JL: So, let’s talk about the rally action in stocks. Last week the Dow gained more than 3%, the S&P was up more than 4%, and the Nasdaq picked up almost 5%. And all that came in the context of weak economic news, the worst employment number in years, and a newly slumping dollar. I’ve got my own take on this, but I know you see the world a little differently. Thoughts?

CASH: My friend, we both know that bear markets can be notorious for mauling investors. We also know that some of the strongest and sharpest rallies take place in bear markets, as you and I have both pointed out. So the way I see it, there’s nothing wrong with trading these rallies as long as you keep a clear head. You just have to be careful not to get juked out and to remember the primary trend.

JL: Right. As the bard once sang, “You don’t need a weatherman to know which way the wind blows.” Though it helps to be paying attention. Speaking of getting “juked,” how’s that fancy footwork holding up? Has it been a good week in the trenches for Cash Mcdash?

CASH: Well I must say, despite my modest nature –

JL: <COUGH> Ahem! <COUGH>

CASH: Need a lozenge there, pal? Maybe a bottle of water?

JL: Nah, I’m good.

CASH: Oh good. As I was saying… have to tell you that last week was my best so far this year. LongTop Financial (one of our recommended names) hit a new recovery high, and GFA (another one) was up 10%, finishing Friday on a great note with two times normal volume. The solar stocks we tipped for a comeback, JA Solar (JASO) and LDK Solar (LDK), were up 21% and 25%. And don’t forget my buddies over at Blackstone (BX). That one crossed $17 and finished the week 21% higher.

JL: Man, that’s not a bad week. Not too bad at all.

CASH: No kidding. In fact, you can call me butter ‘cause I’m on a ROLL!

JL: Alrighty then. Calm down there, Butter…

CASH: Hardy har har. You know I’m just messin’ around. But I do get pretty passionate about this. There’s nothing more satisfying than working hard, getting the trades on, and then seeing that hard work pay off. It just feels good to win.

JL: Oh, no doubt. I’m with you all the way there. But tell me, do you think we’re going to see continued strength? Are you hanging onto your positions?

CASH: Actually, I think the easy money for the time being –

JL: Hold on, hold on, hold on. You think those gains were easy? In this market?

CASH: Sure! When you’ve got the patience to wait until the mood is incredibly sour, and you couple that with the discipline to buy quality names that have been beaten down, and then mix in the fortitude to hold them through a rally few believed would happen… then the game really does feel easy!

JL: And playing golf like Tiger Woods is easy, too, I take it. You just line up your club the right way, take a nice swing, hit the ball 400 yards…

CASH: Ha ha, point taken. Yes, I was oversimplifying things a bit there. Every trader has ups and downs. (The great Tiger Woods has ups and downs, too.) But markets have patterns. These newly issued names have highly measurable tendencies. And don’t forget, I’ve been doing this day in and day for out for many years. A longtime student of the market can gain a meaningful edge just by watching, understanding and absorbing the patterns. A wise man once said, “It’s amazing how much you can learn just by paying attention.”

JL: That wasn’t me was it?

CASH: I said a wise man, not a wise guy.

JL: True. Okay then, so what’s next? Are you going to be closing these positions? Getting liquid? Going short?

CASH: No, I still have a bullish bent to my trading; it’s just not as screaming obvious as it was a few weeks ago. I used Friday’s exceptional strength in the solar names to lighten up positions a bit, while still holding partial positions. I’m still constantly trolling for good long-term names that will give us months of good returns, while scaling out of short-term names that offered some nice quick pops.

JL: Sounds good, Butter.

CASH: Are you going to keep calling me that?

JL: Hey, it was your personal request! Are you saying that’s no longer your preferred name? You’re abandoning it already? I can’t believe it’s not butter.

CASH: Ouch! You should be fined for that one. In fact, you may need clinical help. Which reminds me…

JL: You’re reminded you need to go to the clinic?

CASH: No, wise guy. I want to tell you about the latest name on “the calendar.” Remember, the syndicate calendar we talked about last week?

JL: Ah, gotcha. A clinical IPO.

CASH: It’s actually a secondary offering. The name is Wuxi Pharmatech (WX on the NYSE).

JL: Wuxi Pharmatech, huh? That name just rolls right off the tongue.

CASH: And the company continues to roll out new services! Have you heard of contract research organizations, or CROs for short?

CASH: Indeed. You weren’t surprised again, though, were you? After all, if I may refer you to the notes of our conversation last week…

JL: No time for false modesty; that’s one of the things I like about you. Speaking of last week, you mentioned a few names as we closed out the conversation. The first was Blackstone (BX:NYSE).

CASH: Right. Looks like BX tripped our $17 trigger yesterday. So Blackstone could be off to the races.

JL: Yep. And how about those solar picks, yowza! In my chicken-scratch notes, I see you took a bullish turn on LDK Solar (LDK:NYSE) and JA Solar (JASO:Nasdaq) last time we talked. Well, LDK solar was up 26% and JA solar was up 32% — in a week! I know you’re nicely connected, but is there something more I should know about where you get your information?

CASH: Oh, ye of little faith. I could tell you more, but then I’d –

JL: Never mind, I don’t want to know.

CASH: Heh. There’s not so much to know anyway. It’s all part of reading the markets and getting a feel for supply and demand. I can’t figure out everything, but I’m pretty decent at nailing down my little universe of recently issued stocks.

