Looking at Net-Net BAMM and Short Watch GNIN

Net-Net BAMM I am currently looking for some net-net's and deep asset value worth writing about. After spending some time going through a stock screen I found Books a Million (BAMM) to be one of the most compelling net current asset stocks I saw for the time being. In looking in the stock market sewers for deep value stocks one can often find somewhat of a diamond like Silver Leaf Resorts SLVF or Adams Golf ADGF were. I'm not sure if BAMM is a diamond but it is something to look at if the stock price gets a lot cheaper. So I think it is something to just watch as the price here at $2.40 is just below net current asset value.

Short Watch Green Innovations (GNIN) Green Innovations (GNIN) traded over $7 million shares Friday and is currently going full zombie. It's up from $1.00 to $2.75 just this month. It's been running everyday and buying volume is eventually going to get exhausted. It's been volatile on the way up so it will be volatile on the way down. To short a momo stock like this it's a bad idea to short when it is green (positive) on the day. It needs to crack the previous days close before it is a short setup. The setup is going to be here very soon. Could even be Monday or Tuesday.

Dry Bulk Shipping Stock SHIP

Hello folks. I put this shipper Seanergy Maritime Holdings Corp. (SHIP) up on Twitter about a week ago after the dry bulk shipper post. SHIP is a low floater. It has a small float and it only has a market cap of $26 million. It has run especially well along with all the other shippers. It's a really good one to trade because of how volatile it is. Very high day range. It had a huge run in January from $1.20 to $2.70 a share. It just printed a hammer off this new flag. Right now it definitely looks like another flag because of the decreasing sell volume I drew the red lines over.

Old Net-Net Blonder Tongue BDR On The Move

Former net-net Blonder Tongue Labs (BDR) has 5.5 mil in net current asset value and a market cap of 9.6 million. It has always been one of those perennial net-nets. Always below and around net current asset value. Unfortunately I wasn't watching it lately. It has bottomed out as this chart shows. I circled the failed breakdown. The stock then was in breakdown mode until the lower low turned into a spike bottom. Confirmation of the failed breakdown is where I drew the arrow. Failed signals can be very powerful. The second chart is the beautiful flag it printed. The chart is real bullish here still even though I missed the perfect setups and price. I'm long biased on BDR.

Follow Up On Shippers

DRYS made the push I was looking for in the last post. That was the move. FREE still has light sell volume on this consolidation so the set-up is still there on a strong intra-day move on volume. It needs to run to atleast .26 tomorrow before it is a good set-up. It needs to atleast break above the prior days high.

Watch The Baltic Dry Index and Shippers

The Baltic Dry Index has formed a little base recently. It is far from a confirmed bottom but it has held this area very well. Very big blocks of shares have come into the shippers that haven't been seen in awhile. I really like NEWL FREE and DRYS with a long bias here. Watch FREE, DRYS and NEWL this week.

Gold Technical Analysis January 2013

Gold is still in a secular uptrend. The yearly charts are a lot more choppy. There was a spike bottom in the chart below that is getting retested. I don't see any good signals here because of how choppy the long-term chart is. Crude oil is equally range-bound and in an uptrend the past couple weeks.

Some Cool Economic and Market Videos

Economic discussion on currency and gold from the most unique economics blog on the internet. Below is a short talk about market cycles, bubble jumping and the challenges of pure investing. The video quality is bad so just listen to it. Part 1 Part 2 Part 3

Quantitative Easing and The Stock Market

As you may know it is widely hypothesized that quantitative easing has contributed to the rise in asset prices the past couple years. Here is that in pictures.

click to enlarge

I think in the near-term any QE3 would probably more than likely continue to lift assets. I find now that getting a grasp on major economic trends locally and globally can make industry and equity selection much easier as well. As any QE continues stocks and commodities will rise especially metals like gold and silver. Same dance, only a new song.

A Contrarian Setup With Penson PNSN

Last week Penson Worldwide (PNSN) a major international clearing firm and the second largest clearing firm in the U.S. came out about $42 million that might bring a write-down. A board member who had a relationship to the $42 million resigned. Immediately following this news the stock crashed from $5.00 to $2.73 a share in two days.

Although the $42 million seems significant it is only a measly 0.49 percent of their $8.7 billion in average daily customer balances. Penson also has more than $5.8 billion in cash and equivalents. They even had a pretty good recent quarter. In their last quarter revenue was up. I don't see this development seriously damaging their long-term business. In-fact with a market cap now of around $100 million I see this as an attractive valuation.

Although this is an opportunity there are things to keep in mind. Over recent years their revenue growth has declined slightly and they aren't consistently profitable. Overall, I think this is a more speculative play but I think there is a good setup for a small position here off what appears to be some capitulation and technical strength.

The price action looks like the beginning of a bullish engulf. Buy volume needs to stay steady for this to continue. I like an entry point on price strength above Fridays close. If the stock doesn't follow through here, however, I only want to watch and see how the technicals develop.


full disclosure: no position currently

Macroeconomic Stock Plays

I have been writing a lot about macro trends from monetary metals like gold and silver, oil to rare earth element stocks. Outside of the precious metals I haven't included that many individual stock picks. So, today I'm going to look at a couple of stocks.

Rare Element Resources (REE) mines for rare earth elements and gold. REE has a market cap of only $568 million at yesterdays close of $13.17 a share. Their Bear Lodge property looks to have a substantial amount of rare earths. I think this major is a good addition or alternative to other majors like Molycorp (MCP).

If you are interested in rare earths here is some information from the US Government Accountability Office on rare earths in the defense supply chain. One interesting tidbit from the report is that once a company gets the capital to begin a mine it can take from 7 to 15 years to get a property fully online due to regulatory procedures.

This next stock is currently my favorite setup at the moment. It is a natural gas company called Union Drilling (UDRL). While there is roughly $200 million in net tangible asset value and only a $237 million market cap I'm more interested in the chart play. The $10.40-$10.50 area has become a resistance level and as it stands today it is still consolidating around these levels. This is bullish consolidation currently and I see UDRL heading higher if it can print $10.61.

I expect a significant move higher either today or the next couple trading days.

A Final Thought
I believe that a top down approach continues to be one of the best strategies in this current environment. I want to continue to look at the oil and gas drillers, commodities and the precious metal miners. The writing has and should continue to be on the wall in regard to these areas outperforming.