WSW, Saturday, 14 April 2012

General Comment

A while back we had a ‘worry notice':

http://chiefio.wordpress.com/2012/02/25/stocks-worry-indication/

Some folks took that to mean ‘crash coming’, and in comments I noted that it meant ‘dip coming’ that could be traded. Then when that dip returned to the prior high, trade out and see which way it resolves. About 3 in 4 it resolves to the prior trend, upward. About one in four it resolves down. This one was like due to head ‘down’, and it generally has done just that. The question now is: 10% to 20% “correction” or something worse coming? Basically, you wait until a clear ‘buy’ indicate to get back in.

News Flow

News flow has been ‘not so good’. China reported slowing. The EU continuing to talk about Spain and Portugal and maybe even Italy as being problematic. Unemployment in Spain is horrid and Spanish bond yields are jumping up (meaning bond prices are plunging) as folks worry that a country with a load of unemployed folks will not be able to pay its bills.

In the USA, the administration continues to pursue a ‘tax and hobble’ strategy. Republicans look set to send up Romney and women are embracing Obama. So it looks like the “Daddy will give his favorite kids lots of stuff” has a decent shot at a second term.

The idea of higher taxes on dividends has taken some of the enthusiasm away from high dividend paying stocks, and even though corporate earnings have been reporting higher numbers, folks are questioning how well that will hold up with the political and economic winds blowing to the cold side. So on a Price / Earnings ratio basis, stocks are very cheap. On a ‘compared to bonds’ basis they have great yields. But in a dicey world, folks are building in a very large risk premium for buying anything.

Meanwhile, oil has dipped on lower economic growth, but not too much, while coal is just being hammered by a double whammy of the EPA passing rules to shut down coal use while natural gas is under $2 / unit ( ‘has a 1 handle’ so prices like $1.98 ).

http://www.washingtonpost.com/business/industries/natural-gas-producers-are-being-forced-to-scale-back-as-prices-fall-storage-caverns-fill-up/2012/04/08/gIQAIofc3S_story.html

Has one guy saying it might even fall below $1 / 1000 cubic feet. ( A Therm is about the same energy as 100 cubic feet and has about 100,000 BTU in it, so is close to a gallon of gas. A more exact number is 1.15 therm / GGE. So at those prices, Natural Gas is running about 20 CENTS per gallon of gas equivalent. A few years back it was running about $12 to $15 / 1000 cubic feet, so was about $1.50 / GGE, which was a modest advantage compared to the $1.80 gasoline then, but now it’s just crazy cheap compared to $5 / gallon gasoline. Thank you fracking!

For those who are inconvenienced by not having these nice shortcut comparisons due to using SI units, a comparison chart is here: http://www.tulsagastech.com/measure.html There’s a nice chart showing equal price / energy from different heating fuels here: http://www.nh.gov/staywarm/fuelprices.htm that has therms priced at about $1.50 to be comparable to $2/gallon kerosene or 6 cent / kW-hr electricity. Makes it pretty clear just how much natural gas has plunged.

So all sorts of folks are looking for ways to run vehicles on it, convert electric generation to it, and ship it over to Europe where prices are much higher. “Watch this space”. Various pipelines, ships, and vehicle conversion companies are going to make money off this (unless Obama and the EPA succeed in shutting down pipeline construction and fracking…)

In the long run, this will give a great energy advantage to the USA. Were we smart, we’d be building ‘Gas to Liquids’ plants at a prodigious rate and telling OPEC to enjoy pounding their sand. Being as we’re not so smart, we’re sinking $Billions into defending the Persian Gulf when we get 1/10 th of the oil that comes out of there ( the rest going to Europe, Asia, etc…) All we would need to do is displace 1/10 of the net Middle East production and we could simply leave the middle east. But don’t worry, we’re firmly in the hip pocket of the EU and Israel, so we are the low cost cop on the beat… Sigh.

Back at news flow:

The US latest employment data was ‘not good’. Fewer new hires than expected, more folks let go, some of the prior numbers (that had been good) revised a bit worse. Businesses not putting a lot of money into expansion with an unknown tax axe hanging over their head as Obama wants to raise our already high rates even higher. In the mean time, Europe is not buying much as they try to figure out what money they will use and what countries will leave the Euro Zone. China is slowing so much they are actually admitting it, and Korea is trying to launch a missile that just happens to be the right size to carry a nuke to the USA. Oh, and Japan has a higher debt to GDP ratio than Greece with Sony announcing layoffs of 10,000 or so folks. All of which makes demand for energy and metals low, so Australia and Brazil not doing so well. It’s looking like a ‘risk off’ world right now as folks are not seeing the sunshine.

Conclusions and Likely Actions

Very fast trades into longs at bottoms of dips and sells at return to the moving average of price lines. Perhaps some shorting then. Waiting for a new trend to develop. Expecting more drop, and especially if the EU and China continue having a ‘low buying so little selling’ profile, watch out for a major drop. Watch for opportunities to enter very cheap metals and shipping positions for long term value buys.

Some short trades on prices touching the simple moving average (SMA) lines from below. Start of some bottom fishing. Selected momentum stocks that are beating the trends.

Pointer To Other Topics

Some general comments on how long term investing differs from trading and my thoughts on things to do for the long term investor, start with this page:

http://chiefio.wordpress.com/2011/06/12/lti-long-term-investing/

If you are expecting global warming stuff, it’s under the “AGW” categories in the right hand margin. Things specific to the NCDC data and GIStemp are under categories with those in their names.

