Buzz of the Street: What Will Gold Do?
Some of this week's most insightful and timely vibes.
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Monday, August 31 2009
Back to Business
By Fil Zucchi
After a very fun 2 weeks break it's back to the grind. I had started writing one of those long-winded, data filled pieces to explain why I continue to think that this is a bear market rally that will end in more tears, but all it took was a quick read of the 'Ville to realize that it would have been more than redundant. So I'll stick with some stock specific comments:
- As I dug into Cypress Semi (CY) Q2, it reminded me that this is probably the only semiconductor company I need to own. Its sales-thru accounting (as opposed to the channel stuffing techniques of many others) combined with the myriad of products CY is designed in, gives you as good a look into the semiconductor industry as you can ask. Not to mention that the company pretty much tells you when to buy and sell its stock, by using a simple Price/Sales measures. If you do not believe me just read this primer, look at this chart and how it superimposes to CY stock price. So, where does it leave CY's stock right now? Neither here nor there as far as I am concerned, but since I want to have a presence in case we get a sharp move either way, I remain long Dec calls and short stock, delta neutral.
Responding to some questions on the homebuilders, I remain of the view that housing is about to enter the horizontal part of a multi-year "L" bottom. Companies will dilute equity holders into oblivion to raise cash from people who believe there actually is any equity in these companies, so no amount of cheerleading will get me long the stocks, but as I buzzed several months ago, there are some companies out there that will survive, and I am actively looking for bonds opportunities if yields are in the mid-teens.
Further on the homies, there is some anecdotal evidence that builders are going back to some spec building and/or rolling the dice on buying back some land. I will caution that most non-public builders can only keep their operations in suspended animation for so long before they simply have to call it quits. From that standpoint, my sense is that a bunch of these guys are going "all-in" on the notion that a bona-fide recovery has started. If they are wrong they are toast whether they press their bet or continue to sit things out.
The CAD/AUD cross which looked so good just a few weeks ago has turned punk and has me slightly in the red. The 1.0750 area is where I just may have to jump ship.
Editor's note: Fil had positions in DTG, CMI, CY, CAD/AUD at the time this Buzz was published.
Yearning for Boredom
By Smita Sadana
You know what's the most important thing on my radar as of now?
McClellan Oscillator, which is getting close to short-term oversold levels.
Oversold? I know it doesn't sound right even as I can confirm from the visual. Mind you, this is an extremely short term window, which can be worked both by price or time. None of my other short term indicators are flashing oversold right now.
Click to enlarge
Ideally, I would like to see the SP-500 at the first support level that I mentioned earlier, combined with oversold readings since a premature move from here can prolong the uncertainty.
Click to enlarge
And talking about suspense and uncertainty, I don't mind knowing the story of the few movies I get to watch before-hand; I wanna know exactly what's coming and who's going to say what. Given that suspense is what I deal with on a daily basis, can you really blame me?!
Editor's note: Smita had positions in SPY at the time this Buzz was published.
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