Tuesday, October 27, 2009

what the charts say:

strong:  UVE, ALIF.ob

on support:  BSPM, CSOL.ob, NEP, CHGS

close to support:  PUDA, LPIH, APWR

still selling off:  XIDE, CSR

overbought:  CPQQ.ob

  -- there is a lot more the charts are saying... but I need to listen more carefully.

taking my lumps

I sold INSM for a loss even though I may regret it later...

I bought more PUDA and BSPM -- names I like and the people I follow like a lot.

I want to only hold my best ideas -- when you start doing well, there's a tendency to allow second-rate stocks enter the portfolio and this is pretty much the same as giving your money away.

I'm not afraid to buy cheap China microcaps on a pullback.  I know they make money and will make money in the future.  Stupid stocks like AIG are going down -- and that's a good thing.  They never deserved to be so high.  A lot of StockTwits are shorting for small change.  I should make 50 - 100% on PUDA here.  I also like NEP which I sold out - and here it is just a bit above where I first bought it.

 UVE is green.  And I added ALIF to managed portfolio.   Traders love to focus on the daily fluctuations but I think as I grow older -- those daily moves are mostly a waste of time.  Today -- quite a few names got dirt cheap again... so I'm a buyer.  A few names are cheap but I think they can go cheaper.

 I'm feeling a lot better now that I got rid of INSM.. it was worrying me and once I exit a position like that --- I can see clearer.

 The more patient I am, the better I do.  This selloff is necessary and could last a while.  There is never any need to feel rushed when trading.  In fact, if you feel that way, you are probably on the verge of making a big mistake.  That's what happens to me.

Power of Outliers

I read a good blog entry from Don Miller -- great reminder.

When I look at my gains this year (and losses) -- well, I have a lot of losses.  I'm still learning.  But the gains are concentrated in just a few names where I really made a bundle.  And those big gains are what made this year work.  Trading is not about being right or wrong.  You will be right and wrong.  The difference between the pros and amateurs is how they capitalize when things go right and minimize the losses on their mistakes.  When you accept being wrong often... you can control the bleeding faster by taking action.   And knowing when to let the winners run (and add to them) helps the big winners overcome the mistakes.

I want to focus on being selective now as the markets drop.  I think I made a mistake following INSM.  I'm getting a bad gut feeling and I've already taken a moderate loss.  I think I will follow this advice, sell it out, and wait to reinvest it in a winner.  There's no reason to be patient with loser stocks, especially ones I'm developing a bad feeling about.

Monday, October 26, 2009

pain rising

bad day getting worse...

 I can see the market is in a trend down pattern now.   My microcaps all getting whacked.

 I've been adding to a few but I know this is hopeless when the markets are in selloff mode.  Fear trumps value.

 I trying to stick to stronger names.  PUDA / APWR are up today.  I bet these are good ones to add to.

 CSR is doing horrible and I have to wonder if bad news is coming out soon.  I'm almost sure of it.  A few people I follow have been adding today.  Should I trust their judgment or my own?

 In truth, I'm down about 1% -- so not like it's a ridiculously bad day.

UVE: New Idea


I own UVE at 5.16

Combining TA plus FA -- it needs to stay over 5.04 today to confirm a new uptrend.  

I am also watching PUDA, LPIH, CHGS for add-ons.  I did add PUDA at 7.23 last week too.

Friday, October 16, 2009

Going on Vacation

I go to Florida tomorrow.

This week was decent.  I am learning fast now.  Last two days were a bit weak.

I am upset because I exited a few rockets instead of doing nothing -- EGMI and CHIO to be exact.  Doing nothing is usually the right thing to do.  I do too much.

I lost a little bit on Thurs. and Friday but it was mostly a strong week.

I will just keep my positions.  I imagine doing nothing while I'm on vacation will likely be better than me micro-managing.

 I hope you had a great week.  Gotta go.

Thursday, October 15, 2009

SMID ready?


this one has no volume but I think the chart is set.  Just needs some positive news and this ticker, which lots of people I follow love, should move.

My Team On Top Of It

It wasn't a great day due to a certain blow up in AXPW.ob -- forcing me to exit for my biggest loss in weeks.  I bought AXPW.ob because I was following a tip not backed up by fundamentals.  Foolish.  The loss was less than 1% of my holdings but still hurt.

Fortunately, the gang that I followed, the China value people, have talked a lot about NEP and I've been sitting on a large position for a few weeks and today NEP was the 6th best stock on the AMEX and due for more gains.   So it was a good day.  I also did well with APWR which I charted as a breakout and it did fine.

It is amazing how well you can do when you follow a group of smart people and buy the best ideas.  I kept thinking I should add to NEP because there were three or four bloggers/posters I follow who all independently liked NEP -- when EVERYONE loves a good value stock that even I can see is understandably cheap -- those are the stocks that tend to do the best.  The more disagreement, the less so.

I also bought back a big position in CSGH.ob which might have been premature but this is still a profitable company.  I can understand it may not be the best idea because quite a few people I follow had reservations after today.  But quite a few bought on the big 20% plunge in the morning.

One name that everyone seems to like a lot now besides NEP is BSPM.ob.  I don't own much as I didn't like this one as much as NEP but I'm thinking it should do well.  My chart work is great lately.  For example I drew this chart of RODM this morning and it was dead on.


I also drew the breakout for APWR and have enjoyed the two day rally.  I think it goes even higher.  Oil prices are ripping to new highs.  There's no stopping it now that the dollar is toast.

It's just so much easier when you are working with a team than alone, even if that team doesn't know they are working for you!   Congrats if you hit it big once again.  I'm happy to work for you, for free.  Don't you wish all your employees were like that?

SEAC: nice chart

no position but found this chart compelling...  don't know much about this stock.


Will watch.

Wednesday, October 14, 2009

I Would Trade 10,000 Dow, And I Would Trade...

Well, there we go again.  Another benchmark broken again.  Two steps forward, 800 steps backward, a few giant leaps forward on the back of a broken dollar, and it's all good.