This posting is about the other thing I do, looking at investment markets. Prior postings in this series are available here: http://chiefio.wordpress.com/category/wall-street-week/

Posts with some relevance to trades, but not in the format of a full WSW analysis, are available under this category:

http://chiefio.wordpress.com/category/economics-trading-and-money/

The “Infrastructure Charts” for stocks, bonds, commodities, etc are in the Stock Charts category:

http://chiefio.wordpress.com/category/stock-charts/

That is a bit of a play on words as “stock” can mean stock in a company, stock of goods, or as in photography, a set of standard images. To that extent, a chart of ‘the usual bond ETFs’ is something like a stock of goods, and a stock picture… ;-)

The Nature of the Charts Here

The charts in this posting, or the linked infrastructure postings, are usually live charts, so my comments will describe how it is now, but in a week it will be showing new data and a new week. If I capture a “static image” I usually label it as such. You can tell by looking at the date bars on the bottom of a graph.

I typically use the live charts since I think it is more important to be in touch with what the market is doing NOW than to preserve the historical chart, this is, IMHO, a reasonable choice. Just don’t be surprised if the chart I describe is not the one you see a few weeks from now! If you would like to see the historical chart, you may enter custom date ranges on the charting tool at:

www.bigcharts.com

Or change the particular indicators or tickers of interest. I strongly recommend learning to make your own charts for your particular holdings.

Wall Street Week -
Saturday, 14 April, 2012

Long Term Context

I’m promoting this chart to the top for a while, as it is now in control. Look closely at what it’s saying.

This is a very long duration chart (5 years) of NYSE. It will not change much from week to week (just one tick mark) so guides longer term attitude. During a new bull market, it can lag so much that you miss the best bits, so a ‘trend trade’ positive can be done until this one confirms. During a new bear market, it can lag so much that you get hurt if you hold stocks, so a ‘trend trade’ negative can be done until this one confirms. Basically, shift to shorter term (one year / daily tick mark) charts for trades near inflections of the Slow Stochastic here.

(Oddly, the NYSE ticker symbol stopped working, but using this saved link with the SecurityID in it does still work. I’ve added other USA Indexs for comparison)

5 Years, NYSE

5 years, NYSE

Remember that you can click on the chart to get a much larger more readable version.

Right now, the chart has “be out”. At the bottom, DMI / ADX has the black ADX line at 15 or so. That says weak trend, use Slow Stochastic. It also has the Red DMI- just crossing the blue DMI+, giving a confirmed downtrend. Next up is MACD, that’s been in a ‘stay in’ configuration with blue on top, but now looking like a ‘crossover soon’. As ADX said move to the faster Slow Stochastic, it called the exit much earlier. (When it reaches the bottom and crosses back over, there can be a trade to the upside on a bounce). For now, Slow Stochastic is “red on top” be out of the NYSE. You can also see that the other market indexes have also started down. Even the Nasdaq QQQQ is rolling over. It was driven ‘crazy high’ on Apple Mania, but even Apple has now dropped some.

Overall, it’s not a time to be in stocks (but we already called that one a while back) other than fast trades / shorts.

We do still have price over the SMA lines, but they are ‘weaving sideways’ so not a lot of trend to the upside. Time to pick individual stocks or sectors, not the broad market.

Bonds vs Stocks

This next chart is TLT vs SPY, as the S&P 500 is the basic investment vehicle for most folks (unless you really want to pick sectors or individual stocks, you ought to start with a “SPY / Bond” oscillator, as on this long term chart. TLT is long term US Treasuries, so gives a good view of the major alternative where cash runs during times of doubt. If you plotted a line 1/2 between those two, you would get the performance of a portfolio that was 1/2 in each. A pretty good basic strategy for times that are hard to judge. They form a natural hedge pair during spikes, for example. This is a very long term chart where each tick mark is one week.

TLT vs SPY (20 year Treasury Bonds vs Stocks) with RSI, MACD and DMI

TLT vs SPY (20 year Treasury Bonds vs Stocks) with RSI, MACD and DMI

Last time I’d said:

OK given this bonds chart, I’d be getting out of them. No upward momentum. The Fed can’t cut rates much or at all from here, if the economy DOES pick up, and rates start to rise, bonds will tank, hard. Only thing left is the “Fear Trade” and if the Euro looks like it might survive, expect money to start flowing back that direction (or to other currencies). Indicators are for a ‘dip’ with RSI making ‘lower highs’ after a ‘near 80′ and MACD ‘red on top’ (though still above zero, so not a time to short, yet…) and DMI / ADX+ have inflected as well (though still ‘blue on top’ so again not a time to short – yet).

And we’ve had a pretty nice dip in that bond price. Just wish I’d been more willing to short them.

At this point we have price back at the SMA stack from above, so the ‘short’ is over until prices firmly cross under. RSI has dropped from ‘near 80′ to the middle and MACD has ‘red on top’ so saying stay out. (ADX is over 25, so says ‘trending, use MACD not slow stochastic’). We’ve got MACD near zero, and with it looking a bit like a crossover or pause is developing (blue line slope going flattish). So at this point we could see a small rise in bonds on a ‘fear trade’, but as soon as The Fed starts raising rates, bonds will tank. Until then, it’s likely to be a ‘flat roller’, so swing trade in and out on the roll (that looks like it has about a 6 month swing).

