Big Money, No Whammies

The End of Big Money, No Whammies

2007-03-13T09:19:00.000-07:00

With career hunting, wedding planning, and graduation all on my heels, I have too many things going on to keep the site moving, so this will be the last post.

I will return to this venture if I get the chance in the future. As for now, take a long term view and keep playing the market.

Thanks to everybody for the support, input, and all of the e-mails.

Happy trading,
-Chris

Let It Ride

2007-02-26T21:36:00.000-08:00

As long as my current stocks show no major flaws, I'm staying put. I'll update you when the next buy or sell hits. Until then, pay no attention to the white noise and let it ride.
-Chris

Pulse of my Predictions II

2007-02-18T18:25:00.000-08:00

It’s time I do a checkup of my suggestions for 2007. To better show how things are going I've created a simulated portfolio of $10,000 and split the money equally between each of my picks.

Here are the results:

Grey indicates the position has been sold. As you can see I’m nearing my goal of a 30% gain for the year, mainly because of the leap ONXX took. I will keep trading and set a new goal of a 45% gain for the year. This should be tough but I’m up for a challenge.

Of the “Six Stocks for 2007” I gave at the beginning of the year, assuming you entered and exited when I suggested, you would be up on all six of them –although XWG by only a penny.

I’m happy with the way things are going, but we all know how quick a market can turn on you, so I’m staying diligent even with this early success. I'll take another look at the big picture in a few months.
-Chris

Sell ONXX

2007-02-12T09:06:00.000-08:00

We had a profitable day today in every aspect of the word. Onxx pharmaceuticals gained 97% based on Nexavar, their Phase III liver cancer drug, which was stopped in order to get immediate approval. Here are two articles that sum it up: MSN & TheStreet.

I will sell out of my position and I suggest the same. I bought Onyx based on technicals as quoted from my Jan. 2^nd post:

Far be it for me to pick a bottom, but we do have a candlestick connoisseur’s doji star, coupled with a solid positive MACD.

It did end up a bottom, but this recent jump has nothing to do with technicals. The fact is I got lucky. Onyx could have just as easily found that Nexavar created a bad side affect, and it would have gotten hammered.

I don’t buy based on speculation, and I especially don’t hold based on it (some are saying to hold because Bayer may buy out the company).

A weekly chart shows resistance around 26, with a newly overbought RSI. This is somewhat negligible, however, as technicals will probably not drive the stock in the coming days.

Pigs get slaughtered, so please be prudent. It’s not everyday you can say you doubled your money. Today is just our day.

If you bought Onyx Pharmaceuticals when I suggested at 10.70 then you would have a 125.70% gain.
-Chris

Sell STP, Buy AMGN

2007-02-06T20:07:00.000-08:00

I'm sticking with technicals. Tomorrow sell STP and buy AMGN.

Here is a 14 month weekly chart showing that STP is reaching overbought territory. Although its MACD is amazingly still headed skyward, its RSI is touching 70, something new to the stock. Also there is major resistance around 42, and we are nearing an all-time high. Finally, for candlestick users, a daily chart shows a “hanging man” indicating a possible reversal.

No need to get greedy, if you bought Suntech Power when I suggested at 34 then you would have a 14% gain. (this includes the 1.97% loss after-hours)

Time is ripe for Amgen again. We sold last time at 76 and the stock is back down at 69. A strong 200WMA at 66.17 will prevent from major losses. As a bonus, a weak upside-down head and shoulders pattern has emerged. (I say weak because it is not in good form)

Worst case scenario, the stock breaks 200DMA support and falls to 68 or 66. More likely is another race to 76.

To put things in perspective, AMGN has a better chance of profit and less risk of falling than STP at these levels.
-Chris

Buy Midway Games

2007-02-04T22:48:00.000-08:00

First let me say that Nike and its stock charmers decided to break resistance at $100. I’m not afraid to take a loss when prudent, so let’s all cover our NKE shorts. If you shorted Nike when I suggested at 97.70 you would have a 2.5% loss.

Back on topic, I found a game developer who had been kicked in the head by Wall Street. Since December ‘05 the stock of Midway Games (MWY) has gone from $23 to $6. And yes, with a negative income and EPS, it’s a no brainier. Yesterday the stock closed at $6.90 and I’m buying shares for my personal portfolio. Here’s why:

As you know from my previous article on the Wii, I know what teens and young adults are likely to buy. This is my sort of specialty when it comes to investing. I know better than analyst XYZ what's going to be a hit and what's not. Lets take a look at Midway’s upcoming games.

Unreal Tournament 3 – This first person shooter is well known among gamers, right beside Halo and Counter Strike. This is the type of game that kids buy out of loyalty, even when an illegal version can be downloaded.

Strangle Hold – Not a blockbuster, but the type that will always be rented out because of its action.

Hot Brain: Fire Up Your Mind – This will be called PSP’s answer to the Nintendo DS handheld’s Brain Age (the highest selling game on DS). Smart idea, Midway.

Lord of the Rings Online – A new MMORPG with amazing graphics. Find me a series with a bigger fan base and I will call you a liar (minus Star Wars, which is overplayed in the gaming world).

Finally, I have to mention that Midway owns the licensing to Mortal Kombat… nuff said.

So what if Midway has some great games coming out?
We have three catalysts that I believe will make big money for Midway and us.

1. New consoles – We just got a fresh batch of new game systems, effectively ending the lag for game publishers of outdated PS2s, Gamecubes, etc.

2. MMORPGs – Midway did their homework on the PC market by getting into the online world. MMORPGs, or Massive Multiplayer Online Role Playing Games, are not a one time purchase for gamers; instead monthly subscriptions allow gamers to stay playing in the online world. This kind of income is new for Midway, and has been a Godsend for companies like Blizzard Entertainment (creators of World of Warcraft). These games capture a loyal fan-base and make a killing (when done right).

3. Great set up in charts - The stock is below the 50DMA which could cause some turbulence, but its MACD is about to cross zero, it has support right below it around 6.55, and recent positive earning from other game developers like ERTS could prove to be an added boost, getting derivative players to add positions.

Midway is adapting quickly to a smarter way of making money in the developer business. I have a lot of confidence in the company. Needless to say, buy MWY on Monday.
-Chris

Turn a Blind Eye to the Dow

2007-01-29T18:36:00.000-08:00

No, I’m not shorting it or buying DXD, or even calling for a drop. I’ve learned my lesson. Today I would merely like to point out that from a technical standpoint, I would rather close my eyes.

I'll use a 5 month chart to illustrate:

First, I’ve set 4 vertical areas showing bounces off of the mid-Bollinger Band. You can clearly see how the inclines slowly become less steep until they level off. This is normal and can happen with any stock, but when it coincides with a negatively correlating MACD, it normally spells trouble. As the inclines level off, the MACD gets worse, and we see downward slopes.

Second, I’ve shown were the MACD should be with a horizontal purple line, if the DJIA was at 12,200. But the DJIA is at 12,500, so the MACD should be even higher than the lower purple line—it’s not.

Third, I’ve shown with a green line that the DJIA keeps rising while the buying pressure weakens. This indicator, called the Chaikin Money Flow, shows a clear downtrend in buying pressure. We are not below the zero line yet but the trend is clearly down.

The one thing in the Dow’s favor is it's RSI, which is below 60.

There is much less information on the weekly chart, although we do curiously see a crossover on the MACD. This would normally coincide with a fall by now; make up your own conclusions as to why it hasn’t yet.

The message I’m trying to get across is not to short the Dow, but rather to trade carefully. I don’t like what I see, nor should you.
-Chris

Christmas Loves LCD’s II

2007-01-24T15:47:00.000-08:00

GLW had been treading water for no apparent reason this past month, but my respite came as earnings were released today with numbers much better than expected. Corning gave very light expectations for this upcoming quarter, but investors were so impressed with management’s new understanding of seasonality, that the stock ended up over 10%.

With such a low bar set for earnings this quarter, another surprise to the upside is in order.

The chart of GLW looks better than when I first suggested it in December. The MACD is basically identical; however, the Slow STO is now at its midpoint rather than overbought as pointed out before. The 200DMA resistance at 22 is keeping investors from getting overly ambitious in a single day, but I believe we will get above it soon. Here is the previous chart, along with today's.

XWG gave back after-hours gains it achieved yesterday, and lost the battle of staying above 2.7. Technical indicators are getting dicey, so I will be watching it closely.
-Chris

Sell AMGN Today

2007-01-22T18:45:00.000-08:00

We have done well again with this one, but I have to let it go after January’s quick Biotech run-up.

We are currently overbought on the RSI, at a resistance around 76, and have very little pressure in terms of cash flow coming in. I believe we could put its capital to good use elsewhere for the next month or so. If you bought AMGN when I suggested at 68.4, you would have an 11% gain. The stock is at 76.04 after-hours.

So where do we put our profits? We short sell Nike (NKE) of course.

As far as technicals go, Nike looks as though it’s been pulling to break 100 for the simple sake of saying it’s in the triple digits. Yesterday’s 2% loss confirmed that nobody is ready to buy Nike at $100. MACD looks negatively inverted, and a quick look at a 50% Fibonacci retracement says that Nike could fall below 90.

Five months of highs are rare and usually unsustainable for companies with as few growth prospects as Nike. Also, Philip Knight, one of the largest stockholders of Nike, has sold over one million of his four million shares just this month.

This is not a risky bet, worst case scenario is that the stock hits 101, and we quickly sell for a very small loss. Best case scenario, and a more likely one, is a quick 10% gain.

On other fronts, I’m seeing a 6.6% gain after-hours for XWG, so we could sell it out tomorrow depending on how the price action moves in the first hour of trading.

I hope this bodes well.
-Chris

Burning a Hole in My Portfolio

2007-01-16T08:06:00.000-08:00

STP is hot, up over 10% in the past week, and why wouldn’t it be with news that Wal-Mart is looking to install solar panels on its stores. This, my friends, is HUGE news. I’m still positive on STP even at these high levels, as it will benefit even if Wal-Mart goes elsewhere for their panels.

Once the viability of Solar is proven by the world’s largest company, a revolution of sorts will likely follow. Can you honestly see other companies not adapting? Wal-Mart is not doing this to be eco-friendly; they want to save on the energy bill, while getting some good PR. Again, who wouldn’t?

You can’t look at the price of STP and say to yourself “I’ll wait for a pullback,” But it’s on a roll right now and momentum might make you miss out. Maybe it does pull back a few points and you can scold me for my insistency to get in now, But either way this stock will be above 45 by year end.

As explained in previous articles, STP has the lowest forward P/E for solar stocks, around 60, giving the stock room to run toward the norm for solar of 100. It also has the cheapest labor, giving high profit margins and extra cash to spend on research and development. Finally, with a 10 year contract for silicon, STP is ready for the future.

