Tuesday, February 28, 2012

Buying When It's "Wrong"

Tuesday was an interesting day to say the least!

Media Coverage of Things Apple is Worth More Than
I got a note this morning from Josh Brown telling me that CNBC was looking to do a segment on the Tumblr we co-author, Things Apple is Worth More Than. Now maybe you all out there are extreme pros but I was as excited as I could be. The clip was aired at 2:15 today and here it is for review:

It's a little strange to see things you have worked on shown on television. Josh highlighted the segment today as well (Apple-Zilla!) and in the clip he makes some good points on why it is useful to keep in mind how big Apple is. Apple is probably the most innovative and successful company in the history of the world, and the Apple Tumblr tries to put that success in a perspective that will boggle the mind.

Thank you Josh for the great opportunity.

Buying When It's "Wrong"
You know it has happened to you. Something happens and it's wrong. It feels wrong and you know it's wrong. Still, no harm has been done and in a cosmic sense of things it's right.

Maybe one of those rare times the cashier rings you up, takes your cash to make change and BOOM, you get an extra buck or more back. It's wrong, sure it is. But how many times have you over paid? How many times have you lost change in the sofa? Maybe it is a small measure of payback. Perhaps on a food run you leave the drive through window and discover you got an extra order of fries (cool) or an extra Big Mac (Epic WIN!) in your sack of food. That too is wrong, but again how many short changed orders have you had to endure over time? Both are wrong, but you deal with it.

I bring this up because the current market rally has felt all "wrong" since the beginning in December. The laundry list is long and distinguished and most participants are well aware of the major concerns. As of late we have to throw in market indices that are running into uncharted territory. It all feels so wrong.

Yet the market goes up and individual stocks continue to perform well.

Since December 20, 2011 the SPX has moved higher by more than 10% and the whole way most or all of the following has been true:
-Greece continues towards some kind of default
-Euro nation debt is still a monster problem
-Earnings have been on the lower end of estimates
-Bonds are screaming a large disconnect from equities
-China is unclear
-Volume has been very low
-As of late the major indices are higher than anytime since 2008, before the financial crisis
All this and more.

Yet stocks are moving. Individual set ups are numerous and finally are showing follow through. Rotation and pauses have been enough to keep things from overheating. It's almost sinister in the way things have been going. And it feels wrong.

But you have to deal with it. As long as I am finding set ups that are working I am going to be trading long even though it feels wrong. At some point the law of large numbers, buyer exhaustion, or some other factor is going to put the brakes on this market. At that point, feeling "wrong" about buying stocks will be felt in kind. Until then, take the extra buck or Big Mac and enjoy the gift. While it lasts.

Have a good night.

Monday, February 27, 2012

Buy Charts and a Look at Some Utilities

The Daytona 500 was rained out yesterday and is being run tonight. Clearly I will be a bit distracted so just a quick post that is chart heavy for tonight.

Market Operations
This morning's sell off just did not feel like it was going to stick and pretty soon after the open buyers stepped in. After things settled in this morning I opened up 3 new long positions.

WFM (Whole Foods Market)
I usually don't enter into names I see all over Twitter and other places, but the long term 2006 top for WFM is too interesting a spot not to try out here. Click any chart for larger view.:

CTCT (Constant Contact, Inc.)
I saw this one over in the 12631 trading room as worked up by ChessNwine. Tight basing after a breakout over $30, has some room to run higher:

CACI (CACI International Inc.)
I found this idea on a PPT screen. Great buyer interest and stock has moved past the $60 level here:
I still hold BANR but it's putting me to sleep and will cut soon if the stock fails to move.

A mix of names for this week.

When I was doing my screens I noticed a large number of utility stocks making up the accumulation list. Some of these names are seeing buying numbers that are even larger than during the height of the summer doldrums. A couple I found:

There were about 4-5 other names that looked the same in the same sector. This screen tends to show accumulation before price moves. Why are "safe" plays like utilities being bought more aggressive than any time since the summer? I am not sure, but it's worth watching the rest of the week.

Have a good night.

Friday, February 24, 2012

Friday Always Closes "At the Highs"

Another week in the books! Had a great Friday and it's weekend time. Daytona 500 is on Sunday, maybe Kevin Harvick can pull off another one?

Market Observations
I don't like that oil is over $100 a barrel. There is a lag until it hits gas prices. I think oil is higher for poor reasons (Mid East tensions, pick any other) so maybe it will not last. That's about the only bad thing I see right now. Next week should be indicative of market direction for the next few weeks so I will be ready with a new watch list for Monday. I have only one open long (BANR, looks ugly after today!) so I have plenty of cash to put to work.

I don't mention my long term account much for a variety of reasons, but it's hard not to share that Sony (SNE) is up about 20% since I highlighted the double bottom around $18 in early January. It has run very hard and very high and I will have to decide next week if that's all it has left.

Friday Night Entertainment
The financial blogosphere's best (and only) Friday night party line. Multiple chat lines are allowed.

My good friend David Batista found a real gem and had it up yesterday. I cannot believe I had never seen this clip, as huge a fan of the Conan film that I am. Here is "Conan the Barbarian: The Musical":

Instant classic! Thanks David.

Hard to top that one, but here I will try to keep up.

Pictures; It's Just Easier
No pop up books, but images.

I am a HUGE wildlife supporter but this is just too funny (The WWF used to be a Professional Wrestling league but lost out to the World Wildlife Fund):
epic win photos - WIN!: WWF WIN
see more epicfails

photobomb that guy - Can I Has Photobomb?
see more This is Photobomb
@TA_Trader will like that one.

Film Clips
A couple ideas for your weekend rentals or streams.

