Winter Wonderland

The snow is still coming down.  Always a special type of quiet.  The dogs went out for a romp.  How they love the snow.    Bird feeders make good (though unintentional) sport for bird dogs.  I finally had to bring Daisey in.  She had ice balls on her feet, sides and her legs.

The birds are a bit frantic.  We have grackles (or blackbirds, I cannot tell which) that have come in in droves. They are not molesting the other birds, so everyone has something to eat.   Daisey was making the rounds to the three feeders, yipping and having a big time.  The feeders are far enough apart and she makes enough noise that the birds eat just fine. We have juncos, tufted tit mice, mourning doves, purple finches, gold finches (though not gold yet), cardinals, downey woodpeckers, and nut hatches.  However, once she hunkered down in the snow at one feeder, it was time for her to be herded inside.  She and the birds needed a break.

I needed a break too. It is cold out.  I shoveled the sidewalk this morning.  Mark was out with the snow plow on the Wheelhorse.  He's been working on that a couple of days, so it was good to give it a maiden run.  I cleaned the vehicles off.  With holiday prep, I'm severely off my exercise regimen.  Tromping through the snow, shoveling and sweeping was good energy expenditure.  With all the holiday meals and temptations (that I've not bothered to resist), my energy cup overfloweth...so energy expenditure is a good thing.

Weekly Sector Report | 12/25/10

Santa has not dispensed many lumps of coal for the market--however short sellers in strong industries are likely dragging a heavy sack.  Last week the broad market index ($DWCF on Stockcharts) when up 1.06%.  Here is the chart (click all images to make larger):

Let's take a look under the market hood and see how the broad sectors performed:

Now for a look at a drill down of the top/bottom 10 performers:

I have created a chart book for you.  You can download it here  (8.5mb).

Almond Toffee and Stock Picking

We have pretty simple Christmas's in Leisa-land.  None of us needs anything; none that we know need anything; and plenty of people who we don't know have great needs.  We like to focus on the latter group.  However, for the people we know and love, I like to give a gift from the kitchen.  In past years it has been a cycle of  cinnamon rolls for Christmas morning, cookies, or homemade candy.

At a nearby salvage store, I stumbled upon some terrific items.  I don't go there very often, but I elected to take a peek before going on a foraging mission to other stores.  My, my, my!  First, I found a 10 3/4" ScanPan.  I picked it up and said, "Wow, what a great pan!"  It had a $20 price tag on it.  I bought one.  They also had some great 2 qt Rubbermaid food service containers.  My idea, then, germinated from seeing this great deal on these containers (2 for $3.99--they are @ for $12-13 at Sam's).  They are fabulous in the kitchen.  I decided that I would use these utilitarian containers to house almond toffee.  I also found some other wonderful things to assemble as a great gift bag.

Upon returning home, I Googled the ScanPan.  The cheapest I found it was for $132.  I went back the next day and bought the remaining 5 pans.  Such a deal!  One goes to a trading friend, one to my Stepmom/Dad, one to my sister, one to a neighbor, and then an extra one.  It is one of the finest  fry pans I have used--and the coating is ceramic titanium, not Teflon. Beautiful balance and superior cooking performance--though non-stick, it sears! I may just KEEP the extra one.

Now to my candy making saga.....   It has been quite a long time since I have made candy. Like most baking endeavors, 'stuff' needs to be precise--most particularly method and temperature.  I should have known that a recipe that said "You don't need a candy thermometer; the almonds will tell you when your toffee is ready, because the skins will pop."   Cranberries do that, so I didn't suspect these instructions.  After two failed batches, I not only suspected, but I indicted the recipe, sent it to jail and threw away the key.

Clearly I was in need of a time out to reflect and to research.  Like most things that you are researching on the internet (cooking, stock picking, who to marry, when to plant tomatoes) there are many, many ways to approach your objective with a thread of universality.  Even temperature so as to not 'shock' the mixture (which causes the butter/sugar to separate) and do not attempt on a humid day seemed to be two important threads.  Most importantly, these were the two things that I could pinpoint as problematic and this was confirmed by my abysmal success to failure ratio of 1:2.  Was it more humid than I thought?  or was I just a toffee-making dunce?  Likely a bit of both.

For a couple of failed attempts, I was able to grind the failure into the most decadent ice cream/cereal topper you can imagine.  You CAN make a silk purse out of a sow's ear it seems.  There were two batches that literally just had to be thrown away--but one of those could have been ground up.  I was too desolate with my back-to-back failures to be creative at that point.  One of my failures included leaving out 1 whole cup of sugar.  Funny thing, it still turned out great, just not as dense. Anyway, the cost of my ingredients in my failures were still less than had I taken a cooking class.  (Rationalization is a great thing!). 


