Breakfast Links?

3:49 am (Hawaii) LinkedIn's IPO price was $45, but CNBC is reporting that it's jacked up in a crowded-as-heck trading floor in NYC to $85. Sure smells like 1998 all over again. It isn't exactly as bad; at least LNKD had $3 mil in profit last year. Back in the dotcom bubble era, there were 10 bombs for every AOL or AMZN or EBAY or YHOO. So many companies that were bleeding money.

If LNKD opens at 85, it has nowhere to go but down. Good luck if you buy above 100. The profit-takers are going to exit the theater long before it catches on fire and the roof comes down on bagholders. Back when GOOG was an IPO, the best time to enter was a few months after the debut, when shares plummeted. Then it ran and ran and ran.

Whatever the case, this will make for great entertainment. Maybe a circus. Even AGQ might not be as hyper as LNKD, just for today.

Update 4:07 am (Hawaii) Freakalytics estimates LNKD's float at roughly 94.5 mil shares. LNKD went from 83 to 92.99 to 84.43 in less than 10 minutes. Just watching and being entertained here. 100% cash.

Freakalytics: LNKD analysis, insights (May 19 2011)

Sellers seize last bastion

UNG bulls battled the bears mightily as the price rose to an astounding 8.47, but the sellers are winning now. Price has been driven down to 8.28 as profiteers jump ship. To be expected, of course. Safe handling can include trailing stop loss on a hot potato like this.

That leaves just a handful of winners on the bull side, like EBAY. We could see -300 on the Dow by the close. We could also see +100. I wouldn't bet against either.

Nat gas plays were done on the bull side much earlier today with the exception of UNG. Only the brave and foolish mess with this from this point. Next week? New start for the natty gassers as projections take root in the new Obama-led clean energy era. The spec trade will turn into the value trade, barring global insanity.

Aloha means Goodbye

Off the Top 25: eBay and VMware. Sayonara.

Bargains?

These are the stocks among my Top 25 that are trading below their 100-day simple moving averages.

Chipotle Mexican Grill

















eBay

















Goldman Sachs

















China Life Insurance

















lululemon athletica

















PetroChina

















Research in Motion

















VMware

Pupule portfolio

Includes new additions to the faux portfolio

AAPL | in at 180.05 (6 shares) | 10% of position | 1/4/08

BIDU | in at 361.00 (3 shares) | 10% of position | 1/4/08

CEO | in $167.22 (60 shares) | 100% of position | 12/24/07

CHL | in at $84.65 (12 shares) | 10% of position | 1/2/08
CHL | in at 85.44 (23 shares) | 20% of position | 1/3/08
CHL | in at 83.88 (36 shares) | 30% of position | 1/4/08

CMG | in at 127.01 (8 shares) | 10% of position | 1/4/08

EBAY | in at $32.49 (30 shares) | 10% of position | 1/2/08
EBAY | in at 32.84 (61 shares) | 20% of position | 1/3/08
EBAY | in at 31.30 (96 shares) | 30% of position | 1/4/08

FMCN | in at 55.71 (18 shares) | 10% of position | 1/4/08

GOOG | in at 657.00 (2 shares) | 10% of position | 1/4/08

GS | in $214.32 (47 shares) | 100% of position | 12/24/07

ISRG | in at 305.00 (3 shares) | 10% of position | 1/4/08

LFC | in $80.70 (124 shares) | 100% of position | 12/24/07

LULU | in at 40.54 (25 shares) | 10% of position | 1/4/08

MCD | in at 57.93 (17 shares) | 10% of position | 1/3/08
MCD | in at 57.05 (35 shares) | 20% of position | 1/4/08

MSFT | in at 34.38 (29 shares) | 10% of position | 1/4/08

NKE | in at 62.71 (16 shares) | 10% of position | 1/3/08
NKE | in at 61.74 (32 shares) | 20% of position | 1/4/08

PTR | in $181.72 (55 shares) | 100% of position | 12/24/07

RIMM | in at 103.35 (10 shares) | 10% of position | 1/4/08

VMW | in at 83.95 (12 shares) | 10% of position | 1/3/08
VMW | in at 80.49 (25 shares) | 20% of position | 1/4/08

