Tuesday, August 17, 2010
8/18/10 Betting It All On Sandridge
David- If you insist on putting over half of your portfolio into SD, that's pretty much how you're going to approach every earnings announcement.
Bullish/bearish/neutral- those of you who read my posts should understand that:
(a) When I get bullish, it's usually no-holds-barred bullish. I will say exactly what's on my mind, which generally includes a bullish tint on all time frames.
(b) When I get bearish, it's usually no-holds-barred bearish. I will say exactly what's on my mind, which generaly includes a bearish tint on all time frames.
(c) When I'm neutral, it's usually no-holds-barred neutral. I will say exactly what's on my mind, which generally includes a neutral tint on all time frames.
A flip from (a) to (b), or (b) to (a), can occur at any time. Early this morning, I was quite bullish. As the DJIA approached the +200 point range, my bullish take turned skittish, and I did not hesitate to bolt my positions.
Sometimes I think my 'reads' are bipolar.
Right now, I'm parked in neutral.
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Mark- Congratulations on the 4.5%. tof may be right about seeing the '3s' over the next several years, and we can play it all the way down.
ReplyDeleteDavid- btw, today's short squeeze on POT is just another example of the dangers of betting it all on one spin.
ReplyDelete2nd_ave -- my plan of betting on SD does not involve betting on whether the stock is going to be up or down tomorrow. I want to bet on the company, and if the company's cashflow is moving in the right direction (increasing), then the stock price will inevitably move up as well. I sent an e-mail with some questions to the SD rep today and will probably do some iterations with him over the next few days, until I figure out how their cashflow in 2011 and 2012 will depend on the prices of oil and gas. If I see that they will have a decent operating cashflow under modest assumptions for the price of oil and gas, then I'll invest in the company, just like I have invested into ECU. I should also say that my IRA is only $15K, since it was given to me while I worked part-time as a student for a small company before coming full time to Sun. So I can gamble it all away and it won't matter. :)
ReplyDeleteDavid- Fair enough.
ReplyDeleteDavid- I'll share a story about BMD later this evening.
ReplyDeleteOh yeah, BMD. I think I recall THAT one....
ReplyDeleteF_ _ _ ing Birch Mountain.....
"Oh, but they will be selling lime and gravel for oil sands....it will be a big winner...."
I still have a mark on my ASS from BMD.
I also stopped out of SD. TWICE. CP was right on target today.
IMO, (which in view of my record is worthless), is that the chart for SD is going in one steady direction (trend), which is DOWN, and I was a total IDIOT for putting ONE PENNY into it until it was going steadily in the opposite direction, OR I should have shorted it.
Also IMO, if mortgage rates are going down, it's because T's are going down in yield and homes are going down in price, which dosn't say much for the econ, employment or profits going forward.
What chart is trending steadily higher? T's.
T's are going higher and equities are going lower. I scanned the charts of all the equities on my watch lists today and every single chart is going sideways (or down like SD) and has been for months. Until that changes I'm sticking with my Landry playbook and sitting on my hands.
FF
FF I hate to admit it but your conclusion rings a certain degree of clarity.
ReplyDeletePerhaps small American businesses are about to experience a "difficult"(putting it mildly) slog going forward.
Multinationals have been busy positioning themselves for the event?
FF...Well said...You nailed it
ReplyDeleteAh, yes. Birch Mountain Resources.
ReplyDelete(a) It all started with a Motley Fool write-up that lauded the company as an oil sands play.
http://www.fool.com/investing/general/2007/06/20/a-lode-of-limestone-at-birch-mountain.aspx
They might as well have titled the article 'A Lode of Bullshit at Birch Mountain.'
(b) Not only would they be supplying oil companies with the gravel to build roads, they were working on supplying reagent grade limestone to reduce pollutants during the processing of oil sands.
(c) I traded the symbol BMD countless times, from the double digits to the low single digits. I also recommended the company as a LT play on the mother blog (albeit with the caveat that no single company should exceed 6-8% of any investor's portfolio).