As a side note, I’m very happy with the way our stocks have been treating us. To track the performance on Whammies better, I created a simple spreadsheet and I will give a portfolio update at the end of each month.

Trade carefully.
-Chris

SanDisk & Updates

2007-01-09T09:29:00.000-08:00

SanDisk (SNDK) is one of my favorite picks right now. It's a new year, which means new products. Good ones, which use flash memory.

1. 32 Gig Solid-State Drive (SSD)
While 32 Gigs isn't much, the benefits of a flash-based drive outweigh the small size, especially for business use. These drives will be available for laptops for an additional $600. Yes, it's expensive, but valuable. Here are the benefits:

The drive consumes 40% the energy of a conventional hard drive, giving laptops 10% longer battery life.

The speed of applications will be dramatically increased.
"random read rate of 7,000 inputs/outputs per second (IOPS) for a 512 byte transfer, more than 100 times faster than most hard disk drives. Taking advantage of this performance, a laptop PC equipped with SanDisk SSD can boot Microsoft Windows Vista Enterprise in as little as 35 seconds. It also can achieve an average file access rate of 0.12 milliseconds, compared to 55 seconds and 19 milliseconds respectively for a laptop PC with a hard disk drive."

No matter what speed processor or how much memory a computer has, it is limited by the speed of a hard drive when loading applications. The SanDisk SSD removes this limitation.

Flash-based drives are much more reliable than conventional drives. Working as a computer technician, I have witnessed corrupt hard drives as being the most common problem people have with laptops. People will be willing to pay a premium for the security of knowing that their data will be safe. If consumers are willing to pay several hundreds of dollars for warranties, they will be willing to pay similar amounts to know that their information will be safe.

Although these drives are smaller than most laptop hard drives, you have to realize that most people (especially business users) will not fill 32 gigs worth of space. Most people pay for extra storage they will never use. College kids downloading DVDs will need more than 32 gigs, not people using computers for business use or the common user.

2. New MP3 Players
While everybody knows that Apple has a very solid grip on the portable audio market, we cannot forget that there are other players. SanDisk is able to produce MP3 players with similar features (minus iTunes) at a much lower cost, since they are the actual producers of the memory used. This vertical integration gives them an advantage in the market.

Sansa Express (pictured): This 1 gig music player has a screen, a built-in USB connector, is similar to size to the iPod Shuffle, and is only going to be $59. People who have less than 1 gig of music probably aren't committed to using solely iTunes as their music library, so the Sansa Express should be able to grab some good share in this market.

Their other MP3 players are also similar in size (although a bit bigger) to apple's models, but offer additional features at a much lower cost.

3. Flash USB drives & Memory Cards
This christmas season, flash USB drives were flying off the shelves. At the price they're at, everybody wants one. Many stores used SanDisk's USB drives as leader items to get people into the store during the holidays. This form of advertisement means that the retailers spent this money out of their own pockets.

4. The stock's valutaion
SanDisk got hit hard in the past year.
The PEG ratio, my favorite metric for measuring a stocks value, trades below 1 at 0.91.
The trailing P/E ratio is 24.5, compared to the industry average of 64.7.
Quarterly revenue growth (yoy) is 27.4% compared to the industry's lowly 8.50%
Operating margin is 19.4% compared to an industry 10%.

This company's ratios are clearly better than others in its industry, but it trades at a lower P/E. This isn't right.

Earnings come out January 30th. Watch for a rise going into earnings.
-Sam

Updates
01/08/07 SNDK @ 44.71. New bullish call.
10/31/06 EXP @ 40. Now @ 43 (7.5% Gain) Staying very bullish on this one. Great valuation and housing is coming back into a positive light.
10/15/06 DHIL @ 63. Now @ 87.19 (38% Gain) I recommend reducing. The CEO sold a bunch. It's risen very quickly, so it'd be best to take money off the table.

Updates on Current Stocks

2007-01-08T10:39:00.000-08:00

Amidst the turmoil of Motorola, communication equipment maker, Wireless Xcessories Group, has taken a very modest loss of 4% as opposed to 10% for MOT. This should mean something to you knowing the beta on XWG is much higher.

Either the light volume is creating inefficiencies (as the two should trade alike) or XWG simply has better growth prospects, being a much smaller company. I’m betting on the latter. The stock is showing some resolve, as it touched its current strong support of 2.7 and bounded back up. I’m optimistic that we will have at least a 20% profit on XWG by December.

STP is climbing up to a resistance, so either flip it short term and allow it to come down around 50DMA support, or relax, grab an iced tea, and know that STP will be even higher in a few weeks.

TINY is not playing by the books, I thought it would stay above 200DMA support, but instead it’s dropped a full point. Charts don’t look hot anymore, but the news on TINY is reason enough for me to commit a cardinal sin, and keep a stock with an ugly chart.

ONXX is trading exactly as I hoped; it is now slowing down at resistance in the high $11 range. Expect some indecision at this level.

Finally, GLW is getting unpredictable, as each technical indicator is telling a different story than the rest. It may be too late by the time a winner allows for prediction of price change.
-Chris

Happy New Year Indeed

2007-01-04T13:01:00.000-08:00

Before 2007 I sorted through some ugly charts of oil and metal stocks. I'm glad that I stayed out as both keep falling while drug stocks like AMGN and ONXX are doing well. Here's an article from The Street explaining why.

I obviously should have stayed short on Netflix rather than taking the quick profit, as the stock is starting to look like a shooting star.

Finally, STP took a 4% hit, allowing me a chance to get in. (I bought shares of STP for my personal portfolio today @ 32.63)
-Chris

Six Stocks for 2007

2007-01-02T13:32:00.000-08:00

First are the two stocks I’m bringing over into the New Year, STP and GLW.

(All Daily charts are six month, All Weekly charts are two year)

STP is one of the hottest stocks I’ve seen in awhile. As mentioned in previous articles, alternative energy will stay hot through 2008 as elections will probably go to the Democrats and a new environmentally conscious congress will give bigger tax breaks and incentives to businesses for clean energy.

Charts show the 50DMA crossing the 200DMA to the upside, which normally coincides with positive stock movement. There is also a healthy amount of supports.

GLW has a strong support right below 18, and the MACD is perfectly inverted. If the trend continues downward, expect a large jump after touching support around 17.7.

We also see a trend on the slow stochastic of 15 day low streaks, then jumps in the stock; we are currently at the end of another streak. (I own shares of GLW in my personal portfolio)

When you watch a stock for long enough it becomes predictable. XWG is a stock that I have profited from on more than one occasion, and I believe it’s that time again. Daily charts show a moderate inverse correlation on the MACD, but more importantly, it’s about to cross the 0 line. Add some volatility with a 50DMA right above the stock, and presto! Similar story on the weekly chart with an even better negativity on the MACD, and a 200WMA right above the stock. XWG is a bit more risky, but we're all young at heart, so live a little. (I will buy shares of XWG when the market opens tomorrow, pending a pre-market run-up or run-down)

We missed out on TINY a few months back when it shot from 9.5 and eventually touched 15. TINY is back down at 12, and I’m willing to bet the recent pull back was just profit taking, nothing more. There is a fairly good trend on the daily slow STO, as annotated with arrows, and I’ve added a box on the weekly chart to show where the stock price should be if it was trending with the MACD (The stock is a bit ahead of itself in the downward direction). With a fair 200WMA support beneath it, I’m giving this one the green light.

ONXX is getting some bad coverage in the media, with their recently nixed Phase III drug, Nexavar. I think investors overly thrashed the stock. I don’t like the three year down trend, and far be it for me to pick a bottom, but we do have a candlestick connoisseur’s doji star, coupled with a solid positive MACD. I like the opportunity but will cut this one free if it keeps falling. (I own shares of ONXX in my personal portfolio)

It’s time to bring back AMGN since we let it slide back to 68, and it’s near a trend line and 200DMA support. If it breaks below its 200DMA @ 65.76, I will probably sell right away, so keep that in mind.

Two stocks I’m watching are HRAY and NVT, I’m not convinced on either of the two, but if anything develops I’ll have an update.
Lets have a great year.

-Chris

My Picks in 2006

2006-12-29T18:44:00.000-08:00

Profit/Loss

RMD - 10% Gain
CHCI - 35% Gain
HAL - 11% Gain
HANS – 33% Gain
AMGN – 9% Gain
WTR – 11% Gain
CME – 0% Push
DXD – 16% Loss
NTDOY- 21% Gain
LZB – 12% Gain
NFLX – 12% Gain
SIRI – 12% Loss
STP – 13% Gain
GLW – 11% Loss

Average Profit/Loss: 9%
Average Loser: 13%
Average Gainer: 17%
Amount Correct: 71%

So, how am I supposed to calculate if I hit my goal of a 30% gain for the year? Well, I need to figure out the average turnover for each stock and multiply that by the average P/L for each stock, and I get a good estimation of what my picks brought in.

I don’t need to make the assumption of how many stocks were in my portfolio at any given time to account for the amount of money used, because there is always 100% investment at all times. I realize that this is not always true, but I need to simplify for obvious reasons.

(901 Cumulative Days Held) / (14 Stocks) = 64.36 Days Held on Average
(64.36 Average Days Held) / (155 Total Days Traded --I started late in July) = 2.4 Turnover Rate
(2.4 Turnover)*(9% Average Profit) = 21.6% Total Profit

Gain since July 28th (The start of this blog)
DJIA = 12%
S&P500 = 12%
My Picks = 21.6%

(155 Total Days Traded) / (360 Days per Year) = 2.32 Annualizing Factor
(2.32 Annualizing Factor) * (21.6% Total Profit) = 50.1% Annualized Gain

I wouldn’t have liked to sell GLW so soon, but I think it’s the only fair way to end the year. I will probably re-add it for a fresh start in 07’. There were a few areas where I could have improved, but overall I think I did well.

In my next post I will start my portfolio for 2007.
Happy New Year.
-Chris

One More Day

2006-12-28T21:17:00.000-08:00

The trading year ends tomorrow and I'm left with STP, SIRI, and the recently added GLW to my picks. STP is sitting on a 15% gain, SIRI a 12% loss, and GLW a quick 11% loss. I will close all three positions out tomorrow and start fresh in 2007.

In my next post I will review my trades for 2006.
-Chris

Two Thumbs Down

2006-12-22T14:35:00.000-08:00

Let go of Netflix shorts when markets re-open on Tuesday, 26th.

With four more days of trading until the new year, I'm rolling up my positions. I will re-evaluate my two stocks left and look for more, as I battle the idea that the market could finish at an all time high.

If you shorted Netflix when I suggested at 29.50 you would have a 12% gain. The stock is currently at 26.20 and sitting just above 200DMA support and 50WMA support.

I still think this is a stock to short, based on two simple facts:
1. Competitors are emerging from everywhere
2. Downloading is the future of rentals, not mailing

I would rather not lose money we've already made if NFLX gets a pop based on technicals. Bank the money and lets look forward to a great 2007.

