4 Long / 2 Short Ideas For September

by: David Urban

As the summer winds to a close, investors sift amongst the wreckage, and traders return to their desks, four opportunities stand out on the long side and two short ideas materialize. September can be a rough month for the markets and with the uncertainty of Congress returning to Washington, Europe moving closer to the precipice, and corporate America grinding to a halt, it looks as though market volatility is making itself comfortable.


1. Amazon (NASDAQ:AMZN) – The recent selloff provided investors with a brief buying opportunity. While the metrics may seem expensive, the business continues to move along without a hitch. Christmas season approaches and with that will come an ever greater demand for Amazon’s products.

The Kindle remains the book reader of choice and should drive e-book sales for Amazon. If the Tablet rumors are true, Apple (NASDAQ:AAPL) may finally face competition for the iPad as customers trade up from their Kindles. The larger question will be price points and how much of a loss Amazon is willing to accept in return for market share.

2. Apple (AAPL) – The recent relinquishing of the role of CEO by Steve Jobs caused a brief selloff, which looks more like a buying opportunity for investors. If the stock price is any indication, the numerous articles predicting Apple’s demise appear to be far off the mark.

The iPhone 5 is right around the corner, as is the release of the iCloud. The iPad remains the tablet of choice and what people miss about HP’s (NYSE:HPQ) strong sales of TouchPads at $99 is that by having no content back up, the tablet losses flow right to the bottom line.

3. Silver (SLV, AGQ) – The investment case for silver is becoming more clear by the day. As Washington DC continues to argue and point fingers, the EU continues to grapple with the Greek bailout. First Finland’s request for cash collateral in return for support, then rumblings start to increase in Germany and finally the IMF comes out opposed to any collateral as security for the loans.

In the meantime, more and more regular people are asking about silver as they see the price per ounce as more affordable when compared to gold.

4. Gold (GLD, DGP) – The case for gold is the same as for silver. Sovereign problems will continue to drive economic uncertainty and puts a floor underneath the price. While we may see a pullback as the price action last week was based on ever shrinking volume, the direction of the move through next spring will be up and to new highs.

The current rally is being supported by concerns over the future of the EU as Greece continues to have problems meeting deadlines and gridlock paralyzes Washington DC and the US economy.


1. Euro (short FXE, long EUO) – Both the US dollar and the euro have significant problems but the major issues surrounding the euro will drive the currency lower over the coming months. Participation in the bailout program is running below the 90% level for participation sought by investors.

The cash collateral deal sought by Finland has fallen though, although the Finns are insisting on some sort of collateral in exchange for their participation.

Germany, whose economy was leading the EU out of the recession, has come to a stall and Europe seems set on a double dip recession unless politicians can come to a long-term agreement on dealing with the PIIGS.

Now the IMF has stepped into the fray saying that collateral from Greece is out of the question and the troika reviewing the government’s books has left the country.

2. HSBC Holdings PLC (HBC) – I'm not sure that their Greek and European exposure is fully quantified despite taking write-downs in the recent quarter. The newsflow since the earnings release has not been good and the recent news that UK banks are fighting capital buffers against tail risk leads me to believe that there are significant problems right around the corner.

Disclosure: I am long AAPL, DGP, AGQ.