"The Wrestler" is a tough movie and one that I think all should see. Not only does Mickey Rourke give a performance of a life time, the story is so painful and real that it can hurt. A lighter clip finally made it's way to YouTube, but of course I can not embed it. As the lead characters rock out to Ratt and "Round and Round" both explain the crap 90's grunge music in perfect clarity:
Click for Video
"Like there's something wrong with wanting to have a good time!"

The great Dustin Hoffman may never have been better than in "Kramer vs. Kramer" and paired with timeless Meryl Streep it's a classic. Here is the French Toast scene:

This scene makes me laugh and want to cry.

Rock Blogging
Some tunes for the people, they are still free as of now.

My friend Andrew Nyquist just had his birthday! Besides founding See It Market and being a great market operator, he likes good music! Here is a sick as all get out version of Bush playing "Machine Head":

@andrewnyquist on Twitter

Via Twitter @gtlackey was looking for some Jane's Addiction with "Mountain Song" and that works:


How about some Kenny Wayne Shepherd? Try out "Never Lookin' Back" and check that baseline:

Just heard that for first time today!

Via Twitter @Andi_Hammer was looking for some Mishka and "Above the Bones" and this tune is pretty good:

Last two!

Market anti-theme? Iron Maiden does it with "Be Quick or Be Dead":

Last call!

Close the show with (I know have had it on before!) Big Wreck and "That Song":


Have a good night.

Thursday, February 23, 2012

Work in Progress

Only had 3 days so far of a 4 day work week, but still feels long! Alas, tomorrow is Friday!

This does mean you need to get Friday Night Entertainment blog requests in on the comments or over Twitter.

Market Operations
I sold out of AREX today from my buy on 1/31/2012 (Great work up on this one by ChessNwine, thanks!). Gain was +6.4%. There is nothing really wrong with the chart or the name, now that I am out it may well run higher big time. I have held the stock for 3 weeks and was ready to move on. Also, have been working on some screens that I want to direct more capital towards. Here is a look and I had a target on this around $41:
Good stuff.

Work in Progress
As the markets change, one has to adapt as well. When I re-entered the trading scene and mindset at the start of 2011 I was focused on bounce plays and oversold rebounds as the market had been very aggressive finding things of that sort to put money in. It worked well, for a while. After the Japan earthquake disaster things got much more difficult and the market sped up the tempo finding moving stocks then walking away. Rotation on an almost daily rate. Difficult to trade from a longer time frame (days- to 2 weeks is my trading window). Then the summer came and while shorting did not work in my trading account, things were very dicey.

By the end of the summer a new trend emerged and that was strictly watching overbought/oversold conditions as markets moved as one to each apex and bottom almost weekly. Some longer runs up and down formed, but by the time you could trust them, things changed.

2012 has been a much better environment. The start of 2012 has been a great time for many, and I am included. Patterns are going to end points, accumulation means something, the nerves have been assuaged.

And so things change again.

I have been noticing that many of my screens have been seeing stocks with excellent returns. Problem is my homework nights over the weekends are not finding the stocks moving in the week ahead, but a week after that or more. But they are finding great results and leads. I have a few screens built inside the iBC PPT that are working, but my timing has been off.

I see this as a good thing.

Instead of recklessly plowing into anything moving, larger money is back to scoping out a position, layering in, and holding on. This takes time and commitment. It is a huge positive for the market going forward.

As such, I want to try and work on these screens and ideas and allow them more of my focus. I have been testing plenty of the screens and I would be doing well had I allowed a touch more time for setups to both fully form AND stay on my radar. Maybe I am used to the hyper active turnarounds from times past, but I am dropping things from my main gun sights and that lag seems to be what's needed.

Of course, things could change. They always do.

Have a good night.

Wednesday, February 22, 2012

Cinematic Re-Posts

I am sort of bored and not much happened today in the markets. Instead of pushing out a post repeating all the same type of stuff, why not take a break?

On August 20, 2011 I covered what I believe was one of the greatest obscure movie references of all time and I did all the research to support it. Take a look back on this classic post:
The Ultimate Obscure Observation
This was pretty bad ass if I do say so myself.

I often share clips of the best films I have seen, but how about the worst movies ever? In September I joined up for the Alex J. Cavanaugh Worst Movies Ever Blogfest and had a great time:
Worst Movies Ever Blogfest
10 of the worst films ever for various reasons!

Have a good night.

Tuesday, February 21, 2012

Trade That Did Suck and Then Flipped Me Off

Had Monday off but today felt like a Monday so not much gained there.

Trade That Did Suck and Then Flipped Me Off
My buddy BC Lund writes a series of blogs that are titled "Trades That Didn't Suck" and as soon as I get a good one I will rush out a post along that line.

As is, I am sharing a Trade That Did Suck and Then Flipped Me Off from today and I hope you take some value away from it. If not, at least laugh at me a little.

Back on January 31 I opened a position in WTS (Watts Water Tech Inc.) and I have posted the charts of the setup on the blog (search WTS tags). I had the stock just under $38.50. I have been holding this one a while and it has done reasonably well.

I was running through my open positions this morning (AREX, BANR, WTS) and that's really when the fun started. On Finviz I saw the earnings section for WTS read as "FEB 20 AMC" as in YESTERDAY after market close. I was really shocked and consulted my little trading booklet where I keep things I need on hand written down. I had WTS earnings for February 22. Obviously I was wrong and it made no difference at that point in the morning how I had the wrong date.

