Every weekend on Financial Tides I try to give an objective summary of what happened in the stock market during the past week. This week we had a ying yang market but unfortunately there was more yang than ying so we are down for the second straight week. As measured by the Value Line Index of 1700 stocks we were down 6.26% this week and 1.74% last week with an October loss of 5.31%.
Let's see how the market did using my standard market momentum criteria as found on BarChart:
Value Line Index - an index of 1700 stocks - trending downward but not to panic yet.
1 - The Index was down 6.26% this week, down 1.74% last week and down 5.31% for the month. [more]
On Financial Tides sector ETF's pop up purely as a short term technical play. They are a way to take advantage of a sector that excels in the current market conditions. The Consumer Staples sector is presently that kind of sector.
On BarChart's ETF screener XLP -- Consumer Staple Select Sector ETF comes up as one of the most steadily rising ETF's. Recently XLP has hit 11 new highs in the last 20 trading sessions and 30 new highs in the last 100. A nice steady, consistent performer with a 65 day price appreciation of 10.05%, not bad in this ying/yang environment. BarChart rates XLP as a 65% BUY with 9 of the 13 technical indicators as BUY, 3 HOLDS and a single SELL.
Over on Motley Fool CAPs their members rate this stock as a 145 to 11 likelihood of outperforming the market and in this case I agree with the majority.
Recommendation: BUY XLP - Consumer Staple Select Sector ETF below 26.25 with a protective stop loss no higher than 25.50.
Jim Van Meerten is an investor who writes about financial matters here and on Financial Tides. Please make a comment below or email FinancialTides@gmail.com
A little over 5 years ago I began a fantasy portfolio on Marketocracy. I was in love with the stock market since I was 14 but because of positions held by either myself or family members I was unable to actually trade the way I wanted to. After seeing an article in Forbes -- Best of the Web about fantasy stock market simulation games I was hooked. In the same article they also recommended BarChart as a stock screener and technical analysis tool. I began trying all sorts of investing strategies, some worked for a while and some were total disasters from the start. I read the comments of other players, especially Marketocracy's M100 - their top of the line players and learned a lot from them. Finally I got into a groove and settled on not only my own stock picking strategy but my portfolio management strategy as well. It is very simple:
Add to my portfolio stocks that are hitting new highs at least 50% of the time during the last 20 trading sessions. If there aren't any don't buy anything. Use BarChart's 13 technical analysis indicators to get a TA consensus about the stock. I don't know how to compute all of those indicators myself but if the stock isn't a buy on at least 80% of them I pass on the stock. Once in my portfolio I prune the stock if it fails to maintain a trading range above its 50 day moving average.
It sounds simple and as I shared my ideas on various Internet sites many, many people told me it wouldn't work. I now have 2 funds on Marketocracy that use these principles: VMNHI - stocks hitting new highs and trading over 100K shares a day and VMSLO - stocks hitting new highs trading between 25K and 99K shares a day. [more]
At Financial Tides we're a sucker of good Bar-B-Que and DAVE not only serves up a good brisket but is projected to serve up nice earnings growth. DAVE owns, operates and franchises barbecue restaurants and blues clubs. The company currently owns locations and franchises locations in Minnesota, Wisconsin, Illinois, Iowa, Nebraska, Utah, Maryland and Virginia and has signed development agreements for an additional franchised locations. Its menu features award-winning barbecued and grilled meats, an ample selection of salads, side items, sandwiches and unique desserts.
Only one analyst, Mark Smith of Feltl & Co follows DAVE but with projected sales of 137M it has a lot of other fans. Mark rates the company a STRONG BUY with earnings growth of 24.5% this year and 14.8% next year.
BarChart rates DAVE an 80% BUY on a technical analysis basis. The company is selling for around 6.70 and Barchart has a support level of 6.46.
Recommendation: BUY Famous Dave's --DAVE-- below 6.75 with a protective stop loss at 6.00
Jim Van Meerten is an investor and writes about financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com.
Disclosure: I hold no position in Famous Dave's -- DAVE -- at the time of this publication. [more]
I think we all agree the economy though week is in recovery. Emerging companies will need help implementing their new computer systems and Financial Tides thinks Tyler Technologies - TYL - might be the on to help companies and governmental agencies with their IT implementations.
