iBankCoin
Joined Dec 4, 2012
319 Blog Posts

Share Short As A Percentage of Float Is Not Useful

Shares short as a percentage of float is a useful variable. Why? Because it does not tell you anything. The ONLY measure that matters is the short ratio or the days to cover ratio.

The short ratio tells you how long it will take the shorts to cover. Shares short as a percentage of float only tells you that against outstanding shares there are or are not lots of shorts.  It is useless.

I want to know how long the squeeze will last. As an example, in the case of HLF the short ratio is 12.90. That means is the shorts were covering AND there were no longs buying it would take them 13 trading days to cover their position based on average volume. IF the shorts had to compete with natural buyers, then one could use a multiplier of say 1.5 to get the true short ratio. So in the case of HLF,  I could argue very easily that the position would take 19 days to cover. Ackman is soooo screwed it is funny.

At Erlanger Research we modify the short ratio to get a better read of it. The exchanges short ratio is shares short divided by volume over the last twenty trading days. The problem with this is unusual volume could move the short ratio even though the short position remained unchanged. Therefore, we use 12 month volume as our denominator to create the Erlanger Short Ratio.

Next we then look at the range of the short ratio over the last five years and then create the Erlanger Short Intensity Ratio. If a stock had a high short ratio of five and a low of zero and the current number was four, then we would determine the Short Intensity level was 80%.

Below are the top ten biggest changes in the NASDAQ Short Positions. Next week we will talk about how we then look at the technicals to determine if a stock is in a short or long squeeze, or neither. Have a good weekend.

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Daily Playbook HLF Analyst Meeting Today Let The Fun Begin

January 10, 2013

In After Hours Trading

DRWI (-.05), PSMT (+.05), RELL (-.01), RT (-.01), TXI (-.04), VOXX (+.19).

What’s Happening This Morning

US futures: (S&P +4.50, DJI +30, NDX +7.20 with fair value a bit lower) Asia higher and Europe mixed. Copper higher and gold higher with WTI Crude & Brent Oil Futures higher. $ is lower vs Euro, lower vs. Pound and higher vs. Yen. US ten-year Treasury Yield +.023. Prices as of 7:45 a.m. EST.

Earnings Expected

Earnings due after the close SNX XRTX. Due out tomorrow morning WFC.

Rags & Mags: Inside Wall Street

We are big fans of www.247wallst.com summary of the newspapers each day. Going forward we will link to their website so you can read their summary, Media Digest

Reported Earnings This Morning

None out yet. MSM and SVU due.

Data Points

Yesterday saw 2049 stocks rise and 956 fall on the NYSE. NASDAQ saw 1602 rise and 858 fall. The S&P 500 now back above its 50 day moving average and above the 200 day moving average. The 10 day spread moving average of breadth is positive. We are back to invested on the Madison Market Timing Indicator.

 

Economics

Weekly Jobless Claims Due Out At 8:30 EST a.m. Natural Gas Inventories due out at 10:30 a.m. EST.

Politico

The European Central Bank is expected to cut interest rates while Bank of England is expected to hold rates steady. Federal Reserve Esther George speaks at 1:10 p.m. EST and Federal Reserve St. Louis President Bullard at 2:00 p.m. EST.

Conference & Analyst Meetings

JP Morgan Healthcare Conference, Goldman Sachs Global Energy Conference and Merrill Lynch China Gaming & Lodging. CVX holds mid quarter update at the close.

Conference of Note

HLF holds their analyst meeting as they counter Pershing Square’s Bill Ackman. 

M & A News

Key Upgrades and Downgrades

Firm Upgrades Downgrades
JP Morgan
Goldman Sachs EVR DAL R
Morgan Stanley HTZ
Deutsche Bank
Citigroup PRU HIG AFL
Barclays
Wachovia/Wells Fargo
Credit Suisse
Banc of America
UBS
Lazard WYNN
Merrill Lynch
Jefferies
Cantor Fitzgerlad
Dahlman Rose
Sterne Agee
Stifel Nicolaus
Societe Generale NE ESV

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Daily Playbook

January 9, 2013

In After Hours Trading

AA ( in line), APOL (+.32), GPN (+.06), WDFC (+.13).

What’s Happening This Morning

US futures: (S&P +2.35, DJI +23, NDX +2.80 with fair value a bit lower) Asia and Europe higher. Copper higher and gold lower with WTI Crude & Brent Oil Futures lower. $ is higher vs Euro, higher vs. Pound and higher vs. Yen. US ten-year Treasury Yield -.0008. Prices as of 7:55 a.m. EST.

