Ok, so a couple updates on the resurrection of this blog. One, I've created a separate blog for my opinion writings. It can be found here. ( http://timsopinionblog.blogspot.com/ )
Two, I'm going to focus this blog more on longer timeframe positions (months or even years). It'll probably be more focused on value and dividend stock picks and sometimes the indices, with a lesson-type post here and there. However, I'm also going to use technical analysis to identify trends and buy points.
I'll do some shorter-term stuff, too, like index trades and dividend capture trades. My concern about getting too much into shorter-term stuff is simply frequency. Blogging about trades with timeframes measured in days can be difficult and stressful. I'll try to do it from time to time.
I'm taking Thanksgiving week off from work, so I'll have some time to get these posts going.
Friday, November 19, 2010
Saturday, October 23, 2010
Rallying to Restore Sanity and/or Fear...
As we approach Election Day 2010, there will be rallies all throughout the nation. Some will rally for Republican candidates, some for Democrat candidates, some for Tea Party and other Independent candidates. But, there is one rally that should unite us all, one that transcends all the fear-mongering, partisan bickering, venomous rhetoric, and unbridled rage that we have seen American political discourse become. Naturally, I refer to the Rally to Restore Sanity and/or Fear, which will take place on Saturday, October 30th in Washington DC at the National Mall.
Here’s a little background about the rally and its premise. The Daily Show is a satirical news show on Comedy Central hosted by Jon Stewart. It’s meant to poke fun at news coverage and current events and is tailored after your evening national news. There’s also The Colbert Report, hosted by Stephen Colbert, which is a satirical take on news talk shows, likely tailored after Bill O’Reilly as Colbert claims. Knowing the rally is being put on by a pair of comedians, it’s very tempting to dismiss it, but please don’t make that mistake. They have a message.
The rally’s website, www.rallytorestoresanity.com, provides a great overview of who the rally is for and what it’s about. Two quotes sum it up quite nicely.
First is, “We’re looking for the people who think shouting is annoying, counterproductive, and terrible for your throat; who feel that the loudest voices shouldn’t be the only ones that get heard; and who believe that the only time it’s appropriate to draw a Hitler mustache on someone is when that person is actually Hitler.”
Next is, “Ours is a rally for the people who’ve been too busy to go to rallies, who actually have lives and families and jobs (or are looking for jobs) — not so much the Silent Majority as the Busy Majority. If we had to sum up the political view of our participants in a single sentence… we couldn’t. That’s sort of the point.”
These two quotes pretty much say it all. These people make up the majority of the population. We run the political spectrum from right to center to left. We believe that the venomous political climate currently in the USA is highly counterproductive. We want to solve problems. The belief of the people attending this rally, myself included, is that if the American people do not transcend partisanship, we cannot come together to solve the major problems our nation is facing. And, if there’s one thing we all probably agree on, it’s that the USA has problems that need fixing. I’ll spare you the long list. This is a rally for people who want to get away from partisanship and start actually solving our problems, who see something wrong with demonizing, insulting, and hating someone who disagrees with you, and who want to see sanity injected back into the American political dialogue.
I have two other points of note about the rally. First, you can also go to www.saneornot.com to see some of the signage that may or may not be present at the rally. There are some great signs there. Second, the rally is actively encouraging donations to the Trust for the National Mall. Further, all proceeds from merchandise sales will also be donated to that very same trust. As the name implies, the Trust is responsible for the upkeep of the National Mall. I think it’s pretty important because it’s where the monuments to some of our greatest leaders reside, and these need the funding for upkeep so future Americans can remember the greatness of these leaders.
This is a rally calling for the restoration of civility to American political discourse. It’s a call for a refocusing of our energies away from tearing each other down and back on working together to solve the huge problems our nation is facing. Every single American knows that we have the talent, work ethic, and determination to fix the ills that plague our nation. We just need to get ourselves recalibrated on combating our problems instead of each other.
If you attend, you also have the added benefit of being in Washington DC when all the politicians are away, many in desperate struggles to keep their jobs. There is no saner time to be in Washington DC than when the politicians are back home. I’ll be there. Will you?
Here’s a little background about the rally and its premise. The Daily Show is a satirical news show on Comedy Central hosted by Jon Stewart. It’s meant to poke fun at news coverage and current events and is tailored after your evening national news. There’s also The Colbert Report, hosted by Stephen Colbert, which is a satirical take on news talk shows, likely tailored after Bill O’Reilly as Colbert claims. Knowing the rally is being put on by a pair of comedians, it’s very tempting to dismiss it, but please don’t make that mistake. They have a message.
The rally’s website, www.rallytorestoresanity.com, provides a great overview of who the rally is for and what it’s about. Two quotes sum it up quite nicely.
First is, “We’re looking for the people who think shouting is annoying, counterproductive, and terrible for your throat; who feel that the loudest voices shouldn’t be the only ones that get heard; and who believe that the only time it’s appropriate to draw a Hitler mustache on someone is when that person is actually Hitler.”
Next is, “Ours is a rally for the people who’ve been too busy to go to rallies, who actually have lives and families and jobs (or are looking for jobs) — not so much the Silent Majority as the Busy Majority. If we had to sum up the political view of our participants in a single sentence… we couldn’t. That’s sort of the point.”
These two quotes pretty much say it all. These people make up the majority of the population. We run the political spectrum from right to center to left. We believe that the venomous political climate currently in the USA is highly counterproductive. We want to solve problems. The belief of the people attending this rally, myself included, is that if the American people do not transcend partisanship, we cannot come together to solve the major problems our nation is facing. And, if there’s one thing we all probably agree on, it’s that the USA has problems that need fixing. I’ll spare you the long list. This is a rally for people who want to get away from partisanship and start actually solving our problems, who see something wrong with demonizing, insulting, and hating someone who disagrees with you, and who want to see sanity injected back into the American political dialogue.
I have two other points of note about the rally. First, you can also go to www.saneornot.com to see some of the signage that may or may not be present at the rally. There are some great signs there. Second, the rally is actively encouraging donations to the Trust for the National Mall. Further, all proceeds from merchandise sales will also be donated to that very same trust. As the name implies, the Trust is responsible for the upkeep of the National Mall. I think it’s pretty important because it’s where the monuments to some of our greatest leaders reside, and these need the funding for upkeep so future Americans can remember the greatness of these leaders.
This is a rally calling for the restoration of civility to American political discourse. It’s a call for a refocusing of our energies away from tearing each other down and back on working together to solve the huge problems our nation is facing. Every single American knows that we have the talent, work ethic, and determination to fix the ills that plague our nation. We just need to get ourselves recalibrated on combating our problems instead of each other.
If you attend, you also have the added benefit of being in Washington DC when all the politicians are away, many in desperate struggles to keep their jobs. There is no saner time to be in Washington DC than when the politicians are back home. I’ll be there. Will you?
Reviving the blog...
Ok, so a lot's been going on in my life the past few months and I left this thing by the way side. But it's coming back and it'll be a bit different than before.
For one thing, this won't just be a stock blog. I'm using this also as a place to editorialize. I figure it Bill O'Neill can do that with IBD's editorial section, I can do that here on my blog. :-p
Two, I'm not sure if I'm going to do stocks or indices here. I haven't decided yet.
Three, this won't be starting back up again until probably next week or so. There's a reason for that, and it's in my first editorial.
For one thing, this won't just be a stock blog. I'm using this also as a place to editorialize. I figure it Bill O'Neill can do that with IBD's editorial section, I can do that here on my blog. :-p
Two, I'm not sure if I'm going to do stocks or indices here. I haven't decided yet.
Three, this won't be starting back up again until probably next week or so. There's a reason for that, and it's in my first editorial.
Saturday, February 6, 2010
Weekly View Friday 5 February 2010...
Weekly Review:
We had a couple days of bounce, but then it was straight back down until the last hour on Friday. The real dip-buyers continue to be MIA, but many domestic indices are approaching their 200-day EMAs (and many foreign indices have broken their 200-day EMAs).
Weekly Preview:
Earnings continue to slow, as many of the big names have already reported. As with last week, we're still oversold, perhaps more so, and a bounce is probably coming (again). This correction is a good thing.
Earnings season keeps going this week. Here's a breakdown of the ones I'm watching day by day. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
Monday: BWP, CVS, HAR, HAS, HS, L, LO, MCY, NTE, GOLD, NDAQ,
Tuesday: ADCT, ANDE, AINV, AEC, ATML, AXS, CPT, CRL, CMP, ERTS, ESLR, FWRD, GFA, HIG, HIMX, IUSA, LNCR, LNC, NUAN, OMI, PIKE, SLRY, SWI, TCK, TMRK, PFG, TRID, VMC, ACM, AGCO, AGU, ANR, BIIB, BJS, CAM, CE, CHD, CTSH, CGEN, CVH, CYNO, EOG, IACI, ITUB, KUB, MLM, TAP, NYX, PHM, TIN, KO, UBS, VSH,
Wednesday: ASEI, BIDU, CPST, CERN, LGF, NTGR, DIS, XL, MT, BHP, BSX, BHS, CCE, CSC, SCOR, DF, DISCK, ELN, EQIX, FORR, ICE, ID, LNCE, LVLT, MMC, OMC, SNY, SNI, S, NYT, WYN
Thursday: ATVI, AMKR, STV, CLB, XRAY, ELON, RE, LFT, MAS, PRE, PAA, PRU, ALL, VALE, AKNS, ALU, ARE, ALXN, AN, BWA, CS, DVA, DYP, ECA, EXPE, FLIR, GPI, JASO, LH, MFC, MAR, MFE, OZM, PTEN, PEP, PM, SKYW, STO, STRA, THS, VFC, VIA, WWE,
Friday: A, ACL, AB, BJRI, NILE, BWLD, CEPH, CMG, CSTR, BGC, IPAS, TUNE, MOH, NED, PNRA, PNSN, PRAA, RNWK, STMP, CAKE, DUK, IR, NAT, PDS, SAAB, UPL,
Monday: PAAS,
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Links in the post: http://fiateconomics.com/ , http://www.thestreet.com/
We had a couple days of bounce, but then it was straight back down until the last hour on Friday. The real dip-buyers continue to be MIA, but many domestic indices are approaching their 200-day EMAs (and many foreign indices have broken their 200-day EMAs).
Weekly Preview:
Earnings continue to slow, as many of the big names have already reported. As with last week, we're still oversold, perhaps more so, and a bounce is probably coming (again). This correction is a good thing.
Earnings season keeps going this week. Here's a breakdown of the ones I'm watching day by day. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
Monday: BWP, CVS, HAR, HAS, HS, L, LO, MCY, NTE, GOLD, NDAQ,
Tuesday: ADCT, ANDE, AINV, AEC, ATML, AXS, CPT, CRL, CMP, ERTS, ESLR, FWRD, GFA, HIG, HIMX, IUSA, LNCR, LNC, NUAN, OMI, PIKE, SLRY, SWI, TCK, TMRK, PFG, TRID, VMC, ACM, AGCO, AGU, ANR, BIIB, BJS, CAM, CE, CHD, CTSH, CGEN, CVH, CYNO, EOG, IACI, ITUB, KUB, MLM, TAP, NYX, PHM, TIN, KO, UBS, VSH,
Wednesday: ASEI, BIDU, CPST, CERN, LGF, NTGR, DIS, XL, MT, BHP, BSX, BHS, CCE, CSC, SCOR, DF, DISCK, ELN, EQIX, FORR, ICE, ID, LNCE, LVLT, MMC, OMC, SNY, SNI, S, NYT, WYN
Thursday: ATVI, AMKR, STV, CLB, XRAY, ELON, RE, LFT, MAS, PRE, PAA, PRU, ALL, VALE, AKNS, ALU, ARE, ALXN, AN, BWA, CS, DVA, DYP, ECA, EXPE, FLIR, GPI, JASO, LH, MFC, MAR, MFE, OZM, PTEN, PEP, PM, SKYW, STO, STRA, THS, VFC, VIA, WWE,
Friday: A, ACL, AB, BJRI, NILE, BWLD, CEPH, CMG, CSTR, BGC, IPAS, TUNE, MOH, NED, PNRA, PNSN, PRAA, RNWK, STMP, CAKE, DUK, IR, NAT, PDS, SAAB, UPL,
Monday: PAAS,
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Links in the post: http://fiateconomics.com/ , http://www.thestreet.com/
Daily View Friday 5 February 2010...
Friday was a whole bunch of ugly until the final hour, when a rumour of a Greek bailout hit the wires and caused a massive short squeeze, allowing the market to largely undo the damage done earlier in the day, and in some cases, close green. I am not surprised at all by this, and let me explain why. In short-term downtrends, like what we've been in for the past few weeks, the bears tend to cover their shorts on Friday afternoon to lock in profits ahead of the weekend. This is pretty common knowledge on the Street. This reduces downside pressure on the market and actually puts upside pressure on it as the shorts cover. But, to bring in actual buyers, not just short-covering, you have to give them a catalyst. What better catalyst than a rumour pertaining to a solution to one of the market's recent major worries (Greece, which the smart crowd has known for months was a problem even though it just hit the headlines in the past couple weeks, but I digress)? This rumour sparks actual buying. It's a bit too perfect to be a coincidence, and I have no doubt someone strategically leaked the rumour at just the right time to the media. It happens ALL THE TIME on the Street. Check out this video from Jim Cramer about a similar matter he made several years ago.
I closed my CBI calls today. It broke below support, as I feared it would yesterday due to the increased volume on yesterday's downdraft.
ROST has a little uptrend going, and I'm liking a buy in this one.
We're seeing some big breakdowns, as well. EME, FUQI, JST, JTX, and NEU all broke down. My FUQI calls are pretty much worthless, of course.
The shorts are all working, and TSL just rallied back nicely. This could be shorted here. CHRW, EJ, NTES, QCOM, and R also appear to have further downside. ARO and GFRE also look like they could be shorted here.
I'm going to clean out the watchlist a bit this weekend.
Position: Long CBI, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Links in the post: http://www.youtube.com/watch?v=HRa0B34jMOQ
I closed my CBI calls today. It broke below support, as I feared it would yesterday due to the increased volume on yesterday's downdraft.
ROST has a little uptrend going, and I'm liking a buy in this one.
We're seeing some big breakdowns, as well. EME, FUQI, JST, JTX, and NEU all broke down. My FUQI calls are pretty much worthless, of course.
