Friday, November 28, 2014

11/28/14 Stormy Monday

A few thoughts re Monday's open.

(a) OPEC has dealt Russia a blow far more serious than anything delivered by Western sanctions.  How will Putin respond?  It's not like him to turn the other cheek.
(b) One danger of trading counter-trend is the possibility that overbought or oversold conditions often exceed what's conceivable.  How much lower can foreign currencies (in particular, the ruble) sell off against the dollar (-30% YTD)?  Selling begets more selling.  Ironically, Japan's Shinzo Abe would probably celebrate a -30% drop in the Yen as 'touchdown!'
(c) Speaking of oversold, it's possible that a secular decline in oil and gas stocks is just getting started.
(d) Miners?  This sector has perfected the art of snatching defeat out of the jaws of victory (a close second would have to be NGas).

The portfolio suffered a -1.4% hit on oil.  Had I decided to hold positions in emerging markets and miners through today's close, the damage would have been twice as bad (RYPMX closed off -8.11%, or -9.4% from my exit basis; RYWVX closed off -4.1%, or -4.4% from my exit basis; RYMBX closed off -5.49%! [completely unexpected], or -6.6% from my exit basis).  I have no actionable 'take' re Monday apart from an expectation of 'volatility.'  My only positions are cash and a small position in HDGE.

209 comments:

  1. Traders who don't at least occasionally take a meaningful hit simply aren't taking on enough risk. That's my 'rationalization' for today!

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  2. Who are the silicon producers besides Shinetsu? We should be watching them. Is it possible demand for fossil fuels is beginning to wane because mass production of renewables has stalled or perhaps manufacture of renewables has reached the point of becoming self-sustainable?

    Silicon producers should also benefit from lower energy prices, thus solar production.

    http://www.pcasilicon.com/silicon-wafers/raw-material-process

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    1. Considering solar production uses a lot of energy than these guys should be able to improve margins, no?
      SUNE is the ticker for the old MEMC.... wow, is that a butt load of debt or is my data fubar? Or, could be a big short squeeze developing?

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  3. BXE - See that trend line intersecting ~$3.50 ? Hmm...

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  4. RBA - Equipment auction business in an uptick?

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  5. CPRT - I spent a few days this past summer removing parts at the local wrecking yard, cars were being crushed as fast as they could b/c there was no room for more, the place was a madhouse. I think I mentioned the experience.

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    1. I watched it for about a month until the earnings response was negative and it crashed, LOL, then look what happened, complete 180...

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  6. This chart seems to indicate the US federal reserve has been considerably more conservative then other central banks:
    https://yrah53.files.wordpress.com/2014/11/b3swfwtcaaaluub.jpg

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  7. $9 cash cost per barrel seems pretty cheap, this company said they're meeting their goal of producing 40,000 barrels/day?
    http://www.gulfkeystone.com/media/85360/gkp-half-year-report-2014.pdf
    https://uk.finance.yahoo.com/news/3-stocks-buy-oil-prices-100933187.html

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    1. Is GKP.L = GUKYF ? It nearly doubled from the mid-Oct. bottom. Looks like C&H at the moment suggesting 2x upside (or more?)?

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  8. BHI - Didn't HAL submit an offer? Why is BHI down? Is HAL in there buying shares at these prices?

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    1. Is that about a difference of $10B ?

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    2. No answers or responses to this question from those who might have an answer.

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  9. Reminiscences guy out with a long blog - out of almost all oil including BXE, but details his list of holdings and some are worth looking into I think.

    http://reminiscencesofastockblogger.com/2014/11/30/week-177-perspective/

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    1. Yeah, I see it thanks. I'm having a tough time with this guy b/c he doesn't ask the same (forward looking WHAT IF) questions I do. Now says he owns an oil stock and this isn't it?

      "Pan Orient – So I own one oil stock right now and this isn’t it. Yes, I know, this is an oil play, but its really only kind of an oil play right now. The stock is trading at only a few cents over cash level. They have some okay oil assets. The idea here is that the downside is presumably limited given that the stock is worth cash, and so any sale or positive news from any of the remaining assets and the stock goes up. Presumably all oil assets are not worth zero yet. I added this one in the oil carnage of the last couple days because it was basically at cash for a while."

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    2. Oh, he works in the oil industry..... Interesting.....

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    3. Well that makes sense, basically I read him to say: Look for a company that has a big pile of cash b/c that means they made money while they could and that's about as good as it gets till oil lifts, if ever..

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    4. ELNK - "Little or no debt" - Seriously, is he talking about some other company or fumes he inhales at work?
      Long Term Debt/Equity = 373.84% ?
      Either I have no idea of how to assess (quite possible!) or he doesn't?

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    5. He's looking for a part business sale to get rid of the debt:

      "At the end of the day my hope here is that we will see the sale of most of the businesses and be left with the remaining growth business, managed services, little or no debt and maybe even a bit of cash left over."

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    6. Oh I see, thanks, I guess I just couldn't concentrate on the complex sentence structure.

      "Perhaps they sell non-core businesses and restructure to eliminate this large debt so management can concentrate on the core."

      To me it's not clear what would be left of the core, I'm no financial genius and my reading comprehension is weak. I wish him the same level of success he experienced with this grand logic in his BXE position.

