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Barry Ritholtz is predicting a bounce in home builders

Posted on 8/31/2006


BTW, I wouldn't be surprised to see a bounce in the homebuilders.

There has been so much written about them, down 50% from their peak. TOL for example returned back to its 2004 break out level, and its 200 day moving average . . .

Thats for nimble traders only . . .

Posted by: Barry Ritholtz | Aug 31, 2006 11:55:46 AM


Note: It is in the comments to the main post.

Homebuilders call reader reaction

Here are two emails which just landed in my email!!!

  1. Just want to thank you for your home builders call a week ago. I am up 35% on your CHCI pick and closing the position today. Not bad for a weeks worth of effort. Again thanks for the call.
  2. First of all thanks for the CHCI headsup. Really appreciate the fact that you have been naming your personal buy stocks lately on the blog. It helps BIG time, and would strongly urge you to carry on that practice.


The Originl Home Builders call which set off the storm

The overcrowded short trade in the housing stocks<



When everybody gets it, best part of the move may be over. What do you see day after day, a negative story on housing. Today all the leading newspapers have negative stories about housing on front page. Expect a magazine cover this weekend or next on housing crash.
So time to cover your housing stock short. It might be time to buy housing stocks if you are value investor. I am buying CHCI,Comstock Homebuilding Comp

Housing Stocks
AVTR,Avatar Holdings Inc
AXR,Amrep Corp
BHS,Brookfield Homes
BZH,Beazer Homes Usa
CHCI,Comstock Homebuilding Comp
CTX,Centex Corp
DHI,D.R. Horton Inc
DHOM,Dominion Homes Inc
HOV,Hovnanian Enterprises A
ITB,iShares Dow Jones US Home Construction Index Fund ETF
KBH,Kb Home
LEN,Lennar Corp Cl A
LEN.B,Lennar Corp Cl B
LR,Lafarge Sa Adr
MDC,M.D.C Holdings Inc
MG631,Residential Construction
MHO,M/i Homes Inc
MTH,Meritage Homes Corp
NVR,Nvr Inc
OHB,Orleans Homebuilders Inc
PHM,Pulte Homes Inc
RYL,Ryland Group Inc. The
SPF,Standard Pacific Corp
TARR,Tarragon Corp
TOA,Technical Olympic Usa Inc
TOL,Toll Brothers Inc
WCI,Wci Communities
WLT,Walter Industries Inc

Earnings Trend

Keep a close eye on earnings. Best place to find unbiased information about earnings is Zacks. Post holidays the market attention will turn to earnings. Some of the stocks will start breaking out in anticipation of earnings. Also keep an aye on sectors showing good earning momentum.

Positive surprises have outnumbered disappointments by almost 4:1.
With almost 94% of S&P 500 companies reported, the summer earnings season is all but complete and the results have been surprisingly positive. The median second quarter reported growth rate is an impressive 13.2% and positive surprises have outnumbered disappointments by almost 4:1.

The top-performing sector for the second quarter was Energy, with a median year-over-year EPS gain of over 65%. From here however, growth in the sector is expected to slow, with analysts expecting median earnings growth for all of 2006 to be just over 30%. Much tougher comparisons due to the anniversary of last years storms are the cause of the growth slowdown. Looking into 2007, analysts are expecting median growth for the sectorÂ’s companies of 16.2%. No tree grows to the sky, but this is still very impressive given the gains of the last few years in the sector. This would push Energy just under the Tech sector, where analysts are expecting an ambitious 18% median growth rate for 2007.

The Industrials, Telecom and Materials sectors also performed well in the quarter, with 19%, 17%, and 15% median earnings growth, respectively. For the Material, metals producers like Alcoa (AA) and Nucor (NUE) lead the charge, with EPS growth rates of 87% and 43% respectively. Growth in this sector, unlike in Energy, is expected to hold strong for the remainder of the year. For 2007 however, analysts are expecting a slight cool down, with median EPS growth for the sectorÂ’s companies expected to be just under 13%.

Momentum Flip

I have talked about the daily scan of stocks making 50% or more move in a month many times and how it tells you a lot about market. If you have been tracking the scan daily you would have noticed that for many weeks, most of the stocks appearing on this list have started their move from bottom of range or weakness. Buying breakout from weakness has worked. While in a roaring bull environment you will notice most of the stocks on the scan are at top of their range or making climax moves after long run ups.
You need a dynamic and simple indicator which alerts you to such market possibilities. This is one indicator which tells you a lot about market and if you study it over many years you will get very good read on market. Plus it reminds you everyday that there are opportunities for long side profit in most market environment.

Stocks up 50% or more in a month

AEHR,Aehr Test Systems
NRMX,Neurochem
POZN,Pozen Incorporated
SIGM,Sigma Designs Inc
SNTS,Santarus Inc
TAR,Telefonica De Argentina
WTHN,WiderThan Co Ltd

Wouldn't it be nice to know about these stocks before they make a 50% move. Here is a scan universe I use to find such candidates when they just start making the move using a momentum scan. The list below shows stock with high momentum for last one month. The list is generated using a simple rate of change scan. Next set of 50% movers should emerge from this set.

ACAD,Acadia Pharmaceuticals
ANAD,Anadigics Inc
BIVN,Bioenvision Inc
CBAK,China Bak Battery Inc
EPL,Energy Partners Ltd
FORD,Forward Industries Inc
GGR,Geoglobal Resources Inc
GKIS,Gold Kist Inc
ICOC,Ico Inc
IVII,Intervideo Inc
LYTS,Lsi Industries Inc
MCRS,Micros System Inc
NRMX,Neurochem
OLAB,OraLabs Holding Corp
RACK,Rackable Systems Inc
RMBS,Rambus Inc
SIGM,Sigma Designs Inc
SMP,Standard Motor Prods
SMSI,Smith Micro Software Inc
SNCR,Synchronoss Technologies Inc
SNTS,Santarus Inc
TAR,Telefonica De Argentina
VOLC,Volcano Corp
VPHM,Viropharma Inc
WTHN,WiderThan Co Ltd

See some of my old posts to understand how and why this works.

Hot new trend

Posted on 8/30/2006
Grandma would never approve of something like this!

When we first heard about meal assembly kitchens -- where customers spend a couple of hours putting together a week or a month of dinners they can cook at home -- we thought the idea was ingenious. As we were reporting on the trend more than a year ago, half a dozen meal assembly places were set to open in the Washington area, all of them franchises of national chains such as Dream Dinners, Let's Dish!, Dinner My Way and My Girlfriend's Kitchen. Since then, the numbers have exploded.
The drill at the places is basically the same. You don plastic gloves and maybe a head covering and put together the ingredients for up to a dozen or so different meals. Think of it as a do-it-yourself meal kit, a cake mix writ large. Then you take the individually packed fixings home to your own freezer to be cooked as needed. Instructions are foolproof, meals are easily customized and the atmosphere's friendly.
Roberto's Nasdaq Trader has joined the debate on the use of contrarian indicator 'The Big Picture'.Here is my response which I posted to that long bearish piece.

Count the number of negative posts on housing on most popular blogs in last 40 days. Look at comments by people who frequent it. Uniformly bearish on housing. Look at price action on housing stock.
Does it matter whether that person made a contrarian call a year ago or two year ago? We are talking abut current scenario.
Popular contrarian’s worst fear should be when that person becomes a contrary indicator because followers blindly start believing in everything blindly and media starts lapping up every word.

Betting against Big Picture Part 3

The ongoing discussion on contrary thinking continues. There is a fairly long post on The Big Picture about it. Plus there are comments left by Barry on this blog. Thrust of the argument is that others do not understand contrary thinking!!!


There are all too many pseudo-contrarians who do not understand how (and when) these sentiment indicators work; I saw one that claimed the Housing posts on this blog were a buy signal for the Homebuilders.


Now readers of this blog can go back and see the series of posts on The Big Picture during the period I mentioned and come to their own conclusion.

More than that if you want to learn something about real contrarian trading see the Reuters screen I have mentioned here couple of times. That screen buys weakness, many times 52 week low and is the best performing screen amongst all Reuters screen. You can backtest it and see for yourself.

If you apply a little bit of independent thinking you will also understand why it works.

