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September 29, 2005


The couple trading days I took off from writing were rather dull with the exception of the inversion of the CPU manufacturer stock price curve. AMD finally traded at a higher price than Intel yesterday, and then extended its lead, trading up 70c today versus 54c for Intel. I'm going to go out on a limb and say that sometime down the road, maybe in 18 months or 2 years, AMD will split their stock and still have a higher share price than Intel.

Today, we saw some very interesting action. First, Research in Motion deflated its fans' aspirations last night by reporting subscriber growth at the low end of their forecasted range, despite implying several weeks ago that they would hit the high end. It seems many traders were actually expecting them to beat their range and revise upwards. However, I believe we will see much more in the way of disappointing subscriber growth as competing products from Microsoft, Nokia, and Palm all hit the market. For any of you who remember the demise of Borland and Quattro Pro when Microsoft hit the market with Excel, this situation seems eerily similar for RIMM. In my opinion, shorting RIMM is a no-brainer, and the shorts will make money as soon as the people with no brains stop buying it. Perhaps we saw the beginning of the end with RIMM's 10% drop today.

The market in general showed some tremendous muscle today. After a soft opening, the averages churned upwards all day and closed at the highs. With no apparently news driving the market, one can only assume the buying spree is related to month-end (and quarter-end) positioning. Both August and September are starting to be reminiscent of the spring when we would end each month with a rally into the first week of the next month, then drop to new lows. If the pattern holds true, we should see several more days of strength, followed by another, more determined sell-off

A final note of interest is that precious metals surged to new highs. Gold edged above $475 again, and silver finally got a close above $7.50, a level that has shown strong resistance. If the level holds, silver may very well test its 2005 high above $8.

The entrance of Q4 should be very interesting, indeed.

Disclosure: Short INTC, RIMM; Long INTC Puts


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