Friday, May 17, 2013
05/17/13 Bonds On Deck
No, not Barry, but rather the more exciting long term Treasury bonds. Is there an alternative to shorting when the indexes begin to pull back? Sure- rotate back into bonds. A YTD chart of TLT indicates a trade setting up on the long side:
http://finance.yahoo.com/echarts?s=TLT+Interactive#symbol=tlt;range=ytd;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
One side benefit to owning TLT is the monthly dividend payment (next installment June 1), although I don't plan to hold the position long enough to collect.
The bond/equity trade off isn't always in play, of course. Both sold off hard during the financial crisis. But in general investors will rotate into bonds when switching gears to 'risk off.'
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Credit to Geoff for prompting a look at TLT.
ReplyDeleteGoldcorp set to open at a new 52-wk low.
ReplyDeleteFor some reason, I'm partial to NEM. TOF had one he was watching, I forgot what it was, interestingly, the chart impressed me.
DeleteI'm glad I don't have my guns handy.
ReplyDeleteSeveral of the stocks I've been salivating over closed higher than their open yesterday, gave me a positive feeling despite yesterday's perceived weakness.
DeleteING - Yesterday's worse on my screen is today's winner, LOL.
ReplyDeleteTXT - Umm, I shouldn't have sold this one a few days ago.
BMY - This chart made me pee a little yesterday.
ReplyDeleteConfidence 83.7, better than expected.
ReplyDeleteBought some more FMD at $1.25.
ReplyDeleteInteresting idea on bonds 2nd. Not sure if it's go time yet. Still think we have a date with 1,700 first.
Great move on CECO bro!
DeleteAnything can happen on TT, even bromance. ;)
DeleteCECO - Nice. Predictable too, considering the way it acted yesterday.
ReplyDeleteWould a rising Canadian dollar be indicative of commodities demand? I'm not sure.... Coal maybe?
ReplyDeleteBrandt - "the USD is near historic lows to the CAD. The weekly chart shows a possible massive H&S bottom with a complex H&S bottom serving as the right shoulder."
Whoa, I dodged a bullet on miners by getting the hell out of Dodge yesterday.
ReplyDeleteMake that a fusillade of bullets.
DeleteING - Yesterday was the knockout attempt, just like CECO
ReplyDeleteBuy these, guys, and ride them up.
Own both.....smiling
DeleteLeading economic indicator(s) better than expected.
ReplyDeleteGMO - Hmm, what's this action all about?
ReplyDeleteI think GLD has another date with 130.
ReplyDeleteSo many are waiting for a bottom, what if it never happens?
DeleteWell, I think demand would overwhelm supply at 200.
DeleteFLOW - I'm watching to see if this one rises out of it's channel here, plan to buy it if it takes one more dive towards lower trend line (~$3.50).
ReplyDeleteNSPH - What do you guys think of this chart?
ReplyDeleteFNMA - Was yesterday the obligatory knockout day?
ReplyDeleteKWK - Doesn't look too good, does it? Is this price action fake, or does it reflect reality?
ReplyDeletewow CECO and all education stocks are going off!
ReplyDeleteEvery freaking time CP recommends I take a position and I decline, this happens. He suggested CECO, and I treated it like the stuff that moves through the cecum.
Deletecheck out FMD. It's an old high flier in the credit / financial services industry. On life support for a while but things are rebounding nicely. check out the CEO's comments on the last conf call:
Delete"Before turning the call over to Ken, let me say a few words about the capital markets. We believe that the private student loan asset-backed securities markets appears healthier now than at any point since 2007. In both primary and secondary markets, bonds are being placed and traded with increased uncertainty. In our last call, we discussed 2 of the key metrics which determined the economics of a securitization, funding costs and a required capital.
Funding cost have continued to improve due to both the growth of the investor base, as well as the quality of the collateral being financed in the market today. From the capital side, this quarter saw an important development as the benchmark issuer placed a new single-lay rated subordinate bond, the first such bond in the private student loan space since 2008. The market responded extremely favorably as significant investor oversubscription allowed the bond to price well inside initial guidance. The result was in a lower all-in cost of funds for the benchmark issuer compared to its prior transaction in October 2012, which did not include a subordinated bond. The inclusion of the subordinated bond increased the amount of funds raised as a percentage of student loans financed from 78% to 84%, reducing the capital requirement of the issuer. As we have stated in the past, the return of the subordinated bond market is a linchpin for market accessibility and that this transaction signals the continuing normalization of the private student loan ABS market. We will monitor developments in the capital markets relative to our other funding sources, remaining opportunistic in the use of the company's equity capital."
"In addition, we are now on the lender lists of approximately 1,000 educational institutions, which we believe positions us for a solid upcoming peak lending season,"
by the way i'm pretty sure the transcript should have said "increased certainty" in the first paragraph above.
DeleteFMD - I have to think $2.26 is destiny, based on a $1 bull flagpole height and breakout from here.
DeleteOh, and was yesterday's $1.10 50SMA retest the knockout attempt that always seems to occur just prior to a breakout? Just asking.....
DeleteI think that was a misprint...
Delete$1 flagpole, well I f'd that one up. The pole I'm looking at is $0.25 in length, which suggest another $0.25 upside from the breakout should it begin from here.
DeleteJust my amateurish attempt at chart reading, FWIW.
I'm confident that Blum is selling into this rally in CECO. I've seen a lot of 30k to 70k blocks go through. After his selling pressure is removed this could really skyrocket.
ReplyDelete12:41 PM EDT, 05/17/2013 (MidnightTrader) -- Shares in the secondary-education market are higher today, buoyed by news that Senate Majority Leader Harry Reid and 11 other Democratic Senators proposed a freeze on the interest rate for the Stafford student loan for two years.
DeleteIf the measure is not passed, the interest rate on the Stafford loan, one of the more popular student loans, will double to 6.8% on July 1, impacting 7 million undergraduates.
Shares of Corinthian College (COCO), Career Education (CECO) and ITT Education (ESI) are all posting double-digit gains of 15%, 11% and 10%, respectively.
The crazy thing about FMD is the share count hasn't really ballooned like I thought it would since they had to go through such rough times over the past few years. They had 95 million shares in 2007 and they currently have 107 million shares. This is key when considering just how high it can go if the securitization market returns. From $57 down to $0.61 recently...even a move to the 78.6% retracement level is a 10 bagger from here. Can it do it? I've seen crazier stuff happen.
ReplyDeleteLook at their earnings pre crash:
2004: $0.79
2005: $1.59
2006: $2.45
2007: $3.92
SCTY - Don't look....
ReplyDeleteFMD - I'm in, @$1.27.... Grasping at my chair in preparation for a movement.....
RSOL and SCTY omg.
DeleteSCTY. Another TASR.
DeleteI bought a few puts in FB. I really don't like that chart.
ReplyDelete3000 fmd@ 1.27
ReplyDeleteDuring the weeks like we've just had, it is nice when AUMN is doing its usual "opposite to GDXJ" thing: AUMN is up 1 point on the week while GDXJ is down 15%. Maybe at $1.50 AUMN was priced to NEVER have any profit?
ReplyDeleteDudes this FMD is quite possibly the biggest potential winner I can find. Could be a monster. The securitization market for student loans is back big time from what I gather. Share dilution since 2007 has been minimal – about 10%. No toxic financing. Book is about $2.00 but if the securitization market comes back it could skyrocket.
ReplyDeleteThink MTG, RDN, or MBI...
Bring it on, I don't mind adding either, the PE is absurd.
DeleteWhat if we're experiencing the EXACT opposite of the fall 2008 collapse?
ReplyDelete