(d) It eventually ended up on the pink sheets as BMD.to, with a price of $0.01.
David- I kid you not when I say it represented (at the time) a compelling story. I haven't a clue what lies behind the SD play (not interested), but I would caution you to take any communication from a company representative with a grain of salt. The financial industry is corrupt, no doubt about it. BC is quite accurate in saying that 'stocks are sold, not bought.
To be honest, I can't recall whether I made money or lost money on the stock- obviously, it couldn't have been much either way if I can't recall. But I felt bad about having brought the company to the attention of others.
Latest from Twiggs-
ReplyDeletehttp://www.incrediblecharts.com/tradingdiary/trading_diary.php
Boys....
ReplyDeleteAPI storage report was pretty bearish for crude.
ReplyDeleteCPE might be good at 4.80.
ReplyDeleteENER here?
I'll add to INTC @ 19.00
ReplyDeleteCP- Looking at price/volume NANO just breaks my heart :)
ReplyDeleteLooks like there was ONE rouge juror in the Biagojevich case. Go figure. I'm guessing the pay off was a large #2 with an extra side of fries.
ReplyDeleteNANO - That one was a no-brainer really... Continued semiconductor shrinks are going to require ever increasingly sophisticated metrology solutions.
ReplyDeleteI really haven't been following it closely enough but we used to envision a "lights-out" fab where there were only machines humming away, metrology was integrated into the production equipment (in-situ), and the wafers are moved strictly by robot. Lot's of money was spent just studying the possibilities and actually producing prototype equipment... We used to joke that if we were building cars, our production cost would be at least a million per unit.
Until a game changing technology comes along like self-assembling molecules or something along those lines.
easing out of my disastrous TYP trades here in the AH session, sold 1/3 at a small profit and have orders in to dump the rest at a small loss. at least i didn't panic yesterday and bail out at the low.
ReplyDeleteMorning guys and vb,
ReplyDeleteCheck out BQI today. They've agreed to....I don't really know the BQI story but they are looking at selling out I think, and their stock's catching a bid.
Still long some PAL even though I sold half at a nice profit.
One day forward, one day back!
Going to the bach next week, up near Vinod territory in Mass.
Bringing lots of wine.
BMD was a dog with fleas. I remember my buddy Mike lost some sheckles in BMD.
ReplyDeleteLooking for the RBY re-trace......waiting....waiting:)
The Euro LOOKS like it's going up. The dollar LOOKS like it's going down, should be good 4 the market.
ReplyDeletedumped the rest of my typ, ended up making a few pennies
ReplyDeleteDamn- late start this morning. Which included getting stopped by the SFPD for a fix-it ticket (one headlight out).
ReplyDeleteIs TBT a buy here?
ReplyDeleteINTC/CSCO are holding up fairly well.
ReplyDeleteLandry-
ReplyDeleteRandom Thoughts:
The market put in a solid rally but there was some selling going into the close. However, it had a decent day nonetheless.
It's remains stuck in a range though.
Again, for the aggressive, I'm still seeing some high flying stocks (i.e. high relative strength) forming Pioneer First Thrust (email me if you need the First Thrust pattern). Wait for entries though.
And, once again, keep in mind that overall, the big blue arrow continues to point sideways. Therefore, for the most part, you probably want to continue to sit on your hands.
I wish someone would have told me 20-years ago that there are times when it's okay to do nothing in this business. Write that down and thank me later.
OK, I'll take Landry's advice for now...
ReplyDeletehey 2nd - I've moved in and out of TBT a couple of times this past 5 days or so. Right now I'm not looking to get back in until a move above 33.12
ReplyDeleteTough, tough action.
ReplyDeleteLate start here also. Man, any deviation from my normal routine just kicks my ass.
ReplyDeletePort holding up well so far.
ANOTHER 5% for NANO????
ReplyDeleteSD...of course. I'm meeting with MOG today and see what he say's just to piss everyone off :)
tyh@27.76
ReplyDeleteShanghai closed red so I don't anticipate much of anything today, should probably sell something if I were smart.