A few curses later, I looked around for some news on the WTS earnings. Seems they slightly missed estimates (of course) so I was expecting to be taught a nasty lesson about rechecking earnings dates for open positions. WTS is sort of an unknown name and there were no pre-market trades to check this morning before the open until about 9am. This stock is so unfollowed I could not even find solace in a Yahoo Finance message board ultra bull pumper to make me feel any better.

All indications were that WTS would open down about 3-3.5% which would eat up almost all my gains in the name. If you have ever been long into a missed earnings report you know that's not too bad. Down 10-20% is not uncommon. I figured I could wait for a bounce after the open and exit the stock while salvaging a small profit.

Armed with my new plan I saw the stock gap down hard, but then there was a solid bounce taking WTS back over $39 where I exited the trade for a gain of 1.4%. To this point I have made the major mistake of having incorrect information and not being on top of earnings dates for an open position. I walked away unharmed, but that's not a common outcome on a screw up like this. I have February 22nd noted on most of my material for the WTS trade so something got mixed up. My blunder.

And now for the second part of the trade where WTS flips me off.

I was more worried about not getting caught up in a sell off this morning to note the stock action as much as I should have. On my chart for WTS it's clear that $38.30 was the scene of the breakout and even with the gap down this morning, it never broke back below that price. Had I been a touch more calm and had more time to look over the action I would have noticed that huge flag. And then the buy interest came in. Big time. What started off as an earnings miss gap down by day's end had become a monster bullish engulfing candle (click for larger view):
This kind of print is a dream come true for longs. My target was $42 for this name and it may get there this week. Without me.

So I would say WTS is giving me this right now:

To recap:
-I had incorrect earnings date
-I failed to keep key support levels for this stock in mind
-I pushed to close a trade more out of rushed fear than a place of calm
-I failed to remember that in 2012 missed earnings are actually a good thing (kidding, slightly)

Poor execution all around and it's probably my worst trade since last Spring (there were a few around that time). If this can serve as a wake up and keep me focused then I will take that as a positive going forward.

Have a good night.

Monday, February 20, 2012

This Week

I have had a nice long weekend. Just a fast post tonight.

Two longs I like over the near to intermediate term.

On a weekly chart the $29.70 price point is clear as major support:
Maybe worth a look.

This is a WEEKLY chart:
Could get very interesting and fast.

Have a good night.

Sunday, February 19, 2012

Sunday Filet Mignons

Lazy Sunday over here. I did cook and interesting dinner so here are some pictures. I may hold off on a market post until tomorrow after food coma.

Bacon Wrapped Filet Mignon
This is not a difficult recipe to make, but comes out very nice.

Got your filet's covered in pepper and sea salt:

Wrap them up with some bacon, used toothpicks to hold the strips together:

Heat up a stainless steel pan so it's good and hot, then sear away:
About 2 minutes on each side, then slide the whole thing into an oven at 425 degrees.

The smaller ones took about 10 minutes to finish up, the larger ones took 15 minutes. Out of the oven:

On the plate ready to eat with white asparagus:
Came out pretty good but I had thick cut bacon and I think it would be best to use regular sliced bacon.

Have a good night.

Friday, February 17, 2012

Do Not Feed Friday After Midnight

3 day weekend here! Always nice to get an extra break.

Market Observations
Today was option expiration and as usual it was a tight range day. I will cover market strategy closer to next week. Markets are closed on Monday for Presidents Day.

I made a rookie dumb mistake today with my position in AREX. Last week the stock touched over $38 and promptly pulled back. From the chart and the buy volume I expected to get another shot over $38 and that would be my target area and result in a 10% gain. The stock ramped up at the open today and was well over $38. I had meetings scheduled for almost the entire day and I figured I could grab the sale later on in the day when I could watch the tape a little. Never even came close again. An ugly session leaves AREX at $36.66 (CREEPY!) and not only did I miss my sale but that was a nasty reversal day. I could have set a stop at $38 and went off to meetings, but I did not. It was sloppy and poorly done. If I get something out of this trade it will be in spite of my trading it, not because of it.

Friday Night Entertainment
No Emmy nomination yet, but I think one will be coming soon.....

Alone in the Shadow of Robot Dominion Over Man, My Voice Still Cries Out
I get the feeling that my coverage of robots and the chance (90% and rising) that said robots will turn on the human race is a running gag here to many readers. It's NOT! I am serious, and don't call me Shirley!

Well hot off the presses via Extreme Tech is the announcement of a new military program modeled after the "Avatar" line of thought! Here you go:
DARPA reveals Avatar program, robot soldiers incoming
A snippet:
In the words of DARPA itself, the Avatar program will work on “interfaces and algorithms to enable a soldier to effectively partner with a semi-autonomous bipedal machine and allow it to act as the soldier’s surrogate.” In other words, DARPA wants to develop the walking equivalent of an unarmed aerial vehicle; a bipedal robot drone where the controlling soldier is hundreds or thousands of miles away from war front.
Unarmed, LOL too funny.

Here is Boston Dynamics "PETMAN", we are doomed:

But keep laughing.

Image Candy
Some fun stuff to gander at.

Napoleon might have won at Waterloo with this as his trusted steed: funny pictures history - MY RIDE
see more Historic LOL

Wait, bears don't do their thing in the woods?:
demotivational posters - SO NOW YOU KNOW
see more Very Demotivational

Film Clips
Some films for consideration.

Maybe one of my all time favorite scenes is from "Matrix: Revolutions" when Trinity (not @TXSSwingtrader Julie!) and the crew battle to get Neo back.
"Your really ready to die for this man?"

"If she has to she will kill every one of us".

Not a movie, but the last best chance for TV was "The Highlander" series. Skip to the 40:35 mark in this clip of "Homeland" and watch to end. If you are not impressed, I don't know what to say:


Rock Blogging
Songs for the soul to set you free.

