Busy Buying

I’m very busy on this seemingly benign market day buying quality chart setups and working my existing longs.  There are a few notable pockets of strength in the market today.  The office supply (such an exciting business, think The Office) industry is hot with merger and deal talks.  I think the news is enough to shake up the shorts in ACCO so I started a position in the name.

I’ve ratcheted up my Japan exposure today by initiating a new position in PC.  My buys of MTU yesterday and PC today have increased my Japan exposure to around 8%.  I like the chart setups and the overarching macro theme.

I have several other charts lighting up my stalker screens, but I’m not getting overzealous here.  Instead I’m just buying underlying strength.

Finally, I like how ZNGA continues to behave.  You always have it in your mind that a 10% down day is “normal” in this name, yet it’s been consolidating its recent progress well.  I may add to this position this week.  Like Fly said, if AAPL makes the turn here, it trumps the action in other NASDAQ components.  It could buoy plays like ZNGA.

http://youtu.be/wpNk860pTO4

Yesterday the market pushed higher from a long sideways churn.  Prior moves this year that broke out from the sideways consolidation carried a big punch. Yesterday’s move was certainly impressive, moving nearly ten handles from the low, but certainly less explosive then the moves earlier this year.

However, as has been the case since the year started, going with the flow and riding the tape higher has been the best course of action.  When riding the action, you want to know where price has been and how it’s behaved. Given the confluence of many value area lows around 1515.75 last week, I can see the buyers were hard at work at these levels.  Should they not show up to defend them in the future, it would suggest their behavior has changed and a possible sentiment shift has occurred.  It would also place many newly initiated longs underwater.

Given the age of the rally and its proclivity to chop around as indecision mounts, I’m giving my bias line more room to the downside then I have in the past.

After not battling but going with the flow as my afternoon commute home morphed into anything but normal, I fed the animals and grabbed my gym bag.  As I headed back to my car I recalled earlier when I saw a Dodge Ram blow a tie-rod on the highway.  Wobbly, wobbly, piece of shit, I thought.  I had a lovely swim and it was back to make preparation for my three hundredth post.  There was much work to be done.

First and foremost, a heavy salad was prepared.  Arugula, kale, and mixed greens were a bed for a large cut of turkey breast (modern grocery=heaven).  After dinner, sufficient wood was gathered and a modest fire was built in the hearth.  Three thickets of sage were lit ablaze from the young fire and used to smudge the parameter walls of casa de Raul.  A liter of Pellegrino, a glass with three ice cubes and three tablespoons of Sicilian lemon juice, and a cup of blackberry sage tea steeped thirty seconds sit beside me.  Hello everyone, welcome to the very ceremonial three hundredth post.

I’ve learned much in three hundred posts.  And things have been pretty awesome since I picked up the pen.  I have more ideas in my mind now, they’re becoming tangible, I’ve met some brilliant minds both on and off the internet, and I’m banking coin in the stock market.  I’m swimming better in the pool then I have in my entire life.  I’ve always been more of an open water guy, thus my game at the walls is weak.  For a long time, I just accepted it and stuck to perfecting my stroke mechanics for when I got back to open water in the summer.  I decided recently to make my greatest weakness my greatest strength.  Now the wall is my favorite part!  This is very anecdotal to trading.  For me, perfecting one trade strategy and repeating it over and over and over until muscle memory clicked is what got me cash flow.  This is the second of three steps for any successful business.

There’s a three stage progression to build a business: capital, cash flow, go for the jumbo.  That is it, any business, all kinds.  Now that I’ve progressed into stage two I can build a plan to address my greatest weakness.  Then I diligently execute that plan through a series of good decisions.  You don’t need to be a genius to make good decisions, but you do need good data.  Given the right information, most of you are smart enough to make enough correct decisions to be successful.

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

When you get punched, don’t fight back.  Be water, amorphous.  A good plan has the ability to change as conditions merit.

I suppose these are some of the bigger themes I’ve been executing lately.  And groundwork is being made for the big salami.  The leap of faith to pure entrepreneurship.  You’ve met me at a strange point in my life.  A transition phase so planned for, so diligently executed, that the year 2013 was pinpointed.  I’m 27 (divisible by three) which is damn near a perfect age.  2013 is of course divisible by three.  There was that whole galactic alignment to start the year.  It’s my busting out year.

So an interesting archive this blog makes.  Unless The Fly vaporizes my entire existence into dust, which he may, I can always come back to these most noble halls and see my words spread across the screen like aged scrolls. Suppose The Fly does vaporize everything, perhaps it’s for the better?

You may scoff at the idea of owning a pirate ship, but as sure as I’m sitting here in the wheelhouse, I can tell you there’s not a more honest job in the world.  This is free enterprise.  If you want fake pirating, follow the hackers on twitter.

