Tuesday, January 24, 2012
1/24/12 Not so fast
I watched market action intermittently all day, and then after hours. Marketwatch headlines that caught my eye included 'Market's as undervalued as in 1990' (from Hulbert, of all people) and 'Buyers board the stock train.'
I can see most of you are making good money buying the dips, and I'm all for it as long as it lasts.
But I'm a guy who swings at negative sentiment pitches, and I see no reason to change
anything. 'Let prices come to you.' Remember that one?
Ain't playing for Pepsi
Ain't playing for Coke
I don't play no game
Makes me look like a joke
That's no joke, bro.
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Boo!
ReplyDeleteMusic added to lead post.
ReplyDeleteI'll stick to what works for me, thanks. Swinging at a change-up can backfire quickly. It would be almost as bad as Neil deciding to try disco in 1980- he didn't, and that's why he's still around.
ReplyDeleteI like that song. I remember Neil's video got banned from Mtv because a Spuds McKenzie look alike was liking a buxom models chest. I think Bud had it pulled. i hope i can find the original.
ReplyDeleteBob
Good news for aapl is good news for the nazquack.
ReplyDeleteIt's a big stock in a lot of institutional ports.
Other techs should do some catch up. SKUL should.
Just a mention....DANG is on 'the list'. A text book entry would be 7.57 which is also just above the previous peak high on 10/28 (the breakout point for the current move). You dip buyers may want to front run that entry. I think 10.50 is a good short term price target. If I get a trigger I will go in a little oversize and take half off at 10.50.
Nice pullback on IRE today like I wanted. There sure are a lot of transitional moves on speculative stocks recently. Good confirmation on the Russell today too.
CC- When you are doing landry's system, on average, how much of your port is in play?
ReplyDeleteCC I agree I wrote a similar post last Friday.
ReplyDelete"Dang hitting resistance where it should. Nice deep cup with a perfect JLO bottom base. Would like to see consolidation or a bear flag in the 7.50 to 6.50 range for a couple of days. 6.50 because 50% fib retrace on this current rally. I feel a 2.50 break out to $10 could happen very quickly. Of coarse it could happen today and I will be left behind just looking at the JLO bottom and wishing what could of been."
Setting up
Wow dude what a great live performance. I'm a huge Neil Young fan and never heard of this song. I guess I was too young and busy listening to AC/DC and Guns n Roses when this came out. thanks for sharing it
ReplyDeleteMark, It depends on how many stocks trigger. If we get a bunch that trigger it could be fully invested, but once we hit the price target on each position, we reduce risk by selling half the position, which free's up capital for other trades. The size of the position is determined by the level of risk involved and the beta (historic volatility) of the stock in question. The risk is even at one to one. My own risk is 2% of the port if I'm stopped out. If a person has a greater risk tolerance it can be higher. On a low priced stock I might decide to risk 3-4%.
ReplyDeleteWe have one right now that triggered a week ago. The entry was $2, the price target is $2.80, the stop is 1.20. So the risk/reward is even at .80 up or down.
So in theory, if the port is, for example $100,000, then the risk of any one position if stopped out is $2000.
So the above stock would be a position of 2500 shares. ($2000 divided by .80 = 2500).
Lately I've been anywhere from 30% to 60% invested. We're seeing a lot more possible set-ups, now we are waiting to see if they trigger. I'd like to see a trend strong enough to be all in.
I have all of Neil's records (and discs). He's one of my longtime favorites.
ReplyDeleteYes RoBear, I remember your post and you were right. Looks like you have plenty of time to put on a position. I doubt it gaps above 7.57 at the open. It could take a few more days of consolidation.
ReplyDeleteCC I have traded this sucker a few times it is a wild ride with large gaps and huge spreads at times. I might use an early entry on DMA crosses. If it test the 10 and holds I will enter. Or I will enter on the 7.57 break. I use the same risk system as you which is stop (risk) dependent.
ReplyDeleteIndia to send worthless metal to Iran in trade for oil:
ReplyDeletehttp://www.debka.com/article/21673/
You can see where the leadership has been so far this year:
ReplyDeleteYTD Returns:
o MSCI Europe Banks 9.5%
o Hang Seng 9.1%
o DAX 8.2%
o S&P 500 4.5%
o CAC 40 4.2%
o S&P/TSX 3.7%
One of the keys going forward will be how these European Banks react what happens in Greece and other European governments. Italian government yields have started moving back up the last couple of days and getting these moving back down would be more equity supportive.
BB- That's a very helpful post, thanks.
ReplyDeleteThis morning's argument with myself: Last night AAPL beat handily. One would 'expect' this to lead to strong futures and a big up day on the Naz.
ReplyDeleteNow let's look at the other side.
AAPL reports huge, projects even higher revenues going forward, has a ton of cash. Do traders sell the news?
Last night on Bloomberg there was an institutional investor suggesting AAPL is "priced to perfection". I HATE when they say that, it's code for sell.