The shorts are all working, and TSL just rallied back nicely. This could be shorted here. CHRW, EJ, NTES, QCOM, and R also appear to have further downside. ARO and GFRE also look like they could be shorted here.
I'm going to clean out the watchlist a bit this weekend.
Position: Long CBI, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Links in the post: http://www.youtube.com/watch?v=HRa0B34jMOQ
Thursday, February 4, 2010
Daily View Thursday 4 February 2010...
The ugly came back today with a vengeance. We started the day with a big gap-down open on the indices and we never looked back, as we have now pretty much fully erased the oversold bounce from earlier this week. Volume picked up today as we took out last week's lows. There's absolutely nothing good I can say about today's action.
We're learning now just how much of a disaster the European Union really is. We saw it today in the earnings report of STD. Tomorrow, we have the big annual jobs report on tap. You know, the one that may have underestimated job losses in the past year by about a million or so. :-p Stupid birth/death model, but I digress. The market is clearly not expecting anything good there, either.
We're getting more and more oversold as we approach various support levels. The action definitely got ugly today, but if there's even a slight upside surprise tomorrow morning, we could have a snap back higher.
I made no trades today because I was in meetings most of the day. CBI is now a bit disconcerting to me, though. It bounced a bit this week, which I expected because the volume on its first selloff leg really wasn't that fierce. Today, however, marked a noticeable surge in volume as it sold off. That said, it held the 50-day EMA. CBI is holding tough. If it drops below this week's lows, however, I'll sell and take my loss.
Pretty much every short I mentioned dropped hard today. Too bad I wasn't in any of them. That's the thing about shorting versus going long. When you short, the declines are much quicker and much more vicious once they start, whereas going long usually entails a gradual grind higher. It makes sense if we think about the emotions involved. Either way, it's fear. When a stock is rising, one fears missing the profit, but when a stock is dropping, one fears the loss of capital. Obviously, the latter's going to be a more powerful fear because in that case, you lose money versus in the former where you simply don't win money. Losing is not the same as not winning. It's the way our minds are wired generally. So, the downdrafts set in much quicker and are much more violent. That means I have to be a bit more willing to be anticipatory with my shorts, rather than reactionary. Shorting isn't simply the inverse of going long.
I'm actually pondering a format change for the blog and my general approach. In a nutshell, I've realized that I have trouble trying to watch so many stocks for short timeframe trades and I've realized that I have an easier time if I focus on the indices. It narrows down my universe for daytrading and short timeframe trades, which is very important for me because I have a tendency to try to watch everything and subsequently miss everything. So, I'm considering shifting my focus on short-term stuff more towards the indices and picking stocks more from a longer-term perspective. That was part of the original goal of the blog, anyway. I'll probably shift it to picking a new longer-term stock play each week while updating daily about the current picks and the action in the indices. So, the watchlist will probably be pretty well cleaned out and rebuilt again.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
We're learning now just how much of a disaster the European Union really is. We saw it today in the earnings report of STD. Tomorrow, we have the big annual jobs report on tap. You know, the one that may have underestimated job losses in the past year by about a million or so. :-p Stupid birth/death model, but I digress. The market is clearly not expecting anything good there, either.
We're getting more and more oversold as we approach various support levels. The action definitely got ugly today, but if there's even a slight upside surprise tomorrow morning, we could have a snap back higher.
I made no trades today because I was in meetings most of the day. CBI is now a bit disconcerting to me, though. It bounced a bit this week, which I expected because the volume on its first selloff leg really wasn't that fierce. Today, however, marked a noticeable surge in volume as it sold off. That said, it held the 50-day EMA. CBI is holding tough. If it drops below this week's lows, however, I'll sell and take my loss.
Pretty much every short I mentioned dropped hard today. Too bad I wasn't in any of them. That's the thing about shorting versus going long. When you short, the declines are much quicker and much more vicious once they start, whereas going long usually entails a gradual grind higher. It makes sense if we think about the emotions involved. Either way, it's fear. When a stock is rising, one fears missing the profit, but when a stock is dropping, one fears the loss of capital. Obviously, the latter's going to be a more powerful fear because in that case, you lose money versus in the former where you simply don't win money. Losing is not the same as not winning. It's the way our minds are wired generally. So, the downdrafts set in much quicker and are much more violent. That means I have to be a bit more willing to be anticipatory with my shorts, rather than reactionary. Shorting isn't simply the inverse of going long.
I'm actually pondering a format change for the blog and my general approach. In a nutshell, I've realized that I have trouble trying to watch so many stocks for short timeframe trades and I've realized that I have an easier time if I focus on the indices. It narrows down my universe for daytrading and short timeframe trades, which is very important for me because I have a tendency to try to watch everything and subsequently miss everything. So, I'm considering shifting my focus on short-term stuff more towards the indices and picking stocks more from a longer-term perspective. That was part of the original goal of the blog, anyway. I'll probably shift it to picking a new longer-term stock play each week while updating daily about the current picks and the action in the indices. So, the watchlist will probably be pretty well cleaned out and rebuilt again.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Wednesday, February 3, 2010
CHRW and R (Short)...
I've got a pair of shorts tonight. Normally, I wouldn't combine two picks in the same post, but I am here. The reason is both are truckers and both have similar charts and both reported earnings today. CH Robinson Worldwide and Ryder both disappointed the markets today with their earnings and both look destined to fall. In the short term, I believe CHRW has better downside, but in the long term, I believe R has better downside. So, I'd be inclined to end up taking a combined full normal position size for me, but divided in half between these two. If a position for you is normally 10% of your portfolio, I'd commit 5% to both names to reach 10%, for example.
The technical setup is pretty straightforward here. We have two stocks who broke their 200-day EMAs on heavy volume and left gaps behind. Furthermore, we have two stocks who broke down out of multi-month bases, leaving a lot of overhead resistance behind. These are decisive breakdowns, and I expect any effort to rally will be met with aggressive selling and shorting. Transports in particular are a good place to look to short if you are bearish on the economy and/or expect a double-dip scenario to play out (which I am and I do). Even if you disagree with that and have your portfolio positioned accordingly, a short in either or both of these through puts would provide a nice hedge.
As for the options, I'm looking for a multi-month decline, so I'm willing to go a bit further out in time, but I also believe there will be a more immediate decline following a little relief rally. So, in CHRW, I'm looking at some more near-dated contracts, say a put spread involving the purchase o the February $55 puts and sale of the February $50 puts. Going a bit further out in time, I'm looking at creating another call spread involving the May $55 puts and the aforementioned February $50 puts. I'll of course look to enter the buy leg on the rally and enter the sell legs on the drop. R is a bit trickier because its chain has wider bid/ask spreads. I think R is going to get some strong support around $30, so I'd be inclined to sell puts around the $30 strike. For instance, I'd consider buying the May $4o puts and then looking to sell the May $30 puts.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
The technical setup is pretty straightforward here. We have two stocks who broke their 200-day EMAs on heavy volume and left gaps behind. Furthermore, we have two stocks who broke down out of multi-month bases, leaving a lot of overhead resistance behind. These are decisive breakdowns, and I expect any effort to rally will be met with aggressive selling and shorting. Transports in particular are a good place to look to short if you are bearish on the economy and/or expect a double-dip scenario to play out (which I am and I do). Even if you disagree with that and have your portfolio positioned accordingly, a short in either or both of these through puts would provide a nice hedge.
As for the options, I'm looking for a multi-month decline, so I'm willing to go a bit further out in time, but I also believe there will be a more immediate decline following a little relief rally. So, in CHRW, I'm looking at some more near-dated contracts, say a put spread involving the purchase o the February $55 puts and sale of the February $50 puts. Going a bit further out in time, I'm looking at creating another call spread involving the May $55 puts and the aforementioned February $50 puts. I'll of course look to enter the buy leg on the rally and enter the sell legs on the drop. R is a bit trickier because its chain has wider bid/ask spreads. I think R is going to get some strong support around $30, so I'd be inclined to sell puts around the $30 strike. For instance, I'd consider buying the May $4o puts and then looking to sell the May $30 puts.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Wednesday 3 February 2010...
The bounce continued today, but across the board, volume was pretty anemic. Honestly, it was a rather boring trading day. The market seemed to be in wait-and-see mode regarding many things, ranging from CSCO's earnings tonight (it's trading up a couple percent in the aftermarket, but nothing crazy) to news on Europe and China to news out of the US (jobs report on Friday).
No trades today. I was tempted on both the long (IACI, JTX, SPAR) and short (EJ, NTES, TSL) sides, but did nothing on either side.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
No trades today. I was tempted on both the long (IACI, JTX, SPAR) and short (EJ, NTES, TSL) sides, but did nothing on either side.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Tuesday, February 2, 2010
Daily View Tuesday 2 February 2010 (Groundhog Day edition)...
Happy Groundhog Day. The critter saw his darn shadow today, so six more weeks of winter. Boo. Maybe the forecast helped the market today because the market rallied again today. Who knows? Since the market seems to be tied to oil, maybe the forecast for more winter propped oil. I have no idea, but the rally continued. Volume was mixed compared to yesterday, lower on some indices and higher on others. We'll have to see if the rally continues, as we're now approaching resistance at several 50-day EMAs. The bears are in charge until we've reclaimed those levels. We saw a lot of this in the second half of 2009. Whenever the market was on the brink of technical breakdown, the bulls saved the day and powered higher. Conventional technical analysis says these V-shaped bounces should not be trusted, but the pattern established over the past six months says otherwise. In essence, the exception has now become the rule unless proven otherwise.
No trades today in any account.
Again, I'm liking what I see in CBI on the long side. I'm also liking EME holding support like it has. This one is looking worthy of a nibble on the long side for a starter. IACI and SPAR are looking good, too.
On the short side, EJ's rallying a bit for me, and I'm liking that. Same with TSL. These are the lowest-risk short setups right now.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
No trades today in any account.
Again, I'm liking what I see in CBI on the long side. I'm also liking EME holding support like it has. This one is looking worthy of a nibble on the long side for a starter. IACI and SPAR are looking good, too.
On the short side, EJ's rallying a bit for me, and I'm liking that. Same with TSL. These are the lowest-risk short setups right now.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Monday, February 1, 2010
JTX (Long)...
This is an example of my inner value investor. Jackson Hewitt is the US's second largest tax preparation firm, behind H&R Block. JTX has had some major issues over the past few years, issues of the legal, operational, and financial natures. This is how a stock drops 90%.
JTX also has a LOT of debt, way more than I like to see typically (the current ratio is 0.85 and the debt/equity ratio is ~150%). Because of the high debt and previous years' earnings consistency issues, JTX does not score favourably on the screens. On the plus side, its price/sales ratio is ~0.3 and the P/E ratio is ~3.5. JTX does not pay a dividend and does not report earnings again until probably early March (I can't find a date, but the last quarter was reported back in early December).
The chart also looks like death warmed over. Again, that's what happens when a stock drops from $30 to $3 in a couple years.
What I like here is the options chain. JTX's options are dirt cheap and there are a lot of ways to play, and though the common stock is viable, I would rather play with the options. The April $2.50 calls trade at $0.7/$0.8 bid/ask, so you can sell March and/or April $5 calls against these to reduce your downside and still leave you with a tidy profit should the stock rally past $5.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
JTX also has a LOT of debt, way more than I like to see typically (the current ratio is 0.85 and the debt/equity ratio is ~150%). Because of the high debt and previous years' earnings consistency issues, JTX does not score favourably on the screens. On the plus side, its price/sales ratio is ~0.3 and the P/E ratio is ~3.5. JTX does not pay a dividend and does not report earnings again until probably early March (I can't find a date, but the last quarter was reported back in early December).
The chart also looks like death warmed over. Again, that's what happens when a stock drops from $30 to $3 in a couple years.
What I like here is the options chain. JTX's options are dirt cheap and there are a lot of ways to play, and though the common stock is viable, I would rather play with the options. The April $2.50 calls trade at $0.7/$0.8 bid/ask, so you can sell March and/or April $5 calls against these to reduce your downside and still leave you with a tidy profit should the stock rally past $5.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Monday 1 February 2010...
Well, we got the start of our bounce today, as the bulls were able to string something together. It wasn't much, but it was better than they've mustered the past two weeks. Indeed, compared to the selling barrage of the past two weeks, today was pretty anemic. We'll have to see what the bulls have for tomorrow. Though I am still inclined to look to short for quicker trades, I do still believe the broader uptrend remains intact, so it's a short-term bearish, intermediate-term bullish view.
I didn't make any trades today in any of my accounts. Right now, I'm content to give the bulls some room to try to take us higher in the next couple days, though I do expect any such bounce to fail and I expect the bears will be able to drag us lower.
I'm really liking the rallies in EJ, QCOM, and TSL today. These are setting up quite nicely on the short side.
I'm also really liking CBI's action. It held tough during the selling, and today the volume was heavier today on the upside than it was last week on the downside, which is a good thing.
EME held where it had to today, and this one could bounce a bit off the 200-day EMA. IACI and SPAR are also looking good at support.
JST and NEU are probably going to be taken off the watchlist soon. NEU tanked following its quarter and JST is not looking so good.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
I didn't make any trades today in any of my accounts. Right now, I'm content to give the bulls some room to try to take us higher in the next couple days, though I do expect any such bounce to fail and I expect the bears will be able to drag us lower.
I'm really liking the rallies in EJ, QCOM, and TSL today. These are setting up quite nicely on the short side.
I'm also really liking CBI's action. It held tough during the selling, and today the volume was heavier today on the upside than it was last week on the downside, which is a good thing.
EME held where it had to today, and this one could bounce a bit off the 200-day EMA. IACI and SPAR are also looking good at support.
JST and NEU are probably going to be taken off the watchlist soon. NEU tanked following its quarter and JST is not looking so good.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Sunday, January 31, 2010
QCOM (Short)...
QUALCOMM is too juicy of a short to pass up on. They reported earnings after the close Wednesday, and as you can see, the market didn't like what they had to say. I didn't listen to the call, but I read several recaps of the call and the quarter and it was pretty ugly.
So I wasn't short going into earnings. So what? QCOM looks destined to go much lower from here. As you can see, the two-day blitzkrieg left a massive gap-down and on Friday it took out previous support at $40. Gaps this big don't get filled quickly, so I'm not inclined to look at this as a long. Most likely, what will happen is QCOM will establish some kind of short-term low, perhaps Friday's low around $38.50, and bounce higher up towards either resistance at round-number $40 or Thursday's high around $42. The bears and I will be waiting for that to happen to load up on some short exposure. Based on the weekly chart, I think QCOM's going back to the mid $30's, but it could go as low as $32.
