Out of moly again

Sold mcp at 28.7$ this am. Looks like a solid sale point. May re-enter from the long side depending on mkt conditions


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Moly, Transocean

Sold MCP @ 28.21 (30% gain) on Monday. Bought it back at 26.25. Huge, beautiful bullish reversal today with a long tail on heavy volume.

Bought back by RIG call late last week for a nice 30% profit. RIG is beginning to look overbought but I think oil is starting to break out and RIG may exceed 70 in the near term.

Repulsed

Gold was repulsed (temporarily and not violently) from $1300. The miners have sold off worse than gold itself. This is a good entry point for additional miner shares. In other news -- the s&p Is amazing and I will be covering all my shorts probably Monday when we hit 1155


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Backing up the truck short

Bought 1000 more sds at 29.9
Will sell all 2000 sds at 28 if we break out here

The FOMC meeting marks the top


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Rotating out of auy to gdx

Sold 1000 auy @ 11 (7% gain)
Bought 200 gdx @ 55.6


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Market Topping Now

Market divergence continues. Money flow loss leader for the past two days running has been SPY, indicating distribution.

Increasing FX volatility due to Japanese Central Bank intervention is also causing wild swings in the currency markets.

OPEX Thursday should be down substantially (1%+) and OPEX Friday should be flat to down if history is any guide.

The ST top is in, as is the Intermediate and long term.

RIG and MCP

Wrote a 60 October covered call on RIG at $60 for $3.1 as it looks very toppy. Bought MCP at $22 last week.


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Gold looking ST toppy here

Gold feels a bit toppy here in the short term. A pullback to the 1230 area before a further advance next week when volume comes back to the market seems reasonable.


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The silly season… CRM, NFLX, OPEN

How about a stock with a 213 P/E ratio and a 79 forward P/E that is worth over 15 billion.

How about large cap stock with a Price/Book ratio of 42? (this is NOT a misprint)

How about a stock that only is expected to have 91 million in REVENUE (not income) for the full year of 2010 yet trades at a market cap of 1.3 BILLION dollars?

From these above statements you would think I was writing this article in 1999 but actually I am talking about the three stocks listed above (CRM, NFLX, OPEN)

As of today:

CRM = $120 with a market cap of 15.5 billion
NFLX = $146 with a market cap of 7.7 billion
OPEN = $55.5 with a market cap of 1.27 billion

Why are these stocks going parabolic at the moment?

1. Tech is hot: AAPL, VMW, GOOG and friends have been the “safe havens” for folks. Although the overall market is in a clear and well-defined downtrend since April of this year hedgies have been hiding out in tech. A few large high profile buyouts have just added fuel to this fire.

2. Momentum: These stocks have done nothing but go STRAIGHT up since the fall of 2008. Since this time period CRM is up over 550%, NFLX is up 700%… When a stock goes STRAIGHT up for this long without any real shake out moves people just keep adjusting their sell stops and riding the wave.

(un-numbered side note.. NFLX was trading for less than $20 in 2008 and currently trades for $146 but do you know anyone who is a new subscriber to NFLX in that same time period? Personally I got my subscription back in 2005 and most folks I know FINALLY jumped on board in 2006-2007 or so)

3. Large short interests: All three of these stocks have had very consistently high short interests.

TMFDeej pointed out the stock OPEN to me back in July when he wrote the blog post:
Cast your vote for the World's Most Overpriced Stock:
http://caps.fool.com/Blogs/cast-your-vote-for-the-worlds/423777

At the time this stock was trading for $45 a share and I said:
“This always happens with these stocks. The short interest gets really high because the stock is really overvalued, then the stock goes into a parabolic blowoff destroying the early shorts before it implodes. Hard to pick the tops on these momo stocks so I am waiting for CRM to roll over before I get short... “

Since the time of this comment in July I believe all three of these stocks have ramped at least 20%… Could this be the “parabolic blowoff”. I’m not smart enough to tell you if it is over but I can just say be on the lookout for a rollover/breakdown of the trends to get short. (only if you are an aggressive trader, I may personally stay on the sidelines)

In summary the market looks to be rolling over as the long-term moving averages are crossing to the downside. (my next blog this weekend will be about this fact)

These momentum leaders have been rising in my opinion for the three reasons above and when the market turns south I believe these types of “momo” stocks will lead the way.

Adding more defensive names

Johnson & Johnson @ $58.81 (NS), 3.7% Yield
Utilities SPDR @ $31.54 (NS), 4% Yield

In lazard

Bought a few lots of lazard (laz) @ 33. Company and economic story


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