I'm not the kind of guy who buys on good news- I like to buy bad news and sell good news. My problem lies in staying with the trade after opening- IRE, DANG- I should have bought a few thousand shares and just sat on 'em.
ReplyDeleteI won't try to predict which pullback burns the dip buyers. But I will predict the dip buyers get burned at some point.
ReplyDelete2nd the key is definitely position size. even then we sell too early. look at sorl man...up 35% in a week or so. i cut my small position loose at 2.93 when there was really no reason to do so.
ReplyDeleteanyway this was originally how i thought this was gonna shake out.. a drop of the st of union. luckily i cashed 1/3 of chips in but the rt call was all cash as of yest
i think for the most part human tendency is to take chips off the table quickly after such a rough several years and past few months. so when we take small positions we look at the run in the mkt and say eff it im lucky to make that $$ when really we should be looking at it as objectively as we did when we had no position and were looking to buy. if we can master that and position sizing then odds r we will have good returns.
ReplyDeleteSo far I actually like today's price action.
ReplyDeletebought back some skul at 13.06 that i sold yest
ReplyDeletei agree mark...if that is all the bears get then thats good.
ReplyDeletecoals are tuurning...good respponse to neg news
MDW - There's a lower trend line that intersects $1.80. Although I rather doubt it's going there, I may have to pick some up if it does.
ReplyDeletethe 130.8ish area has been pretty strong support...let's see if it holds.
ReplyDeleteActually BTU isn't turning...looks like they're being selective with the coals. WLT and ACI look decent. Look at CSTR...That thing is going to break higher soon and finally clear the 200 DMA. probably now would be a good time; when people least expect it.
ReplyDeleteThe uptrend feels pretty relentless to me. Even down days seem to start near the day low, then finish up from there. Seems like every minor dip is being bought.
ReplyDeleteSeems like we're walking off the overbought condition sideways. As long as we stay above the short term support I'm good. I'm not thrilled we start the day gapping down and then climbing out of it to close more or less flat, but it could be much worse. Not the kind of action that plays to any of us.
ReplyDeleteno negativity for 2nd and no trend or breakouts for anyone else.
We'll have to see what the Fed says, like everyone else seems to be waiting for.
CC - There have been plenty of trends/breakouts in individual stocks.
ReplyDelete2nd - here's one that jives with your thinking; granted I believe this guy has been bearish for a couple of years now:
http://finance.yahoo.com/blogs/breakout/market-rally-2012-almost-over-bianco-134553880.html
Ok I completely take that back. Looks like Bianco has NOT been bearish. He called for a big rally in September and looks like he subsequently got fired for it. Of course ZeroHedge called him some bad names which shows how consistently wrong ZH is:
ReplyDeletehttp://www.zerohedge.com/news/david-bianco-cds-hits-all-time-high-following-his-sp-price-target-hike-1400-1450
However, Bianco was quite wrong heading into 2008/9:
http://www.reuters.com/article/2008/10/06/sandp500-research-ubs-idUSBNG36407920081006
Boy, somebody must have said something somewhere. Any news on the Fed?
ReplyDelete*FOMC HOLDS FED FUNDS RATE TARGET AT 0.25% (AS EXPECTED); Rates to stay Exceptionally low at least 2014
ReplyDelete- Vote:9-1 (Fed's Lacker)
- Discount rate unchanged at 0.75% - Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.
- Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
- Decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction
- While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed.
That was good for about 5 minutes of sugar rush.
ReplyDeleteTOF, I'm not getting negative or anything, but "have been" is past tense.
I'm more interested in 'right now' and 'in the future'. My broker only let's me trade the right side of the charts, the bastards.
CC - There "have been" breakouts in the past few days while the market has traded sideways.
ReplyDeleteORRF?
ReplyDeleteAdded to IRE at 6.07
ReplyDeleteLuckily covered my IAG short earlier...had a feeling about the Fed.
I'm sure there is a party in David's wallet today. I hold PNPFF in my ROTH.
TOF, not so much breakouts but transitions. They are turning, no doubt, but 'trend' is a longer term idea. I DO hope you are right since I'm long a few of them. Nice call on dmnd.
DMND, SKUL, DTLK, and SORL are a few that come to mind. It's hard to do but we need to remember to just throw away our opinions of the economy/fed/europe etc and just pay attention to the individual companies and how their stocks are trading.
ReplyDelete"I'm sure there is a party in David's wallet today."
ReplyDeleteWell, all the stocks on my watch list (my largest positions) are green today. :) GDXJ is having a hell of a day, with SVM outperforming GDXJ. Remember I said that SVM will be the next one to break out? :)
Overall, I am not thrilled. Being thrilled is a recipe for disaster, for taking profits too early here. My largest position (AUMN) is the one in which I believe for fundamental reasons, and this should give me the strength to view its day-to-day moves for 2012 with a mere curiosity, knowing fully well that in 2013 it will surpass its 2012 peak and in 2015 it will double its 2013 peak.
