I think I’ve mentioned before that this is beginning to feel like a game of musical chairs, trying to squeeze out a few more profits on the long side before the music stops.  On Wednesday morning, the jukebox received a jolt after China’s attempt to curb the speculative, trading mania which sent a quick shiver to world markets.  However, just as has been the case over the past few months, the music continued to play and bulls were dancing.  How long can buyers aggressively buy these dips?  Nobody can say for sure, but as I mentioned in a report several days ago, the market was indicating significant fatigue.  (see  https://selfinvestors.com/tradingstocks/weeklyafter-stock-market-review-archives/the-selling-was-coming-you-were-ready/) I mentioned in that report that the S&P had taken out its upward trend line with volume but that I wouldn’t be suprised if the market shrugged off this technical damage once again.  It did and the S&P reclaimed that trendline this week.  Go figure.  However, the fatigue is still in place.  One thing that stood out to me last week was the high volume price churn on Thursday which can be a good indicator of a market top.  Here’s a look at the S&P:

You see on the daily that the S&P did reclaim that upward trend line.

Looking at the price/volume action in the S&P over the course of the week, I’d call it net neutral.  A bullish reversal on Wednesday, followed by that churn day on Thursday.. Tuesday and Friday were fairly meaningless.

My motto remains the same – be careful out there right now. While there remains short  term trading opportunities on the long side, it’s not a bad idea to sit in cash.  Avoid the feelings of potentially "missing out".  Patience.

::: Model Portfolio Update :::

The portfolio remains a bit out of synch with this market and continues to have trouble gaining any traction as  I continue not making large bets on the long side and holding steady with some short positions.  While my approach has been unsuccessful over the past several weeks, there will be better times ahead.  Such is trading.  The important thing for me is to trust my analsyis and realize I won’t be right all the time.  Trying to make up for a lack of performance with aggressive buying at this stage could be a recipe for disaster.  During the week, there were a few minor transactions in the portfolio.  I closed one position when I  covered my GTI short for a 4% loss.  On the long side, I added to my long term Google position which now represents about 15% of the portfolio.  I will be looking to up that to 20% if it can break out and hold above its all time high of 513.  I also added a short term long trade, looking for a quick 10 – 15% profit.  Current allocation of the portfolio stands at 51% long, 29% short and 20% cash.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. REIT – Residential: 10.90%
2. Technical Services: 9.20%
3. Copper: 8.90%
4. Nonmetallic Mineral Mining: 8.65%
5. Steel & Iron: 8.05%
6. Silver: 7.65%
7. REIT – Hotel/Motel:  7.60%
8. Processing Systems & Products: 7.50%
9. Electronic Stores: 7.20%
10. Industrial Metals & Minerals: 6.70%

– Top 10 Worst Performing Industries For the Week –

1. Residential Construction: -2.80%
2. Long Distance Carriers: -1.10%
3. Toy & Hobby Stores: -.30%
4. Broadcasting Radio: -.30%
5. Jewelry Stores: -.25%
6. Drug Manufacturers Major: -.25%
7. Music & Video Stores: -.20%
8. Education & Training Services: .05%
9. Toys & Games: .10%
10. Mortgage Investment: .15%

– Top 5 Best Performing ETFs For the Week –
 
1. Korea Fund (KF)  9.00%
2. Ishares Brazil (EWZ) 9.00%
3. Ishares Latin America (ILF) 8.40%
4. HLDRS Internet Infrastructure (IIH) 8.10%
5. Latin America Discovery (LDF) 8.05%

– Worst 5 Performing ETF’s –

1. US Home Construction (ITB)  -2.25%
2. SPDR Homebuilders (XHB) -1.45%
3. Chile Fund (CH) -.95%
4. HLDRS Pharma (PPH) -.40%
5. Ishares Italy (EWI) -.20%

:::  IPO’s Worth Watching for This Week :::

Surprise, surprise, yet another chinese solar IPO!!

1. Yingli Green Energy (YGE): Yingli Green Energy is green from top to bottom. The vertically integrated photovoltaic (PV) manufacturer makes polysilicon wafers and ingots that it uses to create PV cells and modules, which it incorporates into solar energy systems that turn sunlight into clean energy. The company, with an annual production capacity of 95 megawatts of polysilicon ingots and wafers, 90 megawatts of PV cells, and 100 megawatts of PV modules, is one of the few companies in China involved in all stages of PV manufacturing, sales, and installation. Its customers are mainly in Germany, Spain, China, and the US.  Trading set to begin on Friday.

2. Starent Networks (STAR): Starent Networks makes infrastructure equipment used by wireless carriers to offer enhanced voice and data services like video, multimedia messaging, and Internet service. Its ST16 Intelligent Mobile Gateway helps cellular companies as they transition from second- to third-generation networks. Carriers that have deployed Starent’s equipment include Verizon Wireless, Virgin Mobile, and China Unicom. Founded in 2000, the company has received funding from Matrix Partners, North Bridge Venture Partners, and Highland Capital Partners, among others. It has operations in Brazil, Canada, China, India, Japan, South Korea, Spain, the UK, and the US. Starent filed to go public in 2007.  Trading set to begin on Wednesday.

3. Infinera (INFN): The buzz on this company is that it designs photonic integrated circuits (PICs) intended to replace much larger components within optical networks. It also offers networking equipment built around these chips. Infinera’s chips are made from indium phosphide, a specialized compound semiconductor material that offers light-years faster performance than standard silicon. Customers include cable system operators, Internet service providers, and telecommunications carriers, such as freenet, Global Crossing, Level 3 Communications (60% of sales), Qwest Communications, and XO Communications.   Trading set to begin on Friday

4. Limelight Networks (LLNW): Limelight Networks wants to be the center of attention for digital content providers. Founded in 2001, the company offer services for delivering media content via the Internet for more than 700 customers such as DreamWorks, Akimbo, and Belo Interactive. As the demand for digital content grows, media providers need to find more ways to cater to larger audiences. Limelight Networks’ clients provide content through a variety of devices, including PCs, mobile phones, and digital video recorders.  Trading set to begin on Friday.

5.  FBR Capital Markets (FBR): an indirect taxable REIT subsidiary of FBR Group. The company was formed to be the holding company for FBR Group’s capital markets business, including investment banking and institutional sales, trading and research, and asset management business.  Trading set to begin on Wednesday

::: Upcoming Economic Reports (6/4/07 – 6/8/07) :::

Monday:        Factory Orders
Tuesday:       ISM Services
Wednesday:  Productivity (rev), Crude Inventories
Thursday:      Initial Claims, Wholesale Inventories, Consumer Credit
Friday:           Trade Balance

::: Notable Upcoming Earnings Reports I’ll Be Watching This Week :::

Tuesday: Guess (GES)
Wednesday: DSW Inc (DSW)
Thursday: Bio Reference Labs (BRLI)

::: In Case You Missed It – Blog Entries of the Past Week :::

1. Google (GOOG) Gaining Strength; Breakout Imminent
https://selfinvestors.com/tradingstocks/stocks/google-goog-gaining-strength-breakout-imminent/

2. Bulls Running on Fumes; Stock of Day – Heico (HEI)
https://selfinvestors.com/tradingstocks/weeklyafter-stock-market-review-archives/bulls-running-on-fumes-stock-of-day-heico-hei/