Options-wise, if the short-term rally plays out like I expect it to, I'm looking to load up on some February $43 puts. Depending on how long this rally takes to play out, I might look out to March and create a put spread involving February puts.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Weekly View Friday 29 January 2010...
Weekly Review:
Last week, like the week before it, was pure carnage. Selling was heavy and volume was high despite the markets getting some pretty good newsflow. The dip-buyers are still MIA.
Weekly Preview:
Earnings will start to slow, as most of the big names are out of the way. We're pretty oversold, and I think we're due for a relief bounce to the upside, a bounce which I view as an opportunity to establish some trading shorts. There are a lot more good short setups out there now, but they still need a bit of a bounce to allow a lower-risk entry.
Earnings season keeps going this week. Here's a breakdown of the ones I'm watching day by day. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
Monday: EEP, ACV, CYOU, GCI, HEW, HUM, NI, SOHU, SYY,
Tuesday: APC, PCL, RCII, TUP, ADS, AMB, AMSC, AXE, ADM, ADP, BEAV, CMI, DHI, EMR, ETR, NRGY, LXK, MAN, MPEL, MTU, SEED, PCX, PNR, PBG, PRGO, PXD, RDWR, SU, DOW, HSY, PTRY, SMG, TKR, TNB, TDW, UPS, UTI, WHR, WEC
Wednesday: ACE, AFL, AMX, AJG, CHRW, CTRP, FISV, SOLR, IRF, JDSU, MTW, MEE, MET, MIL, MWA, NETL, NWS, QSFT, RSYS, RVBD, SGI, TSO, TRMB, VRSN, AKAM, ALVR, ASCA, AOL, ARW, BDK, CKSW, CNQR, DBD, HW, HNT, HMC, IP, ITG, ITT, LAZ, MHO, MMP, WFR, NOV, NVLS, LIIM, PFE, RL, POWL, R, SGU, BCO, TMO, TWX, TM, TZOO, WU, WWW,
Thursday: NDN, ACTS, ALEX, AMP, AIZ, ATW, AVB, BBBB, CELL, BRS, BRCM, CBG, CSCO, CYTK, DLB, DCP, EFX, EQR, KIM, MWW, NBIX, OPNT, SPTN, STLD, THQI, TGI, V, WLT, YUM, ACTI, ALKS, AGN, ATK, AIPC, AVP, STD, BCE, BDC, BCRX, BG, BKC, CME, CI, CINF, CLX, DB, DO, ELNK, ENS, FALC, GSK, HIT, HSP, K, LZ, MA, MCO, MWIV, NCR, NOC, NUS, OPWV, PENN, PBI, POL, RAI, SLE, SFLY, SNA, SNE, SE, SPR, HOT, TEN, TBL, UL, WBC,
Friday: ARAY, ACTL, BEZ, BEBE, BBND, BAP, FMC, ILMN, IN, MTD, MCHP, MPWR, NFG, N, OPXT, PKI, PWAV, RAH, SLH, SUN, TSYS, AET, AYE, AXL, AIV, BZH, BPO, BRKS, BPL, XIDE, LEA, MDC, NTT, PC, PPL, SPG, SEP, SYT, TE, TSN, GROW, WY,
Monday: BWP, CVS, HAR, HAS, HS, L, LO, MCY, NTE, GOLD,
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Last week, like the week before it, was pure carnage. Selling was heavy and volume was high despite the markets getting some pretty good newsflow. The dip-buyers are still MIA.
Weekly Preview:
Earnings will start to slow, as most of the big names are out of the way. We're pretty oversold, and I think we're due for a relief bounce to the upside, a bounce which I view as an opportunity to establish some trading shorts. There are a lot more good short setups out there now, but they still need a bit of a bounce to allow a lower-risk entry.
Earnings season keeps going this week. Here's a breakdown of the ones I'm watching day by day. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
Monday: EEP, ACV, CYOU, GCI, HEW, HUM, NI, SOHU, SYY,
Tuesday: APC, PCL, RCII, TUP, ADS, AMB, AMSC, AXE, ADM, ADP, BEAV, CMI, DHI, EMR, ETR, NRGY, LXK, MAN, MPEL, MTU, SEED, PCX, PNR, PBG, PRGO, PXD, RDWR, SU, DOW, HSY, PTRY, SMG, TKR, TNB, TDW, UPS, UTI, WHR, WEC
Wednesday: ACE, AFL, AMX, AJG, CHRW, CTRP, FISV, SOLR, IRF, JDSU, MTW, MEE, MET, MIL, MWA, NETL, NWS, QSFT, RSYS, RVBD, SGI, TSO, TRMB, VRSN, AKAM, ALVR, ASCA, AOL, ARW, BDK, CKSW, CNQR, DBD, HW, HNT, HMC, IP, ITG, ITT, LAZ, MHO, MMP, WFR, NOV, NVLS, LIIM, PFE, RL, POWL, R, SGU, BCO, TMO, TWX, TM, TZOO, WU, WWW,
Thursday: NDN, ACTS, ALEX, AMP, AIZ, ATW, AVB, BBBB, CELL, BRS, BRCM, CBG, CSCO, CYTK, DLB, DCP, EFX, EQR, KIM, MWW, NBIX, OPNT, SPTN, STLD, THQI, TGI, V, WLT, YUM, ACTI, ALKS, AGN, ATK, AIPC, AVP, STD, BCE, BDC, BCRX, BG, BKC, CME, CI, CINF, CLX, DB, DO, ELNK, ENS, FALC, GSK, HIT, HSP, K, LZ, MA, MCO, MWIV, NCR, NOC, NUS, OPWV, PENN, PBI, POL, RAI, SLE, SFLY, SNA, SNE, SE, SPR, HOT, TEN, TBL, UL, WBC,
Friday: ARAY, ACTL, BEZ, BEBE, BBND, BAP, FMC, ILMN, IN, MTD, MCHP, MPWR, NFG, N, OPXT, PKI, PWAV, RAH, SLH, SUN, TSYS, AET, AYE, AXL, AIV, BZH, BPO, BRKS, BPL, XIDE, LEA, MDC, NTT, PC, PPL, SPG, SEP, SYT, TE, TSN, GROW, WY,
Monday: BWP, CVS, HAR, HAS, HS, L, LO, MCY, NTE, GOLD,
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
Position: None
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Saturday, January 30, 2010
Index Update 31 January 2010...
In my 401k, I have a limited array of investment options, as does pretty much everyone. But, I have a very good 401k in that it has passively-managed index funds available and I don't have to rely exclusively on actively-managed mutual funds. The difference is very important. Passive funds are designed to exactly track an index, say the $SPX. Often, they have pretty low annual fees (mine are ~25bp or 0.25%). Active funds, on the other hand, try to beat the index they've benchmarked themselves to, again say the $SPX. Since they're trying to beat the index, they'll charge higher fees (typically 50-100bp, but sometimes more). Really, active funds are little more than a Wall Street marketing sham to try to bleed more money from you. Who wants to just match the market when you can beat the market? That's the thing. The vast majority of active mutual funds does not even perform as well as its benchmark (I'm talking 2/3 here or more). So, that means if you buy an active fund, you're probably paying them more money to underperform. You're getting ripped off. Obviously, not all active funds underperform the market, but most do.
Except for a couple cases in my 401k, I stick with passive funds. The exceptions are a FCNTX, which is a legacy position I kept open because it's closed to new investors; SGIIX, a top-performing global blend fund that is actually within spitting distance of its all-time highs; and TEEMX, an emerging markets fund (because I don't have direct access to emerging markets in my 401k). I also have my fixed income fund (which I refer to as 'cash'), UTX common stock from my employer, and my index funds for $IEE, $MDY, $RLG, $RLV, $RUT, and $SPX.
My system has served me very well in allowing me to sidestep much of the 2008 collapse, though it did not get me back in last year as quickly as I would have liked. That said, since I started this at the beginning of 2006, as of today, my 401k's performance is 12.01% annualized versus the $SPX's -3.67% in the same time.
The reason I bring this up is the market in the past two weeks has done some significant damage to my signals. The monthly signals are still fully bullish, except for the $IEE signal, which fell this month from fully bullish to partially bullish. The weekly signals are where the carnage is. The $IEE, $MDY, $RLG, $RLV, $RUT, $SPX, and UTX have all gone from fully bullish to bullish neutral in the past two weeks. I use a 5-point system to rank the indices on the daily, weekly, and monthly timeframes.
0 = fully bearish
1 = partially bearish
2 = neutral bearish
3 = neutral bullish
4 = partially bullish
5 = fully bullish
I use the monthly signal to tell me what my maximum asset allocation will be towards a particular holding. The weekly tells me how much of that maximum I should commit right now. The daily helps me fine-tune my entries and exits.
Because of the strength in the monthly charts, I will still go ahead with my plan to add at the 200-day EMAs, as I did earlier this month at the 50-day EMAs. However, if the 200-day EMA fails to hold, I will sell what I've bought and take the minor loss despite the strength in the monthly charts. When a stock or an index has used a level, say the 50-day EMA, as support for a long time, and that level gets decisively broken and is not quickly reclaimed, that is your first red flag of trouble. Then, the next support level, in this case the 200-day EMA, is the next key. If this gets decisively broken and is not quickly reclaimed, that's your second red flag and that's your cue to sell your position down to a small placeholder and step away until the security is able to reclaim the 200-day EMA. Previous support has now become new resistance, so in this case, you let it drop until it shows you signs of life.
This approach saved me big time in 2008's meltdown. It left me slower to get in 2009's rally than I would've liked, but look at it this way. If you lose 50%, then gain 50%, you're still 25% below where you were to start because once you lose 50%, you need to gain 100% to get back to even. The trick is to try to keep your assets as close to all-time highs as possible.
Position: Long FCNTX, SGIIX, TEEMX, UTX, and index funds for $IEE, $MDY, $RLG, $RLV, $RUT, and $SPX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Except for a couple cases in my 401k, I stick with passive funds. The exceptions are a FCNTX, which is a legacy position I kept open because it's closed to new investors; SGIIX, a top-performing global blend fund that is actually within spitting distance of its all-time highs; and TEEMX, an emerging markets fund (because I don't have direct access to emerging markets in my 401k). I also have my fixed income fund (which I refer to as 'cash'), UTX common stock from my employer, and my index funds for $IEE, $MDY, $RLG, $RLV, $RUT, and $SPX.
My system has served me very well in allowing me to sidestep much of the 2008 collapse, though it did not get me back in last year as quickly as I would have liked. That said, since I started this at the beginning of 2006, as of today, my 401k's performance is 12.01% annualized versus the $SPX's -3.67% in the same time.
The reason I bring this up is the market in the past two weeks has done some significant damage to my signals. The monthly signals are still fully bullish, except for the $IEE signal, which fell this month from fully bullish to partially bullish. The weekly signals are where the carnage is. The $IEE, $MDY, $RLG, $RLV, $RUT, $SPX, and UTX have all gone from fully bullish to bullish neutral in the past two weeks. I use a 5-point system to rank the indices on the daily, weekly, and monthly timeframes.
0 = fully bearish
1 = partially bearish
2 = neutral bearish
3 = neutral bullish
4 = partially bullish
5 = fully bullish
I use the monthly signal to tell me what my maximum asset allocation will be towards a particular holding. The weekly tells me how much of that maximum I should commit right now. The daily helps me fine-tune my entries and exits.
Because of the strength in the monthly charts, I will still go ahead with my plan to add at the 200-day EMAs, as I did earlier this month at the 50-day EMAs. However, if the 200-day EMA fails to hold, I will sell what I've bought and take the minor loss despite the strength in the monthly charts. When a stock or an index has used a level, say the 50-day EMA, as support for a long time, and that level gets decisively broken and is not quickly reclaimed, that is your first red flag of trouble. Then, the next support level, in this case the 200-day EMA, is the next key. If this gets decisively broken and is not quickly reclaimed, that's your second red flag and that's your cue to sell your position down to a small placeholder and step away until the security is able to reclaim the 200-day EMA. Previous support has now become new resistance, so in this case, you let it drop until it shows you signs of life.
This approach saved me big time in 2008's meltdown. It left me slower to get in 2009's rally than I would've liked, but look at it this way. If you lose 50%, then gain 50%, you're still 25% below where you were to start because once you lose 50%, you need to gain 100% to get back to even. The trick is to try to keep your assets as close to all-time highs as possible.
Position: Long FCNTX, SGIIX, TEEMX, UTX, and index funds for $IEE, $MDY, $RLG, $RLV, $RUT, and $SPX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Friday 29 January 2010...
An ugly end to an ugly week. It looked like the bulls were going to get some bounce action going, with good tech earnings and a great GDP (5.7% versus 4.4% expected). Everything aligned perfectly for the bulls, but the sellers overwhelmed them and we closed very weak. Ouch.
No 401k trades or regular account trades, but I sold RGR for a small loss in the IRA. I wasn't about to repeat the mistake I made with FUQI. Once a breakout fails, the key is to get out and minimize the damage. With FUQI, I let hope get to me, and it cost me.
The market is changing character. This correction is more painful than any pullback we've had over the past several months. It's feeling to me like the market was held up through the end of last year to lock in profits in 2010 for tax reasons. The basic logic is if you close a trade in a year, it goes on that year's taxes, so if you've got to take some loses in 2009, you sell before 2009 ends and take the tax loss on 2009, but if you have gains from 2009, sell them in 2010 so you don't have to pay the taxes for another year.
I'm still in the CBI calls, too. CBI is holding its breakout level and its 50-day EMA...for now. It's one of the best-looking charts I see, as it's still holding support. Plus, the volume on the decline in the name hasn't been overwhelming, which cannot be said for many other stocks.
I forgot to mention earlier this week that CRE's shareholders have approved the liquidation plan, so this one's looking like its on track. It had a huge-volume selloff on Friday, but the price didn't drop that much. I'm not sure what to make of that, but I'm a buyer of CRE on weakness.
Position: long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
No 401k trades or regular account trades, but I sold RGR for a small loss in the IRA. I wasn't about to repeat the mistake I made with FUQI. Once a breakout fails, the key is to get out and minimize the damage. With FUQI, I let hope get to me, and it cost me.
