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.

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.

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.