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Intuitively Bullish
I decided to lock in half of my gains in my long ISRG position today at $382. Here is the original buy timestamp inside the 12631 Trading Service, where members receive instant email alerts for all trades and posts too.
chessNwine
New Long: $ISRG 3/4 position @ $349.39. Stop: Below $337 Looks to be breaking out from multi-month falling wedge. Will post chart in a moment.11:29:46am EST on Fri, Jun 17, 2011
I then added the final 1/4 to my position 06/28 @ $363.19.
I want to discuss this position here to discern between daily and weekly timeframes. In other words, this is not the old “Siskel & Ebert” film critic show with a thumbs up or thumbs down view of stocks. Frequently, there are shades of gray. In the case of Intuitive Surgical, the daily chart (first one below) is telling me that the stock is stretched in the short-term and is far extended from its most recent base. It is also clearly past a high probability entry point. Beyond that, I am up over 30 points from my original purchase. So, for the sake of discipline and as the probabilities tilt away from me short-term, I decided to lock in some gains.
However, it is important to keep perspective on the trade. Looking at the weekly chart (second below), the overall picture remains decidedly bullish, with ISRG attacking 2010 and this year’s highs today, while breaking out of a cup and handle pattern and springing off of the 20 period weekly moving average.
Hence, I will look to stick with this thesis going forward, without being blinded by greed in the short run.
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Whatever Goes Up May Very Well Go Sideways
Those traders who expected the market to automatically give back a large chunk of last week’s gains via a swift move lower have to be frustrated with the action this morning. As I noted last Friday in multiple posts, an overbought market that stays overbought and fights off a correction hard is bullish. While the senior indices are basically hugging the flatline, the energy/materials complex is acting well, with the financials and transportation stocks consolidating.
As the morning progresses, I am looking for stocks that continue to set up behind those issues that are already extended and consolidating. If last weeks’ move higher truly has staying power, then it follows that more and more stocks should continue to work. A few names that meet that criteria this morning: $AIRM $BPI $SAPE $SOLR $SREV $STNR.
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Stocks Setting Up Behind the Leaders 07/04/11 {Video}
Members of The PPT & 12631 Click Here for Screen Mentioned in Video
Tickers Mentioned in Video: $BKH $BPI $GET $GME $GNK $LL $MSO $SPY $TIVO $XLU
http://vimeo.com/25982653
Father Time Offers a Reprieve
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With the benefit of hindsight, the stock market sure looks like an easy place to quickly amass a fortune. If we could turn back the hands of time, going all-in long on LULU at $4.33 per share (now trading at $115.62) in early March of 2009 was the “easy and obvious thing to do, duh!” While it may be fun to look back at all of the ignoramuses alive in the 1960’s who missed a chance to invest in Berkshire Hathaway when the shares were as cheap as Warren Buffett’s favorite restaurant, doing so is usually an exercise in futility. With the amount of issues that trade each day Wall Street is open for business, there will always be too many missed opportunities to count, regardless of the investing legend and regardless of how many assets under management.
Although we cannot turn back the clock, Father Time occasionally offers a reprieve. In the case of Genco Shipping and Trading, Limited, you are talking about the quintessential “value trap” for quarters on end. Back in late January, I wrote this piece when the stock was at $13.29, giving a bearish thesis based on a weekly descending triangle breakdown. Since then, Genco has been one of the few stocks to not only retest its 2008 crash lows, but also marginally breach them. The stock currently trades at $7.57, after going as low as $6.28. So, if you have been beating yourself up for not getting long back in late 2008/early 2009, here is another chance.
Of course, you may curious as to whether it is actually correct to turn bullish on Genco down here. The value guys will tell you that the stock is insanely cheap down here, and they are correct in an academic sense. Unfortunately, Mr. Market not only frequently ignores academics, he also punishes them harshly from time to time. As you can see, a cheap stock can become much, much cheaper when the prevailing trend is down.
Turning to the technicals, the weekly chart shows a slow and steady drip down for well over a year now. Those small-bodied candles indicate the bears’ staying power of a driving rain, making it that much more difficult to play for any type of sharp upside reversal. In fact, traders who tried to do as much likely threw in the towel, thus perpetuating the drip lower. That said, the daily chart shows more progress being made by the bulls in at least eight months. Note how price climbed back over the 50 day moving average, and is now attempting to consolidate on it. While the 20 day moving average is smoothing out, the rest of the reference points are still declining, meaning that the bulls have their work cut out for them to develop a pattern of higher lows and higher highs.
Finally, and this is where Father Time may actually be proffering a rare gift that should be treasured, GNK has phenomenal seasonality in the month of July, batting 100%, or up six out of six times, according to the proprietary algorithm inside The PPT service here at iBankCoin. Moreover, the stock yields an average return of nearly 13% in July.
In other words, if Genco truly is cheap and has no business being anywhere close to its crash lows, then now is the time for those bullish convictions to come to fruition.
Seasonality
Month Avg % Return Total # Months # Months UP # Months DOWN January -6.08 6 2 (33.33%) 4 (66.67%) February 3.179 6 5 (83.33%) 1 (16.67%) March -0.761 6 4 (66.67%) 2 (33.33%) April 12.691 6 5 (83.33%) 1 (16.67%) May 4.661 6 4 (66.67%) 2 (33.33%) June -6.5 6 2 (33.33%) 4 (66.67%) July 12.978 6 6 (100%) 0 (0%) August -2.335 6 3 (50%) 3 (50%) September -3.437 6 4 (66.67%) 2 (33.33%) October -5.301 6 3 (50%) 3 (50%) November -8.48 6 2 (33.33%) 4 (66.67%) December 10.159 6 3 (50%) 3 (50%)
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