Friday, June 29, 2012
06/29/12 River of Green
+2.47% one-day gain for the port! I awoke around 9 pm Thursday night for no particular reason, reached over to check the news feed on the Droid, and 'knew' it would be a 200+ point day for the DJIA. I was so sure the point total would exceed 200 that I did not hesitate to open positions in EEM, SLW and AA within the first few minutes of pre-market trading this morning. Moments later I walked into the pantry for a package of Ramen, glanced down and noticed a boxed bottle of Nadurra on the floor! WTF. I initially thought it was Fate delivering a forgotten fifth at a propitious time. Turns out my wife and kids had simply forgotten to unveil the bottle on Father's Day.
+9.18% YTD.
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good job bro!
ReplyDeletehttp://seekingalpha.com/article/312652-buying-cyclical-stocks-wisdom-or-inexperience
ReplyDeleteVery interesting article from 6 months ago. This guy was spot on:
"The only stock on this list which looks attractive on a Schiller 10-year smoothed earning basis is U.S. Steel at 7.2 PE. All the others look very expensive relative to the S&P 500 Index.
We believe that buying cyclical stocks and emerging markets under the assumption that secular forces in emerging markets will nullify the cyclical nature of sectors like energy; mining and heavy machinery exposes investors to a great deal of risk and shows a lack of understanding of the history of the markets. Please show me a cab driver or shoeshine boy who doesn’t know that there are secular forces at work in emerging markets.
Over-paying for stocks based on “well-known facts” is not a good way to take advantage of the “current distress”. We believe it would be better to wait for three to five years of poor performance in these stocks, which we expect to see, and until earnings have declined quite a bit before you buy. After all, it is just the first monetary easing move after a year of constant tightening in China. Besides, China could be starting its first real economic contraction as a quasi-capitalist country."
He examined CAT, DE, JOY, SLB, X and he said he wouldn't touch any of them except maybe X. He was wrong on X but still he was right on all others before today. After today I think DE is marginally above those prices.
Having see the decimation in sectors like coals and solars amongst others, its easy to see how this guy could be right that those other stocks could go through a massive correction at some point. Most cyclicals do over a 5 to 7 year time frame.
Damn I think we need to pay attention to this guy. He freaking nailed it:
ReplyDeletehttp://seekingalpha.com/article/488851-which-stocks-win-on-main-street-s-comeback
"In a normal economic cycle, the energy, heavy industrial and basic materials sectors of the S&P 500 index are slow out of the starting gate in the early stages of a bull stock market. They don't begin hitting their stride until economic growth accelerates, because their attractiveness usual coincides with capacity becoming scarce. It makes sense, because sales usually pick up before inventories are replenished and before new capital goods are required. However, the globalization of large-cap U.S. cyclical stocks like Caterpillar (CAT), Deere (DE), Schlumberger (SLB) and Joy Global (JOY) has caused them to be much more sensitive to the international economy and much less sensitive to U.S. economic growth. Caterpillar only gets 27% of its revenue from the U.S. and we believe the U.S. is the least reliant on commodities and most energy efficient it has ever been. For example, energy consumption per real dollar of Gross Domestic Product was 18% in 1970 and was 7.3% at the end of 2011. The U.S. is the largest economy in the world. It is as big as the next four country GDP totals combined, yet commodity prices have increased more in the last ten years as in any ten-year stretch over the last 205 years. This is despite the fact that commodities matter the least to the gross domestic product of the U.S. as they have ever mattered.
Therefore, we believe that the normal bull market in cyclical sectors has been spent on the excitement that China and the BRIC-trade related countries have created the last ten years. We also believe that the slowdown in the emerging world and acceleration of the U.S. economy is the death knell of the commodity bull market of 1999-2011. Finally, utility and telecom companies should enjoy some positive effect of the rebound in the U.S. economy, but that is offset by potentially higher borrowing costs for these capital intensive industries. We are avoiding all five capital intensive sectors of the S&P 500 index.