JL: Ah yes, that reminds me of another prediction. Last week you expressed confidence that the IPO market would pick up. I didn’t see any IPO’s price last week. So is that call on hold, or revised, or what?

CASH: I’m assuming you haven’t looked at the calendar yet.

JL: Hmm. I know it’s the first week of April. What are you getting at?

CASH: Sorry. I was being a little bit tricky there. In IPO land, referring to the “calendar” is usually trader-speak for the calendar of new issues. Or the “syndicate calendar” as some call it.

JL: Ah, right. And the syndicate calendar has some good stuff on it?

CASH: You bet. There are now four IPOs lined up for the week of April 7. See, it’s not like an IPO can launch at the drop of a hat. A few things have to happen first. For starters, it takes time for the underwriters to make their sales pitch. They have to parade the company in front of lots of buyers — do that whole dog and pony show — in order to drum up institutional demand.

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JL: So there’s more to it than just a handful of phone calls and filing paperwork.

CASH: Most definitely. These deals have a ton of fanfare to get potential buyers excited. Sometimes it works and sometimes it doesn’t… but with all the chardonnay lunches and steak dinners, no one seems to mind the process. Besides, don’t you remember the other half of my prediction?

JL: You mean the part about secondaries picking up? Where an already-public company issues new shares?

CASH: Correct. It could be that, or it might be a group of large shareholders issuing their stock in what’s called a “block trade.” These take a bit less time to line up because the stock is already trading, and underwriters can usually go to clients who already own a position in the name. Usually the stock comes overnight — similar to an IPO transaction — and is offered at a discount to the previous day’s close.

JL: So when the deal is a “block trade,” the large holders are essentially willing to sell at a discount in order to move a large volume of shares. They get the chance to liquidate a big chunk of their holdings without relying too much on the daily trading volume.

CASH: You got it. But liquidity is still very important. These deals can only be brought to market when enough liquidity exists for the underwriters to find buyers. And for what it’s worth, there were six of those deals this past week.

JL: So that’s a positive liquidity sign. What kind of companies are we talking about? How did they go?

CASH: There were two financial deals that met with a decent amount of resistance. The market still isn’t quite ready for the bond insurers or intermediate finance companies — though maybe that’s changing now. There were also two energy companies that sold shares and traded very well. Oil is a hot commodity, you know.

JL: You don’t say!

CASH: Heh. Yeah, can you believe it?

JL: That’s only four deals, wise guy. What about the other two?

CASH: The fifth was a small REIT (real estate investment trust) that did relatively well. But the sixth is much more exciting. That one was Neutral Tandem, a company that offers niche technology to telephone carriers. The company is profitable and growing nicely. The sellers there were private investors liquidating part of their position. The stock is trading roughly flat from the offering, but it’s encouraging to see how readily the market soaked up the supply. I have a feeling we’ll be coming back to Neutral Tandem a few weeks down the road.

JL: Sounds good. So, given all that evidence, I guess your IPO call was money too, huh? Chalk up another win for the mighty Cash McDash?

CASH: What can I say? When it works, it works. Know what I mean?

JL: Since you’re on such a hot streak, how about throwing out a fresh name before we wrap this up.

CASH: Sure. I’ve actually had my eye on a specific homebuilder.

JL: A homebuilder, eh? Rooting around in the trash heap again? I know the builders have bounced, but it’s probably a waste of breath for me to go on about deserted subdivisions, massive supply overhang, adjustable mortgage rates ticking up, consumer credit getting tight…

CASH: I tell you what, though. From my point of view, there’s nothing wrong with the housing market.

JL: Come again?

CASH: There is nothing wrong with the housing market.

JL: No way, pal. I’m not falling for it this time. There has to be a twist in here somewhere…

CASH: Okay, okay, you caught me. I’m not talking about the U.S. market. I’m talking about Brazil. Specifically, I’m looking at a company called Gafisa — symbol GFA on the NYSE.

JL: Ga-who? How do you pronounce that again?

CASH: I just call ‘em GFA. They’re a Brazilian homebuilder structuring entire new communities in Brazil. As you know, Brazil is one of the most dynamic countries around these days. As the country capitalizes on its new wealth selling agricultural goods to the world, the Brazilian population is increasingly able to afford the kind of things that we take for granted. Stuff like better food, better clothing, and yes, even housing.

JL: And they’ve got a lot of room to grow down there.

CASH: No doubt. If the Brazilian housing market qualifies as a “bubble,” I say it’s one that could keep inflating for a decade. It also doesn’t hurt that GFA gets most of its revenues in Brazilian currency rather than dollars, translating to larger gains for investors as the dollar weakens.

JL: No complaints there. Is there a spot you find particularly attractive on this one?

CASH: Well, given the market’s renewed strength, I’ll go out on a limb here and say the time is about right to start building a position in this name. I would try to pick up stock below the $38 to $40 range to keep costs low and reduce risk. Fundamentally, GFA is supposed to more than double earnings this year, to $2.93, and is then expected to ramp that up to $4.83 in 2009. With the stock in the mid-$30s, the valuation is very attractive.

JL: Excellent. We’re going to have to set up a way to keep track of all these ideas.

CASH: Sure. Profit is the best way I know of to keep score… If I’m not helping my investors make money, they don’t stay investors very long. So if these conversations aren’t helping our readers make money, I’d imagine it’s the same deal. There are plenty of ups and downs in this business, but we’ve all got to profit if it’s gonna be worth while.

JL: Very true. We’ll keep brainstorming. Talk to you next week.