Major stock market indices continue to consolidate. It is prudent to diversify and take some risk off. Instead of traditional hedging stratagies like shorting I see more opportunity in low beta vehicles. This allows one to continue to stay bullish and capture any further market gains while hedging slightly. I really like difersifing onto gold GLD, US Treasuries via ETF TLT and alternative ETF CGW.
Technically gold and Treasuries are clearing resistance here and are moving inversly to the major indices. Water ETF CGW is also very uncorrelated to the market over the past few weeks. If there is a major crash history shows US Treasuries to be the best place for safety. In 2008 us treasuries surged. It also seems reasonable to allocate some of this bond position into foreign bonds.
I believe these three ETF's can add some diversity to a portfolio while giving it some protection as well.
April 21, 2017
November 10, 2016
This Is Sector Rotation
The sector rotation is going out of big tech and into financials, healthcare, possibly defense and transportation. This is essentially a strong bull market move. It's interesting tech is not leading the way but people are obviously positioning for the presidency and congress. I was wondering if the fall in tech had something to do with possible tariffs coming on tech companies in Asia if we start taxing China. I think it might have something to do with that but its just capital going from one sector to others here regardless.
The call I made here on the blog to buy biotech and financials was pretty epic the other day. Biotech is outperforming big-time. The other macro thing going on here is long term US treasuries are continuing to crash. Ticker TBT is the way to go as I have been talking about here for some time.
After surveying some scans and putting things together I have a great watchlist. I really like this small-cap Scorpio Bulkers SALT. It's a shipper. Breakout on trend on high unusual volume, earnings guidance is trending up and is improving. "I have to be able to draw it in crayon" -Peter Lynch
HEAR needs 1.45 to start to clear this long flag.
On the short side I like HADV EA GORO short. From Twitter Marc Lehman @markflowchatter Sell side desk indicating 2 leading $EA titles are being discounted 40% at Target and Walmart = slow pre orders for holiday sales
The call I made here on the blog to buy biotech and financials was pretty epic the other day. Biotech is outperforming big-time. The other macro thing going on here is long term US treasuries are continuing to crash. Ticker TBT is the way to go as I have been talking about here for some time.
After surveying some scans and putting things together I have a great watchlist. I really like this small-cap Scorpio Bulkers SALT. It's a shipper. Breakout on trend on high unusual volume, earnings guidance is trending up and is improving. "I have to be able to draw it in crayon" -Peter Lynch
HEAR needs 1.45 to start to clear this long flag.
On the short side I like HADV EA GORO short. From Twitter Marc Lehman @markflowchatter Sell side desk indicating 2 leading $EA titles are being discounted 40% at Target and Walmart = slow pre orders for holiday sales
November 9, 2016
Net Current Asset Stock STLY
Stanley Furniture (STLY) is a well known brand in the furniture industry. With the stock just around a $1.00 a share it's below net current asset value or quick liquidation value. Because a lot of their assets are in furniture inventory this isn't a true "liquidation" value. The margin of safety would peg the stock much lower than net current assets. This is still a compelling net-net. It is a good one I believe if only because it is not a perennial one. Net current asset stocks that suddenly become this cheap that are retail with a good brand name often work out.
Net current assets are 19.2 mil. Market cap is 16 mil. I read the last quarterly and its just not being managed well. They have some apparently short-term supply chain issues. It's a decent net-net especially if they can turn it around any. Things are going poorly at the moment. They have cashed out life insurance policies to raise cash. This is as much a turnaround play as a value play. That's something to keep in mind.
Net current assets are 19.2 mil. Market cap is 16 mil. I read the last quarterly and its just not being managed well. They have some apparently short-term supply chain issues. It's a decent net-net especially if they can turn it around any. Things are going poorly at the moment. They have cashed out life insurance policies to raise cash. This is as much a turnaround play as a value play. That's something to keep in mind.
November 7, 2016
The Stock Market Amid Elections
The major US equity markets have been consolidating for days going into this past weekend. Today, November 7th we are seeing a surge in high beta names and corporate bonds. I strongly believe this is a clear signal that this recent downturn was simply a bull flag. It's not to late to back up the truck long equities for the rest of the year. I especially like financials via the etf (XLF) and the biotech sector with (IBB). Financials are breaking out here. Biotech has just put in a confirmed pipe bottom formation near multi-year support. I see confirmation of follow through in equities in looking at high yield corporate bonds. They gaped up big in the morning. A Hillary Clinton or Trump presidency will be pro banks and financials.
full disclosure: long UYG and BIB the double long XLF and IBB etfs
full disclosure: long UYG and BIB the double long XLF and IBB etfs
October 19, 2016
Stocks Flat Open As Investors Await Fed Speakers And Deutche Banks Fate
Stock index futures were on a path to flat open as investors longed for news on Deutsche Bank's agreement with the U.S. Department of Justice and the speeches from Federal Reserve's decision makers.