Earnings Expected

Earnings due after the close TXI RT RELL VOXX DRWI. Due out tomorrow morning MSM SVU.

Rags & Mags: Inside Wall Street

We are big fans of www.247wallst.com summary of the newspapers each day. Going forward we will link to their website so you can read their summary, Media Digest

Reported Earnings This Morning

AZZ (+.05), GBX (+.04).

Data Points

Yesterday saw 1372 stocks rise and 1635 fall on the NYSE. NASDAQ saw 1066 rise and 1436 fall. The S&P 500 now back above its 50 day moving average and above the 200 day moving average. The 10 day spread moving average of breadth is positive. We are back to invested on the Madison Market Timing Indicator.

 

Economics

Weekly Crude Inventories due out at 10:30 a.m. EST. Treasury holds a 10 year auction today.

Politico

Secretary of State Hillary Clinton will now testify on January 22. CT Senator Richard Blumenthal introduced a bill in the Senate to toughen purchasing requirements for ammunition.

Conference & Analyst Meetings

JP Morgan Healthcare Conference, Goldman Sachs Global Energy Conference, Merrill Lynch Defense Outlook and Dahlman Rose Precious Metals Conference.

Conference of Note

Consumer Electronics Show (CES) continues today in Las Vegas.

M & A News

DISH to buy CLWR for $3.30 a share. Watch to see if S counters as they have a bid for CLWR already and hold a minoroty position in the stock that includes certain rights DISH is asking them to waive.

Key Upgrades and Downgrades

Firm Upgrades Downgrades
JP Morgan SON
Goldman Sachs MA ONE WU
Morgan Stanley SYY
Deutsche Bank
Citigroup ESI
Barclays
Wachovia/Wells Fargo
Credit Suisse APU
Banc of America
UBS
Lazard
Merrill Lynch
Jefferies CTXS PCG
Cantor Fitzgerlad
Dahlman Rose
Sterne Agee
Stifel Nicolaus
Societe Generale ABB

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Update On Our Ideas So far 5 Winners & 2 Losers (Start Date 12/4)

Here are the names we have recommended and current price with p/l and %. Now Five long ideas and Two Shorts. Batting Average 71%, so far. I write this update for a second time and one or two were bound to become losers.

Latest idea was long NSC on Friday at 11:30 a.m. EST.

P 12/4 $8.91 $10.14 $1.23 13.80%

AMD 12/10 $2.35 $2.67 $0.32 13.61%

CMG 12/18 $288.01 $297.76 $9.75 3.38%

TASR 12/17 $7.67 $9.14 $1.47 19.17%

NSC 1/4/13 $65.25 $-64.00 $-1.25 -1.92%

Shorts (Negative Means We Are Making Money)

SWHC 12/17 $9.26 $8.76 $-0.50 -5.40%

RGR 12/17 $46.40 $48.93 $5.45 %

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Daily Playbook: Light Economic Day Ahead & Lacker Speaks 1:30 p.m. EST

January 8, 2013

In After Hours Trading

TEAM (+.06). SHLD CEO to leave due to family health issues and SHLD Chairman Lampert to become CEO as well. CAG INN announce secondary offering. YUM lowers China guidance, again. KND PLXS lower guidance.

What’s Happening This Morning

US futures: (S&P +1, DJI +2, NDX +0.2 with fair value a bit higher) Asia lower and Europe higher. Copper and gold higher with WTI Crude & Brent Oil Futures higher. $ is higher vs Euro, higher vs. Pound and lower vs. Yen. US ten-year Treasury Yield +.0078. Prices as of 7:35 a.m. EST.

Earnings Expected

Earnings due after the close AA APOL GPN MG WDFC. Due out tomorrow morning AZZ GBX HELE LEDS SJR STZ.

Rags & Mags: Inside Wall Street

We are big fans of www.247wallst.com summary of the newspapers each day. Going forward we will link to their website so you can read their summary, Media Digest

Reported Earnings This Morning

IHS (+.10) LNN (+.40).

Data Points

Yesterday saw 1372 stocks rise and 1635 fall on the NYSE. NASDAQ saw 1066 rise and 1436 fall. The S&P 500 now back above its 50 day moving average and above the 200 day moving average. The 10 day spread moving average of breadth is positive. We are back to invested on the Madison Market Timing Indicator.

 

Economics

A minor release today. Consumer Credit is out at 3:00 p.m. EST.

Politico

Federal Reserve Richmond President Lacker speaks at 1:30 p.m. EST.

