August 3, 2010 I regret I’ve not reported sooner but I have been caught up in our tech trades with SNPS and SNDK. We still have a nice profit on our SNPS but we’re down about 4% on SNDK. Since our purchase of SNDK an online tech newsletter issued a negative report on SanDisk setting off a string of sell orders. I expect to show a profit of SNDK in the next few trading days. One must realize that when the floor traders see an abundance of sell orders entering the market the tendency is to get out of the way and ask questions later which adds to the downward momentum. At any rate, we survived the pillage. Later today most will be looking to see the number of jobs created in August in the private sector. At 1:26 am the equity futures indexes are off slightly so it’s hard to call, but my guess is the the market will take the numbers in stride regardless of whether or not there is an improvement. As we approach the end of the third quarter, portfolio managers will be looking to beat respective benchmarks which should increase order flow on the buy side. At this juncture I would be more concerned with the prospects of Greece defaulting on their debt than the market testing its recent lows. I’ve mentioned before that the number to be aware of is S&P support of 1025. The first test occured July 2nd. The next occured in the last three trading days. My technical analysis would require the market to clase below 1025 for at least three days to warant concern. So far this year the S&P has closed below 1025 only once on July 2nd. Last week we placed collar trades on AWK, American Water Works which has a dividend yield of 3.78%. We bought the collar at $21.983 and sold the Mar $22.50 calls for $1.55 and bought the Mar $20 puts for $0.85. Keep speculation to a minimum. Expect the market to be volatile through the balance of the year. The trade is income not speculation; hence the collar recommendations. Questions on the foregoing or the market in general should be directed to me on the blog link where I will post a response for all to see.

Inspite of one viewer’s response relative to Palmer Pigweed; there is no cure. The weed will and has come back. All treatments are very temporary. The key thought should be aimed at the added cost to the farmer which increases commmodity prices not the efficacy of some dubious treatments. December #2 Cotton is at a historic price of $89.75 cents a pound. December Wheat prices are at $7.225 a bushel up more than a dollar a bushel in recent months. December Soybeans are at $10.19 a bushel down from $16.54 A bushel June 30th 2008 but looks to be gaining strength. I found an ETN, (exchange traded note) symbol RJA which I would consider once the grain complex cools off a bit. The problem is that it is an exchange traded note which is a subordinated note with no underlying assets which is contractually tied to an index,unlike an etf. I did like that the lead components were cotton, wheat and soybeans though. Because of these unique differences, one has to weigh the credit worthiness of the issuer. This is not a recommendation yet. Grain prices are slated to move even higher mid 2011 through 2012 as glyphosates continue to prove ineffective against Palmer Pigweed worldwide. We have time to get in. This should be considered a long term investment. I will give a more detailed assessment on the Greece situation over the holidays. I’m more concerned with a meltdown linked to a terrorist threat or an event like a Greek bond default than a sell-off of the market due to our weak economic recovery. Will advise on any new collar trades.
Futures are up sharply.

Existing Home Sales dropped 27% in July. The consensus was 4.72 million. 3.83 million was

the number released, the lowest since the inception of the tracking in 1999. Toll Brothers

announced earnings of 16 cents per share topping the 14 cent consensus. A significant

improvement over last year when the company lost $472.3 Million. This is good news but Toll

Brother’s has a 90 day lag in building cycle compared to 30 days being the industry average.

The end of the tax credit impact has probably not been felt yet. This market wants to rally.

We’re still holding on to our tech position in SNPS and looking to add to another tech name

likely SNDK.
In other news, my best friend Loretta, showed me an article last night about a glyphosate

(Roundup)resistant weed called Palmer Pigweed. Her idea started me thinking on how we could

profit from and or insulate ourselves from stock market risk rather that being in bonds. But

first allow me to give you some background on palmer pigweed or the genus name,

magnoliohyphyta, also known as Amaranthus. This plant has been cultivated by indigenous

people South America and India for years. It is edible and is a high source of protein.

However if it is planted in an over fertilized environment the nitrates in the leaves can be

toxic. It is definitely toxic to livestock. This all points to the failure of genetically

modified Round Up ready seeds. Palmer pigweed is largely immune to RoundUp (glyphosate).

