Thursday, February 10, 2011

How Will We Define a "Correction" in the Current Market?

Almost Friday! I need this one big time, been a long week. Be sure to get your request in for Friday Night, the cupboard has been bear for some time. I hope a friend of mine has a minute to select the opening song for the night, or anything else for that matter.

AMRC: Should I Play Earnings Lotto?
A little while ago I entered in a small position for the stock AMRC. They do energy saving stuff or some crap, when you are chart looking you have to ignore things like details. Anyways, it has gone no where since I bought it and I wanted to dump it for a small loss before their earnings set for February 17, which is next Thursday.

Maybe I am bored but I was leaning towards holding this stock in to earnings and playing Earnings Lotto! Just like last night, maybe lotto is in our blood! Either I can grab the bump up I was looking for (+10% or so) or I will get dusted for 20-30% on the downside. Great risk-reward setup! I will put up a poll (top left) and you can vote on it, though I may not actually do what the winning response is. Have at it!

Attack of the Killer Apps
Not quite "Attack of the Killer Tomatoes" or "Killer Clowns from Outerspace" but here it comes!

Leigh Drogen of Surfview Capital has to be the most dialed in writer I read on all things new tech. While I basically disagree with him on almost everything, I am an old fogey after all, I cannot argue that he sees trends way before they happen.

In a post today Drogen discusses the company Munchly and this is his description:
No More Waiting in Lines at the Stadium
You’re at the ballpark and you’ve just found your seat when that sweet smell of beer and hot dogs hits you smack in the face. You don’t stand a chance against it; your will to stick with that 2,500 calorie diet is toast. You’re about to make a run for the concession stand to stuff your face when your favorite player steps up to the plate with two on and two out. Either that hot dog is gonna wait, or you’re gonna miss the game.

The people at Munchly are about to solve your conundrum in a rather simple, but genius way.
Great hook! A little more:
In a matter of months, select sporting venues and movie theaters will begin a pilot program allowing patrons to order from concession stands with their smart phones. Certain venues will then deliver your grub to your seat, and some will alert you when your order has been filled so that you can run up and grab it. No more waiting on lines.

Yeah, I know, you want to throw a brick at your computer screen and scream, “Why didn’t I think of that!” Sorry, Greg Pelly and Andrew Tider, the co-founders of Munchly, beat you to it. I had a chance to view a demonstration of the Munchly application at the New York Tech Meetup earlier this month. Besides being hilarious with their routine, which is part demonstration, part comedy act, they basically had the room saying, “About damn time!”
You need to swing over and read the whole thing.

I have serious questions on the logistics of such a service. How many runners per seller stand will have to be available for every stadium? What will the wait time be? How much more will it cost? Alcohol sales will be an issue I think due to age verification laws and such. Call me a cynic but at a playoff game when you are NOT GOING to leave your seat, this thing just might fly. Plus, most people are crazy lazy so this may just work! Leave a comment here or over at Leighs site with your thoughts as I am super interested in what people think about this.

As an aside: I will call an App bubble when:
You are in a stall doing your business, notice there is no toilet paper, and in true "spare a square" fashion dial up your phone to get paper delivered to your stall location. Indeud.

How Will We Define a "Correction" in the Current Market?
I am running way late so another idea I was rolling around the past few days.

Call it "The Bernank" market; the "Generational Rally" market; the "Never Ending Story" market; or the "Buy the Fuc&ing Dip" market this baby is downright sick in the ascension higher. So what is a "correction" in such an atmosphere? I do not think many people have thought about this and it can pose problems if one should occur. I did not say "if and when" on purpose by the way.

Save for the run down last summer, this market has not moved lower at all for, well forever. What would a correction be as opposed to a dip?

Investopedia offers this:
What Does Correction Mean?
A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset.
So last summer meets the criteria roughly.

A dip I guess would be 1-3%.

Instead of getting caught up in what a correction vs a dip would be, I would point out that anything less than 10% is not going to scare anyone and this sets up a nasty dynamic.

Trading volume is ultra, mega low. All you perma bulls have to admit participation is limited at best, just go ahead and say it. Margin is very high however. Not a good mix.

I see an very real possibility for a major distribution move where markets may "correct" 10% with dumb money buying all the way and then a total rout occurring. This possibility is very real and I would not ignore it. What better way to stick it to the little guy once again, nice.

That said, now is not the time. Many are worried about QE 2 ending in the early summer, but I am not even worried until maybe next fall. We shall see.

Have a good night.


CT-Hilltopper said...

How about "Mary Jane's Last Dance" by Tom Petty and the Heartbreakers.

Good Times! LOL

getyourselfconnected said...

Oh WOW!!!!! A C-T sighting! I thought you were only caught on night vision camera in the Amazon!

Great to see you! I think your pick will make the show.

All my best dear.

GawainsGhost said...

Black Sabbath, "Rock 'n' Roll Doctor."

We all need a doctor now and then, and the best medicine is rock and roll.

The market corrects itself, always has, always will. Prices go up, prices go down, always have, always will. Hot money eats beta for lunch. Smart money dines on alpha.

As to your investment, do you hold it and hope for a profit? Or do you sell it now and take a loss?

Hard to say. There could be greater profit or loss in the future. However, you can't be worried about price fluctuations. Your only concern should be with fundamentals. If it's a strong company, stick with it. If it's a weak company, get out while you can.

You have to ride the wave. But you need a good surfboard.

Anonymous said...

Not sure what you are trying to say as I think you arent being clear on your definitions. You say what if it "corrected" and then a "total rout" occurred.

If so, that isnt a correction, is it? If there is a 10% move followed by a 20-40% move (i.e. total rout), that isnt a correction right?

Id be happy to opine if I understand what you are trying to get at.

getyourselfconnected said...

what I meant, and I agree it was not clear (sorry), was that even a 10% correction would not be respected in this market but viewed as a massive buying opportunity. At THAT point I can see a rout occurring because of the make up of the market at this point.

Dave in Denver said...

LOL - good one GYC:

I would think the Vietnam people would be more mad that their dong got smaller, but who knows

getyourselfconnected said...

Thanks Dave!

Anonymous said...

Get - OK, gotcha. So basically, the issue is, when the market starts to dip, how can you tell if its a correction versus the start of a full blown rout?

Unfortunately, you cant really be sure. Frustrating I know. Incidentally, thats why I dont like BTFD as a good investment policy - you have no idea if its a dip or a rout :)