There are meetings that are going on to discuss the terms of settling this fine and speculations were rife in the course of the weekend that the bank desired the penalty to be lowered.
Trading on Monday saw the Dow falling 104.40 points amidst lows before it ended up slipping by 55 points. Additionally, the S&P 500 went down by 0.3 per cent, while real estate plunging by 1.8 per cent to become the lead decliner.
While the U.S. rate hiking schedule kicked off on Tuesday, most investors eye the employment data for September scheduled to be released on Friday.
Two Federal Reserve speakers are scheduled to speak on the possibility of rate hikes in the course of the week. Richmond Fed President Jeffrey Lacker insisted that there was need to increase interest rates and in order to ensure that inflation was kept under control.
In Europe, shares of Deutsche Bank had recorded a higher value on their first day of trading after a long weekend. The bank went through challenging days last week where the Department of Justice leveled a penalty of $14 billion due to the role the bank played in a festival of toxic mortgage securities in Wall Street in the period that leads to the 2008 financial crisis.
Given the many other troubles that Deutsche have experienced – manipulating the financial benchmark, the general confusion that surrounds its mission, and issues of trades that seemed to have violated the sanctions placed in Russia – makes the American move to charge the bank a huge fine visiting at the inopportune moment.
The dangers facing Deutsche Bank sent the stock markets across the globe on a wild ride. However, the biggest worry seems to emanate from the vast array of unknowns and not its finances. Furthermore, the bank seems not to bother whether Europe will be able to muster the will to embark on a rescue mission.
All these seem to heighten the fact that Deutsche Bank – whose shares have declined to more than half their value this year – requires some new investments that are secure, in case it wishes to avoid any impending crisis.
The biggest fear lurks when Deutsche will disintegrate to a point that it will threaten the globe with a financial shock. However, the main question will lie on whether the buffers and new rules that were instigated after the last crisis can prevent the severity from spreading.
The chaos ranging from the debt crisis to the bitterness over the rising number of refugees, European governments have shown something less than an example of a united government action. The EU seems to have embraced populist anger and encouraged constraining solutions. With Germany not allowing bailouts for banks from other countries, the mission to rescue Deutsche is politically radioactive.
If the worst case scenario is to happen – the bank may possibly collapse, forcing the bank to collect money from the global market. Various institutions that carry out trades with Deutsche may be inclined to get their cash back. Given the amounts of cash witnessed in the bank's balance sheet that can extend to up to 1.8 trillion euros, then the effect will have to be distributed to every financial crevice in the world.
Despite rumours in pundit quarters indicating this type of scenario may be re-emerging, provokes similarity to be traced back to the disastrous bankruptcy experienced by one of the American banking big boy, the Lehman Brothers, about eight years ago, but most economists disregard the talk as overambitious and overblown. The shares of Lehman had seen a tremendous decrease in value at the CMC Markets.
Deutsche Bank's cash reserves sums up to about €240 billion. It has further sold bonds that can end up to be equity whenever it deems necessary. The fine of $14 billion proposed by the Justice Department unveils a possibility for a negotiation that could amount to a fraction of the amount. It is such a way of interpretation that left the stock surging on September 30th.
There are meetings that are going on to discuss the terms of settling this fine and speculations were rife in the course of the weekend that the bank desired the penalty to be lowered.
Trading on Monday saw the Dow falling 104.40 points amidst lows before it ended up slipping by 55 points. Additionally, the S&P 500 went down by 0.3 per cent, while real estate plunging by 1.8 per cent to become the lead decliner.
While the U.S. rate hiking schedule kicked off on Tuesday, most investors eye the employment data for September scheduled to be released on Friday.
Two Federal Reserve speakers are scheduled to speak on the possibility of rate hikes in the course of the week. Richmond Fed President Jeffrey Lacker insisted that there was need to increase interest rates and in order to ensure that inflation was kept under control.
In Europe, shares of Deutsche Bank had recorded a higher value on their first day of trading after a long weekend. The bank went through challenging days last week where the Department of Justice leveled a penalty of $14 billion due to the role the bank played in a festival of toxic mortgage securities in Wall Street in the period that leads to the 2008 financial crisis.
