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Nov 9 2013 Weekend Market Comment

Nov 9 2013 – Thursday night I shut off my monitor a smugly grinned, the market sold off, just as my last weekend market comment said it would, I was in cash, short gold miners and short long dated treasuries and even a little long bet on TripAdvisor. A tiny bit of “would-a could-a should-a” lurked in the back of my mind, perhaps last week if I was bold I could be riding the double short NASDAQ -- QID for a nice bounce today. Ah but that would be against a rule of mine. No equity shorts while we are in a strong bull market.

Come Friday I was reminded why I had that rule, oh baby what a surprise! The market rudely rallied without so much of hint of notice to me. The U.S. jobs report was better than expected and unlike the past good news was hailed as good and the buy the dip crowd hit the buy button. Well it should not be a complete surprised many fund managers are swimming in cash and look foolish for not cashing in on this near record rally. 

This is November and funds buy in November. Also there was the NEWS of the Twitter IPO doing very well. I was wrong, but still I did not get burned, my gold short worked on Friday, TBT did very well, and even TripAvisor  made an up swing. The lesson is that you don’t need to be in equities all the time. Yeah I was in a lot of cash and missed a hot day, but one day does not make a market for a swing trader like me. Frankly Tuesday next week will be far more interesting, we will see if our green arrow graph perks up. Despite all the good news, it does not look all that good.

 Also the NYSE % above 50 day graph is still looking bad . . .

and that is a problem because lately the big stocks are out performing the little ones so this graph would be worse if it was say the NASDAQ. So lets look at the NASDAQ summation index. As I often say -- this thing is far from perfect but it is not to be ignored either, it can be a very early warning system, clearly the market is not a strong as many think. 

The VIX or “fear gauge” show that once again hubris is back in the markets. You know I like to play safe when this thing get near recent lows . . . and it is not only at recent lows but starting to climb. That means the real smart money is buying puts and selling calls. Never a good sign.  

In honor of Twitter I began looking at Social media stocks. Here is SOCL the ETF that tracks Social media stocks like FaceBook and Twitter. The first thing you will notice is that lately this is not going too well.

There is a reason for that most of these stocks are a load of crap. No earnings and not all that much proprietary technology. As these service flood their content with ads and as the spying on users gets creepy, the users are turning off or switching brands. There is one Social Media stock I like, not because it is any more profitable or has a huge user base. I like this one because it has a real use, and I can see a pass product that this fading out to be replaced by this. The site is LinkedIn and the reason LinkedIn works is that people want to get jobs and employers get more from linked in than a paper resume gives.

Counter to the never-ending selfies on Instagram, food porn on Pinterest, silly GIFs on Tumblr, messy drama and rants on Facebook, the tone and presentation of LinkedIn maintains a rare social media decorum and professionalism. No annoying memes, cheesy inspirational quotes, or photo album creepers. No bashing, bigotry, racism, sexism, slurs or personal insults. Unlike the vitriol of YouTube comments or the one-upmanship of Reddit, LinkedIn commenters are civil, provide constructive criticism, and encourage open discussion.

LinkedIn replaces HR sites like Monster Worldwide and traditional classified ads, so the good news is we see a technology based on a certain need, human resources. LinkedIn is also unique, no one is going to use FaceBook as a way to get hired, not when your friends can post pics of your drunk naked butt on your news feed. Sure the management at LinkedIn can screw things up but if they don’t the thing could be a long run money printing machine. Consider stashing this away in your long term playbook with RenRen, Tripadvisor, Tata Motors and Iron Mountain as a company with a great future and worth a small bet on buy and hold.

The bottom line, Friday was impressive and I might be missing the next up swing, but I will decide next week, and then at first no all out bets. the pros are getting off the field.  Perhaps I will play some more conservative plays.

November 11 is Remembrance Day -- Thank a soldier

“A hero is someone who has given his or her life to something bigger than oneself. ”
- Joseph Campbell