Note, too, that this last week bonds jumped up on a ‘risk off’ swing. As long as folks are dumping risk assets, bonds will be on a rising run, so it is likely there will be a swing trade upside for a while in bonds.

General Stock Markets Overview

The broad stock markets charts are here:

http://chiefio.wordpress.com/2011/12/15/global-stocks-survey/

Last time I’d said:

The SPY, in particular, has a configuration that CAN be a slow steady uptrend. MACD sideways weaving. RSI can ‘roll’ between ‘near 80 and near 50′ in a persistent rise. Until a DMI crossover, you can just have blue on top wobbling closer and further from red. So it’s not YET a “Get Out”, so much as it’s a “worry and prepare”.

That was a good call, and we did have a SPY rise for a bit, flatten, then fall. I ought to have done a WSW sooner and specifically called out that exit, but I did give the ‘worry’ posting and caught that dip trade and warned off overstaying that trade. Still, for folks not trading such ripples, I ought to have done a WSW that said “Exit called for now” about 2 weeks ago.

Right now, all the stock indexes have rolled off, so it been time to be out of them. SPY is holding on the 50 day SMA line. DMI is ‘red on top’ but inflected toward a potential crossover to blue on top (meaning it might call a ‘be in’ soon). But the ADX line is headed down below 25, so trend is leaving and Slow Stochastic is calling trades. Looking at Slow Stochastic, it’s headed up. All of that says most likely a time to enter for a short fast trade to the upside, but don’t stay long. Volume in the drop was low, and Williams %R is still saying be out. Volatility has also stayed low in the drop. Mixed signals… So while a ‘trade in’ ought to work, I’m inclined to sit in cash or only make a small trade. It could just as easily be pausing on the 50 SMA line before it breaks through to the downside on bad new.

I really don’t like it when the indicators are mixed. But as SPY and QQQQ are doing way better than the other tickers, it says mostly be out of those other markets (emerging markets and European) and be in lower risk trades.

UK vs other rising stock tickers

UK vs other rising stock tickers

EWU  -  UK ETF
QQQQ -  NASDAQ 100 ETF
SPY  -  S&P 500 Benchmark ETF
EWJ  -  Japan ETF
EWL  -  Swiss ETF

Last time I’d said:

EWJ and EWL are trending nicely and not yet at RSI near 80… Japan has had “some issues” and the currency had a recent sudden drop, yet in USD the stocks are rising. Hmmm… Folks who had run to Yen, selling them to buy… something. I’d guess Japanese stocks, from the chart. A partial holding in Japan is likely worth it.

All well and good, but again that ‘not making a WSW’ posting toward the end of last month left it unsaid that they had gone flat then and it was time to exit. I think I need to be more timely in making these postings and not depend so much on an intermediate “warn” posting…

Right now, for EWU, we have MACD at ‘red on top’ and below the zero line, with RSI having ‘lower highs’ off a near 80 point. Time to be out of the UK for a while. The rest of the European indexes (in the link) look pretty dismal too. That European news is biting those markets hard. SPY is beating the emerging markets too, so we have ‘risk off’ there, too. Further down the link, IDX Indonesia, EWA Australia and ENZL New Zealand have done a ‘go flat’ while the others have fallen. Possibly some good resource stocks there holding value in an inflationary world as folks know demand will return eventually.

10 Day Hourly Fast Trader Chart

Eventually I’ll put this in a linked chart as well.

Trader Chart - Longs and Shorts of Index Funds  10 day hourly interval

Trader Chart - Longs and Shorts of Index Funds 10 day hourly interval

The Dollar Lately

Time to measure our Rubber Ruler.

The currency charts are now on the Bonds and Currencies chart here:

http://chiefio.wordpress.com/2011/12/20/bonds-overview-charts/

Currencies are a bit of a mess. Mostly all just flat. I think everyone has tried gaming their currencies and now it’s time to give it a rest. Looks like Yen might be over sold a bit on the bad news. Gold is ‘ringing down’ from the overpriced top, looking for stability in all the wrong places. Euro looks like it’s flatted into a floor of sorts. Not seeing any trade I like in it though.

Were Bonds a good idea?

The bonds charts are now on the Bonds and Currencies chart here:

http://chiefio.wordpress.com/2011/12/20/bonds-overview-charts/

On the stock sell off, bonds have ticked up. TIPS in particular have a nice gentle rise to them. IBND the International Corporate Bonds are in a nice rising trend and even Emerging Markets bonds EBND is looking nice, though coming off it’s high a bit more than I like. Perhaps folks are running away from sovereign debt? WIP has gone a bit flat, but still has that large yield. TIP Treasury Inflation Protected securities look to be holding up the best. But there is tradeable ‘ripple’ in WIP using Slow Stochastic.

World Inflation Protected Securities - 1 year daily

World Inflation Protected Securities - 1 year daily

Base Metals vs. Precious Metals

Precious metals:

http://chiefio.wordpress.com/2011/12/13/gld-gold-vs-silver-and-currencies/

The precious metals all looking a bit flat to drifting down. Last time I’d said it looked like a reasonable diversification, and then GLD got whacked a couple of days later. Not feeling so good about gold now, but in a ‘risk off’ context it usually rises; but watch out for those air pockets…

SLV Silver ETF

SLV Silver ETF

Base Metals infrastructure chart posting is here:

http://chiefio.wordpress.com/2011/12/14/base-metals-vs-gold-and-silver/

Base metals, too, had a fall on the China Slowing and Europe not buying news. Back to waiting on them for a possible entry ‘in a bit’.

