A Non-Day... Part II
The SPX seems hellbent on trading in an extremely tight range, given that there aren't any major catalysts to propel it (yet) over and above the 1223-25 resistance level, which I had previously mentioned. I would look to buy any dips toward the 1210-05 level, as I feel the bulls are needlessly trying to push their luck here, not realizing we came up too high too fast. There is no rush -- we are not even buying Thanksgiving turkeys yet, so the market has plenty of time to find a base in the 1205-1225 range before it eventually decides to go higher, (provided bad macro news don't spook it!), for calendar 2005 year end.
Everyone's talking about the "mild weather". What are we, English? It's going to be freezing in 2 weeks time, so if you are selling oil/natural gas/heating oil because of the "weather", please stop! Don't follow the herd. There are perfectly good reasons why oil is going down, but "weather" isn't one of them. In America, when the media can't find a reason why certain things are happening, they just invent one!
Speaking of herd mentality, Warren Buffett [of all people] has apparently "reduced" his massive bet against the dollar, due to some heavy losses in recent months. Correct me if I am wrong, but the last time he and his good friend Bill Gates ganged up on the buck, the $/euro was trading at around 1.30 and Bill even mouthed something like this: "Yep, the ole dollar is goin' down, down, down!". I might live to regret this, but I actually want to be short $/euro @ 1.175, i.e. I want to place the contrarian trade to the one that the media reports that "everyone else" is doing (including Warren and Bill). Judging from the herd's track record, it might be an opportune time to short the dollar again (higher 10-year yields and interest rates notwithstanding!) -- there is still the "small matter" about the global savings imbalance and U.S. deficit.
Last but not least, what is up, or shall we say, "down" with Guidant (GDT) these days? Now they are suing Johnson&Johnson (JNJ) to force them to complete the acquisition?!! GDT stock is at $55.50. Wow! Now, there is of course no argument from me that GDT is no longer the same company it used to be a year ago (they got hurt by all those recalls!). But trading at $55.50 when there is still a good chance that they get taken out at $65 to $68 on a renegotiated deal? That's a bit too steep of a discount, I feel. I would buy GDT @ $55.50, for a first time purchase/punt, and put it away for a while -- the stock should be worth more even as a stand-alone entity. A few angry and scared shareholders who are getting out of their losing positions don't change the fundamentals (granted those might have worsened a bit, but that's already in the price!). I expect the stock to trade at $60 before long (without a deal), and much higher should JNJ negotiate a nice discount to the original deal price, due to "material adverse change in the acquisition circumstances".
Everyone's talking about the "mild weather". What are we, English? It's going to be freezing in 2 weeks time, so if you are selling oil/natural gas/heating oil because of the "weather", please stop! Don't follow the herd. There are perfectly good reasons why oil is going down, but "weather" isn't one of them. In America, when the media can't find a reason why certain things are happening, they just invent one!
Speaking of herd mentality, Warren Buffett [of all people] has apparently "reduced" his massive bet against the dollar, due to some heavy losses in recent months. Correct me if I am wrong, but the last time he and his good friend Bill Gates ganged up on the buck, the $/euro was trading at around 1.30 and Bill even mouthed something like this: "Yep, the ole dollar is goin' down, down, down!". I might live to regret this, but I actually want to be short $/euro @ 1.175, i.e. I want to place the contrarian trade to the one that the media reports that "everyone else" is doing (including Warren and Bill). Judging from the herd's track record, it might be an opportune time to short the dollar again (higher 10-year yields and interest rates notwithstanding!) -- there is still the "small matter" about the global savings imbalance and U.S. deficit.
Last but not least, what is up, or shall we say, "down" with Guidant (GDT) these days? Now they are suing Johnson&Johnson (JNJ) to force them to complete the acquisition?!! GDT stock is at $55.50. Wow! Now, there is of course no argument from me that GDT is no longer the same company it used to be a year ago (they got hurt by all those recalls!). But trading at $55.50 when there is still a good chance that they get taken out at $65 to $68 on a renegotiated deal? That's a bit too steep of a discount, I feel. I would buy GDT @ $55.50, for a first time purchase/punt, and put it away for a while -- the stock should be worth more even as a stand-alone entity. A few angry and scared shareholders who are getting out of their losing positions don't change the fundamentals (granted those might have worsened a bit, but that's already in the price!). I expect the stock to trade at $60 before long (without a deal), and much higher should JNJ negotiate a nice discount to the original deal price, due to "material adverse change in the acquisition circumstances".
posted by Ivan at 11/07/2005 12:03:00 PM
0 Comments:
Post a Comment
<< Home