BEAR WITNESS: TUESDAY EDITION
Here's what caught my attention today. Have a look at the industrial minerals and metals sector today. All small-cap names here. En fuego: click chart to enlarge Commodities were weak today. Bonds continue to...
A FASCINATING INTERPRETATION OF THE VIX & PUT/CALL RATIOS: VOLUME 2
Notes are on the chart. Per the usual, conventional wisdom regarding these two indicators is way off base here. Moving averages only to provide a clean price picture. click chart to enlarge
BEAR WITNESS: MONDAY EDITION
Something new I'm trying out here. I do a lot of stuff I don't tell you guys about. I want to change that. Ideally, I want what my eyes see in the markets to be transferred into your field of vision on a nightly basis. I'll put quick notes on there that reflect what I'm thinking as I look at the information. Charts are the easiest way to digest the information quickly, which is why I use them. No stochastics, MACD or anything like that to speak of...not necessary ever really. No economic statistics or headlines...that's just noise. Raw price information and what can be immediately derived from that information is all that is needed. Hope it helps you over the long run. Here's what got my attention tonight: DOLLAR...
9 CHARTS THAT WILL HAVE YOU DANCING BETTER AND SMELLING GOOD DURING THE WEEK AHEAD
click chart to enlarge
THE GUN: SOME VERY SIMPLE REASONS WHY SPRT IS BUY HERE
October 1st, 2012 - SPRT sold at 4.35 for +35% gain since August 7th. August 7th, 2012 - SPRT reinitiated at 3 July 24th, 2012 - SPRT sold at 3 for +15% since June 16th. June 16th, 2012 - SPRT reinitiated at 2.60 March 29th , 2012 - SPRT sold for +21% since posting I've been following SPRT for about 8 years now. There are no intricacies or complicated stories to tell here. It's not a post-restructuring play like GSIG or PTGI. Plain and simple: It's a software company that is transitioning to new partnerships that will aide in recovering the revenue growth that has battered the stock price since its December 2010 highs. SPRT has had a near 10 year history of moving between the $1.50 range and the $7 range. It managed to make it all the way up to $15 in 2004. Please see the chart below for further technical details. click chart to enlarge Cash flow at the company has been erratic. However, they have no debt to speak of and about $1.20 per share in cash on the books. That means at current prices the company is selling for a little more than 2 times cash. That's for a company that has signed new service contracts recently with major companies including Comcast and Staples. In addition, the CEO and other officers were purchasing shares on August 1st. He probably would have been better off if he would have been reading my notes on August 1st and held off until September, at least. Nevertheless, insiders know the history of the company and the cycles it is prone to going through on an ongoing basis. The addition of RGM Capital as a form 4 owner and continued buyer doesn't hurt either. Bottomline: Very simple here...company with a substantial operating history that has a very defined business cycle is sitting at the low end of its 10 year cycle. This is while the company is transitioning to new service contracts that will increase revenue growth and profitability in 2012. It has a clean balance sheet. Insider buying by CEO and a savvy value investor throwing his support behind the company around current prices. The company is an easy double over the next 12 months, if not a three bagger. Downside risk from these levels is roughly .70 cents or 25%...worst case scenario over the next few...
10 THOUGHTS THAT CUT THROUGH AND CLARIFY THE CURRENT MARKET PICTURE
Previous ranges have been obliterated. We seem to be on a quest to define an entire new set of price ranges for the important market averages. All the meanwhile, most market participants seem to be obsessed with the idea of a pullback more than they are the journey that is at hand. Let's examine where the market currently stands to better clarify the picture: - The Dow somewhat easily broke through a major generational resistance area in the 12400-12500 range. It is preparing to test another generational resistance area at 12850-12950. Should the Dow clear this level, breaking convincingly over 13,000, the game will be on in earnest for the bulls. More on this in the weekly chart review tomorrow. - Timing of the break will also be important. If a convincing break of 13,000 develops before mid-March, the potential for a powerful move up in the April-May time period is substantial. If it breaks in April, then the potential for failure is that much more substantial. The timing variables are constantly shifting. I am watching. - Speaking of timing variables, these two studies provide an excellent guidepost for timing this move based on previous results. I will point to them continually, as I believe they are extremely relevant to the current market. The first is the VIX study I posted some weeks ago and the second is the put/call study I posted some weeks ago. Both point to higher prices for the market averages. Both also show how investors cannot just depend on traditional analysis of these gauges to utilize them with any success. Those who just say the put/call is down to such and such so the markets must top or the VIX is down below X so the markets must be overbought are only looking at one crumb and forgetting that there is an entire cookie up above. - The Nasdaq 100 is just chilling at a 10 year plus high in consolidation mode. If it continues to consolidate while the market catches its breath, the potential for a continued powerful move forward becomes that much greater. - The relationship between a falling US Dollar and a rising equity market seems to exerting itself once again. This is most important for the bond market as this "synergy" will create a trend towards rising yields. - The fact that bond yields have refused to participate in this market rally is a signal that a great majority of investors remain skeptical of the market. Whether you want to use this as a contrarian indicator or not is up to you. What is does mean is that a large...
