Now I am going to tell how to determine if the recent drop of volume in the recent trading days are a cooling off period before the market starts its march to 16,000 OR if it is the last wind of this two month rally as the market implodes around us.

Yes, right here I will tell you how you can determine what will happen in the market. All of you take a coin out of your pocket or junk drawer. Go ahead and do it. I'll wait a second. . . "It's 10 O'clock on a Thursday Night, its time for the blog to begin. . . Ok you ready? If you sing those lyrics to the tune of "The Piano Man", it really works, but I digress. Take the coin, heads is a market crash, tails is a run to 16,000. Ok you ready. FLIP THE COIN. Now ya know. You are welcome. Invest accordingly.

So How Gold Is Gold

One of our readers sent me a recent gold newsletter. It had an interesting angle to gold I don't personally agree with. I won't bore you with the whole newsletter, but they were implying that the recent run up in oil could be a catalyst for another big run on the shiny stuff. The thinking being is that higher oil will drive explosive inflation and all the drachmas of the world will be devalued and we will all be eating gold. I don't buy because the recent run up in oil is estimated to be 25-30% speculative not a true supply and demand issue, as such when things stabilize (and I have a feeling they will because I used another coin and it came up tails) oil will correct.

Don't get me wrong, we are gold fans holding what would be 16% of our portfolio based upon the underlying value of our Jun $140.00 Call options. (We are currently up 15.1% on those options.) I think GLD is a good way to play the metal and it would be prudent, in my humble opinion, to have at least 5-10% of your portfolio in Gold just as hedge. We have not drunk the doomsday cool aide.

I was talking to one of our readers at lunch today and I shared with him some homework I had done on a couple of stocks that we talked about. We thought you might appreciate.

RMD ResMed Inc., through its subsidiaries, engages in the development, manufacture, and distribution of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders. It offers various products for the treatment of obstructive sleep apnea and other respiratory disorders, including airflow generators, diagnostic products, mask systems, headgear, ventilation devices, and other accessories, such as cold passover humidifiers, carry bags, and breathing circuits. The company also offers data communications and data control products, such as ResLink, ResControl, ResControl II, TxControl, ResScan, and ResTraxx modules that facilitate the transfer of data and other information to and from the flow generators. ResMed Inc. markets its products to sleep clinics, home healthcare dealers, and third party payers. The company sells its products through a network of distributors, independent manufacturers, representatives, and direct sales force in approximately 70 countries primarily in the United States, Germany, France, the United Kingdom, Switzerland, Australia, Norway, and Sweden. ResMed Inc. was founded in 1989 and is based in San Diego, California.

Now I am jaundiced because I love the product (although if they packaged an alarm clock and iPhone/iPod docking station in the unit, it would be a grand slam.) The distribution point they have chosen for our region is weak. I always feel like I am walking into have a lube job, not buying a sterile medical device. If I had a cool (as in neato, not brrrr) place where I could drop off the unit and have it "clinically detailed" every month or two, I'd be all over it and willing to pay for it. It would probably provide ad on sales opps for the company if the guy changing my oil knew how to sell.

Ok fundamentally, I like the 5+ bucks of cash per share, the forward P/E is a little rich at 16, but we would be buying future growth. That is what makes the stock sexy. Tons of us obese baby boomers will have apnea and need to address the issue. Debt seems to be acceptable. Their GM is sexy at 50%+ and I like the 20 million share buy back they put forth last year. I also like the raw materials inventory build against the revenue number as it looks like they are building to actual sales growth and anticipated sales growth. Always a good sign. And of course when you have the keyboardist for the Grateful Dead on your product development team, that says it all.

Technically speaking, there is some chatter out there about the stock being overbought, but I don't see it. There is a nice cup and handle forming from about Nov 8 through Jan 7. If it finishes the handle in the next couple of days, you have a perfect picture buy point at 29.77. (ok you have to ignore the Jan 27 gap up to make it picture perfect, but their quarterly beat kinda squiggles the number). I'd take a flyer under 30 with a stop at $27.60.

WAKE UP ONE MORE

WDFC WD-40 Company engages in the production and sale of consumer products. The company offers a multi-purpose maintenance product under the brand name of WD-40, which acts as a lubricant, rust preventative, penetrant, cleaner, and moisture displacer; multi-purpose drip oil and spray lubricant products, and other specialty maintenance products under the 3-IN-ONE brand name that are used in locksmithing, HVAC, marine, farming, construction, and jewelry manufacturing applications; and a line of industrial grade, specialty maintenance products that include lubricants, penetrants, degreasers, and cleaners under the brand name of Blue Works, which are designed for the needs of industrial users. It also provides homecare and cleaning products comprising a liquid mildew stain remover and automatic toilet bowl cleaners under the brand name of X-14; automatic toilet bowl cleaners under the 2000 Flushes brand name; a line of room and rug deodorizers sold as powder, aerosol foam, and trigger spray products under the brand name of Carpet Fresh; an aerosol carpet stain remover and a liquid trigger carpet stain and odor eliminator under the Spot Shot brand name; carpet and household cleaners, and rug and room deodorizers under the brand name of 1001; and heavy-duty hand cleaner products in bar soap and liquid form under the Lava and Solvol brand names. The company markets its multi-purpose maintenance products in Asia, Australia, the Pacific Rim, Europe, the Middle East, and Africa, as well as North, Central, and South America; and homecare and cleaning products in North America, the United Kingdom, Australia, and the Pacific Rim. It sells its products primarily through mass retail and home center stores, warehouse club stores, grocery stores, hardware stores, automotive parts outlets, and industrial distributors and suppliers. WD-40 Company was founded in 1953 and is headquartered in San Diego, California.

Fundamentally, a pretty sound company whose brand is terribly undervalued. It throws a decent yield at 2.5%+. Beyond that, nothing to exciting in the fundamentals though I noted they have a healthy CCC (cash to conversion cycle). Anecdotally, I think their recent move to "specialists' line of products will do wonder to leverage the brand. I just bought some Thompson Water Seal, strictly off the brand. If there was a WD 40 offering next to it, I would have paid more for it. If promoted well, it should contribute nicely to EPS.

Technically, the chart is unattractive. I even got out my chart book from IBD and it looks like we had a buy point or pivot point at 44.97 last July, but I don't see a consolidation anywhere else that I could call a buy point. It is going on my watch list. You know it sounds stupid, but I wonder if they have ever thought of a personal use lubricant. KY has the market share, but I bet WD has better brand recognition. I could see dual distribution of both products in both markets.  As long as they don't confuse the two products. . . .

OK ONE MORE QUICKIE

Get out the gambling money on this one.  Liquid Metal, right here in good old RSM, CA.  It is a penny stock selling for 20 cents a share.  RUMOR has it they may be making all the back plates for the iPhone 5.  Personally I do not belive the rumor and the news is a sucker bet.  But there is one born every minute.  At 6:34AM this morning, it was my minute.  I AM LONG LQMT

 Salve Lucrum