PALL Paladium vs JJC Copper, JJN Nickel, JJT Tin

PALL Paladium vs JJC Copper, JJN Nickel, JJT Tin

What about Brazil? Also India and China.

Well, while the China news blew the metals call last time, this one was pretty much spot on:

Brazil (and some of the others) has had a nice run up. Right now, the price bars are very short (compressed) and the price is about the same as the last top. I’d reduce risk and move out. It’s higher beta than other countries, so when it’s “risk on” be in, but when it’s “risk off” or even “risk worry” I slide out.

And we can see how they rolled right over:

Brazil the EWZ ETF vs the BZF currency ETF

Brazil ETF vs Currency Race

EWZ  - Brazil
GLD  - Gold fund
BZF  - Brazilian Real currency
IDX  - Indonesia
FXI  - China
EWA  - Australia
EPI  - India - WIsdom Tree fund
EWC  - Canada
EWW  - Mexico
GUR  - Middle East Fund

But with RSI headed to 20 and with MACD looking ready for a crossover to blue on top, time to watch for a buy signal.

Sectors

ETFs with Dividends

With Obama pushing to raise taxes on dividends, all of thse took a bit of a hit in the last week.

http://chiefio.wordpress.com/2011/12/29/dividend-etfs/

Ag Commodities & Ag Related Companies

Grains look like a decent trade. Hmmm….

Not a dramatic trade, but workable.

http://chiefio.wordpress.com/2011/12/31/agriculture-stocks-and-commodities/

FUD "food" and JJG "gain" vs DBA an agriculture basket benchmark

FUD "food" and JJG "gain" vs DBA an agriculture basket benchmark

CZZ looks like it’s topped out for a while. TNH has just had a rocket ride up. Going somewhat parabolic. I’d cut any holding in half and wait for a pull back. TSCO Tractor Supply continues to do well. Guess we know who’s getting that added grain money…

Transports

Only Canadian Rail and a couple of ships look interesting, and not all that much… Mostly the ‘shipping stuff to China’ trade. RCL Royal Caribbean has a nice rolling rise, tradable and with a trend. CCL Carnival getting sold off based on their having a couple of stupid and expensive accidents.

http://chiefio.wordpress.com/2011/12/31/transports/

Oil And Fuels?

The charts are here:

http://chiefio.wordpress.com/2012/01/01/oil-and-energy-stocks-and-etfs/

The Obama Tax The Oil Companies story has turned these into dropping trades.

RTK is having a run (probably due to their fertilizer business) but CCJ has had a ‘pop and drop’. Nuclear not moving anymore.

REITS

As predicted, these have gone flat. Still nice dividends, but not rising.

REITS Race

REITS Race

PEI  Pennsylvania Real Estate - Mall REIT (REMOVED to make better graph)
VTR  Ventas - sr. care, nursing homes, hospitals
PSA  Public Storage - junk storage units
BXP  Boston Properties - office REIT on BosWash corridor  
HCN  Health Care REIT -  extended care, senior care, medical offices
HCP  Health Care Properties - ex. care, senior living, Dr. offices
PCL  Plum Creek Timber - lumber and trees REIT
SPY  S & P 500 broad stock market benchmark
RPT  Ramco Mall REIT
PLD  Prologis - logistics 

Monthly Running Stocks

Well, the “up / down ratio” is pretty grim. More risk than reward.

So what “won” and “lost” over the last month? (though remember, they may not be the winners next month… it’s just to provide ‘context’).

One Month

10 Best Performing IndustriesIndustry
Dow Jones U.S. Travel & Tourism Index 	10.12%
Dow Jones U.S. Full Line Insurance Index 	7.65%
Dow Jones U.S. Computer Hardware Index 	6.53%
Dow Jones U.S. Internet Index 	4.93%
Dow Jones U.S. Airlines Index 	4.70%
Dow Jones U.S. Pipelines Index 	4.11%
Dow Jones U.S. Restaurants & Bars Index 	4.02%
Dow Jones U.S. Gambling Index 	3.84%
Dow Jones U.S. Travel & Leisure Index 	3.77%
Dow Jones U.S. Consumer Finance Index 	3.67%

Some residual vacation plays, insurance, some tech stuff, and things that move oil and gas.

How about the losers?

10 Worst Performing IndustriesIndustry
Dow Jones U.S. Tires Index 	-10.40%
Dow Jones U.S. Platinum & Precious Metals Index 	-9.94%
Dow Jones U.S. Gold Mining Index 	-9.06%
Dow Jones U.S. Exploration & Production Index 	-8.81%
Dow Jones U.S. Paper Index 	-8.00%
Dow Jones U.S. Forestry & Paper Index 	-8.00%
Dow Jones U.S. Real Estate Services Index 	-7.31%
Dow Jones U.S. Oil & Gas Producers Index 	-6.63%
Dow Jones U.S. Oil Equipment & Services Index 	-6.38%
Dow Jones U.S. Oil & Gas Index 	-6.26%

Things Obama wants to penalize. Energy production, mining, forestry; plus tires and real estate as we keep our wallets shut.

Weekly Wining and Losing Sectors

The best and worst of the week? Do they tell a different story on the short term trade?

Up/Down ratio is about flat on the week, just as the market wobbled, but stayed flatish overall for the week.