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  10. Sounds like there may be the potential for a lot of Iraqi oil coming to market?
    http://www.platts.com/news-feature/2014/oil/iraq-oil-crisis/oil-firms-evacuating

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  11. CCK/BERY/BLL - Recipients of low materials costs, I assume.

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  12. AKAM - Seems pretty good
    NWLI - I'm liking this one more and more, LOL Cash up the wazoo, huh?

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  13. I'm finding no energy producers with hedges in place for next year following current contract expiration's. Great time for SA to kick frackers in the teeth, huh?

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  14. A different kind of world, huh? Cold and lonely, very quiet hanging out here. Anyway, no doubt there will be an emphasis on natty production considering oil is so cheap so not sure I'd get long natty quite yet? I see a lot of people seem to be shooting from the hip without the benefit of hard facts and figures to back them up, facts and figures they probably don't know how to obtain or comprehend, much like me..

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  15. Looks like that gold thing went down.

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    1. Voters in Switzerland reject plans to hoard massive amounts of gold, limit immigration
      2 hours, 47 minutes ago
      BERN, Switzerland (AP) — Swiss voters overwhelmingly rejected three citizen-backed proposals to protect the country's wealth by investing in gold, drastically limit immigration and eliminate a special tax that draws rich foreigners. The separate proposals — put to voters nationwide Sunday by conservative politicians, ecologists and a liberal group — had needed a majority of voters and Switzerland's 26 cantons (states) to pass. A proposal to require the central bank to hold a fifth of its reserves in gold was opposed by 77.3 percent of voters, according to final results from Swiss broadcaster SRF. It would have forced the Swiss National Bank to buy massive amounts of gold within five years, likely causing its global price to jump. Finance Minister Eveline Widmer-Schlumpf said the vote reflects people's confidence in the SNB and the view that gold is no longer as important as it once was as a tool to back up paper money.

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    2. My price hasn't updated from Friday yet.

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    3. Gold bugs are the confirmed red-headed step children of the commodities world.

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    4. Smart voters - that was a dumb law.

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    5. Oh joy, where have I seen this episode before?

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    6. So it a good idea for SNB to keep buying euros to keep the Swiss Frank artificially weak? In that case I don't know why anybody needs actual employment, we can just trade based on the next central bank intervention?

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    7. Then I can assume I'm correct, you feel it's okay for central banks to play with your capital and chose winners over losers.

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    8. BB - When you say things like that it makes me suspect you're easily shepherded.

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  16. Saudi A. - These guys should copy the Swiss and start buying up tons of $US dollars, to push the $US so sky high even refineries or anything else made by the US couldn't hope to compete. That includes energy, top of the list.

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  17. SPWR/SCTY/TSL/ENPH - Solar - Betcha green energy sources rally like an SOB in the morning now with crude and natty crashing like this b/c now we're no longer living in the stone age with copper tools and it's the ending of hydrocarbons now all of us will need a solar panel on the roof to heat our homes with when it's -15*F outdoors during the middle of February. Maybe something like a 2'x2' PV array, what do you think?

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    1. That would do it as long as it has an ENPH inverter.

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    2. :) Well, that doesn't mean it's gonna happen for sure! But watch out in case any Peruvian anchovy fisheries begin failing.

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  18. I fully anticipate the S&P should gap up no less than another 10pts tomorrow morning in rejoice over man kind's ability to break free from the long hydrocarbon chains that bound him for so many centuries.

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  19. I wonder if the CLR CEO has checked to bottom of his shoes recently....

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    1. Maybe he should check inside his shoes, to see if they smell like a zookeepers shoes.

      UBS - Did you guys notice UBS gaped up last session?

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  20. Asian markets open more or less as expected:

    (a) Shanghaier +0.8%, Hang lower -1.9% in early trading.
    (b) Australia's All Ordinaries -1.2%.
    (c) Gold drops -20 (-1.7%), silver off -0.65 (-4%) following rejection of the gold initiative by Swiss voters.
    (d) Commodities red across the board. Crude, NGas, and Gasoline futures extend Friday's losses by an additional -2% each.

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  21. I almost just wrote a differential equation to calculate my stop limits.... But stopped short b/c there are only a few positions. I bet you guys with 150+ positions could use something like this. Come to think of it, I'm not sure what would happen to me if the market took a big dive and my 150+ positions with it, would I be able to exit that many quickly enough to avoid being buried?

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  22. Banks are probably the right stock to be in if the $US breaks out and runs to 160

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  23. Oil

    http://www.investing.com/analysis/crude%E2%80%99s-crashing-%E2%80%94-$35-in-sight-234054

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  24. 20 feet from Stardom

    Movie on Netflix, near certain 2nd will like this, perhaps others here too.

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  25. http://inflationdata.com/articles/charts/inflation-adjusted-oil-prices-chart/

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  26. LGCY - Stopped out @$16.87 from $20.77 entry

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  27. FCAU road show for the Ferrari IPO is expected to start this month. Should start to see some more analyst coverage in the US soon. I like looking at the volume of comments on Twitter / Stocktwits and other boards about stocks and I'm not sensing anything close to euphoria yet. I expect to see an irrational spike at some point over the next 6 months or so as we head into the IPO.

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    1. My fear is it'll prove to be another BALT/FMD/INVN
      Although, Buffett bought into GM so seems something might be up for autos but can't understand what it is unless perhaps it's ex-US?

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    2. They're all a BALT / FMD / INVN...doesn't mean we can't make $$ off them!