I have MacGyver-like tendencies.  Because temperature is so important, and most candy thermometers are clunky and hard to read (plus mine will not clip to my pot side), I used my digital thermometer--the one with the probe and the snaky metal.  If you don't have one, you should!  To keep it fastened to the pan, I have a nifty Trudeau spoon clip that was gifted to me last Christmas.


There is quite a bit of stirring required in making this toffee.  A wooden spoon yields a mean blister to hands unused to such work (mine!).  The probe needs to be out of the stirring thoroughfare. This little clip held the probe in just the right place.  I wrapped the lead wire a couple of times around the top to keep it snug against the pan and at the right depth and connected it to the body.  I placed the body in a small glass bowl so I could easily see the read out.   A nice little gift for the cook in your life.

I melted a mix of Valrhona milk and Guanaja bittersweet chocolate feves and then brushed them over the surface with a silicon brush.  Just a very thin layer to not compete with the toffee.  I took a picture of it for you.  Interested in the recipe, I succeeded with?  You can find it here.

So happily, I've compiled a bag of needful things:  spicy brown mustard, Pompeian Red Wine Vinegar, Indalo Extra Virgin Olive oil, Chinese Detox Tea, Praline Topper, and Almond Toffee and a 2 qt Rubbermaid refrigerator box.   A very nice combination of things that will nurture the body! I made gift tags from my souped-up Santa picture of Lucy! It is nice to remember this special girl who will be gone 4 years this January.

The best gift is to give something of yourself to another:  time, love, compassion--and a helping hand when needed to those in need. We did all of those things, to include helping my daughter sponsor a family at her school in great need.

This is my tree with Wyatt underneath from last year. Because of my many failures at Almond Toffee (but those failures were overcome!), this might be the only tree I see!

I wish you the best for the Holidays and for the New Year.

P. S......What does any of this have to do with Stock Picking?!  Read, research, do, fail, reflect. . . rinse and repeat. . . read,  research, do, cut your losses, take a sow's ear, make a silk purse, build your skills, build your confidence, use the right tools, improvise when you have to, and above all.......don't burn yourself.

There truly is nothing new under the sun, and the same threads run through all of our endeavors--no matter what we do.

Weekly Sector Report | 12/17/10*

The total stock market index ($DWCF on Stockcharts.com) advanced .33%.  Beneath the surface there was much activity in the sectors.  Here's the weekly graph (click all images to make larger):

Financial services had a lousy weekly largely due to V and MA getting their legs cut out from under them with the proposed regulations on capping debit card fees.  To get a view of the magnitude of the market's response on these two charts click here.

The WSJ Industry page as a great snapshot of the best/worst performing industries.  Here's the snapshot for this week:

You can choose from multiple time frames to see this type of performance.  These types of relative looks will help build a mental map for you to gauge market action. Click here to see how this easy visual tool works.

I had a reader ask me a question about being able to find low-risk entry points using these sector reports.  There are a number of FREE on-line tools to aid the individual investor who wants to do his/her own research. Ultimately we want to be in the industries that are attracting money relative to other industries, and be in the strongest performing stocks (attracting money relative to its sector siblings).  By clicking on any of the industry links, you can also see a snapshot of the strongest performing stocks in that sector.  (You can also do this easily in FINVIZ by clicking here. )


As steel was a great performing industry this past week, I wanted to share a couple of charts, the weekly and the daily, with you.

WEEKLY Steel Chart

Daily Steel Chart 

On both the weekly and the daily chart, steel has been breaking out and then pulling back to consolidate in a strong confluence of moving averages.   Interested in seeing who's on the homecoming court at the steel sector dance?  You can do so by clicking here.  There are a number of ways to find strong stocks, this just happens to be my way which appeals to my DNA and contributes to my understanding of the overall market.


Time to pull back out for the bigger picture.  Let's take a look at the total market index:

We are fast approaching a volume bar (see dotted line) that should we surpass it, the gravity of volume overhang will dissipate.  What is interesting to me is that we often come to these important technical junctures that are coincidental with important news junctures--the next big news cycle being 4th quarter earnings and of course the report from the retail sales.

I have a good friend that reminds me, "There are no coincidences."

I have prepared for you a chart book with the weekly and daily sector charts.  You can find it here. It is a large file, so be patient with the download.

Perplexed? Flummoxed! Creating a No Dithering Zone

You can tell by the title this is going to be a mish-mash post!

I was thinking over the weekend how far I have come in understanding the markets better.  I have put in quite a bit of seat time and have paid a handsome tuition (sometimes repeating a class) to learn the market's lessons. I'm still learning, and my tuition is much cheaper!  I was pondering about whether or not I had actually outgrown the name of my blog (a notion quickly dispelled this weekend in looking at my chart books!).  

First, an aside.  Beginning this endeavor to understand the markets has taken me down the road that started with being unconsciously incompetent.  While unconscious incompetence in driving can cause great harm to one's body, such a state in undertaking the markets can cause a little corporeal damage to the portfolio.

