MarketBook 4/25/08

I have one word to describe the horrible manner in which I ended the week:  MSFT!  Seriously, Balmer, Gates, et al … you’re killing me.  Yahoo! … you’re killing me.  Techs … you’re killing me!  What a sorry way to close out a week, which was otherwise very positive, in terms of the markets. 

I had Microsoft in both of my accounts; however, I was only able to follow through on my stop/limit orders on one of my accounts, so the other one stuck with Mister Softy all the way through earnings and down from there.  That includes the $30 options calls that I held.  Like I said … Microsoft is killing me!   

In efforts to recover, I got back into some energy funds (OIL and IYE) after oil declined yesterday.  I am hedging this play by being somewhat bullish on the dollar with UUP.  Here’s my strategy there, which I took from Art Cashin:  as the dollar gained strength on Thursday, many funds abandoned their oil-related positions, which ultimately led them, and many other investors, to cover on shorting financials (which were up yesterday).  So, with all that being said, it isn’t a mystery that as the dollar recovers, oil will struggle.  Further, the dollar will likely not regain strength as long as oil is pushing higher near $120 a barrel. Of course, this may not hold if the Fed cuts rates next week. 

On oil, my price target is $125, then I think it will come back.  I am remaining committed until then.  Today, a minor situation in Iran, along with strikes in Nigeria, helped oil push back up from Thursday’s declines. 

I also made a move on financials today, which is very uncommon for me, but I moved early enough on some of the recoveries that began last night.  I got in with SPY in pre-market open trading, and this had some good gains today; however, I imagine it will be out the door on Monday. 

Next week should hold some interesting developments in store, with earnings continuing to roll out and some potential big news coming from the Fed.  Either way, the Fed is meeting, so count on the market watching it closely.  Until then, I’m going to watch and hold all of the red lights circling my trading sheets from Microsoft! 

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