This Market is For Closers Only

Higher interest rates is bullish thing for certain banks. With the yield curve getting “curvier”, I like HBAN, KEY and CMA.

The market is soft this morning, but who knows how it will play out. Every dip has been a buying op. But, not all stocks are going up anymore. On weak days, 75% of stocks trade lower, making it much harder to bank coin off swing trades. Most people get frustrated and over-trade tapes like this. I’ve always found it to be useful to “stop trading” when the tape gets convoluted. My style of trade is not conducive with day trading, even though I can do it as good as anyone. But I need to take down big positions in liquid stocks, which is hard to do in a stock that’s gapping higher within a 2 hour window.

If this tape is hard for you, trade small and take some pointers from some of the talented day traders on the site: Ragin Cajun, Option Addict and Raul.

OVTI is exploding to the upside. I really like that name, evidenced by selecting it for my semi-managed GAPR index inside of The PPT. Using the algorithms and my opinions, I manage an index of growth stocks at a reasonable price (GARP), inside of The PPT, on a semi-annual basis. Year to date, it’s up almost 40%.

Top picks: IMMR

I can’t believe SYNM and MGPI popped today. You don’t understand, I monitor everything. I was “eyeballing” these two stocks in particular because they’re so lowly and lame. To this point, I took a trip into the “houses” of homeless stocks this evening, taking copious notes along the way.

The point of this exercise is to identify these small pieces of offal before they “go mansion” on the markets and buy condos near the shore for themselves.

Here’s what I have so far. If you were smart, you’d affix alerts to some of these names, geared towards momentum (I use 2%+ for the session).

GEVO
GSAT
CPRX
PSDV
PRMW
AFFY
END
AMRN
DNDN
CYTK
ZIOP
VICL
ACRX
NLNK
ACHN
MM
IMI

Note the over abundance of mad scientist stocks, doctors making medicine to kill people instead of making them feel better. Always be careful of the FDA when playing these stocks.

We went from solar to boats to alternative energy stocks to silver and now to alternative fuels. Shares of SYNM and MGPI are skyrocketing for reasons unknown to the sun, moon and the stars.

REITs are getting smashed again, which is good for prospective buyers–negative for everyone else. All eyes on Japan tonight. After that 5% beat down, 15% over the past week, they need to rally the NIKKEI. My bias is to be cautious in the face of these issues. My boat stock, FRO, got crushed today after bad earnings. I always thought they’d report bad news. This is a multi quarter play, not some magical shift that occurs overnight. The boat trade is dead. If you’re not long term, sell now and allocate funds elsewhere. I am holding my shares.

IMMR helped hedge me against the FRO loss; but I am still down about 1% for the session. Being that the market is up and the stocks I sold are up, my 45% cash position is actually hurting me today.

I can only hope for a further shakeout in the market, so that I can do some buying.

After looking around for some ideas, I find myself too conflicted to start new positions here. With TLT dropping, horrific seasonality ahead for the miners in June, I cannot justify getting long for a quickie now. There are only a few sectors that interest me, one being solar, and it’s too rich to buy up here. The other, believe it or not, is the gold/silver miners. However, if you saw the seasonality stats for some of these names in the month of June, you’d cringe at the prospects of being long one into the teeth of a beatdown.

There are many speculative stocks trending here and maybe I am being too risk-averse again. But I have my gains and a plan to buy REITs, when no one else wants them. I will be there to buy when the last sell ticket is cast.

Until then, I will wait in the shadows, tending to my FRO, hoping IMMR can continue to offset its wilted ways.

NOTE: My cash position is upwards of 45% now.

Once again, the market makes jackasses out of the people (like me) who sold into what appeared to be “warnings” of an overheating tape. As always, this is one giant bear trap, devouring suckers whole at the expense of reason.

I am looking to reallocate cash now.

DEVELOPING…

The idiots over at TSLA have decided to triple the amount of “solar powered” charging station, enabling drivers to travel “coast to coast.” Also, in their infinite wisdom, they’ve decided to make a sweepstakes out of the announcement of their new ‘super charger’ supplier–to be announced today at exactly 1:30 pm (est).

