Im going to close my old journal and open up this new one. The old journal was getting too cumbersome and wasnt going anywhere to be honest. The usual journals which state positions and P&L are a little tedious and boring, at least for myself. As well, you never know if someone is telling you the truth anyway. Pictures of PNL sheets are easily manipulated. In this new one, you post up your swing trade idea BEFORE it takes place. Give us a little thesis and some detail. Maybe a chart or two. Make it short, but sweet. Please no profane or off-topic comments. Only civilized/educated/classy commentary, Im going to put asterisks around *classy*. Dont put someone down if their swing trade doesnt come true. Moderator, please remove all profane or off-topic comments. I want this journal to be useful to all and not turn into a flame session. Thank you. I will start off. CVS http://stockcharts.com/h-sc/ui?s=CVS&p=W&b=1&g=0&id=p45558971350 Not a buy right now, but towards the middle of December - start of January. The tech market is getting filled up like a balloon and itching for a good old fashioned pullback. Economy maybe on shaky ground next year. Whitehouse just downgraded the economy for next year. Start of 2007 will bring back fear and investors will flock to this safe haven stock. Wait for it to pull back under 25-26 which will probably happen by Dec/Jan. Look for the most ideal pricepoint and then wait for Feb/Mar. Sell over 30. If done right, over 20% gain during an economic slowdown in 1-3 months. I have a rough suspicion that it will pullback in Mar-April area and then May will be another time to go long. Too far out to make any detailed descriptions.
I agree with your take on CVS. As investor fears increase, stocks with proven track records of actual positive earnings will be in favor. Picking up some beaten up producers should make for some good returns over the next few months. For those same reasons, I am eyeing LoJack Corporation (LOJN) http://stockcharts.com/h-sc/ui?s=lojn&p=W&b=1&g=0&id=p45558971350 It should be very close or at the bottom and good for a 30 day return in the 10-20% range. They have a lot of good projects in the pipeline that should start bearing fruit. A few others on my list to watch are: MED, CPSI, WAG, APOL, RRST, NNI
In my personal opinion CVS looks like it will go down. Fundamentals are not to bright for retail for next year. If looking at TA side of CVS it almost looks like H&S pattern. I would stay away from that one. Happy Thanksgiving.
Lojack looks like a very good pick. My opinion is that it needs to get hammered right down to the 200 week moving average of about 13 dollars. Here are the most important statistics I believe: Average Volume (3 month)3: 191,859 Average Volume (10 day)3: 281,875 Shares Outstanding: 18.19M Float: 17.53M % Held by Insiders4: 3.79% % Held by Institutions4: 81.80% Shares Short (as of 10-Oct-06)3: 1.34M Short Ratio (as of 10-Oct-06)3: 11.2 Short % of Float (as of 10-Oct-06)3: 7.70% Shares Short (prior month)3: 1.47M Float is small and most of it is held by institutions. Low volume and a nice chunk of shares appear to be short. There will be a nice short covering rally and I know those guys are looking at the 50/200 week moving averages. They will probably start covering right around 14 dollars. I feel that it will receive its best pounding in December. December 15th will be the last day for the institutions to sell for tax reasons. December 27th or the last day of actual trading will be the last day for the rest of the shareholders. The float is so small that a nice bailout by even the retail shareholders will cause a nice little drop in the price. Downgrade by Matrix and the resignation of the CEO should keep people from buying this thing. Right when it hits that 200 week moving average. Its losing about a quarter a day. At the present rate, it should reach there right around December 5-10th. Timing the short covering rally will be difficult. When it does happen, then I believe the stock will rise not just from the short covering, but all those clowns with stock screeners or on Yahoo that will suddenly flock to the stock. This company has great financials. P/E: 15 ROE: 19, FPE: 13, P/S: 1.3, P/B: 2.68 Book value of 5.65 per share.
Pig farming was good the last year or so, but the problem ahead deals with ethanol. Ethanol uses lots of corn and the Democratic Congress plans on introducing legislation to up the blend to 85% in the coming future. Most of these pig farms have lots of debt from capital investment of many years ago during bad times. This particular outfit has nearly 2.7 billion in debt and about 89.5 million in free cash. A few recent articles on the internet suggest that pig farmers are not very confident of the future and are trying to cut expenses as much as possible due to decreasing margins caused by corn expenditures. http://stockcharts.com/h-sc/ui?s=SFD&p=W&b=6&g=0&id=p44612821742 I looked at the chart and the price is at the right place for a turnaround, right near the 200 week moving average. However, the key part of the chart is the dojis at the end and the lowered volume. The selloff was on very heavy volume and then the walkup from 26.12 to 26.99 was on much lighter volume. If you notice on the chart right around the February price point at 25.75, I see the island turnaround and then walkup on increasing volume. Thats what I would like to see and that would have made for a nice 2-3 month swing trade. If this swing trade were to go forward, then there is little possibility it would go higher then the 50 week moving average of 28. Right now its at 27 and you have little probability it would go much higher then 28. Also notice the 50 and the 200 week may cross 2-3 months from now which is a clear sell signal to myself. Im predicting it will consolidate at the current price point and then once the 50/200 week crosses, it will go lower.