Need a ripper to get started, so a little Lenny Kravitz and "Are You Gonna Go My Way" is in order. Excellent!:


My man on Twitter and 12631, @PjDempsey, was looking for some live Pearl Jam and this is a nice video of "Black":


I thought The Interloper might have been messing with me but after hearing Uncle Tupelo and the song "Moonshiner" I am glad I heard it:

Harmonica always gets me. Thanks.

Via Twitter and @CapCube here is The Clash and "I fought the Law":

Two songs left!

I need some Rage Against the Machine and "Renegades of Funk" will do nicely. Turn this up:

Last call!

My friend, formerly Trader Mark, has a new gig over at Market Montage and he did a AWESOME 80's tune play set of 80's rock last night. My counter is the great band Cinderella and "Somebody Save Me" and live is the only way:


Have a good night.

Thursday, February 16, 2012


A little rain here today but still warm and warmer tomorrow.

It is Friday tomorrow so you know it's time to get those requests in. Music, books, films, sports, science it's up to you.

A friends son asked me tonight about a stock market project he has in class. I was more than eager to help! As such, I am limited on time for a meaningful post so just one general observations.

I wrote an article in November which talked about the ingrained fear of missing a V-shaped bottom. The eager rush to buy big drops was so fierce it almost never let up until after the late November massacre in stocks. Since then I think a real change has happened. Instead of a fear of missing out, a fear of the rug being pulled out from underneath has become the main go to emotion.

I saw this last night as futures were weak and plenty of "I told you so's" were pouring out about market tops. This morning it was even worse early on but by the real cash open the rug failed to be pulled.

The fast switch from aggressive to defensive is something I am not used to over the last market cycle. By late day I was getting more than a bit annoyed with the "bulls" taunting "bears" or "longs" over "shorts". I worry about MY positions and the rest is outside my ability to influence.

As is I have 3 open longs:

Obviously all did well today on such a market uptrend. It's a 3 day weekend coming up (markets closed on Monday) and while I want to go all cash and start fresh next week, I have a feeling this run higher is not quite ready to do the pull back thing.

Have a good night.

Wednesday, February 15, 2012

Distribution is the Better Part of Valor

Winter may have a trick or two left, but it's going to be 50 degrees plus over the next two days in the Boston area and that makes winter much easier to deal with.

Distribution is the Better Part of Valor
Note: I sold KFN (-2%) and BCR (+2%) today for changes in my trading account.

Distribution days are one of those market observations than can have hard, set rules but you also need to allow for a little wiggle room. Investopedia tells us that distribution is:
"When trading volume is higher than that of the previous day without any price appreciation."
Simple enough.

On any given day every stock that is bought is sold and vice versa. Price is used to gauge the desire of one side or the other to move a security. Aggressive buyers will push bids up and prices follow. Sellers looking for an exit will take less and less just to off load the position. Volume tells us how many are in the active mode for a stock.

I was thinking about distribution today as it relates to a stock I missed buying, and one I currently hold. Joe Fahmy offered on Twitter that the Nasdaq had it's second day of distribution selling since January 1st today. Here is a chart of the QQQ which shows the two days very clearly and follow the defined rules (click any chart for larger view):
There was a smaller one on January 16, but the overall volume was low. The days of February 16 and February 10 were followed by solid moves up, so there is the chance there is not a severe correction at hand.

The stock I had in mind was a name I was pissed I missed a break out on a few days ago but it was an earnings deal so that's how it goes. This stock will not show the classical distribution rules in play, but tell me this is not an unwind of shares steady and strong over the course of days. SMG:
You can see the last 6 days have now eclipsed the accumulation over 5 days leading up and into the earnings report. The stock has even dropped out of the ascending triangle that made the setup attractive in the first place. Yet only two technical distribution days over the last 7.

Looking over my open 3 positions (AREX, BANR, WTS) I am most concerned that WTS is at a critical junction in the distribution debate. Take a look:
Why didn't I sell if I had qualms about the action? The 20MDA is coming into play tomorrow as possible support. The selling today was heavier and may signal a near term bottom. I also wanted to be in the stock as this plays out so I can react to it. Tomorrow's session is my debate ender.

When you start to see signs of distribution, remember that discretion is the better part of valor. (I played with that line for the title, obviously)

Have a good night.

Tuesday, February 14, 2012


Happy Valentines Day for all the readers! I hope you got to do something nice today or this past weekend. Today was a crazy busy day at work and of course it was an interesting day at the end for the markets.

I am not one of those that think "the market" has a real good track record predicting much. It's often way late at market tops, and hopelessly eager anywhere near any kind of bottom. I have often said that the market is good at looking 6 months ahead, when it's not concerned with the next 6 minutes. Sometimes you get a day like today that just befuddles and leaves one bewildered. Befuddlewilderment!

Here is a 1 minute chart for the SPY today and you can see what looked to be a "trend" down day was reversed in short order right before the close:
There may have been some rumors of a Greece thing or some other random input. I have no idea. Things got pretty testy out on Twitter on the reversal and once again emotions are running hot.

So in an effort to improve overall morale, here are some picture representations for "Befuddlewilderment" and maybe it will catch on:

Have a good night.

Monday, February 13, 2012

Position Review and Thoughts on Rotation

Never fond of Monday's but today was not actually half bad. Tonight I can access and use Twitter on my mobile phone but I cannot use any of the buttons or post tweets on my desktop computer. No one seems to have much of an idea about this. If you can help, email me or use the comments section.

