Friday, November 05, 2004

Friday Nov 5, 2004

Markets continue their streak of gains driven by better-than-expected job data and oil price at a 5-week low (does any one track how many weeks oil prices went up for?). S&P was up for 8th straight day. Strength in Semis, Networking, Biotech, Gold and Cyclical names. Financials and Housing stocks were off due to interest rate hike fears. Treasury market was also kept in red today.

Retailers continued a broad move up but BBY was downgraded by Buckingham after I mentioned it yesterday, I would still own the shares for retail exposure. S was upgraded by Goldman and Pru as speculation regarding attractiveness of its real-estate swirl.

In Technology, GOOG was initiated on at Reduce (which means sell?) by UBS and YHOO at Neutral (what's Neutral?). NVDA, a graphic chip maker saw a 14% rise due to better than expected results which were more driven by improved cost control then improving market environment. I am worried about the guidance for January quarter given loss of XBOX revs and big ramp up in GPU units in a flat market at best. AMD gained aginst a downgrade to Sell (they still issue Sell ratings?) from BofA, I prefer to own AMD over INTC currently since INTC has too many product/engineering issues and inventory problems are rarely solved in one quarter. CNXT which is sub-$2 stock dropped 9% after reporting Sept quarter earnings, so what spooked the market? For starters, the management wasn't as up-front about the business as they were just last quarter (bad thing usually). No expectation of demand pick-up with the inventory situation remaining bad. Pricing pressure on WLAN chips remain severe (good for consumers bad for producers). Companies like CNXT give great insights into various tech markets and listening to their earnings call is more rewarding then owning the shares and there wasn't much bullishness on this call. RIMM saw a big drop due to speculation regarding upcoming court decision, I am no attorney but lets hope RIMM hired some smart ones because market doesn't like what it is hearing. TKLC was downgraded by Raymond James due to valuation but it still ended in the green. TKLC is a great way to play both the profilieration of wireless communication and Voice over IP.

INTU the makers of Quicken and QuickBooks products dropped after MSFT announced a competitive product offering. A product due in one year might or might not make big dent in INTU business but markets dislike uncertainties of any kind.

Small side note: This is in no way all-inclusive recap of the market, I only provide high-level recap and try to highlight stories that I can add value or humor to.

At time of publication I was net long TKLC, although positions can change at anytime without notice.


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