About Shark Watch
Thursday, July 31 - 4:19 PM
Lower than expected Gross Domestic Product numbers and higher than expected weakly unemployment claims got the market off to a poor start this morning, but after two days of big gains some buyers were feeling left out and willing to buy the weakness. That gave us a late morning high, but after drifting around for a while we closed weak as market players contemplated the very important jobs report that is due out in the morning.
Some weakness after a big two day rally is to be expected as traders lock in some quick gains. The key, of course, is that the pullback be contained. The move today was on lighter volume, which is a good sign, but the news tomorrow is going to be important and now that the month of July has ended we have some seasonal weakness working against us.
My theme lately has been lack of market leadership and that continues to be a key issue. The energy and commodity stocks that bounced yesterday after weeks of being beat up couldn’t manage any follow-through at all today and in fact gave back most of the gains. We still have biotechnology leading as deal news drives the group, but we have nothing else showing signs of leadership.
The market is at an important juncture after a good move and some promising technical action. The bulls still have the benefit of the doubt at this point but its precarious and can easily slip away if we don’t see some buying other than the dead cat bounces that have been driving us.
Have a good evening. I’ll see you tomorrow.
Thursday, July 31, 2008
Wednesday, July 30, 2008
today
Despite a substantial rebound in oil and gas, the market shrugged it off and managed a very strong late surge. I suspect that the strength in oil brought in a few premature shorts who served as fuel for a bit of a squeeze.
Financials managed to tack onto yesterday's gains after looking weak for a while, but the primary story was in energy- and commodity-related stocks. These groups were favorites earlier in the year but have broken down badly in recent weeks. Today they finally found some buyers, and the squeeze was on. They even managed to close near their highs, and that bodes well for some follow-through.
Follow-through has been the difficult thing for this market lately. One of the reasons we don't have any good leadership is that strong stocks are quickly sold by market players who lack the confidence to hold anything. Many gravitate toward the oversold bounce plays such as financials last week and in energy today, but trying to gauge how far these moves will carry is an extremely difficult task.
We have some good earnings after the close from First Solar (FSLR - commentary - Cramer's Take) and Visa (V - commentary - Cramer's Take) that may help keep the sentiment positive, but oil and financials continue to control this market.
Have a good evening. I'll see you tomorrow.
At the time of publication, DeP
Financials managed to tack onto yesterday's gains after looking weak for a while, but the primary story was in energy- and commodity-related stocks. These groups were favorites earlier in the year but have broken down badly in recent weeks. Today they finally found some buyers, and the squeeze was on. They even managed to close near their highs, and that bodes well for some follow-through.
Follow-through has been the difficult thing for this market lately. One of the reasons we don't have any good leadership is that strong stocks are quickly sold by market players who lack the confidence to hold anything. Many gravitate toward the oversold bounce plays such as financials last week and in energy today, but trying to gauge how far these moves will carry is an extremely difficult task.
We have some good earnings after the close from First Solar (FSLR - commentary - Cramer's Take) and Visa (V - commentary - Cramer's Take) that may help keep the sentiment positive, but oil and financials continue to control this market.
Have a good evening. I'll see you tomorrow.
At the time of publication, DeP
Tuesday, July 29, 2008
today
About Shark Watch
Tuesday, July 29 - 4:32 PM
Afternoon Comments
While there is no arguing that the majority of the strength today resulted from the hope that the MER news may mark the beginning of the end of the bad news for the financials, there was plenty of good news to go around. Solars managed to buck the trend in energy stocks following news regarding subsidies in Spain, oil pulled back once again, consumer confidence came in well ahead of expectations, and X blew earnings estimates out of the water.
As such, the market enjoyed a broad-based rally and is now in a position to possibly put in a higher low. Given the dismal action we’ve seen over the past two months, a good counter-trend move is certainly possible. Plenty of folks are underinvested and if buyers can build on this, and in particular, push the averages to fresh short-term highs, then we may start seeing investors get nervous about missing out on another move like we saw back in the March-May intermediate uptrend.
That said, we’re still waiting for some group to step up and show some leadership. Obviously, folks are thinking that the financials may assume that role, but even though that group may see some more upside in the near-term as market players assume that the worst has been priced in, we suspect that the banks and brokers aren’t completely out of the woods.
The bottom line is that, while we may be set up for some decent action, this market has a lot of work to do before it’s time to build more substantial positions.
Have a great evening and we’ll see you tomorrow.
Tuesday, July 29 - 4:32 PM
Afternoon Comments
While there is no arguing that the majority of the strength today resulted from the hope that the MER news may mark the beginning of the end of the bad news for the financials, there was plenty of good news to go around. Solars managed to buck the trend in energy stocks following news regarding subsidies in Spain, oil pulled back once again, consumer confidence came in well ahead of expectations, and X blew earnings estimates out of the water.
As such, the market enjoyed a broad-based rally and is now in a position to possibly put in a higher low. Given the dismal action we’ve seen over the past two months, a good counter-trend move is certainly possible. Plenty of folks are underinvested and if buyers can build on this, and in particular, push the averages to fresh short-term highs, then we may start seeing investors get nervous about missing out on another move like we saw back in the March-May intermediate uptrend.
That said, we’re still waiting for some group to step up and show some leadership. Obviously, folks are thinking that the financials may assume that role, but even though that group may see some more upside in the near-term as market players assume that the worst has been priced in, we suspect that the banks and brokers aren’t completely out of the woods.
The bottom line is that, while we may be set up for some decent action, this market has a lot of work to do before it’s time to build more substantial positions.
Have a great evening and we’ll see you tomorrow.
buy mso
It will be impossible to avoid Martha Stewart (MSO - commentary - Cramer's Take) on TV in the next few weeks. Her firm will be rolling out a new line at 3,000 Wal-Marts (WMT - commentary - Cramer's Take). The Bentonville, AK colossus is going to show Martha how it can push a product and how crafts, a $30 billion industry, can be dominated by her.
I continue to believe that people do not understand how loved her brand is in mid-America. This crafts initiative, I believe, will quickly plug the hole until the Sears/Kmart (SHLD - commentary - Cramer's Take) deal ends in 18 months. And I believe Wal-Mart wants that deal so to show her how big she can be in WMT stores.
But Wal-Mart has tough competition from Macy's (M - commentary - Cramer's Take), which also loves her stuff.
All of this is the icing on the cake of the story that Martha told on the conference call. This is the first real good quarter in a long time and I believe the first of many.
This company is morphing rapidly from a publishing company -ugh--to a merchandising company. And the retailer that you most want to merchandise with is Wal-Mart.
Now that this quarter is out of the way, I would buy this stock aggressively right here right now.
I continue to believe that people do not understand how loved her brand is in mid-America. This crafts initiative, I believe, will quickly plug the hole until the Sears/Kmart (SHLD - commentary - Cramer's Take) deal ends in 18 months. And I believe Wal-Mart wants that deal so to show her how big she can be in WMT stores.
But Wal-Mart has tough competition from Macy's (M - commentary - Cramer's Take), which also loves her stuff.
All of this is the icing on the cake of the story that Martha told on the conference call. This is the first real good quarter in a long time and I believe the first of many.
This company is morphing rapidly from a publishing company -ugh--to a merchandising company. And the retailer that you most want to merchandise with is Wal-Mart.
Now that this quarter is out of the way, I would buy this stock aggressively right here right now.
Monday, July 28, 2008
brutal
David Peltier
Brutal Day
7/28/2008 4:32 PM EDT
Tough action out there. 4-to-1 down volume to up volume on the NYSE, and 6-to-1 on the Nasdaq.
Also had 29 out of 30 stocks down on the Dow Jones Industrial Average-- save Alcoa (AA:NYSE), as the company said that investor Highfields Capital Management will boost its stake in the company to 8% of the total shares outstanding.
Position: none
Brutal Day
7/28/2008 4:32 PM EDT
Tough action out there. 4-to-1 down volume to up volume on the NYSE, and 6-to-1 on the Nasdaq.
Also had 29 out of 30 stocks down on the Dow Jones Industrial Average-- save Alcoa (AA:NYSE), as the company said that investor Highfields Capital Management will boost its stake in the company to 8% of the total shares outstanding.
Position: none
today
he one minor positive about the action today was that volume wasn't heavy, but other than that, it was downright dismal. The point loss was substantial, breadth was running about 1600 gainers to 4400 decliners and the banks and brokers, which supposed had priced in the worst, traded down sharply. To make matters even worse, the major indices have no support until they hit the lows of the year.
When the market is as poor as this, I tend to keep repeating the same point over and over, which is that you shouldn't be trying to anticipate when a major turn will occur. Just stay out of the way, keep your capital safe and when the action improves then you jump back in.
Right now, it's all about protecting your capital. Let others make the major calls. All you need to do is focus on what you see on your screens, and that should be enough to keep you very cautious. The key to making money in the market is having lots of money when you can produce the best returns on it. Protect that capital, and it will eventually payoff big.
Have a good evening. I'll s
When the market is as poor as this, I tend to keep repeating the same point over and over, which is that you shouldn't be trying to anticipate when a major turn will occur. Just stay out of the way, keep your capital safe and when the action improves then you jump back in.
Right now, it's all about protecting your capital. Let others make the major calls. All you need to do is focus on what you see on your screens, and that should be enough to keep you very cautious. The key to making money in the market is having lots of money when you can produce the best returns on it. Protect that capital, and it will eventually payoff big.
Have a good evening. I'll s
Friday, July 25, 2008
today
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Lack of Good Leadership Continues
By Rev Shark
RealMoney.com Contributor
7/25/2008 4:05 PM EDT
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A mixed day of action after the sharp selling Thursday is probably a slight victory for the bulls. The sellers were unable to build on yesterday's ugliness, and that keeps hope alive that our recent bounce has further to go.
There were three main themes today driving the action. First, financials continued to struggle as the news flow there is a bit problematic.
Second, crude oil and commodities remained weak, and that is giving hope that inflation will moderate, but the danger there is that weak demand is a function of a slow economy.
Third, groups such as coal, steel, metals and mining bounced today after breaking down badly in recent days. That was the main strength, and really isn't very good leadership.
I have been complaining a lot lately about the lack of good leadership, and that continues to be the big problem plaguing us. We do have some strength in biotechnology, pharmaceuticals and within a few pockets in technology but we need more.
Banks and brokers are not going to be leaders. They might hold up, and may have even seen their lows, but they are unlikely to charge ahead and drag the rest of the market up. Until we get better leadership, it's going to be a very choppy market.
Keep in mind too that the technical patterns of the major indices are very poor. We've have had a bit of bounce within an ugly downtrend, and there is absolutely, positively no reason to assume that we have bottomed. Don't let that get you down. The good news is that if you have cash on hand, some great opportunities will eventually arise.
Have a great weekend. I'll see you Monday.
P.S. Volatility Can Pay Off. Options Alerts Boasts 77.2% Total Average Return.
Drawing on his experience as a former seat-holder on the CBOE and CBOT, Steve Smith shows how options trading can lead to potential big profits, especially in this turbulent market. TheStreet.com Options Alerts gives you Steve's best picks and, just as important, his rationale for each recommendation absolutely free when you take a trial to his premium investing service now.
ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS
RELATED STORIES
Rev Shark Blog
Weak Crude and Weak Banks Largely Offset
7/25/2008 1:35 PM EDT
Sedate action on a balmy summer Friday.
Rev Shark Blog
Financials Rally Was Nothing but a Short-Squeeze
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A recent report by Reuters throws a bit of water on the big up move by the banks.
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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Lack of Good Leadership Continues
By Rev Shark
RealMoney.com Contributor
7/25/2008 4:05 PM EDT
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A mixed day of action after the sharp selling Thursday is probably a slight victory for the bulls. The sellers were unable to build on yesterday's ugliness, and that keeps hope alive that our recent bounce has further to go.
There were three main themes today driving the action. First, financials continued to struggle as the news flow there is a bit problematic.
Second, crude oil and commodities remained weak, and that is giving hope that inflation will moderate, but the danger there is that weak demand is a function of a slow economy.
Third, groups such as coal, steel, metals and mining bounced today after breaking down badly in recent days. That was the main strength, and really isn't very good leadership.
I have been complaining a lot lately about the lack of good leadership, and that continues to be the big problem plaguing us. We do have some strength in biotechnology, pharmaceuticals and within a few pockets in technology but we need more.
Banks and brokers are not going to be leaders. They might hold up, and may have even seen their lows, but they are unlikely to charge ahead and drag the rest of the market up. Until we get better leadership, it's going to be a very choppy market.
Keep in mind too that the technical patterns of the major indices are very poor. We've have had a bit of bounce within an ugly downtrend, and there is absolutely, positively no reason to assume that we have bottomed. Don't let that get you down. The good news is that if you have cash on hand, some great opportunities will eventually arise.
Have a great weekend. I'll see you Monday.
P.S. Volatility Can Pay Off. Options Alerts Boasts 77.2% Total Average Return.
Drawing on his experience as a former seat-holder on the CBOE and CBOT, Steve Smith shows how options trading can lead to potential big profits, especially in this turbulent market. TheStreet.com Options Alerts gives you Steve's best picks and, just as important, his rationale for each recommendation absolutely free when you take a trial to his premium investing service now.
ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS
RELATED STORIES
Rev Shark Blog
Weak Crude and Weak Banks Largely Offset
7/25/2008 1:35 PM EDT
Sedate action on a balmy summer Friday.
Rev Shark Blog
Financials Rally Was Nothing but a Short-Squeeze
7/25/2008 12:04 PM EDT
A recent report by Reuters throws a bit of water on the big up move by the banks.
Rev Shark Blog
Eager Bulls Run Up the Score
7/25/2008 10:21 AM EDT
Pressure on oil prices keeps buyers active, but this dynamic won't last forever.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Good Feelings Come to an End
By Rev Shark
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7/24/2008 4:19 PM EDT
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The good feelings over the past week generated by a big bounce in banks came to an abrupt end today. A lot of folks wanted to believe that the huge move in banks were signaling that things had gotten too negative and it was safe to jump back in. While things might have gotten too negative, the ensuing bounce was too euphoric, and that invited the profit-taking we saw today.
Outside of financials, it continues to be a sea of pain in the energy- and commodity-related stocks. However, just like the financials a week or so ago, thing may be getting too negative out there, and conditions are getting ripe for some sort of oversold bounce. We just need a good catalyst like the banks had when a few earnings reports were better than expected.
If you are looking for upside action, that is your best chance in the near term because almost every other major sector looks terrible. I see absolutely no upside leadership right now, and the major indices are setting up for possible retests of recent lows.
I'd really like to be more bullish, and I'm hopeful we'll get a good upside trade in energy- and commodity-related stocks, but the state of leadership in this market is abysmal, and that is going to take some time to correct.
Have a good evening. I'll see you tomorrow.
P.S. Volatility Can Pay Off. Options Alerts Boasts 77.2% Total Average Return.
Drawing on his experience as a former seat-holder on the CBOE and CBOT, Steve Smith shows how options trading can lead to potential big profits, especially in this turbulent market. TheStreet.com Options Alerts gives you Steve's best picks and, just as important, his rationale for each recommendation absolutely free when you take a trial to his premium investing service now.
ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS
RELATED STORIES
Rev Shark Blog
Sellers Take Control
7/24/2008 12:52 PM EDT
There is very little working right now, outside of extremely short-term trades.
Rev Shark Blog
Panic in Energy
7/24/2008 11:27 AM EDT
A failed bounce attempt once again puts the sector on alert as the race lower continues.
Rev Shark Blog
Disjointed Action
7/24/2008 2:28 PM EDT
I see little to recommend on the long side.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Thursday, July 24, 2008 | 4:34 p.m. ET Daily Archives
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Good Feelings Come to an End
By Rev Shark
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7/24/2008 4:19 PM EDT
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The good feelings over the past week generated by a big bounce in banks came to an abrupt end today. A lot of folks wanted to believe that the huge move in banks were signaling that things had gotten too negative and it was safe to jump back in. While things might have gotten too negative, the ensuing bounce was too euphoric, and that invited the profit-taking we saw today.
Outside of financials, it continues to be a sea of pain in the energy- and commodity-related stocks. However, just like the financials a week or so ago, thing may be getting too negative out there, and conditions are getting ripe for some sort of oversold bounce. We just need a good catalyst like the banks had when a few earnings reports were better than expected.
If you are looking for upside action, that is your best chance in the near term because almost every other major sector looks terrible. I see absolutely no upside leadership right now, and the major indices are setting up for possible retests of recent lows.
I'd really like to be more bullish, and I'm hopeful we'll get a good upside trade in energy- and commodity-related stocks, but the state of leadership in this market is abysmal, and that is going to take some time to correct.
Have a good evening. I'll see you tomorrow.
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7/24/2008 12:52 PM EDT
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7/24/2008 11:27 AM EDT
A failed bounce attempt once again puts the sector on alert as the race lower continues.
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Disjointed Action
7/24/2008 2:28 PM EDT
I see little to recommend on the long side.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Wednesday, July 23, 2008
dndn opts - apwr; apwr ; apwr; apwr; apwr
Steven Smith
Dendreon Options
7/23/2008 10:05 AM EDT
Hey Adam, I was waiting for trading to open before replying. You certainly have the first part right that the November calls are extremely active, the volume leader is the November $7.50 call which is trading hands at around $2.20 giving it an implied volatility of around 180%. This suggests the options market is expecting a 50% price move by the November expiration.
This compares to the August and September options, none of which have traded over 450 contracts, and are carrying an IV in the 110% range suggesting about a 30% price move within those time frames.
One way to play this might be to create a variation on a covered call. Buy the stock, which is currently trading around and sell vertical call spreads. For example, with the stock trading around $6.20 one can sell the August $7.50 call for around $2.20 and buy the August $10.00 call for $1.50 or a net credit of 70 cents. This will reduce your cost basis to $5.50 a share.
But the real key here because you are selling a vertical spread, rather than standard covered call which caps profits, upside profit potential remains unlimited once the stock crosses above the $10 strike price.
Position: none
Dendreon Options
7/23/2008 10:05 AM EDT
Hey Adam, I was waiting for trading to open before replying. You certainly have the first part right that the November calls are extremely active, the volume leader is the November $7.50 call which is trading hands at around $2.20 giving it an implied volatility of around 180%. This suggests the options market is expecting a 50% price move by the November expiration.
This compares to the August and September options, none of which have traded over 450 contracts, and are carrying an IV in the 110% range suggesting about a 30% price move within those time frames.
One way to play this might be to create a variation on a covered call. Buy the stock, which is currently trading around and sell vertical call spreads. For example, with the stock trading around $6.20 one can sell the August $7.50 call for around $2.20 and buy the August $10.00 call for $1.50 or a net credit of 70 cents. This will reduce your cost basis to $5.50 a share.
But the real key here because you are selling a vertical spread, rather than standard covered call which caps profits, upside profit potential remains unlimited once the stock crosses above the $10 strike price.
Position: none
today - chk chk chk chk chk
About Shark Watch
Wednesday, July 23 - 4:50 PM
Afternoon Comments
Even though the financials finished 0.40% lower, it was their first day in the red after a remarkable 31% run. Meanwhile, industrials, tech and consumer discretionary each posted decent gains while the continued pullback in oil put more pressure on energy and materials. As such, while the gains for the averages were modest, it was another strong day for the bulls.
Of course, like we mentioned this morning, this recent run is starting to get a little long in the tooth. With energy names taking a beating lately and the broader market start to get a tad oversold, we suspect that it won’t be long until we see a reflexive bounce in oil and commodity related stocks. The thing that really needs to happen is for some new leadership to emerge. Big-cap tech acted a little better today, but we need to see some sustained action there. If this rally is going to turn into something more, then new groups will begin to rise to the top. Our job is to pay attention and respond when that happens.
Have a great evening and we will see you tomorrow.
Wednesday, July 23 - 4:50 PM
Afternoon Comments
Even though the financials finished 0.40% lower, it was their first day in the red after a remarkable 31% run. Meanwhile, industrials, tech and consumer discretionary each posted decent gains while the continued pullback in oil put more pressure on energy and materials. As such, while the gains for the averages were modest, it was another strong day for the bulls.
Of course, like we mentioned this morning, this recent run is starting to get a little long in the tooth. With energy names taking a beating lately and the broader market start to get a tad oversold, we suspect that it won’t be long until we see a reflexive bounce in oil and commodity related stocks. The thing that really needs to happen is for some new leadership to emerge. Big-cap tech acted a little better today, but we need to see some sustained action there. If this rally is going to turn into something more, then new groups will begin to rise to the top. Our job is to pay attention and respond when that happens.
Have a great evening and we will see you tomorrow.
Tuesday, July 22, 2008
today
About Shark Watch
Tuesday, July 22 - 5:21 PM
Afternoon Comments
As we worked our way through the afternoon, it was looking like the market was going to finish out the day with modest gains, and given the gap lower at the open and the fact that investors were able to shrug off a slew of poor earnings reports, that would have been pretty darn good. However, a wave of buying which came at a torrid pace in the final 30 minutes of the day allowed the indices to close with average gains of 1.2% on decent volume and breadth that was about 2:1 to the positive. While the drop-off in oil put pressure on energy and materials, it was that move which led to the initial recovery off lows as the hope begins to grow that the commodity may be seeing a sustainable move off recent highs.
Although much of the late move was aided by buying in consumer discretionary, industrials, and staples, the big winner on the day was again financials. Of course, if you wanted to keep pace with the market today, you would have had to been positioned perfectly and wiling to buy areas of the market that had already bounced strongly and were facing some pretty bad news. At the same time, if you stuck with the sectors which had led for most of the year, you would have lagged badly. There are obviously trades to be had right now, but finding them has required shifting focus on a daily basis and very short time-frames.
From a technical perspective, the averages have moved right into overhead resistance, and as such, the ball is fully in the bulls’ court. Can they deliver a meaningful push higher, or has this market come too far, too fast? We’ll have to see, and with more earnings reports set to hit, we might not have to wait too long to find out.