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    3. The thing about the entire small cap space is that the majority of them don't survive in the long run. Knowing that up front means its probably best to just trade them. Otherwise we can invest in the best 500 companies in the US by just buying SPY and living our lives like the rest of the people in the US.

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    4. The auto market is positioned well for good business. Cars are oldest ever on the road in north america and europe. The North America market is growing and should do well for a few years as the auto stock gets upgraded. Europe, if it turns, will show wome growth. GM is selling more in china than the US now, so well positioned for growth there.

      I own GM as well as FCAU.

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    5. I thought you sold GM. But if it's good enuff for Buffett then I'm interested.

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    6. TOF - Good point about them all being turds. Which is where interpreting charts and price action becomes important. I've noticed right before a new down leg begins there's a little ramp just before (see LGCY @ $20.77), tops are marked by a higher low (Batman ears), etc., ema's rolling over, etc.

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  28. JONE - Stopped out @ $9.67 from $10.22 entry

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  29. CP, the reason I thought the Swiss vote was dumb as it says they have to buy 20% of their reserves and "never sell it again".

    There is no point in buying all this gold if they can't sell it. The point to having it is to help deal with financial crises. If they can't sell it, they may as well just buy it and blow it up as as least that way they won't have to pay people to guard it.

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    1. Yeah, too bad the vote was about gold, that aspect was flawed.

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  30. Oil and the metals bouncing this morning, but nat gas and the food commodities down.

    Could be just a dead cat bounce or could be the bottom. No way of knowing where this finally stops.

    interestingly BXE making a pretty big purchase of land and producing assets this AM. I would think they got them at a good price.

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    1. When the ship is going down just leverage it up, I guess!

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    2. Yeah I know, have seen this trick before too many times. Is there even any insider participation at all, ie: do they have their own skin in the game or are they bailing out their uncle by tossing shareholder capital down a rabbit hole?

      I bet they aren't eating their own cooking, just ripping off shareholders?

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    3. Hopefully they are being smart. They are a conservative energy company and use partnerships instead of debt to fund growth and are underleveraged compared to most.

      Some companies will make huge money out of this oil price drop. Hopefully BXE management will be one of them.

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    4. Speaking of debt, any idea of how much there is?

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    5. Wasn't it PAL that bought out an way overpriced clapped out gold mine and couldn't find anything in the ore?

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  31. GUKYF/GKP.L - See this one, these guys are producing oil in the Kurdish region.

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  32. Retail spending down 11% and autos gonna rally? Umm, I'll wait for confirmation, thanks. Maybe if Germans follow Swiss and vote to allow their central bank devalue their currency but that's all it is, just pulls demand from the future and prolongs the reality.

    What about China's PMI, nobody mentioned how great it is.

    "BXE - Buying more land, must be good!"

    Seriously, I have to wonder if you guys might be trying to sink me?

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  33. BXE - "Increased production guidance" LOL, they couldn't meet the last guidance they provided, now we're supposed to believe they can increase guidance? Oh please, I wasn't born last night!

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    1. Well, I think Orange was suggesting BXE should buy property? Maybe Orange is the "uncle" being bailed out before the bottom drops out?

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  34. LGCY - BACML still has this one as a buy, guess they wait till it's really obviously in serious financial difficulty before they downgrade it. Talk about foresight, no wonder these financial criminals have to receive constant government bailouts.

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  35. Too much oil - Doesn't that beat all, never thought I'd ever hear that.

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  36. "Some companies will make huge money out of this oil price drop. Hopefully BXE management will be one of them."

    BB - I tend to favor the side saying this move will be more permanent. Watching these types of moves play out in other sectors I wouldn't be shocked to see a retest of the 2008/9 lows. The long term chart of oil shows that drops of 50% to 70% aren't entirely unusual. I honestly have no idea but knowing a little about sentiment and casually following traders in this sector for the past 10 years makes me unwilling to invest in it. I think we are witnessing a bubble popping.

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    1. At some level (maybe here?) and with a reasonable risk-reward setup, I'm sure this will be a great place to trade shorter term reversals. But it seems to me that the bursting of the bubble just started. The period to really build long term wealth, if this is the case, will be a year or a two, maybe more, down the road.

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  37. The rebound in GLD/SLV is impressive.

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    1. What a nasty move man! I was reading a couple of trader comments on gold last night and saw a good deal of cheering. What a kick in the jewels.

      What have you been up to? How was your weekend? We're still tossing around ideas on where to live. Just researching stuff before making a move up north. The new plan is most likely if we do make a move north it would only be us and my in laws would stay down here, but we would do a month long trip in the summer plus a week or two during the holidays.

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    2. We're probably split right down the middle on here versus north, though. Lots of things to consider.

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    3. Good weekend. Parents down from Oregon so way too much eating going on. Let me know if you need any more info. Should be a fun summer trip though!

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    4. Ha yeah will let you know. We're planning on doing a trip or two up north first to scout out areas.

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    5. I wouldn't leave SD if it was a 50/50 proposition, I agree you should do the trip and compare living in SD vs traveling.to SF

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  38. Replies
    1. Definitely has lost appeal since there's no shortage of molybdenum available.

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  39. Probably worth asking but anyone have a take on the contagion risk of the oil collapse? Odds we see a 1998 style meltdown if Russia goes down the chute? Any risk of across the board selling?

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    1. Not a great answer, but I think it would only happen if it was for a protracted time frame. Say 2 years?