My portfolio is a bunch of poached plays from minds more focused than my own, but is nonetheless very long, 75% to be exact. 

Names I’m in, without much research other than loyalty to the halls of iBankCoin:

CCJ and AWK | Mr. Cain Thaler

ZNGA | RaginCajun (we’ve won many more, but this one remains open)

RH, FB, and DNKN | chessNwine

FSLR and TPX | elizamae has shined a light on the volume voids here

ANGI, C, VHC, RH, MTU, FB and many more | “The Fly”

There are a few other names I’ve peppered in.  And of course I’ve applied my risk management to these plays.  And occasionally, I spend sleepless nights digging through Edgar and The PPT.  But it is true.  All you needed to do so far this year was show up and buy stocks.  Don’t let anyone fool you into thinking there was more to it.

I’ve been doing this for years.  READING iBANKCOIN has me raising the watermark AGAIN this week, no doping required.  My sails are open and the tailwinds are strong. And to the brilliant minds of iBankCoin, a solemn tip of the hat. May the sun always shine on your face, and the wind be at your back.

My portfolio is transforming into a tree hugger’s paradise.  Consequently, I am turning into a tree hugger.  As such, I will turn a blind eye to the black smoke rising from the CREE plant in China and only declare them to be beacons of hope in the corporate quest to save our planet.  I also hate coal especially much now.  Coal makes peoples lungs hurts and trees are like the earth’s lungs.  Therefore coal hurts the earth’s lungs.

Coal also hurt my book three times this year.  Those ne’er do wells at ANR, dastardly folk, refusing to adhere to their seasonality in a timely manner took a decent bite out of my portfolio.  Thus they are evil and hate Al Gore.  How could someone hate the inventor of the internet?

Some of my eco-friendly holdings, because I’m an eco-friendly kind of guy:

CREE, OESX, FSLR, CCJ, and FB

“Facebook!?” you may ask, yes.  They’re led by Mark, the patron saint of eco-consciousness.  He’s decided it would be best to build hundreds of thousands of server racks in Iceland, creating a landscape much like The Matrix, because he can use the cool outdoor air to chill his computer brain.  Never mind you the heat exhaust, we need to take our eco-minded approach only to the extent in which it benefits the businesses we trade.  May many others follow suit and carpet the polar lands with servers.

There are other names to consider.  All kinds of solar names are ripping diapers off the shorts today, exposing their soiled, naked bums.  Other heroes, like Elon Musk and his noble electric TSLA rides should be added to your book.  Vile shorts, when will you learn to love the planet?

I’m off for now to gather roadside trash to burn in my new incinerator furnace.  Raul3’s going green.

The market is set to open near the highs of last week after a healthy overnight rotation began around 3am. If the bulls are serious about inflicting pain, I’m looking for them to capture 1520 early on and sustain it. That is the land grab required to take this tape on an exploration higher.

I kept my bias lines a bit tight last week to the downside. I gave a general area I wanted to see hold and when we got down to those levels, a bear flag below my bias line had me cutting a few names. In retrospect, and given the tenacity of this Bull Run, I cut the names too early. MOS in particular, I was caught in the rough chop. The trade is not dead. Therefore I’m highlighting a specific level, 1510.50, that I want to see the market close above. If going into the close, we cannot sustain this level, I will reduce long exposure further.

I’m using my time wisely today, taking advantage of this non-market-but-still-work-to-become-better day to dig into the LED players I mentioned last night.  It is one thing to trade these stocks, but it’s another entirely to invest.  I went through the most recent earnings announcements and news stories from the stocks listed in my last post.  What an uninspiring heap of dung these companies are.

Besides CREE, the other names I mentioned seem marred with mismanagement and poor decision making.  $1.3M this quarter in R&D bro, really?  Who got a new Hummer out of that deal?  I’ve seen these types of operations before.  It’s like adding a biotech cock measuring contest to your business model.  No thank you.

If I have to hold my nose and buy one of these ancillary plays it will be either OESX or GTAT.  GTAT has earnings at the end of this month so I’ll be on the sideline with them for now.  Good chart pattern nonetheless.  OESX has new management in place and is curtailing their R&D foolishness.  Considering their leverage and precarious cash flow situation, if they can go ANDRE THE GIANT this quarter and “get it while it’s here boy” their stock could triple.

On the topic of ALB, they are very virgin to the LED game.  They are a huge chemical company and are kind of awesome.  They’re making the high purity metal organic products needed in LED general lighting application.  This could work out really well for them.  Whether or not it drives top-line growth over-and-above the rest of their business seems less likely but certainly possible.  It’s not as pure of a play on LED lighting.

