Wimpy Wednesday

Dow Jones 9,899.25 -40.73 -0.41%
NASDAQ 2,158.85 -11.72 -0.54%
S&P 500 1,055.65 -6.35 -0.60%

Sure enough, the market turned shortly after mid-day and tanked. It was thin volume through the day in most stocks and ETFs, and the thin ice melted under pressure. People just selling into rallies, no surprise, though the bulls held the market up as long as they could.

I entered VXX late at 31.11, sold for a small loss at 30.80 and watched it climb up over 31 again. Re-entered before the bell at 31.33 and will probably hold overnight. The bulls had their chance and gave the ball back to the bears. Bernanke's positive comments about the state of the economy had a life span of about 2 hours before they dissipated into thin air. So we topped short term as I suspected.

Watching AAPL sink to 245, 244, 243 ... it's a quiet stretch now that iPhone G4 is out. The critics are having their say about the closed system. Par for the course. Euro, euro, euro. As long as there's a major issue in the global economy, AAPL gets hit indirectly sooner or later. Much as I love my Apple computers, so glad to be not married to the stock.

I mentioned earlier that one sign of a top is when broke-ass penny stocks like BBI (Blockbuster Video) are among the percentage leaders. BBI has $1 billion of debt. That's right, BBI is the crackhead of all retail, barely worth more than a quarter per share and carrying that kind of debt. Yet, BBI closed at 0.29, up 4.61%. Instead of limping through the finish line, shares finished fairly strong.

Another penny, HAUP, finished at 2.16, up 1.89% and off its high of 2.27.

Earlier, nat gas plays were en fuego with 38 of 39 on my list in the green. By the close, only 12 of the 39 were positive. KOG led with a 2.92% gain (3.17) and MMR finished up 2.06% at 10.42. UNG was close to the bottom with a 2.44% loss (7.98).

NFLX closed up 4.51% at 115.31, more than 2 bucks off its intraday high. This is one of the more sporadic stocks and I just can't get into it as long as the competition gets stronger and stronger. I supposed the same could be said of Apple, but Apple isn't a one-horse wagon.

Financials did OK until late in the day. C closed up 4.03% at 3.87, but GS dropped 0.71% to 136.80 and FAS finished -2.04% to 20.64. FAZ closed up 2.17% at 16.91. Haven't traded FAZ or any finnies in ages.

STD gave up most of its gains and closed at 8.99 (+0.45%).

GLD (-0.37%), TLT (-0.11%), UUP (-0.39%) were flat. Euro finished up (FXE +0.34%) just slightly. Unusual combination, but overall these issues were flat.

BP closed near its low at 29.20 (-15.8%) after a horrendous loss today. BIDU (-4.38%), IMAX (-4.02%) and AAPL (-2.59%) also lost chunks of market cap today. F (11.05, -1.52%) and GOOG (474.34 -2.15%) also casualties despite their recent good news.

Getting toppy already?

Another awesome night of rest. 6:58 am Hawaii time and the markets are flush with green gold. DJ up 93, Nas +27 and S&P +11 with 3 hours left in today's session. Nas is up 1.26% after lagging yesterday. Yesterday's strong finish was a tell for Nas, but I didn't really care. I slept nice, still 100% cash.

The Nat Gas sector is on fire. My list of 39 has 38 issues in the green. That's quite positive for the time being. BEXP (+6.80%), PQ (+6.62%), KOG (+6.56%) and MMR (+6.19) lead after a couple of down days for the sector. Natural profit-taking before another run, probably.

UNG is the lone red bleeder (-1.59%) at 8.05. It's reverted back to its form in pre-Obama Clean Energy speech times. Huge selling today.

Nat gas is up, but so is oil. USO is up 3.04% despite BP dropping a whopping 8.87%. Much of that, as well as the market's surge up, came on Bernanke's bullish speech. BP trading at 31.75 now.

US Steel rallying again, up 3.5% to 42.79. FCX up 2.05%, though its off its highs. FXI up 1.83% (39.52).

Positive on those fronts, plus financials are up. C (+3.43% to 3.87), GS up fractionally to 138.19 (a steal?) and Spanish conquistador STD is up 2.79% to 9.20. C has been a smart buy below 3.60 for the past year. STD dipped momentarily below 9 today. Both tempt me.

Dollar down (UUP -0.65%, 34.16) and Euro up (FXE +0.65%, 119.91). We may be topping a bit here if the tiny caps are any indication. BBI is up 2.27% to 0.29 and HAUP is +3.30% to 2.19. BBI (Blockbuster Video) is likely going to file for bankruptcy and trades primarily as a lottery ticket. How quickly the market turns stupid again.

