September 2007
September 27, 2007 –
"It seems bizarre, writing after a significant US interest rate cut, to be talking about a brighter future for the greenback. ... A world in which the US external balance was below 3 per cent of GDP would not be so attractive for a dollar bear, it seems to me." - Financial Times article yesterday entitled Dwindling US Trade Deficit Could Reshape World Business. This article was written by Jim O'Neill, head of global economics research at Goldman Sachs, so I think he knows what he's talking about. [more]
September 25, 2007 –
"analysis shows that an investor in the Russell small- and micro-cap indexes could, ..., collect much of the index gains by simply buying at the close of the fourth-last trading day of the month, and selling at the close of the last-day of the month." http://seekingalpha.com/article/2563-window-dressing-in-micro-cap-stocks
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September 24, 2007 –
There's a big solar conference today, and the solar stocks started the day like they've been acting all week - crazy on fire! And then the market started to pull back, and all the speculators started selling. Pheww.. I really want to get back into ASTI, but with a 70% move in 4 days, I just couldn't do it. YGE, TSL, LDK, JASO, EMKR - they all look interesting but I need a good entry to feel safe. And of course, it is important to get into the better companies. Look at DSTI today, another small speculative solar, it's just not a quality company - and it's down 5%.
Added to CAPS: TNH, and TRA - two stocks from a basket of agricultural/fertilizer stocks that I'm watching. I had made a mental note to remember - next time this sector was down for a day - get in! Ethanol may be a joke, but the huge growth in money coming to farmers is not. Arguably the ag stocks will run up to the elections (as no candidate or political party wants to suggest cutting the agricultural handouts before then). I probably could have safely added my entire AG watchlist, but I already have so many CAPS picks I'm trying to be selective. My AG watchlisters are: ADM, AGU, BG, CF, DE, MON, MOS, POT, SMG, SYT, TNH, TRA [more]
September 23, 2007 –
Wow, has solar moved this past week! I wish I could tell you the immediate catalyst, could it really be the Fed lowering rates? Over the last few months, there has been huge attention on alternative energies in this Congress. And of course, who hasn't heard about the price of oil? The prices of these stocks already feel so extended, that I almost hate to write about them, but it is the area I'm most heavily researching right now. [more]
September 21, 2007 –
Unbelievably, the paper, web and television reporting is still filled with "the world is ending!" Well, maybe it is, but in the meantime big players are pouring money in the small caps (IWM - the ultra long for small caps - led the list today) and in to China. [more]
September 19, 2007 –
I kept looking at the leaders on CAPS and particularly on the latest contest, and I saw all these "thumbs down" on some etf's. Well, I didn't pay much attention, but I've finally figured it out. By using one of the etf's that get leverage (twice the market), they can get twice the movement, by choosing "thumbs down" on an ultrashort - in CAPS (not real life) they actually get 150% better than the index they're tracking. First - here's a list of leveraged etf's (both bullish and bearish). http://etf.stock-encyclopedia.com/category/leveraged-etfs.html . My picks for CAPS today are thumbs down on all these ultrashorts: SZK, SFK, SJF,TWM, SKK, SJH, SDK, SJL, MZZ. In real life I bought IWM (the ultralong for the small caps - which even with yesterday's rally of plenty of catching up to do). Good luck all! [more]
September 17, 2007 –
Picked some outperform for Coal and China, and couldn't resist an emotional underperform on Circuit City. Those rail transportation numbers from last month (see earlier blog post) show that more coal is being shipped. So I picked: CNX, ANR, NRP. I don't know if those are the best coal companies (usually folks mention BTU, ACI, and MEE when mentioning quality coal), but they were the coal companies that looked like they had the best charts to me.
China. I've been waiting and waiting and waiting for a pullback on Chinese stocks. And it just doesn't happen. Those new investment dollars are supposed to be coming into the Hong Kong market very soon, and the Hang Seng may look bubblish to me, but the Shanghai is even more extended. So what the heck. Plus my father (a big China follower - and who would tell you to read the free online paper the China Daily http://www.chinadaily.com.cn/ if you're going to keep up), wrote and told me that he bought more GXC and EWH on the pullback. So who am I to argue? He's been right all year. [more]
September 17, 2007 –
OK, I know the news is all Fed all the time, but we all know there are other things happening this week. My bet is that the most important will be: brokers earnings, the Fed, and FedEx! If FedEx guides into a weak Christmas season... it's going to be a tough winter no matter whatever else happens.
