tag:blogger.com,1999:blog-43188329159769796962012-02-16T19:09:47.292-08:00Adding Alpha to Portfolios.http://www.blogger.com/profile/16917778387990744459noreply@blogger.comBlogger651100tag:blogger.com,1999:blog-4318832915976979696.post-31031863048522498992008-09-25T17:54:00.000-07:002008-09-25T17:59:13.288-07:00Here is the revised list (949 and counting), of IFIs (Identified Financial Institutions), based on the SEC revisions of 09/23/08:<br /><br />AAME<br />AANB<br />AB<br />ABBC<br />ABCB<br />ABCW<br />ABK<br />ABNJ<br />ABVA<br />ACAS<br />ACBA<br />ACE<br />ACFC<br />ACGL<br />ADS<br />ADVNA<br />ADVNB<br />AEG<br />AEL<br />AET<br />AF<br />AFFM<br />AFG<br />AFL<br />AFSI<br />AGII<br />AGM<br />AGMA<br />AGO<br />AGP<br />AGX<br />AHD<br />AHL<br />AIB<br />AIG<br />AINV<br />AIZ<br />ALD<br />ALL<br />ALLB<br />ALNC<br />AMB<br />AMCP<br />AMFI<br />AMG<br />AMIC<br />AMNB<br />AMP<br />AMPH<br />AMRB<br />AMSF<br />AMTD<br />ANAT<br />ANCX<br />ANNB<br />AOC<br />APAB<br />ARCC<br />AROW<br />ASBC<br />ASBI<br />ASFI<br />ASFN<br />ASRV<br />ATBC<br />ATLO<br />ATLS<br />ATN<br />AUBN<br />AWBC<br />AWH<br />AXA<br />AXG<br />AXP<br />AXS<br />AZ<br />BAC<br />BANF<br />BANR<br />BARI<br />BAYN<br />BBD<br />BBNK<br />BBT<br />BBV<br />BBX<br />BCA<br />BCAR<br />BCBP<br />BCH<br />BCP<br />BCS<br />BCSB<br />BDGE<br />BEN<br />BERK<br />BFBC<br />BFED<br />BFF<br />BFIN<br />BFNB<br />BFR<br />BFSB<br />BGCP<br />BHB<br />BHBC<br />BHLB<br />BK<br />BKBK<br />BKCC<br />BKJ<br />BKMU<br />BKOR<br />BKSC<br />BKUNA<br />BLK<br />BLX<br />BMA<br />BMO<br />BMRC<br />BMTC<br />BNCL<br />BNCN<br />BNS<br />BNV<br />BOCH<br />BOFI<br />BOFL<br />BOH<br />BOKF<br />BOMK<br />BOVA<br />BPFH<br />BPOP<br />BPSG<br />BRKA<br />BRKB<br />BRKL<br />BSRR<br />BTC<br />BTFG<br />BUSE<br />BWINA<br />BWINB<br />BX<br />BXS<br />BXXX<br />BYFC<br />C<br />CAC<br />CACB<br />CADE<br />CAFI<br />CAPB<br />CAPE<br />CART<br />CARV<br />CASB<br />CASH<br />CATY<br />CB<br />CBAN<br />CBBO<br />CBC<br />CBIN<br />CBKN<br />CBNJ<br />CBNK<br />CBON<br />CBSH<br />CBU<br />CCBD<br />CCBG<br />CCBP<br />CCFH<br />CCNE<br />CCOW<br />CEBK<br />CFBK<br />CFFC<br />CFFI<br />CFFN<br />CFNB<br />CFNL<br />CFR<br />CHC<br />CHCO<br />CHEV<br />CHFC<br />CI<br />CIA<br />CIB<br />CINF<br />CISG<br />CIT<br />CITZ<br />CIZN<br />CJBK<br />CLBH<br />CLFC<br />CLMS<br />CM<br />CMA<br />CME<br />CMFB<br />CMGI<br />CMSB<br />CNA<br />CNAF<br />CNB<br />CNBC<br />CNBKA<br />CNC<br />CNLA<br />CNO<br />CNS<br />COBH<br />COBK<br />COBZ<br />COF<br />COLB<br />COOP<br />CORS<br />COWN<br />CPBC<br />CPBK<br />CPF<br />CPHL<br />CRBC<br />CRFN<br />CRMH<br />CRRB<br />CRVL<br />CS<br />CSBC<br />CSBK<br />CSE<br />CSFL<br />CSHB<br />CSNT<br />CSWC<br />CT<br />CTBC<br />CTBI<br />CTBK<br />CTZN<br />CVBF<br />CVBK<br />CVCY<br />CVH<br />CVLL<br />CVLY<br />CVS<br />CWBC<br />CWBS<br />CWLZ<br />CYN<br />CZFC<br />CZNC<br />CZWI<br />DB<br />DCAP<br />DCOM<br />DEAR<br />DFG<br />DFR<br />DFS<br />DGICA<br />DGICB<br />DHIL<br />DLLR<br />DNBK<br />DR<br />DRL<br />DSL<br />DUF<br />EBSB<br />EBTC<br />EBTX<br />ECBE<br />EFSC<br />EGBN<br />EHTH<br />EIG<br />EIHI<br />EII<br />EMCI<br />EMITF<br />ENH<br />EPHC<br />ERIE<br />ESBF<br />ESBK<br />ESGR<br />ESRX<br />ESSA<br />ETFC<br />EUBK<br />EV<br />EVBN<br />EVBS<br />EVR<br />EWBC<br />F<br />FABK<br />FAC<br />FAF<br />FBC<br />FBCM<br />FBIZ<br />FBMI<br />FBMS<br />FBNC<br />FBP<br />FBR<br />FBSI<br />FBSS<br />FBTC<br />FBTX<br />FCAL<br />FCAP<br />FCBC<br />FCCO<br />FCCY<br />FCF<br />FCFL<br />FCLF<br />FCNCA<br />FCSX<br />FCVA<br />FCZA<br />FDEF<br />FDT<br />FED<br />FFBC<br />FFBH<br />FFCH<br />FFCO<br />FFDF<br />FFFD<br />FFG<br />FFH<br />FFHS<br />FFIC<br />FFIN<br />FFKT<br />FFKY<br />FFNM<br />FFNW<br />FFSX<br />FHN<br />FIFG<br />FIG<br />FII<br />FISI<br />FITB<br />FKFS<br />FLIC<br />FMAR<br />FMBI<br />FMD<br />FMER<br />FMFC<br />FMR<br />FNB<br />FNBN<br />FNF<br />FNFG<br />FNLC<br />FNM<br />FNSC<br />FPBI<br />FPBN<br />FPFC<br />FPIC<br />FPTB<br />FRBK<br />FRE<br />FRGB<br />FRME<br />FSBI<br />FSBK<br />FSGI<br />FSNM<br />FSR<br />FSTF<br />FTBK<br />FULT<br />FUNC<br />FUR<br />FVE<br />FWV<br />FXCB<br />GABC<br />GAN<br />GBCI<br />GBH<br />GBL<br />GBNK<br />GBTS<br />GCA<br />GCBC<br />GE<br />GFED<br />GFG<br />GFIG<br />GFLB<br />GGAL<br />GGP<br />GHL<br />GIW<br />GLBZ<br />GLG<br />GM<br />GNW<br />GOV<br />GRAN<br />GRNB<br />GROW<br />GS<br />GSBC<br />GSLA<br />GTS<br />HABC<br />HAFC<br />HALL<br />HARL<br />HAXS<br />HBAN<br />HBC<br />HBHC<br />HBNC<br />HBNK<br />HBOS<br />HCBK<br />HCC<br />HCII<br />HDB<br />HEOP<br />HFBC<br />HFFC<br />HFWA<br />HGIC<br />HIFS<br />HIG<br />HMN<br />HMNF<br />HMPR<br />HNBC<br />HNT<br />HOMB<br />HOME<br />HRZB<br />HTGC<br />HS<br />HTBK<br />HTH<br />HTLF<br />HUM<br />HWBK<br />HWFG<br />IAAC<br />IBCA<br />IBCP<br />IBKC<br />IBKR<br />IBN<br />IBNK<br />IBOC<br />ICE<br />ICH<br />IDC<br />IFC<br />IFSB<br />IHC<br />IMP<br />INCB<br />INDB<br />INDM<br />ING<br />IPCC<br />IPCR<br />IRE<br />ISBC<br />ITC<br />ITG<br />ITIC<br />ITU<br />IVZ<br />IX<br />JAXB<br />JEF<br />JFBC<br />JFBI<br />JLI<br />JNS<br />JPM<br />JRJC<br />JXSB<br />KB<br />KBW<br />KCAP<br />KCLI<br />KENT<br />KEY<br />KFED<br />KFFB<br />KFS<br />KRG<br />KRNY<br />L<br />LAB<br />LABC<br />LARK<br />LAZ<br />LBAI<br />LBBB<br />LBCP<br />LEGC<br />LEH<br />LFC<br />LION<br />LKFN<br />LM<br />LNBB<br />LNC<br />LNCB<br />LPHI<br />LPSB<br />LSBI<br />LSBK<br />LSBX<br />LTS<br />LUK<br />LYG<br />MAIN<br />MASB<br />MBFI<br />MBHI<br />MBI<br />MBR<br />MBRG<br />MBTF<br />MBVA<br />MBVT<br />MBWM<br />MCBC<br />MCBF<br />MCBI<br />MCGC<br />MCO<br />MCY<br />MER<br />MERR<br />MET<br />MF<br />MFC<br />MFG<br />MFLR<br />MFNC<br />MFSF<br />MGYR<br />MHLD<br />MHP<br />MI<br />MIG<br />MIGP<br />MKL<br />MKTX<br />MLVF<br />MNRK<br />MOFG<br />MOH<br />MORN<br />MPB<br />MRH<br />MROE<br />MS<br />MSBF<br />MSFG<br />MSL<br />MTB<br />MTG<br />MTU<br />MVC<br />MXGL<br />NAHC<br />NAL<br />NARA<br />NASB<br />NATL<br />NAVG<br />NBBC<br />NBG<br />NBN<br />NBTB<br />NBTF<br />NCBC<br />NCC<br />NDAQ<br />NEBS<br />NECB<br />NEWS<br />NEWT<br />NFBK<br />NFP<br />NFS<br />NFSB<br />NHTB<br />NICK<br />NITE<br />NKSH<br />NLY<br />NMR<br />NMX<br />NNI<br />NOVB<br />NPBC<br />NRF<br />NRIM<br />NSEC<br />NSFC<br />NSH<br />NSUR<br />NTQ<br />NTRS<br />NVSL<br />NWFL<br />NWLIA<br />NWSB<br />NXTY<br />NYB<br />NYFX<br />NYM<br />NYX<br />OB<br />OCFC<br />OCN<br />OFG<br />OKSB<br />OLBK<br />OLCB<br />ONB<br />ONFC<br />OPHC<br />OPOF<br />OPY<br />ORH<br />ORI<br />ORIT<br />OSBC<br />OSBK<br />OSHC<br />OVBC<br />OXPS<br />OZM<br />OZRK<br />PABK<br />PACW<br />PBCI<br />PBCT<br />PBHC<br />PBIB<br />PBIP<br />PBKS<br />PBNY<br />PCAP <br />PCBC<br />PCBI<br />PCBK<br />PCBS<br />PEBK<br />PEBO<br />PFBC<br />PFBI<br />PFBX<br />PFED<br />PFG<br />PFS<br />PGC<br />PGR<br />PHLY<br />PICO<br />PJC<br />PKBK<br />PL<br />PLBC<br />PLCC<br />PLD<br />PLFE<br />PMACA<br />PMBC<br />PMI<br />PNBC<br />PNBK<br />PNC<br />PNFP<br />PNSN<br />PNX<br />PPBI<br />PRA<br />PRE<br />PRK<br />PROS<br />PROV<br />PRS<br />PRSP<br />PRU<br />PRWT<br />PSBC<br />PSBH<br />PSEC<br />PTA<br />PTP<br />PUK<br />PULB<br />PVFC<br />PVSA<br />PVTB<br />PWOD<br />PZN<br />QCRH<br />QNTA<br />RAMR<br />RAS<br />RBCAA<br />RBNF<br />RBPAA<br />RBS<br />RCBK<br />RCKB<br />RDN<br />RE<br />REXI<br />RF<br />RGA<br />RGA A<br />RIVR<br />RJF<br />RKH<br />RLI<br />RNR<br />RNST<br />RODM<br />ROMA<br />ROME<br />RPFG<br />RVSB<br />RWT<br />RY<br />SAF<br />SAFT<br />SAL<br />SAMB<br />SAN<br />SASR<br />SAVB<br />SBBX<br />SBCF<br />SBIB<br />SBKC<br />SBNY<br />SBP<br />SBSI<br />SCA<br />SCB<br />SCBT<br />SCHW<br />SCMF<br />SEAB<br />SEIC<br />SF<br />SFG<br />SFNC<br />SFST<br />SGB<br />SHBI<br />SHG<br />SIEB<br />SIFI<br />SIGI<br />SIVB<br />SLF<br />SLG<br />SLM<br />SMBC<br />SMCG<br />SMHG<br />SMMF<br />SMTB<br />SNBC<br />SNFCA<br />SNV<br />SOCB<br />SOMH<br />SONA<br />SOV<br />SRCE<br />SSBI<br />SSBX<br />SSE<br />SSFN<br />STBA<br />STBC<br />STBK<br />STC<br />STD<br />STEL<br />STFC<br />STI<br />STL<br />STSA<br />STT<br />STU<br />SUAI<br />SUBK<br />SUFB<br />SUPR<br />SUR<br />SUSQ<br />SVBI<br />SWIM<br />SWS<br />SYBT<br />TAMB<br />TAQ<br />TAXI<br />TAYC<br />TBBK<br />TBHS<br />TCB<br />TCBI<br />TCBK<br />TCHC<br />TD<br />TDBK<br />TFIN<br />TFSL<br />TGIC<br />THFF<br />THG<br />THRD<br />TIBB<br />TIL<br />TMCV<br />TMK<br />TMP<br />TNCC<br />TOFC<br />TONE<br />TOWN<br />TRAD<br />TRH<br />TRMK<br />TROW<br />TRST<br />TRUE<br />TRV<br />TSBK<br />TSFG<br />TSH<br />TWGP<br />TWPG<br />UAM<br />UB<br />UBB<br />UBCP<br />UBFO<br />UBNK<br />UBOH<br />UBS<br />UBSH<br />UBSI<br />UCBA<br />UCBH<br />UCBI<br />UCFC<br />UDR<br />UFCS<br />UHAL<br />UMBF<br />UMPQ<br />UNAM<br />UNB<br />UNH<br />UNIB<br />UNM<br />UNTY<br />USB<br />USBI<br />UTR<br />UVE<br />UVSP<br />UWBK<br />VALU<br />VBFC<br />VCBI<br />VIST<br />VLY<br />VNBC<br />VPFG<br />VR<br />VSBN<br />VYFC<br />WABC<br />WAIN<br />WAL<br />WASH<br />WAUW<br />WAYN<br />WB<br />WBCO<br />WBK<br />WBNK<br />WBS<br />WCBO<br />WCG<br />WDR<br />WF<br />WFBC<br />WFC<br />WFD<br />WFSL<br />WGNB<br />WHG<br />WHI<br />WIBC<br />WL<br />WLP<br />WM<br />WPL<br />WRB<br />WSB<br />WSBC<br />WSBF<br />WSC<br />WSFG<br />WSFS<br />WSH<br />WTBA<br />WTFC<br />WTM<br />WTNY<br />WVFC<br />XL<br />Y<br />YAVY<br />ZION<br />ZNT<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3103186304852249899?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-39647404758554956082008-06-03T13:46:00.000-07:002008-09-25T18:04:46.930-07:00<a href="http://bp2.blogger.com/_t_dCoMvZcYk/SEWuQdWS3NI/AAAAAAAAALc/UyJxYCWvVmM/s1600-h/kass.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/SEWuQdWS3NI/AAAAAAAAALc/UyJxYCWvVmM/s400/kass.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5207760141903125714" /></a><br /><br />[Pictured: Doug Kass says buy bank stocks, as he gets ready to jump into a pool of sharks at his home in Florida.]<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3964740475855495608?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-30054813929619382232008-05-01T16:09:00.000-07:002008-05-01T16:11:15.432-07:00Hanging out at <a href="http://www.ibankcoin.com/">www.ibankcoin.com</a><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3005481392961938223?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-34196213660289256602008-04-23T07:46:00.000-07:002008-04-23T07:56:41.915-07:00Todays sector buys:<br /><br />Energy:<br /><br /><strong>Stone Energy (SGY)….$65.85</strong><br /><br /><strong>Fording Canadian Coal(FDG)….$62.88</strong><br /><br />Industrials:<br /><br /><strong>Genco Shipping(GNK)…$70.16 (short term trade)</strong><br /><br />Materials:<br /><br /><strong>Gerdau S.A.(GGB)….$38.19</strong><br /><br /><br /><em>Disclaimer: This information is for educational purposes only. The stocks listed in this post are those purchased by the author and are not necessarily appropriate for all investors. This information should not be construed as a recommendation to buy stocks, as it is not sufficient enough to be used as the primary basis of investment decisions. Please consult your personal investment advisor</em>.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3419621366028925660?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-19185849465975573532008-04-22T06:54:00.000-07:002008-04-22T07:37:08.855-07:00Update on current Focus stock portfolios. My Focus Portfolios consist of ten stocks that are for aggressive to very aggressive investors. These stocks require a cast iron stomach, as the volatility is high. However, the rewards can be commensurate.<br /><br />On 04/14/08, I bought:<br /><br /><strong>Agrium [[AGU]] @ $74.95<br />Apache [[APA]] @ $133.70<br />Cleveland Cliff [[CLF]] @ $146.59<br />Companhia Siderurgecia [[SID]] @ $39.88<br />Devon Energy [[DVN]] @ $111.69<br />FMC Technologies [[FTI]]@ $63.39<br />Murphy Oil [[MUR]] @ $89.25<br />Lindsay Mfg [[LNN]] @ $108.76<br />Mosaic [[MOS]] @ $123.08<br />Permian Basin Royalty [[PBT]] @ $25.22</strong><br />From the names you see, this is a concentrated portfolio of stocks.<br /><br /><br />Yesterday, 04/21/08, I bought seven stocks:<br /><br /><strong>Apache [[APA]] @ $141.71 (adding to position)<br />China Mobile [[CHL]] @ $85.16<br />CONSOL Energy [[CNX]] @ $88.13<br />Flour Corp [[FLR]] @ $160.60<br />Mechel Open [[MTL]] @ $155.54<br />Monsanto [[MON]] @ $128.52<br />Rio Tinto [[RTP]] @ $497.28</strong><br />These stocks were selected from different sectors and industries to achieve more diversificaton.<br /><br /><em>Disclaimer: This information is for educational purposes only. The stocks listed in this post are those purchased by the author and are not necessarily approppriate for all investors. This information should not be construed as a recommendation to buy stocks, as it is not sufficient enough to be used as the primary basis of investment decisions. Please consult your personal investment advisor.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1918584946597557353?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-59669300577572561842008-04-17T00:33:00.000-07:002008-04-17T00:34:31.549-07:00I've been having fun picking targets out. It's almost getting ridiculous. Lots of stocks starting to give me buy signals. This market is about to bust loose and shoot some bears in the balls.<br /><br />Here's what I've been buying for short term trades:<br /><br />[[APA]]...still a buy under 142.<br /><br />[[CLF]] ...it still looks good to buy up to 152.<br /><br />[[SID]]...buy it up to 44.<br /><br />[[FTI]].. bought around 66. Buy up to 69.<br /><br />[[MUR]]..looking real good. Bought under 90. Good still up to 93.<br /><br />[[MDR]] looks interesting here under 60. I may pull the trigger on that one tomorrow.<br /><br />[[GHM]] is another candidate. It closed at 52. A breakout to 54 would propel it up to over 60 in no time.<br /><br />There are many more: [[DVN]] closed at 116.63; [[MOS]] at 136.82 still looks good; [[OXY]] at 83.19 is going higher; if you don't mind paying $500 a share, look at [[RTP]]; [[TNH]] @143.45; [[ATW]] under 109, etc., etc., etc... See? It's starting to get ridiculous.<br /><br />So many stocks begging to be bought, and not enough money to fill the orders.....<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5966930057757256184?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-79559430324793906652008-04-08T06:50:00.001-07:002008-04-08T06:58:55.159-07:00For those of you in the Bullish minority, here are some trading ideas for the near term:<br /><br /><strong>GILD</strong> closed at 52.00 yesterday.<br /><br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R_t4kKoGomI/AAAAAAAAAKw/-JR-XfbPGiA/s1600-h/gild040408.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_t4kKoGomI/AAAAAAAAAKw/-JR-XfbPGiA/s400/gild040408.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186871958570443362" /></a><br /><br />Big base breakout. Looking at a target range of 69-70 on a market rally.<br /><br />—————————————————————————<br /><br /><strong>BNI</strong> closed at 95.54 yesterday.<br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R_t4kKoGomI/AAAAAAAAAKw/-JR-XfbPGiA/s1600-h/gild040408.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_t4kKoGomI/AAAAAAAAAKw/-JR-XfbPGiA/s400/gild040408.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186871958570443362" /></a><br /><br />Bullish price objective is 117. Very nice looking chart.<br /><br />—————————————————————————<br /><br /><strong>CHRW</strong> closed yesterday 59.74.<br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R_t5VaoGonI/AAAAAAAAAK4/IHnAKIm12Ug/s1600-h/chrw040408.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_t5VaoGonI/AAAAAAAAAK4/IHnAKIm12Ug/s400/chrw040408.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186872804679000690" /></a><br /><br />Look at the demand that comes in at 52-53 levels. Huge base breakout from there. The PnF horizontal count puts this stock at a $94 price objective on a longer term rally. <br /><br />—————————————————————————<br /><br />and finally….the egregiously irrational MTH, which closed at 21.84 yesterday.<br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R_t50qoGooI/AAAAAAAAALA/ZuIzsu5TLdg/s1600-h/mth+040808.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R_t50qoGooI/AAAAAAAAALA/ZuIzsu5TLdg/s400/mth+040808.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186873341549912706" /></a><br /><br />Target: $35. Look at the bottoming pattern. George Costanza, do the exact opposite of what your common sense would tell you.<br /><br /><em><strong>Disclaimer: Trading stocks involves risk. You could, and should lose money (just to keep yourself humble).</strong></em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7955943032479390665?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-90858743236301496732008-04-08T06:46:00.000-07:002008-04-08T06:48:47.008-07:00In Barron’s they highlighted that on 01/22/08, only 13% of stocks on the NYSE were trading above their 200 day MA. Currently, that number has risen to 30%. This potential rally could take stocks up to the 40% level.<br /><br />In the Ag sector, I still like <strong>MOS </strong>even here at the $120 level. New money might want to take a partial position here and then add on a pullback. Look for $150 on a target, with a potential for at least $170 within 12 months. Don’t rule out a special dividend, either. This company is making money hand over fist.<br /><br />In steel, take a look at <strong>AKS</strong> currently trading around $63. The price target I’m looking for within 12 months is $92.<br /><br />I know, I know. Very optimistic.<br /><br /><br /><strong><em>Disclaimer: Buying stocks involves risk. You can lose money. This info is for educational purposes only. Do your own research before making a trade.</em></strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-9085874323630149673?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-24386439984347878512008-04-08T06:38:00.000-07:002008-04-08T06:45:10.386-07:00In a previous post on Point and Figure, I covered the two main trend lines, the Bullish Support Line and the Bearish Resistance Line, and how they come into play. I briefly touched on the subject of establishing a price objective for a stock.<br /><br />In today’s post we’ll get into the usefulness of determining a price objective, why you must have a price objective, and how you go about calculating it. In PnF, there are two different ways to do this: the “Vertical Count” and the “Horizontal Count”.<br /><br />Price objectives are important. If you’re trading without a sense of where a stock is going, or where it might be going if the position moves against you, you’re just rolling the dice. You might as well jettison your money into a black hole.<br /><br />Many investors and traders approach the market like it’s a game. It’s entertainment to them. After all, it’s fun trading stocks, right?<br /><br />If you are serious about making money in the market, you have to treat your trading just like any business you might own and operate. It’s not a game. It’s a business venture, and it’s full of risk. Most of you already know this, but I’m addressing the newbie or “dabbler” in the market.<br /><br />If you’re not serious about establishing and using a disciplined system for trading (or investing), you will lose your stake. There are many people in this business that are a lot smarter and experienced than you or me. Just ask The Fly (who I’m sure will wholeheartedly agree). How you go about establishing an effective trading system is a whole different topic. There are many books describing many systems of trading. My advice is to develop or use one that fits your personality, temperment, and style. And keep it simple.<br /><br />PnF analysis gives us a way to calculate the price objective of a stock, whether we are going long or short. This is critical for when we do a risk-reward analysis (you do a risk-reward analysis before you put on a trade, don’t you?)<br /><br />Let’s look at the Russell 2000 iShare (IWM: 70.96 0.00%):<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_t136oGojI/AAAAAAAAAKY/0mK_I5mNJDw/s1600-h/iwm20080408.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_t136oGojI/AAAAAAAAAKY/0mK_I5mNJDw/s400/iwm20080408.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186868999337976370" /></a><br /><br /><br />From the chart, you can see that the Price Objective shown on the right hand side is 84. Later on, I’ll get into how it’s calculated. Since we are all internets and live in the internet age, we have computers that conveniently do this for us, but it’s important to know how the number is arrived at, especially if you are “low tech” (over 47 1/2), and want to chart your stocks by hand like the “old guys”, circa 1929.<br /><br />IWM has broken through the Bearish Resistance Line and is above the Bullish Support Line. It has also broken a double top. That is a clear buy signal. So let’s do a quick risk-reward analysis to see if this is a trade still worth taking.<br /><br />It closed at 71.16 on Friday, April 4. We’ll use 71 for the sake of simple math. So the potential is 13 points. (The price objective of 84 minus 71). What’s the downside? From the chart, the Bullish Support Line is at 65. So if it breaks that, being the disciplined trader that you are, you would close out the position. Maybe you place your stop at 64.<br /><br />Now you’ve established a downside risk of 7 points (71 minus 64). Is this a trade you might take? Maybe. I typically want to see 2 points upside for every point of downside, at a minimum. The upside on IWM is 13 points. The downside is 7 points. Not quite 2 to 1, but close. Maybe you place your stop at 65 instead, or even higher, thus increasing the reward to risk. Having a price objective comes in handy when making these kinds of decisions.<br /><br />That’s great, you say, but how are price objectives arrived at? There are two ways. We”ll go over the vertical count and the horizontal count.<br /><br />The Vertical Count <br /><br />One of the nice things about PnF is that the math is so simple a fifth grader could to it. No head-exploding calculus or Monte Carlo analysis is needed.<br /><br />To calculate the vertical count, we’ll look again at IWM to see how the Price Objective of 84 was arrived at.<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_t136oGojI/AAAAAAAAAKY/0mK_I5mNJDw/s1600-h/iwm20080408.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_t136oGojI/AAAAAAAAAKY/0mK_I5mNJDw/s400/iwm20080408.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186868999337976370" /></a><br /><br /><br />IWM bottomed out at 65 and began to move up. Then it gave a buy signal . The buy signal came when the column of X’s exceeded the previous column of X’s. This is called a double top breakout. In this case, the buy signal came at 69 (intraday).<br /><br />To determine the price objective, you count the number of X’s in the column and multiply that number by 3 (since we are using the three box reversal method). Then multiply that figure by the value per box. Since IWM is trading between 20 and 100, the value of each box is 1.<br /><br />There are six boxes in the column of X’s, so 6 x 3 x 1 = 18.<br /><br />Take that number and add it to the bottom of the column of X’s at the level where the column began. That number is 66. Now add 18 to 66. What do you get? Using the vertical count will give you a rough idea of of the stock’s price objective on that move.<br /><br />Keep in mind that this is only a guideline. It is not set in stone. Just because a stock reaches its price objective doesn’t mean that you automatically sell it. A lot will depend on the current price trend, relative strength, trading bands, resistance, momentum, etc.<br /><br />Vertical Count on a Short Sale <br /><br />The calculation for the vertical count on a short sale is similar to that of a long position, except that instead of multiplying the move by 3, you multiply by 2 . Take a look at everybody’s favorite short, (FED: 25.97 0.00%).<br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R_t2baoGokI/AAAAAAAAAKg/h-v_oqoj7Uo/s1600-h/fed040808.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_t2baoGokI/AAAAAAAAAKg/h-v_oqoj7Uo/s400/fed040808.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186869609223332418" /></a><br /><br />FED has given a strong sell signal, breaking a double bottom, and is well below any Bullish Support Line. How low can it go? First count the number of boxes in O’s. There are nine. Multiply that times 2, and you get 18. Now subtract 18 from 32 (the price level equivalent to the first box at the top of the column of O’s). FED’s price objective on a short sale is 14. At this point, I would do a risk-reward analysis to determine if it’s a trade I want to put on, and where I would want to place a buy stop to cover if the short position moved against me.<br /><br />The Horizontal Count <br /><br />Another way to determine price objective is by using the horizontal count. To do a horizontal count, you would first count the number of boxes across the base a stock has built. Then multiply that number by 3 ,and then multiply that number by the box value. We’ll use (POT: 173.28 0.00%) for our example.<br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R_t2vqoGolI/AAAAAAAAAKo/euWIAHE5s7s/s1600-h/pot040408.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R_t2vqoGolI/AAAAAAAAAKo/euWIAHE5s7s/s400/pot040408.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5186869957115683410" /></a><br /><br /><br />POT has broken a double top (again), much to the chagrin of the “ag shitters”.<br /><br />The useful thing about a horizontal count is that you can easily tell which stocks are breaking out of a large base. In the case of POT, it gave a buy signal at 166. That is pretty easy to see on the PnF chart. This is another advantage of PnF.<br /><br />Look at the base of the formation it broke out of. That formation is 11 boxes wide at the 156 through 158 levels. That is a very large basing pattern. Normally, a base might be 6 or 7 boxes before a breakout; often times, only 3 or 4.<br /><br />Using the formula for the horizontal count: 11 x 3 = 33 x 2 points/box = 66. Now look at the bottom box of the column of X’s. It is at 154.<br /><br />Price objective : 154 + 66 = 220<br /><br />If you like the idea of buying (or shorting) a stock that is breaking out of a large base, look at the horizontal count. Going back to the example of ballistics, think of the horizontal count as the powder charge. The bigger the charge, the farther and more power the bullet has.<br /><br />If you like the idea of buying (or shorting) a stock that has momentum going for it, look at the vertical count. You can think of the vertical count as the distance the bullet will travel before gravity pulls it back down to the ground.<br /><br />I like to use both counts to get a better perspective in determining price objective.