The Free Market Capitalist

Blog has MOVED

2011-10-18T03:48:00.000-04:00

Google has decided to yank my ads so I've moved the blog over to TheFreeMarketCapitalist.com Fuck you Google :)

Fuck you Google :)

El Paso Agrees to be Bought by Kinder Morgan for $21.1B

2011-10-16T18:35:00.000-04:00

Earlier today El Paso (EP) agreed to be bought by Kinder Morgan Inc. for a 40% premium to Friday's close, creating North America's largest Nat-Gas pipeline operator. I see plenty of M&A's in the pipeline industries future so I put together a screen of the companies similar to El Paso (EP) that I think are most likely to be snatched up next.

Check out the screen after the break:

Plains All American Pipeline (PAA) looks like the most desirable candidate to me. It's the cheapest in terms of Forward PE with the highest quarterly growth rate. But I have to say Atlas Pipeline Partners (APL) looks pretty interesting too.

Tomorrow's Gameplan

2011-10-16T16:02:00.001-04:00

Make no mistake that this market is OB, but guess what? It doesn't matter. With Europe looking "solved" (yeah right), and earnings season kicking off with a Google-sized bang, the bulls are in control. This rally could go another week, but when we're OB like this my research tends to lead me more towards finding good stocks to short, not buy. I may snag some Apple (AAPL) and Qualcomm (QCOM) to play Wednesday's earnings report but only if I see a good entry. Also, one of my screens shows that Nabors Industries (NBR) and CVR Energy (CVI) have historically run on avg 8%-9% from where they closed Friday, over 95% of the time! Not bad odds right? I'll be picking some up early in the AM. But on the short side, another one of my screens turned up three names that historically have fallen, on avg, at least 5% over 70% of the time they became OB. It's not time to short since they're not quite OB yet, but I'll be watching Rio Tinto (RIO), DineEquity (DIN) and Rubicon (RBCN) very closely. Harbin Electric (HRBN) is already flashing "Tech OB" so I shorted some on Friday. Last time Harbin Electric (HRBN) registered "Tech OB" in my screen it fell over 12%. Chinese stocks are getting killed anyway recently so if the market turns, this one could test it's 200d MA. Harbin Electric (HRBN) closed at $22.09 on Friday and it's 200 day MA is $18.10.

This is not a recommendation to buy or sell any securities. DAK was long AAPL and short HRBN at time of publication but positions can change at anytime.

Insanity would be putting it lightly

2011-10-15T17:06:00.003-04:00

I'm 27 years-old and most of my friends are my age or younger. While I sit at home this Saturday digging through 10-Q's and 8-K's looking for the next undervalued asset, many of my contemporaries are "occupying" Wall Street . They are protesting against what they believe is a corrupt banking system that has led us into near financial ruin and left the country with 9% unemployment, while the CEO's of these banks walked away millionaires. Anyone who can't understand the frustration of these people is just being an asshole. But while I understand, I can't support OWS. The message is unclear, the goals are not definable and the tactics being used cannot be effective in the long run. Yes, they've brought media attention to their cause, but the second unemployment starts to drift back down towards the 7% range (which I think happens by next X-mas), the masses and lame-stream media will lose interest in their "occupation." The "people" will be sipping the Kool-aid once again, playing sheep in a broken system just waiting to be sent back into depression, after depression, until we're a third-world country abandoned by the rich and powerful that got us into the mess to begin with. Great. I'm glad you want to do something. Much of the system should be overhauled and certain regulations put in place, no question. But class warfare is just populous thinking. Taxing success is the wrong message to send to any population. Their is a proper balance that needs to be struck and the OWSer's want to take it to far. But, once again, can you blame them? Had these greedy fuck-tards not abused the shit out of the corrupt system put in place over 30+ years ago this wouldn't be happening. The government is the one to blame. Democrats and Republicans. The banks are just scapegoats and tools that have been used by our Federal Reserve. OWSer's are misdirecting their anger. If they really want to change the system, they should focus thier attention on Washington, not Wall Street.

Tomorrow's Gameplan

2011-10-13T17:16:00.000-04:00

Google (GOOG) reported a stellar quarter after the bell, handily beating eps estimates by 11%. I'm guessing we'll be up off the news tomorrow (tech anyway), but this rally has been long in the tooth since Friday. If we are up, I'll be using it as an opp to close out my longs and add to my shorts. It's hard to get short into Apple's (AAPL) earnings due out Wednesday after the bell, but this market has been OB for a while. I'd rather miss some upside and perserve capital, than get caught too exposed. If anything, let's pray Apple (AAPL) is down Monday so we can get in before earnings, but don't count on it. I promise we'll have a better entry point than tomorrow. I started a position in Western Refining Inc. (WNR) which is red hot right now. I started another position in $VXX and will open one in $FAZ if we have a real melt-up. PLEASE BE WARNED: There is pain ahead in this market so don't get caught up in the "jubilation" tomorrow.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

A little perplexed is I...

