TRADE UPDATE – SWSH
Took an initial long position in SWSH at 5.59 for a short-term trade. Reverse of a pump and dump is occurring here. We'll call it bash and trash. In this case, short sellers have lined up to profit from overvaluation, corruption and a bevy of other perceived ills. I am not making a bet on whether short sellers are right or wrong here. What I am making a bet in is that there are too many of them and that they are a jumpy bunch. The company has earnings being released next week. The stock has collapsed by 50% in less than a month. Some covering should begin happening soon here. The stock is also sitting on some important technical levels that will attract covering should some upside momentum become apparent. This is a mover...so keeping it at a medium sized position at the absolute most. Chart is here:...
RESPECT, EMOTION, CATALYSTS AND TOILET SERVICES
I talk a lot about "respect" in the market analysis sense of the word. It's a daily topic that I repeat. It's a very simple yet powerful concept that not enough investors pay attention to. I make a consistent effort to humanize the markets. I think its beneficial to have a vivid imagination when it comes to how you perceive the market or an individual stocks behavior. Price action is, after all, a derivative of human emotion. You have very small portions of a stocks trend that are driven by rational, level-headed reaction to the fundamentals of a company. The majority of the trend, including the process of forming a bottom and a top, are driven by human emotion. Have you ever wondered why a company that has been treading along its 52 week lows doesn't react to good earnings? A promising product release? Or any positive change? Fundamentals don't matter at extremes. Catalysts matter. And it has to be the type of catalyst that gets real investors to pay attention. You can literally see real investors pour into a stock once the proper catalyst becomes public. That is where you start loading up on the name. That's how you are able to pull large gains out of the market over 6, 12 and 18 months period. Bad news is that these opportunities do not come along very often. The more bullish a market becomes the less you have the opportunity to find stocks that are dysfunctional enough to present this type of opportunity. Speaking of opportunity. I mentioned SWSH last night as a potential long opportunity. I also said that the next move - whether up or down - would be fakeout. It moved down today. At one point it was down about 6% for the day. That may be all the bears get from here. The bulls may get their chance to shine here...
INFLATION TRADE: GOLD AT 3,500 AND THE NASDAQ AT 4,000. WHY NOT?
Days like today should serve as encouragement to anyone with bullish aspirations that go beyond next week. Days like today tell us that the inflation trade is alive and well. Commodity prices and equity prices are bosom buddies. And as long as this remains a recurring theme in the marketplace, the bulls will continue to win. There will be short term setbacks. Some intermediate term setbacks will come along. Over the long-term, however, inflation will win. It will come in the form of higher asset prices, equities included. The leaders of the inflation trade are major commodity issues. Gold and oil being the king and queen. The modern day gold bull has become a leading indicator of the inflation trade. It tells us that the inflationary forces that have successfully resurrected the world economy will continue exerting their force over everything from equity issues to the price of corn, coffee and oats. There isn't an investor out there who would have predicted $1500 gold prices paired with the Nasdaq being at 10 year highs. This is just one example of the recent change in market dynamics and correlations. This change has created a series of new correlations that will continue to challenge everything traders have come to believe about what commodity inflation means for the equity market. $300 crude oil and Dow 21,000. You bet. Gold at 3,500 and the Nasdaq at 4,000. Why not? Everything that you think is "normal" will be turned on its head in the coming years. It will be all be part of the inflation trade. And it will be a chance to profit if you maintain an open...
TRADE UPDATE – EDC
Took a roughly 2 point loss on EDC at 38.60 - 38.65. All out. Market not doing what it's supposed to do. Trimming short-term exposure.
AN OUTSTANDING TRADING OPPORTUNITY WILL ARISE FROM THE TOILET
I have gotten some questions about my intermediate term system of trading stocks. The next signal I get using the system I will post as a trade update. It is basically a system that triggers off of range expansions with some volume filters. There are also a couple of fundamental considerations taken into account. Not overly complicated. It works well. Most importantly, it defines my risk precisely every second I'm in the position. I am currently long this stock using the system for more than a week now: I am adding SWSH to my watchlist. They are essentially a toilet cleaning and janitorial service. If you have ever peed in a urinal at Denny's then you have probably seen their products. I believe that a tremendous long opportunity for a short-term trade is developing here as the stock has an enormous amount of trader interest (short sellers especially) that is distorting its pricing. I am waiting for the pattern to develop over the next few days. I feel that the next move, regardless of whether it is up or down, will be a fakeout. The real opportunity will come after...
TRADE UPDATE – EDC
Took a long position in EDC at 40.50. Mentioned in "The Gun" last night. Link here http://www.zenpenny.com/?p=1701
THE GUN: A SUPERCHARGED ETF AND PRETTY NYSE LISTED STOCK
It has been awhile since I saw anything that look appealing enough to present as a short-term trade on "The Gun". Tonight we have a leveraged ETF to help you grow some hair on your chest. And we have a comparatively tame NYSE listed name for those who want to remain hairless. Both present their fair share of opportunity: click on chart below to...
4 CHARTS TO KEEP YOU IN PEACE AND NOT IN PIECES DURING THE WEEK AHEAD
click on the charts below to enlarge
3 INVESTMENT OPPORTUNITIES WITH EXPLOSIVE CATALYSTS
This article also featured on TheStreet.com You can't have an investment without a catalyst. A catalyst keeps a stock that you intend on holding for the intermediate term from becoming a memento that is passed onto your grandchildren. The lack of a catalyst in a "cheap" stock keeps your money tied up in an investment that seems to have all the qualities you desire but suffers from depression that doesn't allow the stock to do anything but sit in place. Catalysts can come in the form of macro influences, restructurings, shareholder activism and management changes just to name a few. The following are three companies with catalysts that provide the fuel necessary to reach their full potential: PSTR - Given the enormous spike in natural gas investments by all of the major oil/gas companies, it would be prudent to assume that there is a world of potential in small to mid-cap natural gas related companies over the long-term. Aggressive investors should be looking for small-cap natural gas stocks that have the potential for significant appreciation that will eventually make them attractive buyout targets for larger companies within the energy field. PSTR deals almost exclusively in natural gas. The company has not taken part in the ascent that most other natural gas companies have experienced over the past 12 months due primarily to some debt and litigation issues. During the second half of 2010 energy investor Thomas J. Edelman, through his newly formed fund White Deer Energy, injected a significant amount of capital into the company allowing for a restructuring of debt and renegotiation of credit agreements. PSTR is generating a significant amount of cash flow from current operations. For 2011, the company is allocating $52 million towards capital spending, of which 100% will be funded with internal cash flow. Company management has been aggressive in drilling new wells and pursuing new leaseholds in order to further drive company growth. The company owns thousands of miles of valuable pipeline for the transport of natural gas. As natural gas growth occupies an increasing portion of energy infrastructure the value of the pipeline will prove an increasingly attractive asset. The eventuality for PSTR is strongly tilted towards the company being acquired by a much larger company. In the meantime, it seems company management is doing everything right in order for the stock price to appreciate due to an increasing attention from investors towards small to mid-sized natural gas companies. I currently own PSTR for managed accounts and have written an in-depth research report about the company available here. GSIG - GSI Group is a company that was on the verge of being...
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