Merry Christmas
-Chris

Ho Ho Hold on...

2006-12-13T10:20:00.000-08:00

Every now and again charts just don't work-- if they did, everybody would use them. Even after Corning re-affirmed fourth-quarter guidance, it broke through support and decided it wanted to hang around in the 19's. Normally I drop a stock that breaks a strong support, but GLW does not have enough flaws to make me drop it.

Assume the analyst at UBS is right and there will be a weaker demand for LCD monitors and big screens. Wall street will not care when they release Q4 numbers in January, and see potential growth. Charts still look pretty on the MACD side, so I will give GLW a month to cooperate. RSI is getting low, Slow STO is below 20, I don't see more short term free fall to come.

As a side note, STP could be looking to start a Cup-and-Handle. Lets cross our fingers and hope that Christmas comes on time.

Good luck to all of you and be careful, the DJIA charts still look UGLY.
-Chris

*edit* I caught this article after hours today on NFLX, which is the reason they took a 2.5% drop when the market closed.

Christmas Loves LCD's

2006-12-06T16:26:00.000-08:00

Buy Corning Incorporated (GLW). Not only does this holiday season look good for Liquid Crystal Displays, it also looks promising for a shortage in fiber-optics. Of course anybody who knows GLW could tell you that, but I have other reasons for suggesting the stock-- always technical.

Here on the daily chart one might suggest that GLW is below both 200 and 50 day resistances (mainly right below the 50). Although it could be a resistance for the stock, the plus side is that a stock close to a support/resistance invokes volatility. Add volatility to a stock that's crossing the zero line on its MACD, and you have a good possibility of a breakout upwards. I don't like the high SlowSTO, but perfect charts are hard to come by. Also, as annotated on the chart, there is a good support not too far away if the 50DMA buffers the stock.

Similar story on the weekly chart, a 50WMA resistance approaching while the MACD is ready to cross the zero line.

The risk/reward is excellent here, and I will be adding GLW to my personal portfolio tomorrow.

I hope you're all enjoying the holiday,
-Chris

Lazy Stocks Part II

2006-12-02T08:12:00.000-08:00

Take profits on La-Z-Boy (LZB) and sit tight as I scour the market for another stock. I hate to leave only 3 stocks in the portfolio, but I'm pretty sure we can get back into LZB at a higher price. If you shorted La-Z-Boy when I suggested at 13.29 you would have a 12% gain. The stock is currently at 11.85 and nearing some moderate support from it's uncorrelated MACD. I've been a bit busy lately, but I expect to find a gem to add to the list soon.

Have a great weekend.
-Chris

Time to sell Nintendo and DXD

2006-11-20T18:23:00.000-08:00

Take the good with the bad, and sell both positions today.

First off, Nintendo's hype is at its peak after its official launch ended today. I don't want to become victim of buy on the rumor sell on the news. Once we find out how great sales were with the initial launch, some investors may pull out. If you bought NTDOY when I suggested it at 23, you would have a 20.75% gain. The stock is currently at 27.75 with loads of momentum investors packed in. Sorry for the ugly Yahoo chart, but Stockcharts.com doesn't have ADR stocks listed.

Time to eat our loss on the UltraShort Dow30 (DXD). The Dow wont listen to reason and I don't have the time to sit on a position losing money. I'm throwing this sucker back in the pond and finding a better opportunity. If you bought DXD when I suggested at 69.5 you would have taken a 15.68% loss, as it now trades at 58.6. I still think we are overbought, but when so many people have money sitting on the sidelines and the market is the only place they want to put it, then your going to see a lot of people paying up for mediocrity.

Have a delicious Thanksgiving.
-Chris

Huge set of updates today!

2006-11-14T08:14:00.000-08:00

I’ve been loaded with exams and essays, but I’ve done a good amount of stock research today to do some portfolio adjustments. First, lets start with the stocks I want you to let go of.

Amgen (AMGN) has finally got something to step in the way of it’s mojo. With the democrats taking control of the house and senate, all channels of communication are saying, “Drug companies will take a hit.” Well thank you for your self fulfilling prophecy. Amgen has been slowly sliding a bit, so its time to lock in the gains. I suggested Amgen at 66 and it’s time to sell now at 72.05. I will send this one off with a 9% gain.

Aqua America (WTR) took a major jump in October, and things have gotten a bit more unpredictable lately. For the short term investor I am suggesting to lock in gains. I would NOT sell this stock if I was a long term investor. Aqua America has much room to grow, and the sell I’m suggesting today is for the trader only. I suggested WTR at 21.70 and it now trades at 24.15. Lock in this 11% gain.

Chicago Mercantile Exchange (CME) looked horrible from chartist’s perspective and sadly it still does. I can’t hold onto a short if investors don’t agree, and that seems to be the case. I suggested shorting CME on a day when the stock had a 30 point jump. This means you could have shorted the stock at the top of its range and made a profit, or got in too early and lost. I will call this one a push, even though I did end up shorting myself at 517 and the stock is now at 502. For records sake this stock has been a break-even 0% gain.

Now onto the good stuff, I found a new short sell to add to the portfolio, Netflix (NFLX). I have been waiting patiently for this stock to get high enough, and it finally has. Its last earnings report was a good one, but this shouldn’t last. The whole concept around Netflix is great. For a monthly fee, you get to receive DVDs through the mail without late fees. Wonderful if it weren’t so easily outdated. Let me give a few examples of new and future technology that will steal Netflix audience:

Handhelds like PSP are selling their own special DVDs
Microsoft will start selling hi-def through Xbox Live
Amazon.com will start selling downloadable movies
Apple is starting iTV in 2007 to download movies
Blockbuster’s TotalAccess is similar to NFLX but allows returns directly to stores

Even if Netflix started selling downloadable movies, the question you have to ask is “Can Netflix compete with Sony, Microsoft, Apple, Amazon, and Blockbuster?” My answer is no, not a chance.

Competitors aside, the charts look bad. This two-year chart shows a major resistance at 30, along with a lower MACD. I will be short selling Netflix in my personal portfolio.
-Chris

Stay Put For Now

2006-11-08T15:08:00.000-08:00

No trades today, the positions suggested are all set to win this winter; with the Democrats sweeping the elections, I’m staying with the DXD position to offset potential losses. Since my objective is to make a profitable portfolio, I don’t see a reason to add or drop any of my positions just yet since they are all doing fine (minus the DXD so far, which has been acting as an insurance stock). Happy trading, and good luck out there.

Checkout this article on the election and how it affects the market
-Chris

Things Cooling Off

2006-11-03T21:21:00.000-08:00

Time to take another look at the Dow. Charts show some bearish news, as the MACD has pulled back to levels from the 1st of October. I annotated with a dotted line where the stock price should be at. I like the fact that the Dow broke its mid Bollinger band line (previously it's support). But I don't believe that we will fall below the 50DMA. Too many bullish nuts out there.

STP is for me. There is no way around it, solar power is undervalued. This is one of the only types of power that will never go out of style. Coal emissions will only get more strict, Nuclear Plants are not wanted near cities, populations keep growing. I don't see a more viable clean, efficient, renewable energy source anywhere. Long term players should stock up on STP at these levels. The stock is about a point above the long standing support around 23. This is no time to go soft on solar. I would stock up on Monday if I didn't already today.
-Chris

Eagle Materials

2006-10-31T14:23:00.000-08:00

For the past few months I've had my eye on Eagle Materials (EXP). This company has taken a big hit down from its 52-week high. It has had a very pessimistic sentiment because of the decline of the housing bubble. Over the course of this stock's entire life, it has had great life. It wasn't until the past 9 months that it experienced a very large jump, which was followed by a similar decline.

EXP just released their earnings today, which were pretty close to being in line with expectations. More importantly, they gave guidance for FY '07. These numbers are above analysts expectations for the most part. This should bring a much needed increase in sentiment for the company. Already in after-hours trading, the stock is up 6%. This gives us an indicator on how the market views the earnings results.

EXP knows their business a lot better than any analyst could. Analysts will raise their estimates in the coming weeks in order to make it look like they know what they're doing. These raised estimates will give the stock even more momentum.

Positive earnings reports can have an effect on stocks for months to come. A market anomaly known as Post Earnings Announcement Drift (PEAD) often times occurs. PEAD is when a stock releases an earnings surprise and the stock proceeds to drift in the same direction for the next months to come. This should happen with EXP.

EXP has reached a low point where it has shown support. Heavy buying keeps it from falling below this level. Check out the latest insider transactions. They all show strength at these levels. At these levels, it makes me believe that there is more chance of upside than downside.

The valuation of this stock looks good as well
P/E: 10.38 for EXP , 13.78 for Industry
Qtrly Rev Growth (yoy): 26.9% for EXP , 15% for Industry
Operating Margins: 28.5% for EXP , 16.66% for Industry

Lower P/E, yet higher revenue growth year over year and high operating margins? Bargain.

Watch for the trend on this one to finally shift back to positive.
-Sam

Short-term Thoughts

2006-10-26T15:58:00.000-07:00

Amgen (AMGN) is nearing resistances so I would be a seller around 80. If you are long term, keep the stock. I just think it will be bouncing around those levels for enough time that the short-term trader could put their money elsewhere for a bit.

Suntech Power (STP) is showing some positive developments, as it has gotten above its 50DMA and has formed an attractive flag pattern. I illustrated its previous flag also.

Aqua America (WTR) is nearing resistance at its 50WMA, but has good MACD movement about to cross the zero line. Earnings come out on November 1st; the stock could get pushed down, but since most earnings have been good this quarter, I'm sticking with it.

Finally, I'm glad Sirius (SIRI) decided not to break it's only support. It gained over 5 percent today, hopefully not just a knee jerk.
-Chris

Toxic Shock

2006-10-23T18:33:00.000-07:00

After the Cameco screw up (CCJ), I have to advise selling Liberty Star Gold Corp (LBTS) which I suggested about a month ago for the risky investor. The disruption of uranium should allow a good price to take money off the table. Also the charts show some resistance ahead. If you bought when I suggested the stock at .62 you would have made 98% on your money.

I also suggested Glencairn Gold Corporation (GLE) at .58 and it is now at .51 and I would hold off on buying more if you picked it up. These two weren't added to the picks list since they are too risky for the average investor.
-Chris

Interest in Shorts

2006-10-22T21:28:00.000-07:00

Today I'll throw out a few stocks I'm looking at with interest. I haven't done my due diligence, so these are just ideas for those who are looking for oddball stocks.

Pre Paid Legal Services (PPD) has a short interest of 69.92%. This means that out of all shares held, about 70% are from investors who are short the stock. You could interpret this in two ways:

1. Investors are right, and this stock will take a tumble

2. The stock has been climbing so Short Interest Theory will take hold, pushing the stock higher.

To the right is a one year weekly chart showing the high SlowSTO trying to consolidate. Expect volitility.

