May 12, 2006

Stick a fork in the markets?

I am not a market timer but if I were paid to do that (nobody in their right mind would), I would have been selling stocks and buying PUTS the last few weeks (PLEASE - not a recommendation for you). I chronicled the weakening signs starting two weeks ago with the Microsoft downer. I sucked as a timer and hated being wrong ALL the time, so I stopped. I am an ASS, but not insane.

I am not following the markets as close as I used to being more mechanical now than ever.

BUT, I am human.

Some of my stocks have had incredible runs the last 24 months. Apple, Gold, Oil, Restaurants etc... As a human, my inclination is to sell everything (I am not recommending it for you). Lot's of other humans feel the same way and feel it more as profits start slipping. That is why the exchanges initiated circuit breakers - to take the last act of humanity out of the market :) !

A few things are starting to stand out - BIG TECH HAS NO LEGS. BIG TECH IS TIRED. BIG TECH HAS NOOOOO GROWTH. Good news is I don't own or would not own it based on my strategy. I am only in the strongest stocks.

While corporations have never had more cash, their stock option liabilities, crazy buyback programs, top heavy-overpaid management and corporate costs have never been higher.

A few weeks ago when Microsoft missed, I made plenty of fun but also wrote about my amazement that the markets had not reacted worse.

I am starting to think that we will have a big delayed reaction and it has started this week. Here is why:

Dell - ugly - big trouble
Intel - ugly
IBM - I have no idea what they really do except bad commercials
Cisco - important company, no growth or sex
Yahoo - confused
Ebay - scared

The internet is still inning one, but big TECH does not seem to benefit anymore. The only way to grow is for them to cut back costs. But they are the big employer's of people.

Interest rates keep creeping higher, gas prices do the same and few trust our government nor central bankers.

The companies and stocks performing well, Shippers, Big Oil, Metals are inflationary indicators. How is that good for the majority of us?

The mood of the Consumer is calm, but as Bill Cara said today in a MUST READ column - they are TIRED . He also says traders are tired - and he writes on the markets all day long - every day. He is more wired into the mood of the market than me. I am now looking more from 20,000 feet. He has been pretty cautious for months, but today he implied a possible big drop ahead He is not conflicted like Cramer and CNBC. He has no Fidelity and Schwab ads to run. Most important - he has been pretty damn good.

A shock or incident in the near future would not surprise me. I am interested to see the headlines this weekend. If they are CALM and supportive, we could have troubles next week.

The aftermath of a real market shock would be exciting and I would probably be very bullish. I am putting together a game plan. It is not complicated.

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