Completely sold longs: BABY ( +6.56% at 24.7, bought at 23.18)
Added to longs: MEA (14.31), APWR (21.91)
I wish BABY had a follow-through while the market was up 300 points, but it seems to be trailing CMED in price action. I probably will re-enter BABY under 24. It’s true, I probably wouldn’t make a good father anyway.
Comments »With the Dow up this big, and while everyone is chasing for stocks to go long, I like to look at the sectors that are NOT doing good. I found a really interesting case with the solars. The solars are looking quite weak today, with their leader, First Solar, Inc. [[FSLR]] dropping hard on a bright green day. This amazes me because 1) FSLR had a stellar conference call, and 2) none of the solars could manage a rally today, or all week!. While everything is printing green, notice how all solars today are not just red, but deep red. Yingli Green Energy Hold. Co. Ltd. (ADR) [[yge]] , Canadian Solar Inc. [[csiq]] , JA Solar Holdings Co., Ltd. (ADR) [[jaso]] , [[fslr]], SunPower Corporation [[spwr]] , Suntech Power Holdings Co., Ltd. (ADR) [[stp]] .
Now without looking at any news, or pulling out any charts, let me ask you what is happening here? Well, this is what we call “sector-rotation.” It’s a sign that a lot of the speculative investors have left or are leaving a certain sector. Just think of it as money flowing from one sector (solars in this example) to another (haven’t figured that on out yet!). This is important information for you if you decide to trade solars in the future. Essentially, today’s action, and FSLR’s impotence, is telling me that the game has changed, and that the bigger waves will be coming at a different beach. It also is telling me that solars are now “contrarian-stocks,” which means when the market goes down, these solar stocks will probably move up. This is not that surprising to me, because solars should be acting more like an energy play. Finally, today’s action gives me another reason to bet bearish against solars, and for that, I am re-setting my short-cover spot to FSLR above 270, and short the solars under 250.
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Has anyone else noticed how .com retailers are messing it all up again? This seems like 2000, but fundamentally, this is different. In 2000, it was just a big bubble. Eight years later, the competition on the internet is so diluted (eBay is not eBay any more) and more importantly, people are cutting up their Amazon.com or eBay credit cards, and opting for the “save 2 cents a gallon” gas cards. In other words, there is a shift in demand- people are using their disposable income to cover necessities, like food (rising cost in commodities), shelter (rising cost of loans from a bank meltdown), and energy (rising cost of oil). If you think the brick-and-mortar stores are going to feel the pain, then the .com-retailers are going to feel it even harder! (If you’re interested in shorting the classic clothing-retailers, I made a good call on ANF breaking the 2-year channel on my old blog. This is a CRITICAL breakdown, and I expect all the other clothing retailers to fall too. Oh yeah, and I’ll tell you the next time something makes me itch, because that’s a good short-sale indicator. Lol!)
Here is a list of internet-retail stocks that I will begin shorting:
Overstock.com, Inc. [[ostk]] ““When you enter a downturn, that’s actually when middle class people seek to retain their standard of living and switch to discount shopping. So the downturn may actually push people toward Overstock to stretch their budget,” Patric Byrne, CEO of OSTK 7/18/08 … Wow, I really want to invest in OSTK after that comment!
The Knot, Inc. [[knot]] … it was a nice concept, but I think the person who spends the money on the wedding is daddy… who unfortunately, does not know how to use the internet.
TheStreet.com, Inc. [[tscm]] … iBankCoin doesn’t like you. Nuff said.
priceline.com Incorporated [[pcln]] … summer is over. I’ll name a price for you Priceline, how about, target = 70s?
Amazon.com, Inc. [[amzn]] … is a short under 80. Amazon.com is your correlation-stock. As long as it stays under 80, then I will short these .coms
VistaPrint Limited [[vprt]] …this company is the King of Spamming! How many “this is the best deal of the year” offers have I gotten from them so far?
eBay Inc. [[ebay]] …another strong correlation-stock, that you can use for a short-sale entry. When eBay gets a new 52-low, you should be entering your second position of shorts.
WebMD Health Corp. [[wbmd]] … Oooh! This one is a contrarian pick. If you short .coms, then you may want to get long WBMD as a hedge, because it is closely tied to the pharma/medical plays. Or conversely, you can short WBMD when the medical stocks head south.
Bankrate, Inc. [[rate]] … is this a bank stock?
Sohu.com Inc. [[sohu]] … also a play on China. I would be careful with this though. It seems easily influenced by news. Try SINA Corporation (USA) [[sina]] instead.
… there are just way too many to mention. I encourage you to build off this list.
Comments »Completely sold longs:
PCX ( +6.13% at 110.12, bought at 103.68)
FCX ( +11.21% at 87.33, bought at 78.52)
New longs: EDU (74.68)
Trimming my energy picks. I nailed this week’s bottom in energy/commodity stocks, which was “the day after the Fed.” My sentiments are still the same in that post http://ibankcoin.com/gioblog/?p=1504 , but I want to see the price of oil justify that bounce. I did not like the action in coal and HK today which made me sell these two commodity plays. I’m looking to re-enter some time next week. This market is looking weak, so I will focus on some shorts. Fly may be swearing at all of us sometime next week.