Per Yahoo Financial TLY provides integrated information management solutions and services for local governments in the United States, Canada, Puerto Rico, and the United Kingdom. The company's financial management systems include modules for general ledger, budget preparation, fixed assets, requisitions, purchase orders, bid management, accounts payable, contract management, accounts receivable, investment management, inventory control, project and grant accounting, work orders, job costing, GASB 34 reporting, payroll, and human resources. It also offers specialized products that automate various city functions, including municipal courts, parking tickets, equipment and project costing, animal licenses, business licenses, permits and inspections, code enforcement, citizen complaint tracking, ambulance billing, fleet maintenance, and cemetery records management, as well as provides utility billing solutions, student information systems, and applications to manage pension funds.
Tyler Technologies' courts and justice solutions comprise a suite of solutions to automate, track, and manage the law enforcement and judicial process, including court case management system, law enforcement system, prosecutor system, and supervision system. The company's property appraisal and tax solutions automate the appraisal and assessment of real and personal property, including record keeping, mass appraisal, inquiry and protest tracking, appraisal and tax roll generation, tax statement processing, and electronic state-level reporting.
Its public records and content management systems record, scan, and index information documents maintained at the courthouse, such as deeds; mortgages; liens; UCC financing statements; and vital records, including birth, death, and marriage certificates. The company also offers professional information technology and property appraisal outsourcing services. Tyler Technologies was founded in 1966 and is based in Dallas, Texas.
There are 5 analysts watching TYL including Banc of America and BB&T so the stock does have a major following. There are 4 STRONG BUY ratings and just 1 HOLD. Sales are expected to grow by 10.7% year over year and earnings estimates for next year are expected to grow by 18.1%. Nice numbers and they exceed expected growth in GDP.
On a technical analysis view BarChart rates this stock a 96% BUY with 12 of 13 TA indicators a BUY and only 1 HOLD. The stock has hit 16 new highs in the last 20 trading sessions and has had a 65 day price appreciation of 23.6%.
Summary: 4 out of 5 analysts rate TYL a STRONG BUY based on fundamental analysis and BarChart rates it a 96% BUY based on technical analysis.
Recommendation: BUY Tyler Technologies TLY around 19 with a protective stop loss of not less than 17.
Jim Van Meerten is an investor and writes on financial matters here and on Financial Tides. Please leave a comment below or email Financialtides@gmail.com
Disclosure: I do not hold any positions in TYL - Tyler Technologies at the time of this publication. [more]
GNW - Genworth Financial - sell on price weakness - below 50 DMA
For years I've driven in I-95 through Jacksonville on my way to Florida and wondered about the Modis sign on a skyscraper in the distance. I found that Modis is a subsidiary of MPS Group which provides all kinds of business services. Today I have added MPS to my S&P 400 fund on Financial Tides.
Per Yahoo Finance MPS Group, Inc. provides staffing, consulting, and business solutions to various industries in the United States, Canada, the United Kingdom, continental Europe, Australia, and Asia. The company operates in two divisions, Professional Services and IT Services. The Professional Services division provides specialized staffing and recruiting in the disciplines of accounting and finance, law, engineering, healthcare, and property to companies and government agencies. This segment also offers technical and engineering strategic workforce solutions, such as on-site management consulting and in-house project services; and staffs temporary and full-time employees in attorney, paralegal, legal administrative, and legal secretarial positions. It also places temporary and full-time employees in accounting and finance, tax, and audit positions; and traveling healthcare professionals in the areas of nursing, physical and occupational therapy, and speech and language therapy. The IT Services division provides specialty staffing, consulting and business solutions, and marketing and creative solutions. This segment engages in the placement of IT contract consultants for IT project support and staffing; recruitment of full-time positions; and provision of on-site recruiting support for application development, systems integration, and enterprise application integration. It also specializes in Web design and development, application development, digital data management, business intelligence, infrastructure and security, and interactive marketing; and provides software-based workforce solutions. MPS Group, Inc. offers its services primarily under the Modis, Badenoch & Clark, Accounting Principals, Entegee, Special Counsel, Idea Integration, Soliant Health, and Beeline brand names. The company was formerly known as Accustaff Incorporated and changed its name to MPS Group, Inc. in 2002. MPS Group, Inc. was founded in 1992 and is headquartered in Jacksonville, Florida.
Outsourcing of business services is big business these days and MPS is one of the biggest. 12 analysts follow the company and 3 presently rate it a buy or strong buy. Earnings consensus is expected to increase from 10 cents a share this year to over 18 cent next year; an 80% increase.
