Tuesday, January 31, 2012

The Story of the SS Republic

I had a very busy day today. Not much to say on markets, they continue to have good action under the surface while the indices take a pause. Amazon missing earnings may cause some jitters tomorrow. I made two buys in the late afternoon, will see how it goes.

The long rally of 2012 has some tension building in the finance universe so rather than mix it up there, a totally non market related tale tonight.

The Story of the SS Republic
I am a huge fan of stories of lost ships and treasure. The SS Republic delivers quite a tale.

The ship was built in 1853. Powered by steam engine and propulsion was done by two huge paddle wheels on the sides of the ship. Originally the given name was Tennessee.

Adventure? Check out this list:
-Part of first steamship service between NYC and Central America
-During the California Gold Rush, transported "49'ers" to the eastern shores of Panama and Nicaragua to travel to California's Sierra Nevada mountains
-Transported the last wave of mercenary soldiers in William Walkers rogue take over of Nicaragua, then brought the defeated back home
-Served the Vera Cruz, Mexico to New Orleans shipping lane

Quite a run already, but it gets better.

In New Orleans when the US Civil War broke out, the Confederate navy seized the ship and used it for blockade running. She was re-named the CSS Tennessee in 1861. When the Union forces took over New Orleans the ship was dubbed the USS Tennessee and was pout to use at the Battle of Mobile Bay in 1864.

In March 1865 the old ship was deemed to expensive to refit and was sold at auction. Now given the name SS Republic, the ship was used for the New York to New Orleans travel route from then on.

Gold and Silver Currency for Rebuilding the South
Leaving New York on October 18, 1865 the ship was loaded with passengers as well as a sizable amount of gold and silver coins meant for rebuilding the hard currency base in the south after transfer to New Orleans.

A strong hurricane off Georgia proved too much for the ship, from Wiki:
On the fifth day of her voyage, a hurricane off the coast of Georgia proved too strong for the ship. By evening, her hull was leaking so badly that the fire in the boiler was extinguished, and she stalled in heavy seas, taking on water faster than her crew and passengers could bail her. At 4 pm on October 25, 1865, she sank. The passengers and crew escaped in four lifeboats and a make-shift raft, but 40-foot seas throughout the night made keeping them afloat a serious challenge. It was not until two days later, on October 27 that the survivors, now desperate with thirst, were found by the sailing ship Horace Beals. On October 29, the steamer General Hooker had been sent to look for the Republic, and rendezvoused with Horace Beals. The passengers were transferred and taken to Charleston. Most of the passengers and crew survived, although several were lost on the raft before they could be rescued. All the coins were lost.
And that was that. Or was it?

Rediscovery and Recovery of the Coins
In 2003 the company Odyssey Marine Exploration (OMEX) was able to locate the wreck off Georgia in 1700 feet of water. OMEX uses historical study, side scan sonar arrays, and Bayesian search statistics to locate ships.

The side scan sonar made the two huge paddle wheels very clear to see (its hard in this picture, but it was clear):

The rover robot that OMEX uses to search the ship and recover coins took this picture of one of the wheels:
All told, nearly $75 million dollars in gold and silver coins were recovered at the wreck.

Now that is a tale!

Further reading:
Lost Gold of the Republic - Priit J. Vesilind

Full disclosure: I have a small position in OMEX from years ago that is still "underwater" (pun intended) and thus this tale is not investment advice or trying to get back to even, just find it very interesting.

Have a good night.

Monday, January 30, 2012

Technical Difficulties

Another Monday, I don't like them. Still, was a better Monday than usual.

Drive Profits Like You Stole Them
I always do most of my screening and chart work on Sundays to get ready for the week ahead. For shorter term trades I try and stick to a one week time frame. In the iBC trading room, the 12631, I work out ideas and post charts for discussion. Last night I had over 8 real candidates. The soft open today kept most of them from moving, but soon after the open one name was looking good and it was not even a pick of mine.

Sunday night I checked out Art of Tradings Trader Stewie's post:
10 New Setups To Watch Next Week
All nice looks but one stood out to me big time, ROVI. This chart just looked explosive. Here is my work up:
I was in this morning early as this stock stabilized fast. Then it took off. Hard.

I was trying to sell in the afternoon but my smart phone kept acting up and freezing. Was not a great feeling. I got it pushed through and closed the trade with a 5% gain for the day. Looking at the chart I would revisit this name with a close over $35, this could be a big runner.
(You can follow Stewie on Twitter; @Traderstewie)

Technical Difficulties
The open was pretty messy today but you had to figure it was going to get bought. I had a bunch of names to think about opening spots in, but they were hanging around and there seemed to be no hurry. Add to that I had a hot runner from the position above and technical difficulties with my phone all day and I mostly did nothing.

And that's fine.

As long as the market stops being a freak show of insanity, there is always plenty of time to trade. I have been banging the table for a few weeks about individual names performing better than they have in a while. Even Josh Brown was on CNBC (first clip in this series) talking about the same thing:
Media: Set-Up City

One name I like (it has SEX in the ticker!) is MSEX and it's still looking ready to roll:
I have plenty more.

It is still a favorable tape that will reward solid homework and set-up hunting. Until I see the names and set ups I am watching start to fail overall in large numbers, I will keep a lack of interest in broad market moves.

Have a good night.

Friday, January 27, 2012

Friday; It's What's for Dinner

Boston metro saw some crazy heavy rain today. It has cleared out and will be almost 50 degrees into Tuesday?! February may be a payback month.

Market Observations
This week saw three major market positives:
-Blow out earnings from Apple (AAPL).
-The Fed, while not opening up QE 3 directly, made it clear they want to see some inflation even if they have no idea where the hell it shows up.
-Facebook has moved up their IPO offering, all the way to next week.
That is quite a trio of fuses to light an already explosive looking market.

