Sunday P.M.

I'm back from a nice visit with an old friend who lives in Maryland. I combined a dog run from Richmond to Springfield. My friend lives in Rockville, so it was just a short drive from there.

We had a large group of dogs. The volunteer who coordinates this effort every single week shared the following video. It is of a dog, now grown, who was adopted out as a pup from the Kinston SPCA--the originating facility for my dog run. It's a reminder of how a loving home can offer an animal the opportunity to be a valued member.

Click here.

My friend, Carol, and I had a very long walk and managed to meet some really cool dogs. One woman had a large male American Bulldog on one hand and a diminutive and extraordinarily cute female French Bulldog. She was barking almost ferociously, but she was a total love bug. Here barking was 'talking'. The AB was a a very affectionate and extraordinarily handsome (and big) fellow who was eager to meet new friends.

It was nice to get away, but I'm very slammed. I've another busy week. This weekend was a nice recipe respite (gosh, it is terrible to get old!).

A reader asks about WH


I'm still holding. This chart is broken....and if it cannot hold above the green line, then another cliff dive is possible.

From Good to Great ---

http://www.stockmarketmentor.com/public/1737.cfm

Dan Fitzpatrick provides a number of free videos through his Stock Market Mentor service. Stock Market Mentor is a paid service, but like most folks, Dan provides entrees into the value of his service through these free videos. I do not subscribe to his paid service, but I eagerly await and enthusiastically watch his videos. I suggest that you do as well, and you can do so with your own adverbs.

What I like so much about DF's series, is that they are straightforward and to the point. And if you want to understand how to manage risk reward on a chart, then his videos will help you. Finding lower risk entry points that are closer to points that will tell you with anvil-on-the-head clarity that you are wrong, provides smaller price space and reduces your losses. If you buy when the space between right and wrong are wide, you'll have to pay up for being wrong.

It's such a simple concept, but very hard to do in practice if patience is not in your investor/trader psychological arsenal. Lack of patience in entering, leaving or staying in a trade can cost you money (to include selling before significant move--I do that frequently). The antidote for impatience is clarity and discipline. Find low risk entry points and clarify what will happen in the chart to prove you wrong. Walk away when the space is wide between being right and wrong, but keep a good watch list.

Your watch list is your reminder of things to look for when the the space between right and wrong narrows. I'm better about my lists, but I'm not great. I want to go from good to great.

BAC

Here is a 7 year chart on BAC. I found the volume astounding. Most of the volume in this stock is at the current price bar. I don't own this anymore. I took my money and ran. I left money on the table--but that money only stayed on the table for one day.

I also sold one half of my AZC. It had doubled. I exercised discipline and sold. Of course, losing 'house money' is painful too.

I have a date with this little guy today, among others:

Spring Forward, Fall Back

The simple saying to help the old folks (which now includes me that left her memory and other valuables in some other year) remember which way to set the clocks. It is also appropriate for market rallies--of any sort. It's just that in bear markets, the 'fall back' literally involves one falling out of their chair and cracking his/her head on the concrete floor.

Seems like the Fed's comments cause a barnstorming event. With the kindling being quite dry from a relentlessly downward march in equity prices, only a spark was needed to cause a conflagration of buying. I don't feel compelled to jump all in, and I've had a few seeded positions that are rewarding. I elected to sell my BAC as I had UYG exposure. I took my 62% gain, but had I hung on (famous last words), I would have enjoyed 50% more gain. But, I elected to invoke the discipline in this screwy market of taking substantial gains (particularly over a short period) when I have them.

Enough about me already....let's look at the industrial metals chart

Has it bottomed? I do not know, but we are seeing a recovery in metal prices. This is the chart that I watched and posted infrequently about when there was a mad rush to all of the metals. Those stocks were topping while the industrial metal prices were surreptitiously falling.

Financial stocks should be the first guys out of the block in another bullish phase with commodity prices recovering. We just need to know if the financials are a false tell. Opinions abound; I watch the charts.

AIG: Wondering out loud

In the news again with bonus payouts. There is something almost laughable about the argument by any of these firms that required intercession from the government because they ran their businesses so badly claiming that the bonuses are a requirement to keep their so-called talent.