2011-10-13T13:56:00.002-04:00

Not knowing what to do sucks. I've been waiting for a correction that's looks like it's never coming and missed an ass-load of upside doing so. I'm not in "panic-chase" mode by any means, but yesterday and today I've slightly increased my long exposure via $TZOO and $WNR. I'm hedging those bets with some $VXX and should be about 65% cash, 25% long and 10% short by day end. I'll be looking to increase my short exposure by trimming down my long position to about 10% and adding to my $VXX, and staring some $FAZ if we gap higher from here.

This is not a recommendation to buy or sell any securities. DAK was long TZOO, WNR and VXX at time of publication but positions can change at anytime.

I was too damn early

2011-10-12T14:04:00.004-04:00

My technical indicators have been flashing OB since Friday and now are even in the upper end of the OB range, but it doesn't matter. Stock fundamentals have been too low for a while, and with Europe looking solved for the time being and the good companies are playing "catch-up" with fair value. Damn the technicals. It's dumb to get in front of this upwards momentum. Call me dumb. I had to cover all my shorts and sell my $VXX and $EDZ today. I got aggressive with some $TZOO and still have some $AAPl, $ARCO, and $ALXN but remain almost 80% in cash. I know I'm probably going to miss a few days of upside but 20% long exposure when we're this OB is fine with me. Remember the motto: Perserve capital.

This is not a recommendation to buy or sell any securities. DAK was long TZOO at time of publication but positions can change at anytime.

Here's China's response to 'Trade' bill

2011-10-11T22:28:00.001-04:00

Official Statement form China
商务部新闻发言人就美参院通过《2011年货币汇率监督改革法案》发表谈话

2011-10-12 08:22 文章来源：商务部新闻办公室

文章类型：原创内容分类：新闻

10月11日，美国国会参议院通过《2011年货币汇率监督改革法案》，商务部新闻发言人沈丹阳就此发表谈话指出，在全球经济复苏面临严峻考验的关键时刻，美参院推动以立法方式逼迫贸易伙伴货币升值，无异于发出了贸易保护主义升级的错误信号。此举严重违反了国际规则，不仅威胁中美经贸关系的稳定发展，也与世界各国共同应对挑战、反对贸易保护主义的努力背道而驰，中方对此坚决反对。

沈丹阳强调，中方一贯主张中美双方加强沟通，共同采取积极正面的措施发展中美经贸合作。美国会的相关议案一旦成法，势必导致中美经贸关系严重受损，这是中方所不愿看到的。希望美方深思明辨，客观理性地对待汇率问题，作出正确抉择。

Isn't that crazy? Kidding...jump past the break for the translation.

October 11, the U.S. Senate passed the "2011 Oversight Reform Act of currency exchange rate," Shen Danyang, a spokesman for the Ministry of Commerce has issued a statement that the recovery in the global economy facing a severe test of the critical moment, the U.S. Senate to force through legislation to promote trade partner currencies, is tantamount to upgrade sent the wrong signal of trade protectionism. This is a serious violation of international rules, not only threatens the stable development of Sino-US economic and trade relations, but also with other countries to jointly cope with challenges, runs counter to efforts to oppose trade protectionism, China is firmly opposed. 　　Shen Danyang stressed that China has always maintained the two sides to strengthen communication, common to take positive measures to develop Sino-US economic and trade cooperation. Once the motion will be related to the United States into law, will inevitably lead to serious damage to China-US economic and trade relations, which is the Chinese side want to see. Hope that the U.S. food for thought discernment, rational and objective treatment of the exchange rate, make the right choice.

It's a little wompy cause Google did the translate but it basically says this will strain trade realtions at the wrong time. And the trade war begins..........

Quote of the Day

2011-10-11T19:23:00.003-04:00

"Whether you think that you can, or that you can't, you are usually right."

-Henry Ford

Slovakia!! God bless you....

2011-10-11T16:36:00.001-04:00

Slovakia’s Prime Minister Iveta Radicova

Tonight, after much speculation they would vote it down, the Slovakian government voted on the EFSF package to save Greece and did just that. This is just political posturing by the Slovakian opposition party to sway voters, as Slovakia, just like Germany and France, have presidential elections coming up next year. I'm 100% sure they will pass it eventually, but not until they've thrown the current president, Iveta Radicova, under the bus. The fact that all this bullshit fell on an election year in the three most important countries on the planet has just added to the boondoggle. Alcoa $AA reported a stinker of a number after the bell and while everyone expected a disappoint, no one (except the options risk pricing) expected this crapola. The stock is plunging more than 5% after-hours. Between $AA and Slovakia, we're set up for some pretty rough action for the bulls tomorrow. Today I added to my $VXX and shorted some $CRM. I unloaded most of my longs save for a little Apple $AAPL, Alexion Pharma $ALXN and Arcos Dorados Holding $ARCO, only cause I think I can buy everything back cheaper later this week or next. I bought some Activision (ATVI) based on the chart, it looks like it's ready for a break.

