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The VOLUME story...

Recs

16

September 27, 2009 – Comments (15) | RELATED TICKERS: CNO , DDC , GCI

So far, every blog I’ve posted was pretty much for one single reason: To be able to show you my old blogs (once time proves me right) and tell you: I told you so.

This blog, however, is different. I’m writing it for two reasons this time:

1.       To be able to show it to you at some point in the future and tell you: I told you so.

2.       To try to help people who are open to new ideas, and people who are trying to find ways to spot future 10-baggers (Isn’t this site about investors helping investors beat the market?).

I know that what I’m going to share here with you is not going to be anything new to a lot of you, but I’m still going to do it. I think we’ve all seen a bunch of blogs calling this rally a “junk rally on low volume”, “this rally has no legs as volume is very low”, and all along I was trying to explain to those guys that they are looking at the wrong volume.

So before I tell you my volume story, I first have to tell you that its roots are based in my blog written on 7/14/09 (link to this blog will be posted at the end of this blog). In that blog I’m basically saying that I’m convinced we are in a bull market (a huge one) that started in March of 2009. I also say that one of the two reasons I’m convinced of that is the huge jump in volume (of shares traded) of the stocks leading the rally to that point. (The other reason I listed is the huge gains the leading stocks had up to that point – some up to 2,000%).

Now, let me list here some of those leading stocks and their charts to show you what I mean (click on the ticker symbol to see the chart).

The time frame shown on the charts will be 10 years – from May 1 of 1999 to May 1 of 2009, and the stocks listed will be stocks that I personally purchased either in March or April of this year (and my purchase was based on what I’m going to show you here):

LVS, CENX, GNW, TCK, FITB

Now, what is the common thing for all of these charts when it comes to the volume? You are right: A huge jump in volume in the months of March and April. And when I say huge, I mean HUGE. Never, ever, in 10 years shown on the chart, these stocks have volume as high as they did in March and April of this year. Not even close. Not when they were going up during the bull market which started in 2002, and not even during the collapse of the market in 2007 and 2008. And before I forget, let me specify that this huge jump in volume of these stocks was during the time when their stock prices were going up, when these stocks started recovering (I hope you agree this is a very important detail).

Now, let me here list for you these same stocks, but this time I’m going to also show you their price on March 9, 2009 (bottom) and the price today (note: not my buy prices and not my gains, but I did buy all of these stocks very close to the bottom):

LVS, March low price $1.42, today $17.60, Gain 1,139%

CENX, $1.06, $9.46, 792%

GNW, $0.91, $11.87, 1,200%

TCK, $2.87, $26.00, 806%

FITB, $1.39, $9.59, 590%

By this point, I hope you are getting what I’m trying to say: Buying stocks based on this huge jump in volume could’ve made you a lot of money (and for a lot of you, I’m sure it did). And I also hope you now understand what I meant when I was saying people are looking at the wrong volume (instead of looking at S&P and DOW volume, look at the volume of stocks leading the rally).

My other point is: Based on this huge jump in volume (never before seen in history of these huge winners, NEVER. Are you getting this?), I also think that this bull market is going to be the biggest ever (which remains to be seen).

OK, so we basically covered everything I wanted to say with this volume story, but one question remains (I always had this question when people were explaining with charts something that happened in the past):

What about the future?, meaning: What does this mean for me going forward? How does this help me?

First of all, it helps you by telling you something huge is happening. If that something really is a new, huge bull market, then you stand a very good chance to profit from it (unless you are long on shorts, and not on stocks).

Secondly, the stocks I listed above as example of stocks that led this rally should (and I say they will) continue to outperform the market nicely, and if you find good entry points, you should profit nicely from them. I'm sure you all also noticed that all of the above mentioned stocks are still 70-80% off their 2006/2007 highs, so if these stocks really completely recover, I hope you know what that means to us... (I also have a theory than no stock goes up 500% for no reason, meaning: "That stock will continue to go up and will be a huge winner...") 