There is a terrific article at Market Masters (and other great stuff worth reading) that talks about the 4 stages of competence from a trading perspective.  

1. Unconscious Incompetence
2. Conscious Incompetence
3. Conscious Competence
4. Unconscious Competence

I think I'm a 2.75 on that scale.  Over the weekend, I was reminded how aptly named my blog is.  As I was going through my detailed subsector report, I found a bushel of sectors above their pre-crash highs:

• Apparel makers
• Clothing and accessories
• Broad line retailers
• Commercial vehicles and trucks
• Computer hardware
• Electronic equipment
• FOOTWEAR!!!!
• Industrial Engineering, machinery, suppliers, transportation (4 sectors)
• Personal goods
• Railroads
• Restaurants and bars
• Specialty chemicals
• Specialty retailers
• Tobacco
• Travel and Leisure
• Trucking
• Tourism
• Trucking
• Waste disposal

To say that I'm flummoxed as to why there are so many retail sectors and industrial sectors is an understatement. (As I write the BBY has missed).  The list is 22 of 147 subsectors (remember that folks slice/dice things differently!)  I use the Dow Jones sectors from Stock Charts that closely approximates the WSJ's industry page.

Besides finding a way to complain while giving you that list of sectors, that project of sitting down on Sunday by the fire with my book of charts reminded me of another important lesson.  (Can you tell I'm in a reflective mood?).  Naturally I have to yammer a bit before stating the lesson.

In 2009, the day after Thanksgiving, I elected to do a sector study of gold miners.  I spent the entire day looking at charts and profiles of miners.  I believed that they had bottomed.  What did I do?  I dithered.  I've come to believe that nothing is more dangerous than dithering.  I'll devote an entire post to dithering, so I'll spare you having to trudge through more words on this. But there are a couple of points to close with:

• The charts DO tell us what the price action is over time.  And the sectors' price action in relation to others tell us where money is going. Our job is ultimately to put our money in places where it will increase.
• Price action is neither valid or invalid relative to our opinion about it--it just is.  We either choose to cultivate habits that (1) allow us to discover such price action (our research) and (2) act in accordance with the evidential matter, or we choose to dither.
• Dithering is not a helpful trait.  We must remember that the market will not pay us for NOT taking a risk.  Seeing constructive price and volume action and responding by dithering because (1) the action is not in accord with our opinion, and/or (2) we want more information, more certainty, more people supporting our decision means that we've given up opportunity for 'certainty'.  In fact, that means that we have increased the risk in our position as whatever news we were waiting for is also commonly known and likely priced in.

So being perplexed, or worse, flummoxed, are only bad things when those emotions are allowed to occlude our powers of observation or promote a continuing state of inertia--either to buy OR to sell. Every year I get a little bit better at holding these emotions in abeyance.  The blog name must stick--and it is never good to wander too far from one's roots.

I want to close with a quote from George Soros that I keep under my "Wisdom" tab.  It is something worth remembering when what we 'know' v. what we 'see' are at odds.

“Economic history is a never-ending series of
episodes based on falsehoods and lies, not truths. It represents the
path to big money. The object is to recognize the trend whose premise
is false, ride that trend, and step off before it is discredited."

Volatility Squeeze Candidate: PDO

Wandering around in the charts, I found this set up on PDO.  First a chart (click to enlarge), then some bullet points:

What I like about the chart:

• volatility is very, very narrow. The stock is gearing up to make a move
• ULT is moving up; that suggests to me that the move will be up.
• Significant volume @ price bar where price has been accumulating.
• Some constructive volume over time.

What I don't like about the chart:

• Very, very thin volume.  However, that can be a boon for this type of set up.  Volume will need to come in to make this stock move.
• Bad news could make this stock fall out of bed.

What I like about the financial profile(1):

• Very strong balance sheet
• Profitable, but goosed with gain from an asset sale.

(1) I don't do in depth financial reviews; very cursory.  This trade is primarily a speculative technical trade.

Position:  I entered a long position @ 4.72 today.

Weekly Sector Report | 12/10/10

I've been featuring this chart weekly to allow a more 'bird's eye view of the broader market--not just S&P, not just the Dow, not just the NYSE and not just the Nasdaq (Click on all images to make larger).

I highlighted the prominent volume bars.  To my eye, there is some resistance ahead.  But the indexes are made of sectors and sectors of stocks.  As I was reminded in re-reading Mamis's "When to Sell", he notes that at any point in time 1/3 of the stocks are moving up, 1/3 moving down and 1/3 are in a sideways pattern.

A little sector rotation can keep the indices in a range, while several sectors can be flip-flopping about. Nevertheless, it is useful to keep the forest in mind while walking through the trees (and trying to avoid the things that slither about and bite us should we not be looking).  Let's take a look at the broad sectors:

The financial services industries have performed very well.  Banks are still borrowing s-t for next to nothing, and a rise in long term interest rates creates more net interest gains for them. TBT, the double short on TLT, has had impressive gains.  (I've traded in and out of in and I'm currently out).  Perhaps the rotation is out of bonds and into financials?  It is a trade that would make some sense and the charts seem to be showing that.