Conference & Analyst Meetings

JP Morgan Healthcare Conference, Citibank Global Internet, Media and Telecom Conference, Goldman Sachs Global Energy Conference and RBC Canadian Bank CEO Conference.

Conference of Note

Consumer Electronics Show (CES) continues today in Las Vegas.

M & A News

Key Upgrades and Downgrades

Firm Upgrades Downgrades
JP Morgan ITW NOC HRS ERJ
Goldman Sachs KKR HITT
Morgan Stanley AZO ROK
Deutsche Bank
Citigroup
Barclays
Wachovia/Wells Fargo
Credit Suisse
Banc of America
UBS
Lazard
Merrill Lynch MFC MKSI pky
Jefferies EQR HIW

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The Shorts Did Not Panic Last Week

In Erlanger Chart Room, we track how Short Squeezes are doing against Long Squeezes. Everyone know what a short squeeze is and a long squeeze is where there are no shorts and weak technicals. These are THE best stocks to short EXCEPT for when the market hits a low and bounces.

We saw this in the work as our universe of short squeezes made 5.70% week over week while the long squeezes made 5.43%. The Russell 2000 gained 5.65%. If shorts were really covering last week, then we would have seen some outperformance of the short squeezes and another category we track shorts are correct. We did not.

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Daily Playbook: Fair Value Dragging Futures Lower

January 7, 2013

In After Hours Trading

Democrats and Republicans on weekend talk shows reverted back to prior stances on taxes and spending pre the cliff agreement.

What’s Happening This Morning

US futures: (S&P -1.75, DJI -14, NDX -3.0 with fair value higher) Asia mixed and Europe lower. Copper lower and gold higher with WTI Crude & Brent Oil Futures lower. $ is higher vs Euro, higher vs. Pound and lower vs. Yen. US ten-year Treasury Yield +.0123. Prices as of 7:55 a.m. EST.

Earnings Expected

TEAM earnings due after the close. Due out tomorrow morning MON IHS RPM AYI LNN SCHN.

Rags & Mags: Inside Wall Street

We are big fans of www.247wallst.com summary of the newspapers each day. Going forward we will link to their website so you can read their summary, Media Digest

Reported Earnings This Morning

CMC (+.23).

Data Points

Yesterday saw 2307 stocks rise and 699 fall on the NYSE. NASDAQ saw 1565 rise and 823 fall. The S&P 500 now back above its 50 day moving average and above the 200 day moving average. The 10 day spread moving average of breadth is positive. We are back to invested on the Madison Market Timing Indicator.

 

Economics

This is a very light week in terms of economic releases. We do not consider any of this week’s releases to be major releases.

Politico

President Obama is now back from the sun of Hawaii and the debate on the debt ceiling now kicks into gear.

Conference & Analyst Meetings

JP Morgan Healthcare Conference, Citibank Global Internet, Media and Telecom Conference and Macquarie Oil & Gas Explorers Conference.

Conference of Note

Consumer Electronics Show (CES) kicks off today in Las Vegas.

M & A News

Key Upgrades and Downgrades

Firm Upgrades Downgrades
JP Morgan AMAT
Goldman Sachs HXL BK
Morgan Stanley
Deutsche Bank
Citigroup KKPNY
Barclays
Wachovia/Wells Fargo
Credit Suisse SCTY
Banc of America
UBS
Lazard INTC
Merrill Lynch MTD IFFNY
Jefferies CAJ WAG
Cantor Fitzgerlad EMC
Dahlman Rose
Sterne Agee
Stifel Nicolaus
Societe Generale
Keefe Bruyette
Friedman Billings
Robert W. Baird
Needham SCTY

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NSC Idea Via Calls

We published a call recommendation on NSC yesterday at 11:22 a.m. EST on http://www.goldandenergyoptionstrader.com. It was followed by our rationale last night.  Here is that writeup.

Sometimes the best ideas come from unusual places. I have found over time that my best ideas come from insights that are very obvious to me but not yet to others.

Over Christmas, I drove with my family to Texas to see my wife’s family. On the way from Wisconsin to Texas I noticed that ALL the major rivers were creeks. This includes the Arkansas, Missouri, Oklahoma and Rio Grande. The Mississippi is not a creek but it is a shadow of its former self.

Then on Wednesday night there was a story on the NBC Nightly News about how low the Mississippi is and then soon tug boats may not be able to travel a good portion of the river. Here is the link to the story:

http://nbcnews.to/Us9vEM

Holy s— I realized that I had my catalyst to take the knowledge of the river levels and make money off it. How?

One of the key cargo items on barges in the Mississippi is coal. If the barges stop, then that means guess what? Coal will need to be moved around by truck or rail cars. The best solution is rail cars.

