Message To Money On The Sidelines....

Discussion in 'Trading' started by stonedinvestor, Jun 10, 2008.


    Can we make a late run here? Sounds stupid COMMON IN THE WATER IS FINE!

    Strange day today.... we have bad breadth (NYSE adv/dec 1263 up 1820 down, Nasdaq 1287 to 1485) as of 1:45 or so.... and most every tech service I know of is pointing down.... YET we have a serious move in the bond down a full stick I believe.... and this is telling us something.... gold is down $27 where is all this money going to go... I'm betting the bond & gold money comes right into stocks which in turn forces in the money on the sidelines. I'm going Up here. Still A break of the 2 day trendlines could set up a VERY nasty last hour, so the market is very flux here with both sides eyeing each other and equally ready to pounce AND throw in the towel....

    I'll get a lot of criticism for not following my indicators 100% - there are negative divergences today- but there is also a turnaround tuesday a Cycle turn date of the 7th.... and history has shown that when you have huge outsized joblessness for whatever reason- stocks tend to do quite well. 30% sort of well. The Gov's control of these numbers is troubling and indeed the weekly job picture did not add up to such an employment spike.

    Did today's turn down start a little too soon. Pepe the short seller likes 2:00 but it seemed forced today, it wouldn't take much of a rally from here to panic some shorts and hopefully set into motion a sequence of good events.

    Anyway buying WAVE again. Some of you probably remember we made some money on this name and then lost some, well we are back in. There is a lot of neysayers with WAVE regarding the spectrums they have for sale.... for me it is embarrassing to admit I like the other part of the business! The chips in phones the spectrum sale will be icing on the cake and money to be spent in an M&A spree.... The bears cast a negative light on the real tech side of WAVE and I am just going off what I read... but it all looks good to me.

    I've got an strong inclination to buy ZOLT here. they are down today and have been down yet their business WIND is booming... This carbon play has an SEC investigation going on no worse than RMBS or any other this will get settled ZOLT will pay a fine... and the stk should shine... I've asked for review help on this name.

    Other stocks on my hot list- ISIS (again and again why don't I just buy it?) VSCI (too hot ) HOT (not hot enough but everyone on Fast Money liked it $2.75 higher. GEOY (been hawking for a while hasn't shown enough pep yet but a summer countdown to launch story and it's fans will tell you they are showing up now with a copyright in Google map searches... Glu Mobile is a really interesting small play it had decent earnings I thought and impressive non news driven action today... traded well over it's average volume by noon... If the market would steady here I will buy it.

    Renewed Chatter about UA being a take out... I don't usually buy into these stories but they would make a good fit with quite a few larger players I would think... just beginning to research.

    My favorite plays would be ZOLT I think based off a low volume pull in on the charts and a down name in a hot sector. And WAVE which is pushing strong now into the close.

    Ethanol is getting a bit of a re examine here - check out the Barron's story... based on replacement parts VSE is probably giving you the rest of the gov mandated business for free. Can you imagine adding less Ethanol to gas at this point? gas would go up even more. I have to firm up my research, the first Model T's ran on ethanol but I judging by the white smoke out my back my old Benz wagon does not like it at all. How dilutive can they go with the ethanol I wonder?- I think some race cars run on only Ethanol but I'm not sure. If we can just get all these animals to eat something else like gooseberrys and amp up the ethanol blend to 15% to 20% AND get ethanol's damn production price down.... a technology breakthrough here would save our bacon gas wise but can VSE deliver the goods? PEIX is another name in the Barrons article and there was a third but my wife cleaned up
    too much.

    Anyway walking the floor Bob Passani says where is the rally. 3:03 might it be about to arrive?

  2. Boy like waiting for the train that never comes.

    Interesting put action in JP Morgan Chase.
    Out-of-the-money put buying is hitting JP Morgan Chase.

    >Fresh buying interest was observed in deep out-of-the-money September puts at the 25 strike, bought on a volume of some 12,400 lots (nearly 4 times the open interest) at 43 cents per contract – implying a decline of more than one-third of JP Morgan Chase’s value!! The September contract coincides with JPM chase earnings on July 27.

