Your Daily Profit
March 11, 2009
*****Global Markets Up…
Finally, early strength for stocks yesterday didn’t turn to
weakness. And in fact, stocks finished the day with a flourish to close at the
Maybe even a little too perfect…
Traders have been anticipating a rally for days. The shorts are all
covered. Bloomberg reports that hedge fund Paulson & Co. (unrelated to Hank or
Goldman) recently took the last of its 606 million pounds in profit from
downside bets on English banks…
Paulson: “Let others fight over the crumbs of profit in banking.”
& Co.: “Right you are!”
No, a rally was coming. Who’d bet against the Dow after it hit 6,440,
turning the clock back to 1996? But, more importantly, who’s going to bet that
the rally keeps going now?
*****After all, the stock market was just led higher by Citigroup, of
all companies. If only it could have been U.S. Steel (NYSE:X) telling us that
orders were up. Why couldn’t General Electric (NYSE:GE) have said that credit
card debt wasn’t so bad?
Sadly, it was dollar-a-year CEO Vikram Pandit reporting that his
Citigroup was having the best year since 2007. Isn’t that when the housing
market collapse spread to the banks?
Again, I suppose if you get billions in taxpayer money, you should be
able to put it to work in loan modifications and loan principle “adjustments.”
I’m not so sure that’s worth a 38% one-day jump in your stock price.
*****I hate to sound a sour tone. And I’m painfully aware that
investment wisdom states that the weakest among them, the financials, must lead.
But I have a hard time believing that other investors will believe that things
are improving for banks and the entire lending market just because Citigroup
said it had a good couple of months. They’ve been wrong before…
In other words, it’s not that I don’t think the financial sector is
getting better…maybe it is, maybe it isn’t (and between you and me, this is
definitely something I’ll be keeping a close eye on.) It’s just that I wonder
how many will take Turnaround Tuesday seriously over the next few days?
*****Europe’s biggest bank,
HSBC, got in on the action and said it doesn’t need anymore government loans.
Asian markets certainly seemed to love Citigroup’s news during overnight
trading, too. Japan’s biggest bank, Mitsubishi Financial Group was up 6%. Never
mind that machinery orders in Japan fell for the 4th straight month,
however less than expected.
And ignore the surprise 45% drop in exports in January while you’re at
*****The one thing that’s missing is oil. Why, why, in the face of such
a clear demonstration of the return of the global economy, did oil prices trade
Fixed asset investments in China rose 25% in January and February.
Surely a possible return to double digit growth in
China, the world’s second biggest oil
consumer, would light at least a spark under oil prices? Nope, the U.S. Oil
Trust (USO) fell 2.86%. Probably the only asset in the world that lost money
Strange times we live in…
*****I bring all this up for a reason. I’ve recommended a few stocks
here in the Daily Profit And my SmallCapInvestor PRO
subscription advisory letter is sitting on a 25% gain from a biotech stock we
recommended last Monday, March 2.
I realize SXC Health Solutions (Nasdaq:SXCI), Graham Corp (AMEX:GHM),
CardioNet (Nasdaq:BEAT) and Emergent Biosciences (NYSE:EBS) aren’t up 25%, but
you could have some gains to protect. And I won’t be at all surprised if you
could buy them all back 10%-15% cheaper in the next few days.
So let’s take advantage of any strength in prices today and get out of
these stocks with an eye to re-enter, say, Monday.
*****As for the biotech stock, it’s called Arena Pharmaceuticals (Nasdaq:ARNA).
It’s expected to release Phase III trial results for its obesity drug. Two other
companies, Vivus (Nasdaq:VVUS) and Orexigen (Nasdaq:OREX) have already released
less than stellar results. That leaves Arena carrying the easy weight-loss
I have no plans to hold this stock into the trial results. That’s a
recipe for disaster. But if the stock drops, there might be another 25% gain to
be had in the next couple pf weeks. And if the results are good, there could be
significant gains coming for this stock.
For more on SmallCapInvestor PRO, click HERE.
*****Finally, the Recovery Portfolio video conference went great last
night. We’re entering a trade that offers is highly likely to net 24%, and gives
you 17% downside protection. You can view a replay of this even
*****That’s it for today.
03-11-2009 8:23 AM
Filed under: CitiGroup, SXCI, biotech, GHM, EBS, BEAT, GE, X, USO, Vikram Pandit, C, ARNA, VVUS, OREX