Friday, January 27, 2017

1/27/17 Unbreakable

How many of you recall the 2000 M. Night Shyamalan film?  The powerful rally off the March '09 lows has survived every attempt at derailment, and I expect it will finish 2017 unscathed as well.  We should listen carefully to what the market is saying-> it wants to go higher.  Perhaps much higher.  No one saw the Nineties dot.com boom coming, nor did anyone foresee what many refer to as a 'once in a lifetime rally in the Nasdaq.'  No one saw the Trump Rally coming, nor is it possible now to say how long it continues or how far it takes us.  They may refer to it as a 'twice in a lifetime rally.'  That's the thing about markets.  We're only able to correctly characterize crowd behavior in hindsight.

61 comments:

  1. Watching volume in SPWR today.

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  2. Both the DJIA and SPX currently on pace to print their worst one-day declines since last October. After a string of articles over the weekend noting the worrisome lack of volatility in the indexes, the VIX spikes +15% today. In my opinion, a perfectly normal (and much needed) pullback is underway. One which forestalls a more serious decline.

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  3. I am doubtful we see a significant decline this year, despite (or perhaps in spite of) the kook in charge.

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    1. Picked up AKS, CBMX and EGY today. The little guys could be triples in my opinion. I like AKS for a trade here.

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  4. By the way, 2nd - I agree with your take on the market and really liked the comments about Trump and reference to other presidents because it gives you good perspective. I voted against him for only one reason: I don't like tariffs and think it's a horrible way to level playing fields. I just hope he doesn't try to meddle too much into small business. The proposed policy against importers is going to hurt me pretty bigly if it goes through so my comments are biased.

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  5. I don't get it: BDI has been going down for two weeks now, but the shippers are higher than they were, going up on the days when BDI is down! Do you think this shows strength or spells danger?

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  6. TOF- I see you like EGY. What's the story?

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    1. Yeah its a really simple biz model. They had issues with their drills in Africa that they fixed and they guided production of 4600 barrels a day so far in Q1. If you do the math they will earn $0.06 in Q1 at $52 oil assuming same production (their cost is $21-22/barrel and they cut overhead a lot). They don't have a ton of production growth but they have almost no debt and a decent amt of cash to buy more assets. They just bought into another well in the same area that they claim will boost production 10% without any additional overhead.

      I also like they they haven't diluted at all over the past 10 years and that their margins are really high (over 55% with oil at $50 and when oil was at 100 they had like 90% gross margins ). They have huge leverage to high oil and if we get into a war with Iran I think you could see oil go to $75.

      Chart is solid too. I think it could get to $3-4, $6-7 if oil goes to $75.

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    2. Where in Africa? Do you think any of their assets are at risk of seizure?

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    3. They're in the same spot as XOM, Gabon I think. They've been there for like 15 years.

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  7. APPL has finally overtaken SEDG as my largest position for one GOOD reason and one BAD reason :)

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    1. I was looking at SEDG a few weeks ago. Looks like growth came to a halt. Market got that one right i guess.

      I'm keeping a close eye on SPWR this year. I think some time around mid year it will be good to go.

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  8. Same old shit for MITK. They run it like a public co. which would be fine if they were :)

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    1. $0.21 EPS past 12 months...not too shabby. Probably reasonably valued around $5.

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  9. Another stock I took a position in that I really like (think it has 3x upside too) is CBMX. They're guiding for b/e by Q4 at $5.1M sales per quarter. That means even if 2million shares from warrants they have that exercise at $5.17 are converted, it is currently trading at 0.78 price to sales and they would have about $13Million in cash. SQNM was bought out last year for 2x sales and it was losing a shit ton of money per year.

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  10. Mike, are you still holding AKS? X, which is highly correlated to AKS on the 1-year chart, is up 10% today, but AKS is basically flat. The black box algos should start buying up AKS soon (or selling short X), since they "know" they are supposed to move together...

    I just bought some AKS for a trade at $7.83 and placed a stop at yesterday's lows of $7.6.

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    1. I liked X at $20...up here I guess its still ok. I think it could go to $50.

      AKS...same deal, liked it at $5.50. Up here I guess its ok.

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    2. Yep, black box algos are shorting X today and going long AKS. I wonder what next week will bring...

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  11. I wonder what's up with AAPL today.

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  12. Bought some more BTE now at $3.83. Placed a sell limit at $4.33.

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  13. UAA....kinda surprised here. More popular than NKE where I life. I'm guessing NKE dominates EEM.

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  14. MITK- I have 12 month gaap earnings of .03.

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  15. Mike, the CBMX chart does look interesting -- it has a steady series of higher lows and higher highs since November, and today's pullback seems like a good entry opportunity. I just bought some at $3.60 (sold some GDXJ at a small profit to obtain the funds for this purchase -- GDXJ seems a bit stretched here anyway and I wanted to move my money to something that is not that stretched).

