Joined Jan 1, 1970
509 Blog Posts

Morning Comment

Wednesday’s meltdown caused the NYSE Bullish Percent to drop from 22% to 17%. A drop to 16% would have signaled a reversal and I would have abandoned my bottom fishing expedition. Nonetheless, you have to stay with your trading system and methodology, or else what’s the point in having one?

I’ll give things one more day. If Thursday is down big time, the NYSE Bullish Percent should end up reversing back down below the 16% level, and I will get defensive with my equity posture again. In this environment, one thing we know is that things can go to extremes on the downside very quickly.  

Yeah, the news is all bad. That’s what everybody is focusing on….so much so, that people could end up missing the obvious.

If you can count, take the following test. Let’s see how strong your powers of perception and observation are. Only half the people answer this correctly.

[youtube:http://www.youtube.com/watch?v=XlasZy6KfzM 450 300]

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It’s nice to have the luxury of cash when there’s blood running in the highways and byways. I spent time selectively buying into this shitstorm, all day long. Not shooting the wad, but selectively allocating dollars here and there.

I also picked up, going into the close, 3M Company [[MMM]] @$57.41(it’s cheap), Transocean Inc. [[RIG]] @$67.15, and [[XLE]] @$42.93.

Though I did take some hits today, my mustache is still intact. I remain hedged and confident that I made some good buys here. The weak hands were shaken out today, no doubt.

We will bounce strongly sometime between now and mid December, in my opinion. The credit markets will be the key. If the market doesn’t rally, current equity prices are attractive at these levels, and can be held for profit if you’re patient enough. We are not Japan, and this is not the Depression.   

When it seems most scary, sometimes it’s the best time to invest. You know, “Costanza” and all that shit.

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Buying Energy

You guys are killin’ me. This is just too much to take.

Ahead of the emergency OPEC meeting this Friday, I picked up a little Continental Resources, Inc. [[CLR]] , @ $22.66,Transocean Inc. [[RIG]] , @ $68.58, Apache Corporation [[APA]] , @ $70.13, Brigham Exploration Company [[BEXP]] , @ $6.63, and [[DXO]] , @ $5.11. I will continue to scale into energy names like these.

Look people, the Saudi’s need $55/bbl to balance their budget, the Russians $70, and the Iranians and Venezuelans $95/bbl. Plus the dollar is killng them. They will cut production significantly, knowing that the asshat American consumer has now started driving back and forth to the mall again, four times a day, due to cheap sub-$3 a gallon gas.

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Morning Comment

Despite the market being down yesterday, the NYSE Bullish Percent increased by 1% to 22%. This continues to be a divergence from the major averages and is worth noting.

Today is a good day to bottom fish, or die. Take your pick.

Just realize that trading and investing is all about risk. You can’t be risk averse and expect to win in the stock market. Embrace risk. Cherish her. Let her be your ally. But realize that she can be a treacherous girlfriend. Even though she once gave you weekend blow jobs and a bottle of beer, she can also turn on a dime and dump you for some pre-med geek that got accepted to Brown University. Risk is that fickle. Where was I?

Oh yeah, bottom fishing. Start buying. We will end up positive today. The Bullish Percents don’t lie.

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Bottom Fishing

Look people, let me make this as simple as I can……start buying here.

If there’s ever a time to go bottom fishing, it’s now. The market has been washed out and is trading off a bottom. I said, “a bottom”, not “THE bottom”. We won’t know if we’ve seen “THE BOTTOM” until several months from now.

Kudos to The Fly for ID-ing the areas to fish in: materials and energy. I’d also add industrials. Given the massive Q3 sell-off in these sectors, it’s not hard to see why this can still be a lucrative area to fish in.

Granted, bottom fishing is not for everyone. In fact, if you commit your whole portfolio to this strategy, rest assured that you might be in the running for the  “Asshat of the Year” award. If you wait until you feel good about buying stocks, you’re going to miss the opportunity. As a matter of fact, if you wait for your charts and indicators to show technical strength, you’re going to miss the opportunity. Just know that after an egregious, violent ass-kicking sell-off, it’s not unusual to see the most beaten up names bounce nicely. (Notice how back in the summer, financials had a move off the July lows). There are times when bottom fishing is appropriate for part of your portfolio, and now is one of those times.

So, here are some names that you can check out. As you start to do your research, pay attention to when they report earnings. (No, I’m not going to do that for you). Also, make sure you establish stop loss points and stick to them. It’s just plain smart to have an exit plan in case the trade doesn’t work out. Consider it done, that you have been put on notice.

Apple Inc. [[AAPL]] , Agrium Inc. (USA) [[AGU]] , American Superconductor Corporation [[AMSC]] , Atwood Oceanics, Inc. [[ATW]] , Akamai Technologies, Inc. [[AKAM]] , Archer Daniels Midland Company [[ADM]] , Cal-Maine Foods, Inc. [[CALM]] , Chicago Bridge & Iron Company N.V. [[CBI]] , Cameco Corporation (USA) [[CCJ]] , Continental Resources, Inc. [[CLR]] , China Mobile Ltd. (ADR) [[CHL]] , Deere & Company [[DE]] , Eagle Bulk Shipping Inc. [[EGLE]] , KBR, Inc. [[KBR]] , LDK Solar Co., Ltd. [[LDK]] , 3M Company [[MMM]] , Meritage Homes Corporation [[MTH]] , Northrop Grumman Corporation [[NOC]] , Southern Copper Corporation (USA) [[PCU]] , [[RIO]] and Texas Industries, Inc. [[TXI]] .

Happy angling.

This is just a partial list. Now go make some money.

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Smashmouth Investing

If you’re trading this market on leverage, like Joey-Bag-of-Margin Calls, then doom on you. You need your head examined along with the rest of the volatility-loving hedge fund reprobates.

However, if you can see past Friday, and have some balls, then start buying here and there. Just don’t go all in like a degenerate. Measure your moves and fire a battery of counter punches at the market. That means buying on pullbacks. In times like these, the money is made by those who invest and trade like they got a pair.

Today, we traded based on earnings reports. That is a more normal occurrance, and is actually an encouraging sign. No shocker that earnings are mixed, or missing the mark. The market has already priced in the earnings disappointments, along with Armageddon. Keep in mind that October is the time to buy, according to the seasonality camp.

Prepare for a “Battle Royale” the rest of this week between bulls and bears. But I have a hunch that we end up positive for the week, putting together two weeks back to back.

Smashmouth investing is never pretty.

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