Pigweed can now be found in cotton, soybeens and often rice. This plant has a tendency to

absorb nitrogen in the soil thus choking out surrounding plants. It can grow an inch per

day, bear from 250,000 to 500,000 seeds per plant. The root has been known to be as thick as

a baseball bat at its base and can reach a height of 8 feet. Monsanto and its patents have

been allowed to run amok to the detriment of farmers and seed companies. Globally,18 weed

species have been found to be glphosate resistant. Palmer pigween has already been

documented in 8 states. To date the weed is most problematic in cotton. Tall palmer pigweed

will reduce yields,jams farm equipment and must be removed in order to harvest the crop at

all. Syngenta, Monsanto’s competitor,unashamedly recommends 7 herbcides in a single growing

season. The bottom line here is that cotton, soybeen and rice prices will increase

substancially because of the increased cost to farmers. More to come tomorrow. Don’t go out

and buy an etf or etn yet.

Last week seven of the ten sectors were negative. Only technology,materials and consumer managed a gain. Fortunately we were in tech and stayed long over the weekend with our modest position remaining. At 2:32am today the Dax was up 5.90 and our US equity futures were up mildly. Not bad considering today Kensey Nash, Sanderson Farms, Stealthgas and Tuesday Morning reort before the open.No big whoop. Barnes & Noble report before the bell on Tuesday as well as Big Lots and Burger King. Verifone reports after the close. No big whoop. Wednesday is slightly more exciting as American Eagle announces as well as Perry Ellis and TOLL Brothers before the open. After the market guess, cyberonics, Jo-Ann Stores and Shoe Carnval to name a few. Thursday, Conns reports before the bell as does Double Hull Tankers and Ship finance Int. After the close, comes Be Be Stores, JCrew, Dollar Financia and Int Rectifier. Friday, Frontline and Tiffany & Co report.
In other news, Iran releases an 2 armed aerial drones a day after initiating its nuclear plant. A few major German companies rebuked Chancellor Merkel over her policies saying that they will impair economic growth. France reduces its outlook for 2011. At 4:41am our equity futues markets are strenthening.
At 4:50am the Dax and the CAC as well as our equity futures continue to strengthen as we approach the opening bell. In tomorrow’s posting I will discuss what I consider to be crucial negative developments in the farming sector and how to take advantage of them. Thanks Loretta! The market should fair much better this week with the edge going to the tech sector.

The market has been all over the map this morning as the equity futures have moved from positive at the Dax opening to a slight negative at 3:20am CST. Our attempt to place a collar trade on Ameren (AEE) at our levels this week faltered so far so on Tuesday we took a position on Synopsis (SNPS) expecting them to beat estimates and they did so we enjoyed a nice profit yesterday despite the market sell-off. We still have a small position in SNPS left expecting a nice rally by the close today. In the news Greece’s unemployement continues to grow as the country looks for ways to increase taxes. Tourist season is almost over and their economy is expected to worsen. So much for the recent good news [sic] from the IMF and EU in terms of Greece meeting their economic reforms. They are due to receive their second installment late September if the eurozone finance ministers agree September 7th. On our side of the pond we could see a small bounce in the market as I expect the tech sector to improve. As goes the tech sector goes the market, it seems. I expect a cash infusion in the mortgage markets soon or at least more loan modification revisions. The program in its present form has been a dismal failure. The problem it seems is that the program participants have nearly the same payment although interest rates have been reduced dramatically. By the time you add two years or so of missed payments to a 40 year note plus real estate taxes you’re at virtually the same payment. It would have been cheaper for the government to have credited the missed payments giving the consumer an even chance to keep their homes. Some of the data I’ve seen shows that one-half of the mortgage payment goes to the escrow account for real estate taxes. They should have also have given a tax credit for those not needing loan modifications. Obama will have to do something that’s for sure. Now that he has begun his hike on the “Keynesian Trail”, he can’t stop now. No earnings excitement today. Will continue working on the Ameren collar trade mentioned in earlier commentaries.

Asian markets were up in overnight trading and European markets were also trading higher.Initial claims rise to 500,000 putting a damper on today’s open.The spike in claims seems to be due to census workers completing their assignments, Which actually could lessen its impact . We’ll see next week if the private sector is actually improving. The nasdaq is slated to open down almost 5 points. Across the pond, Bundesbank has revised the its growth estimate for Germany increasing it’s GDP estimate for 2010 to 3% from 1.9%. Dell, HP,Gap,Nordson, Marvel and WetSeal report after the bell.Looks like the market is trying to pare back its initial losses. Yesterday we placed a trade on Synp looking for in line rev report and higher earnings and made a few sheckels. Looking to place a collar on Ameren (AEE) buying the stock at current levels and selling the Mar $30 calls and buying the Mar $22.50 puts. For those who may not know, there is a section explaining collar trades in my last report(pdf) at the top of “Commentary & Strategies.

