Focus Stocks Update

Fuuuuuccckkkk!!!!

Sorry about that. I just had to get that off my chest. Strangely, I still don’t feel better.

As of today, these stocks are now known as “fuckus” stocks.

Holdings: (most recent prices) and original purchase prices:

[[AGU]]@86.26

[[BIG]]@ 29.05

[[CLF]]@89.40

[[CNX]]@91.41

[[FDG]]@69.30

[[FLS]]@121.10

[[PBR]]@65.55

[[POT]]@199.26

[[WFT]]@41.99

[[WLT]]@83.87

I am still sitting on profits, but they are going the way of “The Magic Man”…now you see ’em, now you don’t.

I’ve got it in my head that these will bounce back like a super ball. However, right now, they’re being tossed like rotten peaches off the cliff of death.

Definitely egregious and reprehensible.

Decisions to make tonight.

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This may seem like heresy to the majority of bears here, but I’ll just throw this out and let you perform your inquisition.

We may be getting closer to a near term bottom. There, I said it.

I emphasize near term, because fundamentals are not even close to supporting an “all clear, hands on deck, buy, buy, buy” scenario.

Still, I remain bearish on the market, until I become bullish. It’s a Zen thing.

Yesterday, the NYSE Bullish Percent moved closer to the magically oversold level of 30%. It now sits at 32%. For all you newbies, the Bullish Percent indicator is a measure of market sentiment. It measures the percentage of stocks that are on buy signals based on Point and Figure (PnF) charts.  

As you know, I start to look at opportunities to go long when the Bullish Percent dips below the 30% level and crosses it again on the way up. By crossing back above the 30% level, it typically signals a major shift in market sentiment that can develop into a trend and be sustainable for a period of time.

In addition to the NYSE Bullish Percent, the OTC Bullish Percent is now sitting at the 30% level after yesterdays action. On top of all that, the percentage of OTC stocks that are trading above their 10-week moving average is now only 22%. This may set up an interesting scenario where the OTC may lead the charge to get the market out of it’s funk. Hey, shit happens.

In the meantime, I continue to sit in cash (59%) half of which is allocated to the Australian Dollar via [[FXA]] and the Canadian Dollar via [[FXC]]. Both the Aussies and Canucks have commodity based economies whose currencies continue to waylay the dollar. I’m also nursing my 10 focus stocks, my commodity and inverse ETFs and my [[MA]] short. At this point, I’m not adding to anymore short positions (via stocks or inverse ETFs) unless on small rallies, and if so, will set stops pretty tight.

The current trend is still down, but I’m starting to plot a course for when sentiment changes, thereby accumulating more coin for the vault, egregiously of course.

You see, many simpletons true to form, simply “stick to their guns”, whether bullish or bearish, stubbornly clinging to their opinions. Then the market says, “fuck it, I’m going to Constanza your ass”. Then out come the hickory axe handles, and the simpletons get waylaid unexpectedly, “Walking Tall”-style. 

In closing, to perfect our craft, we all must take heed and listen to the voice of the market, measure it’s pulse, and finally ride it’s coattails all the way to the bank, whether in a bearish or bullish posture.

Be well, do good work and keep in touch. 

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The market has been accosted and beaten with fuggly sticks pretty much all day. No surprise there. It had it coming. Still too many bulls crying out for a reversal. No mercy for you, regrettably.

Even though it appears to be making a comeback from the lows today, it’s still a  matter of how FUBAR this deplorable market will get. If you’re a bull at heart, then take heart. Go stab yourself with a spoon. It doesn’t appear to be getting any better near term.

Rising oil will continue to waylay the bulls and all things gay. It’s the law, by the way.

As for moi, I am happily twiddling my thumbs sitting on piles of cash as I watch [[MA]] go down, as ordered. By the way, death to MA and all who practice usury. 

In Costanza-like fashion, I am stubbornly holding on to the 10 focus stocks. I believe they are “safehavens” for bulls looking to hide from giant granite balls falling from the sky. Despite that factoid, they are getting the hammer of Zeus today.

However, with equal justice meted out, [[ZEUS]] is getting the homo hammer of Thor in spades. How appropo. 

I covered my [[COF]] short position @ 38.25, partly because it doesn’t feel good to be short that stock, and partly because I can.  Also, I just covered [[UA]] @ 25.60 for $6 and change, because people running around in tight spandex make me nervous.

Finally, my urging is this: do not step into this developing maelstrom of evil by going long, except for energy and energy services. The market can be like a bitch who appears to be raising her skirt for a “look see”, then frags your ass with grenades.

Keep this in mind.

You may now continue to move about and establish more short positions. 