The Wall Street Journal's Industry page is a great place to look at comparative performance among sectors.  You can find that page by clicking here.  It is a public page, so you shouldn't need a subscription.  If I'm wrong about that, please give me some feedback.  Here's a clip from the YTD performance of the financials:

(source WSJ Industry page)

Of the 17.49% increase YTD experienced by Full line Insurance, almost 1/2 of it came from this week alone.  If you are doing some holiday stock shopping, there are many beaten down stocks in those sectors that might warrant a closer look for your investing/trading style.

For this week's chart book, I've elected to create for you an expanded book that includes WEEKLY charts of all of the subsectors (147).  Why?  Because I was looking at these myself, and I was very interested in seeing where each of the sectors were in relation to pre-crash highs.  It is interesting to see several sectors have surpassed that level.   You can access the report  here  .  It is a large download suitable only for fast connections.  I'm including an abbreviated report (without those schedules) here.

Weekly Sector Report | 12/03/10

Last week was a week for the bulls as they managed gains in all sectors. The broad market index was up 2.9%. Here's a look at the weekly sectors at a glance (click on all images to enlarge)

The total stock market index has been flat over the last 4 weeks.  It is both overbought, and it is approaching levels that will have technical and fundamental analysts doing some head scratching.

I'm also including a chart of the $NYA with the advance minus decline 10 day moving average.  It is still pointing upward.  This last advance is with fewer (ema of 400 net new highs) than the last advance (ema of 670 new highs) in early November.

I've created a chart book for you.  As the end of the month was during the week, it includes monthly charts.  It is a large pdf, so please be patient with the download.

Break Out the Snacks! J & J Snack Foods (JJSF)

I was taking a cruise through the snack food universe (through the charts, not the grocery store aisles), and I found this pretty chart that I wanted to share with you of J&J Snack Foods Corp (JJSF) (click all images to make larger).

There is much to like about this name both fundamentally and technically (but see longer term chart below).

Technically:

• Beautiful inverse head and shoulders pattern 
• clean breakout at neckline on good 2.33 x relative volume
• clearing of volume@price overhang bars
• caution warranted to wait for a pull back on the overextended price

Fundamentally (check them out on FINVIZ):

• They have a quarterly cash dividend of .1175 up from .1075 (though I don't screen for that)
• Recently beat on earnings
• Great balance sheet (cash, good current ratio, no l-t debt)

I also like to take a step back and look at longer term charts.  Let's look at a monthly chart:

Lots of happy holders in this name!  However, the chart is approaching all time highs; accordingly it would be wise to look at valuations in addition to earnings growth as part of your due diligence to see if it fits with your investment theme. 

Position:  Watch list!

Weekly Sector Report | 11/26/10

An interrupted trading week:  interrupted by our American Thanksgiving tradition, some spit spat between N/S Korea as well as continued concerns about sovereign debt.  The broad market index was down .61% with quite a bit of push and tug in the underlying sectors.  Here's the sector summary (click all images to make larger):

 Banks, Financial Services and Financials were hardest hit.  With the USD strengthening in the wake of these concerns, Basic Materials and Resources also suffered.  Retail stood tall, and the results of Black Friday will certainly impact this sector.

Let's take a look at the weekly chart of the total stock market index:

It was a light volume week due to the holiday, and the market continues to consolidate at this level. It is going to go one way or the other.  Would that I had a crystal ball!  Mine's in shards; perhaps yours is in better shape. 

I want to point out the the lower part of the chart  where I've consolidated two indicators (that show up on the detail charts).  The purple dashed line shows the performance of this index for the time period shown (Jan 07- current).  The broad market is still 20% below those highs.  It is a cogent reminder that "not-losing" is the key to winning.

The market is gathering energy through this consolidation for a move.  I don't mind being marginally committed (a/k/a standing aside) to see which way that might be. If the N/S Korean conflict and the sovereign debt issues get cleared, the move is likely to be up.  If not, a pullback will be in store.

I've prepared a chart book for you which you can access here.  It is a large file, so please be patient with the download.

Happy Thanksgiving!

Of all of the holidays, none is more special to me than Thanksgiving.  Sharing the bounty of the land with loved ones is a act of great love.  I believe that cooks are the ultimate alchemists--transforming one thing into quite another.  While we rely on stocks and broths to enrich our foods, those key elements were really nothing more than eking out the last bit of goodness from vegetables and bones.

