doubled in 2013.

This week I took some open positions in Bank of New York Mellon (ticker BK)

Added SDY the ETF that tracks conservative dividend stocks. Why this ETF? Well I plan to play some more aggressive ETF plays if we get a green arrow, But I want to participate in the turn and not get burned to bad if it fizzles, so this is short term holding if it tanks I will stop out, if it does well I will trade it for a more aggressive position soon.  

I took a new position this week in COMPANHIA ENERGETICA DE MINAS (ticker CIG on the NYSE) I have been watching the disintegration of Brazil for some time, waiting for this stock to become too appealing to ignore. I am no fan of Brazil; I still think they are headed for financial ruin. But this firm is a well-run power company and of course even 12 people stuffed in a tiny Rio apartment still watch TV and need to keep the refrigerator running. At current valuation the dividend is running 17%. That is a sexy investment or as they say in Portuguese; és sensual.

Of course my biggest position now and for months now is in TBT. As the ten year treasury broke 3% this week the traders panicked and covered, and for me well lets just say OMG what a great week to own TBT. If you followed me in on this trade you are up over 15% on a bond play and yeah you’re welcome!  

The US dollar is rising and gold looks like it has peaked, but I am still saying away for now.

On the Canadian front Methanex (ticker MX)  is a Vancouver-based, publicly traded company and is the world's largest supplier of methanol to major international markets. Earning growth and strong demand has put this stock on a steady path up.

If you really want to take a flyer, consider Trip Adviser (ticker TRIP) I think as the consumer get stronger, people will travel more, dine out more and get more advice from their smart phones, all through Trip Adviser. Plus the new business AirBnB is very exciting. If you look at most major hotel chains like Hilton, Marriott or Best Western the money is in the call center that takes the reservation and “sells” it to the franchised hotel. AirBnB will allow Trip Adviser to get a fee on every night of Bed and Breakfast accommodation in the world, with almost none of the costs a hotel franchise call center has. Sweet!  

Bottom Line: So this turn looks viable. As we head toward the magic green arrows you can nibble conservatively here. 

Heck of an Interview
In case you have not seen this yet this is the big hit on You Tube this week. A prank of epic proportion to sell a big screen TV.

I am Here About the ``Job``
Speaking of Interviews, the disappointing level of American job creation in August may have had an unlikely source: Porn.

Friday's report from the U.S. Bureau of Labor Statistics showed the economy added a net 169,000 positions, about 11,000 short of the consensus estimate.

While it's difficult to point one specific reason why job creation missed expectations, speculation in some corners immediately turned to the $97 billion adult film industry. According to the BLS, the business sector it identified as "the motion picture and sound recording industry" lost 22,000 jobs in the month—enough to account for the shortfall and then some.

So folks get out there and buy a DVD or sign up on a web site and show these hard working young people that their is a still a bright future if you have determination and talent.

Here are a few new titles with a good story-line and high production values:

  • Driving Into Miss Daisy
  • Sorest Rump 
  • Gangbangs of New York
  • When Harry Ate Sally 
  • How Stella Got Her Tube Packed
  • In Diana Jones and the Temple Poon
  • American Booty
  • Pulp Friction
  • Swallow Hal 
  • Buffy The Vampire Layer
  • and the classic but still touching; On Golden Blonde 

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