Because I am a skeptic at heart, I would wonder why Facebook is rushing this move so much. After a huge rally, are they worried it might reverse? I have no idea but file it under "suspect".

That said, next week may provide one of those rare opportunities to get long and be very confident. Market players will make very sure that IPO has a nice running environment. Seeing the Internet momo plays skyrocket late day makes me confident a run higher is at hand. All to place an IPO everyone can dump to make money. Nice.

Friday Night Entertainment
Because you worked hard all week and deserve a break.

Missing Ships and People
I love real mystery or tales of extreme situations. Always have. The great site iO9 has a collection of 10 tales that they think could make great science fiction novels:
10 Real-Life Lost Voyages That Would Make Amazing Science Fiction Novels
A couple selections:
-Roman Ninth Legion
-Percy Fawcette, whom have covered before. This will get movie treatment and I think I saw Brad Pitt will star.

There were also some great articles on iO9 this week about "Mitochondrial Eve" and how that data backs up the idea that humans evolved one time in one place in Africa then spread across the globe. Here is a graphic with years ago estimated and routes of human migration:
Way cool. Full disclosure: I do not write for iO9, nor have any relationship with them other than I think the site rocks and makes scientific stuff more easy to understand for non-scientists.

Picture Pages
Visual cues.

Smile Rabbit!:
photobomb that guy - Mom Always Liked You Best!
see more This is Photobomb

The old days:
funny pictures history - WORLD BEFORE CRAIGSLIST
see more Historic LOL
Never changes.

Film Clips
In case you need a movie idea.

Plenty of great horse centered films (Hidalgo, War Horse) but from my youth I always loved "The Black Stallion Returns" best of all:


If you have not seen the classic film "Used Cars" with Kurt Russell, well, you should:

The price (or rent?) is too damn high! Blame Bernanke.

Rock Blogging
Bringing the tunes since 2007.

Loyal reader Gawains was looking for some Steppenwolf and "Born to Be Wild" circa 1969 works!:

Good pick.

One of the hardest workers on charts and ideas on Twitter is G. Thomas Lackey and he puts so much effort in day and day out he needs a song break. He also knows engines and cars, which is cool beyond doubt. Here is Sublime and "Santeria":

You can follow him on Twitter via @gtlackey

My friend Arctic Gambino wanted The Black Keys and "Your Touch" and I have never heard this song, its wonderful! Bluesy and edgy:

LOVE IT!!! Follow him on Twitter as @a_bh_a

Not quite under the 1 year rule, but I was wanting some LA Guns and "Over the Edge":


I am in a sad mood so why not up the ante with "Love Hurts" from Nazareth:


Two songs to go.

Heavy time.Turn it up. White Zombie and "Thunder Kiss 65":


Last call.

Close the show with Heart and "Alone":

Fitting.

Have a good night.

Thursday, January 26, 2012

Best of the Web Thursday

Short post tonight.

Best of the Web Thursday
Markets saw some minimal losses today. Whether profit taking or other, it was needed if this is going to be a big run. I was so busy last night I had no time to really have a action list ready for today. It worked out as most names I have an eye on provided better entry points by day's end. I will do a full workup this weekend and be ready for next week.

Not one to leave you with no content though.

Why not check out the great Tumblr that Josh Brown (The Reformed Broker) and I co-author:
Things Apple is Worth More Than
Yes, it's back!

My man Jake of EconomPic had a great post on Leading Economic Indicators and some changes that were made. Please swing by and check it out, very important:
The New (And Improved) Leading Economic Indicators Shows Expansion

ChessNwine will keep you from getting too excited, long or short with a well thought out, reasoned take in his market recap for today:
Stock Market Recap 01/26/12

Robert Sinn (The Stock Sage) explains profit taking and has a great look at what subscribers get to see in his daily updates (Full disclosure, I am very happy to be one of the early adopters, excellent tool for trading) via the SMS service:
The Bulls Ring the Register

Good luck and remember it's Friday so get your requests in for Friday night.

Have a good night.

Wednesday, January 25, 2012

Reaction is Highly Exothermic

I was busy the second part of the day as some equipment went crazy, so I am a bit pressed for time tonight to get caught up and get some other things done.

Reaction is Highly Exothermic
When I wrote last night's post I had a feeling that the lift in markets was not just do to some wishful thinking and people holding their breathe. I figured some kind of change was on the way that would be seen as positive. I had hoped perhaps FED head Bernanke may want to reel in expectations in the face of high oil and a rising stock market, but nothing like that happened today.

The Thermite Reaction was initiated.

The FED statement was fairly tame, and my first reaction was "is that it?". It was later in the press conference that Bernanke made it clear, more easing is on the way and the FED has even gone greenlight on targeting inflation at 2%. Calculated Risk has a great rundown and you can see it here:
Analysis: Bernanke Paves the Way for QE 3

I would argue that the FED has lost their minds here. They cannot control WHERE cash will flow when prompted by such a policy and there is sure to be serious ramifications from this action going forward. The FED is always behind a curve and inflation may run well ahead of target before unemployment drops by a large margin, if at all. Unemployment is a structural problem, not a cyclical one, but the FED is still stuck in the past. Nothing can be done to stop them. No one really wants to. Sad, but it is what it is.

As is, the last 3 weeks have reminded me of another time and that was in the summer of 2010. In August the FED opened the door to QE2 at the Jackson Hole meeting and markets ran from there all the way to the actual implementation. A small correction happened in November, but it was not large. That run went all the way into February 2011. The whole way many, myself included, thought the run up was nuts and made no sense. Here is a daily chart look:
A million things are different now of course, but I get the same market feel at this point.

Greece is small, and it will take Portugal a while to get bad. It's an election year so the money and promises will be flowing for all kinds of things. The push from the FED today could result in a great trading market environment lasting weeks to a few months.