Pupule portfolio

Friday, Jan. 4 additions to the faux portfolio
AAPL | in at 180.05 (6 shares) | 10% of position | 1/4/08
GOOG | in at 657.00 (2 shares) | 10% of position | 1/4/08
RIMM | in at 103.35 (10 shares) | 10% of position | 1/4/08
ISRG | in at 305.00 (3 shares) | 10% of position | 1/4/08
CHL | in at 83.88 (36 shares) | 30% of position | 1/4/08
MCD | in at 57.05 (35 shares) | 20% of position | 1/4/08
CMG | in at 127.01 (8 shares) | 10% of position | 1/4/08
BIDU | in at 361.00 (3 shares) | 10% of position | 1/4/08
FMCN | in at 55.71 (18 shares) | 10% of position | 1/4/08
NKE | in at 61.74 (32 shares) | 20% of position | 1/4/08
VMW | in at 80.49 (25 shares) | 20% of position | 1/4/08
LULU | in at 40.54 (25 shares) | 10% of position | 1/4/08
MSFT | in at 34.38 (29 shares) | 10% of position | 1/4/08
EBAY | in at 31.30 (96 shares) | 30% of position | 1/4/08

Ins and Outs

Jon Najarian says the Fed must act, but even if the Fed were to slash rates, wouldn't they take their sweet ol' time as usual? That's why papertrading is no substitute for the real deal. With my Ins and Outs of the Top 25, it's easy to say, 'Yup, dive in on the cheap stocks today.' It's tempting only in real life. On paper, easily done. AAPL at 180? Deal. RIMM at 103? In.

Worst-case scenario: Fed refuses to act until its end-of-January meeting (if it acts) and the market crashes. Best-case scenario: Fed makes a bold move, earnings reports (which begin on Monday) are more bullish than expected. Market rises.

How bearish has the market become? Last week, only eight of my Top 25 were below their 50-day simple moving averages. yesterday, the number increased to 12. Today? Eighteen. Those of us in cash will reign.

1. AAPL 180.05 -14.88 (-7.6%) | 50-day SMA: 183.26 | 100-day SMA: 164.98
Big money got out of the big growth stocks today. AAPL is below its 50-day SMA for the first time since mid-November. Volume was the biggest since that period, too. MacWorld is around the corner. Inch in.
2. GOOG 657.00 -28.33 (-4.1%) | 50-day SMA: 684.78 | 100-day SMA: 621.23
Interesting price point here. Inch in is fine with an eye on a dip to the 100-day SMA (621). If GOOG falls through 621, it's a horror film in real life.
3. RIMM 103.35 -9.47 (-8.4%) | 50-day SMA: 112.82 | 100-day SMA: 103.10
Unlike AAPL and GOOG, volume in RIMM today wasn't as extreme. That doesn't give RIMM long any semblance of comfort. How can RIMM fall below its pre-earnings price? RIMM blitzed estimate and raised guidance. The patient will be rewarded. When the market recovers, RIMM will be among the rally leaders. Price is nice here to start inching in.
4. ISRG 305.00 -16.75 (-5.2%) | 50-day SMA: 313.95 | 100-day SMA: 271.47
Amazing. ISRG was so far above its moving averages just days ago, and now it's below its 50-day SMA. Inch in, though I think it may pull back to 275 if the Fed does nothing.
5. NTDOY.PK n/a

6. POT 142.65 -4.23 (-2.9%) | 50-day SMA: 123.57
Potash is almost immune to market turbulence and it's not the only fertilizer stock rocking the free world. Too pricey still.
7. CHL 83.88 -1.56 (-1.8%) | 50-day SMA: 89.83 | 100-day SMA: 81.82
Bears are in charge of this great stock. Four of the last six sessions have been down for China Mobile, and those four trading days had big volume compared to the up sessions. I'd continue to inch in here with an eye on 80 as a key support level.
8. PTR 176.00 +5.36 (+3.1%) | 50-day SMA: 199.40 | 100-day SMA: 184.71 | 200-day SMA: 157.72
PetroChina was due for a rally, and with crude oil hovering near $100/barrel, why not now? I started inching into PTR in the Pupule portfolio recently and will continue to do so at these levels. The world will always need oil. China needs oil. OK, maybe alternative energy becomes substantial within five years. That's plenty of time for PTR to run.
9. FSLR 245.58 -20.29 (-7.6%) | 50-day SMA: 215.47 | 100-day SMA: 163.93
Finally, a gap down, and yet, First Solar is miles from any kind of a fair price. Wait.
10. MCD 57.05 -0.88 (-1.5%) | 50-day SMA: 58.61 | 100-day SMA: 55.15
A pullback like this in McDonald's is absolutely stupid. Now 11% down from its recent high, MCD is still selling a ton of latte, a ton of snack wraps (kids love 'em) and basically stealing customers from Starbucks. (A Mickey D and Starbucks were built next to each other recently in Honolulu. Guess which one is always packed and which one is half-empty?) The "Dollar Menu" at McDonald's is BUILT for recessions. Certainly worth inching in here.