 

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The market hasn’t seen this kind of an oil boom since back in the late 1970’s – early 1980’s. Some of you were probably throwing up milk and crapping in your Huggies back then, but regardless, oil hit new highs of over $35/bbl. Adjusted for inflation, that’s over $70/bbl in 2006 dollars.

This was mostly due to supply contraints that were a result of events in Iraq and Iran in 1979 and 1980.  Odd, no?

The energy sector was almost 30% of the S&P 500. Inflation was running rampant. Mortgage interest was 16%. In short, to quote Louis Armstrong, “what a wonderful world”.

Oil was all people talked about. All that investors wanted to buy.

Subsequent to that period, energy went bust. Oil prices dropped from over $35/bbl in 1981 to under $15.

 

 And, as recently as 2004, energy was only about 7% of the S&P 500. Financials were 23%.

Fast forward to the first half of 2008. As a result of all the plundering going on in the bank stocks, financials now represent under 15% of the S&P 500. Energy is now about 16% of the S&P.  So, from the perspective of sector weightings within the S&P, energy has more than doubled its weighting in just four years, but is nowhere near the weighting the market saw in 1980.

What does the future hold? Well, imagine this….if trends continue, could we possibly see a flip flop of 2004, where energy now becomes 23% of the S&P and financials 7%? Will financials continue to get waylaid by the bears? How about if energy gets to 1980 levels,…30% of the S&P?  Is it possible? Time will tell. We’re best advised to continue to track oil prices.

Putting it all in perspective, It appears that there is still room for the upside in energy stocks.

 

 

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Today, boca asked me how the flyfishing went over the weekend. Rather than lie and say, “pretty good!”, I felt compelled to give you a more detailed and accurate accounting.

You see, the flyfishing junket was aborted “midstream”, due to egregious leverage from the homefront. As I mentioned last Friday, there were questionable roadblocks, namely “weekend projects”, that were slated to be postponed in lieu of fishing and alcohol consumption. However, these so-called “projects” actually  ended up on the front burner. 

I can’t give you all the graphic details, but suffice it to say that my ticket to ride the booty train this past weekend was not going to get punched, unless I was on the right track, so to speak. Treachery, thy name is manipulation.

It’s a sad fact that women can be tough negotiators, especially when they’re not in the kitchen making sandwiches.

It wasn’t a total loss, though. I did manage to catch two rainbows and a brownie, and of course, completed the “projects”, and got my ticket punched.

Disclaimer: This post has absolutely nothing to do with the market or investing.

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News Flash 16:07 ET: This just in from Mr. Obvious…..”the market is weak and gayer than a plastic pink flamingo”. 

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It’s just normal for many traders and investors alike to try to come up with some winning predictions when it comes to the market. I keep hearing, “the market will do this, the market will do that”, yadda, yadda, yadda.

Sorry, but trying to predict what the market will do next is about as worthless as a velvet picture of a monkey’s ass.

In the world of investing, we can take two approaches. Either we try to prognosticate (a fancy word for predict) where a stock or the market is headed, or we adapt to market conditions and act accordingly based on the information we already know.

My approach is to adapt. That means I prefer to take my cues from current data and make a decision whether to act on it or not. To do this, one must have a system in place that screens through all the market bullshit, and faux-advice from the media,  and generates reliable and useful information to help structure trades or an investment portfolio.

The most useful methodology that I’ve found is to use the relative strength approach. That is, looking for securities that are outperforming or underperforming relative to the general market and their peers. Most of us already do this: look at strong sectors, then look at strong stocks within those sectors and go long those stocks. Or, look at weak sectors, then look at weak stocks within those sectors and go short those stocks. This is not rocket science for dummies.

However, most Joe Blow investors and their brokers think the market is like a complex maze of events, kind of like a rubiks cube / jenga party. Unbeknownst to them, it’ s quite simple when you break it down logically. I didn’t say it was easy.

The alternative to adaptation is to try to predict where the market is headed. This is quite difficult without the aid of a time machine. You’ll have a better chance of getting a date with Pamela Anderson, than being able to predict the market consistently. It follows that, If predicting the market consisently was possible, Pamela Anderson would be banging Dennis Kneale during lunch breaks. It ain’t gonna happen.

Now that earnings season is upon us, it behooves us to ignore the cries from CNBC for “gloom and doom”, or a “bounce / recovery from here” and focus on what the next move is based on what we already know. Not by predicting, but by thinking through at least three possible scenarios and working up a game plan ahead of time, much like a head football coach would do.

“What do i do if oil keeps going up, or if it goes down? “What will I do if earnings on financials are better than expected?” Don’t chain yourself to one particular scenario, stubbornly holding on to your opinion because you’re afraid of being wrong. Be flexible enough to switch to the other side efficiently and elegantly.

Adapt to the changes as they come.  

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