On a Technical Analysis basis BarChart rates this stock a 96% buy with 12 of 13 indicators a buy and only one hold. The 6o% price increase in the past 65 days shows MPS is finally being recognized as a leader in its industry. 7 new highs in the past 20 days shows price appreciation still has room to grow.
Recommendation : BUY MPS -- MPS Group below 13.60 and keep a tight stop loss around 12.50.
Jim Van Meerten is an investor and writes on financial matters here and on Financial Tides. Please make a comment below or email to FinancialTides@gmail.com
Disclosure: I hold in my Marketocracy S&P 400 portfolio but have no actual positions in MPS at the time of this publication [more]
Gas and oil prices have been on a tear recently but just how far can they go? Pioneer Natural Resources -- PXD --is featured in Financial Tides as a pick of the day. According to Yahoo Financial : Pioneer Natural Resources Company engages in the exploration and production of oil and gas in the United States, South Africa, and Tunisia. It produces crude oil, natural gas, and natural gas liquids. The company primarily holds interests in the Spraberry field in the Permian Basin area; the Hugoton and West Panhandle fields in the Mid-Continent area; and the Raton field in the Rocky Mountains area. As of December 31, 2008, it had proved undeveloped reserves and proved developed reserves of approximately 246 million barrels of oil and natural gas liquids; and 1,064 billion cubic feet of gas. The company was founded in 1997 and is headquartered in Irving, Texas.
Of the 15 analysts following PXD 9 rate it a buy or strong buy. This year there is an estimate of a 12 cent loss but next year the company is expected to make 1.63 per share. A very nice increase. In the last 30 days 6 of the analysts have increased their EPS estimates for next year.
On a technical analysis basis BarChart rates PXD a 96% buy with 12 of 13 technical indicators a buy and only 1 hold. The stock has traded into 14 new highs in the last 20 session and has had a 75% price appreciation in the last 65 days.
What's not to like about the stock? With half of the analysts following PXD creating a BUY buzz mentality and the technical indicators show that the buzz in presently working, you should consider this stock.
Recommendation : Buy PXD - Pioneer Natural Resources around 45 with a protective stop loss no lower than 35. Be prepared to move that up on a weekly basis till the stock runs out of gas.
Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please comment below or an email to FinancialTides@gmail.com
Disclosure: I hold no position in PXD at time of this publication. [more]
We are at a very pivotal time in the market. Half of the pundits are saying that we are headed higher and the other half thinks we are in for a big correction. What are we to do?
You know what to do, your Mom and Dad taught you before you were six. Always look both ways before you cross the road. That road is the stock market. Should you stay where you are and wait for the traffic to clear or is it now safe to go ahead and cross to the other side?
I look at the signs. Yesterday the ValueLine Index -- an index of 1700 stocks -- closed below its 20 day moving average. BarChart's market momentum showed 61% of the stocks closed below their 20 day moving averages. The ratio of stocks hitting 20 day new highs to 20 day new lows was 537/1066 = .5 , another sign for caution. No one will fault you for sitting out a day or two.
What is happening and where are we headed? The easiest way to explain where we are is to share with you my recent experience on a trip to Florida down I-95. Traffic would speed up and everyone was flying along above the speed limit. All of a sudden red tail lights flashed and everyone slammed on the breaks. This caterpillar or accordion effect happened over and over but there were no apparent accidents causing the slamming on of brakes. What's this got to do with the financial world? Let me explain.
Picture the financial world as 3 groups of cars: the stock market, the economy and company earnings. They are all traveling down the same highway in the same direction but occasionally they bunch up and the brakes get slammed on. You would think that drivers would not bunch up and everyone would just put the cars on cruise control at 70 and travel along like a train but that's not how the drivers think and neither do our 3 cars.
The stock market usually leads the way, it's a leading economic indicator, the economy is in the middle and earnings because they are reported after the fact usually follows the pack from behind. That's what is happening with our little convoy.
The stock market got too far out in front. The economy is trying to catch up and its leading economic indicators are catching up but its coincident indicators have been flat for 3 straight months. Earnings are being reported now and seem to be verifying that the stock market and economy are correctly headed higher. The stock market is slowing down and allowing the rest of the convoy to catch up. We will space out again in a week or two and the stock market will get out in front again.
On my Wall Street Survivor portfolio none of my stocks are trading below their 20 day moving average so I haven't trimmed out anything and I'm fully invested. I'll just stay on the curb right now, wait for the traffic to clear and be patient.