The market is changing character. This correction is more painful than any pullback we've had over the past several months. It's feeling to me like the market was held up through the end of last year to lock in profits in 2010 for tax reasons. The basic logic is if you close a trade in a year, it goes on that year's taxes, so if you've got to take some loses in 2009, you sell before 2009 ends and take the tax loss on 2009, but if you have gains from 2009, sell them in 2010 so you don't have to pay the taxes for another year.
I'm still in the CBI calls, too. CBI is holding its breakout level and its 50-day EMA...for now. It's one of the best-looking charts I see, as it's still holding support. Plus, the volume on the decline in the name hasn't been overwhelming, which cannot be said for many other stocks.
I forgot to mention earlier this week that CRE's shareholders have approved the liquidation plan, so this one's looking like its on track. It had a huge-volume selloff on Friday, but the price didn't drop that much. I'm not sure what to make of that, but I'm a buyer of CRE on weakness.
Position: long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Thursday, January 28, 2010
TSL (Short)...
I think Trina Solar is looking pretty vulnerable here. Sure, it's down about 25% in the past couple weeks, but I still think it has further to fall. I see a momentum stock that has broken down technically. I'm looking to get short here through some puts as it rallies back towards its 50-day EMA. Note the declining volume on the advance following a solid week plus of selling. Massive, high-volume breakdowns like this are often the first shot across the bow to tell us that a stock that's had a monster run is getting ready to reverse and head lower. You can also see TSL hasn't traded consistently below the 50-day EMA in almost a year, so the level was solid support, and I now believe it will be solid resistance. TSL has support for now at the most recent low around $21, but I think this will yield and TSL won't find steady support again until the 200-day EMA around $18.
TSL doesn't report earnings again until March.
I think the February puts are pretty fairly priced, especially compared to the March ones. This should come as no surprise since the March puts would have extra premium baked into them due to the longer time duration and the earnings catalyst. I like the February $24 puts the best here, and even more on a low-volume rally up towards the 50-day EMA around $24.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
TSL doesn't report earnings again until March.
I think the February puts are pretty fairly priced, especially compared to the March ones. This should come as no surprise since the March puts would have extra premium baked into them due to the longer time duration and the earnings catalyst. I like the February $24 puts the best here, and even more on a low-volume rally up towards the 50-day EMA around $24.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Thursday 28 January 2010...
The markets were down pretty hard today. It was not pretty. The big disappointment was QCOM, a large component of the Nasdaq 100 who happened to be down about 14% today. In other news, Big Ben was confirmed for a second term, which is probably a market-friendly development. The big aftermarket reports were MSFT and AMZN, and we have GDP news in the morning.
No trades today in any account. I'm not seeing much I want to buy right now, but I'm also not seeing much I want to short. The market has had a decisive change in character the past two weeks, and I now believe we're in a market where one can actually make money on the short side.
As far as the watchlist goes, I'm actually considering a short of ARO. Resistance is looking like it's setting in and I believe the stock could return to the previous lows, which is ~15% downside from current levels with maybe 3% risk (I wouldn't give it much room above the 50/200-day EMAs).
CBI is holding tough. I considered adding to my position today, but elected not to. If it breaks down from here, it's got further to fall and I'll cut my losses.
CRE's powering higher. I'm wishing I loaded up more aggressively at lower levels, but the solid accumulation in a declining market suggests to me that maybe the market thinks the liquidation will be better than I'm currently thinking.
I still want to see rallies in EJ and NTES before getting short of them.
SPAR is interesting me on the long side, too. It's pulled back right to the 50/200-day EMAs (and the breakout level I mentioned before). Furthermore, the volume on its declines has been very mild. I'm liking this one for a long at current levels with a stop below the 50/200-day EMAs.
RGR, ROST, and IACI are also holding tough.
Position: long CBI, CRE, RGR
Disclaimer: This is not a recommendation and is presented for informational purposes only.
No trades today in any account. I'm not seeing much I want to buy right now, but I'm also not seeing much I want to short. The market has had a decisive change in character the past two weeks, and I now believe we're in a market where one can actually make money on the short side.
As far as the watchlist goes, I'm actually considering a short of ARO. Resistance is looking like it's setting in and I believe the stock could return to the previous lows, which is ~15% downside from current levels with maybe 3% risk (I wouldn't give it much room above the 50/200-day EMAs).
CBI is holding tough. I considered adding to my position today, but elected not to. If it breaks down from here, it's got further to fall and I'll cut my losses.
CRE's powering higher. I'm wishing I loaded up more aggressively at lower levels, but the solid accumulation in a declining market suggests to me that maybe the market thinks the liquidation will be better than I'm currently thinking.
I still want to see rallies in EJ and NTES before getting short of them.
SPAR is interesting me on the long side, too. It's pulled back right to the 50/200-day EMAs (and the breakout level I mentioned before). Furthermore, the volume on its declines has been very mild. I'm liking this one for a long at current levels with a stop below the 50/200-day EMAs.
RGR, ROST, and IACI are also holding tough.
Position: long CBI, CRE, RGR
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Wednesday, January 27, 2010
Daily View Wednesday 27 January 2010...
A really quick post because it's even later than last night. :-p Lots of news today and all of it appears to be market-friendly. The iPad wasn't as overwhelming as I thought it would be, but it's still pretty darn cool. Geithner and Paulson got grilled by Congress, but again there wasn't really much to report on there. Nothing of note from the Federal Reserve, either. We had one dissenting vote, but that was about the language (Hoenig wanted to remove the bit about keeping rates low 'for an extended period', but was ok with keeping the rate unchanged). The market really liked that, as the bulls were really able to take us higher into the close.
As for Obama's address (and the GOP response), I don't think these will be big market impacts tomorrow, mainly because Obama did a decently good job at remaining fairly centrist and kept the hostile rhetoric to a minimum. He was much less populist than I feared he would be, and I think we'll be ok tomorrow.
UTX reported a good quarter this morning. No real surprises in it, but the stock sold off a little bit. I made no trades in the 401k today.
I did, however, close the sell-leg of my CBI call spread. CBI rallied quite nicely for me and this position is now back pretty close to even. If CBI can continue its upside tomorrow, I think this position will finally be back to being profitable.
Once again, no pick tonight. I'll have some tomorrow or over the weekend.
Position: long CBI, UTX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
As for Obama's address (and the GOP response), I don't think these will be big market impacts tomorrow, mainly because Obama did a decently good job at remaining fairly centrist and kept the hostile rhetoric to a minimum. He was much less populist than I feared he would be, and I think we'll be ok tomorrow.
UTX reported a good quarter this morning. No real surprises in it, but the stock sold off a little bit. I made no trades in the 401k today.
I did, however, close the sell-leg of my CBI call spread. CBI rallied quite nicely for me and this position is now back pretty close to even. If CBI can continue its upside tomorrow, I think this position will finally be back to being profitable.
Once again, no pick tonight. I'll have some tomorrow or over the weekend.
Position: long CBI, UTX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Tuesday, January 26, 2010
Daily View Tuesday 26 January 2010...
I know, it's pretty late posting this one, so I'll make it a quickie. I'm not liking the way the market's acting. The bounce continued today...sort of...and it wasn't very vigourous at all. The thought is entering into my head that maybe it is different this time and the pullback won't yield one of those V-shaped bounces we've all become so used to over the past nine or so months. The volume was big last week on the selloff and it's pretty small so far this week on the bounce, which is a classic tell of a dead-cat bounce. This could be associated with the fact that the Fed is due to announce its decision tomorrow, along with Apple and their iTablet or whatever it will be, and then we have Obama's State of the Union tomorrow night. The market is extremely fragile right now, to say the least.
I'm not putting up a pick tonight, either. However, I'm more inclined to get short rather than long at this point, pretty much across the board. That being said, I'm not going to sell what I just bought last week in the 401k, at least not yet. The anticipation for the potential of more downside is the reason I moved small there, leaving plenty of room to add should we fall further. Note that I would have added to my 401k position in my employer, United Technologies today, as it dipped below its 50-day EMA, but I didn't because UTX reports earnings Wednesday morning before the open.
Position: long UTX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
I'm not putting up a pick tonight, either. However, I'm more inclined to get short rather than long at this point, pretty much across the board. That being said, I'm not going to sell what I just bought last week in the 401k, at least not yet. The anticipation for the potential of more downside is the reason I moved small there, leaving plenty of room to add should we fall further. Note that I would have added to my 401k position in my employer, United Technologies today, as it dipped below its 50-day EMA, but I didn't because UTX reports earnings Wednesday morning before the open.
Position: long UTX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Monday, January 25, 2010
Daily View Monday 25 January 2010...
It was a pretty lackluster day in the markets today. We managed a slight bounce, but this appears to be an oversold bounce in the wake of last week's carnage. Not really much to say about the trading action itself today besides that.
News wasn't bad today like it was last week, when we had China tightening, Obama talking about declaring war on Wall Street with his Volcker Rule (don't get me started on how misguided this rule is and how it shows a complete lack of comprehension on the part of Obama and friends as to what caused the crisis; unless history's been rewritten, it was bad loans, not proprietary trading, but what would I know? :-p), and rumblings that Big Ben may not be reconfirmed (I can't fathom how he didn't see this bubble coming, but he did what had to be done to avert a global financial collapse).
In the aftermarket, AAPL at first glance, would appear to have crushed expectations. However, they had some accounting changes that really matter, and the beat is greatly diminished as a result. That said, AAPL is trading flat in the aftermarket right now. It'll be very interesting to see what happens tomorrow morning.
I made no moves in either the 401k, IRA, or trading account today. We have actual short setups for the first time in a long time, though. I'm not putting out a new pick tonight, either. AAPL earnings tend to be a particularly big deal, so I'm really curious to see what happens tomorrow.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
News wasn't bad today like it was last week, when we had China tightening, Obama talking about declaring war on Wall Street with his Volcker Rule (don't get me started on how misguided this rule is and how it shows a complete lack of comprehension on the part of Obama and friends as to what caused the crisis; unless history's been rewritten, it was bad loans, not proprietary trading, but what would I know? :-p), and rumblings that Big Ben may not be reconfirmed (I can't fathom how he didn't see this bubble coming, but he did what had to be done to avert a global financial collapse).
In the aftermarket, AAPL at first glance, would appear to have crushed expectations. However, they had some accounting changes that really matter, and the beat is greatly diminished as a result. That said, AAPL is trading flat in the aftermarket right now. It'll be very interesting to see what happens tomorrow morning.
I made no moves in either the 401k, IRA, or trading account today. We have actual short setups for the first time in a long time, though. I'm not putting out a new pick tonight, either. AAPL earnings tend to be a particularly big deal, so I'm really curious to see what happens tomorrow.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Sunday, January 24, 2010
EJ (Short)...
E-House is a Chinese real estate agency/brokerage company. It does not report earnings again until early March. It scores 93% on the Peter Lynch screen and 85% on the Martin Zweig screen.
EJ's short setup is very similar to NTES's, which was the previous short pick. EJ recently broke below its 200-day EMA on heavy volume, falling out of a base that has been forming for the past several months. As with NTES, I am hoping for EJ to rally about 10% or so to return towards its 200-day EMA, and I would look to use such a bounce as a chance to get short. It is similarly oversold, as it's fallen now for 8/10 last trading days. I also anticipate the 50-day EMA being dragged down towards the 200-day EMA to provide an additional layer of resistance. Based on the weekly chart, if the bears can really get a hold of EJ, I could see the stock getting cut in half from here, plunging all the way back to $8.
In the options, I like the March $17.50 or $20 puts, which could be put into a put spread with the February (and eventually March) $15 puts. Again, I'm looking for it to have a little oversold rally in the short term to set up a better shorting opportunity.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
EJ's short setup is very similar to NTES's, which was the previous short pick. EJ recently broke below its 200-day EMA on heavy volume, falling out of a base that has been forming for the past several months. As with NTES, I am hoping for EJ to rally about 10% or so to return towards its 200-day EMA, and I would look to use such a bounce as a chance to get short. It is similarly oversold, as it's fallen now for 8/10 last trading days. I also anticipate the 50-day EMA being dragged down towards the 200-day EMA to provide an additional layer of resistance. Based on the weekly chart, if the bears can really get a hold of EJ, I could see the stock getting cut in half from here, plunging all the way back to $8.
In the options, I like the March $17.50 or $20 puts, which could be put into a put spread with the February (and eventually March) $15 puts. Again, I'm looking for it to have a little oversold rally in the short term to set up a better shorting opportunity.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
NTES (Short)...
Before I proceed to detail my first short pick on here, I need to provide a quick overview of my shorting methodology. Ok, for starters, I short using puts and/or put spreads most of the time, but sometimes I will short using common stock as long as I can hedge it somehow, be it through selling covered puts or buying calls at a higher strike. So if it's not a stock with a good options chain, I'm probably not going to look to short it. Shorting is inherently more risky than going long because reward/risk symmetry is not your friend. Said another way, if you go long a stock, your theoretical maximum profit is infinite and your maximum theoretical loss is 100%, but if you get short of a stock, your theoretical maximum profit is 100% and your maximum theoretical loss is infinite (in reality, your broker would most likely automatically close out your short once the losses get too high). Also, when picking stocks to short, the primary driving force is the technicals. Fundamentals don't matter as much to me when shorting (shorting something because it is 'overvalued' is a great way to lose money because overvalued stocks tend to become more overvalued before they become fairly valued). That being said, if a stock scores strongly on the screens, I'll be a bit more cautious when shorting it, versus if the screens say it's a weak stock, at which point I'll be a bit more aggressive.
So, onto NetEase.com. Why am I picking on this Chinese internet gaming/advertisement firm? Simple - the chart is awful. The fundamentals are actually pretty decent, as it scores quite highly on the Peter Lynch screen (93%) and 72% on the Motley Fool screen, but beyond that, it doesn't get above 70% on any screen. NTES doesn't report again until late February or early March, and it has a good enough options chain for me.
So, I hate the chart. It was looking ok until this week, when NTES broke down below its 200-day EMA (and multi-month) support on heavy volume. NTES was down ~10% last week. The stock was as high as $42 a couple weeks ago, but it closed Friday at $33.50, so this is a pretty oversold stock. Shorting an oversold stock like this is playing with fire, especially considering that NTES has been down 10 of the past 11 trading days, including the past five straight. This one is set-up to have a short-covering snapback rally, which would present a safer shorting opportunity. What I want to see in NTES is a low-volume rally up towards the 200-day EMA, currently around $36.50. That's when I'd be looking to start my short, and I wouldn't give it much room above the 200-day EMA because the most recent high was up around $42 and that's a lot of pain to endure. Longer term, based on the weekly chart, I would expect NTES to have downside towards the upper or mid $20's, as it has a substantial base built there.