11. STP 81.84 -6.38 (-7.2%) | 50-day SMA: 71.64
Buy here? Fuggedaboudit. Today's pullback is a speck of dust compared to this insane run from 45. Wait.
12. CMG 127.01 -14.69 (-10.4%) | 50-day SMA: 135.77 | 100-day SMA: 124.02
Chipotle Mexican Grill is getting cheaper and cheaper. This is a nice price to inch in, but will consumers opt to buy fast, healthy Mexican food rather than the dollar menu at Mickey D's?
13. BIDU 361.00 -14.09 (-3.7%) | 50-day SMA: 367.50 | 100-day SMA: 313.93
After five down days in a row, Baidu is worth inching in here. Still easily capable of falling to support level at 300.
14. FWLT 159.69 -9.48 (-5.6%) | 50-day SMA: 150.46
Recession proof? Possibly. But this price is still too high.
15. FLS 93.20 -2.95 (-3.1%) | 50-day SMA: 91.71
Another stock that thrives in global growth, but pricey here. Wait.

16. FMCN 55.71 -3.27 (-5.5%) | 50-day SMA: 57.00 | 100-day SMA: 52.83
Down big on moderate volume, worth inching in here.
17. GS 199.93 -4.91 (-2.4%) | 50-day SMA: 218.79 | 100-day SMA: 209.50 | 200-day SMA: 212.21
Goldman Sachs is king and emperor of the financials, the Godfather of Greenbacks. And yet, the stock is on thin ice right here; 200 is a key support level. If GS falls through, next stop is 180, and then 160. Inching in is a good idea, but don't dive head first.
18. NKE 61.74 -0.97 (-1.5%) | 50-day SMA: 64.06 | 100-day SMA: 60.86
Fair price, almost good. Six down days in a row, but I like the growing international exposure (China) and commitment.
19. CEO 170.50 +0.66 (+0.4%) | 50-day SMA: 176.57 | 100-day SMA: 159.95
Like PetroChina, CNOOC Ltd. is a state-owned entity in the Middle Kingdom. I missed the boat on CEO twice: once at 91, later at 111. With the latter, the P/E was only 12. Then it ran to 215. Here, CEO is still a fair price, but I'd inch in only. The stock has run up with increasing volume for two days and could be due for a pullback.
20. VMW 80.49 -3.46 (-4.1%) | 50-day SMA: 94.54 | 100-day SMA: 87.04
Dead money for a few weeks now unless you're a short. Nice price for a near-term trade, though. Inching in for the Pupule portfolio with an eye on support at 71.

21. LULU 40.54 -4.22 (-9.4%) | 50-day SMA: 43.95 | 100-day SMA: 42.03
Today's hellacious jobs report casts a bad omen for retailers. Pricey yoga pants ($100/pair) aren't a big priority if and when we head into a recession. But I do think that lululemon athletica's core customers are not affected by layoffs in the financial and homebuilding sectors. LULU's customers will continue to work out, and they will show off the results by purchasing lululemon pants. Women 18-35 will keep on keepin' on. They will keep spending. It's the vanity factor. It works well.
22. MSFT 34.38 -0.99 (-2.8%) | 50-day SMA: 34.65 | 100-day SMA: 31.86
The Halo effect is done. What drives Mister Softee from here? As Sgt. Schultz often said, "I see nothing!" Scaling in here for a near-term trade on the Pupule portfolio.
23. AMZN 88.79 -6.42 (-6.7%) | 50-day SMA: 87.82 | 100-day SMA: 87.19
Another stock, like RIMM, that will lead a market rally if the Fed cuts. Amazon bluntly told the world that unlike other struggling online retailers, its sales were quite fine, thank you. Price is better, but not quite good yet. Wait.
24. EBAY 31.30 -1.54 (-4.7%) | 50-day SMA: 33.51 | 100-day SMA: 35.19 | 200-day SMA: 34.20
If the country is heading for a recession, it will be the eBays of the world that will benefit. Still, the stock took a hit today. Inching in on the Pupule portfolio.
25. LFC 73.00 -1.64 (-2.2%) | 50-day SMA: 83.99 | 100-day SMA: 81.68 | 200-day SMA: 66.44
Does anyone really think life insurance won't work in China? This is a land, as I've mentioned before, where ancestor worship was once the rule. As the middle-agers accumulate wealth, they will put their hard-earned money into life insurance while the younger generation plays the stock market.