Next, is a stock that I'm considering adding to my picks as a short sell candidate, Netflix (NFLX). It's short interest is al so high (although nowhere near PPD) at 22%. The mid-Bollinger band is looking to be its new resistance line; the 200WMA will be the real test. This is also a one year weekly chart.

Third is a stock we all love to hate, General Motors (GM). Short interest is a moderate 12% so don't look there for clues. The charts, however, show a short story worth of information.

From the beginning of the year GM has managed to climb all the way up to 33, but the past three months investors have been apprehensive about putting in new money. The problem is hovering above the 200WMA at 35. This line in the sand is a second strong resistance from a year ago that could send the stock right back down even if it crossed its 200WMA.

The daily chart is showing a lot of negative MACD correlation. The main thing keeping me from shorting GM is what could be construed to be a flag pattern on the weekly chart above.

I'm curious to see how these three will pan out. Time for some pumpkin pie.
-Chris

*Edit* Short Interest Theory holds true as PPD hits over 10% intra-day, NFLX reports good earnings causing shorts to panic upwards of 18% (afterhours included), and GM adds over 5%.

No, It’s Not Just Me

2006-10-18T08:52:00.000-07:00

After catching the first two hours of CNBC, it became clear that it’s not just me. All of the analysts booked to speak had a similar opinion; the Dow is being exuberantly irrational.

Talking head #1 told how his firm had the year end price of the Dow at 12,100; we touched within 50 points of this today.

Talking head #2 explained why he wouldn’t advise clients to put money in at this point, explaining that they would be chasing money that was already made (too little too late argument).

Talking head #3 enlightened viewers as to how the Dow is not factoring in everything from rate hikes to terrorism anymore.

Heck, even Jim Cramer is speaking to the fact that there are no shorts left, making at least a 200 point correction inevitable. Jim Cramer is being cautious?

So call me crazy when I confidently say that you should short the Dow, even if it’s only for 200 points. That’s four percent if you buy DXD, and any money is good money.

Yes, I was wrong about a double top in the Dow, but I’m not a stupid trader (although that’s debatable) my portfolio has been right overall, and I am not selling any DXD in my personal portfolio. Becomming even more overbought will make me liable to trade some puts in the Dow mini-futures.

Dear Stock Market,
Don't make me trade futures just yet.

-Chris

Updates Galore

2006-10-17T10:14:00.000-07:00

This morning the core PPI came out much hotter than expected at .06%, raising inflation concerns and burning the indices.

Chicago Mercantile Exchange
Big news today, as CME Bought the Chicago Board Of Trade for $8 Billion, making even the commentators on CNBC confused about how CME went up. As we all know, the acquirer usually drops, while the acquired jumps (The stock began up 6% and is now up 2%). We are slightly better than break-even on CME at this point and I am holding my short position because the charts still look bad.

Aqua America
Good price action has been going on as buying volume has been picking up. The stock is reaching near its 200DMA; I believe it will eventually get over the hump, but expect some testing and retesting at this level. The AP wrote this article yesterday on water companies.

La-Z-Boy
Last Thursday LZB cut the company’s earnings guidance by 10 cents per share . The stock shed a few points and we are now in business as far as the short trade is concerned.

Nintendo
This stock is showing a possible Cup-and-Handle pattern and with Sony’s recent screw-ups, Nintendo should be able to take some market share (or investor dollars) to keep its momentum this holiday season.

As a side note- Amgen reports on Monday, read the comments section of the last post for my thoughts.

Have a great week,
-Chris

Ready for a fresh new start?

2006-10-15T14:40:00.000-07:00

In order to bring more frequent postings and another perspective on the market, I’ve added a partner to Big Money, No Whammies. This person has an eye for detail, especially for IPO’s (I can remember him suggesting to me Volcom, Under Armour, and Crocs all at very profitable points).

He is known in the Business College of Central Michigan University for frequently winning Stock-Trak, the financial simulator for students to compete in the stock market (usually 300+ business students). After shorting Natural Gas Futures he is again at the top of the crop this year.

I wouldn’t have asked him to join the blog if he wasn’t smarter than me. I’ll stop now because you get the point, and I don’t want his head to get too big; so without further ado, Sam Scherf’s first posting starts now.

It's been plastered all over the media that the stock market has been reaching record highs. Regardless of if you're a believer in a bull or bear market, you can't deny that the market's getting more positive attention than usual.

When people see a boom, they want to jump in on the ride. For this reason, I decided to take a look at which investment advisers are doing well. Diamond Hill Investment Group Inc (DHIL) has caught my eye as a good catch.

Price
This is a company that has a quarterly revenue growth of 285% year over year. Their trailing P/E ratio is 25, making them below the average P/E of 27 for Regional Investment Brokers.

Economies of Scale
The company currently manages over $3.1 billion in assets. Last year at this time, they managed $1.15 billion. Financial service firms don't need to increase their costs by too much more when managing larger sums of money, yet will receive much larger commissions.

Stability
Although the stock has already had a huge (and justified) run up for this year, it's showing stability in its price. The company has shown consistent growth throughout its life, and the present should be no different.

The fundamentals of this company look strong. I would recommend this stock as one to hold on to for the long term. Investment management companies are showing no signs of slowing, and this pick shows promising attributes to take advantage of that trend.
-Sam

Come Back on Monday

2006-10-11T20:56:00.000-07:00

Nothing to see here folks, just riding out my portfolio through the week. Check back in on Monday morn'.

Notes Before the Open

2006-10-08T10:55:00.000-07:00

I’ll be sticking with the eight picks I currently have for a few weeks; I don’t intend to add or drop anything this month unless I see a clear imbalance. If a turnaround doesn’t occur soon, I will be seriously confounded and concerned. Here's a quick read for Monday.

Technical Issues:

I understand that Internet Explorer users can’t see the page correctly, so I’ll work on this to get things looking right. If you use Firefox like myself, then you should have no problem.

Also I received an E-mail on Nintendo, so I’ll reiterate that the Yahoo Finance quotes I use don’t allow ADR’s so Nintendo will not show up, but it is one of my picks.

Windy City Ready to Topple

2006-10-05T13:03:00.000-07:00

Today I found a short that I’m willing to endorse wholeheartedly. On Friday short sell Chicago Mercantile Exchange Holdings (CME).

I'm not merely suggesting CME because I believe that the stock market as a whole will drop, although this would hit CME extra hard. Quite simply, this stock has way too much room to fall.

As today’s article in Fortune Magazine states:

“The Merc's highflying share price makes us wonder whether there's a cheaper way to get exposure to the booming market for futures, options, and other financial esoterica. Goldman Sachs, for example, has transformed itself from a traditional investment bank devoting most of its resources to underwriting securities and advising on mergers into arguably the most sophisticated trading machine on Wall Street. Goldman's earnings growth over the past four quarters exceeds the Merc's -- 88% to 31% -- and yet Goldman's P/E is nine, compared with 48 for Chicago.”

Let’s see what the charts are telling us:

The daily chart shows two resistances lines just above the current price. Also the Slow STO has been high for too long, and will eventually follow suit as the arrows show. The RSI is getting too high but the MACD looks normal.

The weekly chart is more interesting (and as always, more important). The MACD has been sinking for almost six months, while the stock price has stubbornly been holding on. This never turns out well for the stock price and we will eventually see a reconciliation of the two. Finally, On balance volume is relativly lower as the stock goes higher.

If all of this technical gibberish means nothing to you, then by far the greatest argument that the CME is at or near a top is the sheer amount of shares sold by insiders. The Chief Technology Officer as well as the Chief Executive Officer sold half of their total shares last month. Directors, Officers, and members of the General Counsel are all selling. You don’t see this amount of insider selling in a short three month period very often.

Again, if you're not sold on the "hard landing" argument for the market, then at least stay away from CME.

Twilight Zone

2006-10-04T16:00:00.000-07:00

What a great run today; we closed the DJIA at 11,850. Patience is now my game plan; I will double down on my DJIA shorts if the daily RSI hits 80 or the weekly RSI touches 70. Either way our positions are well set for the 4th quarter.

I was watching as Sirius third quarter subscribers numbers came in above estimates for the 5th time.

"Sirius Satellite Radio, which is based in New York, says it added 441,101 subscribers to reach a total of 5.1 million for the third quarter, a 135% jump from year-ago levels. This came in above the average estimate from analysts of 418,000 new subscribers. The company reaffirmed its target of reaching 6.3 million subscribers by the end of the year."

Shares dropped 3% on this news? Looks like the XM Director resigning and BofA securities analyst comments spooked investors.

Aside from this, Lazy Boy gains 8% today on news that a board member is leaving and that they are getting sued.

I feel like I'm taking crazy pills.

Pulse of my Predictions

2006-10-01T20:03:00.000-07:00

Time to do a checkup and review of my suggestions.

SIRI – Buy on July 28^th
Price then: 4.03
Price now: 3.92

Very little price action here, Sirius is still waiting for holiday season I assume. I used the weekly chart because it shows the supports/resistances better. Also it gives a good picture of its rising MACD action. SIRI will have to trade with its MACD sooner or later; lucky for you if you haven’t had a chance to pick up shares yet, now is your opportunity.

DXD – Buy on July 31^st
Price then: 69.5
Price now: 64.7

I suggested this one as a hedge to make sure you’re not caught when the market drops. I’m still unwaveringly suggesting it. Some can call it stubborn, I’ll call it safe. DXD is now over 1/3 of my personal portfolio.

AMGN – Buy on August 15^th
Price then: 66
Price now: 71.53

Smooth sailing with Amgen. If you’re still iffy on this one, consider this: The stock is showing a pennant pattern, it has a new 200DMA support, and the 50DMA is ready to cross the 200DMA (technical jargon meaning the uptrend will continue). This is a triple threat if I’ve ever seen one.

STP – Buy on Aug 20^th
Price then: 30
Price now: 25.83

Suntech Power is down about 4 points since suggested. This is a volatile stock, and will likely pop back above its 50DMA soon. Last week showed a very large after hour trade when the stock went below 24. I’m wondering what institution/big money investor decided that the price was too cheap? Either way I agree.

NTDOY – Buy on Aug 9^th
Price then: 23
Price now: 25.85

Still soaring and it’s not even the holiday. Nintendo will continue to do well.

I’ll allow LZB and WTR some time since I suggested them so recently.
Overall not bad, It looks like I have more losers than winners but that's only because the stocks I've closed out are not included.

Here are my closed positions:
RMD - 10% Gain
CHCI - 35% Gain (or break even if you bought before earnings)
HAL - 11% Gain
HANS - 33% Gain

If I stop now, I would have six gainers out of nine, so I'm keeping pace at 2/3 correct. But of course amount correct means nothing if you have larger losses in trades that went the wrong way. In this case, the average loser is 8% while the average gainer is 18%.

So far, so good. I'll take another look at the big picture when the year is over.