For options, I like the February $36 puts if I was going to short it right here, right now. However, I believe it will have a little rally and will present a better entry in these puts or even the February $37 or $38 puts. If I was going to short it right now, I would form it into a debit put spread with the February $36 and $33 puts for ~$2.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
So, onto NetEase.com. Why am I picking on this Chinese internet gaming/advertisement firm? Simple - the chart is awful. The fundamentals are actually pretty decent, as it scores quite highly on the Peter Lynch screen (93%) and 72% on the Motley Fool screen, but beyond that, it doesn't get above 70% on any screen. NTES doesn't report again until late February or early March, and it has a good enough options chain for me.
So, I hate the chart. It was looking ok until this week, when NTES broke down below its 200-day EMA (and multi-month) support on heavy volume. NTES was down ~10% last week. The stock was as high as $42 a couple weeks ago, but it closed Friday at $33.50, so this is a pretty oversold stock. Shorting an oversold stock like this is playing with fire, especially considering that NTES has been down 10 of the past 11 trading days, including the past five straight. This one is set-up to have a short-covering snapback rally, which would present a safer shorting opportunity. What I want to see in NTES is a low-volume rally up towards the 200-day EMA, currently around $36.50. That's when I'd be looking to start my short, and I wouldn't give it much room above the 200-day EMA because the most recent high was up around $42 and that's a lot of pain to endure. Longer term, based on the weekly chart, I would expect NTES to have downside towards the upper or mid $20's, as it has a substantial base built there.
For options, I like the February $36 puts if I was going to short it right here, right now. However, I believe it will have a little rally and will present a better entry in these puts or even the February $37 or $38 puts. If I was going to short it right now, I would form it into a debit put spread with the February $36 and $33 puts for ~$2.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Weekly View: Friday 22 January 2010...
Weekly Review:
Last week was pure carnage, to put it mildly. We had heavy, high-volume selling pretty much all week long. It's not the news that matters so much as the market's reaction to the news. The dip-buyers were nowhere to be seen, and we had some big earnings reports last week.
Weekly Preview:
We have more big earnings reports this week, as well. I'm still sticking with the view that this is a correction rather than the start of a reversal, though the heavy volume with which we sold off last week is a major red flag. Regardless, I'm going to become more aggressive on the short side than I have been in a very long time. Said another way, I'm actually actively looking for shorts again, which I haven't done in many months.
Earnings season keeps going this week. Here's a breakdown of the ones I'm watching day by day. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
Monday: AKS, CNH, DGX, ETN, HAL, SEE, VSEC, WAT
Tuesday: AMGN, AAPL, ATHR, CR, GGG, JDAS, OLN, PRXL, TXN, TSCM, VMW, ZION, ABC, AME, BHI, CRS, CCUR, CBE, GLW, DAL, DD, EMC, ENR, FPL, JEC, JNJ, MTG, NVS, NUE, BTU, RYN, RF, SHW, SI, SIFY, TLAB, MHP, TRV, TUES, X, VZ, GWW, WFT,
Wednesday: ALTR, BXP, BKI, ELY, CNI, CASB, DV, GILD, MCK, MTH, MOLX, QLGC, RFMD, RKT, STM, SYK, WMS, YHOO, ABT, AAI, ATI, BMC, CAJ, CAT, COP, EXP, EWBC, EOC, ENI, GD, HES, HOKU, ITW, LRCX, NVR, PX, ROK, SAP, SII, SO, STJ, BA, SWK, TEL, UAUA, UTX, USG, VLO, WLP,
Thursday: ACF, AMLN, BYI, CBT, CMO, CTXS, CVD, ETFC, FLEX, GMCR, HBI, HRS, LSTR, MEOH, MUR, NFLX, NYB, NE, NSC, QCOM, RYL, SRDX, SYMC, TER, TTEK, VAR, MMM, ADPT, ALK, MO, AEP, ABFS, AZN, T, AVID, BLL, BAX, BDX, BMS, BMY, CP, CAH, CSH, CELG, CL, COLM, CPWR, CNX, CY, D, DRE, EK, LLY, EQT, ETH, F, BEN, GR, HP, ISCA, JNS, JBLU, KSU, KMT, LLL, LEG, LMT, MKC, MJN, MNRO, MOT, NOK, OXY, ODFL, OXPS, OSK, PII, POT, PG, RTN, COL, SY, TROW, TSM, TXT, EL, TWC, TYC, LCC, WRLD, ZMH
Friday: ARG, AMZN, AMCC, ARBA, BCR, CPHD, CB, CYT, DHR, EMN, FII, GNW, IMGN, RMBS, JNPR, KLAC, KYO, MXIM, MSFT, NEU, RHI, SNDK, SNV, ACI, ALV, AVY, CVX, FO, GHM, HON, MAT, NWL, DCM, NS, PCAR, SAIA, WL,
Monday: EEP, ACV, CYOU, GCI, HEW, HUM, NI, SOHU,
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
Validea rebalanced their monthly portfolios this weekend, so I didn't run the screens and instead updated those watchlists.
Position: Long UTX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Last week was pure carnage, to put it mildly. We had heavy, high-volume selling pretty much all week long. It's not the news that matters so much as the market's reaction to the news. The dip-buyers were nowhere to be seen, and we had some big earnings reports last week.
Weekly Preview:
We have more big earnings reports this week, as well. I'm still sticking with the view that this is a correction rather than the start of a reversal, though the heavy volume with which we sold off last week is a major red flag. Regardless, I'm going to become more aggressive on the short side than I have been in a very long time. Said another way, I'm actually actively looking for shorts again, which I haven't done in many months.
Earnings season keeps going this week. Here's a breakdown of the ones I'm watching day by day. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
Monday: AKS, CNH, DGX, ETN, HAL, SEE, VSEC, WAT
Tuesday: AMGN, AAPL, ATHR, CR, GGG, JDAS, OLN, PRXL, TXN, TSCM, VMW, ZION, ABC, AME, BHI, CRS, CCUR, CBE, GLW, DAL, DD, EMC, ENR, FPL, JEC, JNJ, MTG, NVS, NUE, BTU, RYN, RF, SHW, SI, SIFY, TLAB, MHP, TRV, TUES, X, VZ, GWW, WFT,
Wednesday: ALTR, BXP, BKI, ELY, CNI, CASB, DV, GILD, MCK, MTH, MOLX, QLGC, RFMD, RKT, STM, SYK, WMS, YHOO, ABT, AAI, ATI, BMC, CAJ, CAT, COP, EXP, EWBC, EOC, ENI, GD, HES, HOKU, ITW, LRCX, NVR, PX, ROK, SAP, SII, SO, STJ, BA, SWK, TEL, UAUA, UTX, USG, VLO, WLP,
Thursday: ACF, AMLN, BYI, CBT, CMO, CTXS, CVD, ETFC, FLEX, GMCR, HBI, HRS, LSTR, MEOH, MUR, NFLX, NYB, NE, NSC, QCOM, RYL, SRDX, SYMC, TER, TTEK, VAR, MMM, ADPT, ALK, MO, AEP, ABFS, AZN, T, AVID, BLL, BAX, BDX, BMS, BMY, CP, CAH, CSH, CELG, CL, COLM, CPWR, CNX, CY, D, DRE, EK, LLY, EQT, ETH, F, BEN, GR, HP, ISCA, JNS, JBLU, KSU, KMT, LLL, LEG, LMT, MKC, MJN, MNRO, MOT, NOK, OXY, ODFL, OXPS, OSK, PII, POT, PG, RTN, COL, SY, TROW, TSM, TXT, EL, TWC, TYC, LCC, WRLD, ZMH
Friday: ARG, AMZN, AMCC, ARBA, BCR, CPHD, CB, CYT, DHR, EMN, FII, GNW, IMGN, RMBS, JNPR, KLAC, KYO, MXIM, MSFT, NEU, RHI, SNDK, SNV, ACI, ALV, AVY, CVX, FO, GHM, HON, MAT, NWL, DCM, NS, PCAR, SAIA, WL,
Monday: EEP, ACV, CYOU, GCI, HEW, HUM, NI, SOHU,
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
Validea rebalanced their monthly portfolios this weekend, so I didn't run the screens and instead updated those watchlists.
Position: Long UTX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Friday, January 22, 2010
Daily View Friday 22 January 2010...
And the bloodbath continues. Today's action just caps a week of pure, unadulterated carnage in the markets. Despite the selling onslaught, I still believe (for now) this is a painful correction rather than a reversal, and I'm playing it as such. We've had a 5% or so pullback in the domestic indices and 10% or so in the foreign indices. The selling this week, and particularly today, felt very panicky. We're due for an oversold bounce and the success/failure of the bounce will be very instructive.
I'm not a slave to the $VIX, but in the past two days, it's gone from 18 to 27 and it spiked right into its 200-day EMA. The last time it did that was back in early November, at which point all the indices ended their short-term corrections and proceeded to power higher.
I made no trades in the trading account or IRA today, but I did a little buying in the 401k. Small additions to my $MID and $RUT index funds, as those hit my buy points at the 50-day EMAs with today's close. Those two tagged their 50-day EMAs at the close today, while pretty much every other index I'm in sliced right through them today.
Another ugly day on the watchlist. For active positions, RGR and CRE held tough today, which is a true testament of strength in both names. I'm liking both of these. CRE had particularly large volume today, which is interesting to me. FUQI was flat on the day, but showed some signs of life. This one may give me the rally I'm looking for to reduce my loss in the position. CBI pulled back today a couple percent. I'd like to see it pull back a bit further before I close the sell leg, and I think I'll get that. Like with FUQI, I'll add to my existing long call position once I see some signs of upside.
CEU, EME, GFRE, and IACI have all pulled back to logical buy points. These are ones I'm looking at to get long with a tight stop. ESI is looking strong, as well.
JST is in no man's land. I'll keep it on the watchlist, but I'm not looking to enter it yet.
I'm updating my watchlists and screens tonight, which I'll discuss in the weekly view.
Position: Long CBI, CRE, FUQI, RGR, $MID index fund, $RUT index fund
Disclaimer: This is not a recommendation and is presented for informational purposes only.
I'm not a slave to the $VIX, but in the past two days, it's gone from 18 to 27 and it spiked right into its 200-day EMA. The last time it did that was back in early November, at which point all the indices ended their short-term corrections and proceeded to power higher.
I made no trades in the trading account or IRA today, but I did a little buying in the 401k. Small additions to my $MID and $RUT index funds, as those hit my buy points at the 50-day EMAs with today's close. Those two tagged their 50-day EMAs at the close today, while pretty much every other index I'm in sliced right through them today.
Another ugly day on the watchlist. For active positions, RGR and CRE held tough today, which is a true testament of strength in both names. I'm liking both of these. CRE had particularly large volume today, which is interesting to me. FUQI was flat on the day, but showed some signs of life. This one may give me the rally I'm looking for to reduce my loss in the position. CBI pulled back today a couple percent. I'd like to see it pull back a bit further before I close the sell leg, and I think I'll get that. Like with FUQI, I'll add to my existing long call position once I see some signs of upside.
CEU, EME, GFRE, and IACI have all pulled back to logical buy points. These are ones I'm looking at to get long with a tight stop. ESI is looking strong, as well.
JST is in no man's land. I'll keep it on the watchlist, but I'm not looking to enter it yet.
I'm updating my watchlists and screens tonight, which I'll discuss in the weekly view.
Position: Long CBI, CRE, FUQI, RGR, $MID index fund, $RUT index fund
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Thursday, January 21, 2010
Daily View Thursday 21 January 2010...
Oh man did it get ugly today (again). Yesterday was bad, but today was even worse. The selling today was broad-based and with heavy volume. This is not what you want to see. We have some big news going on in the aftermarket tonight (earnings) and tomorrow we'll know China's GDP growth, which has become a very big deal lately because it's too hot for comfort. GOOG got whacked pretty good in the aftermarket following its earnings tonight, and will likely open weak tomorrow morning, putting pressure on the market.
The US indices are all pulling back near their 50-day EMAs, which have acted as support consistently the past several months. As such, I am still viewing this pullback as a buying opportunity. In the 401k today, I made small purchases in my $RLG, $RLV, and $SPX index funds, as these are basically right at their 50-day EMAs. The weekly charts are still bullish, so I'm comfortable buying a little on weakness. These are not big buys, and I'm leaving plenty of room in case support fails to hold.
I'm not doing a new pick tonight. The carnage this week has been too broad and I want to let the week conclude and the weekend begin so I can catch my breath and regroup. I'll possibly delete a couple picks from the list here. I may also retool my approach to picking in the list. The more I think about it, the more I realize I'm a chartist first, an options player second, and a fundamentalist third. So, I need to tweak my approach accordingly. So far in this blog, I've been doing fundamentals first, then charts, then options. It's just not a style I'm feeling comfortable with.
Today was a bad day on the watchlist. My unwillingness to play ESI prior to its earnings proved costly, as the stock was up over 10% at one point before closing up about 6%. ESI left an inverted hammer, which makes me think that I'll get a chance to buy into it as it fills the gap-up it created. A close like today's, at the lows of the day, indicates weakness, or at the least an inability of the bulls to take it higher.
There were breakdowns left and right today. FUQI failed to hold support and shed another 5% today. My remaining calls are really hurting and this chart feels like it's breaking down, so I'm thinking the plan is to look for a rally to escape the calls to minimize the damage. As of right now, the call spread cut the loss in half on this trade, and if I can get a rally to unload these calls, I can cut into that remaining loss.
CBI had a nasty pullback and this trade is now back to flat. Had I entered it better, it would've been a decently profitable trade. I'm looking to exit this trade with at worst a minimal loss. The chart still looks good, but the position was entered poorly, so I might just cover the sell leg on a dip and look for the stock to hold its breakout.
CEU and EME continued their pullbacks today. Both still have further to fall, I'm thinking. IACI is testing its breakout level and has filled that gap-up. It's holding tough along with CRE, RGR, ROST, and SPAR.