Monday after close - Adobe earnings - expected to be good (but they can't save the market)
-- I don't think ADBE good or bad will influence the market much, but it will add to tech/software excitement if we also get good news from ORCL on Thursday.
Tuesday
The Fed
Lehman earnings - expected to be bad
Best Buy earnings - expected to be bad
Autozone earnings - unknown (I've heard people expect this to be bad, but my sister who works at a parts supplier has told me when people don't buy new cars, they're fixing their old ones)
--If Lehman does ok, the other brokers reporting this week are going to rally like mad.
Wednesday
Thursday
FDX earnings - FedEx is the most respected news giver of what's been happening in shipping and their forecast is given a lot of respect. It may be THE conf call to listen to if you're hoping for a strong consumer into Christmas. If I remember correctly though, FDX was predicting a recession earlier this year.
Circuit City earnings - expected to be bad (I thought it interesting these losers were reporting this week - Best Buy and Circuit City - they'll be bad no matter what - but if people are feeling negative they'll use it as just one more excuse to sell off)
NKE earnings - will be taken as information on the consumer - they're a huge international brand
ORCL earnings - after the bell - there is cautious optimism. NOVL reported great earnings and a great forecast into end of year recently with their earnings - so a confirmation from ORCL will start an even bigger flight/flood of money into tech.
GS earnings - supposedly people feel negative, but every CNBC show has people saying "we expect Goldman Sachs to surprise". I think the feeling will be that if Goldman Sachs can't pull out a surprise, then things really are bad in the financials and they will sell off even faster. If GS pulls off a surprise, imo it'll be a minor rally and then flat. (this shows my predisposition to thinking "how on earth can financials rally into end of year?" but they certainly might) [more]
September 16, 2007 –
I've been thinking about the economy, what those low shipping numbers in trucks and railways mean, wondering if anyone will pay attention to a couple of the biggest losers reporting earnings this week - Circuit City and Bed Bath and Beyond, or if I should just ignore Bernanke and even Lehman and just focus on FedEx's earnings and guidance that come on Thursday. And I have to scream in my head no more! No more subprime! No more recession talk! No more wondering if tech is the only safe haven! I've gotta cheer up - I've gotta go shopping! [more]
September 16, 2007 –
Wondering why you keep hearing that Buffett is buying railway stock, but RAIL, CSX, NSC and others are down or flatlining? Is all the commodity boom related to speculators only? Or the declining dollar? How come all the big guys seem to know this info weeks before you do? Well, for one thing they're not getting their news from the Wall Street Journal.
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September 14, 2007 –
Yesterday financials rallied like the problems are over "what subprime?" Today we have a British lender who needs a bailout from the Bank of England - the first such bailout since 1978! There's plenty of light at the end of the tunnel - see my earlier stories on the massive infusions of cash coming from the Chinese retail investor - but there's some more pain to come. We have to be able to hear news like this and have it NOT knock down the market. And the following quote from a Marketwatch article needs to stop being true - we need to know what's out there: "Unlike U.S. mortgage players, where there remain doubts as to the book value from mark-to-market hits from revaluation of the sub-prime portfolios, Northern Rock is a prime lender with negligible intangible assets," Crutchley said. http://www.marketwatch.com/news/story/northern-rock-gets-bank-england/story.aspx?guid=%7B36C97E2F%2D46F9%2D417D%2D82FA%2D8AC546168DB5%7D [more]
September 14, 2007 –
China is about to start investing overseas. They will concentrate on Hong Kong and the USA first. And over $6B was raised in one day to do so! May hit our markets as soon as next week. http://www.chinadaily.com.cn/bizchina/2007-09/13/content_6104851.htm And if you only like small caps (like I tend to) then take the blinders off, because the Chinese are going to start with the large caps, and one would think with companies they know - like McDonalds and Burger King. More important than the Fed than anything else is additional money in the markets. And here it comes! [more]
September 13, 2007 –
And no it's not the jobless claims. What's the things scaring everyone? What's the boogie man under the bed that no one knows how bad it is? Commercial Paper. Do a search in your favorite news search service (Google, Yahoo, whichever) for "commercial paper". The Fed posts information every Thursday about 10:30am eastern - and today's showed that things looked better than the last 5 weeks.