Have a great evening, and we will see you tomorrow.
Tuesday, July 22 - 5:21 PM
Afternoon Comments
As we worked our way through the afternoon, it was looking like the market was going to finish out the day with modest gains, and given the gap lower at the open and the fact that investors were able to shrug off a slew of poor earnings reports, that would have been pretty darn good. However, a wave of buying which came at a torrid pace in the final 30 minutes of the day allowed the indices to close with average gains of 1.2% on decent volume and breadth that was about 2:1 to the positive. While the drop-off in oil put pressure on energy and materials, it was that move which led to the initial recovery off lows as the hope begins to grow that the commodity may be seeing a sustainable move off recent highs.
Although much of the late move was aided by buying in consumer discretionary, industrials, and staples, the big winner on the day was again financials. Of course, if you wanted to keep pace with the market today, you would have had to been positioned perfectly and wiling to buy areas of the market that had already bounced strongly and were facing some pretty bad news. At the same time, if you stuck with the sectors which had led for most of the year, you would have lagged badly. There are obviously trades to be had right now, but finding them has required shifting focus on a daily basis and very short time-frames.
From a technical perspective, the averages have moved right into overhead resistance, and as such, the ball is fully in the bulls’ court. Can they deliver a meaningful push higher, or has this market come too far, too fast? We’ll have to see, and with more earnings reports set to hit, we might not have to wait too long to find out.
Have a great evening, and we will see you tomorrow.
sndk
Shares of Two-rated model portfolio holding Silicon Motion (SIMO:Nasdaq) are under pressure this morning, trading in sympathy with SanDisk (SNDK:Nasdaq). We're not taking any action in this Alert, but want to give readers our thoughts and reiterate our strategy for Silicon Motion. Shares were recently trading down 9.7%, at $12.35.
For its second quarter, SanDisk posted earnings and revenue results that missed Wall Street expectations due to ongoing weakness in NAND pricing stemming from oversupply and sluggish demand. These issues are not entirely new, as we've highlighted the negative trends in NAND pricing in previous Alerts. Although Silicon Motion makes NAND controllers rather than the commodity NAND memory that has experienced a collapse in price recently, the company's fortune remains closely tied to NAND memory leaders like SanDisk. Analysts continue to defend Silicon Motion and highlight the non-commoditized nature of NAND controllers, as well as the company's ability to differentiate itself, but we have not been so willing to ignore the issues that the company has faced.
One of the amazing features of the current market is that even after it seems as if analysts and investors have taken their expectations down, there is still almost always room for a surprise to the downside. Shares of Silicon Motion have fared better than SanDisk, and we're willing to wait to see the details in the company's quarterly results next week before taking any action. But we're not interested in trying to bottom-fish with this name, as technology and growth stocks in general have had a terrible time finding their footing in the current environment. On a long-term basis, technology can offer fantastic returns for growth- oriented investors, but we're not willing to suggest backing up the truck with these names in order to try and catch a bottom.
Our focus during earnings season is on our Watch List names, as well as other stocks that might offer the large upside potential we're aiming for in the Breakout Stocks model portfolio. Health care has been a huge focus for us, and we're closely watching and waiting for quarterly results from our favorite names in order to determine an attractive entry point. We continue to watch other sectors - - including software and energy -- but we believe that small-cap growth names in biotech, scientific equipment and health care information technology can offer significant upside for investors while carrying a modest risk profile, compared to many other sectors that continue to show weakness.
For its second quarter, SanDisk posted earnings and revenue results that missed Wall Street expectations due to ongoing weakness in NAND pricing stemming from oversupply and sluggish demand. These issues are not entirely new, as we've highlighted the negative trends in NAND pricing in previous Alerts. Although Silicon Motion makes NAND controllers rather than the commodity NAND memory that has experienced a collapse in price recently, the company's fortune remains closely tied to NAND memory leaders like SanDisk. Analysts continue to defend Silicon Motion and highlight the non-commoditized nature of NAND controllers, as well as the company's ability to differentiate itself, but we have not been so willing to ignore the issues that the company has faced.
One of the amazing features of the current market is that even after it seems as if analysts and investors have taken their expectations down, there is still almost always room for a surprise to the downside. Shares of Silicon Motion have fared better than SanDisk, and we're willing to wait to see the details in the company's quarterly results next week before taking any action. But we're not interested in trying to bottom-fish with this name, as technology and growth stocks in general have had a terrible time finding their footing in the current environment. On a long-term basis, technology can offer fantastic returns for growth- oriented investors, but we're not willing to suggest backing up the truck with these names in order to try and catch a bottom.
Our focus during earnings season is on our Watch List names, as well as other stocks that might offer the large upside potential we're aiming for in the Breakout Stocks model portfolio. Health care has been a huge focus for us, and we're closely watching and waiting for quarterly results from our favorite names in order to determine an attractive entry point. We continue to watch other sectors - - including software and energy -- but we believe that small-cap growth names in biotech, scientific equipment and health care information technology can offer significant upside for investors while carrying a modest risk profile, compared to many other sectors that continue to show weakness.
Monday, July 21, 2008
based on the 3/31/08 10q, and with Sandisk (SNDK) trading at monday's open at $18 per share, the stock is trading at just over 2 times balance sheet cash ($8 per share) and 0.66 times enterprise value (EV) to four-quarter trailing sales. In addition, the stock is trading at 6 times enterprise-value to four-quarter trailing cash flow and 11 times enterprise value to four-quarter trailing free-cash-flow.
Hard to believe SNDK is that cheap.
looking at the valuation of SNDK at the March '03 low before it began its three-year run from $7.50 to $80 in Jan '06, and in March '03 at the nadir of the tech bear market and for the stock, SNDK was trading at 1.5 times EV to four-quarter trailing sales, 7 times EV to four-quarter trailing cash from ops and 10 times EV to four-quarter trailing free-cash-flow, thus "relatively" anyway, SNDK is cheaper today than in March '03.
The operating leverage with the capex and the pricing sensitivity is a killer for the stock.
NAND flash pricing has just been murderous thanks to the capacity additions over the last two years. Kass went short SNDK last fall at much higher prices thanks to the additional Samsung capacity. (What a great call that was...) Intel (INTC) said in their call that NAND flash pricing was bad in q2 '08, but they managed through it, and it didn't detract from INTC's quarter as in q4 '07 and q1 '08.
If you are a value investor and you like beaten-up names with solid cash-flow, SNDK might be for you.
Even if NAND flash pricing just stabilizes, SNDK will benefit from cell phone growth.
Semis have been horribly frustrating the last st two years. We've been trading in and out of the group. Their correlation with overall technology capex and trading action has been far lower than the 1980s and 1990s.
Position: Long SNDK, INTC
Hard to believe SNDK is that cheap.
looking at the valuation of SNDK at the March '03 low before it began its three-year run from $7.50 to $80 in Jan '06, and in March '03 at the nadir of the tech bear market and for the stock, SNDK was trading at 1.5 times EV to four-quarter trailing sales, 7 times EV to four-quarter trailing cash from ops and 10 times EV to four-quarter trailing free-cash-flow, thus "relatively" anyway, SNDK is cheaper today than in March '03.
The operating leverage with the capex and the pricing sensitivity is a killer for the stock.
NAND flash pricing has just been murderous thanks to the capacity additions over the last two years. Kass went short SNDK last fall at much higher prices thanks to the additional Samsung capacity. (What a great call that was...) Intel (INTC) said in their call that NAND flash pricing was bad in q2 '08, but they managed through it, and it didn't detract from INTC's quarter as in q4 '07 and q1 '08.
If you are a value investor and you like beaten-up names with solid cash-flow, SNDK might be for you.
Even if NAND flash pricing just stabilizes, SNDK will benefit from cell phone growth.
Semis have been horribly frustrating the last st two years. We've been trading in and out of the group. Their correlation with overall technology capex and trading action has been far lower than the 1980s and 1990s.
Position: Long SNDK, INTC
today
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Waiting for Apple to Set the Mood
By Rev Shark
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7/21/2008 4:22 PM EDT
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The indices suffered some minor losses today, but breadth was solidly higher all day. That is the sort of action you want to see to digest gains like we had last week, but under the surface the market continues to be extremely choppy. Much of the strength today came from oil, steel, coal, agriculture and other sectors that sold off last week as financials rallied.
As I discussed this morning, the recent market action isn't going to do much to help set up some good charts. In part, we just need some time, but more basically, the problem is that there is no clear leadership. Most of the stocks that have led this year have broken down technically in the last couple weeks while most of the recent strength in the broad indices is a product of dead-cat bounces in financials.
We have a lot of important earnings tonight such as Caterpillar (CAT - commentary - Cramer's Take), American Express (AXP - commentary - Cramer's Take) and Texas Instruments (TXN - commentary - Cramer's Take), but most important is Apple (AAPL - commentary - Cramer's Take), which should help set the mood for the market. Given the way the stock has been acting, optimism isn't running too high.
Have a good evening. I'll see you tomorrow.
At the time of publication, DePorre had no positions in stocks mentioned.
P.S. Missing Lenny Dykstra's deep-in-the-money calls? They're now here..
Lenny "Nails" Dykstra's new service, TheStreet.com Nails on the Numbers, is the only place where you can now find the profit potential of his deep-in-the-money calls. Limited time to save $100.
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Rev Shark Blog
Apple Is the Key Here
7/21/2008 3:43 PM EDT
The company's report tonight, and the market's reaction, will say a lot about what direction we're headed.
Rev Shark Blog
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7/21/2008 1:51 PM EDT
You don't have to invest like the fund managers do, and that's your edge.
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Bad Stocks, With Bad Charts, Need to Prove Themselves
7/21/2008 11:42 AM EDT
Right now, a lot of bad stocks are bouncing, but the charts have yet to turn positive.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Waiting for Apple to Set the Mood
By Rev Shark
RealMoney.com Contributor
7/21/2008 4:22 PM EDT
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Try Jim Cramer's Action Alerts PLUS
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The indices suffered some minor losses today, but breadth was solidly higher all day. That is the sort of action you want to see to digest gains like we had last week, but under the surface the market continues to be extremely choppy. Much of the strength today came from oil, steel, coal, agriculture and other sectors that sold off last week as financials rallied.
As I discussed this morning, the recent market action isn't going to do much to help set up some good charts. In part, we just need some time, but more basically, the problem is that there is no clear leadership. Most of the stocks that have led this year have broken down technically in the last couple weeks while most of the recent strength in the broad indices is a product of dead-cat bounces in financials.
We have a lot of important earnings tonight such as Caterpillar (CAT - commentary - Cramer's Take), American Express (AXP - commentary - Cramer's Take) and Texas Instruments (TXN - commentary - Cramer's Take), but most important is Apple (AAPL - commentary - Cramer's Take), which should help set the mood for the market. Given the way the stock has been acting, optimism isn't running too high.
Have a good evening. I'll see you tomorrow.
At the time of publication, DePorre had no positions in stocks mentioned.
