long EMX, WEGI and short XLY, GM, AXL, SYX, AXP

Long EMX trading in Canada last at $1.85 EMX trades under ticker ESMNF on the US Pink Sheets. We've accumulated since this news last October and continue to add.

Long WEGI in the US at $0.085 The price of such a stock says a great deal about what kind of "investment" it may be - a highly speculative one in which one could easily lose a great deal. It is also seasonal, driven by speculation on summer storm damage in the US. In 2005 the stock rose nearly 1500% from its January price. In 2006 the stock ran up 290% from its January lows, and in 2007 the stock ran up 190%. Diminishing returns perhaps, but excellent returns nonetheless. The past few years held mild storm seasons, so if 2008 is between normal and severe storm-wise and the pattern in the stock movement repeats, we could once again see a huge run-up in this stock's price. It adds a bit of variety and possible excitement to our holdings.


The rest of today's trades are defensively motivated. We've firmly called a bear market for much longer than most commentators have even dared to consider a bear market possible, and we stick by our bearish sentiment believing today's highs in the markets may be the highest levels most stocks will enjoy for quite some time to come.

On November 11 2006 we wrote :

"We remain long-term gold, silver, and alternative energy bulls and US housing, banking and dollar bears. Our current short-term outlook is for a US dollar and market bounce, and a slide in precious metals, before the long-term trends resume. We expect in due time the Dow Industrials will signal a "Dow Theory" bear market by confirming the move to fresh lows for the year as seen in the Dow Transports recently.

Thus we short IYT (last at $82.42) via the purchase of June 2008 $80 puts, last traded at $5.60 A preferable entry in this trade would present itself should IYT bounce to near $85 or even $90 If so, we shall add to our effective short at that time."

With the benefit of hinsdsight we now know that a more accurate call could hardly have been made. Subsequent to that IYT short, the high the stock reached was just shy of $89 before sliding in earnst. We did add to our personal shorts then as we'd written we would, and at last Tuesday's market open we could have booked over 25% gains. We did not however, and with the recent bounce at today's close of $83.08 we're essentially at the break-even level.

IYT is an ETF reflecting the Dow Transports. We feel the US Fed's actions are futile, as proven by the market action resulting from the past few rate cuts, and thus now would be a good time to enter or add IYT short in our opinion, though since we already hold that position in this blog we instead make a complimentary play by shorting XLY which is a comsumer discretionary spending "spider" at $31.27 on which we maintain existing option puts.

The reasons for shorting General Motors to us seem self-evident, so we short GM at $27.46

American Axle & Manufacturing Holdings Inc. supplies the automakers. We short AXL at $21.65

Systemax was the subject of an unflattering article in this past weekend's Barron's, which was a pleasant surprise since we've personally held puts on SYX for some time based on our premise of receding consumer spending, and on the strength of the additional points in the Barron's article and weakness in the stock despite rising markets we announce SYX short here at $13.59

Credit card defaults are rising and tough stock and housing markets are squeezing those who feel rich but are truly only rich in fiscal irresponsibility, so we short American Express at $47.34 We may be early in doing so, thus should this trade go against us we'll perhaps one day add via shorts to Mastercard and perhaps longs in collection agencies.


Note that normally Hammond Power's reports lead to a surge in the stock price, and we can only hope for the same soon since the company is due to report Q4 and 2007 results any day now.

Our bearish outlook on the markets, banking, and housing remains as it has over the past several months, and so too our bullish outlook on gold and silver which has remained consistent since inception of this blog. For more see the entry of April 12 2007.


We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult your broker or investment advisor before making any investing decisions.

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