This is not a recommendation to buy or sell any securities. DAK was long ATVI, AAPL, ARCO, ALXN, VXX, and short CRM at time of publication but positions can change at anytime.

Today's Gameplan

2011-10-11T10:50:00.000-04:00

So I've been tweeting how OB we are for a couple days but the hammer hasn't come yet. I don't even think it comes today so I actually bought some $QQQ this morning when we were down and I am already showing profit. I'll be selling out of them a day end and will be in about 70% cash. I've lightened up on all my longs since I think I can buy them back cheaper in a few days. I still have my $EDZ and $VXX which I'll add to them if we rally hard. Many stocks are cheap but they could be cheaper. We've come up pretty fast from 1074 and we need a breather.

This is not a recommendation to buy or sell any securities. DAK was long QQQ, EDZ and VXX at time of publication but positions can change at anytime.

The brilliance continues....

2011-10-10T13:20:00.004-04:00

Apple sold over 1M iPhones in the first 24 hours of availability bumping shipping times back to 1-2 weeks.

So, it's becoming more and more apparent just how brilliant a business move releasing the iPhone 4S instead of the iPhone "5" was. In just 24 hours Apple (AAPL) managed to sell almost twice as many iPhone 4S's as they did iPhone 4's even though this was a "minor" refresh. I admit they probably would have sold a few more "5's" had they done a major upgrade but let's look at this like as a business, not as a consumer.

It's been less than 2 years (the standard time until you can upgrade your phone at a discount) since the release of the last iPhone so this phone wasn't meant to target iPhone 4 users who would be less likely to upgrade anyway (unless the carriers waived those contracts which they may have done for a "5"). This phone was meant to go after the 70M+ iPhone, iPhone 3G and iPhone 3GS users (for which this is a huge upgrade) who are eligible to upgrade, the 1B+ non-smartphone users, and the fools still using Blackberry's, Nokia's and Droids. Then when Apple (AAPL) releases the "5" next summer, the carriers waive every ones contracts so we can all upgrade at the discounted price. Boom goes the dynamite. Also, Apple's (AAPL) margins will go up since there in no major redesign and there shouldn't be any supply shortages after the initial rush. I don't know if this move is one last flash of brilliance from Job's, or the first in many to come from Tim Cook, but look for Apple (AAPL) to continue it's dominance in the mobile market.

This is not a recommendation to buy or sell any securities. DAK was long AAPL at time of publication but positions can change at anytime.

Yay Socialism...Yay Beer

2011-10-10T11:14:00.000-04:00

So the first European bank falls prey to the debt crisis. We're down 400 right? Wrong, face-melting rally actually. Dexia sold itself to the Belgium government for $4B (something you would have known hours before it actually happened if you follow me @freemrktcptlst) and instantly futures responded positively. Add to that the "promise" (ha!) by Merkozy that the whole thing we'll be handled in 3 weeks and it's off to the races, right? Well, yes this is very good news, but the algo's are still showing me we're much closer to OB (overbought) than OS (oversold) so I'd be using these rallies for taking profits and quick trades. I'm in about 48% cash and will be using today and tomorrow to lessen my exposure to ARM Holding (ARMH), Netflix (NFLX), and yes, even Apple (AAPL) because I see a 5%-7% correction in our not so distant future. I just want to raise cash so I can position myself well for the next leg up. Let's talk about Apple (AAPL) and Netflix (NFLX) for a second. Both are rallying today for different reasons. Apple (AAPL) reported that they shattered previous presale records with their new handset the iPhone 4S, selling over 1M in the first 24 hours of availability. Netflix (NFLX) (a FMC takeover target) is up over 6% on word the board has decided against spinning the DVD-by-mail business off into 'Qwikster', which has investors hopping. I bought Netflix (NFLX) around $110 and it's hovering around $126 today so I have to take profits, but I reiterate this stock is cheap and primed to be bought by, oh let's say Amazon (AMZN).

This is not a recommendation to buy or sell any securities. DAK was long AAPL, NFLX and ARMH at time of publication but positions can change at anytime.

Quote of the Day

2011-10-09T19:55:00.000-04:00

"There's an old Wayne Gretzky quote that I love. 'I skate to where the puck is going to be, not where it has been.' And we've always tried to do that at Apple. Since the very, very beginning. And we always will. It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."

-Steve Jobs

1955-2011

Food for thought....