<br /><br />Finally, remember that calculating the price objective is simply a guideline. It is useful in helping you analyze risk-reward. Use the “count” as a guide, but don’t get hung up on it.<br /><br />It is more important to consider the market sentiment, sector, relative strength and chart patterns when initiating long or short trades.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-2438643998434787851?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-52873138732273535602008-04-04T06:54:00.000-07:002008-04-04T07:21:14.807-07:00The employment numbers came out this morning, and as expected, the <a href="http://www.bls.gov/web/ceshighlights.pdf">U.S. Bureau of Labor Statistics reported </a>job losses of 80,000 nonfarm workers.<br /><br />However, 64% of that number, or 51,000, came from the construction industry, not other areas like education and healthcare or the industrial base.<br /><br />Isn't this what we could have intuitively expected? We have been talking about the slowdown in housing and construction for over 6 months now.<br /><br />In that light, I don't think the number is that bad, actually.<br /><br />Don't be surprised to see the market hold these levels today, which sets us up for a rally to 13,000 next week.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5287313873227353560?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-89151003137831425232008-04-03T21:46:00.000-07:002008-04-03T22:26:26.197-07:00An unfavorable jobless claims report would have normally been expected to sink the market today, effectively wiping out most of the gains from Tuesday. You will recall that during the past several weeks this was the case. Market up, market down. But something has changed. Call it fate, manipulation or asshattery. The fact of the matter is, you can’t make money if you’re not in the game. The position to be in now is LONG. The market should end the week positive. The bulls are back in control. I’m buying the major big cap indexes via DIA, SPY, and QQQQ. Also taking positions in EFA and some IWM tomorrow.<br /><br />Take a look at the technical evidence:<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp2.blogger.com/_t_dCoMvZcYk/R_Wy9aoGodI/AAAAAAAAAJg/IYQepiuznfo/s1600-h/indu+20080403.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_Wy9aoGodI/AAAAAAAAAJg/IYQepiuznfo/s400/indu+20080403.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5185247314176287186" /></a><br /><br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp0.blogger.com/_t_dCoMvZcYk/R_WzI6oGoeI/AAAAAAAAAJo/HaaDqns9lqE/s1600-h/qqqq+20080403.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_WzI6oGoeI/AAAAAAAAAJo/HaaDqns9lqE/s400/qqqq+20080403.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5185247511744782818" /></a><br /><br /><br />Look at the small caps:<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp3.blogger.com/_t_dCoMvZcYk/R_WzbqoGofI/AAAAAAAAAJw/NPoD-onXSvo/s1600-h/Rut20080403.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_WzbqoGofI/AAAAAAAAAJw/NPoD-onXSvo/s400/Rut20080403.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5185247833867330034" /></a><br /><br /><br />…and Large cap international…<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp0.blogger.com/_t_dCoMvZcYk/R_Wzn6oGogI/AAAAAAAAAJ4/wN1eyLwknqY/s1600-h/efa+20080403.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_Wzn6oGogI/AAAAAAAAAJ4/wN1eyLwknqY/s400/efa+20080403.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5185248044320727554" /></a><br /><br /><br /><br />Finally, gold’s decline is helping to make the case…<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp3.blogger.com/_t_dCoMvZcYk/R_WzyqoGohI/AAAAAAAAAKA/Uxi2xL6E4qQ/s1600-h/gld+20080403.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_WzyqoGohI/AAAAAAAAAKA/Uxi2xL6E4qQ/s400/gld+20080403.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5185248229004321298" /></a><br /><br /><br /><br /><span style="font-style:italic;">Disclaimer: Technical analysis is a lazy man’s way to invest. You can lose money trading stocks on a technical basis. This information does not contain everything you need to know about the market or any particular stocks. In summary, conduct you own due diligence so you can take responsibility for you own results</span><br /><br />Recent comments I made on iBC:<br /><br /><a href="http://www.ibankcoin.com/king_of_the_pg/index.php/2008/04/03/life-takes-visa/">Life Takes VISA</a><br /><br /><a href="http://www.ibankcoin.com/king_of_the_pg/index.php/2008/04/02/technically-significant-breakouts/">Technically Significant Breakouts</a><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8915100313783142523?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-87730035257165123522008-03-31T08:57:00.001-07:002008-03-31T09:47:08.901-07:00XOM and CVX are bumping up against resistance:<br /><br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R_EM3KoGoNI/AAAAAAAAAHg/xGw_2srhfnU/s1600-h/xom+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R_EM3KoGoNI/AAAAAAAAAHg/xGw_2srhfnU/s400/xom+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183938787965051090" /></a><br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R_EM96oGoOI/AAAAAAAAAHo/ufptcINDKQI/s1600-h/cvx+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_EM96oGoOI/AAAAAAAAAHo/ufptcINDKQI/s400/cvx+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183938903929168098" /></a><br /><br /><br /><br />Ascending Triple Top Breakout BUYS: CAT, WMT, IBM<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_ENFaoGoPI/AAAAAAAAAHw/IgAEyk5QOwo/s1600-h/CAT+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_ENFaoGoPI/AAAAAAAAAHw/IgAEyk5QOwo/s400/CAT+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183939032778186994" /></a><br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R_ENRKoGoQI/AAAAAAAAAH4/I4AO8-QrOqc/s1600-h/wmt+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R_ENRKoGoQI/AAAAAAAAAH4/I4AO8-QrOqc/s400/wmt+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183939234641649922" /></a><br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R_ENeqoGoRI/AAAAAAAAAIA/jPW5rYVMW1I/s1600-h/ibm+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_ENeqoGoRI/AAAAAAAAAIA/jPW5rYVMW1I/s400/ibm+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183939466569883922" /></a><br /><br /><br />These have broken a double top: KO, GE are potential buys<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOJaoGoSI/AAAAAAAAAII/lZYroKFhcLU/s1600-h/ko+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOJaoGoSI/AAAAAAAAAII/lZYroKFhcLU/s400/ko+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183940201009291554" /></a><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOWaoGoTI/AAAAAAAAAIQ/_sooKVll8kQ/s1600-h/ge+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOWaoGoTI/AAAAAAAAAIQ/_sooKVll8kQ/s400/ge+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183940424347590962" /></a><br /><br />Shorts: PFE, MSFT, AA, MRK.... SELL!<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOlaoGoUI/AAAAAAAAAIY/gHbXIceff-Y/s1600-h/pfe+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOlaoGoUI/AAAAAAAAAIY/gHbXIceff-Y/s400/pfe+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183940682045628738" /></a><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOuaoGoVI/AAAAAAAAAIg/2IMFc_swlF0/s1600-h/msft+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EOuaoGoVI/AAAAAAAAAIg/2IMFc_swlF0/s400/msft+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183940836664451410" /></a><br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R_EO2qoGoWI/AAAAAAAAAIo/h1jYjflXY4I/s1600-h/aa+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_EO2qoGoWI/AAAAAAAAAIo/h1jYjflXY4I/s400/aa+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183940978398372194" /></a><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EO-aoGoXI/AAAAAAAAAIw/KJ28eKmfToo/s1600-h/mrk+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EO-aoGoXI/AAAAAAAAAIw/KJ28eKmfToo/s400/mrk+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183941111542358386" /></a><br /><br /><br />Potential breakdowns for shorting: BAC, AXP, DD, JPM watch for continuing deterioration....<br /><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EPVaoGoYI/AAAAAAAAAI4/DF6SNfMzlPk/s1600-h/bac+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EPVaoGoYI/AAAAAAAAAI4/DF6SNfMzlPk/s400/bac+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183941506679349634" /></a><br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R_EPgKoGoZI/AAAAAAAAAJA/EWrbVpKIojA/s1600-h/JPM+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R_EPgKoGoZI/AAAAAAAAAJA/EWrbVpKIojA/s400/JPM+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183941691362943378" /></a><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R_EPvaoGoaI/AAAAAAAAAJI/aiJGzoc0370/s1600-h/axp+200800331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R_EPvaoGoaI/AAAAAAAAAJI/aiJGzoc0370/s400/axp+200800331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183941953355948450" /></a><br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R_EQCqoGobI/AAAAAAAAAJQ/q2y4KKXTM7s/s1600-h/dd+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_EQCqoGobI/AAAAAAAAAJQ/q2y4KKXTM7s/s400/dd+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183942284068430258" /></a><br /><br /><em>Disclaimer: This information is for educational purposes only. There is risk of loss when throwing egregious amounts of money into the stock market. Make sure to conduct your one DD.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8773003525716512352?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-51607269444234279532008-03-31T08:02:00.000-07:002008-04-03T12:20:42.272-07:00I like the VISA story, but am holding off on buying it here. It looks like it is forming a wedge. A break out to over 65 would be bullish, a break below 60 would be bearish. I will buy it or sell it on a break out from either side of the wedge formation.<br /><br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R_D9c6oGoMI/AAAAAAAAAHY/SQTYfA08E4U/s1600-h/v+20080331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R_D9c6oGoMI/AAAAAAAAAHY/SQTYfA08E4U/s400/v+20080331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183921844319068354" /></a><br /><br /><br />The pitch for VISA goes something like this:<br /><br />Offering cash has become as socially unacceptable for high-speed transactions as is writing checks is in the express line of your grocery store. Have you noticed the dirty looks? Have you seen the Visa ads on TV where everything in the store comes to a grinding halt when a customer pulls out cash from his wallet? <br /><br />The game has changed. Today, 55% of all transactions in the U.S. are cashless. <br /><br /><br />American Express has its niche, and some people will always carry MasterCard. But large numbers of people will use Visa for cash.<br /><br />"Life," like the ads say, " takes Visa."<br /><br />The 1.5 billion Visas out there could very well double in quantity. It would follow that the $2 billion in Visa transactions may double, too. The Visa infrastructure, which has been 10 years in the making, can sustain a huge volume of business without a single dollar being spent on upgrades. Voila, it goes to Visa's bottom line.<br /><br /><strong>Visa first changed the game</strong> the day its founder, Dee Hock, created a new type of organization.<br /><br />He imagined the world's first virtual company in 1970, organizing itself to allow banks to compete for customers while collaborating around brand-building.<br /><br />His name for this invention: the "chaordic organization." He made up that word by combining "chaos" and "order." Chaordic organizations are self-organizing and self-governing. They operate not through hierarchies of authority, but through networks of equals. It isn't power or coercion that makes them effective, rather it's clear shared purpose, ethical operating principles, and responsibility distributed through every node.<br /><br />American Express has an (expensive) address: World Financial Center, New York, NY. But Visa's address is in your wallet. That was the brilliance Dee Hock's breakthrough.<br /><br /><strong>Visa's second game changer</strong> was to get itself favored over cash. Now remember, Visa itself never extends credit-the banks behind each individual card do<br />that. Visa simply gets paid per transaction. So it is a riskless strategy to drive down the size of the average transaction.<br /><br />Key here was to do away with the signature requirement on small purchases. That speeds up the line at Starbucks- and makes it convenient to use a card instead of cash. Visa's business has thrived, much to the chagrin of MasterCard.<br /><br /><strong>Visa's third game changer</strong> is a play for Asia's rising middle class. <br /><br /> <br />But milking that opportunity has been a challenge for Western businesses and investors. China plays by China rules, and China rules are very different.<br /><br />However, scoring on the China retail market is huge. Retail sales in China grew 13% in 2006, 17% in 2007 and will likely top 20% in 2008. During the recent New Year's holiday, spending was up 60% from last year.<br /><br />And yet most of this spending happens without a credit card. Cash or a complex system of credit notes ("chits")carried by local Mom and Pop stores is the current system.<br /><br />The stage is set for Visa to dominate Asia and China. It comes in as a global brand, yet it operates as a local, being issued through local banks.<br /><br />Game over.<br /><br /><em>Disclaimer: This info is for educational purposes only. Trading on this info is subject to risk of loss. </em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5160726944423427953?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-78071152074128610552008-03-31T07:38:00.000-07:002008-03-31T07:41:24.253-07:00This is a continuation of the previous post on Point and Figure charting.<br /><br /><strong>Updating a PnF Chart</strong><br /><br />The basic concept of updating a PnF chart is simple and straightforward: Whichever column the chart is in (X’s or O’s), you will remain in that column as long as the stock continues in that direction by one box or more. Let’s stop and take a look at what I mean.<br /><br />Here is the chart of JPM:<br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R_D3sKoGoLI/AAAAAAAAAHQ/zaAMXz9e9LA/s1600-h/JPM+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_D3sKoGoLI/AAAAAAAAAHQ/zaAMXz9e9LA/s400/JPM+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183915509242306738" /></a><br /><br /><br /><br />Currently, the stock is in a column of O’s, meaning supply is in control and price is going down. As long as JPM continues in that direction by one box or more, you will stay in that column. So, in the case of JPM, your first question at the end of the trading day should be, “did the stock decline one full box or more on the chart?”<br /><br />You will notice that on Friday 03/28, the price closed at 42.71. It didn’t reach 42, so an “O” is not placed in the box corresponding to 42 (remember, on stocks between 20 and 100, the value of a box is 1 point). The low of the day was 42.65. It is common practice to use the intra-day highs or lows to determine if the column of X’s or O’s moves to another box. In the case of JPM, the column of O’s stays at 43. If JPM had an intra-day low of 41.75, you would fill in the 42 box with an “O”, but you wouldn’t fill in the 41, since the intra-day price didn’t actually reach 41 (or lower). Simple enough.<br /><br />Keep in mind that all you are doing is recording what the stock does on each trading day. That’s it. Nothing more, nothing less. Easy. You don’t have to mess with the chart until the next trading day. Here is the logic you would use for a stock that is falling in a column of O’s, as JPM is:<br /><br />1. What was the daily low? Did it fall from a previous low? (If yes, put an “O” in the appropriate box(es).<br /><br />2. If the answer is no, then you have to ask yourself some other questions:<br /><br />a. Did the stock reverse up (3 boxes) in price on the chart? (If no, stop there. You don’t need to record anything!) If the answer is “yes”:<br /><br />b. Move one column over and up one box and place X’s in the boxes up to the appropriate place. Then stop there, and move on to another stock you are charting.<br /><br />Going back to the example of JPM, for you to start a column of X’s tomorrow, the stock would have to hit an intra-day high of 46, which is 3 boxes above 43.<br /><br />The daily highs and lows for a stock are all you will need to set up PnF charts. Fortunately, you don’t need to do these by hand (even though you could if you wanted to). You can easily pull up a PnF chart for most stocks, ETFs, mutual funds and indexes from www.stockcharts.com.<br /><br />The only record of time in the PnF chart is the replacing of an X or O with the number of the month when a box on the chart reaches the first entry of that month. Placing the month in the chart has no significance other than as a reference point. As the stock moves back and forth in price, it alternates back and forth from one column to the next, X to O, O to X, and so on. At no time will you have X’s and O’x in the same column. As mentioned in the previous post, the month is indicated by it’s respective number (March = 3, Apr= 4, etc.) with Oct, Nov, Dec indicated by A, B, and C, respectively.<br /><br /><strong>Trendlines</strong><br /><br />Trend lines are one of the most important guides you will have in PnF charts. It is uncanny how a stock will hold to a trend line, either going up or down. And it is easy to see on a PnF chart, whereas on a bar chart, it takes a little more subjectivity in drawing trend lines.<br /><br />The two basic trend lines used are the Bullish Support Line and the Bearish Resistance Line. There are two other trend lines we will discuss later: the Bullish Resistance Line and the Bearish Support Line. For now, let’s discuss the Bullish Support Line.<br /><br /><strong>The Bullish Support Line</strong><br /><br />This is a major component in the stock’s chart pattern. It gives us a look at the underlying trend. Think of these lines like brick walls. In general, when using PnF charts to analyze stocks, you would not buy a stock that is not trading above the Bullish Support Line. Drawing the line is very simple.<br /><br />Let’s take a look at JPM again:<br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R_D3sKoGoLI/AAAAAAAAAHQ/zaAMXz9e9LA/s1600-h/JPM+2008+0331.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R_D3sKoGoLI/AAAAAAAAAHQ/zaAMXz9e9LA/s400/JPM+2008+0331.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5183915509242306738" /></a><br /><br /><br /><br /><br />Once the stock has formed a base of accumulation below the Bearish Resistance Line (red) and gives the first buy signal off the bottom, we go to the lowest column of O’s in the chart pattern and begin drawing a trend line starting with the box directly under that column of O’s. Notice the short blue Bullish Support Line just starting at 37, under the column of three O’s. You then simply connect each box diagonally upward in a 45-degree angle to draw the trend line.<br /><br />Unlike bar charts that connect prices, PnF charts never connect prices. The angle for the Bullish Support Line will always be a 45-degree angle, and the angle for the Bearish Resistance Line will be the reciprocal of the 45-degree angle, or 135 degrees.<br /><br />Consider the longer blue Bullish Support Line started prior to the more recent shorter one. Since JPM traded significantly higher (up to 49) above this trend line and subsequently gave a sell signal (reversal column of O’s), followed by another buy signal (column of X’s), the shorter term trend line can be drawn.<br /><br />The prior trend line is still shown to give you a longer term perspective of support. That will always serve to be the long term trend line and may come into play months or even years later. The new short term trend line will now serve as a visual guide. It is valuable in that it can identify the short term direction of the stock. Traders will often initiate a long trade when a stock has declined near the Bullish Support Line because the stock is close to a stop-loss point.<br /><br />The most important thing about PnF is it’s clear guidelines for whether or not a stock is on a buy or a sell signal, and if it is in an uptrend or downtrend. Just remember, this is art, not science.<br /><br />Next time….The Bearish Resistance Line<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7807115207412861055?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-8684120056647610342008-03-27T09:35:00.000-07:002008-03-27T09:41:57.296-07:00Picking up on where we left off on my previous intro to PnF, let’s briefly recap:<br /><br /><strong>Review</strong> <br /><br />The PnF chart uses the price action of a stock to measure supply and demand. It’s really a study of pure price movement in that time is not taken into consideration while plotting the price action. Since only price changes are recorded, if no price change occurs (as represented by the boxes and their value), then the chart is left untouched. Price changes are shown by a column of boxes that have either X’s or O’s. The value per box is important, because it can be assigned accordingly to dampen or increase price sensitivity, depending on how you trade. More on that later.<br /><br />As stated, PnF charts use rising columns of X’s and descending columns of O’s to represent price movements. What you see when you look at a PnF chart is the underlying supply and demand of the security. The columns of X’s illustrate demand exceeding supply (rally), and the columns of O’s illustrate supply exceeding demand (sell-off).<br /><br />If you are looking for a way to filter out all the “noise” in the market, PnF is a solution to that if all you are interested in is the actual price movement of a stock or index. PnF charts help you observe market activity, and as such, are very helpful in identifying support/resistance lines, buy/sell signals, and trendlines.<br /><br />By being very flexible, P&F charts can easily be made more or less sensitive to price changes, which can help in determining differences between long term and short term trends. By varying “box” and “reversal” sizes, these charts can be adapted to almost any need. There are also many different ways these charts can be used for entry and exit points. As such, all types of traders and investors can benefit from applying and understanding the basic principles of PnF charting.<br /><br /><strong>The Chart </strong><br /><br />Let’s talk about the chart itself. How is it set up?<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-vNC6oGoGI/AAAAAAAAAGo/VjuKIoVTX6Y/s1600-h/SPX+2008+0326.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-vNC6oGoGI/AAAAAAAAAGo/VjuKIoVTX6Y/s400/SPX+2008+0326.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5182461246200782946" /></a><br /><br /><br />This is a most recent chart of the S&P 500 as of yesterday’s close. Price is shown on the vertical axis and time is show on the horizontal axis. Looking at the price increments on the chart, move up from the bottom from 1250 to 1260, 1270, 1280, etc. From this you will notice that each price increment corresponds to a box on the chart grid. Therefore, each box represents a value of 10 points, or a movement of 10.<br /><br />As I mentioned before, you can assign an arbitrary value to each box, depending on how you trade. If you are a short term trader, you would want to adjust the box values to a smaller number, thus allowing you to move quicker on price changes. If you are an intermediate term trader, you assign a larger value. A long term investor, may want to assign an even larger value to each box. If effect, what you end up accomplishing is filtering out the volatility of a stock’s price, which many times just represents normal movement and fluctuation in price action. Reduction of this “noise” can help prevent you from taking action when you really don’t need to. <br /><br /><strong>Assignment of box values</strong><br /><br /> Now, let’s get into the mechanics of charting by looking at the values of the boxes used to construct the chart. When I say box sizes, I’m not referring to a specific dollar or point value on the chart. The box sizes will change as the stock price moves through certain price levels. It’s important to make the distinction between “boxes” and “points”. For practical purposes, we will use the conventional “3-box” reversal method. It is not a 3-point reversal method. You will understand why a little later.<br /><br />When looking at and analyzing PnF charts, it is important to think in terms of boxes rather than prices. Between 20 and 100, the box size is 1 point per box. If a stock is trading below 20 or over 100, we want to use different box sizes.<br /><br />For penny stocks, those under 5, the convention is to assign each box a value of 0.25. Once a stock reaches 5, the box value increases to 0.50. You can see this illustrated with our friends from MVIS:<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-vNT6oGoHI/AAAAAAAAAGw/J98pP-3GQVY/s1600-h/mvis+2008+0326.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-vNT6oGoHI/AAAAAAAAAGw/J98pP-3GQVY/s400/mvis+2008+0326.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5182461538258559090" /></a><br /><br /><br />Here are the conventional or “default” values that represent the size of each box, based on price:<br /><br />Under 5……….1/4 point per box<br /><br />5 - 20…………..1/2 point per box<br /><br />20 - 100…….. 1 point per box<br /><br />100 - 200…… 2 points per box<br /><br />200 - 500…….4 points per box<br /><br />500 - 1000…..5 points per box<br /><br />1000 - 2500…..10 points per box<br /><br />2500 +………….50 points per box<br /><br />These values can be used for stocks as well as indices.<br /><br />The reason why we increase the box size is to adjust for volatility as price or value becomes a greater number. By doing this, we can compress the chart and get a normal picture of the supply - demand relationship of a stock. Stocks like GOOG require 5 points per box, (and now more recently, 4 points per box) , while YHOO only 1 point per box.<br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R-vNiKoGoII/AAAAAAAAAG4/8_KADIUQ6VI/s1600-h/goog+2008+0327.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R-vNiKoGoII/AAAAAAAAAG4/8_KADIUQ6VI/s400/goog+2008+0327.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5182461783071694978" /></a><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-vNs6oGoJI/AAAAAAAAAHA/YrcWQgYJnus/s1600-h/yhoo+2008+0327.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-vNs6oGoJI/AAAAAAAAAHA/YrcWQgYJnus/s400/yhoo+2008+0327.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5182461967755288722" /></a><br /><br /><br />The key to constructing the chart relates to how the chart switches from one column to the next (moving to the right). When a stock is rising and demand is in control, the furthest column to the right will be in X’s. When a stock is falling and supply is in control, the furthest column to the right will be in O’s.