Friday night, we tried Dosa Fillmore on a recommendation:
http://dosasf.com/
The food was good, but damn, South Indian food is hot! I ordered the lamb meatballs, but needed two orders of Basmati rice + a few hundred mL of Bear Republic IPA to get it down.
Saturday, same old same old. We lost 7-2, and the little guy scored the 2 goals for his team. One of the 2 goals was a corner kick which ricocheted off an opponent into the net.
As with all earnings trades, there is usually a move, a countermove, then another move. So I'm not ruling out a 3-4k return on your C short. Not at all.
The grass seeds I planted last Sunday are starting to show up as seedlings in a few areas. My only problem right now is a groundhog or gopher, which of course piles up dirt around its exit holes. Any ideas for driving it away?
Ugh, the power supply in my computer crapped out, so I've been hacking hardware this evening.
Got it working now...
Groundhog - I'd get one of those Have-A-Heart traps you can place the food inside and when the varmint goes inside to eat, he steps on a metal plate and a spring-loaded door slams shut behind him trapping him inside.
Make sure the trap isn't too small, and has the correct food, and if someone's cat gets trapped, you can simply let it go.
A 22cal pump pellet rifle can quietly do the varmint in, or even a 55gallon trash can full of water in which the trap can fit presents a drowning hazard not easily escaped.
Groundhogs and gophers usually don't just go away on their own, but one of those stick in the ground wind-driven yard ornaments designed to make enough racket to drive a groundhog nuts might be another alternative?
Redbox Alert - Went to the local grocery store to pick up some hamburger buns (they were out of the cheapies!), and noticed someone renting a DVD as I pulled up.
2nd - now that you're in the buy and hold category and from what i can tell, buy and hold blue chips only, i'd recommend following David Van Knapp, a guy that loves Dividend Growth Investing:
I've followed him for a few years now. He is essentially shooting for investing in a portfolio of companies that will pay a 10% dividend yield within 10 years of when he started his portfolio. So he's hoping that they will grow their current dividends to pay that kind of yield. I think it's a great strategy and definitely realistic.
"From my perspective, Wall Street's "relief" about the economy, and its willingness to set aside recession concerns, is a mistake born of confusion between leading indicators and lagging ones. Leading evidence is not only clear, but on a statistical basis is essentially certain that the U.S. economy, and indeed, the global economy, faces an oncoming recession. As Lakshman Achuthan notes on the basis of ECRI's own (and historically reliable) set of indicators, "We've entered a vicious cycle, and it's too late: a recession can't be averted." Likewise, lagging evidence is largely clear that the economy was not yet in a recession as of, say, August or September. The error that investors are inviting here is to treat lagging indicators as if they are leading ones."
Hussman is very certain about the recession now. Only a few months remain before we'll have to publicly put ashes on our heads and cry out: "Why didn't we listen to Hussman!" Or put some burning coals on Hussman's head -- we'll see which one it is going to be.
"A few weeks ago, I noted that Greece was likely to be promised a small amount of relief funding, essentially to buy Europe more time to prepare its banking system for a Greek default, and observed " While it's possible that the equity markets will mount a relief rally in the event of new funding to Greece, it will be important to recognize that handing out a bit more relief would be preparatory to a default, and that would probably be reflected in a failure of Greek yields to retreat significantly on that news."
As of Friday, the yield on 1-year Greek debt has soared to 169%. Greece will default. Europe is buying time to reduce the fallout."
"As of last week, the Market Climate in stocks remains negative, but has deteriorated significantly from the more benign negative levels that we've seen in recent weeks. Generally speaking, the worst market plunges tend to feature three things - overvaluation, negative market action, and a short-term overbought condition. You rarely see the three together, because establishing that sort of condition requires a strong rally against both overvaluation and negative internals. That's about where we are, though we can't rule out a modest extension for a bit - mostly because advisory bearishness is reasonably elevated as of last week. That said, the drop in the CBOE volatility index late last week suggests an abandonment of bearish views, and more generally, just as early shifts toward advisory bullishness at the beginning of bull markets are often accurate and followed by further gains, early shifts toward advisory bearishness at the beginning of bear markets are also often accurate and followed by further losses. Overall, market conditions remain negative, and Strategic Growth and Strategic International Equity remain well hedged."
What should I take away from Hussman's letter? That I should buy more January puts on DB in the event of a continued market rally this week and I should NOT open any new long positions until Greece defaults. So I am canceling my buy limit order for more TBT and will just keep selling whatever TBT I have if rates keep going up.
