FRIDAY MAY 30 THOUGHTS

One of the things lost in the rapid ascent of the price of oil in the last few weeks is the sharp ascent in interest rate yields and the value of the dollar in relation to the rest of the world’s currencies. Much of the climb in oil prices has been due to the weak dollar and rock bottom interest rates as oil is priced in dollars. But, very subtly, the dollar has appreciated more than 10% against the Japanese yen, for instance, since March 17 while the 10 year yield on Treasury bonds has risen about 75 basis points. This indicates a renewed surge of confidence in the financial system as people world-wide buy dollars and sell bonds in order to place their monies into more aggressive investments. It also portends a potential uptick in inflation. As interest rates rise, investors much less consumers seek investments which will give them a greater return. Yet, it also indicates that individual bubbles like oil prices may deflate while the prices of other things that have been held in check (clothes, et al) should rise. For day trading purposes in the immediate-term, focus on the first idea- namely that people are much more likely to seek risk at this point even with interest rates on the rise thus a lot of the plays that have been working on the short side will likely not be as effective. Furthermore, it makes declines a bit shallower in things like financials with rallies in individualized plays much sharper.

Overnight, things were quiet. DELL posted much better tha nexpected numbers so it is trading higher and providing support for a firmer tone to the equity markets. Foreign markets were mildly positive, the dollar is neutral, and oil is up a bit at the time of this writing.

Newsflow is very slow right now; it is going to be 77 and sunny in Manhattan today. So, whatever you do, barring a wild swing in oil, the best time to do it will be in the first hour.

DELL- not looking to trade it, but will monitor as a bit of a proxy for the market.

JCG- way way way down on atrocious earnings. It's the A-B-A2 pattern again. if say it opens at 38.50, rallies to 39, and falls back to 38.50, short a new low.

MRVL- same idea as JCG, but in reverse. if it opens around 16.50, falls back to 16.25, and comes back to 16.50, buy the 16.50.

HXL- announced gigantic contract from Airbus. Same idea as above; if it opens at 24.50ish, sells off a little, and comes back to the 24.50ish, it is a buy on momentum buying.

Solars- all strong as Morgan Stanley said to use yesterday's weakness as a buying opportunity.

SINO- if it opens a little higher, sells back off and holds unchanged, buy it where it opens.

MA- was strong all day yesterday. They received a number of upgrades this morning, but it is not up much. If it gets to unch, it's likely a short.

Relative slim pickings. Summer market. Tread carefully.

Good luck.