FRIDAY JUNE 6 THOUGHTS

On Wednesday afternoon, among other things, Fed Chairman Bernanke said that the economic slowdown in the Untied States was due more to housing than rising oil prices and that a repeat of the economic malaise of the 1970’s was unlikely. However, he also said that the US has a ‘serious’ oil shock, inflation expectations are a ‘significant’ concern with it much’ higher than we would like,’ and that the Fed is responsible for 'stable prices over the medium-term.' Why the doubletalk? Is it because he is uncertain as to the economic outlook? Maybe. But far more likely is the subtlety of this statement. During the last handful of Federal Reserve meetings when interest rates were cut, he focused far more on housing than inflation. In the last statement, he ostensibly indicated it was an equal concern. Now, he is turning his immediate focus to inflation which signals that not only will the Fed cut interest rates, in fact, there is more an outside possibility that rates will go up. This indicates two things. First, if the financial system gets in trouble anew, the main Fed tool (cutting rates) is not at its fingertips and they will have to resort to far more desperate measures to rescue the economy as they did in assisting J.P. Morgan. Second, inflation is clearly a worry. Thus, the Fed is trapped right now but ready to act. Thanks. It does indicate that things are a bit more precarious than otherwise thought; they cannot raise rates to curb inflation out of a fear that the economy does not need another shock yet they cannot cut rates should the economy truly tank. The net of all of this: Who really knows? Except that if the Fed is this nervous about the inflation that we see in front of our very eyes on a daily basis, it indicates that there will be rapid and violent rate hikes should the economy prove to be on solid footing. And for day traders, it means that a 6 dollar move higher in oil in a day could be viewed as a positive one day because it indicates worldwide demand is strong, but bad the next because it indicates interest rate hikes could be coming.

Overnight, markets in Asia were up as well as in Europe, but the gains were leveling off as the day progressed in Europe. Oil was sharply higher yesterday and continued higher this morning. Also, the jobs report is due out which will help to give direction to the market, but unless it is particularly divergent from expectations, it likely will not have much of an impact (althoug hit is more likely to have a negative impact than a positive due to the rise in the markets yesterday and the pre-indicator jobs report Wednesday morning).

ISPH- has almost doubled this morning on positive data from a phase III trial. Stock has been over 7 as I type this. If 7 relaods pre-open (and hopefully, I will get this out in time), it is a great short.

APWR- good earnings. Stock should open nicely higher. A-B-A2 here. If it opens at say 25, falls to 24.75, and rallies back to 25, it is a buy.

TSL- other terrific play of the day. It has run-up a lot. If it posts better than expected earnings and tries to rally but fails, short everything possible when/if it goes negative on the day.

SINO- has been bludgeoned over the last few days. if it opens a little higher, falls back to unchanged, and begins rlaly, it is a buy.

NTI- momentum could shove this stock dramatically higher...no definitve trade off-hand, but keep an eye on it.

MDZ- closed very weak yhesterday. In a weak environemnt, looking continuation short thr unew low.

TRX- closed near its high. If the stock opens down, look to buy it thru unchanged.

SLB/ most oils- way up yesterday. If it opens down, buy thru unch. But with oil higher, the better play may be that if it opens higher, short thru unch.

CMTL- up a lot yesterday on earnings. if it opens down, loking to buy thru unchanged and more at 50 with a quick out if 50 reloads.

SQNM- has been up on huge volume two days in a row on news. if it opens down, buy thru unch.

WIN- Cramer last night pumped it up.

GENT- down on terrible drug news. reverse A-B-A2. if it opens at say 4.50, rallies to 4.70, and falls back, short 4.50.

BUCY/JOYG- Cramer as well; BUCY way up and JOYG flat. Do not know what to make of it.

GEOI- odd. Doing a private placement at 22.50- six points below market. Stock should open above there...if it ticks below 22.50, short it. if it opens way down, but holds, it'll be an A-B-A2 buy.

BAC/CFC- merger approved last night. Do not know what to make of news, but will watch.

RCH- going to NASDAQ on Monday morning. Stock may be up this morning because of that. I know. Silly. But watch.

FMCN- terrible earnings...stock seemingly off of its low from last night...may rally post-open that much more.

Have a good weekend and good luck today.