Emil’s Blog

No we’re not talking about ice cream, rather we’re talking about a small dip in stocks over the next few days, so that this stock market rally can continue. Stay invested in your winners, and if you have any extra cash, pick up any of the following on pullbacks: AAPL, VMW, GOOG, APKT, SPRD, SWI. I think the bull goes much higher before summer.

The new year couldn’t be playing out any better. The first day was up strong, lackluster for 4 more, but still higher than last year, foretelling on an 87% basis, that the S&P this year will be higher than last. If we don’t get a big hiccup in the next 2 weeks, then we’ll get it within a couple of months, but either way, it’s going to be safe to buy and hold this year. My favoritos remain Google, Strategic Hotels, XTEX, and some other dividend plays like TNH and VLCCF. Technology should be a solid winner this year, so if you can’t pick a single issue like Apple or Google, then go with the tech ETF, TYH.

Long-term – US Economy is looking real good. Due to our technology leadership in Hydrofracking, we’ll be a net exporter of energy, so who knew. There’s so much cash getting invested now, people are getting negative interest rates due to the inflation we’re all getting but that the government doesn’t count. That’s going to change, Ladies and Gentlemen, and the big winners are going to be the stock market and gold.

Intermediate Term – We’re going higher next year no matter who gets elected. If Obama beats Romney, it’ll be higher. If Romney wins, there will be a jag down as he appeases his base, but he’ll flip-flop and both the stock market and the economy will get back on track.

Short-term – We will have one more major dip between now and June, either caused by the European issues (Merkel is dealing with profligate children, her PIIGS, and the I won’t give you any more money, oh you won’t buy my products, well here’s a couple more bucks will rock back and forth, but will be resolved. Or you could get an issue with Iran threatening the Port of Hormuz, but I think Obama will delay his sabre-rattling until, oh let’s say, October 1st. Short-term the best gains will be made by the end of summer, and the market will stagnate until the election, unless it’s really learned beforehand who’s going to win – ie like Clinton beat Dole, anybody could have called that one.

I expect that Jan 31 will be higher than Jan 1, so that is the only fly in my prediction for next year. Let’s hope I’m right.

I’d like to say I know perfectly what 2012 has in store for us. I’d love to say that 2012 will be a “bang on” great year for the stock market. But I think it will be a transition year, marking some ups and downs in a trading range waiting for a Presidential decision.

Long-term (3-5 years) – looks pretty good if you don’t need a whole lot of money and are willing to stay sternly invested all the way through. The US has tipped from the world’s biggest oil user to an actual exporter. We’re going to lead the world in nat gas exploration and that’s going to give us an edge. Once the long-term deficits problem is fixed, and it will be, the US economy will be ascendant again.

Intermediate-Term (1-2 years) – the stock market will be marking time with ups and downs, with a final resolution of back to a recession if a Republican is re-elected, and back to boom times if a Democrat is re-elected. This isn’t my opinion, it is based upon a statistical survey of stock market history. If an independent gets in, I haven’t got a clue.

Short-term (3-6 months) – my instincts tell me that we are going to start off the year going down but will be up by the second quarter, then down in the summer and rise into the Fall. Unfortunately, it could be the exact opposite and you’ll get an inkling on January 3rd, by the end of week 1 and definitely by the end of January. The reason for my pessimism is Italy, and the unwillingness of the European Union to print euros. If the euro descends, the dollar goes up, the stock market goes down, but to a point where the psychology will change and support will come back to the US Stock market. If the Europeans actually do decide to print (inflation), or at the moment when some insiders get a whiff that the printing will begin, the global stock market will bounce to new highs. I imagine this tug of war will be resolved within 6 months, but it may last longer.

My current plans are to keep some cash around, invest in balanced mutual funds, dividend paying stocks and ETFs, and only maintain long positions in the strongest stocks like Google, Whole Foods, Xtex, and Bee. I aslo plan on weekly purchases and sales of bullish etfs at weekly bottoms (like financials FAS, Tech TYH, or energy ERX), or weekly purchases and sales of bearish etfs at weekly tops such as (financial bear FAZ, tech bear TYP, or energy bear ERY).

The market’s been a little dangerous lately and until some of these obstacles are resolved, the best thing to do is move to the sidelines and try to catch the ups and downs for your favor.

Yes, that’s the best I got. Happy New Year!

I said in my last blog that I believed the Stock Maginot Line would hold, and it definitely is, due to Bernanke and his Global Friends. I think it’s OK to go all in for the Santa Claus Rally, and keep our fingers crossed that we don’t return to where we were last week in early January. Stay tuned.

Hang onto your seatbelt as the Euro crisis starts descending and takes our market down with it. If you are in strong stocks and in for the long term you can weather it. In any case, make sure you have some cash around. Or even go short for protection such as buying TYP (short technology) or FAZ (short financials)

The market looks like it wants to probe the Stock equivalent of the Maginot Line or the September lows (down another 7-10%) and will probably be lifted by a concerted effort from the ECB, the Group of 20, or maybe even the Chinese, although they will wait until every western leader gets down on their knees and begs.

