Even in the bear market trading enviornment that we are in, there are still a few buying opportunities outside of the short biased ETFs. Wyatt Worldwide (WW) is an example of one such stock that has good earnings, good technicals, plus it gave us an intraday setup to take advantage of, allowing for early entry. This is a trade I gave in Toni's room today (she had to go get her mom at the Airport, so I agree'd to substitute teach) Brandon
JB Hunt is one of the leading stocks in the trucking group. Over the last several weeks Transports, including Rails and Truckers, have been trying to carve out a bottom in the market and move higher. JBHT has been one of the leaders. As you can see on the chart it has a large gap up that occured on Jan 30th that has yet to fill. This is a sign of strength, as most gaps will fill. Instead of filling though JBHT has stayed in a narrowly defined range with in the range of the gap day. As I said, this is often the sign of a very strong stock. This can hold especially true in an uncertain market such as we are seeeing right now. Fundamentally JBHT is not the best stock out there to be sure, and this will limit my exposure to about 1/3 of my normal size (which is already reduced due to the market market phase we are in). I'll continue to watch the intraday timeframe on JBHT and see if it offers a breakout setup. These are ideal because it lets you get into a swingtrade/position trade type setup, while only taking on the risk of a daytrade. This allows you to increase size, but keep your risk relatively the same. If you have any questions or comments on any of the posts or the blog in general please feel free to ask.
I had planned to keep this journal and my blog active every day, and will still do my best to do so. As many on here known I have been having health problems the last year or so, and earlier this week as I was taking a shower I noticed a large lump under my nipple, I had gone and had the Mamagram (which is definatly NOT a man friendly thing to have happen, esp if your skinny like me and dont have any man boobs) and an ultrasound. I will be having surgery on Friday to remove it and see how things go from there. Brandon
Markets were strong across the board on Wednesday after news that Warren Buffet might be riding in on a white horse to save some insurance companies. January retail sales came in at a dismal +0.3%, but it was enough to cheer up traders who had been expecting a fall of about that much after December's drop of 0.4%. The markets also showed pleasure with Washington finally passing the bill should stimulate China's economy when American's go hold wild with their $600 checks that the Government will take out a loan from China to give them. These consumers will then likely go to Walmart or some other type store to buy goods made in China. Score China +1! The Federal Reserves Head Idiot at the helm is set to testify before the Senate Banking committee today. Several of the Regional Fed Heads have been openly talking about the risks of recession being high. Fed Fund futures are currently showing a 50% chance of another drop in Fed lending rates in March. Selfishly, I wish they would just stick to baseball â at least then they can not be tinkering with something they know nothing about and screwing me, you, my children, yours and several generations of American's to come. Of course we should not worry about the very real infection that has taken hold of our minds and economies, Obama is hope monger and makes us all feel warm and fuzzy inside! The Dow Jones Industrials closed up 178.83 points to close at 12,552.24, while the more broadly based S&P500 closed up 18.35 points and closed at 1367.21. The Nasdaq recorded the best gains, adding 53.89 points, for a total gain of 2.32%. It closed at 2373.93. Small cap stocks also fared pretty well with the Small-Cap S&P600 rising 2.05%, closing the day at 380.17. Investors Business Daily is calling yesterdays action a follow through day because Nasdaq Volume rose about 1% compared to Tuesday's levels. My own personal stance is going to remain very cautionary, mostly in cash. The 1% in Nasdaq Volume seems rather meaningless to me, and NYSE volume actually pulled in around 7%. In addition to that, my own scanning reveals very few stocks that are coming out of a sound bases to provide the leadership for a new leg up. Several stocks are coming off bottoming type patterns, but this very rarely fuels sustained upside moves. A few stocks are showing good patterns, among them Watson Wyatt Worldwide (NYSE:WW) which started its sharp move a week ago and has continued to add on gains since then. Several Latin American Issues have also been strong, examples include ECH (Chile Holder) and Mexican Coca-Cola bottler Femsa (NYSE: KOF). Strength in Latin America is actually a theme I trust more than strength and growth here in the United