Only two of the nearly three dozen issues comprising the AMEX Gold Miners Index (AMEX: GDM) are trading above their 200-day moving averages. And it's only by the thinnest of margins that these two are still in positive territory. The US dollar has been quietly trending higher since the European trading session.The EUR/USD hit a high of 1.4768 shortly after the London open but ended the US session near its daily lows.Although this strength was also seen against many of the other major currencies, the dollar failed to rally against the Japanese Yen.This weakness was primarily due to the move in US equities which dropped over 170 points in the US session.Oil also reversed sharply, ending the day slightly under $116 a barrel, after having hit an intraday high of 118.76. One of the interesting side benefits of having a blog is that you can get a sense of what some investors are thinking just by looking at the Google searches that result in people clicking through to the blog. Today, for instance, I note some have found their way to VIX and More with the following Google searches: This weekend I am teaching at a conference for individual investors. While talking with them it has become apparent they really don't know what they want when it comes to investing or trading their money. The number one question I am being asked - "is the bottom in?" While that is something to look for off of any correction or downtrend, the key issue is can you define why you have each position in your portfolio? Why the rally today? The oil price declines are taking hold despite a passing hurricane and ongoing Iranian issues. The sell commodity plays and buy mainstream stocks is a trade that’s gaining more traction. Add a slightly better than expected ISM number, antsy trading desks and hedge funds then conditions are always ripe for a short squeeze. As to the Fed? Well, a gazillion pundits, including me, had the Fed’s actions called right which means it was all a little too obvious. One strange comment after the Fed decision was as follows: After what has seemed to many investors to be the “longest year”, stocks have been going through a volatile period which some interpret to be bearish. There are still many analysts who are quick to label the current market phase a temporary pause on the way to a bigger stock market cascade. Contrary to these expectations, the market tape is sending a different message as we’ll establish in this commentary.

Affymetrix (NSDQ: AFFX) reported disappointing results last week that missed analyst estimates and lowered its full-year guidance in the process, sending the shares down sharply to trade near all-time lows set 12 years ago around the time of its initial public offering. The Company reported a five cent loss per share and revenues that were down by 1.6% from the year-ago period at $86.9 million [M], blaming weak sales of its GeneChip systems to drug companies for a large part of the shortfall as big pharma companies such as Pfizer (NYSE: PFE) are implementing cost-cutting initiatives and trimming their R&D budgets. Affymetrix also lowered its outlook for full-year revenue to $455 - $460M from previous guidance of $490 - $510M amid continuing weak pharma sales. The Company is also struggling against its much larger competitor, Illumina (NSDQ: ILMN), which sells similar systems for genetic analysis and recently posted better-than-expected results and raised its guidance.

Affymetrix is currently trading at a market cap of $528M with $460M in trailing 12-month revenues (although this includes a one-time $90M patent payment from Illumina in January), $590M in cash, and $436M in debt. The Company has 69.4M shares outstanding and a high short interest of 15.9M shares representing over 23% of the float as of mid-July. The company's much larger rival Illumina is valued at a market cap of $5.3 billion on trailing 12-month revenue of $472M, $303M in cash, and $400M in debt. While Affymetrix may appear to be a value based on this comparison; it lacks the growth and market share gains of its larger rival.

 

Illumina experienced a 65.8% increase in 2Q08 revenue from the year-ago period thanks to strong sales of its Genome Analyzer systems and consumables versus a 1.6% decline in 2Q08 revenue for Affymetrix. While Illumina may be priced for perfection while trading at all-time highs; Affymetrix may be more of a value trap even after the recent decline due to its recent history of missing estimates, sinking margins, and lowering guidance. Until the operating results begin to show signs of a turnaround, I would stay on the sidelines with Affymetrix and would rather play Illumina through the HealthShares Enabling Technologies (AMEX: HHV) exchange-traded fund with the Company as its top holding and a 13% stake.

mikehav.blogspot.com

For the most part, this summer has not been kind to precious-metals investors and speculators. While gold did rally rather sharply from mid-June to mid-July, up 12.6%, it could not challenge its $1005 March high. And soon after this retest failed it plunged $47, 4.8%, in just 2 trading days this week. When you hear this clever slogan on CNBC's Fast Money, just remember it applies to a ever more narrow chorus of traders-those who try to trade for a living. Over the past year the window to let the trades play out has shrank from three to four weeks to three to four days and, in some cases three to four hours. During the 2003-2008 bull market you could safely put these trades on and successfully make lots of money, allowing them to play out over the course of three to four months. It has been a very volatile week for the US dollar, even though compared to the beginning of the week, the exchange rate for the EUR/USD and USD/JPY has remained virtually unchanged.