Stocks Reversed from Highs in Lackluster Trade
August 16, 2008
Conditions do not seem to be improving for the overall stock market. The market failed to build on Thursday’s retake of the NASDAQ’s 200dma. Instead, stocks pulled back unable to hold the morning’s open prices. Reversals to the downside are never a sign of strength. Volume did rise on the NYSE but ended lower on the NASDAQ avoiding its first day of distribution since the most recent follow through. New Highs did edge out New Lows but its far from dominating which is a troubling sign for the most recent confirmed rally. I can’t get terribly excited about this market especially when CNBC and other talking heads are screaming to buy!
There are very few opportunities out there to load up on a Monster Stock. Notice I did not say “stocks.” There simply are so few out there that I can not justify pouring a ton of capital to any stock. However, there is an intriguing chart out there that is not something I’d trade just yet. If you are into large cap stocks this one is certainly to take a closer look at!
Stocks Reversed from Highs in Lackluster Trade
Start Looking for a Bottom?
August 16, 2008
Toro submits:
Well, maybe next year.
However, when the doomsters and perma-bears start being venerated by mainstream thinking - as Nouriel Roubini is beginning to be - then the Zeitgeist of the market is shifting to excessive pessimism.
Recession? Different Method, Same Answer
August 16, 2008
Ed Leamer of UCLA has a very interesting discussion that relates directly to my recent post asserting that we probably weren’t in a recession. Here’s the abstract of his paper:
Monthly US data on payroll employment, civilian employment, industrial production and the unemployment rate are used to define a simple recession dating algorithm that nearly perfectly reproduces the NBER official peak and trough dates. The only substantial point of disagreement is with respect to the NBER November 1973 peak. The algorithm prefers September 1974. In addition, this algorithm indicates that the data through June 2008 do not yet exceed the recession thresholds, and will do so only if things get much worse.
Recession? Different Method, Same Answer
Financials Downgraded - Fast Money Recap (8/15/08)
August 16, 2008
Recap of CNBC’s Fast Money, Friday August 15.
Financial Idiosyncrasies - Goldman Sachs (GS)
Financials Downgraded - Fast Money Recap (8/15/08)
VIDEO - Pennants (bullish) (SPY, rated BUY)
August 16, 2008
A new video (Bullish Pennants) has been added to the Leavitt Brothers’ Chart Pattern tutorials…
Bullish Chart Patterns
VIDEO - Symmetrical Triangles
VIDEO - Ascending Triangles
VIDEO - Wedges
VIDEO - Flags
VIDEO - Pennants
Bearish Chart Patterns
VIDEO - Descending Triangles
VIDEO - Wedges
VIDEO - Flags
VIDEO - Pennants
VIDEO - Rectangles
Here’s our report on the financial crisis and many of the responses we got…
How Did We Get Into This Financial Mess?
Responses to How Did We Get Into This Financial Mess?
http://www.leavittbrothers.com/
VIDEO - Pennants (bullish) (SPY, rated BUY)
Beleaguered CIT Group Stirs Trading Activity (CIT, rated BUY)
August 16, 2008
Shares of CIT Group Inc. have been in a tailspin for a year, but options traders on Friday appeared to be betting on a mild rebound in the New York-based commercial finance company.
Trading in CIT clocked in at nine times the normal level, with investors picking up 65,000 calls that allow them to buy CIT stock and 4,000 puts that allow them to sell it, according to Track Data.
What this means to you and me? Buy CIT now and make a fortune.
Beleaguered CIT Group Stirs Trading Activity (CIT, rated BUY)
National Beverage Corp. (FIZZ) is a BUY
August 16, 2008
FIZZ Continues Its Steady Rise Under The Radar! August 11, 2008 Greetings! Good morning to all underground subscribers. We wanted to update you once again to a stock that has slowly been rising under the radar. The company we are referencing is National Beverage trading on the Nasdaq under the ticker “FIZZ”. When we first talked about this stock issue on August 1, 2008 the stock was $8.05 a share. FIZZ is trading at $8.96 a share National Beverage Corp. engages in the development, manufacture, marketing, and distribution of beverage products in the United States. It offers multi flavored soft drinks, juice drinks, water and specialty beverages, sparkling waters, energy drinks, and nutritionally-enhanced waters. The company provides its principal soft drink products under Shasta and Faygo brand names. It offers juice and juice-based products under Everfresh, Home Juice, and Mr. Pure brand names; and flavored, sparkling, and spring water products under LaCroix, Mt. Shasta, Crystal Bay, and ClearFruit brand names, as well as offers nutritionally-enhanced water under ASante brand name. In addition, the company markets energy drinks under Rip It, fruit-flavored drinks under Ohana, and holiday soft drinks under St. Nick’s brand names. Further, it develops and produces soft drinks for retailers and beverage companies. FIZZ currently trades around only 16 times 2008 earnings with around $566.00 million in revenues. Cash on hand is around $55 million with little to no debt. Again, just be careful if you decide to dip your toes into these waters only because its average 3 month volume is around 35,000 Keep “FIZZ” on your screen as we believe this stock will continue to rise and we also feel it is an attractive acquisition candidate. Also continue to keep Sanmina on your radar as it has hit $2.15 from our original $1.89 alert Again I would like to impress upon members