April 21, 2006 Post
The Reuters stock screener is an excellent free tool. More than that you can get many good ideas from their standard screens. Look at the performance of their screens:

Indexed vs S&p vs NASDAQ
All Reuters Select Screens 312.12 +217.34 +252.94
Growth Screens 268.26 +173.48 +209.08
Accelerating EPS Growth 213.38 +118.61 +154.21
Relative Growth 453.33 +358.56 +394.15
Relative Momentum 163.80 +69.03 +104.62
Rising Expectations 174.45 +79.68 +115.28
Sales Growth Leaders 481.20 +386.43 +422.03
Value Screens 391.59 +296.82 +332.42
Contrarian Opportunities 1,489.57+1394.80+1430.40
Favored Value Plays 483.66 +388.89 +424.48
Income Stocks 227.81 +133.04 +168.64
Growth At A Reasonable Price 280.77 +186.00 +221.60
Relative Value 440.17 +345.40 +380.99
Quality Screens 285.14 +190.37 +225.96
Fastest Turnover 302.15 +207.38 +242.98
Industry Leaders 260.18 +165.41 +201.01
Return On Investment 197.46 +102.69 +138.29
Strong Operating Margins 394.46 +299.69 +335.28
Sentiment Screens 309.65 +214.88 +250.48

There are many ideas to work with in them. All of them beat the indexes handsomely, are mechanical and free to use. There is extensive detail on the methodology and philosophy behind each screen. Registration is required to access them. A good assignment for weekend.

Update:
What stocks does the Contrarian screen show today
CHS, IEHC, MGRC, PSUN, MLS
Now that screen outperforms S&P by +1097.97 and Nasdaq100 +1139.85. That is real contrarian system.
Low volume trading environment continues. So the crystal ball predictions are not very reliable. The system suggests low range day with early strength sold and then a late rally.
If you had taken the short oil stock trade suggested by system some days ago, you should have profited handsomely yesterday.
When you see a headline like below in today's New York Times, you should immediately look at oil stocks and ethanol stocks. The price action in both set of stocks does not confirm that view.

Detroit Sees Cheap Gas as History
The Chrysler Group, which depends more heavily on sales of pickup trucks and sport utility vehicles than any other Detroit automaker, said Monday that it expected gasoline prices to remain at $3 to $4 a gallon for the rest of this decade.
The comments by Thomas W. LaSorda, ChryslerÂ’s chief executive, are the first time a Detroit automaker has issued a specific forecast on gas prices since they began climbing to $3 a gallon and higher.

Betting against Big Picture Part 2

Posted on 8/28/2006
Barry Ritholtz is upset that his analysis is being used to make money by making a contrary bet and he has left a comment on last post about housing market.

There is a difference between analyst mentality and trader mentality. As a trader when you see an analyst or commentator making 4 posts on housing crash in 24 hours you should only look at three possibilities. Are the housing stocks in the near future going up, down or sideways. That is the critical difference between traders and analyst. You should only be interested in what trade it precipitates.

Look at the entire analysis about inflation which dominated all popular blogs few months ago. All the popular blogs were pounding the table on inflation, I said and traded contrary to that and said so.




The long bond trade should have never worked if inflation was such a major concern. The bond trade contrary to popular blogs hysterical inflation pounding was the right trade at that time and it was exactly opposite of what should have happened if the analysis was correct. You can go and see for yourself what was the analysis on these blogs during and before the move. If you had followed that you would be losing money on their call.

Good analysis and good trading set ups are very different thing. Good trades are contrary to popular analysis.

Betting against big picture

How does one go about cultivating the instinct of taking a contrarian bet on fundamentals/news? is it just a matter of taking all the rumors you hear and betting they're wrong?

Vladimir, a reader asked the above question about my housing call.
Here is what I observed before deciding on taking a long trade in housing.

New York Times and Washington Post Both had a front page story on housing. Now that is extremely rare for them to look at housing. The thrust of the story was housing is going to crash. Now when you see headlines like that you should just run and buy. They are always late to party.

Popular Blogs I was looking at popular blogs like The Big Picture, Bill Cara and Maoxian. All three had a
negative housing story. In fact The Big Picture had 3-4 negative stories about housing. Now these blogs are read by thousands and are very good contrary indicator, especially The Big Picture Blog. You can always safely bet against CNBC commentators. I was reading the comment on that blog and they were even more negative. So that set off a alert in my mind, hey everyone is so negative on housing and thumping table about it, lets look at the price action.

The Price Action While all this negativity about housing was being touted by these so called expert, the price action on the housing stock was just consolidating and stocks were not going down. So I decided to look for stock which is down more than 50% from high and had some catalyst, I found CHCI which had insider buying.

Update: Here is more on this at the popular blog.

Baron also recommends buying housing stocks

Posted on 8/27/2006

Centex, D.R. Horton, Pulte, Lowe's, Whirlpool, Countrywide Financial and other housing-related stocks look reasonably priced -- and could do well if the housing market stabilizes in 2007.


You could have got the same news earlier here on 24 th August.


The overcrowded short trade in the housing stocks



When everybody gets it, best part of the move may be over. What do you see day after day, a negative story on housing. Today all the leading newspapers have negative stories about housing on front page. Expect a magazine cover this weekend or next on housing crash.
So time to cover your housing stock short. It might be time to buy housing stocks if you are value investor. I am buying CHCI,Comstock Homebuilding Comp

Housing Stocks
AVTR,Avatar Holdings Inc
AXR,Amrep Corp
BHS,Brookfield Homes
BZH,Beazer Homes Usa
CHCI,Comstock Homebuilding Comp
CTX,Centex Corp
DHI,D.R. Horton Inc
DHOM,Dominion Homes Inc
HOV,Hovnanian Enterprises A
ITB,iShares Dow Jones US Home Construction Index Fund ETF
KBH,Kb Home
LEN,Lennar Corp Cl A
LEN.B,Lennar Corp Cl B
LR,Lafarge Sa Adr
MDC,M.D.C Holdings Inc
MG631,Residential Construction
MHO,M/i Homes Inc
MTH,Meritage Homes Corp
NVR,Nvr Inc
OHB,Orleans Homebuilders Inc
PHM,Pulte Homes Inc
RYL,Ryland Group Inc. The
SPF,Standard Pacific Corp
TARR,Tarragon Corp
TOA,Technical Olympic Usa Inc
TOL,Toll Brothers Inc
WCI,Wci Communities
WLT,Walter Industries Inc

Tim Hortons may be perking up

Posted on 8/25/2006


The market environment is not very conducive to trading. Hey but you still have to find good opportunities for short term profit or long term profit. So I am taking a position in Tim Hortons (THI), the famous Canadian coffee company. It is a recent IPO which has been showing up on my relative strength scans.

THI - Tim Hortons Inc. is quick-service restaurant chain in Canada. The Company's menu spans a range of categories, such as blend coffee, flavored cappuccinos, specialty and steeped teas, home-style soups, sandwiches and baked goods, including donuts, bagels, muffins, cookies, croissants and pastries. Its restaurants operate under a variety of formats.

Month end dynamics should push indexes up

The market continues to trade in range. The month end will push the indexes up. Real market direction will manifest itself post 1st week of September.
All market direction predictions have a very short trading life span, that is the reason for two contrary market direction call yesterday. In morning I came in with a down move prediction and reversed it in afternoon. The Index trading model works on very short time frames, hence its only for very nimble traders. Indexes work like pendulum on short time frames. If you can work out the two extremes of the move it is easy to anticipate moves.

Long Watchlist
These are the stocks I am watching for possible entries or already own.
ARD,Arena Resources Inc
BDY,Bradley Pharmaceuticals
BEBE,Bebe Stores Inc
BTJ,Bolt Technology Corp
CPY,Cpi Corp
CRM,Salesforce.com Inc
CWTR,Coldwater Creek Inc
ELN,Elan Corp Plc
GRB,Gerber Scientific Inc
IAAC,Internat Asset Holdg Cp
IHR,Interstate Hotels & Resorts
INPH,Interphase Corp
MWRK,Mothers Work Inc
NVEC,Nve Corp
PCLN,Priceline.com Inc
RIMM,Research In Motion Ltd
STEC,Simple Technology Inc
TAR,Telefonica De Argentina
TLCV,Tlc Vision Corp
TZOO,Travelzoo Inc
VOLC,Volcano Corp

Short Watchlist
Stocks I am short or watching for possible short entries.
NVT,Navteq Corp
TXU,TXU Corp
CTSH,Cognizant Tech Sol Cp A

Research in motion (RIMM) on the move

Posted on 8/24/2006

The blackberry maker RIMM, seems to be setting up for a nice up move.

