Markets and Positions in Review

The market once again posted unfathomable rise. The dislocation between fundamentals and technicals of the market is alarming. What needs to be particularly paid attention to is that the recent market rally is lacking breadth with mega and large caps, particularly in the Dow Industrials which comprises of 30 large stocks, leading the way. Small caps and technology sector has not really participated. The last time the Dow lead the market was in 1929 right before the crash.

The economic news continue to point to weakness, but the market already seems to have priced this in and is looking forward 6 to 13 months ahead. The GDP which was reported on Friday was 1.3%! We haven't seen numbers like that since when? But according to Wall Street Journal, the GDP numbers may have signaled a bottom. We will see how that works out. The market can only do one of two things right now. It can continue up in its current torrid pace or correct. All I can say is that in my years of observing the markets since 1995, moves like the ones we've seen since February 27th mini correction does not happen at market tops. I would be a stronger believer in the market if the following happens:
-NASDAQ begins to lead the indices higher.
-Small Caps and RUSSELL 2000 regains strength.
-IBD 100 index begins to show strength.
-Volume picks up throughout the indices.

The housing news and economic news have been all bad. The market remains like teflon for bad news. The way I see it is that this happens at market bottoms not at market tops. The lowered expectations due to supposed slow growth in corporate earnings have additionally become fuel for this rally. Again, this does not happen at market top.

On the trading front, I would like to update my positions and what happened.
1) Countrywide (CFC)- I HAD my ASS handed to me the past week, as expected, my foolish bet that CFC would unravel before April options expiration was erroneus. Furthermore, CFC has began to move up on continued bad news and continued selling by Mozillo who continues to assert propaganda regarding this stock. My April $30 call contracts expired worthless. At this point, I will stay in a watch mode and look for technical weakness. There is strong accumulation in this stock. For what? I have no idea but I still believe it will unravel but I will not be placing huge stakes in this company. For now, I am out of this stock but will be ready to jump in at the moment's notice when the company unravels.

2) LHC Group (LHCG)- This stock continues to reside below the 50 EDMA and showing continued selling in heavy volume for the past few weeks. With earnings coming out on Monday 4/30/2007 and conference call scheduled for Tuesday 5/1/2007, I still remain bullish. I have to remind everyone that this company will likely blow away estimates but with the current weakness in the small caps, the stock has followed suit. It has held support near the $27.30 level and likely catalyst will be the earnings. I hold May

3) CATERPILLER (CAT)- CAT was recommended by me in mid January when it was trading around $63 and change due to technical strength and misplacement on the stock by wallstreet. Since then it has run up a cool $10 to $73 and change and is challenging $80. I continue to hold June $65 call options in this stock and has made me quite of bit of money. I do not think the run is over until it hits $88.

4) Google (GOOG)- Oh google, Oh google! This is one frustrating stock as it has not participated at all in the stellar earnings. I continue to believe in the long term potential of this stock but currently it is frustrating me due to the market discount for one reason or another. With BIDU and AMZN running away this week, it was disheartening to see Google doing nothing. I own June $500 calls.

5) BIDU (BIDU)- I was completely wrong on this one and have taken a loss on my $95 puts which are worthless now. It continues to support my thesis that the market bottom might be at hand.

6) Carter's (CRI)- Carters have slowly and quietly inched up to $26 range after being beaten to a pulp in January. I hold June $20 calls on this stock. I am considering converting to stocks on this play as I consider this a long term value. Once the retail end of the business is rectified and Osh Kosh's acquisition is integrated, I can see this stock near $40 in a year or so. It is clearly undervalued.

Lastly, I can't end without my watch lists. I continue to watch with great enthusiasm for TA TA Motors (TTM). An Indian automaker specializing in small fuel efficient and cost efficient vehicle which concentrates on Indian market. The demand is high as the middle class Indians are increasingly opting for small fuel efficient cars. They have the middle class base and the demand to warrant further growth. Recent Indian market meltdown in February has not yet recovered unlike their other Asian counterparts and presents a compelling value play here.

Valuclick (VCLK) is a small cap stock with potential to break out this week after earnings. It is a internet advertiser that gets paid by click much like double click and I see this stock as a possible acquisition target somewhere down the road. Perhaps by Yahoo or Microsoft. None the less, the earnings play for May $30 would be a compelling play. I plan on establishing 10 contracts at $1.25. Wednesday earnings should be a blow out and I can easily see $38 by options expiration.