I present these two charts for your consideration. Can you guess why?
The first chart is the US Home Construction Index to which much is attributed when the constituents thereof begin to show some life (read green shoots). The second chart is the Fixed Line Telecommunications Index…. I would suggest that we could see some multi-year languishing in the former based on the latter.
I continue to believe that the inflationista v. deflationista smackdown continues to be one of the single most important conflicts in the market today. The resolution of that conflict—and the simple of unfolding of time will reveal the winner—will create two distinctive pools of winners and losers.
Puru Saxena was on Financial Sense Online. He gave a very cogent explanation as to why he did not believe that we were going to have hyperinflation—pointing to several periods, the Great Depression being one of them, as well as to the Japanese example. The velocity of money seems to be crawling at a snail’s pace—and supply without movement = constipation and economic discomfort.
Peter Schiff is the penultimate poster child of avoiding one trap but falling into another. Though he ably (and with much ridicule in the beginning) called the financial crisis when it was unpopular to do so, he believed that the results of all of the government’s reactions to it (e.g. the printing of money) would lead to hyperinflation. Positioning accordingly with investments in commodities (at their peak) he suffered the same investment losses had he just stuck his head in the sand as many other investors do during bear markets.
None of us can lose sight of the very real fact that we can be right about one thing and very wrong about another. Should you successfully navigate through treacherous terrain littered with quicksand, that success does not mean that you’ll not get bitten by a deadly snake after safe passage.
While the financial institutions have had ample help by the government in getting their capital bases in order after monumental losses on the asset side of the house, the balance of the population gets no such help. Our investment losses and debt burdens are distinctively ours to bear. Debt can only get serviced through the liquidation of assets and/or the application of an income stream (wages). Until asset prices for homes and investments improve, liquidation runs a risk of leaving a gap between the liquidation proceeds and the debt.
There’s so much nonsensical talk about green shoots. If we are to believe the lessons of the past bear markets, then we must wrangle with this: there was not a time where the market failed to respond to good news. It is true that the market STOPPED responding poorly to bad news. However, the complement needed to have a melancholy bottom reflecting true despair to the point that it was immovable to even good news never came to pass. I believe that my observation is accurate, but if not, I would welcome being corrected if this view is distorted. It’ is something that I think about.
While life is complicated, it is often unnecessarily so. Often, simple answers must be coaxed out by asking simple questions. As I’ve asked in this space against the backdrop of much nonsense about “global liquidity”, “the emerging market consumer”, and all manner of effervescent phrases about how things would go up, and up AND UP, is this:
What do you have to believe to be true?
. . . . to support whatever your allegation is regarding ‘facts’, or ‘reality’. A simple listing of what you have to believe to be true to support advanced nonsense (which is always wrapped in a robe if credibility) will be enough to shake you out of a euphoric stupor. It works for the obverse as well if melancholy has unshakably set in—so I’m not trying to pick sides. It’s also worth noting that a simple answer of “I don’t know” to such a question posed is perfectly acceptable and always true, for none of us can ‘know’ the future. Anticipating and betting on the wrong outcome can be dangerous to one’s portfolio as Schiff demonstrates.
While there is a polarity of the inflationista/deflationista conflict that confers a different ugly set of circumstances for either outcome, there is an in between place of hedging one’s risk—setting up a Swiss flag in some small space between the inflatinista/deflationista camps (but out of the direct line of fire). John Hussman is a master of this strategy, and if you do not read him, you should. He has a measured approach that most notably measures returns over an entire market cycle. Short term comparisons of his performance v. the market indices are irrelevant as he is managing risk and return over longer periods—to include the great down drafts. Hedging is the perfect antidote to uncertainty.
I looked at my sidebar and see that YTD, I only have 59 posts. I used to do that in a month. Before I had my own blog, I used to yap a bit on the blogs of Bill Cara, Roger Nusbaum, Real Money, Tim Knight, and Barry R. I still post on Real Money, and I've recently started posting on TK's blog again. He's such a following there now....it was just a handful some years ago as was BC's.
Yesterday, I reviewed my year to date performance—specifically my win/loss. I do not do that regularly. I’ll be frank, in 2005 I probably would have vomited had I seen the number. There is a compulsion to bet large—treating the market as a Lotto. It’s too easy to think that way, and parts many (including me) with their dollars.
I’ve been doing a much better job of holding onto my dollars. But I wanted to share it with you. This is 2009 performance to date.
The above represents my maturation as an investor. I’ve kept my stock exposure low—the above is performance using no more than 15% of my portfolio committed at any time. I believe that performance really is about controlling losses. I’m regretful that it took me so long to understand that.
Further, I know that I don’t manage my gains very well. But that is part of the continued maturation. But the real source of pride (that’s a hateful word) is that my win/loss ratio is where it is. The above numbers (% gain/loss) is inclusive of fees, and exclusive of dividends.
