Thursday, March 26, 2009
(Cont'd from above)...

Jim (cont'd):   

Why do I think it will continue even though the signs of a tech come back are scarce… and there is still much more bad than good news… well, lets see… the fundamentals matter… I think that they have improved in tech… but no so much to justify the extended long march higher that I see in the group already and that is still coming… the real fuel on the fire of this tech rally is something different… it is two different kinds of group think… what you see playing out is a titanic war… between the bullish mutual funds and the bearish hedge funds… the battle ground…. technology stocks… when it comes to tech two things are happening when it comes to the big institutional money managers… the masters of the universe who pretty much set stock prices with their enormous trades… they are at work right now… they are in there… duking it out… you don’t come to me to hear that Best Buy (BBY) reported a better than expected quarter, you can read that all day… you come to me to find out what the big guys will do off of it.

Now, remember I used to run a hedge fund before I did this show… a half a billion dollars swinging around every day… I know what all the big money managers are doing… I have got their playbook… and when you know all the plays you can get the jump on the players… so listen up because I am going to tell you how to eat the lunch or drink the milkshake in the parliaments of the times…. of all of these might hedge fund managers… so what is happening… what do I think will happen… here is what you need to know… right now the hedge fund managers they abhor, they cannot stand, they hate technology… they have shorted these stocks aggressively… and the rally… it is killing them… and what is driving this tech rally… the simple fact that when the economy is looking up, like it is now, no matter how low it was before… mutual fund managers buy tech instinctively, right or wrong… as soon as the economic outlook brightens these guys just love to stuff their portfolios with technology stocks… and boy they have a lot of fire power… way more than the hedge funds… because they manage way more money… so now the hedge funds are missing out… in a few days the quarter will end and they are going to feel the pain of this move… so now the hedge fund honchos are caught on the wrong side… the wrong side of the semi-conductors, the wrong side of the networks, the wrong side of the software companies, and the wrong side of the internet plays… they were dead wrong for these stocks for the quarter… and now they are caught with, yes indeed, their shorts down… and when that happens, when they know that they are just panted… they furiously switch sides… which is what you are seeing today… they all are going to pile into the best tech performers, which I am going to give you if you stay tuned, which will send them even higher… that’s the main ingredient of this tech rally.

Do not get me wrong… it is not all about the big boys… you have to understand the fundamentals too… what has happened in tech is that the companies that sell gadgets and gizmos to you, cut back on their inventory… cut back on their manufacturing so severely… well, they figured everybody is gloomy right… there is nothing good happening… nobody was in the mood to buy anything right now, stereos, cameras, nothing… so they overshot the mark with their negativity… just like you may have… now they frantically need to rebuild their inventories or products… simply because the stores, the shelves are empty.. that is something that Best Buy (BBY), the biggest tech retailer pretty much confirmed today with its better than expected quarter… there is demand that no one expected… not the Fed, not the President, not the bears, nobody… and now the Best Buy’s of the world need to get back to the gadget makers… who will go and order more components from companies like the ones that we have recommended… Taiwan Semiconductor (TSM), like Xilinx Inc. (XLNX), we heard the same story from Corning Inc. (GLW)… with better than expected orders for glass… for the screens on your computer… because there were just so many cut backs that any strength at all… any small increase in demand is rippling… like a riptide… and it is sending the earnings higher.

Throw in the so called better than expected numbers from Nokia (NOK) assembler, Jabil Circuit Inc. (JBL) yesterday… I say so called because really Jabil low balled the numbers, and they beat em… and you have got the ingredients for that real rip snorting tech rally that you keep seeing on your screen… or that you are watching right now on the ticker… or that you can read about in the paper tomorrow… all of the semiconductor equipment companies… Applied Materials (AMAT), KLA-Tencor Corp. (KLAC), Novellus Systems, Inc. (NVLS)… there is nothing positive happening there at all… it doesn’t matter… they are part of a group… it is this little bit of good news coupled with hand over fist mutual fund buying and hedge funds copulating… they are giving up on their shorts… they are buying to cover and close out losing positions… that is how Google, Inc. (GOOG) and Apple (AAPL) and Research In Motion (RIMM) go higher… despite the fact that online advertising is weak and Google is laying off people… there is nothing blockbuster at all in Apple’s product line… and the only real positive in RIMM is the suggestion by Goldman Sachs that the quarter won’t be so horrible.