BLUE NILE NILE http://stockcharts.com/h-sc/ui?s=NILE&p=W&b=1&g=0&id=p92527639428 This is the ultimate holiday short. Everyone knows it already as the float is 30% short. Average Volume (3 month)3: 167,989 Average Volume (10 day)3: 86,412.5 Shares Outstanding: 16.02M Float: 13.99M % Held by Insiders4: 29.14% % Held by Institutions4: 124.90% Shares Short (as of 10-Oct-06)3: 4.24M Short Ratio (as of 10-Oct-06)3: 25.3 Short % of Float (as of 10-Oct-06)3: 30.50% Shares Short (prior month)3: 4.32M Small float stock. I am betting that it has about 6 more dollars of downside. Cover before the next earnings call. Mark Vadon, CEO, doesnt like the stock to be too low so he has some surprises in store for us all. For example, at one point this year he had lowered guidance and then at the next conference call he had beat the guidance. I believe it was around August 1st and there was this massive short covering rally. There is a movie coming out on December 8th called "Blood Diamond". This movie should put a nice little knife into the diamond industry for a little while. If you went out to see that movie, would you be more or less ready to buy diamonds over the internet? Instead, you might want to buy it at a trusted namebrand retailer like Tiffanys. Several other companies are eating into Blue Niles profits, even Walmart. The P/E is simply too high, 51 times earning and 39 times forward earnings with a growth rate of -26%. Huh? I think it can be shorted right now and then covered in early January. Its important to cover in January as this is a small float, Valentines day is right around the corner after January which is a good time of year for diamonds and the shorts will cover their shares at some point. Im not sure if they will wait until the summer or cover in January. January MIGHT be a good time to go long and sell right before Valentines day. Still a little bit early to project that far forward.
ACME PACKET APKT http://finance.yahoo.com/q?s=APKT Average Volume (3 month)3: 1,155,340 Average Volume (10 day)3: 732,100 Shares Outstanding: 56.71M Float: N/A % Held by Insiders4: N/A % Held by Institutions4: N/A Shares Short (as of 10-Oct-06)3: 0 Short Ratio (as of 10-Oct-06)3: 0 Short % of Float (as of 10-Oct-06)3: N/A Shares Short (prior month)3: 0 Since this is an IPO, there is very little information to go on. It was bid up right before the conference call because many thought that they would hit it out of the park. Indeed, it was a great conference call except for one little technicality. It cost a lot of cash to bring the company public so next years revenues will be lower then the current year. That sent the shares tumbling from the 14s. In review of other message boards, there were indeed many who lost their shirt on this one. However, on a Mad Money lightning round last week Jim Cramer came out and openly recommended the stock stating that he would feature it on that weeks show. That sent the stock soaring into the 16s and getting as high as 17. It seemed to hold up well at the 15-16 price points for that week on the Cramer pump. Cantor Fitzgerald then came out with a "hold" recommendation but stated that they felt the one year price target should be 16. That analyst recommendation stabilized the price right around 16. This week, since Cramer had told a fib, the stock flexed down a little to the high 15s. Then on Monday and Tuesday, there appeared to be some nice volume and then what appeared to be a few block buys. The price started to flex up a little toward the end of day Tuesday as if something was going to happen. Then on Weds morning, Goldman Sachs did something interesting. They came out with a "neutral" rating and stated the one year price target is 21 dollars. Suddenly, the price started to gravate higher and gained 1.20 in one day. On November 30th, Acme will present at the Credit Suisse Technology conference. The key here is to listen to the live webcast of the conference and note what happens to the price of the shares over the coming days. If Acme does well at the confrence, then the price will go higher. If Acme fails to do well, then the stock will probably recede back down to the 16 dollar price point. You have to look at what the price does the next day or two after the conference because you may think they did well, but someone else might think they did poorly. I would look for block trades to see if someone is taking a position. The Goldman Sachs news release was bogus. I believe they (or one of their buddies) took a position before they released the news as evidenced by the mysterious block trades from no apparent news. They then released this bogus analyst statement stating a "neutral" rating but with a fat price target. If anyone comes back to them to accuse them of wrongdoing, then they can always say that their rating was "neutral". I tend to believe more in Cantor Fitzgerald to give me an honest answer then Goldman. You might want to get in before the conference. The price will be bid up on expectations of a good conference. I believe Goldman will have representatives at the conference or will watch it live by webcast. If the webcast doesnt go well, then Goldman will quickly dump the shares and might even short the stock. If the webcast does go well, then Goldman will simply hold onto the shares as part of a longer term strategy. This is a highly risky trade and very theorhetical. There is no historical data to go by or technical charts that we can easily reference. Its more of a gamble, then a trade. I honestly would get in if there was a pullback tommorrow during the shortened trading day. I would like it to pullback towards 16. However, if something were to go wrong, I believe the long term growth is there and that it wouldnt be unreasonable to buy/hold the shares for over a year. I believe as they get more into 2007, then investors will start to look forward to 2008 when the cost of going public will have been paid for and revenues increase.
Last one for the night, Im on a roll. CATERPILLAR http://stockcharts.com/h-sc/ui?s=CAT&p=W&b=6&g=0&id=p01517379561 This is a 6 month long term swing type trade with the thesis that Caterpillar will return to pre-May levels of $81. Caterpillar is an incredible company and arguably the best run company in the entire world. Everything appears right on the balance sheets. However, growth was the question back in May and had bugged the company up until November 22nd. On November 22nd, the company used the "C" word, China. http://money.cnn.com/2006/11/22/news/international/caterpillar.reut/index.htm In the coming weeks, I believe the company will continue to issue press releases about its overseas operations and attempt to turn attention away from the domestic issues, i.e. housing market. The shares of Caterpillar are an excellent buy at the current price and if the company is aggressive enough with the press releases and interviews in regards to China, we should see the price return to the 80 dollar point set back in May. As the price rises above the 50 week moving average, then it will start getting pumped by the financial press once again. Since this has a sizable float, I believe it will take some time to turn this ship around. It will be a good 6 month swing with the upside of 30%. I see little downside to the stock at this point especially when the company starts pumping the fact about its China operations. The P/E sits compressed at around 12 right now. We could easily see that jump to 15-16 area or just about at the average for the overall market on the assumption of asia growth. I see the potential of 30% upside in 6 months to be an acceptable, although uninspiring, upside.