INVESTMENT SUICIDE PRACTICED DAILY THROUGH TWITTER
I've mentioned three different companies as potential investment (longer than 6 months) opportunities in 2012: GSIG, PTGI and PRGS. I'm not going to be that guy who just throws a dozen companies a week out as potential trades or investments just to get readers. It will just serve as a means of giving the perception of substance without any substantive results. There are hundreds of trading sites out there that will give you ideas and setups...this isn't one of them. I'll go over the technical picture for some individual names this weekend. PRGS has developed into a monster since I profiled it on January 16th when it was trading in the $18 range. It closed today near $22, far exceeding any expectations I had for the company in the near-term. If you were fortunate enough to buy in the $18 range, I would consider taking a portion off and keeping the rest for the longer-term price target of $29. GSIG is shaping up phenomenally well in terms of price action and technicals. There is some very real accumulation taking place here. I would like to see it break through the $12 range in order to give the all clear to challenge multi-year highs at $14. On another subject all together. I have been relatively inactive on Twitter logging on only a couple times a day, spending no more than 5 or 10 minutes on there at a time. The Twitter atmosphere simply doesn't match my current investment mindset. It very much did during the second half of 2012 and you couldn't tear me away from it, as it's an extraordinary venue for gaining information. Probably the most extraordinary I have ever witnessed. There is a problem, however, with an abundance of information when your investment methodology relies on patience. Information has the potential to disrupt your discipline. When logged into Twitter or any other venue for outsized information transfer, there will be tiny seeds of information planted into your mind on a real-time basis. Some of those seeds will reinforce your opinions about market direction or an individual company. Some of those seeds will challenge your opinions about market direction or an individual company. The more of these seeds that are planted, the more propensity an investor will have to rethink his or her thesis. Twitter is built on a venue that thrives off of short bursts of information. Short bursts of information in rapid succession throughout the trading will only naturally promote activity. It is inevitable that if you are exposed to enough short bursts you will have the urge to act, regardless of whether it conflicts with your long-term...
I DO IT ALL ON A WHIM
My best friend I have known since I was 8 years old calls me whimsical. It's true. I am prone to making important decisions on whims. I like to move every several years. I have never bought a home because I don't know if I will be in the same city for more than a few years. I have started countless companies, some successful, others not so much. My bosses, I remember (last time I had one was 1998 at Bank America Investments), would have nothing but praise for me the first 6 months of employment. But that praise would turn to steely eyed skepticism as I would become disinterested and make it very obvious in the workplace. My whims are what led to my advisory service being created in the late 90's, which led to the formation of my hedge fund. My whims have also led to my attempt to play poker for a living (made reasonable money but couldn't stand it); attempting to open an art gallery regardless of the fact that I couldn't paint (I thought I could); starting a distribution business which I ended up selling off a few years ago. During my late teens to early twenties (circa 1993-1996) these whims took the form of much less savory adventures that I would describe except for the fear of arrest. Whimsicality is a thin-lined attribute. By that I mean that there is a thin line separating genius from madness. If you end up successful, then your whimsicality is regarded as an eccentricity which is the key behind your success. If you end up unsuccessful, then your whimsicality is considered a liability and you are regarded as reckless or careless. Life is filled with thinly lined attributes, as is trading. Now that I have gaggles of children running around my house that depend on me for juice and crackers, I have been forced to curb my appetite for whimsicality. Sometimes I envision picking up everything and moving to an avocado farm in Peru, where I will live off the land, teaching English to senior citizens on Monday and Wednesday nights at the local Peruvian adult school. Upon presenting the idea to my wife, she reminds me of our children's schooling, soccer leagues, relatives and other perceived necessities. And then looks at me as if I have a furry tail and walks away. Therefore, I am forced to channel my whimsical nature into this forum. I will not allow my readers demands for consistency in material and strategy to get in the way of my whimsical nature as my wife has. My strategies are subject to market conditions that...
A LESSON IN TRENDING MARKETS AND INVESTOR FORGETFULNESS
My posting on December 17th entitled, "The Most Important Chart I've Posted This Year" lived up to the title. We're fairly close to moving above 1320 on the S&P 500. By the looks of things, it seems that most fund managers, investors and pundits have missed out on this January rally for the most part...myself included. The entirety of the Twitter and blogosphere has been taken over by a short-term minded pseudo investment class that enjoy the analytical process more than the fundamental reason people participate in the capital markets. That is, of course, to make money. In the late 90's and early 2000's there was an entirely different class of investor that ruled an entirely different medium of communication. Back then, it was message boards and chat rooms that allowed people to communicate their ideas. There were colorful characters that would interact with the vast number of minions who would hang on every word they said. Pumps and dumps were common as accounts were inflated by a fortuitous set of circumstances that allowed fairly inexperienced individuals the opportunity to buy thin stocks at the behest of whatever guru held preeminence at that very moment. We all know how that story ended. The minions lost a majority of what they had made and instead turned their attention to real estate some years later. The gurus went onto different ventures outside of the markets. Some went to jail. Several stayed in the markets and achieved levels of success that few thought possible. You want the common denominator of failure amongst both the gurus and the minions who followed them? Short-term thinking. It was a poison tipped dagger back then and it remains a poison tipped dagger today. The guys I know who achieved monstrous levels of success all had longer-term time frames and avoided getting jostled and churned by the markets to the point of emotional exhaustion that leads to fatal decision making. Those who saw failure all had short-term time frames in mind that attempted to navigate each twist and turn to the point of circus like absurdity. We now have a whole new set of characters who think that irrespective of the market environment it should always treated as a pinball machine that bounces you from one direction to another. That style of investing worked during the second half of 2011. That style of investing would have got you killed during 2009 and 2010, however. That style of investing would have worked during 2004 and 2005. That style of investing would have got you killed during 2006 and 2007. There is a time and a place for it. I...