WSW, Sunday, 6 May 2012

General Comment

Last time I’d said:

This one was likely 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.

At present the European and Asian markets are down hard today. 1% to nearly 3% in the indexes, up to 5% in many “name” issues (the Japanese exporters in particular along with the Australian miners and minerals stocks). That may change as the market finishes the day, but as of now it’s pretty ugly. The USA futures are calling for a down day for us, too.

The French have elected a Socialists that is not enamored of the German Austerity. The Greeks have shunned their two major moderate parties, giving more votes to both the far left and far right ( i.e. the Socialists and the Nationalists).

All of this puts the EU and the Euro Zone at risk.

http://chiefio.wordpress.com/2012/05/06/a-cold-epiphany/

Asia has reported a slowdown (and that is whacking Australia as supplier of materials less likely to be needed in a recession).

Crude Oil has gotten whacked some, too, on an increase in Margin Requirements by the exchanges. That and the Saudi’s talking down oil prices and threatening to pump more (as they do anytime they’ve slightly overplayed their hand and the alternatives are gaining some share and / or some countries actually look like they might do something to take the needle out of the arm…) Such as the USA starting to move more “stuff” including buses and long haul trucking onto natural gas.

http://chiefio.wordpress.com/2012/04/18/american-energy-freedom-in-10-years/

As noted before (in comments, I think) it’s now a ‘Risk Off” world.

What’s working? Things like TIPS – inflation protected treasuries.

Cash – in particular US Dollars and Yen.

News Flow

Mostly covered above. I’d only add that the US Employment data was crummy. Yeah, jobs were added. ALMOST enough to hire about 1/2 of the new June Graduates and not nearly enough to call the economy ‘growing’. “Growth” is about 2% which is less than the actual inflation (not the funny numbers the government uses now, which are also about 2%) so at best we are treading water. If you take growth of Federal jobs out of it, there are LESS non-government workers today than when Obama took office. This is NOT getting better.

Japan is now a non-nuclear nation, having shut down their last running nuclear plant. They now join Germany in the “backfilling nuclear with oil” business. In warm weather, historically, US Diesel prices drop below Premium gasoline (sometimes below mid-grade). Now they are staying high. European demand for Diesel and possibly also Asian demand. The USA is exporting what it makes at high prices. Glad I have a choice of “Diesel or Gas”, even if I’m driving my usual “winter car” in spring… (In winter, the demand for heating oil raises Diesel prices above gasoline, as Diesel is basically slightly more filtered #2 heating oil).

The “Talking Heads” shows are not expecting a rising market. They are expecting more Eurozone Strife and a weak global economy.

With Europe headed for the dumper, they will not be a decent position to buy Chinese or Japanese goods. That’s causing Asia to tank, and that is reflected in expectations of low resources demand, so Australia getting hit. Industrial metals taking a whack, too. ( So Platinum getting pushed down).

Duck and cover time. But we already knew that was likely.

Conclusions and Likely Actions

Last time I’d said:

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.

That looks to have been pretty much “spot on”. If you waited for the touch of the Simple Moving Average lines and shorted, it was a very nice trade. At this point it’s likely a bit late to put that trade on, but too early to take it off. Usually about 2 or 3 days in there’s a ‘relief rally’ and you want to cover shorts before that (then put them on again back at the SMA stack). Watch the news flow for a positive turn and if you see that, cover shorts fast. Never let a short age too long…

Folks not wanting to short markets ought to hide out in non-Euro currencies ( likely Yen, Swiss Franc, and some few selected others). If the ‘slowdown’ scare continues, the resource currencies also get hit, so avoid Aussie Dollar and likely the Canadian as well (though only for a little while… that oil demand will return strength to it fairly quickly).

What a mess.

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 -
Sunday, 6 May, 2012

Long Term Context

I’d promoted this chart to the top for a while, as it was in control. Now we ought to move to the faster, daily tick mark charts.

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.

Last time I’d said:

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

Now this time scale is a bit more conflicted. The DMI / ADX reading is very low. Low strength. Then, it is the Slow Stochastic that ought to be traded. It is saying “near a bottom of this dip”, while MACD is looking slightly positive as it is above zero, but looks like a ‘crossover down’ may be shaping up. Frankly, it mostly says “don’t trade this time scale” to me, so we move to a faster time scale or step out to inflation protected assets and wait.

The pattern of “lower highs” in most of these markets is “not good”. Only the Nasdaq violates that pattern, and it has largely been carried by Apple and a couple of others. They can turn on you fast and look “toppy” to me. Most of the rest of the world looks worse.

