Raising Cash and Buying Calls Anticipating Better Stock Prices, but Still Large Amounts of Volatility......

I sold QCOM and put a limit order to buy some QCOM calls at lower a lower price.   One reader was suggesting this and I thought it made sense.   Additionally, I have captured the small QCOM dividend by holding for the last week.    The ex-dividend date was yesterday.  

How Low Will EU Liquidity Crisis Push Down The Dow?

I think to unknown is at the core of this crisis.    So as soon as foreigners start clearing out the unknowns we will get a better idea.   Today's trading suggests there is some resistance at current levels.    Whatever you buy it is likely to drop or increase with the broader market moves, just like with the Lehman Crisis in this country.   Gold, Cash, and DLTR seem to be the only contrarian bets available.    Anyone else have an idea?   

8200-9500 according to Cramer.

8700 according to http://blogs.forbes.com/digitalrules/2010/05/how-low-will-the-dow-go/

Market Inflection Point Upward or Downward?

Is it time to watch some movies for the next 2-3 weeks and let the market unwind?    It is just becoming too difficult to get a handle on what is going on?    Up Down Who Knows?   Its a boxing match between the Bears vs. Bulls and we seem to be in round 4 of a 9 round fight.  There does not seem to be an apparent inflection point supporting the bulls or the bears.   Some answers will be needed to the following questions or there will need to be enough time where investors become used to unanswered questions.  

1. EU Stability!
2. China accelerating growth!
3. Reduction of Government vs. Banking!
4. Record profits!
5. Pent up Demand can not be stopped?
6. Political Stability in Thailand!
7. Greece gets the boot from EU!
8. Portugal Bailout?
9. Ireland Bailout?
10. California Bailout?   Rhode Island?   New York?
11. Federal Debt?
12. Lowered unemployment?
13. BP solution in the Gulf!
14. Foreign inflows of Cash into the NYSE!
15. United States seems like new equity safe haven?

Itchy to BUY, but market might still be going down - What to do?

How can I raise cash and buy stocks at the same time?   Sell actual stocks and buy call Options?
My trades for today include:
Bought 100 shares of QCOM on a limit order I set up a long time ago.
Bought 1 Call Option on AAPL with strike price at 250
Sold 200 Shares of T (AT&T)

Net result was less cash, but I still have some reserves left to purchase.   The Qualcom purchase was a surprise, but in retrospect it might be a good call if the market strarts upward.    Who knows.......

The Risk to Buy Equities is Dropping Quickly - A Mild BUY right now!

Only god knows if we have or will soon hit a low.   Indecision and Chaos from the EU continue.   If you think it is time to start nibbling on stocks, it might be time to look at some European/International worst  hit and high dividend stocks like:
Glaxo Smith Kline
Siemans
Sarnofi Aventis
Banco Santander

Really, as the Euro drops these should actually do better given their international and export biases?   Still the questions is whether to buy now or wait for prices to drop further?    I am still fence sitting on whether the pessimism has reached a climax yet.   Things are only mildly insane.

New Observation - Sell on the Close and Buy at Midday

Check out the DOW daily charts lately.   This pattern seems to repeat itself over and over lately.    Before the close is getting a lot of volume too, so technicians might suggest this means the market is going higher soon?

How would the market get hooked on GREED again?

How will the bulls be released again.   What raised expectation is going to lift this market into a new bull run?

1. EU Stability!
2. China accelerating growth!
3. Reduction of Government vs. Banking!
4. Record profits!
5. Political Stability in Thailand!
6. Greece gets the boot from EU!
7. Lowered unemployment! 
8. BP solution in the Gulf!
9. Foreign inflows of Cash into the NYSE!

Wow, I really can not think of many great options.    As long as earnings continue there will be at least a steady rise.    If not the risk of downdrafts seems repeated and pervasive in the near future.

Let me know what your alternative POSITIVES are?

Next Market FEAR Factor - CALIFORNIA? - The Goldless State

The 8th largest economy in the world could mirror or even be a larger mess than the effect of the Mediteranean Club Busters.    To make things worse there is not IMF to force a correction or add liquidity given it is not a separate country.    The Feds might be forced into effect?    Just really hard to say.....    If California goes bust as evidenced by their credit rating, the austerity measures will reinforce the BEARS again.    Fear of the unknown would mirror what is already happening in Portugal, Italy, Ireland, Greece, and Spain (PIIGS).    If this issue comes up soon than fear will really start to rule the market and we could expect some real drastic drops in the market.

Let me know your thoughts on the subject?

Read more on:
http://news.yahoo.com/s/ap/20100514/ap_on_bi_ge/us_california_budget

Hard Decision to Sell in a Bear Market!!! I sold some IGV

IGV is an ETF I have held for many years.   I am starting to think that averages or diversified versions of "High Tech" leave to many mediocre stocks in the mix.   This ETF probably has a high beta or high correlation with the market and therefore I should expect to be able to buy this for less in the near future.  We will see. 

What is the Game Plan with this Current Toppy Market?