States. Record numbers of migrants, both legal and illegal, are going back home to Mexico because there simply are no longer jobs outside of Agriculture for them in the United States at this time. Mexico experienced a net gain of 25% in foreign investments last year, and FOR THE FIRST TIME IN HISTORY experienced lower inflation than we did in the United States. Other parts of Latin America are seeing similarly positive situations develop for astute investors to take advantage of. New Market Corporation (NYSE: NEU) has broken out of a decent base on good volume, low volume pullbacks should provide a buying opportunity of the market also cooperates, the same thing also applies to Femsa (NYSE: KOF) and Wyatt Worldwide (NYSE: WW). New names to watch would include BKE on a breakout, SLH on a breakout and UDRL on a low volume pullback should the market to the same. The homebuilders continue to have strong patterns that should offer buying opportunities in the future. On a more personal note I'm going to try to keep this blog/thread active on a daily basis. I'm trying to figure out how to make a podcast, and if I do figure that out we will have 15 to 20 minute daily podcasts on the market. Over the next several weeks though my writing may be erratic since I am tomorrow as I am schedualed for a Mastectomy tomorrow, having found a lump in my right breast. The good news is that this is has been found very early, and at this point they have said the Mastectomy will have better than a 90% chance of preventing any mastization of the disease. I'm set to have the surgery in a small local hospital, which I'm more nervous about than anything else I guess, so If I do end up not having it Friday it would only because I have decided to go to Iowa City and have it treated there rather than have it treated here. I mention this not so that anyone can worry, the doctors have all given me pretty good assurance that the Mastectomy will remove the tumor and prevent it from spreading. I should be able to avoid radiation treatments and chemo as well, but to explain in advance that I may not have something to say every day, or as often per day, as I have wanted to with the relaunch of my blog and money management business. If you would like to contact me I can be reached at bfredrickson76@gmail.com Disclosure: Long Femsa (KOF), ECH (Chilean ECN as part of my theory on Latin American Growth) and Wyatt Worldwide (WW) I no longer have short positions and am still just over 80% in cash. Should the market show me better signs of strength I will have no problem bringing that number up, but with the Political Economy such as it is I do not really except much real strength to show up anytime soon.
Hi BF: Sorry to hear about your troubles, I know you have documented them in the past. Keep up the good work and hope your operation goes well! Cheers, -empee
Thanks empee. I think that I'm lucky that we caught things early. I no longer have a nipple on the right side, and if I was a woman I'd probably be even more self consious about losing my breast, but I think we got really lucky. I'm pretty sore and tired, and they want to do one round of chemotheropy to be on the safe side, but that should be it.
Everyone knows that in the long run stocks always go up. Our brokers and the smart people on TV have fancy graphs they show us that prove that over the long term, stocks only go up. They tell us that yes, from time to time there will be this nasty thing called a bear market, but if you just hold on in the "long run" You'll be just fine. Well, in real terms that long run is an awfully long time. What brokers like to show you is the nominal value on the S&P500 or the Dow. What none of them would be willing to show you is the inflation adjusted chart, because if they did no one would believe in buy and hold investing. The chart I have posted here shows the Inflation Adjusted price of the S*P500 from 1967 until 1996. You will notice that after the peak in 1969 it was 23 years (1992) until the buy and hold faithful got back to breakeven. After the 1969 peak real gains did not exceed that of T-Bills until 1996. A part of the graph I do not have here is the peak in 1929. After that peak it was 37 years in inflation adjusted terms until a long term investor got back to breakeven. In more recent times Nasdaq investors are still nowhere near breakeven even in nominal terms, let alone inflation adjusted terms, since the peak in March of 2000. What I don't want this article to make you think is that its hopeless to try to make money over the long term in the stock market. Myself and many other traders and investors are living proof that this is not true. However, you should always be concerned about your downside. The very best trader is not the one with the best return, but with the best risk adjusted return. You also need to be open to other asset classes, not just stocks.
