Why I’m Tuning Into Satellites
What
do you get when you combine a technical oversold condition and some short
covering, with a two-week interval before the next UN anthrax-and-nerve gas
encounter group? Maybe a short-term extension of last Friday’s mini-rally. That’s why it’s a good idea this coming week to hedge your short bets, get fully
back on the sidelines, or, if you are into the short term trading scene, maybe
make a few bucks going el longo on El Cubos. Here’s the deal.
The
Blix report last Friday at the UN muddied the war waters further rather than
clearing the air. All we know now is that we won’t know about whether we are
going to war until March 1, which is the next time the Blix show returns to the
UN. Traders being traders and technicians being technicians, that means
there’s a small two-week interval now — call it the eye of the Iraqi hurricane —
for a possible little rally.
We
have little interest in participating significantly in this little affair as
it’s strictly short run and no sure thing. However, we do warn the shorts that
things could get a bit squeezed.
The Week’s Macro Data Market Movers: The Blue Dollar
The
Macroeconomic Calendar
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* Potential major market
movers in red
Our
pick of the weak for a data surprise is the trade numbers. Why? It’s too soon
for the weak dollar to be boosting exports and oil prices are spiraling up, so
watch out for a negative surprise on the trade deficit. This could spill over
into downward pressure on the blue dollar and bluer stock market.Â
Wednesday may also throw a bad news dart at the housing bubble — watch the likes
of
(
RYL |
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PowerRating),
(
BZH |
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PowerRating), and
(
CTX |
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PowerRating) in the wake of possible bad news on the starts front. Otherwise, this is a very quiet week that will be filled in the media by a lot
of “will we/won’t we” war blah blah blah.
Macroplay of the Week: Satellite Radio
It’s really irritating when I
spend several days on my picks of the week only to have them wind up on the
cover of Barron’s
BEFORE the newsletter hits. But hey, I’ve been cruising with my new Sirius radio
system since Christmas and it seems like it’s a foregone conclusion that this
stuff is here to stay.
The
question, examined ably enough in the
Barron’s piece, is whether you should go
with XM Satellite Radio or Sirius? In taking the safe route,
Barron’s clearly
favors XMSR for the obvious fundamental reasons — more customers and revenue and
a better commitment for installing the XM package in their cars by GM. And yes,
it is troublesome that Sirius may well be hanging by a thread and may plunge
into bankruptcy if it can’t get its refinancing approved — wiping out
ALL
shareholder value.
But
here’s the deal: The two companies combined have total control over the
satellite radio market until at least 2007 because the FCC won’t be granting any
new licenses. Seems to me that makes SIRI valuable enough to avoid bankruptcy.Â
So
consider a basket of
XM Satellite Holdings
(
XMSR |
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PowerRating) and
Sirius Satellite Radio
(
SIRI |
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PowerRating) — but Lordy, wait until a few days (or weeks)
after any “Barron’s Bounce.â€Â This one will take a while to develop.
Here are the charts. XMSR looks a LOT better technically than SIRI but I
like adding some SIRI in the mix and view it as an option at 75 cents rather
than a stock.
Until next week,
Peter Navarro