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...
3 MONSTROUSLY POSITIVE TECHNICAL EVENTS LEADING TO AN ORGY OF BULLISHNESS
The end of the consolidation fell onto the lap of the bulls today...right on schedule. That schedule was mentioned here and on Twitter/Stocktwits numerous times since last week: And here again http://www.zenpenny.com/wp-content/uploads/2012/08/DOW6.gif And on Sunday for good measure http://www.zenpenny.com/wp-content/uploads/2012/09/SPY.gif The significance of today's move up should not be taken lightly. It was perhaps the most significant technical event since the low for the year in early June. I would say that it was THE most significant technical event of the year if the Dow had decided to join in a break of the ever-important pink trajectory, pictured here. What we got today was the following: 1. The S&P 500 screamed upwards. A fantastic breakout above a tight consolidation range. 2. The Nasdaq Comp destroyed its generational trajectories. Those trajectory points are picture here. More significantly that destruction of the trajectory points happened on an enormous expansion of the daily range. Makes it all the more significant. 3. The VIX got pummeled right as it touched its generational trajectory. I'll have a review of that in the weekend chart review on Sunday. The leaders in this orgy of bullishness: Semiconductors, financials and small-caps. The nefarious threesome that always shows up to these events, bringing the full cadre of heat to the awe-inspired spectators. You know who I see missing out on this rally? All the supposed braniacs that like to think more than they like to make money. Those who put intellectual ego ahead of what the market is telling them. I apologize in advance, but you have to be A) a mouth-breathing invalid B) a knuckle dragging troglodyte or C) a relative newcomer to investing to have not seen the fact that this market was begging for this outcome. Since a majority of those I see are not newcomers by any stretch, I have to imagine that Wall Street is a breeding ground for invalids and troglodytes. A fact that I would be 100% content with if only they would admit their tendency towards erroneous judgement (mouth-breathing) and foolish behavior (knuckle dragging). Instead what you get is a vast array of elaborate justifications for how, what and why of a rigged system that only faces one eventuality: destruction. You get maniacal reasoning, coated in pseudo-intellectual jargon to somehow validate the erroneous assessment of those who keep getting the markets wrong. As we have found out over the past several years, there are lots of ugly things about the financial markets. The one elegant trait. That piece of beauty that can never be denied is the fact that you can't lie. The market will grade you immediately, regardless of class, creed...
QUICK THOUGHTS
I may not escape this pullback unscathed. My short-term trend indicator is a couple days away from turning to bearish. As you know, this completely contradicts my personal opinion about the direction of the markets. Personal opinion doesn't matter, however. My system of controlling risk is my system of controlling risk, taking precedent over all else. If I do get a confirmed signal, I will move to 75% invested from the current 95% level. I will also initiate a hedge to cover the 75% invested position on a dollar for dollar basis. As I have discussed previously, there have been numerous close calls in 2012, where both my short and intermediate term indicators have looked like they were going to flip and have remained bullish. I am hoping that this will be another close call. By the looks of it, we are setting up for the perfect low on a time and price basis either tomorrow or Thursday. I continue to expect that to be the low for the month of September. There have been slim pickings in terms of new small-cap investments. Once my trend indicators firm up a bit, I may put some money to work in KKD as a long-term play. I also have interest in YELP once again, if it moves into a favorable technical position. If you'll remember, I originally published research on YELP in April. I sold it for a loss sometime later. It is too erratic to make into a large position. However, I believe it will be long-term winner. Worth taking a small position in over the next few weeks. This has been a good year up to this point. I plan on making it a great year in the months ahead. I don't see anything that can get in my way other than myself. I'll keep an eye on...
