Roller Coaster ride!

by Larry Levin

Whoa...today's market action gave us more rallies and death defying plunges than your favorite roller coaster at a Six Flags amusement park. My neck is sore from whiplash!

To give you just a brief example of the massive market swings, I/ll give you some rough ranges, first from the open and then from the peaks & valleys. The S&P futures had a weak open and dropped -12.00-points, then rallied +20.00-points, then fell -17.00-points, then exploded +26.00-points, was quickly crushed -25.00-points, and amazingly reversed again for +16.00 more. That was a wild ride indeed!

After three days of big losses one would expect buyers to hit the tape, which they did early. "There are a lot of deep discounts, and value buyers are out there," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.

One who trades the trend could argue that "value buying" is just a euphemism for adding-to-a-loser. After all, if a stock falls a "value buyer" will have all sorts of reason to buy more. "If you liked it at $80, you have to like it at $70," they say. "Now it's a bargain at $50-share," can be heard next. Later you'll hear, "Look, if you liked it $80 and again at $70 and $50, you have to LOVE it at $10.00-share!"

Hmmm, I"d call that fighting the trend and adding to a loser. But what do I know? Value buyers will always be right...eventually, but the question is, can you stay solvent as long as they have reasons to buy?

The weak open was attributed to Cisco's "warning," weak retail sales, and the failure of the Senate to pass the Income Redistribution Plan last night.

The start of the 2008 retail season wasn't good. Although the Street had "lowered the bar" in an attempt for the retailer's to make earnings goals, they failed to even meet these lessened expectations. "With uncertainty about the economy, and the possibility of a recession, consumers have pared their spending," said Michael P. Niemira, ICSC's chief economist. "Looking forward to February, we expect much of the same, as U.S economic problems do not seem to be dissipating anytime soon," he added. Hmmm, sounds like there will be great "values" in the future of the retail sector.

Cisco reported 10% revenue but analysts were expecting 15% growth. CEO John Chambers also warned that sales were slowing. "What began as a slowdown in the U.S. in the second quarter is now spreading, as both U.S. and Europe saw unexpected softness in January," according to Richard Windsor, analyst for Nomura International. "This is particularly troubling as North America and Europe make up 70% of [Cisco's] revenue."

Hmmm, sounds like there will be a great "value buy" in Cisco’s future. What's that? You already bought CSCO at an earlier "value buy?" Very recently several "experts" were pounding the table (as they like to say) at the great buy CSCO was. It was $33-share then. Certainly $30-share was a "value buy" - right? What about $28-share? What about $26.00-share...surely THAT price was a value, right? Well, it traded as low as $22.30-share just 3-days ago, so I suppose it's close to a "value buy," whatever that is.

Real Time Trading Signals*for

Trade Date: 2/7/07

E-Mini S&P Trades*
(before fees and commissions):

9:11 VA Buy 45.00 = -1.50 all

9:20 VA Sell 45.50 = +.75, +3.50, +2.50

10:01 FT Buy 46.50 = +.75, +2.25, +3.00

10:20 ID VA Sell 49.25 = -1.25 all

10:52 ENG Buy 49.25 = +.75, +.25, +.25

12:51 ENG Buy 41.25 = +.75, -1.25, -1.25

1:20 FT Sell 34.75 = +.75, b/e

E-Mini Russell Trades*
(before fees and commissions):


1) Buy @ 8:40am at 694.2 = -1.2 (1 lot)

2) Sell @ 8:50pm at 690.3 = +1.0 & b/e

3) Buy @ 9:10am at 697.4 = -.8 (1 lot)

4) Buy @ 9:22am at 700.1 = +.8, -1.3, -1.3

5) Buy @ 9:37am at 695.9 = -1.3 & -1.3

6) Sell @ 10:34am at 692.6 = +1.9 (1 lot

7) Buy @ 12:04pm at 698.4 = -.9 (1 lot)

8) Buy @ 1:30pm at 702.2 = b/e & b/e

9) Sell @ 1:36pm at 701.2 = +1.0 (1 lot)

10) Sell @ 2:12pm at 696.4 = -1.1 (1 lot) )...-$540.00


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