Thursday, December 21, 2006

dead wrong!

If you thought I was not posting because I jumped off the balcony after this week, you would be very close to right. Disastrous action this week:

* AAPL fell off a cliff. Broke through $85 on the downside, holding now around $83. I backed up the truck and bought more on anticipation of a great quarter and a blowout set of announcements. It should be all good news from here - a calm restatement around the options stuff, talk of Christmas iPod sales, MacWorld buzz and finally earnings announcement on Jan 17. We should run from here. I am calling a bottom.

* ORCL. Disappointing quarter, and I went long. I still like the risk/reward on the trade but it didn't work out.

* RIMM. Didn't get the risk/reward I was looking for (call options were very pricey), so I sat this one out. And of course it moves higher!

I am taking donations.

Sunday, December 17, 2006

ORCL and RIMM earnings this week

This week, Oracle and Research in Motion both report earnings. Big options volume ahead of the reports. Here are my ideas:

* ORCL. Oracle was hit this week with reports from Lehman that database revenues would disappoint investors this quarter. The data apparently come from customer surveys. Personally I don't have much confidence in this, as databases remain very important to the web industry as a whole. The report however did provide a nice haircut and profit taking move to the downside over the past week. This leaves ORCL in a great risk reward position. Expectations may be dampened enough that a weak report will not trigger much of a downside move in price. I like the risk/reward going long ahead of earnings tomorrow.

* RIMM. Research in Motion is likely poised to report blowout numbers after releasing the popular BlackBerry Pearl this quarter. Analysts are probably being conservative in their estimates of Pearl sales. The downside here is that RIMM has moved up so much that all the good news may be in the stock; any weakness would be severely punished. Palm Inc. reports on Tuesday, so investors may be looking at Treo sales as indicative of what RIMM may be capable of delivering. I think this is apples and oranges - if there is any downside move in RIMM because of what Palm does, I would consider it a buying opportunity.

Summary: long ORCL, cautious on RIMM unless Palm gives us a way to get into it cheaply.

Thursday, December 14, 2006

New ways to play a Santa Claus rally

I've been doing some research today on some new ways to play a Santa Claus rally. After freeing up some capital today I have some buying power to deploy. Here are some ideas:

* JNJ. I have been looking at rotating into healthcare at the end of this big tech push towards Christmas. JNJ looks like it is breaking out here and I see nothing but upside. I may pull the trigger on a small part of my position tomorrow.

* AAPL. I am still hugely bullish on AAPL, even with the strange (options-related?) trading activity today. Everybody was up, but Apple was down. Maybe profit taking on the big move yesterday. But since AAPL is way above the $85 strike, I think bulls will try to push this stock above $90 in tomorrow's session. If it doesn't happen I've got plenty of buying power to step in on the dips (unlike last time).

* LOW. Lowe's is a great way to play housing weakness. Low interest rates mean cheap equity loans for remodeling. Low housing prices mean people will be sticking around and getting a new kitchen rather than selling their houses for new construction.

That's it for now. I still like Mastercard on any weakness, and I think GS is going to do really well as the bulls start to pile in over the next few sessions after options expiration tomorrow.

taking some profits

Taking some profits today on a nice up day. I closed out the last part of my options position in Exxon Mobil (XOM) with a nice gain. I was a bit of a hog with this trade; things got a little out of control last week. I bought more XOM on the dips and today I exited with a healthy gain. The right play would have been to take a bit off the table at the 52-week highs.

I've also closed out a bit of Research in Motion (RIMM). Not the entire position. I felt I was too exposed to tech here and the Q4 tech rally seems to be losing steam.

In other bad news, my Boston Scientific (BSX) play didn't materialize at all and I'm completely underwater in those options.

And GS didn't move at all on blowout numbers. It is basically pinned at $200 for options expiration week. I think it should rally to year end and be comfortably in the $220s shortly. As I wrote in my analysis earlier I think this could be a $240 stock.

The highlight of my portfolio at the moment is a hugely successful position in Apple Computer (AAPL) ahead of Macworld. I'm staying long this one until Jan 5 when the stock should be trading in the triple digits!

Monday, December 11, 2006

Picks for the end of the year

Avid JP golf + stock readers, my profound apologies for leaving you hanging through the big rally in November. I've been engaged in moving my household up to beautiful and exciting Sunnyvale, CA. And it has been a little bit destructive for the old portfolio! Not enough rigor spells doom + gloom. But no worries, I think we are well positioned to profit from any year end rally.

As I write this, here are my holdings:

Apple Computer (AAPL), Google (GOOG), Goldman Sachs (GS), Halliburton (HAL), Lowe's (LOW), Mastercard (MA), NY Stock Exchange (NYX), Research in Motion (RIMM) and US Gypsum (USG).

I had some positions in Exxon Mobil (XOM) earlier this week, which I closed out. I moved out of XOM and made a speculative short-dated options play on GS. I think these guys will have a blowout number. If they can manage $6 a share per quarter, that implies a valuation of $240-275 per share at a peer-justified multiple of 11 or 12. I think tomorrow before the close they will announce such a number. It's been a great quarter for trading and also not bad for M+A activity either. Best of all, I think 2007 is going to be great for traditional underwriting activity too. So I like GS here. I didn't play this with Dec calls (I could have) but instead January calls. Last time it took a little while for the bulls to pile in. It could be a similar situation this time, especially if a Santa Claus rally materializes.