And there are some real reasons other than mindless mutual fund purchases and hedge funds throwing in the towel… the weak dollar… that is terrific for these companies… the companies all do a lot of business overseas… like ActionAlertsPlus.com favorite, Hewlett-Packard (HPQ*), and of Intel (INTC) which seems to go up now everyday… the valuations for companies like Hewlett Packard, and EMC (EMC), and Intel, and Microsoft (MSFT) are at historic lows… and even Apple when you back out all the cash that it has… its valuation isn’t stretched… if you want to buy a tech stock based on the fundamentals, the one that I would be buying right here right now is QualComm Inc. (QCOM*) which I just bought for my charitable trust, ActionAlertsPlus.com, this one is up 5 points from its bottom, the technicians didn’t like it… we said buy it, we are right… it is only up 3 from where it is seemingly cruising for a while… best product portfolio, it is the one tech stock with a new product cycle coming on… the 4G cycle next year… giving it earnings visibility that the others just don’t have… Qualcomm… fit’s the bill… they are shorting… we want to be longing.

But the best reason to like tech is simply how much the hedge funds hate it… I know how these guys think… I was one of them… they all pile into the best performers in the group… they know that mutual funds like to buy the quarters winners to show the shareholders how smart they are… so do you want the hedge fund buy list… the stocks that should go up as money managers who once hated this group start worrying and learn to love it… alright, here you go, write them down… Corning, up 49% for the quarter… Marvell Technology Group Ltd. (MRVL) 45%… Apple is up 29%… BMC Software Inc. (BMC), not a favorite of mine but it is up 26%… I think they bid up Nvidia, I don’t care for NVDA but they will take it up because it is up 31% already… they will grasp for IBM (IBM) up 17% even though it is supposed to be buying Sun Microsystems Inc. (JAVA)… Broadcom Corp. (BRCM), haven’t liked that in 7 years, up 23%… Google, Inc. (GOOG) up 15%… Yahoo! (YHOO) up 9%, not my favorite… EMC (EMC), up 15%, do not even know how good the quarter is there because I own VMware (VMW), 80% of it, but it doesn’t seem to matter to the hedge funds that are short.

Bottom line…

▼   ▼   ▼   ▼   ▼

The Bottom Line!:     Tech is being pushed higher by mutual funds… and the hedge funds that hate it are about to switch sides and start buying hand over fist… you get in ahead of them… you mark my words, this tech rally as great as it is…. isn’t over.

BL: I think the big money is about to head for tech, consider getting there before they do...  What a day… Dow up 175... Nasdaq up a monstrous +3.. and you know what I have been saying… you stick with this rally… since 6500 we have been on board to be able to accumulate… I sure hope that it comes in so we can buy even more… the tech rally… you ain’t seen nothing yet.

[verbatim recap]

▼   ▼   ▼   ▼   ▼

Jim went on after this segment to take questions from callers, and responded with his comments...

```````````````````````````````````````````````````````````````````````````````````
Q:    I was reading the local newspaper yesterday and I saw that Suncor Energy Inc. (SU) will be acquiring Petro Canada. And I was wondering if you thought if Suncor would be a good long term investment? And if so, what a good stock price would be?...

Jim:    No, I am not going to recommend that… I don’t like the fact that they bought another company… these are oil shale sand plays… they require oil to be $80, $90 before they make big money… I would much rather see you in Cramer fave Chevron Corp. (CVX*)… which can boost the dividend, has a better balance sheet, and is not as much levered to oil shale but as to all the oil that they just found, sputted in the last two years, and they are hitting it out… I own it for my charitable trust, I have been buying it consistently for ActionAlertsPlus.com, if you want to follow along...

```````````````````````````````````````````````````````````````````````````````````
Q:    Sheila Bair of FDIC on March 20th, that the FDIC reserves would drop to zero unless new fees are imposed on banks and depositors. It appears that the same Federal Deposit Insurance Corporation that we rely on to insure our accounts will instead to be relying on us to keep them solvent. Please advise if I missing something here, or if this is the beginning a vicious cycle that could ultimately doom our banking system and our economy.

Jim:    FDIC is probably the most reliable thing that the federal government has ever done, stems from the Great Depression… I believe they have never failed, they will not fail… Sheila Baer is an incredibly responsible individual… I really think that she is doing a really dynamite job… and I am not concerned… they raised fees, that is a good move… we have to preserve the sanctity of your deposit… and we will… and she will.. and she is doing a great job.

```````````````````````````````````````````````````````````````````````````````````

[verbatim recap]

[end of segment]

Read Jim's next Segment here  

Read Jim's next Segment here