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.

I’ve added TIP, the Treasury Inflation Protected securities ETF, so you can see how it is acting as a safe haven.

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:

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.

That, too, has ‘worked’ relatively well.

At this time I’d “Duck and Cover” into TIP. Things are likely to be a bit “wild” for a while. It’s a relatively safe place to hide and if The Fed does more to kick up inflation, it has a protection kicker in it. The TLT indications are for a ‘crossover blue on top’ for MACD maybe “soon”, and with RSI at ‘near the middle’ the likely trade is further upside (especially in a risk off world); but I’d rather have that inflation ‘kicker’ in my hip pocket at this point.

With the Eurozone risks, there just too much chance of a load of global coordinated “Easing” causing an inflation spike.

General Stock Markets Overview

The broad stock markets charts are here:

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

ALL the stock index tickers look either flat or falling. Not seeing an entry call, and not seeing any reason to take risk for no likely reward.

Even the ones with the best “look” to them and some recent rising trend have at best turned into “flat rollers” suited for rapid swing trades and not much else:

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

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/

The usual “risk off” players look best. US Dollar, Swiss Franc, Yen. The Canadian Dollar is holding flat against the US. I’ll likely do a more in depth look at it mid week. ( In fact, I’m thinking of doing one of these areas each week instead of letting it all go several weeks and playing catchup… or maybe some of them on a ‘one each day of the week’ basis. Money Monday, Bonds Tuesday, Oil Wednesday, etc?)

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/

Last time I’d said:

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.

That’s pretty much how it still looks. TIPs winning the most, WIP holding steady with a dividend. Emerging Market bonds picking up steam. The Euro Flight will likely run to USD and some selected emerging market bonds. I’d likely go about 80 / 20 % split. In the following chart we see that TIPs are winning in that group.

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 and base metals both looking crummy. Just stay out for now and wait for a clear bottom indication. Even gold is more or less flat with high wobble. Not a great idea. If you want to hide, hide in TIPs instead.

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/

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.

Pretty much “dead meat” for now. We wait for RSI to show “higher lows off of 20 ish” and for MACD to show a clear “blue on top” with a decent up slope toward a zero crossing. DMI needs a clear “blue on top” and ADX moving higher too. Until then, it’s watch and wait, but don’t touch.

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

These guys are holding up more or less flat. Nice. Dividends protecting them. A reasonable diversification with modest risk. Lower volatility. I’d look at buying modest positions on dips to the low side of the ‘flat roll’. Cell phone providers in particular look to be doing reasonably well. Some other utilities too.

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

Ag Commodities & Ag Related Companies

Last time I’d said:

Grains look like a decent trade. Hmmm….

Not a dramatic trade, but workable.

And that continues to be about the only trade here (other than shorts). Trading those periodic ripples.

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

I’d also said:

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…

And that’s pretty much what has happened. CZZ rolled over, TNH has now had “lower highs”, so other than booking the dividends, the rise is likely slowing to a flat (watch for reversal downside… unless there’s bad news it is not likely, but momentum players will be leaving the shed…) TSCO continues to look nice, but in a generally Risk Off world, I’d likely step aside after that long a nice run. There will be a lot of cheap things to buy in a while, so free up the money and reduce risk.

Transports

Despite the falling oil, I’d step out of any transports. Even the Canadian Rail CP looks flattened. If China slows, they don’t need as much rail shipments…

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/

Last time I’d said:

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.

Pretty much the same now. With oil dropping and natural gas in the dumper, not a lot of interest. Possible “Bottom Fishing” in the natural gas area as price bounced off the “one handle” (price starting with a $1 number at about $1.98) and has stabilized a bit over $2. CCJ also looks like it’s had the “dead cat bounce” at the bottom, so long term accumulation of nuclear could start now (for the VERY patient…)

REITS

REITS are showing a bit of life. A small position, held for dividends, ought to work. Inflation protection built in too, longer term.

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. Home Construction Index	11.43%
Dow Jones U.S. Retail REIT Index	5.19%
Dow Jones U.S. Hotels Index	4.93%
Dow Jones U.S. Railroads Index	3.74%
Dow Jones U.S. Mortgage REIT Index	3.40%
Dow Jones U.S. Fixed Line Telecommunications Index	3.20%
Dow Jones U.S. Real Estate Holding & Development Index	3.18%
Dow Jones U.S. Real Estate Investment Trusts Index	3.02%
Dow Jones U.S. Building Materials & Fixtures Index	3.02%
Dow Jones U.S. Recreational Products Index	2.99%

Home Builders on a “Not Dead Yet” bottom fishing. Real Estate (inflation hedge and bottom fishing). Building materials on a Home Builders not dead bottom fishing. A bit of Telecom and some rails. I’m not impressed, but it does indicate that sinking some money into Real Estate for longer term is likely a good idea.