On the cusp: Taking a close look this weekend at Costco and Altria as additions to the Top 25.

Pupule portfolio

The faux portfolio moves on. Began inching into MCD, VMW, NKE today. Each with a 10% position (pyramiding). Added more CHL and EBAY (each 20% of position).

Weighted scale of $10,000 per stock
PTR • in $181.72 (55 shares) • 100% of position • 12/24/07
GS • in $214.32 (47 shares) • 100% of position • 12/24/07
CEO • in $167.22 (60 shares) • 100% of position • 12/24/07
LFC • in $80.70 (124 shares) • 100% of position • 12/24/07

CHL • in at $84.65 (12 shares) • 10% of position • 1/2/08
CHL • in at 85.44 (23 shares) • 20% of position • 1/3/08

EBAY • in at $32.49 (30 shares) • 10% of position • 1/2/08
EBAY • in at 32.84 (61 shares) • 20% of position • 1/3/08

MCD • in at 57.93 (17 shares) • 10% of position • 1/3/08
NKE • in at 62.71 (16 shares) • 10% of position • 1/3/08
VMW • in at 83.95 (12 shares) • 10% of position • 1/3/08

I should have remembered to pyramid into PTR, GS, CEO and LFC as they've all declined since Dec. 24. Great stocks cheap. Three important words.

Ins and Outs

Well, well. There are now 12 stocks among my Top 25 that are trading below their simple moving averages. (One is very, very close.) Yesterday, only nine were on the radar.

Buys? Not necessarily. But worth exploring. 

1. AAPL 194.93 • 50-day SMA: 183.39 • Wait
2. GOOG 685.53 • 50-day SMA: 685.16 • Up just 14¢ on lower volume. Wait
3. RIMM 112.82 • 50-day SMA: 113.25 • Fair price, but mediocre volume says this is dead money near term
4. ISRG 321.75 • 50-day SMA: 313.94 • Wait
5. NTDOY.PK 74.55 • 50-day SMA: n/a • Recent 50-day was 73.13. Wait
6. POT 146.88 • 50-day SMA: 122.90 • Wait. It may take almost forever, but wait
7. CHL 85.44 • 50-day SMA: 90.13 • 100-day SMA: 81.52 • Up 79¢ on lower volume. Good price. Inch in and expect a better price
8. PTR 170.64 • 50-day SMA: 201.02 • 100-day SMA: 184.28 • 200-day SMA: 157.38 • Plunging on low volume. Great price. Inch in
9. FSLR 265.87 • 50-day SMA: 213.56 • Wait
10. MCD 57.93 • 50-day SMA: 58.58 • 100-day SMA: 55.05 • Fair price, great earnings, inch in 

11. STP 88.22 • 50-day SMA: 70.94 • 24% over its 50-day SMA. Ridiculous. Wait
12. CMG 141.70 • 50-day SMA: 135.77 • Wait
13. BIDU 375.09 • 50-day SMA: 367.28 • Sideways action since October. CFO's mysterious death doesn't help
14. FWLT 169.17 • 50-day SMA: 150.15 • Big gap up today (4.7%). Wait
15. FLS 96.15 • 50-day SMA: 91.43 • Traded seemingly forever in the 60s and 70s. Pricey now. Wait
16. FMCN 58.98 • 50-day SMA: 57.04 • Wait
17. GS 204.84 • 50-day SMA: 219.26 • 100-day SMA: 209.27 • 200-day SMA: 212.26 • Down 1.3% today. Great price, inch in
18. NKE 62.71 • 50-day SMA: 64.10 • 100-day SMA: 60.80 • Six down days in a row. Fair price, inch in
19. CEO 169.84 • 50-day SMA: 176.96 • 100-day SMA: 159.33 • Fair price, up 1.4% on increased volume
20. VMW 83.95 • 50-day SMA: 94.05 • Fair price, facing stiff competition long term. Inch in for near-term trade only