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    1. I like this one a lot. It's my largest position right now. If they hit their estimated break even by Q4 they will do $5.1M revenues (they said $4.9 to $5.3M quarterly revs will get them to break even). So last quarter they did $3.2M. That means they will be growing about 35% to get there. And then if you look at other companies that were bought out in the same space they were bought for multiples of between 2.2 and 3.3x annual sales. If they do $5M in q4 2017 then that's a $20M run rate. 2.2 to 3.3 x that is $44 to $66M. Fully diluted shares is 4.5M. So that's a $10 to $15 stock. And they will have $12M in cash (assuming the warrants are exercised to get to the 4.5M shares). I'm willing to wait this out.

      Its about as cheap as you will find in the market.

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    2. OMG, why did I even look at this chart. You know I love it....ugggggg

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    3. Why does this only trade on .05 increments?

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    4. Was there a change to the mechanics of trading on some markets recently? I've noticed this as well on other stocks.

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  16. CBMX may make a large jump when it gets bought out, but until then it will do a lot of zig-zagging. If the recent pattern of higher lows and higher highs holds up, then it should get to $4.25-$4.50 range and then have a pullback below $4. So I just placed a sell limit order at $4.25 for the shares I purchased at $3.60.

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    1. Hope it works for you. I'm holding for the MTL move.

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    2. A tripling of your largest position would be awesome! Good luck!

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    3. I think its possible it could get to $10. My cost is $3.3. We shall see.

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  17. hey home-boy - any thoughts on HOV? appears to have turned the corner.

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    1. I have no idea how these guys operate.

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    2. Why? What do you mean? Chart looks awesome and they're generating some solid FCF.

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  18. Folks, something is up with the shippers -- BDI is down to 700, while NMM and GNK are above the level when BDI was 1000. Imagine what will happen to them when BDI starts moving up, and its chart suggests that 700 is closer to the bottom than to the top of BDI. Maybe now it's the time to load up on the shippers...

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  19. Been doing some trimming the last couple weeks. Stocks have gotten more expensive and the risks, especially political, seem to have gone up, so probably a good idea to have some cash ready. I'm usually early in doing this, but I like to do buys and sells over time as it is impossible to top-tick things, so I think starting now is good.

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    1. We're definitely in melt up phase. Will be interesting to see how high they can drive things. Valuations for the market ain't cheap by a long shot so we will need earnings to really start ramping.

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    2. Yeah, one of the reasons I'm worried is so many of the stocks I've looked at recently have a trailing p/e of say 25 and a forward p/e of 15, so a lot of good expectations built into stock prices.

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  20. TOF- I don't have any insight into track home builders. I can say material and labor costs for now are pretty flat. But if this keeps up labor rates could spike on a shortage.

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  21. That's not fair! X is outperforming AKS once again! It is at new highs this morning, while AKS is still way below its December peak...

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  22. Picked up a little more HLX at $7.51. Placed a sell limit at $8.50.

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  23. NMM is up 6% now despite BDI breaking down below 700 for the first time in months. The stealth (or not so stealth) accumulation phase is still under way. I believe MTL also starting creeping up from $1.50 to $2.00 when all commodities were going down, and then it jumped to $3, $4, $5, $6 when the wind for commodities turned around...

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    1. Nice profitability out of NMM this morning and a bounce.

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    2. Yep. The MTL time move might have begun in earnest. I had a sell limit order at $1.85, which was triggered at $2.00 this morning, for the shares I purchased at $1.65. I suppose I can count it as a Valentine's Day gift. :) Should do something extra special for my wife today. :))

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  24. .05 spreads. I asked about this and it's a 2 year pilot program from FINRA. Not sure how certain stocks are selected.

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  25. Just too a page out of Davids playbook and sold 2k shares of SEDG I bought at 13. Good to take some chips off the table and if they have a good report i'll still be happy. If they stink....I'll reload!

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    1. OK, earnings and rev came in about what I expected. Margins were better q/q/y. Cash on hand 220M from 200M q/q. Guides seem in line as well. 115-120M margins 31-35%.

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  26. Placed a sell limit order for 1/4 of my remaining position of NMM at $2.20, in case it gaps up tomorrow at $2.50. :)

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  27. Decided to make myself another Valentine's Day gift and sold at $8.20 the shares of HLX I purchased yesterday at $7.51, without waiting for the $8.50 limit to be hit. Today might be just a one-day-wonder oversold bounce, and it would be sad not to take advantage of it, especially given my lucky entry yesterday.

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  28. AKS -- lagging X once again, but the chances of it moving up from here are much better, I think, than those of moving down because X is making new highs and black box algos will try to close the gap...

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  29. Copy Cat.....

    BERKSHIRE HATHAWAY INC INCREASES SHARE STAKE IN APPLE INC TO 57.4 MLN SHARES FROM 15.2 MLN SHARES -SEC FILING

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  30. Finally, AKS is closing the gap with X. :)

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  31. Just bought some GNK at $9.76 -- its chart suggests (to me, at least :)), that the next move will be another spike up. Especially since BDI has stopped falling and is starting to move up.

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  32. If SPWR can get a little more volume and turn that bar green, we will have quite a reversal.

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  33. Glad I took profits on HLX on Valentine's day. If it were not for that holiday, I might not have thought of giving myself a present. :)

    But maybe it is time to reload now?

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