This leaves U.S. consumer discretionary, financials, healthcare (pharmaceuticals) and technology. We believe all of these sectors stand to benefit from the next stage in the U.S. economic recovery. Consumer discretionary companies would benefit from the unleashing of the pent up demand, while financials would prosper from the rebound in housing and lending. Pharmaceutical companies would gain from lower unemployment and greater prosperity and technology profits would be driven by meeting the capital good needs of these commodity efficient industries. We believe this is especially true for companies with the best balance sheets and those which have the best free cash flow, because they won't have to fight with Main Street for borrowed capital as it makes its comeback."
IYH - healthcare ishares closed at a new multiyear hi on the weekly chart at $79.50.
ReplyDeleteXLU - utilities is close to a multiyear hi at $36.99. I'm sure it's the yield of 3.77% doing the trick there.
Both of these charts have nice steady uptrends.
I noticed that I also bot 700 shares of AKRX at 15.72. It's in a nice steady uptrend and it's only touched the 20 day EMA twice since the middle of may. Stop around 14.80 and a first sell target of 16.64.
CLNE - Looks like it might want to run again?
ReplyDeleteAMLN - Bristol Meyers Buyout:
ReplyDeletehttp://finance.yahoo.com/news/bristol-myers-squibb-buy-amylin-021553346.html
Have a look at the OBV on this issue.
Deletehttp://stockcharts.com/h-sc/ui?s=AMLN&p=W&b=5&g=0&id=p32479135738
DeleteARNA - Chart sure looks sweet, it's been a nice ride for patient longs.
ReplyDeleteARNA's OBV never died either, as 52wk lows were printing. It just kept rising then finally took off:
Deletehttp://stockcharts.com/h-sc/ui?s=ARNA&p=W&b=5&g=0&id=p56734070477
Took the little guy to watch the Earthquakes play the Galaxy at Stanford Stadium. San Jose comes from behind to win 4-3. A beauty of a game, including a 'wrong goal' by SJ, and a free-kick goal by Beckham. Beautiful stadium, with good views from any seat.
ReplyDeleteLEN - Quite a breakout there.
ReplyDeleteillini- How bad is it in Illinois?
ReplyDeleteI'm starting to like Ford as an investment.
ReplyDelete2nd - the autos and airlines, two awful long term investments, look good. the airlines have actually gotten in the habit of covering their costs (via baggage fees, etc) and shedding huge burdensome pensions. LCC looks excellent.
DeleteDamn- corn and wheat futures spiking hard, probably on the Midwest storms.
ReplyDeleteGood work 2nd. We were going to go to that games also, but the local semi-pro team that we know had a must win game to make the playoffs. 4-2 win. Girls work the sidelines.
ReplyDeleteFinished painting today and cabinets come Tue!
Sheesh, you sure know how to milk a remodel job!
DeleteGWW - What do you guys think of this chart, does it look positive to you? I tend to believe the answer is yes.
ReplyDeleteLooks parabolic to me:
Deletehttp://finance.yahoo.com/echarts?s=gww#symbol=gww;range=my;compare=;indicator=sma%2850,200%29+volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Any of you guys think NOK can turn it around? They have $8 Billion in net cash (cash/cash equiv less debt) vs $7.7 Billion mkt cap. The company used to pay $0.40 to $0.50 annual dividends (equivalent of 20% to 25% on today's price).
ReplyDeleteAll I know is things change. If Nokia's management is creative enough, they'll become a player again. If not, they get bought out.
Deleteright...this could be their ibm moment. are they able to turn things around and make an unbelievable investment for shareholders?
DeleteNOK - I don't know man, the chart looks like it's at a critical intersect. Will NOK trade up off the lower trend line regardless? I'd like to see signs of progress before catching this knife.
ReplyDeleteAt this point I think we can probably just throw the charts out the window...will it make it or not is the vital question right?
DeleteI suppose we could ask the same question re: RIMM?
DeleteSweet dividend, and enough cash to pay it for a short while. Yeah, it's probably a few quarters away from the cliff?
DeleteBought 200 shs of DECK at $44 this morning. Want to start a position in the company and edge in over the next few weeks. I believe the Uggs are fashion boots that are still in style. The company is cheap if estimates hold or even if they drop by 20% given the opportunity they have to grow overseas.
ReplyDeleteWFR = Wow! Up almost 75% since it's lows a month ago.
