rovo's Market Journal -- 2011

[livinincali]

Personally I think the market is going to start focusing on earnings. Job numbers are important for the trade tomorrow but earnings over the next month are going to move the market. This is going to be the first quarter in a while where the YoY earnings comparisons aren't going to be easy to beat.

[livinincali]

Couple quick updates on technicals

F has obviously broken out. This is what the probabilities favored although that whipsaw on Tuesday did probably scare some people out and I was worried about it in the middle of the day. Once it recovered into the close it didn't look nearly as bad but still slight risky. At this point there's not much in the way of good targets but the top of the current channel is somewhere in the 19-20 area over the next couple of weeks. This is one were you probably tighten your stop up to the breakout level of about 17.50. It really shouldn't be trading below that point until we see a trend reversal.

HI looks to be topped in the short term with a lower high recorded yesterday. The trend down would likely be confirmed with a move below 20.50. I guess this one could still surprise us with a move up so you'd continue to keep a pretty tight stop at the 200 day moving average around 21.35 if you were short, but odds favor a short at this point.

TTT looks terrible technically but it's hard to get a good read on it because it just paid a special $0.90 dividend which produced the huge gap down. Excluding the dividend it would be trading around 8.60 which would look pretty good from a technical perspective.

[livinincali]

The big one is the TBT/TLT pair and right now I can't tell you what this pair is going to do. If I had to guess I think TBT probably breaks to a new high but it might be short lived.

[Bluerobin]

Rovo, I agree about market direction. I am taking some time off from "day or swing" trading. I have to get a new group of stocks from which to choose. Also, I am involved putting together a long term portfolio for income, which is proving challenging. I may post about that one.

[klewcm]

DI - Post # 83

If is dividends you are looking for, sorry. However if it is capital gains. it may not happen for quite awhile as many / most mutial funds are sitting on huge piles of "Capital Loss Carry Forwards" to offset gains.

[yclept]

I took a stab this morning at TNA. Was in at 75.57 and out at 74.3001 -- a hundred shares, so I guess my intent was to give someone a bit over a hundred bucks. Funny, I don't think that was my intention going in!
Some poor sucker bought 300 for 6.94 of the 800 JGBO I bought yesterday for 6.3699. Poor devil. I guess he got a lesson on moving in and out of low volume stocks without using limit orders. I still have 1300 JGBO -- it's still for sale at 6.94. Might buy some more if it drops back to the 6.4 mark or so. I think it's significantly undervalued, but it'll be a long time before it becomes a ticker with dependable liquidity. Reckon I have to keep the holding small if I want to sleep well at night!
But all in all, today's working out okay for me. Right now ports are up 0.53% which isn't too bad for a day when the indices are so far going nowhere.

[rovo]

Cali is confused about HI. I'm confused about HI. The market is confused about HI. From a low of 20.76 earlier today on anemic volume to the current level of 21.57 on heavy volume. I really shouldn't speak for Cali but the market action on HI is totally strange. BUT, as I said a few days ago, I'll give it some time and see what happens.

I just put a GTC order in for 500 shares of ISRG at $255 for a long term position in my tax deferred account. I've been watching this stock for years but never did anything with it. The pricing is finally coming down to more realistic levels with a PE of ONLY 33. LOL

[rovo]

I have 5K shares of HI in my IRA as a short term trade and I just put them out there for sale at 1K each, starting at $22 with $0.50 increments. My buy price was $20.00 per share for the 5K shares. I bought these on Nov. 12th. in anticipation of a great earnings report which didn't happen.

[rovo]

I've been trying to play mind games with the HI options I'm holding which expire this month. I think my opponent is a computer because he seems to be winning. LOL. Huge orders flowing thru HI today as I've seen 10K share orders several times. I wish I knew what was going on. Currently about 800K shares against the average of 200K and the price is up just about a dollar. I moved a few shares at 22.00 but only 400 of my 1K sold. There are about 20K shares for sale at 20.00 and mine are just a blip on the radar.

[rovo]

DI, Was that a bunch of PUTS you sold?

[rovo]

The other 600 shares of HI traded at 22.00 so I managed to sell 1K at 22.00 vs. my buy of 20.00 on November 12. +10% is OK with me for holding 2 months.