Position Review and Thoughts on Rotation
I have been long a few stocks for a while now. After a few down days and some positive market movement today, it's a great time to review all 5 and see where things stand.

Opened a position on 1/31/12. The setup was a long intact uptrend and a move over the $34 range which was anew breakout area. Today's chart:
AREX had a crazy day on 2/8 and hit as high as $38. Since then it has tailed off and now is retesting the "scene of the crime", the breakout level just above $34.50. A successful touch and hold of the 20 MDA is supportive of this name going forward. That said, the stock has stalled out here.

Opened a position on 1/31/12. The set up here was a clear move out of a very tight basing channel. The accumulation volume had been excellent as well. $38.50 was key zone to clear. Today's chart:
After touching $40 this name has cooled off a bit. Volume has dried up on the downward move and buyers returned today. This one is still set up nicely for a move higher.

Opened a position 2/1/2012. To be fair this should have been stashed in my long term account. I have every indication that BANR will cross up and over $20 and run, just maybe not soon! May have been a little early here. Today's chart:
This one actually did close over $20 on 2/3 but since has fallen off. On the positive side the small gap from 1/25-1/26 has been closed and buyers returned today.

I worked on this one with a friend a while back but I missed the fireworks around 1/20-1/23. After that I was playing resolution of the bull flag as (opened position on 2/8/2012) seen in today's chart:
This one caught a price target upgrade the other day and thus a price and volume spike up. Right now it is facing serious price resistance at about $96. Above that and it's a "$100 Dolla Roll".

Opened a position on 2/8/2012. I had worked on this chart (and about 10 others) the night before and I just liked the action so I bought a spot. Today's chart:
The buyer accumulation has been outstanding for this name. The price has cleared the breakout level of $9. A bit of a pause here right now.

So all in all the 5 are not bad open positions nor in any real trouble. So what's the problem?

How many times did I use the words "pause", "resistance", "cooling off" in the selections above?

Even on market down days many names have been running well. Granted I tend to stay away from the hottest sectors (biotech, solars, chinese egg rolls) but many other things have been moving. The 5 above had real momentum coming into where I bought them, yet have slowed down.

So it could be benign reloading and the age old "resting, wants higher" sort of thing. Hopefully that is what it will turn out to be.

On the other hand there is another side to rotation of money, especially at the upper ranges of longer rallies. That means when things are moving they gather interest and steam, but as soon an it stops (resistance, news, etc) money moves along.

I think most understand rotation as it relates to sectors. Money leaves bonds say and goes to riskier assets. Buyers may walk away from the utility sector and instead chase semiconductors higher. That's well established.

What I am seeing some signs of (not absolutely, not definite) is buyer rotation from a binary choice: moving vs. non- moving.

There are some good examples in the names above and some others on screening names I have saved. Be aware and keep an eye on your positions. If they have been moving and see a pause, it's important they continue to keep moving. If they are supported by strong technicals and the momentum has been there, a walk away from buyers may mean you are holding a "non-moving" name and money will be rotating out. I may have a few in the above names myself.

Have a good night.

Friday, February 10, 2012

Markets Actually Dropped, but Friday Only Rises

Snow on the way for tomorrow. I so love winter.

Market Observations
I did not like the action on Wednesday and Thursday. Today markets had their first real test to the downside. A late day run helped keep the damage contained. I guess it's put up or shut up time. None of my positions stopped out, which was a surprise. Maybe that bites me on Monday, but trade your plan and stops. Not really much more to add at this point, more market thoughts on Sunday night.

Friday Night Entertainment
Let's see what's interesting.

Running Liquor During Prohibition
I stumbled upon a cool tale on, wait for it...., Wikipedia this week that I thought was worth a look.

During Prohibition all kinds of alcohol smuggling was done. This gave rise to many of the embedded organized crime families of the future. How all the booze made it into the United States has many tales and this is just one.

The ship that delivered more liquor than any other ship was The Malahat. The 5 masted schooner would take alcohol brewed in Canada and shuffle off to the Pacific Rum Row which was outside the maritime limits of the United States. The ship would anchor there and await smaller, faster boats to come and load the booze, then run it to ports on the West Coast. I would point you to the article for even more details it's quite a story. The Malahat:

Friday Funnies
Crawling the Internet for material for a smile.

"They all float, down here.":
demotivational posters - YOUR FEAR OF CLOWNS IS VALID
see more Very Demotivational

AT-AT not a Transformer!:
funny facebook fails - Failbook: Commuting on Hoth
see more epicfails

Big George Foreman
Robert Sinn (The Stock Sage) was looking for some George Foreman clips and as things are, I am well versed in Foreman fights.

Maybe the most thrilling heavyweight fight of all time featured a young George Foreman (after losing the title to Ali) versus the stubborn veteran Ron Lyle in 1976. You can see Foreman's complete record here.

There are too many great parts to try and single out, so here is a great 6 minute compilation of the fight, you will be stuck in your seat (if in a hurry skip to the 2:40 mark on):

With Howard Cosell on the call no less. Be quiet Kenny Norton!

I missed this fight live sad to say but it's my favorite Foreman moment. Trailing on points in a fight he had to score a knockout to win, Foreman lowers the BOOM on champion Michael Moorer in the 10th round after the late Angelo Dundee told Foreman "You gotta put this guy down!":

Jim Lampley's "IT HAPPENED, IT HAPPENED!!" is so classic!

Film Clip
Go to a Red Box, stream via Netflix, or just hit an On Demand button but check this film out. "Revolutionary Road" a new era classic:

Great film.

Rock Blogging
Tunes on the way.

My go to expert on all things vintage Rock is loyal reader Gawains. Tonight he suggests The Faces and "Stay with Me" and here is a great live version:

I can't believe Rod Stewart used to rock. Who knew?