I'd be a bit more cheerful but somehow, my portfolio was down today.  I just had the wrong combo of microcaps.

What's irksome is I run a mock portfolio at tickerspy here: http://www.tickerspy.com/portfolio.php?pid=81349

And my fake portfolio was up 6%.  How's that?  It's weird how well I can do when it's not real money.  And my managed account was also up.  So hip hip hooray.

The past week I have been using charts well and I feel like another piece of the puzzle regarding my ultimate trading strategy has slipped into place.  Like APWR -- I had bought a big fat position for my Mom one day before today's move.  Now obviously, almost everything went up -- but APWR was up 8% so I really picked a great one.  On the terrible side, I sold CHIO even though I charted that as a break out chart and missed a 50% move.  Kind of annoying.  I listened to someone I trusted, who I'm sure was correct.  But the point being -- the chart is the ultimate judge and jury of your wins and losses.  When in doubt, trust the chart.  That's lesson #4532.

Today's tape has the feel of more upside but the thing to look forward is a weak finish.  For example, MYST.ob is one I had a small position in and it's run almost 100% in the past few days.  I sold the entire position in my managed account but I bet it has at least one more day of big gains.  There was no weakness in the tape.  Meanwhile, it was clear that CSGH.ob topped out days ago.   CSGH.ob is actually interesting because I think it's going to find support soon and possibly bounce.

Well, I'm tired and Glee is on soon.  Congrats if you hit it big.

CSGJ.ob - Chart Pattern:


This is a lesser known China smallcap that I just bought a little bit of today based on today's new emerging uptrend.

So far I've caught CHIO one day before a big move, and APWR yesterday and CIWT two days ago.  Not a lot of science... just something I've noticed.

Tuesday, October 13, 2009


I am working on blending TA and FA together to find perfect plays.  CSR might be a possibility.  Quite a few people I follow like it.  It has numerous problems, but the question is, are those problems fully priced in?  Because if so, then what you've got is a super cheap stock that nobody likes -- letting you get in ground floor.  Today's price action and chart suggests this might be time to buy in.   I'll let the chart do the talking.  I do not own any yet but I did buy some for my managed account.  I'm finding that doing an annotated chart is extremely helpful for me to see what the market thinks about a particular stock.

Good luck if you decide to buy some CSR.  I don't think this is going to take off and zoom, but it looks to have a solid support line -- not too far away from current prices which can be used as a quick exit.


instinct override:

CHIO earnings came out and despite the now bullish chart, I didn't like the chatter of the people I follow.  This one has always kind of bothered me -- I hate companies that burn cash.

So I sold the whole thing.  I think I made a little bit overall... breakeven at worst.   Like I said, the chart is good but I am skittish so I decided to look elsewhere.  I feel better about names like NEP and even APWR which I don't even have a big position in.

Now -- see -- this is the problem with being a follower and not a leader.  I really don't know what's up with CHIO.  Is it good or not?  I never made a clear plan.  I guess what I saw was -- the ER came out today.  It seemed good, but some people had some questions regarding 'quality of earnings' and meanwhile - the stock is only up 1% for the day -- and the past 6 months have sucked while everything else has been running up.  Is it appropriate to bail out on a gut feeling?  It's not what Buffet would do.  I'm no Buffet for sure.

 I follow a lot of other people's picks.  That's my strategy. I'm 100% responsible if the stocks I pick fail.  I never blame the guy I was following.  So if I decide to bail out -- that's my decision too.  The good thing for CHIO holders is that I'm wrong a lot more often than I'm right.  I'm dumb money.  (Just having a decent year :)  So I move on.

Today the market was mixed but I still made money (again!) this time thanks to CKGT, CIWT --- and that's about it really.  But those two were good enough.

 I added NEP and APWR today.  (Neither did much.)  I feel more comfortable with those names.  I've followed them longer.  I also feel much more comfortable with big board stocks, even though I've probably made most of my profits this year in .ob stocks.    Well -- it's been another fine day.  And good day to you, sir.

shorts on Twitter:

see a lot of FAZ / SRS buyers on StockTwits today.

 Which means we power higher soon.

CIWT chart

I came across this name and thought it was good, but figured I'd check the chart to determine whether I should buy.  I created this chart last night.

Then I bought some this morning.  Turns out -- my chart was right on the money.  And now I'm up $1300 on day 1 of a new stock -- all because I browsed the 'nets and found what was getting some love on the boards.


Monday, October 12, 2009

New Rules:

1) never buy more than 1/4 position in a stock you've only heard about today.

2) stick to your bread and butter

3) stick to price targets

4) use charts for entries only after the fundamentals warrant a buy in the first place.

5) don't be impulsive

6) trust your instincts more 

Too Much Trading

Once again -- I did too much.

Took some profits in LPIH.ob for no good reason -- still have some but have already given up lots of profits by selling my best ideas.

Once you find a gem - you need to stick with it.  Now LPIH.ob -- which I think can get to 3 easily, is only at 2.19 and I've given away over 10,000 shares too cheap.  Stop doing that.

My other new China co,  CHIO, is also beginning to rev up.  I do not want to sell this for less than $3 share -- it's only .99 now.  Note to self:  Don't sell this cheap either.

When a stock has topped out -- there are signs.  I sold most of my CSGH and PUDA and CPBY look a little tired.  (I don't own CPBY.)   I'm also now watching CIWT.ob which is a low vol. play with no news but some higher volume came in today.

Despite being very cautious, today was a great day.  I can only imagine where I'd be if I weren't so afraid all the time.  Ha ha.  INSM -- my other value name, is acting horribly.  Well, you can't win them all.  The China stocks are on fire.  It's pretty clear where the action is.  The only question is when to get off the bus.

Looks toppy:


The dollar kill trade can't last forever.

got cautious:

Two things got my hackles going:

1) guy calls a Fib ratio at 1.61 since the March bottom.  Natural tendency for markets to cycle downward from here.

