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Sector Selling, Opportunity buying??



April 05, 2014 – Comments (17) | RELATED TICKERS: BIIB , BIB

There was a time here on CAPS were writing two blogs in one day was considered spamming.  Only one would show on the list of blogs that kept track of those that rolled off the “front page” faster than you could read them.  It appears now days that two blogs in one day might not be pulling an Alstry, and since I have more ideas than time, I’ll give it a go.

It appears that as dead as this place has become that new people are still finding it.  My “followers” have grown rapidly in the last month since I became active again. I’m not clear what they are “following”…my rapid style trading calls for ideas, my thought provoking blogs, my witty pitches, or just trying to skim some cheap caps points….hopefully they know that my score and pitches don’t demonstrate that I actually know something.  In general, it’s hard to tell why they are following me as pitch recs and blog recs are in short supply based on the old days.  Not that I’m a pitch monger, it’s just good to know someone is out there.  The ship left the station here on CAPS two years ago as far as rankings on those metrics.  Talking with myself is generally okay, even answering myself is okay, but I need another outlet when I start arguing with myself. 

Nevertheless some new folks are checking into the community, even if it feels more like Detroit to some of us who have been around awhile. I’ve also enjoyed hearing from a few old caps “friends” who are still around keeping the lights on.

In recent blogs I noted the selloffs in higher beta, higher P/E equities.  I suggested, hoped, part might be sector rotation by the big guys, but it appears it wasn’t just end of quarter.  Internet stocks and biopharms are taking the brunt as are some of the smaller Russell 2000 stocks.  Anything with a HIGH P/E, (or no P/E), is getting focus, (except some trash stocks I have pitched and may blog about later).  The debate on Bubble or NOT a Bubble, crash or boom times, will continue, but it does appear that investors are taking profits and taking a more conservative approach.

While my sentimeter has been tipping negative lately, the S&P continues to set new highs, as awallejr has been pointing out, the quality stocks with easy to measure metrics are still doing well and cash is rotating into the market. If it can’t go to low interest bonds, and doesn’t seem to be going to precious metals, it has to go somewhere.  Not everyone is willing to go back into the markets after getting burned in 2008-2009, but other than the occasional healthy correction, I just don’t see a serious selloff for quite sometime.

I noted that pursuing my 401K options that some are heavy into biopharms and social media and I’m planning to rotate out of them.  My real estate REIT had been missing out the last two years when compared to the rest of the markets, but I had been holding a small stake for diversification.  It appears that Real Estate REIT has gone up 10% this year and other mutual funds only about 1-3%, so perhaps I should be rotating into it instead of out.   Part of the ups and downs in real estate, however is tied to interest rates.  Some that buy mortgage backed securities will continue to suffer if rates rise.  The core, real retail that awallejr blogs about, however, continue to pay a safe dividend with good P/E's.

I also noted Energy Stocks and Utilities seem to be in favor.  So overall, money is not leaving the market, but perhaps some investors are learning to take some off the table when a sector is heated compared to the rest of the market.

Of course that leaves the question of what defines heated.  Large P/E’s can be perfectly valid if a company is growing 20-30% a year, has a moat, and is managing their money.  I pitched BIIB, Biotech Idec earlier today.  I had felt it might continue retracing, but had it charted for about $178-182 as a good entry point.  Since I don’t really know what I’m doing chart wise and I wanted in, I redrew my lines, connected the dots a different way, and  triggered it on CAPS at $186, a selloff of about 20% from its recent high.   Understanding a biopharms pipeline, patents, and growth is key to knowing when to hold them and when to run.  It’s hard to correlate unless you have a lot of time and specialized knowledge. Overall, however as ZZLangerhans, Porte and the zzporte collaborative has noted, the hot sector has some good and some bad.  For a while much of it will rise or fall in conjunction, but sooner or later, the better does rise.

I don’t think the BIOPHARM and Social Media stock selloff is over.  But entry points can be sought if you’re careful without too much more damage to your paper portfolio.  Sometimes I do think all this “playing” around over educates me.  Looking at the holdings of a mutual fund in my 401K plan can help me make decisions (good and bad) more than looking at the funds past performance and expense ratio.

