The McCain Oscillator*

Discussion in 'Trading' started by stonedinvestor, Nov 4, 2008.

  1. PCR UP 50 CENTS ALREADY!!!!

    Here is the trick. You start the day with all your crappola notes on folded paper and tissue fragments and matchbook covers and you run your daily scans and you look for minute divergences... So today this morn we had PCR down with the market and then as the market was at am early low the stk crawled back to even.... interesting, a stk that moves back up in the face of a sell off in which 431 of 500 S&P stocks at the time were on the decline... well that bore further action. Now we are pressing a new low DOW down 170 and the Perini has moved up 3% since our purchase! Hummmmmmm. If it looks like real buying and it smells like real buying, it's probably real buying... I wonder if it's a few of you high octane Elite Traders who have done this?~ si

    PS- Hint #2. Dow down 1.7%. Nazdog down 1.9%
    ISIS flat. The stocks can talk people you have to be willing to listen, even on down days.
     
    #11     Nov 5, 2008
  2. OpCo today on Wellpoint.


    SUMMARY
    WellPoint is seeing evidence of price strengthening across geographies by its competitors, even in California. This is now occurring particularly in the
    individual and small group markets. Price strengthening combined with stable cost trends in 2009 would open the door to commercial margin expansion.

    KEY POINTS

    * There appears to be support mounting among investors for the company to begin paying a substantial dividend, although the company's posture toward dividends does not appear to have changed. By year-end, the company should have $1.3 billion in cash at the parent available for capital deployment and we'd like to see the company continue to buy back stock at current depressed

    * The company believes that industry consolidation will become a larger part of the managed care story in the coming year. On the third quarter
    conference call, CEO Angela Braly stated that the firm is operationally ready to acquire and integrate a sizable company, meaning that acquisitions of any size are on the table.

    * As we have heard several times at our conference, WellPoint views the Medicaid market as a potential growth engine going forward, specifically the
    long-term care and aged, blind and disabled populations that make up 70% of the costs.
     
    #12     Nov 5, 2008
  3. It's A New Day!

    Good morning stock champions. Nothing like a light volume 2 day pullback to get you back in the game but what to buy? That is always the question. Today's lesson will be on not listening to the press or Wall street analysts.

    If you look at today's NY Times you will see a plaintive retail story repeating the same mantra we have heard on Fast Money and with Dana Delaney or whatever the heck her name is- the retail analyst... That WallMart is the only retail stock who will make money this Christmas. What a load of hogwash. Then look today at Market Watch the headlines scream about weak retail numbers, this is the stroy they want to tell, they have already decided (1) worst Christmas ever (2) only folks scrimping and saving and crawiling into their WallMart will drop any cash... facts play very little roll in this drumbeat of retail negativity.

    Now I should tell you I come from a retail backround I owned with my wife a clothing store in Lower NYC for ten years so perhaps I have a better angle on trends and possible sales gains than the average dope writing for the Times.

    Lets get to the facts- I have favored URBAN OUTFITTERS. I have written about URBN here on ET recently and have a high regard for the company. They reported why have you not heard about the numbers? Well they don't fit in the doomsday scenario the press & Wall Street brokerages wants you to swallow right now.

    URBN SALES UP 26%! Try getting that in tech you stupid stupid analysts. Same Store sales a very tough metrric- one in which the beloved wallmart tossed in a 1% gain... well at URBN they are UP 10%!!!!!! What a joke, they will catch a downgrade or two today I'm sure by these analysts who simply must keep pushing their thesis to short retail.

    RALPH LAUREN an investing and Hedge Fund Favorite, how did they do? Well remember those screaming headlines about retail's demise this morning??? RL BEATS BY 33 MF'ing CENTS!! Year over year growth is 10%!!!!!

    Hummmm. Let's look at teen retailer Aeropostal... ARO s same store were not great an increased 1% for the month, compared to a same store sales increase of 3% in the year ago period. However for the third quarter of fiscal 2008 total net sales have increased 17% to $482.0 million, from $412.6 million in the year ago period. For the third quarter same store sales increased 7%, compared to a same store sales increase of 2% last year. WTF! I thought all retail was in the soup???

    Year to date total net sales have increased 20% to $1.195 billion, from $999.6 million in the year ago period. Year to date same store sales increased 9%, compared to essentially flat same store sales last year. WTF... It would seem same store sales has accelerated considerably for two months and then slowed down recently in the face of the global meltdown.