Anyway, I see panic ahead and I am hopeful we can get into a nice bounce – however if we break 2350 on Nasdaq (down another 200 points), just like when the original Maginot Line was broken, then look out below.

Hard to believe that it was on October 2 that I wrote the Stagpression Sour Mood Blog, and then warned about the 2335 Nasdaq Bottom. As I write the Dow is up over 350 points and Nasdaq is up almost 100 points, having gained 400 points in 3 weeks.

Don’t pay any attention to the doomsayers, this market is going much higher. If you had purchased some of my top picks, you’d be up between 20 and 30% in a few weeks. My hottest picks were SWI (up 18% today alone), FFIV up from 60 to 110, HOV up 50%, and TNH is up almost 20 points and it pays a 10% dividend. Look up some of the others I recommended 2 blogs ago, they are going much higher.

Sounds like the market is due for a rest, but fahgeddaboudit. Hang in there!

Here’s one of those rare mid-day blogs. I was going to write to you last night about my feeling about an explosive rally coming in the next 2 weeks and maybe as early as tomorrow, which is now today. I think my 2335 low hit 2 weeks ago may have been the low for 2011, and we are now going into a nice Christmas rally, which could explode and possibly surpass the old highs for 2011. Take another look at that list I gave you in my last blog especially the financials, they have been too low for too long, I think they are going to lead this rally.

We narrowly escaped a slide into the abyss last time I wrote. My number not to go below was Nasdaq 2340 and it closed at 2335 2 weeks ago. Being smart I waited another day for the confirmation and started selling half of my 401K before the 4 pm market closing the next day, and lo and behold, the market soared. It’s been up strongly on low volume ever since.

Things look promising but I’m going to maintain my vigilance nevertheless. With ECRI predicting a double dip still, and not really trusting the Europeans to douse the whole house with water instead of letting small fires get out of control all the time, I’d be more optimistic. THe R’s are hating Obama’s jobs plan, and the entire world is moving to austerity when they should be moving to infrastructure spending, on a grand scale. I still see a roller coaster ride ahead.

But it doesn’t mean that the stock market has to suck. I’ve seen some pretty good gains in all of my longs the past 2 weeks and if you were still invested, you should have, too. Apple is up nearly 20% since Steve Jobs announced he was quitting, and now the world is memorializing our greatest inventor since Thomas Edison. The Siri voice app in the new Apple 4S sounds sensational to me, and I’d love to get one just for that.

Speaking of inventors, I was reminded of Edison’s old pal, Henry Ford. Besides being a far-thinking inventor, he may have known something that the rich should be paying attention to today. He was concerned that his workers couldn’t afford cars on their wages. SO he raised them. Kind of reminds me of the greed going on around Wall Street these days – the middle class has been starving for 30 years for a decent increase in their percentage economic gains. It’s time that the rich gave the middle class a raise. I’d throw in zero taxes on corporate dividends as an incentive. Then you’d see this economy grow.

Tech is going to lead so I have 9 picks for you:
VMW VMware, ARUN Aruba Networks, FFive FFIV, Spreadtrum SPRD, Camelot INfo Sys CIS, Sil;icon Motion SIMO, AAPL, GOOG, and Solarworks SWI, not necessarily in that order, buy a couple from this group.

8 Consumer picks are Verifone PAY, Berkshire Hathaway BRKB, Unified Foods UNFI, Lululemon LULU, Ulta Cosmetics ULTA, Strategic Hotels BEE, Hovanian Housing HOV, and Las Vegas Sands LVS. PIck a couple from this group.

4 oil stocks are XTEX, UNG, VLCCF, and BP.

3 Banks Goldman Sachs GS, Bank of America BAC, Analy capital NLY.

1 Gold stock Yamana AUY.

3 Food and Ag related Sauer Danfoss SHS, Whole Foods WFM, and Terra Nitrogen TNH.

If you like dividends, then from the stock picks above, there are 5 of them paying nice dividends which you can enjoy while they appreciate in value.

XTEX pays 8%, VLCCF pays 13%, BP pays 4.5%, NLY pays 15%, and TNH pays 10%.

Study the above stocks and make your picks, I think they are good for at least one year.

Read any newspaper and you’ll get it, the sour mood. Europe will have until Oct 11 to serve up a paltry 400 Billion backstop to their mess. China is slowing down. Morgan Stanley is bleeding. The US Congress and the President would rather blame each other than fix what’s wrong with the economy, and on and on.