P.S. Missing Lenny Dykstra's deep-in-the-money calls? They're now here..
Lenny "Nails" Dykstra's new service, TheStreet.com Nails on the Numbers, is the only place where you can now find the profit potential of his deep-in-the-money calls. Limited time to save $100.
ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS
RELATED STORIES
Rev Shark Blog
Apple Is the Key Here
7/21/2008 3:43 PM EDT
The company's report tonight, and the market's reaction, will say a lot about what direction we're headed.
Rev Shark Blog
Don't Play the Wall Street Game
7/21/2008 1:51 PM EDT
You don't have to invest like the fund managers do, and that's your edge.
Rev Shark Blog
Bad Stocks, With Bad Charts, Need to Prove Themselves
7/21/2008 11:42 AM EDT
Right now, a lot of bad stocks are bouncing, but the charts have yet to turn positive.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Friday, July 18, 2008
today
About Shark Watch
Friday, July 18 - 4:27 PM
Afternoon Comments
Although the averages finished in mixed territory with the Nasdaq lagging badly, the market was able to hold on to its impressive gains from the previous two days. Certainly, that is encouraging, but as we stated earlier, most of the action over the past couple of days has been driven by stocks with absolutely abysmal charts while the areas that led the market for much of the year have broken down from a technical perspective. It’s been frustrating not finding better charts to buy, but if this is the beginning of a more lasting trend, then the set-ups will come.
While we have been taking some very short-term trades, this leaves us with a high level of cash, which is fine, because we still have a long way to go before we can even think about building longer-term positions.
In the meantime, earnings reports will continue to pour in next week, and as a result, we should see this market continue to move around. It’s impossible to predict how that will play out, but we are positioned well to take advantage of opportunities as they present themselves.
Have a great weekend and we will see you on Monday.
Friday, July 18 - 4:27 PM
Afternoon Comments
Although the averages finished in mixed territory with the Nasdaq lagging badly, the market was able to hold on to its impressive gains from the previous two days. Certainly, that is encouraging, but as we stated earlier, most of the action over the past couple of days has been driven by stocks with absolutely abysmal charts while the areas that led the market for much of the year have broken down from a technical perspective. It’s been frustrating not finding better charts to buy, but if this is the beginning of a more lasting trend, then the set-ups will come.
While we have been taking some very short-term trades, this leaves us with a high level of cash, which is fine, because we still have a long way to go before we can even think about building longer-term positions.
In the meantime, earnings reports will continue to pour in next week, and as a result, we should see this market continue to move around. It’s impossible to predict how that will play out, but we are positioned well to take advantage of opportunities as they present themselves.
Have a great weekend and we will see you on Monday.
Thursday, July 17, 2008
today
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IBM (IBM - commentary - Cramer's Take) has been the only bright spot in the earnings parade so far tonight, and a lot of that was due to currency gains. Google (GOOG - commentary - Cramer's Take) was trashed, Merrill Lynch (MER - commentary - Cramer's Take) disappointed, and Microsoft (MSFT - commentary - Cramer's Take) cut guidance. The PowerShares QQQ Trust (QQQQ - commentary - Cramer's Take) is down big after hours, and you have to wonder what the folks who were going crazy with their buying today were thinking.
The bulls have their work cut out for them tomorrow if they are going to salvage this recent rally. Look for pressure to resume on the financials.
At the time of publication, DePorre had no positions in stocks mentioned.
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RELATED STORIES
Rev Shark Blog
Market Action Was All About the Sectors
7/17/2008 3:59 PM EDT
Depending on what group you were in, it was either a great day, or a disastrous one.
Rev Shark Blog
Strange Action Ahead of Earnings
7/17/2008 2:17 PM EDT
We're seeing panic-buying of financials, of all things. Remember, it's just a bear market bounce.
Rev Shark Blog
Don't Force Your Style on the Market
7/17/2008 12:47 PM EDT
If your approach doesn't suit these conditions, then step aside or think short term.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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About Shark Watch
Thursday, July 17 - 3:36 PM
Heading Towards the Close
Although the averages are off their highs as we work our way into the final hour, the steady uptrend which began yesterday morning remains in place. Energy and material continue to lag, while financials approach an advance of 6%. Like we said earlier, the faster this market bounces, the greater the chance that investors will take what has been given to them and move back to the sidelines. It also sets up an interesting set of circumstances ahead of earnings tonight from GOOG, MSFT, ZION, COF and IBM. Given this two day run, it will be interesting to see if mediocre reports can bring more buyers.
That said, we aren’t that inclined to short in front of those reports. But, we might be more inclined to fade a strong open tomorrow if we see one.
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Thursday, July 17, 2008 | 4:53 p.m. ET Daily Archives
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7/17/2008 4:38 PM EDT
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IBM (IBM - commentary - Cramer's Take) has been the only bright spot in the earnings parade so far tonight, and a lot of that was due to currency gains. Google (GOOG - commentary - Cramer's Take) was trashed, Merrill Lynch (MER - commentary - Cramer's Take) disappointed, and Microsoft (MSFT - commentary - Cramer's Take) cut guidance. The PowerShares QQQ Trust (QQQQ - commentary - Cramer's Take) is down big after hours, and you have to wonder what the folks who were going crazy with their buying today were thinking.
The bulls have their work cut out for them tomorrow if they are going to salvage this recent rally. Look for pressure to resume on the financials.
At the time of publication, DePorre had no positions in stocks mentioned.
P.S. Cramer's Investor Service on Sale — Limited Time
One of Wall Street's most successful hedge fund managers, Jim Cramer knows how to make money. Now, learn how Jim's navigating today's volatile market, including the buys and sells in his personal portfolio, at Action Alerts PLUS — and save $50. Act now on this limited-time offer.
ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS
RELATED STORIES
Rev Shark Blog
Market Action Was All About the Sectors
7/17/2008 3:59 PM EDT
Depending on what group you were in, it was either a great day, or a disastrous one.
Rev Shark Blog
Strange Action Ahead of Earnings
7/17/2008 2:17 PM EDT
We're seeing panic-buying of financials, of all things. Remember, it's just a bear market bounce.
Rev Shark Blog
Don't Force Your Style on the Market
7/17/2008 12:47 PM EDT
If your approach doesn't suit these conditions, then step aside or think short term.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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About Shark Watch
Thursday, July 17 - 3:36 PM
Heading Towards the Close
Although the averages are off their highs as we work our way into the final hour, the steady uptrend which began yesterday morning remains in place. Energy and material continue to lag, while financials approach an advance of 6%. Like we said earlier, the faster this market bounces, the greater the chance that investors will take what has been given to them and move back to the sidelines. It also sets up an interesting set of circumstances ahead of earnings tonight from GOOG, MSFT, ZION, COF and IBM. Given this two day run, it will be interesting to see if mediocre reports can bring more buyers.
That said, we aren’t that inclined to short in front of those reports. But, we might be more inclined to fade a strong open tomorrow if we see one.
Wednesday, July 16, 2008
today
About Shark Watch
Wednesday, July 16 - 4:32 PM
Afternoon Comments
Well, after a choppy morning, the pullback in oil and decent WFC earnings finally triggered the sort of oversold bounce that everyone has been looking for. Of course, as is the case with so many bear market rallies, the doomsday scenarios from just a couple of days ago that resulted from a bank failure and emergency government actions were all but forgotten as shorts scrambled to cover their positions and longs began to buy in case some of the oversold conditions were relieved. Once that happened, it started to feed on itself, and we were left with a market that bounced well over 2.5%.
Of course, the big question is if we can see some follow-through. Like we’ve pointed out, each bounce over the past two months has ended up being a one-day affair, giving trapped longs a chance to escape and shorts an opportunity to remount their downside bets. We’ll see if things are different this time, and if earnings reports are terrible, then they just might be. That said, we can’t forget we’re in a bear market, and as a result, we can’t count on any action to the upside to last.
Have a great evening, and we will see you tomorrow.
Wednesday, July 16 - 4:32 PM
Afternoon Comments
Well, after a choppy morning, the pullback in oil and decent WFC earnings finally triggered the sort of oversold bounce that everyone has been looking for. Of course, as is the case with so many bear market rallies, the doomsday scenarios from just a couple of days ago that resulted from a bank failure and emergency government actions were all but forgotten as shorts scrambled to cover their positions and longs began to buy in case some of the oversold conditions were relieved. Once that happened, it started to feed on itself, and we were left with a market that bounced well over 2.5%.
Of course, the big question is if we can see some follow-through. Like we’ve pointed out, each bounce over the past two months has ended up being a one-day affair, giving trapped longs a chance to escape and shorts an opportunity to remount their downside bets. We’ll see if things are different this time, and if earnings reports are terrible, then they just might be. That said, we can’t forget we’re in a bear market, and as a result, we can’t count on any action to the upside to last.
Have a great evening, and we will see you tomorrow.
Tuesday, July 15, 2008
today
About Shark Watch
Tuesday, July 15 - 4:33 PM
Afternoon Comments
Although things were looking pretty good as the final hour got under way, stocks sold off sharply into the closing bell, dampening what was an impressive rally off the opening lows. The dismal action into the close certainly highlights the notion that market players have absolutely no confidence in this market right now, even though just about everyone continues to expect a more vigorous oversold bounce. Financials were particularly hard-hit after a 2% gain turned into a 3% loss.
Given the fact that the market has proved itself completely unable of holding on to any gains recently, however, such action is completely understandable. After this morning’s bounce off of lows, it makes perfect sense to lock in some quick gains in the midst of a bear market.
Meanwhile, INTC just reported earnings, beating both on the top and bottom lines with earnings of $0.28 per share on $9.5 billion in revenues versus estimates of $0.25 and $9.32 billion, respectively. Shares are lower is after-hour trading as their guidance for the third quarter is below estimates.
Have a great evening and we will see you tomorrow.
Tuesday, July 15 - 4:33 PM
Afternoon Comments
Although things were looking pretty good as the final hour got under way, stocks sold off sharply into the closing bell, dampening what was an impressive rally off the opening lows. The dismal action into the close certainly highlights the notion that market players have absolutely no confidence in this market right now, even though just about everyone continues to expect a more vigorous oversold bounce. Financials were particularly hard-hit after a 2% gain turned into a 3% loss.
Given the fact that the market has proved itself completely unable of holding on to any gains recently, however, such action is completely understandable. After this morning’s bounce off of lows, it makes perfect sense to lock in some quick gains in the midst of a bear market.
Meanwhile, INTC just reported earnings, beating both on the top and bottom lines with earnings of $0.28 per share on $9.5 billion in revenues versus estimates of $0.25 and $9.32 billion, respectively. Shares are lower is after-hour trading as their guidance for the third quarter is below estimates.
Have a great evening and we will see you tomorrow.
Monday, July 14, 2008
today
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Bad News Isn't Bad Enough
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7/14/2008 4:14 PM EDT
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A buy program in the final hour took the indices well off the lows of the day for a little while, but it didn't last long, and we closed on a down note. Once again, we did not get any real gut-wrenching capitulatory action which might wash things out so we can buy. Instead, we end up with just another abysmal day that invites a continuation of selling on any minor rally.
