Double Journey

And I would sell.  Now full disclosure time.  I own Microsoft stock, stock I received while employed there.  Microsoft came out and beat their estimates.  More importantly, they gave good guidance as opposed to Apple who came out with good earnings and less than optimistic outlooks.

While I’m going to hold on to Microsoft (I rarely make moves in my long term portfolio) my recommendation is to sell.  You see, I have VERY little faith in this company long term.  They are losing talent left and right.   Most of the top developers I worked with have already left the company or are planning to leave.  Most of them are heading over to Google.

Companies like Microsoft are very dependent on their talent and the talent just isn’t going to Microsoft anymore.  Those that are still behind are quickly seeing that there are better opportunities elsewhere.  I still have to make my post about why I left Microsoft.  I’ll follow up with that one shortly.

Almost time to re-enter the market. The market opened sharply down and recovered after the Fed announced a 3/4 point rate cut.  One quick comment on that.  Not sure what type of house that my former professor is running.  I would prefer to see the fed leading the way rather than reacting to every little thing (OK a 500 point drop isn’t little) that happens.

I still think that the market is flat to down over the next few weeks if not month.  But it is impossible to pick the bottom of a market.  If you can take the long term pain, you should start thinking about putting your money back into the market.  Financial stocks are going to be the first to recover, but they might still be pretty scary here.  I still like my MO and I really want to by Home Depot, but I’m holding off for now.  Bottoms take a long time to form.  In 2000, it took months before we actually reached bottom even though there were several sharp drops.

There is still weakness however.  Apple is touching the 130’s in after hour trading.  They had a good quarter, but their outlook was grim.  That is going to be the theme for a lot of companies.  Good earnings, grim outlooks.  Thank god I passed on it at 195.  Tech is going to be a hard place to be.

This week at Mac World, Steve Jobs announced the company’s latest product, the Macbook Air. I have to admit, it is pretty cool. I’m actually in the market for a new laptop and I’m leaning toward getting a mac (despite my dark Microsoft days). In case you haven’t heard yet, here is a video showing the Macbook Air.



Now the problem is that it starts around $1800 and goes up from there all the way up to $3000. It’s a little bit more than I want to spend.On a related note, boy am I glad I didn’t buy Apple when I was looking at it.The stock looked poised for weakness there and boy was I right. Rick urged me to buy at $195, but I resisted. The stock closed just under $160 today, down 6%, I would have taken a huge haircut on that trade (although I would have gotten out way before now) Maybe I should ask Rick for advice, and then do the exact opposite. I might make my double then! Actually, my advice would be to short Apple at this point. The market is looking ugly, and the former leaders like Apple are going to get whacked. Short the market as a whole (sds) or short some of the stocks that have been great like Apple or Monsanto.

Despite Rick’s urging, I’m probably not going to buy Apple today. Although I really want to get into the market, this isn’t the right stock to do it. There are many reasons I like Apple in the short term, but the price action on the stock just isn’t shaping up. Here is the one month chart on Apple.

Now look at the last five trading days. See that nice uptrend? That in itself doesn’t scare me. Most people don’t want to chase a stock that has gone up like Apple, and for the most part I agree. But sometimes it makes sense if a stock is taking off, which I think Apple has the potential to do. But look at the last candlestick. You see how it is red? You see how narrow the candlestick is? you see how it is hovering right near the bottom of the price action today? This is a perfect Gravestone Doji setup.

For those not versed in technical analysis, think of it this way. You had a great run up in the stock. Today, the stock tried to go higher, which is why you have the point sticking up. but toward the end of the day, the bears took over and started selling the stock. It ended up slightly lower (there is still about an hour left in the trading day so this could reverse). This is generally a weak signal, but still significant. What makes this sign stronger is the fact that the market overall is up today, so Apple is looking weak here. Confirmation will come tomorrow if there is another sell off in the stock. I think Apple could break 200, but I think it could also fall down to support at the 170 level.

OK, I promised I would do a trade this week, and I didn’t. My bad. I’m in the middle of a move, and for those of you who have moved across country before, you know what a huge pain in the butt it can be.

I was planning on trading Activision this week. I had researched it last weekend, and was ready to pounce on it Monday or Tuesday. Then of course they announced the Vivendi deal, and that killed any trade I could do.

So now I’m looking for my next story that will be successful. I was carefully watching Apple today. It looked good while the rest of the market was kind of flat. It found some resistance as it met its 52-week high but I like the price action it can have between now, Christmas, and Mac World. May try and get into it on Monday, we will see how things turn out. The other name I’m closely watching is Potash. They make fertilizer. Not the most exciting thing in the world, but right now there is a global growth story happening in the farming industry and this company looks poised to take full advantage of it. I’ll have to examine their charts this weekend, and I’ll try and make a call on it before I head down to California at the end of the week.

Everyone have a great weekend. There will probably be some significant changes on this site over the weekend, so watch out for them!