ReplyDeleteYep, and still over 70% from it's 52wk high.
Deleteoh man why did you have to go and ruin the party!?
DeleteSensex - Jeeze, this thing jumped up like a happy puppy.
ReplyDeletePMI - 49.7, the lowest in a few years.
ReplyDeleteHDSN - He, he, kicking ass....
ReplyDeleteBanks - I think BC has a good point on these banks, the real issue is whether they drag us all into a downward spiral or if they pull their grand caper off and come out smelling like a rose?
ReplyDeleteI guess they're plenty greedy enough to drag us down.
Landry's Latest:
ReplyDelete"The market had the mother of all rallies on yet another "they fixed Europe" announcement. As I've said quite a bit, I really don't think that you can build a bull market on a bailout. You know me though, I only care about the charts and could give a flip about the news. With that said, the Ps are bumping up against short-term resistance and longer-term resistance. Those who bought during the range from March to May might be looking to get out at breakeven on any additional rallies. So, this could cap the upside action.
You know me though, take things one day at a time. Honor your stops on existing shorts and wait for entries on new ones. Also, since we have a holiday shortened week, trading will likely be thin and choppy. So, you probably want to make sure those entries are very liberal to avoid getting triggered on noise alone. I just paid for your free newsletter subscription. You're welcome."
"they fixed Europe"
DeleteWell, I guess they finally reached a point where there was no other option? We should continue keeping a close eye on Germany.
MEOH - This chart almost looks like the HDSN chart. Seems like a return to $26 would be quite bearish and this chart needs to break out soon, up and over $28
ReplyDeleteTomkat...who could have possibly seen that coming.
ReplyDeleteNearly everyone in the Castro District? Oh, and Rock Hudson, and he's dead.
DeletePEIX - Grain prices are killing this one I guess.
ReplyDeleteDF - Got to admit, this is a great looking chart looking backwards.
ReplyDeleteSFD - I'm not sure what to make of this chart.
ReplyDeleteI wonder if it would be a good strategy to just buy a bunch of dog stocks. Stocks like NOK, RIMM, HPQ, ACI, FSLR, etc and just hold them for 5 years. I suspect at least one of them turns it around in a big way
ReplyDeleteOkay, I'm officially pissed.
ReplyDeleteOne of the service calls for the last couple of days was short LQDT at $48.
My power went out this AM......just came back on to LQDT at $38.90.
wow. that erased quite a few days of trading gains. i was looking at that from the long side earlier this year but just couldn't get comfortable with how popular their websites are.
DeletePerhaps my brain just isn't geared toward focusing on the negative, or it may be I recognize that some folks with high hopes and dollar signs in their eyes have foolishly bought this stock, probably based on some manufactured story they were snookered into believing.
DeleteIt's everyday life in the big Casino.
Oppenheimer and The Benchmark Company have been pumping this one.
DeleteThe simplistic price transfer function lacks imagination, apparently earnings didn't go well. 52wk high double top can be a clue. I have to wonder: Is Oppenheimer a pump and dump firm? The Benchmark Company also rated this one a buy, maybe these two have been working the crowd?
Over the weekend I was looking at prior recessions and how the markets traded during them. While there were obviously some big drops, there were also some recessions were the market barely even dropped and actually went higher. i wonder how this upcoming recession (if there is one) would work out. my suspicion is the market would actually do ok because of valuation. We have been trading sideways for 13 years while earnings have more than doubled.
ReplyDeletei don't think it really matters though...we just need to focus on stocks that will do well regardless.
Today I've been working on trying to understand why ethanol(biomass specific feedstock) is a better fuel than methanol(fossil fuel or biomass feedstock, still cheaper to manufacture).
DeleteAnd then, somehow hydrogen gets thrown into the picture, which H2 can only be produced economically by using nuclear fission. Hmm...
Okay, so what are some other variables, and how is the energy contained by these fuels(energy storage mechanisms) actually converted to something useful? Well, they can be burned by conventional means of thermal decomposition(at the risk of creating oxides of nitrogen) or maybe converted by chemical decomposition such as in a fuel cell.