In AIG's case, they said that the bonuses were legally binding. A reasonable person has to wonder how the clause surrounding the measurement and payment of bonuses for performance is crafted which would allow performance that led to insolvency and financial chaos in world markets to be compensated with a bonus.

Lastly, one has to wonder that if these wunderkinds routinely negotiate employment contracts that allow for payment of bonuses under such circumstances (not to mention leading the company to experience 'such circumstances') how can the company be considered competent to extricate itself out of this mess?

Here's the English Setter girl, Belle, I transported yesterday:

Stuff

I'm just back from doing a brief run from RIC to Fredericksburg. I took some pups up and came back with Belle, a beautiful English Setter on her way to her forever home. She reminded me so much of my Lucy! We were early to the meet stop (as they were early arriving in F'burg) so I took her for a walk in the rain. It is cold and miserable, but she was happy as cold be. She's has a long trip, so this break was welcome for her. Dogs don't mind the rain!

I've stimulated the economy a bit this week. Today I bought some wine (Oak Grove 2007 Viognier). It has price point of $7.99. I bought a case. It has a 89 pt rating from Wine Spectator. That's terrific value and quality intersect.

After Total Wine I went to Stein Mart. I needed a bit of sprucing up. I need to revive my Fit By Fifty initiative and spruce up that way. Here is is mid March, and I've done nothing since New Year's. Bad, bad, bad.

Last week, I went to Tuesday Morning and bought some prohibitively expensive sheets. But that are beautiful and sumptuous. I also bought a two coverlets. One made out of bamboo fiber which is very pretty. It's been several months since I have bought a thing. I'll be back in guerrilla economic mode. But it was nice to beautify my bedroom a bit...as well as myself.

I did buy some BAC at $3.73. I'm just going to forget about. I'll be like the Prince on Citigroup many, many years ago. I still have lots of cash, and I'm not in any hurry to get in fully.

Pics from our Snow

I was reflecting a bit yesterday morning on the violence of the weather as cold and warm air collides that marks the transition of winter to spring. The violence of the market is so similar.

We had a beautiful snow on March 1. I did manage to stop long enough and take some pictures. There is a lovely muffled quietness in the snow enveloped woods. Here are a few pics. The dogs are Ella and Macy. I would have snapped a picture of Daisey, but she was busy running all day long in the snow. She had ice on her little tufts of fur and did not stay still long enough to appear in any frames:

Acapulco Cliff Divers

Well, it is one thing to see them in Acapulco, and it is quite another to see them in you portfolio. Here's my diver, who goes by the name of WH

I don't have a stop loss. Personally, on thinly traded stocks, you can get shaken out easily enough. I'm still long, but I'd be lying if I said that the 34% decline wasn't a wee bit painful.

The chart is also a useful example of how seeming support, once broken and aid a abet a rather sizable downfall. As support was rather easy to see, I'm confident that there were alot of stop losses sitting around it. Accordingly, once obvious support is broken it triggers a cascade of sell orders that result in the picture you see above.

A stop loss order does not help you in these instances. I have found that it's best to watch the chart and be willing to endure a hit if support is broken or sell and re-enter when the stock's action is more constructive.

Defensive?

Here's a chart (click to make larger) of consumer staples. You'll recognize this chart as media sausage stuffing for recommending that you buy something 'defensive'. At a high of about $30. it is now trading at $19 and change for a 34% loss. So much for being defensive. It's like wandering into the streets loaded with jewelry at the annual Thug Convention Parade and Pillage. Rather than being beat up and left for dead unconscious on the sidewalk, you were defensive and copped a few moves that allowed you to just to crawl away after taking a beating and losing your jewelry. The better choice would have been simply to stay inside in the warmth, comfort and security of your home.

Conventional Wisdom

I've written in this space about the danger of conventional wisdom with respect to the markets. Conventional wisdom works when things are conventional. Conventional wisdom is likely to get you killed if you are in unconventional times.

I like Martin Goldberg's blog. He has a post about Consumer Staples---the previously presumed to be 'safe harbor' for investors. His post is entitled: Throw away the cookbook.