One of the reasons I have so many picks in CAPS is from an old habit of using it as the greatest watchlist ever (before they added the ability to have a watchlist in CAPS). I really didn't think I had a chance to get a high CAPS score - I just liked how I could see over time how groups of stocks and specific ideas played out. One weekend I might go through hundreds of small caps, looking at charts, picking the top 5 or 10 and then entering them into CAPS to see how they played out. Another time I might be listening to someone on tv, or reading something in the Financial Times (or even Elle or Vogue) - I'd do a quick look through some fundamental numbers, glance at the charts, then pop it into CAPS.
More powerful than economic news, more powerful than earnings, is the basic piece of data: how many buyers are there? And how much money are they putting in the market? [more]
So first of all, this is just my second blog post, and I still don't know how to add things like a return/paragraph mark. My picks are always going to be made with one eye on the macro (what do I think the markets are doing) and one eye on the micro (what's going on with some great stocks). While I am waiting for some good entry points for some amazing stocks (a bunch that blew away earnings, are still falling with this jumpy market), I'm mostly focused on the macro right now. In the macro we have: 1) the end of month / end of quarter - window dressing, which will get multiplied with the pre-Labor day rally. This means a great Friday this week. Nice to know for trading, but doesn't help you in CAPS (except to close some outperforms on Friday). 2) the Rosh Hoshanah / Yom Kippur Trade - this sell off before Rosh Hoshanah and buy in after Yom Kippur has more reliability than some of the other old saws "sell in May and go away" for example. This year Rosh Hoshanah is September 14, and Yom Kippur is September 23rd. I wouldn't go long on anything before September 14th. 3) overall bull, I think we'll be back into it for real by about mid-October. We'll get some great buying opps in September, but October is when we should get confirmation that we're not in a new Bear. [more]
There's so much happening in the markets, none of which I've experienced before, that I hesitate to make longer term calls. But I think back-to-school is interesting, and there is a potentially interesting trade here. I'm not going to make calls on every single retailer, but I do think we're going to see strength at the kids stores, and weakness at the "mom" stores. Whether the American family has less actual cash in their pockets right now or not, there is fear among the consumers. And I think parents all over will forego buying new clothes for fall, but won't do that to their precious princes and princesses. So to me that means, underperform Chicos and Coldwater Creek, and outperform for Abercrombie, Zumiez, and American Eagle. There are probably some excellent others to expand this group, but I'm still looking (on the outperform side - possibly PSUN, URBN, maybe some little kids stores?). There are women's stores and products that tend to do well no matter the atmosphere, but I'm still developing this hypothesis. [more]