21. LULU 44.76 • 50-day SMA: 44.29 • Fair price, low volume. Long way from earnings, likely to fall more
22. MSFT 35.37 • 50-day SMA: 34.58 • Wait
23. AMZN 95.21 • 50-day SMA: 88.06 • Wait
24. EBAY 32.85 • 50-day SMA: 33.60 • 100-day SMA: 35.23 • 200-day SMA: 34.21 • Dysfunctional stock, crummy policing of ripoff sellers. PayPal is undeniably strong, though. Great price, horrible volume. Inch in for near-term trade
25. LFC 74.64 • 50-day SMA: 84.57 • 100-day SMA: 81.53 • 200-day SMA: 66.29 • Good price, down five sessions in a row. Inch in

Pupule portfolio

I admit, though the Pupule portfolio is purely for paper trading, study and entertainment, I was rash to jump into four stocks without pyramiding in as I'd written before.

Here's what I did last week when those four stocks gave us some interesting entry points.

Weighted scale of $10,000 per stock
PTR • in $181.72 (55 shares) • 12/24/07
GS • in $214.32 (47 shares) • 12/24/07
CEO • in $167.22 (60 shares) • 12/24/07
LFC • in $80.70 (124 shares) • 12/24/07

Today, three of the four are down from these listed entry points (down a combined 3.4%), but long term, I would be satisfied. Today also provided two great entry points for China Mobile (trading below 50-day SMA) and eBay (trading below 50-, 100- and 200-day SMA), the latter of which is certainly for a near-term trade only. (eBay has too many security and credibility issues regarding ripoff sellers for me to consider it long term.)

CHL • in at $84.65 (12 shares) • 1/2/08
EBAY • in at $32.49 (30 shares) • 1/2/08

These buy points in GS and EBAY represent the first step in pyramiding, a 10% piece of the eventual position for each. Tomorrow, possibly, the next step of 20%.

Ins and Outs

Two sessions ago, eight of my favorite 25 stocks showed up on the radar. They had interesting prices. Not all necessarily had entry points to buy. After today's session, there are nine stocks on the radar.

based on closing prices, Jan. 2, 2007
1. AAPL 194 • 50-day SMA: 182 • Wait
2. GOOG 685 • 50-day SMA: 684 • 100-day SMA: 618 • Wait
3. RIMM 113.71 • 50-day SMA: 113.26 • 100-day SMA: 102 • Wait
4. ISRG 323 • 50-day SMA: 313 • Wait
5. NTDOY.PK 73.95 • 50-day SMA: 73.13 • 100-day SMA: 67 • Wait
6. POT 146 • 50-day SMA: 122 • Wait
7. CHL 84 • 50-day SMA: 90 • 100-day SMA: 81 • Good price, could get better • chart
8. PTR 173 • 50-day SMA: 202 • 100-day SMA: 183 • 200-day SMA: 157 • Very good price • chart
9. FSLR 267 • 50-day SMA: 210 • Wait
10. MCD 58.10 • 50-day SMA: 58.51 • 100-day SMA: 54.95 • Fair price, could be cheaper • chart
11. STP 85 • 50-day SMA: 70 • Wait
12. CMG 146 • 50-day SMA: 135 • Wait
13. BIDU 381 • 50-day SMA: 366 • Wait
14. FWLT 161 • 50-day SMA: 149 • Wait
15. FLS 94 • 50-day SMA: 91 • Wait
16. FMCN 57.13 • 50-day SMA: 56.96 • 100-day SMA: 52.50 • Wait
17. GS 207 • 50-day SMA: 219 • 100-day SMA: 209 • 200-day SMA: 212 • Great price, could get better • chart
18. NKE 63.28 • 50-day SMA: 64.11 • 100-day SMA: 60 • Fair price, could be cheaper • chart
19. CEO 167 • 50-day SMA: 177 • 100-day SMA: 158 • Good price, could get better • chart
20. VMW 84 • 50-day SMA: 94 • Good price, could get better • chart
21. LULU 44.82 • 50-day SMA: 44.55 • Wait
22. MSFT 35.22 • 50-day SMA: 34.48 • Wait
23. AMZN 96 • 50-day SMA: 87 • Wait
24. EBAY 32.49 • 50-day SMA: 33.67 • 100-day SMA: 35.26 • 200-day SMA: 34.20 • Great price for a short-term trade • chart
25. LFC 74 • 50-day SMA: 85 • 100-day SMA: 81 • 200-day SMA: 66 • Good price, could get better • chart

As always, the best approach when a good stock dips is to wade in rather than dive headfirst.