David - for what it's worth, Hussman did remain bearish/cautious for far too long during the market's recovery in 2009/2010/2011. So while he may be proven correct, it doesn't mean that his bearishness should all of a sudden warrant revising your investment strategy overnight, in my opinion. I think his time frame is much longer than any of us save 2nd of the buy and hold crowd.
2nd - perhaps it's time to pull out that classic gopher movie Caddyshack and study some of the techniques there?? -- You know someone had to mention this right???
There's a lot of smaller energy companies out there with excellent land positions, but without the capital to develop these, so you see the big guys coming in and buying.
Last week, Chinese energy giant Sinopec bought Canadian Energy company Daylight Energy (another company with great land positions) and I think you are going to see more of these over time.
Every time I flip over to Marketwatch, there seems to be another buyout announcement. Latest is some company called Tredegar buying some other company called Terphane.
That's a couple of weeks in a row now - shows how cheap these companies are in the market.
Surprised HAL is down so much - haven't looked in detail, but thought the results were good. It could be related to the size of the Anadarko payment to BP.
"The daily chart of WMB almost makes me abandon my bearish bias in the U.S. stock market indexes. WMB has a similar H&S top completed in late July, chopped sideways for 8-weeks, had a false breakdown on Oct. 4 — all like the stock indexes — and has done a “V”-extended bottom since. I just wish the volume on the advance was much larger and I could get real excited about this stock in the near term. In many ways the daily chart of WMB has been a twin brother to $SPY since the 2008 high. These two markets should not look so much the same, but they do. Maybe the play is to buy WMB and hedge it against SPY options. Any thoughts on this you options wizards? (I have no history trading options — I wish I knew more about it)."
"David - for what it's worth, Hussman did remain bearish/cautious for far too long during the market's recovery in 2009/2010/2011."
TOF -- there are two things that we can take away from Hussman's letters: the DATA he is collecting and his INTERPRETATION of the data. This is the first time his DATA (i.e., his indicators) are showing a certainty of recession in the near future. His composite set of indicators were giving such as signal in the past ALWAYS and ONLY when recession was imminent, so we should definitely not dismiss this lightly.
BEXP: a few months ago I placed a buy limit order for 3 November BEXP $28 calls at $4.90, but only one of them was actually bought since BEXP took off right away. Since then, there we countless times when I was happy that only one call was bought (when BEXP dropped below $28) and also when I was unhappy about it (when BEXP rose above $30). Looks like I'll end up being unhappy about only one call getting purchased.
Just sold my one call for $8.40, for a whooping $350 gain.
Wow... I guess I should be happy for the $15K in funds I "found" on yet another credit card, which should almost completely cover my margin debt at ETrade and will thus allow me to endure a market drop of any magnitude. Also, it looks like I really lucked out with my decision to re-open DB puts when it briefly touched $41 last week -- that should give me a small "consolation" prize in the event of a market collapse.
CSTR is on sale fellas. I think they could do at least $1 EPS this quarter and higher next quarter, for a run rate of the upper $4's for 2012. At about 11 times that EPS run rate, it's dirt cheap given its growth
TOF: what concerns me about CSTR is that Buffett had taught us that the value of a company's stock is ultimately determined by a discounted sum of all the cash the stock is expected to deliver into shareholder's hands over the next 20 years. That is, if earnings for the next year are zero-ed out, then the value of the stock should not change much. With CSTR, if it is expected to have great earnings for 2012, but they will then steadily decline, don't you think investors will see through the earnings bump next year and will start getting out of CSTR *NOW*?
David- Yeah, I knew all of that early this morning. The setup for the trade way a SPY channel top on Friday and C's earnings today. Oh well, should have picked best of bread, WFC instead! Go figure.
"With CSTR, if it is expected to have great earnings for 2012, but they will then steadily decline, don't you think investors will see through the earnings bump next year and will start getting out of CSTR *NOW*? "
David - Who's to say they will steadily decline? My argument all along has been that far fewer people are using streaming than people believe because of several reasons:
1.) It is perceived as being difficult to set up by the majority of the movie viewing public. 2.) Most users of streaming have a wireless internet connection and I believe there is at least a perception if not a reality that the picture quality isn’t as good because of a potential weak internet signal. 3.) The streaming business model is not as good because movie studios and other content providers are charging significant fees to stream their content...hence it will ultimately be far more expensive to offer streaming than the kiosks. 4.) I also believe a significant amount of Netflix DVD by mail customers signed up for the streaming service only because it was offered as a free add-on. This most likely significantly skewed the streaming subscriber numbers. Netflix recently hiked their streaming + DVD by mail combo by 60% from $10 to $16 per month and my take is this most likely resulted in a significant drop in streaming subscribers and I believe Q3 and Q4 Netflix earnings will show that the overall streaming subscriber base is smaller than people in general think.