Think Big, Invest Little

2006-09-27T22:41:00.000-07:00

Nanotechnology companies are comparable to biotechnology companies; unpredictable, risky, and able to spend billions of dollars with no end result. Don’t get me wrong, these sciences do create breakthroughs that are priceless to advancement in all areas of life, but the odds are usually against them.

You can double your money on a flip of a coin, but the odds are 50%. You can earn 50 times your money on a nanotech, but the odds are 1/20. Why not own all of the nanotechs, and forget about which one makes you the money? That’s exactly what the ETF PowerShares Lux Nanotech (PXN) does. By owning a basket of nanotechs, you can allow more than half of them to flop, and as long as just one makes a breakthrough, odds are you’ll profit with less risk. (Keep in mind the odds from the example were arbitrary)

Here is the list of PowerShares Lux Nanotech’s Top 10 holdings

Although I like PXN and I continue to watch nanotech companies with interest, I refuse to suggest buying either. When investing you can’t lose sight of the bigger picture, and I am adamant that we are too high on the DJIA. Unfortunately, nanotech companies will trade in sympathy with the market.

There are plenty of bulls right now who disagree that the market will take a hit; if you’re in that camp, go straight ahead and buy PXN. As for me, I’ll stick with my gut and wait until the “all clear”.

With the end of this months trading one day away, I am in the bear camp, believing that the strength in the past few days was mostly due to window dressing. Keep in mind skepticism is almost never a bad thing.

Here are some random articles on nanotech companies that I found of interest. Fool1 Fool2 Yahoo Forbes

Splish Splash

2006-09-26T07:45:00.000-07:00

I’m decidedly negative on the market, but I always have a positive bias when looking for stocks. After seeing an odd upgrade on a company I’ve been tracking for a few years, I took a closer look. Buy Aqua

America

(WTR) (around 21 if possible) if you want a good solid long term stock.

Why buy the largest water utilities company? UBS initiated WTR at a buy on September 22^nd, making five consecutive analysts buy signals since the stock dropped to its low this May.

Here is a map from the UN website showing projections for future clean water.
When the two most populated countries in the world have a hard time finding clean water, you have an opportunity to profit.

But wait, Aqua America is only in the

U.S.

so how can they supply

India

? This is true, and it gives me more reason to suggest the highest market cap water company. WTR will have enough capital to be able to grow into other countries when the time comes.

This all seems so far in the future, but to an investor’s retirement account 15-20 years is just right. Again I am suggesting this stock as a long term buy.

Lets take a look at the charts:

Daily-The stock price remains at 21.5 while the MACD has risen near the 0 line. A trend with the Slow STO is telling the stock to bounce at levels below 20.

Weekly- WTR has a 200 week MA at 18.5. This support level is too strong for WTR to fall below.

So what’s the drawback? The problem with most water companies are that they look overvalued. WTR has a PEG ratio over 2. Ouch. It seems investors have already come to the conclusion that water is a good investment. If you think that WTR needs to pull back before you buy, believe me when I say that this baby will bounce on its 200Week MA (if it actually drops to that level).

Lazy Stocks

2006-09-22T22:35:00.000-07:00

Can you smell the recession? Maybe a few more rally days, maybe not, either way things are turning sour and there is no denying it. A few traders are calling Amaranth the canary in the coal mine. (Amaranth is the hedge fund which announced this week that they lost investors 6 billion dollars)

Today I'll pick a company that has nowhere to go but down. It's been awhile since my last pick, so I've done some research on a nice short. On monday short sell La-Z-Boy Inc. (LZB).

Not only have they missed earnings estimates for a second quarter, they've gotten downgraded by a few analysts lately, and the charts look bad.

The stock has crossed below both of its DMA lines
MACD is crossing downward
RSI and Slow STO has room to move downward

Simple pick here folks, furniture is not going to suddenly start selling with americans on tighter and tighter budgets.

Good luck on Monday

Quickie

2006-09-20T09:35:00.000-07:00

Here we are, at that point where the double top is at its pinnacle. The high for the Dow in May was 11,675 and the equally crucial candlestick high was 11,642. Let the Dow hit these highs and let the reversal begin.

I’m sorry that today has little to do with the market, but I thought I would put out a quick F.Y.I. as I have been bogged down with homework, I have sold a couple of my positions, NBR & STP.

Both have excellent opportunities and I would still be in them if I could, but I needed to free some cash to purchase a tablet PC for school and business. I looked critically for a few weeks and finally picked the T4210 Tablet from Fujitsu.

I dropped NBR and STP because they were my longer term picks and I plan on staying more liquid. I still own NTDOY, DXD, AMGN, and SIRI.

Don't Take My Word For It

2006-09-17T19:15:00.000-07:00

With the talking heads beginning their countdown of the DJIA nearing record highs, I thought I would elaborate on my conviction of a drop in the market.

Here is a chart of the personal savings rate as recorded by the U.S. Department of Commerce. Granted, we have had a negative savings rate since mid-2005, but one has to wonder how long this can continue without affecting the market.
http://bea.gov/briefrm/saving.htm

Here is a chart showing the rise of non-mortgage household debt. Does it bother anybody else that the rise is parabolic?
St.LouisFed.Org

Here is the outlook of consumer spending (in the context of the housing market) courtesy of Comstock Partners Inc.
Comstockfunds.com

There is also some interesting talk about the VIX and its relatively recent (2 year) correlation with the DJIA. I’ve created a chart to show the inverse relationship. If this association continues, the DJIA is getting ready for a drop.

If you don’t plan on buying SDS or DXD to hedge against a possible drop, I would at least pull some consumer discretionary stocks off the table.

Have a great week.

Hello opportunity, my name is Chris

2006-09-13T16:26:00.000-07:00

As I wrote on my August 16th post referring to the DJIA , "We could be setting ourselves up for a double top." Feel free to look at this next picture and tell me what you see...

We couldn't have asked for a better setup,

A double top has formed

The MACD has a decidedly negative correlation

Volume is drying up as the stock keeps going higher

Using my three rules for trading from the post “Keep It Simple Stupid”

We have a great reason for buying the DXD; technicals show amazing potential, and fundamentals show a slowing economy with a flat yield curve.

I see no conflicts that aren’t already priced in.

Timeframe is short to medium term.

Finally oil can easily become the monkey wrench. Give us any kind of oil disruption: hurricanes, pipeline breaks, international disputes, etc. and we will see the DJIA get a kick in the teeth.

I plan on selling half of my position in NBR, and pushing two-thirds of my margin into DXD Tomorrow.

*Edit* Today I did just that, selling some NBR and picking up some DXD.

I love Gooooold!

2006-09-12T19:06:00.000-07:00

Gold is a commodity that everybody in the investment world seems to have an opinion about. Today I am giving out two excellent gold stocks. For those of you who like gold as an investment, buy Liberty Star Gold Corp (LBTS) and/or buy Glencairn Gold Corporation (GLE).

Both companies are small, risky, and full of opportunity. These two are smaller than any of my previous recommendations; they are micro-cap stocks. I will not be posting them onto the “picks section" (Yahoo quotes), as I am simply posting these two for the aggressive investor.

The time horizon for these two can be anywhere from short-term to long-term.

Here are the Charts for LBTS and GLE:

Time to Cover

2006-09-11T15:13:00.000-07:00

Halliburton (HAL) got the thrashing it deserved today, and saved my reader picks from a bad day. Time to cover, as this may be a double bottom, and it's daily MACD is not coorelating with its weekly anymore. If you shorted this stock where I suggested it about a month ago, you would have made a cool 11%.

Now that we've consolidated these past few days, I'm eagerly waiting for one last push out of the bulls, to 11,600 on the Dow Jones Industrail Average. If we keep going sideways or down, the pattern that has developed for the past four months may become useless. Let's hope for a bounce in the next day or two.

Money Where My Mouth Is

2006-09-07T09:19:00.000-07:00

Today I took the initiative to buy NTDOY. I suggested this stock on August 9th when it was at 23 and I'm buying now around 25. The stock could come back to 24, but waiting for it to come down a point didn't help in the last round, so why try now? The stock recently hit 26.5, and now it's back to a level where I feel safe getting in.

Again I will reiterate to Buy NTDOY, it has the future of gaming in it's pocket.

My positions are getting kicked around a bit, but if you positioned youself with enough DXD, as I keep suggesting, you should be doing just fine.
(Full disclosure: I bought shares of NTDOY on 09/07/06)

*edit* I found this article on SIRI that should tempt even the non-believers.

Getting Ready for Next Week

2006-09-06T06:53:00.000-07:00

Ready to add to my DXD position. I will double down on my DXD position today IF the DJIA breaks even, or better yet, goes positive. I believe the DJIA will make a correction soon enough that it seems pointless for me to wait and possibly miss out on the first day of cliff diving. The anniversary of September 11 is coming up and I wouldn't be surprised if we get a market shocking event. I hope I am wrong, but I wouldn't bet on it.

Always frustrating when a company takes a 13% gain the day you decide to buy it. As mentioned yesterday, I was doing my due diligence on LBTS. I take a break to grab a bite around two O'clock, get back, and see it has hopped above .85! I'll have to take a rain check.

Here's an update on my current positions:
NBR
STP
SIRI
DXD
AMGN

I recently sold UNH and NSRGY this week.

Tuesday E-mails

2006-09-05T05:57:00.000-07:00

Welcome back to the party, Hope you all had a great Labor Day.

An analysis on Boeing Co. (BA) was asked for. Either I keep getting some very unpredictable charts, or this market is getting troubling, my guess is a little bit of both. BA is showing the same symptoms of VLO. A consistent bounce when the weekly RSI touches 50, yet a terrible MACD correlation. I have no need to research further to tell you stay away, or if you trade options, make a straddle. I have an inclination that the stock will bounce but I'm not buying on a whim, nor should you.

Readers should know that if you bought Comstock Homebuilding Cos. Inc. (CHCI) on my recommendation I would suggest taking the money. Although I gave a long term view, recent facts on homebuilders are surfacing that tell me to change my mind. You would have a 35% profit if you bought after earnings or you would have broke even if you bought before.

Finally there is a small stock that I have my eyes on called Liberty Star Gold Corp. (LBTS) I still have some work to do on this one, but I just thought I'd throw it out there. It's uranium projects look promising.

Now that Labor Day is over, get ready for better volume.

E-mails galore

2006-08-31T08:24:00.000-07:00

In one of my e-mails I was asked about Embraer-Empresa Brasileira de Aeronáutica S.A. (ERJ). As can be assumed, it’s an aircraft maker based in Brazil. Usually I’ll stay away from aerospace, but this one looks promising. This is not a stock for the faint of heart, as no aerospace stock ever is, but with its latest positive earnings and yesterday’s deal with China's Hainan Airlines Co. we have plenty of catalysts to keep this one in the air. ERJ supplies many different countries allowing it to dodge the coming recession in the American markets. Charts look good, but it’s overextended. Allow it to come back down to 37.5 and if you like this one, hop aboard.

