Author Archives: trendfollower
As I posted yesterday, nothing major is going to happen on Monday post-Greek vote. Now, what to do now. I would stay put. One option would be to short volatility, which I did yesterday, but it is not worth the risk, because still there is not possibility of a knee-jerk reaction on the vote. Second option would be load on commodities/oil sector, but other risks are still present, such as slowing global economy and the summer doldrums. Assuming nothing major happens through the summer end of August may be the time to do this. I still like several names like WNR (trying breakout today, but lack of volume-probable closes around $20.50), TFM (long term play-potential double this year), DDD (though i do not like pricing on the secondary-8% discount – $27.50, i might wait for $25-26 range to buy), CRK-very speculative company trying to switch from natty to oil, very high short interest, ARCO (Latin America’s McDonald), and UAN-great fertilizer company with 10% dividend, but its parent CVI is being ruined by Ican. And I would buy AIG on any weakness if any at $27-28.
WNR is on the verge on a major multi-year breakout. It has been bumping $20-21 for a year now. It may bump again, but the news keep getting better for the company. Just yesterday it announced prepaying another portion of its debt. It has paid more than $600 of its debt since end of 2010. At this rate< it will be debt free in 2013, which is very unusual for a refinery. Crack will stay most likely stay high regardless of the pipeline reversal. And 20% plus shorts will be covering in pain. If it moves,expect $25-27 in a short period of time.
Nothing is going to happen next Monday. Best case scenario, the market will be up 300 point, worst case-down 200 point. The history of the market shows that huge moves comes when an anticipated event come into play. Remember 2007-08 – no one anticipated this type of collapse BEFORE it happened. Initially, smart and dumb money bought the dips, but the market kept going lower, and finally everyone sold at the botom. Now, the retail has long gone, institutions sold or hedged. Plus averyone is anticipating the Greece exodus. However, there is too much at stake in Europe so even if the bad guys win the election, they will be convinced/forced to follow the rules by the high and mighty. Even if they are completely nuts and exit the euro, it will not happen overnight and will take a while, thus leaving time for the orderly exit. The rule: be scared of an anticipated event when everyone is bullish/bearish. Trade accordingly.
I like TFM for several reasons. First, after its secondary priced at $50.50, just 3% off the closing price, it is holding up very well. Second, it is bumping its 50 day average. Third, it belongs to defensive sector, but growing fast. Fourth, it crashed earnings just several days ago. As for the market it is usual chop but i like UVXY for a day trade.
Beware. Beware of the lack of trend. This is the mantra you need to follow for a while. Two major factors are contributing to this trendless market-the FED’s free money and global scare. Until either of the factors wins, you should buy the dips (not breakdown) of stocks that you like for whatever reasons and sell the 5-10% rips. Avoid shorting this market with conviction, you may short individual stocks you hate for whatever reasons, but do NOT touch indices, or worse triple ETFs. In any event, welcome to the great summer slot machine casino of the summer of 2012.
FB and Yelp are running.
Look. We all smart and savvy. Obviously, a wishy-washy approach to predicting the market is much easier and thoughtful. A great chart reader John Lee (Charts Gone Wild) has stated for almost a year that the market was not tradable, similar approach has been taken by chessnwine (although he is more balanced.) But, to make money in the market you need to make bold calls, or trade the range buying dips and selling rips. I would praise of Fly’schizophrenic style (one day high on cocaine – one day Romania bound escape). For example, last several days several stocks were ripe for bounce/upside move-market was down-but the stocks barely moved down. Today they are up significantly (e.g. INVN 15%) Those types of call distinguish a successful trader from a dividend collector. Of course this does not work all the time, but the goal is to see when the benefit is worth the risk. So please do not be so pleased with those “cautious” no trading calls.
Cast your opinions whether this is a bear market rally of a legitimate bottom. My take is the former.
It has been more than a month since I indicated that YELP has no a sustainable business model in this environment and its stock was going to crash. It was way before the FB IPO and the tape showed that the stock was doomed short term. Several factors have contrubute to this decline: competion (numerous web players fishing in the local market, including GOOG); extortion lawsuits, although dismissed, they undermied company’s reputation; FB failure; market decline; unprofitable quarter and lack of an upside surprise-expected but still damaging, ravaging shorts, etc. What surprises me is Fly’s conviction with respect to this stock-he usually cut his lossess very quickly if the investment thesis does not work. Apart from his holding into VXX, in similar circumstance he quick cut his huge losses in Palm. Is there any future in YELP? It is a big question, the best scenario would be its acquisition. As an alternative, I would look into DDD, INVN, AIG, WNR, TFM, ARCO, UAN those stocks held up very well in the last few days and appear poised to the upside short and long term.
Extremely weak. huge bids are filled relentlessly. May go to a new low