Also, I point to the Hulu subscriber metrics as proof that consumer acceptance of streaming isn’t nearly as robust as people expect. Hulu launched in the spring of 2008. Over the past 3.5 years Hulu has gotten significantly media attention, yet its current paid streaming subscriber base is only 1 million. Hulu was trying to sell itself for several months and just last week gave up. I would assume that a leading streaming provider would have significantly higher subscriber numbers and would not be looking to sell itself after only 3.5 years in operation.
David - One other thing just regarding the market in general, it's pretty clear that the market doesn't really look much further than 6 months or so out on anything. Why else would NFLX get to $300? Or REDF to $30 back in the day? Or JSDA to $30 several years ago? The majority of people in the market follow the crowd...and if the crowd believes in growth and wants to pay up for growth, then there's really no stopping it until reality hits them square in the face. I prefer to be in that ride early and out of that ride early. With CSTR, I just think that ride lasts a lot longer than people think. I think their peak earnings could get up to $6 to $8 per share because I think the majority of people that watch movies will continue to choose DVDs/blue ray discs and in that segment of the market, I think Redbox will have over 50% market share for a while.
I know RB or BB mentioned that the overall dvd market size in dollars is shrinking, but I think that is more a function of prices going down from the Blockbuster $5 rental to the Redbox $1 rental than due to fundamental problems. But even if it does shrink, I think if CSTR does $6 EPS, they would generate at least $300 Million in free cash flow. At that rate they could buy back their entire company within 5 years.
ZH - Ha, I saw an article last week where Tyler Durdan was criticizing Belgium b/c they currently have no government.
I guess Tyler is misleading people, I recall Belgium not having a government many times this past decade, not so unusual. In fact, no government might be the kind of relief we need here?
CP - how long is the cycle? I don't think technicals work for CSTR...just a few weeks ago it was forming a longer term head and shoulders pattern. Before that it went through the dreaded death cross (which I think you could argue is actually a buy signal)...
TOF - CSTR's RSI(7) gave an accumulation signal Sept.22nd and a buy alert Sept. 23rd. Friday, RSI(7) was 78.91 (distribution signal), and I'm guessing today it may have cycled through 70?, which is a sell signal.
That doesn't mean there can't be another push higher in the next couple of days, that wouldn't be unusual but traders are quick yo take profit as opposed to guessing a top and until the RSI comes back down, adding or taking new positions is considered a high-risk proposition if you believe in the validity of the RSI indicator.
Money flow (excluding today, no data yet) has also flattened off from 76.
TOF - CSTR - I believe the H&S pattern that was forming is invalidated now, by this latest rise. There's no more H&S symmetry to the pattern once the $40 neckline was rejected. It will be interesting to see if a double top forms, then we can use that for a potential downside target.
Also, considering the H&S pattern, as with many of the others formed, the downside target was an "unbelievably ridiculous" $17, really not a credible threat worthy of serious consideration?
(SVM's H&S target was $0.50, LOL!)
These patterns don't always pan out the way they seem to suggest, it's not a 100% certainty, and so many people discount the possibility, automatically throwing these observations into the round file b/c "TA doesn't work".
Well, we had a clear warning on S&P, as the H&S right shoulder was forming in July, so sometimes these patterns, once neckline is confirmed, aren't always completely useless?
CP - OK, gotcha. I see the RSI(7) you're looking at. If I wasn't really bullish on the fundamentals of the company and was willing to trade it then yeah I guess it would make sense to sell here and try to time when to get back in...my problem is I usually would just sell, forget about it, then watch it go much higher.
JB - Yeah I like that trade...problem with these momo stocks is it will most likely gap way below 51 and then render the entry point impossible.
TOF - "my problem is I usually would just sell, forget about it, then watch it go much higher."
Yep, and that could easily happen. Assuming all things equal, your particular "situation" is similar to mine with SVM except fortunately, your entry was vastly better than mine.
At this point, I'm looking for a good place to add to my position on a pullback, or perhaps find an entry in CSTR should lower prices present an opportunity. So yeah, I'm definitely looking at CSTR and feeling some stress knowing I missed out as it moves higher, LOL! ;)
CP > Yeah I was talking to my friend about CSTR today...we're both sitting with large positions in the company....I was telling him how it's so much easier to say we have conviction in a stock when your entry point is good relative to the current price. The ultimate test is maintaining conviction when it moves against you in a big way. When I bought CSTR it did that, but luckily it moved much higher very quickly.