My plan is to stick with individual stocks. Play the best set ups with the best patterns and observe price action that way. The indices may fluctuate but the 100% correlated market has been broken up. If this is a huge fake out, it will be clear as more and more names start to fail trades.

Sentiment is running very hot here, and that can usually be a contrarian indicator. But nothings ever never, and nothings ever always. When the animal spirits are set loose, calling them back proves a difficult task.

Have a good night.

Tuesday, January 24, 2012

Explosive Ingredients

Amazingly it was 50 degrees here today and very sunny. It was almost like a spring day. Went for a walk and that was great in January.

Apple Blowout Earnings
Apple (AAPL) once again blew out the house on earnings. The numbers continue to be staggering, and growing. Even the most aggressive estimates I had seen were way off. 13 Billion in net income for past quarter and revenues grew to 46 Billion. You cannot even fathom such a thing.

Now it may be time to get re-acquainted with the excellent site, Things Apple is Worth More Than on Tumblr. I need to start making updates as Apple is now surging higher. Suggestions welcome anytime!

Explosive Ingredients
Thermite Reaction

Markets are running higher since mid December. Earnings have been good, and Apple just blew it up. Tomorrow the FED meets and will start their effort to be even more clear on their plans. It's an explosive mix.

Articles and rumors ran around in December that the FED was prepared to buy anywhere from 600 Billion to 1 Trillion more in mortgage backed securities in another round of QE. With markets running hot and oil still near $100 more QE may be a bit aggressive from the FED. That said measured inflation is still zero and there is Euro market drama in the wings. I do not discount that Boom Boom Bernanke may pull the trigger yet again in another effort to ignite animal spirits.

So is more FED buying priced in here or not? It's a close call, but I think there is a feeling that more help is on the way. At a minimum some kind of re-investment program like before (QE light) is in play. Anything else could set off a run higher that will have real legs. If the FED sticks with just keeping rates low until 2050 the market action from there is going to tell me a lot about how strong things are.

Have a good night.

Monday, January 23, 2012

Taking Profits, Cutting Losses

No, I still hate Mondays.

New England Patriots in Rematch with New York Giants
The New York football Giants beat a very good San Francisco team that made two major fumble errors in the game. The New England Patriots overcame numerous mistakes as the Baltimore Ravens missed a game tying field goal at the end of regulation.

And now it's the big Superbowl rematch. Just unreal.

Taking Profits, Cutting Losses
Last Tuesday I bought some stocks after screening and things were looking good overall coming into Monday. I closed all four positions today for various reasons. Two will highlight in tonight's blog. The other two were INTU (+1.2%) and ANSS (+4%). Nothing wrong with either name and I will revisit INTU for long term account, just grabbing some profits.

I had high hopes for the position in NXTM. Friday the stock was hit and this morning it started off ugly and went down fast from there. Having stops in place is always important and I was stopped out fast at around $18 for a -1.1% loss on the trade. It got worse from there with a big drop all day long. The move down retraced most of the good move up I was seeing. While it has not violated the hammer print on 1/12/12 there are many names moving well now and I saw no reason to hang around on this one:
Know your exits.

My last trade was CRESY and this one really worked out well. Traded to plan and expectations. Have to love when that happens!:
Breaking out of the triangle I had a target of $13 on this name and it overshot that a bit this morning. I closed the trade out for +10.5%.

Overall, markets needed a break today and I may stay in cash until I see what Boom Boom Bernanke has to say on Wednesday. There is also AAPL earnings tomorrow that can really affect things. Overall 2012 has been way more constructive than the last months of 2011.

Have a good night.

Friday, January 20, 2012

Options Expired Today, but Friday is an Easy Roll

It's Friday! It's NFL Championship Sunday! It's overwhelming to say the least.

Market Observations
I stayed long into the weekend, probably not the best idea ever. I recapped my stocks on Twitter so if you are not on there, you missed it.

One I want to point out has two MAJOR drawbacks so lets start there with CRESY:
-It's a smaller name at $650 million market cap and average daily volume runs at 150k shares a day.
-It's Argentinian, and I hate buying non-US stocks.
With those in mind it was strong look on an iBC screen I use and it has been bought very heavy in the later parts of the day. Volume was heavy today and a while back 3 million shares were bought up. Interesting:
Enough work!

Friday Night Entertainment
Another weekend is upon us.

Cowboy Record
I came across this great post over at Ptak Science Books which showed a record of an old era Cowboy and his experiences. It was a nice read, but a picture included just jumped out at me. I am assuming this is in New York and a Texas Cowboy is shown the huge city way long ago:
I was shocked how huge NYC was when I went and I am well aware of such things. How did this cowboy feel?

Fun with Images
The eyes see all. No kidding!

"Let me take you on a scenic cruise":
demotivational posters - SEEMS LEGIT
see more Very Demotivational

AWWW!:
funny pictures - Happy National Hugging Day!
see more Lolcats and funny pictures, and check out our Socially Awkward Penguin lolz!
Love the kitties!

Sports Clips
In honor of the huge football weekend I am running sports clips instead of film clips.

My man Robert Sinn (See his great blog here) was looking for an early Mike Tyson fight. The one that sprang to mind was Tyson vs Jesse Ferguson. In Troy, New York 1986 a young Tyson got a real test and answered big time in the 5th round, shattering Ferguson's nose and ending the fight (Ferguson would be DQ'd in 6th for holding). Skip to the 5:35 mark of this clip for the huge punches that finished it:

Body shot then uppercut with the right!

From last year, Kevin Harvick wins California and beat Johnson to do it. We were way short of title, but this was sweet:

NICE!

I love my Saints, but the 49ers, via Vernon Davis, were amazing in last weeks game. Catch all the angles in this video:

Hate it, but I do respect it.

Rock Blogging
Pump up the volume.

