Even after this run-up I see some very bullish signals setting up in the price action recently.

Fundamentally, the bullish case also remains as Ben Bernanke and the FED has pledged to keep rates low for some time and also because they have embarked on QE 2. I think it is very likely we will see QE 3,4,5 etc. eventually. Especially considering Japan is still back at a zero interest rate policy and doing even more QE here now 20 years later. There's also a lot of stories going around on JP Morgan's possible short covering going on and just how big some of these traders positions are. Whether or not there is a massive short squeeze taking place or about to take place I'm not sure but it certainly would just add to the bullish case.

Silver Chart Analysis
















There was a much larger consolidation from May through August that came before the big run we've experienced recently. This recent one is a lot smaller and tighter. Old resistance has been retested successfully where the arrow points. There was major resistance at those levels. Another bullish thing is there has been a flurry of hammer and small doji candles here around trend support. In the past months there would be hammers off trend support right before big runs.

Some potentially bearish technical things about the chart are that trend support was broken. Silver was trending very well for months but that cracked. After such a run though trend support widens so this isn't a hugely bearish signal. It is more of a neutral one at this point.

In final, if silver can push up a bit from here and hit 29.57 I see significant upside. If it fails to follow through I'll switch and be short biased.

Thomas Group (TGIS) has a market cap of $4.14 million and from the November 12th quarterly report there is $4.18 million in net current asset value. The stock had an unusual volume spike on 12-01 and printed $2.99. The price is currently at $1.90. It is pretty speculative to me as a long term hold but I think it is worth looking at over the next couple days for a trade.


full disclosure: no position

This funny Xtranormal cartoon has been making its way around the internet.




Gold is pushing up around resistance in the 1,000's. This area it is approaching has been rock solid resistance as you can see from the first chart. A technician that uses normal trend lines and not an internal trend line will fail to read this market correctly in my opinion. That first line is way to high and was a result of momentum and emotions in the market. The arrows show a range that it tends to trade in. A resistance level it finds easier is in the second chart with the top resistance line.
















Of course to clear all this resistance though it is going to have to take out all these spike tops. The grand daddy chart is last. You don't want to miss this.















This chart below is the chart to be looking at on gold.
















This chart sends a powerful signal. It is saying that it is more than likely that gold the commodity will continue higher. Let me rephrase that. Very likely. Let me explain what I see.

The bottom red line is golds support trend line. In lamens terms the price keeps bouncing off of it and it goes higher. This is bullish and good for buyers. Price was consolidating off that trend line. The interesting and important thing here is the triangular consolidation that has taken place.

I want to wait a week or two to see what happens as gold tests its former highs. Any congestion would be bullish. If it breaks out I think it still would be a good idea to put on a position or with stocks or ETF's. There is a possibility that this could be a failed signal. In that case it would be a good short on a move to the low 900's. But the technical picture right now is buy, especially on a new high in the low 1,000 area. I'm not sure how the fundamentals support a major run. I feel like the best time to play it is if we see hyper-inflation. I can't ignore market forces though with the technical analysis. China and other foreign countries who hold US debt could up to something?



full disclosure:no positions in gold commodities or stocks at time of writing

The past week or so there has been a macro play on China tightening supply of rare elements. The mining sector in general has been extremely hot this year of course off the back of metals like silver and gold rising. This latest news which I imagine is further driving speculation of supply issues has boosted the share prices of a lot of mining stocks.

Rare earth minerals have a plethora of uses from fuel, to computers, and even lasers. This company called China Direct Industries CDII does magnesium mining and has rights on zinc mines. The balance sheet has $49 million in net tangible asset value against a current market cap of just $50 million.

full disclosure: no position in CDII

PARL has net current asset value of around $89 million and a market cap right now with the stock at $2.47 of about $50 million. A big bulk of NCAV is in inventory.

There was some significant volume in the stock on Friday and it is testing up against this long standing range it has been in since last year. The stock has been stuck between about $1.50 and $2.40s a share. Price action wise I think it is more likely to pull back the next couple days than start running higher. I may buy it a lower price. We'll see. I've just got it on a watchlist now.