Jim Van Meerten is an investor and blogs on financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com
Disclosure: I do not hold any stocks that are in my Wall Street Survivor portfolio at the time of this publication. [more]
Each weekend on Financial Tides I like to take stock of the market and see if the market has changed direction and I might need to rethink my strategy. I report how my portfolio on Wall Street Survivor is doing against the other participants from MSN's Top Stock blog. I try to use the same standard methodology and explain my conclusions.
I use BarChart and the various technical analysis indicators I have come to rely on for the last 5 years. Let's look at them one at a time:
Value Line Index - an index of the 1700 stocks followed by Value Line - I like this better than the S&P 500 because it contains more stocks and is not market cap weighted so that larger companies are not given greater weight. To me that's a better feel of the overall market. [more]
On Financial Tides I usually don't look at small speculative stocks but the technicals on this are too good to pass. Please follow my stop loss recommendation.
As described on Yahoo Finance: NXT Nutritionals Holdings, Inc., (NXTH) through its subsidiary, NXT Nutritionals, Inc., develops and markets alternative sweetening systems, and other food and beverage products. Its products include SUSTA Nectar, a table top sweetener alternative; SUSTA ingredient for beverages, cereals, baked goods, dairy products, candies, and chewing gums; and NXT/SUSTA branded products, including beverages, water, nutritional bars, and supplements, as well as Healthy Dairy smoothies that are SUSTA-enhanced yogurt smoothies. SUSTA is a low glycemic index nutritional sweetening system, which is a blend of inulin fiber, fructose, botanical extracts, natural flavors, vitamins, minerals, and probiotics. The company is based in Holyoke, Massachusetts.
NXTH is new and has yet to make a profit but I have heard a marketing plug on the radio so I became interested. No analysts are following this stock.
BarChart's 13 technical indicators have this 12 out of 13 buys with only one hold. The stock has hit 20 new highs in the last 20 days and of course is 5 for 5 this week. The price appreciation has been 194% in the last 65 days.
Recommendation: This is a highly, highly speculative play and is only for someone who wants to take a gamble not an investment. Buy NTX Nutritional Holdings -- NXTH -- around 3.25 and put a moving stop loss at no less than 2.75. Monitor this one closely and protect yourself by moving that stop loss daily.
Jim Van Meerten is an investor and writes about financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com
Disclosure: I hold no positions in NXTH at the time of this publication. [more]
If there is one economic report I look forward to every month, it's the Conference Board's Leading Economic Index. Most of the stuff written by economist is so full of statistics, formulas, tables and graphs that by the time you weed through it all you forgot what the information says; the Conference Board's report is different. They use only 3 major categories:
Leading Economic Index -- LEI -- 10 indicators Coincident Economic Index -- CEI -- 4 indicators Lagging Economic Index -- LAG -- 7 indicators
This month I'll sum up the report by this quote: "All in all, the behavior of the composite indexes suggests that the recession is bottoming out and that economic conditions will continue to improve in the near term." Pretty simple to understand, straight forward and to the point. [more]
If there is anyone under 30 in your household just ask them about Skechers USA -- SKX. This company has captured the hearts and minds of the youth of America and should catch your interest too. They make shoes that kids (and the young at heart) want. They market through Nordstrom, Macy's, Dillard's, J C Penny and Foot Locker. Just look at any sales circular in the newspaper and you will see ads for their product.
Analysts like this stock too. There are 4 analyst following this stock and they continue to increase the earnings expectations for this company with all 4 upgrading the estimate in the last 30 days. This years estimate of 49 cents goes up top $1.11 for next year, better than double!
BarChart likes SKX too with all 13 technical indicators giving a 100% BUY. Hitting 16 new highs in the last 20 trading sessions shows momentum you can appreciate. The last 65 day have seen an 84% price appreciation.
Recommendation: BUY SKX around 25 with a protective stop loss at 20.
Jim Van Meerten blogs about financial matters here and on Financial Tides. Pleased comment below or email to FinancialTides@gmail.com
Disclosure: I hold no position in SKX at the time of publication [more]
So the word is out that Kenneth Feinberg, the Obama hatchet man, is going to have the pay of the top 25 executives at 7 of the companies who have not paid back the TARP money, by as much as 90%. If that's a good idea for those companies why not look at the rest of the people who got us into this mess. What's good for the goose is good for the gander, right? There are more than just these 175 executives who deserve pay cuts.