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    2. a long period or a very sharp down move to the $40's. Otherwise yeah this was probably a great trading opportunity here. SLCA / HCLP are all up big from the lows today.

      crazy moves down in a lot of stuff. today could have been capitulation.

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  40. Nov auto sales figures should be out tomorrow. Will be interesting to see how GM / F / FCAU do. They all have pretty similar chart patterns. My guess is barring anything extraneous we should see a breakout higher for all of them soon.

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  41. Take a look at the trading in SD today.

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    Replies
    1. I see nothing other than a bounce, what do you see?

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  42. $US - Well then, has this one topped or what? Do fundamentals support a breakout or not?

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  43. "I wouldn't leave SD if it was a 50/50 proposition, I agree you should do the trip and compare living in SD vs traveling.to SF"

    CP - I'm an east coast guy. I miss things like changing seasons, good food, good sports, lots of culture, nature/woods....it's hard to complain about San Diego, but it misses the mark on a lot of those things. To me it's a great place to retire in later on in life. For my kids, I'd rather they experience more in life than just the beach and mild weather.

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    1. Best thing you can do for your kids is to get them involved in your business, have them answering the phone, taking orders, opening the store, restocking shelves, etc., all of that kind of stuff. Bring them into the family owned business and teach them how to take it over. They can learn from you.

      I don't think it matters where they live but it sure is nice to know what the weather is going to be like next week b/c it allows you to concentrate on more important things like having fun.

      Buy a couple jet skis, or rent a ski boat and take them to the Colorado river just below the dam at Havasu camping for a week. Heck, you could rent the jet skis and a cabin even.

      You have options, you could swim in the ocean, go snow skiing, go boating on the Colorado, all in the same weekend if you wanted.

      About anywhere in Cali is gonna be nearly the same, SF area in winter you still leave the house with a light jacket on. I maybe saw ice on the ground 3 or 4 times, LOL.

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  44. This is exactly what I like to see as far as technicals go...this is a weekly chart of BJRI (BJ's Restaurant):
    http://stockcharts.com/h-sc/ui?s=BJRI&p=W&b=5&g=0&id=p52410239923

    Notice the diverging price and RSI readings between late 2012 and early 2014? I don't place more emphasis on technicals in general but this chart setup seems to have more success than others, and the weekly chart seems to be more reliable. I think DB and some of the European financials are setting up like this. BALT was setting up like this in early 2013 and turned out to be a good trade.

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    1. I also noticed this pattern set up in KKD and SNE but they have moved already. I guess it's a cup and handle...but more importantly I think is that they showed some positive divergences that to me were tells that they were nearing bottoms and selling pressure was letting up.

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    2. Alright, let's see how it goes tomorrow with this one. Looks screaming cheap by every metric.

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    3. Well BJRI is already up too much to make it low risk at this point.

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  45. TOF, you could very well be right. The money that will be made an energy a few years out still.I'm still not buying any energy stock. But I do hope the ones I own are being managed well.

    not sure if you saw it, but the CEO of Canadian Natural Resources, a very smart oil guy is saying well may hit $30 before this is all done.

    really hard to know right now. When you have over supply of a commodity, sometimes no price is low enough

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  46. SD- CP, just noting the 2 day move. That's one hell of a range.

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  47. BEAV - Knockout at the 50SMA, seen lots of charts do this lately just before screaming higher, seems like.

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  48. No need for the strategic petroleum reserve anymore since we can produce oil from shale and won't need to for a long while.

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  49. How about crude carriers to bring all that cheap oil from Saudia Arabia that we've been charged an arm and a leg for forever?

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  50. RBA - These guys will make a killing auctioning off all that surplus oil production equipment we won't need anymore.

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  51. $US now 88.5, what happens if it breaks up through?
    FCAU - Alright, I nibbled some @ $13.03
    Rates are pretty dang low, that money could migrate somewhere?

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  52. Interesting take on what the Saudi's are up to and a macro view on who benefits.

    http://coxeadvisors.net/november-28-2014don-coxe-oil-and-politics-a-toxic-mix/

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  53. per Cashin

    Can Seasonality Succeed Again? – Since November began, we've been pounding the tables of the positive
    history going into 2015. Several other friends have also noted the historical patterns.
    In his weekend report, my friend and fellow trading veteran, Jim Brown, over at Option Investor wrote:
    According to the Stock Trader's Almanac 2015 should be a banner year. It is by far the best year of the
    4-year cycle and especially in a second term president. Since 1939 the Dow has averaged a 16% gain,
    S&P +16.3% and the Nasdaq a +30.9% gain. Years ending in five have only had one down year in the
    last 13 decades. The average gain is 28.3% for the Dow, +25.3% for the S&P and +25.6% for the
    Nasdaq. For the current election cycle the current quarter and the first 2 quarters of next year average
    gains of 21% for the Dow and S&P and +34% for the Nasdaq. Finally, in the last 84 years there have
    only been 3 times where the markets were up double digits 3 years in a row. In each of those
    occurrences the 4th year was up an average gain of +23.1%. Let's all hope really hard that all those
    historical averages repeat in 2015.
    Jeff Hirsch, over at the invaluable Stock Traders Almanac, wrote, "Pre-Presidential Election years have seen no
    losers in 76 years". That's what you have to call statistically significant. Thanks Jeff.

