Weekend Review 1-10-10

Well the Jobs Report was not that terrible...but rather more disappointing, coming in at a minus 85,000 for December. The job losses were disconcerting as a rebound in employment is key to a sustained recovery in the economy. But the market likely focused on the fact that a pickup in the labor market often lags other improvements following a recession. We were losing 600,000, 700,000 jobs a year ago and we are now toggling around zero. My play off the Jobs report, was that a stronger than expected number would of been bullish for the dollar. Which would of caused a sell off in gold, commodities and perhaps even oil. But, it now appears  that things will stay status quo. Silver, platinum, palladium and gold were up tall week and performed strongly since December 31st.
However, one should keep in mind that the Federal Reserve has stated that their program to buy mortgages will end on March 2010. This has sparked fears that mortgage rates could rise and knock the fragile housing recovery off course.  Bottom line, sooner or later, jobs will be created and things will improve...maybe not this month, but the market is sensing that very soon. It's like musical chairs, this time you got a seat, but next time who knows?

This market can change direction on a dime, first of all the UPS guidance Friday I believe kept the markets from selling off hard. We're in a transitional period now, the market is setting up to see if earnings coming up starting with Alcoa (AA) can justify p/e's. The rally from the March extremely oversold bottom is over...now its back to reality.
I've been stressing a shift into stocks that benefit from an improving economy, like silver (over gold) and oil stocks as global demand rises. I also like technology, but more on the enterprise side than consumer side, hence RIMM over Apple. Juniper (JNPR)& Google (GOOG) on the build out of broadband. Financials like JP Morgan (JPM) and Lincoln (LNC) will benefit from the bullish yield curve, matter of fact JPM reports earnings on Jan 15th, Jamie Dimon will prove he's the 'Best of Breed' and I see JPM going to $50 very quickly. On the health care front ABT & UNH are doing great! As for oil...I'm extremely bullish on the drillers, specifically RIG & PDE and have suggested this week the Canadian NatGas Trusts PWE & PGH.
The Volatility Index ($VIX) is at 18, which as I highlighted the otherday as not necessarily  being a bad thing. This market now needs to justify the P (price) with some E's (earnings)...if the earnings improve that will lead to a stronger economy and more jobs eventually.

The Itz Pix Portfolio is beating the S&P 500 the 1st week of 2010, the portfolio is up 6.34% while the S&P 500 is up 4.38%. The top 5 performers are GNK +14.75%; SLW +14.51%; RIG +12.32%; VLO +11.46% & AUY +10.2%.
Update on covered call positions. The Yamana AUY-AP was bought back to close on 12/16 for $0.10 cost basis is $7.70 [AUY]. For SLW the Dec. 16 call expired cost basis $12.05. Two open positions are ABT Jan $52.50 call ABT-AX, With ABT trading at $55,  I would suggest letting the stock get called for a +$8.96 (20% gain) in 5 months. As for GNK the Jan $25 call GNK-AE, lets wait until a day or 2 prior to OPEX, most likely I'm going to suggest buying back the call and rolling up to $28 strike and out to April. This stock is very volatile and 5% daily moves are to be expected.

Weeks Economic Events: Monday Alcoa (AA) starts off earnings season, Wednesday-Beige Book, Thursday- Intel earnings, Friday JPM earnings and CPI.

Two stocks in the energy sector (drillers) that I have suggested for Itz Pix Portfolio, that I believe will break out to higher levels very soon.

Market Review...Pre-Jobs Report

Two events happened today that had a direct influence on crude oil's direction.

China Raises Key Interbank Rate
China's central bank unexpectedly raised a key interbank market interest rate Thursday for the first time in nearly five months, signaling a change in its policy focus toward pre-empting inflation risks in the new year. >>READ STORY


Jeff Rubin's Oil Rally Predictor Jumps to $100 per Barrel This Year
Jeff Rubin, is a Canadian economist and author and former chief economist at CIBC World Markets. >>READ STORY

I've been citing the breakout in crude oil ($WTIC) for a few months now and yesterday 'officially' called for a oil rally! I've also writen on this blog that once oil broke out; it would rapidly run to $90...and my target is $105 per barrel. I would say that the rate rise in China, maybe a proactive move to the US possibly raising rates. Tomorrow's Jobs Report is a pivotal event in the Fed's decision. Everyone calling for no rate increase...I'm sorry everyone cannot be correct. My belief has been and remains that as global economies recover, energy demands will increase...thus.. higher oil prices. Now, I've used the charts and the gold lag period to backup my call, that said... expect the next week or so to be volatile for the dollar as well as oil, gold and commodity trades. It will be a tug-of-war as both camps sort out their differences..higher rates or growing energy demand. You could see the counter trade change, if expectations of higher inflation take hold, we could have a rising dollar as well as higher commodtiy prices.
Just looking over the Itz Pix Portfolio, the gainers today were healthcare ABT & UNH plus financials JPM & LNC. Technology and commodities were down today.
I've posted a chart of the Volatility Index ($VIX)...the media's been talking about how the "market is complacent" and the VIX is under 20! So???
You tell me...should you sell?

Google (GOOG)

Google has broken under $600, as well as it's 21-ma which has provided support on the way up. Next level is the 50-ma/lower end of the uptrending channel.