Certainly any reading this is far divorced from a marginal existence; however, life on the edge is about getting enough air, nutrition and water to support life systems. Too many in this world live life at the margin.  I often read in the blogosphere about how unfair the markets are and 'if only this, that, the other.'   I find such lamentations surprising.  As much as we would like to wish for life to be fair, it most certainly is not.  Nevertheless, as individuals, we can be agents of equal opportunity 'fairness' on a unit to unit basis.  A unit can be a person, place or thing:  children, rainforests, animals, elderly or any of the other 'units' lacking needful things.

Thanksgiving is the holiday of gratitude.  I believe that a grateful heart is a great, full heart.  A grateful heart does not need things.  Rather, a great, full heart has natural abundance, and within that bounty is generally a singular passion: to share that bounty with others.   So much of the media, particularly the financial media, sputters with 'news' about how wrong things are.  If our bodies are made of what we eat, then surely our minds are made of what we read, see and hear.  The duty of 'fair and balanced' is not so much on what an outlet reports to you (after all they are still just trying to fill and sell advertising space), but rather YOUR acquisition and processing of it.  I'm seeing a surprising amount of stuff so slanted and so oft-quoted (think of your favorite fear mongering site) that it seems to be taken at face value without so much of a whiff of discernment.

I still remember well my conversation with David, the frail, elderly, sharp-as-a-tack man that I met on my way to Las Vegas.  Though physically fragile, he was passionate about staying engaged in things that interested him--investing being one of those things.  (He was on the way to the Money Show!).  I asked about the health of his wife.  He said this to me, and it still resonates today:  "I focus on the things that I still can do; my wife focuses on the things that she cannot do."

You think that I've run off the road and I'm in the weeds again, don't you?  I'm meandering back to the path!  My Thanksgiving wish for you is to embrace the notion of a grateful heart, and the bounty of a great, full heart.  My wish for you is to delight in the sharing of that bounty with others.  While it is is easy to focus on the bad--they do provide good 'stories', there is much to celebrate in this world and in the work of people interested in meaningful change.  Seek out that balance of what is right in the world lest your heart and head become poisoned from the assault of what is wrong with the world.

Though we may feel powerless to change the ills of the world, we most certainly have the power to touch another consciousness in this life.  That touch can alleviate hunger, isolation, fear, or physical discomfort--and it significantly changes the world for that recipient.  Our Thanksgiving table, then, is a way for us to both celebrate and share.  It is a time to reflect, too, on how we can extend the boundaries of that sharing in these times of great need.

My best to you on this important day.

Weekly Sector Report | 11/19/10

The total market index was basically flat at .15% change. Within the total market, banks, other financials and utilities were the most notable underperformers. Below is a graphic of the 23 sectors and the total market index. (Click all images to make larger).

Let's take a look at a WEEKLY chart of Total Stock Market Index that includes the volume@price bars:

The markets continue to work off overbought conditions.  As we saw last week, the market is still very fragile to news that surprises regarding sovereign debt. It is also worth noting that for the first time, bonds and stocks have diverged.  TLT has fallen with a falling stock market.  So while the flight to safety might be in the USD, it is not going into treasuries.

I have created for you a chart book with the daily, weekly sector charts in addition to the table of 148 industries sorted by performance as well as short interest per sector.  It is a large file, so please be patient with the download.  You may access it here.

Weekly Sector Report | 11/12/10

The indices which seemed to defy gravity were reminded that Darwin's rule pertains to both apples and markets. In the DJUS industry universe of 148 (table included in report), only 13 of the 148 industries were positive.

To be sure it was a healthy pullback as the market was overextended. Whether it becomes something more than remains to be seen. There seems to be some issues with Blogger uploader, so I'm unable to upload images into this post.  I regret the inconvenience.

You can review the full report here.

Weekly Sector Report | W/E 11/05/10

The market showed no signs of fatigue last week. The broad market index was up 3.57% with a sweep of sectors positive across the board.  Below is the Weekly Sector profile compared to the broad market index (in blue). (Click to make larger).

Note that the more defensive sectors, healthcare, food/beverage, utilities, are lagging.

Here's a chart of the broad market index (Click to make larger)

Prices are very extended and caution is warranted for longs.  Prices are approaching a heavy volume@ price bar (which I have extended and placed in a dotted outline).  It will be interesting to see how volume/price action react at these levels over the next few weeks.

To facilitate your personal study of the the sectors, I've created a downloadable PDF which contains detail sector information, summary sector information, and chart books for the summary sectors in both weekly and daily format.  It is a large file, so be patient with the download.

CCM: Big Volume + Blue Sky

I wanted to share a chart of Concord Medical Services (CCM).  It is a Chinese ADR. From the company's website:

Concord Medical Services Holdings Limited ("CMS" or "the Company") operates China's largest network in terms of revenue and total number of centers in operation in 2008. Since its inception CMS has been committed to building an extensive network of radiotherapy and diagnostic imaging centers in China and employing state-of-the art medical technology to sustain lives and reduce sufferings. Today, the Company operates a network of more than 80 centers spanning more than 35 cities and 20 provinces and administrative regions in China.

