Good trade, good trade

Have fun up in Florida chief! Take that CHID.ob profits with you and have yourself a nice cold Corona!!

New charts at [Intuitive] Swing Trades:

• OSIP– Medical laboratory and research::pharmaceuitcal
• MGPI– Process and packaged goods::ethanol
• NCOC– Industrial Metals and minerals::coal
• DXPE– Industrial Equipment Wholesale::MRO/Electrical contractor
• ALJ– Oil & Gas Refining::Oil/gas

These picks will be logged on the [Predictions Table] ( download .xls spreadsheet)

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There’s just something about the market that makes me want to short everything. Well, not everything, but it seems like good news is getting harder to find. It’s easier to find uncertainty… which makes precious metals oh so precious.

Marketwatch/Articles I’m Reading

• Oil inventory announced today– U.S. surprisingly heavily stocked. Oil stocks get hit.
• This guy hammers Cramer’s gold pick, Crystallex (KRY). Good arguments.
• China Digital (CHID.ob) cracks $1.00!
• Bush will probably get more aggressive on alternative energy.
• I keep asking myself: “Should I buy puts in Bausche and Loumb (BOL)”?
• The White House predicts bird flu chaos.
• “I expect gold and other metals to pull back and consolidate. These gains are just unsustainable.” – S&P’s Leo Larkin
• Maybe I should have bought my gold speculative pick: Western Goldfields (WGDF).
• Motely Fool gives a nice roundup of steel stocks.

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The leading ethanol related stocks spiked up again, thanks to a positive earnings report by Archer Daniels (ADM), which Cramer predicted would sell off today. Speaking of Cramer, if you watched Mad Money yesterday (5/1), he went into detail about the ethanol industry. Man is this guy pumping the industry or what?! But remember, it’s not just him. Last week it was President Bush; lately I’ve seen all kinds of “green” commercials by GM and Ford Motor; and don’t forget, Bill Gates. All of this happened in the past few weeks. I actually thought there would be a correction about a week ago, but the news keeps on coming. Anyway, if you haven’t already read it or you’re not to sure what types of ethanol plays are out there, you can read my ethanol write-up.

[Intuitive] Top Ethanol Picks
[click HERE for list of all ethanol related stocks I could find]

• Pacific Ethanol (PEIX) – My favorite as of today. This pick used to be in the [Intuitive]ScoreCard… thought it would sell off but it didn’t. The news that Gates invested in the stock seems to be new news to a lot of people. Ha! The stock has formed a bullish ascending triangle (rising bottoms). The stock is currently in a breakout and has made my momentum screen.

• Archer Daniels Midland (ADM) – One of the world’s largest agricultural processors, they process (you guessed it…) corn for ethanol. Their 3Q profit grew 29% thanks to higher demand for ethanol (sale price goes up) and better corn prices (lower expenses). [ Higher sales – Lower costs = higher profit margin].

• Green Plains (GPRE) – This one’s a spec. Not to many people know about this stock since it’s relatively new. Probably because Pacific Ethanol is stealing the show. Low volume… for now. Could see $60.00 in a short time.

MarketWatch/Articles I’m Reading

• First, this one’s for Gary. Gold Corp (GG) is up 15% in three days! And he has options so multiply that a couple of times!! Go ahead and click here again. Bwa ha ha!!
• Timet zooms up again. But if it goes down tomorrow, we know it has consolidating tendancies.
• Remember: Iran jitters and weak dollar = super gold!
• Spot price for gold hit $666.00, uh, does that mean we should sell?
• Chesapeake, a natural gas company, had record gas production for the 19th consecutive quarter… that is impressive.
• I detected a HUGE spike in Diversa Corp (DVSA) at 2pm today.. Something is going on here.
• Top scientist predicts no H5N1 bird flu virus in United States this year.
• Nine tech IPOs you should wait for. Hey, I remember seeing GoDaddy commercials during the Super Bowl!
• This lady caused the sell off yesterday– Maria Bartiromo, aka, the “money honey.”

  

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Check out my new Swing Trades site. It’s called [Intuitive] SwingTrades. The URL is: http://intuitiveswingtrades.blogspot.com/
I will keep a link to this site on the right of this page.

I covered 5 swing plays: PEIX, GROW, GIGM, AGCO, and NDOL.pk

When I have the time I will work on a [Intuitive] Options website. That can get pretty complicated. anyway….

…time to sleep.

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Carbon Fiber = Cash

A recent future value calculation of Zoltek (ZOLT) has re-sparked much interest in the carbon-fiber industry. How did carbon-fiber catch my attention in the first place? Once again, simple supply-and-demand rules. Follow the path I took, and you’ll find some interesting stuff about this niche industry:

• About a month ago I had a talk with Melody, asking how Jason was doing up in Washington. She said he was working at a small carbon-fiber company that produces airplane parts (airplane industry = hot hot hot). She said the company was very busy. They had more work than they could handle! Please note, this is a small private company- when the smaller companies have too much work, than you know the entire industry is in bull mode. Ah! That got me thinking: “If the carbon fiber industry is en fuego, then shouldn’t the carbon fiber related stocks be hot too?”