Photo: Denise Milani (no website)

Big bounce: no dead cats here

AAPL, C, GOOG ... they bounced huge today. Compared to some smaller issues, though, they didn't move as big.

• Blockbuster (BBI) ran 18.57% from 0.28 (Wednesday's closing price) to 0.33. I wouldn't touch ol' Blockhead, but it says a lot that a company seemingly destined for bankruptcy could move like this. Maybe it's an indicator that the top is in, at least for the near term.

• FAS up 12.8% and TYH up 10.76%. Financials and techs roared higher today. Volume could've been better, but the bulls win.

• The Governor and Company of the Bank of Ireland (IRE) soared 9.0% to 5.31 and continued its climb after hours (to 5.46).

• Baidu hovered below 70 early in the day and I punted. That hesitation cost me; BIDU ran 8.7% to 73.49. If the market avoids hellish news for a day or two, BIDU might return to 80.

• US Steel (X) hammered the bears and rose 8.29% to 48.86. Big turnaround after days of weakness.

• STD up 5.57% as Euro banks rode the wave. NBG was up, too, by 6.7%.

• Ford (F) raced ahead for a 5.5% gain to 11.99. It was at mid-10 range just days ago.

I haven't caught any bounces this week, but I plan to grab a handful or two before this run is done. Or I'll wait it out and see when the next run hits. Ready to go in either direction.

What now, Blockhead?

Jeffrey Powers at Geek News Central suggests Blockbuster Video as a reasonable acquisition target for Google. He has good point about how BBI would fit with YouTube, though I have to say, Google has enough mojo and moola to build its own video distribution network without entangling itself in Blockbuster's enormous debt ($1 beeeeeelllion).

Worth a read nonetheless. BBI (0.40 -0.0050 -1.23%) couldn't get a better reprieve than one like this.

Bust of a day for BBI

Shares of Blockbuster have waned to 39¢ after an in-line earnings report after the closing bell today.

Prior to the earnings report, BBI had run to an intraday high of 0.54 before closing at 0.50 (+15.6%). When I took a look in the morning, BBI was available at 0.46, then bumped to 0.50 and stayed above that threshold most of the day, even with a late selloff in the market.

BBI had been at 0.25 less than two months ago. The buys in a company on the brink of bankruptcy above that level were based on conjecture, rumors, even hope. But today's earnings report revealed no silver lining, nothing new or creative to stem losses. Closing stores is one thing. Coming up with new streams of revenue is another.

Traders wanted something. They got nothing. They bailed.

With a loss of $654 million last quarter, plus debt of $1 beeeeeeeellllion, BBI shares are where they belong. The remote possibility of Carl Icahn strategizing a multi-media conglomerate that would include Blockbuster makes the shares worth considering at, mmmmm ... maybe 25¢. Unless management pulls a rabbit out of its collective arse real soon, that's where BBI is going.

At least one blogger has an idea for Blockbuster — if it doesn't want to file Chapter 11, that is.

On this note, Netflix closed at 110.01, a gain of 2.18 (+2.02%). NFLX hit a high of 119.50 on rumors of a buyout. The CEO was on 60 Minutes a few years back. Struck me as a brilliant thinker and innovator. I should've gotten some shares then.

Blocked and busted?

Blockbuster (BBI) on the move this morning. I haven't touched a sub-$3 stock since Fannie Mae, which is as bottom-of-the-barrel as it gets. BBI has an earnings report after the bell today and traders have moved BBI in recent months since a major selloff in mid-January. BBI closed yesterday at 0.46, dipped to 0.4426 early today, and has since climbed to 0.54. It's an entertaining watch, but getting in is a whole different story. Taking a position based on any old price just because BBI seems cheap is foolishness. I'm not against a very small speculative position. But these specs are in the barrel for a reason, and they'll run down on the slightest whiff of bad news, far faster and lower than a $50 or $100 stock.

Whatever the case, an orderly, sensible entry point is worthwhile if this spec is to be played. This is for today's movement only.

BBI: day high 0.54, day low 0.4426

38% retrace: 0.5028

50% retrace: 0.4913

62% retrace: 0.4798

Go back to the day (Jan. 20) before the most recent selloff, and it looks like this:

38% retrace: 0.58

50% retrace: 0.52

62% retrace: 0.45

That 0.58 level is where the recent run stopped and reversed back down, and the 0.52 level is where BBI is hitting a ceiling today. Some good news in today's CC would likely push BBI to the 0.70-0.79 level. Anything less than spectacular news might take it to April levels below 0.30.

