Tuesday, March 8, 2011

Oil prices 'stuck', Wall Street gains, bought and (short) sold these stocks and options in my portfolio.

Wow, a lot of things happened in these volatile trading hours. First off I wanted to say something about oil prices. It seems oil is settling in around $100 to $105 a barrel, that's actually good news, prices seem to slow down, if not pull back a bit.
There are talks about government intervention, for instance to tap into the oil reserves, (which  by the way have little or no impact on a broader perspective) but at least it's an effort and and an acknowledgement by the US government  oil prices are at a level where they shouldn't be. Economic recovery is (and should be) on everyones agenda and surging prices at the pump is certainly not helping a already badly hurting, coming out of the great recession economy.
I see the things that happened today on the global markets as very positive, as of this time of writing the Asian markets confirm my analysis. Stocks gain value amid high oil prices which confirms investors overall aren't scared by it. In a broader sense, not everyone can be as stupid to think the market is at an upswing.

With that said I am once again bullish on DIA and SPY, in fact, I bought SPY yesterday. Also bullish on Sprint S, because of the possible take over bid of T-Mobile, which would make it become one of the three giants of the telecom industry in the United States. (Verizon V and AT&T ATT)

Oil, USO I sold; I think it reached its peak, and it's time to cash in the profits. (chart below)


That's about oil. 

These are the stocks I've shorted today, and mind you, I seldom short equities unless it's as clear as a bell to me these companies are not going to perform well in the future. In fact, I only hold these two 'shorts' in my portfolio. I think the following companies are really outdated in their business model and will under perform, if not completely seize in their existence.

BBY: Best Buy
SHLD: Sears Holding 

Both in the retail industry, these two companies refuse to adapt to the modern markets. In both cases, as mentioned in my previous posts, they have too many 'window shoppers' and not enough conversion to sales leads. Sadly, most consumers are using the two companies to 'test' and 'get their hands on' products they will buy cheaper online or elsewhere. Another problem is that both companies are too big. Most consumers are getting overwhelmed by the abundance of new products that are trying desperately to grab their attention.

Today was a perfect example to short BBY: market rally on wall street; even after all the negative news about oil, middle east, economy etc, the best they can rally is 0%, closing even in the negative at the end of the day?
I had my eye on this stock for a long time, but now the time has come short BBY.

BBY:


Another one in this category is Sears, which also hold K-Mart. (SHLD)


A retailer in this environment with a stock price of $80 + has to have a lot to show for and unfortunately for them this isn't it. Their business model is too scattered all over the place; the "we sell lawnmowers, baby clothing, and TV's too" concept is just a little too risky, like BBY, too big, ridiculously under trained staff, no way able to survive in the modern retail landscape.

In a nutshell;

Bullish on DIA and SPY, especially the 19th Call option for both of them, also I like Sprint S, I think it's a cheap stock with lots of potential. 

I don't like Best Buy BBY and Sears SHLD , shorted those two (and the only two) in my portfolio.



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