ReplyDeleteI'm OK with doing nothing.
ReplyDeleteSometimes it pays off to wait for the final 30 minutes of the day. Or the following day's open.
certainly i should have done nothing, now i'm going to need more bandages for my hands
ReplyDeleteSD - Yes, if MOG likes it then perhaps he's aware of something most aren't, and it's worth considering.
ReplyDeleteThere was another one like that recently he initially advised to run from but I don't recall the details of where it went from there, was it PXP?
REDF just got a bunch of bigger buy orders and the stock is up nicely. I have officially "loaded the boat" in this stock as the title of this post suggests not to do. I have about 40% of my total money in it at about a $1.95 average...yikes!
ReplyDeleteMy thinking is there is so much potential for this stock to soar higher given how much room there is to grow in the India internet and the downside is limited to its cash, which is about $1.50/share. They are basically operating at break even right now.
i'm not dead yet, if tyh can punch above 27.90, i think it has room to run
ReplyDeleteREDF- Yep, same thing happened yesterday. Who ever wants in here is not being to subtle.
ReplyDeleteGL, guys.
X is still ripping. I'd be careful shorting today.
ReplyDeletelooks like tyh is failing again just under 27.90, so i'm out at 27.89....couple of $$$ for fido
ReplyDeleteStinky on CADC...Trying to get lucky.
ReplyDeleteLater!!
Mark - Did you manage to get the additional $40k you were going after?
ReplyDeleteI'd bet everyone would like to see a picture or two during construction...
yeah bro, post some pix, it's been awhile since i've seen one of your projects.
ReplyDeletea bit of a weird one, not based on TA, I'm scaling into Dell.....keep your eyes peeled for some announcements soon.
REDF - Two thumb's up on that one TOF, I like the story.
ReplyDeleteI have the notion RBY is going to rise above the 200 day today.
ReplyDeleteLong RBY:)
RIG - Higher highs, higher lows...
ReplyDeleteYou guys have to read this.
ReplyDeletehttp://www.ritholtz.com/blog/2010/08/felix-zulauf-up-close-and-personal-transcript/#more-58273
Took many RBY profits....flat no pos.
ReplyDeleteLobster 2nite:)
woops...sold a little early:)
ReplyDeletelobster roll?:)
Anon - thanks for posting that article. Almost makes me crap my pants thinking about being long in this market.
ReplyDeleteHoly shit. After reading that interview with the Felix dude I took a look at the Japanese market in the mid 90's which is what he said was a parallel to today in the US.
ReplyDeleteDraw a 2.5 year chart of the Nikkei on Yahoo Finance from June 1 1995 to Dec 1 1997. This is the exact same way the markets have been trading in the US since March 2009. If this is any guide, we will probably be up around the 1,100 level for another month and a half and then the market plunges 20%.
S&P is having some difficulty breaking out above 1100. I have just reloaded at $20.71 the 200 shares of TWM I sold on Monday at $22.
ReplyDeleteIt's not that I am becoming too bearish -- it's just that my portfolio is net long now, and I would like to be close to fully hedged until the market direction becomes clear.
Boy, am I glad I covered my XHB short at the low of $14.15 on Monday -- it is having two great days in a row...
i think quite a bit about the parallels between '90's japan and '10 with the usa, but the primary difference is globalization. Long term I remain extremely bullish, globally, since we are going to add 1B+ folks to the middle class over the next 10 years and bottom line that s/b very positive for stocks
ReplyDeleteI just read the Felix interview and decided that now is indeed the wrong time to invest long-term into Chinese stocks. So I just placed a sell limit order at $8.19 for 250 shares of WATG I purchased at $8 last week (got a partial fill so far of 100 shares) and placed a sell stop limit order at $7.99/$7.98 for the other 250 shares.