    The papers have been saying jamie is out to buy someone else - maybe WM, a possibility that could account for some expectation of downward pressure on JP Morgan’s share price. But it’s the timing in concert with July quarterly earnings that makes you wonder if some traders aren’t looking for a larger-than-expected writedown to come out of JP Morgan this time around.

    Implied volatility at 48.5% shows option traders pricing in one-third more price risk to JP Morgan shares over the next 30 days – making put protection mucho expensive.

    JULY 27 I'm circling that date on the calendar that might relly be get up and leave day. & don't forget to have a nice summer.

    Got my first recon report of the beach by the way- Fire Island... the erosion is pretty bad in some areas and the rentals are down no one is boating much with the high price of gas.... it sounds pretty depressing. Even I had to cut back to just August this year.

    The Fast money crew looked pretty ashen up there tonight and the NASDAQ to save electricity can't run their ridiculously huge Times Square screen.... Times are tough. There is an air of everything is very bad... that is why we will rally very hard shortly. Goldman Sacks might kick off the financials for a head fake run... you saw buy interest today in the morning in beaten up WM and Wacyovia seems to have stabled up a bit... a name like BEN might prove good for a quick 15%-20% or some of the factor plays- CIT... hate to say it but we should probably begin drawing up a shortlist of financial names we can stomach. Then will JP Morgan reveal something terrible on July 27th and start this whole sickening spiral down again- this time with the bank failures we haven't seen yet....

    Fridays CPI were it to show downward pressure on inflation would really help. I think lousy teenagers scewered this last jobs report but the damage is done. Some poor lady called Kramer last night about Dryships should I sell I'm already down 20% and you like the sector. He told her to hold. Love the Dry Bulk space. Down $6 today. ~stoney
  3. Good read:)
  4. here's the barron's ideas regarding ethanol in case you missed it....

    Once-in-vogue ethanol stocks have taken a beating over the past year as investors went from wildly bullish to wildly bearish due to concerns about a production glut, and claims ethanol is a driving force behind rising food prices -- which could threaten its coveted government subsidies.

    But Barron's Andrew Bary thinks the ethanol rally will resume. "The stocks are depressed, the businesses are profitable and the companies generally trade below the replacement cost of their ethanol plants."

    Oil refiners get a $0.51/gallon credit when they blend ethanol with gasoline. Local ethanol producers are also helped by a $0.54/gallon tax on imported ethanol. The government mandates that 9B gallons of ethanol be used this year, 10.5B in 2009 and 15 billion by 2015. Critics say ethanol is an inefficient way to fuel automobiles, and that the industry would collapse without federal subsidies. They may be right, but with strong bipartisan support on Capitol Hill, that's unlikely to change. Then there's this: At current gasoline prices of $3.50+ per gallon, mixing in ethanol at $2.50 (or $2 after the subsidy) is making gas cheaper.

    While capacity will rise from 9B gallons to 13B in early 2009, there's not much on deck after that. A once-feared glut now looks unlikely as plans for new plants fell apart amid tumbling valuations for ethanol producers and the credit crunch.

    Shares of Verasun Energy (VSE), -61% this year, Aventine Renewable Energy (AVR) -59% and Pacific Ethanol (PEIX) -60% all trade at a discount to their book value.



    Recently, four times as many calls as puts are being scooped up by ethanol traders, yet another sign the market may be near a sig bottom. ~ si
  5. gobar


    Ahead of the Bell: Ethanol shares may fall further

    7 minutes ago

    (AP:NEW YORK) Shares of ethanol producers may open lower Wednesday, a day after the Department of Agriculture said the corn harvest will be low and the presumptive Republican presidential nominee called again for an end to ethanol subsidies.

    Taken together, the two factors could continue a share-price slide in the sector.

    Sen. John McCain, R-Ariz., said in an interview on CNBC that ethanol subsidies contribute to higher transportation and food costs, a long-held position now explicit on his campaign Web site.

    Also Tuesday, a Department of Agriculture report showed a 10 percent decline in expected corn supplies this season, to levels not seen since the 1995-96 season. The report also put yields down 3 percent from last month's figure and below the 1990-2007 trend. Corn is the main U.S. feedstock for ethanol.

