Short Setup On NTP

Recently, I came across a familiar chart pattern in the stock NTP. It shows a long period of normal, light daily trading volume. We can see roughly two weeks ago the stock surged much higher on unusual volume. The unusual volume continued everyday as the stock continued to run. The daily candle's representing each trading day became shorter the past few days. These are doji candles. Doji candles indicate uncertainty and often are the beginning of a trend reversal. In the case of NTP this reversal could be down. This kind of enormous unusual buy volume always gets exhausted. It can't keep up for weeks. This stock looks overbought. I see it going lower in the short-term.

Initially, I only noticed the chart but digging deeper into the company I discovered this is a Chinese company. There was some news before the move up about a share buyback. I couldn't find any other substantive news on the stock around the beginning of the run.



Full Disclosure: I have a short position in NTP

Remember SPU? Great Short Setups

Almost 3 years ago I put out Sky People Fruit Juice SPU as a net current asset stock. In about a week it has shot from $2 to $14 a share. No doubt a major short squeeze is going on and just pure momo. It has now become a great short. Another great short is KONE. Both of these will be significantly lower in a week. OPTT is another candidate when it finally loses momentum. Below are the charts of SPU and KONE.

Market Direction

I'm not worried about Europe impacting US growth significantly. That being said I see a very good chance of another down range day on the US indices today Monday the 27th. There could easily be a mini crash. By mini crash I mean at the least enough of a percentage move to trigger circuit breakers. Such a surge in the VIX and a wide ranging day on the major indices like Friday usually produces some follow through. Especially in todays market with all the bots and high frequency trading.

If there is any bubble big enough to produce a sustainable crash it would probably have to be in an industry that represents a large share of GDP. The top industry as a share of GDP in 2015 was finance, realestate and insurance at around 20% of GDP. In 2006,2007 this sector was around 30% of GDP before the housing crash. I don't see any real "bubble" in any particular major sector. That's not to say there can't be a recession. There's nothing wrong with a recession. The stock market has been around resistance for awhile now and this could end up being the move that will drive it down for a short term correction at the least. I've been long Smith and Wesson SWHC which has turned out to be a great long for the week or so I've been holding. It was up Friday and is up even more pre-market over $26 from my mid $23 entry. I'm hedged with QID and want to trade any crash today with orders out to long YANG and FAZ.

Pet Stocks Make the Portfolio Purrr, More BUFF FRPT

You might remember my article on two great pet companies from last year. The two pet companies I looked at in that article were PETS and WOOF. Both have done very well. PETS just reported earnings, beat the street and boosted the dividend. The stock just broke out over $20. WOOF is on a run to. I continue to believe this industry is a great long-term play. It's non-cyclical. Just look at the numbers in that BLS report in the article above. Some things worth repeating.

In 2011, households spent more on their pets annually than they spent on alcohol ($456), residential landline phone bills ($381), or men and boys clothing ($404).

Despite the recession, families continued to spend consistently on their pets between 2007 and 2011. Spending on pets stayed close to 1 percent of total expenditures per household, despite the recession that occurred during this time.

Spending on pet food stayed constant or increased during the recession, even while spending at restaurants fell. Married couples without children living at home spent the most on their pets out of any household configuration in 2011.

Blue Buffalo Pet Products (BUFF) is another good one in this business. Revenue growth is great and there is $129 million in free cash flow. The valuation is fair considering their growth. It ain't cheap but its growth at a reasonable price. The PEG ratio is about 1.6 and earnings forecasts have consistently been getting bumped higher. They report earnings tomorrow on the 10th. This is one to keep an eye on.

As more of a distressed play we have FreshPet (FRPT). This one has been beaten down for awhile. However, the analyst consensus is they will be swinging into profitability next year. I've seen the brand in Walmart so they have a fair chance at success.

I really hope the stock market has a semi-crash this year so I can buy a basket of all these pet stocks and any profitable pet or veterinary related company.

Unemployment Claims Trend

The St. Louis Fed put out a graph of initial claims for unemployment benefits. 253,000 is the lowest number seen since the 1970s. You can see how the major spikes coincide with recessions. It has been such a long time without a major rise that it seems impossible that the current trend can hold much longer. I drew a line that shows the bottom of the trend. The line arguably could be a little higher and flatter. It seems to fit the bottom best here though. Regardless, we are overdue for a spike.

This graph shows just how well the economy has been doing. The FED keeps touting 2% inflation targets or whatever magic figure it is. What a joke. We don't need it. Clearly, the only need for such targets is national debt service on our huge national debt. GDP growth last year was modest considering the situation. Some day inflation is going to take off and the FED will be to slow to adapt. That's how it has always been done in history atleast.

37% Gain On Jones Soda JSDA!

I posted right after my exit of Jones Soda JSDA on DynamiteStocks.com. So I thought I would post here since I originally mentioned JSDA on this blog. I went long JSDA at $.53 right after my intial post and sold the other day at $.73 for a +37% gainer.

Jones Soda JSDA

While looking through a stock scanner for stocks showing high buy volume spikes I came across a familiar name. Jones Soda (JSDA) has been around a long time and even have their products in my local high end grocery store Harris Teeter. It's been almost forgot now though and trades on the OTC with other penny stocks at just $.51 a share. It bottomed out lately at about $.30 a share. Average daily trading volume on JSDA is 85,000 shares. It traded 1.5 million shares Friday!

This is a $21 million company. Looking at the balance sheet everything is fine. No long-term debt and a 1.5 current ratio. Hardly your typical penny stock. Something must be wrong. Yes, revenues have been flat to down the past couple years. Gross margins are stable now though. I think this is one of those companies where expectations are so bleak that anything positive boosts the stock. I see that likely hood a lot more than I see the revenue and earnings getting worse. With the balance sheet the way it is they have plenty of time to get it together. Technically, the stock has bottomed. It looks like a high bull flag going on here. If it breaks over $.56 again it's off to the races.