Given the many other troubles that Deutsche have experienced – manipulating the financial benchmark, the general confusion that surrounds its mission, and issues of trades that seemed to have violated the sanctions placed in Russia – makes the American move to charge the bank a huge fine visiting at the inopportune moment.
The dangers facing Deutsche Bank sent the stock markets across the globe on a wild ride. However, the biggest worry seems to emanate from the vast array of unknowns and not its finances. Furthermore, the bank seems not to bother whether Europe will be able to muster the will to embark on a rescue mission.
All these seem to heighten the fact that Deutsche Bank – whose shares have declined to more than half their value this year – requires some new investments that are secure, in case it wishes to avoid any impending crisis.
The biggest fear lurks when Deutsche will disintegrate to a point that it will threaten the globe with a financial shock. However, the main question will lie on whether the buffers and new rules that were instigated after the last crisis can prevent the severity from spreading.
The chaos ranging from the debt crisis to the bitterness over the rising number of refugees, European governments have shown something less than an example of a united government action. The EU seems to have embraced populist anger and encouraged constraining solutions. With Germany not allowing bailouts for banks from other countries, the mission to rescue Deutsche is politically radioactive.
If the worst case scenario is to happen – the bank may possibly collapse, forcing the bank to collect money from the global market. Various institutions that carry out trades with Deutsche may be inclined to get their cash back. Given the amounts of cash witnessed in the bank's balance sheet that can extend to up to 1.8 trillion euros, then the effect will have to be distributed to every financial crevice in the world.
Despite rumours in pundit quarters indicating this type of scenario may be re-emerging, provokes similarity to be traced back to the disastrous bankruptcy experienced by one of the American banking big boy, the Lehman Brothers, about eight years ago, but most economists disregard the talk as overambitious and overblown. The shares of Lehman had seen a tremendous decrease in value at the CMC Markets.
Deutsche Bank's cash reserves sums up to about €240 billion. It has further sold bonds that can end up to be equity whenever it deems necessary. The fine of $14 billion proposed by the Justice Department unveils a possibility for a negotiation that could amount to a fraction of the amount. It is such a way of interpretation that left the stock surging on September 30th.
October 3, 2016
Cabela's CAB Merger spread
Cabela's (CAB) is being purchased by Bass Pro Shops in a cash deal for $5.5 billion or $65.50 a share for Cabela's shareholders. So CAB shareholders will receive $65.50 a share. Cabela's stock has been around $62 to $63 all morning. There has been as much as a 4% spread to made. I bought some CAB at 62.90 this morning. There is still over a 3% spread at the moment. If there is a mini market crash the spread could even widen. So it's worth keeping an eye on. All cash deals are the safest. The deal is expected to close in the first half of 2017 and still requires shareholder and regulatory approval. Here is the official SEC filing.
September 29, 2016
PSG Ripe for a Short
This company Performance Sports Group ticker PSG has run up 100% in less than 30 days from $1 and change to $4.00 a share. It appears the main driver of this huge run is that it is in such a poor financial position it got an extension on a loan agreement. This is from another article,
Shares of Performance Sports Group (PSG) were surging 29.44% to $2.33 on heavy trading volume late Friday morning as the sports equipment maker nears a deal to receive a 60-day extension to meet its loan covenants, sources told the New York Post. If the Exeter, NH-based company fails to reach such a deal, it will reportedly default on August 29 and consequently become vulnerable to creditor action. Certain creditors hope to swap their debt for equity and assume control of the business, the Post reports.
A quick peek reveals it doesn't seem to be going well financially for the company. I ask myself is a move from $1.80 to $4 logical given what I see here. I think this run-up is overdone. Technically, it has printed a couple doji candles back to back and the last two trading days have been red. It looks ready to roll over if $3.88 fails to hold. I have a stop order to short sell PSG at $3.87.
Shares of Performance Sports Group (PSG) were surging 29.44% to $2.33 on heavy trading volume late Friday morning as the sports equipment maker nears a deal to receive a 60-day extension to meet its loan covenants, sources told the New York Post. If the Exeter, NH-based company fails to reach such a deal, it will reportedly default on August 29 and consequently become vulnerable to creditor action. Certain creditors hope to swap their debt for equity and assume control of the business, the Post reports.
A quick peek reveals it doesn't seem to be going well financially for the company. I ask myself is a move from $1.80 to $4 logical given what I see here. I think this run-up is overdone. Technically, it has printed a couple doji candles back to back and the last two trading days have been red. It looks ready to roll over if $3.88 fails to hold. I have a stop order to short sell PSG at $3.87.
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