Research In Motion Limited (RIMM) is a designer, manufacturer and marketer of wireless solutions for the mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIMM provides platforms and solutions for seamless access to e-mail, phone, short message service, personal organizer, Internet and intranet-based corporate data applications. RIMM also licenses its technology to handset and software vendors to enable these companies to offer wireless data services using the BlackBerry Enterprise Server and BlackBerry Internet Service. RIMM's revenue stream is generated by the BlackBerry wireless solution, comprised of wireless handhelds, software and service. The Company's three wholly owned subsidiaries, directly or indirectly, are Research In Motion Corporation, Research In Motion UK Limited and RIM Finance, LLC.

Time to buy newspaper stocks




The Economist says buy newspaper stocks. DJ and NYT might be good buys at current price levels. The Economist cover has incredible track record of making contrarian calls.

Print Media Stocks
BLC,Belo Corp
CDMS,Cadmus Communications Cp
DAGM,Dag Media Inc
DJ,Dow Jones & Co Inc
DJCO,Daily Journal Corp
ENL,Reed Elsevier Nv
GCI,Gannett Co Inc
JRC,Journal Register Co
JRN,Journal Communications
LEE,Lee Enterprises Inc
MDP,Meredith Corp
MEG,Media General
MG728,Publishing-Periodicals
MNI,Mcclatchy Company (The)
MSO,Martha Stewart Lvg Omni
NYT,New York Times Co The
PED,Smartpros Ltd
PLA,Playboy Enterprises B
PLA--A,Playboy Enterprises A
PRM,Primedia Inc
PRVT,Private Media Group Inc
RTRSY,Reuters Group Plc Adr
RUK,Reed Elsevier Plc
SSP,E.W. Scripps Company
SVN,Sun-Times Media Group
TRB,Tribune Co
WPO,Washington Post Co Cl B

The overcrowded short trade in the housing stocks



When everybody gets it, best part of the move may be over. What do you see day after day, a negative story on housing. Today all the leading newspapers have negative stories about housing on front page. Expect a magazine cover this weekend or next on housing crash.
So time to cover your housing stock short. It might be time to buy housing stocks if you are value investor. I am buying CHCI,Comstock Homebuilding Comp

Housing Stocks
AVTR,Avatar Holdings Inc
AXR,Amrep Corp
BHS,Brookfield Homes
BZH,Beazer Homes Usa
CHCI,Comstock Homebuilding Comp
CTX,Centex Corp
DHI,D.R. Horton Inc
DHOM,Dominion Homes Inc
HOV,Hovnanian Enterprises A
ITB,iShares Dow Jones US Home Construction Index Fund ETF
KBH,Kb Home
LEN,Lennar Corp Cl A
LEN.B,Lennar Corp Cl B
LR,Lafarge Sa Adr
MDC,M.D.C Holdings Inc
MG631,Residential Construction
MHO,M/i Homes Inc
MTH,Meritage Homes Corp
NVR,Nvr Inc
OHB,Orleans Homebuilders Inc
PHM,Pulte Homes Inc
RYL,Ryland Group Inc. The
SPF,Standard Pacific Corp
TARR,Tarragon Corp
TOA,Technical Olympic Usa Inc
TOL,Toll Brothers Inc
WCI,Wci Communities
WLT,Walter Industries Inc

Market setting up for another leg down

There were more stocks breaking down yesterday. Number of recent breakouts have failed. Sectors which were still clinging on to their range tops are witnessing breakdown. Expect one more leg down in the overall market.

High Volume Breakdowns
ACLI,American Commercial Lines Inc
ALB,Albemarle Corp
AMWD,American Woodmark Corp
AP,Ampco-Pittsburgh Corp
APSG,Applied Signal Tech Inc
ASGN,On Assignment Inc
ATHR,Atheros Communications Inc
AVCT,Avocent Corporation
BBL,Bhp Billiton Plc Ads
BG,Bunge Ltd
BGP,Borders Group Inc
BIG,Big Lots Inc
BKUNA,Bankunited Financial A
BRP,Brasil Telecom Partic Sa
CKEC,Carmike Cinemas
COHR,Coherent Inc
CPB,Campbell Soup Co
CSR,Credit Suisse Group
DBRN,Dress Barn Inc
DFE,WisdomTree Europe SmallCap Dividend Fund
DGII,Digi International Inc
DIGE,Digene Corporation
DNB,Dun & Bradstreet Corp
DOL,WisdomTree International LargeCap Dividend Fund
DOO,WisdomTree International Dividend Top 100 Fund
DSV,streetTRACKS DJ Wilshire Small Cap Value ETF
DTLK,Datalink Corporation
EAS,Energy East Corp
EDE,Empire District Electric
EGLT,Eagle Test Systems Inc
ELP,Companhia Paranaense De
ESE,Esco Technologies Inc
ESS,Essex Property Trust Inc
EWW,iShares MSCI Mexico Index Fund ETF
EWZ,iShares MSCI Brazil Index Fund ETF
FBTX,Franklin Bank Corp
FED,Firstfed Financial Corp
FNET,FortuNet
GGB,Gerdau Sa Ads
GSG,iShares GSCI Commodity-Indexed Trust Fund ETF
IAAC,Internat Asset Holdg Cp
ILF,iShares S&P Latin America 40 Index Fund ETF
ILMN,Illumina Inc
IMAX,Imax Corp
IPCC,Infinity Property & Casualty
ISE,International Securities Excha
ISLE,Isle Of Capris Casinos
KB,Kookmin Bank
KBH,Kb Home
KRE,streetTRACKS KBW Regional Banking ETF
KTCC,Key Tronics Corp
KWD,Kellwood Co
KYPH,Kyphon Inc
LNET,Lodgenet Entertainment
LOW,Lowe's Companies Inc
ORA,Ormat Technologies Inc
PBY,Pep Boys Manny Moe&Jack
PERY,Perry Ellis Int'l
PFGC,Performance Food Group
PGTI,PGT Inc
PGWC,Pegasus Wireless Corp (NV)
PSS,Payless Shoe Sources
PTI,Patni Computer Systems Ltd ADR
RBA,Ritchie Bros Auctioneers
RGS,Regis Corp
RIO,Companhia Vale Do Rio Doce
SCHL,Scholastic Corp
SID,Companhia Siderurgica Nacional S.A.
SLAB,Silicon Laboratories Inc
SM,Saint Mary Land & Explor
SNE,Sony Corp
SOV,Sovereign Bancorp Inc
SPH,Suburban Propane Partnr
SSD,Simpson Manufacturing
SYK,Stryker Corp
TNE,Tele Norte Leste Partic
TNT,Tatneft Ads
TSP,Telecom De Sao Paulo Sa
TXCO,Exploration Co Of Delawr
TXN,Texas Instruments Inc
TZOO,Travelzoo Inc
UHCO,Universal American Fin
VAS,Viasys Healthcare Inc
VBR,Vanguard Sm Cap Value Etf
VCBI,Virginia Commercebancorp
VCP,Votorantim Celulose Papl
VNDA,Vanda Pharmaceuticals Inc
WMH,HOLDRS Wireless ETF
XRAY,Dentsply Internat Inc
ZIGO,Zygo Corp

Select oil stocks breakout

Posted on 8/23/2006
The market continues to churn at current level. Yesterday was good day for select Energy stocks. Some of the stocks witnessed high volume breakouts. Look at stocks like ARD, TXCO, PTR, CNE, DPTR, DBLE, BTJ, DK etc.
Asset management is another sector which has attracted lots of buying recently. BAM, IAAC and, GROW are some stocks to keep an eye on in this sector.