    "These numbers reflect the difficult planting season and continued adverse weather across the Midwest," Soleil Securities Group analyst Ian Horowitz said in a client note commenting on the USDA's monthly "World Agricultural Supply and Demand Estimates" report.

    Beyond bad weather, booming worldwide demand to feed livestock and make ethanol, coupled with rocketing energy prices have lifted corn's price to nearly $7 a bushel from around $4 a year ago.

    Ethanol shares have fallen throughout this year. Shares of Pacific Ethanol Inc. dropped from $5.37 on March 13 to close Tuesday at $2.95. On Feb. 28, Aventine Renewable Energy Holdings Inc. closed at $7.05; on Tuesday it closed at $5. And since Feb. 1, Verasun Energy Corp. shares have tumbled 51 percent.
  6. Thanks Go interesting stuff. The corn decline of 10% is weird because of course ethanol does not use the type of corn we eat and this measure I am 93% sure measures THAT corn not the junk they mix into the Ethanol process. My take is my family is cutting back on Salmon as of yesterday for the rest of the summer and I'll add corn to the list for this summer until it get's really really yummy. As to the Republican angle. Let's not get into politics except to say geez I don't see anyway this isn't a landslide for the dems. Did you see that cowface Mcaine in his speech. That weird way he smiles. It's like a dried out lizzard. and then when he talks who's the idiot who told him to methodically turn to the three cameras? Boy did he look stupid, that pained gas fart smile and then the turn left say something, turn center soldier- smile turn right.

    Contrast that with the smooth debating style of Obamma and you have the recipe for a major blowout. Even the starchiest supporters of the Republicans I run into feel Mcaine is being offered up for the slaughter. Never liked in his own party, he has been pushed forward to take the mantle and be run over by the angry populist truck.

    lets watch these stks carefully today and see how they react. ~ stoney
  7. Finally the train and the trade has come.

    I have been feeling pretty stupid going long each day into the close only to be stopped out the next morning... our market was beginning to replicate Vietnam's where there is a 2% fall limit so each day the market opens down 2% and that's it until the next day's 2% fall....

    Today we get the added help of two big cashy M&A deals AND some great retail numbers considering and if we can just fudge the CPI tomorrow we will be off to the races before anyone figures anything out.

    BIG State Street upgrade today to CONVICTION LIST at Goldman no less, this is great because I totally agree and have been buying the name and also because it's puts a whole floor of some non speculative banking names... a Lehaman upgrade to not disgusting or neutral is also helping... there I'd like to see them just sell the firm to South Korea and let this Einhorn twist in the wind when it spikes $10 bucks.

    Some stocks you might look at today....
    A good financial

    .... This is a partial list unfortunately, CSR in China I am intreged by the enormous insider buying by the CEO, is he propping up the stock or does he know something? In general I'm not hopping at retail but it's not on the black plague list anymore, I'm more open to an Under Armor or Urban Outfitters now, maybe even a severely beaten down name like Cabellas...~ stoney
  8. Hey Gobar check this out-- remember REX stores? It was a pretty good retail stock back in the day... they are covertly going ethanol on us!!!

    From SeekingAlpha-

    REX Stores Corp. (RSC) is an interesting hybrid company. It operates a regional chain of electronic stores, but has been investing in the Ethanol business the last few years, and closing down a significant number of stores. RSC reported earnings on June 5 and held a conference call to discuss the results. Here are highlights from the first fiscal quarter ending 4/30/08:

    Financial Highlights

    Sales - $47.1 million.
    Net Income - $1.5 million.

    EPS - $0.13 per diluted share.
    $1.7 million of income from synthetic fuel limited partnership investments and equity in unconsolidated affiliates (tax credit program related to this has been discontinued).

    Retail Business

    SSS - decline of 0.3%.
    Store Count - 111 (39 owned and 72 leased)
    Another 10 owned stores are closed or sublet to others.

    Three distribution centers owned and on books at $12 million.

    Dayton, OH - 470,000 square feet.
    Pensacola,FL - 180,000 square feet.
    Cheyenne, WY - 45,000 square feet.

