I’ve been busy with the mundane trappings of raising new capital today, so I hadn’t had time to check in.
Much to my delight….markit [sic] up today!
We have oil, energy and financials up. We have utes up and materials up. Consumer staples and industrials. Interesting happenings. Who knew?….
Tack on another profitable day for the bulls.
Delightful.
Back later on.
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The next major move could be up. Considerably.
What we are seeing is a shift in leadership from energy, steel, ag and industrials to the current industry sectors on the move: transports, REITs, banks, waste management, biotechs, and drugs.
Write it down and start looking for new ideas in those areas. Fuck the short selling. It’s getting crowded. Short interest is at record levels and has been for a while. Game over.
Also starting to come up in the ranks: gas and electric utilities, electronics, software and computers.
Don’t ask me why. You can’t figure the market out during periods like this.
I believe that we are on the cusp of a shift in the prevailing trends. Take your cues from how difficult things are to figure out. Trending markets are fairly easy to figure out—-both up or down. This market is indicating that a major change is transpiring, imho.
It is during these times that traders and investors must be able to adapt to change. It’s not the strong or the smart that survive. It’s the ones who are the most adaptable to change.
Change or die.
Disclaimer: I could be wrong and full of bullshit, so don’t plow all your money into stocks.
Comments »Some may have a hard time believing that I’m starting to see improvement in the financials. “What are you smokin’?”, or “you’re wrong”, “you’re early”, etc., etc…
Things don’t “feel” right. Yeah, I know…it might not feel right, but since when do your or my feelings have anything to do with the way the market operates?
Here’s another area to start exploring: REITs.
Aside from paying you decent dividend yields, they’ve also been showing some improvement in demand and RS.
I like the idea of [[ACC]], $28.98, which develops, owns and manages off-campus student housing at schools like Florida State, Texas A&M, Oklahoma, U Penn, Colorado, San Diego State and Michigan, to name a few. However, I would wait to buy it on a pullback to $26, as the company has been recently downgraded from BUY to HOLD by one analyst on the street due to market price valuation issues.
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There’s also [[BAM]], $32.13, which owns interests in 106 properties, totaling 73 million ft2 in the downtown core areas of NYC, Washington DC, LA, Houston, Calgary and Ottawa. They also own over 1 million acres of timberland in the US, Canada and Brazil. In addition, they are focusing on hydroelectric power generation and co-generation plants, so it’s also an infrastructure play.
A triangle chart pattern is forming and given the improving strength of the sector, it has the potential to breakout to the upside. I already own shares @ $31.58 with a stop at $28. Fundamental price target is $40, with a bullish price objective of $60, based on the PnF charts, so my reward to risk ratio is better than 2:1.
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Finally, check out [[BXP]], $93.29, which develops, owns and manages prime property in Midtown Manhattan, Washington DC, San Francisco and Princeton, NJ. I haven’t bought it, but would consider doing so on a pullback to under $94. My only concern with this one would be how rents are holding up in Manhattan, given slower growth, increase in sublets and additional office space becoming available.
The 9% divi helps a little, though.
These are just a few of the names I find interesting. One might also simply look at buying [[ICF]], $74.64
Right now is a good time to be checking out these battered areas for bargains. We are in a lower risk environment for stocks right now, contrary to what all the fear-mongers are selling the public. Opportunity knocks lightly, it doesn’t hammer you over the head.
Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates. Trade at your own risk
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I’m baaack!
After an outrageously good time last week, I’m ready for more fishing this week…..in the markets.
One thing I noticed since coming back from vacation, is the positive action I’m starting to see from many sectors. Yeah, I know….you can’t tell by looking at “the market”. When I left for vacation on 07/18, the Dow was at 11,500, the S&P at 1261 and the Naz at 2282. So WTF am I talking about? Did I lose my mind in Alaska?
People, in just over two weeks, about half of the 40 industry sectors I watch, have seen sentiment shifts back to bullishness. I’m telling you, demand is starting to come back into stocks. This is what typically happens in this kind of environment when the financial news is so negative. This is the perverse nature of the market, sometimes.
Taking a look at the banking sector, I’m seeing some improvement in sentiment. If you’re thinking about bottom fishing, this is the spot to drop your line.
Did you know that earlier this month, sentiment was so negative on the banks that only 8% of bank stocks were on PnF buys signals (bullish percent indicator)? You have to go back to 1987 to find sentiment so negative on the banks. Last week, that number had improved to 16%, and now it stands at 36%. My point is, things are improving. Still, there are problem banks, no doubt.
Not all banks are created equal, though. One stock that I’ve nibbled on today is [[STT]]@ $68.83 (13:39 ET).
It has pulled back from $74 and I think it’s a good buy here.
There aren’t too many stocks in the banking sector that are reporting second quarter gains. However, STT actually reported a 50% increase in net-income for Q2:2008 as well as a 39% increase in revenue. Additionally, of the 18 analysts on the street that cover the stock, the average recommendation is an “Overweight”. STT appears to have a fundamentally solid picture.
From a risk/reward standpoint, it looks very favorable. The bullish price objective is $98. On the downside, I’d set my stop at $65, a point at which it would break a double bottom. So, at $69, there’s an upside objective of $29 vs. downside of $4.
That’s over a 7:1 reward to risk.
But let’s not be so optimistic. From the PnF chart, it looks like there’s strong resistance to the upside at $85. Let’s revise the risk/reward ratio to $16 upside ($85 – $69) vs. $4 downside.
