What is in Santa Claus' stock portfolio this year? Nintendo and Apple probably

The Holiday season looks like it might be rough for retailers given that the average American family will probably be spending a week's paycheck for gas just to get to Wallmart. So what will Santa Claus be busy lugging on his carbon emission free sled? One of the CNET editor's top holiday gift picks, the Nintendo Wii.

The first thing that all investors should consider before buying stock in Nintendo (OTC:NTDOY), Japan's interactive game manufacturer, is that it trades as an ADR and is quoted as a pink sheet over the counter stock. Unlike other pink sheet stocks this stock is much more stable than the average penny stock. Another thing that investors should take notice of is that through all the market turmoil in the last year, this stock has more than doubled. Starting at about $32 per share at the beginning of 2007, it has risen to as high as $78 and has like many other stocks dropped almost 20 percent in the last couple of weeks with the market correction. Unlike some toy manufacturers whose stocks have suffered losses this year due to product recalls as a result of well publicized Chinese lead paint stories, Nintendo's got game, literally.

This meteoric performance for Nintendo stock began with the launch of their Wii product and sales have been booming as evidenced by retailer reports of shortages of the game console. Sound like an Apple story? Sure does, and speaking of Apple expect them to struggle keeping products on the shelf as gadget hungry consumers gobble of their technological marvels after the Thanksgiving weekend also.

These market corrections are a trader's paradise and an investor's opportunity. Just when it seems like there is nothing but bad news and extended bearishness, the market surprises and comes roaring back. I have seen this happen many times in the past and the end of year seasonal upside phenomenon will probably not disappoint again.

This market will probably stabilize over the course of the next couple of weeks paving the way for a Santa Claus rally at the end of the year. Of course if the average investor or the market gets naughty, then they both can expect to get Iceland's early versions of Santa Claus and a big fat potato to claim as your year end gift deduction or tax loss, whatever the case may be.

I have increased holdings over the last few days with the correction and have reduced my short positions. I currently have a position in Apple but not in Nintendo as of this post. If the market has more weakness over the next couple of days, I will be adding to my select retail positions as well as initiating a position in Nintendo.

I do not own the Nintendo Wii.

Likelihood for a Summer rally fading on Wall Street

Market players head into this trading week shortened by the holiday, but face a heightened sense of awareness that the story for stocks is about as unsatisfying as a season ending Sopranos episode.

While it is situations like this that investors look for, to grab stocks when out of favor and at lower prices, it is very important to stay overly cautious and wait for prices to stabilize before initiating new positions. At this moment, the trend is certainly downward and low participation this week will not help the cause for bulls.

The Federal Reserve board last week also helped to feed the bears by leaving interest rates unchanged and issuing a statement of their inflation concerns that was about as informative as my weekly trips to the local grocery store to buy milk at $3.80 a gallon. Of course of little highlight by Bernanke and his crew is the continued housing slump and self-imposed sub-prime mortgage mess that this illustrious group created when they raised rates in the first place that killed credit-challenged home buyers in the last few years.

Since I wrote the call to add positions to short the major market averages 10 days ago, the Dow Jones Industrials has dropped roughly 250 points or almost 2% with the SP500 following suit down about 30 points. Oil prices have revisted the $70 per barrel mark, interest rates have crept even higher as evidenced by treasury yields, and downward earnings revisions for stocks have outpaced higher estimates.

So what should you do with all these negative factors?

As a day trader, I am able to take advantage of the down days just as much as i am able to benefit from the up days. My short term trading ussually revolves around volatile stocks, indexes and ETFs. However my long term investing strategies see great situations in areas that have been bucking the downtrend and I see some great opportunities this summer to buy stocks as they are falling.

The industries and stocks I like right now are agricultural products(MON), utilities(UTH), envronmental services(WMI), oil services(OIH), financial services(NYX), and some select technology plays (CSCO,AAPL,YHOO).

Since I am overall bearish in the near term and looking to hedge any long positions in my portfolio, I like the ETFs that short the major market averages(DXD,SDS,QID).

Investors hoping for a Summer rally after the holiday week when earnings season kicks off are likely to be disappointed. They are better off to wait and see what the results look like this quarter to better guage when the market will react and head to new highs. This trader doesn't see it happening till the end of the year.

Performance table of highlighted posts:

Post Date Post Item Post Price* Current Price** Return Pct.*** Time Period****
07/02/07 YHOO NA $27.13 NA NA
07/02/07 AAPL NA $122.04 NA NA
07/02/07 CSCO NA $27.85 NA NA
07/02/07 NYX NA $73.62 NA NA
06/22/07 BX ($35.98) ($29.27) 18.6% 1 Week
06/20/07 QID $45.50 $45.69 0.4% 2 Weeks
06/20/07 SDS $51.01 $52.72 3.4% 2 Weeks
06/20/07 DXD $48.82 $50.15 2.7% 2 Weeks
Combined OIH October Strangle 2.0% 3 Weeks
06/08/07 OIHVK $6.20 $3.80
06/08/07 ODLJO $8.80 $11.50
Combined OIH July Strangle 13.6% 3 Weeks
06/08/07 OIHSM $5.20 $1.10
06/08/07 OIHGL $11.00 $17.30
06/08/07 OIH $167.03 $174.73 4.6% 3 Weeks
06/06/07 FIW $21.18 $21.73 2.6% 3 Weeks
06/06/07 PHO $20.35 $20.92 2.8% 3 Weeks
06/06/07 CGW $25.68 $25.57 -0.4% 3 Weeks
05/30/07 WMI $39.27 $39.07 -0.5% 4 Weeks
04/13/07 UTH $144.21 $141.65 -1.8% 11 Weeks
04/05/07 MON $58.30 $67.58 15.9% 12 Weeks



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* Post Price is the price as quoted in post or the highest price on the day of post/long positions or the lowest price on the day of post/short positions. () indicates short position.
** Current prices based on the close of trading June 29th, 2007

*** Return percentages do not include dividends, fees or commissions.

**** Time period is the time since the original post, rounded off to the nearest weekly period.