Good Ol’ Valero (VLO) This stock has been my biggest money maker of all time and I was asked for an analysis. Currently VLO is a chartist’s nightmare. As shown, there are two strong opposing trends. The stock is sitting on its 50 week moving average, which implies high volatility. If anybody trades options, I believe a straddle is in order. I have the bias that oil will hit $90 per barrel, so I can’t say to short this one, but buying seems unreasonable. VLO has its nearest support at 40, and its best support all the way down to 30. I’ll stick to the trends that are more consistent.

I will cherry pick from the stocks Andrey left in the comments since I still have more e-mails I need to get to, and I can’t do too many at a time unless I want to make a mistake.

I’m skipping World Wrestling Entertainment, Inc. (WWE), since they reported today. Again I’ll advise to never jump into a stock the day before earnings. Not even the professional analysts have a good handle on predicting earnings. If anybody got into WWE, hop on out for the short term because it’s already overextended (17.40 at the time of this writing).

Finally, Vical Incorporated (VICL) was suggested. I love the fact that insiders from the company are picking up shares. A few analysts like the company and it may have some good products in development, but it has no revenue generators yet. As we all know I currently own Amgen, but all biotech’s are not created equally. This is a high volatility stock with an average day of 4% change. You should not own VICL unless you can handle a big risk. Some may disagree, saying that VICL has licenses, partnerships, and XYZ product being developed but with a recession coming, a company without a product is a sitting duck.

Thanks for the stocks,
and again I hope this was helpful.

*Edit* I found this article that mentions AMGN as a recession proof stock.

Random Stock Analysis

2006-08-30T09:18:00.000-07:00

In these slower days near the end of summer, there are not many stocks out there enticing me, so today I’ve decided to entertain a few stocks thrown at me by a fellow trader at stockforlife.blogspot

If you have a stock you need analyzed, feel free to drop me an e-mail or add a comment.

Cabela’s (CAB) – I don’t like the outdoor retailers here, but with two strong supports this one might be considered for the longer term. There is not a lot of reward here short-to-medium term because most project this stock to reach 22 by Jan. The stock is nearing 20, so I’ve no interest. Also the Short % of float is 12.51, which tells us that volatility will make CAB’s moves unreliable. (As a technical trader reliability is key)

Cubic Corporation (CUB) - The charts on this one looked wonderful in November. Although the most recent quarter was excellent, we are dealing with a family owned company that has more potential than they will allow it. Erratic earnings and bad charts give me reason to think this is a short sell nominee; however this company is an obvious buyout candidate. CUB is below both of its 50 & 200 week moving averages. I would wait for a second good earnings announcement or a surprise catalyst before considering.

Abercrombie & Fitch Co. (ANF) – I was debating on this one mid August when it broke its 50DMA and sat on it for a week, but those of you who read this blog know I’m not one to buy a stock right before earnings. Earnings came out positive, and the stock is currently up around 63. I like the stock and think it can hit 70-75 by December. Personally, I’m not eager to get into retail with a recession coming, but this one will look fashionable if it comes back to 60 (its 200DMA).

Harris & Harris Group (TINY) – A venture capital group investing in the future of technology; “tiny technology”. I have to say I had never head of this group until it was suggested yesterday, and last night I did enough research to write a small book on this one. The charts look perfect and I’m taking a position! Well… at least that’s what I thought last night. Today they took a jump over 10%. Damn. I can only hope that traders sell it back down near its 50DMA around 10, and then I’ll give it another look.

Always looking for the next trade so feel free to drop a stock.
I hope this was helpful.

Few Updates

2006-08-29T05:55:00.000-07:00

Well I'm finally moved in, but my final year of school started yesterday. My Bachelor of Science in Business Administration is within reach, however, I'll have to slow down on the posts to keep the grades up.

I'll keep up to date on the important things. Also, I've added the Yahoo quotes so we can better track the stocks I've suggested.

Now back to the market,

STP bounced on the 50DMA as prescribed
AMGN broke through the 50DMA another happy note
SIRI is looking uneasy nearing resistance at it's 50DMA, I'm guessing a few days of turbulence, and then it can shake above it.
CHCI is doing wonderfully for a homebuilder in midst of the more recent turmoil in the builders
HAL seems to be immovable. I will be honest, this is my least confident pick but I still think it will fall.
DXD and SDS are on the backburner until the Dow Jones Industrial Average hits a double top, or until big money finally realizes that this recession will last more than a year.
Finally, I'm taking RMD off the watch list as it provided a nice gain, and I took it.

Happy trading

Keep It Simple Stupid

2006-08-25T12:19:00.000-07:00

When I started trading I thought I would beat the market with a complex valuation model.

I included everything I could. Technical factors, analyst opinions, I even used other valuation models into my own. Then I had it spit out a number 1 through 100, 100 being the best.

Every stock would spit out a number around 60. No stock ever stood out in my models. Analysts for the investment banks I used in my model would have "buy" or "outperform" ratings without reason. The analysts changed their minds sometimes monthly. There were no time lines to the investments suggested.

The problem with these services are time frame and reasoning. There are none. They don't tell us to "buy for this reason" or "sell at this point". The way I see it, they can just keep a buy rating on everything and sooner or later they will be right.

My own three rules for K.I.S.S.
1. Have a very good reason for buying a stock (technical/valuational & logical)
2. Make sure there are no conflicts (earnings, recent CEO departure, recalls, etc.)
3. Pick your timeframe (long-medium-short term)

Forget the analysts! As insider information is almost impossible to come by anymore, these guys no longer have a clue. They know just as much as you and I.
____________________________________________

Onward to money making. STP is ready to move up. This stock will most likely bounce on this 50DMA support line, and if not, the lowest it can go is 23. I don't know how to make this any more clear. Buy STP for the medium-long term. Barring any crazy anomalys, this stock is going higher.

So Far So Good

2006-08-23T09:44:00.000-07:00

I'll keep today’s post short and sweet.

The first pick of my blog, RMD finally reported earnings and gave just what I asked for. If you took a position in shorting this baby as I suggested, you would have made over 10% in three days. As of today I’m taking profits and saying to cover if you are still short. Although this one could go lower just like HANS did, I’m happy with my gain.

SIRI bounced back above its weekly 200DMA to my delight after riding the coattails of XMSR’s upgrade by Bear Stearns.

The market is consolidating, so don't think too hard about what is going on. As always I'll be searching for the winning picks. Happy Humpday.

The Future Looks Bright

2006-08-20T13:59:00.000-07:00

One of the biggest topics in America today is energy prices. So a logical long term investment includes renewable energy. Wind ethanol, geothermal, or solar: they are all useful. The question is which one will make you the most money. That being said, buy Suntech Power Holdings (STP) here's why,

1. Wind power companies don't seem viable as a safe investment since the government must give out incentives for these companies to be profitable.
2. Ethanol companies have been hyped recently, as many gas stations are now using the fuel. It will be a great renewable energy source, but the market needs to settle a bit, as investors have already profited here and valuations were a bit overdone.
3. Geothermal stocks are fine, but I don't think they will ever get the spotlight they deserve, because too many people don't understand the process. A congressman won't support an energy source that the public is uneducated about.

That's what this really comes down to. Our politicians will be the main supporters of alternative energy as Americans are finally getting fed up with high energy prices and global warming.

This is why I am suggesting solar energy. Solar stocks are off the high that we reached early this year, and are ready for another round.

Let’s look at the 3 most likely candidates:

ESLR– Forward P/E of -24.60 (yes they are still unprofitable). Recently the CEO sold about 1/5 of his shares. Ouch, I want my CEO buying more shares. Also due to research and development, ESLR had a larger loss than expected in its latest earnings report.

SPWR– Forward P/E of 106.10. Last week the CEO sold 2/3 of his shares. Again, ouch. Average earnings news here (for a solar stock).

STP– Forward P/E of 45.70. No sells yet by the CEO. STP Raised guidance a week ago. Also, they are extremely profitable as they are based in China, keeping their labor costs very low.

The biggest possible threat to solar power companies is a shortage of silicon, and STP decided to cover their bases by signing a 10 year contract with MEMC electronic materials in which they will provide silicon wafers. Nothing but positive articles here.

In no way am I saying that the other two solar companies mentioned are bad stocks to own, they will both probably do well. STP just looks like the best one to pick up. Once again buy STP and hold, as it should do well all the way though elections in 2008 (and probably further)

Snooping through the web the other day I found Barry Ritholtz’s blog, which gave some very interesting articles on the stock market. Check them out here and here.
Kudos Barry, for the excellent research.

(Full disclosure: I bought shares of STP on 03/17/06 and 12/7/06)

*Edit* Today looks perfect to buy them, as they started around 29.5.

Take Two and Call Me in the Morning

2006-08-16T17:26:00.001-07:00

I will be posting less regularly for about a week or two because I'm moving. After I'm all set in my new place, all will be back to normal.

Last post I finished by saying Buy Amgen, allow me to explain the trade. Amgen (AMGN) is the second largest biotechnology company in the world, so there wont be much volatility. When you get a stock with a market cap around 100 billion dollars, everything is usually priced into it already. This is why I prefer small to mid caps, but in this case the large size may help.

Daily Chart

Good spot on the Slow STO
Rising MACD
Yes, I see the stock is below the 50DMA but this will be broken

Weekly Chart

Bad MACD
200DMA support

Keep in mind, the 200DMA is the strongest support/resistance line for a stock. Amgen is coming back into favor as pundits like Jim Jubak and Jim Cramer have recently highlighted. (click on their names to read further)
_______________________________________________

Now on to the DJIA, something that it seems many technical traders are missing and what I mentioned earlier, is that we could be setting ourselves up for a double top. (marked by the dotted line at 11600)

I've shown how the DJIA had reacted whenever it's Slow STO gets above 150 in conjunction with it's RSI above 65. Each time it has dropped over 600 points. If we hit 11600 levels in the next week or so, this could play out again.

You could easily make the opposite point, when the Slow STO hits 20, the DJIA bounces, but what makes this shorting opportunity more promising is the 4 month double top which would develop.

Buying the DXD would be the obvious play if this pattern forms.

(Full disclosure: I bought shares of AMGN on 08/08/06)

The Waiting is the Hardest Part

2006-08-15T18:52:00.000-07:00

Biggest rally in two weeks, eh? With all of the bearish talk I've been making, you would think I'd be upset about this, but I'm not. My portfolio, which I outlined last week, is doing great. (Mostly thanks to STP my solar power company which reported earnings)

Core PPI was reported today, and unexpectedly fell .03%. This eased inflation fears, allowing the bulls to make another "Fed is done rally".

