Use access key #2 to skip to page content.

correction is getting meaningful: some bargains are popping up

Recs

29

May 06, 2010 – Comments (12)

Well we are correcting again after some violent chop.  The VIX is up, fear abounds over greece and eurozone contagion, the markets were overdue for a correction, and overall things are creeping up towards nasty!

Bargains are starting to pop up, but not to the extent that we saw them in February...  I think we probably have a ways left to go down, however, as...  fear isn't rampant yet.  February saw rampant fear.  Cramer and all the fellows at Real Money Silver, except Doug Kass, afraid and not recommending buying.  Fear on the airwaves, fear here, fear there. 

We don't have widespread panic yet here, in my view.  So thats bearish.  But I don't generally try to time markets, in general I just try to buy what I think is clearly cheap.  

Some things I like:  goog at 510, thinking about buying calls

GS in the mid 140's

I am back long GNW, covering all of my hedges, making it once again a sizeable position.  That thing goes significantly lower I'll add to my stake. 

I have covered hedges on CENX, TCK, GCI, and more.  

I did not add to RJET on the big dip yesterday as I'm sticking to my "I have enough of it" theory.  The quarter was dissapointing.  For now I'll stick to it, i'm basically even on the stock.  

If we dip significantly lower I have massive piles of lly, vz, mo, t, and more to sell to buy battered up stocks.   If they dip significantly I will unhedge my residual casino shares and go long those buggers again. 

I bought ATPG today, raising my stake by 50% in the low 15s

I am thinking about buying TCK calls, long dated, and in the money.  And selling TCK puts.  This company is worth 60 bucks fullness of time.  

I am buying OTE.  Its 30% owned by DT and not affected directly by a greek default, it is of course affected by a greek recession and by drops in the greek market.  However, the yield is good and the stock is cheap here.  

I am not buying more NBG today.  I am still not comfortable that I have a 100% solid handle on NBGs situation.

I am liking HIG here also, and I am thinking about selling puts against some insurers like GNW, HIG, and stuff.  

I like BP and BP long dated in the money calls.  

Remember, each dip we have seen since the march bottoms has not, when viewed from the indexes, been all that dramatic.  A couple near 10%, most smaller.  But each dip has unveiled stocks that are massively beaten up.  

I will deploy funds rapidly if we sink lower.  At around S&P 1100-1120 there should be sufficient bargains to justify me abandoning my low beta dividend positions and deploying all the funds into "best ideas".  like the ones above.  

This is how the game has worked since the march bottoms.  The big dip in July made me massive bank, I wasn't as aggressive or successful in the February dip.  I will increase my aggression level this time the lower we go...    

Do I know we don't crash far lower?  No.  But do I think its likely we go, say, to the February lows again?  No.  My reason for that is thats a long way down, almost far enough to qualify as its own bear market on historical charts.  And I don't think such a dramatic dip has occured so soon after a major meltdown in the past.  

Also, the economy is progressing, the ECRI says no double dip, earnings are good and if the economy keeps picking up they will get better due to severely lean companies having lower overhead than any time in recent past.  

etc.  

Anyway...  happy hunting, and get ready to buy!

 

12 Comments – Post Your Own

#1) On May 06, 2010 at 1:22 PM, davejh23 (< 20) wrote:

"Do I know we don't crash far lower?  No.  But do I think its likely we go, say, to the February lows again?  No.  My reason for that is thats a long way down, almost far enough to qualify as its own bear market on historical charts.  And I don't think such a dramatic dip has occured so soon after a major meltdown in the past."

Except for the Great Depression...the real crash came after a significant run up which followed the initial scare in 1929.  Dow fell 86% from Spring 1930 to mid-1932.  Of course, I don't expect to see anything like that (DJIA to 1570) unless most developed countries default on their debt and global trade stops...or something else just as dramatic.  I do worry that investor sentiment is still so high, but that could change in a hurry...

Report this comment
#2) On May 06, 2010 at 2:02 PM, IBDvalueinvestin (99.64) wrote:

I thought they were bargains yesterday too, but they are getting lower. Thats why I am switching to defensive mode into Biotech.