AHS,Amn Healthcare
AIV,Apartment Invest & Mgmt
ALOY,Alloy Online Inc
AMD,Advanced Micro Devices
APSG,Applied Signal Tech Inc
ARD,Arena Resources Inc
AVII,Avi Biopharma Inc
BABY,Natus Medical
BAM,Brookfield Asset Management Inc (currently Brascan Corp)
BELFB,Bel Fuse Inc Cl B
BMO,Bank Of Montreal
BOBE,Bob Evans Farms Inc
BOOM,Dynamic Materials Corp
BTJ,Bolt Technology Corp
CAI,Caci International Inc
CEGE,Cell Genesys Inc
CNE,Canetic Resources Trust
CPT,Camden Property Trust
CPY,Cpi Corp
CRMT,America's Car-mart Inc
DBLE,Double Eagle Petroleum
DEIX,Directed Electronics Inc
DK,Delek US Holdings Inc
DPTR,Delta Petroleum Corp
DV,Devry Inc
EPR,Entertainment Prop Trust
ERJ,Embr Emprs Brsl De Aero
EXPE,Expedia Inc
FCEL,Fuelcell Energy Inc
FRZ,Reddy Ice Holdings Inc
GKIS,Gold Kist Inc
GME.B,Gamestop Corp Class B
GRC,Gorman-Rupp Co
GSH,Guangshen Railway Co
GT,Goodyear Tire&Rubber Co
GVA,Granite Construction Inc
HB,Hillenbrand Industries
HHH,HOLDRS Internet ETF
HITK,Hi-Tech Pharmacal Co Inc
HLTH,Emdeon Corp
HOKU,Hoku Scientific Inc
HURC,Hurco Companies Inc
IAAC,Internat Asset Holdg Cp
ICF,iShares Cohen & Steers Realty Majors Index Fund ETF
IIT,Indonesian Satellite Cp
ISE,International Securities Excha
IWOV,Interwoven Inc
JGG,Nuveen Global Government Enhanced Income Fund
KEP,Korea Elec Pwr Ads
KEY,Keycorp
KTCC,Key Tronics Corp
KVHI,Kvh Industries Inc
LANC,Lancaster Colony Corp
LFC,China Life Insurance Company
LNT,Alliant Energy Corp
LTBG,Lightbridge Inc
MAA,Mid America Apartment
MAT,Mattel Inc
MCHP,Microchip Technology Inc
MFD,MacQuarie/First Tr Global
MFLX,Multi-fineline Electronix Inc
MGPI,Mgp Ingredients Inc
MIND,Mitcham Industries Inc
MIR,Mirant Corp
MLS,Mills Corporation The
MORN,Morningstar Inc
NABI,Nabi Biopharmaceuticals
NAFC,Nash-finch Co
NATI,National Instruments Cp
NUHC,Nu Horizons Electronics
NUVO,Nuvelo Inc
NVEC,Nve Corp
NWY,New York & Company Inc
OMRI,Omrix Biopharmaceuticals Inc
OPY,Oppenheimer Hldgs Inc
PBY,Pep Boys Manny Moe&Jack
PEIX,Pacific Ethanol Inc
PERY,Perry Ellis Int'l
PGWC,Pegasus Wireless Corp (NV)
POSS,Possis Medical Inc
PROS,Procentury Corp
PTA,Penn Treaty American Corp
PTI,Patni Computer Systems Ltd ADR
PTR,Petrochina Co Ltd Ads
PZZA,Papa Johns International Inc
RGLD,Royal Gold Inc
RKT,Rock-Tenn Co Cl A
RNWK,Realnetworks Inc
RY,Royal Bank Of Canada
SFL,Ship Finance Intl Ltd
SJM,Jm Smucker
SNH,Seniorhousing Prprtys Tr
SQM,Sociedad Quimica Chile
SRQ,DWS RREEF Real Estate Fund Inc
STEL,Stellent Inc
STXS,Stereotaxis Inc
SUAI,Specialty Underwriters Allianc
TAL,TAL International Group Inc
TD,Toronto Dominion Bank
TEO,Telecom Argentina Sa
TOL,Toll Brothers Inc
TPX,Tempur-pedic Intl
TXCO,Exploration Co Of Delawr
TYG,Tortoise Energy Infrastructure
TZOO,Travelzoo Inc
UIC,United Industrial Corp
VAW,Vanguard Materials Etf
VLCCF,Knightsbridge Tankers
VTIV,Inventiv Health Inc
VXF,Vanguard Extended Mkt Etf
WG,Willbros Group Inc
WHR,Whirlpool Corp
WLM,Wellman Inc
WPL,Wp Stewart & Co
WY,Weyerhaeuser Co
WYE,Wyeth
XMSR,Xm Satellite Radio Hldgs

Gold stocks breakout

Posted on 8/22/2006
Gold stocks across the board have broken out yesterday. Lets see how much leg the move has. This might be related to the Iran move. Which probably end in a whimper. The move might be also linked to inflation fear resurfacing. Other metal stocks are also showing signs of renewed rally so he commodity themes seems to be back in vogue. Does that mean more economic expansion.

AAUK,Anglo Amer Plc Adr
ABD,ACCO Brands Corp
ACGY,Acergy S.A. Ads
AIRM,Air Methods Corp
ALY,Allis-Chalmers Energy Inc
AMC,American Mtg Acceptance
APU,Amerigas Partners L.P.
ARCAF,Arcadis Nv
AVII,Avi Biopharma Inc
BBL,Bhp Billiton Plc Ads
BCSI,Blue Coat Systems Inc
BEBE,Bebe Stores Inc
BME,Blackrock Health Sciences Trust
BNS,Bank Of Nova Scotia (the)
BRP,Brasil Telecom Partic Sa
BT,British Telecommun Plc
CACH,Cache Inc
CBRL,Cbrl Group Inc
CEI,Crescent Real Est Eq Tst
CLEC,Us Lec Corp Cl A
CLZR,Candela Corp
CNE,Canetic Resources Trust
CPT,Camden Property Trust
DAVE,Famous Dave's Of America
DEAR,Dearborn Bancorp Inc
DEG,Etablissements Delhaize Freres
DK,Delek US Holdings Inc
DLS,WisdomTree International SmallCap Fund
DOO,WisdomTree International Dividend Top 100 Fund
DV,Devry Inc
EME,Emcor Group Inc
EQ,Embarq Corp When Issued
FCX,Freeport Mcmoran C&G B
FRG,Fronteer Development Group Inc
FXE,Euro Currency Trust ETF
GGN,Gabelli Global Gold Natural Resources & Income Trust
GHDX,Genomic Health Inc
GKIS,Gold Kist Inc
GLB,Glenborough Realty Trust
HAWK,Petrohawk Energy Corp
HNR,Harvest Natural Resources Inc
HWCC,Houston Wire & Cable Company
IAAC,Internat Asset Holdg Cp
IDWK,International Displayworks Inc
INTL,Inter-Tel Inc Cl A
KGC,Kinross Gold Corp
KOP,Koppers Holdings
LIHRY,Lihir Gold Ltd Adr
LXU,Lsb Industries Inc
LZB,La-Z-Boy Incorporated
MDZ,Mds Incorporated
MFN,Minefinders Corp
MIC,Macquarie Infrastructure
MNG,Miramar Mining Corp
MOSY,Monolithic Sys
MSFT,Microsoft Corp
NEU,Newmarket Corp
NSU,Nevsun Resources Ltd
OMRI,Omrix Biopharmaceuticals Inc
PBT,Permian Basin Royalty Tr
PBY,Pep Boys Manny Moe&Jack
PGWC,Pegasus Wireless Corp (NV)
PHTN,Photon Dynamics Inc
PNW,Pinnacle West Capital Cp
PPC,Pilgrim's Pride Corp
PTI,Patni Computer Systems Ltd ADR
RSO,Resource Capital
SAFM,Sanderson Farms Inc
SHFL,Shuffle Master Inc
SIRO,Sirona Dental Systems Inc
SM,Saint Mary Land & Explor
STAR,Lone Star Steakhouse Sal
SVI,Services Acquisition Corp International
SYNT,Syntel Inc
TALX,Talx Corporation
TARO,Taro Pharmaceutical Inds
TD,Toronto Dominion Bank
TEC,Teton Energy Corp
TKP,Technip-coflexip Ads
TLEO,Taleo Corp
TNE,Tele Norte Leste Partic
TRMB,Trimble Navigation Ltd
TXRH,Texas Roadhouse Inc Cl A
USO,United States Oil Fund ETF
VDE,Vanguard Energy Etf
VIP,Vimpel Communication Ads
VSTH,VitalStream Holdings Inc
VTIV,Inventiv Health Inc
XING,Qiao Xing Univ Telephone
XVE,Viceroy Exploration Ltd

Mad Mullah's can not keep the market down

Posted on 8/21/2006

Expect more upside market momentum before the market goes down. Mad Mullah's can not keep the market down.
Some nice breakouts like NEU, TRMB, HWCC, VIP etc today. You can find more ideas below.