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    1. wow those are some really impressive stats. all on the back of cheap oil i guess. earnings up 12-15% in 2015 due to lower costs and higher top line growth?

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  54. GGAL - Finally located one from the deep, deep south.

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  55. TRIP looks to be bottoming. Needs to get back over 74. Long a few here.

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  56. "Juice Jacking" - Well, there's a good one.

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  57. Hey CP - Thanks for the advice on where to live. Appreciate it.

    Hope you guys are doing well today. Some nice moves in some of the energy stocks.

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    1. That was a nice write up, made we want to be one of his children growing up.

      What a Dad.

      Good Holidays everyone and especially good health, our best asset.

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    2. So right Telestar. Only thing is we don't realize it until we get sick.

      TOF; all your talk about moving and whatnot has me thinking. As you know, I live in Barcelona but I'm from Boston. I spent a summer in SoCal and wouldn't mind moving there, just got to convince the wife who doesn't want to be too far from the family here in Spain.

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    3. Oh cool. Where in boston are you from? i lived in cambridge, allston, brighton, and brookline right out of college.

      San Diego is nice. Same weather every day pretty much. I'm actually sick of the monotony which is bizarre to even say given how mild the weather is compared to other parts of the country. Housing is very expensive near the coast but if you move inland a little you can find something fairly affordable....downside is its pretty hot. Gets up to 100 during the days in the summer (and sometimes in the "fall"/"spring") if you move inland about 5-10 miles. I will say I miss the diversity in weather, things to do, people, etc that you can find in other big metropolitan areas.

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    4. I'm actually from the burbs, Sudbury. Although the weather is nice in Barcelona, I really miss the seasons and even the cold and snow, but especially fall. I went to school at Umass Amherst and that area was really great, with the best of both worlds...nature, culture (5 universities), and plenty of things to do.

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    5. Nice. Sudbury is a really nice area. We moved to Northborough last fall to spend time near my brother's family (he now has 4 young kids (had his 4th on Thanksgiving day)) but my wife got pregnant right as we were moving and it threw a monkey wrench in the plans so we moved back. I'm like you though, really miss the changing seasons....

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    6. Do not ever move to Hawaii, guys, you would hate it. Growing up on East Coast, Baltimore, I do not really miss the seasons. I have a strong like of warm and can go play in snow when I like.

      That being said, Autumn with the changing of the trees is an sensory treat, no mushrooms needed.

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    7. I'm sayin' Cali is the best place I know of if you really want the outdoor experience. There's so much you can do nearly all year round. I have to have a 50*F day here just to get me out cutting firewood.

      You want snow, go to the Sierras, I bet there's gonna be some snow there soon? Pitch a tent in the snow, I have before, several times. Maybe I missed the snow?

      F'in SALT! I hate this shit, everyone here must have salt strewn everywhere, idiots trying to fight off the weather. I don't like anything about salt, maybe I should buy salt stock!?!?!?

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  58. TRIP into the gap area. A fill would take it back to 82.62.

    Hopefully I don't jinx it by making this post...

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    1. wouldn't want to trip it up.

      i'll be here all day...

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  59. HII - This looks sorta like a brief knockout just prior to breakout, huh?

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  60. Oil - Where will crude prices be heading in 5 years?
    ENPH - How do you like that move? I'm not saying it's sustainable b/c GE and SNE should be able to develop a better mouse trap (or buy ENPH's of course) b/c as always, later versions will be improved versions.

    GUKYF - You guys watching this one at all?

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  61. Genius of the year award!
    "Bank of America/Merrill Lynch Downgrades Energy Sector"

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    Replies
    1. Time Analyst of the Year

      Timely

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    2. Yeah, I haven't seen the report myself, obviously looking out for their customers best interests.

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  62. Iran is fighting ISIS, must be protecting Kurdish. I guess Iran is now a US ally in the region. Kinda suspected this considering Iran wanted Sadam gone but never understood why the US had armed Sadam other than to pressure Iran into something unclear.

    Perhaps it's really all about Iran's oil wealth, how sad.

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  63. $TLM Oil Search Ltd. has bid more than $300 million to buy the Papua New Guinea assets of Talisman Energy Inc.,

    This could be very significant if Oil Search also takes on all liabilities.

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    1. Citie's map looks jumbled on my screen:
      http://static1.businessinsider.com/image/5478971b69bedd1f6b9bd367-960/citi-breakevens.png

      Delete
    2. TLM @ 4.72. Small for a LT hold.

      Delete
    3. CP- Pretty tough to read and you would need to know all of those fields.

      Delete
  64. MHR- Saw this turds CEO on Cramer yesterday. Said he's been bearish on oil for 2 years now and has been transitioning into Natty! How funny is that.

    ReplyDelete
  65. Replies
    1. PRCX out 91.44

      MDW interested at .65 ish, I suppose I like aggravation.

      Delete
    2. .65 would be a good entry, easy stop.

      Delete
  66. Hedge funds, on average, have returned just 2 percent in 2014, their worst performance since 2011, according to data compiled by Bloomberg.

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  67. My kitchen reno is kicking into high gear. The place is empty and the electricians finishing up today. Hardwood in tomorrow and then new cabinets on Friday (although they won't confirm they are ready). New counter and plumber next week.

    Hard to keep too much focus on the markets because there's a lot of crappy little stuff here I need to stay on top of, but getting it done.

