The Irony Of This Rally…
The Big Picture Investor: Ducks in a Barrel…
Â
Navarro’s Broad Market Outlook: Fire Away
           There are two
mercantilist rituals that take place every Xmas season, but the timing is always
the uncertainty. One ritual involves the picking of the consensus day between
Thanksgiving and Xmas when most retailers start to mark down everything — and
yes, it has come earlier and earlier each year. The other ritual involves the
decision by the big money managers that they’ve “made their number†for the year
and start to close out stock positions. It will be the timing of this latter
decision that will determine how long the current rally will last. The irony is
that the more robust the rally now, the sooner the managers make their nut and
start selling off.  Methinks the good cheer won’t last til Xmas… Until then,
making money will be like shooting ducks in a barrel — but it remains a trader’s
market.
Aloyan’s Technical Take: A Rationalized Market!
           For the week, all
three major indices finished in the green:Â the Dow closed up 151 points (1.46%)
at 10539, the S&P 500 was up 18 points (1.54%) at 1184, and the Nasadq closed up
46 points (2.28%) at 2085. All three indices continue their follow-through,
after breaking their ’04 downtrend resistance lines the previous week.Â
My
sector breadth reading remains strong, with last week at a positive 88%; the
Internet sector outperforming and the Drug sector underperforming. My trend,
momentum and breadth indicators remain positive. Of note, has been the overall
declining volume on the follow-through last week. However, up volume continues
to outpace declining volume. We are getting seriously “overbought†on both a
short and longer-term basis. Ergo, chasing this market can be hazardous to your
financial health (without hedging). On the negative side, my sentiment and
economic/fundamental indicators remain bearish!
Bottom line:Â This market is now in the
irrational state of rationalization.  If you choose to participate on
the long side, make sure you are hedged!–Stay tuned.
Peter’s Picks: Updating NWAC, WMB, XYBR, CPTC.OB
Still
very happy with my 2006 NWAC and WMB calls, both of which are well into the
green. XYBR came out with a merely so-so earnings report so I finally cut all
but 1000 shares loose with loss big enough to matter but not big enough to
hurt.Â
I
continue to build up the position on Composite Technology (CPTC.OB), which had
another encouraging week. It is not without risk, however. In a discussion I
had with the head of investor relations, he described the company’s situation as
that awkward adolescent moment between starting up and moving to full
production. Still, I remain enamored with the product itself and the prospects
of high efficiency CPTC cable decking transmission grids from China to France.Â
At a little over two bucks, it’s got ten-bagger potential — and the risk of
holding options rather than stock.
David’s Pick: Reiterate long on 3COM (“COMSâ€).
Â
For investment
management, analysis & insight, seminars, books, plus much more…visit our new
website at:
https://www.platinumcapitalmanagement.com
Â
Â
DISCLAIMER:
This newsletter is written for educational purposes
only. By no means do any of its contents recommend, advocate or urge the
buying, selling, or holding of any financial instrument whatsoever. Trading and
investing involves high levels of risk. The authors express personal opinions
and will not assume any responsibility whatsoever for the actions of the
reader. The authors may or may not have positions in the financial instruments
discussed in this newsletter. Future results can be dramatically different from
the opinions expressed herein. Past performance does not guarantee future
performance.