Interest rate fears and new-year repositioning gave a negative tone to the start of 2007. Fear and anxiety ran through the markets, narrowly avoiding tech and biotech stocks. The Fed minutes from December's FOMC meeting, released Wednesday, were unsurprisingly hawkish. But when traders realized the Fed wasn't discussing a more neutral stance, an early morning rally reversed. Friday's strong nonfarm payrolls report, a higher than expected 167,000, was a surprise, given an earlier forecast for a loss of 40,000 jobs.

Once again, RealMoney's bloggers were all over the market action, and we'd like to share the best of their commentary this week with readers of the TheStreet.com. These posts best capture the intent of these blogs, which is to provide intelligent discussion on the issues each writer sees as most pressing that day.

Let's take a look at Jim Cramer on the trade, Rev Shark on putting away the New Year's party hats, Cody Willard on the trouble with Google ( GOOG), Steve Smith on a clean slate for 2007 and Tony Crescenzi on two kinds of bond selloffs.

Click here for information on RealMoney.com, where you can see all the blogs -- and reader's comments -- in real time.


Cramer's Blog: Get Hip to The Trade

Originally published on 1/4/2007 at 10:51 a.m.

Bizarre: The Nasdaq keeps wanting to ramp here. People want to get behind this group even as, seasonally, you aren't supposed to.

I keep focusing on Qualcomm ( QCOM) as the tell. Here is a company that just got word it's being investigated for antitrust issues in Korea. It keeps spending big money on law and patent suits on its competitors and customers! It's linked to the cell-phone story, which is among the weakest of the tech stories. It preannounced to the downside.

And it can't stay down.

That's just nutty, or is it? Traders feel that commodities went up too much and tech did nothing. So the trade is to sell commodities -- all commodities -- and buy tech growth.

I never question this stuff. I just accept it. The trade should last until the quarters are announced and Microsoft's ( MSFT) Vista ships -- pretty much at the same time.

I'd play it while not overlooking that Oil Service HOLDRs ( OIH) call trade as a hedge to the trade.

At the time of publication, Cramer had no positions in any of the stocks mentioned in this column.


Rev Shark's Blog: Put Away the Party Hats

Originally published on 1/3/2007 at 12:25 p.m.

As I mentioned earlier, my working thesis is that strength in the first few days of 2007 will set us up for a very sharp dip within the next couple of weeks. I believe there are several things that are coming together right now that are going to trip us up, at least momentarily.

Foremost is the very high level of complacency. We have bullish forecasts across the board for 2007 from pundits and gurus, a widespread belief that housing has bottomed, and little doubt that a soft economic landing is about to take place.

Some are even saying that this is an "amazingly positive moment" in the market. Throw in weak oil and the large amount of cash in private-equity funds, and what choice do we have but to go up?

We may indeed have a very good 2007 when we close the books a year from now, but in the short term, the anxiety to jump in big at this point and to worry about underperforming is exactly the emotion that tends to trigger sharp reversals.

This is highly emotional trading right now, and as buying power is depleted and the excitement about the new year ebbs, the driving force behind this rally will dry up quickly. That will trigger the rush for the exits and give us a nasty little dip. I can almost see the market beast licking his chops right now and planning on how he is going to pull the rug out.

Enjoy the new year euphoria, but don't trust it to last for long.


Cody Willard's Blog: Cracks Spread in Google's Armor

Originally published on 1/3/2007 at 10:14 a.m.

Google used to get it. I mean, in a pure sense, this company really got it.

I used to fawn over the virtues of Google's open strategies, in which it worked to empower the individual and become the de facto conduit of information flow in the new world.

And Google is still by far the best Internet property out there. Its search results rock, and it remains a de facto standard in search. Its advertising network is mind-blowing in its simplicity and, increasingly, in its reach across platforms (Internet, radio, newspaper, etc.) and breadth (graphics, audio, print). I've owned Google since the day it came public, and I'm not about to sell it today. Indeed, I'm a buyer of it, as I'll detail later.

But all is not well in Google-land. The company's famous "Do no evil" slogan and content-source agnosticism are ever more compromised by the tens of thousands of programmers, developers, managers, MBAs and executives from the mainstream business and education worlds who are pushing the company's paws into ever more honey jars.