How about the losers?

10 Worst Performing IndustriesIndustry
Dow Jones U.S. Platinum & Precious Metals Index	-16.76%
Dow Jones U.S. Furnishings Index	-13.13%
Dow Jones U.S. Industrial Suppliers Index	-12.04%
Dow Jones U.S. Auto Manufacturers Index	-10.52%
Dow Jones U.S. Forestry & Paper Index	-9.52%
Dow Jones U.S. Paper Index	-9.51%
Dow Jones U.S. Life Insurance Index	-9.36%
Dow Jones U.S. Investment Services Index	-9.07%
Dow Jones U.S. Steel Index	-8.02%
Dow Jones U.S. Business Training & Employment Agencies Index	-8.01%

Stuff We All Buy. SWAB? Platinum goes into catalysts for the cars we are not buying. Furnishings we are not buying. Life Insurance and Investments we’re not buying. Steel in the buildings and vehicles not being bought. Autos and the industrial base behind them that we’re not buying. Business not training the folks they are not hiring… Yeah, I can see that.

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 dismal, and likely to be worse after the European Flu gets here.

10 Best Performing IndustriesIndustry Name	
Dow Jones U.S. Trucking Index	1.52%
Dow Jones U.S. Brewers Index	1.23%
Dow Jones U.S. Footwear Index	1.04%
Dow Jones U.S. Distillers & Vintners Index	0.64%
Dow Jones U.S. Reinsurance Index	0.49%
Dow Jones U.S. Mortgage REIT Index	0.26%
Dow Jones U.S. Fixed Line Telecommunications Index	0.26%
Dow Jones U.S. Beverages Index	0.23%
Dow Jones U.S. Residential REIT Index	0.21%
Dow Jones U.S. Airlines Index	0.20%

A small lift to trucking and airlines on the fuel price decline. We’re buying some beer and shoes and distilled spirits and wine. Again we’re talking on the phone and using the internet. A touch of Real Estate. OK, that’s a theme. Reinsurance didn’t get whacked with a load of losses.

Dropping?

10 Worst Performing IndustriesIndustry Name	
Dow Jones U.S. Platinum & Precious Metals Index	-9.24%
Dow Jones U.S. Life Insurance Index	-7.28%
Dow Jones U.S. Business Training & Employment Agencies Index	-6.43%
Dow Jones U.S. Auto Manufacturers Index	-6.28%
Dow Jones U.S. Transportation Services Index	-6.21%
Dow Jones U.S. Industrial Suppliers Index	-5.92%
Dow Jones U.S. Heavy Construction Index	-5.79%
Dow Jones U.S. Commercial Vehicles & Trucks Index	-5.61%
Dow Jones U.S. Exploration & Production Index	-5.30%
Dow Jones U.S. Computer Hardware Index	-5.21%

Expensive things we’re not buying (again) along with things that go into them ( platinum catalysts and Industrial Supplies) along with a roll off in oil Exploration & Production (thank you Mr. Obama…) and slow computer sales (to the companies that are not selling things and not hiring people to use those computers). And not training folks.

All in all, pretty dismal

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.

I’m going to break this out into a set of separate postings. It isn’t well suited to this format. I need to have new ‘tranches’ starting every so often, but also tracking the older ones for performance. Perhaps a “Momentum Monday” posting? At any rate, for now the original set stays so we can see what happens in a downturn, but expect in the future that this becomes a stand alone and leaves the WSW posting proper.

These were picked a few 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. We are showing some “roll over” in some of the names, so that indicates a need to check at least once a week and exit on those roll off movements. Yet some others are holding up and ought to be ‘graduated’ to a different class. Things that swim against the market tide.

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.

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

VIX the Volatility Index

We’re continuing to see the low volatility at ‘tops’ and the rising volatility in the dips. To me this is still saying “stay out” for now.

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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14 Responses to WSW, Sunday, 6 May 2012

  1. adolfogiurfa says:

    “Stay out”, buy more popcorn and read Musings from the Chiefio everyday…

  2. R. de Haan says:

    The unbalanced demand we have for diesel and jet fuel compared to gasoline has been solved ny NATO.
    Obviously they have scrapped the NATO fuel standard (diesel/jetfuel).
    They now allow the application of cars, trucks and marine applications to run on gasoline.