Wanted to give a shout out to one of the hardest workers I know. New member of the Stocktwits team, tireless San Francisco real estate professional, and a great friend - Julian Hebron (The Basis Point). Luckily he is also into the best metal songs so here is Ministry and "New World Order":

Like that one! Hang in there Julian!

That song got me all amped up! Let's go right into "Guerrilla Radio" via Rage Against the Machine and turn the dial way UP:


A blast from the past comes from Gtotoy and his pick for Paul Pena with "Jet Airliner" and this is a fine tune:


My great friend Jennifer Hillier (who I heard a rumor may have her second book coming out this year!) was looking for some Talking Heads, and how can I say no? Here is "Once in a Lifetime":

Like that tune.

Last two songs.

Get up and get wild with Dragonforce's epic tune "Through the Fire and the Flames":

"So far away, we wait for the day" so good.

Last call, grab a girl a drink or the mouse.

Needed a little Creedence and "Lodi" will do just fine:

Have a good night.

Thursday, February 9, 2012

Giving Back, It Works

Tomorrow is Friday night, and that means get those requests in for anything you want as fun or interesting.

Giving Back, It Works
Tonight instead of a post here is what I did:
-Talked to a dear friend that needed some support for a long time
-Made 6 charts by request and sent them out, even though I am no great chartist, second opinions are always a good thing
-on Twitter I reached out to new folks
-on Twitter I DM'd anyone that wanted to talk, and had great talks with folks I know

And I think by the response I have seen it was all very much worth it.

My note for tonight, give back. Whether you are a top dog (you know who you are) or a stray like me, anyone that reaches out is important and can add to the discussion and maybe even to you.

Have a good night.

Wednesday, February 8, 2012

Risk Appetite and Spreads

I think I am off a day because I did not go to work on Monday. Feels like Thursday for some reason. I don't know.

Risk Appetite and Spreads
Forget it! This is a clean blog, unlike SOME other ones I have seen on the Internets....

In a few previous posts I have compared the S&P 500 with some "safe" sectors, usually tobacco (I use the stock RAI as proxy) and the utilities sector (XLU), to get a feel for how much risk appetite market participants are showing at any given time. I look at these charts every day, but now is a good time to do a blog post as there are some interesting things going on. The thing about comparing sectors too keep in mind is that spreads can contract or widen by:
-One component dropping hard
-One component blowing up higher
-One component shows increased growth while the other either slows or stalls
What I am saying is if the SPX is rising it does not mean tobacco or utilities will collapse, but maybe they will under perform, and vice versa.

Note: I actually prefer the uncluttered Yahoo basic comparison charts for this type of work, but you can always make your own.

Here is RAI vs. SPX for a 6 month time frame:
The spread between RAI and the SPX is the most narrow since the October-early November 2010 market top. I would say that the October compression of the spread was a fast event while the compression since early December has been a more gradual closure. Also tobacco is not falling off a cliff, it has slowed but the sector has good growth and still is attracting money. This is a better environment than a risk on/risk off panic.

Here is a 6 month comparison for the XLU and the SPX:
For the first time in 6 months the SPX has now crossed above the XLU since mid January. It's clear in late December money rotated out of utilities and a bunch flowed into stocks. The run has not weakened as yet. Again, utilities have come in, but they are not spiking down in a risk on kind of frenzy. I view this as a positive for the market.

Backing out for a two year view of the XLU vs the SPX:
I think this chart is important for three reasons:
-The late August 2010 run in the SPX finally crossed over the XLU around mid October, paused, then resumed it's run for another 3 months. The Armo Trader has some comparison charts worth a look on this time period compared to now as well.

-Notice the utilities, while lagging, were not getting killed over that time. They performed, but underperformed the SPX.

-By a highly sophisticated technical method I use, it's called counting, I count 6 months where the SPX was entangled or lower than the XLU in May - October 2010. Applying the same count starting at August 2011 I arrive at the here and now of late January - February 2012. And the SPX just crossed over.

6 months of indecison. 6 months of fear. 6 months of macro headline panic mornings. Maybe these things need 6 months to work themselves out. I will FULLY grant that the late summer of 2010 had the promise of QE 2 and it was delivered right in the fall, that is a real tangible that markets do not have right now. Still, the action and the charts carry weight in their relationships.

Have a good night.

Tuesday, February 7, 2012

Time and Event Pressures on a Trade

Back at it today.

Time and Event Pressures on a Trade
Not all market moments are created equal.

There will be "good" times to be trading long and there will be "poor" times to be initiating open positions. There are all kinds of situations that warrant some attention be paid when trading stocks. The purpose of this post is to go over some of those situations as well as a live example from this week.

The three key factors to consider when looking to open a position are:

Where is the overall market in terms of the current cycle?
Depending on what kind of oscillator you use, you know that markets tend to go through the overbought/oversold cycles. A big mistake I made last year was starting new positions near overbought signals (I use iBC PPT Hybrid score) and I think you remember how things went last year at sentiment highs. Buying when markets overall or the sector you are looking at are extended tends to limit your upside on any remaining move.

The rally in 2012 so far has been able to keep markets from getting overheated, and turns at overbought levels have not had anywhere near the teeth they did last year. All this can change, but for now it's the reality on the ground.

Earnings Announcements
When I am using my long term account I obviously do not move in and out of the names I hold. That's a different game and not the target of this post. When I am using my trading account I am usually looking for near term moves measured in days to maybe 2-3 weeks tops. Earnings season can mess with that.

