LOOKING AT THE DOW ON A LONG-TERM BASIS REVEALS WE ARE AT A CRITICAL JUNCTURE
I was preparing to do an updated study of crude oil, following up on last week's piece, when I started getting distracted with other pieces of analysis, indices and commodities. My distraction is your benefit. I started looking at the influence of the generational trajectory points on the Dow over the past 15 years and was compelled to do a little show and tell. A study of crude oil will be posted this weekend, as well. A couple charts here for your monetary pleasure. Compelling, irrefutable evidence of the critical nature of current market...
THROUGH THE WIRE
I've had a lot of questions about PXLW over the past few days. Undoubtedly, it comes as a result of the persistent pullback, which has seen me give back a substantial amount of my profit since initiating the position in late July/early August. Before getting to my opinion on PXLW, let me state the following: I will never sell a position and not update it on this website. I am not a flamboyant charlatan who has an obsession with being 100% right 100% of the time. If I lose on the trade, I will discuss it here and post the loss. If I win, I will discuss it probably more than I do the loser and post the gain. You will never suddenly not hear about a position for a month, followed by a proclamation that I sold the position without disclosure. That is a game I don't play. It just so happens that I have been right a lot in 2012...and substantially so. I have still lost, however. I lost on CIS, YELP and GSIG to name a few. All of those trades were posted and discussed, as they always will be. As far as PXLW goes nothing has changed at the company fundamentally as far as I know. The only aspect to cover then is the price action. It just so happens that I have studied literally hundreds of thousands, if not over a million charts in my now 18 year career. With that said, my opinion on the price action should give you some comfort. To give you a cliff notes preview: Nothing at all has changed. The price action, pullback, volume and anything else pertaining to structure all remain bullish. My position remains a large one. Here is the...
NO REST FOR THE WEARY
Now that the market has gone into "play dead so I can slather another coating of horned defecation on the bears" mode, I feel it is a good time to review the status of the portfolio and the contents within. September has been another kind month to the portfolios. With a near double digit return that now puts the year to date return close to 55%, it would be easy to become complacent, lackadaisical or some other variation of plain lazy. I, however, have eaten arsenic laced concrete far too many times in my career to relax when I am ahead. It becomes a question of consistency rather than the sheer power of your gains during any time period. For the sake of consistency, it is a best practice to mark to market your gains on a weekly or monthly basis so as to not become complacent when you are sitting on large cushion. A 20% drawdown is a 20% drawdown whether it starts from being flat on the year or up 80%. In either case, it is something that should be controlled or else you can find yourself sitting on a much larger problem in a relatively short period of time. The market is a fickle lover. Here is a rundown of each individual holding: SPRT has carried the portfolio in September. It is up more than 40% for the month and looks set to continue the trend higher. As a result of the addition I made to the position earlier this month and the recent decline in PXLW, SPRT is now the largest position in the portfolio. PXLW is suffering a fairly standard, low-volume pullback that doesn't concern me at all at the moment. Of course, I would have preferred a consolidation at higher levels, but this pullback is nothing out of the ordinary from a price or volume perspective. I'm holding comfortably. WMIH, as I mentioned in the research report, is a very long-term holding in the portfolios. It is not a question of whether a positive outcome will play out here. For me it is a question of how long it will take to play out. I believe we will see some concrete positive evidence of the direction WMIH will take before year end. At the latest, it will be Q1 of 2013. I continue to see it as the opportunity with the most potential in the portfolios. Price action has been as expected. SPNS is caught in a lack of liquidity land with a large seller holding down the price. I expect SPNS to have a very rapid appreciation when this seller moves out of the...
5 CHARTS THAT DEMONSTRATE A MARKET THAT STILL HAS A WAYS TO GO BEFORE A SHORT-TERM PULLBACK
I usually start the weekend chart reviews with the Dow, S&P and Nasdaq. This week, however, the most significant tells are coming from the Russell 2000 and the CRB. Both of these indices are giving a pretty clear indication of where we will see a short-term top for the entire market...and its quite a bit higher than most suspect. click chart to...
THE ONLY THING THAT WAS DISAPPOINTING THIS PAST WEEK
On August 14th, I posted an article titled "The SOX Needs Time Therefore The Entire Market Needs Time." The chart posted made the case for the SOX moving into a period of sideways movement as it met its upside trajectory point. What I didn't realize at the time was that the market wasn't going to let weakness in the pesky semiconductor sector hold it back from its preordained destiny. What has been surprising is that it turns out the SOX needed more time than I expected. Here is an updated analysis: click chart to...