2) uber-Bear Tim Knight recently bought a bunch of long positions, frustrated at missing the March run up.  Even worse, he's just buying based on charts, so he's long crap like CROX.  Can there be anyone else later to the game than Tim Knight?  I really doubt it.

I sold AHC for small loss as my very knowledgeable brother-in-law pointed out the assets probably won't fetch close to what they would in a firesale.  I rushed into this one.  Like a fool.  Just not a greater fool.

3) Dollar is down and the markets still went red.  That's really a bad sign.  What happens when dollar goes up?

Overall though, making a mint on China smallcaps.  (LPIH +14% today)

So it's all good -- but I would watch out.  Not feeling so good being heavily long today.

ripping it

Another huge day with

LPIH.ob  going over 2.00 now.

Some of my favorite bloggers like AHC so I tagged along since newspaper stocks are blessed.  I got the idea from one of my links.

Market does seem extended.  A  StockTwit msg today said that the SPY is now a Fib ratio -- 1.631 times the low = today's price.

I believe in cycles, even though there's a lot of hocus-pocus surrounding Elliot Wave believers.

The GFRE.ob (now GRUS) I bought on Friday is up 13%

The China names are insane.  The dollar is being trashed once again -- so there's just no stopping the push into risky stocks.

 You gotta love this market, even if you hate it, you know?

Saturday, October 10, 2009

Think Big, Think Less

I'm sure 99% of traders are having their best year ever.  Either that or they were bearish and have been completely blown out.

It's time to think big -- if you haven't already.

Why won't the markets pullback?   The U.S. is a mess.

Whenever I take the macroview though, it makes sense.  The U.S. is 5% of the world's population.  I know we consume 25% of the energy.  But there are 3 or 4 billion people out there and they all want to live like Americans some day.  The drive to consume, to grow will continue even if every American becomes as frugal as they say.  And Americans won't ever be frugal.  I know Americans.  They'll stop spending only because they ran out of money.  But give an American a job, and he or she will spend a good deal of it on shit he or she doesn't need.  'New frugal' is a passing phase.

What happened to Prius sales as soon as oil prices dropped?  You see?  People don't want to do what's right.  Well, they do.  But they want to do what feels good more.

And what feels good now is making money in China small caps.  By keeping my eye on the Yahoo/ Twitter boards, and the charts, it doesn't take a brain scientist to see where the money is flowing.

RINO, CPBY, CMTP, HRBN, KONG, CAGC.  A new one I bought on Friday (which I'm really late to) is GFRE.ob.  Why daytrade for $500/day -- most of these stocks are up 200 - 300% in the past few months.  Think big.  Find where the money is flowing and go with it.  You don't have to be a contrarian.  You don't have to be smarter than the market.  Just be in sync with the market.  Run with the hope and greed.  The bad news has dominated the news for so long.

I'm going to focus on finishing the last quarter strong.  Buy 'em and hold 'em for the big rips.  Keep it really stupid simple now.  Overthinking is deadly.  Think big, but think less.  Yes we can.

Friday, October 9, 2009

SRZ: duh!

I just figured it out.

SRZ has 435 facilities.

The sold 21 for $200 million.

So how much does that value the co?  A LOT more than $5/share, that's for sure.


So I was actually right on HUM -- got a full point and I took it.

So $600 profit

and currently about to be stopped out of ERY for a $650 loss.

Add the gains from LPIH and this week will be a great week.

If oil actually tanks -- might not even have to take that loss.  But the HUM is sold and locked in.

Added some FVE today with SRZ doing so well.  FVE is a value name I like (nobody else does).  Very slow roller.

update:  lost about $350 on ERY so the daytrading provided minimal profits.

why 3x inverse ETFs suck

 I thought OIH would be down today.

 I was right!

 Guess what?  ERY is red anyway.  Correlation just isn't there.  (I'm guessing CVX is the reason.)

 Oh well -- I'm still not stopped out yet.  Lesson learned.  Trying to get too cute just never wins.  Patience does.

 One of my favorite bloggers likes NEP a lot -- and bought some today.  That's two 'smart guys' I follow now who love NEP.  So I'm feeling stronger about NEP -- but it will take time.  Good, the slow rollers are usually my best ideas.

Bernanke Saves the Buck

What a call.

 Dollar should be strong all day -- can't afford to let it fade -- absolutely not -- or it means Ben has no credibility.  If he says he will defend the dollar -- then the dollar has to man up -- if at least for one full day.

Thursday, October 8, 2009

Chart thoughts:

Once again perusing the charts.

Gold is ridonkulous and RSI is pinging overbought.  Same with many oil stocks but not all.

meanwhile,  SPY did a doji and  QQQQ and XLF were both black candles (a win for bulls, but close was lower than the open) -- this denote a lot of selling pressure throughout the day.

The answer can be found in UUP -- a tremendous volume day and the lowest close since March.  Yep -- this is the Greenspan/Bernanke strategy writ large.  Just look how the destruction of the dollar can create rallies, that benefit the top 10% and let the rest of the fuckers out there deal with inflation and no jobs.  Now Geithner knows the drill.  Whenever things get too hairy he will say "the U.S. supports a strong dollar policy" which really means "the U.S. supports whatever get the guy in charge reelected".

Market rallies get you reelected.  Nobody wants to be like Bush Senior.  But -- there is a caveat.  The pussification of the dollar cannot -- absolutely cannot -- go exponential.  You can't have people mad-rush exiting the dollar.  That's going to be totally screw everything up.  You still have to sell a few trillion in Treasury debt each year.  Reckless abandonment will also obviously -- create a rush to commodities and ignite inflation.  And this of course, is what happened today -- you had a madrush to gold/oil and the dollar blasted.

 So there's two things at play in the short term for OIH in particular.

1) filled the gap on the weekly chart
2) overbought gold/commodity play dangerous to Fed
3) XLF/SPY/QQQQ mostly non-confirming

Basically we've reached the point, I think, where this rally is at this point in time, completely running on a dollar collapse move.