of the underground especially you newbies is that always remember, pigs get slaughtered so when a stock has gone up it never hurts to take half or your cost off the table and ride the rest. On the other hand if you are alerted to a stock and do decide to jump into one that has already run up significantly you may want to go easy at first.. Just a little advice from the Sandman. Don’t forget to please spread the word, because as I talked about before, there’s always strength in numbers. Also a special thanks to all of you who continue to support the underground!!! We have grown at a significant rate thanks to you. One other thing to leave you with…Please remember that these stocks can be very volatile so as always be very diligent if you decide to jump into them About The Companies National Beverage Corp. engages in the development, manufacture, marketing, and distribution of beverage products in the United States. It offers multi flavored soft drinks, juice drinks, water and specialty beverages, sparkling waters, energy drinks, and nutritionally-enhanced waters. The company provides its principal soft drink products under Shasta and Faygo brand names. It offers juice and juice-based products under Everfresh, Home Juice, and Mr. Pure brand names; and flavored, sparkling, and spring water products under LaCroix, Mt. Shasta, Crystal Bay, and ClearFruit brand names, as well as offers nutritionally-enhanced water under ASante brand name. In addition, the company markets energy drinks under Rip It, fruit-flavored drinks under Ohana, and holiday soft drinks under St. Nick’s brand names. Further, it develops and produces soft drinks for retailers and beverage companies. The company’s customers include national and regional retailers, mass merchandisers, wholesalers, and discount stores, as well as hospitals, schools, military bases, airlines, hotels, and food-service wholesalers. National Beverage provides its products through national and regional grocery stores, warehouse clubs, mass-merchandisers, wholesalers and dollar stores, convenience stores, gas stations, and independent and specialized distributors, as well as through direct store distribution facilities. The company was founded in 1985 and is based in Ft. Lauderdale, Florida. Sanmina-SCI Corporation provides integrated electronics manufacturing services worldwide. It offers various services, including product design and engineering, comprising initial development, detailed design, preproduction services, and manufacturing design; volume manufacturing of components, subassemblies, and complete systems; final system assembly and test; direct order fulfillment and logistic services; and after-market product service and support. The company manufactures various system components and subassemblies, which include printed circuit boards, printed circuit board assemblies, backplanes and backplane assemblies, enclosures, cable assemblies, precision machine components, optical modules, and memory modules. Sanmina-SCI offers its services to original equipment manufacturers primarily in the communications, computing and storage, multimedia, industrial and semiconductor capital equipment, defense and aerospace, medical, and automotive industries. The company was founded in 1980 and is based in San Jose, California
National Beverage Corp. (FIZZ) is a BUY
Thank you for Smoking (PM, rated HOLD)
August 16, 2008
+ve
- Potential growth in China & possibly in Europe
- No revenue from US which is a high litigation risk market
- Weak economy = More Smokers = More smokes per smoker!! Like it or not but it’s a fact 
- Buyers are addicted and brand has a lot of value and they have the biggest ones out there
- Decent dividend yield
-ve
- Recent buy of Rothman, Canada - second largest in Canada. Again getting into litigation risks. If the risk doesn’t materialize this will be +ve
- Weak dollar - Most of the revenue is International, so a strong dollar WILL HURT
- Moral hazard
Thank you for Smoking (PM, rated HOLD)
Value Investing vs. Value Pretending
August 16, 2008
Joe Ponzio submits:
For more than 50 years, great "value" investors — Warren Buffett, Benjamin Graham, Charlie Munger, Seth Klarman, to name a few — have been touting the benefits of investing when there is blood in the streets, buying businesses when they are on sale. At each turn, somebody would ask them: Aren’t you concerned that, by constantly talking about how you became so successful, you’ll create a following that will, in turn, increase competition and reduce your potential investment returns?
It is said that value investing is more popular today than ever before. I tend to disagree.
Value Investing vs. Value Pretending
The Market Showed Its True Colors As The Day Went Along; I Don’t Care About The Weak Rally In The Nasdaq And SP 600 When The IBD Indexes Are Lagging So Badly
August 16, 2008
I have made mention many times how I have produced some incredible returns in short, intermediate, and long-term time frames with some incredibly fantastic stocks. Sometimes they were perfect charts like in 1999, 2003, and 2004. Sometimes they were CANSLIM pure stocks like 1998, 2005, 2006, and 2007. But sometimes there is nothing to buy, even when a market rallies. This short rally on the SP 600 and Nasdaq has so many traders itching for action that it is becoming down right depressing.
The fact that so few can see the ugliness in the charts that they buy is disturbing and makes me wonder just exactly how many our learning from my past success instead of just piggy bagging off of some random idea.