Because of this news, the alternative energy sector has been on fire, with the likes of soon to be bankrupted companies shooting higher–in the hopes that they might be the recipient of “The Great TSLA Super Charger Contract of 2013.

According to the market, the contestants are:

CPST
BLDP
QTWW
UQM
ARTX
FCEL
PLUG
ABAT
HYGS

NOTE: Following this historic event, the shares of 99% of the sector in question might come under extreme selling pressure.

In light of the recent correction in REITs, I want to buy some, simply because I do not believe rates are going up. The natural buy here is TLT; but upside is limited due to the bull market in stocks. I am going to provide two groups of stocks, one that offers conservative returns and the other is straight up high beta cocaine gambling–high risk and reward.

List 1.
KIM
HCP
WPC
VTR
AEC
AVIV
NNN
O
REG
BPO

List 2.
JMI
IRC
SBRA
NCT
MTGE
RPT
UHT
AGNC
ETFs
PHK
PTY
JRS

These stocks are buyable now. If the losses should deepen from here, I will be an aggressive buyer.

I don’t care about anything but large cap, treasuries and REITs right now. These are real economy cogs, not some fly by night rumor mill buoyed story stock. It’s disheartening to see names like KMB, CPB, WY and BX taken to the woodshed, even though I do not own any but KMB. These stocks are long overdue a correction and the corrections have arrived, fast and furious (extra diesel). I am not suggesting this correction is anything extraordinary. It’s actually quite ordinarly and pedestrian, save the spike in treasuries. However, I am suggesting that you pay close attention to the trends, for they are telling us the market is overheated.

The big divvy payers have led the market higher. It should come as no surprise to see them lead us lower. I am sure there will be people who believe we can still rally, as the large caps get flayed. But this is simple folly, a mistake made by people wearing blued collars and burlap’d pinstriped on top of velcro underpants.

NMR, HCP, VTR, HCN, SNE and MFG are officially in correction mode.

Other dividend payers getting taken to the woodshed include: BAK, HAS, TLK, BIP, BBD, ABV and NGG. PPT members can access this screen here.

I lost 1.5% today, but raised a lot of cash. At the close of trade, I was up 29% for the year and in a 42% cash position.

Everyone is having fun trading FNMA today. I, however, have opted for a less exciting afternoon, looking for broad market clues and building a watchlist of stocks that can last the test of time.

The IYR is down another 2.5% today. Let me explain to you why this is happening.

REITs enjoy a very low rate environment. Because of these low rates, they’ve been able to finance projects at extremely low costs. REITs live and die by the credit markets and are valued based upon their NAV, which is based upon their balance sheet. If rates are heading higher, that is a material downside event for their balance sheets and NAV, which in turn means the stock prices need to go down.

But are rates really going higher? Do we really think the Fed will allow this to happen?

I am skeptical of anyone who shorts The Bearded Clam, for he has made me fortunes since 2009. Assuming I am correct, the REITs are great buys down here.

We must take a look at O, SBRA, MPW,JMI, AVIV and other hard hit REITs.

I am going to narrow down my watchlist to a few good REITs and begin buying them soon. I am respectful of market forces and will allow for the stocks to breathe, knowing they’re under extreme selling pressure. Believe it or not, this is typical of May, seeing the REITs get hit. It happened last year and in 2010. Both times the May sell off represented optimal entry points for the industry. I believe buying them from here until mid June will yield the same results.

REITs are getting smashed again. See for yourself.

In turn, mortgage related plays are getting hit too.

Add in the homebuilders, which are down more than 1% today, some much worse than that, and you have a legitimate reason to believe this correction is for real.

PHK is down more than 4.5% again today, further solidifying evidence that anything with yield is getting hit. I must admit, this is surprising, especially since TLT is up for the day.

High risk alternative energy plays continue to surge based on speculation that TSLA is doling out a “super charger” contract this week. Names in the mix are BLDP, UQM, ECTY, PLUG and CPST.

For now, SRS and DRV are the inverse plays to own, as these REITs get smashed to pieces.