I’m currently 87% cash. I sold my WH into the orgy fest of buying on Friday. It may very well be an example of selling too soon, but I’ll took my 54% gain and ran. I’m missing out on the .43 dividend that will pay out. But I figure my dividend was front loaded.
Why did I sell….I’ve been trying to stick with my buy low volatility and sell high volatility scheme with the qualifiers that
It’s nascent, highly probably that it is poorly informed, and likely that it is poorly executed. Nevertheless, I’ll not let those things stand in the way.
I’ve highlighted for you the volatility narrowing periods. This stock has a good opportunity to go much higher if the volume can support it. I’m hoping that it will pull in and consolidate, at which time I may re-enter. I feel that the LOW RISK entry and money has already been made. I’ve owned this stock for a little bit, having survived the dip to the depths (would that I had bought more!). I increased my position by 2/3’s in the last volatility narrowing and then 3 days later…POW!
Anyway, I like looking for these types of stocks. And this strategy has been successful for me. Here is Great Basin Gold. It is in a channel and holding tight to the 10 EMA. I’m not sure where this thing is going to break. It is an example of the Bollinger Bands in side the Keltner Bands. There if it breaks upward—terrific. If it breaks downward…Wahhhh!
Here’s UNG….The volume in UNG has been nothing short of phenomenal. I’m not sure if it is good or bad but we’ve seen the same I’ve some UNG in my account and my I’ve a rogue SEP IRA of my husband’s that is in FSNGX (Fido mutual fund).
I believe that the Utilities are looking pretty interesting here in terms of volume and price patterns. I bought some UPW on Friday. I should note that often it is better to be in individual stocks that are going to move in the group rather than the group itself. But I was lazy (read: busy) and I did it the easy way.
With UNG being at a key inflection point, you might find that the gas utility stocks might be of interests.
In my Kelt/BB filter, I found this stock—UTL. You can read about them here on FINVIZ. I may buy a little on Monday. I’m not clever enough to know what this flattish H&S formation could dole out---so there is a bit of a worry
Here are the other stocks that show up on the filter. I’ve no opinion on them so much, and you KNOW that I do not make recommendations to buy or sell. However, I do want to demonstrate for you some of the things that I’m considering/doing/abandoning to support the mission of this blog. stock screen that has proved to helpful.
Ever since I loaded Windows Live (which has certainly made blogging with images etc so much easier) my Word has not worked. In fact nothing worked to well and I had to do all sorts of restorative stuff. Anyway, I broke down and I upgraded to MS Office Professional 2007 to replace my MS Office Professional 2000. I got my money’s worth. I also purchased the Visio—I needed a flowcharting program for my client work. At least it is a business expense.
Now I’m off to work to meet my looming deadlines.
Celebrate the splendor and grace in your day (if you can find it!)
Remember my PDRT and my dumb ass admission about not selling into it….they’ve declared bankruptcy—just days afterward. My opportunity to sell at .35 now is an opportunity to sell at .02. So never believe (and I don’t) that the stock price discounts all known information! A good lesson in doing the hard thing (selling into a froth and locking in profits or the obverse) is often the right thing.
I’ve been deploying, with very good success, my buy low sell high mantra as it pertains to volatility. By low volatility, sell high. I’ve been screening for stocks where the Bollinger is inside the Keltner Channels or some variant where the price is breaking above/below the Keltner channel. I found SPRD on such a scan. Day before yesterday, I elected to act on that find. I put a buy in for a limit of $2.40…it was hit, and for a little while it was the high of the day. I felt cheated! But, the darn thing took off. I sold .75 of my position at 2.88. It went past $3.00, and I had remorse. Those emotions!
Also in the Chinese wireless space is CNTF. Here’s a chart:
Some will remember my Acapulco Cliff diver cum mountain scrambler stock, WH which I’ve held steadfastly because I believed that fundamentals trumped technical action.
Of course, my position was small enough that I could do this and not be bothered. I did not sell into this spike. I’m just going to hold and perhaps add to this position over time. The volume is constructive….but the volatility is high, and it is not for the faint of heart.
Here’s another holding….Seemed like a low risk entry @ .76.
While I don’t normally troll in these waters, I’ve had the best luck with the “Stocks under a $1” crowd. Here’s my final holding. I find the volume interesting. The chairman owns a good bit of this stock and has been selling. Someone is buying….I have this stock at a whopping basis of just less than .20 per share.
From FINVIZ
New Dragon Asia Corp., together with its subsidiaries, engages in the milling, sale, and distribution of flour and related products to retail and wholesale customers. It produces and markets wheat flour for use in bread, dumplings, noodles, and confectionary products. The company also provides various instant noodle products, such as packet noodles for home preparation, as well as snacks and cup noodles for outdoor convenience. In addition, New Dragon Asia offers soybean products, including soybean protein powder and soybean powder to food and beverage manufacturers. Its flour products are marketed under the ?Long Feng' brand name. The company sells its products principally through distributors in the People's Republic of China. New Dragon Asia also exports noodle products to South Korea, Australia, Malaysia, and Indonesia. The company was founded in 1999 and is based in Longkou, the People's Republic of China.