Under the surface, the action was even worse than the indices indicated. Breadth was quite poor, at better than 2:1 negative, and the fear over the regional banks caused some downright horrendous action in the already badly abused financials.
The problem with this market is that while the news is bad, it isn't bad enough to give us some capitulation. Instead, we get a herd of traders trying to anticipate a turn, and they end up immediately taking profits or stops with ever minor move.
At least tomorrow we have some earnings reports to consider, but until we can end this obsession with financials, it is going to be tough to get much upside traction going. Once again, the trend continues down, but this is getting awfully extreme, and it won't take much to cause a bit of a short squeeze.
Genentech (DNA - commentary - Cramer's Take) earnings are out after the close and are below estimates. However, the stock is holding steady, which may be an indication of the level of expectations out there. Tomorrow night we have Intel (INTC - commentary - Cramer's Take), and that will be a much better test.
Have a good evening. I'll see you tomorrow.
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RELATED STORIES
Rev Shark Blog
This Oversold Market Looks Hard to Buy
7/14/2008 2:24 PM EDT
Before you jump in, make sure you have a clear idea of your own time frame.
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These Feeble Bounces Aren't Helping
7/14/2008 11:19 AM EDT
This market is encouraging weak bulls and not giving us the washout that we need.
Rev Shark Blog
Sitting Out the Maelstrom
7/14/2008 10:17 AM EDT
We have a crisis of confidence: We're oversold and could get even more oversold.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Bad News Isn't Bad Enough
By Rev Shark
RealMoney.com Contributor
7/14/2008 4:14 PM EDT
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Try Jim Cramer's Action Alerts PLUS
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A buy program in the final hour took the indices well off the lows of the day for a little while, but it didn't last long, and we closed on a down note. Once again, we did not get any real gut-wrenching capitulatory action which might wash things out so we can buy. Instead, we end up with just another abysmal day that invites a continuation of selling on any minor rally.
Under the surface, the action was even worse than the indices indicated. Breadth was quite poor, at better than 2:1 negative, and the fear over the regional banks caused some downright horrendous action in the already badly abused financials.
The problem with this market is that while the news is bad, it isn't bad enough to give us some capitulation. Instead, we get a herd of traders trying to anticipate a turn, and they end up immediately taking profits or stops with ever minor move.
At least tomorrow we have some earnings reports to consider, but until we can end this obsession with financials, it is going to be tough to get much upside traction going. Once again, the trend continues down, but this is getting awfully extreme, and it won't take much to cause a bit of a short squeeze.
Genentech (DNA - commentary - Cramer's Take) earnings are out after the close and are below estimates. However, the stock is holding steady, which may be an indication of the level of expectations out there. Tomorrow night we have Intel (INTC - commentary - Cramer's Take), and that will be a much better test.
Have a good evening. I'll see you tomorrow.
P.S. Missing Lenny Dykstra's deep-in-the-money calls? They're now here..
Lenny "Nails" Dykstra's new service, TheStreet.com Nails on the Numbers, is the only place where you can now find the profit potential of his deep-in-the-money calls. Limited time to save $100.
ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS
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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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Friday, July 11, 2008
today
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Today's Market Update with...
Ron Romaine, Value Line's Senior Industry Analyst
July 11, 2008 - 4:59 PM ET
Stocks are mixed and interest rates jump on heightened oil and credit fears.
At the close today, four of the five major US stock market indexes had followed counterparts around the world and fallen; the sole exception was the Russell 2000 small cap index, which rose over 4 points, to 674. The Dow Jones Industrials lost 128, to 11,101; the S&P 500 was down 14, to a two-year low of 1239; the NASDAQ Composite had given up 19, to 2239; and the Value Line arithmetic index, the sole equally weighted benchmark, was at a 12-month low of 1916, off 11 points today. Leading the Dow's drop were CVX (CVX), Boeing (BA), JPMorgan Chase (JPM), and American International (AIG), down 3.8% to 4.2%. General Motors (GM) and Caterpillar (CAT) rose 2.4% and 2%, respectively. Amid fears for their survival, S&P members Fannie Mae (FMN) and Lehman Brothers (LEH) tumbled 22% and 16%, respectively, while Anheuser Busch (BUD) rose over 8% on hopes for a takeover by InBev at $70 a share. NASDAQ losers featured Infosys (INFY), United Airlines (UAUA), Baidu (BIDU), and Teva (TEVA), retreating 7.1% to 13.3%. Wynn Resorts (WYNN), Steel Dynamics (STLD), Activision Blizzard (ATVID), and Biogen Idec (BIIB) advanced 2% to 11%.
Adding to concerns for the capital markets if Fannie Mae and/or Freddie Mac were to need help to survive, the near-month crude oil contract hit another high, at $147.27 a barrel, before closing up over 2%, at $145.08. Beside continuing tension in the Middle East over Iran's nuclear program and its threat to block the Strait of Hormuz, oil supplies are threatened by violence in Nigeria and a possible strike in Brazil. Gold rose 2%, to $960.60 an ounce.
Interest rates jumped 10 to 13 basis points, despite the bad news, to 3.94% for the 10-year Treasury note and 4.52% for the 30-year bond.
Have a safe and, if possible, pleasant weekend.
Factual material is obtained from sources believed to be reliable, but the publisher is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. © 2008 Value Line Publishing, Inc. RIGHTS OF REPRODUCTION AND DISTRIBUTION ARE RESERVED TO THE PUBLISHER. The Publisher does not give investment advice or act as an investment adviser. Value Line, Inc., its subsidiaries, its parent corporation and its subsidiaries, and their officers, directors or employees as well as certain investment companies or investment advisory accounts for which Value Line, Inc. acts as investment advisor, may own stocks that are mentioned on this Value Line Web site.
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Today's Market Update with...
Ron Romaine, Value Line's Senior Industry Analyst
July 11, 2008 - 4:59 PM ET
Stocks are mixed and interest rates jump on heightened oil and credit fears.
At the close today, four of the five major US stock market indexes had followed counterparts around the world and fallen; the sole exception was the Russell 2000 small cap index, which rose over 4 points, to 674. The Dow Jones Industrials lost 128, to 11,101; the S&P 500 was down 14, to a two-year low of 1239; the NASDAQ Composite had given up 19, to 2239; and the Value Line arithmetic index, the sole equally weighted benchmark, was at a 12-month low of 1916, off 11 points today. Leading the Dow's drop were CVX (CVX), Boeing (BA), JPMorgan Chase (JPM), and American International (AIG), down 3.8% to 4.2%. General Motors (GM) and Caterpillar (CAT) rose 2.4% and 2%, respectively. Amid fears for their survival, S&P members Fannie Mae (FMN) and Lehman Brothers (LEH) tumbled 22% and 16%, respectively, while Anheuser Busch (BUD) rose over 8% on hopes for a takeover by InBev at $70 a share. NASDAQ losers featured Infosys (INFY), United Airlines (UAUA), Baidu (BIDU), and Teva (TEVA), retreating 7.1% to 13.3%. Wynn Resorts (WYNN), Steel Dynamics (STLD), Activision Blizzard (ATVID), and Biogen Idec (BIIB) advanced 2% to 11%.
Adding to concerns for the capital markets if Fannie Mae and/or Freddie Mac were to need help to survive, the near-month crude oil contract hit another high, at $147.27 a barrel, before closing up over 2%, at $145.08. Beside continuing tension in the Middle East over Iran's nuclear program and its threat to block the Strait of Hormuz, oil supplies are threatened by violence in Nigeria and a possible strike in Brazil. Gold rose 2%, to $960.60 an ounce.
Interest rates jumped 10 to 13 basis points, despite the bad news, to 3.94% for the 10-year Treasury note and 4.52% for the 30-year bond.
Have a safe and, if possible, pleasant weekend.
Factual material is obtained from sources believed to be reliable, but the publisher is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. © 2008 Value Line Publishing, Inc. RIGHTS OF REPRODUCTION AND DISTRIBUTION ARE RESERVED TO THE PUBLISHER. The Publisher does not give investment advice or act as an investment adviser. Value Line, Inc., its subsidiaries, its parent corporation and its subsidiaries, and their officers, directors or employees as well as certain investment companies or investment advisory accounts for which Value Line, Inc. acts as investment advisor, may own stocks that are mentioned on this Value Line Web site.
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today
About Shark Watch
Friday, July 11 - 4:41 PM
Afternoon Comments
It was certainly another wild day for the market as reports about a possible bailout for FNM and FRE triggered some massive selling early in the day which was only exacerbated by Secretary Paulson saying just after the bell that no such plan existed. Although the action was dismal as the day progressed, reports that the Fed would open the discount window to the GSEs served as a catalyst for a vigorous wave of short-covering. However, that quick pop reversed just as soon as it had started.
By the end of the day, the indices lost, on average, just over 1%, and while breadth was 3:2 to the negative, that’s a lot better than earlier in the session. Part of that had to do with the outperformance in the small-caps, but how the Russell 2000 was able to finish with a decent 0.67% in this sort of environment is anyone’s guess.
Meanwhile, earnings season gets under way in earnest next week, and it’s a safe bet that all ears will be on guidance for the rest of the year. The bulls have been pinning their hopes on a strong second half rebound, but the expectations for a speedy recovery have been waning recently. That may help if reports aren’t as bad as feared, but we also need to remember that there are plenty of issues still facing this market. Problems with the financials and high oil prices aren’t simply going to disappear.
The bottom line is that we are in a market that is trending downward. We may be in store for some sort of relief rally, but the tendency has been for any sort of action to the upside to fail quickly. Through all of this, we have continued to hold high levels of cash.
Have a great weekend, and we will see you Monday.
Friday, July 11 - 4:41 PM
Afternoon Comments
It was certainly another wild day for the market as reports about a possible bailout for FNM and FRE triggered some massive selling early in the day which was only exacerbated by Secretary Paulson saying just after the bell that no such plan existed. Although the action was dismal as the day progressed, reports that the Fed would open the discount window to the GSEs served as a catalyst for a vigorous wave of short-covering. However, that quick pop reversed just as soon as it had started.
By the end of the day, the indices lost, on average, just over 1%, and while breadth was 3:2 to the negative, that’s a lot better than earlier in the session. Part of that had to do with the outperformance in the small-caps, but how the Russell 2000 was able to finish with a decent 0.67% in this sort of environment is anyone’s guess.
Meanwhile, earnings season gets under way in earnest next week, and it’s a safe bet that all ears will be on guidance for the rest of the year. The bulls have been pinning their hopes on a strong second half rebound, but the expectations for a speedy recovery have been waning recently. That may help if reports aren’t as bad as feared, but we also need to remember that there are plenty of issues still facing this market. Problems with the financials and high oil prices aren’t simply going to disappear.
The bottom line is that we are in a market that is trending downward. We may be in store for some sort of relief rally, but the tendency has been for any sort of action to the upside to fail quickly. Through all of this, we have continued to hold high levels of cash.
Have a great weekend, and we will see you Monday.