LULU - TOF, I don't see anything in the chart that rings any alarm bells, it looks as if there may be more upside there. Assuming $45 is a double bottom, the target would be an incredible $75, a case for which doesn't seem supportive based on P/E.
Many other balance sheet metrics don't seem to support share price, either.
WHR - Just as an experiment, I think a decent entry on this one based on the chart is somewhere in the neighborhood of $51 to $53, and closer to $53 if the 20SMA support holds.
"I was telling him how it's so much easier to say we have conviction in a stock when your entry point is good relative to the current price. The ultimate test is maintaining conviction when it moves against you in a big way."
Tell me about that! More than half of my portfolio is invested into AUMN, and my cost basis is about 100% higher than where AUMN is trading right now. How is that for a conviction test?
The chart of S&P futures sampled at a 30-minute interval since 10/3 looks like it is ready to go down tomorrow to around 1160-1170. At that point, it can either set up a new leg up to 1250 or continue its descent to 1120. Let's see if we do indeed get another big down day tomorrow...
Friday night, we tried Dosa Fillmore on a recommendation:
ReplyDeletehttp://dosasf.com/
The food was good, but damn, South Indian food is hot! I ordered the lamb meatballs, but needed two orders of Basmati rice + a few hundred mL of Bear Republic IPA to get it down.
Saturday, same old same old. We lost 7-2, and the little guy scored the 2 goals for his team. One of the 2 goals was a corner kick which ricocheted off an opponent into the net.
ReplyDeleteAlso went to a theatre for the first time in awhile, to watch Ryan Gosling in Drive. It kind of reminded me of George Clooney in The American.
ReplyDeleteAs with all earnings trades, there is usually a move, a countermove, then another move. So I'm not ruling out a 3-4k return on your C short. Not at all.
ReplyDeleteThe grass seeds I planted last Sunday are starting to show up as seedlings in a few areas. My only problem right now is a groundhog or gopher, which of course piles up dirt around its exit holes. Any ideas for driving it away?
ReplyDeleteOld fashioned traps work the best 2nd.
ReplyDeletegap on through to the other side? i think so for manana.
ReplyDelete2nd - i really liked Drive. just a really well done, original idea.
Ugh, the power supply in my computer crapped out, so I've been hacking hardware this evening.
ReplyDeleteGot it working now...
Groundhog - I'd get one of those Have-A-Heart traps you can place the food inside and when the varmint goes inside to eat, he steps on a metal plate and a spring-loaded door slams shut behind him trapping him inside.
Make sure the trap isn't too small, and has the correct food, and if someone's cat gets trapped, you can simply let it go.
A 22cal pump pellet rifle can quietly do the varmint in, or even a 55gallon trash can full of water in which the trap can fit presents a drowning hazard not easily escaped.
Groundhogs and gophers usually don't just go away on their own, but one of those stick in the ground wind-driven yard ornaments designed to make enough racket to drive a groundhog nuts might be another alternative?
Redbox Alert - Went to the local grocery store to pick up some hamburger buns (they were out of the cheapies!), and noticed someone renting a DVD as I pulled up.
ReplyDeleteRedbox Alert SW USA style: 3 people deep in the redbox near me; 2 people deep in the redbox near the place we looked at in Carmel Valley.
ReplyDelete2nd - now that you're in the buy and hold category and from what i can tell, buy and hold blue chips only, i'd recommend following David Van Knapp, a guy that loves Dividend Growth Investing:
ReplyDeletehttp://seekingalpha.com/author/david-van-knapp/articles
I've followed him for a few years now. He is essentially shooting for investing in a portfolio of companies that will pay a 10% dividend yield within 10 years of when he started his portfolio. So he's hoping that they will grow their current dividends to pay that kind of yield. I think it's a great strategy and definitely realistic.
Some quotes from Hussman's newsletter today:
ReplyDelete"From my perspective, Wall Street's "relief" about the economy, and its willingness to set aside recession concerns, is a mistake born of confusion between leading indicators and lagging ones. Leading evidence is not only clear, but on a statistical basis is essentially certain that the U.S. economy, and indeed, the global economy, faces an oncoming recession. As Lakshman Achuthan notes on the basis of ECRI's own (and historically reliable) set of indicators, "We've entered a vicious cycle, and it's too late: a recession can't be averted." Likewise, lagging evidence is largely clear that the economy was not yet in a recession as of, say, August or September. The error that investors are inviting here is to treat lagging indicators as if they are leading ones."
