Ugly Open Reverses With A Strong And Choppy Intraday Session; Stocks Still Close Lower Despite The Intraday Rally

August 2, 2008

Even though inedexes closed down .5%, they really did not go very far but they did do it in a very choppy motion. So unless you like turbo trading support and resistance for peanuts then there really is not a whole lot to do. I do understand that some people love daytrading and love to spend all day trading. Well if you enjoyed Friday then you are for sure a diehard market fan. It simply is not the way I want to spend my time. Now rewind back to 1999. I was making a TON of money HOLDING stocks. Not daytrading. But if I was bored had access cash and did not have perfect stocks to invest I could and would daytrade. I have to admit it was not as much fun as I did not get to see my pretty max green BOP charts and I did not like the feeling my heart had when I had multiple positions on. But if that is what you like doing then enjoy daytrading.

Right now, I think trading to the downside is the right game but as it is clear the markets are trending below the 50 and 200 day moving average. I tell you what, if some of you are impatient and can not stand having on longs (even if the chat is ugly; why???) all you need to do is go out and have fun until you at least see the price bars above the 50 day moving average. Once you see that you know that in the short term prices are moving higher. Then you can go in and look for max green BOP beauties like my XSI long that I have on. It isn’t perfect but nothing is in this market. I just want you to study all the green all over that chart and notice the perfect bounce/breakout on volume in late June. If you still don’t see these after the 50 DMA is taken then sooner or later you will once the indexes prices on the averages cross back above the 200 DMA. Once the indexes are above the 50 and 200 DMA there will be a few green filled BOP charts (hopefully) for us to enjoy.

If not there will be at least some CANSLIM quality longs that will show up in our new leading industry groups that will produce some huge returns. Trust me when this market turns I will be in the leading stocks in the new leading industries with the perfect CANSLIM stocks. If the chart is loaded with max green and breaking out of a perfect pattern or the stock is a perfect CANSLIM quality long breaking out of a solid pattern we will be long and ready to make a lot of money.

I know a lot of people are sick of waiting this market out but that has to be done or else you looked like all those idiots that were yelling at me in January that the market bottomed an that buying bank stocks had to be done. Well some told me to load up on JPM, some told me to load up on GS (that wasn’t that bad of a pick), but some told me I was an idiot for not buying MER. Well thankfully I saved myself I think a 50% loss. But I do want to explain how I look for potential bottoms. First off I love to see sentiment like it is now. I think the put/call has backed back off which shows that we are bit too complacent which is not good. Before we were a bit fearful as the put/call hit numbers like 1.3 on the most recent low which was real bearish. That showed the dumb money was definitely buying puts which is bullish long term.

On top of that, the bears in the investors intelligence survey were just hitting 50%. That is the first time in five years that 1/2 of the newsletter writers were bearish. That goes along with the weak week before that showed only 27% bullish which was also a five-year low. These are some extreme numbers. The only thing that would have been better was a put/call ratio around 2.0 as the 1.3 reading while high was still below the 1.4 levels in March. Still it was bearish out there.

However, there is one stock in particular that I am watching to help tell me if we have put in a tradeable low. My first clue that we have one is that my two most recent near-perfect charts have hit me with immediate advances one lasting 15 trading sessions and one lasting one month. And one stock that had a HUGE bullish intraday reversal on the largest volume ever after many years is my bullish tell. I will need all three stocks to continue to work in fashion for me to believe that my baby rally with a weak market can last. It is just nice to know you that we can make some gains after such a long time of ugly action. DGLY and PDO were godsends while BRKR, BKE, BCO, and AEHR were typical of a market near the end of a bullish trend. I personally hope the worst is over but something deep down tells me “yeah right big boy.”

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Ugly Open Reverses With A Strong And Choppy Intraday Session; Stocks Still Close Lower Despite The Intraday Rally

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Very Few Stocks Are Setting Up for a Short Term Run

August 2, 2008

This market continues to NOT offer up any long term charts for Monster Stock gains! I am seeing charts set up for a run 1-3 years out, stocks like CAL and UAUA (yikes airlines). Wait a minute, these aren’t ready to run at the moment. Airlines need to find a way, rather than charging for bags to develop a new way to drive revenue through to the bottom line. One way, THE INTERNET. Overseas flights do provide the ability to connect wirelessly to the internet and could drive enough high … [visit site to read more]

Very Few Stocks Are Setting Up for a Short Term Run

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You have built it…. They will come (ETFC, rated BUY)

August 2, 2008

It’s been a long time since everyone went running for the hills. Those few brave souls who have hung in there or tried to pick the pivot points of the ocean that is the economy have been harried and beaten half out of their senses.

The old saying "All hard work brings a profit" comes to mind when I look at companies like E*Trade. Certainly these guys made some bad decisions, certainly they are in a time where people have run from the services they offer.