Seemed like a decent prospect to be in a stock that fed the hungry masses--though their sales performance has markedly declined (which is not generally a good sign). It's a flier to be sure.
My son graduated from HS on Saturday. He is down at the beach…he’s not bothered to call. I called for just 30 seconds to ensure that he was okay. It sure is freeing to have him reach this important milestone!
. . . but one issue of bonds is sometimes made the basis for other issues. Indeed, one of the money- making devices of the time is the formation of companies that issue their bonds on the security of other people's bonds that they have purchased, either yielding a higher rate of interest or obtained at lower prices than they expect to realize for their issues. There seems, in fact, to be no limit to the production of securities that are spread before capitalists. There never was a time when it was so easy to invest money — and to lose it. Of the securities that are offered with first-class recommendations, it is probable that about one third are actually good, one third have some value, and one third are practically worthless. Hence the very natural inference that whatever art there may be in the matter of investing is to be exercised chiefly in the avoidance of unworthy offerings, and it is to that point that a profitable discussion of the subject must be mainly directed.
Click on the title page pictured above and be transported to this book on line….
Here’s a chart for your review. I’ve never heard of CVR---I found them on a stock scan. From the company’s website
They are not one of the fertilizer names that you hear about.....might be an opportunity. I know that I'm looking.CVR Energy is an independent petroleum refiner and marketer of high value transportation fuels in the mid-continental U.S. and, through a limited partnership, a producer of ammonia and urea ammonium nitrate, or UAN, fertilizers. At current natural gas prices, our nitrogen fertilizer business is one of the low cost producers and marketers of ammonia and UAN in North America.
Here’s another look at UNG. You’ll remember that I had this in a post about Weinstein’s never to buy a stock below its 30 week moving average. This is a weekly chart. The volume is nothing short of staggering over the last three weeks. What I find interesting is that the close for the weekly white candle and the red candle was within one penny: 13.71 v. 13.70 respectively. Am I suggesting that it is a bottom? I might be—but more importantly, the subsequent stock action would be a better tell—to confirm rather than guess. I’m already in, but at a favorable entry. Accordingly, I’m not a seller here.
From FINVIZ—I consider FINVIZ a staple in my stock research. If you’ve not visited them, take a look here.
No where is it more apparent on the idiocy of analyst ratings and price targets than at market turns. Remember, analysts are selling inventory—do not become the you in “Sold to you!"
Here’s another example—Had you been buying in May as UBS encouraged, your capital would have gone away……with impunity.
Again, from FINVIZ……
Pay attention to charts, fundamental and emotions---do not pay attention to analysts.
My father sent me an interesting article from Hoisington Management. You can view it here, and I’d encourage you to do so. I think that the article is straightforward. Upon reading it, and seeing the conclusion, I clicked on the linked. Hoisington is a fixed income money manager. Accordingly, I would expect their opinion to be nothing other than presented.
I don’t say that to impugn the article in any way, but rather to REMIND that point of view colors the processing of all of the information that is received. (As I wrote this, I digressed into searching for ‘mental models’….I soon will own 2 books on the subject).
Provided I read these, I’m sure that I’ll write about them. I’m intrigued by the subject for the reason that inflation v. deflation, bull v. bear and any other oppositional ideas are presented in ways that seemingly require us to choose because they are presented as mutually exclusive. Is there really such a thing as elemental truths from opposing points of view that are truly mutually exclusive?
Our job then as human beings is to mine for those truths and forget the buckets. Hard to do, and I don’t pretend to be able to do that well. But this post is provoking a nascent interest in understanding it better. This blog is named The Perplexed Investor, and certainly the space between to opposing points of view is where the state of being perplexed exists.
I’m beginning to believe that being perplexed is a GOOD thing—particularly if the state of perplexion leads to discomfort. Why? The only remediation to that discomfort is to investigate and understand the issues at hand. Understanding the issues does not mean that you resolve the conflicts. However, understanding DOES mean that you are equipped to evaluate outcomes and make decisions that are appropriate for your situation. Isn’t that the only way to become COMFORTABLE (in a discomfiting way). That’s healthy dynamic tension. It means that one understands that there is uncertainty and the state of being puzzled by it means that one isn’t duped into believing that there is one clear answer thereby occulting one’s view of other possibilities. I’m listening to FSO and their military futurist guest. I will likely go hide under a rock after listening to it. (I should be concentrating on this post).
I think that one of the most dangerous periods for new investors is when they are struck by the belief (pick a style) that there is a sense of a ‘holy grail’ for investing. Buy and hold, value, contrarian, technical analysis or whatever else, are sometimes presented as seemingly holy-grails without an attendant presentation and/or understanding of the risks.
Ultimately, successful investing (living) is about managing risk and reward over a specific time horizon. And my new mantra is from Napier---in that to make money in the market, I don’t have to forecast the future accurately, only slightly better than the majority. That sounds like a hubris-infused comment, but it is not meant to be. Education, flexibility, discipline and humility are armament against hubris.