Thursday, July 10, 2008
today
About Shark Watch
Thursday, July 10 - 7:55 PM
Afternoon Comments
The wild intraday swings just kept on coming today as continuing turmoil with FNM and FRE pressured the financials, INTC CEO’s positive comments ahead of the close, decent chain-store sales numbers and a late spike in oil kept everyone on their toes. We still have an oversold market, and that suggests we may still get a decent oversold rally, but with so many potential catalysts, things could easily go either way right now. It won’t take much at all to trigger a fresh leg down or a wave of short-covering, so we need to be ready for whatever comes our way.
On our end, we continue to be positioned defensively, but did add a bit to some small oil and medical stocks late in the day. We’re inclined to add to those should they follow through, but we still don’t see any reason to get aggressive on any front right now. As we have seen, trying to predict anything when it comes to this market lately has been futile.
Have a great evening and we will see you tomorrow.
Thursday, July 10 - 7:55 PM
Afternoon Comments
The wild intraday swings just kept on coming today as continuing turmoil with FNM and FRE pressured the financials, INTC CEO’s positive comments ahead of the close, decent chain-store sales numbers and a late spike in oil kept everyone on their toes. We still have an oversold market, and that suggests we may still get a decent oversold rally, but with so many potential catalysts, things could easily go either way right now. It won’t take much at all to trigger a fresh leg down or a wave of short-covering, so we need to be ready for whatever comes our way.
On our end, we continue to be positioned defensively, but did add a bit to some small oil and medical stocks late in the day. We’re inclined to add to those should they follow through, but we still don’t see any reason to get aggressive on any front right now. As we have seen, trying to predict anything when it comes to this market lately has been futile.
Have a great evening and we will see you tomorrow.
Wednesday, July 9, 2008
today - very ugly - again
About Shark Watch
Wednesday, July 9 - 4:41 PM
Afternoon Comments
Although the action had been weak since late morning, the selling really accelerated late in the day, and the major indices gave back all of yesterday’s gains and more. Once again, the financials led the descent, and even the drop back to session lows for oil wasn’t able to help matters. All it did was sent both energy and materials into the red.
We’ve been mentioning that the oversold conditions have increased the chances that we would see some sort of oversold rally, but the lack of any real panicked selling hadn’t really set us up for the kind of counter-trend bounce we saw back in March and May. We mentioned yesterday that the fact we hadn’t had a really good washout meant that there were likely plenty of folks sitting on losses who would be ready to sell into any strength. Once it became obvious that yesterday’s rally wasn’t going to continue, a little profit-taking turned into a full-fledged reversal.
We’ll see if crude can continue to move lower and if that will pull some money back in. That said, this sort of dismal action is a real confidence killer, and even though we’re still oversold, it’s won’t be easy for investors to really trust any action to the upside.
The bottom line is the same one we’ve been reiterating for the past several months because it bears repeating. This market is in a downtrend and we can only stick to very quick trades if we want to do anything on the long-side. It’s going to take a lot of work and a whole bunch of patience before it’s safe to start building core positions.
Have a great evening and we will see you tomorrow.
Wednesday, July 9 - 4:41 PM
Afternoon Comments
Although the action had been weak since late morning, the selling really accelerated late in the day, and the major indices gave back all of yesterday’s gains and more. Once again, the financials led the descent, and even the drop back to session lows for oil wasn’t able to help matters. All it did was sent both energy and materials into the red.
We’ve been mentioning that the oversold conditions have increased the chances that we would see some sort of oversold rally, but the lack of any real panicked selling hadn’t really set us up for the kind of counter-trend bounce we saw back in March and May. We mentioned yesterday that the fact we hadn’t had a really good washout meant that there were likely plenty of folks sitting on losses who would be ready to sell into any strength. Once it became obvious that yesterday’s rally wasn’t going to continue, a little profit-taking turned into a full-fledged reversal.
We’ll see if crude can continue to move lower and if that will pull some money back in. That said, this sort of dismal action is a real confidence killer, and even though we’re still oversold, it’s won’t be easy for investors to really trust any action to the upside.
The bottom line is the same one we’ve been reiterating for the past several months because it bears repeating. This market is in a downtrend and we can only stick to very quick trades if we want to do anything on the long-side. It’s going to take a lot of work and a whole bunch of patience before it’s safe to start building core positions.
Have a great evening and we will see you tomorrow.
Tuesday, July 8, 2008
for yesterday and today
About Shark Watch
Monday, July 7 - 3:27 PM
Mid-Day Update
Although the market wasn’t really going much of anywhere, it was at least going nowhere in positive territory. However, news that both FNM and FRE might be required to raise an additional $75 billion in capital due to an accounting rule change sent those stocks, the financials, and the rest of the market lower. Of course, the fact that crude bounced off of its lows and the dollar fell after trading higher earlier in the day hasn’t helped much either.
The bad news is that this market isn’t even able to hold on to a modest bounce regardless of how oversold it is, but the good news is that this is just the sort of action that will finally discourage those who are holding desperately on to the hope that we’re going to bounce right back as soon a all those silly sellers realize that things really aren’t all that bad.
On our end, we’re simply sitting in cash and waiting for a chance to ride a bounce when it occurs. That said, as we’ve seen over the past several days, oversold conditions are no guarantee of a bounce, and trying to anticipate one – especially when so many are looking for it to happen – is dangerous.
About Shark Watch
Tuesday, July 8 - 4:38 PM
Afternoon Comments
Certainly, with oil pulling back, continued oversold conditions and a bit of a bounce in the financials, everything was in place for a rally. However, Mr. Market sure made things interesting today, because just when it was looking like investors’ hopes for an oversold bounce would have to be put on hold yet again, a sudden wave of buying about two hours before the close sent just about the entire market sharply higher into the close on good breadth and heavy volume.
Of course, the real test is if the buying we saw today can continue. Given how far and fast this market has fallen over the past several weeks, there is undoubtedly room to the upside. That said, this market is badly broken, and those who are sitting on big losses after buying the “worst is over” line during the March-May intermediate uptrend will be looking to recover some of their losses. That’s what makes overhead resistance such a powerful force in a downtrending market.
The bottom line is that, if we do see some follow-through, we need to make sure we adjust our stops and keep our time-frames short.
Have a great evening and we will see you tomorrow.
Monday, July 7 - 3:27 PM
Mid-Day Update
Although the market wasn’t really going much of anywhere, it was at least going nowhere in positive territory. However, news that both FNM and FRE might be required to raise an additional $75 billion in capital due to an accounting rule change sent those stocks, the financials, and the rest of the market lower. Of course, the fact that crude bounced off of its lows and the dollar fell after trading higher earlier in the day hasn’t helped much either.
The bad news is that this market isn’t even able to hold on to a modest bounce regardless of how oversold it is, but the good news is that this is just the sort of action that will finally discourage those who are holding desperately on to the hope that we’re going to bounce right back as soon a all those silly sellers realize that things really aren’t all that bad.
On our end, we’re simply sitting in cash and waiting for a chance to ride a bounce when it occurs. That said, as we’ve seen over the past several days, oversold conditions are no guarantee of a bounce, and trying to anticipate one – especially when so many are looking for it to happen – is dangerous.
About Shark Watch
Tuesday, July 8 - 4:38 PM
Afternoon Comments
Certainly, with oil pulling back, continued oversold conditions and a bit of a bounce in the financials, everything was in place for a rally. However, Mr. Market sure made things interesting today, because just when it was looking like investors’ hopes for an oversold bounce would have to be put on hold yet again, a sudden wave of buying about two hours before the close sent just about the entire market sharply higher into the close on good breadth and heavy volume.
Of course, the real test is if the buying we saw today can continue. Given how far and fast this market has fallen over the past several weeks, there is undoubtedly room to the upside. That said, this market is badly broken, and those who are sitting on big losses after buying the “worst is over” line during the March-May intermediate uptrend will be looking to recover some of their losses. That’s what makes overhead resistance such a powerful force in a downtrending market.
The bottom line is that, if we do see some follow-through, we need to make sure we adjust our stops and keep our time-frames short.
Have a great evening and we will see you tomorrow.
Monday, July 7, 2008
DO THESE
look at scottrade
do all of real money for mon, 7/7/08
http://www.thestreet.com/k/aap/_alertk/archives/200807070950.html?isLatestEntry
http://www.thestreet.com/k/aap/_alertk/archives/200807071541.html?isLatestEntry
also do blog for mon, 7/7/08 - shark, rm, etc.
do all of real money for mon, 7/7/08
http://www.thestreet.com/k/aap/_alertk/archives/200807070950.html?isLatestEntry
http://www.thestreet.com/k/aap/_alertk/archives/200807071541.html?isLatestEntry
also do blog for mon, 7/7/08 - shark, rm, etc.
Thursday, July 3, 2008
to remember
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Some Comments About Today.
From: Dan@stockmarketmentor.com
Sent: Wed 7/02/08 11:08 PM
Reply-to: Dan@stockmarketmentor.com
To: bradgrimes@hotmail.com
Hi bradley.
Sorry this is coming so late. I arrived home earlier today to
find that Tonya had not weathered my absence particularly well -
- fleas, infection, rash, etc. So I've been playing Daddy
until just a while ago.
But I wanted to get some thoughts out to you about today's
market action...and the market in general. During my flight, I
watched CNBC most of the way home. Interesting day from 36,000
feet at 500 mph. I had a very clear view that today was going
to be a real stinker. Somehow there is peace in sitting in
your chair watching the market, and knowing that there isn't
one thing you can do. When action is not an option, the senses
are more objective.
I got home and started to read today's forum. It seemed to me
that everyone was a bit scattered...just seemed like there was
a lot of confusion, and a lot of folks just eager to "DO"
something. I'll be honest with you -- I started to get a
little frustrated because I really felt that the theme over the
past few weeks was right. That is, caution is a trading
strategy during these times. Less is more. Discretion and
discipline over bravery. (If you want to exhibit your bravery,
join the Marines and go to Afghanistan).
I know that some of you have been getting a bit frustrated with
this tone -- and I acknowledge that this isn't the
typical "stock picking newsletter" where the real market is in
gambling and not trading/investing! I've seen those
newsletters -- just a constant barrage of new stock picks,
irrespective of market environment. The idea is to keep your
subscribers "busy"! Like slot machines, you just want to
keep 'em pulling the handle and watching the cherrys, berries
and $$ roll around. Even if you post a bunch of lousy trades,
the subscribers will stick around as long as they get to keep
pulling the handle. They like the ACTION more than making
money. Simply put, "HOPE" sells! Hope keeps us engaged. Put
another way, think "lottery ticket".
I chose to go a different way. I decided that there was indeed
a market for folks interested in really learning to manage
their own money, and who understood that the stock market
should not fall into the "entertainment" category. I wondered
whether I might be spinning my own wheels with this endeavor of
mine -- to really help folks help themselves; to put people in
a position of power -- actually, of empowerment -- where the
knowledge gained ultimately enables folks to make better, more
informed decisions. Turns out that I was right. Lots of folks
are eager to learn and I'm eager to teach. If you're receiving
this email from me, you're probably one of those folks!