Tuesday was the first day of US Trading this week due to the Presidents Day holiday. The American markets started off on a good footing, with the Nasdasq up as much as 1.3% early on, but as has often been the case recently investor fears crept in, and by the end of the day all major markets closed with losses, the Dow Industrials lost about 11 points after earlier 100 point plus gains, and closed at 12,337.22. The Nasdaq closed at 2306.20, down 0.7% after the early gains. Volume was off slightly on both exchanges from Fridays levels. I believe that the weak follow through day we experienced recently can safely be discounted at this point. We continue to trade in a mode that is classic of bear markets, and recent activities and reports do not offer a whole lot of hope going forward. The recent H3 report by the Fed shows just how badly the situation has gotten for American Banks and Financial Institutions, and in aggregate our banks have now gone through their own capital and are forced to borrow reserves from the Fed in order to keep lending. The H3 report is available at http://www.federalreserve.gov/releases/h3/Current/. This is not something that is going to be easily fixed, and I would expect to see continued unease in the credit markets. Things have gotten so bad that the Port Authority of New York recently could not get buyers for its bond issue until its rates hit 20%, six months ago it probably would have had to pay less than 6% on the same note. The same thing is happening to companies, municipalities and government agencies across the board. Not only is the level of fear high, there is simply no money to put to work even if they wanted to. We have gone from what was initially a liquidity crisis, and quickly see a very real solvency issue arising. Energy and Food inflation continue to be major themes in American and Global markets. The very best sectors have been those related to Agriculture business and mining, with ETFs such as DBA, JJG (grains), USO (Oil), and SLV and GLD (silver and gold) putting in strong performances recently. At this point in time there is not much of an edge to be found with heavy commitment to US equities. I continue to maintain a mostly cash position and do not see that changing any time soon. As the election cycle heats up those running for President have a lot of incentive to talk about how âbadâ things are for the âaverage Americanâ. In our consumer based economy this can only make things worse, and with the likely winner Obama's solution being more government, bigger government and higher taxes investor fears are not likely to be eased. We continue to see the effects of Globalization, which is a force that I don't think can be turned back. Last note, I realize this is not the best and most put together article I have ever written, but I'm still recovering from some rather bad personal news and it's likely to take me a few days to adjust.
Wednesday was essentially the mirror image of what we had on Tuesday, markets gapped lower across the board on worries of inflation, highlighted by the oil closing above $100 and various other commodities breaking to new all time highs. By the end of the day though, the market had shrugged off the bad news and moved higher. The Dow closed up 90 points to 12,427.26, while the Nasdaq gained about 21 points, closing at 2327.10. Volume was higher on both exchanges, particularly so on the Nasdaq, where it surged 18% from the prior days level. Advancing issues led declining ones by 21 to 13 on the Big Board, while they led 17 to 13 on the Nasdaq. Given the higher volume totals on the exchanges, and particularly the fact that the market rallied inspite strongly off its lows in spite of bad news traders could take this as a positive sign and start looking for leadership issues to get involved with. They are pretty easy to find and summed by this way: Commodities, Commodities, Commodities! I myself am watching Natural Gas (ETF: UNG) for a pullback to offfer a small buying opportunity. For the most part, however, I've been very cautious thus far in 2008 and will remain so. At this point I am 90% in cash, but willing to put some of it to work if the right opportunity presents itself. This type of market can be very frustrating for traders and investors, back and forth, back and forth. Up one day and then down equally the next, then up slightly the next etc, etc and on it goes. This type of whipsawing action can quickly take capital if you do not have sound money and risk management principles in place. (I will put up an article on risk and money management this weekend, If I can figure out how to do a podcast I will also do that). As difficult as this type of market can be, I really love it because it is during these harder times that a good trader/manager is able to shine. During a bull market anyone can and generally does make decent money, but during times like this I am able to show my clients exactly why they have trusted me with their money. Nothing fancy, just good old capital preservation, and when the good setups come available again we are there for them without the lost capital and confidence that many suffer. I'm not going to give any setups today as I will not be able to follow them. I have a doctors apointment at the University of Iowa at 3, which means I will have to leave here around 11. I suspect that the appointment will take all day, so I'm probably just going to stay overnight with friends in Iowa City, which is where I went to college. I will likely be back late morning or early afternoon tomorrow. If you have any questions or comments feel free to email me @ bfredrickson76@gmail.com