Here are three examples of Google's fumbles that I expect, over a very long time (say, 10 to 20 years), will be the company's undoing:

  1. Is it content-source agnostic or not? Click on its video page and see it try to guide you to videos that it can sell and get a cut for. You lose consumers' trust when you try to sell them information from favored sources, rather than just acting as a blind conduit.

  2. Google's much-ballyhooed Gmail API strategy, in which it was going to allow the 1.5 billion people on the Internet full control of their Gmail accounts, has been quietly terminated. Oh, sure, Google is still offering the ability to develop Gmail applications such as task-bar notification of new emails, but it has quietly shuttered the ability to log in and control your Gmail account from any site but the actual Gmail site. Where was the press release announcing that change, which rendered hundreds of applications developed off the Gmail API worthless? Google didn't exactly hype that change the way it did the launch of the original Gmail API.

  3. Here's the third and outright evil example of Google having lost its way: It's fighting against private-ownership rights as it attempts to enlist the U.S. government to stop innovation of Internet-like networks. The catch phrase for this battle comes from Google and its brethren, who call it "Net Neutrality." Google is pretending that it's fighting for some sort of level playing field, when it's actually fighting for "Forceful Net Control" (a much more accurate term that I'll coin for it).

    Verizon ( VZ) and other companies are sinking tens of billions of dollars into their physical networks, which they think will enable all kinds of new killer apps that would collectively take us into Web 3.0 and beyond, making Web 2.0 look like a minor stepping stone into the future. But Google and its cronies are sending millions upon millions of dollars to your representatives and asking them to freeze the current Internet in place.

    Google says it's acting in the best interest of consumers and end users. Why the use of force then? A truly "non-evil" company would have no interest in using governmental force to stop attempts at innovation. A truly "non-evil" entity would want Verizon to risk billions innovating its network and figuring out ways to monetize such investments. Using force to stop innovation sounds awfully evil to me. And I'll cynically call this one like it is and say that Google's evil here stems from the fact that it knows it has won this version of the Internet and wants the government to make sure it stays on top. Evil is as evil does.

None of these bullet points makes me want to sell Google. Again, I'm a buyer of Google here. But you can see the cracks in the Google armor spreading. And it's time to start looking for the next Google. This company is certainly opening the door by shedding, purposefully or not, its original, revolutionary, open, good strategies.

At the time of publication, the firm in which Willard is a partner was net long Google, although positions can change at any time and without notice.


Steven Smith's Blog: A Clean Screen

Originally published on 1/3/2007 at 8:40 a.m.

The beginning of a new year is the time when trading has the most in common with writing: It presents a nice, clean, empty screen on which to make your mark.

Some people might approach it with caution, not wanting to get off on the wrong foot. Others throw a bunch of stuff up quickly to see what sticks and then work from there. In either case, it's important to realize that today is just the beginning, so don't give it too much weight. There will be time enough for revisions and ruination.

This is especially true in options trading, which lends itself to making multiple adjustments in an attempt to improve a position, but quite often leads to clouding the investment thesis. Just as in writing -- where piling on more words and sentences doesn't necessarily lead to illumination -- adjusting and adding to an existing option position usually just convolutes the strategy and diminishes profit potential.

This year, I will be striving for more clarity in both writing and trading.

Successful writing requires making a point clearly and concisely, with as little jargon or fluff as possible. Successful trading means sticking with the usual rules, including defined entry and exit points, and avoiding the seduction of layering on multiple strikes and hedges in hopes of securing or salvaging a position.

When something doesn't work, hit delete and begin again.


Tony Crescenzi's Blog: Two Kinds of Bond Selloffs

Originally published on 1/5/2007 at 10:27 a.m.

There are two kinds of bond selloffs that the stock market has to contend with. One is more favorable than the other.

The first, which is the type seen recently, is one that occurs in response to indications of continued economic expansion. In other words, no recession.

The second, not seen in a while, occurs when the bond market becomes fearful of future interest rate hikes.

Today's selloff falls under the umbrella of the type that indicates continued economic expansion, with no interest rate hike in sight. This should limit the bond market's selloff and hence its impact on the stock market, provided upcoming news does not tilt toward a meaningful acceleration of economic growth. If it does, the second variety of bond selloff would materialize and likely spur weakness in equities.

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