I retired early as my internet connection was down since just past noon. It came up briefly at 9pm and crashed shortly thereafter. I went up to bed and picked up Mamis. In his book, the Nature of Risk, he devotes about 3 chapters to market language. And in re-reading those chapters, it was a reminder that while technicals are helpful, nothing beats looking through a chartbook every night to watch how charts are unfolding in the face of the technicals--as in every market, it will unfold differently.
While market tools are readily available, there is a true skill. Sometimes I think that it is a disservice to most investors to hold out the greats and say "You can be like this too if you do ...x, y, z". Like putting oils and brushes to the masses and say that all can go from paint by colors to becoming a master of the canvas. I've found my best picks from my mind-numbingly clicking through charts. Early a.m. with coffee. p.m. with wine (I tend to blog at those times too which may explain alot!.
Click, click, click---back up. And the one that makes you pause and look a little closer sometimes is 'the one' and sometimes you look and find a wart within a pimple with a hair getting ready to sprout...click, click, click. I do find lots of obscure stocks that way that go on to be quiet performers. Sometimes they are rabid dogs that need to be shot and put out of their misery. But Mamis's comment really concretized the importance of looking at many charts and getting an intuitive feel for what is going on.
For those of you are working on your technical analysis skills, I recommend your getting Dan Fitzpatrick’s free video. It’s just a few minutes, and he’s an excellent, gifted teacher. His video prompted this post in that I read Mamis last evening and saw Dan’s video this morning. And if you take the time to LOOK at charts, really look at them, you’ll see ‘stuff’ unfold that is not in the media.
Here’s my update on WH that I did not have last evening due to the 5 minute window of my internet malaise. This is a weekly chart. I’m spending more time scanning using weekly charts—I’m finding that it gives a cleaner view….less noise. The above chart is becoming my favorite view. I can see the Bollinger Band width (the light purple line), volume and relative performance to the SPX. The expansion in the BB is unsustainable, so I fully expect this stock to pull in.
Back to Mamis…..one of the things that he noted that I wanted to share with you is that the leaders of yesterday will not be the leaders of tomorrow. I had to think about that a bit particularly relative to energy, metals and agriculture which were the last leaders.
I'm also listening to GaryK this a.m.. He’s talking about gold. Here’s a chart of the GLD
I’ve been looking at this chart and see a potential double top OR a potential INVERSE H&S----so watch the $100 level. I’ve still not gotten over my INACTION from the Thanksgiving’s work of looking at all of the gold stocks and not acting. I’m reminded that study without action amounts to not much. And that goes to anything….hard work without achieving an outcome doesn’t amount to much either….we can look to our business life and see that as well.
That is another manifestation of risk….that you CAN work hard and NOT accomplish what you want (but surely you’ll accomplish SOMETHING if not only the practice of knowing what it is like to work hard). That doesn’t mean that you don’t work hard, you must. For if you do not work hard, you are unlikely to be successful, and if you do work hard you are likely to be successful—the degree to which is unknown, but surely higher than your choosing to NOT work hard.
Much like investing. Some will put as much work into it as others. A ‘few’ will be more successful than the ‘some’ just as surely as ‘some’ will be more successful than the many. Napier’s comment from the FT’s Long View particularly resonates…..He said (paraphrased), “I don’t have to forecast the future accurately, only slightly better than you.” If you cannot be the best, it pays to be marginally better than others. Sounds a bit like an underachiever’s mantra!
I don’t have an internet only phone, and today was a reminder as to what a stupid idea that might be. I write this post sans internet, and that way since 12 pm or so. I was working remotely---meaning I was home in my less fine clothes—and reliant on the internet to connect me to my work. Thankfully, I started very early this a.m. and was able to log onto a client’s computer while she was working through something (thank goodness for gotomypc.com!) that required my guidance.
I also had brought home a box filled with crap that needed to be gone through. It was from a client and represented ‘stuff’. I needed to go through it, so being unplugged helped me winnow my way through the box. I had file folders and a labeler. I’m down to a small stack of “stuff”. I know what it is because I’ve handled it about 10 times more times than the paper experts tell you that you should. I’m not sure why I cannot make a decision to do anything with it.
The bummer is that there is an important doc in my in box at a client that I’ve been waiting for, and I cannot read it. I was connected through cell phone and regular phone. I couldn’t help but reflect on being without a !%%##$#% phone at all had I had only a VOIP connection. Cable just is no where near as reliable. I’ve rarely been without phone service—and it was natural disaster related.
I sold some of my holdings into this strength. I lightened up on UYM by 1/2 which was up 20%and sold my ERX which was now close to break even. I have CEF, Great Basin Gold, TGB for gold stocks. My WH is doing quite well. Here’s an old picture from 03/27—It has recovered from its Acapulco Cliff Diving.