My good friend Jennifer Hillier has just moved in to a new place and is getting settled. After a huge move, its great to be in your own space. Let's go with Staind and "It's Been a While":


A great information source is on Twitter, @Arctic Gambino and he was looking for some White Stripes "7 Nation Army":

Like it.

Fellow 12631 member and twitter follow, @azulgrana_ wants Iron Maiden's classic "Run to the Hills" but I say only live:


Excellent request by Mr. Hebron (The Basis Point) and mad props for getting a StockTwits job! Ted Nugent and "Stranglehold":

Yes, thats sweet.

Two left.

HoobaStank and "The Reason":

For you.

Last call!

This song, if you give it a chance, can mean trading or writing or anything that you work hard for. Kenny Rogers with "She Believes in Me":


Have a good night.

Thursday, January 19, 2012

Punched in the Nose, Now What?

Had a busy but great day today. That's always good. 3 sleeps until NFL title games, are you ready?

Punched in the Nose, Now What?
Markets were getting that look like the old runs today, but some news on earnings may have been the monkey in the wrench (via John McClane in "Die Hard").

I am not going to recount all these things. Can the market take a punch here? This is why I have been long for the past week, to see what would happen after a low volume uptrend was met with some bad data.

So will the buyers step up, or will they run for the exits?

Will they be Tommy Bell, who lost a lopsided 15 round decision to the immortal Sugar Ray Robinson , taking a beating the whole way but standing strong, as Ray won the welterweight title but did not quit?:

or

Will the market and profit takers take one shot and collapse like Donald Curry against Mike McCallum? (skip to 1:00 mark):

We shall see.

Have a good night.

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.

Tuesday, January 17, 2012

Tuesday Charts

I had a LONG day at work and got home a bit late because it was, wait for it, raining ever so slightly! As such a little pressed for time so just a few thoughts and some charts.

Market Observations
I had plans to open up some longs today. I saw the huge gap up and figured I would wait until around lunch to see how the market was going. I was doing tons of work anyways. Overall markets weakened as the day went on almost closing out the entire gap up open.

Things have gotten a little extended here and a pullback would be very welcome to firm up some support in the SPX 1280-1295 range. I will post charts of some names I am looking at below, but again single stocks acted better than the indices today and that is an important market dynamic change. Should even a near term top be formed, as long as the names I am looking at are moving, who cares?

It's a very heavy earnings week and the banks have been terrible so far. Should that carry over and infect markets on any other poor reports in other sectors things could get more dangerous. I think keeping an eye on the better moving stocks will alert you to that being the case.

Charts
Here are the names I had worked on in the 12631 Trading Room Sunday night and I posted them at that time. Most looking good here (a couple really moved already, dang it!) but I did not like today's candle on TTEK and will have to review that idea going forward. Click any chart for larger view.

NXTM:

ANSS:

MWIV:

CRESY:

INTU:

Still looking at these stocks and will see what the week brings.

Have a good night.

Monday, January 16, 2012

Mondays Still Stink in 2012

I hate Mondays anyway, but today was a real mess. Having issues with several computers at work and no one seems to have any good ideas on how to fix them. Also was super busy all day. Add to this it was 5 degrees this morning and it's expected to snow/ice tomorrow morning, right at commute time, 2-3 inches. Yeah, that kind of start to week.

Market Observations
My idea that the indices had been showing signs of a top probably died last week. With all the downgrade news markets are not really reacting downward and that's another sign sentiment has changed. I still believe there is a bit too much hoping going on out there, but it's working.

I did a bunch of screens last night and in individual names there are plenty of attractive set ups. Here is one I found via iBC PPT screen, NXTM:
There is price history index wise to support the idea that a reasonable move up here is on the way, and it may take a little while.

In this S&P 500 chart I have annotated all the way back in late July and early August a few sessions where price was highly contested in a small range:
We all know price has memory, but does it run that far back? Sometimes, and the low volatility and tight price action as of late lends weight to a scenario where a slow grind up can happen. This will allow individual setups that can work time to get moving. So this may be the best swing trade environment since October. Started a while ago, but I missed it.

I really don't like index watching and it would be really refreshing to have a market of stocks here, not just the stock market all correlated and crap. I am looking to play some longs this week. You may want to sell all your longs at the open.....

Why Do People Bother?
While I was making dinner I clicked on a new Josh Brown post and I was disappointed in the topic. It sucks to work your butt off, provide the kind of content that has been missing for the regular investor on the street for years, interact with readers the whole way
and still get vitriol and insults from random people. From the article:
But none of that matters now. I guess I'm a target for misanthropes and those with too much time/anger on their hands. And it doesn't feel good.
In the past few weeks I've been assaulted online three times, having instigated none of it.
Hit the link for the full piece.

Josh does not need me or anyone to defend him, he can handle it. What annoys me is why do people even bother? If you want to sling insults and attack someone, what's the point? What can be gained?

Add to that, Josh is my friend. So this really makes me confused as I have seen how much he has helped me and many others over the years so this sort of thing makes me angry. Sadly, it's part of being out there and putting yourself and your work on display.

Have a good night.

Sunday, January 15, 2012

Great Football Weekend

What a show this weekend!

Great Football Weekend
Just some great action all weekend and maybe the best football game I have ever seen.

San Francisco 49ers 36, New Orleans Saints 32
My beloved Saints could not hold on to the football in the face of a brutal San Francisco defense. I have never seen so many great tackles and perfect hits as I did on Saturday. The Niners are well coached.

Even after 6 turnovers, the Saints grabbed the lead with just 1:30 to go or so. And then the 49ers made some magic happen. It was an epic tilt and I believe the best football game I have ever seen. I am disappointed the Saints lost, but you cannot take anything away from those Niners, tip of the hat.

New England Patriots 45, Denver Broncos 10
A nasty, angry, motivated Patriots team obliterated the Broncos. Tom Brady was in the zone and the game was over by the half. Even the defense looked reasonable!