ABD,ACCO Brands Corp
ACGY,Acergy S.A. Ads
ALY,Allis-Chalmers Energy Inc
AMC,American Mtg Acceptance
APU,Amerigas Partners L.P.
AVII,Avi Biopharma Inc
BBL,Bhp Billiton Plc Ads
CLEC,Us Lec Corp Cl A
DEAR,Dearborn Bancorp Inc
DK,Delek US Holdings Inc
DLS,WisdomTree International SmallCap Fund
DOO,WisdomTree International Dividend Top 100 Fund
DV,Devry Inc
EME,Emcor Group Inc
FRG,Fronteer Development Group Inc
FXE,Euro Currency Trust ETF
GKIS,Gold Kist Inc
GLB,Glenborough Realty Trust
HNR,Harvest Natural Resources Inc
HWCC,Houston Wire & Cable Company
IAAC,Internat Asset Holdg Cp
KOP,Koppers Holdings
LXU,Lsb Industries Inc
LZB,La-Z-Boy Incorporated
MNG,Miramar Mining Corp
NEU,Newmarket Corp
PBT,Permian Basin Royalty Tr
PBY,Pep Boys Manny Moe&Jack
PHTN,Photon Dynamics Inc
PPC,Pilgrim's Pride Corp
SAFM,Sanderson Farms Inc
SIG,Signet Gr Plc Adr
STAR,Lone Star Steakhouse Sal
TALX,Talx Corporation
TNE,Tele Norte Leste Partic
TRMB,Trimble Navigation Ltd
VDE,Vanguard Energy Etf
VIP,Vimpel Communication Ads
XING,Qiao Xing Univ Telephone
XVE,Viceroy Exploration Ltd

Stock pickers market

The overall market continues to consolidate near the recent low. Expect a possible move up in to next earning season. If you ignore the bearish noise from big picture types, you will notice the earnings have been very good so far and earning projections are not expected to go down.
Earnings Data: No Recession Soon
by Dirk Van Dijk
Aug 07, 2006
The summer earnings season is wrapping up and the S&P 500Â’s growth numbers have been a pleasant surprise. Of the 413 (82.5%) companies within the large-cap index that have reported, the median second quarter EPS growth is 13.1%. The median surprise is an impressive 3.9% and positive surprises have outnumbered negatives by over 4:1.

With so many positive surprises flooding reports this season, a market rally wouldnÂ’t have been out of the question. But thatÂ’s not whatÂ’s happened. In fact, the S&P 500 is actually down almost 3% over the last three months.

So what gives? Well it seems to be a combination of factors. The The Israeli/Lebanon conflict, volatile energy prices, and choppy jobs and retail sales reports, weaker than expected GDP growth and higher than expected inflation numbers have investors biting their nails and holding their cash. In short as the “E” has been moving up, the P/E has been moving down, leaving the “P” basically unchanged (although very volatile from day to day).


So what is happening in the market is new leadership is emerging. The sectors which have done well in the past like oil and commodities have not seen any up move in this phase infact some of the stocks in these sectors are heading down. New set of companies have emerged in retail and technology sector to lead higher. Retail seems to be having some nice breakouts currently.
I continue to find some good opportunities like INPH, PWEI, DK, NUHC,AETH, STEC, etc. I am also eyeing some techs like RIMM and retail like AEOS, ANF, BEBE, MWRK etc. If you look below the surface some good opportunities are setting up on both long and short side. It is a stock pickers market.

Ideal time to short oil stocks

Posted on 8/17/2006
Looks like an ideal time to short the oil stocks. Everything is breaking down. When a heavily owned sector starts a down move the exits are normally jammed. As I have said so many times earlier the oil sector has put in a long term top.

June 16, 2006 post


The energy sector has seen a multi year high. Expect many years of under performance from this sector. The bounce in last two days does not matter. Majority of these stocks are not going to see their high again. Alternative fuel, coal, oil, gas all these sectors will not regain the leadership for long time to come. Every rally in the energy sector is a shorting opportunity.
Some good candidates ready for blood bath.

ALJ,Alon USA Energy Inc
APA,Apache Corp
APC,Anadarko Petroleum Corp
APL,Atlas Pipeline Prtnrs Lp
ATLS,Atlas America Inc
ATW,Atwood Oceanics Inc
BHI,Baker Hughes Inc
BP,Bp Plc
BPL,Buckeye Partners (L.P.)
BRG,Bg Plc
CAM,Cameron International Corp
CEO,CNOOC Ltd Adr
CLB,Core Laboratories N.V.
CNQ,Canadian Natural Res Ltd
COG,Cabot Oil & Gas Corp
COP,ConocoPhillips
CPNO,Copano Energy Llc
CVX,Chevron Corp
DO,Diamond Offshre Drilling
DRQ,Dril-Quip Inc
DVN,Devon Energy Corp
E,ENI SpA ADS
ECA,Encana Corporation
EEP,Enbridge Energy Partners Lp
EEQ,Enbridge Energy Mgmt
EOG,Eog Resources Inc
EON,E.On Ag Ads
ERF,Enerplus Resources Fund
ESV,Ensco International Inc
ETP,Energy Transfer Pntr Lp
FTI,Fmc Technologies
GI,Giant Industries Inc
GRP,Grant Prideco Inc
GSF,Globalsantafe Corp
HES,Hess Corp
HOC,Holly Corp
HYDL,Hydril
IEO,iShares Dow Jones US Oil & Gas Exploration & Production Index Fund ETF
IEZ,iShares Dow Jones US Oil Equipment & Services Index Fund ETF
KMG,Kerr-Mcgee Corp
KMP,Kinder Morgan Energy Partners LP
KMR,Kinder Morgan Mgmt Llc
LSS,Lone Star Technologies
LUFK,Lufkin Industries Inc
MRO,Marathon Oil Group
MUR,Murphy Oil Corp
MVK,Maverick Tube Corp
MWE,Markwest Energy Partners Lp
NBL,Noble Energy Inc
NE,Noble Corp
NFX,Newfield Exploration
NXY,Nexen Inc
OKS,Oneok Partners LP
OXY,Occidental Petro Cp
PAA,Plains All Amer Pipeline
PBR,Petroleo Brasileiro S.A. Petrobras ADS
PBR.A,Petroleo Brasileiro S.A. Petrobras ADS Class A
PCZ,Petro-Canada
PETD,Petroleum Development Corp
PGS,Petroleum Geo-services Asa
PPP,Pogo Producing Co
PTR,Petrochina Co Ltd Ads
PVA,Penn Virginia Corp
PWE,Penn West Energy Trust
PXD,Pioneer Natural Rescs Co
PXP,Plains Exploration & Prod
RDS.A,Royal Dutch Shell plc Class A ADR
RDS.B,Royal Dutch Shell plc Class B ADR
RIG,Transocean Inc
SFY,Swift Energy Co
SGY,Stone Energy Corp
SII,Smith Internat Inc
SLB,Schlumberger Ltd
SM,Saint Mary Land & Explor
SNP,China Petro & Chem Ads
SU,Suncor Energy
SUN,Sunoco Inc
SXL,Sunoco Logistics Ptnrs Lp
THX,Houston Exploration Co
TNT,Tatneft Ads
TOT,Total Sa Ads
TSO,Tesoro Corp
UCO,Universal Cmprssn Hldgs
UNT,Unit Corp
UPL,Ultra Petroleum Corp
VLI,Valero Lp
VLO,Valero Energy Corp
VTS,Veritas Dgc
WFT,Weatherford International Ltd
WGR,Western Gas Resources
WHQ,W-h Energy Services Inc
WLL,Whiting Petroleum Corporation
XOM,Exxon Mobil Corporation
XTO,Xto Energy Inc
XTXI,Crosstex Energy

Breakouts a galore

Looks like a first phase of long market recovery. A few top of the range candidates have started breaking out. Expect the market to go sideways for sometime or retrace part of the move before it takes off.