It’s been a good cycle on CAPS as I had/have a habit of down thumbing the high P/E companies, perhaps out of jealousy, but certainly I’m learning that I struggle with forward pricing on growth stocks.  I was glad to see some like Netflix “correct”, validate me somewhat, even if I was ahead of myself, and I was able to close it on CAPS.

There is money on the sidelines, there are some risk takers coming in.  We had the January selloff and statistics indicate that 90% of the time we sell off in January, we finish lower for the year.  You can make lots of things out of statistics.   I can draw my lines different ways looking for the “cheese”. I can argue with myself until I change my mind.   In the end, however, I need an entry plan and an exit plan, be willing to take a small lose when I’m wrong, and hold what’s working.

I still think we have some sector sell downs coming, but will consider them buying opportunities and not mattress stuffing opportunities.   I’ve heard some say that the bears must be running out of ammo, but they made enough off these sector selloffs to feel vindicated.  It’s not until the bears become bulls, however, that I will worry.



The SKY is Not Falling Today, but Venus has been very bright in the morning sky lately....

DISCLOSURE:  IF I knew anything I wouldn't be spending my time blogging here...

A trade is a trade, until it drops like a rock, you refuse to take a loss and it's in your portfolio for the next two years until you finally offload it to offset some capital gains.....

17 Comments – Post Your Own

#1) On April 05, 2014 at 7:47 PM, valuemoney (< 20) wrote:

A beat up sector if you think energy is becoming in favor (offshore drillers).... NE DO RIG :) and one more worth a look....GEOS

Personally I like NE and GEOS the most.

No positions in any

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#2) On April 05, 2014 at 7:56 PM, valuemoney (< 20) wrote:

Disclosure: I don't know much either but my last 29 out of 31 green thumbs have positive scores and over 90% of my green thumbs I have EVER made have positive scores. :)

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#3) On April 05, 2014 at 11:27 PM, anchak (99.91) wrote:

I think there's some serious rotation going on - might give rise to some strange volatility.....

Hopefully the dust will settle and provide a good buying opportunity in summer!

P.S. I wouldn't know a stock if it bangs against my forehead!

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#4) On April 06, 2014 at 9:03 AM, TSIF (99.98) wrote:

Anchak, it seems to me that you don't have to know anything about a stock to buy it....just buy what's hot, hot, hot, until it's not, not, not.  Don't be the last to buy or the last to sell.... :)

valuemoney, you had to do that to me....I'm fairly familar with NE, DO, and Rig, but hadn't looked at them in awhile.  I recall thing GEOS looked interesting, but was a missed ship...something I'm trying to wean myself of....missed ships can be caught at other ports, it may just cost a little more to catch it there.

So I ran my 3-minute drill on GEOS and it scored so high that I started doing level 2 without even realizing it, and here we are 20 minutes later with places to go....

I'll have to pick it back up later...scoring that high on my level 1, DD is pretty rare, but many of them still get kicked out on level 3...sniffing ahead, the market opportunity on this one may be an issue....or maybe not.  :)

Thanks for checking in.... :) 

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#5) On April 06, 2014 at 9:41 AM, TSIF (99.98) wrote:

GEOS got caught by the sector selloff and has been testing its 52 week low, breaking through slightly..hard to say which direction it will break, it's between $62-64 since the big dump, with investors partially waffling on the large deferred $29M order, that the customer is looking for new funding for....looks like it's already stacked in inventory, decreasing GEOS flexibility if the order doesn't come in next quarter.....Caught by the selling...either an attenuated bottoming and a good entry...or more room to fall.....


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#6) On April 06, 2014 at 2:02 PM, Teacherman1 (< 20) wrote:

It's simple TSIF. Buy low, sell high.:)

Just use your crystal ball to pick the bottoms and tops.

Took a short break from my "nursing duties" to check in.

Personally, I hope the market keeps dropping, I have a lot of picks on my watch list for new buys if they just get low enough.

Still trying to get ahead of the curve, but it is getting harder.

Hope you all have a nice weekend and a profitable week ahead.  

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#7) On April 06, 2014 at 6:05 PM, valuemoney (< 20) wrote:

Thanks for blogging! I don't say much myself. I do go though and look for ideas here in Caps quite a bit though. And I do read blogs if the catch my attention. It depends on who writes them also. Usually I go about quietly doing my own thing. GEOS canceled order will pry only have a 60 cent effect on earnings at most for the year. Overall that isn't that huge. Now look at NSR and why that stock has went down. The effect of that contract and the drop in the stock price is problably warranted. Plus NSR might drop even more. 