August17th,2008 8:00am All futures are up these morning pointing to a sharp rally.Home Depot, Walmart and TJX report before the open. Walmart revenue slighyly below consensus as is Home Depot’s. TJX has beaten both top line and bttom line.Home starts in July were strong after June revisions . Sect or is still weak.PPI growth meets expectations but deflationary concerns are still there. Oil is at $75.79 +0.55 and gold is at $1227.40 +$.40. If technologies hold the rally it should sustain itself through the close.Industrialization Production for July is up solidly. Will advise of new collar Trades today.

At 4:28am this morning the Dax turned positive as did The S&P futures and the Dow futures. Inspite of JC Penny’s cutting their outlook last Friday on consumer weakness for the balance of the year, the market is oversold on a short term basis. If we can see the Nasdaq index turn positive and stay positive through the open this morning, we could see a nice rally today. The tecnology sector will be the key. The Wall Street Journal mentioned this morning that China had surpassed Japan as the world’s second largest economy and likely to do so for the year. China’s sheer size has had a dramatic impact on the world’s economy from its commodity purchases to its recent relaxation on its peg on the yuan. In other news, Russia will be fueling Iran’s nuclear power plant on August 21st. The Obama administration voiced its support for Russia’s position, hoping for Russia’s support later in UN’s sanctions against Iran. My opinion is that it is simply wishful thinking. Russia has seldom lent its suport when it could negatively affect its’s coffers. Another interesting read in the WSJ by Mark Whitehouse mentioned that effect of our economy’s sluggishness leading to boomers having less to spend in retirement. Boomer’s have less money,earn less on what they have, and their house values ae not rising. The Employee Benefit Research Institute reports that if current conditions persist, three in five boomers will be at risk of running short of money in retirement. What this all means is that our economy will take longer to recover, much longer. Volatility will be with us for quite some time. Senseless speculation in these times will be disastrous for the un-initiated. Most would do well to consider Collar Trades or Spreads in this environment. For those who may not know, my last report highlighted how collar trades work. No collars were placed last Friday. Markets are poised to open lower.

Futures were up solidly last night but presently are off. The Dow futures are off about 30 points at this hour. Consumer Price Index, CPI, was just released and increased 0.3% for the first time in four months easing deflation concerns. Retail Sales rose 0.4% in July rising less than forecasted.Excluding auto dealers and gasoline stations, purchases fell 0.1%. Gold is trading at $1216 and crude is at $75.83. At less than 40 minutes to the opening bell futures are off mildly. Looks like we may have a rally today. This market volatility underscores the need for using “Collar Trades”. Will be looking for collars today and will advise as the trades are placed. Call or e-mail should you have questions. More quantitative easing to come. The long term treasury could be at 2% by year end.

I was wondering why the market sold off yesterday and the day of Bernanke’s speech. His message of quantative easing was expected. Today I hear that the slow down everyone is talking about is not just a slowdown in general but rather a slowdown in the form of second quarter GDP revision. Private economist’s have put out the word that the projected growth rate is likely to be cut almost in half. Instead of growing at 2.4%, projections are at 1.3%. The Commerce Department is expected to release their revised second-quarter GDP estimate August 27th. Although this is clearly bad news, the real problem is that June exports were down 1.3%. Germany,Japan and China are all exporting much more than they are importing. Cisco Chief Executive John Chambers, surprised everyone yesterday citing “unusual uncertainty” from his customers and the market. Cisco’s profits jumped but their revenue guidance missed expectatations. Looks like the market will sell-off again today.

August 11,2010 8:00am The market seems transfixed on the trade deficit as economists were expecting 42.2 billion instead of 49.9 billion in June. There was a 6 billion dollar surge in imports. Exports were down 2 billion in the same period. The problem is that the market did not react positively to the Fed’s quantitative news announcement. The dollar hits a 1995 low today versus the yen and gold is at $1205. The underlying fear is that the Fed’s announcement will not cure the unemployment problem. Give the market until tomorrow to digest all this data as policy makers will mull over current trade policies. I would be surprised if the market would not rally on Thursday despite all of the announcements. Stay to the sidelines. Will be looking for bargins today and will advise before the close. Futures are off sharply ahead of the open.