Hussman is very certain about the recession now. Only a few months remain before we'll have to publicly put ashes on our heads and cry out: "Why didn't we listen to Hussman!" Or put some burning coals on Hussman's head -- we'll see which one it is going to be.
Another quote from Hussman:
ReplyDelete"A few weeks ago, I noted that Greece was likely to be promised a small amount of relief funding, essentially to buy Europe more time to prepare its banking system for a Greek default, and observed " While it's possible that the equity markets will mount a relief rally in the event of new funding to Greece, it will be important to recognize that handing out a bit more relief would be preparatory to a default, and that would probably be reflected in a failure of Greek yields to retreat significantly on that news."
As of Friday, the yield on 1-year Greek debt has soared to 169%. Greece will default. Europe is buying time to reduce the fallout."
Conclusion from Hussman:
ReplyDelete"As of last week, the Market Climate in stocks remains negative, but has deteriorated significantly from the more benign negative levels that we've seen in recent weeks. Generally speaking, the worst market plunges tend to feature three things - overvaluation, negative market action, and a short-term overbought condition. You rarely see the three together, because establishing that sort of condition requires a strong rally against both overvaluation and negative internals. That's about where we are, though we can't rule out a modest extension for a bit - mostly because advisory bearishness is reasonably elevated as of last week. That said, the drop in the CBOE volatility index late last week suggests an abandonment of bearish views, and more generally, just as early shifts toward advisory bullishness at the beginning of bull markets are often accurate and followed by further gains, early shifts toward advisory bearishness at the beginning of bear markets are also often accurate and followed by further losses. Overall, market conditions remain negative, and Strategic Growth and Strategic International Equity remain well hedged."
What should I take away from Hussman's letter? That I should buy more January puts on DB in the event of a continued market rally this week and I should NOT open any new long positions until Greece defaults. So I am canceling my buy limit order for more TBT and will just keep selling whatever TBT I have if rates keep going up.
ReplyDeleteHere is a good article on European banks:
ReplyDeletehttp://www.bloomberg.com/news/2011-10-13/no-1-financial-strength-ranking-spells-doom-commentary-by-jonathan-weil.html
David - for what it's worth, Hussman did remain bearish/cautious for far too long during the market's recovery in 2009/2010/2011. So while he may be proven correct, it doesn't mean that his bearishness should all of a sudden warrant revising your investment strategy overnight, in my opinion. I think his time frame is much longer than any of us save 2nd of the buy and hold crowd.
ReplyDeleteBEXP buyout by Statoil this morning for $36.50.
ReplyDeleteHope some of you guys are still holding.
2nd - perhaps it's time to pull out that classic gopher movie Caddyshack and study some of the techniques there?? -- You know someone had to mention this right???
ReplyDeleteBEXP is getting bought by Satoil. Anyone long BEXP? Hope so!
ReplyDeleteI'm surprised BEXP agreed to 36. Must be really tough business there.
ReplyDeleteThere's a lot of smaller energy companies out there with excellent land positions, but without the capital to develop these, so you see the big guys coming in and buying.
ReplyDeleteLast week, Chinese energy giant Sinopec bought Canadian Energy company Daylight Energy (another company with great land positions) and I think you are going to see more of these over time.
Opened a position in BAC @ 6.23, using the funds from last week's sale of FCX. I last recall selling BAC in the teens last winter.
ReplyDeleteKyle- That gives me one more reason to download the movie on NFLX.
ReplyDeleteEvery time I flip over to Marketwatch, there seems to be another buyout announcement. Latest is some company called Tredegar buying some other company called Terphane.
ReplyDeleteThat's a couple of weeks in a row now - shows how cheap these companies are in the market.
Mark- Hope you have an out here.
ReplyDeleteTraded in the BAC for an equivalent dollar amount of WFC, which is getting knocked down -6%.
ReplyDeleteBEXP - Holy crap, I've been wanting to buy that one again and haven't!
ReplyDeleteSVM - Maybe this one gets bought too(long shot)?
Recession - I'm thinking a good bit is priced in already?
ReplyDeleteStill short 2nd. I don't know. HAL getting killed and BEXP got what I consider a tiny premium.
ReplyDeleteCain - If Cain is Able to win the election and get his 999 plan through, I'm going to introduce my 555 plan and announce my run for governor.
ReplyDeleteSurprised HAL is down so much - haven't looked in detail, but thought the results were good. It could be related to the size of the Anadarko payment to BP.
ReplyDeleteHave to go take a look.
EP - You're in the green even if you managed to buy the 52wk high...