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full disclosure: no position

Silverleaf Resorts (SVLF) has gone back down below net current asset value. It's brother in the industry Bluegreen (BXG) is down a lot too and below NCAV but I didn't like BXG's last quarterly.

SVLF has $127.8 million in net current asset value and is trading at a market cap of only $39.4 million at the moment with the stock at $1.04.

full disclosure: long SVLF @ 1.04

Near Net Current Asset Stock & health care stock Forward Industries FORD products include soft-sided carrying cases, bags, clips, hand straps, protective face plates, and other accessories for medical monitoring and diagnostic kits, cellular telephones, and bar code scanners. I read in the annual report that diabetic products were 75% of sales in 2009. With more people now being covered by the government all these people who are or are about to get type II diabetes should add to that segment.

I believe the market cap was just over NCAV. Net current asset value is $22.2 million and current market cap is around $22.5 million. The stock is volatile though and was up 19% Friday so it could actually dip below. They have a great balance sheet. The bulk of quick assets are in cash. I am sure there are a lot of other health care reform stocks out there as well that will benefit from the government subsidies if you will. This is just one that caught my eye because of the huge volume last week. MDF is an interesting chart too.

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The stock is in a clear uptrend and seems to be possibly a failed double top on this wide ranging day spike. The only concerning thing is how much of an appetite is left after this run but being around NCAV seems positive in this regard. Hard for me to pick a spot technically to enter because the stocks momentum looks strong here. I might play it of continuation or a pull-back to new support at around 2.60. It's actually a better investment and hold type of play probably on health-care. Luckily one of the few long-term investments I still have is a healthcare mutual fund that I've held for some years. I sold my Stryker SYK about a couple years ago.

full disclosure: no position at time of writing

VSCI is a healthcare company that makes endoscopes for medical and industrial uses. VSCI has a market cap right now of $48 million. The balance sheet isn't as deep value as I usually look at but it is good.

Balance Sheet
Looking at the balance sheet we have current assets of 8,806 - inventory of 3,915 = $4.89 million.

$4.891 mil / $2.720 million in current liabilities = healthy quick ratio of 1.79

Also, there is $3.5 million in net tangible assets. The balance sheet looked good enough to me.

Income Statement
They had good sales growth year over year in 2009. Fiscal 2010 looks like negative sales growth. This first quarter of their fiscal 2011 revenue was down 21%. Urology and bronchoscopy sales were both up and ear nose and throat sales and repairs etc. (guessing that is industrial segment) were down.

More from the first quarter they just reported

  • ENT and TNE sales decreased 63% to $0.4 million from $1.2 million
  • Urology sales increased 28% to $0.9 million from $0.7 million
  • Bronchoscopy sales increased 113% to $0.4 million from $0.2 million and
  • Repairs, peripherals, and accessories sales decreased 33% to $0.3 million from $0.5 million,

It looks like they haven't been profitable on the bottom line annually for atleast a couple years. Looks like there was positive EPS of $.57 in 2007 annually(2008 fiscal?).

Some Thoughts
It looks like this healthcare companies biggest problems have been gross margins. Morningstar shows a 37% gross profit margin in 2004 and it's just been slowly declining since.

The old CEO resigned in November of 2009 and was replaced with an interim CEO who was on the board since 2005. I'm not sure if this has changed as of late right now though.

Ownership
The interim CEO Warren Bielke has bought 300,000 shares of stock just this year. Some $320,000 worth.

Morningstar says American Funds Smallcap World 529A has a 3.3% stake.

More Observations
The stock price went from $1.50 in late '07 to $6 in early '08.

The conference call for Q1 2011 was on August 12th. Interestingly the stock ran 28% after the conference call on the 12th through late August. I haven't read the transcript of that call yet. I didn't see it on Seeking Alpha. The audio looks to be here. The thing is though the call may not have actually been significant as far as the way the stock traded. It might just be correlation without causation. I would like to know if they have any guidance on revenue or earnings though.