[rovo]

It must not have been a computer fighting me as I managed to sell the 44 option contracts in HI at $0.40 against my buy price of $0.15. Yesterday these were worth nothing. My, how things change. I was expecting to have to write these off for a total loss but now I have a small $1K gain instead. Yeah Baby.

[rovo]

This has been one heck of a week in the market and I am really beat and blurry eyed. Normally I just work for a couple of hours a day but this week I've been on-line from 8AM till 4PM. I usually try for a couple grand of profits a day but this week/year I'm doing much better at $3.5K per hour. I just figure the market will go dry on me at some point and I had better make the $ while I can. I got the year's living expenses covered and I'm now working on the tax bill. LOL. ;D

Month-to-Date is now at 5.09%.

[livinincali]

I don't know what happened with HI. It certainly did the unexpected based on the technicals, but I guess the gods were smiling on rovo today. Obviously there's probably some rumor involved with today's move, but I don't know what it is. These kind of baffling moves are usually only explained by some kind of unexpected event, but there could have been a decent short squeeze that contributed to the rise in price once it got going. Fortunately I didn't actual have a short on HI. I got my 19.50 to 20.50 move which was still a nice gain for a couple of weeks.

I guess we wait and see with HI now. There's not much TA that can be done on it at this point. It's blown out the bollinger bands and is going to look really overbought but I'd expect it to keep rising for a bit as any shorts in that stock are now stuck. There is some possible resistance at 22.25 but I don't expect it to hold the stock down.

[livinincali]

I have a long dollar short Euro trade on right now with EUO again. Last time I did this it didn't work all that well but the chart looks better this time. I also put on a long GLD trade just as a buy the dip trade. I'll bail on this one pretty quick if it doesn't start rising in the next couple of days. The chart of GLD doesn't look all that great but pretty much everything has been surprising to the upside lately so you got to give it a go when the trade presents itself. I don't have much confidence in the long GLD trade but I figured what the heck.

[rovo]

I was just looking at GLD myself. Yes, it looks ripe for a little upward pop or a drastic fall. Right now I think there is still enough interest in gold for the upward move to occur. Kind of like the last hooray.

GLD has a triple peak and wasn't able to break thru the high. I'm still planning on putting a short play on it as soon as 5-15-50 cross says sell. I may also buy some PUTS on GLD.

[rovo]

I also like your play on the long $ / short Euro. Tomorrow could be very intersting.

[lovetobike]

I joined rovo today and sold 200 of my 500 shares of HI at 22.00. I bought those 200 at $21.22/share and so there wasn't much of a gain. I did get a nice $95 dividend from them! I'm getting a little nervous that HI had hit its peak and will go down sometime soon. Of course now that I say that it will skyrocket!

My Fertilizer stocks had another good day today. To date I'm up:

AGU:+ 9% (up 0.93% for the day) (yesterdays value included some shares I forgot I had sold)
POT: +26% (up 4.4% for the day)
MOS: +12.5% (up 0.64% for the day)

I've got quite a bit of cash and am exploring places I can put it during this projected run up. I'm having a hard time making decisions though.

[livinincali]

I'll be honest I can't find many stocks that I really like long right here. Doesn't mean the market won't keep heading higher from here, but I'd like to see how it looks after some kind of multi-day/multi-week pullback. Virtually every timeframe including the monthly is showing signs of being overbought. I have a feeling that the fed has been successful at creating another bubble in equities, but it could last for another couple of years.

I do think that we're going to see the market selloff when the fed removes the liquidity support even though macro indicators will probably remain good for awhile. I.e. the market will top even though employment is getting better. Problem will be profit margins in stocks and earnings coming in under optimistic estimates.

[yclept]

Gold. I bought DGZ on 12/28 and obviously it's done okay for me since then, up 2.48%. I have to be careful with this one, as I hate gold so much and think that as an investment vehicle it's absolutely ridiculous, and that the people who own it are stupid -- suffice to say I'm not a gold fan! And I can get in trouble by holding onto shorts against it out of spite. Hopefully this time I'll play it right.

[heavyweightboxer]

Jumped back in F and then back out again with some profit. Sitting on just a few contracts of CSCO Jan 21 calls. Back to mostly cash looking for next opportunity. Tried to get back in F but didn't get a pull back. Will look again tomorrow because I don't think it is done. Got my account back to break even today so happy about that under the circumstances after missing a ton of profit on V.