    The Company also raised its earnings guidance for the third quarter today. Based on the better than expected results for the month, the Company now expects third quarter earnings in the range of $0.61 to $0.62 per diluted share, versus its previously issued guidance of $0.59 to $0.61 per share. The revised guidance compares to earnings of $0.48 per share last year, representing an increase of approximately 27% to 29%......

    Ok three retailers. Three sets of powerful results that fly in the face of everything you have read. That's a stonedinvesting opportunity folks, go retail shopping today.

    That's my concentration this morning along with Gas play XTO. They reported yesterday not a great number but decent. I like to watch stks that sell off and then come on after the CEO has his conference. XTO did just that yesterday even in the face of a cascading down market XTO dipped to $35 and closed near $37. That's powerful out performance and thus received a Goldman Sachs upgrade this morning. Put XTO on your short list today along with the above retail names. ~ stoney
     
    #13     Nov 6, 2008
  4. Well, as is my way, I easily get sidetracked into a different name and for a while this morning it was Titanium Metals, but as the morning has dragged on I keep going back to dangerous MEDIFAST. Folks, you just can't argue with those numbers and raised guidance! PE of 18 with a forward PE of 10.... I have to think about this more today.

    Boy all the idiots came out on TV today talking about retesting the bottom. I really don't respect anyone any more Phil Roth god bless him I don't know where he wound up he'd probably be a goo listen now. These idiots from the trading floor they just don't have a clue. This is classic set up for more upside we had to get the VIX back up which we talked about in the above part of this thread, we did that the McCane Oscillators have reversed a bit.

    We haved this tug of war now until NOV 15... yesterdays little bitch climax was some trigger happy Hedgies getting out, anticipating their redemption requests. The Plunge Protection Team is now out of the market so we are on our own... but with many players on the sidelines until new money comes to them at the start of the new year we should be able to make some hay in a small investor way... Friday's job number is being anticipated like the arrival of the plague - there just is no doubt this will be the worst number ever... My market sense tells me to go against the grain whenever possible and so i am angling for a recovery later today & a huge up Friday and after some back and fill and probes slightly higher a nice breakout from mid November to Thanksgiving time. After that it will pay to be in winners if you can find them, tax loss selling should be brutal.

    I continue to hone in my research on WLP WELLPOINT, it qualifies on almost every metric and they will be a a winner in the new rules on medicaid medicare which is quite complicated stuff... I'll flush this out more to you all before we buy.

    I continue to really like the biotech ISIS, so at some point here something has to pop and be rolled into ISIS... If I could wrap up with WLP & ISIS I would be happy... but I've got to watch these retail plays, in tech the only good news lately it seems has been in RIMM & FFIV so RIMM especially might be worth a look here $3 pullback from a high yesterday, I didn't check yet this morning... SLV The silver Index fund, I haven't liked the way it's traded lately but my aim has been to saddle my wife's IRA with Silver at some point.

    Not sure why Cisco is the only eyes view of the weak OCT aren't all these lousy forward guidance from various companies doing the same thing?? Investors are never clued in; it seems we have come to terms with the fact that we are in an extended recession and then we act all surprised when CISCO says the same thing. Everyone is hiking their jobs number tomorrow. The world is ending. The world is ending. Except LIBOR is falling, banks are lending and and an early Lawrence Summers announcement from Obama is coming.~ stoney
     
    #14     Nov 6, 2008
  5. The next 30 days or so will be critical to shares of Research in Motion (RIMM), with its new Storm smartphone being the key driver, says Citigroup analyst Jim Suva, pointing out the hazards of any potential delays to its launch.

    “Simply put, we think RIM needs a timely and successful launch of the Storm in time for the holidays,” Mr. Suva said in a note to clients. The Storm, RIM’s first touchscreen smartphone, is initially to be marked through Verizon (VZ) Wireless.

    Mr. Suva’s note also points that RIM’s other new smartphone – the “much-anticipated, long-delayed” Bold - is finally available through AT&T (T), RIM’s largest carrier partner in the U.S. It was launched on Tuesday. “Checks at AT&T stores show strong initial demand with many stores having sold out before noon,” he says, reflecting pent-up demand thanks to launch delays and replacement sales rather than new subscriptions.

    As well, in his view, the enterprise/business focus of the Bold is likely to limit its mass appeal, and that RIM recognizes “its ambitions are in the consumer space,” a niche which the Storm smartphone and the clamshell Kickstart is meant to fill.

    If the Storm model “only reaches Verizon/Vodaphone in late November, we believe that results will be mixed.”