DIVIDEND STOCKS:
I will continue to readjust my portfolio towards High Dividend Earning Stocks.    There dividend provides some imunization against short seller given they have to pay a dividend when holding the short.   Furthermore the list is set of blue chip stocks that are trusted names that have a proven track rocord.   This list is a two months old and created from a list from Hypovereinsbank in Germany.  
AT & T INC. REGISTERED SHARES DL 1 n.a. 6,45
VERIZON COMMUNICATIONS INC. REGISTERED S... 6,31
DU PONT NEMOURS & CO., E.I. REGISTERED S... 4,45
PFIZER INC. REGISTERED SHARES DL -,05 4,42
MERCK & CO. INC. (NEW) REGISTERED SHARES... 4,08
KRAFT FOODS INC. REGISTERED SHARES CLASS... 3,99
CHEVRON CORP. REGISTERED SHARES DL-,75 3,71
MCDONALD'S CORP. REGISTERED SHARES DL-,0...3,40
COCA-COLA CO., THE REGISTERED SHARES DL ...3,24
JOHNSON & JOHNSON REGISTERED SHARES DL 1 3,22
HOME DEPOT INC., THE REGISTERED SHARES D... 2,86
CATERPILLAR INC. REGISTERED SHARES DL 1 2,83
PROCTER & GAMBLE CO., THE REGISTERED SHA...2,80
INTEL CORP. REGISTERED SHARES DL -,001 2,77
EXXON MOBIL CORP. REGISTERED SHARES O.N. 2,61
3M CO. REGISTERED SHARES DL -,01 2,58
TRAVELERS COMPANIES INC.,THE REGISTERED ...2,47
BOEING CO. REGISTERED SHARES DL 5 2,34
UNITED TECHNOLOGIES CORP. REGISTERED SHA... 2,24
AMERICAN EXPRESS CO. REGISTERED SHARES D... 2,24
GENERAL ELECTRIC CO. REGISTERED SHARES D... n.a. 2,23
WAL-MART STORES INC. REGISTERED SHARES D... n.a. 2,01
INTL BUSINESS MACHINES CORP. REGISTERED ... n.a. 1,76
MICROSOFT CORP. REGISTERED SHARES DL-,00... n.a. 1,75
JPMORGAN CHASE & CO. REGISTERED SHARES D... n.a. 1,31
DISNEY CO., THE WALT REGISTERED SHARES D... n.a. 1,12
ALCOA INC. REGISTERED SHARES DL 1 n.a. 0,98
HEWLETT-PACKARD CO. REGISTERED SHARES DL... n.a. 0,61
BANK OF AMERICA CORP. REGISTERED SHARES ... n.a. 0,27

CASH ?  During the list be downturn during the good old TARP days in 2008-9, cash seemed to be the only investment that did not loose value.    So I think I am going to raise my cash levels as stocks appreciate to about 20% at least plus what funds I might need in the next few years.   This is always a hard process to implement especially in a down market. 

GOLD ?   Seems priced high currently.   I have some amounts in a 401 K.   Indian Wedding season is late summer so one might expect gold to continue up from here.   I am extremely leery of a GOLD Bubble?  

Why Don't I Feel Like BUYING?

I did buy some INTC today.    Shouldn't I be more bullish about prospects now that the EU has gone with the Nuclear Solution - 1Trillion Euro Option?   Maybe this is just a hangover from "Fat Finger" Thursday's whipsaw action.    I guess I continue to ask what is next to spur the market? 

Inflows of Cash into Equities from Bond Funds -  Will this trend continue with the new RISKS?

Earnings should continue to roll out mostly positive.

Anybody else see another positive I am missing?

Scary Next Week ..... 3 Gs, but mostly

GREECE
Clarity in Greece is needed before the market can be lowering volatility and therefore growth.    Bankrupsy and restructuring is needed similar the to 80s Latin America debt restructuring.    A second option is to remove Greece from the EU and back to a devaluating Dracma.   Not likely option 2, but a short term solution none the less.   

GOLDMAN
US Goverment vs. Fat Cats who allegedly destroyed our Market.   Don't worry about Fannie Mae or Freddie Mac?       

GOVERNMENT
Government regulation is evolving.    Derivative regulations are eminent.   Breakup the too big to fail financial companies?   Then there are the unknowns that will sew future crises.

So, expect further market chaos and therefore lower markets for the next few days without a concrete solution here.    If the EU presents a solution market risk will decrease and therefore expect a rising market, but not too old highs. 

Who Brought the Bears Out, Who, Who, ?

Case for Bears:
What happened to crazy Iran?   Not even a peep?  Venezuela?
Oil Spill in Gulf of Mexico?
What about Portugal, Ireland, Italy, Greece, and Spain?
    Greece Immediate Danger
    Spain Lurking Danger
    Portugal Next In Line
What about California or other state bankrupsies?
Will commercial real estate drop in valuations debts clobber the regional banks?
Is the government going to continue the harassment of the investment banks? 

Will Technical Analysts Expectations like the market is too high continue
    "Sell in May and Walk Away"
Long Term - Baby Boomers are going to take their money out of the market 46'-64'ers

Might be a while before we all start thinking about the Case for the Bull Market.   When the theme strengthens we will likely start hearing:

Case for the Bulls:
More money coming into market
EU will not let its currency collapse.
Old Investors short term memory fading from the economy on the brink.
Market has cheaper valuation than foreign markets.
Inventories are low and replenishment cycle is positive.
Market is improving so why would commercial real estate be an issue.  
Earnings season is mostly positive and improving
Dollar is strengthening in a world of worse options.   So lending to US should continue.
The momentum is already positive towards growth and will be hard to turn this ship negative.
Long Term - There has been about 10 years of market stagnation.   What goes down must go up eventually

What Price Should BP Valued at with the Horrible Spill Still Evolving

Some rough estimates might be good to figure out whether it is better to Sell or Hold.   The BP/RIG accident outcome could be identified based on the EXXON Valdez event. There I believe $5B was the payout. Carried with 4% inflation out 22 years would yield say a new cost of litigation at 12Billion if the Exxon accident is accurate. Seems like BP has lost about 20% of its stock price already which would be about $31B loss. Do you think the market might be overreacting just a little?   I would say to over reaction on the above would be close to about 10points on the stock reduction in BP if the Exxon/Valdez disaster is an accurate model.    Anybody have another model that might prove better?