> > > Pyramiding into a stock

No. 24 eBay: No denying potential

I liked using eBay. I did. Until someone sold me a piece of crap. Then I couldn't get any help from eBay.



















Still, PayPal is a monster and eBay could do very well with further global expansion, i.e. China. Time will tell.

Pupule's Top 25 (Dec. 25)

eBay: nice price, not for me

eBay is one of those companies that is producing great numbers, yet I have had a mixed bag of personal, customer experience that leaves me neither a fan nor supporter. Though I rated the stock an A- a month ago, I don't have the enthusiasm for EBAY that I do for most of my A and A- grade picks.

Fortunately, making money in the market has less to do with my personal feelings and everything to do with the fundamentals of the stock, the company and the market. eBay has been extremely volatile this year, and today's pullback

Pupule says: Buy small. At 39 even, the stock is just below its 10-day SMA (39.12). Like Amazon, eBay for me is not an exciting opportunity. Even Amazon holds a superior customer experience, but I can't deny EBAY's fundamentals and growth prospects in Asia. But I won't be buying EBAY before many of my other A and A- stocks.

A rare Monday down day

So much for fears over the People's National Congress in China. While Chinese stocks held ground and some even soared to new highs — unexpectedly in the eyes of some concerned investors and traders — it was the U.S. market that folded a bit. The Dow Jones fell 108 points (0.77%), Nasdaq dropped 25 points (0.91%) and S&P 500 dipped 13 points (0.84%). The Dow fell under 14,000 to 13,984. Was it Citigroup's dismal earnings report? Possibly, but the Co had already warned about lower earnings. Was it crude oil, which finished the day above $86 a barrel? Not really. The market has gained significantly on oil's up days in the past few weeks.

Maybe it's just a little more fear and profit-taking than usual. More financials will report this week. But with Yahoo (Tuesday), eBay (Wednesday) and Google (Thursday) reporting this week, the Nasdaq will have some volatility. I'm not expecting much from the first two, though Yahoo's earnings from Asia could be significant. How soon will eBay penetrate the Chinese market? I won't be holding my breath. Google failed to meet expectations last quarter, but their game plan is sound. Spending on R&D and new hires as they expand in China is acceptable in my book. The G-phone is a bonus.

China held up, which still sounds a bit surprising. Just a little. New Oriental Education and Technology (EDU) launched to a new high after announcing earnings before the open. EDU closed on Friday above 66, opened today at 71 and closed at 75. That was a nice response to the PNC's first day. Nearly all the Chinese stocks that I watch are virtually the only greenies on my lists. CMED is at 42 (after hours). FMCN is up 1.7% to 59.15. CHL is up 1.9% to 88.80.

China and oil continue to be a glorious combination. PTR is up 9.2% to 236 and CEO is up 5.7% to 188 (after a mid-day high of 192). CEO was at 92 on subprime meltdown day (August 16). The stock was up big in premarket on less than 10,000 shares, triggered by crude oil's gain. I think.

CHL is up 1.9% to 88.80. STV was surprisingly positive, now at 50.15 (up 2.1%).

No, China wasn't perfect. BIDU dropped 2.7% to 314. SINA and YGE were down. Even Macao plays LVS and WYNN were down.

Note to self: don't fight the trends. Oil rules. China energy and pollution are going to be Quarry Logic fixtures for decades to come. The Chinese middle class will not be deprived.

Quarry Logic: Growth that can't be stopped

As Mo'ili'ili Quarry was dug out to pave the roads of Waikiki and greater Honolulu 60 years ago, there are necessities across America and the globe that cannot be denied. So, I'm going to keep a tidy little list to remind myself of what's important not to me, but to the rest of the world. The blossoming may not happen next week or next month, but sooner or later, these companies will bear fruit. Big, juicy, awesome fruit.