2011-10-09T02:35:00.002-04:00

In 1972, the first year after Nixon took us off the gold standard, adjusted for inflation, gold's yearly average price was $244 per troy ounce. Subsequently through the next decade, America went through hyper-inflation, high oil prices, rampant unemployment, two recessions, and Middle Eastern conflict. Sound familiar??? Well, at the peak of the fear in 1980, gold's yearly average price had risen to an inflation adjusted $1637 per troy ounce. Fast forward to 2001, the beginning of our decade of hyper-inflation, high oil prices, rampant blah, blah, blah, gold's yearly average price was $271 per troy ounce. Today, gold prices have ramped all the way back to 1980 levels closing Friday's trading session at $1644 per troy ounce. We've been here before people. In 1972, it took roughly the same amount of gold to buy goods and services as it did in 2001. Crazy, huh? I'm not implying gold has peaked, or this is the end of America's version of the "lost" decade. In fact, was it not for the economic and foreign policies of freshly elected Ronald Reagan, our situation would have gotten even worse. This highlights the urgent need for a leader that can do what's necessary to return America to prosperity. This is not a "let's blow Reagan" speech, or a call to imitate everything he did. Times have changed and different strategies are needed. That's why the Free Market Capitalist supports Ron Paul for President in 2012.

Thanks Salida, you made my year...or did you???

2011-10-08T14:06:00.003-04:00

If you read my blog you know I had been calling for a correction in gold based on two factors. First, the chart was forming a textbook double-top that should have put fear in the heart of any investor, and second, the precious metal was simply overbought and due for a pullback. Even good ideas get ahead of themselves. Long-term I actually think gold is a buy. But what's the exact reason for gold's $300 pullback which actually helped me get back to even and then ahead for the year? For weeks there have been rumors that Salida, a Toronto based hedge fund that invests primarily in metals and energy, was giving up the ghost. Them along with Paulson we're rumored to be liquidating their holdings on the open market fueling the massive declines (it has been the the common thinking that losing hedge funds have been raising cash by selling their gold positions to cover margin calls or redemption's). They've denied these rumors of liquidation and I tend to believe them. I've attached their monthly performance letter which explains their massive fuck-up, causing them to be down almost 50% on the year. It looks like they continued to load up on precious metals and oil stocks into $1900 gold and $100 Western Texas Intermediate. Oops. Check out the letter for yourself.

Me love cookie...

2011-10-08T13:08:00.002-04:00

Do you believe them?

2011-10-07T13:54:00.004-04:00

Here's the info, it's up to you if want to believe it or not. I really don't know. No one does, hence the issue.

This is interesting.....

2011-10-07T13:51:00.002-04:00

Stats are fun, but with Europe looming over us, we can't take this as gospel. That said, JPMorgan thinks it's true.

Quote of the Day

2011-10-07T12:30:00.002-04:00

"No one is so brave that he is not disturbed by something unexpected"

-Julius Caesar

Somehow I think Apple's gonna be ok.....

2011-10-07T12:13:00.000-04:00

A little perspective

2011-10-07T11:10:00.005-04:00

Today's jobs number was ok, but it is not conducive with adequate economic growth. Take a look at this scary bitch of a chart. The main problem is that the people out of work are not trained for 21st century jobs. They're trained for jobs that are NEVER coming back. Those jobs are in Asia now. The focus of this government (in addition to creating a national bank that's sole purpose is investment in the United States through small loans to qualified small businesses and persons) should be educating the aging, out-of-work laborers whose jobs have been shipped to India. Unemployment will drop 2% when housing comes back, but we'll never be at the historical Bush-era lows of 4% unless our workforce shifts it's focus to computers. Period.

A little early, but happy none the less

2011-10-07T10:51:00.001-04:00

I unloaded when we were only up a bit yesterday so I've missed the last 300 points but it would have been foolish to not lock in gains when you're up 30% on the week. I'm sitting in about 55% cash and don't intend to do much today. The downside risk is there but so is the upside. Neutral is the way to be. If you were braver than I, don't sell until late in the day. Everyone who made bank this week is taking profits now, but there won't be any bears willing to put there asses on the line and get short here so I think we have triple digit gains by day-end. I'm still holding Apple (AAPL), Arcos Dorados Holding (ARCO) and ARM Holding (ARMH) cause I've taken such a bath with them and I don't see much more downside (famous last words lol). Also, I still have my Netlix (NFLX) on takeover spec and Alexion Pharma (ALXN) on FDA-approval spec which I'll hold til it happens or I'm wrong. Still long dollar and short euro.

-Stay thirsty my friends ;)

Day of silence.

2011-10-06T08:18:00.001-04:00

No posts today.

Rest In Peace

2011-10-05T20:40:00.002-04:00