THURS. SEP. 25- Buffett's 2nd I-Bank Foray

Warren Buffett clearly has had a long and prosperous career in finance. Arguably the wealthiest individual on the planet, he has a net worth some people estimate in excess of $50 billion. He has done many things correctly over the years from accumulating shares of Coca Cola and Washington Post two generations ago to buying numerous successful smaller businesses in a myriad of industries. Wise investments such as these have padded Buffett’s returns over the years. However, one notable ‘miss’ cast a wide shadow over his otherwise stellar returns and reputation. Buffett became one of the largest shareholders of Solomon Brothers post-1987 crash. In 1991, the firm almost collapsed after a bidding scandal over the way it handled some submissions to the trading department re its bonds cast a pall over the company. It got to the point where Buffett was forced to take the reins of the CEO job at Solly in order to try to keep the company afloat- admittedly something he was indeed able to do. All of this is important because Buffett is being seen as the savior of Wall Street because of his stake in Goldman Sachs (GS). Now, the circumstances are obviously different than 17 years ago. Buffett is not taking a position within the company nor does he seek to buy common shares of stock instead focusing on the preferred class. Buffett is one savvy individual and obviously has a shot of making a tremendous amount of money on his investment as Goldman shakes out, but it still doesn’t solve the rest of the financial problems the world faces nor does it mean he’ll be right. He is also betting that some sort of economic plan will be approved imminently. G-d help us all if he is wrong on the bailout much less his investment, but realize that even Buffett is not perfect. For day traders, we’ll be tracking the rumors of the government plan for the next two days at least and hoping Buffett’s GS bet turns out a lot better than his Salomon investment else not only is he in trouble, but the rest of us are as well.

Overnight, markets in Asia were generally down, but the mood seemed to change in Europe as investors are becoming gradually convinced that the U.S. government will do something to bail out the banks. State-side, futures are up as well in the very early going. Trading will once again be rumor-driven and illiquid with all attention on the package but likely with an upside bias as early weakness in GE as shaken off and the tide of believers in ‘the plan’ continues to swell.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified



Good-

NKE- great earnings

BBBY- in-line numbers, but better than whisper numbers

TMTA – putting itself up for sale

SQNM- very strong yesterday


Bad-

PAYX- missed on revenues

COF- share offering at 49; if stock opens above 49, short thru 49 else A-B-A2 to upside

FIF – missed earnings

PPC- rumors abundant that the credit of PPC is going south all day yesterday which were confirmed by the company at 1AM; if it opens higher, short thru unch and watch TSN, CALM, SFD for sympathy move

OSK- horribly weak again; looking to short thru yesterday’s low between 9 and 9.05

GU- closed weak; looking to short at 6 or below

TEN- if it opens higher, looking to short thru yesterday’s low around 12.40ish

JOSB- down dramatically; looking for an A-B-A2 snapback if market strong otherwise if it opens higher, short thru yesterday’s low around 31.40ish

FFIV- closed near a low; looking for an A-B-A2 short if it opens lower

GE- warned on earnings

THURS SEP 25 BEF

CHTT 1.03/114M .93/106M 3.98/457M 4.54/486M

DFS .36/926M .29/894M 1.52/3.77B 1.38/3.69B

MKC .48/781M .85/959M 2.14/3.22B 2.39/3.47B

MTN -.19/256M -.75/159M 2.73/1.14B 2.31/1.05B

SCHL -1.00/293M 2.14/710M 1.89/2.00B 2.20/2.06B

TXI .87/274M .92/287M 3.55/1.12B 4.02/1.21B

THURS SEP 25 AFT

A.CN .67/6.02B .70/6.25B 2.65/23.39B 2.91/25.73B

FINL .17/353M -.10/281M .56/1.32B .68/1.35B

RIMM .87/2.59B .97/2.93B 3.78/10.98B 5.38/15.58B



Good luck today.

www.protradingnetwork.com