I’ve initiated a new long in Central European Distribution Company ticker CEDC.

Note:  If you buy CEDC because of this post Premier Obama will move your family into a heroine infested housing block, and you may lose money.

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We’re seeing follow-through today on yesterday’s selling and it’s decimating many bullish charts.  As of lunchtime the SPY has made a clean break through its 33ema.  However, the 99ema is right below and I’m hesitant to dismiss the bull case entirely until we see the markets put in a lower high.  With that in mind, I want to turn your attention to a relative strength standout today and hot money high flyer, Lululemon Athletica ticker LULU.  The stock is up today.  I started buying this morning but was shaken out by the broad selloff. Should we see the market stabilize and turn around (which it is yet to do) I could see this name rocketing higher.  Keep it on your watch list.

Aside from my quick jaunt in LULU ownership, I liquidated most of my longs.  Remaining longs are AWK, ATML, GS, RVBD, and FB and I’m short SKS and M.  Cash is hovering near 60%.   

UPDATE: sold RVBD too

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We’re getting our first solid snow and by the looks of it winter is off to a healthy start.  Last winter featured mild temperatures and practically no accumulation of snow.  Jeff Daniels and I can attest to the importance of snow and ice for our iconic lakes.  I mostly enjoy the ripe conditions for Tokyo drift driving.

The funny thing about the first significant snow is how everyone acts brand new.  Even the well studied librarians insisted it was imminent that the roads would become impossible to trek.  Oh the horror!  I performed my inaugural double-doughnut parking lot warm up before advancing to some chicane action near the obviously empty golf course.  You must always consider your risks when performing advanced driving maneuvers and perform every slide in a kickass manner–Ludacris on bump.

I’m almost giddy to shovel all the snow in the morning.  It’s the light and fluffy, good for making you feel boss strong and getting the blood flowing into your rosy cheeks (no butt).

Back to drifting, how do so many people resist the urge to slide their car around like they’re James Bond being chased through Stalingrad by a bunch commies?  Are people so caught up in the mundane that they completely overlook a practically free and amusing activity?  Then I thought perhaps they don’t have a method for learning the technique.  Then I thought about trading.

One thing you will notice about consistent traders is their methodical approach.  I look back at the worse trades of my year and they were all deviations from my plan.  I tend to throw money at an idea quick, trial-by-fire.  Take for example my entry today shorting Macy’s.

One overarching thesis going into the New Year is weakness in high-ish end retail stores.  Today the early holiday sales data comes out and we get a bid sell the news reaction.  I practically sold the lows on M.  I’ve already deviated from my method of trading.  My method is simple, it’s momentum and order flow boiled down to two simple steps:

Define the trend (or lack of)

Trade pullbacks in the direction of the trend

I love this method because it has a margin for error.  I also know much sooner if I’m wrong.  Fortunately I started very small in my M short.  But even that is a deviation.  Nowhere in my plan does it say, “Toss a feeler on and add when the sauce starts to thicken” or whatever.  It says trade the pullbacks.  Now I may have to ride peak-to-trough before I can even assess the downward momentum.

I acted brand new.  And we should all learn from it.  2013 is about trading the PLAN only.  As for drift driving, you can call me Steve McQueen.

http://youtu.be/5cPN6EsE6cc

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Today the market’s weakness resulted in an early flush in a few names, especially retail as we cut through the key support level highlighted in my premarket profile work.  Many retail and department store names were sold off early morning when data came out suggesting a ho-hum holiday of selling.  The data points are lining up in favor of my department store thesis.  Unfortunately, AMZN took a hit too, and I sold the name for a scratch after being up in the position.

Other than selling my shares in AMZN I started small shorts in Macy’s (M) and Saks (SKS).  Also I sold my degenerate OTB guy position in BGMD at a 5% loss.  I suppose I should have booked that dog as soon as it was a winner.

MOS had a solid first day in my possession, and shares of POT and MON behaved well also.  All the companies have earnings right around the corner in early January.  After the earnings are out of the way I plan to build into the names for Q1.  Unless they start sucking wind, then I’ll abandon the entire idea.

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My second major theme for 2013 is that department stores all face serious headwinds, and are the most vulnerable industry.  Here’s a link to my first theme going into 2013.  Anyone who loves the stock market and has been dragged out shopping during the holiday season should love this piece.

