STEC shares popped today on the announcement that the Zeus solid-state drives will be used in EMC Corp.’s latest Symmetrix storage product. This endorsement of STEC by EMC gives STEC a lot of credibility going forward and we should see more of these announcements this year.

Steve Jobs has always been one lead the tech trends, and tomorrow he will give his keynote at Macworld. I, like many others, expect jobs to unveil a new Macbook with a solid state hard drive. Much like how the iPhone is being copied by handset makers, all the PC makers will try to copy it, and I believe 2008 will be the year of flash laptops.

My last post on STEC was ‘Taking Profits in STEC’ because it was up 35% in 10 trading days. I’ve seen that type of movement before and for what its worth, I strongly believe that this EMC announcement was leaked. In the post, I said STEC would stay ‘range bound between $9.30 and $10.50.’ Actually, the stock found its bottom way down at $8. Today, STEC closed at $9.40, much lower than the $11 highs STEC was fetching during the leak, so I think these prices are a bargain. It’s hard to predict if this STEC momentum will continue in the next few days, but I certainly will be building a position tomorrow morning. A nice boost may come to STEC and SNDK if Apple does announce a flash laptop, so I will be buying before the 9am PST keynote.

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DECK’s chart is amazing… We made a ‘W’ in November right on top of the rising 50-day MA, and now we are picking up the trendline that started in May. DECK is down $3 today, a great buying opportunity. These guys crushed estimates in November and they will do it again in February.

If we like oil, we love Brazilian oil.  Since I love the USO chart, why not play emerging markets and oil all in one stock? PBR was mentioned a while back and is about to make all time highs. I think this stock is about to explode once it clears $119.

HES was mentioned in the ‘3 great looking charts…” post 23 days ago and has gone up 36% in that time. I think you would be a pig not to take profits on this one…

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Oil and gold are making classic pennant formations and trading just above the rising 50-day MA, very bullish signals. I’m playing oil by simply buying USO, which tracks the commodity price, much like GLD does with gold. To play gold, I am buying Aurizon Mines, AZK, my favorite emerging gold play to get some extra volatility. These commodity plays work because oil and gold are great hedges against stocks. As the US dollar gets weaker, commodities get more expensive because they are traded in dollars. It’s simple and non-correlating, which is great. Also, commodities go hand in hand with the global expansion I talked about in the previous post and you don’t have to deal with any company execution risk; its all just supply and demand.

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To me, this video articulates an argument that I completely believe in, which is the explosive growth of global wealth. The video cites that England in 1900 was the leader of the world, and now the US has taken their spot, as if to say, China or India will do the same to the US. This may be true, but it will not matter. When I say ‘matter,’ I mean to the US stock market. US multinational corporations will exploit this growth and profit from it. I am in the business of making money, not saving the US economy, so if a huge corporation fires all its US workers and moves to China, I don’t care, as long as it benefits stock holders. Right now, by far, the biggest issue on wall street is “Will the US go into a recession in ‘08,” oooooo, scary isn’t it; the big R word. Do you think that it will affect McDonalds earnings at all if the US goes into a recession? Well… it will, but on the positive side. It works like this: If the US economy gets weaker then the dollar goes down. If the dollar goes down, McDonald’s converts its pretty euros and yuan to dollars and they crush estimates. In times like this we need to think simple. Huge brand names in America like Coca Cola, McDonalds, and Disney carry over into any foreign country. Also, oil and gold are great ways to play the falling dollar because they are traded in dollars.

We have been in a bull market for five years and you will hear people say that we are ‘due’ for a bear market. I do not agree. That argument is made using historical data and is assuming ‘all things equal.’ Today’s market is not the same as the market in the 70’s or 80’s so you should not treat it that way. The rate of innovation is exponential, so couldn’t the stock market create an exponential curve? It did; during the internet bubble, and if you look at the dow jones on a long term chart, it is exponential. If you look at any tech stock on a long term chart, the bubble will be evident.

Juniper Networks ‘99 - ‘07

Valuations were stretched to the max, but they were that way for a reason. People were realizing that the internet and globalization were going to change the world. Now, valuations are trading close to average on a historical basis even though we are experiencing far above average growth.

If we get a big sell off in the next couple months, I will be buying. I believe we will look back and see this as a great buying opportunity and that we were worrying too much about the US economy in a time of unprecedented global expansion.