Finally, I want to add PHG to the LED pool.  Philips is a huge patent holder.  They really bother me though.   A big part of what they’re doing is litigious hostility.  They are going to be on everyone’s ass making sure no patent infringements occur.  Obviously they’re doing this because they sell light bulbs, all kinds, to us and there is a huge margin built in.  It feels like they’re protecting their legacy margins by throwing a wet blanket on LED up and comers.  However, they are a big, “safe” play on LED expansion. I would only pay $24.00 for the stock if I was considering an investment.

I came about this trade in an around about way.  Here’s the story.

I charted and ranked the seven #Japan stocks I’m watching over on chartpin.  Although going over the setups and getting an idea for how they trade, I’m not exactly dropping everything to build 20% of my cash into a basket of three or four ADRs.  However, a few of the charts are offering decent entries and they’re on my radar going into Tuesday’s trade.

But there’s a bigger play that continues to swirl in my mind.  I bumped into a small Italian man at the grocery because I was staring up and doing Rainman math.

I swam like the wind today.  You may wonder how exactly it is the wind swims.  As I sit here, gingery sipping a hot cup of Red Rose, the working man’s tea, I can tell you unequivocally, the wind swims well.  Swimming and pondering the world I could only think about lighting grade LEDs.  All kinds.

Obviously CREE is the best pure play as they drive the R&D train into the future.  They rock.  I took shares long the day after earnings to wet my beak and it’s run 18% since then.  I would like a dip to add.  In the meantime, these ancillary plays are offering ace entries:

ALB isn’t a pure play, but has a horse in the LED race.

LYTS is in a position to crush competitors and drive market adoption of LED retrofits.  They have several décor and signage offerings, but they tend to build out the design updates with LED lighting systems too.  They have proven the cost recapture and savings a business can receive from switching over. Winner.

OESX does high bay high power lighting and other commercial retrofit work.  They offer financing too, LEVERAGE.  RVLT is a similar idea.  Winner.

GTAT makes sapphire and sapphire making components.  The chart shows a possible inverse head and shoulder bottoming pattern.

LEDS is out there, trading in the penny range, but this company is pretty haggard.  Their website has spelling errors on it and could be a joomla template.  Their CEO even won the ASSHATE OF THE WEEK award.  Avoid and let die.

If you own a company and intend on staying in the graces of Premier Obama, an LED retrofit project is sure to keep you safe from drone attacks on your bullshit BMW 3 Series.

Go henceforth to the charts and get in on the LED action.

The buyers showed up again in the final hours today to defend the coveted 1514 level. This time around, the price action formed a picture perfect bear flag on the intraday charts, just below 1514.  If you weren’t a bear up unto that point, it may have been enough to bait you in.  Unfortunate for any overeager bears (or shaky bulls), there was no downside.  Instead we saw a squeeze into the bell.

This was an interesting week as we made our way through the 7^th inning of earnings.  Individual stocks are trading all over the place, decoupling from the mild upside action in the S&P.  This is how a healthy market behaves.  Always keep the index in mind, but you must analyze the price action of individual issues.

Major news headlines this week included State of the Union and its minimum wage increase talk, a barbequed cop killer, the complete failure of Carnival’s Triumph, the $HLF meatloaf fight, and a galactic rock smashing into Russia.  No big deal, just another week in the world.  Did I miss anything?  Last summer any one of these items could have cost us 200 Dow points.

This week feels like it had two Tuesdays.  All the puzzle pieces are here.  The three day weekend (from the market, I always work) is an excellent opportunity to regroup and strategize going into the second half of my iBC interim position.  My best ideas come about 15 minutes into a mile swim.  Not at 5pm on Friday.  So I kindly bid you adieu, for king and country!

h/t @dvk1970 for cueing me to the parties responsible for holding up the market this afternoon:

We’re coming under a decent bit of selling pressure as we enter the lunch hour.  Most of my longs are red, but with cash at 33% (oh yeah) and most charts holding up well, I haven’t made any sales this morning.  Should we lose 1514 as I mentioned earlier, and sustain trade below that level, I may take profits and raise a bit more cash.

Not all is weak today.  I’ve been very interested in the Japan trade this year partially by Fly’s highlighting the space, and partially by a few good friends in the country who like the new leadership and their prospects going forward.  Thus I’ve been stalking EWJ, HMC, TM, NMR, MTU, PC, and CAJ.  The Nikkei dipped over 1% last night and these names have dipped as well.  A few of them are offering enticing entries today.  Depending on the afternoon session, I may begin allocating capital into a few of these names.  With the US markets running hot, I may allocate up to 20% of my capital into these names.  These ADRs do most of their movement overnight, so swing trade is really the only way to trade them.

Let’s see where this selling takes us.  I’m laying off the throttle a bit.  I went hunting for stock picks last night and this morning, but nothing is matching the picture I want.  Chinese burrito HTHT looks decent.

I cut GNRC yesterday at the close (aka low of day) and when I saw the Goldman downgrade early this morning I thought I made the right move.  Shares are up almost 5% and I think this stock is still a winner.