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The buying interest in FXP has been strong in the past 2 weeks. What is this telling you? For one, the Olympics is near. At this time, there will be a lot of waves in China-related stocks for the next few weeks, therefore I’m packing my stuff and heading for China to catch some waves! For now, I am leaving the Ag plays because POT should consolidate here around 180. If you’re a swing trader, get ready to ride the volatility in China stocks!
How does an event like the Olympics affect the investing community? Probably the most important thing is EXPOSURE. A lot of people have been playing the China-lotto, investing blindly in Chinese stocks, not knowing what on Earth that company does. ( I knew someone who was crazy about a “Chinese Biotech” company that in reality, sold fertilizer, or a “Chinese mobile company” that sold batteries. What the? This is plain old greedy trickery, and I advise you to be careful when you buy those micro-cap Chinese stocks that no one has heard about. ) Well, now with the Olympics in China, the world will get a sneak peak into an effectively hidden country. Investors will get to gauge what China really looks like, and estimate the potential of China’s growth. If you study Chinese history and culture, you will find that that country is very self-contained, almost the exact opposite of America. However, with the Olympics, China will be forced to finally show their cards.
Here’s a list of Chinese stocks on my watch-list:
Better Volume
[[FXI]]
China Mobile Ltd. (ADR) [[CHL]]
[[FXP]]
Aluminum Corp. of China Limited (ADR) [[ACH]]
New Oriental Education & Tech. Group Inc [[EDU]]
Focus Media Holding Limited (ADR) [[fmcn]]
Yingli Green Energy Hold. Co. Ltd. (ADR) [[yge]]
SunPower Corporation [[SPWR]]
Conservative:
China Fund Inc. (The) [[CHN]]
[[TFC]]
Movers:
CDC Corporation [[china]]
China Finance Online Co. (ADR) [[jrjc]]
China Southern Airlines Limited (ADR) [[ZNH]]
Qiao Xing Universal Telephone, Inc. [[xing]]
The9 Limited (ADR) [[ncty]]
Right now I am heavily short China with my [[FXP]] position. However, I am searching for a bounce in some beaten down Chinese stocks since we are heading toward long-term supports. If you feel the trend in China is down for the next few months, you may want to buy BOTH [[fxi]] and [[fxp]] .
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Tomorrow, I’m not really looking for some 10-footers. I’m taking out my longboard, and I’ll catch whatever 2-3 footers that come my way. Which beach will you be surfing?
NORTH SHORE: Bear killer? or Profit taking? Tomorrow, Surf with the leaders! These stocks had 1) a powerful rally yesterday, and 2) showed signs of profit-taking in the final 30 minutes of the day. This is typically a bear trap, but remember, Thursday could be a bail out day for momentum traders. Look to get long these leaders if they gap back up to their trend channels. You will know if the rally will continue if it gaps up on low volume, then volume accelerates when the price returns to the channel… that’s a sign the bears are covering, and the bulls are re-buying. Otherwise, stab these leaders in the back and short them if they fail to return to yesterday’s channel! Here’s your list:
SOUTH SHORE- True Religion Apparel, Inc. [[TRLG]] earnings play, thanks to Mac. The company reported stellar earnings. It has the rare combo of 1) beating estimates, 2) raising guidance, 3) heavily shorted (about 50% of float), 4) less than 10% from 52-high. I would like to see how the bears handle this… will they squeeze? And conversely, if TRLG doesn’t move on this great earnings report, then TRLG gets on the swing short-sale list (for next week).
WEST SIDE- Overstock.com, Inc. [[OSTK]] . How many nails do we have to put in this coffin? Take a look at OSTK’s 9-month chart. There is a story being told here. And there is NOT a happy ending. I don’t know how long this bear bounce will last, but I will use that 21.75 point as a resistance for a swing trade. If you want to day trade OSTK, look for “bail-out” Thursday, where the longs will exit before the weekend. So far, OSTK is up 50% in the past 3 weeks, and that was off of one of the ugliest conference calls handled by a CEO in the history of CEOs.
EAST SIDE- Shippers! I commented about shippers yesterday. Use the baltic index and DryShips Inc. [[DRYS]] as your correlation-“stock.” I will only play the long side here. If I see those indicators point up, then get long some of the beat-down shippers like TBS International Limited [[TBSI]] , Diana Shipping Inc. [[DSX]] , or Excel Maritime Carriers Ltd [[EXM]] . If, however, DRYS gets rejected at the 70 spot, short TBSI, which overshot by a few percent yesterday. This East Side trade will probably work best in the morning.
Other plays: FSLR might break 270 here. If it does, look to get long JA Solar Holdings Co., Ltd. (ADR) [[JASO]] or Canadian Solar Inc. [[CSIQ]] which were one of the best performers in the solars yesterday. I just can’t be super bullish about solars right now.
See you at WallStreaK! Maybe.
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