 If I'm correct, the dollar will receive some intervention support for the next few days to avoid a blow out.  I have kept and loaded up ERY with a wide stop -- now this is probably going to end up being a small disaster but I'm still only risking 1/3 of 1% of my portfolio.  I think it's a worthwhile hedge and I continue to dabble in inverse ETFs despite dozens of failures.  Still -- I think my read of the market is absolutely correct.   So I bid you all good luck.  The dollar has just about fallen off the edge.

 But as with all things, the Fed is the master of stick saves.  And if indeed the dollar does go up -- well, the rest of the market is already gearing for a takedown.  Trade cautiously.  Be humble.  I'm sure most of you are better at this game than I am.  But it's always nice to get another opinion.  Even if you think I'm completely wrong here.    good luck out there.


  Amazing -- I just finished my thesis and there it is -- Ben responding exactly to the story of the day. He must get out there and defend the dollar on ripshit drops like today -- a mega selloff is terrible for the U.S.   Now he's obviously not going to raise rates unless he has to -- but if this selloff continues -- he definitely might have to step in... so Geithner is calling Goldman right now and saying "Look, boys, you got to cool it for a few days, Ben's getting a little testy."

 If the market doesn't drop tomorrow, I really will be shocked tomorrow.  It's all plain as day now.

Arrogance Meter

If you follow a lot of people like me, you've probably come across a few "arrogant bastards" that kind of tick you off sometimes.  They love to talk about how great they are -- especially on big win days.

 Well, they're usually great and they have something to teach all of us.  However, one thing I look for is when the Arrogance spikes to a certain level -- it's time to get cautious.  The key to success in the markets is humility.  You are no better than anyone else.  And when great traders get arrogant -- they are liable to make huge mistakes.  There comes a time when some traders think they'll never make a mistake again.

 Today the Arrogance Meter was off the charts.

 Now notice what's happening into the close.  Yep, pretty damn weak.  The craptastic leaders like AIG, GS, FNM and even AAPL (great co) are all red.  Are you sure you want to follow Arrogant Winners long and strong tomorrow?  I don't.  Look, I did just fine thanks to LPIH.ob, but tomorrow I could get defaced.

 The dollar got blasted to shit today -- of course commodities are going to rally.  But we're at very depressed levels here.  The Fed still has debt to sell.  Lots of it.  They can let the dollar sink -- but it can't drop this fucking fast every day.  Pardon my French.  That's not going to do at all.  Tomorrow, I wonder, how are commodity investors going to feel with a bouncing dollar?  They're just going to let today's monster profits sit there and let someone else take them?

 Or maybe I'm totally wrong.  I probably am.  Today was a curious day.  SPY closed with a doji.  Indecision there.  All I'm saying is...  when you're full of ego, chance are you're not paying as close attention as you should be.  When the money's rolling in, I suggest you be more cautious, not less.  Tomorrow might not be the same.

Oh, the Humana(ty)

I ran a DCF analysis...

I assumed 3% growth the next 10 years... I shaved $7 off their book value.  I plugged in $3 earnings  (estimates are for over $6 this year).  I still get fair value of $47 assuming these horrific estimates...

I bot HUM.  It makes no sense not to own it.

The market is taking a very short term view of this company.  They just can't lose money fast enough to justify the current price.

 They'd have to earn around .80/share this year to justify the current price.  That means they have to show huge losses for the rest of the year because they made a lot more than that last q.  If someone can justify 35.89 as a fair price -- I'd love to hear it.  The margin of safety is enormous here.  You have to give when the market is pricing companies on political news that assume impossible scenarios.

Another point:  How hard can you squeeze health insurers?  Everyone calls them greedy but profit margins are less than 3% for HUM.  There's not a whole lot of fat to cut here.

 Obviously today's action is understandable... people want to be in what works today.  Which is oil services.  Problem is, I don't think oil services with OIH at 122 is going to work tomorrow.  So I'm skating where the puck is going.  But it feels like crap.

short term bad / long term good

Stupid moves of the day:

got into ERY and averaged down to 12.92 and it's still a loser

 Yes oil and oil service co's are ripping higher... except one, the one I have an oversized position in: NEP.  That's my usual luck running true.

bot HUM at 36.62 and that's a loser.

on the plus side: my oversized LPIH.ob position is ripping again and so I am killing it again simply on that position alone.

OIH topping out?


It's a ridiculously great day for OIH but look at the weekly chart.

I'm calling the top here.

Wednesday, October 7, 2009

INSM: getting closer

I'm obsessed with this ticker.  Creeped up a little more, closing on top of the 20 day MA.

 From the Yahoo board it's clear there's some odd trading going on.  Like I tried to buy 5k at .837 today, the bid went up to .8372...  I got 300 shares filled, but after hours there was a sale for about 3k at .8345 so apparently it only goes down when the higher bids disappear.  Hm.

 Meanwhile, China microcap land is burning it up.  So many runners and now Alcoa just lit yet another candle under the market's ass.

  This is an easy market to make money in.  You just have to believe and stay with your best names and basically -- stop daytrading.  The impulse to constantly being doing something is so incredibly detrimental to my own bottomline.

 That said, my stupid move of the day was trying to daytrade that RPRX and losing about $400 in a hour.  Then I bought PUDA and made back $200 -- but I shoulda kept it.  I did buy a chunk for my managed account now.

 The people I follow love PUDA, CPBY, BSPM, CSGH (a bit extended), RINO (extended now) and MYST, among a few other.  CCGY is another one that I personally don't like for some reason.  I don't just buy everything.  I mean, look, how can we possibly succeed?  90% of all traders fail.  It really seems impossible to get an edge.  But the internet is the edge.  The ability to find the ideas of the best small time, private investors and follow them has been my secret to success.  It has its risks.  People may be con artists.  The people I follow may not stick around.  (That's why I keep searching for more and more people.)