[heavyweightboxer]

Rovo, I see more room in F, in your opinion, do you see if running past $19 in the short term? Any insight appreciated. Opinions from others welcome also. I have rarely posted until the move to this board but have followed since the 08 crash. Thanks in advance

[rovo]

Heavyweightboxer, My opinions are just that, an opinion. I know nothing more than is available to anyone else on Ford. Yes, I think Ford has a lot more room to run for a bunch of reasons.

My current holdings in Ford are:
30,000 shares which I'll probably hold until I see a reason to sell them. 400 Option Contracts F Mar 19 2011 $20.00 Call
100 Option Contracts F Jan 21 2012 $30.00 Call.

I do not need any more shares of Ford because it would be too over weight in my portfolio. As such I'll be selling the March Call options when I think they have peaked. I also expect the Jan 2012 Call options to be of considerable worth before they expire.

This time next year I do expect Ford to be around $30 per share and this is why I have the Jan 2012 Call options.

I don't want to go into all of the reasons about why I have these expectations as there are numerous reasons. Some of the reasons may prove to be false as time goes by but I'm quite certain $30.00 is doable within the year.

IF we start to slide back into another recession, then all bets are off but I don't think that will happen.

[rovo]

DI, I wasn't questioning the quantity of the options but the type of option. You didn't state in your original post whether they / it was Call or Put.

[rovo]

Non-Farm payrolls were much worse than expected and the data is dragging the market down. It may cause some opportunities for accumulation of stocks.

Heavyweightboxer, I too was having trouble posting last night so I couldn't add one thing that is important about Ford and estimating future stock prices. I started to buy Ford last Feb. via Call options and continued to accumulate thru June at prices around 12.25 a share (average). Likewise, I've been accumulating HI since July. My year end price estimates were $20 for Ford and $30 for HI. The Ford was a fairly close estimate but the HI was out in left field. Point being, an estimate is just an educated guess.

[rovo]

DI, The reason I asked about your option trade is because I almost always look at what the regulars post here and try to learn from their / your trades. Sometimes I agree with the transaction, sometimes I don't, but I really like to look at them and try to figure the logic behind the trade. Thanks for sharing your transactions with us.

[livinincali]

Looking like the labor report was a bit of a none event for the market. I was guessing that we'd probably stay in a relatively tight range today and traders are starting to focus on earnings. What we don't want to see in margin compression or misses on earnings expectations. Early last year earnings were coming in way better than expected. Towards the second half they were coming in slightly better than expected. I'm thinking were going to start seeing companies come in line in the next couple of quarters as were close to peak margins right now. Hiring would be a welcome sign but it's likely to produce margin compression along with rising input costs (you see that in the prices paid of the ISM reports). It might be a case on macro conditions getting better but earnings getting worse in the short term. It would be interesting to see how the market responds in those conditions.

[rovo]

The jobs numbers this morning may have been the impetus for a pull-back. Today's market is down and the decline is very broad based. Even long term interest rates are declining as shown by a decline in TBT.

So, where do we see this going? Just a dip? A correction of a few percent? Or an official correction of about 10%?

ETA: The negative slope on the Qs is rather scary. DIA and SPY are just as bad.

[livinincali]

In some respects my long GLD and long EUO (short the Euro) are at odds with each other so I'm probably going to one side of this trade soon but today wasn't bad at all. EUO is trying to break out and is right up against the 200 day moving average while GLD continued to hang on to support for another day and closed flat. The market manged to recover it's early slide so it's still in neutral ground and the longer it manages to consolidate sideways the greater the odds increase for a continued up trend.

As for the market we have the fed intervening and trying to create another bubble to keep the wealth effect going for a little longer. We can see that the fed's efforts haven't done anything to stimulate the real economy because we still have way to much debt built up in the system. The fed has been extremely successful in ramping stock prices and since we know the fed is incapable of doing anything other then producing bubbles we know we have a bubble forming in stocks/commodities yet again.

[heavyweightboxer]

Rovo, I appreciate your opinion on F and do understand you don't make any recommendations to others.

I jumped back in Jan 19 and Mar 20 F calls today and am still holding some CSCO Jan 21 calls. Both stocks look real nice right now and I think it will be a very good week for me next week.