ReplyDeleteLong a handful of SPY calls expiring this friday: $120 SPY at $2.48. I'm hoping to sell them if we get to flat today.
ReplyDeleteInsane, Mark. The DJIA is down -140, and C is holding up.
ReplyDeleteAll right. Covered @ 28.70 for a 1.5K loss.
ReplyDeleteWMB - Peter Brandt -
ReplyDelete"The daily chart of WMB almost makes me abandon my bearish bias in the U.S. stock market indexes. WMB has a similar H&S top completed in late July, chopped sideways for 8-weeks, had a false breakdown on Oct. 4 — all like the stock indexes — and has done a “V”-extended bottom since. I just wish the volume on the advance was much larger and I could get real excited about this stock in the near term. In many ways the daily chart of WMB has been a twin brother to $SPY since the 2008 high. These two markets should not look so much the same, but they do. Maybe the play is to buy WMB and hedge it against SPY options. Any thoughts on this you options wizards? (I have no history trading options — I wish I knew more about it)."
http://peterlbrandt.com/
Finally going your way, Mark. Congrats for sticking to your guns.
ReplyDeleteI bought a handful more SPY calls at $2.27...avg is $2.38
ReplyDeleteMissed your earlier post, sorry.
ReplyDeleteFor bulls, this sell off comes with awesome timing. It shores up the wall of worry.
ReplyDeleteSPY - Looks like Friday's gap up is closed now? That leaves the gap up over the 50SMA that still needs to close, right?
ReplyDelete" For bulls, this sell off comes with awesome timing. It shores up the wall of worry.
ReplyDelete"
Yep...that's all I got for comments.
OWS - I'm surprised NYC doesn't just erect a concentration-camp style chain-link fenced area somewhere and put the OWS demonstrators inside.
ReplyDeleteIn fact, the OWS demonstrators could do this on their own, for dramatic effect.
OWS...That's funny CP!
ReplyDelete"David - for what it's worth, Hussman did remain bearish/cautious for far too long during the market's recovery in 2009/2010/2011."
ReplyDeleteTOF -- there are two things that we can take away from Hussman's letters: the DATA he is collecting and his INTERPRETATION of the data. This is the first time his DATA (i.e., his indicators) are showing a certainty of recession in the near future. His composite set of indicators were giving such as signal in the past ALWAYS and ONLY when recession was imminent, so we should definitely not dismiss this lightly.
BEXP: a few months ago I placed a buy limit order for 3 November BEXP $28 calls at $4.90, but only one of them was actually bought since BEXP took off right away. Since then, there we countless times when I was happy that only one call was bought (when BEXP dropped below $28) and also when I was unhappy about it (when BEXP rose above $30). Looks like I'll end up being unhappy about only one call getting purchased.
ReplyDeleteJust sold my one call for $8.40, for a whooping $350 gain.
Interesting article from ZeroHedge:
ReplyDeletehttp://www.zerohedge.com/news/biggest-market-headfake-ever-wholesale-french-bank-liquidity-run-sole-reason-euro-and-sp-surge
Wow... I guess I should be happy for the $15K in funds I "found" on yet another credit card, which should almost completely cover my margin debt at ETrade and will thus allow me to endure a market drop of any magnitude. Also, it looks like I really lucked out with my decision to re-open DB puts when it briefly touched $41 last week -- that should give me a small "consolation" prize in the event of a market collapse.
Congrats on the BEXP if you guys had stakes. Some lucky dogs out there bought it 2 weeks ago and made 70%.
ReplyDeleteRES might be an interesting play off HAL.
ReplyDeleteCSTR is on sale fellas. I think they could do at least $1 EPS this quarter and higher next quarter, for a run rate of the upper $4's for 2012. At about 11 times that EPS run rate, it's dirt cheap given its growth
ReplyDeleteHere is a ZeroHedge article on Citi earnings:
ReplyDeletehttp://www.zerohedge.com/news/citi-earnings-bloodbath-38-billion-123share-reported-earnings-really-05-billion-or-016share
Mark -- maybe you should re-open your C short?
David - I didn't read it but are you saying that ZH is bearish? Say it ain't so!?
ReplyDeletei wonder if we get an intraday reversal tomorrow or if we just gap up. either way, i'm thinking this is a one day wonder.
ReplyDeleteTOF: what concerns me about CSTR is that Buffett had taught us that the value of a company's stock is ultimately determined by a discounted sum of all the cash the stock is expected to deliver into shareholder's hands over the next 20 years. That is, if earnings for the next year are zero-ed out, then the value of the stock should not change much. With CSTR, if it is expected to have great earnings for 2012, but they will then steadily decline, don't you think investors will see through the earnings bump next year and will start getting out of CSTR *NOW*?