Let's cut the pay of the top 25 executives at the SEC and FDIC, they were asleep at the wheel. Next cut the pay of the 25 top ranking members of both the House and Senate Banking Committees, they didn't create legislation to keep us out of this mess. How about the top 25 executives of the external accounting firms of those 7 companies, they certified financial statements that didn't reflect the true worth of the companies?
While we are on a roll let's cut the pay of the top 25 executives of Standard & Poor's, Moody's, Fitch and A M Best they didn't have proper ratings on these companies. Oh, and let's not forget the top 25 analyst at all the brokerage firms who failed to warn us by downgrading these companies when they should have.
There is a a lot of blame to be spread around and a lot of small investors who took big hits because they listened to the investment advice of people who they trusted, people who they thought were looking out for the little guys.
Little guys of America, unite! Let's hear your comments on who else should take a pay cut. You and I have already taken ours.
Jim Van Meerten is an investor and blogs about financial concerns here and on Financial Tides. Please leave your comments below or email FinancialTides@gmail.com [more]
I doubt is there is anyone reading this that doesn't know what CarMax -- KMX does. Personally, I've bought all my cars from them during the last 15 years. You get a great car for an average price, no lemons and always at or below Bule Book, no hassle. I'm adding this stock to my Marketocracy S&P 400 fund for mainly technical reasons.
BarChart rates it as a 100% BUY with all 13 technical indicators saying BUY. The stock has hit 8 new highs in the last 20 trading sessions and is recently 5 new highs in the last 5 days.
There are 11 analyst following this stock and I think they are under rating what is happening here. No analyst ratings have changed since mid-June and I think that used car sales is where it's at right now.
Recommendation: BUY at around 23 with a stop loss at 19
Jim Van Meerten is an investor and blogs about financial matters on Financial Tides. Please make comments below or email to FinancialTides@gmail.com
Disclosure: I hold no physical position in KMX at the publication of this blog. [more]
I was going through the stack of newspapers that accumulated while I was on vacation and on the front page of The Charlotte Observer was the headline "Cameron Harris sues Wachovia". Since his family sold their insurance company to First Union, Wachovia's predecessor that's big news here in Charlotte. Friends just don't sue friends in Charlotte, bless his heart.
His suit claims that while on a hunting trip with Ken Thompson, Wachovia's then CEO he pumped Mr. Thompson for information about what was really going on in Wachovia. He asserts Ken Thompson's failure to give him what would have been unpublished insider information caused him to keep his stock and incur a large financial loss.. He might have gotten out at $55 instead of riding it down to what ever he owns now. He and his family owned around a million shares so the pony ride down cost him some real dough.
I'm no legal genius but if Ken Thompson had told him about what was really going on and he sold his stock before the swan dive wouldn't he be guilty of insider trading? Wouldn't both he and Ken Thompson be eligible of a free trip to Club Fed down at Ft. Walton Beach, Florida? Hasn't he heard of Martha Stewart.
We all remember how Martha acted on a tip from her friend Sam Waksal and did some time for insider trading. Her trade only gained a few hundred thousand, Cameron Harris' gain would have been around 50 million.
This is a suit I'll have to follow. Can you really sue for failure to receive and act on insider trading information?
Jim Van Meerten is an investor and blogs on financial matters at Financial Tides. Please comment below or email to FinancialTides@gmail.com
Disclosure: I am a former employee of Wachovia and have family members working for Wells Fargo and they have an interest in Wells Fargo stock and vested and unvested stock options. [more]
Sell on techniocal weakenss, Financial Tides
The whole world seems to be fixated on the economy and the H1N1 Swine Flu. News reports today that the first shipments of the nasal version of the vaccine, manufactured by MedImmune a unit of AstraZeneca, will begin today pushed me to find out if there might be an investing play in this fear. The major manufacturers of the vaccine are GlaxoSmithKline (GSK), Sanofi-Aventis (SNY), Novartis (NVS), AstraZeneca (AZN), Baxter Intl (BAX) and CSL Ltd (CMXHF). None of these are pure plays. Each of these companies has a stable of drugs and products so you are really buying a basket of widely varied profit centers. How do I find the best one?
First, I always go to BarChart for technical analysis to find which stock is moving right now. BarChart uses a combination of 13 different technical analysis indicators and then uses an average to see which has the most votes. The ratings were from a low for AZN of 40% SELL to a high for NVS with a 96% BUY, so for me it's easy to see which one warrants further review.