    >> not my type of stock, I shy away from the crowd but I'm digging around a bit here on RIMM today... don't know why....so few tech stocks have a christmas story this year that if management could pull this off it would be the only stroy in the news... these phones didn't work very well in Europe, we are to believe they have fixed the problems... a trendy stock those can hurt ya but nice 2 year support in this $48 range! lol but it's there at least.... ~stoney
     
    #15     Nov 6, 2008
  6. After 6 up-days in a row & coming 20% off the lows, put in on 10/10/08, (a classic Bull Market within a Bear phase) the market was extremely overbought as evidenced by the McCain Oscillator posting an all-time high overbought number and a major Sell Signal of a plus 320.

    Yesterday's McCain Oscillator, posted a still very overbought plus 197 after Tuesday's all time high and hugely overbought plus 320. But it's pulled in that's what counts enabling us to rally more I hope. There can be no doubt extreme highs or lows in the McClellan, above or below 250 to 300 are considered BUY or SELL spikes.

    With some VIX interpretation and all time panic reads this all looks ok to me I hope I'm not on the wrong side of the fence here but I expect the VIX to settle in at an elevated 40 and us to begin to flat line for a very long time after Turkey day...

    Wells fargo's news was weird and best left as something not to concentrate on because it could freak you out. So I'm not. As far as I'm concerned it never happened... got to feel AIG bad news is right around the corner too, they have probably just about burned through their loan.

    Well I've done a whole lot of nothing so far, so I think I will take a bubble bath. Such is the lone upside of working from home. That and the smoking privileges. ~ stoney
     
    #16     Nov 6, 2008
  7. darn I just found the bull case for GREATBATCH that I was trying myself to make. SeekingAlpha ran this Nov 4th. Whoops too late I sold. I'm having some sellers remorse here.

    Up $3.50 cents in yesterdays market how could you not take it i was panicked to book a large gain... but no retrace or sell off. steady as a rock again today, GB may have been a sell mistake!~si

    Description

    Greatbatch (GB) is a designer and manufacturer of custom parts and technologies for implantable devices and within the commercial battery industry (mostly for oil and gas applications). This is specialty power. GB's legacy emerges from a private battery company that transformed itself to a public company in 2000 providing implantable batteries for cardiac medical devices.

    Relevant History and Strategic Course

    Current CEO Thomas Hook, elected in 2004, drastically rationalized the manufacturing facilities at GB. He consolidated 16 facilities into just 4. Sales and profitability grew dramatically.

    However, GB had an enormous concentration of customers - by 2005, Boston Scientific (BSX), Medtronic (MDT) and St Jude Medical (STJ) accounted for 70% sales. By 2007, these customers still provided 67% of sales and as implantables for these customers (pacemakers, ICDs) slowed, so did GB's revenues.

    In mid-2007, GB made a dramatic strategic shift, buying seven very small companies to enable GB to enter into new markets such as neuro-stimulation, orthopedics and vascular markets. Post acquisitions CRM now accounts for 50% of revenue. GB is transitioning from being a manufacturer of parts to providing sub-assemblies and full assemblies in important new markets such as neuro-stimulation and orthopedics. This will offer a 2x revenue opportunity.

    Focus in 2008

    As a result of the acquisitions, GB was left with 29 manufacturing locations. The goal in the next three years is to lower that to nine. This would mean a 250bp increase each year from efficiency on the consolidations alone. GB, at its low, had an operating margin of 10%, which should expand to 17.5% if the efficiencies can be sustained.

    Growth and Defendability

    The greatest growth opportunity for GB is in neuro-stimulation. Management has expressed a desire that it become a $100m business in two to three years. This is due to the fact that it is an open nascent field and GB has been asked by smaller companies to make the assemblies for them. This represents a tremendous shift in which GB is not limited to the leads or sub-assembly but can provide the whole design.

    For 2008, management has given midpoint guidance of $510m in revenue and EPS of $1.20 to $1.50. It is divided into:

    $250m in CRM and Neuro (growing at 5%)
    $75m in commercial (growing 7%)
    $75m therapy delivery i.e. vascular (growing 12%+)
    $110m orthopedics (growing at 10%)

    In Q2 2008, GB delivered an earnings surprise via a $15m beat on the top-line (see conference call transcript). Most of this was in the orthopedic unit via some low hanging fruit and the ability to get products moving much quicker than expected.

    Longer Term Model

    Gross margins for GB have typically been low to mid 40%. In 2005/6, they declined to mid 30% and rebounded in 2007 to 40% as facilities were automated. Many of the 2007 acquisitions are low gross margin businesses based on small volumes. This is the challenge for GB - building up these new businesses and harnessing the talent and design at these acquisition sites.