<br /><br /><strong>Reversals</strong><br /><br />Since we have established that we will use the “3-box” reversal method, it requires a three box change (or more) in the opposite direction to be significant enough to warrant a change in the columns from X’s to O’s when price begins to fall, or O’s to X’s when price begins to rise.<br /><br />So, for a stock trading between 20 and 100, a reversal would require a move of 3 points, which satisfies the 3 box reversal ( 1 point per box) requirement. In the case of GOOG, currently, it would require a move of 12 points, which is the equivalent of 3 boxes, minimum.<br /><br />Let’s look at the S&P 500 again:<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-vN46oGoKI/AAAAAAAAAHI/9742HXd281o/s1600-h/SPX+2008+0326.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-vN46oGoKI/AAAAAAAAAHI/9742HXd281o/s400/SPX+2008+0326.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5182462173913718946" /></a><br /><br />Here we see that the box size is 10 points. That means that a reversal in supply demand would be indicated by a price change of 30 points or more before we would say that is a significant move, or in effect, change in supply - demand for S&P 500 stocks as a whole.<br /><br /><strong>Time</strong><br /><br />The charts account for time by showing the number of the month of the year in a box. For example, the S&P chart above shows that supply was in control (price moving down in a column of O’s) and hit the 1320 level March 2008. The exact day is irrelevant for purposes of guaging supply demand. Since then, you can see from the columns of X’s and O’s, that it has been going through a series of reversals, and has recently broken out above bearish resistance (the red line). More on that in a later post. Right now, lets just focus on the chart set up.<br /><br />Moving back in time, the S&P was at the 1480 level in January (notice the “1″) before it started trading down, and subsequently made seven reversals (count the columns of X’s and O’s by February (”2″).<br /><br />One last point. If you look back in time on the chart, you will notice that there is an “A” and a “B” at the 1540 level. “A” represents the month of October, “B” November, and “C” December.<br /><br />That is all for now. I’ve wasted enough time and need to go make money.<br /><br />Next time….We’ll go over how easily support and resistance lines are established, price objectives and then get a little bit into how you interpret various chart patterns and what they mean.<br /><br />A’D<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-868412005664761034?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-44800629900737347512008-03-25T22:28:00.000-07:002008-03-25T22:35:14.114-07:00If you, the reader, have been observant, you have noticed by now that most of the time, whenever I post a stock or index chart, it looks like some odd ball cross between Chinese checkers and tic-tac toe.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp3.blogger.com/_t_dCoMvZcYk/R-nfYqoGoFI/AAAAAAAAAGg/c5znXIkr0OQ/s1600-h/SPX+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R-nfYqoGoFI/AAAAAAAAAGg/c5znXIkr0OQ/s400/SPX+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181918461118816338" /></a><br /><br />“WTF is that???”, you may have wondered.<br /><br />Well, thanks to a second request by Jake, I have been reminded to post information on this method of technical analysis. Hopefully, this will prove useful as another weapon you can add to your arsenal of stock market fun. The goal here isn’t to make you an expert (I don’t claim to be one myself), but to simply perk your interest and perhaps point you in the right direction where you can learn more.<br /><br />Point & Figure (PnF) is somewhat of a lost art in technical analysis. With the advent of the computer age, and the ability to compute complex mathematical formulas in a nanosecond, many traders and analysts dropped this old (over 47 1/2 years) method for new fangled analyses like MACD, Stochastics, Bollinger Bands, exponential moving averages, DMI, RSI, etc., etc., etc.<br /><br />However, having done this, many have lost sight of the basic principles that cause fluctuations in the prices of securities. Thousands of books, videos, and blogs have been dedicated to technical analysis, but the majority of the ones that I have seen miss the one basic and irrefutable law of the markets: supply and demand. It is this basic law of markets that PnF charting addresses, simply and eloquently. In addition, an advantage to using PnF is that you actually don’t need a computer. All you need is a newspaper that has stock prices (OHLC), a pencil, some chart paper, and the ability to draw X’s and O’s. That makes this method ideal for those over 47 1/2 years of age, especially elderly people like Warren Buffett.<br /><br />One last point before we get into this: Forget about the quest for the Holy Grail of investing…<br /><br /><object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/pWS8Mg-JWSg&hl=en"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/pWS8Mg-JWSg&hl=en" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><br /><br />You know what I mean…that one killer formula, trading technique, or method of analyzing the market or a stock. It has to be out there somewhere, and if you could only find it, you would bank more coin than The Fly and four time machines. I have news for you. The Holy Grail doesn’t exist. Sorry.<br /><br />If it does exist, it’s not what you might think it is. In my thinking, the Holy Grail represents hard work, dedication and proficiency in your craft. What drives you to it is your passion for the market and your goal of beating it handily, at will.<br /><br />Having knowledge certainly helps. However, there are no substitutes for persistence and hard work. That said, don’t look at PnF charting or any other method of analysis as a Holy Grail. They’re not. They’re simply tools. You have to work at being successful in the market.<br /><br />Way back in the late 1800’s Charles Dow found a way to organize and record information about the movements of stock prices. He was the first person to do this. His method of “Figuring” was the precursor to Point & Figure charting. The PnF method is simply a way to organize information about stock data.<br /><br />I don’t know about you, but I suffer from information overload. There’s so much out there. Too much….kind of like trying to drink water from a fire hose (which, thankfully, I have never tried). How do you control all that massive overload of information and break it down to something you can use? That is the challenge. PnF is a logical way of organizing and recording the imbalances between supply and demand. This is what makes it so useful as a method of analysis.<br /><br />When you cut through all the bullshit on the Street, CNBC, brokers, analysts, economic reports and internet resources, what you are left with is raw supply and demand data.<br /><br />The PnF chart only uses the price action of a stock to measure supply and demand. Volume isn’t a consideration. Why not? Because volume has to eventually show up anyway in the chart patterns because there will be no significant price movement unless there are more buyers than sellers willing to sell or more sellers than buyers willing to buy. PnF is only interested in the net supply and demand forces. So much of the volume today is hedging and derivative related and really isn’t a true picture of a stocks supply and demand profile.<br /><br />There are two letters of the alphabet that are used in this charting method: X and O. The “X’” represents demand and the “O” represents supply. The key to PnF is how the chart moves from one column to the next, from X’s to O’s then to X’s then O’s, etc. For purposes of the examples, we will use a “3 box reversal” method. You can use other points or boxes, but for my purposes, I use the 3 box method consistently. Keep it simple.<br /><br />Let’s take a look at the S&P 500 chart again:<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp3.blogger.com/_t_dCoMvZcYk/R-nfYqoGoFI/AAAAAAAAAGg/c5znXIkr0OQ/s1600-h/SPX+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R-nfYqoGoFI/AAAAAAAAAGg/c5znXIkr0OQ/s400/SPX+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181918461118816338" /></a><br /><br />As you can see, the chart pattern is formed by alternating columns of X’s and O’s, representing demand and supply, respectively. The only way a column of X’s can change to O’s is by reversing 3 boxes. The same 3 box reversal method applies to the column of O’s. This moving back and forth from one column to the next is what forms the chart pattern. This is where the PnF chart differs from a bar chart or candlestick chart. PnF leaves volatility out of the equation and gives us a clearer picture of supply and demand. On the other hand, a bar chart includes volatility totally into consideration because the chart has to be updated every day no matter how inconsequential a price movement might be. This is what makes bar charts somewhat subjective and difficult to interpret.<br /><br />Next time….”The Mechanics of Charting PnF”<br /><br />Developing……<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-4480062990073734751?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-14454069631809858302008-03-25T11:08:00.000-07:002008-03-25T12:15:17.745-07:00The Shape Of The Future<br />By <a href="http://www.amazon.com/exec/obidos/ASIN/0471295639/frontlinethou-20">Peter L. Bernstein </a><br /> <br /> <strong>Three months ago, we wrote, "[T]he economic malaise will not be brief, even though its depth is uncertain. The process is going to be like water torture - drip by drip by drip over an extended period of time until all these excesses are squeezed out of the system and new and happier horizons can open up." This metaphor should now form the basis for all decisions, strategies, and analysis. Recessions matter, but the important features of the problems faced by the American economy are not in the short run. The crucial issue is the nature of the new longer-run environment that we are convinced is now a reality. This environment is still in its infancy, but its principal features are already identifiable.<br /><br />Too few people are thinking along these terms. The short run always tends to dominate mass thinking in any case, but in an odd way the short run is irrelevant to the current situation....</strong><br /><br /> The short run is a creature of the immediate past. The longer run will be a profound break from the past. Indeed, the longer run in this instance is going to evolve as it is going to evolve whether we have a perceptible recession in 2008 or whether we squeeze by with a minimum of negative numbers.<br /><br />Why are we so emphatic about this viewpoint? As Goldilocks shreds, we have to start thinking about what kind of long-term environment is going to replace it. Shifts to new environments are always attenuated. They are also rare across time, which means most of us have limited experience with this phenomenon. New environments often tend to sneak up on us and do not announce themselves with a fanfare. Most of us are unaware of what has happened until enough time passes to provide good perspective. <br /><br />Imagine, for example, what would have happened if investors had been willing to think through the powerful positive implications of the disinflationary forces that set in during the early 1980s after Paul Volcker had turned the tide of inflation. Instead, backward-focused investors in fear of renewed outbreaks of inflation ignored the way these new trends would lead to a radical improvement in economic stability and opportunity. The record of long-term interest rates in those years is eloquent testimony to the bias toward the past: although yields on ten-year Treasuries broke briefly below 8% in the wake of the oil price break in 1986, they were back up over 8% in 1987 and averaged over 8% for the next two years. Meanwhile, inflation averaged only 4.3%. Clearly, nobody was willing even to think about what the victory over inflation could produce. Yet it would lead to Goldilocks - a remarkable change in the nature of the whole world - would miraculously emerge from the disinflationary environment.<br /><br />The discussion that follows begins with a few generalities about when and why old environments fade away and begin to yield to new environments. We analyzed this matter some time ago, but recent events provide a better perspective to our line of argument. We go on to explore how much of the old environment has disappeared, which then leads us to some speculation about how the new régime is likely to develop.<br /><br /><strong>The dynamic process: Familiar facts in a new setting</strong><br />Economic environments do not have a specified life cycle, like the business cycle. As I have argued elsewhere, economic régimes tend to persist as long as people are still trying to figure out what is actually going on. This effort strengthens the underlying characteristics of the environment and extends its life expectancy. Change, therefore, is unlikely until people finally arrive at the belief they understand what it is all about. Such a process has no definable rhythm. The arrival of understanding could come sooner or later, depending on the circumstances. Furthermore, this process applies to all environments, both prosperous and depressed, to the 1920s as well as to the 1930s, to the years from 1949 to 1969 as well as to the devastating decade that followed.<br /><br />The 1920s were doomed at the moment when the New Era became a common phrase and Irving Fisher explained that prosperity would last forever. The Great Depression continued until unremitting deflation and waves of bank failures convinced a new administration that the tie to gold at $20.67 an ounce was stifling the economy. In addition, a total reversal of tax-raising fiscal policy and restrictive monetary policy was both essential and urgent. The postwar prosperity of 1949-1969 lasted for over twenty years because it was grounded in doubt as everybody kept waiting for an inflation that failed to show up. Inflation remained low, to general surprise, even though output growth was high. Once people got the idea that high output would not automatically cause inflation, the sense grew that now nothing could go wrong - and so we entered another régime marked by the aggressiveness of monetary policy and war finance in the 1970s. The resulting inflation would rage for ten years before people recognized that a profound transformation of the conduct and targets of monetary policy was essential. The outcome, as mentioned above, was the transition decade of declining inflation in the 1980s, leading in turn to Goldilocks after about 1989.<br /><br />The Goldilocks environment was so benign it appeared to be a long sequence of happy surprises. Goldilocks was aptly named: low volatility in capital markets and in the real economy, low inflation, central banks in firm control, a healthy appetite for risk-taking in the business world that led to revolutionary technological change, the transformation of the "emerging" economies into "developing" economies, and the resulting boom in globalization.<br /><br />After the bursting of the dot.com bubble in 2000, the business sector of the real economy resisted the fever for devil-may-care risk-taking that ultimately infused the financial markets. As a result, Goldilocks had remarkable longevity. Its death-knell would wait until the financial markets finally got the message that high risks were not really high risks in a low-risk economy. Then the fundamental stability and growth momentum of the global economic system created a bulging appetite for risk-taking that led investors around the world to gorge on anything that looked risky. A point came when any trigger would justify ever-greater risk-taking. The actual trigger did not have to be housing, but (with hindsight) we can see housing was a logical candidate. No one seemed to doubt that home prices could ever stop rising. Debt had no ceilings. Just to make everything appear even better, housing requires financing, which was like handing a delicious and multi-layered chocolate cake to the world of finance and financial engineering. Professional investors learned how to clothe high risks in a low-risk format for sale to the Great Unwashed, and to a goodly number of the Washed as well. <br /><br />In the aftermath of the fervor for risk-taking, Wall Street and the mortgage banks have created many deep-seated problems for themselves. As an unhappy side effect, the business sector, a relatively innocent observer, is going to have to absorb much of the pain of curtailed consumer budgets and fewer exports to foreign nations affected by the turmoil in the U. S.<br /><br /><strong>The aftermath: An introduction </strong><br />Human nature develops odd biases. In terms of the economy, memories of past environments are more heavily weighted by the disasters than by the positive achievements of the period. These disasters linger long in collective memories, influencing public policy and investment practice for extended periods of time.<br /><br />Fear of the double-digit unemployment rates of the Great Depression dominated economic policy from the end of the depression in 1933 to the late 1970s. As late as 1978, with inflation raging around 8%, Congress enacted the Humphrey-Hawkins Full Employment Act, providing for "the right of all Americans able, willing, and seeking work to full opportunity for useful paid employment at full rates of compensation." Paul Volcker's great achievement (and courage) were in his conviction he would never defeat inflation as long as he had to tread softly in limiting possible increases in unemployment. That constraint had to change. Volcker saw no alternative if he was to win the battle in which he had been put in command. As he carried out his campaign, the unemployment rate soared from under 5% in 1979 to nearly 11% in 1982, but inflation dropped from a peak of over 14% to less than 6% over the same period. <br /><br />Today's central bankers may make interesting observations about influencing inflation expectations, but everyone knows they must ultimately have the courage to see unemployment increase if their policies to contain inflation are to carry credibility and actually influence expectations. The Fed is in an uncomfortable position at this very moment, because the tradeoff has taken on an unusual complexity, with the job market softening while lingering symptoms of inflation are still visible.<br /><br />As we now move on into the post-Goldilocks environment, which unhappy memories are going to weigh heaviest? Worries about inflation are not about to vanish, but new elements are going to join in. Clearly, everything that led up to the credit crisis and the problems of home ownership will remain a central focus of attention for a long time. <br /><br />In addition, as we emphasized in our issue of August 15 of last year ("Memory Banks and Economic Policy"), the increased income inequality generated by Goldilocks has become a widespread popular concern, already making vibrations among members of Congress and candidates for higher office. As Bill Gross himself put it in strong words last August, "So when is enough, enough? Now is the time, long overdue in fact, to admit that for the rich, for the mega-rich of this country, that enough is never enough, and it is therefore incumbent upon government to rectify today's imbalances." The rhetoric of the election campaign is full of such talk. This concern will influence tax policy and spending policy for a long time to come. <br /><br /><strong>The aftermath: The particulars</strong><br />The repercussions in the financial system are our main concern here. Most of the current flood of analyses of the state of the credit markets concentrate on the problems of the present. This kind of information is little help. We need to develop a sense of how this situation is likely to evolve over time. To accomplish that goal, our primary task is to discover where the roots of the new régime are being planted.<br /><br />We now set out our own views along these lines. We begin with a few generalities. These generalities will lay the basis for the particulars that follow.<br /><br />Credit is always and everywhere a matter of trust. Where there is trust, anything goes, as the recent proliferation of so many structured financial instruments vividly demonstrates. When trust vanishes, the revival of the buoyant credit creation of the past becomes extraordinarily difficult. But without credit creation, economic growth and risk-taking are stifled. <br /><br />Liquidity is also a matter of trust to some degree. But liquidity has another feature that few people notice. Liquidity is a function of laziness. By this I mean that liquidity is an inverse function of the amount of research required to understand the character of a financial instrument. A dollar bill requires no research. A bank draft requires less research than my personal check. Commercial paper issued by JP Morgan requires less research than paper issued by a bank in the boondocks. Buying shares of GE requires less research than buying shares of a start-up high-tech company. A bond without an MBIA (once-upon-a-time anyway) guarantee or a high S&P/Moody's rating requires less research than a bond without a guarantee or lacking a set of letters beginning with "A" from the rating agencies. The less research we are required to perform, the more liquid the instrument - the more rapidly that instrument can change hands and the lower the risk premium in its expected returns.<br /><br />This emphasis on trust and liquidity in a well-functioning credit market provides useful insights into what is happening. Trust has vanished in many areas where it was taken for granted just a few months back. And when the ratings of S&P and its competitors lost credibility, paper that had traded on sight lost the liquidity it once enjoyed because now it involved far more research than in the past. These words are just an elaborate way of explaining why credit spreads were so narrow just nine months ago and so wide in today's markets. <br /><br />This abrupt shift in viewpoints has caused snarls in many areas of the credit markets. Over the longer-run, the most serious of these blockages is the disruption in the process of securitization. Securitization works only in an atmosphere of trust and where the paper involves a minimum of research. Without securitization, and without the lively derivatives markets that developed around the securitization process, the entire credit system loses an immense source of capacity, hindering deserving borrowers in search of financing and, as a result, the pace of economic growth.<br /><br />Until the system can restore trust and the related willingness to buy instruments on the basis of limited research (or even no research), the credit markets are going function below optimal levels. But restoring trust and liquidity is no simple matter. Securitization broke the old personal relationship between lender and borrower, greatly expanding the market for credit in the process. The old-fashioned way - when lender and borrower were essentially on a face-to-face relationship - was slower, more cumbersome, and, most important, far more limited in terms of capacity. <br /><br />In my days as a commercial banker, back in the late 1940s, the president of my bank said to me, "Remember this. I much prefer the customer to be angry at you because you denied him credit than for you to be angry at him because he failed to repay when due." That attitude sounds quaint today, but it was very much in the spirit of a time where jokes about bankers' glass eyes were legion. As the market for glass eyes revives - and it is reviving as we speak -new credit creation will inevitably slow down. As Woody Brock recently emphasized, "the combination of diminished bank capital and tighter lending standards could prove fatal to credit creation."<br /><br />Now, it would be naïve to project this set of conditions into the indefinite future. Trust will regenerate over time, and the burdens of research will lighten. The pace of change in that direction, however, will be slow, a matter of years rather than months. An entire structure has crumbled and has to be rebuilt, brick-by-brick. Nor will that process necessarily be smooth. The impact of unforeseen but inevitable credit problems will loom large, detouring and delaying the pace and patterns of recovery on each occasion.<br /><br />There could be bright spots as well. Our whole argument rests on the proposition that the demand for credit is going to exceed the supply, which is blocked by lack of trust and an increased burden of research. But a case where supply fails to respond to an excess of demand is rare in our system. People in finance have extraordinary energy for innovation in new products, new concepts, new paths to ultimate objectives. For example, hedge funds and sovereign wealth funds are already functioning as sources of credit, although a bump along the way might turn them off as well. <br /><br />These widespread and complex problems originated from an unanticipated sequence of shocks involving banking institutions believed to be impervious to losses in the billions and major impairments of equity capital. As we emphasized above, new régimes are colored by the unhappy memories of the preceding régime, and those memories linger on for extended periods of time. The plight of Citicorp and Merrill Lynch reaching for massive help from foreign government investment funds was an event nobody could have foreseen - but few will forget. How the mighty had fallen!<br /><br /><strong>The critical ingredient in the state of distress</strong><br />The sequence of events that caused the economy to lose its forward momentum over the course of 2007 was unique. This fact is central to our entire argument here. The cause was not too much inventory, not overexpansion in industrial capacity, not a sustained burst of inflation requiring a determined move to tight money and higher rates at the Fed. <br /><br />The root of today's problems in the financial markets and in the economy as a whole is the household sector. The point needs no elaboration, but its significance cannot be minimized. As we have argued on more than one occasion, the shrinkage in the personal savings rate is not the result of consumer profligacy, as other commentators persist in describing it. Rather, the savings rate has been suppressed by a slowdown in the growth of household incomes. The shortfall between income and outlay has been met by borrowing, and in particular by borrowing against the family real estate. Now the opportunity to borrow has shrunk dramatically, an outcome that will profoundly change the household's spending power and spending patterns. But the impact is not just on the household. A slowdown in the growth of consumer spending has ominous implications for the entire global economy - and, along the way, the U. S. federal deficit, soon to be overburdened by spiraling benefit obligations. This predicament is not a short-run matter, unless home prices abruptly reverse themselves and head back into the stratosphere - which is hardly likely. <br /><br /><strong>The bottom line</strong><br />The central message of our analysis is not that the origin of today's difficulties is uniquely in the household sector or that the residue of these difficulties has scrambled the whole credit structure in the financial markets. Everybody knows about these troubles.