 The other part of my recent success has been holding for much longer periods of time.  People get excited when they make $500 in 5 minutes.  Sure, I guess.  In my mom's account, there are positions with $13,000 - $20,000 in paper profits.  It's been as high as $35,000 this year.  All I did was set it and forget it.  Some of them would be larger if I hadn't taken partials along the way.  Everyone can make money in a dozen different ways...   It's really all about finding the strategy that's comfortable for you and sticking to it.  I think maybe that's why people fail.  They don't find their optimal strategy in time and lose to much in the learning process.  Maybe.  I don't know.

 Well... my confidence is up today and I've really been mostly playing it safe.  I don't own many of the great names I mentioned because I sold so many too soon.  I may need to rebuy some CSGH back soon. I thought it would drop but it's such a winner... it might just run to 3 without me.

 I hope you all had a great day in the markets.  Being able to trade for a living is really a dream come true.  I'm still not 100% sure I can be consistently profitable, but this year has certainly helped keep the dream alive.   I think if INSM breaks I'll have all the confidence I need to keep me going.


I added this to the managed portfolio at 14.35  based on chart / valuation.

I've read the blogosphere comments.  I can understand the short interest.  They're products suck or something.  Revenue dropping rapidly... going obsolete.  This is the world of technology.  Innovate or die.

So I'm setting a stop around 13.50 -- about an .80 loss of it drops that low.

Furthermore, the CEO is happy to sell out at 15.50  (but they used company shares to do buyback at 20.00 plus).  Yeah - that's a dickhead move.

There's a little news today and the play here, shorts may have possibly overstepped.  SIGM is in talks to buy CopperGate -- I don't know anything about the deal.  But if this increases revenues and they don't overpay (management has shown that they suck at this) -- then SIGM might be trying to reinvent itself and this would change the dynamics overnight.

In many ways, the 35% short interest is really the positive here.  When there are 9 million share that have to be bought up at some point (out of 24 million) -- it might be wise for some of them to pay up now rather than wait for really good news.

 Clicking in some really conservative numbers, the stock is worth $18 today so the margin of safety is not great.  But tech stocks can change in a heartbeat and the shorts don't have much room to maneuver with the company only trading at $2/share -- the rest in book value.  Up 3.4% on a down day is also positive.  So big picture is kind of weak, valuation is good, technical signs are good/great.

Let's see if this works.  I'm not really following anyone on this.  Mostly trusting the charts, if you can trust a chart. (You can't.)

update:  The Yahoo SIGM board is overrun with the shorties.  I hate it when the board is like that.  It's one thing if this were really a no revenue/no profit spec stock.  But they have to bash it to buyers from coming in.  Any positive news from anywhere is going to cause a squeeze I suspect.  The idea of SIGM buying CopperGate sounds like a bad idea.  They'll probably overpay.  I suppose the stock might be rising on the possibility the buyout will be voted down.  Management owns very few shares -- they probably can't control it for their benefit.  I guess I stepped into quite a mess here but the stock is holding up very well today.  When in doubt,  I always listen to the chart.

experiment with value: UNH

Just as an experiment I have bought 1000 UNH for my managed account at 24.77

I did a DCF analysis and my margin of safety is around 48% supposedly.  I know Warren Buffet owns this.  And finally, the chart says this has come around for a new swing.

So I'm just going to forget about it for 6 months and see if it pans out.   In general, it looks like a piece of crap company.  Value?  yes.   But the story is horrible, as all health insurance companies are these days.

Tuesday, October 6, 2009

Spider Sense:

I mentioned PUDA as one I didn't own that looks good.   Up huge on Monday.   After a few years of trading and observation -- most traders begin to develop a spider sense (some call it 'instincts') and they just load up on a name because they know it's going to run.

Well, one stock I do own is INSM and today I started getting that feeling.  I added more shares today.  This is one of those deep value plays I'm following my new blog-friend Jae Jun into.  I knew when I bought it the technically were pretty crapola and sure enough, it dropped almost 10% after I bought in.

But when you start to see the charts getting bullish on a deep value name -- like ROIAK recently -- it pays to get heavy and then (here's the tough part) do nothing.

INSM has the mother of all gaps to fill (see my chart).   Good luck to all, and to all a good night.


Another Day, Another Dollar (Demise)

You can't keep a good fiat currency up, can you?

Today I was in liquidation mode.  My signal came from $GS which gapped up, closed lower, my guess is there will be numerous 'bearish engulfing' candlesticks -- you can see all the print here:


My guess is there will be a lot more bearish candlestick patterns tonight.  But let's face it, the robots are in charge, and you can't fight fiat currency destruction.  The market has to go up just to stay even.

The other news that caught my eye was the weak 3-year auction.  The whole game is over if the Fed can't sell debt.  So every failed auction is another step toward the abyss.  When you're running a $1 trillion deficit, you don't want your creditors getting cold feet.  That just won't do.  If the market has to drop a bit to drum up interest in "flight to safety" toilet paper, then it'll have to drop.

 Overall, it's hard to get a read on the macro-economy.  Maybe it's better than we all think.  But more than likely, the market, always a short-term machine, has been held hostage to short term investors that keep the virtuous cycle alive.  It's all good until it's not.  But I don't want to be all in when things go fachakta.

 I sold most of my CSGH over 2.  It was a good run.
 I added more INSM
 I added a little more LPIH  (down, broke support... yikes)
 I sold most of my LLFH (3rd time I swung this for money, I own this ticker)
 I sold the PACR (lost less than $100 instead of a big $1000 stop out)

 But here's my favorite:  I bought 200 FAZ today and even though it wasn't much money -- I dumped it for 1.10 gain.  Yes, I traded FAZ for a nice profit and that my friends, is quite incredible for a guy like me.  I read the market correctly today.

 That said, I am bearish regarding tomorrow and for all I know, the market will blast higher.  I bought a big SDS position for my managed account (Mom) and also hold FAZ for her.

 Overall, today was a good day, I hold lots of cash now and I feel good about it.  I don't own any 'stupid' positions like PACR/GIGM.  Just my favorites.

  I hope everyone out there had a great day.  I'm sure you did better than me (I).  But hey, we're all in this together.

 Remember: goal of the week -- patience.