But back to the Forum. So I was reading this morning's
transcript and I found myself frowning. Now, mind you, it is
not my place to approve or disapprove of what is being said.
It's your Forum, not mine. Rather, I see the quality of the
Forum as a reflection of the job I am doing...and not as a
reflection of the job you are doing. You are doing the best
you can, and that's all that matters. But I'm not getting paid
to do the best that I can; I'm getting paid to help you be the
best you can be. Maybe that's a subtle nuance, but I think it
is important to draw that line. I read the Forum as a way to
gauge my own performance as a "mentor".
But as I read through the entire transcript, I saw things start
to come together and I was smiling by the end of it. First,
lots of new faces, and that's a good thing. Welcome to the
newbies! Most importantly, I saw some folks stepping up and
reminding everyone about the nature of the market -- that is
rarely, if ever, gives us what we want. And it sure as heck
doesn't give us what we need. (That's the end of the Rolling
Stones theme) Rather, the market gives us what we TAKE! I saw
folks preaching discipline and patience...and letting the
market do what it will do without trying to "predict" a bottom.
As I finished up my reading, I could see that perhaps some of
the things we are learning together are actually translating
into better decisions and actions. And that makes me proud.
It makes me proud of myself for doing the work to put this
together; and for staying the course and keeping it aligned
with my original vision rather than compromising it for the
sake of expediency and profit. But more importantly, it makes
me proud of you -- because I'm seeing some members make the
transition from eager newbie to a more well-reasoned and
thoughtful place. That's really inspiring and makes me want to
work even harder.
Again, I'm proud to be a part of your growth as a trader...but
it's not about me -- it's about you.
Now, some of you were buying the beaten down high-fliers today,
and that's fine. That would not have been my trade -- with an
abbreviated day tomorrow followed by a 3 day weekend, I
wouldn't have been doing much of anything except maybe trimming
some more (hard to do when you've got as little capital in
equities as I do. Just not too much to trim). But if you were
buying, fine! Just do one thing tonight (if you haven't
already) -- define your loss! bradley, this is a falling
knife market right now. It's not falling fast...but it is
constantly falling.
We are very, very ripe for an oversold bounce, with the S&P
Short Range Oscillator at -10! That's pretty negative! But
the oscillator is not a timing indicator, it's a "condition"
indicator. Conditions remain ripe for an oversold rally. The
little blips we've getting most mornings have been sold into
each time. Just not much there.
But stay patient -- I can't tell you when the market will be
ripe for buying. I can just tell you that I don't think we're
there yet. I can also tell you these 5 things:
1. The market doesn't care about you.
2. The market doesn't even know about you.
3. The market will not comply with your wishes.
4. The market will not conform to your desired timeline --
ever!
5. The market will do what it will do...and it is your task to
surf the market.
bradley, that's the best way I can put it. You've got to
surf the market. And any surfer will tell you that the best
time to go surfing is when the waves are coming in. During the
time of the day when the tide isn't doing much and the waves
are not moving much, it's senseless to go out in the water
surfing. You just sit on your board and your skin shrivels up
like a prune. Finally, when you are tired and impatient and
have sat there long enough, you decide to go in. As soon as
the board is loaded on the car and you've dried off, the waves
start coming in.
On another note, I'm getting the impression that many folks
just not understanding the VIX. When you say, "Does it really
matter?", what you are really saying is, "In order to form the
kind of low that can lead to a sustainable rally, do we really
need to see everybody forced to the sidelines in a desperate
exchange of stock for cash?" The answer is "yes". We need
that dramatic stock-for-cash exchange so that the cash can
start being put to work without having an overhang of "latent
selling pressure" from folks who did not sell and who will
continue to sell into any rally.
Remember, it takes eager buyers to push stocks higher. Without
eagerness, buyers only put in low bids and won't "pay up" for
the stock by "taking" the offer. (That describes the current
environment -- there are buyers. They just aren't buying at
the offer (which is what must be done to push a stock higher).
Rather, they are just sticking their bid out there and
saying, "Well, if I get hit, I get hit. But I'm paying my
price, and not a penny more."
That's what's going on now. There are buyers. There are
ALWAYS buyers -- it's the level of aggressiveness that changes.
The VIX is a REFLECTION of the aggressiveness of buyers and
sellers. It does not DETERMINE that aggressiveness. Get it?
If you don't understand the VIX, then forget all about it,
bradley. Understanding the VIX isn't as important as
understanding the conditions that are required to put in a
tradable, reliable bottom. Yes, the VIX will reflect that.
But if you don't get it, then you don't get it. That's OK --
get over it! But you must understand the concept -- understand
that bottoms are made when hardly anyone wants to own stocks,
and those who must own stocks are striving to protect their
holdings.
Here's one thing I'll promise you. All this talk about how the
VIX just might be irrelevant...how it really isn't important
right now...etc. Well, lots of folks are saying that, but I'll
go back to #4 above -- the market won't conform to your
timeline. As soon as traders begin to disregard the need for a
big washout and start putting their money back in the market in
a complacent and undisciplined manner (which is the
early "greed" part of the market cycle -- ill-conceived greed,
but greed nonetheless), we'll get the washout that had been
dismissed as unnecessary.
bradley, that's the way the market works.
I'm not going to tell you what to do, but I am going to urge
you to ask one question before you take any action: "Why here;
why now?"
Your answer to that question should dictate your action.
OK, here are the links to tonight's videos. They are long, so
please allow them to load completely (wait to see "Done" on the
lower left corner of your browser before playing the video).
Index Recap: http://www.stockmarketmentor.com/members/1348.cfm
Stock Recap: http://www.stockmarketmentor.com/members/1347.cfm
OK, I'll see you in the Forum tomorrow as we watch to see how
the market reacts to the European Central Bank's decision.
Have a good evening (what's left of it).
--Dan
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Some Comments About Today.
From: Dan@stockmarketmentor.com
Sent: Wed 7/02/08 11:08 PM
Reply-to: Dan@stockmarketmentor.com
To: bradgrimes@hotmail.com
Hi bradley.
Sorry this is coming so late. I arrived home earlier today to
find that Tonya had not weathered my absence particularly well -
- fleas, infection, rash, etc. So I've been playing Daddy
until just a while ago.
But I wanted to get some thoughts out to you about today's
market action...and the market in general. During my flight, I
watched CNBC most of the way home. Interesting day from 36,000
feet at 500 mph. I had a very clear view that today was going
to be a real stinker. Somehow there is peace in sitting in
your chair watching the market, and knowing that there isn't
one thing you can do. When action is not an option, the senses
are more objective.
I got home and started to read today's forum. It seemed to me
that everyone was a bit scattered...just seemed like there was
a lot of confusion, and a lot of folks just eager to "DO"
something. I'll be honest with you -- I started to get a
little frustrated because I really felt that the theme over the
past few weeks was right. That is, caution is a trading
strategy during these times. Less is more. Discretion and
discipline over bravery. (If you want to exhibit your bravery,
join the Marines and go to Afghanistan).
I know that some of you have been getting a bit frustrated with
this tone -- and I acknowledge that this isn't the
typical "stock picking newsletter" where the real market is in
gambling and not trading/investing! I've seen those
newsletters -- just a constant barrage of new stock picks,
irrespective of market environment. The idea is to keep your
subscribers "busy"! Like slot machines, you just want to
keep 'em pulling the handle and watching the cherrys, berries
and $$ roll around. Even if you post a bunch of lousy trades,
the subscribers will stick around as long as they get to keep
pulling the handle. They like the ACTION more than making
money. Simply put, "HOPE" sells! Hope keeps us engaged. Put
another way, think "lottery ticket".
I chose to go a different way. I decided that there was indeed
a market for folks interested in really learning to manage
their own money, and who understood that the stock market
should not fall into the "entertainment" category. I wondered
whether I might be spinning my own wheels with this endeavor of
mine -- to really help folks help themselves; to put people in
a position of power -- actually, of empowerment -- where the
knowledge gained ultimately enables folks to make better, more
informed decisions. Turns out that I was right. Lots of folks
are eager to learn and I'm eager to teach. If you're receiving
this email from me, you're probably one of those folks!
But back to the Forum. So I was reading this morning's
transcript and I found myself frowning. Now, mind you, it is
not my place to approve or disapprove of what is being said.
It's your Forum, not mine. Rather, I see the quality of the
Forum as a reflection of the job I am doing...and not as a
reflection of the job you are doing. You are doing the best
you can, and that's all that matters. But I'm not getting paid
to do the best that I can; I'm getting paid to help you be the
best you can be. Maybe that's a subtle nuance, but I think it
is important to draw that line. I read the Forum as a way to
gauge my own performance as a "mentor".
But as I read through the entire transcript, I saw things start
to come together and I was smiling by the end of it. First,
lots of new faces, and that's a good thing. Welcome to the
newbies! Most importantly, I saw some folks stepping up and
reminding everyone about the nature of the market -- that is
rarely, if ever, gives us what we want. And it sure as heck
doesn't give us what we need. (That's the end of the Rolling
Stones theme) Rather, the market gives us what we TAKE! I saw
folks preaching discipline and patience...and letting the
market do what it will do without trying to "predict" a bottom.
As I finished up my reading, I could see that perhaps some of
the things we are learning together are actually translating
into better decisions and actions. And that makes me proud.
It makes me proud of myself for doing the work to put this
together; and for staying the course and keeping it aligned
with my original vision rather than compromising it for the
sake of expediency and profit. But more importantly, it makes
me proud of you -- because I'm seeing some members make the
transition from eager newbie to a more well-reasoned and
thoughtful place. That's really inspiring and makes me want to
work even harder.
Again, I'm proud to be a part of your growth as a trader...but
it's not about me -- it's about you.
Now, some of you were buying the beaten down high-fliers today,
and that's fine. That would not have been my trade -- with an
abbreviated day tomorrow followed by a 3 day weekend, I
wouldn't have been doing much of anything except maybe trimming
some more (hard to do when you've got as little capital in
equities as I do. Just not too much to trim). But if you were
buying, fine! Just do one thing tonight (if you haven't
already) -- define your loss! bradley, this is a falling
knife market right now. It's not falling fast...but it is
constantly falling.
We are very, very ripe for an oversold bounce, with the S&P
Short Range Oscillator at -10! That's pretty negative! But
the oscillator is not a timing indicator, it's a "condition"
indicator. Conditions remain ripe for an oversold rally. The
little blips we've getting most mornings have been sold into
each time. Just not much there.
But stay patient -- I can't tell you when the market will be
ripe for buying. I can just tell you that I don't think we're
there yet. I can also tell you these 5 things:
1. The market doesn't care about you.
2. The market doesn't even know about you.
3. The market will not comply with your wishes.
4. The market will not conform to your desired timeline --
ever!
5. The market will do what it will do...and it is your task to
surf the market.
bradley, that's the best way I can put it. You've got to
surf the market. And any surfer will tell you that the best
time to go surfing is when the waves are coming in. During the
time of the day when the tide isn't doing much and the waves
are not moving much, it's senseless to go out in the water
surfing. You just sit on your board and your skin shrivels up
like a prune. Finally, when you are tired and impatient and
have sat there long enough, you decide to go in. As soon as
the board is loaded on the car and you've dried off, the waves
start coming in.