    ReplyDelete
  68. Useless says: "Aluminum: More confident on aluminum November 24, 2014"

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  69. Rain coming your way? You could go outstanding in the rain

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  70. SGG - Where will this ETF be in another 6 months?

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  71. The DJIA is trading up +105. Everything's fine, then.

    (a) EWZ (Brazil) extends yesterday's decline, -1.5% today. PBR (Petrobras) -1.3%.
    (b) CAF (China 'A' Shares) +4.3%! FXI (China 'H' Shares) +2.5%. Shanghaier overnight +3%, Hang higher also +1.23%.
    (c) EEM -0.06%.
    (d) USO (Crude Oil) -3.15%. OIH (Oil Services) -0.6%. XLE (Energy) +1.2%.
    (e) Miners -3% (Gold gives back -20/oz).
    (f) TLT (Long-dated Treasurys) -0.9%.
    (g) HDGE backing off -0.52%.
    (h) NGas down another -3%, with UGAZ -9.6% and about to test its 52-wk low.

    I can't trade these kinds of cross currents, and don't plan to try.

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  72. I couldn't figure out why I had more money in my account. I figured it was an error on TD Ameritrade's part but it wasn't. I received a dividend from F. I used that to purchase SSY, a tiny little company that owns . I have a friend that worked for a skilled nursing facility (SNF) that got bought out. he told me about what was going on in their industry due to obamacare and i started researching the space 3-6 months ago. i found SSY but they don't have any SNF exposure. They do, however, operate a few small hospitals and there is a lot of M&A in that area as well. SSY trades at deep discounts to book and a very low p/s. I think its worth a gamble. Its a tiny position but at least I have something else to pay attention to other than FCAU.

    ReplyDelete
    Replies
    1. here's an article on the M&A in the hospital space:

      http://www.nj.com/news/index.ssf/2013/09/obamacare_side_effect_more_hospitals_to_merge_under_affordable_care_act.html

      Delete
    2. Is that anything like NHC, or different ball park?
      http://www.investopedia.com/articles/investing/081914/passing-boomers-will-leave-big-economic-wake.asp?partner=YahooSA

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    3. Interesting article. Will have to check out these:

      "One issue, though, remains the declining profitability of such facilities. According to the Partnership for Quality Home Healthcare, profit margins for nursing homes plummeted from an already-low rate of 2% in 2010 to 1% in 2012. That could squeeze companies like National Healthcare Corp. (NHC), Kindred Healthcare Inc. (KND), Brookdale Senior Living Inc. (BKD) and Skilled Healthcare Group Inc. (SKH). Many healthcare professionals blame reimbursement levels, which Medicare and Medicaid continue to slash. (For more, see: Medicaid vs. Medicare.)"

      Delete
    4. SKH looks very interesting. The other ones look too big.

      Delete
  73. BXE - Sold minority interest in Alder gas plant.

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  74. bobby keys

    https://www.youtube.com/watch?v=Fmfi3UbDPnQ#t=22

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  75. http://www.marketwatch.com/story/these-us-oil-producers-have-the-most-to-lose-2014-12-02

    Marketwatch identifies JONE as a high debt/equity company, but they pick up only the public equity and not the privately held equity, so equity is $678 million, not the $182 million they use.

    Just another example of the shoddy work that you see in the financial press all the time and why you need to do your own work.

    ReplyDelete
    Replies
    1. This explains why when I look at it debt seems to be so high. Debt/eq. = 4.2

      Delete
  76. FCAU - Up in premarket, how far is this one capable of going?

    ReplyDelete
    Replies
    1. Depends on your timeframe. I think TOF is looking for $20 into the Ferarri IPO mid-next year, but you can certainly make the case for over $50 longer term based on its current valuation and comparables and even higher if Machionne does all he say he is trying to do.

      Delete
  77. Plunging oil prices sparked a drop of almost 40 percent in new well permits issued across the United
    States in November, in a sudden pause in the growth of the U.S. shale oil and gas boom that started
    around 2007.

    Data provided exclusively to Reuters on Tuesday by industry data firm Drilling Info Inc showed 4,520
    new well permits were approved last month, down from 7,227 in October.
    The pullback was a "very quick response" to U.S. crude prices, which settled on Tuesday at $66.88
    CLc1, said Allen Gilmer, chief executive officer of Drilling Info.
    New permits, which indicate what drilling rigs will be doing 60-90 days in the future, showed steep
    declines for the first time this year across the top three U.S. onshore fields: the Permian Basin and Eagle
    Ford in Texas and North Dakota's Bakken shale.
    The Permian Basin in West Texas and New Mexico showed a 38 percent decline in new oil and gas well
    permits last month, while the Eagle Ford and Bakken permit counts fell 28 percent and 29 percent,
    respectively, the data showed.
    That slide came in the same month U.S. crude oil futures fell 17 percent to $66.17 on Nov. 28 from
    $80.54 on Oct. 31. Prices
    are down about 40 percent since June.
    Change price – change attitude.

    ReplyDelete
    Replies
    1. Wonder how quickly oil production falls or at least growth slows. A lot of those areas have pretty steep declines and production falls quickly without additional drilling.

      Delete
    2. Yes, but.