ReplyDelete"If this is any guide, we will probably be up around the 1,100 level for another month and a half and then the market plunges 20%. "
ReplyDeleteSo, possibly another crash following mid-term elections? I wonder if the victors will be implementing some form of financial chemotherapy...
CP - who knows if we get a crash. but the fact of the matter is we're still below the 200 DMA. that's bearish for the markets.
ReplyDelete200 DMA - We're facing huge uncertainty here, if economic data don't begin to show evidence of improvement somewhere besides perhaps Mozambique, I'd expect selling to commence.
ReplyDeleteI wouldn't be terribly surprised if prices were to weaken into today's close.
ReplyDeleteFAZ dance against 14.75 has continued for past 2 hours...
ReplyDeletePIR off at $6.65. Markets can't get above 1,100 and PIR is a pretty high beta stock.
ReplyDelete"BEIJING Aug 17 (Reuters) - Officials throughout China must work to stabilise the real estate market after property prices shrugged off a tightening campaign and rose in July, the powerful central planning agency said."
ReplyDeleteI'll guess this is why Shanghai was red last night.
Chinese officials might have to implement their property-tax plans a bit earlier than anticipated? The other mechanisms don't seem to be hitting the target as advertised, everything else but the target....
Boyzzzzzzzz
ReplyDeleteBHP - "BHP bets on crop boom with hostile Potash bid- AP
ReplyDeleteBHP Billiton's hostile $38.5 billion takeover offer for one of the world's biggest fertilizer producers, a bet that developing nations will drive a farming boom, could get the Australian iron ore miner involved with yet another commodity prized by China -- potash."
China's battle with BHP rages on... Something's brewing?
Let's hope it's not Fat Bastard's stool sample.
cocktails!!!! i've done enough damage on the enterprise software front for one day......my just get some b*lls and put the 4 horsemen shorts back on into the weak close.....although i probably won't sleep again tonight if i do.
ReplyDeleteI hope it's not a simple/obvious as a failure at 1100. I thought the market was always supposed to do the hard thing....
ReplyDeleteSince XHB is still having a great day and is at $14.80 now, I have also decided to reload now the XHB short I covered at $14.15 on Monday. I did it in a tricky way, though, by selling 5 September $15 naked calls for $0.52. So this means that I'll either reload my short at $15.52 or pocket $250.
ReplyDeleteAll right JB....Bidding DELL @ 12.18, but I'm seeing some strength here.
ReplyDeletefaz@14.79
ReplyDeletei hope you're seeing strength bro...thats the idea!
ReplyDeleteI've got FAZ in no-man's land here. GL, but things seem to be firming up here.
ReplyDeleteThe hard thing would be to punch through 1100 just when everyone's loaded for bear.
ReplyDeleteFAZ - Entry was on 14.75 break (14.76 @ 1508 green bar) - Exit was on 1514 red bar. I'm out. No read past that for me.
ReplyDeleteis there anything more gross/pathetic than the gm public offering...wow, a sad day.....there s/b NO public offering until every cent is paid back, including GMAC....this sucks
ReplyDeleteout of fax @14.91...liking my new chart methodology
ReplyDeleteops, i mean faz
ReplyDeleteCADC - 12k shares traded, LOL
ReplyDeleteTWM closed at $20.95 but is bidding at $21.30 after hours! SPY, on the other hand, is bidding at the same price at which it has closed. So I just sold at $21.31 the 200 shares of TWM I purchased a few hours ago at $20.71. If the market gaps down tomorrow, I still have 500 shares of TWM and all my SPY and IWM puts to protect (at least partially) my downside.
ReplyDeletehow lucky is is this: my order to sell faz at 14.91 hung up for some reason, after 15mins on the phone with fido we finally got the old order cancelled and i was able to sell at 15.06...better lucky than good!
ReplyDeleteOh, sorry -- SPY is also down after hours. I wonder why...
ReplyDeleteDavid - looks like almost everything is off AH...don't have a clue as to why
ReplyDeleteClosed out of all of my longs (STT, PIR, SPY, EEM Index fund) except REDF at around the close.