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September 13, 2007 –
When you learn to drive, no one suggests you can just rely on looking straight ahead and in your mirrors. They tell you where the blind spots are and tell you to be aware of them, and to specifically look to see if something is in your blind spot. No one tells you this with investing, but we all have them. Sometimes we don't even realize we have any blind spots. But we all do. Well, here are mine: large caps, financials, biotechs, and other sectors I haven't noticed yet. [more]
September 12, 2007 –
I've heard people talk about how great a buyback can be - how it will support a stock. And I'm finally having a chance to just watch it in action. About six of BNE's officer's bought stock in the last month or so in the open market - at around $17.50. They thought THAT was low. Well surprise, it was going even lower. With their improving margins every quarter and their improving numbers every quarter, you could hear the anger and frustration with their falling stock price on the last conf call. They said they were buying back stock . And you can just watch it over the last 2 weeks. There are these big 25,000 share purchase - 2 of them today alone. Maybe it's someone else buying, but either way - it's finally turning that stock around. I'm a big chart follower, but with BNE I've just known too many fundamentals to walk away. It's one of the largest positions in our real life portfolio - and I've added at the lows. This here is one of the lows. And those buybacks are finally making a difference. Today looks like the turn. [more]
September 10, 2007 –
I was watching closely. Good news in tech with the market leaders (AAPL, and INTC) - would it make a difference today? It did. I bought a few things for my personal port - IDCC, SIGM, and a little speculative position in HOKU. For CAPS, I added back good tech, some great biotech, and then some underperforms - like LZB. There are plenty of each out there now. Lots of underperforms and lots of outperforms. I finally ran out of space for picks, and gave up and ended my very worst losers. I really like my buys today. IDCC still looks cheap, and SIGM looks to be going higher quickly. [more]
September 10, 2007 –
These are huge tells for the market, and both are up premarket today. They led us up, they both displayed double tops and headed down. If Intel is busy, then lots of others are busy. If Apple sells a million phones already, then all their suppliers are selling tons of whatever they sell. The market looks to open well. We'll see a jump as all the shorts cover in the first half hour. But then what? Could be interesting. If I'm totally wrong about waiting for late September, October or even November, that won't make me feel bad at all. Also possilbe, we see strength today, but not tomorrow. Should be an interesting week no matter what. [more]
September 09, 2007 –
When things start to look bad in the American markets, the watching of the Asian and European overnight numbers becomes more popular. And then the debate ensues - are they just following us? Or are they leading us down? So the Asian markets are down this Monday morning (still Sunday night for us), and I'm not sure it matters if it's a follow through on our awful Friday and bad labor numbers, or if they're presaging a bad day for us.