• China Internet. Computers are not affordable to the vast majority of mainland Chinese. Cellphones are vastly more popular already, as is instant messaging. I once underestimated the role of China's leading wireless king. No more. The players: China Mobile (CHL), Alibaba (40% owned by Yahoo), Research in Motion (RIMM).

• China Energy. Whether it is in house "old energy" or alternative, China needs it. With gas prices just 1/3 of what we pay in the West, consumption will be rampant. But oil alone won't be enough. The players: PetroChina (PTR), CNOOC Ltd. (CEO), Suntech Power (STP), Yingli Green Energy (YGE).

• E-commerce. Yep, it's a hokey term that should've died out a decade ago, according to every bear and naysayer. And yet, Amazon has proven them all wrong, and there will continue to sprout new ideas for retail over the internet, save for Fed intervention and online taxes. Couple e-tailing (yes, another late '90s tag) with China's growing economy (up 11.9% in Q2), and there's no end in sight. Yet. The players: Amazon (AMZN), eBay (EBAY). X Factor: China still doesn't have a reliable, trusted system of online payment. PayPal China (eBay) anyone?

• Search/Advertising. Of course. The possibilities are endless in the West, but in China, we're seeing just the tip of the iceberg. (I am loaded to the gills with cheesy cliches this morning.) BIDU at $324? Scary to think it, but imagine this: 12% of China still has no internet access, and BIDU is fully protected by the government. So much growth is possible, no, probable, which means Baidu's stock is still in its first inning. The players: Baidu (BIDU), Google (GOOG).

• Fast Food. Huh? Larger salaries mean more disposable income in China. Inflation? A big factor, but not so much when families have only one child. Single children will spend, hang out at Starbucks, eat at KFC and McDonald's. I see no end in sight to the fattening of New China, Mexico, India, Brazil... The players: Yum! Foods (YUM), McDonald's (MCD), Coca-Cola (KO), PepsiCo (PEP), Starbucks (SBUX).

• Macao Gaming. Chinese are notorious gamblers, even taking discount junkets from the mainland to Macao. What Wynn Resorts and Las Vegas Sands have done in Macao is utterly unmatched anywhere in the world. So much for Mao's version of communism. The players: Wynn Resorts (WYNN), Las Vegas Sands (LVS).

• Handhelds. The demand is insane, though I don't really relate to it. A cellphone is all I want and need, but the rest of the world is koo-koo for gadget-loaded handhelds that tell us what time it is, who's calling, where we are, while giving us songs to listen to and directions to get here and there. The players: Research in Motion (RIMM), Apple (AAPL), Garmin (GRMN), Navteq (NVT), Trimble (TRMB), Nokia (NOK), Google (GOOG), Synaptics (SYNA).

More later. I'm gonna hit the sack and try to get up in 90 minutes.

eBay on an eRun?

Some folks are excited about eBay all over again. I admit, the thought of eBay carving out a large space in China is interesting. But that's a ways off, and for several months, I've viewed EBAY as a B grade stock

WSJ: A History Lesson Often Forgotten

The Skype disaster has leveled out. It makes peanuts in revenue compared to what it cost eBay. So now what? Now I look a little deeper.

eBay (EBAY) $39

• The skinny
My own experience with eBay was great. Loved to buy throwback NBA jerseys. Then one day, a seller sent me a football jersey that was two sizes smaller than what he claimed. We got into a dispute, and my credibility score took a hit. eBay does nothing to correct or punish corrupt sellers, and from that point on, I lost all interest in buying eBay items. I'm not alone, and I hardly lost anything compared to other scenarios I've read about. But I have my doubts about eBay's growth in China as long as there is a lack of control.

• Earnings





• Fundamentals
See link to Yahoo Finance
Hard to dislike these numbers: 20% profit margin, 25% operating margin, 30% quarterly revenue growth (year over year), 50% quarterly earnings growth (YOY), total cash $3.6 billion, total debt $0. The Co is sitting on a lot of money, the numbers are spectacular, and is China the last hurdle for major growth left? Can outer space be next? I don't see eBay morphing into much more after China, but with 1.3 billion potential sellers and buyers, that's worth catching this stock, I'd say.

• The chart





















Even if I were going to buy shares, I wouldn't do it here, particularly after today's burst.