Next, I look at the fundamentals. Since NVS wins on a TA basis what about the buzz in the news and fundamental side? Right now the consensus of the 5 analyst following the stock is that NVS will have year over year growth in both revenue and earnings. Both Citigroup and Jefferies have recently given BUY recommendations and JP Morgan has it rated an Overweight.
This is how I look for the stocks that I recommend. Is the stock having current upward price movement and are there analysts giving the stock positive price recommendations that will keep driving the stock upward. That may may sound too simple but it works. Your ultimate goal in portfolio management should be to buy stocks trading above their Daily Moving Averages and eliminate stocks trading below their Daily Moving Averages. You beat the average by having an above average portfolio.
Recommendation: Buy Novartis (NVS) around 50 and place a stop loss near the 50 DMA of 47.
Jim Van Meerten is an investor who blogs about financial matters on Financial Tides, MSN Top Stock Blog and Seeking Alpha. Please leave a comment below or email to FinancialTides@gmail.com.
Disclosure: I don't hold actual positions in any of the stocks mentioned in this blog. Normally, I include my recommendations in my Wall Street Survivor portfolio for accountability but on this date I only have buying power of $11K so I can only add 212 shares. Wish I could have bought more. [more]
Over the weekend Chris Adams who writes for the McClatchy Newspapers had 2 powerful articles named Help with mortgages is difficult to come by and Some firms with spotty pasts get tax dollars. In these articles he exposes how firms like Bank of America, Citigroup and Morgan Stanley; firms who were bailed out from the brink of bankruptcy by TARP with billions of taxpayer dollars are now abusing mortgage borrowers who are in trouble. The Treasury is doing little, if anything to monitor the situation.
In one case Ronnie Fruia was about to lose his home when he and his mother and son were all in the hospital. He was in the hospital recovering from a stroke, couldn't even talk but CitiFinancial sent a guy to his room to sign modification papers that didn't even cut his interest rate. State regulators had to step in to get his rate changed from 11.5% to a reasonable 5%.
In another case, Countrywide a subsidiary of Bank of America, put a woman in default while she was being treated for breast cancer. Her church had raised money to keep her mortgage out of default but Countrywide refused to take a payment from the church.
Saxon Mortgage Services, a unit of Morgan Stanley, was sued by the attorney general of Missouri when he found that Saxon failed to properly credit loan payments to accounts even after the borrowers had proved that the payments had cleared their bank accounts. They even charged late fees though the mortgages were current.
The Government Accountability Office - GAO - in July found that the Treasury was short staffed and had hired only half of the employees necessary to monitor the loan modification program.
Taxpayer dollars bailed out the banks from bankruptcy, now they're back on track to pay out big bonuses while at the same time they are foreclosing on the very taxpayers who bailed them out. They have only worked with 12% of the mortgage holders that qualify for the Treasury's mortgage modification program.
Isn't it ironic that the bailout money goes to the very firms that invented these adjustable loans that got borrowers into this mess and now they turn their backs on the borrowers who were trapped in their predatory lending schemes?
Jim Van Meerten is an investor who shares his opinions on financial matters on Financial Tides, MSN Top Stock Blogs and Seeking Alpha. Please leave your comments below or email FinancialTides@gmail.com.
Disclosure: I hold no positions in the companies mentioned in this blog. [more]
This week, in fact the last 2 weeks have not been that great. The market as measured by the Value Line Index, an index of 1700 stocks was down 2 weeks in a row about 5.8%. Not the 10% retracement some predicted but still cause for some concern. None of the stocks I hold in the Wall Street Survivor portfolio have gone down to the 50 Day Moving Average but some are approaching my sell signal. More on that later.
Let's look at the way I view that market:
Vaule Line Index -- 1700 stock followed by Value Line:
BarChart still has a BUY signal of 8% as an overall average but the 5 short term indicators have a 40% sell. Overall there are 5 BUYs, 4 Holds and 4 Sells. Only 5 of the 13 indicators are BUY and since the short term indicators average SELL, I'll be culling at the 50 DMA and not replacing till the market gives a better sense of direction. The VLA is below its 20 DMA but still above its 50 & 100 DMA
BarChart Market Momentum - Of the 6000 stocks BarChart follows how many are trading above their Daily Moving Averages for various periods?