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September 07, 2007 –
For a global view ...Pick up the Financial Times any day during the week. Spain's growth is slowing as is Europe, but what's up with the Middle East and China? Because the FT is based in London, they naturally have a more global view. While around here, it feels like all you see is about Bernanke and the Fed meeting, the FT is talking about all kinds of things. The edition yesterday had one article that scared me and one that soothed me. [more]
September 06, 2007 –
If you're watching my picks today, you'll see a ton of underperforms. I specifically went looking for them. Some are great companies that are just having a tough time now, some are terrible companies that will just get worse. I think we're in for a pullback very soon, and I could either end a ton of outperforms (many of which I really like), or I could find some stocks that are just not cutting it. They range from the well-rated POOL (a supplier of pool equipment hurt by a downturn in housing), to tool makers like BDK and Makita. I only grabbed a couple more financials, many regional banks are actually rebounding, and I found myself marking a couple financials as outperform. Stocks that are underperforming in a rally like the last week, tend to do even worse when we get a real pullback. I'm still an end of year bull, but for now? Mark me bearish. [more]
September 06, 2007 –
I hope I have tons of blog followers and you all bought JCG first thing this morning. If so you just made a quick 4% and caught a low we probably won't see again. My position (that I bought yesterday) is, of course, in the red. But I hope someone learned from my mistakes. Utterly fantastic same store sales numbers from ZUMZ and SKS today (and Buckle - who if I knew who they were I could recommend). Both ZUMZ and SKS hit same store sales increases of about 18% for August! Wow! In this market? SKS is a very nice buy here, as they are always strong into Christmas, have been going through restructuring, and are one day off a 52 week low! Fantastic. ZUMZ reaction to this great number has been muted as they received a downgrade this morning, and are trading so close to a 52week high. I like them both, but if I had to put real money down today, I would buy SKS. [more]
September 05, 2007 –
It's always weird to listen to a very positive conference call, where every single analyst says "congratulations on a great quarter", but watch the stock fall 9 % in after hours. We have more retail numbers this week - same store sales numbers tomorrow, plus a Goldman Sachs presentation by JCG tomorrow. I looked at my ANF and UA picks in the CAPS WII contest, and I took my time and waited for a good price. I should have waited until after earnings, and after this week or so. So I'll take a short term hit, but it's a wonderful growing company. And whether I got in at a good price or not, I know I'll like it long term - just like ANF, ZUMZ. And just like the great suppliers like UA and VLCM. So I got a little impatient. That's ok, it'll come back. But you can get it on sale tomorrow! [more]
September 05, 2007 –
I've been trying to help my score by closing out stocks that make it over 5 points or so, then re-rec'ing them. I'm also considering closing some stocks that are just positive right now, as the market looks a little tired right here. If you look at the charts for IBM, AAPL, you'll clearly see double tops that they're retreating from. If you look at VMW - a hot IPO that rocketed upwards and seemed to lead us up. It looks like it's leading us down. I hate to close positions under 5, but I'd rather be able to re-rec them in a few days when they're cheaper. And I think that's where they're going. Some great quality names like IBM, INTC, and some ok names too. [more]
September 05, 2007 –
So AVNX was a great pick. Earnings beat. The upside in the stock movement is probably limited because of the big down day. [more]
September 04, 2007 –
MIND - how wonderful that I didn't close my open CAPS pick on MIND. A very nice beat and raise. I didn't add it to my contest picks as I wasn't sure about how the weather may have affected them. Conf call tomorrow. I'll be looking through the group of companies that get considered as "equivalents" or "competitors" for shorter term CAPS plays. MIND doesn't really have any direct competitors, but some other small cap energy service companies will know doubt have a nice up based on MIND's results. MIND should easily break above the 20.50 resistance level tomorrow. Maybe even soar to the long term resistance of 25. Who knows, it's a microcap but it has a pretty small short ratio (of just 3.7)). Possible movers on MIND may little caps like BTJ and DRQ. Again, not related - but sometimes the market doesn't care. I might have more picks in the morning (to mention here, and to add to my onlie picks). [more]
September 04, 2007 –
So I posted this morning about picking ATHR and CPRT, and watching PBY (putting it on my watchlist). PBY is an autoparts company which made it to Barron's list of top insider buys this past weekend (about $1.5M in purchases!) And it's already taken off. Too bad it's not benefitting my CAPS score - just my watchlist.
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September 04, 2007 –
This weekend I was reminded why the majority of picks I have in CAPS are outperform. It's because of a natural inclination to look for winners. It's much harder (for me) to go looking for companies that have bad management, who consistenly miss expectations, and who are going to keep lowering guidance. I added a kajillion new picks to my CAPS watchlist this weekend (nice long 3 days so I could read and read and read). There are just two that I decided I couldn't wait for a low, for a better entry, they look so good here: ATHR, and CPRT both joined my CAPS picks with outperforms on them. ATHR is an excellent small semiconductor company (a Hidden Gems pick), and CPRT is a salvage auto parts company (a Stock Advisor pick). Strangely, I may have another auto parts pick to add this morning - PBY (Pep Boys). I was reading over a list of top insider purchases, and checking out the charts. I like the inside support (insider buying is great), and it looks like the price might have bottomed. I'm thinking. [more]
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