 

Report this comment
#3) On May 06, 2010 at 2:21 PM, dragonLZ (99.70) wrote:

Do I know we don't crash far lower?  No.  But do I think its likely we go, say, to the February lows again?  No.  My reason for that is thats a long way down, almost far enough to qualify as its own bear market on historical charts.  And I don't think such a dramatic dip has occured so soon after a major meltdown in the past.

But I think the correction has to be severe enough to have the bears come out (confidently) with: This is the beginning of the end. We told you the big crush is coming. All of this was just a bear market rally...we told you so... etc.

Until that happens, I think we won't have a meaningful correction. 

I'm sure you noticed we haven't heard from goldminingXpert yet, and he's up 2,000 points last few days (up 900 just today).

Once GMX is up to 5,000 - 6,000 points range, I think that's when it will feel like bears are definitely in control again. That's when I would start buying.

Another "indicator" I like to watch is alexpaz. Once alexpaz's rating gets back to 90 or so, definitely the time to get back in with both feet.

However, I do agree with you slowly buying GNW (and some other ones) at these levels is not a bad idea.

Good Luck!

Report this comment
#4) On May 06, 2010 at 2:23 PM, dragonLZ (99.70) wrote:

Crash.

Report this comment
#5) On May 06, 2010 at 2:45 PM, checklist34 (99.73) wrote:

dragon, dave,

     Yes, as I mentioned above, fear hadn't really set in yet when I posted this.

     I would say fear should get manic any minute or day now.  Down 400 and falling like nobodies business. ...  That'll bring out the usual ghouls predicting new lows and stuff.

CL34

Report this comment
#6) On May 06, 2010 at 3:11 PM, checklist34 (99.73) wrote:

That was amazing.  And awesome.

I made some trades, but it was so brief I didn't get everything I wanted to do done.

It was amazing.  Almost 1/2 of Black Monday at the bottom.  Already far enough off the bottom to be one of the biggest days ever.

MAssive hitting of stop losses or a broken robot are the only things that could do this.

Report this comment
#7) On May 06, 2010 at 3:19 PM, portefeuille (99.57) wrote:

I bought ATPG today, raising my stake by 50% in the low 15s

Well done. Do not sell them before they reach 18 USD or so. At least most of them.

Report this comment
#8) On May 06, 2010 at 10:43 PM, rosemanjhk (57.29) wrote:

I agree on ATPG - good buy!

Report this comment
#9) On May 07, 2010 at 12:22 AM, awallejr (82.99) wrote:

Actually ATPG finally is since this should be the last weak quarter earnings report.  Next one will have much higher production numbers leading into even better ones fourth quarter.  The only issue really would be where does oil trade from here until then.  As long as it stays above $70 you would be seeeing serious income increases as a result of major production boosts especially off Telemark.

A conservative way to play it is to sell Jan 2011 !5 puts. Should get you around $4 per contract. I can't possbily imagine ATPG trading at or under $15 by then especially in light of the tripling of production.  Worse case you own the stock for $11 (15-4).

Report this comment
#10) On May 07, 2010 at 12:32 AM, checklist34 (99.73) wrote:

thats a great idea, awall, great idea

Report this comment
#11) On May 07, 2010 at 1:29 AM, portefeuille (99.57) wrote:

Just "for the record". 18 USD is not my long term price target. That would just be the area where ceteris paribus I would sell a small part of the million shares I would have bought yesterday had I had the money, hehe ...

Report this comment
#12) On May 07, 2010 at 1:46 AM, awallejr (82.99) wrote:

I would wait until the $20 before I start to "schnitzel" as Cramer would say.  But I would continue to accumulate the stock at this price or should it drop more, or selling puts.  The future production increase is just being ignored I suspect as a result of the gulf oil spill. But as said, the only real downside is if the price of oil tanks harder than the production increases, a scenario I just don't see happening long term, but who knows short term.

Report this comment

Featured Broker Partners


Advertisement