One thing that stands out is the stock traded 590,000 shares on July 23rd and a whopping 1,109,200 shares July 26th! The stock has three month average trading volume of only 68,000. That was some unusually heavy volume. I believe that the last time the stock traded over 1 million shares intraday was in September of 2007.

















full disclosure: no position but I have it on my watchlist

CIT which is now a penny stock got some news on Friday and subsequently the stock took off. CIT broke out of the days trading range and hit $.93 before people started taking profits which jolted the stock quickly down to the $.70s. CIT began to consolidate.

Here are some other triangles.

This is an ascending triangle.

A longer time frame triangle .

And another intraday trade triangles.




full disclosure: no position

There have been a lot of bio-tech and pharmaceutical stocks in play lately. It is time consuming and very hard to make a good long-term trade in these companies. Luckily, if you can just recognize chart patterns and use basic technical analysis it can take just a couple of minutes or even seconds to get a read on the next direction for the stock.

There's the triangle and key resistance levels. Three times the stock couldn't budge above 5.00. One time the resistance was even 4.99.


full disclosure:no positions

This former NCAV cheap stock Blonder Tongue Laboratories BDR popped 70% today off of earnings.

Operating EPS was positive vs a loss prior. Sales were up driven by digital video encoders. It looks like there is about 14.7 million in current assets and about 7 million in debt. So, this big pop pushed it over NCAV. But it still might be in play. I guess we will see.

disclosure: no position

This site xtranormal.com is pretty neat. It only took me about 15 minutes or so to make this conversation on the stock market movie.


Deep Value Golf Stock

Saturday, May 01, 2010 | 0 comments »

Adams Golf ADGF this little golf club manufacturer that I've talked about a lot in the past has been bottoming out over the past several months and just recently reported their quarter. Revenue was slightly down but EPS was up huge from $.05 to $.21 year over year. They gained some market share in the US.

Net current asset value is $29 million. The market cap is currently right below at the moment at $27 million. So it is in net current asset value territory still at the moment. I bought some the other day at $4.15.
















Just recently broke out of a long trading range and had strong unusual volume.


full disclosure:long ADGF

The stock market keeps rallying but who is buying? Charles Biderman says the pension funds and flows into mutual funds aren't responsible. He says the amount of capital that could drive this type of rally seems to be coming from somewhere else and a lot of it is after market hours in the futures markets. I have no idea if his numbers are even accurate but I found this interview on Bloomberg he did a couple months back interesting.

Click here for Video

Silver Leaf Resorts is in the business of getaway and destination timeshare resorts in the United States. They cater to short vacations and tourists. This is one of those stocks that bottomed in December 2009 and not in March 2010. I really wish I had payed it more attention early this year. It's one of those deep value land plays.

Asset Valuation
I was fairly surprised at how cheap it appears on an asset level. There is $176.319 million in net tangible assets and as of March 8, 2010 38,140,043 shares outstanding. This gives us a $51.87 million market cap against that $176.31 million in net tangible assets or a 29% discount to NTAV.

I crunched net tangible asset value per share at $4.62 per share and the stock is only at $1.36 as of the close today.


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It has technically just broken out of a trading range but has a lot of resistance around the 1.50 area. I think this cheap stock goes higher over the next few days and tests that 1.50 at the least and probably will continue higher from there.


full disclosure:no position at time of writing however I may go long (buy) the stock this week.

Silver Stocks list

Timberline Resources (TLR) is into mining for gold, silver, zinc, and copper deposits. They've had some impressive revenue growth over the past 3 years. However no net income yet annually. Last quarter was net income positive though year over year with a profit of $241,061. Technically, right now it is still along the trend line and at the end of a triangle consolidation.

Kimber Resources (KBX) announced a new mineral resource estimate that has significant tonnage of high grade gold-silver mineral resources with excellent metallurgical recoveries. This stock ran from .60s to 1.31 currently and still might have some momentum. It has resistance however that must be dealt with in the 1.50 area.

Mines Management Inc. (MGN) is primarily a silver mining company. The technicals look a little better now that it is trying to break out of this trading range.

Endeavour Silver (EXK) so far has seen its stock price pretty correlated to the price of silver. Out of all the silver mining penny stocks it appears pretty correlated here.