20 DMA -- 65% are trading below 50 DMA -- 63% are trading above 100 DMA -- 81% are trading above
The ratio of new highs to new lows for various periods -- 1 is neutral, above 1.01 bullish below .99 bearish. [more]
I moved to Charlotte right in the middle of its Golden Age. Hugh McColl and Ed Crutchfield two local good old boys had built not one but 2 international banking empires in the same town and it looked like there was no stopping them from becoming even bigger. Charlotte was calling itself the 2nd largest financial center in the US, second only to New York City. Most of the locals were reaping the benefits of the large dividends from Nations Bank and First Union. If you didn't work for one of the 2 banks you owned a good chunk of the stock.
They both endorsed a brand new, young and charismatic mayor named Pat McCory and the 3 together got funding for ever thing Charlotte needed to be a great city. We were getting mass transit, the downtown was bringing back people after dark to a football stadium, new arena, dining and entertainment venues. The Arts & Science Council and United Way were receiving full funding from everyone. The local joke was that the official bird of Charlotte was the Building Crane. They were sighted all over town, in flocks.
I knew I'd made the right decision to move to Charlotte when I couldn't buy a house. Every time we found what we wanted, before we could make a written offer it was sold; often above the asking price. Every February luxury car dealers and jewelers set up displays in all the downtown atriums hoping to get a large piece of all the bonuses the banks handed out every Spring. Most of the bank executives' kids went to one of the 4 major private schools. Life was good. All that has changed.
The two good old boys retired and left two MBAs in charge. Through acquisitions the names got changed to Bank of America and Wachovia. Things were going fine until they started making some ill-fated acquisitions like Country Wide and Golden West just as the real estate market was about to collapse. The financial stocks began to plummet so acquisitions with stock dried up. The Feds engineered the acquisitions of Merrill Lynch by BofA and Wachovia by Wells Fargo. These had been rumored in the works for years but when they happened prematurely it came to light that no one had actual merger plans in the drawer and the pipe dreams weren't ready to be implemented.
A financial brain drain started, beginning with Wachovia's Cece Sutton, one of the most influential women in banking jumping to Morgan Stanley. Soon one announcement after the other was made as bankers, commercial lenders, investment bankers and financial analyst jumped ship and left town. As transfers and pink slips flew we discovered there were no succession plans in place at either bank.
Ken Thompson wasn't replaced with an insider and now that Ken Lewis is leaving the BofA board is also looking for an outsider. Charlotte has always had a fear of outsiders. "You aren't a native Charlottean are you?" was the first question a new neighbor was always asked. The mayor ran an ill-fated campaign for Governor so the last of the Charlotte Trinity is gone. Charlotte is a ship without a captain.
The paper is filled every day with announcements on building loans for both commercial and residential real estate in default. The Building Cranes are disappearing. Projects are stopped in mid construction. The lot around the corner from my house that was supposed to be a high end luxury townhouse complex but hasn't had a worker on it in over six months. Pink slips are still handed out, bonuses aren't what they used to be. No luxury auto and jewelry displays this past Spring. All of the finance committees at the private schools are worried about next years enrollment as the students' parents are transferred or pink slipped.
Charlotte has survived a lot. It survived Cornwallis, the Civil War - locally known as the War of Northern Aggression (the last meeting of the Cabinet of the Confederate States of America was held here). There is a plaque on a downtown sidewalk that says:" Jefferson Davis stood on this spot when he was informed Abraham Lincoln had been shot". The gold mines and the Federal Mint have long closed, the cotton mills are gone and soon everyone fears the banking money mills will move on too.
Is Charlotte the victim of bad decisions or just providence? Providence just happens to be the name of one of Charlotte's oldest communities, founded long before the Revolutionary War. Will tomorrow's headlines be good or bad?
Well that's the news from Lake Woebegon folks, what's happening in your city?
Jim Van Meerten is an investor and amateur writer on financial subjects on Financial Tides, MSN Top Stock Blog and Seeking Alpha. Please let me SEE your comments below or email them to FinancialTides@gmail.com. [more]
Just a quick note of caution. I normally only write a market momentum blog once a week but the last 2 days of market action should be looked at. Hear is why I'm cautious:
The Value Line Index, an index of 1700 stocks is presently trending below its 20 day moving average. According to the BarChart market momentum page today 59.52% of all the stocks 6000+ they follow closed below their 20 day moving average. The 20 day new high/low ratio was 414/830 - the first time in a while that there were not more new highs than new lows.