Monday, October 5, 2009

Hot Stocks from My Peeps.

The various people I follow are bullish on stocks like:


  Very often, the biggest gainers of the day are very familiar names.  Why I don't own all of them is a mystery.  Perhaps the most bullish name of the bloggers I follow is PUDA.  I don't own any.  I might buy some soon.

 Invariably -- these kinds of stocks do the best.  The ones I buy that nobody likes:  PACR, GIGM, ENDP rarely do well, although ENDP had a fine day today... finally.

 Of the above names, NEP has definitely been a big fat laggard lately.  It's at support and below the recent offering, the way ATPG was... before it doubled.

 Technically, the indexes appear to be in a bind, above support, below resistance, stuck between moving averages and volume dying.  Nonetheless, some people in ROIAK had their best day of the year.  This is now a true stockpickers market.  Most people I'm sure are having the best year of their careers.  It'll take a LOT of panic to reach a tipping point that triggers panic selling.  And the fact is, the above names aren't exactly overpriced, compared to the average SPX member.

 The other laggard is EGMI which put in my favorite Dragonfly candlestick which usually denotes exhaustion in selling and sets up a potential new trend.  Watch NEP and EGMI (for you bottompickers)

 I think I'll buy some more of the above names, but I think I'll wait for the next red day on the indexes.  I'm going to be very picky now.  Mr. Market needs to show me bargains.   I'm not chasing unless I'm daytrading in which case I set tight stops and bet small.

 But ROIAK/CMLS are good examples of stocks I should have held.  The charts were very much in bull mode... it was clear the FA an TA were working together.   NEP and EGMI are not showing the same action.  Technically, I like to rebuy my ENDP if it pulls back a little.  Today's volume/movement is likely the start of a march to 30.  Or not.

 My goal this week:  Be MUCH more patient.  Observe market action... believe in my value long term holdings.   And ditch this cold.  My throat is sore.

Terrible, Horrible No Good Very Bad Trading Day

Made a few entries.

bot STEC/FEED/TA  -- for quick trades.  Sold STEC/FEED for tiny losses... STEC broke out afterward.  Dumb.

I sold the GIGM I had bought at 5 for a .30 loss or so... lost faith again.  I still hold some in my managed account with a wider stop.

The PACR I bought is showing a loss. I will be stopped out soon.

I am losing money on INSM and CHIO.

NEP is turning into a big loss.

LLFH.ob -- I am actually up a little bit on this now... the only buy the dip play working so far.

TA rose immediately after I bought it.  I will hold.

I had mentioned CMLS and ROIAK a few days ago -- I sold them both for tiny gains.  Missing out on today's huge pop.  As I said -- I follow some of the best traders around... I just don't always trust them enough.

To top it off, I sold my ENDP this morning for a nice gain, but not as nice as if I'd just done nothing.  Fortunately I still hold some in my managed portfolio.

Overall, once again, I have done horribly with most of my decision making, but perhaps I am simply not being patient enough.  ROIAK/CMLS were great buys... but you have to wait, don't you.  Patience is a virtue.

My favorite China microcap now, LPIH.ob -- is of course, down on a rally day.

On top of all of this, I am feeling sick, probably swine flu.

I think I'll move to Australia.

Sunday, October 4, 2009

Crowd Behavior

 Interesting article in latest New Yorker about the financial crisis.  It discussed how the 'insanity' of the bubble in housing prices was rational because of the short term rewards given to CEO / Mortgage Banks.

Not participating in the bubble, and having a bad quarter, would cost CEOs their job.  Portfolio Managers had no choice but to buy into rallies or fall behind.  They can't act "rationally" if it means showing no gains while those participating in the bubble pull ahead.  Besides, they get paid each year.  When the bubble collapsed, no hedge fund manager had to give back his 2/20 profit share from the year before.

So the Fed's actions this year / approved by Obama (who doesn't know any better) have essentially made "too big to fail" reality and hence, the suprising rally.  But I suppose there's nothing suprising.  The first part of the rally was probably genuine  (into perhaps July).  But somehow, enough extra tricks (cash for clunkers, new home buyer incentives) created a tipping point, a which point, once again, even portfolio managers who don't believe in the stocks they're buying, are buying them anyway simply because they can't not buy them.

So in effect, we should expect bubbles to occur, and occur regularly.  I'm amazed how long they can run, although I suppose 7 months is not that long really.  It's interesting how this latest pullback has occurred, for the second time, directly after the quarter's end.  Right before Q. end is the time for maximum risk-taking.  

My feeling now is that the markets trend lower until about the first week of December and then miraculously start to rise into the end of the quarter.  Although perhaps reality is finally caught up and the market just crashes.  The problem with bubbles, is that the crowd behavior works in reverse.  If, indeed, a tipping point to the downside forms, now all the portfolio managers will sell, even if they fully believe in the stocks they are selling.  (With force liquidations, many don't have a choice.)  In fact, they will more than likely sell the good stocks with greater liquidity, and keep the 'toxic assets' because they can't be sold anyway.

We can see this on the charts.  In many ways, I worry because I don't really do my own research.  I keep forgetting though, that the charts can provide the answers.  If a stock is cheap, a value name, then it will only be a winning stock when more than just value players buy in.  And if that happens, the charts will always begin to show bullish signals.   I continue to try to combine both elements into my investing with mixed results.

Right now, I will be setting a stop on GIGM.  I'm getting a bad vibe and it seems to me if it starts trading below 4.40, it may stay down for a long time.  I'm better off taking a loss and reinvesting then holding on for a long time and possibly suffering greater losses.  My IRA has lost all its short term gains in the past week.  I can tell the next few weeks will be difficult times.

 This week, I will spend more times studying charts and price action and less on fundamentals.

 After all, it's clear something like AIG or even AONE is overpriced, but it is easy to participate in the names on the upside by following charts and momentum than focusing on what it SHOULD be worth.   Value investing is a lonely/patient game, and I believe firmly at the same time that Price pays.   So I will attempt more short term trading this week, focusing on charts and placing appropriate stops.

