Sunday, June 10, 2012
Over the weekend, we see the Euro finance ministers stepping in to provide Spain with 100 Billion Euro's to resolve their near term crisis. The market will be relieved at first until Spain reports what they really need. There are an estimated over 180 BILLION in so called "Zombie loans" outstanding. A zombie is what they call loans made to defunct builders and such that will never repay and they just sit on the books. So while the market will liklely respond in a short covering rally with new bulls pounding their chests, this weekend deal is still a kick the can down the road approach. Until the next crisis. It is what it is. The market may respond in bull mode for awhile. However, the economy remains weak and jobs data is trending poorly.
Stocks are so volatile that I don't even want to bring up particular issues that are pumped daily on the tv shows. Like take WPRT for example. This co is the on and off darling or dog of wall street depending on your view. WPRT is into natural gas engines that are seen as a way to address the high cost of trucking. Cramer, the Motely fool and newsletter guys pumped WPRT all the way to 50 a share before the reality set in that WPRT has NO earnings and is not expected to have any until next year. So the market hype has already factored in the early success anticipated. Recently WPRT bounced off the low of the 20's as Cramer and Motely continue to pump the caterpillar deal that was made with WPRT. Is it time to jump on WPRT and ride the hype? Natural gas is at historical lows due the abundance of supply. If the trucking industry converts to natural gas, you can bet that the natural gas industry will respond by jacking up the price of natural gas. However related to WPRT, there's so much hype around it that it may go higher. One dynamic that helped tank WPRT's share price was when a partner, Cummins, announced they were introducing their own engine in a line of products.
WPRT is mainly a think tank and relies on the engine manufacturers to produce. Then there's China. But China is not always up front about the way they operate. They are known to steal ideas and spread them around. So anyway, there's the bull and bearish side of wprt. maybe it will be the darling of wall street awhile but the present fundamentals are still weak. In between now and the future growth, companies like to dilute the promise and cash in on the hope we have already seen many times.
But what does the Kick the can down the road approach in Europe mean to our market? We may or may not be in a few weeks of blissful denial but the issues are still there. Trade it or invest at your own risk and reward tolerance to your own peril or glory. I will not tell people what they "should do". Me? I will stay in some of the stock of no name and wait to see if the long term survivor group on the shot of hope beat their odds early next year. This is a no name stock for now because of shorts that bashed it into the desert camp and because the Interim analysis resulted in a continue of the study as traders pulled out.
In the meantime, some ten year fighters keep on getting the shot of hope every six weeks.
Another stock to watch is ARNA. In the near term, it will rise or fall on the basis of exactly what the FDA decides to do on approving it's weight loss management pill, lorcaserin. If they do not delay it for a Risk Evaluation and Mitigation Strategy , ARNA could be on deck for a nice run on an FDA approval. But if the drug is delayed it will not be pretty for the stock as the risk of losing title as the first weight loss pill approved in a long time could go to VVUS. My some money is on approval after reading some views that examined the perceived health issues and it appears that they have been addressed adequately. HOWever , that's my take. Exactly where the FDA will weigh in on the matter seems like a wonderland of wonder until they actually announce something.
I feel that my record has not been the best in predicting biotechs lately so if I am in some, that alone is probably not a great sign. (sigh).
enough self examination and further self flagellations be damned!
I am in some ARNA and will wait out the decsion..
My current positions are some:
a stock of no name, ONTY, in the desert camp waiting, we have provisions.
some ARNA waiting on what's gonna happen with the FDA decsion.
Dry powder that may or may not go to work, under the radar.
I don't tell people what they "should do"...
ALL in my humble opinion, scroll down and read more..
This site does NOT make Buy / Sell recommendations.
Posted by Spider j jones