Market Rap 21 September 2009

Meanwhile, back at the office, I just hung up with Tony Stark. Due to client confidentiality, I am unable to disclose whether I run money for Tony. I can say that due to the magnitude of cash flows in and out of Stark Industries, Tony often comes to me for guidance. He has also borrowed my plane, The Errol Flynn, on occasion.

Before I run off to afternoon meetings, my thoughts turn to the replay of today’s tape.

The S&P closed off .34% or -3.64 points. The NASDAQ closed positive 5.18 points or .24%. Spot gold was off $3.25 and sits at $1,002.90. Oil futures closed lower by 3.57% to settle at 69.50.

Friday Night Announcement

After a strategic late Friday night lowering of guidance, Potash (POT) gapped lower this morning. The bookies — who make money no matter where Potash trades — were out in full force and their comments boosted the stock off it’s lows at $90.82 to close at $93.09. Broadpoint AmTech reiterated their buy rating, price target $116. BofA/Merrill maintaned their buy rating, price target $114. Fading the crowd was Soleil Securities, who cut POT from to hold from buy, price target $88.

Friday night press releases are an ominous sign. If I owned any Potash, I’d be selling it as fast as I could.

Caterpillar Stats

In other news of interest, Caterpillar (CAT) released dealer statistics for the June to August period. Retail machine sales were down 48%. CAT has rallied from the low 20s to the mid 50s since March. Valuation seems unjustifiable here, especially when the forthcoming rally in the dollar is factored in.

Ponzi Accounting

One of my favorite shorts of yesteryear, Prologis (PLD) was back in the news today with an announcement of a consent solicitation for $2.96 billion in debt securities. Prologis has taken advantage of the market strength over the past 6 months to — through various mechanisms — raise an exorbitant amount of capital. The accounting at Prologis continues to resemble that of Enron. At some point, the common equity in this company will be wiped out. In reaction, Wall Street will respond with the ever popular retort: How could we have known?

Nostalgia

On September 23, 2008 I posted my analysis of Research In Motion (RIMM). In what was one of the largest profits on my P&L last year, RIMM moved from $100 down to $40 in just over a month. This year, sports analysts on business TV are pushing RIMM even harder than they were last. On a technical basis, the price action in RIMM looks healthier this year. However, the cycles run with the seasons. When RIMM lowers guidance this week, the shock factor will be of greater magnitude than last year. In what mirrors the timing of their release last year, RIMM is announcing their earnings on the same date — September 24th — and the same day of the week — Thursday. I own puts in RIMM and my nostalgic mind is counting down the time until their numbers hit the wires.

Rimm - September & October 2008

The market is gearing up for something big and I’ll continue to document it here — where as always — the beat goes on.