Silver Stocks to Watch
The iShares Silver Trust (SLV) is a very liquid vehicle and a conservative way for making an investment in silver online in the stock market.

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The silver vs gold chart shows that gold is up just over 30% this year but silver is up over 60%. Gold has gone practically parabolic currently. Is silver overbought currently? Tough to say but technically it doesn't appear so. I think these are some silver penny stocks to watch for potential upside. In the event of a hypothetical crisis I believe silver historically has outperformed gold by a wide margin.


full disclosure:no positions

I found a few interesting stocks below net current asset value the other day. A couple of these I know from the past as being volatile. In other words they just didn't trade super thin for months and years, rather, they have been scooped up by institutions before.

Qiao Xing Mobile Communication Co.(QXM) does handsets in China and is really beaten down here. I found it off a screen and when trying to double check to make sure it is sub NCAV if that's a major criteria for you. I didn't see a recent filing on the SEC website and don't want to put a whole lot of time into DD so do your own DD in this regard.

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Infosonics Corp. is an old favorite because I made 20% on it last year over a few days and got out near the top. They distribute wireless handsets in Central and South America and distributes high-end products under the Verykool brand name. Off the balance sheet there is $25 mil in NCAV and a $16 mil market cap.

I just got filled finally today on this one at $1.13 and am long.

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Seanergy Maritime Holdings SHIP

This is a dry bulk shipper and is beaten down but the technicals indicate it might be bottoming short term.

EF Johnson Technologies EFJI

I really nailed this one awhile back and called the top later on it too.

Unfortunately I don't think I bought it. But, anyway it is back below NCAV of $38 million. It might be bottoming out here. If I play it I might pick it up at mid $.90s so I have a clear stop loss on the breakdown signal.

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clean technical bottom so far



full disclosure: long IFON for a trade

What Can't Be Hidden

Thursday, February 25, 2010 | | 0 comments »

A Seriously Struggling & Flawed U.S. Economic Model
There are a lot of negative things going on economically in the U.S. One of them being the fact that one in four homeowners are underwater and home values and retirement account values are two of the most important determining factors of consumers purchasing behavior. We are in an economy where over 70% of GDP is consumer spending. The retirement accounts are up for now but valuations are about fairly priced at best on US stocks because right now they are discounting an economic recover probably more along the lines of 2001 than 1931 after our Great Depression or 1990s Japan. These people think the 2000s weren't a continuation of the bubble!!? Hello! Greenspan and the housing bubble. The 1990s and 2000s can be corrected by a 2 year recession we have just had?!! I might even argue that the bubble actually started in the 1980s and even earlier with the consumer leveraging up on credit cards and a long standing government induced housing price bubble. The housing based economy is set up on a phony premise of everlasting cheap gasoline and fuel prices, endless supply of credit and perpetually rising home prices.

International Turmoil
There is a real threat of sovereign debt defaults like what we saw with Iceland just recently. Greece, Spain, Dubai and Japan are at risk of default and possibly eventually other major countries. The stock market hasn't realized or priced in additional defaults. That could start a domino effect. I was reading about the Asian currency crisis in the late 1990s. It all began in the small country of Thailand (then seemingly insignificant) and spread to South Korea, Japan, Brazil and Russia. Are Iceland and Dubai like a Thailand was then?

The strange thing so far I'm reading is there was lack of banking supervision prior because they were actually exploited by government giving public loans disguised as private and major asset bubbles were busting around this same time as well. A lot of these Asian countries had less than 30% of GDP comprised of exports which in my view gives some clout to the Austrian economists on what is possible in none Latin American economies and even ones as big as the U.S. There have been a lot of currency crisis in Latin America because of the cyclical nature of their economies among other reasons. In my view what happened in Asia in the 90s and in Iceland just recently shows that currency crisis are possible in a large country like the United States. It's hard to envision a scenario for the US for rates on our bonds not to go up and assuming the economy must continually be jump started and defense spending stays the same there could be serious trouble for the dollar and a following of the rest of the Western nations.