Knowing when a company you own will report earnings is both huge and will bite you at least a few times if you do this long enough. It gets lost sometimes, just finds a way to escape attention. Waking up to or finding out that a position you opened just gapped way past your stop on an earnings miss is a great way to get aggravated. Some times this can even apply to the "big" names in your stock's sector reporting and that reaction finding it's way to your stock.

"You" Events
Everyone I know has been really sick all through January. If you are very ill (I don't mean the usual cold and the like) it's never a good idea to try and force some work. Corners will be cut and your usual sharpness will not be the same.

Going on vacation? When I go I take nothing to be dialed in with and will not even look at a paper. If I am holding something right up to my departure date, I tend to get more jumpy and reactionary because I know I need to close the position before I leave. Take a break, market will be here later on.

If you are one of the soldiers that works all day, a stacked week of meetings at the real job may preclude you from being able to watch the market or pull triggers except on short breaks. Know your schedule and how it will allow for activity.

(Feel free to add others in the comments section.)

With this all in mind I wanted to discuss a trade I could not make this week with The Scotts Miracle-Gro Company (SMG).

The stock came up on a screen I use in the iBC PPT late last week and I worked up a chart showing the pressure building on the stock as it approached the $49.70 price area. The accumulation volume was really coming in and I was looking forward to an entry early this week.

So what were the problems?
1- A "Me" event in that I was off from work Monday after the Patriots Superbowl loss and I just wanted to chill out.
2- SMG earnings were set for this morning before market open.
In light of these reasons I did not buy. The accumulation was for a reason as SMG had earnings it seems everybody liked, rising almost 8% just today:
I know it can be easy, especially this year so far, to say "that was an easy run up right into great earnings!" but I have seen enough of these go the other way to side step this set up right here

As things go, with a little recharge here SMG may be worth another look soon with an eye on the $59 level. Stinks to miss one like this but sticking to a plan and a set of rules will save you much more than it will cost you in lost opportunities.

Have a good night.

Monday, February 6, 2012

Monday Mourning

Well I don't usually like Monday's anyway.

New York Giants Win the Superbowl
Another win by the G-men. The Patriots had many chances to put this game away, but never could. Up 17-9, 17-12, and 17-15 the offense did not generate any sustained drives or points. The Giants executed better and it's over. It's a hard thing, Patriots have been playoff disappointments for years now and another tough loss.

Monday Mourning
I am still a bit off from last night, good thing I took today as a vacation day. As such, going to get some work done tonight on charts and screening so you get a linkfest.

Robert Sinn (The Stock Sage) wonders:
Why Isn’t the Market More Worried About Iran?
I agree with his 3 points on this.

My friend Mark of The Illusion of Prosperity covers Net Worth to Wages Ratio and uses some technical analysis to boot!

I can take a break from the markets anytime and not be behind. Why? Because I check out iBC's ChessNwine and the 5 minute market recap and I am good to go:
Stock #Market Recap 02/06/12

Market Anthropology has some new market analogs to look at, so check them out:
The Illusion of Strength

Macro Man thinks Portugal worries may be on hold for a while should Greece get their act together:
Death by x-axis

The bizarre and sad tale of FedEX flight 705 via Damn Interesting:
Aches on a Plane

My man Paul of No Excuses BBQ does Moinks and wings for the Superbowl and invents the MOINKroissandwich:
And the Winner Is…

Have a good night.

Sunday, February 5, 2012

NY Giants!

Better than us.

Friday, February 3, 2012

Get Friday Night Now or be Priced Out Forever

Well, it's just 2 sleeps and maybe a nap from the Superbowl. The NFL experts are running about 70% in picking the Giants to win. I am already getting nervous. This is the Big Show.

Market Observations
Today was not the kind of panic buying I have seen after big market routs like the ones over the summer and in November. Still, it was pretty aggressive buying of anything not nailed down. Miss earnings? Go up 10%. Chinese burrito with accounting questions? Why not a 20% ride higher? Short squeezes are all the calls, but you have to explain to me who stays short losing massive %'s? Either the short thesis is wrong or the shorts are short from much higher prices.

In any case, no need to recap my stocks, everything was up. AREX and WTS worked well and BANR finally struggled past the $20 mark. I held all three going into the weekend and that may end up being a bad idea. We shall see. Sentiment is running very hot and it would be best for staying constructive to cool off the jets next week.

Friday Night Entertainment
I am sure most will be very happy tonight anyway, but here is my contribution going into the weekend.

Lake Vostok to be Tapped?
I have mentioned the sub glacial Lake Vostok many times here on the blog. It seems the time has come to actually get down there and really take a look at the underground ocean:
Lake Vostok, Antarctica's Largest Subglacial Body Of Water, Soon To Be Explored
Again, the ultra oxygen environment the lake is in will have pressed any life forms in the water to have new and unknown antioxidative protections systems to be able to survive. Oxidative damage is a huge part of many health problems. I know there are risks to doing this, but the potential discovery outweighs that risk in my mind. Besides, we can trust Russian scientists to be careful right........?

I am not 100% sure this is actually meant for facial exercises but I guess I could be wrong (via Geekologie):
Another Day, Another Stupid Japanese Face Exerciser:

Image Fun
Scanning the best picture sites for the best, well, pictures.

"I am Your Father" from long ago:
funny pictures history - I'll NEVER Join You!!!
see more Historic LOL

"What's the most you ever lost on a coin toss before an unmasking?":
demotivational posters - THE NEWEST MEMBER
see more Very Demotivational

Rock Blogging
Right to the tunes!