Friday, October 2, 2009

Melting, I'm Melting...

 Today was not fun.

 I'm really bad at selloffs.  I used to hold onto loser positions until they were down huge and finally sell for mega losses.

 Today was not great.  I lost less than 1.5% of my IRA but it felt much worse somehow.

 Instead of selling and getting into the safety of cash, I bought a little XIDE and more LLFH which could easily sink to 4.26 (50 day MA).  CHIO looks like it's about to fall off a cliff.  INSM looks terrible.

 My managed account dropped about $16,000 which is a lot of money to me.

 Overall, the market did exactly what I thought it would -- big huge gap down and the rest of the day was consolidation only the close was down because the new trend is now pain and more pain.  Nobody wants stocks -- and the dollar was even red.  That said -- it's pretty damn fucked (for lack of a better word) that of all things... AIG and BAC an GS and CIT were all green when these are supposed to be the problem children.  Add to that the overvalued AONE ipo which blasts 14.5% higher.   So much for value hunting.

 I actually was not around all day but got back on around 12 -- noticed some of my guys talking about YONG -- so I bought some and within 3 minutes decided to sell it (I had to go anyway) and made a fast $230.

 I'm sure I'm going to be punished more by Mr. Market but the fact is, I like almost all of the stocks I own.  I know there's a big correction coming but I just have no interest in trading every blip.

  So there are no jobs in America.  Is that the end of the world?  Maybe.

 I would like to focus more on my technical trading.  I had done no research on YONG, I bought in because I checked the chart and instinctively, I knew it was going up.  And it just went right up immediately after I bought.  I knew before I bought CHIO that the chart was terrible... and sure enough I'm down a bunch on it, even though the people I follow believe in it long term.

 So I'm going to focus on making more daytrades while holding my value plays.  I think the key is - you have to completely shift your thought process.  Value players buy cheap, traders buy trending up stocks on crazy volume.  It's hard to do both at the same time.

 I am going to add more to XIDE... I think the techincal sign will be the first up day.  It could drop 10 days in a row.  I don't want to buy it again until sellers are exhausted.

 So I'm feeling kind of nervous.  Although when I see AIG/GS/CIT all green, I have to wonder if shorts are not feeling a bit worried Bernanke's not plotting some crazy move.

  Well... it was a painful week, though not devastating.  I'm alive.  time to relax... no need to dwell on past mistakes.   If you shorted and beat Mr. Market, good for you.  The thing with these China microcaps, when they drop, they drop hard, but when they rise... they can rocket.  (see: YONG)

 Good day to you, sir.

Margin Calls?

I hear people saying the market will crash on margin calls.

Go check the 'nets.  Everyone is either short or holding 50% cash or more.

What's everyone going to do with their cash once the market drops another 200 points?  Just sit there collecting .005% interest?

Thursday, October 1, 2009

big picture: financials

I often follow individual stocks so closely... I forget to look at the big picture.

 I knew the markets were in trouble when I started shorting this week -- and let myself get stopped out instead of waiting for a clearer support pattern to emerge before buying in.

 Now it's quite obvious what's the big headline: CIT.

 They loan to small businesses and a bankrupt CIT is going to shockwave the whole economy.  Credit is going to seize up.  The markets could indeed plummet on another Bear Stearns like fiasco.  AIG has closed below its 20 day MA for the first time since the end of July !!!

 AIG is going to be the first to die here.  It's becoming clear a lot of the bailouts to banks were merely stopgap loans that delayed cash flow problems.  FNM, FRE, BAC have already keeled over.

 Now the stocks I own don't have terrible cashflow problems but they'll be punished as well.   The markets will almost certainly tank now unless.... big unless... the Fed steps in once again.  How could they not?

 Obviously this whole thing is a mess.  It seems the whole rally was just an extended period of hope that the Fed could bubble it all away.  But in the end, the Fed's action can merely delay the toxic debt from hitting critical levels.  Now CIT threatens and more money is needed.  Money the Fed doesn't have.

  Ultimately, I see this is as a great opportunity when value names drop as everyone moves to cash which won't last long.  The cash will eventually find a home again.  But most importantly, Bernanke has no intention of watching the New Depression unfold on his watch.  It's his purpose in life.   So let's see what crazy games unfold now.

   The world is watching.

GIGM support

see chart: http://stockcharts.com/h-sc/ui?s=GIGM&p=D&yr=0&mn=9&dy=0&id=p82008642477&a=179724000

 I see a continuation of selling tomorrow.  I bought GIGM at 5 but now see true support is around 4.80 -- markets have memories.

 I was able to pick up 1000 at 4.90 afterhours.  Once GIGM hits 4.80 it'll complete the 3rd touch of new uptrend line.   One thing I like -- as there is a LOT of negativity regarding management on the Yahoo board... however, there is not a lot of short interest.  So not a lot of money where the mouth is. Investor now are waiting for the latest earnings report...

 My main thesis right now is the markets are going to carve out a bottom -- very fast... and then remain rangebound, much to the frustration of bulls and bears alike.  Those people shorting today may start the day feeling invincible and longs may be thinking the world is about to end... but the return of volatility will provide great opportunities for excellent traders.  Lesser traders will get their asses handed to them.

 I have evolved into a value player with a dash of technical analysis.  My intraday moves are terrible so I avoid playing that game.  And when I do, I do not take big positions.

 In general, I expect to experience quite a bit of pain now.  I'm not sure how I'll handle it.  It may get very scary.  Panicking late is a really bad idea.  So it's time to prepare mentally and accept drawdowns as a value investor.   Today was not a big loss but tomorrow might be a huge hit.  I suppose I'll have to take it one day at a time.

The SPY chart:


In retrospect, seems obvious enough.


 for a massive loss of less than 1% today.

 I always swear off shorting forever right before days like today.

 That was fun, huh?

HUM pattern

bot HUM for managed portfolio at 37.32.

This is based on a multi-day pattern I often use.  My stop is around 36.65.

It's a deep value name I haven't held for a while.  This is a swing trade.