ReplyDeleteDELL filled @ 12.18. You can still see my order. 2.99M shares :)
ReplyDeleteEnded the day green.
ReplyDeleteI really don't see how anyone could have traded today without 'gaming.'
ReplyDeleteCrazy chit happening in DELL AH trading.
ReplyDeletei played tight range. using my new 1min/5min inidcators, and while choppy it didn't seem "worse" than normal....perhaps i just got lucky.
ReplyDeletenot sure re:dell - if anything rolls it will be 10-20 days
Dell - buy the rumor, sell the news? Pure guess...
ReplyDeleteprobably more like buy the rumor sell before the rumor is exposed as flawed...:)
ReplyDeleteOkay, let me add this to the interview I posted earlier. I've been reading this since TLT was at the recent low, so it's very difficult to not give it the credence it's due. Now it aligns with Felix Zulauf's view, and both are looking at the cyclical nature and fundamentals of our insane debt levels. Rosie says we have eliminated or written down $600B of $6T in debt, so we have a long way to go in unwinding this mess. The average American has lowered his/her debt ratio from 135% to 125% of income, with the average in the past being 70%. Zulauf and Rosenberg are seeing the same conditions.
ReplyDeleteSo what should the S&P be valued at?
"Breakfast with Dave"
ANOTHER DAY OF DISMAL DATA
In terms of economic data out of the U.S., yesterday was definitely one for the growth bears, as Claudia (filling in admirably for the data writeups during my jaunt to Whistler) explains below. U.S. single-family housing starts were down three months in a row to their lowest level since May 2009 and permits got
clobbered for the fourth straight month, indicating more weakness in starts ahead (as if the National Association of Home Builders’ housing market index hadn’t already signalled that). And, the 33% bulge in multiple starts plays right into our deflation view as the supply response to apartment demand helps keep
rents under wraps. The median core PPI (which excludes food and energy) was barely up in July and the core intermediate and crude measures deflated, portending industrial price weakness ahead. Yes, industrial production bounced
1% MoM but netting out the downward revisions and the seasonal factor effects as they pertain to the automotive sector (no idling this summer), the underlying increase was closer to 0.2% and we expect a significant pullback for August. The weakness in the incoming economic data in the U.S. will soon show through
in reduced corporate guidance and more downward earnings revisions (think of Bernanke as CEO for USA Inc. and consider that he just cut the forecast for the second time in six weeks). These pose near-term cyclical risks to the equity market outlook.
Based on our GDP views and taking into account cycle-high margins, it seems to us that S&P 500 operating EPS will fall short of consensus forecasts for Q3 — $17 as opposed to $20. As for Q4, our projections for costs, volumes and
pricing leave us at $18 compared with the $22 the market is de facto pricing in. So, earnings, which recently trended up towards $80, are settling into a $70-75 range for the coming year. Slap a 12x multiple on that earnings profile and do the math of what a really an attractively priced market would look like."
FF
SGG had a nice rally over the past few days, and so I decided to raise my sell stop limit order from $51/$50.90 to $52/$51.90 for the 100 shares I bought at $50.
ReplyDeleteSGG is at a place now where it needs to make a decision: either it wants to break out to a new 5-month high or make a double top and go down. In the former case, my sell stop should not be triggered as it is low enough, and if it does get triggered, then most likely SGG will be in the latter mode and so I *should* get out of it (with some profit along the way).
GLD is also in the place where it either makes a lower high (relative to late June) or keeps powering on to a new all-time high. With GLD closing at $120.22 today, I decided to place a sell stop limit order at $117.40/$117 on the 50 shares I have added to my core position at $117.40 in July.