10 Best Performing IndustriesIndustry Name	
Dow Jones U.S. Coal Index 	5.89%
Dow Jones U.S. Aluminum Index 	5.37%
Dow Jones U.S. Mining Index 	4.35%
Dow Jones U.S. Gold Mining Index 	3.92%
Dow Jones U.S. Home Construction Index 	3.48%
Dow Jones U.S. Steel Index 	3.21%
Dow Jones U.S. Internet Index 	2.72%
Dow Jones U.S. Basic Resources Index 	2.42%
Dow Jones U.S. Industrial Metals Index 	2.41%
Dow Jones U.S. Gambling Index 	1.65%

Alcoa put up good earnings numbers, thus the aluminums. The rest looks a bit like a short cover to me.

Dropping?

10 Worst Performing IndustriesIndustry Name	
Dow Jones U.S. Industrial Suppliers Index 	-4.69%
Dow Jones U.S. Paper Index 	-4.05%
Dow Jones U.S. Forestry & Paper Index 	-4.05%
Dow Jones U.S. Furnishings Index 	-2.81%
Dow Jones U.S. Biotechnology Index 	-2.67%
Dow Jones U.S. Clothing & Accessories Index 	-2.52%
Dow Jones U.S. Business Training & Employment Agencies Index 	-2.49%
Dow Jones U.S. Auto Manufacturers Index 	-2.45%
Dow Jones U.S. Gas Distribution Index 	-2.41%
Dow Jones U.S. Consumer Electronics Index 	-2.37%

Just not speaking to me. Some forest products and some personal items, a bit of weak consumer?

Momentum Trades

First off, the caveat page. Know how to exit before you enter a momentum trade:

http://chiefio.wordpress.com/2011/10/26/when-momentum-fails/

This is NOT buy and hold investing, OK?

The general approach is to find lists of stocks going up, then look at their chart for ‘what is in a good configuration and likely to continue’, then wait for an entry. That last part can be particularly frustrating in stocks with a strong momentum as the ‘dips’ either never come, or come at the eventual blow off top of an exhausted big momentum run. So sometimes I’ll just ‘scale in’ to momentum stocks. Buy some each dip, and exit all of it on a topping indication.

This posting gives an overview of the method of picking:

http://chiefio.wordpress.com/2011/07/20/alpha-bubbles-and-lists/

A trial using the default days length setting didn’t return much of benefit. A nearly random result over a month or two. I’m working on the 6 month and 1 month screens now.

These were picked a couple of months ago, and we’re going to stick with the same list to see how well it holds up. At some point I’ll re-visit the selection for a new batch, but for now this ‘pick’ looks like it’s still running OK.

FINVIZ 6 month Bubbles chart provides a list of stocks that moved up over a 6 month period. I’ve selected some of them, randomly selecting from the top group and tossing out those with a big step up and flat or otherwise looking more ‘news driven’ to the chart.

Generally this set has held up well. A roll down at the end in keeping with the market, and some separation developing, so you could sell the worst half and add to the best half and deal with that. Looks like a working system. I’d look to carefully ‘buy the dip’ on some of the strong names, but be ready to dump them if they can’t swim against a sinking tide.

FINVIZ Bubbles Momentum Chart 6 mos

FINVIZ Bubbles Momentum Chart

ARG  -  AirGas
VZ   -  Verizon
GOOG -  GOOGLE
ISRG -  Intuitive Surgical
FAST -  Fastenal Corp
KLAC -  KLA - Tencor
BMY  -  Bristol Meyers Squib
AAPL -  Apple Computers
WMT  -  WalMart
XOM  -  Exxon Mobile

I also tended to pick larger bubbles (as size does matter) and those on top of a pile. We’ll keep this chart here for a few postings and see how the 6 month screen does.

How did the 3 month version do?

I’m going to leave this chart up a while so we can watch how the 3 month chart did. These were picked about November(ish) so we’ll watch them for a few more months and see if a 3 month screen was predictive. Two of these tickers have the “shoot up mostly flat” of “merger news” and I’d screen those out if doing it again. Looks like a couple of weak stocks showed on earnings reports, so prune them.

FINVIZ 3 Month Chart

FINVIZ 3 Month bubbles stocks

FINVIZ 3 Month bubbles stocks

GR   - Goodrich Corp
FFIV - F5 Networks
SNDK - Sandisk
RHT  - Red Hat
TSO  - Tesoro
EP   - El Paso
GWW  - WW Granger
KLAC - KLA Tencor
ORLY - O'Reilly Automotive Parts
FAST - Fastenal

One Month Screen

A one month scale.

Well, a somewhat more interesting set. Finding those quick off the bottom lately.

Last time I’d said:

Oddly, it is more ‘steady’ than the 3 month screen. At this point, I’ll likely drop to a 6 month / 1 month set in future selections. Still, the “method” is holding up nicely. It will be interesting to see if they do better or worse than the broader market if we have a pause of dip. ( i.e. did we find “High Beta” or “High Alpha” – tendency to volatility up and down, or tendency to upward sticky…)

It’s looking more like ‘upward sticky’, but with some that would need pruning on hitting a flat spot. They did take a dip with the broad market, but not worse than it.

FINVIZ 1 mo screen on 3 Jan 2011

FINVIZ 1 mo screen on 3 Jan 2011

GCI  -  Gannet Company
VMC  -  Vulcan Materials
CTAS -  Cintas Corp (Uniforms and entrance mats and such)
GE   -  General Electric
AMP  -  Ameriprise Financial
BBT  -  BB&T Corp (Branch Banking & Trust)
MAS  -  Masco
JPM  -  J.P.Morgan Chase Bank
WFC  -  Wells Fargo Bank
TAP  -  Molsen Coors Beer

Barchart Top 100 did?