They report soon, so any entries here could be dangerous. I had a small position in this which I increased earlier today at an advantageous price.  Here's the chart:

Today was a significant volume day--with more than 400K in volume (v. 63K).  For the price to advance, there needs to be sustained volume, otherwise gravity will work its magic. I like the fundamentals of this company (the sector and the technical set up).  The company reports that cancer is the leading cause of death, and they believe that they are well positioned with their product/service offerings to capitalize on the trend to more accessible health care.

Naturally, the duty of due diligence is yours and yours alone.

Position:  Long CCM at the time of this post.

Weekly Sector Report | 10/29/10

We closed October without any of the oft-anticipated fireworks that define this transition month into 4th quarter. The total stock market index was up .13%--we can call that flat.  Below are the 24 major Sectors and their relative performance.


As is usual, I have prepared a chart book in PDF form for your use with the weekly, daily, and monthly (since it is month end charts) for each of the sectors listed above.  You can downoad it here. It's a large file, so be patient.
Below is a weekly chart of the total stock market index.  I like to view this chart because it eliminates the bias of small, large, mid-cap, tech, industrials weighting that is evident in the other indices. I also like to look at the weekly to eliminate some of the daily noise.


We've a string of positive bars--9 weeks now.  With elections this week, perhaps the market will give us its own version of the move  9 1/2 Weeks?  As we've repeatedly seen, when the market gets to critical junctures, the news flow is the major impetus for the direction up or down--and last week was an example of much activity but very little direction although the sectors had quite a bit of push and pull (which is why I look at them).

Weekly Sector Report

Another week marked by some sector rotation juiced by a strengthening dollar.   Here's a graph of the major 24 sectors (CLICK!):

Travel and Leisure's oomph was due to the strength in Airlines, the highest performing industry.
Here's a chart of the the Total Stock Market (CLICK!)

The last rally that formed the top of the much hyped head in a potential H&S pattern developed over a period of 8 weeks prior to correcting.  We've just completed the 8th week of consecutive, positive weekly close on the broad market.  With earnings season upon us, watching how the market responds to news will be important. The volume over this last 8 weeks has been lower than the previous run up to the last high as well as volume from the same time last year.  While I'm not making any predictions, I would surmise that given this run up combined with the overall overbought nature of the market, there is vulnerability to negative news.

Let's also take a look at the sectors that have the highest short interest (data courtesy of FINVIZ):

As is usual, I've created a chartbook for you.  You can find it HERE.

CHGS, SHZ : Two stocks with huge moves

I mentioned CHGS in this post. In that post, I mentioned that I had sold 1/2 of the position in the ramp and that I would re-buy if it pulled back in.  Time passed, and it didn't pull back down below from where I had sold it.  Accordingly, I bought back into it...in a greater size than what I had sold.  Yesterday's surge was unbelievably wild.  It is also an example as to how stop losses on the speculative plays can shake you out before the move gets going.

Here's the chart (Click!):

First, note the dip before the enormous break.  If your stop was too tight (10%), then you may have easily been shaken out before the rocket boosters engaged.  Speculative plays require speculative positioning (capital allocated).  I did not have a stop on this as I had my capital allocated accordingly, and I believed that with the technicals and the fundamentals, I had a low risk entry.

Second, I was lucky to be at my desk yesterday rather than at a client.  When the rocket boosters deployed, I systematically went into action--selling methodically into the lift.  I marked in fuschia the prices that obtained. This audacious move with huge pockets of gaps was on 46.5x relative volume. 

I currently continue to hold 15% of my position, and I may add to it. I'm interested in seeing the price action after absorption of the previous move.  For every buyer, there is a seller, and I have more to say about that a little later. This stock may very well go to the moon, and there was definitely a moon shot yesterday--but one has to ask about the sustainability of such moves.

There was other robust activity in Chinese mining concerns, SHZ being another case in point. Let's take a look.  Here's a 30 minute chart of SHZ (Click!).  I do not own it, but I did look and pass on it!

This stock rocketed up on 150x relative volume.  Wowsa!  What is interesting on this stock is that the move was not materially sold down as with CHGS.  I wanted to briefly share my view of "why" with you.  Let's take a look at two weekly profiles with the volume@price bars. No, you will not need coffee to stay awake. (Click!)

Zooming out to a weekly chart, we see two very different profiles.  For CHGS, there were lots of eager buyers from 09/09 through 03/10 that may have taken their eye off the ball and did not get out. Yesterday's ramp was some salve on a money wound, and they became very motivated sellers.

SHZ was quite another profile altogether.  The longest volume bar was cleared and there were no previous buyers at higher levels who would be motivated sellers.

I'm a firm believer of the importance of volume@price bars to understand the complexion of a chart and the stability of pricing a particular points.  I don't use pivots on stocks, but rather I look almost exclusively at this profile which helps me spot strength/vulnerability in different time frames.