The other nice thing about this stock is that it pays a very nice dividend. IN fact they stated recently that they want a payout of 30-40% of profits to go out as a payout. NOt too shabby. But, dividends do not mean much if the stock goes south, and that “getting paid to wait” doesn’t mean much if the stock takes a 30% dive. I believed in the fundamentals enough to hang onto this stock (but too scared to buy more!). As my holdings are often thinly traded stocks (ahh, the beauty of a small account!), I do not always have stops on them. I know that goes contrary to what many admonish. However, for thin issues, you can get shaken out prematurely. IN reality I guess what I’m saying is that I was too stubborn or stupid to have a stop loss.
Now my internet is working having been out 9 hours exactly.
Jeff Saut should be part of your regular reading. Click on the pic below to be transported to a very informative and funny piece.
I’ve been a little under the weather with a mild stomach bug. Thankfully it was just stomach pain, headache and low grade fever and none of the other accoutrements that make a stomach bug ‘uncomfortable’ and downright perilous if one ventures too far from the loo.I’m drinking coffee this morning with no pain….so I’m declaring myself free from the bug.
I was reading a bit before turning in and AFTER watching the last episode of 24 (and missing the first, early hour in the two-hour finale). I picked up John Murphy’s The Visual Investor. I read it some time ago, and it is a good primer. I like to be reminded of the basics—because simplicity has its own elegance. It is too easy to get caught up in so many technical factors giving mixed signals that one feels like they are chasing their tail.
One of the sections of this book is on intramarket analysis. I’m a big believer in looking at sectors because there is always actionable action somewhere (other sectors, other markets). I was reminded of the importance of the bond market and the inverse relationship of bond prices and stock market action. More specifically, bond prices and utilities as utilities are very interest rate sensitive. Interestingly, this a.m. I see a column my Helene Meisler on RM and Saut mentioning utilities. Here’s a 10 year chart on XLU—
I’ve no opinion other than it’s a tenuous looking chart.
Last week, though busy, was so much easier as I worked normal hours. Today is the second weekend that I’ve not had to work all weekend. I do have to do into one client and get a couple of things done. I had to ask Client 1 for some forbearance so that I could work on Client 2’s ‘stuff’ that was urgent.
I helped with a dog run yesterday—meaning I gave a hand rather than drive. I’m glad I gave a hand, they needed it. Now that we are in the hot/humid months of VA, it is hard work….and hard on the animals too.
Last evening we were invited to a birthday party for a dog—Gilly. His owners are a lovely young couple. Mark works at the same school as the wife who is an art teacher their. They are both outgoing and very active people. Part of the invitation was to bring a dog. We elected to bring Macy our American Bulldog mix.
There was quite a mix of dogs there. Gilly’s two brothers were there. They were part German Short-haired Pointer and Lab—a good looking set of fellows with the GSP coloring and the lab disposition. There were Chihuahuas, Dachshunds, and a cornucopia of other breeds. Jackie had a professional photographer there, so hopefully I’ll see some pics. I didn’t take my own camera, so I’ve nothing to share.
All the animals got along terrifically, and I was proud of Macy. She was a little nervous at first, but not frightened. It was a lot of fun, and I was glad that we were able to take Macy out. As we live where our dogs can get plenty of exercise, I don’t have to take them out to other places.
I finally converted my husband’s old SEP IRA into a brokerage account. The mutual fund model for investing just doesn’t make any sense for my investing style. I’ve kept his money safe in the bear market. I elected to put 1/2 in the FHKCX at the buy point noted above.
I sold on the gap up—I just saw so many of the sector charts stopping dead in their tracks, I didn’t want to press my luck. His account is already up 25% for the year just on two positions. To EXIT this position, I had to pay a short term redemption fee.
From a technical perspective, I’ve sold a position showing obvious strength. I may have overthought the position and have let my bias get in the way with chart work. There are no volumes on mutual funds, so let’s look at a proxy—FXI
I try to pay attention to volume, and more importantly divergences. While stock prices can fall merely on their own weight, volume is needed to propel a stock upwards. This volume pattern is a bit of a conundrum to me. Why? Because the volume now is QUITE heavy relative to the earlier rise in this ETF. I expect a pull back, and I’ll likely re-enter, but I wanted to preserve some profits. NOw, I’d like to show you something dumb ass that I did…..
Here’s an 11 cent stock that I bought. See that massive spike. Somehow, while I was at work that day, I was compelled to check that stock just at that time it was hitting .35. I failed to just hit “sell”. It would have been a very nice profit. Funny, I’ve had the best luck with penny stocks this year. I don’t generally buy them….but a chart is a chart. Gary Kaltbaum started out selling penny stocks.
Making decisions in the market has more to do with quelling one’s natural emotions---a nice gain can dissipate into status quo in the span of just a few minutes. My first response was “Oh WOW, something exciting is happening, and there is news that I don’t know about that is BIG…..I’ll just hang on.” Yeah, right. It did happen to be the last day they were listed (they are now on the PINK sheets).
Here’s a chart that I wished I had found.