    I know this because in Soain currently a series of fast boats are build with gasoline engines.
    These fast boats are used for coastal patrols.

    If Nato is going “dual fuel” this will restore the curent inbalance in diesel/gasoline production and…. keep prices high.

  3. Pascvaks says:

    I’ve heard it said, “The market factors in things like the recent French and Greek elections before they even take place.” Do you personally agree, and how confident are you that this ‘market factoring’ is accurately reflecting these things? What limits do you yourself place on the so-called ability of the market to anticipate events in the real world?

  4. R. de Haan says:

    By the way, Zero Hedge comes with an article about the increasing scarcity of paid labor and it’s consequences.

    http://www.zerohedge.com/news/guest-post-global-reality-surplus-labor-scarcity-paid-work

    At the end of the road the establishent will come up with some effective ways to deal with the unproductive part of our populations (the useless parasites).
    All creative minds on the subject of population control and methods to end lives in a dignified manner are in the right position now.

    Those with an extermination, funeral business or a biogas plant have and an advance.
    Business will be booming.

  5. adolfogiurfa says:

    @R.de Haan: You remember what happened in Peru in a similar economical crisis. If people is pushed to the limit and they acknowledge there is no helping government anymore, they begin working, and instead asking for a job they begin to producing jobs and starting the now more than 20 years of growth.
    But that was a different case, in this case there are obvious culprits and the reaction perhaps it will be different.

  6. adolfogiurfa says:

    typo: began instead of begin (Why is it so that this computer corrects typing by its own?…a crazy apple)

  7. Pascvaks says:

    @R de Haan –
    IPO “XMANX” will be out soon. Understand it is a very recent startup by a group of retired and ‘former’ SS, FBI, USM Witness Protection Specialists, and Columbian Entertainers. From what I’ve heard, which is next to nothing, once you’re nominated by a State Unemployment Office, or the Social Security Administration, the IRS, Big Sis Inc., The Attorney General’s Office, the Academy of Motion Picture Arts and Sciences, the IPCC, a Member of the UN General Assembly, The Mafia (Italian, Russian, Irish, Jewish, Mexican, Cuban, etc.), Sears, K-Mart, Penny’s, Wal-Mart, Target, SafeWay, A&P, USSteel, a member of the AFL-CIO, or a Presidential Czar, or NEA Teacher, etc., etc., then you’re gone in 24 hours. No-fus-no-mus, spic-n-span, shake-n-bake, bingo-bango, you’re out of here! (SarcOff)

  8. R. de Haan says:

    Hollande will be a disaster. No economic reforms, more spending, more debt.
    Obviously he intends to promote the progress of EU unification (fiscal union) and sacrefice his nation for the “good”.

    Well the French elected this ideologist and they will have to live with his policies.

    I want out. Out of the EU, out of Europe. Period.

    Same for the USA

  9. E.M.Smith says:

    @R. de Haan:

    There’s a movement in the US Military, at least, to engines that can run a range of fuels. Diesels with hardened injectors and pumps such that you can run regular gasoline in them (with the addition of a can of motor oil per tank) for example. My old style precombustion chamber (Ricardo style http://www.ricardo.com/ ) will run on all sorts of fuels. It LOVES kerosene and Jet-A / JP-x up to about JP-8. Gasoline needs some added lube and I can only run about a 50% mix without some cetane booster (or really crappy octane gas ;-) Gas Turbines can be just as flexible.

    So while we have a Nato “One Fuel” push, we might build any particular thing with a “Diesel” bias or a “Jet Fuel” bias (yet able to run either, or even gasoline). I’ve seen an interesting design from VW that was basically a Diesel with a Spark Plug. On high Cetane fuels you use compression ignition. On low Cetane / high Octane, it uses the spark plug. Run just about any mix of alcohols, gasoline, kerosene, Diesel… In the end, that kind of engine is the answer to the fuel type issues. Looks like Chrysler too:

    http://blogs.cars.com/kickingtires/2011/06/chrysler-developing-prototype-engine-that-burns-gasoline-and-diesel.html

    Per “paid labor”: When folks will pay you to do nothing, why work? US “Disability” enrollments are rising very fast. Employment outside government is basically static…

    @Pascvaks:

    It’s called ‘The Efficient Market Hypothesis’ and is quite wrong. More accurate is what I’d call ‘The Consensus Market Hypothesis’. The market reflects the average / consensus of the dollars being wagered. When that consensus is right, the market is right, when it is wrong, I make money ;-) Which was correct: The NASDAQ at the top of the “Tech Bubble” or just after that crash? The Stock Market in 2007, 2008, or 2010? Was silver at the top of the most recent bubble the “accurate” price? (When I ‘called a bubble’) Or is the price now the correct one?