GFRE pulled back to the 50-day EMA on heavy volume. I'm still liking this one. JST, however, absolutely collapsed today, down 12% on very heavy volume as it decisively sliced through its 50-day EMA. It's now right back at the breakout level at $38, and to be honest, I think it has further to fall. The 200-day EMA around $33.50 is definitely in play right now.
Position: Long CBI, FUQI, RGR, $RLG index fund, $RLV index fund, $SPX index fund,
Disclaimer: This is not a recommendation and is presented for informational purposes only.
The US indices are all pulling back near their 50-day EMAs, which have acted as support consistently the past several months. As such, I am still viewing this pullback as a buying opportunity. In the 401k today, I made small purchases in my $RLG, $RLV, and $SPX index funds, as these are basically right at their 50-day EMAs. The weekly charts are still bullish, so I'm comfortable buying a little on weakness. These are not big buys, and I'm leaving plenty of room in case support fails to hold.
I'm not doing a new pick tonight. The carnage this week has been too broad and I want to let the week conclude and the weekend begin so I can catch my breath and regroup. I'll possibly delete a couple picks from the list here. I may also retool my approach to picking in the list. The more I think about it, the more I realize I'm a chartist first, an options player second, and a fundamentalist third. So, I need to tweak my approach accordingly. So far in this blog, I've been doing fundamentals first, then charts, then options. It's just not a style I'm feeling comfortable with.
Today was a bad day on the watchlist. My unwillingness to play ESI prior to its earnings proved costly, as the stock was up over 10% at one point before closing up about 6%. ESI left an inverted hammer, which makes me think that I'll get a chance to buy into it as it fills the gap-up it created. A close like today's, at the lows of the day, indicates weakness, or at the least an inability of the bulls to take it higher.
There were breakdowns left and right today. FUQI failed to hold support and shed another 5% today. My remaining calls are really hurting and this chart feels like it's breaking down, so I'm thinking the plan is to look for a rally to escape the calls to minimize the damage. As of right now, the call spread cut the loss in half on this trade, and if I can get a rally to unload these calls, I can cut into that remaining loss.
CBI had a nasty pullback and this trade is now back to flat. Had I entered it better, it would've been a decently profitable trade. I'm looking to exit this trade with at worst a minimal loss. The chart still looks good, but the position was entered poorly, so I might just cover the sell leg on a dip and look for the stock to hold its breakout.
CEU and EME continued their pullbacks today. Both still have further to fall, I'm thinking. IACI is testing its breakout level and has filled that gap-up. It's holding tough along with CRE, RGR, ROST, and SPAR.
GFRE pulled back to the 50-day EMA on heavy volume. I'm still liking this one. JST, however, absolutely collapsed today, down 12% on very heavy volume as it decisively sliced through its 50-day EMA. It's now right back at the breakout level at $38, and to be honest, I think it has further to fall. The 200-day EMA around $33.50 is definitely in play right now.
Position: Long CBI, FUQI, RGR, $RLG index fund, $RLV index fund, $SPX index fund,
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Wednesday, January 20, 2010
GFRE (Long)...
Gulf Resources is a Chinese chemical manufacturer. It doesn't report earnings until mid to late March. GFRE pays no dividend. It is optionable, but the chain has wide strikes, wide bid/ask spreads, low volume, and low open interest, so it's not a great place to be buying. To be honest, this options chain is so bad that we might as well just say it doesn't have one.
GFRE scores a 2/1, with 100% interest on the Motley Fool screen, 92% interest on the Martin Zweig screen, 74% on the Peter Lynch screen, 71% on the Momentum screen, and 70% on the Joel Greenblatt screen.
GFRE's pulled back about 20% in the past week, peaking just under $15 and closing today right around $12.25. I expect the 50-day EMA to act as support, but it's about $1 lower than current levels. If the 50-day EMA fails to act as support, there is also the previous breakout level around $10.50 to act as support. GFRE has shown exactly zero signs of reversing this pullback, so I'm content to watch this one drop. However, I expect this drop to prove to be a buyable pullback, so I wanted to get it on the watchlist with that in mind.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
GFRE scores a 2/1, with 100% interest on the Motley Fool screen, 92% interest on the Martin Zweig screen, 74% on the Peter Lynch screen, 71% on the Momentum screen, and 70% on the Joel Greenblatt screen.
GFRE's pulled back about 20% in the past week, peaking just under $15 and closing today right around $12.25. I expect the 50-day EMA to act as support, but it's about $1 lower than current levels. If the 50-day EMA fails to act as support, there is also the previous breakout level around $10.50 to act as support. GFRE has shown exactly zero signs of reversing this pullback, so I'm content to watch this one drop. However, I expect this drop to prove to be a buyable pullback, so I wanted to get it on the watchlist with that in mind.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Wednesday 20 January 2010...
We sold off today, as I expected last night. However, we did bounce back pretty well into the close, making a bad day look less bad. The motivators for the selloff were the sell-the-news reaction to the victory of Scott Brown last night and the tightening news out of China. Both are a big deal fundamentally. Earnings came fast and furious today, and that continues tomorrow night. On the whole, the reactions today were pretty good.
I put a few trades on today. I'm now long RGR through common stock. I couldn't bring myself to buy into the RGR option chain. It's too thin for me. The fact that it has an options chain will allow me to sell covered calls and still buy puts for further downside protection (the purchase of common stock, sale of a covered call, and purchase of a put is called a collar). I generally prefer to buy options instead of common stock because options, when used properly, are inherently less risky, but I will make exceptions from time to time.
I also closed the sell leg of the FUQI call spread by buying back the February $22.50 calls I sold. I sold them for $1 each and bought them back for $0.25 this morning, netting a profit of $0.75. However, the trade is overall still a losing position, as the February $20 calls are still in my portfolio. If it fails to hold today's lows around $19 (which coincides with the 200-day EMA), then FUQI's heading back towards the previous low around $17. As it is, the breakout above the 50-day EMA is looking like a failed breakout.
CEU and JST are continuing to pull back, but these are so darn thin that I find them hard to buy. Also, neither is optionable, which greatly diminishes my margin of safety (if you're brainwashed into the conventional thinking about options, that statement probably just blew your mind).
I'm liking the action in IACI, CBI, SPAR, and ROST here. They're consolidating nicely. I'm kind of stuck in the CBI call spread because I sold calls way too early.
Away from the regular watchlist, I did a little buying in my 401k today. I have a massive cash position there because of some heavy selling I did late last year (my weekly charts are all still bullish, but I was feeling greedy and wanted to lock in profits). I will probably do a little more tomorrow on this pullback. I bought a little in my $IEE index fund (or EFA, if you prefer ETFs) and a little in my emerging markets fund, TEEMX. I'm now back at 4% in each of these. Tomorrow, I'll put a little more cash to work in SGIIX because I didn't today, which is my blended foreign fund, to take that one back to 4%. I believe the domestic indices have a bit further to fall, so that's why I didn't go after any of those today.
Position: Long CBI, FUQI, RGR, $IEE index fund, SGIIX, TEEMX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
I put a few trades on today. I'm now long RGR through common stock. I couldn't bring myself to buy into the RGR option chain. It's too thin for me. The fact that it has an options chain will allow me to sell covered calls and still buy puts for further downside protection (the purchase of common stock, sale of a covered call, and purchase of a put is called a collar). I generally prefer to buy options instead of common stock because options, when used properly, are inherently less risky, but I will make exceptions from time to time.
I also closed the sell leg of the FUQI call spread by buying back the February $22.50 calls I sold. I sold them for $1 each and bought them back for $0.25 this morning, netting a profit of $0.75. However, the trade is overall still a losing position, as the February $20 calls are still in my portfolio. If it fails to hold today's lows around $19 (which coincides with the 200-day EMA), then FUQI's heading back towards the previous low around $17. As it is, the breakout above the 50-day EMA is looking like a failed breakout.
CEU and JST are continuing to pull back, but these are so darn thin that I find them hard to buy. Also, neither is optionable, which greatly diminishes my margin of safety (if you're brainwashed into the conventional thinking about options, that statement probably just blew your mind).
I'm liking the action in IACI, CBI, SPAR, and ROST here. They're consolidating nicely. I'm kind of stuck in the CBI call spread because I sold calls way too early.
Away from the regular watchlist, I did a little buying in my 401k today. I have a massive cash position there because of some heavy selling I did late last year (my weekly charts are all still bullish, but I was feeling greedy and wanted to lock in profits). I will probably do a little more tomorrow on this pullback. I bought a little in my $IEE index fund (or EFA, if you prefer ETFs) and a little in my emerging markets fund, TEEMX. I'm now back at 4% in each of these. Tomorrow, I'll put a little more cash to work in SGIIX because I didn't today, which is my blended foreign fund, to take that one back to 4%. I believe the domestic indices have a bit further to fall, so that's why I didn't go after any of those today.
Position: Long CBI, FUQI, RGR, $IEE index fund, SGIIX, TEEMX
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Tuesday, January 19, 2010
Daily View Tuesday 19 January 2010...
The market snapped back from Friday's selling today on the broad indices, but under the surface, it didn't seem to snap back as vigourously. The market felt like it was trapped by the Massachusetts special senate election, in a wait and see mode. Clearly, the market is hoping for a GOP victory to bog down healthcare reform and the Democrat agenda. Generally, political gridlock is good for the markets (the financial meltdown of late 2008 is one glaring exception because the passage of TARP prevented an even worse meltdown). I don't know who wins the election, but I think the markets are going to sell the news either way and we'll just sell off worse if the Democrat wins.
No trades again today. I was quite busy with the darned dayjob, sadly. No pick today, either. The screens don't update to reflect the day's close until I'm guessing midnight, so there won't ever be a pick after the first trading day of the week unless I find a special case.
The big update today came out of CRE, which released an updated 8k. The fee structure was updated to raise the total payment to $8.90, with a provision allowing for a bonus to paid to management if it goes out over $9.25. Methinks such a provision wouldn't have been put in if management didn't think they would easily hit it. I'm thinking it'll be more like $10-$11 once it's all said and done. Even if it's $9.26, CRE's presently trading at $8.16, so that's a minimum $1.10 (~14%) upside, versus at $10 (~23%) or at $11 (~35%), which is still pretty respectable. I'm a buyer on any weakness, but I don't think it's going much below $8.
I didn't get into EME, RGR, CEU, and JST today like I wanted to. I'm not worried about that, though. I'll get a chance tomorrow.
I'm also looking to close out the sell leg of the FUQI call spread. They're trading down over 50%. I'll probably roll the proceeds into more calls. I'm wishing I waited to sell calls in CBI. Oh well.
Position: Long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
No trades again today. I was quite busy with the darned dayjob, sadly. No pick today, either. The screens don't update to reflect the day's close until I'm guessing midnight, so there won't ever be a pick after the first trading day of the week unless I find a special case.
The big update today came out of CRE, which released an updated 8k. The fee structure was updated to raise the total payment to $8.90, with a provision allowing for a bonus to paid to management if it goes out over $9.25. Methinks such a provision wouldn't have been put in if management didn't think they would easily hit it. I'm thinking it'll be more like $10-$11 once it's all said and done. Even if it's $9.26, CRE's presently trading at $8.16, so that's a minimum $1.10 (~14%) upside, versus at $10 (~23%) or at $11 (~35%), which is still pretty respectable. I'm a buyer on any weakness, but I don't think it's going much below $8.
I didn't get into EME, RGR, CEU, and JST today like I wanted to. I'm not worried about that, though. I'll get a chance tomorrow.
I'm also looking to close out the sell leg of the FUQI call spread. They're trading down over 50%. I'll probably roll the proceeds into more calls. I'm wishing I waited to sell calls in CBI. Oh well.
Position: Long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Sunday, January 17, 2010
ESI (Long)...
ITT Educational Services is a post-secondary education firm in the US. It offers over 30 degree programs on the associate, bachelors, and master levels at over 100 facilities in 37 states, serving over 60,000 students. ESI does not pay a dividend and is optionable. The options chain is liquid and has both tight strikes and tight spreads. Note that ESI reports earnings this week, before the open on Thursday 21 January 2010.
ESI scores a 3/1 on the screens. ESI scores 100% on both the Warren Buffett and Joel Greenblatt screens, 93% on the Peter Lynch screen, and 85% on the Martin Zweig screen. This is an interesting mix of screens to perform well on, as it has a good blend of growth and value.
ESI is in a very interesting place technically. It's rallied about 20% from lows in December from $85 to its current level of $100. $85 appears to be a strong support level, and above it we now have the 50-day and 200-day EMAs just below current levels around $96.50 and $98.50, respectively. ESI also has a big gap-down to fill that would take it up to $110.
ESI's in a tricky place because it reports earnings this week, so it makes for a complex play. I usually don't play stocks before earnings due to the unpredictability of the stock's reactions to earnings. In this case, I'm going to, but I'm going to construct a multi-legged options strategy to reduce my earnings risk. I don't have this one entirely worked out yet, to be honest. I'm considering a call spread combined with either a put purchase or a put spread, and I'm also considering a strangle. I'm looking at various purchase and sale combinations of the February $95, $100, and $105 calls along with the February $100, $95, and $90 puts. I'll detail what I do if/when I make a pre-earnings move.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
ESI scores a 3/1 on the screens. ESI scores 100% on both the Warren Buffett and Joel Greenblatt screens, 93% on the Peter Lynch screen, and 85% on the Martin Zweig screen. This is an interesting mix of screens to perform well on, as it has a good blend of growth and value.
ESI is in a very interesting place technically. It's rallied about 20% from lows in December from $85 to its current level of $100. $85 appears to be a strong support level, and above it we now have the 50-day and 200-day EMAs just below current levels around $96.50 and $98.50, respectively. ESI also has a big gap-down to fill that would take it up to $110.
ESI's in a tricky place because it reports earnings this week, so it makes for a complex play. I usually don't play stocks before earnings due to the unpredictability of the stock's reactions to earnings. In this case, I'm going to, but I'm going to construct a multi-legged options strategy to reduce my earnings risk. I don't have this one entirely worked out yet, to be honest. I'm considering a call spread combined with either a put purchase or a put spread, and I'm also considering a strangle. I'm looking at various purchase and sale combinations of the February $95, $100, and $105 calls along with the February $100, $95, and $90 puts. I'll detail what I do if/when I make a pre-earnings move.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
JST (Long)...