My preference is to be in a position before the move. I’m not good about chasing moves either higher or lower. In fact, my best success this year has been from being patiently in positions and then have them move. However, when the move gets made (a la PDRT) you have to part with it. Sigh…..
As I look at charts, I’m reminded of lines that are important. Stan Weinstein implores that you should NEVER buy a chart that is not trading over it’s 30 week moving average. (I’ve ignored that advice on occasion to the peril of my portfolio!).
He also pointed out something that I’ve not seen stated so clearly, and that is that HORIZONTAL breaks of trendlines (either up or down) are more important than sloping lines. Here’s a chart of UNG. I don’t own it, but I do have some of my husband’s money in the Fidelity Natural Gas Fund.
It’s worth watching for these points.
Here’s an example of a chart pattern that you would NOT commit new money to. To my eye, this stock is under significant distribution.
I’ve no position in this stock, but I did want to point out to you a dangerous chart pattern. NOte too that this stock has been under distribution for a LOOOOOOOOOONG time. I learned my lesson in these insurance stocks the hard way….I bought heavily (for me) into puts; but the chart breakdown went beyond my time frame. (Wahhhh!)
I’ve no crystal ball. However, I would expect that this stock will break heavily to the downside. If you don’t use price/volume charts (where the bar is to the left or right), I would encourage your using them. Those bars tell you where the support is. As you can see, this stock is already trading below the longest volume bar. To my eye, that means that the chart has a built in vacuum to pull it down as there is not much support below. We can follow it and see if the chart fulfills its promise.
Here’s an example of another chart with a distribution top—though not as domed. When these break, they break hard.
Happy Mother’s Day to those of you who are mothers or honor your mothers on this important day. My two kids—well they are officially adults at 18/2--I gave me flowers, a gift certificate for some much needed personal beautification and did an EPA cleanup. I was very appreciative.
Since mid-January, I’ve been working full-time plus. In fact, I cannot remember a busier time in my life than the last 30 days. Today is the first weekend I’ve had off since March 26. The days were beginning to run together. I don’t care for that.
My family has been ‘used’ to having me around. Though busy 10 hours a day with my stock research and ‘stuff’, it is very different from operating in deadline and outcome oriented days. I do have to grocery shop. I’m out of everything. Frankly, doing some mundane chores would be welcome.
I did a dog run yesterday. I’m sore from lifting crates, pups and dogs. I had a lovely hound mix riding shotgun. A very sweet dog who was content to sleep but intent in contact. So many of these dogs crave the human touch. My ‘Fit by Fifty’ jag as been compromised by all of this work. It’s an excuse more than a reason.
My portfolio has done well by my not ‘monitoring’ tick by tick. I’ve been listening to Gary K more regularly, only because I’m at a client, and I can listen while running payroll and doing other ‘must do’s’ that don’t include concentration. Concentrated work requires quiet for me: no music, no TV, no disturbances. The good news is that I can concentrate for very long periods of time. That is also the bad news—it’s not good to sit too long. I’ve had long strings of that this month (15 hour days), and I’m glad to be over that for a small bit of time.
What little time I’m spending on the market, I’m spending by looking at charts. Here’s a weekly chart of just one of the many charts that are starting to move.
This chart has the characteristics of what you would want to look for….consolidation along a base coupled with volume on an outbreak. It’s not rocket science, but it sure does seem to be made that way.
When I started writing this blog almost 3 years ago, I named it The Perplexed Investor, because I was truly perplexed. I’m much less perplexed now. But only for the long hours of study and a steady diet of tuition payments. I feel like I’ve learned life-long investor skills. Would that I had learned them earlier!
I do know this…one really has to learn this stuff for themselves. Otherwise, the charlatans and the professionals—oftentimes one of the same—cannot be distinguished. But, ultimately, one has to depend on themselves—and that means studying. I still believe the singular best book on the market is Stan Weinstein’s book. If you master the disciplines in that book. that is all you need to know. That way, you can find charts like this on your own…and you must know how to read a chart; otherwise, you might as well cross the highway blindfolded. You don’t take such risks with your person; why should you do it with your money?
http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html
You might remember that the NY Times did a comparison of this bear market v. other bear markets. Click above to be transported. I see that they’ve updated to 2009. That’s recent, as I looked not too long ago and did not see an update. It’s worth a look.
Jeff Saut is one of those voices that is prudent to listen to. He doesn’t make wild declarations, but insightful comments and analysis that underscores his very intuitive feel for the markets. Plus, you gotta love someone that crafts his/her opinion in a way to inform rather than perform—as in being a circus barker. Do take a look at his newest comment here called 9 1/2 weeks.
I’ve not done a dog run in over a month. I’ll do one on Saturday—Richmond to Springfield. I’ll likely have to work the other day. I should stay home and get some house stuff done. I’ve been busy preparing a forecasting model for my client. It is a work of art, and like Neo in the Matrix I feel like I’ve become one with my model.