However, on the long-term scale they are one of the best brokerages out there. Easy to use interface, simple and straightforward. Most average people don’t want to have to be computer geniuses just to buy and sell stocks. E*Trade does a remarkable job of making that point.

They have proved that they can certainly turn a profit in the past, and if they hang in there tenaciously (as I know they will), diligent investors will be rewarded with excellent returns. I have used their trading platform in the past and I find it very agreeable, their fee structure is excellent, and their marketing is - while not necessarily cutting-edge - noticeable enough when needed.

From a customer point of view I don’t see them going anywhere but up in the long-term. But long-term is the key. They could very well dribble down to 2.25 a share before that happens.

I have had a position in E*Trade since December, at 3.60/share - I closed out most of it in mid-February just under $5.00 because it just could not seem to break through the support. I have since averaged out my position in my personal portfolio at 3.36/share. And now I wait. I can very well see E*Trade hitting anywhere from 8.00 - 12.00 in the next 18 months.

You have built it…. They will come (ETFC, rated BUY)

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money flowing out of real estate to stock education (SWIM, rated BUY)

August 2, 2008

This stock has great potential given its financials, low p/e, and high return on equity. Real estate investors are reeling everywhere and are ending up in investools seminars. These guys have sold nearly 400,000 people in these seminars and are posting record profits. They would appear to have a more solid product than competing products out there as well.

money flowing out of real estate to stock education (SWIM, rated BUY)

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Depressed bank pick (BBX, rated BUY)

August 2, 2008

For the three months ended 31 March 2008, BankAtlantic Bancorp, Inc.’s interest income fell 10% to $83.7M. Net interest income after LLP totaled negative $257K, vs. an income of $39.7M. Net loss from cont. ops. totaled $24.6M up from $2.2M. Net interest income reflects lower interest and fees on loans & securities, also reflects higher interest paid on bonds. Net loss reflects an increase in occupancy and equipment cost

Depressed bank pick (BBX, rated BUY)

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Big Box Battles….Dogs or Discounts? (ODP, rated SELL)

August 2, 2008

Do we have room in this economy for three major office supply stores? The battle between Staples (SPLS), OfficeMax (OMX), and Office depot (ODP) remind me of several other Big Box battles past and present. Anyone remember Home Quarters? Did we really have room for more than Two (Home Depot and Lowes) big box DIY retail stores? What about the mess between Ciruit City and Ultimate Electronics competing with Best Buy?

Kmart lost to Target and Walmart…Sears might not be far behind. Barnes and Noble, Borders, and Books-A-Million is shaping up to be a good fight too. Which one of these retailers will be the next dog and which one is merely at a discount?

Big Box Battles….Dogs or Discounts? (ODP, rated SELL)

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Bill Miller on This Tough Market

August 2, 2008

Jason Kelly submits:

Legg Mason’s (LM) Bill Miller and many other seasoned pros are having trouble in this market. So am I. So, probably, are you. Mr. Miller reminded readers that it is at the end of a string of dismal months that future rates of return are highest, yet the smallest number of investors is interested.

Mr. Miller issued his second-quarter letter earlier in the week, from which I took the following excerpts:

Complete Story »

Bill Miller on This Tough Market

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The flexibility of small Cap in a currently anti-large cap sector (OMG, rated BUY)

August 2, 2008

Certainly this stock has had some major swings in its history. But I like this on based almost entirely on straight fundamental analysis and a good common sense approach.

OMG is small enough to be versatile in a field of big players like DOW, which is 30 times its size. With a nice low P/E hovering in the mid-5 range (compared to a 30+ for the industry) and ROE at 20%+ and an OM of 15%+ The potential for upside in the long-term (1+ year) is high. Not to mention a fantastic balance sheet with free flowing cash to continue to spurn their impressive growth and a book value higher than their current share value. Debt to Equity is only 0.04 long term and total.

As many stocks will continue to tightly mimic the Indexes over the next few months, and many investors will watch their favorite picks fall into a moderately tight swinging range, this company should remain a strong pick for some weeks to come.

But thanks to the small size of OMG they will be better able to adapt to the beaten US dollar and changes to come in the world of manufacturing in North America. Such versatility allows for innovation and, beyond that, a poised striking position. As larger competition painfully and sluggishly cuts back extra costs, they will thus give market share in small bites. To them a tiny loss is a huge gain for OMG. 1% to them is 25% to this small company.

Over the long term OMG will adapt faster, and if they continue to run their business and keep the numbers similar to where they currently stand, stand a much greater chance of doubling, tripling, or increasing their market share by even greater amounts.

The flexibility of small Cap in a currently anti-large cap sector (OMG, rated BUY)

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