On another note, I'm getting the impression that many folks
just not understanding the VIX. When you say, "Does it really
matter?", what you are really saying is, "In order to form the
kind of low that can lead to a sustainable rally, do we really
need to see everybody forced to the sidelines in a desperate
exchange of stock for cash?" The answer is "yes". We need
that dramatic stock-for-cash exchange so that the cash can
start being put to work without having an overhang of "latent
selling pressure" from folks who did not sell and who will
continue to sell into any rally.
Remember, it takes eager buyers to push stocks higher. Without
eagerness, buyers only put in low bids and won't "pay up" for
the stock by "taking" the offer. (That describes the current
environment -- there are buyers. They just aren't buying at
the offer (which is what must be done to push a stock higher).
Rather, they are just sticking their bid out there and
saying, "Well, if I get hit, I get hit. But I'm paying my
price, and not a penny more."
That's what's going on now. There are buyers. There are
ALWAYS buyers -- it's the level of aggressiveness that changes.
The VIX is a REFLECTION of the aggressiveness of buyers and
sellers. It does not DETERMINE that aggressiveness. Get it?
If you don't understand the VIX, then forget all about it,
bradley. Understanding the VIX isn't as important as
understanding the conditions that are required to put in a
tradable, reliable bottom. Yes, the VIX will reflect that.
But if you don't get it, then you don't get it. That's OK --
get over it! But you must understand the concept -- understand
that bottoms are made when hardly anyone wants to own stocks,
and those who must own stocks are striving to protect their
holdings.
Here's one thing I'll promise you. All this talk about how the
VIX just might be irrelevant...how it really isn't important
right now...etc. Well, lots of folks are saying that, but I'll
go back to #4 above -- the market won't conform to your
timeline. As soon as traders begin to disregard the need for a
big washout and start putting their money back in the market in
a complacent and undisciplined manner (which is the
early "greed" part of the market cycle -- ill-conceived greed,
but greed nonetheless), we'll get the washout that had been
dismissed as unnecessary.
bradley, that's the way the market works.
I'm not going to tell you what to do, but I am going to urge
you to ask one question before you take any action: "Why here;
why now?"
Your answer to that question should dictate your action.
OK, here are the links to tonight's videos. They are long, so
please allow them to load completely (wait to see "Done" on the
lower left corner of your browser before playing the video).
Index Recap: http://www.stockmarketmentor.com/members/1348.cfm
Stock Recap: http://www.stockmarketmentor.com/members/1347.cfm
OK, I'll see you in the Forum tomorrow as we watch to see how
the market reacts to the European Central Bank's decision.
Have a good evening (what's left of it).
--Dan
Have a fast connection and want more features? Try the full version to see message previews in your inbox. (It's free, too.)
* © 2008 Microsoft
* Privacy
* Legal
* Help Central
* Account
* Feedback
Warning {0}
About Shark Watch
Thursday, July 3 - 1:27 PM
Afternoon Comments
Given the downright terrible action we saw into the close yesterday, the thin trading environment, the jobs report that was in-line with expectations and a lack of an major surprises from Jean-Claude Trichet, it isn’t all that surprising that we had a mildly positive but lackluster trading session. That said, oil just absolutely refuses to pull back, and until that happens in a meaningful way, it’s hard to see how this market is going to be able to even manage a respectable oversold bounce.
In the final analysis, we had a typical, thin pre-holiday trading session, and the action today did nothing to change the fact that we are in a technically broken market. Yes, we are extended to the downside, but as we’ve seen this week, that’s no guarantee of any reflexive action to the upside. Trying to time such things is a dangerous game to play, and the best thing we can do is wait for one to start taking shape before we jump on for the ride. In the meantime, the best place for us to be is in the safety of cash. There are going to be some great opportunities down the road. We just have to be patient and let this market come to us.
Have a great three day weekend. We’ll see you on Monday.
Thursday, July 3 - 1:27 PM
Afternoon Comments
Given the downright terrible action we saw into the close yesterday, the thin trading environment, the jobs report that was in-line with expectations and a lack of an major surprises from Jean-Claude Trichet, it isn’t all that surprising that we had a mildly positive but lackluster trading session. That said, oil just absolutely refuses to pull back, and until that happens in a meaningful way, it’s hard to see how this market is going to be able to even manage a respectable oversold bounce.
In the final analysis, we had a typical, thin pre-holiday trading session, and the action today did nothing to change the fact that we are in a technically broken market. Yes, we are extended to the downside, but as we’ve seen this week, that’s no guarantee of any reflexive action to the upside. Trying to time such things is a dangerous game to play, and the best thing we can do is wait for one to start taking shape before we jump on for the ride. In the meantime, the best place for us to be is in the safety of cash. There are going to be some great opportunities down the road. We just have to be patient and let this market come to us.
Have a great three day weekend. We’ll see you on Monday.
Wednesday, July 2, 2008
today in the makret
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Today's Ugliness Is the Good News
By Rev Shark
RealMoney.com Contributor
7/2/2008 4:38 PM EDT
Click here for more stories by Rev Shark
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The good news is that it doesn't get much uglier than this. Although the indices took a pretty good hit, they did not reflect the true extent of the damage today. There was some absolute carnage in the groups that have been leading the market for most of the year. Momentum never dies a pretty death, and today was a great example. Steel, metal, mining, agriculture, bulk shipping, solar energy, coal, etc., were absolutely pummeled. Even oil stocks took a pretty good hit while crude oil was trading strongly higher to an all-time high.
This sudden reversal in momentum names, coupled with the over-anxious and premature bottom calling Tuesday, made for some real pain if you hadn't already adopted a defensive approach. However, as I've written several times lately, we really need the hot momentum groups to reverse like this in order to produce a good tradable low.
It's been too easy to find a place to hide in this market, and that has prevented a real washout. The action today left almost nothing unscathed, and that is what ultimately leads to the type of negative sentiment that produces at least an oversold bounce.
Once again, I remind you that the trend is down, and trends have a tendency to last longer than you think they will. However, this is getting quite extreme now, and some relief is likely to come soon. Unfortunately, it is likely to be only a temporary respite.
Don't forget we have a half day of trading tomorrow. The market closes at 1 p.m. EDT. I'll see you tomorrow.
Travel With a Tiny RazorBook in Your Pocket
A Primer on All Those Extra Flight Fees
Four Great Food-Factory Tours
Business-Class Travel: How the Superfly Fly
Business Traveler Update sponsored by Cathay Pacfic
Subscription
Services
Action Alerts PLUS
RealMoney Silver
InsiderInsights
Stocks Under $10
Options Alerts
Top Stocks
View All
RealMoney
Free Trial
Now, enjoy the good life every day!
RSSRSS FEEDS
PODPODCASTS
Charles Schwab
TD Ameritrade
Zecco.com
RealMoney.com: Rev Shark Blog
Print This Story
Today's Ugliness Is the Good News
By Rev Shark
RealMoney.com Contributor
7/2/2008 4:38 PM EDT
Click here for more stories by Rev Shark
Try Jim Cramer's Action Alerts PLUS
CLICK HERE NOW
The good news is that it doesn't get much uglier than this. Although the indices took a pretty good hit, they did not reflect the true extent of the damage today. There was some absolute carnage in the groups that have been leading the market for most of the year. Momentum never dies a pretty death, and today was a great example. Steel, metal, mining, agriculture, bulk shipping, solar energy, coal, etc., were absolutely pummeled. Even oil stocks took a pretty good hit while crude oil was trading strongly higher to an all-time high.
This sudden reversal in momentum names, coupled with the over-anxious and premature bottom calling Tuesday, made for some real pain if you hadn't already adopted a defensive approach. However, as I've written several times lately, we really need the hot momentum groups to reverse like this in order to produce a good tradable low.
It's been too easy to find a place to hide in this market, and that has prevented a real washout. The action today left almost nothing unscathed, and that is what ultimately leads to the type of negative sentiment that produces at least an oversold bounce.
Once again, I remind you that the trend is down, and trends have a tendency to last longer than you think they will. However, this is getting quite extreme now, and some relief is likely to come soon. Unfortunately, it is likely to be only a temporary respite.
Don't forget we have a half day of trading tomorrow. The market closes at 1 p.m. EDT. I'll see you tomorrow.
today
Today is just a wholesale slaughter of anything that exports--just brutal--this is a worldwide slowdown sell off and still one more wave of capitulation. I am sure the tecchnicians will have a field day with the positive opening and then vicious selloff--the classic "island reversal" thatwill take apart anything mineral ..just a total collapse.
Position: none
Position: none
Tuesday, July 1, 2008
About Shark Watch
Tuesday, July 1 - 4:42 PM
Afternoon Comments
Although many market players were fully anticipating a rally today as the new quarter got under way, it certainly came about in a way that few expected. The gap lower at the open gave investors a good opportunity to buy weakness, and while that proved to be a decent bet after the ISM numbers, any action to the upside was to be short-lived as we rolled right back over and hit new lows.
However, some “not-as-horrible-as-expected” sales numbers from GM triggered was looked to be some broad-based short-covering, triggering a sizable rally out of negative territory. Like clockwork, the serial bottom callers came out in force, telling us that the bottom was in. Still, while that is certainly not out of the question and pegging exact bottoms can generate god profits, consistent success in the market only comes from disciplined money management and a methodical approach.
There are only two trading sessions left this week and with many investors turning their attention to fireworks and barbeques, we suspect that we are going to have some typical holiday-style trading coming up. Of course, the jobs report is due out Thursday, so that has the potential to keep things tricky. Our job at this point is to pay attention to the pricing action and make sure our precious capital is protected. If the market is really going to start improving from here, there will be plenty of time to hop on board once we have technical confirmation.
Have a great evening and we will see you tomorrow
Tuesday, July 1 - 4:42 PM
Afternoon Comments
Although many market players were fully anticipating a rally today as the new quarter got under way, it certainly came about in a way that few expected. The gap lower at the open gave investors a good opportunity to buy weakness, and while that proved to be a decent bet after the ISM numbers, any action to the upside was to be short-lived as we rolled right back over and hit new lows.
However, some “not-as-horrible-as-expected” sales numbers from GM triggered was looked to be some broad-based short-covering, triggering a sizable rally out of negative territory. Like clockwork, the serial bottom callers came out in force, telling us that the bottom was in. Still, while that is certainly not out of the question and pegging exact bottoms can generate god profits, consistent success in the market only comes from disciplined money management and a methodical approach.
There are only two trading sessions left this week and with many investors turning their attention to fireworks and barbeques, we suspect that we are going to have some typical holiday-style trading coming up. Of course, the jobs report is due out Thursday, so that has the potential to keep things tricky. Our job at this point is to pay attention to the pricing action and make sure our precious capital is protected. If the market is really going to start improving from here, there will be plenty of time to hop on board once we have technical confirmation.
Have a great evening and we will see you tomorrow
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