First off, I never shop in department stores unless I’ve been dragged there by my girl.  What that means is when I’m there she’s shopping, I’m a pack mule for carrying cargo.  Mentally I’m completely removed from the shopping experience, instead diverting my mental capacity to investigation.  I look at the racks, what people are shopping for, ask for a manager and see how long it takes, and talking to employees about their sales goals.  This is old school channel checks, it’s incredibly subjective, and perhaps only a defense mechanism for my otherwise disdain for being dragged around town.  BUT, this year, I’m telling you as objective as I possibly can, volumes are down.

CASE IN POINT: Sephora.  This is one store where I can get concrete information.  Their store at The Somerset Collection, our best shopping center, and a top 10 grossing store nationally for the company, is missing their sales targets by nearly 10%.  They’re also over on their labor budget.  I consider the products they carry especially sensitive.  Ladies from the upper-middle class need makeup because, as Chuck Bennet so eloquently stated, without it they’ll “get no handbags.”  Women don’t bend the budget knee and give up their beauty products without a fight.  It’s the first in three years they haven’t blown their sales forecasts out.  Red flag.

The second force, the big chipper, the internet.  Yes of course I know department stores have a huge online presence, but they also have huge physical shops–full of expensive sales reps, nice warm air, shined floors, and well you get the picture–overhead.  Smart phones are more prevalent than last year and shopping on the go (read: at work) easier.  Out on the internet the competition is leaner, have better developers, and way more budget flexibility to advertise.  Department stores a losing online.

Finally, we’re going over the fiscal cliff. Whatever, WHATEVER the fuck that means.  Rest assured either by simply being more cognizant of the risk or the high likelihood of it’s occurrence, the upper-class expect higher taxes.  And they’re bitter in general.  They watch way too much news.  Cliff imagery.  Domestic Terrorists.  Doom’s day preppers.  NRA.  Careless citizens snapping pics of people moments before death by train.  Increased hurricane damage.  It’s all enough to BUY A GUN, at the least.  Suddenly, blowing money on RL over at M seems less important.  Why not go on EBAY and get a ten pack of polo shirts from Izod or APP?

With all this in mind, I took to the almighty PPT.  I was happy to receive thesis support instantly, Department Stores are the lowest ranked industry in the service sector.  Their January seasonality is 50/50 with an abysmal average return less than 1%.  Things perk up slightly in February, and March is downright bullish, seasonality speaking.  Here’s a very brief fundamental comparison:

According to these few fundamental comparisons, Sears obviously is getting their ass kicked.  Shorting shares of SHLD has been a well publicized trade, it has been a loser .  The stocks up nearly 30% this year.  Shorts could get their redemption this year.  But I see more vulnerability in the slightly higher end (but not too nice, remember upper-middle class).  Which makes me not want to short KSS, except investors may be ready to dump the shares after watching their modest annual gains gap into the red earlier this month, POOF!  JCP already crushed their shareholders this year, down big.  It’s more vulnerable to a squeeze higher on its inevitable march to zero.

Mostly I’m interested in Macy’s (M)  and Saks (SKS).  I suppose a head-to-head comparison is in order.  After all, either of these stocks aligns well with my overarching thesis.    For now I’ll leave you with my short-term chart annotations for all the highlighted stocks:

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The agriculture chemical sector grabbed my interest this week.  The sector saw a modest improvement in its hybrid scoring last week and the charts are set up well.  Also, I’m looking to build a few themes going into 2013, and I like the story in farming.  We had quite the scare last summer with farmers across the breadbasket reporting low yields.  The media ran the story hard, possibly because they saw it as a piece to advance their global warming agenda, possibly because it created buzz and sold advertisements.  There’s no question it pumped up (artificially?) corn and wheat prices.  I’m sure you remember, but check out the respective corn and wheat price charts, via finviz:

If farmers had even average yields, and didn’t hedge down their profits too much, they were able to take their products to market at higher prices, and could be sitting on cash piles.  Irrigation systems are a possible investment, but an easier investment for a farmer is a beefed up nutrient and genetic regiment.

With that story in mind, I also like the sectors seasonality, which according to The PPT, has better than a 60% chance of increased prices in both January and February.  If I’m building a theme going into the New Year, I want something that will hit the ground running.