How about the Barchart Top 100?

The top of their list last November, selected to a few and charted:

Looks like we got about 2 months out of it, then a roll-off. OK, so better for fast trades, not so good for finding once a quarter buys… The “early rollover” could be a useful indicator of market weakness “soon” though… Need to watch some more for that.

Barchart.com Top 100 top 10

Barchart.com Top 100 top 10

From the mid-December list, I selected 10 stocks. I started with the top, and took every tenth name, but skipping those that were already charted (two on the prior chart and FTK that we already picked on the Oils chart). They look to have held up a bit better. Perhaps what’s needed is an ‘age on chart’ or ‘time in grade’ metric? Hmmm…

Barchart Top 100 December 2011 - 10 scaled picks

Barchart Top 100 December 2011 - 10 scaled picks

Sym 	Name 	                Weighted
                                Alpha 	        Last 	Change 	Percent High 	Low 	Time 	   
QCOR 	Questcor Pharmaceuti 	+176.54 	43.33 	-1.28 	-2.87% 	45.51 	42.84 	12/21/11 	   	   
PZZI 	Pizza Inn       	+149.30 	5.62 	+0.26 	+4.85% 	5.74 	5.39 	12/21/11	   
DPZ 	Domino's Pizza Inc 	+107.70 	33.60 	+0.12 	+0.36% 	33.72 	33.05 	12/21/11 	   	   
SPSC 	Sps Commerce     	+97.10 	26.86 	+0.62 	+2.36% 	27.89 	26.39 	12/21/11 	      
CONN 	Conn's          	+81.60 	10.26 	-0.93 	-8.31% 	11.12 	10.23 	12/21/11 	   	   
SURG 	Synergetics Usa 	+76.00 	7.24 	+0.12 	+1.69% 	7.27 	6.68 	12/21/11 	   	   
STMP 	Stamps.Com Inc. 	+68.80 	25.63 	-0.75 	-2.84% 	26.42 	24.95 	12/21/11 	   	   
ULTA 	Ulta Salon Cosmetics 	+64.00 	65.87 	-1.10 	-1.64% 	67.64 	65.04 	12/21/11 	      
USLM 	United States Lime 	+59.30 	59.63 	-0.44 	-0.73% 	60.30 	59.30 	12/21/11 	   
FEIC 	Fei Company     	+52.60 	40.86 	-0.18 	-0.44% 	41.26 	39.40 	12/21/11 	   

OK, that’s all the Mo’-MO I can do in this posting. Folks ought to mine the lists at those sites and chart up the candidates, then ‘vet’ them for things like, oh, over $2 price and not having flaky financials. Basically start with the bigger names that you know and avoid the strange names with penny stock pump and plunge behaviours. In any case, it does look like a good way to find individual names with some momentum behind them, and for the FINVIZ daily to find some bottoming reversals.

The Long Term Context

Here is another interesting chart where you can see how volatility spikes at market bottoms and drops lower during times of topping actions. It also has “momentum” on it which can act as a reminder of how much force a trend has, and which way. Slow Stochastic is better for a faster trade behaviour when ADX (of the DMI / ADX indicator above) is below 20 or so.

If this all looks like “too much”, just remember that you don’t need to look at more than the one basic chart. The rest of these indicators give more depth of insight into “why”, but not better answers as to when to be in stocks vs bonds.

SPY vs TLT with Slow Stochastic, Volatility (fast) and Momentum

SPY vs TLT with Slow Stochastic, Volatility (fast) and Momentum

Momentum saying to be ‘traded in’, while volatility is dropping low enough to be a worry and Slow Stochastic has inflected so saying to exit.

VIX the Volatility Index

Last time I’d said:

Volatility continues to drop off. Good in general, but can happen at market tops. We’re so low now that it is a worry that we have a short term top. Using options will be getting cheaper, but ETFs that hold options will be losing ‘volatility premium’.

And we took a dip more or less on queue, with volatility rising during that.

Volatility Index and Related

Volatility Index and Related

VIX  - Volatility Index (not a ticker, you can't trade it)
VXX  - Short term VIX futures ETN (a ticker you can trade)
VXZ  - Medium term VIX futures ETN (a ticker you can trade)
FXY  - Japanese Yen
SH   - "Short" sell of SPY
SPY  - S&P 500 benchmark
IYT  - Transports, a leading sector
XHB  - Homebuilders, a leading sector and "canary" 
XRT  - Retail
Volatility Index and Related

Volatility Index and Related

You could make some money on volatility trades, but it’s a dicey fast trade. A 6 month ‘close up’ shows recent trends.

Stock Indicators – what and how

When the long duration charts say “maybe making a top, but perhaps a ‘buy the dip’ moment”, I look at the faster charts and faster indicators and move to a faster time scale with faster trades. But I’m a trader.

For long term investors, you just ride the ride until the chart says “top is definitely in” and “buy the dip” until proven otherwise by a confirmed roll over (price below SMA stack). In general, I’d put very long term bias as “be in”. Trend is up, dip happened. Be in. But you just can’t ignore that the price plot looks very “rolled flat” at least… and we’re all waiting for DC and Germany to “make their moves”… So you must WATCH the chart each week, even if not acting to be out of the market yet.

If all this talk of indicators is leaving you wondering what the heck I’m talking about, hit the link in the heading of this paragraph and there is a bit of an explanation.