THE LATEST DISEASE TO AFFLICT THE MINDS OF INVESTORS
I can't blame any trader or investor for the behavior I am about to describe. It is, after all, inherent in the market's DNA to condition an investors mind into thinking a certain path is the only path possible before doing the exact opposite. At times, this conditioning takes a period years or even decades, causing the resulting market reaction to be that much more powerful in the direction of least expectation along the path of minimal participation. The behavior that has become prevalent among even smart, experienced traders is that of attempting to search for peaks in a bull market instead of simply allowing the trend to work in their favor. More time and effort is being devoted to looking for reasons the current bull market is about to peak than looking for opportunities to profit from it. Additionally, there is a disease of weak hands looking to throw their cards into the muck at the first sign of adversity. It literally takes no more than a couple percent on the downside to create such a stir among investors that they either begin selling short, liquidating positions or hedging exposure to avoid pain. This may explain the reluctance of the market to to down for more than a few weeks at a time. Sellers are too quick to show up, not allowing the market the firepower on the downside needed to result in anything substantial. It is the job of both the trader and investor to work in the direction of the prevailing trend. You simply study the conditions, allowing your positions to work in your favor until you have adequate reason to believe the trend is changing. Adequate reason. A somewhat vague qualifier. It seems that adequate reason has come to mean any market that goes down for more than a few days. That is all it takes. The market has fooled the vast majority into thinking that every hiccup is a replay of 2008. Or more recently, August of 2011. How many headlines did we see coming into August about a replay of last year? How many times last year did you hear about a replay of 2008 taking place? Investors and traders are feeling froggy. They want to jump at every shadow and light breeze that blows their way. The brain washing at the hands of the market is complete and now you are being bent over for a wax. That is the essence of the what is occurring here. You have been conditioned, no differently than the bell ringing for Pavlov's dog, that when a market dips terrible boogie men are about to jump...
INTRODUCING ZENPENNY PREMIUM
Over the past several months I have been receiving a fair amount of requests and inquiries regarding premium services that I offer. I give a great deal away for free on this website and will continue doing so. The research reports, technical analysis and market commentary will always be available for ALL INVESTORS to access for free. I enjoy bringing to light opportunities that a majority of Wall Street overlooks. I especially enjoy profiting from those opportunities while readers who have also grasped onto both the fundamental and technical facts come along for the ride. There is, however, a great deal more transparency into my process that I can provide. This is why I am introducing Zenpenny Premium. I consider Zenpenny Premium to be both an offensive and defensive tool for investors. I will be emailing out a nightly FACT SHEET that will outline the numerous pieces of data that I analyze on a daily basis. It will go in-depth into my research process, delving into individual companies that I am researching on an ongoing basis. It will also offer deeper and more frequent technical analysis on not just indices and commodities but individual names that I rarely mention on the website. Additionally, my proprietary trend indicator that is the primary means of portfolio allocation and risk control will be updated nightly. There is a whole lot more, as well. For full details and to subscribe click...
THE LATEST PROOF THAT SMALL-CAP STOCKS ARE A BARREN WASTELAND OF UNDISCOVERED PROFITS
The appeal of investing in small-cap stocks in the current market environment has more to do with the fact that they have been forgotten by a majority of professional and retail investors than anything else. They are in that middle, attic area that investors don't care much about and rarely dare to stick to their heads in to see what is going on. Institutional investors are too big to invest a $3 stock that trades 40,000 shares per day. Individual investors come by every so often to take a peek but don't really know what it is they are looking for. This repulsion from both sides leads to the occasional no-brainer type of investment that AUTH turned out to be. It took AAPL to come along and remind investors that this was a much more valuable company than the market was giving it credit for given the current technology landscape. I still think they sold cheap. I made my 100%+ return, I can't complain. This repulsion from both sides leads to companies like SYNC stagnating after their IPO, despite an improving earnings landscape due to being in the sweet spot of technology. Another 100% gainer if you read the price correctly. There were a few other 20% plus gainers this year, as well. Software and telecom names that have taken steps to improve their business and don't receive the proper attention. SPNS is the latest name that is a reminder of how much of an ill-forgotten wasteland the small-cap space can be given the current lack of imagination on Wall Street. Tell me another place you are going to find a conservative CEO that has openly stated a $200 million goal for revenues one year from now? That's double where we are now. Stock does nothing. Tell me another place you are going to find a company that has successfully integrated key acquisitions into their business model, allowing the company to experience greater than 70% gains in top and bottom line numbers year over year? Stock does nothing. Tell me another place you are going to find a company that is in the sweet spot of a niche upgrade cycle within an industry that has no other choice but to spend? Stock does nothing. Tell me another place you are going to find a company whose parent company is buying up shares in the open market because they know the market is undervaluing the asset? Stock does nothing. Here are some highlights from the earnings report released Monday: - Revenue increased 91% to $27.2 million, compared to revenue of $14.3 million in the second quarter of 2011 - Non-GAAP...