Baltimore Ravens 20, Houston Texans 13
The Texans actually controlled this game, but made too many mistakes (recurring theme this weekend) to overcome. Ravens are so tough on defense, just a great unit.

New York Giants 37, Green Bay Packers 20
The big upset. Again, just too many fumbles and drops. Did anyone want to win this weekend? Bizarre. Giants D-line has that 2008 playoff run look.

Going to be a great Championship weekend.

US markets closed tomorrow, I am doing some work tonight and more tomorrow and will have commentary then.

Have a good night.

Friday, January 13, 2012

Friday has Been Upgraded to AAA

HUGE Saturday tomorrow! Saints vs 49ers first up and then the Patriots face the Broncos in the night game. My two favorites on the same day.

I am feeling pretty good and getting better. Won't matter tomorrow I am going to be jacked up no matter what.

Market Observations
I sold TZA today for a round trip of 0%. The drop I had been expecting based on topping candles never really came about. At this point confidence that a lasting bottom has been formed and a longer rally is on the way is running very high. Even the debt downgrades today had little impact (so far) on sentiment and prices. My argument for a pull back was based on candles, and this chart shows that when they happen, reversals usually happen quickly:
This action has been 4 days of hanging around so I give it less weight at this point. If this is a major top it's going to catch plenty very unaware. As no one owns a stock overnight I guess it won't matter anyway.

Friday Night Entertainment
Providing the lighter side of things since 2007.

Long time readers know my severe addiction to Wikipedia. One of the fun things I do every day, you may want to write this down, is click the "on this date" bar at the bottom right. An entire list of cool historical events comes up and today had a good one.

In 1968 Johnny Cash performed at Folsom State Prison. You may have seen the film "Walk the Line" that dramatized Cash's life. It's a classic album and doing the show said plenty about Johnny Cash:
Thanks Wikipedia!

Old Truck
Saw an old truck on the highway on the drive home and I could not place the year, it was clearly a Chevy. A little image searching and bingo! It was a 1951 Chevrolet 3100 pick up:
Not as nice as this picture, but it was in good shape. Get that thing in for the winter!

Picture Pages
Time to get your markers and your pencils.

These girls are the last untapped market for Lululemon (LULU):
party-fails-woo-girls-migrate-south-for-the-winter
see more After 12

I don't think that's going to work:
demotivational posters - I WAS SELF-PICTURING
see more Very Demotivational.
New Era. Comedy captures such things amazingly well I think

Film Clips
Rent them, stream them, or buy them in Hong Kong, but see them.

I loved S.E. Hinton's novel "The Outsiders" and I think the book was translated well into the film of the same name. All star cast and great performances. In this clip the greasers get ready for the final rumble and for all the lady readers there is eye candy, I am fair and balanced after all:


Revenge plus a great 50's tune? I am in! From "Christine", the death of Moochie:

Little bitty pretty one.....

Rock Blogging
The tunes are here.

My friend from Twitter @TSXSwingtrader is from Canadia so it's fitting for some Tom Cochrane and "Life is a Highway":

Thanks!

I had never heard this song and had no idea Ace was with another band, but my friend GtoToy sent this to me, Ace Frehley and "Rock Soldiers":

Wonderful! Thanks.

I had my 600th follower on Twitter tonight and while I believe quality is better than quantity it's amazing all the great people I get to interact with. Lucky #600 is @CanvasBTMargins and her request is "Someday" by The Strokes":

Good pick.

How about a live show of Faith No More and "Epic"?:

Sick.

Josh Brown was looking for a tune I know, and I hope he was not joking, here is Band of Horses with "The Marry Song":

Excellent selection.

If we can get back to a market that is not 100% correlated, this is what happens, "The Sultans of Swing" -trading via Dire Straits:


Last call! Grab a drink, a girl, the remote, whatever works.

Had it on many times, but I was thinking of it. "Joey" by Concrete Blonde:


Have a good night.

Thursday, January 12, 2012

Famous Short Squeezes

Still not 100%, but maybe 75% so its all good.

Market Observations
Not much has changed. Still have one position in TZA but should get stopped out tomorrow. Market and players are way too wild, but that can go on a long time. More on Sunday.

Famous Short Squeezes
2012 has been the year of the short squeezes so far. While short interest has fallen to multi-year lows in the indices, many names still have short positions that are out sized. When the shorts are gone, what happens? Not sure, but I am sure no one will be holding the bag.

Along those lines, here are some famous short squeezes both real and by extrapolation.

Bank of America:
The $5 level was such a sure thing and I think even my broke cousin had a short on. Two things, rules can be broken and nobody cares:

Why short when you can walk away? No idea.

Debacle? Yes that one.
VS.
I had forgotten this, but on Twitter @Reinman_MT was fast on the drop.
There was this:
Short sellers desperate to close their positions paid as much as 1,005 euros a share during the session following Sunday's news that there was less than 6 percent of VW voting stock still floating in the market.
At that price Volkswagen's voting stock was worth 296 billion euros ($370 billion), or more than the $343 billion market capitalization of Exxon Mobil
And it ended well:
Merckle's business interests came out on the wrong side of last year's short squeeze of Volkswagen. Rival Porsche silently cornered the market on Volkswagen shares, and when they revealed the extent of their stake, the price of Volkswagen stock shot up to levels that made it briefly the world's most valuable corporation. Many hedge funds who had bet against Volkswagen shares lost huge amounts of money, while Porsche made billions in profit.
Some comments from @Reinman_MT:
"I remember when this happened. Fascinated and horrified at the same time. Points out the risk of shorting very clearly. It's a tale that amateurs (and pros) who blindly short stocks should know. It's true guys; risk are unlimited."
Indeed. Thanks for the added value.

I had a few more but I am running out of gas. Still ill. Wanted to share those and know that short interest is at multi year lows so bag holders may not know who is who.