Models look simple in the end, but the amount of work that goes into them is abundant. And concentrated. Over the last couple of weekends, I’ve worked 12-14 hour days crafting the model, in addition to work over the week. I still have one more to do on this model—alot more, but for now, I’ve got a really robust product.
My other client has been terrific and understanding. His basic needs are getting met, but …… The good news is that I’ve hired a terrific person. Who starts full time this Monday. That will take me out of the day to day and help me focus on the longer term, higher level stuff. Nevertheless, juggling the priorities has been on going.
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I keep reading material in the bathroom. The female system is not so efficacious as the male system if my experience in my household is fair to project. So reading material helps to pass the time. I keep Stan Weinstein’s book in my downstairs bathroom which is right off of my office. It is a well-flagged book, and I like to look at the flags and refresh my knowledge. If you’ve not read the book, you will find it informative.
I’ve finished my Justin Mamis series, and I’m beginning again with The Nature of Risk. Justin Mamis founded The Professional Tape Reader and Weinstein later took it over. If you were to read both of them, you can see how close their philosophy’s are. I think that Weinstein’s book is more to the point. But, as you can tell from my own writing style, a meandering book is one in which I’m comfortable. The Mamis books go to some pains to develop the psychological context. The lists in Weintein’s books are terrifically helpful. They are all flagged.
The 30 week indicator is integral to both Mamis/Weinstein. The weight of the evidence is central to the theme of determining the trend with the 30 week indicator a bellweather. After my respite, I started to look at charts from my indices DJ Sectors that I keep on Stock Charts. I found that most (not all) have been trading over the last month above their 30 week moving average.
The hardest thing about approaching the market (I’m generalizing MY experience) is separating one’s tendency to overlay his/her bias on what they see. Having reliable indicators and weighing objectively the weight of the evidence coupled with buying in such a way to manage sensibly one’s risk in the market (and risk is omnipresent) are central to success.
Many of the currencies are at key technical levels.
If the dollar is to break, commodities go up, then EWA might be attractive. I’m looking at that currently.
I’m out of time. It might be worth your looking at a few of your favorite charts….
While the post title may sound like the opening of an important treatise on freedom, it was merely inspired by a colossal software problem that I experienced recently.
I’ve been writing my infrequent and sparse blog comments over the last couple of weeks using Windows Live Writer. It is a terrific program for interfacing with one’s blog and makes it 100 times easier, faster and more enjoyable to post.
Unfortunately, I must have downloaded some components of this program that planned to take over my entire life. It managed to disable my MS Office Professional (2000) suite of products. I managed to disable and uninstall a number of the components to bet my programs somewhat functional. Word, though, and Powerpoint are toast. I do have my Outlook back up and Excel.
Though I’ve tried to repair the file, and reinstall, Word still remains wordless. But I have many years worth of documents that I need. And the most important thing that I need is my billing template. What did I do?
I remembered that there is a suite of products called OpenOffice.org. They are compatible with Microsoft. I downloaded the suite and was able to open my billing template. I wasn’t in the mood to update my Office Suite product, and I’m still made, that the file doesn’t work. Something about Windows LIVE! kills. At least the carcass is not stinking anymore.
I do remember taking a test drive of the spreadsheet. There were enough differences that I found it frustrating. But word processing is easy. But OpenOffice.org offers a nice alternative for folks that find the licensing for the MS suite expensive and cumbersome. It is maddening, though, to have a fully licensed product and NOT being able to use it.
If you are looking for a robust office suite platform that is compatible with the other suite spawned from the loins of the devil AND that if free, you should take a look.
Having said all that, I would like to have my Word and Powerpoint functioning fully. At least I can write to my blog easily, even though the foundation of how I make my living has been crumpled by this software error.
My son and his lovely date. I skipped my senior prom, but I did go to two other prom’s with guys who were seniors. I was young and cute once too!
It would be worth your time to listen to this broadcast with Doug Noland. You can find it here: http://www.financialsense.com/fsn/main.html
I particularly liked how he outlined the potential mispricing in risk in Treasury assets. But it is a lucid and interesting broadcast, that I think that you would enjoy.
Doug Noland
Market Strategist
David Tice & Assciates
Topic: The Credit Bubble Crisis
My beloved Ginger, my neighbor’s beautiful Golden Retriever is dead. Ginger’s first love was Tim, her second love, the water, and I think that I was her third love. Tim has a wonderful pond
She died last Friday evening. I did not know until yesterday. She was fetching her last ball and came upon the shore and walked up the incline only to collapse. It was quick and painless.
Tim buried her on the hill overlooking the pond. I will miss her very much. Lacy, Tim’s other dog, was very attached to Ginger. When Lacy was little, Ginger would swim and Lacy would climb upon her back. I would take the kayak out and have Ginger, Macy and Lacy swimming around. I turned it over once and wrote about it here. Ginger swam with me the entire way.
When Tim brought Ginger home, I was working in Northern Va during the week. So each week, I’d come home and find this little puppy growing quite fast. She grew so fast she blew her knees out. And this little puppy wanted so much to be friends with Lucy and Greta, neither of whom would have anything to do with her.