• News
EBay slashes Skype deal price, founders step down
Reuters - October 01, 2007 6:02 PM ET
By Sinead Carew and Eric Auchard
NEW YORK/SAN FRANCISCO, Oct 1 (Reuters) - EBay Inc (EBAY) said on Monday it would cut as much as $1.2 billion off the $4.3 billion potential price it agreed to pay for Web-based phone-calling service Skype two years ago.

The writedown on the value of the deal came as eBay said Skype co-founders Niklas Zennstrom and Janus Friis had resigned as executives, and marks a tacit admission of lackluster returns from Skype since eBay acquired it two years ago.

EBay said in a U.S. regulatory filing on Monday it would pay Zennstrom, Friis and other Skype shareholders 375 million euros ($530 million) and take a charge of $1.4 billion against eBay's third-quarter results, due out later this month.

"I think this is a testament that the Skype franchise is not worth as much as eBay originally thought," said Wall Street analyst Youssef Squali of brokerage Jeffries & Co.

Shares of eBay hit an 18-month closing high of $39.66, up 1.6 percent on Monday, reflecting the lower price the online auction leader is paying for Skype and the greater flexibility eBay may now have to put Skype on a new course, analysts said.

The stock is up more than 20 percent since late August in anticipation of strong quarterly results.

Short term, this looks scintillating. But my doubts about the inner workings of the company, from a customer point of view, remain. Separating my experience from the stock, I can see why there's optimism, i.e. the huge run-up.

Grade: A-. This is a real borderline choice, but as far as the numbers are concerned, this stacks up with the other A- graders well. Very well. I just wouldn't buy it here, well above its moving averages. And in my gut, I wouldn't buy this before most of my other A- picks.

Pupule says: Wait.

Fundamental Growth vs. Growth with Some Fun

Back in early March, I began a series of mock portfolios to study the nature of stocks that were as sound as could be.

I figured, well, if the fundamentals are squared up and low risk, the stock will be reliable. Maybe not a high flyer, but solid with a conservative foundation. I went over numbers for dozens of stocks and pegged the ones that had strong growth plus relatively low P/E plus accelerating EPS.

I categorized these stocks in a list I call Fundamentally Sound.

Then I took the stocks that had terrific growth, accelerating EPS, but high P/E numbers and listed them as Growth with Some Fun(damentals). All along, I expected the Fundamentally Sound portfolio to lag since the growth and risk were tempered. The opposite proved true, however, during the first two months I monitored the lists.

Well, it's now past the mid-point of July and time to revisit those lists. Fundamental Growth is up 16.4 percent as 24 of the 25 stocks are in the green. The leader is Posco (PKX) with a 60-percent gain. CNOOC (CEO), one of China's big oil monsters, is up 54%. Amazingly, their P/Es are relatively miniscule. Even with the huge runs, PKX has a P/E of just 12 and CEO is at 13.

Quite a payoff for low risk. Any growth-obsessed investor who is convinced that high P/E is the only way to go may want to reconsider. Other high flyers include China Telecom (CHA) and GlobalSantaFe (CSF), each up 31 percent.

The only stock down among the 25 in Fundamentally Sound is Procter & Gamble (PG), down 2 percent. The P/E range is from 13 to 30, still fairly low but not as it was four months ago.

The Growth with Some Fun portfolio, has rocketed after languishing for the first couple of months and is now up 25 percent. Thirteen of the 14 stocks are up, led by Baidu (BIDU) and its 78% gain. Apple (AAPL) is also up big at 65 percent. Nintendo (46 percent) and Ciena (45 percent) are also having huge advances.

The only down stock was Starbucks (off by 8.8 percent).

The range of P/E in this list is from 13 (XOM) to 172 (BIDU). My take on the second list is that we don't know how or when the next BIDU will come along. It's moving along like the reincarnation of eBay or Yahoo! (circa 1998). But we do know precisely what Apple has produced over the past few years. We just know that growth was imminent for both companies.

I think a mix of both conservative growth and off-the-rails growth can be beneficial in a bull market. It's been intriguing to follow a lot of companies that wouldn't have held my interest 10 years ago. Seems like the older I've gotten, the more I appreciate an efficient, growing business, regardless of product.

My guess is that should there be a global market retreat, the Fundamentally Sound list will hold up better. Live by the high P/E, die by the high P/E.

In the next post, I'll take a look at some other faux portfolios, including stocks recommended at the start of the year by financial writers in national media.