Have a good night.

Wednesday, January 11, 2012

Missed the Boat

I am feeling better but it's hard to tell while on antihistamines all day and night if it's the real deal. Will lighten up tomorrow and see. Still tired, but at least I can see and I am not sneezing all the time. Take what you can get.

Missed the Boat
I found the perfect clip to sum up my sentiments on the start of 2012. Pay attention to the poor kid at the front of the Banana Boat here, as he falls off then waves sadly back to the departed boat:

Perfect.

I was set to go for 2012 and had some good ideas to use. From the Freestockcharts scans using the iBC PPT Monday 1-2-12 (Most posted in the 12631 trading room):
Of course the entry price for most of those (especially TPC) was long gone when the market gapped up on Tuesday the 3rd.

In my year end "thoughtful" posts I put out a major rule I wanted to stick to and that was not to chase stocks when they are gapping up and when the overall market is running on the overbought cycle. This one change would have saved me quite a few losers last year and made a real performance difference.

And in the first few days of 2012, looks like near term that's a stupid rule.

It's always hard to square a more short term trading strategy with a longer term mentality. I struggle with it all the time. One of the number one reasons I opened up a trading account was to shorten time frames and capture fast evolving moves. It's the old man in me that gets in the way sometimes.

I think markets are overextended here and sentiment is running almost at an apex of ebullience (Now that's a word! Nerdy gangsta). But the market has been tricky and has thrown in enough small drops and sideways movement to lull the VIXX to sleep and keep overbought signals from going red. Short squeezes are the rage and after this run short interest is going to be about absent I would think.

My plan is to get stopped out (around -3.5%, still a bit off) in my TZA position or close it by Friday should no meaningful correction happen. I want to feel better as this sinus thing is killing my energy level. I will do a complete homework night on Sunday and come into next week fresh and ready to use market conditions as they present themselves. This may mean grabbing on tight to the leaving boat, or watching it move on but it's going to be by my choice and the rules that I am comfortable with.

Have a good night.

Tuesday, January 10, 2012

At Some Point, Will Need a New Playbook

Woke up this morning and my eyes were about swelled shut. Sinus pressure is bad! Had to take the day off and go the antihistamine route. Feeling a little better now.

At Some Point, Will Need a New Playbook
2012 has started very positive and markets are very happy. Across the board enticing setups are showing up and fear has taken a back seat. Sentiment is running heavily towards the bullish side and action has followed suit.

For the last 5 months of 2011 this has always been a spot to get skeptical and very light or even outright short. At some point this will change and the playbook will have to be updated with new ideas. chessNwine has an excellent recap video today that discusses what may happen going forward this year; a market that rewards the best set ups and stock picks instead of a mass risk on/risk off sort of thing. You can see the recap here.

Looking things over today I was faced with one of two decisions, open up some long positions even as things are extended here (the two indicators I follow Robert Sinn's SMS and the PPT Hybrid score) or use the same old play from the old playbook and take a shot at a short position. I chose the latter.

I bought TZA about 15 minutes before the market close. I did this for two reasons. One was the blog I wrote last night about the last gasp rally to S&P 500 1295 or so. The gap up today had that well in play. The second is that I am feeling pretty ill and it would be easier to manage one position than carry 2-4 positions especially around earnings season where you have to check across your stock buys industry in case there is news that affects your position.

In either case, it should be readily apparent what is going on should TZA continue to fall part here. If a sustained move up is on the way, I feel that there will be great room to the upside in many names and I can play it out going forward that way. Top picks are TTEK, DFS, and INTU.

Have a good night.

Monday, January 9, 2012

Final Push?

I have a full blown sinus issue today. Bad thing is I think it's a viral cold so maybe not much I can do but treat it the best I can. Eyes are pouring water and my sinuses feel like they will explode any second. As such I cannot concentrate much so just a quick post.

Final Push?
I don't have much to add to last night's post. This rally is getting very extended here. Everything seems very forced here and tired. Short squeezes, while dramatic, are not solid base formers and a name like MSFT running wild is a puzzling sort of thing.

I could be wrong. This could be THE change and it's off to the races for a few months. Like I said, if that is so there will be plenty of time to play.

A reversal at a number as clear as 128.0 for the $SPY may be too easy. I think a low volume push up to about $SPY 129.2-$129.4 will be the near term top should it get there. In chart form:
There were many things going on underneath the surface of the market today that also give me pause here.

Have a good night.

Sunday, January 8, 2012

Running a Little Hot

As I write this the Denver Broncos are holding a 20-13 lead over the Pittsburgh Steelers. No idea if they can hang on, but it would be a huge upset if they do!

I am moving in slow motion because I may have overdone the beers during last nights New Orleans Saints second half explosion and win over the Detroit Lions.

Running a Little Hot
I have been pretty suspect of the rally last week. Besides low volume, figured that was going to happen, the names running the hardest were some of the more beat down names with heavy short interest. Overall, short interest is at multi month lows, and the air pocket from the Tuesday gap up is a real weakness for the market should any drop happen. There's not much underneath holding things up. Add to all that the level of bullishness is very high.

I wrote a post last Sunday where I discussed keeping an eye on "safe" companies and sectors should money start coming out of them. I wrote:
It's natural and expected that in a move to a more aggressive stance on the market, money will be pulled from defensives and put to chase after other assets.....
If prices are dropping for BOTH the defensives and the general markets then you have to respect that as a strong signal. In no way has that slight blip been confirmed, but you need to be aware of it.

Up to date comparison charts are in order.

RAI vs S&P 500:
Weakness in the tobacco company RAI for sure, but if the S&P is topping this is not that great a thing.

Utility Index XLU vs S&P 500:
Again, seeing the same thing.