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I recently recommended The India Fund (IFN) and ICICI Bank (IBN), but said that IBN was the better choice. After watching them trade today, I will have to switch my decision. Both stocks still look good from a technical perspective, but the trading today in IFN showed huge momentum. Almost EVERY chart today looks like IBN (firesale midday after fed news). VERY few stocks were as resilient as IFN and my experience tells me that is a huge buy signal.

All this volatility and stress about the fed… what a pain. Why not get into stocks that are the least affected by the US consumer? IFN is a great way to do that, but so is another company that you might not think of being international; McDonald’s.

You might be suprised to learn that McDonald’s earns more revenue internationally than it does domestically, but it’s true. McDonalds has been on a run for multiple strong reasons. Coffee: Micky D’s has started serving fancy coffee’s at a much cheaper price than Starbucks and are taking market share. Emerging markets: As I said, MCD has a huge international presence and these markets are getting more and more wealth every day. Currency: With the dollar trading so weak, McDonald’s brings back that sweet foreign currency and converts it to dollars. Brand Name: It’s not on the balance sheet, but it’s a huge asset. We all know McDonald’s is one of the most famous brands in the world, up there with Coca Cola and this pays huge dividends. People expect a lot of things when they make the pilgrimage to the golden arches and they always get it, like clean bathrooms and consistent food. Great management: This company always underpromises and overperforms, something you have to love as a stockholder. They have met or beaten estimates the last 11 earnings reports

I’ve been considering McDonalds for awhile, but while looking at today’s intra-day chart, I was sold. Much like IFN, the market wide sell-off didn’t phase the stock.

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Since my Nov. 26th post, ‘Bullish movement in STEC,’ the stock has shot up 35% in 10 trading days, without any gaps. To me, it feels like a lot of momentum day traders are riding this stock short term and will puke it out and move on. Today, B. Riley downgraded the stock and took some of the steam out of it. $10.50 seems like a pretty serious resistance area and until STEC closes above that mark a few times, I’m staying on the sidelines. I LOVE flash memory and I think this stock is the best way to play that trend. Once I feel comfortable with the chart I will definitely get back on the STEC bandwagon for another ride.

I think we’re range bound between $9.30 and $10.50.

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While the future of the the US market is up in the air, I suggest playing forign stocks. The theory is that there is always tons of money out there looking for a home and what better place to put it than these international markets that are growing much faster than the US and don’t have credit issues. Last week I recomended Companhia Siderurgica Nacional, SID, (up 6% already), and I still like that one. This week, I’m adding my favorite Indian company, ICICI bank (IBN). Anytime I hear smart money managers asked what way is the best way to play India, this one comes up. They are the largest bank in India and seemingly the go-to play for many portfolio managers who are looking to play India. You could buy IFN, the India Fund ETF by Blackstone for some diversification, but I believe that the outperformers will continue to outperform, and that is ICICI. Even while the India Fund has gained 140% in the last three years, ICICI has gain 280% in that time.

The IFN chart is looking absolutely stellar right now. It not only made the perfect ‘W’ (obviously my favorite pattern) at all time highs, but has the very strong $65 support of the May 2006 peak. I believe both IFN or IBN are great buys, but personally I like betting on the continued outperformance of IBN.

This chart shows IFN(grey) vs. IBN and the $65 spike/support of IFN.

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Here are a few great looking charts I found today in some quality companies.
The argument for global growth is fueling our rallies and Brazil has a ton of momentum. Here’s a great chart from a steel producer in Brazil named Companhia Siderurgica Nacional (SID)

Utilities are super hot right now. Here’s a great one in Public Service Enterprise Group Inc. (PEG)

Full service oil company, Hess (HES), is showing major buy signals.

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I recently read an article on BRLC that I couldn’t agree with more. Read it Here. If you’re not into reading long-ish articles, here’s the skinny:

BRLC’s new management made a bold, but savvy move in turning the Chinese business into a liscencing model, avoiding the problem of recievables. What happened when they did this, was report lower than expected revenue projections and the stock plummeted. In the end, BRLC has a more predictable business model in China and now they can focus on the US.

This stock has gotten dirt cheap. Yes, the estimates were ‘lower than expected’ and thats what moves markets, but if we look at this from a rational standpoint, BRLC is trading at .5x Enterprise Value/’08 Sales EXCLUDING any revenue from the Chinese business. Remember, the Chinese business was more than HALF of 2007 revenue. Once investors grasp the new business model and trust the new management, BRLC will see huge upside from here.

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