Click for Disclaimers, Disclosures, and Where To Get Charts

Remember that on any stock or ticker I say I’m looking at, you don’t just go buy it. You wait for a stock entry indication to get the best possible entry into the position.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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16 Responses to WSW, Saturday, 14 April 2012

  1. Pascvaks says:

    Ahhhhhhhh.. got it! Sit tight! Don’t let the bed bugs bite.. the money we’ve stashed in the mattress.
    (Investing must be genetic. My clan seems to have missed that gene. Thanks Big Guy, I do rely on you to tell me which way the wind is blowing and how thick the smoke is and if there’s rain a’comming. Best! And, thanks again!;-)

  2. omanuel says:

    I agree! My concern is that our economy is controlled by the same mentally-ill world leaders who lost contact with Reality and now suffer the illusion that they control Reality.

  3. R. de Haan says:

    The process going on today in the oil markets is the total spilt of oil prices vs gasoline, diesel, jet-fuel prices.

    The general plan is to hike gasoline prices in order to reduce mobility and push the electric car.

    The current policies:

    1. reduce the amount of oil available to the market
    2. destroy refinery capacity.
    3. (green tax) all activity
    4. confront producers with even higher demands for CO2 emissions

    In other words: KILL OUR ECONOMY and as a next step: Kill You.

    In the mean time:
    As for coal: the US posted a coal export record in 2011.
    The US has become a NET fossil fuel exporter again in 2011.

    Conclusion:
    We can’t see the US separate from the rest of the world in economic terms.
    I personally expect that Leman Brothers II event will set off a systemic collapse of the global financial system.
    This risk is only rising while the capacity of interventions are drying up due to a lack of capital

    As for the US: the country is run by a bunch of criminal hypocrites.

    The same breed that run Europe.

    We have now reached a turning point in The Netherlands where some Green Ass Holes pushed for a “Green compensation deal” when Belgian politicians were closing a deal to make “De Schelde”, the waterway that connects the harbor of Antwerpen with the North Sea.

    To compensate for all the “environmental damage” caused by taking all the “polluted mud”
    out of the Schelde the Belgians brokered a deal with the Dutch to give some land back to the sea.

    The land they talk about is a polder in Zealand where in 1953 a disaster took place during a storm surge that flooded great parts of the Netherlands.

    Just the concept of environmental compensation for things we do is based on total madness.
    But to remove a dike and flood a polder with salt water which already covers 70% of the planet
    is beyond insane.

    There is no living person in Zealand that is going to accept this lunatic scheme.

    What peoeple don’t understand is the fact that this concept of compensation has been initiated by Agenda 21 from the UN and enforced by the EU.

    Next time they order us to remove all our dikes and sea defenses.

    This is no politics. This is war. A war on humanity. Period.

  4. adolfogiurfa says:

    @omanuel: You are right again. Right now, at the 6th. summit of the Americas, those politicians present in that summit, all speak about “redistribution”, ” development” as THEY could make it with an ideological magic “wand”, that is extraordinarily stupid, because, and it is tragically real nowadays, nothing, absolutely nothing is made from the top downwards, it is the other way: No addition of zeroes, no matter how many, gives a single and humble unity.
    Real scientific breakthroughs, economic breakthroughs, etc., etc. is made by the individual. This is what the APOCALYPSE (a revelation from above) in which we are in now, is all about. New paradigms are needed and these will be brought about by individuals with a singular understanding and comprehension. The sooner the leaders of the world, if there are any, understand that all what they can do is DO NOTHING, not to “innovate”, but just preserve personal freedom and try not to meddle in every person lives, the better people will be prepared for the times to come.

  5. adolfogiurfa says:

    @R. de Haan If you can flee away, do it, and don´t care for those who will stay, it is about fate, about destiny: Just leave the fools live their hallucinating dreams behind and sail away due south. The same goes for E.M.: The time is running out.
    Wall Street?, a good future archeological site to study the past.

  6. R. de Haan says:

    I am perfectly prepared and set up Adolfo, don’t worry about me.

  7. E.M.Smith says:

    @Adolfo:

    My problem with “flee south” is that the politics of Latin America are dominated by socialists with
    the same agenda. I’m not seeing a lot of Libertarian Ideals and I do see a lot of greenwashed wealth redistribution desired.

    So I figure that in a year or two I’ll be able to make a visit, but I’m not so sure it’s a bastion of freedom and liberty suitable for a long embrace. Maybe I’m just working from a Gringo perspective…

    @All:

    It’s important, when looking at investments and trades, to be careful not to ‘embrace a story’. Yes, I think the analysis that the negatives are driven by Watermelon Agenda is correct; but you must not be emotionally engaged with it if the markets move the other way. A Maurice Strong or a George Soros can make a decision and move the market against you far and hard. When the Fat Wallets spend, the market moves, no matter how silly their reason. So you must be ready to embrace that tape movement even if you don’t embrace the reason.

    With that said:

    We can only hope that what has started in Australia can slowly spread to the rest of us. Toss the Watermellons out. Reset to liberty. Ditch the “redistribution” notion. (Realize I have no love lost between me and Fat Wallets, but the simple fact is that ‘propensity to invest’ rises with income. It is those Fat Wallets that create industries via that investment. The more you ‘redistribute’ the more is consumed now and the less you have in the future as investment. I don’t have to LIKE that to recognize it.) Also toss out the notion that POLITICS can ever make decent investment or engineering decisions.

