Everywhere I look on the internet everyone is convincingly pessimistic about the market. I think most people are just not used to seeing two huge down days in the market. But to conclude that Monday will be an automatic bounce back is a little dangerous. More and more people are going back to cash, which means more profit taking and more panic selling. I sure hope there is a rebound soon though, because all major indices are falling apart. Leavitt Brother’s Chartspeak has a clear explaination of these indices breaking through support.
This will be very interesting week, since now I have to flip my position on most of the stocks I’ve been watching. I think for now, a good way to play the market is to look for stock charts that look parabolic and start shorting them. These overbought stocks are usually the first to fall. Either that, or just stay on the side…. “Sell in May, go away.”
In the meantime, I’ll be searching for some shortable stocks. The basic materials industry seems like a great place to start. Make that, basic materials + Cramer recommended.
The Bernanke Song
Well, today was an ugly day in the market…. unless you were long gold, materials, or ethanol.
I think we have Bernanke to blame. Here’s a video from business students at Columbia University. I think I learned more about interest rates from this video than I did in my econ class.
Well, my orders never filled today, so I guess I’ll just start trading again Monday. The market is a bit overbought, as you can see from this table– more than half stocks are above all moving averages, and today’s decline was an attempt to fix that.
Proper Copper
I could go ahead and argue a bullish case for Copper, but Business Week does a good job. Read it first.
Some highlights from the article:
- Copper is up 80% YTD, highest in 25 years. It’s basically rising faster than gold.
- Supply <>
- One penny (made of copper and zinc) is now worth two pennies! LOL!!
- South America controls most of copper, but politics are heating up.
- China, India, and 3rd world countries need copper (old news, no?)
So how can we play copper? I came up with only a few companies, because, uh, there are only a few companies. Click [here] for stock quotes of all stocks.
[King of Copper]
Of course, there is Southern Copper (PCU), which has the highest market cap; when people think copper, this stock pops up. This stock has already tripled in about a year. Nice thing about this company is that you can play options. There are 3 break outs in this chart. Can you spot them?
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[The Fastest Cop in Town]
Rearrane PCU, and you get CUP, which is Peru Copper’s ticker. Remember, Peru is the kingdom of Copper. There is political instability there, which makes this stock so so volatile. I can’t exactly find any pattern in CUP, just that it’s a raging bull right now. There has been a lot of insider trading going on lately. If you’re not to comfortable with the volatility, stay away. But for now, check out their major holders… JP Morgan, Morgan Stanley, and Fidelity.
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[Steady Does It]
Northern Orion (NTO) is a company ran in Canada, but their mines are in Argentina. Most of their income comes from Alumbrera (they have a 12% interest, I think Southern Copper has the rest), and the cool thing about this company is that they have a bigger mine in Argentina named Agua Rica coming up which they have 100% interest. They are well positioned for future growth. Click here for S&P’s coverage. Anyway, the chart is a beauty. No dramatic spikes, just a steady up trend… a “buy on the dips” could have made you rich.
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[Copper Applications]
Encore Wire (WIRE) is set for another encore run. They aren’t directly involved with Copper the base metal, but they manufacture copper electrical building wire and cable in the United States… Residential wire and commercial wire. They have NM-B cable, NF-B cable, THWN-2 cable… huh? Maybe we should ask Roger what in the world these are. Anyway, chart shows WIRE to be very bullish, athough the RSI does show it to be overbought.
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Monday- Back to Work
Woke up this morning with a headache. I think it’s from all the loud music from last night’s party. Anyway, felt a little better when I saw that the ethanol stocks made a comeback. I’m starting to feel that Anderson’s Inc (ANDE) is becoming a major index for the ethanol stocks. Anyway, check the group’s performance today [here], quite amazing stuff. As you can see, they were strong the entire day, doing a routine “fill in the gap” from Friday’s sell off. Oh, that picture on the left is the chemical compound of Tarceva, a drug that OSI Pharmaceuitcal makes- they report tomorrow, but I just didn’t have the guts to play a spread [May 25 puts/June 30 calls].
As for some of the stocks I’ve been watching I was particularly impressed with Krispy Kreme (KKD), SGL Carbon (SGG), SVI International (SVI) a.k.a. “Jamba Juice”, AGCO (AG), and of course, DXP Enterprise (DXP). Finally, Gigamedia (GIGM) continues to be a day trading gold mine. I think they report sometime soon, so it should calm down after that. I’ll post some of these stocks on [Intuitive]Swing Traders site at Borders Star Bucks later. Go go Power Rangers!!
Marketwatch/Articles I’m Reading
- Check out this oil poster. We are reaching peak production very soon.
- Oil falls to 3-week low… because of Iran.
- Warren Buffet says commodities- metals, oil, – are overpriced
- IBD’s screen for 10 Fast-Growing Top-Rated Companies.
- My speculative gold pick Western Gold Fields (WDGF) up 70%!
- SanDisk (SNDK) bravely battles the mighty Apple Ipod! Finally, a viable contender.
Marketwatch/Articles I’m Reading
- Perhaps it is time to de-hedge from gold.
- The guys at Motley Fool think Protein Design Labs (PDLI) Is a Buy, so does this guy, and so do I.
- Those OSI Pharmaceuitcal options are getting more expensive!
- Next Up: FNSR, CUP, NTGR, KF, NWL, TMO
I’m taking the day off tomorrow. I’m a bit emotionally taxed. Need to recover from today’s loss. Plus it’s Friday.
Comments »A very choppy market today. Oil drops again, which is naturally ironic since majority of analysts were saying “$80”; we have to wait for them to say “$65” for oil to go back up. ANDE reported very good earnings today, but unfortunately caused major profit taking throughout the ethanol industry. So, Cramer was right about the wrong company. Anyway, profit-taking is always a sign of a buying opportunity [PEIX, ADM, MGPI, GPRE]. The best performing industry so far is copper.
Other stocks that have grabbed my attention are FNSR, PSPT, OVTI, FNET. Many of these have gone up, but are still worth buying the next few days. Finally NDOL went up as much as 81% today in less than five minutes, which went along quite nicely with my $1.00 Nasdaq OTC theory- to remain listed on the Nasdaq the stock must be over $1, which conveniently happened today. This also backs up another claim- pinksheet stocks are very easy to manipulate. If you ever get a fax claiming a pink sheet or BB stock is the “next big whatever”, toss it, it’s probably the next big scam.
That’s it for me. No charts today. I’ll wait until after the “jobs report” comes out tomorrow.
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