Intel Showing the Way Up

It has been a few days since I have posted my market moves. Thought I would update you today, April 16.

The market opened strong this morning based on the decent Intel quarterly report after the close last night. Tech is a market lynchpin. There has been a school of thought that Tech can't do well if Financials are hurting, since the banking industry is a heavy consumer of computing, software and data storage. But the Intel quarter disproves that theory.

At the same time, the banks continue to do what is necessary to reposition themselves for a less ebullient economy. I think most market participants are coming to the conclusion that the worst is past, though it may take quite a while for bank growth to get back to where it was in 2006. But a more conservative banking industry is okay by most participants.

Also, more educated observers, including Jack Welch, ex-CEO of GE, this morning. are talking about the great benefits to profits of reversing the mark-to-market of the bank assets. It is likely they have mostly been over-discounted. Those assets will be a source of profits for years to come. Expect savvy bank execs to use those assets to "beat the estimate" for the next several years, which will drive P/Es up on banks.

Here are my moves today: bought more Daylight Energy (DAYYF) for my IRA account, added to FXI, the China index, added to DOW Chemical (DOW).

I am still sitting on my AEM (Agnico Eagle) gold mining shorts. Today it is at $75, so I am in the red on this. But I have more than the same number of AEM May Puts shorted at $65 which just about covers my losses on the stock shorts. I will continue paying for the stock shorts with the close month put shorts, basically averaging up my cost. I am using the AEM shorts to protect my several precious metal mutual fund positions, since this commodity bubble will likely correct significantly as soon as the market believes the bottom is in for the stock market, and that the Fed will start raising rates as the economy begins to improve.

When it does correct, history shows that commodities correct very quickly and aggressively since so much hot money is chasing such a little base of equity.

As for the price of oil: I am just glad I am loaded up on energy stocks, which eases the pain at the pump. The Canroys are finally starting to move. The can go a long way from here in playing catch up to their USA equals. If oil and gas prices hold, I think $40 on PWE is a good possibility in the next 2-3 months and $25 on PGH.

Hope you have a great day in the market.