      We continue to favor HAL as our top pick. We see the greatest stock price upside in the
      land drillers, but also the greatest downside risk. We still remain on the side-lines for
      the offshore drillers even at these prices, as the risk is larger than the oil price decline.
      Following OPEC's decision to maintain current quotas, the focus has shifted to cuts in
      US E&P spending, which we believe could decline 15%-20% y/y in ‘15 (w/ risk for
      further cuts). We are lowering ests for the oil service diversifieds by 10%-22% in ‘15
      and 12%-32% in ‘16. If WTI remains at $65/bbl we see ~23% downside to ests (20%
      upside at $85/bbl). We are cutting our PT's 10%-35%.

      per expresso UBS

      Delete
  78. This comment has been removed by the author.

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  79. FCX?

    Grasberg resolution remains primary catalyst
    While lower oil prices have negative implications for FCX, Indonesian uncertainty continues to be the
    primary risk to our analysis. FCX has signed a MOU with the Indonesian government to renegotiate the
    current Contract of Work (CoW) which governs Grasberg operations (~25% of NAV). An amended
    CoW is expected to address provisions related to the size of concession area, royalties and taxes,
    domestic processing and refining, divestment, local content, and continuation of operations post-2021
    when the current CoW expires. We continue to believe that clarification surrounding the Grasberg CoW
    and funding of the smelter will be a key catalyst for the stock. In addition, 2016 and 2017 are expected
    to be large free cash flow years from Grasberg given that mining will be from a higher grade portion of
    the pit.

    ReplyDelete
    Replies
    1. Pretty tough to jump in FCX with the crap they pulled buying (bailing out) PXP/MMR.

      Delete
    2. You actually think 99% of any management cares about us?

      Delete
    3. That's a great question T3d, I wonder about that constantly. Wonder where their priorities actually do lie?

      Delete
  80. If you guys have some energy sector strategies or further insight, I'm all ears.

    ReplyDelete
    Replies
    1. I see what looks like some token insider buying but nothing too spectacular or exciting.

      Delete
  81. FCAU - My current short term strategy on this one is to add into any disappointing euroevents.

    ReplyDelete
  82. ENSV - With 50sma crossing down through 200SMA, should get a bounce, no?

    ReplyDelete
  83. "FCAU - Up in premarket, how far is this one capable of going?"

    CP - Who knows for sure but the whole premise was the sum of the parts is worth a lot more than $10. Ferrari is going to do about $350MM or so in net inc but they have plenty of growth drivers to pull (increasing production from 7,200 cars to 10k to meet demand from overseas buyers, increased engine sales to Maserati bc Maserati sales are growing rapidly, increasing licensing of their brand, etc) which could increase NI to $500 to $600 MM. I think this is worth 20X this net income because the brand is not cyclical and it's a premium brand. So I think it could get a $10 to $12 Billion valuation. By comparison, look at premium brands like MANU and LVMHF...both of these trade north of 25 times earnings so you could argue that this is a low ball estimate.

    As it stands today, all in with upcoming dilution, FCAU is worth around $17-$18 Billion. So that means the remaining company after excluding Ferrari could be worth $5 to $8 Billion. Obviously, Fiat is underperforming and Europe is a drag on earnings. But Chrysler alone is going to do $2.5 Billion in net income this year. So if we value it like a cyclical and assume no more upside in earnings then its worth maybe 7 to 8 times earnings or $20 Billion or so. Just those two entities are worth $30 Billion or so or about 65 to 70% upside from here.

    The kickers are if Fiat recovers, expansion into China goes well for Jeep (right now they have minimal sales there), the Maserati SUV sells well (launching next year...by comparison, the Porsche SUV makes up half of sales) and the Alfa Romeo brand launches successfully in the US (all models have already been pre sold out). If this all happens, I think this should be priced like GM or F in terms of price to sales. Right now on a p/s basis, the remaining ex-Ferrari piece would need to quadruple to get to their valuation.

    So if that all goes smoothly, you could theoretically argue for the following:
    $10-$12 Billion for Ferrari
    $140 Billion in sales by 2016 for rest of company x 0.35 to 0.40 p/s = $49 to 56 Billion
    TOTAL: $59 Billion to $68 Billion

    vs $17-18 Billion right now. So pie in the sky upside over a couple of years could be $45 to $55.

    I'm just taking it step by step though. I think we could see $18 to $20 within the next 3 to 6 months. I think the media coverage of the Ferrari IPO will cause a spike.

    ReplyDelete
    Replies
    1. Good analysis TOF.

      CP, if you look at the FCAU chart, there really haven't been good pullbacks since they relisted in the US (there were lots when it was FIATY on the OTC market). Tough call what to do now.

      Delete
    2. The best chart that incorporates both FCAU and FIATY is here:
      http://www.marketwatch.com/investing/stock/FCA/charts?symb=IT%3AFCA&countrycode=IT&time=13&startdate=1%2F4%2F1999&enddate=12%2F3%2F2014&freq=2&compidx=none&compind=none&comptemptext=Enter+Symbol%28s%29&comp=none&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=2&type=2&size=2&style=1013

      You can use whatever metrics you want (time frame, RSI, MACD, etc). I chose the 10 year weekly chart and included MACD and RSI. Weekly RSI is fairly high but its been higher plenty of times before.

      Delete
  84. Wow NM down 64% another crush. Chart looks like double bottom possible

    ReplyDelete
    Replies
    1. Yep, sure does look like there could be a bounce, then lower?

