Brandon’s Call
I was talking with a friend who works for Deutchse Bank and his wife this weekend. We were all in agreement regarding the overall market and economic conditions being nearly catastrophic. He mentioned to me that he just needed to figure out what to recommend to his clients, and we all got a little laugh, (although a cynical one) out of it. That indeed is the problem, and I've spent days pondering the answer.
I revert back to my technical analysis and sector rotation. It is so imperative that anyone invested in any equity understand sector rotation. Imagine if you will a "football field," with the end-zone on the left being the 0 yard line and the end-zone on the right being the 100 yard line. Stocks that are at the 0 - 20 yard represent sectors that have been oversold. Stocks in the 80 -100 area are stocks that have been overbought.
Over-sold<-------------------------------->Over-bought
0---10---20---30---40---50---60---70---80---90---100
Downside risk<-------------------------->Upside Potential
When a sector reaches those high 70,80 and 90% areas, its potential upside is diminished and downside risk becomes much greater. Conversely, when a sector hits those low numbers, it downside risk becomes minimal, and its upside potential becomes greater and more attractive.
Here's the first problem. Nearly everything is oversold now, with the exception of commodities and perhaps gold stocks, although those seem well on their way to joining other sectors at the left end of the field. The question becomes, which sector or sectors will lead in the next market uptrend?
The government has yet to figure out that the way to spur the economy and end another depression before it begins is through job creation. When Reagan brought us out of a recession, it was through jobs that were created during the cold war in aerospace and defense. Hoover and FDR did it through construction in infrastructure and the Hoover Dam. The Clinton years brought us technology. The next Government funded projects for the sake of the country's financial health will be in my opinion, alternative energies; yet that scenario will take a year or more to begin to play out. No economy can prosper on Walmart salaries.
So today, as I was driving home and listening to CNBC on Sirius, a commercial caught my attention. It was a commercial for Advil. Immediately I recognized this as a new advertiser. I then recalled a statement by Mel Karmazin recently that mentioned his desire to offer a low priced solution to advertisers. Mel, your a genius! You may not know crap about stocks but did you ever bowl me over today!
"That's it!, I exclaimed to myself." MEDIA stocks will lead the next market! Allow me to be the first to call it. As companies look to lower costs they will seek out less expensive advertising solutions. A business without a sign, is a sign of no business! Consider help wanted ads, "for-sale" ads and such. Companies that want to survive will be looking for low cost ad solutions, and companies that provide these solutions to corporate America on a national scale will benefit the most. Media such as Sirius XM will thrive, provided of course, that it can survive the current credit crisis.
Positions: Long SIRI
3 – 4 weeks more of abuse before 3Q CC.
For the sake of accuracy Mel bought 2,000,000 shares at $1.37 per share. I bought 1000 shares at $1.33 bringing my cost average to $3.00 per share. Mel’s average is around three dollars per share.
Mel’s investment in SIRI is probably a very small portion of his wealth, so I don’t think it matters much even if he loses it all.
Dow Jones Media Report. Seems a lot are of the buy side opinion. I had no idea I was read by so many!
I held off on buying today…anyone think we might see twenty five cents?
My prediction the shorts will be moving back into financials tomorrow and hopefully get off of Sirius.
Ted K.
Mel do not give a shit
Even if Sirius Bankrupt and he looses it all. He will restructure and get a new 8,000,000 stock options at Zero buy.
For him is replacing old stocks with new ones and a smile that he screwed us all out of our lifesavings
This stock is not reacting rationally at all. It is acting like a company that is falling to pieces at the seams and the fact is that they are streamlining, improving quality of content, sound and hardware & have additional sources of revenue that should gain steam over time.
Mel will likely cut about 1/2 billion in expenses (he stated 425M)
The lower price point offerings should eventually spur demand for a certain segment of people.
The problem is that if your out of the stock when the financing is made public, then it’s too late for the big % move from here.
What’s the bottom dammit !
I know somebody will say 0, but it can’t be.
QUESTION…
Does anyone know why so many 100 share transactions in after hours on nasdaq today? Those are 45.00 purchases + broker fees?
siriushope…
manipulation.
Or is it just penny investors thinking the stock will go to $ 10 and they can make almost a whopping $1,000 ?
Thanks Brandon..when do you predict manipulation will stop?
will uptick rule have any effect of manipulation?
Any day GS is going to lower their price target to .25 and say the economy is worse than they expected.
I would never believe it to be possible, but never say never with the new lows.
Got in a chunk of shares at .49 & now almost ready to bail again and wait – this sucks.
sirius hope…
the manipulation will stop when siri announces the debt restructuring. Until then, I hate to say it, Cramer was right.
As for the uptick rule, it really won’t matter now that the stock is at .50. The damage has been done.
Thanks Brandon for your response, understanding and insights as always.
I am in, and part of the party now. Win or lose we will soon see the flash of light. Whether it be similar to the flash of a nuclear bomb and our investment destroyed or the dawning (and cheering) of a new sunrise.
amibankrupt – Why not give Mel the benefit of the doubt and have faith in him?
SXMInvestor- Goldman Sachs has problems of their own. The shorts were punishing GS this morning. On options Friday (next Friday) look to buy this at an all time low.
Ted K.