Of course you know there are many different designs of fuel cells, only one of which I'm aware of (H2 for NASA) has ever "turned" a profit? Not that it can't happen, or isn't about to, but something interesting is some designs use silicon while others might use noble metals and others can convert methanol. Panasonic recently announced their design converts methanol(huge lack of detail on this)?
Okay, my brain hurts again (probably from squinting while reading). Way too many variables to make quick sense of.
TomKat? It took me a while to realize what this meant...and I'm proud of my ignorance.
ReplyDeleteShe knew what she wanted. She was lookin' for that stud bull, the he cat. And that was me.
DeleteTommy the Cat is my name and I say unto thee... Say baby do you wanna lay down by me?"
Biofuels - Wouldn't it be much cheaper to remove CO2 from the atmosphere?
ReplyDeleteDepends on the fuel. Annual fuels (like grasses) remove quickly, some "biofuels" have quite long carbon cycles (like softwoods) that can take up to 200 years.
DeleteCP, this company, private, seems to have a very interesting fuel cell concept.
ReplyDeletehttp://www.bloomenergy.com/fuel-cell/energy-server/
I'm not sure what weaknesses it has though.
WHR - Crap, I just noticed the Feb gap up from $54ish has already filled.
ReplyDeleteDon't worry though, the gap up from $57.61 needs to fill.
Anyway, the residential NG filling station device fits nicely with GM's recent comment for offering a NG fueled automobile.
DeleteMy REED is looking really good. Unfortunately once again I only have about 3% of the port in it. I guess I shouldn't complain.
ReplyDeleteStop whining like a little girl, I didn't see you bought that one. SODA's had a good run as well, absent the 40PE.
Deleteha! yeah i only bought a few thousand shares. have you ever tried their drinks? pretty good stuff.
DeleteIs it safe to say we missed the boat on WPRT? yeesh. we all saw that one but none of us profited from this move!?!
ReplyDeleteThere are gaps up that kept me out.
DeleteI guess if bears don't get on the stick here, they're gonna have to start covering if they haven't already. There are several stocks on my list ready to break up, it seems.
ReplyDeleteLooks like they're(bears) heading for higher ground?
DeleteRare Indy nostalgia Ebay auction; the fastest production car of the year (turbo Buick) was and still is to many, an important milestone in the Buick family tree.
ReplyDeleteThis thing is ultra rare in terms of Buick nostalgia:
http://www.ebay.com/itm/1983-Buick-Twin-Turbo-Indy-Pace-Car-Engine-4-1l-V6-325-4-Speed-Automatic-/310410088129?_trksid=p2045573.m2042&_trkparms=aid%3D111000%26algo%3DREC.CURRENT%26ao%3D1%26asc%3D27%26meid%3D314044909004238074%26pid%3D100033%26prg%3D1011%26rk%3D4%26
I'm officially calling Thur. my return date. Hope I remember how to trade!
ReplyDeleteI bet if you were to actually get off the couch, the painting would be done by now.
Deletehttp://finance.yahoo.com/blogs/breakout/women-dress-sales-suggest-recession-schoenberger-145013172.html#more-15809
ReplyDeleteJC - CELL was on my watchlist as potential oversold bounce...
ReplyDeleteCrap KINS was on my list too.
So far most of the ones on my bullish trends screen have jumped at least 10% in the past week:
RMCF
KINS
REED
IFON
You guys want a stock with HEAVY insider buying, a recent breakout, and a nice multi month bottoming pattern?
ReplyDeleteCheck out NSPH
CP - Whatcha thinking about DECK? I bought a small amount today at $44. The wife confirms that they're still popular and in fact she said she saw a little boy running around with Uggs on when she took our son out to the store. She then said she wants our son to wear them when he gets a little older to which I vehemently opposed.
ReplyDeleteAnyway, I think it's a good time to start buying.
Let's say this is just a slowdown with the stock related to warm weather and then we, gasp, get cold weather again.
Deletehttp://financials.morningstar.com/income-statement/is.html?t=DECK
If the Uggs are still popular then the above trend in sales/etc should yield further gains down the road and buying a growth company at 8 or 9 times earnings is a very good time to be buying.