Am I panicking? No! My stop losses are always set at the 50 day moving averages. That point hasn't been hit yet. I just won't replace positions if my stop losses trigger till I see a trend. [more]
I know this column is supposed to be about stocks, investing or the economy but sometimes something really gets under my skin. Well maybe it is about economics and the way we let money creep into our justice system. There is a big divide in this country between the way the courts treat 'po folks and the way they treat left coast, left wing, Hollywood liberals. The system is supposed to be blind to race, religion, ethnic background and oh yes, money; but is it? Left coast celebrities can get away with murder: OJ & Robert Blake aka. Baretta included.
When I taught law, students often voiced the opinion that the punishment didn't fit the crime. They thought the judges should be more like GOD. The old "What would Jesus do?" school of thought. GOD has different tools available to him. If GOD were the judge, the victim would be whole again as if nothing ever happened and the perpetrator would be punished severally and would never commit that crime again. Our judges only have the tools of time and money. They can take away your freedom for a period of time or they can fine you and take away your money. The victim is still damaged and the 'perp can do it again. Nothing else is at their disposal.
This Polanski thing isn't about fair trials or pedophiles, it's about our system of justice and how we treat bail jumpers and fugitives with money. Now I know sometimes money and justice is an issue. If a guy fails to show up for a speeding ticket in Arizona and 5 years later is caught driving on a suspended license in Massachusetts we don't lock him up and have deputies from Arizona come and extradite him back to stand trial for a $75 traffic ticket.
All across the country we have guys, sometimes very stupid guys, who may have served many years in prison and then one day just weeks before release, jump the chain gang. People on probation, might have been model citizens but missed a few probation meetings or stayed out too late one night and have their probation violated. We use every resource available to make them pay.
People love watching that bounty hunter "Dog" chase bail jumpers down and give them a tongue lashing and a sermon and tell them to step up and be a man.
In this case, Roman Polanski plead guilty, bought off the victim and skipped the country instead of stepping up and being a man.
People are following this closely and there is a great divide in opinions. This should be about equal justice for all. How will we treat criminals who refuse to do their time by running away?
If you're black and poor you will do the time and we will do every thing we can to knock you down and make you tow the line -- no matter what it costs. If you are a left coast, left wing Hollywood liberal with lots of money and lots of talent then you can have Whoopie Goldberg and Debra Winger plead your cause.
This may not be about investing, but it is about how the courts treat the economic classes differently. I still believe in truth, justice and the American way. Why doesn't Hollywood?
Jim Van Meerten is an investor who gives his financial opinions, and sometimes other things on Financial Tides, MSN Top Stock Blog and Seeking Alpha. Please share your opinions below or email to FinancialTides@gmail.com. [more]
Every month I publish the Financial Tides Performance Scoreboard to give accountability for my recommendations. Each time I BUY, SELL, SHORT or RECOMMEND stocks I let you know which on my funds it is in and let you see the actual cumulative returns of my recommendations. I use BarChart to find my picks and tell you how. Here's how we did at the end of September:
FUND --Cum Return-- Beat S&P 500
VMFIV - 52.33%------- 48.47%
VMFOR - 40.55%------- 37.15%
VMSIX - 60.14%------- 60.80%
VMNHI - 52.27%------- 56.19%
VMSLO - 50.73%------- 70.83%
VMSHT - 24.50%------- 39.92%
A recap of the makeup of each fund:
VMFIV -- made up of large cap stocks in the S&P 500
VMFOR -- made up of mid cap stocks in the S&P 400
VMSIX -- made up of small cap stocks from the S&P 600
VMNHI -- stocks hitting 20 day new highs trading at least 100K shares a day
VMSLO -- stocks hitting 20 day new highs trading between 25K - 99K shares per day - a
continuation of the portfolio I used to win the Strategy Lab Open
VMSHT -- Before you jump to a conclusion the SHT means SHORT or maybe it doesn't - stocks hitting 20 day new lows that look like they will continue to tank.
At any time you can follow the results of any of the model portfolios on the side bar of Financial Tides under the Model Portfolio tab. All results are compiled by Marketocracy.
Jim Van Meerten is an investor who writes about Stock Market Investing on Financial Tides, MSN Top Stock Blogs and Seeking Alpha. Please give comments below or email to FinancialTides@gmail.com.
Disclosure: I do not own any of the stocks in my blogs but put them in Marketocracy portfolios to give accountability to my recommendations. [more]