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for June, 2010.
By William Cash
One day little Willie Ca$h picked two stocks out of three that made him money. What are the odds of that? (FAZ, GTCB Weeeeeeeeeee!) and ACTC. But he thought to himself, that was last week is ancient history. What’s going to happen this week. Well Willie seeing time a little differently than most, decided that he was going to invest some cash in ACTC and add to his little stash of Stems. People were shocked when they heard this…..the shouted, “Willie…that stock is rangebound, it’s never going to go anywhere.” But little Willie bought even more. Why did little Willie buy more? You tell me….
So, this weeks major trade is ACTC. I will be buying two more stocks before Friday from the prestigious “stinky pinkie” collection. I will keep updating as it develops. (I can’t wait.)
By Orion
Today was interesting. Oil inventories up more than expected, GDP down more than expected. Who would have thought that with everything else, oil would still go up, and the stock market would still go up? Rumor has it, the 6.1% decline in GDP will be revised and end up looking more like the 4.8% expected before the government gets done working their magic.
The one thing that I found interesting is that the stimilus bills from the government should have increased government spending, but it actually went down 3.9%. And the GDP would have been worse had consumer spending not increased 2%! So the governement trying to save us, actually made things worse, while the consumers actually saved us. Central planning versus free market? I’ll pick free market every time!
I’m still in FAZ. The market was nearing resistance and couldn’t hold the high levels. Perhaps a nose bleed will start tomorrow.
Here’s the S&P:
So, the market didn’t go down today like I was anticipating. However, we did cross my key resistance level of 875. But the market couldn’t hold, we closed below the resistance. Volume is down, the MACD is still not in great shape. The stochastics lines have been trending up for the last few days, but not as high as they were during the big bull run. The RSI is pointing up, but that hasn’t really told us much in this choppy market. So what I am looking for now is a slide to 844. From this point, I would look for additional increase. The market is gaining strength, and seems to be recovering slowly. The question now is can the forecasted earnings support the S&P at this level?
The Asian markets are up big right now, and the european futures are also up. American futures are holding tight. So tomorrow will make for an interesting day!
Good luck and green trades!
-Orion
By Orion
I am slowly digging out of my mess from last week. The market was slightly down today. It was an interesting seesaw today. Up on good news, down on bad. The housing dump is slowing down, apparently. Just as I expected, information from the stress tests came out today and BAC and C need more money. The UAW has bought Chrysler, with Fiat and the US government having minority interests. Twelve months ago, any one of these pieces of news would have sent the markets into a tantrum! I guess now days, investors are immune. The shock and awe factor is over.
More research today leads me to the conclusion that by the end of third quarter, the worst will be over. From there we make a slow climb out. The entire world is involved in the recession. For the first time in years people are saving rather than spending everything plus some more. Entire retirement savings have been wiped almost clean. Even the “safe haven” of real estate has went down dramatically. Bonds have been depreciating. Almost every investment has gone down. Even those people in cash have lost value because of the depreciation of the dollar.
The good news is that eventually the market will recover. I like downturns because it make companies and individuals improve processes, streamline operations. In other words, there are a lot of good companies that are getting down to fighting weight. When the ecomonies recover, these companies will be in the best shape they have been in since perhaps 1980 or earlier. Weak companies won’t be around, further strengthening the good companies. Finanical capital, technology, and people will all flow to the secure companies. Whatever industries and businesses are left should be good solid companies. So with less competitors, the remaining firms should be better able to capitalize on the anticpated small growth over 2010 and 2011.
Overall, the recession will be good. It will make people realize how precious their resources are. Many thing that have been taken for granted. Lessons learned will not be soon forgotten. This type of market is something that happens once every generation or so. The effects on companies can be measured. Long term business plans can be changed. I am speculating that the day of consumerism has died. No more easy credit, no more overextending personal finances. Yes, there will still be some of this going on, but the majority of the people are learning perhaps for the first time to live beneath their means, save money, and pay cash. This is the lessons learned through the last recession around 1980, during the world wars, and definately during the great depression. I remember watching my grandmother carefully unwrap each present and fold up the paper to be reused later. People are getting back to basics, shopping smarter, conserving, cutting non-essential spending.
The bad news is that people have short-term memories. Eventually, the cycle will repeat itself, perhaps another 20 or 30 years from now. Until then, things are looking up. The market will recover. Jobs will be regained. Life will return to the new normal, whatever that looks like from here.
So enough ranting, here’s the S&P:
I am still anticipating further movement down. I think 840 will be the decision point. With further movement down, we will have to look for more support at 824, 816, and 800. If the market heads back up, I would look for 865 and 875 as key resistance levels. VIX is down, consumer confidence is at a recent high. Things are looking up. Of course, when everyone thinks the worst is over, something bad will happen sending the market back down. With all the legislation passed or being discussed, I still don’t think we are out of the woods yet. Perhaps, the light at the end of the tunnel is not an oncoming train!
Until next time, good luck and green trades!
-Orion
By Orion
Well, the one day trade from last Tuesday has turned into a bad dream. A week later, I am still holding a losing position. How I got here was not having an entered stop loss. Too many unexpected events all combined into the perfect storm to get me to this place.
However, no matter what happens, I am responsible for money made and money lost. Last week, the market mostly went up, and I was unwilling to sell at a loss. Stupidity, stubborness, I’m not sure what, but I was unwilling to pull the trigger and go in the hole.