<br /><br />On the other hand, too few observers have noted how the consequences of these developments are going to require an extended period of time before the blockages they impose have been eliminated. But that is not all they have missed. This extended period of difficulty is going to bring about a new economic régime, different in many aspects from the experience of most people alive today. Along the way, we will have to pass through a transition period that harks back to an unfamiliar past in both the financial system and in the household sector. <br /><br />But this, too, shall pass. Yes, glassy-eyed bankers, prudent consumers, and a reformulated globalization can keep a lid on economic activity around the world for quite a while. What develops from that transition, however, should resemble what took place over the course of the 1980s. Without anyone realizing it, the errors of the past, drip by drip by drip, were buried and a new and better system took their place.<br /><br />You can find out more about Peter Bernstein at his <a href="http://www.peterlbernsteininc.com/">website</a>. He has written a number of excellent books: <a href="http://www.amazon.com/exec/obidos/ASIN/0471295639/frontlinethou-20">Against the Gods</a>; <a href="http://www.amazon.com/exec/obidos/ASIN/0471731730/frontlinethou-20">Capital Ideas Evolving </a>; and <a href="http://www.amazon.com/exec/obidos/ASIN/0470091002/frontlinethou-20">The Power of Gold</a>.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1445406963180985830?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-13806318124531013942008-03-25T10:45:00.000-07:002008-03-25T10:52:40.149-07:00If you have been trading or investing for any length of time, you should have come to the stark realization by now that there are times when the market defies reason and conventional logic.<br /><br />Success in this business depends on the ability to be forward thinking. Trading based on old information is a recipe for mediocrity at best.<br /><br />We all know about the bad news. The market sucks, we have a terrible housing market, conspiracy theories are on the rise, and who knows what will happen with the Presidential election? In short, we are on the brink of Armageddon. Everybody and your old third grade teacher knows that.<br /><br />With a goodly number of traders and investors, including “Joey-bag-of-donuts”, focused on the news (viz. “noise”) from the asshats at CNBC, market recoveries usually begin when a group of market participants know something that the rest of the market doesn’t. <br /><br />Unless you have the advantage of a time machine, the news you and I get is probably known by insiders at least a day or two before it gets released. However, the one aspect that tends to level the playing field for those of us who are “unimportant, third-tier bloggers” is technical analysis. (Btw, I have to put in a plug for Woodshedder. He is definitely a student of the market and his craft.)<br /><br />With that said, I simply want to point out that the market is working on a recovery that might surprise the bearish camp. Supply and demand, the most basic of economic principles, is flashing at least a short term buy signal via the P&F charts:<br /><br />The Dow’s chart pattern has formed a triple top breakout. <br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R-k6zqoGn_I/AAAAAAAAAFw/OKnMl8DYW1w/s1600-h/INDU+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R-k6zqoGn_I/AAAAAAAAAFw/OKnMl8DYW1w/s400/INDU+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181737505556701170" /></a><br /><br /><br />S&P 500, a double top breakout:<br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R-k6_6oGoAI/AAAAAAAAAF4/aYneABi8Cdc/s1600-h/SPX+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R-k6_6oGoAI/AAAAAAAAAF4/aYneABi8Cdc/s400/SPX+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181737716010098690" /></a><br /><br /><br />Naz 100, double top breakout:<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-k7NaoGoBI/AAAAAAAAAGA/fZL1h-EzXio/s1600-h/NDX+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-k7NaoGoBI/AAAAAAAAAGA/fZL1h-EzXio/s400/NDX+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181737947938332690" /></a><br /><br /><br />Russell 2000, double top breakout:<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-k7XaoGoCI/AAAAAAAAAGI/YlPLU7ULyr8/s1600-h/RUT+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-k7XaoGoCI/AAAAAAAAAGI/YlPLU7ULyr8/s400/RUT+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181738119737024546" /></a><br /><br /><br />Check out oil breaking down:<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R-k7haoGoDI/AAAAAAAAAGQ/e8-wEjwivkc/s1600-h/uso+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R-k7haoGoDI/AAAAAAAAAGQ/e8-wEjwivkc/s400/uso+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181738291535716402" /></a><br /><br /><br />…and gold...<br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R-k7qqoGoEI/AAAAAAAAAGY/vKtuCRqIrsM/s1600-h/gld+2008+0325.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R-k7qqoGoEI/AAAAAAAAAGY/vKtuCRqIrsM/s400/gld+2008+0325.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5181738450449506370" /></a><br /><br /><br />Follow through this week will be key. Right now, I intend to focus on technical analysis, not so much the news and the fundamentals. The bear market, the credit crisis, the banking crisis, a recession—all old news. In addition, everyone is expecting Q1:2008 earnings to be “bad”, especially for the banks and financials. All this is already priced in. Pundits are predicting how long all this is going to last. I like it when they start doing that. The market is ripe. Keep in mind that “the market” and the economy are not the same thing. All it takes is one or two major upside suprises, and potentially, off we go.<br /><br />Stock market logic.<br /><br />Trade accordingly.<br /><br /><em>Disclaimer: Conduct your due diligence concerning matters related to your money. You can lose your entire stake in the market. Should that happen, expect a conciliatory Asshat Award to arrive in the mail shortly thereafter.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1380631812453101394?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-82768321026618741392008-03-18T13:19:00.000-07:002008-03-18T13:21:33.290-07:00<strong>Unless you’ve been on vacation in Fiji or just egregiously drunk from St. Patty’s Day, you saw yesterday, a historic moment not seen since the 1930’s, with (JPM: 42.49 +5.41%) stepping in and buying (BSC: 6.07 +26.20%) for just a fraction of it’s book value. They were able to make this acquisiton due to the intervention by the Fed and the Treasury.<br /><br />As we all know, the Fed is fighting three battles:<br /><br />1.) The liquidity crisis that is turning out to be a very serious problem for our economy, as it is confronting the deflationary efffects of the de-leveraging of the global financial system.<br /><br />2.) The banking industry’s credit problems that are just starting out, in my opinion.<br /><br />3.) Fighting inflation, which is an idea that they have given up on for the time being.<br /><br />In regard to the liquidity crisis, as you all know, the Fed is meeting today and is widely expected to lower short term interest rates at least another 75 bp, and possibly 100 bp. It’s pulling out all the stops to fight this deflationary effect that we are seeing in the U.S. as a result of real estate prices falling now to a 16-year low.<br /><br />Not only are real estate prices declining, but the prices of financial instruments are also declining and as a result, the deflationary impact to the financial statements of the broker-dealer community, as well as, some of the global banks has been devastated.<br /><br />It is apparent now that the Fed, along with the Treasury, will do everything in their power to keep us from going into a downward spiral on the deflationary front. They are doing this by emptying their pockets and boosting the lending capacity of the Fed, as evidenced by the use of authority that they have not implemented since the 1930’s, which means that they will now lend directly to broker-dealers.<br /><br />The balance sheet of the Fed shows about $900 B in assets, mostly T-Bonds. They have a number of facilities that they have implemented over the past 60 - 90 days to allow people to borrow from them. As we saw last week, they will be taking as collateral value, MBS which have obviously been absolutely crushed into fine powder. If (and hopefully, not when) the Fed runs out of their balance sheet resources, they will have to turn to the Treasury to come in and start buying MBS.<br /><br />I would also anticipate that this will end up being a global effort of all the central banks, as they are going to strongly fight to prevent a deflationary spiral that could get out of control. This, in the long run will be favorable, as we do not want to go into a deflationary environment like Japan did in the 1990’s, or the U.S. did in the 1930’s.<br /><br />The banking problems are on the credit side. This has been developing for the past two years and the problems are coming to pass before our very eyes. I am of the opinion that the problems are just starting to pick up. We are going to see some very difficult numbers to swallow in Q1 of this year by the banks.<br /><br />IT IS WAY TOO EARLY TO JUMP UP AND BUY THE BANK STOCKS!<br /><br />Banks are not cheap enough yet. When you look at where the stocks have traded in the past, for example in 1990-92, you will see that they traded, in general, below book value. And, because of purchase accounting, these stocks will end up trading below tangible book value and when they drop below tangible book value, that would be the time to start looking at them more favorably.<br /><br />Earnings will be negatively impacted this year by rising credit costs from bad loans, which always will lead to lower stock valuations for the banks. That being said, it is very clear to me that the stock prices of banks will continue to fall from their current levels.<br /><br />On the inflation front, the Fed has essentially admitted that it is not their primary fight right now. The primary fight is to prevent the U.S. from going into a deflationary period by creating liquidity. As a result of having given up the fight against inflation, we have seen increases in commodity prices across the board, which has also affected the dollar.<br /><br />In summary:<br /><br />The loan and credit problems will intensify and get worse.<br /><br />The Fed is forced to create liquidity in a very illiquid credit market that has spread across the globe, thus driving down the dollar.<br /><br />The other big problem, which is different than the liquidity fight, is that the problems in the banking industry will lead to BANK FAILURES, which will probably come to a head later this year.<br /><br />Stay away from buying ALL bank stocks. <br /><br />Trade accordingly.<br /><br />You may want to TAKE ADVANTAGE OF RALLIES to continue to short the financials via (SKF: 116.93 -14.97%), or if you’re a conspiracy theorist, just take your cash out of your local bank and bury it in your back yard. Then go out and buy guns</strong>.<br /><br /><em>Disclaimer: This info is for educational purposes only. Trading on this info is subject to the peril of your own blind risk. Finally, if you do decide to short the banking sector, expect to get a call from your friendly neighborhood banker who will probably be wanting a loan.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8276832102661874139?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-55514350985841112082008-03-14T07:20:00.000-07:002008-03-14T07:33:39.537-07:00Aside from having a "waay cool" symbol, Potash Corp will probably continue to "rock from the rock".<br /><br />Rising cash production costs for phosphate rock is squeezing margins on non-integrated fertilizer companies. Unless we discover and start mining phosphate on the moon, supply constraints will further cause fertilizer prices to go higher from current record levels. <br /><br />POT has access to low cost, high quality phosphate rock and is well positioned to benefit from the rising prices.<br /><br />Every $10/tonne increase in phosphate prices equates to $0.08 in EPS, based on 2009 estimates.<br /><br />This is nicely volatile stock is a great one to trade long and short, but maintain a bullish bias over the long term.<br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R9qLxL09tvI/AAAAAAAAAFg/oDO1uS-mBXo/s1600-h/POT+2008+0314.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R9qLxL09tvI/AAAAAAAAAFg/oDO1uS-mBXo/s400/POT+2008+0314.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5177604398720595698" /></a><br /><br />POT to $190 by Q4.<br />---------------------------------------------------------<br /><br />Disclaimer: Buying Potash based on this information can be dangerous to your health. Do your research.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5551435098584111208?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-78995813162738071322008-03-14T06:49:00.000-07:002008-03-14T06:54:56.958-07:00Yesterday, on www.ibankcoin.com, I posted a short piece on <a href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/03/11/playing-both-sides/">“pairs trading”.</a><br /><br />Consider this:<br /><br />DUG is the UltraShort Oil & Gas ProShares ETF that corresponds to twice (200%) the inverse daily performance of the Dow Jones U.S. Oil & Gas IndexSM. Basically, you would buy DUG if you want to short O&G company stocks, in a big way.<br /><br />If you think that the prices of O&G companies are and will continue to de-couple from the price performance of crude oil and go down while oil prices go up, you might consider pairing DUG with either USO or DBO, thus shorting O&G stocks and going long crude oil.<br /><br />DUG:<br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R9qDGr09tsI/AAAAAAAAAFI/fXv1esRiYdE/s1600-h/dug+2008+0313.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R9qDGr09tsI/AAAAAAAAAFI/fXv1esRiYdE/s400/dug+2008+0313.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5177594872483133122" /></a><br /><br /><br /><br />USO:<br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R9qDdb09ttI/AAAAAAAAAFQ/uMNuXIG2WEQ/s1600-h/USO+20080313.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R9qDdb09ttI/AAAAAAAAAFQ/uMNuXIG2WEQ/s400/USO+20080313.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5177595263325157074" /></a><br /><br /><br /><br />DBO:<br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R9qDlL09tuI/AAAAAAAAAFY/5Qaxx6w7nIc/s1600-h/DBO+20080313.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R9qDlL09tuI/AAAAAAAAAFY/5Qaxx6w7nIc/s400/DBO+20080313.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5177595396469143266" /></a><br /><br /><br />————————————————————————-<br /><br /><em>Disclaimer: If you use this strategy based solely on this information, Jed, Jethro, Ellie Mae, and Granny Clampett will take up residence in your home and effectively “de-couple” you from your sense of peace and sanity. If that isn’t enough, gasoline prices may also top $10/gal, effectively de-coupling you from your bullshit Mazda Miata.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7899581316273807132?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-85482264104404300602008-03-14T06:33:00.000-07:002008-03-25T12:55:35.344-07:00<a href="http://bp1.blogger.com/_t_dCoMvZcYk/R9qB7L09trI/AAAAAAAAAFA/Qw4PHj6oYT8/s1600-h/BIDU+2008+0311.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R9qB7L09trI/AAAAAAAAAFA/Qw4PHj6oYT8/s400/BIDU+2008+0311.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5177593575403009714" /></a><br /><br />BIDU has broken out of a bullish triangle formation. It is a buy in my book.<br /><br />UPDATE (8:41 am MT):<br /><br />Since Chinese stocks have recently been getting the “Mongolian homo hammer of death”, some are now selling at reasonable valuations—particularly the high quality names. (BIDU: 274.90 +2.54%) is one of them.<br /><br />It goes without saying that BIDU is the GOOG of China. But it definitely has the home field advantage over search engines like Google and Yahoo. <br /><br />Chinese is Greek to me. I don’t understand it. The language is too hard to speak. The Chinese alphabet is something like 1400 characters. These people are smarter than your average internet geek. <br /><br />One big obstacle that search engines like Google and Yahoo have in China is censorship. The Chinese government doesn’t put up with YouTube media shit like, “transvestites bungee jump at Mardi Gras”. That won’t pass through the BIDU site.<br /><br />BIDU is fully cooperating with the government’s censorship policies, which is for all purposes, impossible for the reprobates at GOOG and YHOO to comply with. Viz a vis [sic?], GOOG and YHOO are finding it harder and harder to gain market share in China’s regulated internet environment.<br /><br />BIDU is the largest non-U.S. based website in the world. When Chinese people first start learning to use the internet, BIDU is often the first website they go to. A Computerworld survey of internet users in Shanghai and Beijing found that almost 80% of those polled preferred BIDU over GOOG. Baidu controls 24% of China’s online advertising, with GOOG at a distant 9%. It also controls 60% of China’s paid-search market, with GOOG at 26%.<br /><br />For Q4:2007, BIDU reported net income of $30.5 million, or $0.87 cents per share, up 79% year-over-year. Yet, the stock got axed. Sales increased by 110% to $78.3 million for the quarter. It sold off.<br /><br />Know this: by December 2007, it was estimated that China’s internet user population grew to 210 million, which puts it in second place behind the U.S., and slightly ahead of iBC viewers. Costs for broadband access in China have fallen more than 40% from 2003 levels to where subscribers are only paying about $8 a month now.<br /><br />As more and more Chinese get connected, expect BIDU sales and earnings to continue to exceed expectations. <br /><br /><em>Disclaimer: Buying BIDU based solely on this summary puts you in the category of an “asshat”. Do your own research and reach your on conclusions before doing a “JJ”, e.g. committing 85% of your 401(k) to one stock.</em><br /><br /><strong>UPDATE: Blew out my BIDU position @ 277.83 on 03/14/08</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8548226410440430060?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-76398530899930079322008-03-06T06:38:00.000-08:002008-03-06T06:54:24.613-08:00Are you “gold savvy”? Take the following quiz….<br /><br />Gold is:<br /><br />A.) A commodity<br /><br />B.) A currency<br /><br />C.) Formed into bricks and other materials that The Fly’s <a href="http://www.palaceofgold.com/vt1.htm">palace of gold </a>is made of<br /><br />D.) Both A. &B.<br /><br />E.) All of the above<br /><br />(Answer: D)<br /><br />Gold is affected by two things:<br /><br />1. Demand as a commodity: China and India are now the two largest consumers of gold. Much of this has to do with the mindset and culture that is prevalent in those countries. (”Wha hoppen to dorrah? Eet es fo Amelican flucktahds and peepo who roose home to folcrosha.”) People in “Chindia” will continue to buy more of the shiny yellow stuff as they become “middle-class affluent”.<br /><br />2. Demand as a currency: You think the dollar will recover anytime soon? If so, I have some auction rate securities to sell you. The dollar will continue its slide into the “pit of death” and gold is a natural hedge against the involuntary confiscation of your paper stock certificates and dollar denominated assets. Forget about mining shares and rare coins (which, by the way, are for asshats and 13-year old geeks). Buy the bullion, which you can easily store in an underground vault along with 10,000 rounds of armor piercing bullets. If you don’t have a handy vault to store all that, then buy (GLD: 97.72 0.00%).<br /><br /><a href="http://bp1.blogger.com/_t_dCoMvZcYk/R9AFR4_IBLI/AAAAAAAAAE4/xuHow88P8as/s1600-h/GLD+2008+0305.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R9AFR4_IBLI/AAAAAAAAAE4/xuHow88P8as/s400/GLD+2008+0305.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5174641776761767090" /></a><br /><br />(click image to enlarge)<br /><br /><br /><br />Gold is my favorite currency.<br /><br />Other interesting Facts About Gold<br /><br /><em>Disclaimer: If you buy GLD based on this post, a goldbug will take up residence in your underwear and “bugger” you in dark places, and your paper dollars could turn to dust.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7639853089993007932?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-38331075758100944342008-02-23T00:28:00.001-08:002008-02-23T00:28:52.766-08:00<object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/ii0wBbwKB2I&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/ii0wBbwKB2I&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3833107575810094434?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-91064501776137978422008-02-22T22:47:00.000-08:002008-02-23T14:52:28.201-08:00<object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/0RZwBA2gL04&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/0RZwBA2gL04&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object> <br /><br /><br /><span style="font-weight:bold;">Pull up a chart of the DJIA and you will see a classic wedge pattern of lower highs and higher lows that has been forming since January 10.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp2.blogger.com/_t_dCoMvZcYk/R7_B6i_HAuI/AAAAAAAAAEk/_zYyhwXttXk/s1600-h/DJIA+wedge+2008+0222.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R7_B6i_HAuI/AAAAAAAAAEk/_zYyhwXttXk/s400/DJIA+wedge+2008+0222.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5170064108812698338" /></a><br /><br />These wedge patterns form as a result of uncertainty by investors about the direction of the market. Upon further examination, you may notice that the successive lows have been rising in a shorter time frame than the highs have been falling. Although somewhat subjective, this is normally considered to be a bearish formation.<br /><br />Today’s trading of the double reversal-schizophrenic market, supports the case for uncertainty and paranoia in the marketplace.<br /><br />Does anybody really know what they’re doing right now?<br /><br />This might be setting us up for a test of the January 22 lows. The probabilities are high that the market will breakout from this wedge, and in more cases than not, it will be in the direction of the prevailing trend. <br /><br />Note that this current wedge pattern is a repeat of a wedge that formed from the end of October through the end of December of 2007….. And then there was January.<br /><br />The bears may have lost the battle today, but the war is certainly far from over.</span><br /><br /><span style="font-style:italic;">Disclaimer: Investing involves risk. You can lose money. A lot of money. In fact, if you’re careless, you could lose all of your money. If you do, don’t blame me or come cryin’ to me to make it all better. I’m not your adviser. I have better things to do with my time. Complaints should be directed to Bruno @ www.beatmewithanaxehandle.com. You must sign up as a member and file a complaint to receive reparations and a complimentary axe handle. All axe handles are imported and handcrafted from only the finest Romanian hickory. (Please allow 3 - 5 business days for arrival of henchman with axe handle.)</span><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-9106450177613797842?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-18852287914951478962008-02-22T15:06:00.000-08:002008-02-22T15:54:01.302-08:00The market for Auction Rate Securities remains frozen but has seen some progress as municipal borrowers like California and Florida schools converted their auction rate securities to fixed rate debt this week and the Port Authority of NY announced they would redeem $200MM next month. <br /><br />Auctions for both single issuer Auction Rate Securities and the “muni preferreds” issued by Closed End Funds continue to fail to clear the available supply of sellers. <br /><br />Mutual fund companies are making efforts to communicate with investors regarding the implications of failed auctions for preferred holders as well as common holders. While some of the Q&A sessions between the fund companies and investors provide little direction, I believe the fund companies are working on solutions for investors and are willing to work collaboratively to identify some options to resolve the current crisis. <br /><br />Individual "retail" investors hold approximately $60 billion of muni preferreds, or about 20% of the ARS market. <br /><br />Although the timing of a resolution is still uncertain, I do expect an announcement to occur very soon, as pressure is mounting on all fronts to get this issue resolved.<br /><br />The fallout from all this has yet to be quantified. No doubt, adding more leverage used to boost yields on closed end funds is not an option at this point.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1885228791495147896?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-80405528425555606752008-02-22T14:29:00.000-08:002008-02-22T14:33:14.849-08:00Here is what you avid fishermen are looking at:<br /><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R79NCi_HAsI/AAAAAAAAAEI/njoALPW3Ls8/s1600-h/DJIA+2008+0222.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R79NCi_HAsI/AAAAAAAAAEI/njoALPW3Ls8/s400/DJIA+2008+0222.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5169935603391201986" /></a><br /><br /><br /><br />It appears that the DJIA is in a descending triple bottom breakdown. As I wrote in a previous post, this is a continuation pattern of the major trend, and has been shown to have a 93% probability of a further decline over a period of months.<br /><br />The Russell 2000 is showing a bearish triangle breakdown pattern, which also has a very high probability of further downside.<br /><br /><br /><a href="http://bp2.blogger.com/_t_dCoMvZcYk/R79NSi_HAtI/AAAAAAAAAEQ/3JRaI2rrEyM/s1600-h/RUT+20080222.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R79NSi_HAtI/AAAAAAAAAEQ/3JRaI2rrEyM/s400/RUT+20080222.