Itz Pix Portfolio Update

OIL RALLY!

Oil closed over my $82 target level and has entered in my opinion..."Rally Mode"! I see crude in the next 4 months hitting $100 per barrel. I also am suggesting 2 Canadian Natgas Trusts tonite: Pengrowth Energy Trust (PGH) & Penn West Energy Trust (PWE). Natural gas along with the crude oil sector stocks are staged to rally over the next several months, based on a colder than normal winter (in 25 years) and a global recovery. The trusts will appreciate, but will also pay a nice yield along the way; PGH 8.1% & PWE 9.6%.

I posted several charts, I've been harping for months now, that crude oil was tracking gold by a 4 month lag. To watch for a break over $82, well today's action was the trigger...I've suggested 2 oil drillers as plays on the oil sector; Transocean (RIG) back in July at $67, I see it going to $125 and recently Pride International (PDE) suggested November 30th at $31, target price $40.

The last chart is of Stillwater Mining (SWC) a Palladium mining company, which is one of the stocks entering the new Palladium/Platinum ETF coming out next week.

Don't Get To Complacent On Gold Near Term

On the near term even with this recent bounce in gold from my $1075 support level, I still sense that the dollar may rally further. We may see a rally on the dollar this Friday off of the Jobs Report. The charts appear to be setting up as a flag formation, I maybe early on the call, but it raises a yellow flag and one needs to keep this possibilty on the radar. Longer term I believe the dollar will trend lower, but for those that trade...just be ready to pull the trigger.

Research In Motion (RIMM) Update

Research In Motion is a bargain, it presents the best valuation based on future growth relative to Apple, Palm & Motorola. All the hype has been on the consumer end of the smartphone, RIMM has and will continue to be the leader in the enterprise end. Use the current stock weakness to buy or add to positions.
RIMM has a PEG of 0.9x while Apple 1.8x, Growth Rates 1yr & 5 yr 40%/99.92% while Apple's are 17.36% & 78.88%.
RIM Does Something Cool! BlackBerry PowerPoint Gadget Coming For $200 >>READ

Silver Shines

As I stated last week, I expect Silver to be the leader in the precious metals sector and it appears that 2010 so far has indicated that. Silver Wheaton (SLW) has been my top suggested stock for silver, I'd suggested buying adding/buying SLW near $15, currently around $16.58 nearterm resistance $17.

RIMM News

Interesting report from SmartMoney this week....
Smartphone also-rans

In the past few years, several smartphones hit the market with similar features to the iPhone and BlackBerry, but they haven't generated the same buzz. As a result, fewer developers are likely to create applications and other products that cater to those phones.

Today, the BlackBerry dominates the smartphone market with 40% market share, followed by the iPhone with 25%, according to data released by ComScore in December. In the near term, both are expected to stay at the top. ComScore found that most consumers who'll be shopping for smartphones in the next three months plan to purchase a Blackberry (51%) or an iPhone (20%).

By contrast, only 5% of respondents said they planned to purchase T-Mobile's MyTouch. The Palm Pre and Palm Centro received 2% and 1% of the vote, respectively.

A possible upcoming competitor that could shake up the space is Google's (GOOG) Android. According to ComScore, as of October, the Android's market share had doubled to 3.5% in the past year. >>Read entire report


Other News: Morgan Stanley issued an overweight rating on RIMM today.

Commodites Lead the Rally As We Enter 2010

"Happy New Year"!!! What a way to start off 2010. The US Dollar pulled back today and the same trades that worked last year continued to work today. Commodities, tech and now financials. I continue to worry near term about the dollar, the Jobs Report is this Friday, many expect a positive number of around 25,000 jobs. Now if the number beats expectations, that could mean a dollar rally, thus the metals and energy could selloff. This has me concerned and don't forget on Wednesday we get the ISM Service number as well as the FOMC minutes.
RIMM was downgraded to HOLD & PT of $70 from $90 by GMP Securites today, I suggest one be a buyer on weakness.
On the energy sector, Crude OIl ($WTIC) was up on Russian news as well as a extreme cold weather in the NorthEast. I've posted several times over the last few weeks that oil was set to breakout soon, WATCH that $82 level! Again it lags gold's move by 4 months and it is at an inflection point currently. I'm still holding to my $95 per barrel target. Itz Pix have been RIG & PDE, that both benefit from oil as well as natgas drilling.
Silver lead the way higher on the metals, followed by Palladium, on the Itz Pix metal stocks, Silver Wheaton (SLW) lead the pack.

Itz Pix Portfolio:Year End

Platinum & Palladium Join Gold, Silver & Copper

Gold, Silver & Copper shined over the last few years...however Platinum & Palladium are ready to steal some of the glimmer? ... >>READ
Over the last 7 years Copper has lead the way, followed by Silver & then Gold. As highlighted in the chart below. Of course depending at which point in time- you'll find the leadership roles change, as in the last few days Palladium has vaulted forward. ~CHART LINK~
Itz Stock Pix portoflio have Hecla Mining (HL), Freeport McMoran (FCX), Yamana Gold (AUY) & Silver Wheaton (SLW)