Let’s blame Wall Street. They got us into this mess when they gave out mortgages THEY KNEW could not be paid back. We bailed them out and they continued to pay out the bonuses. Andrew Mozilla of Countryside, parhaps the biggest scoundrel in the fiasco, sells out to Bank of America, just in the nick of time, and gets off with a minor legal battle and remains a multi-millionaire.
Bank of America is a slow motion train wreck. They can’t make any money from mortgages, they can’t make any money by lending to large and medium sized companies who are hoarding their cash, and why bother with small businesses like mine who really need the cash to expand…they’d probably cancel my business credit line if they weren’t getting 6% from me. So where do they go, after their depositors, by slapping a $5 charge onto every one of their debit card customers. Most of the debit card customers are young people weaned off the horrible idea of carrying around cash and making change, what a boring, antedeluvian concept.
So Wall Street is crying the blues again and no one is listening this time. The noose is tightening even as their handmaiden authors in Investors Business Daily blame new Dodd-Frank regulations for Bank of America’s fee increase. I couldn’t believe it, why blame the greed of BofA when you can blame a Democrat.

Yes that is the saddest thing of all – blaming more banking regulation when it was the lack of banking regulation that got us into trouble in the first place.

First to go was Glass-Steagall under Bill Clinton – a depression era rule to separate banking from stock brokering – how quaint, keeping banks from a chance to make (read: risk) more money. And Alan Greenspan, fearless Fed Chief who presided over the greatest expansion in the wealth of the rich ever, our Ayn Rand following feathered friend, who was afraid to regulate. All he had to do was raise capital requirements in 2004-5 when he saw the ridiculous housing market overheat, but no, the market would correct its own excesses. And the short sale up tick rule was abolished in 2008, how convenient, just before the crash, so the thieves of Wall Street could make some lavish profits on the way down. What an old-fashioned rule, the short sale rule, that you can’t short a stock unless it upticks. And now the latest trick, high frequency trading, thought to be responsible for last year’s flash crash, when is that going be regulated? When are all the responsible companies, Microsoft, Exxon Mobil, Procter & Gamble, etc, going to put their feet down and tell the Stock Exchanges they are going to pull their listings unless it stops.

The problem right now is NOT ENOUGH REGULATION, and not too much regulation. If the Tea Partiers get in and give us more of the ridiculous mantra of low taxes, and less regulation, I will be pulling all of my money from the stock market, and if I even get a whiff of that possibility, I’m gone.

Now back to the stock market. This market is looking more and more to me like the 1970′s, the era of stagflation. What we have now usually applies to an emotional state but I will also use it to defiie our economic state, “STAGPRESSION”. What it means for the economy is fighting a depression with inflationary spending. What it means for the stock market is an endless gyration from bottoms to tops to bottoms to tops.

The stock market index bottom to look out for is NasDaq 2340. My feeling is that it will hold for the next month, but if not, then move back to half cash, and only stay in strong stocks like Whole Foods, Apple, Xtex,or Berkshire Hathaway, whose great chairman, Warren Buffet, put in a floor by announcing he’s buying any of his own shares that go under $70.

If we get lucky and survive October, then I would expect all of the wonderful tech names, cloud plays like VMWare, FFive, Google, Aruba Networks, will really perform well, so keep your eyes on these, because they will pierce all of the gloom. I’d also start taking a look at Lululemon Athletica, and Ulta Cosmetics as well.

Despite my rant written above, I remain optimistic that Bernanke will do his job, miraculously, the Congress will come around and pass some of Obama’s jobs bill, and that in the end, the regulators will end up saving us, that the exchanges will impose higher fees to speculative commodities like good and silver, and we’ll at least have a small bounce into next year.

Here’s my advice – hang in there!

In my last blog I felt we were bottoming, but might have more turbulence. Little did I know that we had already bottomed (Doug Kass called it a few weeks ago). Nevertheless some damage was done, so as profit taking develops during the next few weeks (yes some brave people bought at the bottom), start shopping your favorites stocks again. A lot of mine are hurting, but I see them picking themselves back up and I expect great gains as they try to top their old highs.

The financial press thinks we may be experiencing another 1937 when Roosevelt cut expenses and caused a double dip. You can understand why as one of parties wants to do nothing else except cut, cut, cut. I think of the humorous film with the great Peter Sellers, “Being There”, where, as the ignorant confidante to the President, Chauncey Gardner advises that the economy will start growing in the spring to be harvested in the fall. IE the pundits are spewing nonsense.

I think of the song popularized by the Byrds:
To everything, turn,turn,turn;
there is a season, turn, turn, turn.
And a time to every purpose.
under heaven.

In other words, the world is erring on the side of too many cuts when what it needs right now is spending. The time to cut was during the 2002 tax cut, what a colossal mistake in hindsight. If the US was sitting on all that cash, the economy would be sitting pretty right now. We need to put our unemployed back to work with a good old fashioned public works program. Bring back the WPA! When they are working again, let’s put the biggest Tea partiers in there to make their cuts – Chris Christie, we’re gonna need you in 2016.

The behavior of the stock market to me looks more like 1987, although that one was caused by a fear of rising interest rates. I saw one analyst compare it to 1978, a roller coaster year typical of the 70′s when inflation was rampant.

Here’s what I think – let’s not overthink it…we just experienced a normal 20% correction, that’s it, no two ways about it, your crazy uncle came out of the closet for a month.

We’re going to gradually recover and then when NASDAQ pierces 2900 on high volume, I expect the bull will resume in earnest. So stay positive, good days lie ahead.