Before taking to the charts, I wanted to compare a few key fundamental statistics:

My takeaway from the above data is that Monsanto (MON) appear to be you innovator.  They’re the only company pumping a serious R&D budget.  Potash Corporation (POT) although having the lowest beta, is the highest risk stock with the worse cash position.  They need demand to come in, or they could be in trouble.  However, POT has the highest ROE, and although I didn’t do any risk adjustments, any such adjustments would only solidify their ROE out performance considering their beta.

I didn’t put the dividend yield stats on my chart, but POT currently has the highest yield.  I see the yield as a risk.  With their low cash position, they may be pressed to reduce the dividend.  This could affect share price.

Year-to-date, it appears much of the negative news could be baked into the share price of POT, they’re had an abysmal performance this year.  There could certainly be an element of “catch-up” built into the name.

Taking to my precious, the charts, we can see big time innovator MON flirting with annual highs, threatening another big breakout.  Also, both MOS and POT are sitting on key support levels.  Should we see strength in these names, both names have room for us to scale some profits well before swing highs, allowing us to book some gains which would reduce our cost basis should we choose to swing the names for multiple months:

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Strong bounce thus far this morning in the S&P, pumping hard off of a key support level.  Financials continue to behave very bullish although the session is still early.  We’re into the back-and-fill range I highlighted this morning after getting a telegraphed bounce off of Monday’s value area high:

 

Although I’m down over 1.5% today and counting, I used this morning’s pop to clean out all the degenerate positions from my portfolio.  All except one, BGMD.   I can’t let this position go unless it gets seriously weak.  It flagged hybrid oversold yesterday with an impressive dataset and look at this chart:

 

 

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“Everyone has a plan until they get punched in the face.” – Mike Tyson

In many ways I feel like my accumulation of degenerate OTB names is a result of two events that occurred earlier this week.  First was my showcase of the alcohol sector with a spotlight on BF-B, CEDC, and BEAM.  I’ve been watching CEDC run like a Romanian goat higher unable to buy the name.  Second was Tuesday morning.  I saw all the signs of accumulation and a big run higher coming, so I put over 10% of my portfolio into SKS and SHLD only to watch them sit the massive pump out, opting instead to trade sideways then down.  Thus concludes my recap of time wasted. Mostly I want to remember to stick to the plan so I thought an iteration would serve me well.

What matters now and tomorrow is how we’re going to pirate coin from the market.

We shall see how she looks in the morning.  I see little reason to turn to the profile at this hour because there’s plenty of overnight action ahead.  Let it play out and we’ll take a look bright and early.  I have a feeling I’ll be cutting a few names in the AM, but I will certainly exude patience and let the morning develop.

One important caveat to this unexpected action is receiving no accolades after making a near-perfect top call.  Our good friend The PPT flagged hybrid overbought on the close Tuesday.  Chalk up another win for the algos.

See you in the morning.

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The market continues the holiday levitation today with steady strength in the financials giving bulls confidence.  Bulls have recaptured the important 1434-1436 price area highlighted this morning and have sustained trade above.  Should they hold price into the bell,  I strongly consider adding to winners.

My favorite pick going into Christmas is online shopping giant AMZN which is fast approaching 52-week highs.  Other lotto plays I’m currently long include AN, PQ, BGMD, and GLUU.

How we close today will let us know if this rally has teeth.

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I started writing a post reviewing my new laptop purchase and Windows 8 and was almost done when I got so bored I damned the whole endeavor and went to my nearest grocery to procure a chicken and Toblerone dinner.  What a fucking country where one casually travels a well infrastructured mile (thank you elizamae) to get their protein pilgrim pride pump.

“I’d also like a 12-inch bar of your finest Swiss chocolate.”  I informed the clerk.  “Be swift good sir I have to address the fine people of the Internet.”

For four dollars, I can buy and eat a fully cooked chicken.  Two miles down the road I can get one that lived a better life for ten.  Amen.

I’m so tired of people comparing us to other homo nations and their stupid billy club bobbies.  I haven’t gone SHABL on this bitch yet but I’ve left our country enough to know it’s the best.  Stop.

Just come here, grind so hard your shoes rip then grind some more because you can have whatever you like.

I like PPC, FB, GS, AMZN, BF-B, AN, VHC, RVBD, ATML, GLUU, AWK, and why the fuck not Ford.

Soak it up friends, this month is when Amerika SHINES.  Celebrate what we can, for those who can’t.

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