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5169935878269108946" /></a><br /><br /><br />In the market, as in cards, I’d rather have the odds in my favor.<br /><br />Rather than spend time on the computer this weekend looking at stocks to do some “bottom fishing”, you might try this kind of fishing, while waiting for the spring thaw:<br /><br />Try your hand at this fishing game. Read the instructions (below the link) first.<br /><br />http://www.peninsulaclarion.com/kenairiverrun/kenairiverrun.html<br /><br />Instructions:<br /><br />You will see the fish swimming in the lake. Click on the place in the lake you want the man to cast his line. Remember the fish are swimming and if you click on the fish by the time he casts his line the fish will have moved beyond that point. So click on a spot ahead of the fish where you think the fish will be after the line has been cast. WARNING: This can be addictive! Don’t blame me if you get your ass in a sling with the Mrs., because you sat around all weekend and didn’t get any projects done around the house. (Not that anyone has ever done that.)<br /><br />——————————————————–<br /><br />This is for all of you great outdoorsmen who love to fish, but don’t want to drive to the lake or go ice fishing right now…so, good luck, and no lies!!!…and turn up yer volume.Note: There is a tackle box nearby, want a different lure? Just click on it! Kenai River Run….. <br /><br />—————————————————-<br /><br />Or, you might do this if you live in a warmer climate…. <br /><br /><object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/vwMSy7xK218&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/vwMSy7xK218&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8040552842555560675?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-18722561786479450222008-02-22T07:09:00.000-08:002008-02-22T12:38:32.217-08:00Bug doo-doo.<br /><br />Yup. Derived from bugs that fart, shit and piss hydrogen and ethanol. Sound far fetched? Think again.<br /><br />You’ve probably been hearing news about new developing technologies for large-scale fermentation processes that produce biofuels from organic waste. No? Well there are, 18th century-corn cobb-house dweller.<br /><br />The “bugs” are actually patented microbes that are genetically engineered to process an oatmeal-like bio-slurry, which produces a byproduct, more commonly known as “biodiesel”. The slurry is nothing more than carbohydrates derived from plant matter that feed the microbes.<br /><br />Just think of the microbes as tiny little employees that do nothing but eat and shit all day long, yet are very productive. Odd, no?<br /><br />In light of the novelty of this idea, I find it somewhat hard to understand why heavy hitter VC firms like Vinod Khosla, Kleiner Perkins Caufield & Byers, and Texas Pacific Group have plowed big money into this technology. Cheap labor, 24/7?<br /><br />After the microbes have done their “business”, the whole mixture is taken out, spun in a giant centrifuge, and density separates out the individual components. The most important of these components is a chemical compound that is nearly identical to diesel fuel…. “bacterial fuel”, or biodiesel, if you will.<br /><br />There is a strong economic case for bacterial fuel because the fuel that the microbes produce is virtually ready for the gas pump, requiring only a simple cleaning step to filter out impurities. Making the bacterial fuel uses about 65% less energy than making ethanol. Also, keep in mind that ethanol requires extensive chemical processing that drives up its price and damages the “Green initiative”. Ask Green Writer about this…I have no idea what those people are about.<br /><br />The fuel also has about 50% more energy content, which means a gallon of the stuff would last about 50% longer in your car, than a gallon of ethanol. Aside from making environmentalists jump for joy, this fuel has a number of advantages to it including, low cost, ease of production and low impact on the environment.<br /><br />To me this bug doo-doo thing does make some sense. We are already dependent on petroleum, so an alternative will take years and years to develop and adopt. Solar is for asshats (and really smart, but diminutive Chinese professors).<br /><br />Now, here we have a way to make petroleum, without having to wait a couple of billion years. It is simply through exploiting an existing biotechnology that God has established. For years (i.e., way before you or I were born), bacteria have been naturally turning sugar they consume into fatty acids. These fatty acids are later converted to lipids for storage. Serendipitously, fatty acids are only several molecular linkages away from diesel fuel. How do I know this, you axks [sic]? I read it in a chemistry book, aiight?<br /><br />What companies like Amyris Biotechnology have done is to tweak the existing chemical process to yield diesel fuel, by creating strains of bacteria that excrete what your Lexus of the future will be storing in its tank and running off of: bug doo-doo. This may give a new twist to the phrase, “your car is a piece of shit”.<br /><br />But, before you get all excited and start bagging up your lawn clippings to take down to the local bug doo-doo producer, be aware that this technology is early stage. It will be three to five years before the finished fuel is market ready. Then they will have the challenge of producing and distributing it in mass quantities. And, don’t forget there’s government regulation and red tape to wade through. So, don’t get your panties all in a bunch over this just yet.<br /><br />There are other companies in this space that are developing this as well; LS9 and Synthethic Genomics to name two others. You can probably expect the farmer to get involved with this too, since he is closest to plant waste material, and has bags of gold coins to invest from his sales of grain. His new found wealth will start to manifest itself in greed and avarice to bank more and more coin. His mindset is that since farmers already control the food production, it only follows that they will eventually rule the world. Pure greed.<br /><br />However, none of these companies are public…yet, so no coin for you right now. It will be interesting to watch how all this develops in the next few years. Perhaps, instead of hawking Chinese Solar Burrito stocks, we will be buying American Bug Doo Doo stocks?<br /><br />Who knows?<br /><br />Some may find it hard to believe that high brow VC firms are investing in this technology, with the likes of people like this…..Will this guy be the next Bill Gates of the energy sector?<br /><br /><br /><object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/pL-M2IzYGuU&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/pL-M2IzYGuU&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1872256178647945022?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com2tag:blogger.com,1999:blog-4318832915976979696.post-42375305038684113562008-02-20T22:50:00.000-08:002008-02-20T22:53:00.153-08:00<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp2.blogger.com/_t_dCoMvZcYk/R70flC_HArI/AAAAAAAAAEA/y-W0r5EOcB8/s1600-h/MOO+20080220.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R70flC_HArI/AAAAAAAAAEA/y-W0r5EOcB8/s400/MOO+20080220.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5169322668608389810" /></a><br />While many are uneasy about the future, an increasing number of down home country bumpkins are banking excesss coinage. I’m talking about your garden variety friendly farmer.<br /><br />According to the USDA, net farm income set a new record in 2007 and will likely surpass that in 2008. Inflation-adjusted farm income hasn’t looked this good since the early 1970’s, before many of you internets were born.<br /><br />What gives?<br /><br />First of all, consider that there is an important transfer taking place that is shifting income away from discretionary purchases and towards necessities, like food. As world food supplies are stressed and prices rise, there is unrest in various places around the world as economically dispersed and distanced as Mexico, Italy and India. For example, in January, world wheat stockpiles fell to their lowest levels in over 20 years, with supply levels sufficient for only about 2 months.<br /><br />And several countries are starting to take action to stem the crisis. For instance, the EU has lowered or removed numerous cereal import duties for the first time since it came into existence. Similarly, pressure is mounting on governments in the U.S. and elsewhere to loosen the rules that impose constraints on land use. If the Western Hemisphere experiences a poor growing season, that would undoubtedly push grain supplies lower to critical levels. The demand for food coming out of the emerging markets, coupled with poor growing seasons in key producing regions like Russia and Australia have contributed to the growing supply-demand imbalance. Pain is on the horizon for emerging country markets.<br /><br />The boom in Ag can also be partly explained by happenstance. For example, the energy bill recently passed by Congress that mandates the production of 15 billion gallons of corn-based ethanol annually by the year 2015 is creating new demand and upward pressure on corn prices. That is also affecting the supply-demand relationship in other grains as well.<br /><br />Thomas Malthus’ dire predictions rested on an assumption that population growth is geometric, whereas food production only increases arithmetically. This further injects fear that recent price trends in food will end in a very scary economic and social conclusion. Shortfalls are the inevitable consequence this global view. It appears to be playing out today.<br /><br />But, are things really that bleak?<br /><br />What may offset the end result may be found in better irrigation (LNN: 70.26 +0.63%) and land management, introduction of better pest control systems, improved fertilization (POT: 156.00 +2.30%), (MOS: 114.04 +4.10%), (AGU: 70.42 +3.62%) and higher yielding grains (MON: 119.05 +1.00%). More technological innovations in Ag will continue, and may even accelerate, given the price levels of farm commodities. High returns seem to attract capital. Not odd, no?<br /><br />The bottom line is that it is not too late to “milk the farmer”. There is still room to bank more coin is this space. The Ag sector stocks will still be volatile, no doubt. But, these are great stocks to trade as well as invest in for the longer term. However, in my opinion, you’ll make bigger money buying and holding on to these stocks, and adding to your position on normal pullbacks. The Ag sector is in the midst of a long term uptrend that could last for years. Many of the companies in this sector have highly visible and predictable revenues and earnings—a big factor when buying stocks during a period of negative index earnings growth. Of course, many of you will not heed my “buy and add to, long term” advice and will try to trade these stocks daily for nickels and dimes. That’s fine. Short term swing traders can make good money. Believe it. Ag stocks are in a big long term uptrend with more room to run.<br /><br />The supply-demand imbalances in the Ag sector, particularly the grains, is very serious and will be the top story and focus for international policy makers in 2008. Keep in mind that the global trend from rural living to city living in the emerging countries is pushing up demand for better food and more of it. Add to all this the cost of transportation and the unknown factor of the weather, and we could see continued price inflation in food. The near term beneficiaries of all this will continue to be the Ag biotech and fertilizer companies that are able to provide solutions that help the farmer increase crop yields, and thus, help them live large.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-4237530503868411356?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-30256457619039679552008-02-15T15:55:00.000-08:002008-02-15T15:56:31.716-08:00....<br /><br /><object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/awskKWzjlhk&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/awskKWzjlhk&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3025645761903967955?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-59397995370697994812008-02-15T15:52:00.000-08:002008-02-15T15:55:18.646-08:00As a follow up to my post yesterday, this is an update on the situation in the ARS (auction rate securities) market.<br /><br />Background:<br /><br />On Thursday of last week, six Goldman ARS auctions failed, which means (GS: 178.41 +1.05%) did not provide a supporting bid to take up the slack for the lack of buyers to meet supply by the sellers. Those six issues that didn’t clear represented about $500 million.<br /><br />Not surprisingly, a lot of institutional investors started asking questions about the structure of the auction market for the short term 7-day “floaters”. Then last Friday, JPM didn’t support its auction issues. The crack started to widen. <br /><br />This past Monday, the student loan ARS auctions “failed”. This sector is currently in distress and many auctions are not clearing the available supply. This was followed by news on Tuesday that Citi didn’t clear student loan and muni issues as lead manager. Then yesterday, MER, LEH, UBS, et al, didn’t clear their CEF (closed end fund) issues, which are names like Nuveen, Blackrock, Calamos and Eaton Vance.<br /><br />In most cases, the holders of these are largely institutional investors. They are paid high “max” rates of interest in many cases to hold the securities until they can sell them at the next weekly auction. [Can anyone say, “money market mutual funds”? and “corporate treasury accounts”?]<br /><br />Onward. Let me define what the term “ did not clear” means.<br /><br />This means that there are not enough buyers to match sellers. When this happens, the auction “fails” and the interest rate on the ARS goes to the “max” rate. This ends up being bad economics for the issuer and will likely lead to deals being collapsed (shares redeemed). But eventually, the market will “right size”. More on that later.<br /><br />Let me digress and briefly explain, in laymans terms, how these instruments are structured.<br /><br />Let’s say that I’m a fund manager of a CEF that invests in muni bonds. As you well know, a CEF is a mutual fund that is traded on an exchange like a stock, as opposed to an open end fund that issues shares to new investors as it takes in new money.<br /><br />Since I don’t have sources of new money, other than the current interest on my muni portfolio, my local MER investment banker may then approach me, offering to underwrite an ARS bond issue for my fund. The securities issued are sold at auction where buyers bid an interest rate that they want to earn on their money. In the case of a muni ARS, the interest is tax free. Also the interest rate will reset, in most cases, on a weekly basis, on the same day of the week that they were originally auctioned off. This happens weekly until the securities are redeemed by the issuer (me, in this example). Also, because of the reset, the interest rate is variable. It is tied to an interest rate index, like BMA. Hence the term, “floaters”.<br /><br />The reason why I would do this? ……. leverage. I can take the proceeds from the offering and go out and by longer term muni paper at a higher interest rate and make the spread between the interest rate I’ll get and the interest rate I’ll have to pay on the muni floaters. This is one way I can juice the the common dividend on the CEF shares. <br /><br />MER, as the lead underwriter, has a moral obligation (not a contractual one) to provide supporting bids each time the issue comes up for the weekly auction. That means that they are the buyer of last resort. They step in and provide liquidity to the market, which allows for orderly transactions of the muni ARS auctions each week. This has been the protocol for the last 20 years. As we know now, the underwriters are refusing to do this.<br /><br />Now, when an auction fails to clear, the investors holding the securities are now required to hold some or all of the securities until the next auction, but are paid a penalty rate of interest, the “max rate”. By the way, that interest penalty is to me, the issuer. The maximum reset rates for these deals have been reported in excess of 6% tax free, in some cases.<br /><br />Yesterday, this situation spilled over from the student loan and taxable issues, to the “muni preferred” market. Again, these deals are sold as leverage to closed end bond funds (Nuveen, Blackrock, et al). <br /><br />Most of the securities in these deals are held by individual “retail” investors, like mom and pop. These muni preferred auction securities, aka “tax free floaters” don’t normally offer the egregious maximum rates to the investors in taxable issues who experience a postponed auction. While each deal might vary, the max rate on tax free floaters in most cases, is based on 110% of the BMA index, which puts the yield currently at about 3.30%, tax free. (The taxable deals have a max rate that is typically 150% of LIBOR, or about 4.65%, currently.)<br /><br />Queston #1: If I’m an investor in these things, and I want to get out, can I? <br /><br />Maybe. Let me give you an example:<br /><br />Let’s assume that there is $10 million worth of supply (sellers), but only $5 million worth of demand (buyers). We can’t match the buyers with sellers. Now, if the underwriter like MER doesn’t put any support bids to “backstop” the issue, that auction is not going to ”clear”. We go to the max interest rate. However, since there are some buyers, the sellers would be able to get out on a pro rata basis, in this example, 50% of their position could be sold. The other 50% would have to wait for the auction again next week. The transaction is pro rata across all the sellers, not on a FIFO basis. The buyers, obviously, would get 100% of what they wanted to buy.<br /><br />Question #2: If an auction fails to clear, and there are no buyers, what happens then?<br /><br />The answer is….we don’t know. The auction could continue to fail week after week.<br /><br />Fund managers do have the option to de-leverage their fund, and unwind the floaters, but will they do that? Again, we don’t know at this point. However, I’m almost certain there will be some arm twisting to get them to do just that.<br /><br />In my case, as the hypothetical muni fund manager, I could sell assets in the muni portfolio and redeem the muni floater, thus taking the leverage off the common shares of the fund.<br /><br />It is called a muni “preferred” because it is senior to the common shares of the fund. Usually, when a muni ARS issue is structured, there is normally 300% coverage by the assets in the fund to the ARS. In addition, the fund always structures the issue so that there will always be, at a minimum, 200% coverage, guaranteed at any time.<br /><br />If the NAV of the overall fund falls below 200% coverage of the preferred, I would be forced to redeem the preferred to maintain the coverage ratio.<br /><br />So the reason why an auction ”fails” is not a credit issue, but a liquidity issue and the added concern with the auction process overall.<br /><br />Again, it is a liquidity issue, not a credit issue. Think about it. You have the coverage (collateral, if you will) of 200% at a minimum; you have the credit rating, usually A or better; and you have the diversification within the muni portfolio.<br /><br />That all said, expect the situation to continue, if not worsen in the near term. <br /><br />Eventually, the market will right size through de-leveraging by the fund managers or buyers coming in to seize the opportunities of higher max rates. We just don’t know when this will happen. In the meantime, the current holders of ARS will get a max rate each week, until an auction clears.<br /><br />The ramifications of all this are better left as the subject of another post. I’m sure you can think of a few “shoes” that could drop as a result of all this.<br /><br />Be well and have a great and worry-free President’s Day weekend.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5939799537069799481?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-28185442208216220722008-02-15T15:51:00.000-08:002008-02-15T15:52:32.943-08:00Auction Rate Securities (ARS) have recently joined the list of fixed income sectors experiencing dislocations due to the fallout created by the problems in the subprime mortgage market. Borrowers ranging from student-loan authorities to municipalities to large bond funds depend upon this market to raise money for making loans and funding projects. They do this by selling securities whose rates reset weekly in auctions held by various dealers. <br /><br />The Student Loan ARS sector has been largely an institutional market whereas the securities in the Closed-End Fund (CEF) sector, featuring names such as Nuveen, Blackrock, RMR, First Trust, and Calamos, is more of a retail market. Regardless, in recent days the investors who typically buy auction-rate securities have been balking. This has created a mismatch between buyers and investors who try to sell their securities at the weekly auction, and as a result the auction(s) haven’t “cleared”. <br /><br />Auctions for some Nuveen and Calamos issues haven’t cleared in the last few days when the lead underwriters failed to support the auctions. <br /><br />The number of daily auctions, particularly in Student Loans sector, not clearing has increased in the past few days and will likely continue to do so in the near-term until market conditions settle down. When an auction doesn’t clear, an investor looking to sell must continue to hold some or all of their securities until the next auction and receives a “maximum” rate from the issuer. This rate is set forth in the security offering agreement and will depend upon the type of ARS. <br /><br />The rate on the CEF products reset at a spread to an underlying index. Taxable CEFs such as RMR, First Trust, and Calamos are indexed to LIBOR. <br /><br />The tax exempt CEFs (Nuveen and Blackrock, etc.) are indexed to the BMA (Bond Market Association) index. <br /><br />Both short-term indexes will follow the direction of short-term interest rates as Central Banks change monetary policy. <br /><br />Dealers in ARS (C, UBS, JPM, GS, etc.) have no contractual obligation to take the securities in. In the event an auction doesn’t clear, this has created liquidity concerns on the part of current holders. Because of these different reset agreements, there is a wide disparity in reset rates and the “maximum” rates may vary widely between the CEFs, the muni ARS, and the student loan ARS. <br /><br />Auctions will continue on a weekly basis. When an auction doesn’t clear, the investor will receive the “maximum” rate until the next auction opportunity. You probably heard that the Port Authority of NY and NJ interest rate on Tuesday jumped to 20% from 4.2%. Investors will continue to receive that rate until the auction clears upon which time the rate reverts to a market rate. This “maximum” rate will act as a penalty to the issuer and should be an incentive for them to move to reduce supply by refinancing into other vehicles (collapsing deals and redeeming shares) which will help to “right-size” the market and clear the auctions. <br /><br />The inability of an auction to clear has created a near-term liquidity issue in the ARS market and as a result an investor in those deals will find themselves owning securities subject to the next auction opportunity. The underlying credit quality of the issuers generally remains very high, investment grade at the least and/or some issues are involved in the government-guaranteed student loan market. As far as I have heard from my sources, the sector does not have a credit issue. The dislocations in the sector have caught the attention of the media and the rush to sell has overwhelmed the market, increasing the likelihood auctions will not clear creating a liquidity issue. <br /><br />Lost in the media discussions is the fact that these instruments carry investment grade underlying credit ratings or are involved in the government-guaranteed student loan market, hence this is not a credit issue. <br /><br />This period of volatility is likely to persist for the near-term, but for investors comfortable with a potential lack of liquidity that can ride this out, it may be an opportunity to benefit from attractive short-term yields.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-2818544220821622072?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-87858115493802745042008-02-11T12:39:00.000-08:002008-02-11T12:42:42.085-08:00A basketball player is fouled and goes to the line for two free throws. He is a 70% free throw shooter. What is the probability that he makes both shots?<br /><br />Answer: 49% (0.70 x 0.70 = 0.49)<br /><br />That means, on average, he will make both shots about half of the time.<br /><br />We have a similar situation in trading. If we buy a stock right and sell it right, accomplishing both correctly 70% of the time, we have an even chance of making money.<br /><br />An interesting study was done a number of years ago by Earle Davis at Purdue University on PnF signals (Point and Figure charts are simply a logical, organized way of recording supply and demand).<br /><br />He found certain price patterns exhibited very high statistical probabilities. For example, a stock in a bull market that broke a triple top had an 87.9% chance of being profitable for an average gain of 28.7% in about 6.8 months.<br /><br />He also found that in a bear market, a stock that broke a triple bottom had a 93.5% chance of moving lower for an average “gain” (short) of 23% over only 3.4 months on average.<br /><br />I don’t know about you, but if I had a stock that had a 93.5% chance of going against me for a loss of 23%, I’d want to short it, or at a minimum, at least know about it.<br /><br /><a href="http://bp0.blogger.com/_t_dCoMvZcYk/R7Cy6y_HAqI/AAAAAAAAAD4/ciaDtiX4QyA/s1600-h/UBS.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp0.blogger.com/_t_dCoMvZcYk/R7Cy6y_HAqI/AAAAAAAAAD4/ciaDtiX4QyA/s400/UBS.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5165825495782589090" /></a><br /><br /><em>Be careful that you don’t short UBS based on this post, or a yodeler in lederhosen might crash your next party, and you might lose some money.</em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8785811549380274504?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-12610398850084490162008-02-07T08:52:00.000-08:002008-02-07T08:55:01.826-08:00I have fond memories of family vacations when I was a kid. We took practically the whole summer off, pulling a 32′ trailer around the country, visiting many of the National Parks. My dad was a college professor, so he had nothing better to do in the summers than haul me and my sister and my mom all over creation.