That’s a 4:1 potential reward for every dollar risked. I’ll take that all day long.
Do not be surprised if the banks eventually lead us out of this bear market. The sector has not looked this favorable to buy, since 2004.
Another sector to look at is REITs. I like [[RYN]] here around $45.50
Also, waste management companies like, [[AW]], $11.55; [[CLHB]], $77.97; and [[TTEK]], $23.95, are worth a look.
I’m busy for the remainder of the day—-playing catch up.
Happy trading.
Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates. Trade at your own risk
Comments »
It’s time for my bi-annual fishing trip to Alaska to fish for “Kings on the Kenai”. Although late July is toward the tail end of the salmon run, I should still be able to make the mandatory haul of “kings” and “reds”.
Each year I purposely take a break from the market for at least one week. Every two years I head up north to a buddies cabin on the Kenai River to fish for some outlandish sized salmon. The accomodations are Spartan—just the way I like it. No kids, no cell phones, no computer, no internet.
This year we’re going with another couple. The guys fish while the wives kick back, and read stacks of books and novels, while sipping on expensive wine. It’s a very laid-back and relaxing time that is much welcomed.
As I think about the current situation with the stock market, I see that it maybe worth the time to go fishing. The past two sessions gave the bulls some hope and a decent bounce. Was Tuesday the bottom? I don’t know. My guess is that six months from now, we’ll probably be able to determine if it is (was).
My point is, that it’s time. Time to seriously start looking at candidates to establish long positions, if you haven’t already. I’m not saying, “go all in”. No, that strategy is for riverboat gamblers and fools. But, if I were a betting man (which I am), I would stay with the market leaders in the strongest sectors. Especially those stocks that have gotten the combo ice pick / hammer to the chest: energy, steel, fertilizers, and coal. I think traders will go right back to the same names, should this market start to show a broader based rally. Old profitable habits are hard to break.
I’m saying just be ready for some surprises.
Right now, there are some new fishing holes that continue to come to my attention:
Biotechs and Drugs.
Yeah. That’s right. Though I blew out of those “adventures in fuckery“, the biotechs still remain a sector to explore. The group has come off a bottom, where the bullish percent sentiment was 14%, to where it currently sits now at 32%. Typically stocks approach oversold territory at 70%. We still have a ways to go.
A few names here: [[SVNT]], $26.36, [[ILMN]], $84.62, [[CPHD]], $28.81, and [[ALNY]], $31.83. [[CELG]], $71.43, looks a little overbought here, so I’d be careful about wading into it. Wait to buy it on a pullback. You might even get it at $66.
The other sector that is rising up in ranks is, surprisingly, the Drug stocks. Market sentiment was lowest in March, with only 18% of the stocks in an uptrend. Drugs have sort of been hanging around and have been sleepers. Quietly the sector as a whole has been improving to where 34% of the stocks in the sector are on buy signals.
Some interesting names include: [[PMC]], $22.06, [[RIGL]], $24.85, [[DEPO]], $3.99 (for those that insist on penny stocks), and [[BNT]], $14.80. The usual suspects like [[ABT]], $57.50, certainly should be on the buy list for those more conservative.
One drug stock to avoid is [[APPX]], $23.38, which looks overbought.
Notice the long tail up. This stock is vulnerable to a sell off. Look for the reversal back down to $20 if you’re looking to short it.
Well, there you have it. A starting list of candidates for some fishing fun.
Obviously, there are no guarantees that the biotechs and drugs will continue to show improvement, so trade at your own risk—-and exercise caution.
Enjoy your day and weekend. See you all after next week.
Off to catch the Kings and Reds !
Comments »Employee 8 made a comment earlier and I just want to expound and clarify my position on [[CNX]], and why.
I didn’t sell CNX today. I’m still holding it.
CNX, being part of the group of focus stocks, aka “fuckus stocks”, has a 30% trailing stop loss. All the ten stocks do. As of yesterday’s close, I was breakeven on CNX. I won’t sell it until it closes down to $77.25 at some point—-a 30% drawdown from it’s recent high close on 06/20.
My thinking here is to hold highly “resilient” stocks in leading sectors that show high volatility, and let them run through the ups and downs. I did research awhile back on this strategy, and the results were astounding.
The first group of focus stocks, started last June, is up 94.30% as of yesterday. The current 10 focus stocks in that group are: AKS, ANR, SID, BAP, GTE, LSR, LNN, MTL, MOS, POT. Number of trades: 26.
POT is up 204% since 06/04/07; MOS 117% since 11/5/07; GTE 193% since 1/17/08 and ANR 147% since 3/4/08.
I wouldn’t have these kinds of returns if I was too quick on the trigger in selling everytime a stock got “hammered”. It does take some balls to hold stocks using this strategy. But the payoff can potentially be grande.
This tells me that a portion of my portfolio needs to be allocated to this kind of strategy. Picking the right stocks in the right sectors and holding is everything.
I’m either out with a target of a 1,000% return, or a 30% loss from the highwater mark. Otherwise, I hold.
I wouldn’t do this as a total portfolio strategy because the volatility can keep a person up at night.
The current one I started in May is up 7.62% as of yesterday for the 10 stocks.
I’m doing one of these a year (give or take) and the whole strategy is going to be no more than 20% of my investable assets. I’m only disclosing the activity on the current one from May on this blog.
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