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August 28, 2006

Last Week, Part II

Somebody please hit the fast-forward button. This last week of August has begun in the image of the second-to-last week of August... a real snoozer. I find myself doing extra stretches and sets of pushups just to stay alert. A lecture on tax law conducted by Ben Stein would be more stimulating. I imagine things won't pick up before Labor Day, so we'll just have to grind it out. In any case, it's been a good time to catch up on reading.

Despite the dearth of activity, a few pertinent items did unfold. In the commodities arena, precious metals and oil felt more pressure. Oil slipped by more than 2%, leading to about one percent losses in related equities such as Conoco Philips, Chevron, and Encore Acquisition. The weakness here can easily, and appropriately, be blamed on the unwinding of hurricane bets as Ernesto appeared ready to churn its way into the history books. Traders are understandably antsy after last year's disasters, but if oil spikes every time a tropical storm enters the Caribbean, a lot of money will be made fading those moves.

Gold and silver followed through on recent weakness, seeing further declines of 1.5% and 3%, respectively. Likewise, Newmont Mining and Pan American Silver saw 2% and 3% declines. I continue to bide my time while hunting for new entry points into metals plays. Metals appear to be continuing a consolidation phase in the wake of the parabolic moves of spring, and these processes take time. I could, but won't, name a couple of renowned traders who have lost money with impatient re-entries.

Intel was the recipient of an upgrade by Friedman Billing Ramsay, which stated their reasons as "stabilizing unit demand, inventory improvement, and an end to price discounts." Really? Last time I checked, inventory was still swelling, more capacity was coming online, and demand was showing signs of stress. But who am I to say? I haven't checked in over a month. Maybe Intel has straightened out all their problems since then.

Disclosure: Short INTC; Long INTC Puts; Short NEM Puts


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