And thirdly, I’m going to stick my neck out and will try to predict which stocks are good buys right now based on this volume “theory” (either the huge jump in volume started just recently or they are still cheap stocks. Or both.).

This should then tell us all if this volume thing works or not. And this prediction will either be something I will eventually be embarrassed about or something I will use as my: I told you so :)

Right now, I’m just going to list 5 candidates:

BPOP, today $2.75

GTN, $2.38

CNO, $5.04 (jump in volume and big gains stated in March, but still a cheap stock)

HWD, $8.09 (same as above, but also “only” 370% gain since March 9)  

GCI, $9.38, (same as above, but also “only” 381% gain since March 9)

 

So, these are the stocks I think are good buys right now. Let’s see if I’m going to be wrong or right. These are long term picks, and I will revisit these picks in 3 months, 6 months, 1 year. I expect every single one to at least double in 12 months or less (HWD, GCI), and the 3 cheap ones to triple or more.

By no means this should taken as my recommendation to you to buy these stocks, but more like something to keep an eye on, so if in the end this really shows that these were good picks, then maybe you yourself can use this “volume theory” in the future.

Good Luck everybody!

 

Disclaimer: I’m not an expert (not just on stocks, but on anything). I either own or will own (again) all of the stocks mentioned above when the time is right. Also, I’m a bull, by nature…

15 Comments – Post Your Own

#1) On September 27, 2009 at 1:34 PM, dragonLZ (99.42) wrote:

Sorry, forgot to add the link to my blog from July 27, 2009 (not July 14, as I said above).

Here it is.

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#2) On September 27, 2009 at 1:36 PM, topsecret09 (37.25) wrote:

This blog, however, is different. I’m writing it for two reasons this time:

1.       To be able to show it to you at some point in the future and tell you: I told you so.    LOL !!!!!!!!!!!!!

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#3) On September 27, 2009 at 1:53 PM, portefeuille (99.66) wrote:

I have recommended some of the ones you mention.

-------------------------

#96) On March 05, 2009 at 7:47 PM, portefeuille (99.99) wrote: LVS - 1.99 - outperform

#134) On March 09, 2009 at 1:09 PM, portefeuille (99.99) wrote: CENX - 1.11 - outperform

#169) On March 11, 2009 at 3:18 PM, portefeuille (99.99) wrote: FITB - 1.46 - outperform

#265) On March 20, 2009 at 11:47 AM, portefeuille (99.99) wrote: HWD - 2.74 - outperform

#478) On April 25, 2009 at 1:37 AM, portefeuille (99.99) wrote: LVS - end outperform - 7.48 - no new rating

#487) On May 04, 2009 at 3:44 PM, portefeuille (99.99) wrote: FITB - end outperform - 4.62 - no new rating

#510) On May 25, 2009 at 9:37 AM, portefeuille (99.99) wrote: CENX - end outperform - 6.12 - no new rating

#768) On September 03, 2009 at 2:14 PM, portefeuille (99.99) wrote: HWD - end outperform - 6.81 - new rating: market perform

------------------------- 

(from here)

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#4) On September 27, 2009 at 1:54 PM, topsecret09 (37.25) wrote:

  Out of the ones that you have listed I like GREY TELEVISION (GTN) the most. Have been following It,unfortunately I did not know about the stock In eary September when the chart said (BUY ME NOW)....  Just for the fun of It I will go out on a limb too,and give you my ONE STOCK that I think will be at least a 4 bagger within 6 months. Stock Is currently not rateable In CAPS,but It will be In due time...  Currently at 92 cents (LGDI)  http://www.lgdi.net/

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#5) On September 27, 2009 at 2:47 PM, streetflame (29.99) wrote:

Smart bulls like UltraLong and portefeuille understand the difference between a snapback rally and a blowoff top rally.  See UltraLong's +27 points red thumbing GTN so far.

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#6) On September 27, 2009 at 2:53 PM, dragonLZ (99.42) wrote:

Streetflame, you see this, then tell UL I'm very happy about his 27 points... 