FACEBOOK IS THE NEXT YAHOO AND THAT MAKES IT VERY BULLISH
In the chart below you will see a comparison between the YHOO IPO in its first 53 days and the FB IPO 53 days in. If the similarities in price movement weren't enough, I present you with this article from the day of the IPO that tells of YHOO hitting a high of 43 on that day before closing at 33. FB, as we know, hit a high of 45 on the day of its ipo. Here is the article from 1996 http://news.cnet.com/2100-1033-209413.html Also notice in the article how comparisons are made to other struggling IPOs in the internet space, such as Lycos and Excite. Very similar to the general dismal feeling surrounding social media stocks. Just as the internet was several years old then, social media today is an industry that is only several years old. The similarities go on and on. I wish I had access to article from a few months after the YHOO IPO showing how dismal the sentiment had become towards it. Unfortunately, I haven't been able to locate them. The sentiment is surely similar to what we are experiencing with FB currently. Here is the chart showing the price comparison: click chart to...
I’M ALI MESHKATI AND I TALK ABOUT MY PERFORMANCE NUMBERS
It is fair to say that the financial blogosphere exerts a great deal of influence in today's world. Bloggers move markets. You couldn't say that even 5 or 6 years ago. With that level of influence comes a sense of machismo among these beacons of influence. That sense of chest pounding popularity then begins the fine art of creating moral codes of what is and isn't considered acceptable conduct among financial professionals. These are financial professionals, mind you, that have proven themselves useless over the past 12 years. They are a breed of professional that holds no real purpose. They don't treat illnesses. They don't defend against impropriety. They don't create. They have been trained to speak a certain way, delivered through the polluted womb of an educational system that seeks to deliver pedigree to the institutions that demand it. Thereby furthering the illusion of intelligent research and an attention to due diligence. There is no greater degree of uselessness than that of a Wall Street professional. For proof all one has to do is look at the performance numbers for the average hedge fund. The hedge fund is after all the destination of choice among the elite. That destination used to be Goldman Sachs and we saw what that created. The average hedge fund, filled to the brim with pedigree, distinction and hubris is nothing more than a vehicle meant to enrich those who collect the 1 and on occasion the 20. They have underperformed terribly. The aroma of mediocrity is putrid even if you wear a $300 tie and $800 shoes. A well-trained nose can't be fooled. The average investment adviser is no better. They are simply tools of the industry that rely on pedigreed research to drive an investment thesis that is built on robotic duplication of what has been working recently. There is little originality. They rely upon diversification to the umpteenth degree so that they can cling onto the mediocrity that is not losing too much of your money at once. An Alfani tie and Levi's dockers doesn't seem to do the trick either. Just buy the SPY. It is no wonder then that talking about performance numbers is frowned upon. Never mind that the financial markets are not a venue for story telling or being witty, but rather to perform. That fact seems to get lost. Among all the bloggers and financial media, it seems that Wall Street has turned into a children's fairy tale that involves picking apart news stories and adding ominous quips about the nefarious types that will harm us. Performance shouldn't be discussed. Instead what needs to be take place is a colorful discussion that is completely...