I apologize as a few people have let me know there was no second half of the blog this morning.  I don't know how it did not get published, but here ya go.

Keep That Rally Goin Rawhide

Yeah it was good day in the market.  The good news started well before the bell with happy manufacturing numbers out of China and apparently good news out of Greece.  All of that had us out of the gates about 120 points up on the Dow.  Volume appeared to be lite but a rally just the same.

We did not have a lot of time for homework yesterday, but I heard a name pop up several times on Bloomberg and in the litany of e-mails I get. It is a biotech company that has had a few missteps with the FDA, but some institutional buying is picking up indications someone might know something. It is risky but worth doing some homework. The company is Exelixis, Inc., a biotechnology company, develops small molecule therapies for the treatment of cancer. It focuses on developing Cabozantinib, an inhibitor of tumor growth, metastasis, and angiogenesis that target MET, VEGFR2, and RET, which are key kinases involved in the development and progression of various cancers. The cabozantinib is in Phase III clinical trial for the treatment for medullary thyroid cancer. The company also engages in various clinical programs for cabozantinib focused on the treatment of metastatic castration-resistant prostate cancer, ovarian cancer, breast cancer, renal cell carcinoma, non-small cell lung cancer, hepatocellular cancer, and melanoma. In addition, Exelixis, Inc. involves in developing a portfolio of other novel compounds to address serious unmet medical needs through collaborations with various pharmaceutical and biotechnology companies, including Bristol-Myers Squibb Company, sanofi-aventis, Genentech, Inc., Boehringer Ingelheim GmbH, and GlaxoSmithKline and Daiichi Sankyo Company Limited. Its products under development through collaborations include XL475, XL281, XL139, and XL413 inhibitors; ROR antagonists; therapies targeted against LXR, a nuclear hormone receptor implicated in various cardiovascular and metabolic disorders; XL147, XL765, and isoform-selective PI3K inhibitors; XL518, a small-molecule inhibitor of MEK; sphingosine-1-phosphate type 1 receptor; XL880 inhibitor; and therapies targeted against the mineralocorticoid receptor, a nuclear hormone receptor implicated in various cardiovascular and metabolic diseases. The company was formerly known as Exelixis Pharmaceuticals, Inc. and changed its name to Exelixis, Inc. in February 2000. Exelixis, Inc. was founded in 1994 and is headquartered in South San Francisco, California. (Thank you FINVIZ)

This would be a speculative play not CANSLIM approved. The fundamentals and the charts say "Danger Will Robinson". But if your looking for fun in all the wrong places this might be interesting. We are buying some with Play money in the Salve Lucrum portfolio.

ARE YOU GOING TO THE PARTY?

Now I had 6 calls or e-mails yesterday about Facebook. Everyone from the highly esteemed son in law down to a Senior Vice President of a reputable bank was aksing what little o me thought. In getting back to my son in law Ryan, I said:

"Got your message last night about FaceBook.  Here is my read, this is probably going to be one of the most oversold and over demanded initial offerings since Google and before that Apple.  It may even be bigger.  So what happens is you have 10 billion dollars or so (It's hard to tell because the offering has not been priced yet) that will go to insiders (Key employees, board members, key suppliers, etc.) then the best customers of the top underwriters (Morgan Stanley, Goldman Sachs, and ?) then some key hedge funds and mutual funds who have good relationships with those underwriters.  Then at the bottom of the food chain are retail traders and investors like you and I.  We would be the last ones at the party.  You know how that goes, the music it great, their is still alcohol being served the ladies are still looking presentable, but the party is near it's peak.  So you start drinking (buying the stock) and you dance (read all about your purchase which just reinforces how brilliant you are in choosing such a wonderful investment), and maybe you drink some more.

Then a couple of hours later, (about three months) the band does their last number, (Facebook reports its first quarterly earnings), the bartender announces last call, (Analysts start questioning the valuation of Facebook.  Is it really worth 20, 30 40 times earnings?)  Then even the D.J. shuts down (Hedge fund managers start telling their top customers its time to take some profit.)  You realize you gotta buzz going so you can't drive home (You and I, Joe investor are still convincing ourselves this is a great investment, after all they have 749,821,413 users.)  So you sit on the gutter and get sick a couple of times, find a coffee shop, drive home and pass out.  (You ignore all the analysts explaining why they are questioning the value because that involves words like return on equity, price per earnings, price to book, short float and short ration.)  And you wake up with a nasty hangover.  (Your 1,000 dollars worth of FB-That is the ticker, perhaps it means Feel Bad- is now worth $582.00)

So my plan is to wait till they are about two weeks away from their first quarter earnings report, and buy a series of PUTs 30 60 and 90 days out.  A Put is the right, but not the obligation to sell a stock at a future date at a future price.  It is a bearish move, meaning you are betting the price will go down.  So if FB is say at 200 a share two weeks before their earnings call, I would buy some 205 dollar PUT options at say $5.00 for 30 days out, some 205 dollar PUTs 60 days out which might cost you 7.00 and some 205 dollar PUTs 90 days out which might cost 10 dollars a contract.  Each contract controls 100 shares of the underlying stock.  If my suspicions are right and FB corrects the 40-50% down , those PUTs would be worth 40 to 80 dollars each.  You sell and go to a real party.

And today begins a new day.