    There is tremendous leverage in the model and any incremental good news affecting the growth rate in the CRM segment, which has been riddled with recall and medical problems outside of GB's control, would be hugely positive.

    Assuming a top line growth rate of 10% in 2009 and 14% in 2010 would place revenue at $655m. Delivering on the promised expansion of operating margin as a function of efficiencies would mean a 14% operating margin. This would deliver an operating income of 92m or an EPS of $2.42.

    Typically, small cap medical device companies trade at 24x EPS. Applying a 20x multiple to GB would give a price of $48.

    Debt

    As of Q2 2008, GB had debt of $358m. Interest Expense for the quarter was $4m. They generated 24m in cash flow from operations.

    $241 of the debt is the function of two convertible notes at 2.25% per annum due in 2013 and convertible at $40.29. The other $115m is a line of credit underpinned by GB's non-realty assets.

    Risks

    Acquisitions were too expensive or not integrated well. Cost cutting is not linear so quarters may slip.
    Continued sluggishness in the CRM market. In Q2 2008, sales in this category declined 2% due to a recall of leads on Medtronics' Fidelis product.
    GB has historically been a highly acquisitive company, but bouts of acquisitions tend to be followed by periods of integration. GB has stated no further acquisitions for 2009.
    Valuation Metrics

    Stock Price: 21
    Shares O/S: 24m
    Mkt Cap: 500m
    Cash: 20m
    Debt: 358m
    Enterprise Value: 818

    EPS 2008: $1.20
    EPS 2009E: $1.90 (11x)

    Sales 2008: 520
    Sales 2009E: 580

    Disclosure: Author holds a long position in GB
     
    #17     Nov 6, 2008
  8. 3:33 back in the chair.

    Greatbatch refuses to go down it's up another 2% in the face of this market, it must be the only stock up today. Amazing. What a great call. Why did I sell?

    Just re bought ReneSola SOL in my wife's IRA... I like this name in the solar space best now.

    Not much else looking good except our watch list-

    Wellpoint flat

    ISIS flat

    I'd like to step up and buy URBN here @$18.40 I'm having trouble finding the guts.

    Reading through Molson Coors earnings from a few days ago very impressive. TAP

    What really happened today? The guy from Intel said it's going to be the worst recession in his lifetime. What has the market been saying for months now? Certainly the time for surprise is over. ~ stoney
     
    #18     Nov 6, 2008
  9. I AM SO SCARED RIGHT NOW.

    Boy it took guts to go long the market at the close yesterday- I almost felt foolish. Every single person has said terrible jobs report. Stocks will go down again.

    I am going to go out on a limb here and this prediction is based on absolutely no fact or research- I believe the number will not be that bad. I'm hearing 250,000- 300,000 jobs lost a lot I'm at 90,000. Nothing to be proud of but kindling for a large rally.

    I had a dream last night that economy created exactly 3 new jobs. Wouldn't that look funny on the screen?
    Soon I too will be out looking for a job if these 1000 pt, 10% low volume back n' fills become the norm. The buyers and sellers in the market are creating the same wild swings they were at DOW 14,000, but the percentages down here are crippling, will someone just tell them it's a done deal- 10,000 by Thanksgiving!

    Well there I sit. Exposed. No sleep since 2:00 in the morning, one ear closed with gooey mucus long the market & with an earnings play (PCR) in the same sector a competitor crashed and burned yesterday down 30%. I'm truly shit*ing. The coffee helps in that regard. Anybody with me on this big rally, follow through today? I feel so alone. I can't even watch the TV for the number or the earnings please don't tell me either. I prefer to stick my head in the sand and pretend the world will continue, my dividends will return and I can continue to sit at my kitchen table and make money in my underwear.

    Mid day Lawrence Summers announcement from Obama should tilt the McCain Oscillators I hope.

    Fingers Crossed ~ stoney
     
    #19     Nov 7, 2008
  10. Off to a bad start with Perini. They did lower guidance significantly for 2009. I could be toast here. Lowered sales guidance by a smooth $1 billion, I guess we really are in a depression like recession.... painful to read.... although all the current year stuff is good, will beat on sales
    $5.6B to $5.8B vs. consensus of $5.54B. and this qtr's rev they matched consensus of $1.41B.

    Oh this has the makings to be a very bad day for the stonedinvestor. The phrase went to the well one time too many comes to mind... Oh man.

    Say a little prayer....... ~stoney
     
    #20     Nov 7, 2008