So adding insult to injury, I bought more FAZ and averaged down to 11.00. With the market bumping resistance around the 865-875 mark, I speculated that the market was reversing. So, here we are this week, sitting on an 18% loss. I need 2 or 3 days in the black to make money on the deal. If the swine flu keeps the markets sick, I might get out with a sizable profit. Perhaps, the perfect storm of market negatives will form causing a big drop this week in the market. Of course, it feels strange to be looking for a big drop in the market.
So, here’s the S&P chart:
The technicals all look neutral. After the big drop last monday, the market ended mostly flat for the week. Hitting resistance levels and getting turned down. It could be a double top before the next leg down. Or it could be a minor retrace before the continuation up. I’ll be looking for the S&P to at least get down to 840 or so, perhaps a little less. If it can’t stay above this support, then 823 is the next key stop. After that, 780-800 range.
So, what I am looking for is the market to trend down to the EMA20 around 840. If the financials move down more than the overall market, I will be close to even at this point. In this case, I will be watching for direction and looking to go back to cash. If we break the 20 line, I will be holding looking for more movement. The stress test results will be out next week, so this week could see movement in anticipation of the release. I would speculate that the results will not be kept as confidential as they should be. I will be looking for instiutional or insider trading leading into next week.
Until next time, good luck and green trades. Oh, yeah, and don’t forget your stops!
-Orion
By dacuco
Quite possibly the single most important thing you will discover about yourself and trading is which of these you are and what your trade tolerance is for each.
Investor/Speculator - An investor is an individual who commits money to investment products with the expectation of financial return. Generally, the primary concern of an investor is to minimize risk while maximizing return, as opposed to a speculator, who is willing to accept a higher level of risk in the hopes of collecting higher-than-average profits.
dacuco’s penny definition - When two people get married they generally will, in a very serious manner, weigh the long term benefits and consequences of the relationship…companionship with someone they love, great sex for a lifetime (OK, I know - work with me here! lol) solid financial possibilities, two loving, caring and giving individuals sharing in the responsibility of raising beautiful, successful and well balanced children, etc. etc. Now of course relationships like investments can fail but the time given and energy spent in the process of courting and choosing this mate should be taken very seriously so as to eliminate as much of the risk of failure as possible. This is the investor!
dacuco’s penny definition - The speculator is more like the guy who watches girls all night at a bar, paying special attention to the ones that are drinking tequila shots, laughing louder, smiling more, dancing more erratically as the night goes on and rarely with the same guy but somehow remaining steady enough to stay on her feet. Meanwhile two martinis later he’s viewing the world through martini lenses and noticing just how much more beautiful all the women have become. Well with this kind of solid research, sometimes it all works out and manifests the story and experience of a lifetime, and at other times…well you know, he may get something else that demands the immediate attention of a doctor. So is the life of the speculator… higher risk for potentially greater rewards!
The point very simply, in my opinion is, that you CAN’T research, pick or play a penny stock like a big board stock.
The investor may want instant gratification but will generally be equally pleased with the slower and more steady growth of their porfolio along with the comfort and safety of a solid pick and trade. The speculator on the other hand wants his gratification now and is at times willing to sacrifice caution and sanity for possibility!
If we can find were we fit in the scheme of investor/speculator then we can determine how we trade.
The big board investor generally doesn’t and shouldn’t expect his due diligence on a stock pick to produce a 35% run in a short period of time, though certainly it can. The speculator in contrast, shouldn’t expect his pick to continue to produce profits more than a day or two and in many cases far less than that, more like an hour or two. So were do you fit?
A Few Tips For Trading Pennies:
#1 - For anyone that follows me I hope you have noticed I like the middle. Enough time given to research penny stock to eliminate some risk but not so much as to paralyze myself with fear. Analysis paralysis will rob you of opportunities and can take you to a place were no trade is safe enough so therefore no trade!
#2 - I don’t chase runners (you can usually find a place to take your profit and then buy back in on dips or try selling a portion to recover your initial investment and hold the rest to see if continues up)
#3 - I am always satisfied with 20 to 30% profit on a penny stock even if it continues up well beyond that. I try to always remember that in penny stocks no loss is a win!
#4 - Though not always possible I try not to hold (now in the TAM game playing with limited funds at this point it will not always be possible to get in and out that fast) but the principle is sound. I find it amazing when newbs tell me they didn’t sell for 50% profit on a penny stock because they wanted more or just weren’t paying attention. YIKES!
#5 - I’m generally not trying to find the next Microsoft in a penny stock (There are far safer plays for that above $5.00 a share) but I do accumulate some left over penny stock with the realization and expectation that most or all of these “companies” will be valueless or won’t even be around in a short time.
#6 - If I am stuck in a stock too high, that generally means I’m watching it very closely. If I notice that even though it has dropped significantly it has begun to trade in a channel, I may buy and sell that same stock several times at the lower prices as it bounces up and down in retracement inside that channel. Then the the shares that were purchased too high are averaged in and are generally no longer of issue.
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OK…That’s enough for now. I think it’s time for a martini so feel free to raise a glass with me and if you should have any comments you’d like to share, nows the time to post them…because you know I’d love to read them through these martini lenses.
Cheers to all and I hope that you’ll find that comfortable place where you belong, that winning place that exists somewhere between the realm of Investor/Speculator… and that when you do, it affords you great and sustainable success!
So until next time!
Knock em dead!
dacuco