ABV,Ambev (comp De Bebidas Adr)
ACAD,Acadia Pharmaceuticals
AEHR,Aehr Test Systems
ALG,Alamo Group Inc
AMAG,Advanced Magnetics Inc
ARMHY,Arm Holdings Plc Ads
ASMI,Asm Internat N.V.
AVNX,Avanex Corporation
BAP,Credicorp Ltd
BEBE,Bebe Stores Inc
BKHM,Bookham Inc
BLI,Big Lots Inc
BMC,Bmc Software Inc
BRCM,Broadcom Corp Cl A
BRL,Barr Laboratories Inc
BUCY,Bucyrus International Inc
BWP,Boardwalk Pipeline Partners LP
CHRS,Charming Shoppes Inc
CMRG,Casual Male Retail Grp Inc
CNS,Cohen & Steers Inc
CPTS,Conceptus Inc
CRA,Applera Corp-celera Genomics
CRD.B,Crawford & Co B
CRXL,Crucell Nv Ads
CVA,Covanta Holding Corp
DBLE,Double Eagle Petroleum
DIGE,Digene Corporation
DK,Delek US Holdings Inc
DLR,Digital Realty Trust Inc
EWZ,iShares MSCI Brazil Index Fund ETF
F,Ford Motor Co
GGR,Geoglobal Resources Inc
GME,Gamestop Corp
GME.B,Gamestop Corp Class B
HIMX,Himax Technologies Inc
HITT,Hittite Microwave Corp
IAAC,Internat Asset Holdg Cp
IIG,Imergent Inc
IIJI,Internet Initiative Ja
ISE,International Securities Excha
ITC,ITC Holdings Corp
JJZ,Jacuzzi Brands Inc
KFX,KFX Inc
KONG,Kongzhong Corporation
LBY,Libbey Inc
LDF,Latin American Discov Fd
LNDC,Landec Corporation
MDTL,Medis Technologies Ltd
MLI,Mueller Industries Inc
MLNM,Millennium Pharmaceuticl
NGPS,Novatel Inc
NOVN,Noven Pharmaceuticals
NRMX,Neurochem
NTLI,NTL Inc
NXTM,NxStage Medical Inc
PARL,Parlux Fragrances Inc
PMCS,Pmc-sierra Inc
RIMM,Research In Motion Ltd
RTEC,Rudolph Technologies
SCR--A,Sea Containers Cl A
STP,Suntech Power Holdings Co Ltd
SWHC,Smith & Wesson Hldg Corp
TKC,Turkcell Iletisim Hizmetleri ADS
TKO,Telkonet Inc
TLB,Talbots Inc
TOMO,Tom Online
TRID,Trident Microsystems Inc
TRLG,True Religion Apparel Inc
TSP,Telecom De Sao Paulo Sa
TTWO,Take-Two Intera Software
VCP,Votorantim Celulose Papl
VPHM,Viropharma Inc
VRNT,Verint Systems Inc
WBD,Wimm Bill Dann Foods Ojsc
ZONS,Zones Inc

The pigs are flying

Posted on 8/16/2006

Not a very interesting market situation. Expect the bounce to fail. What is up is all beaten down , heavily shorted stocks. There are very few stocks at the top of the range that are breaking out. This looks more like a garden variety short squeeze and short covering. I will be interested when the stocks on my list start flying. Till then let the pigs fly.

Rally Time

After a long time I see lot of interesting candidates on my scans. The rally should provide some good opportunities for profit. I expect the rally to last couple of weeks.

  1. AAUK,Anglo Amer Plc Adr
  2. ABB,Abb Ltd
  3. BMHC,Building Materials Hldg
  4. BOBJ,Business Objects S A
  5. CBB,Cincinnati Bell
  6. CNCT,Connetics Corp
  7. CVA,Covanta Holding Corp
  8. DAKT,Daktronics Inc
  9. DBLE,Double Eagle Petroleum
  10. DLP,Delta & Pine Land Co
  11. EON,E.On Ag Ads
  12. EQIX,Equinix Inc
  13. FISI,Financial Institutions
  14. GEL,Genesis Energy (L.P.)
  15. GEO,Geo Group (The)
  16. GLDN,Golden Telecom Inc
  17. HITT,Hittite Microwave Corp
  18. ICA,Empresas ICA Sociedad Controladora SA de CV
  19. IPSU,Imperial Sugar Company
  20. ITC,ITC Holdings Corp
  21. ITWO,i2 Technologies Inc
  22. MFB,Maidenform Inc
  23. MLI,Mueller Industries Inc
  24. NGPS,Novatel Inc
  25. NRMX,Neurochem
  26. OCN,Ocwen Financial Corp
  27. PRXL,Parexel Internat Cp
  28. PSPT,Peoplesupport Inc
  29. RBAK,Redback Networks Inc
  30. RSYS,Radisys Corporation
  31. SHPGY,Shire Pharma Grp Plc Ads
  32. SNDA,Shanda Interactive Ent Ltd
  33. SPH,Suburban Propane Partnr
  34. SPTN,Spartan Stores Inc
  35. SSRI,Silver Standard Resource
  36. STP,Suntech Power Holdings Co Ltd
  37. SUNH,Sun Healthcare Group Inc
  38. TPTH,Tripath Imaging Inc
  39. VLCCF,Knightsbridge Tankers

Data driven bounce

Posted on 8/15/2006
  • The data driven bounce might have some leg as it is coinciding with options expiration period.
  • The inflation bulls are in hiding today. Soon we will hear the "D" word as the worst case scenario.
  • Oil stocks and commodities stocks have been unable to put any meaningful rally despite factors in their favor.
  • Broadband , telecommunication, internet advertising will lead the next bull move.

Where is the strength

Posted on 8/11/2006
While the overall market is in correction mode, a pockets of strength can be seen in some individual stocks and sectors. Some of the stocks below will be the first to bounce when the weight of the market is lifted.

AE,Adams Resources & Energy
AEHR,Aehr Test Systems
AEM,Agnico-Eagle Mines Ltd
AEPI,Aep Industries Inc
AKAM,Akamai Technologies Inc
AMAG,Advanced Magnetics Inc
AMIE,Ambassadors Internat Inc
APN,Applica Inc
AUY,Yamana Gold Inc
AVCI,Avici Systems
BCGI,Boston Communications Gr
BDCO,Blue Dolphin Energy Co
BGC,General Cable Corp
BVX,Bovie Medical Systems
CLB,Core Laboratories N.V.
CLEC,Us Lec Corp Cl A
CLG,Cumberland Resources Ltd
CPY,Cpi Corp
CRAY,Cray Incorporated
CSPLF,Canada Southern Petroleum Ltd
CTCI,Ct Communications Inc
CUP,Peru Copper Inc
DAKT,Daktronics Inc
DIL,Dyadic International Inc
DTLK,Datalink Corporation
EGY,Vaalco Energy Inc
EZPW,Ezcorp Inc Cl A
FAL,Falconbridge Ltd
FBNW,Firstbank Nw Corporation
FIZ,National Beverage Corp
FTO,Frontier Oil Corp
GIGM,Gigamedia Limited
GMTC,Gametech Internat Inc
HOC,Holly Corp
HSR,Hi-Shear Technology Corp
IAAC,Internat Asset Holdg Cp
IHR,Interstate Hotels & Resorts
IIG,Imergent Inc
IIP,Internap Network Svcs Cp
ILE,Isolagen Inc
ILMN,Illumina Inc
ISIG,Insignia Systems Inc
KNOL,Knology Inc
KTCC,Key Tronics Corp
LBIX,Leading Brands Inc
LFC,China Life Insurance Company
LMIA,Lmi Aerospace Inc
MDR,Mcdermott Internat Inc
MED,Medifast Inc
MIG,Meadowbrook Insurance Gr
MNG,Miramar Mining Corp
MWRK,Mothers Work Inc
N,Inco Ltd
NEU,Newmarket Corp
NG,Novagold Resources Inc
NGA,N Amer Galvanizing & Coatings
NXG,Northgate Minerals Corp
NXXI,Nutrition 21 Inc
OCN,Ocwen Financial Corp
OMG,Om Group Inc
OMNI,Omni Energy Services Cp
ORCI,Opinion Research Corp
PMTR,Pemstar Inc
PSPT,Peoplesupport Inc
PWEI,Pw Eagle Inc
Q,Qwest Cmmnctns Intl Inc
RICK,Rick's Caberet Intl
ROS,Rostelecom
SA,Seabridge Gold Inc
SHOO,Steven Madden Ltd
SIM,Grupo Simec S A Adr
SIMC,Simclar Inc
SVVS,SAVVIS Inc
TXUI,Texas United Bancshares Inc
UFPT,Ufp Technologies Inc
USEY,U.S. Energy Systems Inc
UTK,Utek Corporation
VGZ,Vista Gold Corp
VOL,Volt Info Sciences Inc
WBD,Wimm Bill Dann Foods Ojsc


When looking at sector strength you will see a mix of old sectors still holding on to their gain while other sectors have muscled their way in. This sector makes it absolutely clear which sectors will lead the next rally.