    We are cutting margins a little bit to keep our volume. We feel that during a slower economy, during tough times, it’s better to cut margins a little bit, trying to keep the volume steady....And we seem to be getting some benefit from these rebate checks. The economy of course is still very tough.

    REX also announced the launch of a strategic alternative review process of its retail segment. The Company expects to consider and evaluate a broad range of alternatives during this process, including opportunities to monetize its real estate portfolio.

    The real estate is worth significantly more than it’s on the books, and even retail without real estate due to the service policies and the fact that it’s profitable for this value.

    Ethanol Business

    Ethanol Investment Summary

    Levelland Hockley County Ethanol, LLC - $16.5 million capital investment.
    Patriot Renewable Fuels, LLC - $16.0 million.
    One Earth Energy, LLC - $50.8 million.
    Big River Resources, LLC-W. Burlington and LLC-Galva - $20.0 million.

    "Our belief in ethanol is that with oil prices where they are, that business, our feeling, has to turnaround. We are still making some money. Most or many in the ethanol field are not making money."


    Were closed stores leased or owned?

    "They were all leased properties that were on short-term leases."

    Breakdown of Debt?

    "REX (retail) has $13 million left of long-term debt, and the $32 million was for Levelland/Hockley."

    Capex in quarter?

    "For Levelland/Hockley, it was $5.5 million and One Earth was $23 million."

    Stock Buybacks?

    "Our history has always been when the stock sells below book value to look at doing some buyback."

    Political Backlash against Ethanol?

    "I don’t think that this country can afford to just shutdown basically a 15 million gallon a year business...if we didn’t have ethanol, the price per barrel of oil would even be higher and we’d have a worse balance at trade."

    Are distribution centers worth $40 million?

    "It is worth less than $40 million..but our opinion is it’s worth significantly more than book value ($12 million)."

    >> I find this fascinating on several levels, for one it's a real estate value vs stock price play and how many retail stocks qualify in that regard I wonder... AND this rather broadsighted move into Ethanol has gotten ZERO publicity up until now... it seems you can make money in this business after all! This is the big line-
    "Our belief in ethanol is that with oil prices where they are, that business, our feeling, has to turnaround. We are still making some money. Most or many in the ethanol field are not making money." It HAS to turn around. ~ stoney
  9. RSC, imo.

    Previously they made money on either oil or gas leases, I believe they expired hence the foray into ethanol. Shrewd on management part to invest in something other than their own business which is white goods and electronics (no money in it).

    I believe they started building their own stores on their own real estate about 10 years ago. Malls were dead or dying, rent is too high and zip for warehouse space. Their real estate is "near" mall location but usually a secondary location. Poor visibility, they were hoping to draw on the drive by mall traffic. The buidings are just plain old tear down cement block buildings. Real estate in there locations are a dime a dozen, value it as you want.

    A company in the business such as theirs has no delivery service, can't put reefers and big screens on top of the van, they subcontract it out, hit or miss whether you get customer satisfaction after the sale, which is the install and set up.

    The product they sell is what I may call "seconds or over runs or discontinued" I'm sure they buy these based on price, so it is tough for the consumer to compare.

    The employee sales model is to give the stuff away. Customer walks in, the clerks start throwing away the margin before the customer even asks a question. Example: customer looks at tv, clerk says, we can take x hundred dollars off. Booyah. No one even said hello. The whole place reeks of desparation.

    Lowes and HD selling white goods put the squeeze on RSC, WMT selling TV's took the other end of the business. The highly profitable electronics they carry? Guess what? They run out of stock.
  10. Wow nutmeg great info. This sounds like just the shopping experience I have been looking for. I remember them being more clothes but if Blue ray takes I'm going to need one of those players for sure.

    I've begun a stock screen for retail stores who's real estate is worth more than the stock price... meaning can I come up with a five pack where the retail business is free and hold for two years. It's an easy double and easier to tackle than the banks which people are pushing me towards....

    As I am on the lam I have to run back to my brook now and say my self protective mantras... yes life has gotten this bad. Nut I'd love your take on Cabellas.... ~ stoney
    #10     Jun 12, 2008