Wednesday, January 18, 2012

Why Would I Buy?

This week is flying by as work continues to be extra busy. The AFC title game fast approaches.

Why Would I Buy?
I am going to skip the charts and related stuff. It's a difficult time right now to trade, not because things are NOT working but because things ARE working and that has not been seen in some time.

I opened long positions in 4 stocks today (NXTM, ANSS, CRESY, INTU; charts were up last night) even though there are a few indicators I follow that are flashing warning signs. Why would I do that?

Is this the cusp of a great new bull run to new highs? Is it different this time in regards to debt problems?

I really don't know. What I do know are two things.

One:
Over the past few weeks screens I have run have been returning winners. And I don't mean 1-3% movers here, I mean chunky grabs of over 7% and some big ones (holding time around 4-10 days). I have not seen that in a long time. I usually don't play some of the more aggressive stuff (solars, chinese burritos) so this move has included all kinds of stocks. Individual stock action has been null and void for some time. Now even as indices or sectors move down, other names and places are holding or being bought. I view this as favorable for trading individual names.

Two:
I have seen markets over the years run much further than I would have thought. Much further. Most of them have all started this very way. The December 2010 - early February 2011 run comes to mind. I don't know if this run will be as far or as large but it's moving now.

I think that if we are going to see a correction I will see that happening as my screens fail to return good looking set ups and my positions start to reverse and break down. It's harder for me to have a real feel for the tape if I am not in any positions at all. I am not over committed to the market here, but I am carrying enough spots to get exposure to the action.

Inflection points are very difficult to both see and accept. I was leaning pretty skeptical on this run but now I am more neutral. Of course that's also when tops form, the last few skeptics slide on over to optimistic. If I am wrong I imagine I am going to know in short order, my stops are set pretty tight. If I am right there could be a bunch more time to play good setups and trade this market. Right here, to me, it's worth a shot.

Have a good night.

6 comments:

GawainsGhost said...

Want to know how my day went?

Well, I got a new assignment from Uncle Freddie. The research on this one took some time, because the house is no longer in the data bases under the previous owner's name. Of course not, that would make my life simple and easy.

Anyway, I finally found the information. That's what creative research will do for you. I drove to the house.

Oh, my God, are you kidding me? Overgrown lawn, filthy pool, the house hadn't even been cleaned! There was actually a bar of soap on the kitchen countertop.

There was also a sign in the front yard. Okay, so this house has been previously listed by somebody. I wrote down the information, then returned home to continue my research.

Is this house on MLS? Nope, not in McAllen. Oh, that's because the listing agent is in Harlingen. Good grief.

Now, I want you to think about this for a moment. You want to sell a house. Would you contract with a realtor in another county 50 miles away?

This stupid realtor, who does she know in McAllen? Does she have a maintenance crew? Does she have a pool repairman? Does she know any contractors, electricians, plumbers, a/c repairmen? No.

So, this stupid realtor does what? She drives 50 miles, sticks a sign in the ground, doesn't even bother to list the property in the local market, and lets the house rot. It's been on the market for over a year.

No one is going to buy this house, not in its current condition. So now it's my mess to clean up.

Okay, so call some guys, clean the house, mow the lawn, fix the pool, find out if there are any other repairs that need to be made, turn on the electricity and the water, then put the house on MLS in the local market so realtors know it's for sale. What, do you think people drive around looking for a for sale sign on a filthy house?

This is what I'm talking about. I go to these continuing education classes every year. These people, these stupid realtors, come up to me and say, "Wow, your company has a lot of listings. You sell a lot of properties." Yes, and . . .

"How do I get into the repo business?"

Well, you're going to need at least $50,000 up front. You need a maintenance crew, contractors, plumbers, electricians, a/c repairmen, pool cleaners, etc. You have to pay those people. You will be reimbursed, eventually. But you only get paid when the house sells, after closing and funding. That shuts them up real quick.

Nobody, except some insane investor with a lot of money to waste, is going to buy a distressed home. This is reality. Get used to it.

By the way, do you really think it's any different with stocks?

Do your research, prepare accordingly, and have enough capital to spare.

GawainsGhost said...

Want to know how my day went?

Well, I got a new assignment from Uncle Freddie. The research on this one took some time, because the house is no longer in the data bases under the previous owner's name. Of course not, that would make my life simple and easy.

Anyway, I finally found the information. That's what creative research will do for you. I drove to the house.

Oh, my God, are you kidding me? Overgrown lawn, filthy pool, the house hadn't even been cleaned! There was actually a bar of soap on the kitchen countertop.

There was also a sign in the front yard. Okay, so this house has been previously listed by somebody. I wrote down the information, then returned home to continue my research.

Is this house on MLS? Nope, not in McAllen. Oh, that's because the listing agent is in Harlingen. Good grief.

Now, I want you to think about this for a moment. You want to sell a house. Would you contract with a realtor in another county 50 miles away?

This stupid realtor, who does she know in McAllen? Does she have a maintenance crew? Does she have a pool repairman? Does she know any contractors, electricians, plumbers, a/c repairmen? No.

So, this stupid realtor does what? She drives 50 miles, sticks a sign in the ground, doesn't even bother to list the property in the local market, and lets the house rot. It's been on the market for over a year.

No one is going to buy this house, not in its current condition. So now it's my mess to clean up.

Okay, so call some guys, clean the house, mow the lawn, fix the pool, find out if there are any other repairs that need to be made, turn on the electricity and the water, then put the house on MLS in the local market so realtors know it's for sale. What, do you think people drive around looking for a for sale sign on a filthy house?

This is what I'm talking about. I go to these continuing education classes every year. These people, these stupid realtors, come up to me and say, "Wow, your company has a lot of listings. You sell a lot of properties." Yes, and . . .

"How do I get into the repo business?"

Well, you're going to need at least $50,000 up front. You need a maintenance crew, contractors, plumbers, electricians, a/c repairmen, pool cleaners, etc. You have to pay those people. You will be reimbursed, eventually. But you only get paid when the house sells, after closing and funding. That shuts them up real quick.

Nobody, except some insane investor with a lot of money to waste, is going to buy a distressed home. This is reality. Get used to it.

By the way, do you really think it's any different with stocks?

Do your research, prepare accordingly, and have enough capital to spare.

Sarie (@23aloha) said...

I've read that the bull rally begins to pull back when the last bear buys. Don't like chasing. Don't like being left behind, either. So here I sit in Quandry-ville.

Jennifer Hillier said...

Such interesting terms you use! "Chunky grabs" and "chinese burritos". They paint very colorful pictures in my non-market brain.

EconomicDisconnect said...

Aloha, I know how it feels!

Jennifer, yes I like to use the eye catching phrases.

QUALITY STOCKS UNDER 5 DOLLARS said...

Interesting