Jinpan International is a Chinese company that designs and manufactures electrical infrastructure equipment including cast resin transformers, switchgears, unit substations, and line reactors. It operates in China, Europe, and the US. JST pays a small dividend and is not optionable. It doesn't report earnings again until late March or early April.
JST scores a 1/2 on the screens. It scores 93% on the Peter Lynch screen, 86% on the Warren Buffett screen, 77% on the Martin Zweig screen, 76% on the Motley Fool screen, and 71% on the Momentum screen.
JST has undergone a pretty steep correction in the past week or so, falling from $52 to the current level of $43.50. I view this correction as a buying opportunity, as the 50-day EMA is about a dollar below current levels. JST is pulling back from all-time highs, as well. I'm looking to take a starter long around current levels, but if it fails to hold the 50-day EMA, then I'd probably sell that starter for a minor loss. If it fails to hold the 50-day EMA, I believe a fall back toward the August highs at $38 is not out of the question.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
JST scores a 1/2 on the screens. It scores 93% on the Peter Lynch screen, 86% on the Warren Buffett screen, 77% on the Martin Zweig screen, 76% on the Motley Fool screen, and 71% on the Momentum screen.
JST has undergone a pretty steep correction in the past week or so, falling from $52 to the current level of $43.50. I view this correction as a buying opportunity, as the 50-day EMA is about a dollar below current levels. JST is pulling back from all-time highs, as well. I'm looking to take a starter long around current levels, but if it fails to hold the 50-day EMA, then I'd probably sell that starter for a minor loss. If it fails to hold the 50-day EMA, I believe a fall back toward the August highs at $38 is not out of the question.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Weekly View Friday 15 January 2010...
Remember the market's closed Monday.
Weekly Review:
Last week wasn't the best of weeks for the bulls, as profit-taking and sell-the-news reactions are setting in. Last week was also options expiration week. Earnings season really began. I took starter longs in CRE (common stock), CBI, and FUQI (call spreads).
Weekly Preview:
So is this just a garden-variety pullback in a bull market, or is it the start of a more sinister reversal? It's a pullback until the market proves otherwise, and I'm playing it accordingly by looking to stock up on long exposure.
Earnings season really picks up steam this week. Big names including C for Tuesday morning; BAC, COH, CSX, IBM, MS, STT, USB, and WFC for Wednseday morning; CAL, EBAY, ED, ESI, FCX, FFIV, FITB, GS, ISRG, KEY, LM, LUV, PCP, PNC, PPG, SBUX, STX, UNH, and UNP for Thursday morning; AXP, BBT, BNI, COF, EXC, GE, GOOG, HBAN, HOG, IGT, JCI, KMB, MCD, PBCT, SLB, STI, and WDC for Friday morning; and AKS, AMGN, CNH, DGX, ETN, HAL, and SEE for Monday morning. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
I ran the screens this weekend and the results were as follows:
Five stocks showing over four screens of interest (some and strong), four of which are on the watchlist.
15 stocks showing four screens of interest (some or strong), two of which are on the watchlist.
75 stocks showing three screens of interest (some or strong), three of which are on the watchlist.
27 stocks showing two screens of strong interest, one of which is presently on the watchlist.
Position: Long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Weekly Review:
Last week wasn't the best of weeks for the bulls, as profit-taking and sell-the-news reactions are setting in. Last week was also options expiration week. Earnings season really began. I took starter longs in CRE (common stock), CBI, and FUQI (call spreads).
Weekly Preview:
So is this just a garden-variety pullback in a bull market, or is it the start of a more sinister reversal? It's a pullback until the market proves otherwise, and I'm playing it accordingly by looking to stock up on long exposure.
Earnings season really picks up steam this week. Big names including C for Tuesday morning; BAC, COH, CSX, IBM, MS, STT, USB, and WFC for Wednseday morning; CAL, EBAY, ED, ESI, FCX, FFIV, FITB, GS, ISRG, KEY, LM, LUV, PCP, PNC, PPG, SBUX, STX, UNH, and UNP for Thursday morning; AXP, BBT, BNI, COF, EXC, GE, GOOG, HBAN, HOG, IGT, JCI, KMB, MCD, PBCT, SLB, STI, and WDC for Friday morning; and AKS, AMGN, CNH, DGX, ETN, HAL, and SEE for Monday morning. Note that when I say, "For [blank] morning," I mean the stock reports earnings either after the close the previous day or before the open on that day.
For a preview of this week's major economic announcements, I'll send you here. Michael McDonough does a better job of summing this stuff up than I could. Since this is a stock-picking blog versus an economics blog, I typically won't talk about this kind of stuff. Also, for a better preview of the week's market-related events, I'd recommend going here. TheStreet.com typically has a good weekly preview article for more stock-related events.
I ran the screens this weekend and the results were as follows:
Five stocks showing over four screens of interest (some and strong), four of which are on the watchlist.
15 stocks showing four screens of interest (some or strong), two of which are on the watchlist.
75 stocks showing three screens of interest (some or strong), three of which are on the watchlist.
27 stocks showing two screens of strong interest, one of which is presently on the watchlist.
Position: Long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Friday 15 January 2010...
Profit-taking set in today, and pretty hard at that. The action under the surface was worse than the indices show. This seems to be a common theme so far in 2010, that the indices aren't showing accurately what's going on underneath, either good or bad. Chinese stocks, in particular, got annihilated today. It's options expiration ahead of a three-day weekend because the markets are closed Monday.
No trades today. I didn't want to pull the trigger on anything ahead of a long weekend.
RGR was the big gainer today, and it appears to have taken out resistance at the 50 and 200-day EMAs with heavy volume. I'm probably going to take a starter next week.
CRE was flat today, and everything else was down, some worse than others.
EME was noteworthy today in that it is dangerously close to failing to hold the breakout level and the 50-day EMA, both of which are around $26. A failure to hold here would probably lead EME lower toward the 200-day EMA around $24.
Position: Long CRE,
Disclaimer: This is not a recommendation and is presented for informational purposes only.
No trades today. I didn't want to pull the trigger on anything ahead of a long weekend.
RGR was the big gainer today, and it appears to have taken out resistance at the 50 and 200-day EMAs with heavy volume. I'm probably going to take a starter next week.
CRE was flat today, and everything else was down, some worse than others.
EME was noteworthy today in that it is dangerously close to failing to hold the breakout level and the 50-day EMA, both of which are around $26. A failure to hold here would probably lead EME lower toward the 200-day EMA around $24.
Position: Long CRE,
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Thursday, January 14, 2010
IACI (Long)...
Interactive Corp is a multinational internet firm that is divided into four segments, namely media/advertising, match (personals), ServiceMagic (online marketplace), and Emerging Businesses (mainly Shoebuy and Pronto). They report earnings again on 9 February before the open, and they do not pay a dividend. IACI is optionable with tight strikes and decent bid/ask spreads, open interest, and volume.
IACI passes the Joseph Piotroski screen with 100%. It doesn't score above 60% on any other screen, but the Piotroski screen is very hard to pass, so I'm naturally interested.
IACI broke out this week decisively above resistance at $21, leaving a gap and drift setup. I expect this gap to get filled in the short term, but I view a pullback to $21 as a tremendous buying opportunity because $21 has been resistance since May 2008 and IACI has carved out a sloppy head and shoulders bottom on the weekly chart, with $21 as the neckline and $13 as the bottom. This makes for a 'measured move' of $8 ($21-$13), which makes for an upside target of $29 ($21+$8). And, wouldn't you know it, that correlates with significant resistance from 2007. I've provided a weekly and daily chart here.
Given the longer-term nature of this pattern, I'm considering some longer-dated options here, which I would subsequently spread against more near-dated options. The January 2011 options are actually pretty cheap.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
IACI passes the Joseph Piotroski screen with 100%. It doesn't score above 60% on any other screen, but the Piotroski screen is very hard to pass, so I'm naturally interested.
IACI broke out this week decisively above resistance at $21, leaving a gap and drift setup. I expect this gap to get filled in the short term, but I view a pullback to $21 as a tremendous buying opportunity because $21 has been resistance since May 2008 and IACI has carved out a sloppy head and shoulders bottom on the weekly chart, with $21 as the neckline and $13 as the bottom. This makes for a 'measured move' of $8 ($21-$13), which makes for an upside target of $29 ($21+$8). And, wouldn't you know it, that correlates with significant resistance from 2007. I've provided a weekly and daily chart here.
Given the longer-term nature of this pattern, I'm considering some longer-dated options here, which I would subsequently spread against more near-dated options. The January 2011 options are actually pretty cheap.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Thursday 14 January 2010...
Today was a pretty dreary day in the markets, to be honest. The market drifted with a bullish bias as it awaited earnings reports from Intel after the close and JP Morgan tomorrow morning. Besides those, there's nothing else of interest reporting for tomorrow morning that I know of. Tomorrow is also options expiration, and tonight is index options expiration.
Intel popped in the aftermarket briefly, but it's since settled down and is more or less flat from where it closed.
I took my starter in CRE today. I left room to add should it fall back towards $7.75 (50-day EMA) and again should it fall back towards $7.25 (200-day EMA). Conversely, I'll add more on a breakout above $8.25. The stock got perky today and supported my theory from yesterday that the 50-day EMA was now becoming support instead of resistance. Remember, this is a special case stock.
We also had a pair of updates to screen scores today. CEU became a 0/4, as it decreased from 91% to 85% on the Motley Fool screen (this is because the screen calls for a stock to close above $7, and CEU is right around there) and it increased from 77% to 85% on the David Dreman screen. RGR is now a 1/4. It decreased from 90% to 80% on the Kenneth Fisher screen, but increased from 60% to 87% on the Motley Fool screen.
I was way early selling calls in CBI yesterday. Oh well. I've got to learn to leg into spreads better. The problem is I was so nervous about a reversal that I put on the sell leg too early, and what I need to recognize is that by virtue of buying options instead of common stock, I'm already diminishing my downside risk. Buy the dips and sell the rips. The same goes for FUQI.
EME is right where I want it. I'll probably pull the trigger on the buy leg of a call spread tomorrow.
GME, NEU, SPAR, and CEU are getting interesting, as well. I'm still mad about missing the plunge in CEU yesterday morning, but there's nothing I can do except hope I get a second chance. SPAR, GME, and NEU are two I'd like to see pull back just a little more before I take starters in them.
UTA is still drifting in a volatility squeeze between the 50-day and 200-day EMA. I plan to wait for it to resolve itself. If it resolves bullishly by breaking out above resistance, I'll get long. If it resolves bearishly and breaks down below support at the 200-day EMA, I'll probably take a small short for a trade, as it would likely fall back to $9, where I would cover. If it firms up, I'll reverse and go long, but if it doesn't, I'll remount the short.
RGR, ARO, and ROST are all still in show-me mode, meaning I need more convincing before I go long in any of them.
Position: Long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Intel popped in the aftermarket briefly, but it's since settled down and is more or less flat from where it closed.
I took my starter in CRE today. I left room to add should it fall back towards $7.75 (50-day EMA) and again should it fall back towards $7.25 (200-day EMA). Conversely, I'll add more on a breakout above $8.25. The stock got perky today and supported my theory from yesterday that the 50-day EMA was now becoming support instead of resistance. Remember, this is a special case stock.
We also had a pair of updates to screen scores today. CEU became a 0/4, as it decreased from 91% to 85% on the Motley Fool screen (this is because the screen calls for a stock to close above $7, and CEU is right around there) and it increased from 77% to 85% on the David Dreman screen. RGR is now a 1/4. It decreased from 90% to 80% on the Kenneth Fisher screen, but increased from 60% to 87% on the Motley Fool screen.
I was way early selling calls in CBI yesterday. Oh well. I've got to learn to leg into spreads better. The problem is I was so nervous about a reversal that I put on the sell leg too early, and what I need to recognize is that by virtue of buying options instead of common stock, I'm already diminishing my downside risk. Buy the dips and sell the rips. The same goes for FUQI.
EME is right where I want it. I'll probably pull the trigger on the buy leg of a call spread tomorrow.
GME, NEU, SPAR, and CEU are getting interesting, as well. I'm still mad about missing the plunge in CEU yesterday morning, but there's nothing I can do except hope I get a second chance. SPAR, GME, and NEU are two I'd like to see pull back just a little more before I take starters in them.
UTA is still drifting in a volatility squeeze between the 50-day and 200-day EMA. I plan to wait for it to resolve itself. If it resolves bullishly by breaking out above resistance, I'll get long. If it resolves bearishly and breaks down below support at the 200-day EMA, I'll probably take a small short for a trade, as it would likely fall back to $9, where I would cover. If it firms up, I'll reverse and go long, but if it doesn't, I'll remount the short.
RGR, ARO, and ROST are all still in show-me mode, meaning I need more convincing before I go long in any of them.
Position: Long CBI, CRE, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Wednesday, January 13, 2010
NEU (Long)...
NewMarket Corporation is a holding company that is the parent company with an odd mix of petroleum additives business and Virginia real estate. I'm not really sure how that works out. NEU reports earnings in early February (sometime on or before the 11th). It pays a small dividend that works out to ~1.5%/year at current prices. NEU is optionable, with narrow strikes, but wide bid/ask spreads and low open interest and low volume. Not my favourite setup, but it can work.
NEU scores a 2/0, with 100% on the Momentum screen and 93% on the Peter Lynch screen. Besides those, nothing scores above 70%, so it's not the strongest on the screens.
All that being said, I love the chart. It' just a gently-rising stock that's at all-time highs. Tags of the 50-day EMA have proven to be great buying opportunities and guess what it tagged today with a high-volume hammer. This makes me think it just hit a selling climax and that it has higher to go.
Since earnings are so close, that changes the gameplan a bit. I think NEU will rally into earnings, so I'm going to look to buy some February $120 calls and ride them higher into February. Once February rolls around, I'll have to figure out how to protect the position from earnings risk. It might be with buying puts to create a strangle, or it might be selling other calls to create a call spread, or it might be with both a call spread and a put spread. I'm not sure yet.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
NEU scores a 2/0, with 100% on the Momentum screen and 93% on the Peter Lynch screen. Besides those, nothing scores above 70%, so it's not the strongest on the screens.
All that being said, I love the chart. It' just a gently-rising stock that's at all-time highs. Tags of the 50-day EMA have proven to be great buying opportunities and guess what it tagged today with a high-volume hammer. This makes me think it just hit a selling climax and that it has higher to go.