<br /><br />However, what used to drive him nuts was the inevitable question from the backseat. <br /><br />“Are we there yet?”, my sister would whine in her 9 year old voice. This was nothing short of impertinent impatience in wanting to get “there” ASAP, even though we traveled only 50 miles enroute to a 400 mile destination.<br /><br />Sort of reminds me of the hopeful and impatient bulls in this current market.<br /><br />Most stocks are now in a bear market and we are approaching something that is a full blown bear market—globally. Check these out:<br /><br />The Russell 2000 is down -19% from its’ peak on 07/13/07.<br /><br />Naz……..down -20.30% from the peak on 10/31/07.<br /><br />The Naz 100…….down -22.24% from the peak on 10/31/07.<br /><br />S&P 500……down -15.25% from the peak on 10/09/07.<br /><br />DJIA………..down -13.87% from the peak on 10/09/07.<br /><br />Globally:<br /><br />MSCI EAFE……..down -17.34% from the peak on 10/31/07.<br /><br />MSCI Emerging Markets…….down -21.06% from the peak on 10/31/07.<br /><br />More than 3/4 of the stocks on the NYSE are trading below their 200-day MA. If we take the traditional definition of a “bear market” as a drop of 20% from the prior high, I calculate the current bear market levels as follows:<br /><br />NAZ …….2287.30<br /><br />S&P 500…1249.44<br /><br />Russell 2000….684.35<br /><br />So, the Russell 2000 is almost “official”. The Naz, Naz 100 and the MSCI Emerging Markets Index are already there.<br /><br />Hope for the Bulls is that we are approaching a level of internal market damage that suggests we could be closing in on a low for most stocks. In the last two major sell-offs of 1998 and 2002, we saw 85%-90% of NYSE stocks below their 200-day MA., a point where the indexes began to rally.<br /><br />Outside of technical considerations, we need to see fundamental confirmation to gain conviction about a sustainable market low. This would include a bottom in global leading indicators and a better picture of corporate guidance.<br /><br />Both are not to be seen at the moment.<br /><br />Ominous.<br /><br />Lady Bulls croon for new highs in Mr. Market....<br /><br /><object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/yio9zi_GPPs&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/yio9zi_GPPs&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1261039885008449016?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-56748210698037699892008-02-04T14:51:00.000-08:002008-02-04T14:58:51.697-08:00This is almost a universal mantra for traders everywhere. I agree with this, because it is what you might call, a trading truism.<br /><br />Being a trend follower makes a lot of sense.<br /><br />But realize that with any methodology or system, there are always trade offs. In the case of trend followers, by definition, they are always going to be late to buy and late to sell. ALWAYS. <br /><br />If you wait for a trend to develop, you give up gains at the front end and the back end of a move. Nothing wrong with that if your goal is to capture the middle 2/3 of a trend. <br /><br />What trend following fails to recognize is the initial early shift in the market between supply and demand. I have said it before, and I’ll say it again: markets move based on supply and demand. That is the bottom line. <br /><br />Trend following, using graphs and technical analysis is only a way of measuring the results of supply and demand by looking at price movements on a chart. It is not supply and demand itself. It is a derivative. <br /><br />Markets do not move according to charts. The Fly’s (www.ibankcoin.com) humorous statement about technical analysis being “the lazy man’s way” has some ring of truth to it. <br /><br />Sometimes you have to force yourself to change the angle of your perspective and view things in a different way.<br /><br />That said, I am not against technical analysis. I am for making money, using all kinds of ways to look at the market. At certain times, some ways to look at the markets are better than others.<br /><br />Lately the bad news has been overblown, in my opinion. People start talking about how terrible things are, and before you know it, the herd mentality develops. This is basic human nature. It is true on the other extreme, as well, where people develop “irrational exuberance”. <br /><br />I think we work our way back up from here. The demand factors, right now, seem to indicate that. I know that is not the opinion of the majority, and I take some comfort in that. If you wait to put cash back to work in this market until you feel good about it, you’re missing the move.<br /><br />Parting thought: Where else are institutional investors going to put their money? In cash? With interest rates going down, the return on cash or bonds won’t even beat inflation. There are some very good names that are bargains right now. Mutual funds not only have a fiduciary duty to manage money prudently, but by prospectus, most of them have to be FULLY invested.<br /><br />If you were a trend follower, your money probably would have been on the Patriots.<br /><br /><object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/t6aOX1pAmxc&rel=1"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/t6aOX1pAmxc&rel=1" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5674821069803769989?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-14675231427296899242008-02-03T14:05:00.000-08:002008-02-03T14:51:30.179-08:00<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp1.blogger.com/_t_dCoMvZcYk/R6Y93nk7nJI/AAAAAAAAADo/h2uElfHKJ1Q/s1600-h/spx-20080201.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp1.blogger.com/_t_dCoMvZcYk/R6Y93nk7nJI/AAAAAAAAADo/h2uElfHKJ1Q/s400/spx-20080201.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5162882048552836242" /></a><br />If you read the previous post of my analysis of the move in the S&P 500 on Friday, you would realize that you should be putting together a list of buy candidates this weekend for the market opening on Monday, February 4, 2008. <br /><br />Yeah, I know it's Super Bowl Sunday. But what's more important? Sitting on your ass,stuffing your face and living vicariously through athletic, super-freak physical specimens on the tube..... or banking coin? <br /><br />The recent blood-draining selloff from October thru late January, was just what we needed to provide bargain prices for a long rally up. Well, it looks like we got what we needed. The Market is going up (for now).<br /><br />Here are some stocks on my buy list:<br /><br />PCZ, $46.34<br />AAPL, $133.75<br />RIMM, $92.24<br />PCP, $115.81 <br /><br />If you don't want to take individual stock risk, use ETF's. Here's my current buy list:<br /><br />RKH<br />ITB<br />IWM<br />SLV<br />QQQQ<br />DBA<br />SPY<br />XLF<br />GLD<br /><br />There you have it. Now go watch the football game.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1467523142729689924?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-21096459787722782462008-02-01T15:14:00.000-08:002008-02-01T16:28:32.392-08:00The Market continues its winning ways. Today, the DJIA close at 12,743 + 93. The S&P had an excellent showing also, closing at 1,395 up almost 17. <em>Today's move in the S&P was significant.</em><br /><br />What we have now is an <em>Ascending Triple Top Breakout </em>on the S&P. Take a look at the P&F chart:<br /><br /><br /><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R6OqO3k7nHI/AAAAAAAAADY/7dSFibV1G7w/s1600-h/SPX+20080201.png"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://bp3.blogger.com/_t_dCoMvZcYk/R6OqO3k7nHI/AAAAAAAAADY/7dSFibV1G7w/s400/SPX+20080201.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5162156770310462578" /></a><br /><br /><br />This is a very strong bullish pattern with high probability of follow through to the upside. The last time I saw this pattern was last September when the S&P ran up from about 1477 on 09/18/07 to the high of 1576 on 10/11/07.<br /><br />From where we stand now, it looks like we may not run into resistance until 1420. While we are not completely out of the woods pertaining to a downside reversal, the situation for the bulls has improved greatly this past week. <br /><br />In regard to a potential downside reversal, given all the news and “noise”, the market could get “bitch slapped” around a bit next week. However, I wouldn’t expect to see a confirmed reversal of this recent leg up, until we get down to around 1360 or a little lower. So the bulls shouldn’t get too worried if we see a pullback from here. Right now, the market is trading off of technicals, not fundamentals—obviously.<br /><br />The risk reward on an S&P trade right here looks promising. The upside target is 1490 and the downside reversal point is at 1360. From the current level of 1395, that is a positive risk/reward of over 2 to 1. <br /><br />I will provide a more in depth technical analysis of the S&P and my reasons for why I prefer to use the P&F charts, later on this weekend (before the Super Bowl of course).<br /><br />Go Giants!<br /><br />Developing…..<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-2109645978772278246?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-66047612689322106732008-02-01T06:41:00.000-08:002008-02-01T07:11:23.534-08:00<strong>Well, we made it though the first month of 2008.</strong><br /><strong></strong><br /><strong>For the month, the DJIA was off -4.63%</strong><br /><strong></strong><br /><strong>S&amp;P 500 down -6.12&amp;</strong><br /><strong></strong><br /><strong>Nasdaq 100 down -11.68%</strong><br /><strong></strong><br /><strong>Nasdaq Composite -9.89%</strong><br /><strong></strong><br /><strong>Russell 2000 - 6.88%</strong><br /><strong></strong><br /><strong>However, I am seeing strength in the market:</strong><br /><strong></strong><br /><strong>The DJIA broke a double top yesterday at 12,500, closing at 12,650. This is a bullish sign and I would be a buyer of DIA today at 127 with a price target of 138.50. Keep a stop loss at 124.</strong><br /><strong></strong><br /><strong>Interestingly, the Dow Transports have been climbing with little attention. The airline industry on average, recently posted net positive earnings. I can't remember how long it has been since this has happend. The Transports reversed their bearish downtrend on 01/23/08 at 4,200 and closed yesterday at 4,752. It also broke resistance at 4,650. One way to play this is through the iShares IYT. It closed yesterday at 84.87. I would be a buyer at 85. Stop loss at 82.</strong><br /><strong></strong><br /><strong>The Dow Utilities have now broken out of a double top. Again, a bullish sign. It closed yesterday at about 503. XLU closed at 39.22. I would be a buyer of XLU here this morning under 40. Stop loss is 37.</strong><br /><br /><strong>With all three major Dow indices breaking out, we have a very bullish scenario for the Market. Keep in mind that we have had a very volatile market. However, the VIX is coming down, so trade the Market to the upside for now. Be aware that we could have a reversal at DJIA 13,200, where there is some resistance. The heaviest resistance is at DJIA 13,400 so expect the market to stall out between those points. If we blow through those levels, that would be very bullish and we could probably say the bottom is in.<br /><br />Sector ETFs:</strong><br /><strong></strong><br /><strong>XLP bearish</strong><br /><strong>XLY hold; don't buy- keep on watch list</strong><br /><strong>XLE bearish</strong><br /><strong>XLF hold; don't buy - keep on watch list</strong><br /><strong>XLV bearish</strong><br /><strong>XLI slightly bullish; reversal pattern; buy on a breakout over 38.</strong><br /><strong>XLB slighty bullish; reversal pattern; buy on a breakout above 40.</strong><br /><strong>XLK slightly bullish; reversal pattern; buy on breakout above 24.</strong><br /><strong>IYZ bearish</strong><br /><strong></strong><br /><strong>GLD very bullish; ascending triple top breakout; buy under 92.</strong><br /><strong>USO slightly bullish; reversal pattern; buy breakout above 74.</strong><br /><strong></strong><br /><strong>Keep stops at $3 below entry.</strong><br /><strong></strong><br /><br /><strong></strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-6604761268932210673?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-44172025883419408412008-01-31T11:32:00.000-08:002008-01-31T11:38:43.190-08:00Bot:<br /><br /><strong>POT</strong> at 135.25 on the break above 134 on nice volume.<br /><br /><strong>MOS</strong> at 90.65. Couldn’t wait until the close. It was $3 above my breakout point of 87.63.<br /><br />I will continue to trade these with an upside bias. The AGU earnings should beat estimates. They report before market on 02/13. So that is another Ag play. The Street is expecting AGU to report $0.87, up from $0.25 last year. My guess is that EPS should come in well over $1.00, judging from the POT and MOS results recently. POT and MOS may trade up into the AGU report.<br /><br /><strong>BWLD</strong> at 24.72 due to a "Costanza moment". The stock is confirming a "low pole reversal" on the P&amp;F charts.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-4417202588341940841?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-54954601967576521962008-01-28T13:24:00.000-08:002008-01-28T13:27:19.646-08:00Here are my ten trading rules:<br /><br /><br /><br />1.) Don’t lose money<br /><br />2.) Pick a proven strategy and stick with it.<br /><br />3.) Focus on preservation of capital, especially when the market is being “difficult”.<br /><br />4.) Cut losses quickly. Honor your stops.<br /><br />5.) Read rule #1 at the beginning and end of each day.<br /><br />6.) Focus on capital appreciation when the market is trending.<br /><br />7.) Don’t have more that 10% of your assets invested into any one <a class="kLink" oncontextmenu="return false;" id="KonaLink0" onmouseover="adlinkMouseOver(event,this,0);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,0);" onmouseout="adlinkMouseOut(event,this,0);" href="http://www.ibankcoin.com/flyblog/index.php/2008/01/28/quick-alert-urgent-danny-message/#" target="_new">stock</a>, unless you are an insider intimately familiar with the company.<br /><br />8.) If a stock is dropping and you are looking to go long, or if it is rising and you are looking to short, let the chart action confirm your thinking before you pull the trigger.<br /><br />9.) Use position sizing when buying long or shorting. If your hard dollar stop loss is $1,000, and your stop price is $2.50 below (above on shorting), you should buy (or short) no more than 400 <a class="kLink" oncontextmenu="return false;" id="KonaLink1" onmouseover="adlinkMouseOver(event,this,1);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,1);" onmouseout="adlinkMouseOut(event,this,1);" href="http://www.ibankcoin.com/flyblog/index.php/2008/01/28/quick-alert-urgent-danny-message/#" target="_new">shares</a>.<br /><br />10.) Don’t agonize about “coulda, woulda shoulda”.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5495460196757652196?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-61030146056115526262008-01-25T06:55:00.000-08:002008-01-25T07:05:45.274-08:00Chinese potash price negotiations ware expected to conclude by the end of March or the beginning of April, in contrast to the 2006 negotiations that dragged on like "water torture".<br /><br />Potash buyer ex-China are not holding off purchases, waiting for the outcome of the price negotiations. It's interesting that Russian producers of potash are not shipping product to China at this time.<br /><br />The comments from company management were that they can expect substantial price increases in China this year. Street EPS estimates will be coming up.<br /><br />POT reported Q4 net of $1.16, up from $0.58. Street estimates averaged about $0.98. Revenue increased for the quarter to $1.43 B from $1.02 B.<br /><br /> Management gave guidance of $1.30 to $1.60 for Q1.<br /><br />Continuing to buy shares in both POT and MOS. Also have some shares of TNH, to round out my positions in producers of the three major classes of fertilizer.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-6103014605611552626?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-35474286587606085342008-01-25T06:53:00.000-08:002008-01-25T06:55:07.220-08:00Goldman and CSFB are calling for negative GDP growth in Q2 and Q3. It is no wonder that the Fed is planning to cut rates “aggressively”. I realize that some of you have your own measures and indicators of a recession, such as how many plasma TVs were bought from Best Buy last quarter, or the aggregate tonnage of chicken wings consumed at BWLD stores during the college football season. But let’s just assume for a moment that the “asshats” at Goldman know what they are talking about.<br /><br />How would you trade with this information?<br /><br />First of all, we must make a distinction between “the market” and “a recession”. The two are linked, but not synchronized. By that I mean, they are not concurrent. The market is a forecaster of the economy. Sort of like The Fly’s time machine, only with solid gold wheels and loaded with ridiculously more coin. That’s why “the market” is categorized as a “leading economic indicator”. Leading economic indicators are indicators which change before the economy changes. Stock market returns are a leading indicator, because the stock market usually begins to decline before the economy declines and it improves before the economy begins to pull out of a recession. Leading economic indicators are the most important type for investors as they help predict what the economy will be like in the future. Ok, enough of Econ 101. You get the point.<br /><br />So, let’s get back to the original premise. If we have negative GDP growth for Q2 and Q3 of this year, viz. “a recession”, how would you want to trade, based on that assumption?<br /><br />Convention says that the market forecasts six to nine months in advance. If you subscribe to that, then you would look for a bottoming process in the market sometime between now and March. The low zone of 11,600 - 11,650 on the DJIA now appears to represent an intermediate term support and a stop loss point for the market. Since it was tested the past two days this week, it appears that it may hold for a while. Keep in mind the time factor here. If the market doesn’t make any kind of decisive move up, or drifts sideways here in the next 1 -2 weeks, I think the chances for another downturn increase.<br /><br />We have dropped about 2,600 points from the October peak on the DJIA, so a 50% retracement puts us back in the 12,800 - 13,000 levels. There is heavy overhead resistance there in terms of previous price and volume activity. This may be where we are headed before the market may turn down again. Financials, retailers and homies should be good for a trade here, especially with Chopper Ben and crew determined to cut rates aggressively. I am now hearing from my bond trading sources that Fed Funds are going below 2.00% by mid-summer. Maybe BS, maybe not.<br />However, I would still look for a leg down again to test 11,600. Once we see a double bottom there, I would start to look at buying healthcare and tech stocks. I still like the Ag stocks here, especially MOS and POT, since I think they are fairly recession-proof and will continue to trend up regardless of the timing of a “recession”.<br /><br />As always, take this with a grain of salt and do your DD.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3547428658760608534?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-73872946842651016262008-01-10T07:06:00.000-08:002008-01-10T07:13:15.263-08:00Here are the posts I made the past two days at <a href="http://www.ibankcoin.com/">www.iBankCoin.com</a>:<br /><br />01/09/08 1:37pm<br /><br />Goldman has just declared MOS, “the best opportunity in chemicals”, and upgraded it to a buy. It also cited that <a class="kLink" oncontextmenu="return false;" id="KonaLink0" onmouseover="adlinkMouseOver(event,this,0);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,0);" onmouseout="adlinkMouseOut(event,this,0);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/sorry-to-harp-on-this-but/#" target="_top">investors</a> should, “take advantage of any price weakness stemming from concerns over rising sulfur costs and transitory FX impact”.<br />Shorticus, be prepared to take it up the shorts.<br />——————————————–<br />I feel vindicated by my buys earlier today from $81-82 .<br />——————————————–<br />Update: When asked about current pricing, MOS management indicated that yesterday they contracted a shipment of phosphate (”DAP”) at $685/tonne F.O.B. Tampa, FL headed to Brazil. This is a significant mark up from the $417/tonne average for Nov Q2 prices reported earlier today. Apparently, the higher costs for sulfur, a major component in diammonium phosphate (DAP) production, are being passed on and absorbed. Definitely an indicator of strong demand. Strong demand for phosphate and potash will persist until additional capacity in the industry comes online in 2 - 3 years.<br /><br />01/09/08 11:47 am<br /><br /><br />I listened to the conference call this morning, which was significantly positive. One of the risks I see going forward, though, is the availability of and the increased costs for sulphur, a prime ingredient in the production of phosphate. Analysts were focusing on this particular issue. Management indicated that they own sulphur reserves in FL, enough to provide supply to meet capacity. The current shortages in sulphur are temporarily due to unusual outages and shutdowns of operations at supplier processing plants. They believe this situation will correct itself in the near future as plants come back online.<br />Management gave upside guidance with conviction.<br />As I said in a prior post, I think the fertilizer business is basically recession proof, due to global food shortages, not only because of the weather, but also because of global population growth and the growth of emerging economies in Asia. The increase in the prices of ag <a class="kLink" oncontextmenu="return false;" id="KonaLink0" onmouseover="adlinkMouseOver(event,this,0);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,0);" onmouseout="adlinkMouseOut(event,this,0);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">commodities</a>, specifically, corn, soybeans and wheat, have given farmers a greater incentive to plant more acreage and boost yields viz. fertilizer. High crop yields coupled with higher prices is covering the increase in costs for fertilizer. Farmers are experiencing a good return for their fertilizer <a class="kLink" oncontextmenu="return false;" id="KonaLink1" onmouseover="adlinkMouseOver(event,this,1);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,1);" onmouseout="adlinkMouseOut(event,this,1);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">investment</a>.<br />MOS derives about 66% of its revenues from international customers. Management cited strong and steady demand long term from the overseas markets.<br />In addition, China is short on supplies of phosphate because of strong demand for food. MOS is the largest producer of phosphate in the world.<br />I bought more at $81 - $82 earlier today.<br />For those who care to read it, here are the specific details of the press release: (I apologize for the lengthy post)<br />MOS reported record results, including net earnings of $394.0 million, or $0.89 per diluted share , for the second quarter ended November 30, 2007, an increase of $328.1 million compared to the same period a year ago. These second quarter results included the following:<br />Cash flow from operations of $542.5 million and the prepayment of $450 million of <a class="kLink" oncontextmenu="return false;" id="KonaLink2" onmouseover="adlinkMouseOver(event,this,2);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,2);" onmouseout="adlinkMouseOut(event,this,2);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">long-term debt</a>.<br />An average diammonium phosphate (DAP) price of $417 per tonne, a $174 per tonne increase compared with a year ago and a $10 per tonne increase compared with the first quarter of fiscal 2008.<br />An average potash selling price of $171 per tonne, up $29 per tonne from a year ago and an $11 per tonne increase from the first quarter of fiscal 2008.<br />A foreign currency transaction loss of $52.4 million, or $0.09 per share, compared to a gain of $19.8 million, or $0.03 per share, a year ago.<br />A tax benefit of $35.9 million, or $0.08 per share, relating to certain tax matters specific to the second quarter.<br />These results compare with net earnings of $65.9 million, or $0.15 per share, for the same period a year ago. Net sales in the second quarter of fiscal 2008 were $2.2 billion, an increase of $673.4 million, or 44% compared with the same period a year ago.<br />Mosaic’s <a class="kLink" oncontextmenu="return false;" id="KonaLink5" onmouseover="adlinkMouseOver(event,this,5);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,5);" onmouseout="adlinkMouseOut(event,this,5);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">gross margin</a> for the fiscal 2008 second quarter was $623.1 million, or 28.4% of net sales, compared with $160.5 million, or 10.5% of net sales a year ago. Second quarter operating earnings were $529.6 million, compared with $90.7 million for the second quarter in fiscal 2007. The increases in gross margin and operating earnings were primarily the result of higher selling prices for phosphates and potash and realizing the benefit of favorable industry conditions in the Offshore segment.<br />“Our second quarter results demonstrate that Mosaic is leveraging the robust agricultural economy and delivering record results,” stated Jim Prokopanko, Mosaic’s President and Chief Executive Officer. “Our unprecedented operating <a class="kLink" oncontextmenu="return false;" id="KonaLink6" onmouseover="adlinkMouseOver(event,this,6);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,6);" onmouseout="adlinkMouseOut(event,this,6);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">cash flows</a> have allowed us to prepay $1 billion of long-term <a class="kLink" oncontextmenu="return false;" id="KonaLink12" onmouseover="adlinkMouseOver(event,this,12);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,12);" onmouseout="adlinkMouseOut(event,this,12);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">debt</a> over an eight-month period and we are on track to deliver strong results in fiscal 2008 and beyond,” Prokopanko added.<br />Phosphates<br />Net sales in the Phosphates segment were $1.2 billion for the second quarter, a 61% increase compared to a year ago. The second quarter gross margin was $397.6 million, or 32.3% of net sales, compared with $35.9 million, or 4.7% of net sales, for the same period a year ago. Operating earnings were $346.8 million compared with $5.1 million for the same period last year. The sales, gross margin and operating earnings increases were primarily due to the significant increase in selling prices partially offset by higher costs for sulfur and ammonia.