• The demand is there, what about supply? Currently there is a worldwide shortage of carbon fiber! If you tried ordering carbon-fiber materials from this store you can’t! Click here, scroll through and read all the red print. They even go on to explain why there is a shortage of carbon-fiber, basically blaming the boom in the aerospace industry (remember, all these new airplanes are made of carbonfiber components). Pretty interesting isn’t it? Their regular customers have priority to carbon fiber when shipments come in. This type of backlog reminds me a lot of Titanium Metals pretty problem of having more orders than inventory.

• Carbon Fiber applications– Carbon fiber is not just found on your golf club or your road bike. Currently, the huge demand for carbon fiber is attributed to the aerospace cycle: this year the new Airbus A380, Boeing 787 in 2007, and the Airbus A350 in 2010 require a lot of carbon fiber. Other carbon fiber applications include automobile components, and windmills. Yes, I said windmills- so you get a bonus here, since carbon fiber in a way is a play on alternative energy, another hot sector.

• Carbon Fiber Stocks Bullish– There aren’t too many plays on CF. These include Hexcel (HXL), Zolt (ZOLT), SGL Carbn (SGG), and Graftech International (GTI). Zoltek seems to be the purest carbon fiber play, while Hexcel is the “blue-chip” of the bunch. The biggest carbon fiber company I believe is Torray, which is in Japan which trades on Nikkei. These stocks have performed exceptionally well despite little coverage on the industry. For example, HXL is up 33% in 4 months, and ZOLT is up 300% since the beginning of the year! GTI took a hit, but looks like to be trending up by “filling the gap.”

• Zolt’s run, deserved?– About a month ago I convinced myself that ZOLT looked overbought. But it went on another 70%. I have no idea why this company is acting this way. The income statements shows declining income on rising costs. I’m sure those rising costs is due to increased prices in carbon fiber, but the rise in stock price has to have some catalyst… I have to dig deeper on that one.

  

• Zolt worth $300 in 5-years?- Ron and I came up with some interesting numbers. Go to this website (Diamond Hill Investments) and use their calculator to find the stock’s value based on their earnings model. Try different scenarios, like plug in Google, Apple, Timet. Now plug in ZOLT. The financial calculator spits out a 5-year stock target at over $300! What?!! That’s incredible, but just remember, this calculator is “earnings biased” since the variables uses earnings and P/E ratio in the calculations. Nevertheless, being conservative on that estimate presents a big return. Definitely something to think about.

• Learn more about Carbon Fiber– check out this .pdf document from the leader of CF, Torray. You’ll learn a lot about CF, and you can see a nice chart showing the demand for CF.

Well, the Carbon Fiber industry is something to keep close watch on. It will be interesting to see in the next few weeks if Zolt will consolidate or crash. Hopefully something better than the latter.

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I am outside of Borders right now, and I have some pretty good free wireless! Anyway, the month of May started off quite interesting. If you noticed the day charts for major indices, there was a significant sell off in the final hour of trading- not exactly a good sign for tomorrow. Also, many other high volume stocks saw a similar sell off too. This end of the day melt down occurred on news that the market was “misinterpretted Bernanke’s comments on the end of rate hikes.” Clearly, Bernanke is not doing the greatest job. But at least we can profit from all this uncertainty through investing in hedge items like gold and silver!

If you haven’t noticed, our China pick BBC took a major major hit today… just yesterday I mentioned that our Chinese stocks were under pressure (see yesterday’s post). The drop was hard and fast, which gave us an important lesson- protect your capital. One of the best ways to do that is to set stop-losses. Usually I keep a mental 5% stop loss, but a better strategy would have to set a trailing 5% stop loss or a permanent 7%-8% stop loss. Mathematically, a 7-8% stop loss is the optimal point.

Marketwatch/Articles I’m Reading

• Gold- Buy, Sell, or Hold?
• A few of my momentum picks did real well today.
• I said this before, I’ll say it again “keep your eye on the dollar.”
• Listening to newsletter’s stock picks could be a very good idea!
• A must see stock screen by Investor’s Business Daily- Accelerating earnings. Check it out below!
• Profiting from Deep In The Money (DIM) options
• Whatever options startegy you use, be sure to at least understand the Greeks.
• May 15th will be an interesting day for platinum.
• De Ja Vu for RIMM’s Blackberry

IBD’s Accelerating Earnings Stock Screen

Check this screen out by IBD! There are a lot of good stocks in the screen. I really like screens because they cut your work in half or perhaps even by ninety percent. Think of this screen as finding a gold mine- now all we have to do is dig around to find the gold! If you find one, let me know.

Hmmmmmmmmmmmmmm. It’s very tiny isn’t it. Grrrr! That’s what I don’t like about this blog. I’ll post it on another website tonight.

REVISITING CARBON FIBER

Back by popular demand, I will be posting a small write-up on carbon fiber tonight. Ron and I plugged in Zoltek (ZOLT) into a future stock price calculator derived from earnings and P/E. The calculator priced ZOLT at over $300 in 5-years!! Huh? That’s a 1000% gain. Ha!

Changes To My Site

I have a few charts with technical analysis, but I will post them on the other webiste, My Trader Notes. Link is on the toolbar to your right. I’ll do that tonight once I finish studying some accounting. I have 3 momentum picks, and 1 bulletin board stock that is ready to take off.

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