  8. Randall says:

    You mentioned RTK. Whether by genius, or by luck, Rentech’s management has been able to parlay the purchase of its East Dubuque plant into more than a $ billion of market cap, paying a nice dividend too. Fundamentally, companies, such as ammonia fertilizer and chemical companies that use nat gas ought to be fracking good investments. I’m thinking of dipping into DOW, as one example.

    Sasol and Shell are considering building GTL plants in Louisiana. RTK could also play in this space.

  9. The fourth doorman of the apocalypse says:


    Has one guy saying it might even fall below $1 / 1000 cubic feet. ( A Therm is about the same energy as 100 cubic feet and has about 100,000 BTU in it, so is close to a gallon of gas. A more exact number is 1.15 therm / GGE. So at those prices, Natural Gas is running about 20 CENTS per gallon of gas equivalent. A few years back it was running about $12 to $15 / 1000 cubic feet, so was about $1.50 / GGE, which was a modest advantage compared to the $1.80 gasoline then, but now it’s just crazy cheap compared to $5 / gallon gasoline. Thank you fracking!

    Now I understand why the Saudis are sending ship-loads of oil our way and the Feds want to interfere in natural gas production. Too many apple carts being upset. Of course, if the refining capacity is not available, that might spell trouble.

  10. E.M.Smith says:

    @R. de Haan:

    Well, I was expecting something… Can’t have cheap available energy after all…

  11. omanuel says:

    @R. de Haan [14 April 2012 at 4:36 pm]

    I wish you were wrong, but I came to a similar conclusion:

    Diagnosis: Psychosis was induced in world leaders by fear and the instinct of survival</b when “nuclear fires” consumed Hiroshima on 6 Aug 1945. They reacted to save themselves by uniting nations and hiding information on the source of energy that produces “nuclear fires”.

    Supporting Observations:
    1945: Hiroshima vanishes because E = mc^2: 6 Aug 1945
    1945: United Nations Charter is ratified: October 24, 1945
    1946: Solar interior changes*: Iron (Fe) into Hydrogen (H)
    1956: Publication blocked of Earth’s natural “nuclear fires”
    1967: The Bilderberg standard model of Sun is formulated
    1975: Evidence of local element synthesis in Sun is hidden
    1977: The scientist that reported the pulsar Sun vanished
    1983: New evidence of iron(Fe)-rich solar interior ignored
    1986: Challenger disaster** delays confirmation in Jupiter
    1989: Government tries to discredit cold fusion discovery
    1993: Possibility of nuclear reactor reported in Earth core
    1995: NASA hides Jupiter data confirming Iron (Fe) Sun
    1998: CSPAN*** captures NASA’s release of Jupiter data
    2001: Neutron repulsion solves the Solar Neutrino Puzzle
    2001: 178 SNO scientists report solar neutrino oscillations
    2008: Nature assigns credit for natural reactors to others
    2009: Climategate emails and documents show deception
    2012: Dr. Peter Gleick’s actions reveal AGU/NAS at work

    Treatment: Restore integrity to science, rights of citizens and citizen control over government, without reviving racism, threat of nuclear war, or retaliation for deception. Avoid violence. The situation is unstable and could explode violently to the disadvantage of all.

    I nominate again E. M. Smith for this honor. At stake are the basic rights that were declared as founding principles of this country on 4 July 1776:

    http://www.ushistory.org/declaration/document/

    - Oliver http://omanuel.wordpress.com/about/

    Footnotes:
    * Read opinions of Sir Fred Hoyle and Sir Arthur Eddington before 6 Aug 1946 [Fred Hoyle, "Home Is Where the Wind Blows," University Science Books, 1994, pp. 153-154].

    **CNN video of 1986 Challenger disaster:

    ***CSPAN shows NASA releasing Jupiter data that confirm Iron (Fe) Sun

  12. Pascvaks says:

    Mr. McGuire told Ben, “I just want to say one word to you …. just one word…Plastics. There’s a great future in plastics.” (The Graduate)

    A real shame Mr. McGuire didn’t also tell Ben, “You are what you eat boy, you are what you eat!”

  13. Bruce Ryan says:

    Seems to me unless there is a significant new inexpensive energy development the world is headed for a hand-basket. Spain is basically gone, and it has half its young not finding work. If I remember correctly Ireland’s young can’t find work either.
    When countries this big go “pass” is there any up side for a sector?

    Science may well bring a new revolution in what is ” how it is”. Is there anything else to hope for?.

  14. omanuel says:

    Bruce, we could recover from 66.67 years of misinformation with leadership to

    1. Establish a “Truth and Reconcillation”-type Commission to restore integrity to science, rights of citizens and citizen control over government, without reviving racism, threat of nuclear war, or retaliation for deception.

    2. Avoid violence or retaliation at all costs. The present situation is unstable and could explode violently to the disadvantage of all.

    http://omanuel.wordpress.com/about/#comment-31

  15. Pascvaks says:

    Aye! Life on the Third Point Five Rock is either feast or famine, feast or famine. If someone doesn’t discover a new hemisphere fast there’s going to be trouble. Time to dust off Dickens and see how things were done in the good ol’ days, when life was a little less happy than now. Hope we don’t have to go back further than that. Let’s all pray the good ‘Bishop’ has some fine connections with the powers that be and can get this flea bitten country cleaned up and back on its feet in four years, oh yes, and out of the dog house. But, I guess, it will really depend on where most of the fleas be. We’ll see. Watch the Big Board for tell-tale signs of recovery.

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