    I ‘call the market’ simply by detecting when that ‘consensus’ opinion is out of sync with real values (when value investing) or detecting when it is about to have an inflection (when swing trading) or when it is likely to continue despite no good rationalization (when trend trading). That’s why I frequently mention “It’s not about me” and that “there is always a story”. It is why I have no feeling about the market. I marry no “story”. I participate in no “consensus”. What I do is watch what “the crowd” is doing and asses what “the crowd” is likely to do next. Then position to take advantage of it.

    It is Liars Poker writ large.

    http://en.wikipedia.org/wiki/Liar's_poker

    So right now the “talking heads” are all saying “Maybe it’s not so bad” and calling Hollande a centrist. Markets are stabilizing (and some even going up a bit). A few hours ago they were tanking. Which was The Efficient Market? In my opinion, the ‘consensus’ is still forming (and will likely settle on “He’s OK”). Then the disconnect between the consensus and the reality will slowly set in over a year or two. During that time, seeing where the disconnect will end up before the consensus sees it is how to make better bets than the consensus players.

    For now, I’d be stepped out of the stock markets while the roiling happens. Then I’d asses the disconnect and position in. Shorter term one can find individual tickers with excursions away from trend that will have a Reversion To The Mean (trend) and put on trades in them. Finding places where The Consensus bet has good too far from the RTTM(trend). RSI at 80 or 20. MACD about to inflect. DMI having a crossover setting up.

    @Adolfo:

    There are likely controls that let you turn off ‘autocorrection’. I always get to spend a half hour with any new instance of MicroSoft Office shutting off all the auto-mis-features so it just types what I type and doesn’t “fix” things for me…

    It i

  10. E.M.Smith says:

    @Pascvaks:

    Read:

    Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Mackay

    http://www.gutenberg.org/ebooks/24518

    Or less eye strain ;-) :

    http://librivox.org/memoirs-of-extraordinary-popular-delusions-and-the-madness-of-crowds-volume-i-by-charles-mackay/

    Then realize these same folks move prices in markets. That’s why we have bubbles and crashes.

    IMHO, the AGW Craze will be an entry for a future version of “Memoirs of … Madness of Crowds”

    Or, as one of my friends once said: “Don’t be upset at them being stupid, make money off of them.”

  11. omanuel says:

    @adolfogiurfa:

    Will Markets End Decades of Deception in Models of Reality versus Reality (e.g.,Climategate)

    The seeds of Climategate apparently sprouted from a decision to unite nations, control humans like domesticated animals, and hide this information [1] on the energy that destroyed Hiroshima on 6 Aug 1945:

    “One day in August 1945, while standing in the ruins of Hiroshima, I became overwhelmed by the power of nuclear energy [1].

    “The sight before my eyes was just like the end of the world, but I also felt that the beginning of the world may have been just like this [1].

    Astronomy, astrophysics, climatology, cosmology, solar and space physics been plagued by consensus models of reality since 1946, when Fred Hoyle and the Royal Astronomical Society led these fields astray with two landmark papers [2,3] that very effectively hid the primary source of energy that destroys, creates and sustains life.

    Prior to the end of the Second World War, Fred Hoyle, Sir Author Eddington and leaders of astronomy and solar physics in the West “believed that the sun was made mostly of iron” [4].

    I essentially spent my research career showing that Professors Paul Kuroda [1], Fred Hoyle and Arthur Eddington [4] were right [5] before Fred Hoyle’s 1946 models of the internal composition of stars [2] and the synthesis of elements from hydrogen [3] were published in 1946.

    With kind regards,
    Oliver K. Manuel
    http://www.omatumr.com

    References:

    1. Paul Kazuo Kuroda, “The Origin of the Chemical Elements and the Oklo Phenomenon” (Springer-Verlag, Berlin/Heidelberg/New York, 1982, 165 pp.) page 2.

    2. Fred Hoyle, “The chemical composition of the stars,” MNRAS 106, 255-59 (1946).

    3. Fred Hoyle, “The synthesis of the elements from hydrogen,” MNRAS 106, 343-83 (1946).

    4. Fred Hoyle, “Home Is Where the Wind Blows” (University Science Books, Mill Valley, CA, 1994, 441 pp.) page 153

    5. Oliver Manuel, “Neutron repulsion,” Apeiron Journal 19, 123-150 (April 2012) http://tinyurl.com/7t5ojrn

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