For those of you confused about all of this technical jargon on the economy, let me sum up the two things that are still moving the market:

Inflation- when the prices of goods go up. (due to an increase in available cash & credit)
Stagnation- when the economy's growth slows. (due to slower spending habits of consumers)
Stagflation- when the economy's growth slows while prices of goods are going up.

Stagflation is a problem because tools for directing the economy can't fix it.

Our economy is still slowing and we may switch into bear mode soon, which would create a hard landing. But some pundits like Jim Cramer have been predicting a soft landing. I've not heard anyone take the middle road on this issue, a mild stagflation that would allow the economy to slow, but still eek out a gain. I'm not convinced of anything yet.

Wall Street is trading on the data day-to-day so there is no long term trend yet.

The S&P500 is breaking a crucial level of 1280 to the upside, as the MACD crosses, and moves above the 0 line. This is good for the bulls, and makes me wonder if that double top around 1325 will take place. This being said, hold off on the DXD and SDS as the bulls may have some short term strength.

Wal-Mart (WMT) gave earnings today with its first year over year profit decline in 10 years. Their earnings call alluded to an unconfident full year guidance with concerns of high gas prices. If Wal-Mart isn't suggestive of the American economy, I don't know what is.

Tomorrow at 8:30Eastern Consumer Price Index (CPI) will be announced, so hold on for the bumpy ride. Wait for a clear longer term trend and stay in secular or defensive plays.

Here is an article on interest rates and the economy from the New York Times. (Don't read unless you're truly interested, as it is on the boring side)

Buy Amgen & Sirius. The risk/reward is just too good at these levels.

*Edit* Core CPI rose .02%, slightly positive for bulls. We are now at a 25% chance of a rate hike.

One of These Things Just Doesn't Belong Here

2006-08-14T19:26:00.000-07:00

Don't own a stock that you wouldn't buy today. I've read this in many different books, in many different ways. The biggest folly of the amateur investor is holding losers too long and selling winners too soon.

This is the only time I will ever endorse the opposite. I've been holding Nabors Industries since the beginning of the new year, and all I have to say is: Watch me folly! I wouldn't buy it and I'm holding on. Sounds ridiculous to me too. In any case, today I'm suggesting to short sell Halliburton (HAL)

To get a good look at the overall oil services picture, lets look at Oil Services Holders (OIH). This is a collective trust of oil service stocks, basically like an index. This is its weekly chart

The three blue lines show a head and shoulders pattern (very negative)
The blue circle is the MACD crossing the 0 line (very negative)
Finally, the arrows in eccentricly happy green show bottoms in the slow stochastic (possibly positive)

Many people are shorting these OIH stocks, and for good reason, as stocks like Halliburton (HAL) are showing the worst charts of all. Here are the weekly and daily charts.

On BOTH the daily and weekly charts the stock has broken supports, creating an amazing amount of resistance lines. (50DMA, 200DMA, and trend line for the daily, 50DMA and trend line for the weekly)
The 50DMA is starting to cross over the 200DMA on the daily chart
Daily slow stochastics are overbought

Aside from charts, Halliburton has been having random troubles that could disrupt future earnings.

Now for Nabors, here is it's daily chart

NBR is sitting on its support (positive)
The MACD has just started to cross (negative)

Although I am a technical trader at heart, I can't drop this stock. Why? ALL 3 of the most respected investment research services have the highest possible rating for NBR . As always I can't go into further detail because these are subscription services. If you don't subscribe to any I always suggest you try one out, as most have free trials.

Also as a bonus, Jim Cramer is also very bullish on NBR.

The problem is that many oil service stocks should be moving downward, and the pressure could force Nabors downward in sympathy. As Sesame Street used to say "One of these things just doesn't belong here," and Nabors is it.

Hopefully groupthink won't force the good down with the bad. Short sell Halliburton (HAL)

Overview

2006-08-13T13:48:00.000-07:00

You can't make profits in stocks if you don't keep track of your positions, so lets not get lost. I'll go over all 6 of the stocks I've recommend so far.

RMD
Charts still look great to short sell this one, the only problem is that earnings are on the 17th, so I wouldn't pick it up. Patience is a virtue.

SIRI
No special news here, the prospects are still excellent, as always. The stock is at 3.78, setting right at it's Weekly 200DMA of 3.80. I am, however, getting nervous that it broke a very strong support at 3.90 as shown in the weekly chart. As I said from the start, this is a risky stock so I'm prepared. The MSN article is positive, while TheStreet takes a Yes/No/Maybe outlook.
MSN article
TheStreet article

DXD/SDS
The DJIA has dropped a little more than 100 points since I recommended it, I expect at least 300 more by the end of the month. Sill a good prospect here.

HANS
Ending coverage here, as I excited my position and suggested the same. Shorted around 42 and covered around 32. As shown, the stock reached 28.

CHCI
Well, it's back around 4, where I suggested it after an up 8% day. I've no problems in suggesting adding to this position for the long term. Unless anything big comes up on this one, I will stop tracking for awhile. Thomas Ko is still positive on CHCI in this article.
MSN article

NTDOY
As nobody has dissented with my views on this one, I feel the need for opposition. I found just that in an article by Michael Brush. He explains that video game companies are the ones to be buying for this 4th quarter.

While I don't disagree with the fact that game developers will do well, (I would recommend an ETF for video game makers if there was one) I believe that you will be much more safe in Nintendo. As Tero Kuittinen, of TheStreet.com puts it:

"Nintendo's share price has performed strongly over the summer, moving from $17 to $23 during the past six months. It's a fairly solid performance, considering how wobbly software companies like Electronic Arts and Activision have been during the same period."
Here is TheStreet article for that.

Gamers are picky about their games, don't get greedy and take the added risk of owning a single game maker.

The big picture right now is that the market should be going down in the near term.

Enjoy the rest of the day.

Searching For a Trend

2006-08-11T08:49:00.001-07:00

Did aerospace stocks rise yesterday after a near miss of an airline disaster!? While I’m scratching my head over that one, I'll catch you guys up on my thoughts of GOOG.

In a previous post I talked about the possibility of shorting GOOG and I wish I could say to jump in, but sadly I still can not recommend it. Although I really want to since the technicals are screaming SHORT!!!

4 strong resistance lines, the downward peaks resistance, the upward lows resistance (not shown), the 50DMA, and the 200DMA
The 50DMA is crossing the 200DMA, this type of sell signal is doubly bad, since the first crossover for a company usually follows through.

That being said, the problem is that Google keeps making deals with other companies and it's making the future earnings hard to evaluate. How much upside will they gain from their partnership with myspace.com? Could be more then we expect. Not only that, but the S&P (one of the only ratings systems I respect) recently upgraded GOOG from 3 stars to 4.

I’m going to hold off on this one as it nears a support at 365. If it breaks through, I may reconsider, but then again at that point it may be too late to join in.

Still no major trends showing in the market so if you're waiting to get into something, best stay defensive. As always I will update you guys on Sunday night,

Have fun this weekend!

BTW, this is a pic of a lounge inside the Googolplex (their corporate office)... What a place to work!

Wii Will Rock You

2006-08-09T11:25:00.000-07:00

What's the best way to make money? Find your competitive advantage. Being a college student, soon to graduate, I know something that most of wall street doesn't have a clue about. Video Games. Buy NTDOY,

Which Next gen console will win the battle between the Wii, Xbox360, and PS3?

Wii has four advantages over it's competitors.
1. The controllers are revolutionary with motion sensitivity and a TV controller look.
2. The games are meant for all audiences; yes I can see a 50 year old swinging the controller against a 10 year old in a round of tennis.
3. The cult classic games. Fun gameplay will always trump graphics. Who can wait for the new Duck Hunt or Mario Galaxy?
4. Price Wii Price: $200-250

These four components are shown when comparing Nintendo's handheld DS to Playstation's PSP.
1. The DS is a touch screen
2. The games are meant for all audiences (Brain Age)
3. The classics are here (New Super Mario, Mario Kart DS, Metroid Prime: Hunters)
4. Price $150 compared to PSP's $200

Needless to say, the DS handhelds are flying off the shelves (as explained in their last earnings summary. ) While the PSP has bombed.

Xbox360 released too soon, it's games turned out to be mediocre, and the system will be considered old news by Christmas time.
Xbox360 Price: $300-400

PS3 is a graphics powerhouse with tons of futuristic extras. Yes I could say that the PS3 also has a motion sensitive controller, but from the most recent reports it is merely a rip off, and not well utilized. (Basically just to say that they have it)
PS3 Price: $500-600

No that wasn't a typo. This is what will kill the PS3. Mom and dad will not shell out $500 for a PS3 this Christmas, when they could buy an Xbox360 AND a Wii for the same price.

PS3 fans will tout the HDTV, the Blu Ray discs, the (insert pointless added frill here). Xbox360 fans will mumble something about Halo. But when it all falls down, both of these systems are missing four crucial things.

I'm not charting this one, as it's not as reliable to do with an ADR. Buy NTDOY and hold through January. If you do, I guarantee this holiday season you'll be rockin' around the Christmas tree.

Nintendo is an ADR so you can't just trade it daily. Buy it at market when you think it will bounce, I'm thinking around 22.2 at it's 50DMA.

If you have the time checkout this link on the Wii.

Confidence Rating: 5/5

You Live, You Learn

2006-08-08T08:08:00.000-07:00

After a wreck of an earnings report, CHCI took a whammy that I didn't expect. I did think that their earnings would be dismal, but the size of the move afterwards surprised me. It was a SNAFU on my part to not warn everybody to wait until after earnings (or that they were reporting in the first place). I assume nobody took a position yet as I haven't gotten any hate mail (hah), but now is the time to get in. As a side note- I made a checklist for myself to go over before I recommend any new stock.

A long term position like this should be scaled into, unlike a trade, where you need an "all or nothing" attitude. If you have faith in CHCI, scale into this stock slowly and stop watching its daily movements because this is not a trade. All is well that ends well, and I have no doubt that CHCI will end well. With that said, my long term view holds true, we may have to wait for a catalyst for this little guy, but it will come in time.

I was snooping around MSN's finance page and found that Thomas Ko, the winner of CNBC's stock trading contest, has CHCI in his Strategy Lab portfolio.

(Full disclosure: I bought shares of CHCI on 08/08/06)

*Edit* I probably should say that the Fed decided to pause today, and the market went down on the news. Bad Omen?

Building the right Portfolio

2006-08-06T09:09:00.000-07:00

Buy CHCI,

Traders often go after quick risky plays with high volatility, but every once in awhile you stumble on a value play that you can't set aside. Comstock Homebuilding Co. is just that. Everybody should have some kind of secure long term stock in their portfolio, CHCI is a good one here's why,

This may seem counter intuitive to be buying a homebuilder when homebuilding has already peaked, and it has. But before writing off all homebuilding stocks, we need to understand the psychology of the market with technical analysis.