Another item to watch is when Biotech as an industry gets hot, it can mean it's late in a uptrend cycle. Now there has been a ton of news that has been supportive of the sector so one has to keep that in mind. Here is the Nasdaq Biotech index (^NBI) against the Nasdaq for the last 6 months:
Again, it's looking a little late in the run here by this measure by how much the biotech index is outpacing the overall Nasdaq.

It's my belief that some kind of correction is very close. I could be wrong, and if I am these charts above will change to show that a longer rally is at hand supported by money movement.

Have a good night.

Friday, January 6, 2012

Full Faith and Credit of Friday Night

First week back at work flew by. It does not even feel like a Friday to me. Let's see if I can fix that.

Market Observations
The market rally proved to be far more strong than I had thought it was going to be. I mentioned before that I missed my entries into some plays I wanted. Watched the whole week. As I have mentioned some things moved in new ways and old correlations left my view off center. Things could really be changing here, and the feel of the market was more like the 2010 run off the summer into the fall, just non stop upward motion. Will be worthwhile to monitor things early next week and be ready for anything.

Friday Night Entertainment
"Is this what they paid for? This is what they want!"- Jimmy Connors beating Krickstein at 1991 US Open

Poetry Corner
While I may seem like out of touch with the more artistic side of things, it's not so. I am a fan of all kinds of thing. One of my favorite poets was Edgar Arlington Robinson and his sad tale of a man who felt out of place in his own time is a classic. "Miniver Cheevy":
Miniver Cheevy, child of scorn,
Grew lean while he assailed the seasons;
He wept that he was ever born,
And he had reasons.


Miniver loved the days of old
When swords were bright and steeds were prancing;
The vision of a warrior bold
Would set him dancing.


Miniver sighed for what was not,
And dreamed, and rested from his labors;
He dreamed of Thebes and Camelot,
And Priam's neighbors.


Minever mourned the ripe renown
That made so many a name so fragrant;
He mourned Romance, now on the town,
And Art, a vagrant.


Minever loved the Medici,
Albeit he had never seen one;
He would have sinned incessantly
Could he have been one.


Miniver cursed the commonplace
And eyed a khaki suit with loathing;
He missed the mediƦval grace
Of iron clothing.


Miniver scorned the gold he sought,
But sore annoyed was he without it;
Miniver thought, and thought, and thought,
And thought about it.


Miniver Cheevy, born too late,
Scratched his head and kept on thinking;
Miniver coughed, and called it fate,
And kept on drinking.

Picture Fun
It's worth a chuckle.

New Years kiss no matter what I guess:
party-fails-gotta-get-that-new-years-kiss-dogs
see more After 12

I like McRibs but not this much:
epic fail  - FAIL Nation: Good Thing I Wore My Sweats! FAIL
see more epicfails

Film Clips
Some movie ideas for your selection.

I think Adam Sandler's finest film performance was in "Spanglish". I know, I am out of "ManTown" for that! I really believe it. The film itself is wonderful (though I don't enjoy getting hit on the head with PC stuff) and I submit the following scene as proof of the film's merit:


The great film "The Four Rooms" was punctuated by one of the most funny scenes I can remember. The Lighter bet scene:

Love it.

Rock Blogging
Musical melodies since 2007.

My friend BCLund was looking for The Damned song "Smash it Up" and I had never heard it before. I like it!:

Punk rocky, nice.

I was so very lucky to meet up with and become friends with Julian Hebron when I was in NYC last October. If you did not know, Julian is now on StockTwits (The Basis Point) and gives the best mortgage news out there. I would not have pegged him for a metal type, but he is and here is "Sleeping Giant" by Mastadon:

My favorite type of Friday night tip, great song and I had never heard it.

I love the Guns N' Roses song "Rocket Queen" and by the miracle of YouTube here is a great live version:


I am a sucker for Linda Ronstadt! Here is a nice show of "Blue Bayou":

Yeah, she's good.

The Interloper was looking for some Tom Waits so why not "Hold On":

Nice.

Ok, two songs left.

How about Huey Lewis and the News with "I Want a New Drug"?:

Nice.

Last call! Grab a drink, a girl or whatever you need.

Black Sabbath with "N.I.B":

Perfection.

Have a good night.

Thursday, January 5, 2012

A Confusing Picture, Time to go Fishing

The New Year has started off with a bang, but I am having trouble finding my moorings. Markets are running hot but so far missed my spots this week. Many correlations are breaking, new rotation is happening as things unfold. Low volume moves are making waves and it's hard to figure it all out. Those that can make moves during the day are killing it but I have been pressed busy at work.

I am confused and I don't have many answers. Honest.

This happens from time to time (more than you might think) and when it does, I like to go fishing. It clears my head and focuses my attention and I am better able to make heads and tails of things. It's January now. Not good.

What follows is a fishing pictorial. It's mostly for me, but I hope you see some things that appeal to you.

This bass is really small, almost as small as the spinner bait he went after:
Kayak fishing excitement.

A full on Wachusett Reservoir 4 pound smallmouth:

Quabbin anyone? Kid Dynamite has a written invitation anytime.

Smallmouths:

Exotic? How about peacock bass in Miami canals?:
Or Barracuda in Antigua?:

I feel more calm.

Have a good night.

Wednesday, January 4, 2012

The Winter River

Not much to add to last nights post. Today's S&P 500 print is quite similar to the back to back prints on October 27 and 28th 2011. I missed my entries this week and will wait for resolution by weeks end of this move up one way or the other. My one major difference from the October set up is that back then everyone was really on board the bullish train where this time it's much more subdued. Maybe this will be "the" move up that finally breaks the old range. If it is, no need to be in a hurry.

On tap tonight is the story that explains why I hate the cold so much. Very fitting as we are having our first blast of cold temperatures right now.

The Winter River
I grew up in South Lowell. In Lowell there are two major rivers; the Merrimack and the Concord. The "Mighty" Merrimack is a large, swift river that is home to some of the best smallmouth fishing I know. It's great water and over the years has been cleaned up to an amazing degree.

