General Stock Ramblings

Just a few thoughts today, to help you think.

Vaccines give us a false sense of security. When you have a strategy that everyone thinks reduces death by 50%, it’s pretty hard to invest resources to come up with better remedies.

This is your "think" question of the day.

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And some ramblings.

The recent surge in oil prices hasn’t benefited Big Oil much, and the moment may be passing. Last week we had earnings from BP, Conoco Phillips, Exxon Mobil, Royal Dutch Shell and Chevron.

It’s hard to compare the gang rape that was occurring a year ago and more in oil speculation, and the recent run up to oil at 81.00.

The refinery business is at 81% of capacity and our U.S. Oil Supply is up 28% over last year. We see oil as ready for a major correction, perhaps to $50.00. We are these prices right now because of supply and demand, entirely to excess global liquidity.

As long as profit remains the driving force, health care will remain a commodity, instead of a human right.

The political focus on the federal stimulus package and Bernanke’s own professional mildness have deflected attention from how radically the Fed Chief has acted. He dropped target interest rates to near zero for the first time in history; made trillions of dollars in government cash available to financial institutions; expanded the Fed’s lending and relaxed its collateral requirements; bought up billions of dollars in securities backed by consumer debt, and mortgages; protected the collapse of AIG, Fannie Mae and Freddie Mac; and somehow found time to bear the made for TV harangues of the financially illiterate members of Congress. The particulars of the Fed’s intervention remain lamentably shielded from oversight. But in the Great Recession, Bernanke’s approach may have spared the world a true nightmare *Every stock leader pulls back to the 50 day moving average 2, 3 or 4 times before the move is over.

*Study only 50 stocks. Own no more than 10. Know what you own.

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Lots of big money portfolio managers believe the money in 2010 will be in Microsoft, GE (which we just recommended to all traders that held to sell) and Bank of America, and not in Apple, Google, and AIG.

They may be right.

The great risk has really already been taken as investors flocked back in at 6500 and watched this meteoric rise, on no real results. In other words, their appetites opened to risk, only to last week begin to hesitate that this entire expansion has been built on inflated GDP numbers, restructuring, and falsified earnings growth. The game will get harder as the "good months" progress.

Stocks To Buy and Sell NOW

Stocks we are watching:

1. For those of you that hold GE in any portfolio (not our recommendation). WE do not believe GE has strength long term, and is a losing bet

2. Traders that worked with us last year in our buy on COACH (COH) should consider this again. We think Coach has strong upside over the holiday season, and could rise to 42.00

Any downside is good for buying on this, using a stop loss at 27.00, a strong support line

What I learned at a symposium

First, a Floydian Trader tip: *After a market correction watch whether a stock or a sector shows higher bottoms on its trend chart while the market averages are making lower lows.

After a correction there is often a sector rotation, a change in market leadership.

We will see sector shifts, which have been massively slowed this past year, from the financial sector only when the greed is slowed. We will see oil drop, but only for the short term. Our USD will not survive as we "use and treat it now". The Gold standard will possibly return, and should. Gold is the only commodity that is limited, and has retained value throughout the history of time. Every other form of "exchange" which is what money is has changed multiple ways

The following appeared in our daily OEX alert today but I thought quite appropriate for our trading:

I gave a speech at a symposium last week to some stockbrokers in Washington DC about index option trading. I had the opportunity to meet with brokers from all over the world that "bet the market", and project and analyze.

They heard me for 30 minutes teach:

*False facts

*A rock is not hard

*Most financial statements are false

*The mood of the public is paramount to the mood of the market

The major question I had during this speech was around "how to project financials for future earnings". As you know, this is what half the talking head analysts do as they "chart" the future.

My answer was seriously listened to, and I'll repeat it:

"No company in 2009 can make long term financial business plan projections beyond one year. Too much in the world is changing. Looking at "three year growth patterns" or what a company projects is much like fishing in a river that has poisoned and has few fish". I shut them up with their questions with this:

1. Years ago AOL owned the internet. It is now broke. Who would have seen that so many idiots could have mismanaged a business that had a 86% market share

2. Who would have guessed that Green Mountain Coffee would rise 190% while Starbucks, missing the change in the environment, dropped dramatically. Both had business plans that analysts had defined as "sound"; in fact,

Green Mountain got a "watch" read from Goldman Sachs while Starbucks got a "strong buy". Interesting, the reversed happened.

The conspiracists will have a field day: was Sachs manipulating the market to short and hold calls on both instruments. You bet. And guess who won the biggest?

While in Washington I heard the babble brought on by the GOP on "Obamanation" and the false facts on "socialized medicine" or "how can we control the right of people to earn money". These were stockbrokers, of course, who benefit when United Healthcare et al rise 428% in profits in 10 years, and will not benefit when costs are controlled and contained by competition. We have no competition or free trade in ANY way in the health care industry, and those that believe that our costs will be driven up are using false facts to analyze WHAT NOONE CAN EVEN BEGIN to conjecture about. We only know that typically when competition lowers price (aka Wal-Mart) that others are forced to find ways to be more competitive.

During the Bush reign we never saw the dead bodies coming in from Iraq. This was on purpose. It helped us hide from it.

During the Bush reign we heard about the thriving economy for years, but it thrived ONLY in the homebuilding industry, which created more than half of the jobs that gave us lowered unemployment.

Few thought out "what happens when the bubble breaks".

I left our great capital saddened by the tears of the public caught in the newsbites that lead us to believe what is not even true, or even partway true.

I ended my speech with the kicker: "the market is up because of the stimulus, and the need for something "good" to lead us first. And, if we do not control Wall Street again the same thing will occur, and this time it will be our fault. A President, even Bush , does not do this. Congress does. You do. You do by your thinking, your vote, and your standing up for real facts.

What person in their right mind thinks that this country could be turned around from 8 years of lies in a 10 month period? I smile at our innocence or our stupidity. I'm not sure which.

Nothing we could have done, by the way, when the bank fraud was finally "admitted" would have been the perfect answer. We have 540 men and women (Congress) daily influenced by lobbyists, all whom represent special interests. This has been taking place since our Government was first formed, but is now in a state of pure corruption. It takes a village....you know the line. The doomsayers of "socialism" make me smile, as Obama only represents the majority of the country, and unemployment rates are part of companies ready to return record profits (study the earnings) by simply having fewer people.

Do not for a minute think that free enterprise truly works. Wal Mart is a perfect example, having grown successfully, by filling huge buildings with goods from China, at low prices, and we buy them.

Thousands of businesses have closed because of this "free enterprise". It's not wrong, it's simply to show us that "all is not as it appears".