The average barge holds cargo that fills 15 rail cars or 60 trucks. The average tug boast can push 16 barges. That means 215 railcars or 1060 trucks to replace the barge traffic.

The coal stocks have been pounded on the belief that the coal industry is dead and Obama hates coal. Therefore, rail stocks that transport coal have been hit and now we have the catalyst to move them off their lows.

I am sure analysts are becoming aware of this issue but it takes them time to act and we can move much quicker. I fully expect Jim Cramer to pick up on this in the next week and then the flood gates open for these stocks.

Now this idea is not a pure energy play but coal is the catalyst and we are playing on how it is delivered. This is how one invests and more to the point here speculates.

 

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Did You Get Your Ass Kicked From 2:00 to 4:00 Yesterday?

If you felt pain from 2:00 to 4:00 yesterday then you have no one to blame but yourself. Why?

Because each day we lay out a playbook for the day and on Thursday we noted that FOMC minutes were due at 2:00 p.m. EST. We ONLY list key events for the day that can move markets as opposed to all the bullshit put out by tons of websites and sell side firms.

Today after the Jobs number we have factory orders at 10:00 a.m. EST and then several Fed speakers in the afternoon. THESE WILL BE KEY AFTER FOMC ANNOUCEMENT THAT STATED QE3 COULD BE COMING TO AN END AT THE END OF 2013.

Unless you are a fucking Swami, we find it better to initiate new positions after such events and be aware that markets can move on such news.

Tiger Woods plays a course for several days before a tournament begins and has a course book he uses from the current year and all past years to review before the tournament kicks off on Thursday. You need to ask yourself if you have such a course guide to the markets? If not, then at a minimum use our Daily Playbook.

 

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Daily Playbook

January 4, 2013

In After Hours Trading

ANGO (+.01), PRGS (-.10), SHLM (+.01).

What’s Happening This Morning

US futures: (S&P Unchanged, DJI -4, NDX +4 with fair value flat) Asia and Europe mixed. Copper and gold lower with WTI Crude Futures lower. $ is higher vs Euro, higher vs. Pound and higher vs. Yen. US ten-year Treasury Yield +.0437. Prices as of 7:55 a.m. EST.

Earnings Expected

Next week starts earnings season as AA kicks off earnings on Tuesday after the close followed by notables STZ SVU WFC.

Rags & Mags: Inside Wall Street

We are big fans of www.247wallst.com summary of the newspapers each day. Going forward we will link to their website so you can read their summary, Media Digest

Reported Earnings This Morning

FINL (-.10), MOS (+.07).

Data Points

Yesterday saw 1706 stocks rise and 1330 fall on the NYSE. NASDAQ saw 1187 rise and 1287 fall. The S&P 500 now back above its 50 day moving average and above the 200 day moving average. The 10 day spread moving average of breadth is positive. We are back to invested on the Madison Market Timing Indicator.

 

Economics

December Nonfarm Payrolls and the monthly unemployment rate are due out at 8:30 a.m. EST and is expected to rise to 150,000 from 146,000 and remain at 7.7%. Meanwhile, at 10:00 a.m. EST November Factory Orders is expected to drop to 0.4% from 0.8%.

Politico

President Obama is now basking in the sun of Hawaii until next Monday as the Fiscal Cliff has been “kinda solved”. Next week the debate on the debt ceiling kicks into gear.

 

Federal Reserve Presidents Plosser and Bullard speak at 1:15 p.m. EST and 5:30 p.m. EST. Federal Reserve Vice Chairman Janet Yellen speaks at 3:30 p.m. EST.

Conference & Analyst Meetings

IEEE International Nanoelectronics Conference 2013 with CSCO and IBM presenting. LLY issued guidance early this morning reaffirming guidance for FY 2012 and raised FY 2013 guidance above estimates.

Conference of Note

M & A News

Key Upgrades and Downgrades

Firm Upgrades Downgrades
JP Morgan
Goldman Sachs STI ZQK SKT FDS
Morgan Stanley
Deutsche Bank
Citigroup
Barclays
Wachovia/Wells Fargo
Credit Suisse
Banc of America
UBS
Lazard
Merrill Lynch AVP ABBV EHTH AEC
Jefferies
Cantor Fitzgerlad
Dahlman Rose
Sterne Agee
Stifel Nicolaus ARUN APKT
Societe Generale
Keefe Bruyette BXS
Friedman Billings
Robert W. Baird ESE
Needham MAT
Sun Trust RH
PiperJaffray
RBC
RBS
Raymond James FSLR

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