Since earnings are so close, that changes the gameplan a bit. I think NEU will rally into earnings, so I'm going to look to buy some February $120 calls and ride them higher into February. Once February rolls around, I'll have to figure out how to protect the position from earnings risk. It might be with buying puts to create a strangle, or it might be selling other calls to create a call spread, or it might be with both a call spread and a put spread. I'm not sure yet.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Wednesday 13 January 2010...
It looks like the profit-taking that started yesterday could only last a couple hours, as we saw a very weak open across the board before a pretty powerful rally into the close. This pains me because I was away from my desk for the morning and was unable to bottom-tick today, then I saw the stocks rally with little relent. Oh well. It happens. The perils of having an actual dayjob. I bet a lot of stops were taken out this morning, and probably a lot of traders saw that they bottom-ticked their sales (not something that happened to me, but again, oh well, it happens). The only thing more frustrating than the former is the latter.
Earnings season resumes this week as we get some big ones coming into Friday's trading (Intel reports Thursday night and JP Morgan reports Friday morning). Those will likely leave us with a quiet day of trading tomorrow, but some fireworks on Friday.
For trades, I took a call spread in CBI today with the February $20 and $22.50 calls for a net debit of $1.50. I totally botched the entry of the buy leg, but did well on the sell leg. I tried to get into CBI near the lows of the day, but I got too cute with my entry and subsequently had to adjust the trade, entering it higher than I wanted to. Had I been better with the buy leg, I probably would've been able to put this trade on with something closer to a $1 or less debit. I have a bad habit of trying to get too cute with entries and exits by trying to bottom/top-tick, and today it cost me money. I need to work on that and get better by just setting my price and letting it hit.
The FUQI call spread didn't really move much. I've found that I like starting an option position in a stock with a spread rather than an outright purchase because it helps me minimize my risk. Sure, it caps my reward, but since the spread is committing some, not all, of the capital I'm willing to put into the trade, it's a good way for me to get myself involved. It helps with the bad habit I mentioned above.
CEU and EMR also put in nice hammers today, more pronounced than those from FUQI, CBI, or UTA. I missed the big plunge in CEU and EMR this morning, but I'm not terribly concerned because I think I'll have the chance to catch CEU and EMR. UTA bounced right off its 200-day EMA today, and I missed the chance to get in there. Like CEU and EMR, I'm not concerned there, either.
CRE's hanging right in there. I think the 50-day EMA has now become support. I'll take a starter here in the IRA soon, as well.
RGR, SPAR, and GME didn't really do much today, and there's no real change to their technical pictures.
ARO and ROST are both trying to work their ways higher, but I'm still not quite convinced. ROST had a screen score update. It's back to 3/3 from 2/3. The James O'Shaughnessey screen took ROST from 75% to 100%.
Position: Long CBI, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Earnings season resumes this week as we get some big ones coming into Friday's trading (Intel reports Thursday night and JP Morgan reports Friday morning). Those will likely leave us with a quiet day of trading tomorrow, but some fireworks on Friday.
For trades, I took a call spread in CBI today with the February $20 and $22.50 calls for a net debit of $1.50. I totally botched the entry of the buy leg, but did well on the sell leg. I tried to get into CBI near the lows of the day, but I got too cute with my entry and subsequently had to adjust the trade, entering it higher than I wanted to. Had I been better with the buy leg, I probably would've been able to put this trade on with something closer to a $1 or less debit. I have a bad habit of trying to get too cute with entries and exits by trying to bottom/top-tick, and today it cost me money. I need to work on that and get better by just setting my price and letting it hit.
The FUQI call spread didn't really move much. I've found that I like starting an option position in a stock with a spread rather than an outright purchase because it helps me minimize my risk. Sure, it caps my reward, but since the spread is committing some, not all, of the capital I'm willing to put into the trade, it's a good way for me to get myself involved. It helps with the bad habit I mentioned above.
CEU and EMR also put in nice hammers today, more pronounced than those from FUQI, CBI, or UTA. I missed the big plunge in CEU and EMR this morning, but I'm not terribly concerned because I think I'll have the chance to catch CEU and EMR. UTA bounced right off its 200-day EMA today, and I missed the chance to get in there. Like CEU and EMR, I'm not concerned there, either.
CRE's hanging right in there. I think the 50-day EMA has now become support. I'll take a starter here in the IRA soon, as well.
RGR, SPAR, and GME didn't really do much today, and there's no real change to their technical pictures.
ARO and ROST are both trying to work their ways higher, but I'm still not quite convinced. ROST had a screen score update. It's back to 3/3 from 2/3. The James O'Shaughnessey screen took ROST from 75% to 100%.
Position: Long CBI, FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Tuesday, January 12, 2010
GME (Long)...
Gamestop is the leading video game retailer in America, selling new and used hardware and software. It has over 6,000 stores worldwide. GME does not pay a dividend. GME is optionable with decent volume and open interest along with tight strikes and bid/ask spreads, making it an ideal candidate for options. GME doesn't report earnings again until probably mid to late February.
GME scores 100% on the Joel Greenblatt screen, 93% on the Peter Lynch screen, 90% on the Kenneth Fisher screen, and 75% on the James O'Shaughnessey screen.
Technically, this stock looks like death warmed over. Note the vicious, high-volume gap-down created last week. However, it held the $20 level, which acted as supported this summer. GME peaked over $60 just two years ago, and bottomed out around $18 back in late 2008, so if $20 fails to hold, I'd look for that to be the next downside level.
GME's going to be a bit of an experimental pick for me. I plan to actively trade this name using a series of monthly call spreads. January options are basically done, but not quite. Tomorrow, I'm going to buy some February calls in GME, probably the $19 strike, and if I can, I'll sell the January $21 calls against those, just to try to pick up a quick couple bucks here on expiration week. If I can't do that, I'll just sell February $21 calls (probably some February $22 calls also because GME may report before February expiration). I believe GME will be rangebound for a while between $20 and $21.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Daily View Tuesday 12 January 2010...
Well, that's what profit-taking feels like. The sellers showed up today. The action under the surface was much worse than the indices would indicate, as some of the recent hot stocks (like China stocks) got whacked pretty hard today. I'm not terribly concerned here, as I believe this is simply a pullback and some profit-taking. The indices haven't done anything wrong yet, nothing that makes me think this pullback will become a full-blown reversal.
Earnings season has officially begun, as Alcoa is regarded as the 'official' start of earnings season, and as usual, AA was the perennial failure we've all come to expect it to be. Earnings will pick up steam this week and really kick it into overdrive between now and the end of the month.
FUQI is pulling back towards the 50-day EMA, which I theorize will be new support. I took a starter position in FUQI today in the form of buying a February $20/$22.50 call spread, 1/1 for a net debit of $1.10. Translation: I bought 1 February $20 call at $2.10 for every 1 February $22.50 call I sold at $1, and the difference between what I bought ($2.10) and sold ($1) is $1.10. Since I paid more than I received, it's a debit of $1.10. I took this trade because I believe FUQI will hold support and rally. If it fails to hold support, I'll unwind the trade at what should be a small loss.
Everything on the watchlist besides ROST and ARO was down today. I still think ROST is in no-man's land, however. I'd love to see it fill that gap-down before it fills that gap-up, though. I think ARO's in worse shape than ROST because ARO today filled its gap-down. I think there's further downside in ARO. It's still stuck at resistance by the 50-day and 200-day EMAs.
CBI, CEU, EME, and SPAR all pulled back a bit today, coming closer to their breakout levels. I'm keeping an eye on all of these to make sure they hold those breakout levels.
RGR is struggling to break through resistance similar to ARO, and like ARO, I expect further downside there because it is strong resistance.
CRE is boring, but it's now formed a couple-week base at resistance (which may be morphing into support). I'm tempted to take a starter here and leave room to add should it fall further.
UTA got whacked pretty hard today. I considered a small starter of common stock today, but decided against it.
Position: Long FUQI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Monday, January 11, 2010
Daily View Monday 11 January 2010...
I'll be honest here. I didn't really pay much attention to the market today because today's my birthday and I don't really like to do much work of any kind on my birthday. There's also no new pick for today.
There just wasn't really much going on today. The newsflow seemed to be fairly tame, and for the most part, I was seeing minor pullbacks in a lot of stocks. Nothing drastic, mind you. Also, I saw a few stocks breakout to new highs, yet close well below their highs of the day, which is a sign of weakness (or at the least, a lack of strength).
Obviously, no trades today since I wasn't really watching very closely. Nothing really of interest happened to the watchlist today.
CEU was the strongest stock on the list today, but it was one of those that I mentioned above that had a gap-up to start the day, yet meandered for the day. UTA was up a couple percent today, but still appears to be consolidating. CRE showed some life today, but as I've said before, this is one boring stock. ROST and RGR both were up a bit.
ARO, CBI, EME, and FUQI were all basically flat today.
SPAR was the laggard today, pulling back about 2%. I like it, but I also think it still has further to fall.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
There just wasn't really much going on today. The newsflow seemed to be fairly tame, and for the most part, I was seeing minor pullbacks in a lot of stocks. Nothing drastic, mind you. Also, I saw a few stocks breakout to new highs, yet close well below their highs of the day, which is a sign of weakness (or at the least, a lack of strength).
Obviously, no trades today since I wasn't really watching very closely. Nothing really of interest happened to the watchlist today.
CEU was the strongest stock on the list today, but it was one of those that I mentioned above that had a gap-up to start the day, yet meandered for the day. UTA was up a couple percent today, but still appears to be consolidating. CRE showed some life today, but as I've said before, this is one boring stock. ROST and RGR both were up a bit.
ARO, CBI, EME, and FUQI were all basically flat today.
SPAR was the laggard today, pulling back about 2%. I like it, but I also think it still has further to fall.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Sunday, January 10, 2010
CBI (Long)...
Chicago Bridge and Iron is an old favourite of mine. I made good money in this company in the time before and after their 'accounting irregularities' (whenever you see that about a company you've a long position in, sell first and ask questions later). CBI is now back to levels a bit above when I first got involved in the name a few years ago. The stock peaked over $60 in early 2008 and bottomed out at $5 in early 2009. How's that for a wild ride in the world of buy and hold? :-p
Anyway, CBI is an engineering and construction/maintenance firm, serving primarily the energy and natural resource industries. CBI pays a negligible dividend, but it is optionable. Though not my favourite options chain, it is sufficiently liquid in terms of volume and open interest with manageable strike gaps and bid/ask spreads. CBI is a candidate for call spreads. CBI reports earnings again in late February or early March.
CBI scores a 1/3 on the screens, with 100% interest from the Joel Greenblatt screen, 80% from the Kenneth Fisher screen, 74% from the Peter Lynch screen, 71% from the Momentum screen, and 69% from the Martin Zweig screen.
Technically, CBI just broke out above multi-month resistance at $21. Volume was solid on the breakout and volume has been increasing as it powers higher. However, Friday CBI put in a weak-looking doji bar with heavy volume. This makes me think the pullback will happen sooner rather than later, so I'm keeping an eye on this one and hoping it falls a few percent to allow me to put a position on.
For options, I'm liking the April $17.50 calls as my buy leg, but I would also consider the April $20 calls. Depending on what happens early this week, I may pick some calls up here and sell some January $22.50 calls to make a quick few bucks.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Anyway, CBI is an engineering and construction/maintenance firm, serving primarily the energy and natural resource industries. CBI pays a negligible dividend, but it is optionable. Though not my favourite options chain, it is sufficiently liquid in terms of volume and open interest with manageable strike gaps and bid/ask spreads. CBI is a candidate for call spreads. CBI reports earnings again in late February or early March.
CBI scores a 1/3 on the screens, with 100% interest from the Joel Greenblatt screen, 80% from the Kenneth Fisher screen, 74% from the Peter Lynch screen, 71% from the Momentum screen, and 69% from the Martin Zweig screen.
Technically, CBI just broke out above multi-month resistance at $21. Volume was solid on the breakout and volume has been increasing as it powers higher. However, Friday CBI put in a weak-looking doji bar with heavy volume. This makes me think the pullback will happen sooner rather than later, so I'm keeping an eye on this one and hoping it falls a few percent to allow me to put a position on.
For options, I'm liking the April $17.50 calls as my buy leg, but I would also consider the April $20 calls. Depending on what happens early this week, I may pick some calls up here and sell some January $22.50 calls to make a quick few bucks.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
SPAR (Long)...
Spartan Motors specializes in custom engineering and manufacturing for heavy-duty vehicles. It is split into two segments. Spartan Chassis designs and manufactures custom heavy-duty chassis and the Emergency Vehicle Team designs and manufactures emergency vehicles. This is a classic early cyclical play. SPAR pays a dividend of ~4%. It is optionable, but the options chain is awful, with low volume, low open interest, wide strikes, and wide bid/ask spreads. It's not even a buy-write candidate. SPAR doesn't report earnings again until mid February.
SPAR has a screen score of 0/3. It scored 90% on the Kenneth Fisher screen, 86% on the Benjamin Graham screen, 75% on the James O'Shaughnessey screen, and 74% on the Peter Lynch screen.
This is what a technically-extended stock looks like. SPAR broke out decisively above its 200-day EMA this week, following a base that's been forming since August. Presently, the 200-day EMA lines up around $6, which is around the top of that base, so I expect old resistance to become current support on a pullback. I'm loathe to chase a stock that was up 25% last week, so I'm going to watch this one and hope for a pullback. A 10% pullback from current levels would not surprise me. If it breaks above $7, which I doubt will be the case before a pullback, I might chase it with a small position with a tight stop. In that case, I would probably use the 5-day EMA (green line) as a stop loss.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
SPAR has a screen score of 0/3. It scored 90% on the Kenneth Fisher screen, 86% on the Benjamin Graham screen, 75% on the James O'Shaughnessey screen, and 74% on the Peter Lynch screen.
This is what a technically-extended stock looks like. SPAR broke out decisively above its 200-day EMA this week, following a base that's been forming since August. Presently, the 200-day EMA lines up around $6, which is around the top of that base, so I expect old resistance to become current support on a pullback. I'm loathe to chase a stock that was up 25% last week, so I'm going to watch this one and hope for a pullback. A 10% pullback from current levels would not surprise me. If it breaks above $7, which I doubt will be the case before a pullback, I might chase it with a small position with a tight stop. In that case, I would probably use the 5-day EMA (green line) as a stop loss.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
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