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#8) On April 06, 2014 at 7:38 PM, TSIF (99.98) wrote:

I agree that GEOS cancelled order will be limited downside, and should it be salvaged, instant upside.  My limited concern is that they built the order and will have assets tied up in inventory which will cycle into thier need to be careful managing their funds.

I like getting in as close to bottom as possible, but I realize that being too cheap can cause one to miss the boat, and bottom fishing is not an exact science!

The huge volume of 1M shares and three day drop should have signaled a possible rebound, but it was rejected and a new low set.

I think it's very  promising, just caught up in the sector sell, and bottom is not likely in.

NSR is a great example of avoiding companies that are dependant on predominantly one source of funding....nothing, especially government related lasts forever.....

Drillers are taking a beating, looks like sector bottom fishing for a slightly  different reason...and a good example that some sector selling is more than just rebalancing.  Debt can hurt when the income gets crimped.  Energy is gaining traction, but not the drillers....worth a little analysis.

Good stuff.  Thanks for the comments on blogging...shareing ideas is what it's all about! 

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#9) On April 06, 2014 at 7:42 PM, TSIF (99.98) wrote:

Hi Teacherman1....I keep dropping (or slamming my crystal ball)'s pretty unreliable....very cloudy in there....

I'm okay with a mild correction as well. I've done pretty well bottom fishing during them. 

I wasn't surprised to see OPTT drop after I DD'd further to pitch. I had my limit close set the next day. I was lucky to get points for it.  I pitched it that the spike was overdone since they still needed funding and permitting.  I'd be happy to have it back as an upthumb around $2.20-$2.30....depends on how they progress in Austrailia...

Hope your wife is chasing you around and keeping you in line soon!!! 


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#10) On April 06, 2014 at 8:52 PM, anchak (99.91) wrote:

"just buy what's hot, hot, hot, until it's not, not, not"

LOL! - I kinda do that a lot - except not in stocks - the last one was BIB - for a 5% spread.... Sometime it works - and other time it doesnt - hopefully the frequency of the former dominates.

I looked at GEOS - given you guys going Ga-Ga on it ;)

Looked interesting for a trade @~60 

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#11) On April 06, 2014 at 9:18 PM, TSIF (99.98) wrote:

Unfortunately, BIB is not done selling yet....

What does VST stand for in your pitch???  Secret trader talk....."VERY SEXY TICKER"? 

hot, hot, hot, not, not, pretty well if you buy on the first or second hot and sell on the first or second not....

third hot and third not is a no-no.... 

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#12) On April 06, 2014 at 9:28 PM, TSIF (99.98) wrote:

GEOS.....$60 woul be a point to buy and set a loss limit a few percent's either going to bounce hard from there or pop.... 

 Wasn't going Ga-Ga...but am intrigued....just checking out one that hit 110 twice on the two year chart and formed a nice Dolly now I'm ga-ga....

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#13) On April 06, 2014 at 9:28 PM, anchak (99.91) wrote:

Very Short Term - I held it from 76 to about 86.....limit buy and sell...

Rule of 3 - eh? 

It depends - Momentum is a very strange animal....

All the best!


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#14) On April 06, 2014 at 9:32 PM, anchak (99.91) wrote:

Supports around 55-59

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#15) On April 06, 2014 at 9:35 PM, anchak (99.91) wrote:

BTW  - that moniker can stick with this one - I dont know what's about this sector - but the ETF coverage space is a myriad of perms and combinations ...

BIIB , BIB, IBB.....

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#16) On April 07, 2014 at 8:40 PM, awallejr (38.34) wrote:

Just cracks me up how people panic the minute the market does a correction.  We all say it should, and then when it happens everyone screams the sky is falling.

People need to realize that the boomers simply will not buy stocks.  They are sticking with bonds and that is why interest rates remain tame. And as long as those rates remain tame (which can last YEARS) stocks will continue to do fine mainly for a lack of alternatives.

I am sticking with yield and selling puts.

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#17) On April 07, 2014 at 10:14 PM, Tagit (< 20) wrote:

Good stuff +1

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