ReplyDeleteTOF -- I enjoyed reading ZH lately not because of their opinions, but because of the data they uncover.
ReplyDeleteDavid- Yeah, I knew all of that early this morning. The setup for the trade way a SPY channel top on Friday and C's earnings today. Oh well, should have picked best of bread, WFC instead! Go figure.
ReplyDelete"With CSTR, if it is expected to have great earnings for 2012, but they will then steadily decline, don't you think investors will see through the earnings bump next year and will start getting out of CSTR *NOW*? "
ReplyDeleteDavid - Who's to say they will steadily decline? My argument all along has been that far fewer people are using streaming than people believe because of several reasons:
1.) It is perceived as being difficult to set up by the majority of the movie viewing public.
2.) Most users of streaming have a wireless internet connection and I believe there is at least a perception if not a reality that the picture quality isn’t as good because of a potential weak internet signal.
3.) The streaming business model is not as good because movie studios and other content providers are charging significant fees to stream their content...hence it will ultimately be far more expensive to offer streaming than the kiosks.
4.) I also believe a significant amount of Netflix DVD by mail customers signed up for the streaming service only because it was offered as a free add-on. This most likely significantly skewed the streaming subscriber numbers. Netflix recently hiked their streaming + DVD by mail combo by 60% from $10 to $16 per month and my take is this most likely resulted in a significant drop in streaming subscribers and I believe Q3 and Q4 Netflix earnings will show that the overall streaming subscriber base is smaller than people in general think.
Also, I point to the Hulu subscriber metrics as proof that consumer acceptance of streaming isn’t nearly as robust as people expect. Hulu launched in the spring of 2008. Over the past 3.5 years Hulu has gotten significantly media attention, yet its current paid streaming subscriber base is only 1 million. Hulu was trying to sell itself for several months and just last week gave up. I would assume that a leading streaming provider would have significantly higher subscriber numbers and would not be looking to sell itself after only 3.5 years in operation.
David - One other thing just regarding the market in general, it's pretty clear that the market doesn't really look much further than 6 months or so out on anything. Why else would NFLX get to $300? Or REDF to $30 back in the day? Or JSDA to $30 several years ago? The majority of people in the market follow the crowd...and if the crowd believes in growth and wants to pay up for growth, then there's really no stopping it until reality hits them square in the face. I prefer to be in that ride early and out of that ride early. With CSTR, I just think that ride lasts a lot longer than people think. I think their peak earnings could get up to $6 to $8 per share because I think the majority of people that watch movies will continue to choose DVDs/blue ray discs and in that segment of the market, I think Redbox will have over 50% market share for a while.
ReplyDeleteI know RB or BB mentioned that the overall dvd market size in dollars is shrinking, but I think that is more a function of prices going down from the Blockbuster $5 rental to the Redbox $1 rental than due to fundamental problems. But even if it does shrink, I think if CSTR does $6 EPS, they would generate at least $300 Million in free cash flow. At that rate they could buy back their entire company within 5 years.
CSTR - RSI(7) looks like it's in a cycle high to me...
ReplyDeleteOpened my oldest son's first position (at the close): Fidelity Blue Chip Growth FBGRX. 15-20 year time horizon.
ReplyDeleteIn reference to the above post- I'm referring to cash earned by him at his first real job. He opened a Roth IRA two weeks ago.
ReplyDeleteZH - Ha, I saw an article last week where Tyler Durdan was criticizing Belgium b/c they currently have no government.
ReplyDeleteI guess Tyler is misleading people, I recall Belgium not having a government many times this past decade, not so unusual. In fact, no government might be the kind of relief we need here?
CROX...I shorted the wrong C stock.
ReplyDeleteCP - how long is the cycle? I don't think technicals work for CSTR...just a few weeks ago it was forming a longer term head and shoulders pattern. Before that it went through the dreaded death cross (which I think you could argue is actually a buy signal)...
ReplyDeleteTOF- No wonder your bride got pregnant so quickly...Sheesss...
ReplyDeleteFor you tech analysis guys...is it me or does LULU look like it's setting up for a big fall? I see a series of lower highs...kind of similar to CROX.
ReplyDeleteTOF - CSTR's RSI(7) gave an accumulation signal Sept.22nd and a buy alert Sept. 23rd. Friday, RSI(7) was 78.91 (distribution signal), and I'm guessing today it may have cycled through 70?, which is a sell signal.
