Tuesday, February 17, 2009
Tuesday Morning's Trading Alert & Market Psychology
Morning to all, The three day weekend brought no substantive bank policy news from Mr. Tim Geithner and the market is not saying 'good morning' but screaming 'good murder'... With the S&P down under 800, POTC recommends not establishing any long February option positions until late Wednesday afternoon at the earliest, as we do see a short covering rally beginning Thursday either due to positive bank policy announcement(s), or an SEC policy announcement regarding mark to market accounting in combination with a reaping of profits technical rally ahead of the weekend. Oil is selling off hard, and although a negative in the short-run as S&P heavyweights like XOM are correlated, the long-term effects will be very positive for business and the consumer. POTC would consider buying CHK into what we view as a near bottom (within 10%) for oil and natural gas. Companies like CHK are stock piling supplies at current prices, and with the global population not going away anytime soon the need for these commodities will not vanish. Consider CHK as a core concentrated holding in 2009. (POTC just broke Commandment #5, "never fall in love with a stock": we confess and ask for your forgiveness.) POTC recommends buying CHK in the low $17 range and having a sell stop in 15% below. We strongly believe CHK could be up over 30% in the next several months as clearer minds prevail. The Peter Schiff''s and Marc Faber's of the world look brilliant today, yet their perma-bear rhetoric is stale, monolithic and too rigid to profit from as the market will eventually find some equilibrium and pivot higher, leaving the perma-bears with their fools’ gold medal. The global landscape is experiencing a paradigm shift away from traditional brokerage & banking and as the details are ironed out, technology and other unrelated sectors will thrive; nobody will invest capital in nationalized entities. Money will begin to flow to large technology names in time; consider "cream of the crop" companies like GOOG & AAPL as the market washes out more weak sisters. GOOG and AAPL are two cash rich companies that will continue to shock the world through innovation & win great market share in this environment. Cash rich leaders will emerge stronger, so we are excited by gap down type pullbacks as they offer terrific opportunities for retirement accounts. IF we do close on the lows today, we envision a massive ripple effect around the globe, and a climactic swing/pivot point tomorrow or Thursday perhaps. Exhibiting patience today may be difficult, yet we believe it will reward you over the short & long-run; forcing trades and merely hoping the market turns makes less/little sense. The Psychology of the Call team thanks you for your Tuesday morning attention.
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