Will Blockbuster really compete with Netflix and Coinstar one day? Just that possibility might be enough to push shares up more. BBI has doubled in little more than a month, but with $1 billion of debt, getting over a buck per share and staying there will be rough.

Another perspective: Take BIDU, which split 10:1 recently. It went from 620 to 710 in a day (two weeks ago). Percentage-wise, it's the same as a jump from 0.62 to 0.71. Yesterday, BIDU's split went into effect, and from a pre-split perspective, shares went 710 to 790; today, up to 820 ... or in terms of percentage gain, from 0.71 to 0.82 in a matter of two days. It's all the same no matter where the decimal point is.

BBI has gone from .25 to .51 in a month-plus, same gain if it had gone from 25 to 51 or 250 to 510. Caution advised.

Thursday tornado

Thursday, I have met Monday, and you, sir, are no Monday.

This is normally a stagnant day of the week for the market, but the Dow, Nasdaq and S&P have just turned green for the first time today. BIDU is still on fire, up 3.5% to 81 (82.29 high). AAPL is at 264.89 (+1.1%) and NFLX is up 10.15% to 118.65.

Even BBI is up 10.5% to 47¢ in anticipation of an earnings report after today's close.

All those inverse ETFs and ETNs aren't doing so hot. VXX is down 0.8% to 23.89. I'm glad I stayed out of those today.

I might have tried BIDU at the open (80.97) or in premarket, but sleep debt caught up to me and I got up 30 minutes after the opening bell. It's nice and quiet in Honolulu. Dark and cool at 4 am.

BIDU Fibonacci retrace, two-day span:

38% retrace: 78.67

50% retrace: 77.56

62% retrace: 76.43

The momentum hasn't waned in BIDU, but when the bears take over, it'll be a slingshot.

The euro (FXE) is down 0.50% to 23.89 while the short euro ETF, EUO, is up 1.01% to 23.89. Who wins this battle? I am not going to guess, let alone dip my toes into these waters.

GLD slowing down at 121.18 (-0.18%) and SLV is at 19.21 (-0.90%).

Spooky Specs

Thinking of specs, a.k.a. penny stocks, I can't help but use trashy analogies. I mean, a 44-cent stock has no business being a big part of any portfolio. That's like asking the Octomom to be your wife and offering to sire her next eight offspring.

With that in mind, a little spec-wreck observation never hurts. Beats wasting money in Las Vegas because although 9 out of 10 pennies will crash and burn (my official guess), that one penny that survives and rises out of the ashes ... you never know.

• JMBA. I like Jamba Juice. Tastes so good. Fricking expensive now, though. It was 3.75 or so for an "original" sized drink two years ago. Now it's almost 5 bucks. Holee shit. But I digress.

Several months ago, I saw JMBA at 2.00 and dug into the data. I couldn't pull the trigger. Now it's nearing 4.00. But it's still cheaper than a Jamba drink. Might last longer, too.

• BBI. Did some reading on Blockbuster. I was at one of their locations in Honolulu during a closing-the-shop sale. I had no idea it had gotten that bad. But at 44¢, BBI isn't dead yet. The CEO refuses to give up and has locked in a deal that will allow Blockbuster to rent fresh flicks — while Netflix has to wait a minimum of 28 days.

There are a multitude of issues at Blockbuster. Can they stream efficiently and shut down those expensive brick-and-mortar expenses? Is it too late? Is there a stigma? I think people want cheap goodies and they want it fast. So BBI could justify being a $2 stock in the near term, if things go perfectly in their favor. Damn, 44 cents! What can you get for 44¢ any more, maaan?!

• FNM. I actually took a chance on Fannie Mae a few months ago. What a damn stupid trade that was. There's hopeless, and there's FNM. Even with Uncle Sam's full protection, this stock can't get anywhere. Goes to show, you gotta have something of value when you come to the table. Not a bunch of stupidass, dumbed-down mortgage policies that cost the Fed beeeeeeeellions of buckos. Never touching FNM again. Really.

• C. Whoever bought Citigroup below a buck is a genius. Case closed. Now, at around 4.20, I still wouldn't feel comfortable holding C shares for the long term. Trading it short term is another thing, but long term? Schizo, roller-coaster action that makes normal humans puke.

There are lots of people who can buy something like C at 80¢ and forget about it for five years. That would be best. I'm not one of them. Not with all of Planet Earth going through financial hell, followed by the equivalent of plastic surgery/makeovers, ingesting massive amounts of steroids and other human growth hormones ... but they do have nice smiles and look good in photos.

More penny painsters later.