I lived two blocks from the Concord. This is a medium river in size, and it moves very slow. Highly polluted and with heavy algae this river is home to monster carp and catfish.

In Junior High me and 3 other friends would always go out on weekend nights and find "stuff" to do. My Mom worked nights and I slept over a friend's house whose parents went away almost every weekend anyway. It used to be much colder when I was a kid, or at least I think so, because the Concord river would freeze up in deep winter quite a ways out from the banks. The middle usually stayed unfrozen. A visual, best I could find:
At that age you are getting to the point where you both want to impress girls and be more "ballsy" than your friends. It's not a good mix and I imagine safer now that the number of Facebook friends or Twitter followers for kids is social leverage and money, not actions.

So what we would do is walk out as far as possible to the center of the frozen river to see who would push it the furthest.

Writing that I can feel the set up but I can tell you at the time it was perfectly normal.

We had done it for years. The worst thing that ever happened was some loud cracking and some fast moving feet back to the bank. Until the last night I ever did it.

My friend J was always the most daring. No one really ever tried to beat him, he was nuts. That night he went out a ways and we all followed. He kept going and I followed for a bit. When I looked back my other two friends were a bit further back than made me comfortable so I stopped. J kept easing out and I turned around to go back to the bank. That's when the cracking started.

Multiple cracks and moving fast. Friend J started back fast towards us and I was about to take off when I had a thought. A cowardly thought and not some hero idea for the ages. I thought if something happened to J I would be in the kind of trouble you just don't get out of. Noble I know, but the truth. So I waited for him to get about to me before starting off for the bank. The fissures were faster. We went in the river.

I can't explain the cold. Maybe some of you crazies that do those winter swims know what it's like. If this happened now I am sure I would have a heart attack. It was shocking and terrifying. And I wanted OUT.

The edge of the bank ice was pretty close and I could just touch the river bottom with my feet so I made my way over. I got my arms up on the ice but I was very heavy with the winter coat, gloves, etc. I could not lift myself up onto the ice shelf. Friend J had made his way behind me but could do no better. We both tried again and the ice broke again. And this was the life saver.

Maybe enough distance had been gained, maybe there was a rock under the surface, but now I could get enough of a push with my legs to get up onto the ice shelf. And it held. J followed in the same spot and we were back on the ice closer to the bank. I was exhausted and the smoke that was my breathe pouring out into the night air looked like a chimney. The other two friends had grabbed branches (thanks guys!!!) but we trudged our way back to shore.

I lived maybe two short blocks away, but there was NO way I was going home like this. Brother and sisters would see and tell on me for sure. So we all walked the mile and a half to the friends house that we were staying at. It was most difficult. I cannot really describe it. Just wanted to get inside and get the crusting clothes off.

At the house neither of us could get the wet clothes off, it had frozen up in place and was too hard to pull off. Someone grabbed some kitchen shears and we cut off our pants (which could stand on their own!) and sweaters and T-shirts. The coats we were able to salvage. I remember thinking the skin over my knees was going to split it was so cold and tight. It took about 5 hours under blankets to finally feel normal again.

I never did that activity again, and to be honest I never really did much in the winter time ever again. I have hated the winter and the cold ever since. This is not all that helpful living here, but what can you do. Retire early in the Bahamas! That will work.

Have a good night.

Tuesday, January 3, 2012

Complicated by Gaps

Winter has arrived in full force here this week. Single digits tonight and through to Friday. Knew it had to be coming, but still feels a bit shocking.

Complicated by Gaps
It was yet another gap up morning in markets today. I remarked via Twitter that:
"Gaps are like all in bets in no limit hold em; makes you decide whether you are playing the hand or not immediately. Difficult."

I wanted to cover two examples why gaps make trading more complicated (at least to me) and it's the very dynamic of facing an all in bet that fits in my mind.

Last night I did a full night of screening and homework inside the iBC trading room 12631. Even though markets had been a bit extended, I felt constructive when I found a bunch of good setups. And here is where gap up openings make things difficult.

I have traded the company TPC a few times over the last few months. It tends to be somewhat predictable and has several clearly defines areas of support and resistance. The stock was sitting right at the bottom of the channel it tends to trade in around $12.20-$12.30 and an entry here may be worth a run to $14 should markets hold up. This chart is after today (click any chart for larger view):
So there are two problems with the stock after today:
1-It went up 3.4% in a single day. It was up quite a bit more than that during the day as well. Nice run already and it was over as soon as the stock opened.
2-Now the candle printed today looks terrible, gap up and close on low of the day. Very "gravestone doji" like and gives me pause even though the location of the candle is not after a long uptrend.

So in this specific case the gap up turns a simple channel play into a confused mess.

A bunch of other items I worked on last night were not up so much that I would not buy them (SXC, TTEK, EOC, SNE). But I did not today. And that leads to the second part of gap frustration.

I made a point to highlight in my "Wills and Won't's" post that I would be aware of where the overall market was in a cycle when I was to open trades. Well, today's move up presents yet another ugly candle for many sectors. Most were running fairly overbought already. Here is a chart of the SPY with recent runaway gaps up highlighted:
Looking at the inverse fund for the S&P, SH, shows much the same thing on the downside:
These blow off moves have seen reversal for the last 5 months. Still want to wade into longs?

This brings me back to the no limit poker analogy. Right here you either have to call an all in and make your moves on the long side under the assumption that this will be "the" run higher that does not look back. Or you have to fold and either wait for confirmation of the move up or initiate a short trade against the overbought levels looking for reversal.

This could be a breakaway gap and a move higher could very well be on the way. I am suffering from the recency effect and have a respect for how nasty corrections have been from overbought levels for some time. For now I wait and watch and I have been gap blocked once again!

Have a good night.