I haven’t been blogging because I am doing some “expert witness type” consulting for a legal firm, which of course, I can’t discuss. So currently writing a report that will keep me swamped for the next several weeks. So, this is just a quick entry on multiple topics, and presumes you’ve read some of my previous posts.
Ugh. One of Abraham Lincoln’s most favorite quotes: “You can fool some of the people all the time, and all of the people some of the time, but you cannot fool all of the people all the time.” Obviously, he wasn’t familiar with modern day political marketing, which operates on the philosophy, “you can fool enough of the people most of the time.” The Faux Noise channel provides a running example of this. Kudlow on CNBC is another.
UNG. Spot Natural gas prices dropped to a $1.88/MMBtu on Friday. It had been speculated that if it got below $2, some operators would turn off the supply. I guess they did, because the spot price soared to $2.55 yesterday. The October futures contract, which is what UNG owns, is at $2.82. In the next few weeks, these 2 will get close in price. As of the close on Monday, UNG is selling at a 19% premium over NAV. From September 12th through the 15th, UNG will sell all its October futures contracts, and buy the November ones. The November futures contract is currently at $3.86. UNG investors should read page 16 of the UNG prospectus on the dangers of investing in UNG when there is significant contango in the futures market, and then do the math. The best short play, in my opinion, is to sell slightly in-the-money calls using the October and January contracts. This is what I have done, and added to my position yesterday.
Intel. Intel announced its Lynnfield version of its Nehalem microprocessor. For a thorough review check out http://www.anandtech.com/cpuchipsets/showdoc.aspx?i=3634. But this announcement was expected. The net result is a new low price for a Nehalem – about an $80 price drop. Also, with the new platform architecture of Lynnfield, motherboard prices will also come down $50. So more pricing pressure on AMD. As the price difference between DDR3 and DD2 memory drops, expect a little more price pressure on AMD. Mobile Lynnfield processors are supposed to be announced later this month (according to various reports at the tech websites). Intel’s IDF is also this month. I am long Intel.
AMD. I have previously recommended a buy on this a couple of weeks ago. 2 events caused the stock to be up a lot yesterday: (1) the weekend news of Abu Dhabi buying Chartered Semi; and, (2) Barclays coming out with an overweight recommendation on AMD yesterday. According to various web stories, AMD is supposed to have 2 key product launches this month: (1) 40nm DX11 graphics chips; and, (2) a new mobile processor and platform. As mentioned previously, I bought AMD on Aug. 17th. I added a little to my position yesterday, at $4.58. I do not recommend AMD at its current price. Also, I view my long position as a short-term trade, at this point. By February, if not sooner, I will be out of my position. And, if it gets too high, I might turn into a short in December or January (way too many great Intel products launching in January timeframe (32nm Nehalems, Nehalem-EX, Moorestown) that will make life difficult for AMD in 2010). As also previously mentioned, I am long AMD’s 2012 convertible, which I expect to hold until it matures.
nVidia. As I have written previously, I am short. And, this has been a losing position. But I still like it as a hedge to my Intel and AMD longs. The rationale for my short has been previously explained. But like I said then, I could be way too early on this short.
Lowry. Lowry’s intermediate indicator has been at a Buy since August 4th. The short-term one has been at a Sell since August 31st. I remain cautious.