But then Lacy came, then Macy came. And we had this younger generation of dogs to take the work and worry of puppies off of the older dogs. With Ginger passing, a generation has passed. These dogs lived the best lives. It is not enough to love your dog, but to give your dog a place to BE a dog.
Ginger could BE. And she died doing what she loved to do.
I’m in guerilla mode at work. I had my book club yesterday, which I had to pass on. I started work at 7 a.m. yesterday and closed up shop at 8 p.m. It’s 7:03 a.m. now. I’ve another horrific day ahead. But I did want to acknowledge the passing of my good friend who I called both Gingie and Gingus Khan. She sure did conquer my heart.
After spending productive day getting necessary work completed, I found that this a.m. that my computer is having some issues. It wants to reinstall Microsoft. I have no use of OUtlook or other Windows programs. I’m currently trying to install from a Maxtor backup my program files. I’m not comforted that I’m getting some messages from Maxtor that certain of the files cannot be restored.
I’m also getting on exit update software for Windows, that seemingly does not want to update. Strange—but I’m always suspicious about the amount of invasiveness that we have on product registrations and updates and the like. Seems to me that they are getting too much information. That statement is coming from someone who is not terribly conspiratorial in her thinking.
We rely on this stuff until we can’t, and then our lives go into a bit of a tailspin. This feels like a virus attack, though I’ve plenty of inoculation. Not being able to open Outlook, or use any my Work/Excel files is not a happy circumstance.
I do so like this Windows Live for the Blogger interface. It makes inserting pictures and stuff so much more easier.
I now have to redo my daughter’s taxes as my daughter and my husband share the same first initial and that is how TurboTax saves your file. Yes, the dummy warning came up, but I thought it was because I had already saved the current return previously, so it did not seem like much of a warning.
At least her taxes are simple. I was able to download all of my stuff from Fidelity and Ameritrade. So, I’ll slog hers out as I wait an pray for a restoration. I go to by stepmom’s who if fixing a wonderful Easter lunch. Then it will be off to a client.
This time of year has a convergence of religious observances. Spring’s transition brings with it much violent weather. Transitions in the weather and the market are similar. I write as I listen to FSO. Robert McHugh his talking technicals.
New bull market? Bear market bounce? I don’t know. He thinks, like many, that it is a bear market bounce, and will be followed by a cataclysmic fall later. And there are the ‘many’ who believe that we are in a new bull market.
I think that the market has never gone through a real psychological bottom that would be marked by lackluster response to good news, but also lackluster response to bad news as most are sold out. Maybe I’ve missed something, but I don’t think so.
So far I’m doing okay without having lots of money committed to the market. I’m not worried about missing anything, but rather making some base hits to pay some dividends. My accounts continue to be at all time highs. Because I sidestepped the carnage, I do not feel the need catch up. Rather, I feel the need to continue to be prudent. Prudence meaning opportunistic in finding lower risk entry points with some decent probabilities.
There are lots of interesting chart set ups. I’m interested in seeing what OIH will be doing. Here’s a Renko chart which I think shows nicely the current chop in the chart.
I have some ERX which I’ve held since I purchased it at $34. Yes it went down muchisimo. But I held it. It was 100 shares. I don’t see OIH as being a low risk purchase currently, as the chart on many fronts looks overbought. But the range is worth watching, and there may be a buy point soon if (1) it falls and holds at the bottom of the range or (2) it breaks out of the current resistance with some volume.
Apparently my AZC stock that I bought at .53 received an upgrade. I found this stock by trolling through charts. The volume levels were outrageous in December.
I’m want to unload the last of my position. I didn’t cultivate my holding as well as I should have, but I’m very happy with this low risk high reward position. The trick is to not blow it on a less well-considered position.
I’m reading my third and final Justin Mamis book called How to Buy Stocks. These books have been a tremendous source of information. I’ve not had much time to read or even write to my blog. I sure have missed it. I’ve client work to do most of the weekend. It filled last weekend as well. I also need to do some tax returns. Both of my industrious kids made money last year, and I’ll need to account to the government for it!
No dog run this weekend, either. That’s the second week that I’ve missed in a row. But I’ve offered money to rent a van or pay for gas for other volunteers. At least I can log on and work from home. I can take laundry breaks!
I’m posting this blog through Windows LIve…..it is an easier interface than Blogger’s or even Scribefire. I’m going to hit the publish, and hope that it does not blow up!
You know my fondness for Chinese stocks. Here's one that I have. It has been a attractive performer. They are a biodiesel producer.
AZC has been a phenomenal performer for me. It is at a point where it might fail. Not trusting the advance, I sold into successive rallies. I'm down to 1/3 position, and it is up 2.5x my purchase price. It house money that I do not want to burn down in a conflagration or renewed fears on the economy.
Do you see that very long line in March? That should be a reminder to you that you do not place market orders for thinly traded stocks.