Gut Feeling:

I want to buy cheap but my gut is saying tomorrow is going to be the knock out punch and THEN the market will settle down.

No reason to buy into a shitstorm, even when you're getting value.  I've got plenty of long positions.

I think I've seen this story before.  Two day punch -- with the market hitting a low before noon then rallying back for 2 days.

It seems to obvious to buy now -- the dip won't emerge until more people throw in the towel.  Definitely not there yet.  Too many bulls still.


A couple of people I follow like CSR.

Another China name breaking below the 20 day MA.

Now why should I buy?

 They've got a lot of debt which I hate, they have a lot of dilution which I hate more.  I don't really get all the GAAP vs. non-GAAP earnings situation.  Also -- it's pretty big - over $300m market cap.

 The best bigger cap small cap I ever bought was RINO.  It had a much better feel.  My instincts say CSR is a no-go.  So I say no go.

 Believe it or not, at this moment with the Dow -140...  my portfolio is down less than $100 and would be green had I not jumped into NEP with both feet... and promptly had my feet cut off.

So Correction...

But really, when you think about it...

what do you do when you go all cash?

Cash?  Cash just sounds like a horrible idea... I mean... cash is just going to mold and grow worthless.

I'll keep adding to NEP or something... I don't know.

I already have about 40% cash and it's just not really fun.

GIGM @ 4.98

This is a  'magic formula' stock.

I have fair value somewhere between $7 - $10 /share.

Now touching its 50 day MA.  I just bought a small amount for a long term hold.  I think I know this is a good value name so I can hold on if it drops another buck on me.    That's important.  When I buy spec. names I don't understand -- I tend to panic out.

GIGM I'm familiar with.  I like it under 5.  In fact, I like it a lot.  I'll double up my small position on further weakness.

Mr. Market:

good post: http://www.jonathangoldberg.com/2009/10/dont-panic-sell-beat-mr-market.html

Indeed:  I was a net buyer today so far.

This is the time to focus on companies, not markets.  I think NEP is a great example of a story that got better, but Mr. Market says it is worth less today than yesterday.  Don't argue with Mr. Market -- take advantage.

 Mr. Market will likely crush energy prices temporarily.  The strong dollar ensures this.  Energy stocks will suffer far more than their actual business.

  Probably my next watch list buy is XIDE.  Love to see it get hammered.  If AONE can trade where it does, then XIDE should be worth 15.

Yin and Yang

People lament down days.

But c'mon -- how are you supposed to buy a bargain if no one ever panics?

I bought NEP several times today on the acquisition news.  Now my average is 4.53 on a full-size position.  I'm happy with that.

I bought more CHIO  avg. .96

These positions are losers for now.

So was CSGH before it ran 100%

I bought back LLFH -- getting some at 5.01  today.

Market is still tanking.   Well good.  Did you know CSGH is up 8% today?   ROIAK is up 5%.  The markets movement can only provide you with bargains or extreme prices to sell out.   I admit -- I tend to panic too early.  (See how smart that was?  Did I profit from it?  No.  Ah, not that smart then.)

The Fed has some big auctions this week.  I think this is part of the game.  You have to scare people back into holding $USD otherwise you can't sell U.S. debt cheap.  Meanwhile, the companies I own are mostly making a lot of money anyway.  Except now I get them cheap.  What's not to like?

 Isn't it amazing how everything sells off when the market tanks?  There's no discrimination.  But this is the time when great traders shine and lucky traders die the death of a thousand overtrades.

red day / green stocks:

What's the bucking the trend today?

CKGT - up 2 cents.  I added a little more.  It's consolidating nicely.  And cheap.

AXPW.ob --  flat  -- might add more soon

CSGH.ob -- the king is up.  I'll wait.   I have 1/3rd my position left.

NEP  -- added back a full position today

GAXC.ob - up a penny -- at support I think here

CMLS -- flat -- not sure what I think, low vol.

ROIAK -- up  a nickel   on decent volume (for roiak)  -- might be about to trend up big time.

LLFH -- adding back my position sold around 5.85 last time.    Just got 5.35 and 5.15, bidding on 5.02.

I love how profitless AONE is up 10% today though...kind of funny.  Bodes well for XIDE which is not a bad entry at 7.70 but I'll pass for now.

Twitter Sheep

I went short a bit too early, or perhaps I set my stops too tight... but I always tend to want to short when the market is raging up.

Now Twitter Traders are shorting today -- after a two day drop and a 100 point drop this morning.

I'm tempted to find a long trade here.  Stocktwits are always following, never leading.

Well here's my play:   long PACR @  3.80   -- I'll use a close below the 50 day as a stop.  (but no stop set).

Kind of an odd bird, I know.  I like the chart a LOT more than the stock.  We shall see.  But at least I'm calling it early and not chasing some momo name.

CHIO - an idea

I like when I start to understand 'why' a stock trades like it does.

CHIO is a new 'hot pick' from my China value blogosphere.

The stock has completely died this quarter.  They have very little cash left.  They were also removed from a China Index: http://www.istockanalyst.com/article/viewiStockNews/articleid/3517266

And if that weren't all, the stock can not be traded online at Ameritrade OR E-Trade, you have to phone in orders.

However, if you look at their business, it looks pretty awesome.  Now, there's no way this stock is going to double anytime soon.  So many things have to happen.  But there are a lot of non-business related issues mentioned above that may be creating a heck of a bargain.  I only own a little bit.  This ticker could languish for a long time.  Is it worth adding. Or perhaps waiting for a catalyst?  Or is it a 'scam'?  (I don't think it's a scam really.)

 It's really not a name I would buy on my own.  But some guys I trust like it.  I wish I had more conviction.  If anyone has an opinion - post a comment.  (As if anyone is reading this blog, haha.)

Always Check Their Credibility

On Yahoo this morning,  in an article, Neil Hennessey says the Dow will double from here

Here's how the Hennessey Funds have been doing lately:


It should be clear:  Dumbasses like to make predictions.  It's in their nature.