Our job as traders/investors is to find high probability trades, allocate appropriate capital, and manage the risk in these trades.  I believe that V@P bars help inform that risk.  To take this one step further, looking at the long V@P bar on SHZ's chart, where do you think that there will be some very motivated sellers?  If the price falls back below the $4.00, there will be some nervous holders.

Position:  Long fractional position of CHGS

Sector Report

With this post, I'm re-committing to weekly sector reporting.  However, this report is spanning from July 30, 2010, since I have to use a data starting point, and I'm too lazy to pull the data and enter them individually. I'll resume to weekly changes in the next submission next week.  You can download the full PDF here.

Hard to believe that behind Basic Materials/Resources, that Utilities would be such an outstanding performer!  I chalk that up to dividend yield in the face of declining interest rates.

Here's a chart of the DJ Total Stock Market Index (Weekly Format) with the Volume profile.  I placed a yellow highlight over the next longest bar.

Chart Notes

I wrote about BTM here. I elected to take a position because I like the chart set up.

One holding that I have that I lightened up on is CHGS.  Here's a weekly chart (click to make larger):

I sold 1/2 of my position into yesterday's surge of 25% with 18+ relative volume.  Who's buying? Who's selling?  What news? (I couldn't find any!) I plan to rebuy that 1/2 when (IF!!) it pulls back in. If does not pull back in, I still have a nice entry point, and I will enjoy the ride.

As you can see by the volume at price bars on the left of the chart, there are a few folks that may want to unload as (IF!!) this thing rockets ups further.  However, if it can clear $1.80 per share, there's a nice gap in the volume@price bars that my create an airlift vacuum.

Or, the damned thing could sputter to the ground.  It is not unusual to see "spikey" activity before a meteoric crash and burn.  There are some nice fundamentals here that give me some confidence that is not to happen. 

TRIT is another holding that I wrote about it.  It also enjoyed a good day.  I did not sell my position into this ramp.  Here's a weekly chart (click to make larger):

Volume@price bars on this chart point to some resistance ahead.

My preference is to look at homogenous groups (sector, country).  Because I have been a lazy toad in not providing the weekly sector information (which I will resume next week), I did create for you a China chart book.  The charts are in monochrome so that you can print them out and study them.  It's a tool for your due diligence.  I hope that you find it helpful.  It is a big file....So be patient on the download.  You can download it here.

Blog Stuff and a couple of charts

I cannot believe that I let the 4th anniversary of my blog pass without mentioning it!  It has been a lonely wasteland of a place here of late.   The good news is that I've recommitted to my exercise plan.  You can read about that here.

While I abdicated doing my sector charts because Finviz had them, I'm going to go BACK to providing my sector reports.  The PROCESS of putting that together, helped me feel more centered on the market. I'll resume that not this weekend, but next weekend.  I was feeling like my work was redundant (which it is) against FINVIZ. 

Seems like the market is dominated by currency wars (fisticuffs?)  I'm not sure how any of it gets sorted out, but if we'd best keep half an eye on interest rates and half and eye on the USD levels.

I was wandering about in the foreign telecom sector.  I wanted to share a couple of charts with you.

Here BTM.  It has an interesting Volume by Price profile.  It has been a laggard in the foreign telecom area, but this set up looks promising.

I have no position in this, but I like this set up quite a bit.  Notice that if price can clear the top of the volume bar, there are few sellers lurking above.  Lots of accumulation over this period and at this price level.  As you know, there are no sure things (except that there are NO sure things).  But it's an idea for you.

While many are talking about gold being parabolic, take a look at this parabolic chart that you didn't hear anything about!

I don't own this, nor am I suggesting it as a buy, but it was a nice parabola! As you might surmise, as with most of these telecoms, the dividend made it very attractive.

TNE is another interesting chart:

I'm not thrilled about the fundamentals, but there is some volume coming in, and it might be worth putting on a watch list to see if it can make some more progress.

I don't own any of these, and BTM is the chart pattern that I particularly like.  Not much exposition here, so I'm sorry for my laziness.  I just wanted to throw a couple of charts out.

Here's a photo opportunity that my son alerted me to today--a garter snake on a shredded Busch beer can.  

CLDA

Quick post on an interesting chart, CLDA. 

What I like about it...

• Price has cleared a significant Volume by Price

• Volume is constructive over the last 10 days...but more volume needs to come in to push it forward

• It is solvent (but not profitable) and has already had a recent public offering.

• Revenues are growing

What I don't like about it...

• It's a biotech and subject to the vagaries of all biotechs.
• It is not profitable, so there is a cash burn.