ReplyDeleteThat doesn't mean there can't be another push higher in the next couple of days, that wouldn't be unusual but traders are quick yo take profit as opposed to guessing a top and until the RSI comes back down, adding or taking new positions is considered a high-risk proposition if you believe in the validity of the RSI indicator.
Money flow (excluding today, no data yet) has also flattened off from 76.
http://finance.yahoo.com/echarts?s=CSTR+Interactive#chart3:symbol=cstr;range=3m;indicator=sma%2820%29+bollinger+volume+rsi%287%29+mfi;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined
TOF - CSTR - I believe the H&S pattern that was forming is invalidated now, by this latest rise. There's no more H&S symmetry to the pattern once the $40 neckline was rejected. It will be interesting to see if a double top forms, then we can use that for a potential downside target.
ReplyDeleteAlso, considering the H&S pattern, as with many of the others formed, the downside target was an "unbelievably ridiculous" $17, really not a credible threat worthy of serious consideration?
(SVM's H&S target was $0.50, LOL!)
These patterns don't always pan out the way they seem to suggest, it's not a 100% certainty, and so many people discount the possibility, automatically throwing these observations into the round file b/c "TA doesn't work".
Well, we had a clear warning on S&P, as the H&S right shoulder was forming in July, so sometimes these patterns, once neckline is confirmed, aren't always completely useless?
T3D- Does the BO price of BEXP make you re-evaluate your PT for WLL? That was a dinky premium compared to what HK got.
ReplyDeletetof - I took a look at LULU and I'd be looking to short it below $51.90 or so
ReplyDeleteJB- Don't you mean 50.90 ish?
ReplyDeleteQQQ...Well, that's ONE gap filled.
ReplyDeleteCP - OK, gotcha. I see the RSI(7) you're looking at. If I wasn't really bullish on the fundamentals of the company and was willing to trade it then yeah I guess it would make sense to sell here and try to time when to get back in...my problem is I usually would just sell, forget about it, then watch it go much higher.
ReplyDeleteJB - Yeah I like that trade...problem with these momo stocks is it will most likely gap way below 51 and then render the entry point impossible.
Hey Mark - No, I'd take a chance shorting at 51.94....but as you know I don't know sh*t...LOL
ReplyDeleteJB- OK, it's trading there now so I wasn't sure.
ReplyDeleteC - Looks like this one successfully back-tested the SMA-50 today.
ReplyDeleteTOF - "my problem is I usually would just sell, forget about it, then watch it go much higher."
ReplyDeleteYep, and that could easily happen. Assuming all things equal, your particular "situation" is similar to mine with SVM except fortunately, your entry was vastly better than mine.
At this point, I'm looking for a good place to add to my position on a pullback, or perhaps find an entry in CSTR should lower prices present an opportunity. So yeah, I'm definitely looking at CSTR and feeling some stress knowing I missed out as it moves higher, LOL! ;)
CP > Yeah I was talking to my friend about CSTR today...we're both sitting with large positions in the company....I was telling him how it's so much easier to say we have conviction in a stock when your entry point is good relative to the current price. The ultimate test is maintaining conviction when it moves against you in a big way. When I bought CSTR it did that, but luckily it moved much higher very quickly.
ReplyDeleteLULU - TOF, I don't see anything in the chart that rings any alarm bells, it looks as if there may be more upside there. Assuming $45 is a double bottom, the target would be an incredible $75, a case for which doesn't seem supportive based on P/E.
ReplyDeleteMany other balance sheet metrics don't seem to support share price, either.
WHR - Just as an experiment, I think a decent entry on this one based on the chart is somewhere in the neighborhood of $51 to $53, and closer to $53 if the 20SMA support holds.
ReplyDeleteWHR...52 would be the technical price as I see it.
ReplyDeleteSLV- Yeah, there's a ton of unfilled gaps to the upside, but I might take a trade that there will be more to the down side before those are filled.
ReplyDelete"I was telling him how it's so much easier to say we have conviction in a stock when your entry point is good relative to the current price. The ultimate test is maintaining conviction when it moves against you in a big way."
ReplyDeleteTell me about that! More than half of my portfolio is invested into AUMN, and my cost basis is about 100% higher than where AUMN is trading right now. How is that for a conviction test?
The chart of S&P futures sampled at a 30-minute interval since 10/3 looks like it is ready to go down tomorrow to around 1160-1170. At that point, it can either set up a new leg up to 1250 or continue its descent to 1120. Let's see if we do indeed get another big down day tomorrow...
ReplyDeleteOWS - Their plan must be working, banking sector is green?
ReplyDelete