Joined Jan 1, 1970
509 Blog Posts

Carry On….

I’ll be enjoying the Fall weather in the mountains for the next four days. When I get back, I expect that the market will be lower, and the Fly will not only have banked more egregious coin egregiously, but the vocabulary of his posts may be altered slightly. We shall see….

Carry on.

Have a great weekend.            

Comments »

Costanza Wins Again

On Wednesday, I posted my most recent “Costanza” watchlist.

Fourteen of the ninteen stocks have recently reversed in the last two days and a few are starting to get profitable now. Fancy that.

If you’ve been following the PnF charts, trading based off a long tail down pattern has been like shooting fish in a barrel. Buy on a break above the the 3-box reversal. To wit:

Arch Coal, Inc. [[ACI]] , @ $38

Alpha Natural Resources, Inc. [[ANR]] , @ $66

CF Industries Holdings, Inc. [[CF]] , @ $112

CONSOL Energy Inc. [[CNX]] , @ $50

Energy Conversion Devices, Inc. [[ENER]] , @ $56

Eni S.p.A. (ADR) [[E]] , @ $59

Flowserve Corporation [[FLS]] , @ $98

GMX Resources Inc. [[GMXR]] , @ $48

Joy Global Inc. [[JOYG]] , @ $46

[[KOL]] , @ $35

Massey Energy Company [[MEE]] , @ $42

The Mosaic Company [[MOS]] , @ $80

National-Oilwell Varco, Inc. [[NOV]] , @ $56

Patriot Coal Corporation [[PCX]] , @ $36

Your invoices will be arriving by email, shortly.


Comments »

Play Defense!

Just a quick update on the NYSE Bullish Percent readings which have now dropped to 38% from over 45% a week ago. This is not a good development for the bulls. Sentiment has shifted to the negative side now. Forget about trying to throw that long TD pass. Time to play defense.

This comes on the heels of a drop in the percentage of NYSE stocks trading above their 10 week moving average. That number has declined from over 58% to about 45% in the space of one week. In addition, the percentage of NYSE stocks trading above the 30 week moving average has declined from almost 40% last week to about 31%.

Both of these developments are bearish. Also, one must keep in mind that over 2/3 of the stocks listed on the NYSE are small and mid cap names. So that rally we’ve been hearing about in the smaller issues?….It’s evaporating.

The broader market is going down.

Things to do:

1. Reduce exposure to stocks

2. Increase cash position

3. Can continue to hold some stocks in strongly performing sectors, but tighten stops.

4. Sell laggards

5. Use trendline stops on ETFs

6. Use inverse ETFs to hedge.

Disclaimer: This information is not intended to be used solely to make your personal investment or trading decisions. No claims or guarantees are implied by this information or the dissemination of it. 

Comments »

The Ripple Effect

The historic effects of the past year are a direct result of the “socialization of America” as evidenced by the loosening of lending standards.

As you know, standards and rules are put in place to govern the propensity for people to do stupid and/or illegal acts normally associated with the intellectually challenged. When those rules get abandoned and tossed by the side of the road, a whole new set of problems arise.

Based on a 1992 Boston Federal Reserve study of mortgage lending, policy makers in this country reached conclusions that  there was evidence of…

“patterns of gender and familial status discrimination that differ markedly by race in the US. White couples with children experienced familial status discrimination if the female partner was in the labor market, but not if she was at home raising her children. However, African-American or Hispanic couples with children suffered familial status discrimination if she stayed home to raise her children, but much less so, if at all, if she was in the labor market. This pattern of racial differentiation may reflect social norms dating back to slavery that have favored labor force participation for African-American and Hispanic mothers but not white mothers. “

Over a period of time, this kind of thinking set the stage for a gradual loosening of standards that was promoted by many groups including, consumer advocates, construction and financial industry participants, human and civil rights groups and elected officials. Whether it was subliminal or overt, the message was clear: everybody has a “right” to homeownership, regardless of race, color, creed, marital status or sexual orientation. That’s all well and good. I’m all for seeing people improve their standard of living and lot in life. But, not at the expense of sound economic and fiscal discipline.

Criteria such as a borrower’s credit history, income, time on the job and family history should not be looked at as “outdated”, “negative” or “discriminatory” when it comes to determining who qualifies for a mortgage. It has nothing to do with race or “culture”. It has everything to do with sound fiscal discipline and responsibility.

Standards are there to protect BOTH the lender and the borrower. Unfortunately, policymakers failed to grasp this concept. By pressuring the banking and financial community to lower their lending standards, our government, through the voice of “the people” and special interest groups, has contributed to the problem.

It also gave the incentive for bankers, mortgage brokers and homebuilders to  carry out its own social mission. Simple economics. If you give people an opportunity to make a greater return from doing something, the more they are going to do it. The builder gets to build a house, the bank gets to make a loan and  the homebuyer gets a home . Now everybody is happy!  What a good economy and nice government we have.

Government social policy has created all this havoc. And we all will pay for it—-for a long time.

The scary thing is….they’re not done yet.

The ripple effect of this socialization of the “American Dream” of homeownership, that started back in the early 1990’s, has been felt globally today.

Furthermore, this mindset is also seen in the corporate world as we witness government intervention becoming more prevalent in preventing failures or collapses of organizations vital to the economy. How big does one entity have to get to become “too big to fail”—-to get a free pass?

Right now, we are seeing an “end around play” on American capitalism, the likes of which has not been seen in the history of this country. Correction, it’s probably more like a “double end around flea flicker”, when you consider that the government now owns trillions of dollars in collateralized mortgages through a bailout of Fannie and Freddie. In football, as in life, trick plays are designed to fool the defense and “wow” the crowd.

I’m not sure what will change this. Maybe we’re too far down the path to go back the way of fiscal responsiblity. God help us.

Comments »

Bought ANR, ENER

After practicing with a few games of Frogger on my old Atari, I bought Alpha Natural Resources, Inc. [[ANR]] , at $66.00 and Energy Conversion Devices, Inc. [[ENER]] , @ $56.01 from the Costanza Watchlist.

Enjoy the game.


Comments »