What good is deficit spending and artificial GDP growth like in China where there are empty cities if you still have to pay the piper for decades of juiced excess like here in the U.S.?

When it comes to the possibility of a continuing rise in stock valuations and a lasting improvement "absent stimulus" in the U.S. economy and even China's the burden of proof is on you bulls.

Some Links to Think About
"While deficit hawks have long warned that policymakers need to curb deficits and debt, the new wrinkle is that the U.S. budget deficit picture has worsened so much largely because tax revenues have fallen off so sharply that the government is likely to reach a crisis point much sooner than under past forecasts."

http://finance.yahoo.com/news/Bipartisan-budget-group-says-apf-3303488614.html

"The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt."

http://www.ncpa.org/pub/ba662











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Delusions of Grandeur

Is it actually possible that the green shoots were merely the result of short-term stimulus and inventory shifts by companies? Is it possible that the trajectory of GDP could go sideways or fall for years or even a decade or two after a serious unprecedented structural shift in the economy?

Bernanke said today many times that the current budget deficit is unsustainable. He also said that deficits of over 3% of GDP are unsustainable over time. These two facts would be troubling but lawmakers and the FED believe they are temporary because solid economic growth will shortly return.

All scenarios revolve around the premise of a solid recovery returning. It has to because we are facing a falling tax base and baby boomers retiring. I'm afraid a stagnant economy like Japan in the 1990s will not even be considered by lawmakers when it comes to spending programs and balancing the budget. But I guess why would it? The U.S. has produced one of the greatest economic track records ever in history. Even more rare and impressive about it is the history of economics on the whole when it comes to other countries is often a very dismal one.

Whether or not things get under control shorting treasury bonds and the dollar should be a good long-term macro play. Of course it is difficult here with the potential for at any time a panic rush to dollars but if there continues to be a flock that creates a mini bubble shorting the dollar seems like a no brainer because at the least it will fall from debasing.

Some articles and videos I have come across recently

Deathbed of Keynesian Economics Will Be in U.K.

Jim Rogers: The Dollar is Doomed

I crunched oil and natural gas stock Delta Petroleum's DPTR net tangible asset value to be around $515,000 vs a $368,000 market cap.

I'm pretty bullish on commodities and oil with Bernanke being re-confirmed. He's going to drop dollar bills from helicopters or even outer space if he has to to get the economy going(or just to hold its ground). Commodities have done very well the past 10 years because of inflation whether one wants to believe CPI or not. Gold has outperformed the major US indices since 2000.

Retail stock Borders BGP is just over net tangible asset value but has been beaten down a lot lately. I'd especially like to see some commitment by institutions with upgrades because it very well could continue to drop.


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full disclosure: no position in BGP or DPTR at time of writing

I just noticed former ncav MSON in a technical scan that I initially noticed at the beginning of 2009 is in play on new distribution news. Right now it is a little over net current asset value and I don't know their story here other than there was huge volume recently on this news. As the stock showed in April it can run straight up a ton fast.

I think it might consolidate right around $3.00 around this black resistance at 3.00. This news might give it the potential for a richer valuation of course and more follow through. It's pretty thin and usually doesn't trade that many shares a day.


click for larger image
















full disclosure:no position

My site is up for review on Investimonials now. Investimonials is a new site for honest user reviews on anything financial from books, brokers to blogs. There's not a lot of transparency in the finance niche and I think this site might have some promise for providing it to newbies.

If you want to take a minute review my blog here

I haven't been posting in this blog as much lately because I am posting my trading stuff on DynamiteStocks.com now. I'm still going to blog about fundamentals and macro stuff on Stock Pursuit like I have been recently. It just won't be every week and that often but rather when I feel like blogging on something like I did on the Buffett Burlington purchase. Google webmaster was showing that post got linked to from the Huffington Post and a Buffett focused blog.

Also, if the market has a serious correction(probably won't happen to soon) I'll throw up some of my net-net ideas here.

Upcoming Post
I'm thinking about a macro play on commodities. More specifically, a play on exporting commodities from the United States. I'm going to do a blog post here on that shortly and will lay out my thesis and brainstorm some of the ways to play it.