Charts like this in industries like this have to be allocated risk capital. (Click to make larger)

Position:  None

Notes from my life: Slopefest II and Francis Marion National Forest

Mark and I traveled down to Myrtle Beach to meet some trading friends from The Slope of Hope.  As part of my trip and my re-dedication to exercise, I spent a bit of time researching the parks down there for opportunities to mountain bike.  I found a virtual treasure trove of opportunities at the Francis Marion National Forest. Because neither of us are bike-fit (as we USED to be), we did some warming up about 3 weeks prior to our trip, and we chose a trail that would allow us to enjoy our ride without taxing us too much.  We chose the South Tibwin trail.  It was a good choice.

This trail is shaded, a feature we appreciated in the 85 degree weather.  The trails meander through a quiet wetland area.  Though we doused ourselves liberally with bug spray, anytime we stopped we were attacked by voracious mosquitoes. If you have forgotten your bug spray...get some....industrial strength.
The entre in to Fall is a cue for our spider friends to build elaborate webs.  This fellow (writing spider) not only crafted a wondrous web, but was pretty spectacular himself. While this photo (mine) might send some shivers up the spines of readers, writing spiders are non-poisonous.  Look around your outside and find some of their artwork.

As part of my research into our foray into the forest, I wanted to ensure that I understood the wildlife in that habitat.  Not only are there 5 kinds of poisonous snakes, but there are also alligators.  Yes, alligators.  I've not really thought about alligators and South Carolina as a pair. While neither of us wanted to run across a snake (though we are well-used to them in our area, I'm still frightened by them), we were hoping to see an alligator--from a safe distance.
We put the clip pedals on the bike, and put the clips on my shoes.  I've not ridden with clips on my shoes on a while.  They certainly make for more efficient pedaling.  Unfortunately I managed to lose my balance while I unclipped my left foot, but my bike fell to the right. There's not a thing one can do but go with the flow.   I have a bruised inner and outer thigh, just above the knee and an epic sized bruise on my right buttock--a deep bruise going all the way down to the bone. Not the kind of souvenir I was looking for!
Here's an on-bike camera shot of the typical trail:

Here are some of the vistas:

We did see our alligator...a small fellow who was floating vertically in water--his head just above the water, his arms floating just below the water, and the balance of his body hanging down.  I estimate that he was 3.5-4 feet long.  I did not have a telephoto lens with me so I had to blow this up from the 'speck'. 


There was also a place on the trail--a trail covered in vegetation, that had a horizontal width of nothing but bare ground--about 8 inches or so wide.  We surmised that this must have been an animal crossing (otter, gator, beaver) of some kind where some body part (tail) consistently drug often enough to prohibit vegetation or leaf fall accumulation.

We also spent some time with our GPS (GarminGPSmap 60CSx) using some of the features that we've not used before.  My husband uses it when he goes to Hatfield & McCoy in West Virginia for dirt bike riding.  I've not used this gadget much, but I worked with it--particularly the on-line interface.  It was satisfying to understand the device's features.  There's nothing interesting about the following picture other than I could do it (and I'll likely look back at this!)



After our biking, we elected to continue south on 17 to see other areas of the park. All in all, we drove 147 miles (measured from our Myrtle Beach departure).  Thankfully, we had stopped in the Seewee Visitor's Center to purchase a park map which had all of the forest roads.  It was the best $8 dollars I had ever spent. Please be sure to visit the center, purchase some merchandise and make a donation.  I did all three!  The forest roads themselves would be just perfect for riding one's mountain bike (and the map is indispensable--like insect repellant).  As the trails crisscross these roads, one can mix up the ride.  We did see a forest worker down one of the roads. He was very friendly.  He had been bush hogging the trails  It has been very dry down there, and he was telling of a trio of cottonmouths lurking by a small bit of water (that was normally MUCH larger) that was serving as their sushi (tadpole) bar.  They slithered away as he approached....he said this to emphasize that most of the reptilian wildlife would just as soon avoid you as much as you would wish to avoid them.  Though we did not have a snake bite kit, it would be wise to bring one if you are hiking through on a long trail.  The ground was not always visible where we were riding, and one place was so obscured we decided that prudence was the better part of valor.
We will be planning a trip back, and I cannot wait.

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Attending Slopefest was what made Myrtle beach our destination.  Our exploration day was long, and we were unable to get back by 5 p.m. for the happy hour just prior to dinner at the LIberty Steakhouse.  Tim Knight came by to surprise Slopers.  I knew that Tim would be attending, and I would have liked to see his arrival.  Here are a couple of pics from that.  Look at those shameless wimmin' fawning over Tim!

Here's a pic of me with my Sloper friends, and one of TK and me.  I believe that the look on my face is from Tim donning his "Love Doctor" persona--dispensing advice to a fellow Sloper that I took some issue with!

And here is a singular pic.

It's great that people travel to these things.  Some come alone, some come with intrepid spouses or other family members.  But SlopeFest is about friendship and community.  It is a great way to meet fellow traders and to celebrate our connections with others.  I'm really grateful to have such great on-line friends--and going to Slopefest was a great way to nurture those important friendships.