THE PRICE PATTERN IN CRUDE OIL MAKES A PRIUS THE BEST INVESTMENT OF ALL
In early June, I posted a chart titled "Crude Oil: Just A Question Of How Quickly It Will Get Back Over $100 From Here" outlining the case for crude oil making a relatively quick bounce back to $100 from the mid-80 range. The analysis was 100% based on a long-term trajectory point that crude oil would find support with. I followed up with several other articles in the July and August further confirming that crude was headed back to triple digits. Now that we have essentially met the first trajectory target, I wanted to update readers as to the possibilities going forward: click chart to...
FROM A GOON TO A GOBLIN
Changes in character are one of the keys to judging whether an important index or your favorite stock is about to make its move. A change in character has nothing to do with penetrating some arbitrary moving average or one of the millions of indicators that exist turning green, blue, purple or a combination of the three. It has everything to do with price and volume. Price analysis is an endeavor that should be grounded in purity. There is no need to pollute it with indicators that are only derivatives of price. Learn how to interpret price and volume itself. You will be 100 times more successful. An example of a recent change in character took place in SPRT recently. Let's take a look: click chart to...
THE ASTOUNDING SIMILARITY BETWEEN THE YAHOO IPO AND FACEBOOK IPO CONTINUES TO BE…..ASTOUNDING
On August 2nd, I published an information piece titled "Facebook Is The Next Yahoo And That Makes It Very Bullish." In the article, I outlined the similarities in the price characteristics of the Yahoo and Facebook IPOs in the months following their debut. My purpose in publishing this information was to remind investors that IPOs do not always go as planned. This is irrespective of the fact that a company may be a thought leader, technological innovator or godsend from the planet Kepler. There can be market forces at work that demand investors are put through a period of adversity before the light can shine and flowers are given permission to bloom. Just because such an obscene and heinous event takes place does not mean there is a vast conspiracy against any class of investor. It also doesn't mean that there were criminal elements at work within the underwriting syndicate or within the company itself. Investors have become surprisingly quick to throw around these types of conspiracy theories without much thought. We are living in an era of skepticism and cynicism pertaining to anything Wall Street. Just as 12 years ago, we were living in an era of Wall Street being the holy grail to wealth and independence, with promises of double digit portfolio gains that would span generations to come. Both frames of thought are incorrectly influenced by the emotion of fear and greed surrounding that particular time. Furthermore, the pitiful versions of fundamental analysis that seem to grab a hold of unimaginative minds can only cost you when related to dynamic companies that have the eyeballs of the world transfixed. There is no bell that will ring in the form of a ratio or valuation that will determine when Facebook is a buy. It didn't ring for Yahoo, Amazon or even Google, a company that created nothing but doubt among both institutional and retail investors on its IPO date and for many months to follow. The first chart is that of YHOO 80 days into its IPO and FB 80 days into its IPO. The similarities are obvious. The second chart shows where YHOO is trading a year and a half after its IPO date. I expect FB to pull off something similar. It will make little sense. It will be criticized the entire way up. And that is exactly how its supposed to be. click chart to...
AN AAPL TIMELINE AND WHAT TO EXPECT FROM IT GOING FORWARD
Let's be clear, I own zero shares of AAPL. I probably will never own a single share of AAPL. Not because I am bearish on the stock or the market by any stretch. But rather due to the fact that I have the need to move into opportunities where few others bother to dwell. I become highly nervous and agitated when every person in the world knows, loves and talks about a stock I own. AAPL is the personification of know, love and talk in the stock market. Makes me want to whip my tail out and hang myself from a tree. That is exactly why I do not own AAPL. With all that said, during the entirety of 2012, I have managed to put my disdain for companies with cult followings aside in order to provide you, my ingenious guests, with countless opportunities to profit from the AAPL. I have been singing the AAPL song for months now due primarily to one of the most bullish technical structures you can have in a mega-cap name. Here is the timeline of my bullishness starting on July 25th, the day after an earnings announcement that got player haters from near and far drinking the Kool-Aid July 25th in an article aptly titled: The Drop In AAPL Today Did Nothing To Diminish The Favorable Technical Picture http://www.zenpenny.com/the-drop-in-aapl-today-did-nothing-to-diminish-the-favorable-technical-picture/ August 5th in an article aptly titled: AAPL Continuing Preparation For A Journey Into 700 Land http://www.zenpenny.com/aapl-continuing-preparation-for-a-journey-into-700-land/ August 26th in an article aptly titled: AAPL Keeps Whispering Sweet Nothings Via Its Price Pattern http://www.zenpenny.com/aapl-keeps-whispering-sweet-nothings-via-its-price-pattern/ What all of these articles have in common are continuous calls for AAPL to reach 700 and possibly 800 per share. A call that AAPL only continues to reinforce through behavior that I can only describe as technical excellence bordering on aburdity: click chart to...