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#7) On September 28, 2009 at 6:34 AM, Mary953 (77.06) wrote:

A musician with perfect pitch can tell when the music is sharp or flat.

A mechanic with a gift for engines can hear the purr of a well-tuned machine.

A born-athlete can read his direction and play from the opposing quarterback's eyes and move accordingly.

Any of these people can combine talent, interest, and hard work to "see" that which is invisible to the rest of us.

DragonLZ, the market is speaking to you in a way that few can hear. I haven't been reading the blogs of late, but I am glad I found yours.  I am learning as much as I can from those who understand much better than I do. (Yes Porte, you are one of them.)  Thanks for sharing.

Disclosure GCI has been extremely good for my portfolio as well.

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#8) On September 28, 2009 at 6:56 AM, dragonLZ (99.42) wrote:

Mary, Thank you so much. Nobody ever told me something so nice. I hope you are right.

Thanks again and Good Luck!

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#9) On September 28, 2009 at 1:40 PM, TSIF (99.96) wrote:

I like your volume story, but more so from the "new money", "new resistance" aspect. Not every company that took a beating in the recession will recover to their former glory. If they are losing their shirt and pants to high debt and have no income right now, then it will be a long hard ride. BPOP as a bank may have written off enough debt and may turn the corner. They issued a lot of new preferred shares so EPS won't recover for years, but the stock would if they post a profit.  GTN a recession recovery of new advertising away from the death bed. Part of your volume is on speculators who aren't very loyal to their positions.  Good info overall.  There are plenty of models/methods on the market that portend to not looking at the companies involved, but just one indicator. It does take the minds inability to make a decision out of the equation. Unfortunately, sometimes the mind is needed to help block out the noise in the retail investor. Good luck!

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#10) On September 29, 2009 at 7:02 AM, devilzadvocate (55.78) wrote:

Interesting Article... gives us a new dimension to look at.

Likewise, I bought TCK and CENX in March. I sold most of them last month. Part of this money was spent in purchasing BPOP and CNO :)

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#11) On September 29, 2009 at 12:25 PM, dragonLZ (99.42) wrote:

I like your thinking, devil you... :)

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#12) On September 29, 2009 at 12:51 PM, dragonLZ (99.42) wrote:

I know this might be really embarassing (to publicly proclaim love to someone), but I just have to do it:

GCI, I love you. I LOVE YOU, I LOVE YOU, I LOOOOOVE YOU.

And by your 17% jump today (or $1.72, on high volume, on a down day for the market),  I know you love me too.

So let's be in love forever, my dearest love of all (forever or at least until you get up to $35, whichever comes first :).

Please, please, please don't disappoint me, and I promise I won't disappoint you either. I will never, never, never let you out of my arms again (maybe a small position at $25)...

GCI, I love you, and I know you love me too.

I know by your jumps yesterday and today, you are showing me appreciation for me sticking with you through the tough times. I know you are greatful I picked you up when you were at the bottom (contemplating suicide) at around $2, when other guys were running away from you...

But even then, I knew you were a jewel just like you are today (you were giving me hints by whispering your volume story into my ear :), you just needed some time to get up and spread your wings again...

GCI, I LOVE YOU! 

p.s. I know after you go up another $1 -2 this week (or so), you will probably pull back some (being so shy as you are), but I know you will shine again on the day of the big announcement...

p.s. of p.s.  I love you...  

 

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#13) On October 14, 2009 at 1:16 PM, IBDvalueinvestin (99.68) wrote:

Tck was not hard to find from $2+ to $33+ ? but there are

Others in the coal energy sector still cheap in China LLFH.ob , PUDA, 

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#14) On October 20, 2009 at 7:03 AM, dragonLZ (99.42) wrote:

Update on CNO (from the other day)...

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#15) On October 20, 2009 at 7:04 AM, dragonLZ (99.42) wrote:

Update on GTN...

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