Recently, I have had a rash of personal subscribers go long FUGLY charts like MPWR and MR. First off, I did not go long these stocks and I believe my PAST BIG WINNERS have proven that I know what to look for when it is time to get very long a certain stock. Second off, why did so many go long these two stocks. Were they really that nice? HECK NO. I have no clue how a newbie thinks because I have gone past that level. I went past that level when I started. I looked for answers myself that people meet me and just ask me. The bottom line it is simply amazing that we could have had five years of a bull market and NOBODY SHOWED UP yet this year, the year when the bull died, everyone shows up. This is the exact replay of 2000. And the facts show only 10-20% will be able to come out of this bear market with their accounts in tact.
Recently, I went long two stocks that made huge one day gains of 25% and 30%. I told some of those that bought them to take 25% to 33% off the table immediately because in this market everything fails. Those that did not listen has seen all their profits wiped away in one stock. I suggest taking profits in the other home run before the same thing happens. The facts are that this other stock has a higher chance of working out because the green in its charts came over a longer period and the stock is in the medical group increasing its chances for success.
However, unless you are professional you should not be investing anyways. But Joshua, IBD said that the market is in a “confirmed rally.” Well does a confirmed rally have the NYSE, DJIA, SP 500, and SSEC-x indexes trending under the 50 and 200 DMA? NO! All the indexes will be rallying. Not just the Nasdaq and SP 600. Anyways, to those that still DO NOT GET that a follow-through day does not guarantee a new bull market, can’t you tell something is wrong when breakouts soon fail like MR, MPWR, and OPTR. I can name about another 100 stocks that have broken out and failed recently. The fact that I did find that one gem out of 100 losers has some thinking that this is a bull. NO! The facts are that I can tell a beautiful chart in a strong sector from an ugly chart in a strong sector. While some were buying MR, I was going long that stock that recently just gave me a 65% gain in under two months and a big one day gain of 30% on a good buy. Did I load up on this stock? Of course not! This is not a bull market.
But Joshua what about the follow-through day? I will repeat this one more time, because obviously IBD has not said this enough for some of you: not every FTD launches a new bull market BUT NO BULL MARKET HAS EVER!!! STARTED WITHOUT A FOLLOW-THROUGH DAY. So just because the Nassy flashed one doesn’t mean that the whole market is ready to rock. Doesn’t it throw a HUGE RED FLAG that the IBD 85-85 and IBD 100 indexes are lagging so badly? I mean, folks, these are LEADING STOCKS. THAT MEANS THEY ARE SUPPOSED TO BE L E A D I N G! When leading stocks do not lead but instead lag and show that they are the weakest links in a weak market, you are supposed to be very long cash. That is why I keep saying CASH IS KING. Why? Because, in a market that has gone a whole .52% on the Nasdaq since January 11th, you are not supposed to be trading. The greatest traders of all time would be fully 100% in cash, so why aren’t you?
Even in small downtrends in 2005, 2006, 2007 (the start of November to January), I have proven that I can make a lot of money. But recently NONE of my shorts have worked. Why? There is no trend. At the same time almost none of my new longs are working. Why? Because there is no trend. There is no trend up or down and those of you that think you can trade the market the same way as you can a trending market using the CANSLIM system you are wrong. And if you think it is smart to drop a system that has produced the returns that you can see via my past big winners for a short-term oscillating market you need to realize that out of a system of 46 methodologies tracked by the AAII CANSLIM comes in the top three in overall returns since 1998 with a 1,500% return. The only two other methods beating the CANSLIM system are forms of the CANSLIM system with a touch of value investing thrown in. So the bottom line is that the way to make big money is to use the CANSLIM or a momentum type of system that has you going long leading stocks in a market trending up and have you go short the weakest fastest falling stocks in a bear. But when a market goes nowhere, don’t try to change your investing style. You will just end up making the losses worse.
Those that are not patient are going to get killed by this market as MPWR, MR, and OPTR’s will be lined all across the landscape until all the johny-come-latelys finally get exhausted and drop out. When these weak holders finally drop their stock into the strong holders hands the rally will come and most will not be long the right leading stocks. But those that subscribe to this site will not have to worry for I will be long the leaders and the best setups that exist when the tide turns. But for now you must remember unless your whole chart is loaded with green to max green BOP and strong accumulation there is no way you should make foolish breakout plays in a market that is not rewarding that type of action. Try a little bit of patience. It goes a long way in life.
Aloha and I will see you Monday where I will be doing my usual unbiased work on the market. During the weekend I plan on posting a few winners from 07, XCO from 08, and TZOO from 04. And know I did not get the whole move in TZOO like I did with TASR. But as you will see, just like TASR, TZOO clearly setup in a proper buy pattern that made it an easy choice to get long. When stocks are loaded with max green BOP, extremely strong accumulation, and have incredibly strong fundamental growth it doesn’t make it had to get real long…AS LONG AS THE TREND IS UP ON THE LONG, INTERMEDIATE, SUB-INTERMEDIATE, AND SHORT TERM TREND. Right now we are far from that. There is only ONE STOCK that I see setting up in a near-perfect to perfect pattern. In a good bull market I will see anywhere from 10-20 at once. So we are a long ways away. Patience young Jedi. Patience.
One more time, ALOHA!!!!
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