MG121,Major Integrated Oil & Gas
MG122,Independent Oil & Gas
MG123,Oil & Gas Refining & Marketing
MG125,Oil & Gas Equip & Services
MG126,Oil & Gas Pipelines
MG131,Steel & Iron
MG132,Copper
MG134,Industrial Metals & Minerals
MG135,Gold
MG136,Silver
MG347,Beverages-Brewers
MG351,Cigarettes
MG352,Tobacco Products - Other
MG418,Foreign Regional Banks
MG431,Life Insurance
MG441,Reit-Diversified/Industrial
MG442,Reit-Office
MG446,Reit-Residential
MG524,Long-Term Care Facilities
MG526,Medical Laboratories & Researc
MG624,Pollution & Treatment Controls
MG625,Machine Tools & Accessories
MG636,Heavy Construction
MG724,Broadcasting-Tv
MG731,Department Stores
MG733,Drug Stores
MG771,Major Airlines
MG845,Telecom Services-Domestic
MG911,Foreign Utilities
MG913,Gas Utilities

Market shrugs terror threat

Posted on 8/10/2006


So far the market has acted as I predicted today morning. Buying weakness , gap down, panics pays most of the time. There are some interesting cross currents. Gold is down, dollar is up, oil is down, funeral services stock (SCI)is up.

Service Corporation International (SCI) is a provider of deathcare products and services, with a network of funeral homes and cemeteries. At December 31, 2005, the Company operated 1,058 funeral service locations, 358 cemeteries and 130 crematoria throughout North America. SCI also owns a 25% equity interest in AKH Luxco, S.C.A., known as Pompes Funebres Generales (PFG), a provider of funeral services in France. The Company's wholly owned subsidiary, Kenyon International Emergency Services, specializes in providing disaster management services in mass fatality incidents. SCI also owns funeral homes in Germany and Singapore.
Posted on 8/09/2006
  • Post Fed moves will become clear by end of day. My scans on individual stocks are not finding much. There is lot of volatility and gaps but follow through is lacking.
  • Gold stocks, the barometer of inflation did not find much of bid yesterday. Let us see what happens today.
  • Some of the oil stocks are being taken to the cleaners. I am keenly watching fresh breakout on some of the oil stocks, if they reverse then that will further confirm that the oil long trade is risky bet now.
  • Need to watch Maria or any other pretty face Bernanke is dating, for his post Fed meeting clarifications.
Posted on 8/08/2006
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.
2006 Monetary policy

Market set up for a bounce

Update: If the market bounces after Fed , the bounce will be a few day wonder. Expect shorts to use the bounce to position themselves with attractive entries. The bounce will not have legs.



A nice set up for bounce. The post Fed period is volatile and the first move is normally fake move. Anything can happen tomorrow! So do not trade based on this signal.

Tell me something that my grandma does not know


Market is forward looking mechanism. If you continue to focus on what everyone knows is current situation, you are not a market analyst. Look at what is being chewed to death by bearish commentators.

Housing slowdown: Is there anyone who does not know about it by now. The more critical thing is what is next six month outlook for economy not what has happened.

Inflation: Now this one is being talked about for last 2 years but it impacted market only in last couple of months. Now bearish commentators are all over the place with scary inflation scenarios. When everyone gets it most probably the trend is over. Also inflation is lagging indicator. With economy slowing and excess capacity in so many industries and two major deflationary countries China and India desperate for growth, will inflation continue.

Oil Prices: We have seen this movie before. Oil scare. This time it is different. What did you see yesterday after an event which was supposed to be a viagra for oil stocks. The OIH barely budged. If you are chasing oil stocks now, what were you doing two years ago. The trend in oil started in 2004, if you are discovering oil now, welcome to the party. Probably very few oil stocks will make an up move from here. As I have said many months before the move in oil stocks is over.

What does my grandma knows that bearish commentators do not know.

Fed has become better: Over the years the Fed has become good at managing the economy. Read the book Inside the House of Money : Top Hedge Fund Traders on Profiting in the Global Markets by Steven Dronby, almost every major macro trader in it acknowledges the fact that the Feds have become better at managing the economy.

Recessions/slow downs are shallow: Over the years the recessions have become milder. Look at the 2000-2002 period. Everyone was predicting doom, what happened not even 25% of the predicted gloomy scenarios came true.

Deflation: Grandma says biggest long term threat to economy is deflation. Cost of capital is decreasing rapidly. Productivity is improving dramatically. All that you need to start business today is a business plan, the venture capitalists and angels will pour in capital.

ETF trends

Posted on 8/07/2006
REITs are back in favor. Does that tell you something about market direction. Does the action in telecom sector signal start of long term secular trend.

ADRE,BLDRS Emerging Markets 50 ADR Index Fund ETF
DDM,ProShares Ultra Dow30 ETF
EKH,HOLDRS Europe 2001 ETF
EWK,iShares MSCI Belgium Index Fund ETF
EWN,iShares MSCI Netherlands Index Fund ETF
EWP,iShares MSCI Spain Index Fund ETF
EWU,iShares MSCI United Kingdom Index Fund ETF
EWW,iShares MSCI Mexico Index Fund ETF
EWZ,iShares MSCI Brazil Index Fund ETF
IAI,iShares Dow Jones US Broker-Dealers Index Fund ETF
ICF,iShares Cohen & Steers Realty Majors Index Fund ETF
ILF,iShares S&P Latin America 40 Index Fund ETF
ITB,iShares Dow Jones US Home Construction Index Fund ETF
IXP,iShares S&P Global Telecommunications Sector Index Fund ETF
KCE,streetTRACKS KBW Capital Markets ETF
PHO,PowerShares Water Resource Portfolio ETF
PJP,PowerShares Dynamic Pharmaceuticals Portfolio ETF
SLV,iShares Silver Trust ETF
TTH,HOLDRS Telecom ETF
XHB,SPDRs Homebuilders ETF

Weekly Sector Action

Top 20 sectors with short term momentum.
MG136,Silver
MG321,Textile-Apparel Clothing
MG323,Rubber & Plastics
MG331,Auto Manufacturers-Major
MG332,Trucks & Other Vehicles
MG342,Farm Products
MG421,Investment Brokerage-National
MG423,Asset Management
MG443,Reit-Healthcare Facilities
MG513,Drugs-Generic
MG515,Drug Related Products
MG631,Residential Construction
MG637,General Contractors
MG729,Publishing-Books
MG743,Jewelry Stores
MG812,Personal Computers
MG813,Computer Based Systems
MG821,Multimedia & Graphics Software
MG833,Semiconductor-Specialized
MG845,Telecom Services-Domestic

The secret behind the system

Posted on 8/05/2006
"The biggest secret about success is that there isn't any big secret about it, or if there is, then it's a secret from me, too. The idea of searching for some secret for trading success misses the point." Ed Seykota

So many of you are asking what is the secret of the system which makes market calls. There is absolutely no secret. It is based on several public domain systems. It basically uses a statistical tendency of mean reversion. Many systems like this have been discussed at various forums. You can find similar systems being sold as black boxes by several vendors.
If you want to put a similar system together here are some resources where you should find all that you need to build your own system like this.

Trading Blox: There is a forum on this site where you will find lot of discussion about such systems. Even more useful is under the 'Help and Support' find the Trading Blox users guide It has examples of trading systems. I picked up the central idea for the indexes system from those trading systems. I do not use that software and have not tried it so I have no opinion about it.

Chuck LeBeau's System Traders Forum
: There are lot of good systems on this forum but there is lot of junk also. If you can separate the good from bad you will find some very profitable ideas.

That was the starting point for me in developing the Index Price Direction Projection system. I added some more spice and few bells and whistles to it to reduce the number of signals. The system like any short term system can outperform the market for long duration and then go in to disastrous performance for some periods.
So now that's a free meal for lifetime. A weekends worth of work can get you a profitable system. What more you can also sell it as a fancy black box and there is no lack of sheeps who will buy it from you if you are good salesman.
Posted on 8/04/2006
Update: The early morning gap up will be aggressively sold by the end of the day. That is what the system says. Notice how the "homecooked system" makes absolute predictions as against with many qualifiers. If you want to trade such things, select your instrument carefully. See track record of past such predictions here before you act on it.
You should not trade based on this predictions!