      Delete
  85. BB - Have you taken a look at IRG on the Toronto exchange? Seems extremely cheap. Here's a link to their 9 months financials thru 7/27/14:
    http://www.sedar.com/GetFile.do?lang=EN&docClass=5&issuerNo=00029036&fileName=/csfsprod/data149/filings/02258314/00000001/k%3A\filings\livework\wkout\43140\imvescor_q3.pdf

    They have done about $6.7 Million in after tax inc thru 9 months so that would be about $9 Million for the year. Trades at a market cap of $68 Million or 7 times Net Inc. They also pay a $0.02 dividend quarterly or about 5.5% annually.

    I'd be interested in it if it had more liquidity on the pink sheets.

    ReplyDelete
  86. BKJ - LOL, WTF? I guess this one could have impressive upside potential.

    ReplyDelete
    Replies
    1. It's a pretty cheap stock if they can open more branches successfully. Right now the growth has stalled but it's well run and not expensive.

      Delete
  87. Motortrend prefers the Chevy pickup over the Ford.

    ReplyDelete
    Replies
    1. And GM is a better stock play than F making almost twice as many cars at a lower market cap!

      Delete
  88. BXE - Maybe this one can actually remain above $4 for more than a few hours...... Like til tomorrow morning.

    ReplyDelete
  89. TOF,

    re the FCA chart, looks like they missed a stock split in 2011? Or something strange happened. What I'm thinking if it was a missed split, the current price would be around 22 Euros which is near an all-time high which can be an onteresting time.

    ReplyDelete
    Replies
    1. That split was the spinoff of CNH Industrial.

      Delete
    2. I wish they'd adjust charts better for stuff like that.

      Delete
  90. TOF, I bought Imvescor in 2010 for $0.91 and sold it in 2013 for $1.47 as I thought it had gotten expensive, but then it continued on to around $2.50 (oh well). Interesting that it is now back down close to my sell price. I'lll have to take a look again. Back then, they had 4 restaurant chains that had steady business, but not much growth. Plus they had pretty much all franchises and some in-grocery products, so they made money almost regardless of how the franchises did. They had brought in new management back then and he seemed good, but I don't know if he is still there. I'm surprised the stock is back down here - consumer stocks like this are generally doing pretty well.

    ReplyDelete
    Replies
    1. I came across it on Reminscences blog. Looks very interesting.

      Delete
  91. FCAU - "TOTAL: $59 Billion to $68 Billion"

    GM's current market cap is $54B and they don't have Ferrari/Maserati/Alpha Romeo but GM's car isn't this month's 10th place seller. So many car companies in Europe, wonder why VW didn't buy Ferrari.

    BWA has broken out today.

    ReplyDelete
    Replies
    1. Fords market cap is over $60 billion and sells more but not many more cars than FCAU and a lot less than GM.

      GM's big strength is in China where they sell more cars than the USA. Plus they are a cheap stock relative to most auto makers other than FCAU.

      VW might buy Ferrari or the rumour is all of FCAU. The Jeep business would be of high value and the US market share where VW struggles. They also have a large staple of high end cars including Lamborghini.

      Delete
    2. I think GM & F are both cheap and should move up. I think when I was looking at it a month or two ago I estimated that F & GM could potentially double when factoring in dividends over the next 3 years, yielding a 25% annualized total return on them. If that happens then you have potentially even more upside on a relative basis for FCAU. I was thinking FCAU could theoretically go up 3 to 4-fold from the $10 area over the same time frame but if they continue to outperform like they have this year then you could get a scenario where they trade up to the same relative valuation on sales as GM & F after both of them have doubled. That's all pie in the sky though I guess. I think the whole sector looks undervalued and sentiment is low.

      Delete
  92. Natty - We should probably buy this one soon, IMO.

    ReplyDelete
    Replies
    1. But first there'll probably be a gush of gas as producers work off indigestion from Saudi's raising the stakes?

      Major pipelines were reversed to transport crude into Houston though weren't they, so at that point is when Saudi should've dropped their price?

      Delete
  93. Something to think about:

    The piece of the puzzle that I consider to be more reliable here is the fact that next year sets us up for what is considered to be the most bullish year of them all: year 5. The statistics for the fifth year of the decade are staggering. Since 1895, the average return for year 5 is a humble 28.9%. But what really stands out is the hit rate. Every fifth year has been a positive one for the Dow Jones Industrial Average 11 out of 12 decades. And that one down year was 2005, where the Dow lost just 0.61%.

    http://allstarcharts.com/three-cycles-watch-2014/

    ReplyDelete
    Replies
    1. Yeah these numbers are crazy huh?

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    2. Okay man, I'm gonna need a damn good year to make up for this one! ;)

      Delete
    3. Yeah, and that's just the DOW. Been googling to see how it compares to small caps in year 5, but haven't found anything yet. I think that 2005 was the start of the big large cap outperformance in the US, but haven't checked.

      But yet another sign that its probably too early to get bearish.

      Delete
  94. It sure seems to me that the people in the oil industry are sticking their heads in the sand doesn't it? Is anyone considering the possibility of $40 oil for the next 1-2 years? This just strikes me as that period after the crash when you get a bounce and everyone feels better and then you get lower prices. kind of the phase after the panic phase in this chart:

    http://ibankcoin.com/option_addict/files/2014/04/Sentiment-Chart.png

    ReplyDelete
  95. I don't understand why going to Mars is a priority over cleaning up the plastic soup floating in the Pacific.

    ReplyDelete