<br />The average second quarter DAP price, FOB plant, was $417 per tonne, which is a $174 per tonne increase compared with a year ago and a $10 per tonne increase compared with the first quarter of fiscal 2008. Fertilizer and feed sales in the Phosphates segment were 2.3 million tonnes for the second quarter, comparable with volumes of a year ago. Sales volumes to North American customers increased 70% during the second quarter as this region exhibited strong demand recovery and growth from year ago levels. Sales volumes to international customers declined approximately 25%, principally due to the increased volumes sold in North America.<br />Potash<br />Net sales in the Potash segment totaled $431.6 million for the second quarter, an increase of 23% compared with a year ago. The Potash business’ gross margin increased to $175.2 million in the second quarter, or 40.6% of net sales, compared with $88.4 million a year ago, or 25.1% of net sales. Operating earnings were $161.2 million during the second quarter, an increase of $83.0 million, or 106%, compared to the same period last year. Sales, gross margin and operating earnings increased primarily as a result of the higher selling prices, partially offset by additional costs this year to manage the brine inflow at the Esterhazy potash mine. Brine inflow expenses were $12.8 million in the second quarter of fiscal 2008, compared with $6.4 million a year ago.<br />The average realized potash price, FOB plant, increased to $171 per tonne in the second quarter, up $29 per tonne compared with a year ago and $11 per tonne compared with the first quarter of fiscal 2008. The Potash segment’s total sales volumes of 2.0 million tonnes during the second quarter were 3% higher than last year’s second quarter volumes.<br />Offshore<br />The Offshore segment’s net sales totaled $644.3 million during the second quarter, an increase of 29% compared to the same period a year ago. This increase was mainly due to higher selling prices partially offset by a decrease in sales volumes. Gross margin increased to $50.1 million in the second quarter, or 7.8% of net sales, compared to $23.8 million, or 4.8% of net sales, for the same period a year ago. Offshore operating earnings of $25.7 million in the second quarter of fiscal 2008 benefited from higher selling prices and lower cost inventory positions taken in prior quarters, primarily in Brazil and Argentina.<br />Other<br />Selling, general, and administrative expenses (”SG&amp;A”) were $79.8 million in the second quarter, compared to $70.4 million for the same period a year ago. The increase was primarily due to higher incentive compensation accruals, post-implementation and depreciation costs related to the enterprise resource planning system implemented last <a class="kLink" oncontextmenu="return false;" id="KonaLink7" onmouseover="adlinkMouseOver(event,this,7);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,7);" onmouseout="adlinkMouseOut(event,this,7);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">fiscal year</a> and other consulting fees.<br />A <a class="kLink" oncontextmenu="return false;" id="KonaLink3" onmouseover="adlinkMouseOver(event,this,3);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,3);" onmouseout="adlinkMouseOut(event,this,3);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">foreign currency</a> transaction loss of $52.4 million was recorded for the second quarter compared to a gain of $19.8 million for the same period a year ago. The loss in fiscal 2008 was mainly the result of a stronger Canadian dollar on significant U.S. dollar-denominated intercompany receivables, intercompany <a class="kLink" oncontextmenu="return false;" id="KonaLink8" onmouseover="adlinkMouseOver(event,this,8);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,8);" onmouseout="adlinkMouseOut(event,this,8);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">loans</a> and cash held by Mosaic’s Canadian subsidiaries. This is primarily a non-cash charge.<br />A $10.3 million restructuring charge this quarter was due to a change in estimate related to our asset retirement obligations on certain closed Phosphate facilities, from our May 2006 restructuring.<br />Income <a class="kLink" oncontextmenu="return false;" id="KonaLink4" onmouseover="adlinkMouseOver(event,this,4);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,4);" onmouseout="adlinkMouseOut(event,this,4);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">tax</a> expense was $100.9 million resulting in an effective tax rate of 22.3%, including the positive impact of certain <a class="kLink" oncontextmenu="return false;" id="KonaLink9" onmouseover="adlinkMouseOver(event,this,9);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,9);" onmouseout="adlinkMouseOut(event,this,9);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">tax benefits</a> which are specific to the quarter totaling $35.9 million. The tax rate was favorably impacted by the substantial increase in earnings in the Phosphates business.<br />Total <a class="kLink" oncontextmenu="return false;" id="KonaLink10" onmouseover="adlinkMouseOver(event,this,10);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,10);" onmouseout="adlinkMouseOut(event,this,10);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">equity</a> earnings in non-consolidated subsidiaries were $45.5 million for the second quarter, compared with $15.4 million for the same period a year ago. Mosaic’s equity earnings in Fosfertil S.A. were $18.8 million for the second quarter compared to $5.7 million for the same period last year. Fosfertil continues to benefit from strong Brazilian agricultural market fundamentals. Mosaic’s equity earnings in Saskferco Products Inc. increased to $24.0 million from $9.3 million, primarily the result of higher nitrogen selling prices, partially offset by mark-to-market losses on <a class="kLink" oncontextmenu="return false;" id="KonaLink11" onmouseover="adlinkMouseOver(event,this,11);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,11);" onmouseout="adlinkMouseOut(event,this,11);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">natural gas</a> derivatives.<br />Mosaic ended the second quarter with $642.2 million in cash and cash equivalents. Cash flow from operations was $980.9 million for the six months ended November 30, 2007, an increase of $680.5 million from a year ago. Mosaic’s total debt as of November 30, 2007 was $1.7 billion, resulting in a debt-to-capital ratio of 25%, down from 41% a year ago. On December 31, 2007, Mosaic prepaid an additional $150 million of long-term debt, further reducing its debt-to-capital ratio.<br />Year-to-Date<br />For the first half ended November 30, 2007, net sales were $4.2 billion, an increase of 49% compared with last year. Year-to-date operating earnings were $979.2 million compared with $222.3 million for the same period a year ago. Year-to-date SG&amp;A expenses were $146.4 million compared with $136.1 million for the same period in fiscal 2007. A foreign currency transaction loss of $71.8 million was recorded for the first half of fiscal 2008, compared to a gain of $27.1 million for the same period a year ago. Equity earnings in non-consolidated entities increased year to date to $57.3 million from $19.3 million last year.<br />Outlook<br />Phosphate and potash fundamentals remain exceptionally strong. Phosphate and potash prices increased to even higher record levels at the end of 2007 and this momentum is anticipated to continue into 2008. Further increases in grain and oilseed prices during the last several weeks have bolstered farm economics worldwide and solidify strong nutrient demand prospects for 2008.<br />In the case of potash, supply continues to struggle to keep up with accelerating demand as evidenced by the extremely low <a class="kLink" oncontextmenu="return false;" id="KonaLink13" onmouseover="adlinkMouseOver(event,this,13);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,13);" onmouseout="adlinkMouseOut(event,this,13);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">stocks</a> held by North American producers at the end of the fall season. This situation likely will persist until additional capacity comes on line during the next few years. Market prices are continuing to increase significantly for shipments into all major markets during the first half of 2008.<br />The phosphate situation is similar to that of potash. U.S. producers reported holding the lowest inventories of DAP/MAP in modern history at the end of the North American fall season. More importantly, large increases in market prices for phosphate rock and phosphoric acid in 2008 will dramatically boost costs for non-integrated producers who likely account for almost one-third of global phosphate production. These increases, plus substantially higher sulfur costs underpin higher phosphate selling prices. Finally, phosphate exports from China likely will drop this year due to government policies to make more product available for local farmers.<br />“The market environment remains extraordinary. Agricultural <a class="kLink" oncontextmenu="return false;" id="KonaLink14" onmouseover="adlinkMouseOver(event,this,14);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,14);" onmouseout="adlinkMouseOut(event,this,14);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">commodity prices</a> continue to increase to unprecedented levels, resulting in robust farm economics and nutrient demand prospects,” said Jim Prokopanko. “Mosaic’s leadership position in Phosphates, combined with our exceptional Potash business and our focus on effective operational execution, offers a unique value proposition for crop nutrition customers and <a class="kLink" oncontextmenu="return false;" id="KonaLink15" onmouseover="adlinkMouseOver(event,this,15);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,15);" onmouseout="adlinkMouseOut(event,this,15);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/more-on-mos/#" target="_top">investors</a>.”<br />Mosaic’s realized DAP price, FOB plant, for the third quarter of fiscal 2008 is estimated to be $470 to $480 per tonne. DAP costs, however, are also likely to be higher due to increasing sulfur costs. Mosaic’s third quarter average realized potash price, FOB plant, is estimated to be $190 to $200 per tonne. Third quarter sales volumes for the Phosphates and Offshore segments are expected to be below second quarter levels in line with typical seasonal patterns.<br />For the fiscal year, sales volumes for the Phosphates business are anticipated to range from 8.6 to 9.1 million tonnes, while Potash sales volumes are anticipated to range from 8.5 to 9.0 million tonnes. Both of these are unchanged from prior guidance.<br />About The Mosaic Company<br />The Mosaic Company is one of the world’s leading producers and marketers of concentrated phosphates and potash crop nutrients. For the global agriculture industry, Mosaic is a single source of phosphates, potash, nitrogen fertilizers and feed ingredients. More information on the company is available at http://www.mosaicco.com.<br />This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results. Such statements are based upon the current beliefs and expectations of The Mosaic Company’s management and are subject to significant risks and uncertainties. These risks and uncertainties include but are not limited to the predictability of fertilizer, raw material and energy markets subject to competitive market pressures; changes in foreign currency and exchange rates; international trade risks including, but not limited to, changes in policy by foreign governments; changes in environmental and other governmental regulation; adverse weather conditions affecting operations in central Florida or the Gulf Coast of the United States, including potential hurricanes or excess rainfall; actual costs of closure of the South Pierce, Green Bay and Fort Green facilities differing from management’s current estimates; accidents involving our operations, including brine inflows at our Esterhazy, Saskatchewan potash mine as well as potential mine fires, floods, explosions or releases of hazardous or volatile chemicals, as well as other risks and uncertainties reported from time to time in The Mosaic Company’s reports filed with the Securities and Exchange Commission. Actual results may differ from those set forth in the forward-looking statements.<br /><br />01/09/08 7:27 am<br /><br /><a href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/08/mosiac-mos-milk-the-farmer-indeed/" rhtpr="0" frojj="0">Mosaic </a>reported Q2 earnings of $0.89 per diluted share, $0.16 better than the First Call consensus of $0.73; revenues rose 44.2% year/year to $2.2 bln vs the $2.17 bln consensus. Company reported gross margins 28.4 vs the 25.9 Street expectation. The <a class="kLink" oncontextmenu="return false;" id="KonaLink0" onmouseover="adlinkMouseOver(event,this,0);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,0);" onmouseout="adlinkMouseOut(event,this,0);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/09/update-on-mosaic-mos/#" target="_top">stock</a> is up over $4 in pre-market. <br />As I said yesterday, with all the bearishness, even though the MOS earnings report is good, it may still go down today. It is a buy under $90. If you don’t buy it now, keep it on the radar.<br /><br />01/08/08 8:33 am<br /><br />This is a <a class="kLink" oncontextmenu="return false;" id="KonaLink0" onmouseover="adlinkMouseOver(event,this,0);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,0);" onmouseout="adlinkMouseOut(event,this,0);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/08/mosiac-mos-milk-the-farmer-indeed/#" target="_top">stock</a> that you can own for the long haul. I had highlighted MOS in a<a href="http://www.ibankcoin.com/peanut_gallery/index.php/2007/12/04/useful-information/" rhtpr="0" frojj="0"> previous post</a> in early December:<br />“Regardless of the U.S. economic trends, fertilizer consumption and operating costs should remain fairly constant. But, a modest decline in pricing power is possible if the economy creates a situation where farmers become more cost sensitive. Presently, they are driving brand new pickups and drinking rich man’s whiskey. If that is your concern, take a look at Mosaic (MOS), which has lower exposure to U.S. and Canadian demand. MOS gets only about 40% of its revenue from North America, while Potash (POT), Agrium (AGU) and CF Industries (CF) get roughly 70%, 85% and 90%, respectively. Know this: a U.S. recession is not a substantial risk to fertilizer stocks. However, a reversal in <a href="http://www.ibankcoin.com/peanut_gallery/index.php/2007/12/04/useful-information/#">economic growth</a> in China and India is. But even then, the risk of a sharp drop in consumption is limited because grain supply worldwide is so low and shifts in the workforce of those countries makes changes in demand less likely to slacken. In summary, buy that shit.”<br />On December 4th, the stock was at $71. Is it too late to get in? No. I actually think it may do even better in 2008. Before you call me an asshat, let me give you my take on the stock.<br />The stock is still cheap. Most <a class="kLink" oncontextmenu="return false;" id="KonaLink1" onmouseover="adlinkMouseOver(event,this,1);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,1);" onmouseout="adlinkMouseOut(event,this,1);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/08/mosiac-mos-milk-the-farmer-indeed/#" target="_top">investors</a> have never heard of it, even though it’s a huge operation. Institutional ownership is only 26%. It’s American, so it probably won’t be subject to the speculation of a Chinese lotto stock in the overpriced Asian markets. And it is part of a massive, multi-year, possibly multi-decade shift—to more expensive food.<br />Unbeknownst to the Fly, I “borrowed” his time machine for a joy ride into the future. In 2009, we will look back on 2008, and remember it as the year that food became expensive. Many people will go hungry. This will be one of the big headlines this year. Consider this: Eggs are up 38%, milk is up 30%. Even chocolate is up 6%. Add in the <a class="kLink" oncontextmenu="return false;" id="KonaLink2" onmouseover="adlinkMouseOver(event,this,2);" style="POSITION: static; TEXT-DECORATION: underline! important" onclick="adlinkMouseClick(event,this,2);" onmouseout="adlinkMouseOut(event,this,2);" href="http://www.ibankcoin.com/peanut_gallery/index.php/2008/01/08/mosiac-mos-milk-the-farmer-indeed/#" target="_top">cost of gas</a> and the falling value of homes and people might think twice about buying that iPhone.<br />In Asia, the effect will be more pronounced. One hundred million newbie middle class-ers in China have developed an appetite for steak and eggs, sodas sweetened with corn syrup, and cream and butter. In essence, they want to gain weight and increase their cholesterol levels. Three billion more Asians need basic staples—but grain (wheat especially, but also rice) prices have soared to 17-year highs. A drought in Australia and poor wheat harvests in Russia make matters even worse.<br /> And finally, ethanol production has pushed up corn and soy bean prices to lofty levels this year.<br />Fly’s “Milk the Farmer”, is just another way of saying that we are in a new “agricultural super-cycle”. For example, a cross section of agriculture stocks, the DXAG, was up 66% in 2007, after being asleep since 1980.<br />In January last year, MOS announced $0.15 cents a share earnings, in line with estimates. The stock disappointed in the March report with $0.05 cents, but then reported $0.41 and $0.67 in July and September, respectively.<br />The company reports tomorrow, January 9 at 10:00 am ET. The Street consensus is $0.72. I think there will be an upside surprise.<br />If you want to listen to the conference call, the number is 888-680-0892. The passcode is 44890826.<br />I’m continuing to add to my position while MOS is still under $100<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7387294684265101626?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-49752772038010186742008-01-02T13:53:00.000-08:002008-01-02T13:56:39.949-08:00<a href="http://bp1.blogger.com/_t_dCoMvZcYk/R3wIfjldKeI/AAAAAAAAADA/NVl-sklugME/s1600-h/stp+20080102.gif"><img id="BLOGGER_PHOTO_ID_5151001412026313186" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://bp1.blogger.com/_t_dCoMvZcYk/R3wIfjldKeI/AAAAAAAAADA/NVl-sklugME/s400/stp+20080102.gif" border="0" /></a><br /><div><a href="http://bp3.blogger.com/_t_dCoMvZcYk/R3wIVDldKdI/AAAAAAAAAC4/FY5R6h_InoI/s1600-h/akns+2008+0102.gif"><img id="BLOGGER_PHOTO_ID_5151001231637686738" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://bp3.blogger.com/_t_dCoMvZcYk/R3wIVDldKdI/AAAAAAAAAC4/FY5R6h_InoI/s400/akns+2008+0102.gif" border="0" /></a><br /><div></div><div></div><div>Akeena Solar (AKNS), recently inked a licensing deal with Suntech Power Holdings (STP), which allows STP to distribute their Andalay solar panel technology to Europe, Japan and Australia. Suntech is estimating sales of over 10 megawatts of the Andalay solar panels to those regions in 2008. AKNS was up over 40% , and STP was up over 4% today.<br />“Andalay improves on conventional solar panels by including built-in wiring, grounding and racking designed to provide maximum rooftop performance for consumers while minimizing installation costs for solar system installers. The result is a rooftop solar power system with superior built-in reliability with outstanding aesthetics in an all-black, streamlined appearance,” said Barry Cinnamon, CEO of Akeena. “Moreover, an installed Andalay system uses 70 percent fewer parts and requires 25 percent fewer attachment points than traditional solar systems, meaning better long-term performance”.<br /><a href="http://www.ibankcoin.com/peanut_gallery/wp-content/uploads/2008/01/stp-20080102.gif"></a><br />Suntech has committed to deals for 450 megawatts worth in 2008. It has another 900 megawatts of potential business in the pipeline, but doesn’t have enough silicon or manufacturing capacity to meet all the demand. It expects to reach 1 gigawatt of manufacturing capacity in 2008. This is two years ahead of schedule. It expects to double that by 2010.<br /><a href="http://www.ibankcoin.com/peanut_gallery/wp-content/uploads/2008/01/stp-20080102.gif"></a><br />Suntech’s solar cells produce electricity at about $2.90 per watt. The company is looking to make that more cost effective by cutting the cost down by 48% in the next five years. For that to happen, silicon prices, which are about 75% of Suntech’s per-unit cost, have to come down. This may happen soon, as silicon producers are ramping up capacity. Suntech has indicated that the current long-term contracts that it is agreeing to show that prices are already dropping. The company is also working on thin film technology and other methods that will allow them to make solar cells with less silicon. If the silicon price hurdle can be cleared, then the industry can grow without government incentives.<br />But, solar still has problems. What happens when the sun doesn’t shine? Efficiency is still low. The industry average is a little more that 16%. STP’s is 18%-19% efficiency of converting the sun’s rays to energy.<br />Once silicon, the second-most abundant element on the planet, becomes commoditized, STP’s low cost Chinese manufacturing base will be a big advantage.</div><br /><div></div><br /><div></div></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-4975277203801018674?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-44178116329465715322007-12-27T07:16:00.000-08:002007-12-27T07:17:00.465-08:00<strong>The Commerce Department reported that Durable Goods Orders rose less than forecast in November, posting a .1% gain. Analysts had forecast a rise of 2%, nonetheless this was the first gain in 4 months and followed a revised .4% decline in October. Excluding transportation orders demand was down .7% versus an expected increase of .5%. Orders for military gear fell 24% led by a drop in aircraft demand. Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, fell .4% after a 2.9% gain in October. Initial Jobless Claims rose 1,000 to 349,000 while continuing claims increased 75,000 to 2,713,000. Weekly mortgage data reported by the Mortgage Banker’s Association showed declines of 6.5-8.5% in its applications, purchase and refinance indices. At 9:00am CST we will get the final read on December Consumer Confidence.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-4417811632946571532?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-4369342834959641662007-12-26T08:55:00.000-08:002007-12-26T08:58:22.663-08:00I hope you enjoyed your Christmas / Holiday and are taking some time off to rest and relax.<br /><br />As this year comes to a close, I hope it’s been a profitable one for you. And, as you all reflect on the past year and plan for the New Year, please take a short break from the busy world of finance, to view this brief, but important public announcement. Hopefully, it will give you a better appreciation for how good you have it, and a brighter outlook for 2008.<br /><br />The following is one of the hottest things on the internet and has been featured on Fox News recently. Lizzie Palmer who put this YouTube program together is 15 years old. There have been over 3,000,000 hits on this. In case you missed it, here it is.<br /><a href="http://www.youtube.com/v/ervaMPt4Ha0&amp;autoplay=1" jvzbr="0" alr6w="0">http://www.youtube.com/v/ervaMPt4Ha0&amp;autoplay=1</a><br /><br />Wishing you all a prosperous New Year!<br /><br />UPDATE: As for me, I plan to coast into the New Year 72% in cash as the “hammer of death” smashes the market, Thor style.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-436934283495964166?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-41489967883813922402007-12-18T06:39:00.000-08:002007-12-18T06:40:46.485-08:00<strong>Time to take profits and sit on the sidelines in cash until it looks like a bottom is confirmed.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-4148996788381392240?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-82324825215894086142007-12-17T06:52:00.000-08:002008-02-25T22:55:43.087-08:00<strong>I'm not seeing any specific entry points for any of the sector ETFs. Still waiting for good set ups to appear.</strong><br /><strong></strong><br /><strong>Holding off on any new positions. Taking a defensive stance right now and staying on the sidelines, <em>I remain bearish</em>.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8232482521589408614?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-82993911658191242912007-12-07T11:49:00.000-08:002007-12-07T11:50:55.229-08:00<strong>RIG, the leader in deepwater drilling has been languishing as of late. They had announced an $8.5B financing, which included $6B in converts and $2.5B in senior notes. The downward pressure on the stock is most likely due to selling by the Arbs on the convert. You also have to question why the company would pursue a convert issue just days after a massive recapitalization and $15B buyback through the GSF merger. </strong><br /><br /><strong>While management could have provided more disclosure and transparency on this move, the converts seem to be prudent. This is due to the low coupon rates of 1.5% to 1.625%, and no near-term dilution. </strong><br /><br /><strong>Dilution won’t hit until the stock gets to $168.61, which is the equivalent of a 32.5% converson premium. RIG is obligated to settle the converts for cash up to the principal amount of the notes upon conversion, and in common stock above the conversion price. If the stock gets above $168.81, RIG is then obligated to issue shares at the conversion ratio. If it gets to $185, the converts are about 1% dilutive without factoring in lower interest expense from the coupon rates. </strong><br /><br /><strong>I wouldn’t worry about this issue. RIG is still a buy long term and should outperform others drillers.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-8299391165819124291?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-74541004857341815652007-12-06T06:54:00.000-08:002007-12-06T06:55:51.076-08:00Btw, if you're still wondering, and have a few minutes, here's an eight minute summary that explains (in no uncertain terms) <a href="http://www.youtube.com/watch?v=SJ_qK4g6ntM">the sub-prime mess</a>.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7454100485734181565?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-79270753288947141202007-12-05T12:28:00.000-08:002007-12-05T12:29:44.185-08:00<strong>Interesting news out on Jones Soda (JSDA). Founder and CEO, Peter van Stolk has just announced his resignation. </strong><br /><br /><strong>Board members Scott Bedbury and Steve Jones will assume the chairman and CEO roles, respectively, until a replacement is found. Bedbury is better know for his “Just Do It” campaign slogan at Nike in the late 80’s and his repositioning of Starbucks stores as destination coffee shops in the 90’s. His next challenge will involve the expansion of the Jones Soda brand from niche to mainstream. </strong><br /><br /><strong>This change comes as a result of the mismanagement of JSDA, by van Stolk. The company failed to move into the larger canned soda market earlier this year. </strong><br /><br /><strong>JDSA is currently up over 7% today.