Fly Buy: $FRO

I bought another 100,000 FRO.

Off the EGLE numbers, boat stocks are ripping. I’ve always said “Fly, this is a sector you need exposure to–because when the tonnage gets scrapped, these suckers are going to be stealing from vendors like pirates in the 16th century.”

I only like boat stocks that are not at risk of imminent bankruptcy. I’ve done my homework on the sector and for my money, weighing risk versus reward, FRO is my top pick. DSX, however, is the easy, gentleman’s pick, with a pristine balance sheet and fancy men aboard its vessels.

FRO, on the other hand, are manned by pirates who shoot grape at fellow sea travelers and storm coastal towns for food and water.

This market has a toppy feeling to it. I am leaving my cash in cash for now. However, the boats and networkers look good to me now.

FFIV, JNPR, PANW, CIEN and FNSR can run on the CSCO beat.

In a world where a graffiti “artist” can demand $49 million for a painting, at one of the world’s most prestigious auction houses, it’s hard to ignore BID.

Last night Christie’s enjoyed a record auction, selling crap from Basqiat and infamous drunk driver Pollock.

Look this is very simple. The regular economy sucks and the middle class, after inflation, are “enjoying” 1995 wages, all the while the Fed pumps $85 billion per month into the stock market. The result is a much wealthier upper class, who are then diversifying their winnings into collectibles. As long as the stock market and the elite do well, there will always be a proverbial bid under the shares of BID.

As far as the stock is concerned, it rarely goes up at the onset of the auction season, performing miserably in May. However, the stock should be bought in May and held all the way through. I will be looking to buy BID for long term accounts soon.

The indices are not tracking the true nature of this rally. Over 800 stocks, out of 3,700 tracked, are up more than 10% over the past two weeks. Yet, in a world of its own, the S&P is up merely 3.4% for the month of May. We can easily give it back and book a negative return for the month and the history books will never tell the true tale of this miraculous tape.

There are been 3 primary sectors driving the speculative fervor.

1. Solar
2. Biotech
3. Education

There are gains in other sectors too, but none more pronounced than those three. Are we to chase them up 50% over the past two weeks? While a fresh long might be able to squeeze another 5-10% out of this pistol hot sectors, the risk is decidedly to the downside.

If we are going to continue to run, look for the laggards to catch up. My commodity index is at a fresh 3 year low. Amazing, isn’t it? My social networking stocks have quadrupled, while miners got trounced for another 70%—since the Facebook ipo. I cannot support buying into a sector raining with falling knives; but nothing lasts forever, right? Even education stocks are up 35% and they’re all scams.

A stubborn and headstrong person will begin to accumulate the shares of beaten down commodity companies. I realize they are garbagio now. But today’s garbagio is tomorrow’s treasure.

We’re not done yet. I have a few million to play with and will be using my time to find new buys this evening. CBMX looks interesting, as well as SLCA. I need to find names that can support decent buying interest, as I hate moving stocks with my buys and sales.

The WFR and the rest of the solar space is in space. I like the ENPH story in solar.

Education stocks, like APOL and ESI, have roared– but I hate them because they always miss earnings.

MU is going to $14. Write it down. And Le Fly is going to get into a monster winner very soon.

All ideas are welcomed and will be investigated.

I pared some of my RBCN position because it was huge and +10%. With some of the proceeds, I will allocate funds to whatever is smoking hot. I had ROSG this morning, before it ran, inside of the 12631 trading room– but couldn’t play it due to illiquidity. Since I’m rarely fully invested, it was a horrible feeling for “The Fly” to endure.

I have several names at the top of my list- but will not share them just yet for fears you leeches will front run me.

The tape isn’t that strong, so there’s always a chance of a wicked reversal. My CZR is under pressure, alongside several of my key holdings.

There’s nothing wrong with letting the bears enter the cabin to feed on the crumbs lying on the living room floor. When they are finished, lounged out by the fireside, we will jump on them from the rafters and stick pikes in their faces and tear off their stupid bear heads.

DEVELOPING…

I’ve crossed the Rubicon (RBCN) and have decided to support CZR down here.

http://www.youtube.com/watch?v=51TB69cDccg

For the uninitiated, stocks that break $100 get instant erections and head right to $104-106. This is not conjecture or mere opinion, but scientific fact.

This will be the easiest 5% made in the history of mankind.

You’re welcome.

Solar stocks continue to gap higher, even though oil is weak. Some of the names taking off include SPWR, WFR, SOL etc. One name that has been running higher, quietly, that provides management software for solar utilities is ENPH. Check it out.

I can’t buy solar here. I’d much rather try to get in ahead of any speculative coal run, via JRCC (I am long) and ANR.

Short squeezes are performing once again. Today I like ONE, SUPN, SLCA, SKUL and DMND.

But the market is fluid, so I will be looking for new ideas all day long and will be updating in real time inside of The PPT and 12631.

Interestingly enough, as of now, I am losing money for the day. This is unacceptable.

What causes stocks to go squeeze higher? I can enlighten you into the sentiment of money managers and how they are scared to death of being caught in an epic run, like NFLX or more recently TSLA. Valuation is unimportant in the immediate term. All that matters is fear and greed.

Are the shorts fearful of the stock going higher and are the longs greedy? If so, that stock might be setting up for a monstrous run.

I’ve been studying correlations all of my life. I like to know why things happen. Sometimes they’re random: but most of the time they’re by design. There are certain traits that are common in all short squeezes, none more than shares in the float. If the stock doesn’t have full institutional interest, like NFLX, CMG or GMCR, there must be a small amount of shares in the float in order to get the stock going–preferably under 20 million.

Of those shares, I like to monitor stocks that have at least 10% of its shares sold short. Due to liquidity concerns, I am looking for stocks that trade at least 100k shares per day. And, one of the most important factors is the “pain threshold.” If the stock hasn’t been moving higher, there is little incentive for the shorts to cover. You want to look for names that are up more than 10% over the past month.

Now we get to the proprietary stuff.

Since hundreds of you are now under a free trial membership of The PPT, you can view the screen I am about to reveal. It finds stocks that have jumped by more than 10% in its “Daily Hybrid” score, which is a ranking mechanism that combines both technicals and fundamentals to get a daily read out. When the technicals explode during a given day, which is decidedly different from the prior day, the Daily Hybrid score will spike.

I’ve studied thousands of short squeezes and none of them start without a large jump in daily hybrid.

A perfect example of what I just described lies in the share price action in ESI. Here is a recent history of the Daily Hybrid.

Had you bought the stock based on the upgrade to buy on that 40%+ hybrid change, you would’ve been long under $19 with the stock now trading above $25.

The last part of the puzzle is technical ranking. The technical scores must reach a minimum of 2 on a scale of 5, with 5 being the strongest.

Here are the results:

Since tomorrow is the last day of your trial, take advantage of what I am giving to you now and view this screen for more results tomorrow. Since it’s dependent on daily hybrid movers, the population of stocks will change daily.

This is what The PPT is all about, finding an edge in the market by taking all of the data available to us and deciphering it via the power of a predictive algorithm. There are many aspects to the tool. In no way is it one dimensional. But if I had to isolate just one aspect of the tool that I find to be most useful, this is it.