Friday, March 2, 2007

Midday Musings

I am back from a bunch of morning meetings.

As the Yen continues to make upside progress against both the Dollar and the Euro, we're seeing slippage and dippage in the stock market. Some large -1000 NYSE and Nasdaq ticks just went flying by and advance/decline has been on the heavy side through out the day.

New Century (NEW). As Bob Grant, one of my all time favorite talk radio hosts used to say, "what a bunch of fakes, phonies and frauds." NEW pulled a Freemont (FMT) last night by delaying its annual report. This must be the new thing in subprime corporate-dom in the aftermath of the total lack of mercy Novastar (NFI) was shown the week before when it was cut in half a 2nd time for fessing up - simply delay. NEW is only down 5% today, but the options crowd can smell a rat a mile away. A big spread play has been going on where April 5 puts have been heavily sold while May 5 puts have been heavily bought.

While NEW teeters on the brink of whatever, it's also interesting to note that implied volatility in options of Countrwide Financial (CFC) continues to leap higher. March IV is up near 50 as deliquencies in its subprime portfolio surge to 19%.

Accredited Lenders (LEND) also filed to delay its 10k.

There have been takeover rumors surrounding PALM (PALM) of late. But a Citi analyst wonders today why Palm's CEO would be selling shares. The CEO according to the analyst recently registered to sell 91,000 shares; so Citi thinks chances of a deal are small. Never-the-less, PALM today has managed to break out above the $17 gap down level as the takeover speculation continues to swirl.

Mirant (MIR), the utility that everyone hates here in my downstate New York county, is seeing elevated options volatility. The TXU deal spurred speculation that MIR could attract interest and there has also been talk in the past that a recapitalization could be in the works, or a large stock buyback. MIR posts earnings on Monday. Interestingly, put volume today is running 3 to 1 against the calls.

I exited gold futures in the area of $688 earlier in the week. I am planning to jump back in. $639 is where I have placed an open order... so go ahead black boxes, drive it down further.


Jim said...

Hello Jim,
What is your take on the XAU here,... shouldn't Gold benefit from the weaker US Dollar? Looking back to May 2006, the last time the carry trade was suspect, Gold hit the skids for a month or so. Do you expect a repeat here? Any thoughts on the XAU and time to Buy would be appreciated.
Regards, Jim P.

Jim said...

Hi Jim... XAU. I am going to nibble at gold futures if the price can come down a bit further to me, and even that might be subject to change. My cost basis is low so i can afford to wait to jump back in. I am a large holder in GLD and generally do not buy the majors or the juniors. just my own strange way of doing things. 130 on xau sure look like important support with the chart measuring 120 if things really get bad. I set a buy stop on gold futures at $639 which is probably too low, but these gold stocks are a whole different situation IMO and if the stock market continues to come down, there's the risk that gold stocks will get pounced further as well even if gold regains a safe haven bid.