Rally does not have legs: The current rally has run its course and the risk on long side is high. You should not trade based on this predictions!

Software is still down: I have located the problem but it needs some tech support help which will happen only on weekends.

Earnings continue to be good: Lot of new entrant on my outstanding earnings list. Once the overall market direction clears we should see some nice rallies. Some earning plays are already on the move. They have the momentum to rise inspite of the market weakness.

Secular Sector trends: If you keep your eyes open and not get distracted by the "big picture" doom and gloom scenarios, you will notice start of some new secular sector trends. If you get on them early probable you might benefit from the "boom".

News does not matter: News, economic data releases, daily weekly sentiments are just noise. Long term impact of them is limited. Go back and see last 30 days. Do you remember a tin pot dictator, start of war, and several other news items which were supposed to impact market. If you are long term trader you can ignore such events unless it hits the cover.

What color is Paris underwear

Posted on 8/03/2006
The most frequently asked question to me is what software do you use. The other questions range from what kind of set up do you have. What kind of computer do you use? How many monitors do you have? What indicators do you use? Are you Indian? Are you Dutch ?
My answer so far to all these intimate questions is, that it does not matter. It is like asking Paris Hilton what underwear she wears.
It is the concept that matters. The concept is in public domain, there is no great secret to it. But here are answers to some of these intimate questions.

Software: TC2007 end of day. I primarily use this for data. I believe based on my experience so far, they have the cleanest and most reliable data. The data feeds in to my home cooked datamining and data analysis software. The software runs its magic and spits out some candidate lists. It also once in a while gives short term market predictions. I do not use any real time data, scanning or alerts.


Hardware:
I do not use multi monitors. I have a laptop plus 2 PC set up. One PC is dedicated to brokerage accounts. I have no other software on it. Even in emergencies I do not use it for any other purpose. One PC has the trading software.

Subscriptions: I do not use any subscription service. The only magazine I read is the British rag which starts with E.

Indicators: I do not believe in technical analysis. I do not use any indicators on chart. I do not use any chart patterns.



Inflation worries disappear in 24 hours

Posted on 8/02/2006
What a difference 24 hours make. The market gapped down due to inflation worries 24 hours ago. The "Big Picture" crowd was ecstatic that their hypothesis was right. Yesterday my mailbox was full with mails asking is this a good short. But unfortunately the market has its own agenda. Today it is in rally mode. That should not have come as a surprise to most astute traders.

The moral of the story is you should not trade based on macro factors unless you have a system based on it. Also most of the macro stuff requires a different trading instrument to trade. The timeframe used by the macro traders is very different. On a day to day basis you should not get influenced by such macro factors. Look for persistent market tendencies. Look for tradable edges. At least that's what I do. I read and keep track of lot of the big picture kind of stuff but it has does not affect my trading.
Most of the macro stuff never comes true. Just go back and read the last 10 years of The Economist magazine, the macro traders bible and see for yourself .


The Economist Inflation Cover June 19th 2004


A macro inflation call just two years ahead of time. If you traded based on that, you would be looking for a job at The Economist.

Trade ideas

Posted on 8/01/2006

Below the surface there is lot of buying concentrated in select sectors. Some of these sectors will be leading sectors in next up move.

ADLR,Adolor Corporation
BVX,Bovie Medical Systems
CTDC,China Technology Development Group Corp
GRS,Gammon Lake Resources
KNOL,Knology Inc
MDR,Mcdermott Internat Inc
PSPT,Peoplesupport Inc
Q,Qwest Cmmnctns Intl Inc
SIM,Grupo Simec S A Adr
SLW,Silver Wheaton Corp
TWTC,Time Warner Telecom Inc
USEY,U.S. Energy Systems Inc

Tomorrow will be up day

Using my handy dandy system , I am predicting an up day tomorrow. Those looking for shorts or sitting on newly gained short profit should be again careful.
You should not trade based on this handy dandy prediction, unless you look at the record of such handy dandy predictions on this site.

My other prediction are:
Select stocks in energy sectors will make good moves
You should be looking at metals
Telecommunication is just starting a major move.
Google shorts will encounter great pain.
Sun will rise tomorrow.

Entries & Exits : Visits to 16 Trading Rooms


Save your money don't buy Entries & Exits : Visits to 16 Trading Rooms by Alexander Elder. You will not regret buying it. Because it is an extended informecial for his trading seminars and chat rooms.
Alexander Elder gained his fame with the book Trading for a Living: Psychology, Trading Tactics, Money Management which had some useful trading concepts. Rest of all his book are attempts at milking the fame achieved from that book. This latest book is a high priced junk to attract more people to his trading chat room and seminar.
The book interviews 16 traders and looks at their entry, exit and trading methodologies. Elder adds expert comments to their own methods and offers some suggestion. The problem is all the featured traders are teachers at his chat room, or ex students. There is no performance criteria for selecting them. Most of them going by the interviews have still been struggling with their trading. The entry methods in most cases look similar, why because they are all followers of Elder and their methodologies are copycats of his methodologies. There is hardly anything new or insightful in these interviews. In case you are dumb there is also a very high priced guide
If this book is so bad why the reviews on Amazon so good? Because Amazon allows authors to edit the reviews and if you post negative reviews they just delete it.As someone on Amazon forum has said it correctly
If Elder knows so much why doesn't he stop writing expensive books and go trade and keep his mouth shut. I think there is more money to be made in trading camps, books, seminars and webinars than in trading!!

Don't waste your money on this high priced junk.

Some stocks set for rallies

The overall market action may look dreary but below the surface there is a strong rallies developing in some sectors and it looks like these rallies have legs.
How does a market turn and how can you anticipate market turns. Everyone has different ways to do it and it is a function of your understanding of overall market mechanics. It is also a function of your trading philosophy. Those who go by fundamentals look at stocks trading below a certain valuation levels. The macro players look at interest rates, liquidity, consumer spending, jobs etc. The cycle followers and Elliot wave followers look at cycles and their length. Technical traders look at support, resistance, chart patterns etc. No matter what trading style you follow you should have a way to determine overall market direction.
I follow a very simple objective method to determine market direction. It is based on a ratio of up and down stocks price in last 65 days. It gives you an objective consistently tradable signal. Going by that indicator we have a high probability of a rally developing in next couple of weeks.
When a rally starts developing you will see first set of stocks starts to rally, they have follow through , then more join in. In last couple of days certain set of stocks have started moving and are also witnessing follow through. So the early birds are off and that also gives clear indicator of what sectors are likely to rally.

Breakout stocks
ABCB,Abc Bancorp
AKAM,Akamai Technologies Inc
ALJ,Alon USA Energy Inc
ARWR,Arrowhead Research Corp
BEAV,Be Aerospace Inc
CELL,Brightpoint Inc
CLB,Core Laboratories N.V.
CROX,Crocs Inc
DNR,Denbury Resources Ltd
DPTR,Delta Petroleum Corp
DTLK,Datalink Corporation
DXPE,Dxp Enterprises Inc
EVVV,EV3 Inc
FILE,Filenet Corp
FLSH,M-Systems Flash Disk Pio
GIFI,Gulf Island Fabrication
GMRK,Gulfmark Offshore Inc
HEPH,Hollis-eden Pharmaceut
HSR,Hi-Shear Technology Corp
HUM,Humana Inc
KFX,KFX Inc
MEA,Metalico Inc
MLI,Mueller Industries Inc
NANX,Nanophase Technologies C
NGAS,NGAS Resources Inc
NGPS,Novatel Inc
NGS,Natural Gas Svcs Grp Inc
NTY,Nbty Inc
NUHC,Nu Horizons Electronics
NVEC,Nve Corp
POZN,Pozen Incorporated
PSS,Payless Shoe Sources
PTEN,Patterson-Uti Energy Inc
PXE,PowerShares Dynamic Energy Exploration & Production Portfolio ETF
RRC,Range Resources Corp
SHPGY,Shire Pharma Grp Plc Ads
SIM,Grupo Simec S A Adr
SWN,Southwestern Energy Co
USEY,U.S. Energy Systems Inc
ZONS,Zones Inc