Here's the Weekly Chart

The stock is not trading with its MACD, a quick tell which led me to look at it's daily

Here's the Daily Chart

The Average Directional Index (ADX) shows a move below 40 to suggest that the current trend is coming to an end. A move above 20 would suggest the start of a new trend.

With the On-Balance Volume (OBV) increasing while the stock is leveling off, it shows that buyers are starting to accumulate the stock, possibly making this a good point to call a bottom.

Here again, the price is not playing along with it's MACD.

Let's appreciate the fact that every big money investor has already sold their homebuilding stocks. They knew to sell when things started getting choppy. We are looking at a stock with a P/E of 3.12 and a forward P/E of 3.70. The average P/E in the Residential Construction sector is 6.7! CHCI is not having any unusual problems to merit a P/E of half it's competitors.

To sum it up, CHCI has been cut in half in four months, the sellers are gone, and the gain/loss ratio is very high. Be patient and buy this one for the long term.

Confidence Rating: 5/5 Stars

*Edit* I covered my shares of HANS today, to make a quick four day gain of 33%

Headed for a Whammy

2006-08-04T08:27:00.000-07:00

How many rallies can we get from consensus of a rate hike stop? This upward movement will end and here's why,

With higher margins that will hurt companies, weak unemployment data, a weak housing market, and a slowing economy, we still keep going higher all because of the end of raising interest rates.

To all of the bulls out there I ask, what catalyst will there be after this FOMC meeting? I have changed the comments section so anybody can post now, and I would like to hear some opposition to my opinion or any thoughts on this.

I would like a long term bull market, I just don't see it as a viable outcome. Keep in mind that August and September have historically been the worst month for the S&P in the last 18 years.

I got a kick out of this cartoon, as it sums up my conviction.
If you own a high flyer, sell on the news.

I will add some stock ideas next post. I did end up shorting HANS yesterday, if it hits 35 I will cover, although it could go further this month.

I'm hoping the market surges higher, as it will create more opportunities for us to take advantage of.

Have a great weekend.

*Edit* The Dow is now flat for the day after hitting 90 early on. It seems traders must have taken a step back to look at the big picture. Also I found this article on Google today.

Quick Post

2006-08-03T10:34:00.000-07:00

I'll make this short and sweet today, since I'm backed up with things to do. I will elaborate tomorrow if I get a break.

It's not the end of the day but currently the DJIA broke a strong resistance. Fortunately it has 3 other resistances still above it. I will be doubling down on DXD if the DJIA hits 11,400.

HANS might be a good short depending on where it closes today (the higher the better). I planed on talking about shorting it today so I'm a little disgruntled that it's down 7% before I got the chance. I still think it's good to short because of its lack of supports. Also I'm debating on weather to short GOOG. If it reaches 390 again I might force myself.

The Fed reports on interest rates on Tuesday, August 8th. I don't know whether to root for it or against it, as half my stocks will like it and half will hate it, but I guess that's what diversification is all about.

These next five days will likely decide how the market trades for the rest of the year. Read The Kirk Report for today, as he makes a good point on the strange advance today.

Update on SIRI & Extra

2006-08-02T09:12:00.000-07:00

Unfortunately SIRI did not see a pop on earnings. Although it's earnings were good (missed by 2 cents on EPS, but had higher than expected revenue. Most important, they raised full year revenue and subscriber guidance) So why didn't we see a jump in the stock?

I hate playing the blame game, because there is no "out" for a bad stock picker, it's always his/her own fault. But let me try my best to explain what happened,

The day before Sirius reported Jim Cramer decided to have his biggest segment on XM Satellite Radio. Jim explained why he believes that XM will get bought out by Sirius. AHHHH!!! We all know that Cramer moves the market, and if you are new to this game, that the buying company goes down in price, while the bought company gets a boost. In all fairness, the very next day when it reported, Cramer talked about how Sirius shouldn't have traded so somber.

I still think his convincing idea that Sirius would buy XM trumped the data. I can't make an educated guess on a buyout, but I will say that XM has a history of stubbornness and Mel Karmazin, CEO of Sirius, has said he is not actively looking to buy XM.

Regardless of what happened in the immediate term, it is August and I plan on holding Sirius through December. As explained in my previous article, the last few months of the year are best for satellite radio. As long as it stays above it's 200DMA on the weekly chart at 3.79, I won't get itchy on the trigger finger.
________________________________________________________

Aside from Sirius,
It feels like fun today. Hurricane Chris is getting closer, natural gas is shooting through the roof, and my stocks are doing well. I'll take this chance to go over my current portfolio:

(UNH) UnitedHealth Group- Diversified health care company
(STP) SuntechPower Holdings- Solar power maker in China
(NBR) Nabors Industries - Oil & gas driller
(AMGN) Amgen- Biotech company
(NSRGY) Nestle- Food & beverage company (yes, the chocolatier)
(SIRI) Sirius Satellite Radio- The larger of the duopoly
(DXD) Ultra Short Dow30 Proshares- Previous article explains it

What makes this is a good portfolio?
Based on my belief (and many others) that the stock market will go into a recession, I have concentrated into two types of stocks: (Aside from SIRI, which is tagging along for fun)
Defensive stocks- UNH, AMGN, NSRGY, & DXD
Energy stocks- NBR & STP

These types of stocks should pull their weight no matter how the market plays out.

No trade ideas for today, except to pick up some extra DXD or SDS as the market goes higher these just get cheaper.

Happy Trading!

Market Matters

2006-07-31T17:33:00.000-07:00

Buy DXD and SDS,
These 2 ETF's will save your portfolio. Let me start explaining why by giving my opinion on the stock market. (see picture)

I have to say that I agree with what most of the talking heads are saying about the market. Let me drop a few links before I continue.

http://www.investors.com/

http://www.financialsense.com/

http://articles.moneycentral.msn.com/

http://www.thekirkreport.com/

well, that's the tip of the iceberg and I'm sorry to say that I can't post the best articles, since they are paid subscription services. If you do have a subscription to Barrons, TheWallStreetJournal, or Investors Business Daily then you can connect the dots yourself.

Onward to charts: Weekly Chart of DJIA

This is a 3 year chart showing a divergence on the peaks, while the bottoms are a bit more neutral
The MACD at the tail end of this chart shows a good possibility that it will soon cross the 0 line.

Daily Chart of DJIA

A resistance line is right above the current price
The Slow Stochastic shows a clear trend. As you can see each time it crosses that 80% threshold, the index dives.

This promising daily trend is what I believe will end up pushing the weekly MACD to cross the 0 line. So aside from charts, what else do we have that could throw a wrench into the cogs of our slowing economy?

Rising Oil prices
Avian Flu Pandemic
Iraq War
Israel-Hezbollah War
ANOTHER Rate Hike (probably not likely)
End of Housing ATM
Hurricanes

So what do you do when you believe the market is going to turn sour? Well some genius came up with the idea of an ETF that short sells the Dow Jones 30 and another that shorts the S&P500 index. Not only that, but the two ETF's double the volatility. What does that mean for you? Double the profits. (or double the losses)
ie: If the DJIA goes down 1% on the day, the DXD would go up 2% that same day.

This is an excellent tool to hedge your portfolio against the risk of a fall.

Worst case scenario: The DJIA gets positive again and surges to 11600, forming a double top that no investor would touch considering that the % return consensus on the DJIA this year is in the single digits. If that did happen, it would likely come right back down very quickly.

These "double inverse ETF's" are brand spankin' new, and have been out for 14 days. Use with care, however, because they are more volatile. Buy the UltraShort Dow 30 ProShares and/or Buy the UltraShort S&P500 ProShares.

Confidence Rating: 4/5 Stars
(Full disclosure: I will buy shares of DXD tomorrow)

Taking Risk Siriusly

2006-07-28T10:33:00.000-07:00

Buy SIRI,
either today or on Monday. The company reports earnings on August 1st, and this is one of the only times a chartist will say buy before an earnings report. Sound risky? Not as much as you might think and here's why,

2 year Weekly Chart for SIRI:

First, we have a negative MACD correlation, the stock should actually be trading around 4.5, which is above the daily 50DMA

Second, there is a very strong 200DMA support which is doubled up by a support line from October of 04' when the stock saw resistance at 4.0

Aside from charts, the important thing here is that XM Satellite Radio, Sirius's competitor just released earnings two days ago. How did they do? Horrible. They missed estimates by 17 cents and guided downward. How did the stock react? Up 20% in two days.

Both stocks are down about 50% this year, and my bet is that all the smart big money investors had already priced the bad news into the stock. They knew XM would miss, and they know that SIRI will miss also. All of the sellers for these stocks are gone. I don't think that the same investors who rewarded XMSR for bad earnings will change their minds for SIRI. Also the trading programs these guys use will have buys in at the 200DMA, not allowing the stock to cross it.

XM & SIRI have a history of downward pressure until late summer only to increase in price and peak early in December.

Don't miss out on this easy trade.

Confidence Rating: 4/5 Stars
(Full disclosure: I bought shares of SIRI on 07/08/06)

Medical Money

2006-07-27T17:50:00.000-07:00

Ok, let’s break this baby in. RMD a mid cap medical equipment maker. This could be an excellent stock to short, and here'’s why: The WEEKLY CHART

Stocks should trade with their MACD. The long blue line shows a big discrepancy. The MACD has been flat, the stock has doubled

The long purple line is the trend line, which the stock recently broke

The shorter blue line shows a more recent negative MACD correlation

(excuse the pixelated chart, I'm still working on how to fix it)

To save space and time I will refrain from showing the Daily chart, but it agrees with the weekly. Also, remember that the weekly chart is more important for a divergence this big.

I will give a few short opinions from analysts.

#1
3 Star Rating
High Risk
3 Star Value

#2
Opinion: AVOID - Date 07/17/06

#3
Value: RMD has a Value of $38.90 per share. It is overvalued compared to its Price of $45.47 per share.

#4
Financial Alerts:
6/26/06 RMD's P/E ratio well above industry average.

#5
Insider Trading: The COO sold almost all of his stock
http://moneycentral.msn.com/investor/invsub/insider/trans.asp?Symbol=RMD

The company reports earnings on Aug 17 so I would try to avoid holding the stock through earnings, since it did beat estimates by 5 cents last quarter. All in all, this should be an excellent Short Sell. If you want to be sure, give it some time to let it fully break the trend line.

Confidence Rating: 3/5 Stars

First Post

2006-07-27T15:41:00.000-07:00

Hey everyone

Here's my blog for opinions on stocks, market research, and technical trading. I will give my thoughts on what is affecting the stock market, how we can make money on it, and what the rest of wallstreet thinks.

Why should you believe anything I write about? You shouldn't. As Jim Cramer says "you should always do your own homework first." But for credibility sake, I made a 30% rate of return last year, and I'm on track to do it again this year. I do constant research, reading many hours of investment articles each day; and I constantly study chart patterns.

So with all of that said, Big Money, No Whammies
Let's make some money!