ReplyDeleteIf Zulauf and Rosenberg are not enough to scare you, try this one by another guy with a great track record:
ReplyDeletehttp://www.zerohedge.com/article/must-watch-kyle-bass-interview-there-no-way-i-can-be-long-stocks
Since we are on this topic, here is an article by one of John Hussman's people discussing some of the implications of the 0-rate policy pursued by the Fed:
ReplyDeletehttp://www.hussmanfunds.com/rsi/zerobound.htm
Here are some excerpts from it:
"With fears of deflation spreading among market participants, it was an auspicious time for a member of the FOMC committee to deliver a paper arguing that the Federal Reserve's current policy was likely to increase the probability of deflation. This was the paper put out earlier this month by James Bullard, the President of the Federal Reserve Bank of St Louis. Much of the focus has been Bullard's comment that the US is closer to a Japanese-style outcome today than at any time in recent history."
"In effect, Bullard is saying that a policy that makes a promise to investors that rates will stay low for long periods of time backfires. While the Fed may intend to fan inflation concerns in order to motivate aggregate demand, the private sector begins to assume a semi-permanent state of very little change in inflation, and a growing inability for the Federal Reserve to do anything about it."
"Promising low rates for long periods of time is particularly pernicious following periods of credit crises, points our Arun Motianey, now with Roubini Global Economics, in his book SuperCycles. In a discussion of Japan's low policy rates over the last 15 years, Motianey points out that deflation became worse the longer Japan's equivalent Fed Funds rate stayed at zero.
Motianey argues a slightly different transition mechanism that pushes the economy into deflation, mainly through lending markets. He argues that after a credit crisis, government-supported banks are borrowing at close to government rates and at the same time being coerced to lend at rates lower than they would otherwise demand for the risk of default. The result is that they demand higher credit standards (typically higher operating cash flow) of their borrowers. Borrowers, mostly companies, oblige by halting the growth in or cutting the nominal wages of workers. Generalized price deflation typically follows wage deflation.
Motianey sums up his argument up this way, “Very low nominal rates cannot be used to fight deflation, since they are, in these conditions – the condition of banking system distress – the cause of deflation.” He calls this the Paradox of the Zero Bound."
Continuing the previous post, Bill Hester also points out that during deflationary expectations the normal negative correlation between stocks and bond yields (over a medium time horizon) breaks down:
ReplyDelete"In periods where the economy gets stuck in the “unintended” state, long rates become the primary signal for the expectations of growth and inflation. Lower rates imply an expectation of deflation and economic weakness, and become associated with weaker stock prices."
If that is the case, then the recent plunge in T-yields does indeed spell trouble ahead for stocks, so maybe my reduction in my short position in the light of the very low bond yields was not really warranted...
"The longer that Japan has kept its policy rate low, and continued to promise to keep rates low, the more persistent and intractable the pattern of deflation has become in Japan. In the US, the risk is not only the detrimental effect to the economy if we enter an “unintended” state, but also the effect that an erosion of the faith in the Fed would have in pricing stocks."
Kyle Bass's hedge fund is almost all bonds, including high yield (Junk?) but not treasury. No stocks. Go figure.
ReplyDeleteTLT - Does anybody think TLT looks a little toppy here?
ReplyDeleteTLT might have indeed gotten ahead of itself a little, and so from a technical point, shorting it now and placing a buy to cover stop at 105 is a reasonable strategy.
ReplyDeleteBut then, why short something that is in a clear uptrend?
ReplyDeleteBecause every uptrend is eventually followed by a downtrend and equities are cheap to T's?
ReplyDeleteHere's a pretty picture:
ReplyDeletehttp://news.xinhuanet.com/english2010/china/2010-08/18/c_13451230.htm
CP- The hard thing to do. Yep, I agree. Still hanging in there. Got the 40K, and I'll post some pics once it looks like something :)>
ReplyDeleteSoccer updated from the killings fields of the 5 year old's. (Hailey)...On a break away she was tripped from behind by a boy. Hailey does the full on triple header roll, pops up, regains control of the ball, and drives in for a goal....The boy who tripped her laid on the ground and cried.
ReplyDeleteI'm sure the tripping incident was purely accidental, the buy had no need to cry in shame over that.
ReplyDeleteOops, "boy" I meant. Sorry for the Freudian slip.
ReplyDelete