A great voice of experience, and a great person to learn from is my buddy on Twitter @JackHBarnes. His request was for Sammy Hagar and "I Can't Drive 55" which is an issue for any Porsche driver:


My friend from Canadia, @TSXSwingtrader , both fears US invasion of her homeland and knows good tunes. Try out Hedley and "Don't Talk to Strangers":


Had this up a while ago, but heard it on the radio. Try out some Finger Eleven with "Paralyzer":

"And if your body matches what your eyes can do" I like that!

You don't have a "Fear of the Dark" do you? Via Iron Maiden:

My man Julian Hebron was showing me some really old school Black Eyed Peas. Not my kind of music, but it's a throwback with, well I don't know what it's called:


I need Van Halen's "Atomic Punk":

I feel better.

Last song! Grab a girl, a beer, or what's close by!

Closing with The Who and "Behind Blue Eyes":

Love it.

Have a good night.

Thursday, February 2, 2012

The Lexicon of Market Extremes

3 sleeps until the Superbowl! It's getting harder and harder to block out the game.

Tomorrow is Friday night, so get your requests in for anything you want to see.

Market Observations
A basically flat day overall. Seems markets went on hold after lunch waiting for the jobs number tomorrow. This is silly, jobs are not coming back anytime soon and a 2% beat or miss on the number means little or nothing. But that's how things roll.

My three open longs (AREX, WTS, BANR) were about even today. That's not bad, but with so many names going bonkers (biotechs especially) it can be a little jealousy inducing.

In any case, resolution should be coming soon either through a breakdown of the market (maybe eyeing SPX 1320) or some sideways consolidation into next week to recharge the batteries for a run higher.

The Lexicon of Market Extremes
I was very skeptical of Twitter and held off on using for some time. I have to say it's a great real time tool for market observation. What's also important is that while most that write will settle down and write a calm and measured blog post or article, Tweets often show the very emotion and thinking going on right at the moment without filter.

And at no time is this more clear than at market extremes.

Tonight I will pick out some select phrases or terms you are likely to see any time on Twitter but the frequency, use of various punctuation, and use of CAPITAL letters will get very high at either market bottoms or tops.

Market Bottoms
"Day's Over"
"Margin Calls on the Way"
"S*&t's Broke!"
"Orderly Close..."
"Cramer Just Went Short!"
"That Went Fast"
"Falling Knife"
"Deep Value Plays"
"Book Value"
"Fake Market"
"Artificial Support"

To be fair, market bottoms tend to be quiet affairs on Twitter as markets collapse, no one except random bears are talking much and the smart people are out of the market or not pressing their luck short.

Market Tops
"BOOM!" or "BOOM!!!!!!!!"
"Breaking Out"
"Shorts" usually in conjunction with a "kill" type thing
"Trade the Trend"
"I am Almost Even on That ..insert stock.."
"Buy High, Sell Higher"
"Have to Get In"
"AOL Looks Good"
"This is Easy"
"Send a Stamp and $5 and get My Newsletter by Mail!"
"Who Needs a Good Financial Advisor?"

To be fair market tops are usually noisy and annoying Twitter as all the "players" come out of the woodwork.

Use the lists ans note frequency. By my count, we are not topping out and there is still a good mix of both.

Have a good night.

Wednesday, February 1, 2012

Let Your Stocks Talk

It was 62 degrees here today. While this is great in February, I think Spring just got pushed back by two weeks as Winter will want it's due.

No, I am not going to discuss the Facebook IPO.

Let Your Stocks Talk
I would think that even the most blissfully long mega bulls would concede that the rally that started in mid December is getting a bit long in the tooth. I know I made the commitment to be aware of where markets are in an overbought/oversold cycle when opening positions in 2012.

Up to today overbought has been worked off by some smaller dips and sideways movement. Constructive and it allows set ups to recharge. It's great to see but textbook behavior can make me feel uneasy after a while. Instead of over thinking things, I will let the stocks I buy do the talking by observing the price and volume action as we go forward. Surely they will know more than I will and know it first, yes?

I made two buys yesterday afternoon and one this morning. The 3 are about as different as you can get, and thus I have a broad look at the market via the positions I have. I did this by design to have a few different looks as things progress. Click any chart for larger view.

A small cap oil and gas exploration company. IBC's chessNwine had been working on it and I liked the steady uptrend and was playing for the break over $34. It held over that level today.

A small cap water industrial manufacturer. Very tight base and while I drew the base excluding the lower end, I was most interested in the range provided by the candle on 11/30/11 topping out at $38.50. Played for a close over that and it did so today.

A super small cap savings and loan. $20 has been an a tough level to crack. When you back this thing out to a weekly view (FinViz) you can see the room to run should this little number ever get moving:

So I have exposure to small cap energy, small cap industrial niche manufacturing, and a super small cap financial. AREX has a solid uptrend in place and has just negotiated past resistance. WTS has built a long term base and has closed over former resistance going back to November 2011. Should the market be looking at a "dip" and not a correction I would expect these two names to retest the resistance and be able to hold it as support. If not, then maybe a more forceful correction is a hand. To be fair, neither is so far past resistance that a small dip under it rules them out going forward.

BANR is the most hyper of the three in that it will most certainly require a broad based market run up to continue a power move past the $20 range. I would think this name would be the first to turn back in the face of any broad market weakness, especially in the financials which have been leading the charge.

You will always pay more attention to market action when you have skin in the game. You are least likely to allow bias or hope to mess with your head if you stick to your targets and stops on open positions. I like this set of three to give me a feel for the tape going into weeks end and I will let them do the talking. All I have to do is listen.

Here is an updated chart of MSEX which I highlighted in Monday's post. Has broken the triangle to the upside. It's a really small name so be aware if you are considering it please!:

Have a good night.