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  1. Phil

    Good morning! 

    Buffett buying HNZ for 20% over a close that was already up 10% since Thanksgiving shows you that this market still has legs.   As I've been saying, this M&A stuff is just terrifying for the bears as it's not just HNZ that jumps but the whole sector.  That's why you can't just sit out these rallies – we can get to silly valuations very quickly and THEN it's time to get to cash.  I don't think we're there yet, but that's what our levels are for anyway – to take the emotion out of the equation for both bulls and bears. 

    To that end,  we were looking for pullbacks on Tuesday that never came and, even in this morning's Futures drop, we didn't come close to:

    • Dow 13,850
    • S&P 1,502
    • Nas 3,160
    • NYSE 8,840
    • RUT 905

    Since we're actually up a bit since I posted them, it's going to take even more of a pullback to hit those levels and put us into any kind of worry.  As StJ pointed out the new Big Chart – the Russell is already at the 15% line at 920 and the S&P is right on our 1,520 line (Coincidence?  Of course not) and 14,000 is the 2.5% line on the Dow on the button and that means we have bullish goals of 3,225 on the Nasdaq (now 3,196) and 9,000 on the NYSE (now 8,955) BEFORE we fail 1,520 and 920.  

    As that's not likely to happen – we do need to remain a bit cautious ahead of a possible pullback – especially with the Dollar over 80.50 again (now 80.615) and oil poised for a possible drop (now $97.50 and lined up for yet another short on /CL!).  

    BBRY joining BKS in the graveyard of AAPL competitors.  It's deja vu from the IPod days all over again.   Aside from SNE walkmen and MSFT Zune, there was Creative's whatever it was called and dozens of other MP3 players and they copied the wheel and the screen and the menus and the buttons and they were cheaper and bigger and faster….  Now, there is only IPod.  It did take a long time – I think Zune was 2007 and that was 5 years after the IPod started and they were still trying to take it down.  

    BlackBerry (BBRY-6.1% after former chairman/co-CEO Jim Balsillie discloses he has completely liquidated his stake in the company. The stake was valued at $385M last March, when Balsillieresigned from BlackBerry's board after having already been removed from his other positions. Strategy disagreements reportedly played a role in his departure. Shares are now down 23% on the week. (13G) (yesterday)

    Of course it took AAPL over a decade from the release of the first IBook to become the leading notebook maker – also with a more expensive model that had "less" features than other competitors.  It's funny really – it's as if Porsche puts out a new car and people automatically assume it sucks – despite their very long, successful history of putting out great cars that people love.  Some companies are just good – all the time – like HNZ selling the same old, boring food – year after year after year and making more and more money until Warren Buffett decides they are still too cheap at 16x earnings and offers them 20x.  

    AAPL is trading at just 8x earnings – not including the 3x earnings of cash on their books.  

    Have I mentioned how much I like AAPL lately?  Yesterday's trade idea is still doable:

    AAPL Next week $470s are $6 and we can sell the Friday $465s for $4.25, which is what the next week $475s are going for so I'm thinking it would be fun to see how this works out.  Let's do 5 in the $25KPA as an excercize in Premium Decay.  



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