Thinking out loud... AG speech a bit more neutral than I had anticipated. Gradually, however, I would expect that he will shortly replace active monetary micromanagement with "talking the market" in the desired counterbalancing direction. This time, apparently, he felt it sufficient to have his lieutenants speak for him.
Xmas retail sales trends were stronger than generally expected. Especially strong were consumer electronics -- especially DVD players, gaming platforms, and video and gaming software. All three combined to make sales of Sony Playstation 2 especially strong.
Part of this is certainly the post-911 cacooning or nesting trend, but as Jeff Bezos commented recently, this trend has been around for at least a decade. Everything connected with the home has been strong on Wall Street lately and everything connected with travel has stunk. At some point we will revert to the mean, but it will take a bit longer than some expect.
My purchases this week were BBI (at 3.8 x Free Cash Flow, with video and game rentals both experiencing double digit volume increases, on temporary weakness based on termination of a Radio Shack partnership)and CREE (on news of a penny miss in EPS and low visibility). My sale was AAPL (on a sell product intro, sell Macworld keynote strategy and some disappointment with the new iMac).
AMAT short at 45.05 is a small one week play, predicated partially on a failed expectation that AG was going to be more negative, partly on max-pain 40 (still don't know the statistical significance of the correlation), and partly on a gut feeling that tech wants to correct about 10% before it moves decisively higher. My LT bias is very positive (naked short Jan '03 40 AMAT puts), but I expect a bit of a bumpy ride in here. |