"i think for the most part human tendency is to take chips off the table quickly after such a rough several years and past few months."
Yep. So in order to hold myself off from selling my core AUMN position, I loaded up a bunch of call options in December and also some crappy stocks ready to break out (like SORL, for example), and so now I have something to sell if I will *really* want to take some profits.
Not a problem for me. You know I'm not a fundamental guy.
ReplyDeleteI'm just trading the patterns and MA crosses.
I have to admit it took some effort to ignore that negative story 2nd posted the other day on DANG.
ReplyDelete"http://dontconfusetheissuewithfacts.com/"
No worries, I got over it today.
If I worried about Europe I sure as heck wouldn't be taking positions in IRE.
It's been a really long time since I did this but I decided to buy 10 x TZOO Feb $32.5 Calls at $0.90 just to play the earnings tomorrow. They're basically an all or nothing play.
ReplyDeleteGod this little box MITK is in is frustrating. Odds favor a break to the upside for this pattern though, so here I wait.
ReplyDeleteI like your patience Mark. MITK is a very interesting company in my mind and one I want to invest in again...just want to wait for a retest of the 200 DMA if possible.
ReplyDeleteCLR...Beautiful.
ReplyDeleteTOF- And I'm the most impatient person in the world...trust me.
Chatter.... Bernanke will demonstrate mobile deposit today.
ReplyDeleteRLD looks like a buy above $8.9...basically the same beaten down but on the rebound type play as all of the others.
ReplyDeleteRES is in the exact same spot as BAS was 2 days ago when I mentioned it was close to a buy. That was 15% ago for BAS. Same play here??? I think so. Earnings are over now...which I like.
ReplyDeleteOur old friend REDF is a little cheaper today.
ReplyDeleteGoldman commentary:
ReplyDeletehttp://www.businessinsider.com/goldman-the-5-most-important-points-from-todays-fomc-statement-2012-1
Mark - RES looks like support right here at $16.3-$16.4
ReplyDeleteTOF- Reading the CC.
ReplyDeleteI think TZOO could really run here...like to $40, especially if they only meet earnings. With the Fed fully behind this market this is a great candidate for a big rebound.
ReplyDeletePlus, the valuation of TZOO is definitely reasonable, at less than 20 times 2012 earnings/FCF. It's the 3rd largest player in the local deals space behind GRPN and Living Social. I'm still surprised those guys don't buy them out. TZOO would add tens of millions of customers to their mailing list and most importantly, a PROFITABLE business...something they haven't achieved.
ReplyDeleteHow about that 20% move up in UNG! Jesse show your face!
ReplyDeleteRES...OK, if the SPX was 1280 I'd take a shot at RES here. Call was pretty good, they really took the time to answer questions. Divy raise. I don't quite get the stock split, they say to increase float, not so sure. I'll wait for now.
ReplyDeleteGuys- Look at the rebound in TBT. This market is going HIGHER...
ReplyDeleteMark - The buy on RES is probably on a close back up above $16.4 (assuming the break below this sticks today).
ReplyDeleteMarket is definitely going higher Mark. This isn't a false breakout.
NOIZ has earnings on 1/27. I hold a small stake in it but I have a better than average feeling that this will become a big low float momo stock.
RLD broke resistance. I went long at $8.94...small position.
David - Congrats on AUMN. So far it's been a better play than MITK.
ReplyDeleteSold 3k RLD at $9.12...good enough for me.
ReplyDeleteHmm... I may be forced to revise my silver forecast higher than $34? Didn't imagine we'd approach this level quite so quickly...
ReplyDeleteI'm such a sally...sold my TZOO calls for $0.95
ReplyDeleteSally- Why do you think the Yahoo board for MITK is of line?
ReplyDeleteMark - who knows. That MITK is building a nice little shelf there huh?
ReplyDeleteJust reminiscing....
ReplyDeletehttp://www.youtube.com/watch?v=XhRJK6W7Oic
One of my best working dogs was named Samson.
TOF- Yeah, but is that a good thing it's so long. Not really sure.
ReplyDeleteI looked at it. It's not long, which might actually be better, but it's a week or so where everyone agrees on price, which is a good launching pad for higher prices.
ReplyDeleteCC- OK, thanks. I know it's a bullish pattern, but not for how long. I'm sure there are a lot of buy orders just above 9.30/100sma.
ReplyDeletevery interesting activity in TZOO after hours. There was a 150k bid at $31.90 a few minutes ago. This sucker could REALLY fly tomorrow. Kinda wish I just held on to my options considering how small of a position it was and how fun it would be to see a 20% up day, which is what I think is going to happen.
ReplyDeleteSo can you guys tell me a little more about MGIC? How does this differ from CRM? The valuation is kinda silly right here. If the market priced it like RNOW or CRM this would be at $20. I see that gross margins are significantly lower...is this the reason?
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