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7927075328894714120?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-58778560730628823272007-12-05T06:17:00.001-08:002007-12-05T07:15:32.505-08:00<strong>Here's something for the "low-priced stock" affectionado:</strong><br /><strong></strong><br /><strong>Flow manufactures Ultra High Pressure waterjet cutting systems and related products. These products are used to cut materials in different industries such as aerospace, automotive, disposable products, food, glass, job shop, metal cutting, marble, tile and other stone cutting and paper industries. </strong><br /><strong> </strong><br /><strong>Flow is in negotiations to acquire its main competitor Omax Corporation, signing an option to acquire the company for $109m rising to $135m after 2 years subject to performance. Any merger will be subject to Hart-Scott-Rodino clearance. Flow currently has $33m in cash and minimal debt. Additional funding will be required, likely with an equity element. Omax is based a half mile from Flow’s headquarters, and like Flow has its roots in technology developed by Boeing (BA)engineers. Integration would be relatively easy from a cultural and logistical standpoint. </strong><br /><strong></strong><br /><strong>Omak has some technology that Flow does not, and also has unique overseas distribution channels. Omak would also benefit from Flow’s internet-based order fulfillment strength. Another advantage of the acquisition is that it will settle the outstanding patent litigation that has been ongoing for several years between Flow and Omak. </strong><br /><br /><strong>Further details will be available during Flow’s 2Q08 conference call to be held tomorrow. The stock has been beaten up since the retirement of the turn-around CEO, Stephen Light, but is up nicely this morning. It’s not too late to get in now, as I estimate a target of $12—but patience should be exercised, something that many of you may be lacking in spades. </strong><br /><br /><strong>EPS: <br />2007A $0.10 P/E: 74x <br />2008E $0.43 P/E: 17x <br />2009E $0.63 P/E: 12x</strong><br /><br /><strong>(Fiscal Years ending in April) </strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5877856073062882327?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-70672793258873907452007-12-04T19:31:00.000-08:002007-12-04T19:33:07.549-08:00<div class="entry">Is a recession already priced into stocks? Well, that depends. There are certain sectors that have already discounted a recession and there are some that have not. The haves and have nots. Additionally, within each sector, there are specific industries that are attuned to economic developments and some that are not. <p>Without getting too detailed, let me summarize and then expound on a specific example.</p> <p>Industries that have largely embedded a recession scenario: Hardlines Retail, Apparel, Transportation, Steel, PVC Chemicals, and Telecom.</p> <p>Industries that have little, if any, recession risk embedded: Electrical equipment, regional banks, softlines retail, airlines.</p> <p>If you haven’t figured it out, list number two is the one to avoid, if you think we will experience a recession.</p> <p>Here is a list of stocks, primarily cyclicals, that should do well if we have a “soft landing” scenario: <strong>ACN, AEO, ASH, BA, CAKE, CIT, FCX, LEH, LOW, MAN, MRO, MU, JWN, OMX, OSK, PRU, STX, RIG, X.</strong></p> <p>On the other hand, here is a list of stocks that are currently discounting little recession risk, that could underperform if we do get a recession: <strong>C, DIS, WLP, S, AMZN, PCP, EOG, TXT, WM, WY, AMP, HOG, NTAP, BEAS, ACI, CENX, TMA, YRCW.</strong></p> <p>And here are your defensive plays that should do relatively well, even in a downturn: <strong>APD, AA, APC, CELG, CNP, CL, CEG, CVS, XOM, FPL, GOOG, HPQ, HNZ, INTC, JCI, LMT, MCD, MCK, NWS, NKE, PEP, QCOM, LUV, SPLS, UPS, TEVA, UTX, UNH, VZ, WMT, WYE.</strong></p> <p><strong>Not Your Father’s Shit</strong></p> <p>Now, let us turn to the important matter of Fertilizer stocks, as an example. These stocks are not pricing in a recession. They are too busy banking coin and pricing in a boom. Driven primarily by Asian demand, and to a lesser extent, alternative energy, industry growth has dramatically overshadowed the normal cyclical nature and the high energy costs.</p> <p>Historically, the correlation between GDP growth and domestic fertilizer consumption is not high to begin with. The global relationship, while stronger, is not overwhelming either. I would also argue that the global correlation is rapidly declining due to emerging market development. As markets develop, their demand becomes less GDP sensitive and more correlated to population growth and other factors.</p> <p>If we look back to the past two recessions, we see mixed messages regarding consumption of fertilizer in North America. Nitrogen consumption increased in 1990-91, but declined in 2001. Phosphoric acid consumption declined in 1990-91, but gained modestly in 2001. And the third major category of fertilizer, potash, declined in 1990-91 and consumption was flat in 2001. But what should matter most to investors is whether domestic producers benefit from consumption trends, which makes looking at North American operating rates more relevant.</p> <p>Moreover, the fertilizer industry has undergone some significant structural changes which have served to dampen the cyclical nature relative to historical trends. Declining economics in nitrogen and phosphates has led to meaningful capacity rationalization, while improving dietary trends in third world regions has been a boon for potash demand. Additionally, corn-based ethanol demand has benefitted domestic producers.</p> <p>Much of these trends appear to be relatively insulated from a decline in U.S. GDP. What should not be overlooked, however, is the highly global nature of the fertilizer industry, and the potentially more relevant threats associated with economic weakness in third world economies. These risks are somewhat modest since GDP only sets in motion the underlying drivers of new demand above and beyond population growth. And, the impact those drivers have on food demand unwinds only slowly. The picture isn’t so bleak. Odd, no?</p> <p>But where could we be wrong? Where is the downside? Regardless of the U.S. economic trends, fertilizer consumption and operating costs should remain fairly constant. But, a modest decline in pricing power is possible if the economy creates a situation where farmers become more cost sensitive. Presently, they are driving brand new pickups and drinking rich man’s whiskey. If that is your concern, take a look at Mosiac (MOS), which has lower exposure to U.S. and Canadian demand.</p> <p>MOS gets only about 40% of its revenue from North America, while Potash (POT), Agrium (AGU) and CF Industries (CF) get roughly 70%, 85% and 90%, respectively.</p> <p>Should we be concerned about valuations? Currently, valuations are well above any historical norm because strength in the market is weakly correlated to economic activity. Potash and phosphorous producers are in a relatively good position to cut back on supply if markets begin to get sloppy.</p> <p>Know this: a U.S. recession is not a substantial risk to fertilizer stocks. However, a reversal in economic growth in China and India is. But even then, the risk of a sharp drop in consumption is limited because grain supply worldwide is so low and shifts in the workforce of those countries makes changes in demand less likely to slacken.</p> <p>In summary, buy that shit.</p> </div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7067279325887390745?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-28367945551108131562007-12-03T12:57:00.000-08:002007-12-03T13:01:35.008-08:00<a href="http://bp2.blogger.com/_t_dCoMvZcYk/R1RukEno6wI/AAAAAAAAACo/IJzuTIIsQ8s/s1600-R/TKC+chart.gif"><img id="BLOGGER_PHOTO_ID_5139854640730925826" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://bp2.blogger.com/_t_dCoMvZcYk/R1RukEno6wI/AAAAAAAAACo/6-YkOESXjec/s400/TKC+chart.gif" border="0" /></a><br /><div></div><div></div><div><strong>TKC. This is the Turkish mobile phone company that get a 15% monthly fee, paid by the Turkish government on the gross revenue of the company.</strong></div><br /><div><strong></strong></div><br /><div><strong>The chart looks really nice. Just what you would expect to see from a non-US based investment</strong>. </div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-2836794555110813156?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-77614652967912212872007-12-03T07:20:00.000-08:002007-12-03T07:22:50.589-08:00<strong>Treasury prices are climbing higher in early trading with the benchmark 10yr up almost a half of a point to yield 3.88 percent while the 30yr bond is roughly a full point higher to lower its yield to 4.32 percent. Highlighting the pronounced degree of volatility currently embedded within the financial sector, investors should expected further consternation in the general direction of interest rates given the release of the employment data at the end of the week and the next FOMC meeting eight days away. Despite all the uncertainty, however, the broader economy remains poised to outperform the financial sector as indicated by the corresponding slopes of the Treasury yield curves.<br /><br />With a difference of 60 basis points, the spread between the 2yr/30yr curve and the 3mo/10yr curve is particularly low given historical norms. Due to the abnormal amount of productivity accumulated over the course of the prior decades and mostly underutilized to this point, the economy will have relatively easier time acting with a greater degree of efficiency than that of the financial sector as investors un-extrapolate growth prospects already “priced-into” a number of investment vehicles.<br /><br />As far as interest rates are concerned, nominal levels have a strong tendency to go lower overall (not, however, in a straight line dynamic) as the current environment is decidedly non-inflationary in nature. With the output gap (the difference between realized and potential rates of GDP) continuing to widen, the strength of long-term disinflationary pressures are poised to easily overcome that of any transitory inflationary dynamics that flare up in the interim. One such risk would be the reversal of the current trade environment.<br /><br /><br />According to last quarter’s GDP data, exports growth topped 18 percent for the period, extremely high for a service-dominated economy. The uncharacteristic performance of exports, subsequently, owes much of its near-term success to the general weakness in the trade-weighted dollar. The performance of the dollar reflects the health of trade at any given time which means that should trade revert to more efficient fundamentals; the dollar should begin to regain its value over a protracted timeframe. Domestic good-production, therefore, will need to be monitored closely for any signs of such a change, a major reason why today’s ISM data is so important.<br /><br />According to the Institute of Supply Management (ISM), the monthly diffusion index for November came in at 50.8, mostly in line with consensus estimates. The lowest realized level since January, activity was about the same it was in October (50.9) showing signs of slowing manufacturing growth quarter-to-date. Much like the headline data, new orders grew at a similar pace they did in October (52.6 vs. 52.5), decidedly below the six month average of 55.3. Hiring, meanwhile, fell to below contractionary sub-50 levels for the first time since March. New export orders, however, was strong again last month while imports fell for the second consecutive month. Taken altogether, although overall export orders remain strong, the overall sustainability of continued strength remains very much in question given the lack of further investment within the manufacturing sector.<br /> </strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7761465296791221287?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-22806151821252677472007-11-29T16:01:00.000-08:002007-11-29T16:02:54.028-08:00It’s very possible that the US and global economy will avoid a “hard landing”. Why do I think that?<br /><br />1.) monetary conditions are lax, viz. a vis low interest rates and a weak dollar<br /><br />2.) net exports are stronger, due to domestic growth within Asia<br /><br />3.) inventories do not look excessive, viz., steel industry, as an example<br /><br />4.) corporations are not over-leveraged or over-invested relative to cash flow generation<br /><br />5.) outside of the housing market, there has been little labor hoarding ahead of this downturn. With high relative margins and limited pricing power in the labor markets, there is less need for lay-offs.<br /><br />The global economy should avoid a recession because:<br /><br />1.) China should grow at 10%. This is after economists have reduced estimates.<br /><br />2.) China doesn’t have a non-food inflation problem—therefore, fiscal policy can be flexible<br /><br />3.) worldwide, labor has limited pricing power, viz wage growth is actually shrinking<br /><br />4.) given the economic environment, central banks can respond to weak/slow growth with rate cuts <br /><br />5.) internationally based corporations are under-invested. <br /><br />Look for the Fed to get aggressive with rate cuts. We could see the “Greenspan days” where rates are back down to 2.50% - 3.00%. <br /><br />But, if we do have a recession, historically, the Fed has cut rates an average of 6% (obviously it won’t happen now). Know this interesting tidbit: the biggest rate cut was from July 1981 to November 1982, where the Fed cut rates 1100 bps, from 19% to 8%! That started a secular Bull Market from 1982 - 2000.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-2280615182125267747?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-13352305978033413462007-11-29T06:15:00.001-08:002007-11-29T06:17:09.217-08:00<strong>Although the economic news released yesterday was weak, stock prices soared after the Federal Reserve hinted that it may lower interest rates again. Assuming the market continues to rally: Prudent Investors may want to buy stocks at this time. Aggressive Investors and Traders should play the market to the upside.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-1335230597803341346?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-54088051114447757272007-11-28T13:13:00.000-08:002007-11-29T06:42:48.992-08:00<strong>Desktop virtualization involves separating the physical location where the PC desktop resides from where the user is accessing the PC. A remotely accessed PC is typically either located at home, at the office or in a data center. The user is located elsewhere, perhaps traveling, in a hotel room, at an airport or in a different city. The desktop virtualization approach can be contrasted with a traditional local PC, where the user directly accesses the desktop operating system and all of its peripherals physically (using the local keyboard, mouse and video monitor hardware directly).<br /><br />When a desktop is virtualized, its keyboard, mouse and video display (among other things) are typically redirected across a network via a desktop remoting protocol (such as RDP, ICA, VNC, etc). The network connection carrying this virtualized desktop information is known as a “desktop access session”.<br /><br />The data center is the desktop. Wall Street has underappreciated this area because they are focusing more on the growth of server virtualization. This creates an opportunity for the average Joe investor.<br /><br />It is expected that the desktop virtualization software market should grow from current levels (small usage) to over $1.5 billion by 2011. In the same time-frame, it is also estimated by savvy investors and people in the know, like me, to grow to over 25 million end users, representing only about 6% of the corporate desktop PC installed base.<br /><br />Any IT organization worth it’s pound of flesh is constantly looking for ways to reduce the cost of maintaining existing IT systems. The corporate desktop sucks more dollars out of a cost structure than IT managers care to put up with. Hardware and software costs typically account for 20%-30% of the total cost of the corporate desktop, with the remaining 70%-80% of the cost consisting of IT maintenance. Desktop virtualization would lower the annual cost of ownership of computing by 40%-50%, versus high-cost workstations. There is also a potential 5%-10% reduction in cost for low-end PCs.<br /><br />Currently, it appears that desktop virtualization technology has developed to the point where it can be applied to the corporate desktop environment, thus improving performance, increased flexibility, personalization, and reducing operating expenses.<br /><br />One way to play this area is Citrix Systems (CTXS). Both CTXS and VMW are seeking to leverage dominant positions in each of their core virtualization markets to enter into the desktop virtualization market. However, CTXS appears to be better positioned to capitalize on the opportunity at hand. The reason is based on the breadth and depth of it’s product portfolio, as well as a large installed based of over 70 million end users.<br /><br />CTXS is the most leveraged play on desktop virtualization. The company will soon release it’s Citrix XenDesktop solution, which has the most feature-rich desktop virtualization software on the market.<br /><br />I realize that many of you are excited about VMW. This is also a good choice, but not as attractive as CTXS, in my opinion. </strong><br /><strong><br />Note: If you buy CTXS based on this post, beware that investing involves risk, and you might lose money.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-5408805111444775727?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-70836927249638790722007-11-28T08:35:00.000-08:002007-11-28T08:42:21.438-08:00<a href="http://bp1.blogger.com/_t_dCoMvZcYk/R02Zd46bsLI/AAAAAAAAACA/MvOQ-UvKCfw/s1600-h/WFC+2007+1127.gif"><img id="BLOGGER_PHOTO_ID_5137931488672329906" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://bp1.blogger.com/_t_dCoMvZcYk/R02Zd46bsLI/AAAAAAAAACA/MvOQ-UvKCfw/s400/WFC+2007+1127.gif" border="0" /></a><br /><div><strong>Wells Fargo disclosed that it will further tighten its home equity lending standards and record a special fourth quarter 2007 provision of $1.4 bln (pre-tax), largely from certain indirect channels through which it is no longer accepting business. The company will continue to provide home equity financing directly to its customers, but has decided to stop originating or acquiring new home equity loans through certain indirect channels.</strong> I<strong>t's too early to buy the stock, but it deserves to be on the watchlist for signs of improvement or a technical breakout.</strong></div><br /><div></div><br /><div></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-7083692724963879072?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-33885188163903328272007-11-28T08:03:00.000-08:002007-11-28T08:07:03.516-08:00RIG has printed $139.50 this morning.<br /><br />Yesterday, Fitch downgraded RIG’s senior unsecured bank facility to BBB from BBB+. Yet the stock was up almost 5% with oil down and closed at $135.75. Odd, no?<br /><br />Maybe it’s because of the trend for the increase in day rates on deepwater drilling projects. Or maybe its because of the merger with Global Santa Fe (GSF), creating a $53 billion revenue generating monsta driller. (Btw, I like GSF because it has “Santa” in it). Or, could it be that RIG has no sub-prime or overly tanned CEO’s? <br /><br />Like it or not, Green-turds, the world needs oil to run and offshore is a vastly untapped area. However, due to political asshattery in countries like Venezuela, Nigeria, and other third world countries, I would expect most of the offshore drilling to focus off North American and European shores.<br /><br />FYI… RIG just inked a deal for a 4-month contract at a day rate of $600,000 on their Pathfinder rig to start in June 2009. As I mentioned in a previous PG post, they have a backlog of $33 billion and it is growing. IMO, there will be more of these deals to come as the cost of finding and recovering oil is getting harder and more expensive. Oil will go well over $100 in the coming year.<br /><br />Note: Under the terms of the merger, RIG shareholders will get $33 cash per share plus 0.6996 share of the new company (”RIG”) for each share they currently own. GSF shareholders will get $22.46 in cash plus 0.4757 share of the new company. The combined company will have 318 million shares outstanding (322 million fully diluted). For tax purposes, the cash distributions will be treated as stock redemptions, meaning that shareholders will treat them as partly return of capital and partly gain or loss on sale.<br /><br />By the way, insiders have been buying the stock.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3388518816390332827?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-90571145276596292162007-11-27T19:51:00.000-08:002007-11-27T20:00:04.450-08:00<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bp2.blogger.com/_t_dCoMvZcYk/R0znDY6bsKI/AAAAAAAAAB4/X_hs4K9ofAY/s1600-h/citigrp+tower.jpg"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer;" src="http://bp2.blogger.com/_t_dCoMvZcYk/R0znDY6bsKI/AAAAAAAAAB4/X_hs4K9ofAY/s400/citigrp+tower.jpg" alt="" id="BLOGGER_PHOTO_ID_5137735320336052386" border="0" /></a><br /><br /><br /><p>A $7.5 billion cash infusion from Abu Dhabi into Citigroup sparked a broad rally on Wall Street today. Although we still have a down/bearish situation, the market could easily move up tomorrow. With that in mind:<br /></p><p><br /><strong style="font-weight: normal;">Investors</strong> should get their shopping lists ready.<br /><br /><strong style="font-weight: normal;">Aggressive Investors</strong> and Traders should play the market up or down as it develops. Citigroup is a stock to put on for a potential trade<br /><br /><br /><br /></p><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-9057114527659629216?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-35799046102900819222007-11-27T08:29:00.001-08:002007-12-03T07:16:09.499-08:00<div><br />AEO - American Eagle reported Q3 earnings of $0.45 per share, in-line with the First Call consensus of $0.45; revenues rose 6.9% year/year to $744.4 mln in-line with the company's pre-announcement. Company issues in-line guidance for Q4.</div><div></div><div></div><div></div><div></div><div><strong><em>Update: AEO was down $0.15 with the market up 215. Apparently AEO investors didn't take the pic seriously.</em></strong></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-3579904610290081922?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-64546564049895369752007-11-26T10:28:00.000-08:002007-11-26T10:44:28.708-08:00<strong>They report earnings tomorrow before the open. Expect to see $0.45 for the quarter. They have already reported that same store sales were up 2% and revenue up 13% from last year at this time.</strong><br /><strong></strong><br /><strong>Store traffice was good this past weekend. They should earn $.70 for Q4.</strong><br /><strong></strong><br /><strong>Within the next few months, expect them to announce details about their fourth concept and an aggressive share repurchase program.</strong><br /><strong></strong><br /><strong>One of the best values in retail stocks out there. Don't forget that their customer base is the younger crowd who exercise little or no restraint when it comes to buying clothes.</strong><br /><em><span style="color:#ff0000;">Disclaimer: Investing involves risk. You should be willing to potentially lose some or all of your investment. I am not recommending that you buy this stock. Your situation, objectives and risk tolerance should be considered before purchasing any stock highlighted on this blog.</span></em><br /><em><span style="color:#ff0000;"></span></em><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-6454656404989536975?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-26276627730608095682007-11-26T09:22:00.000-08:002007-11-26T10:22:13.275-08:00<strong>Gavekal Capital has come out recently with their view on the Euro. They're thinking that in a couple of years, the Euro could be trading at $1.05 - $1.10. For the most part currency rates are determined by relative rates of return on capital. They cite slower growth, as Europe has an aging population. Also the "Islamic-ization" of Europe could impact the EU negatively. Wealth generation is higher in the U.S., as is productivity, capacity utilization and technological innovation.</strong><br /><strong></strong><br /><strong>Their view on the Euro is not the consensus view, but is noteworthy.</strong><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-2627662773060809568?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0tag:blogger.com,1999:blog-4318832915976979696.post-61966897637068361682007-11-26T07:55:00.000-08:002007-11-26T10:38:59.679-08:00<a href="http://bp1.blogger.com/_t_dCoMvZcYk/R0rtto6bsII/AAAAAAAAABU/exN0TDK126U/s1600-h/offshore+rig.jpg"><img id="BLOGGER_PHOTO_ID_5137179693301870722" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; CURSOR: hand" alt="" src="http://bp1.blogger.com/_t_dCoMvZcYk/R0rtto6bsII/AAAAAAAAABU/exN0TDK126U/s400/offshore+rig.jpg" border="0" /></a><br /><div></div><div><div><div><strong></strong></div><div><strong></strong></div><div><strong>Credit Suisse/First Boston has come out with an upgrade on the stock with a target price of $158.</strong></div><br /><br /><div><strong></strong></div><div><strong>RIG currently has a backlog of over $33 billion and is expected to earn $17.25 in 2010 vs. current estimate of $8.05 for FY:2007. That is a CAGR of over 29% on earnings. </strong><strong>The 2008 earnings estimate is $13.75, up from $11.25, and 2009 is $16.75, up from $13.58.</strong></div><br /><div><strong></strong></div><div><strong>This also is a core holding for many mutual fund managers in the large cap growth area. </strong><strong>I bought more shares today.</strong></div><div> </div><div><strong></strong> </div><div><em><span style="color:#ff0000;">Disclaimer: Investing involves risk. You should be willing to potentially lose some or all of your investment. I am not recommending that you buy this stock. Your situation, objectives and risk tolerance should be considered before purchasing any stock highlighted on this blog.</span></em></div></div></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/4318832915976979696-6196689763706836168?l=alphastocks.blogspot.com' alt='' /></div>.http://www.blogger.com/profile/16917778387990744459noreply@blogger.com0