The Oxen Report: Can We Go Any Higher?

Yesterday, we played an Overnight Trade of the Day with GMX Resources. We got involved at 10.25, and we will exit at the start of today for a gain of about 2%. It was an okay gain for the Overnight Play. The company reported a beat on estimates with 0.20 vs. the expected 0.09, but there was a lot of restatement of further losses and one-time charges that are going to weigh on it. You want to get out ASAP because I don’t think this will stay up for long.

The market today is really confusing me. I spent the longest time just deciding what to do. It seems like no one has any idea, and I don’t feel comfortable recommending stocks that I don’t feel comfortable with, so I am going to do a Short Sale that I like. I don’t know where the market is going…

Short Sale of the Day: Hibbett Sports Inc. (HIBB)

Analysis: For some reason, I cannot recommend a Buy Pick. Nothing meets my criteria because it is all way too overvalued. I want to be bullish. I want to blindly recommend some ETF or stock, but I just cannot. The market will most likely rise today, but I think it is going to be pretty neutral throughout the day. If the Michigan Consumer Sentiment Index comes in worse, it will really hurt things. And the question keeps ringing in my head…can we go any higher?

Instead, I went with what I think is a bit safer. We have a typical Oxen Short Sale on our hands, as we are looking for a stock that is getting a bit too much ahead of itself. Hibbett Sports Inc. is one of these companies that might be a bit too much ahead of itself. The stock is opening with over 6% in gains already today. This is a stock with low volume and average beta. This type of move is a large move for it. It is very similar to the Short Sale we had on Wednesday with Harbin Electric (HRBN), a company that gained big going into earnings, gained big after earnings, and had a pop to start the day. Yet, we saw it drop 12% from its high.

Hibbett is most likely going to continue to rise due to the market conditions and the fact that it beat earnings. The company reported an EPS of 0.40 vs. the expected 0.31. That gain is pretty large for a company that has seen very mild growth over the past couple years. Yet, the company, which is based in Birmingham, AL, saw short-term growth due to victorys by the New Orleans Saints and Alabama Crimson Tide this year. A smart investor won’t bank on sports teams to get similar profits. In fact, the company will probably get an overestimation into the future.

HIBB is going to see a lot of selling interest as buying interest dies out throughout the day. It will get a pop and stay neutral and die out from there. Get in at a smart entry when we see the stock topping out, which is where I think I have set my range. Hibbett’s technicals are too attractive for a short sale. The stock is up over 10% in one month, got bought up going into earnings, meaning traders are involved, and it is overvalued on RSI. All these point to reasons we should see a reversal of fortunes for Hibbett.

If you are looking for a Buy Pick of the Day without much thought my pick is Pacific Sunwear (PSUN). It is down 15%. If the market is going to be bouncing up on retail, it will probably move upwards. I won’t officially recommend, but I contemplated it for about 30 minutes earlier.

Entry: We are looking to get involved at 25.75 – 25.85.

Exit: We want to cover for a 2-3% gain.

Good Investing,

David Ristau

This entry was posted on Friday, March 12th, 2010 at 9:16 am and is filed under Uncategorized. You can leave a response, or trackback from your own site.

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David Ristau
March 12th, 2010 at 9:44 am | PermalinkIgnore this user

Oxen Report Entry/Exit

(This is a preview of an Oxen Alert, learn how to become an Oxen Alert member and receive all my alerts)

HIBB – While I really doubt you would have been able to get involved that quickly, HIBB momentarily hit the bottom part of our range at 25.75 before dropping like an atom bomb to the negatives. We made our 3% already. I am not sure what to say about this one. It is pretty much a dud at this point. I hope someone was able to get involved and make some quick money.

Good Investing!

David Ristau
March 12th, 2010 at 9:45 am | PermalinkIgnore this user

PSUN looks like it turned out to work for about 5% gain already today. I should have backed it….oh well.

jere.wood
March 12th, 2010 at 9:45 am | PermalinkIgnore this user

David,
It would be really helpful if you could give advice a little sooner. Your warning on our overnight GMXR was too late. I looked at your post minutes before the open and your comment was not there.
I am down 2.3% at this point.
What do you recommend at this point?
Jere

jere.wood
March 12th, 2010 at 9:49 am | PermalinkIgnore this user

David,
Now I am down 4% on 1,000 shares. What is your advice. Hold since I am down this far and hope for a bounce?
Darn.
Jere

David Ristau
March 12th, 2010 at 9:49 am | PermalinkIgnore this user

Jere -

Overnight trade exits are always at the very start of the day. That recommendation has been available to you since yesterday at 12:30 PM. I always say sell right at the very start of the day. That advice you saw was a repeat of something I said yesterday, and I say every time we have these trades. We have to be quick with our trades to make money.

Now, at this point, if you are down, I would still just sell. I personally don’t mind taking a 2% loss. I think you will end up with much higher if you continue to hold.

You really have to pay attention to what I say on the Entry line and Exit line for each trade.

yodi
March 12th, 2010 at 9:58 am | PermalinkIgnore this user

Thanks for the GMXR tip lost 1,000.00 great

jere.wood
March 12th, 2010 at 10:18 am | PermalinkIgnore this user

David,
I bought GMXR yesterday afternoon at 10.32. You don’t understand. I am at my desk. I look at your post. Then I look at the market. I know we are supposed to sell at the open. I was 60 seconds late and by that time I was already in the red. So I watch it for a minute wondering what in the hell happened because I knew they beat their numbers. Then I look back at your post and their is the dire warning to make sure we get the heck out immediately because this one won’t last long. Had that warning been there just 5 mintues sooner, it could have saved me a $600 loss. I know you were working on your recommendation for today as well but GMXR announced earnings last night. If you suspected this would be a problem at the open, would it not be reasonable to put up a post with that warning?
I know you are using your best judgement based on analysis and I am not criticizing. I am just saying when you see something bad like this about to happen I think more than a minute warning would be helpful.
It is not as easy as it may seem to jump on this stuff immediately when trading in the real world. We don’t have the knowledge you have. I hesitate wondering what the heck to do when it does not go according to plan and I have to jump back and forth, not knowing if there is anything on your post or not.
Jere

David Ristau
March 12th, 2010 at 10:27 am | PermalinkIgnore this user

Yodi -

GMXR opened up 2% higher than the low end of my range and 1% higher than the high part. You have to pay attention to my entry and exit. I said exit right at the beginning of the day, meaning the minute it opens to take advantage of this trade. It has been that way for every single Overnight Trade. That may mean I miss out on a 20% gain because I only get 5%. It may mean also that I only lose 5% instead of 20%. This is how the trade works. I am sorry you lost money, but if you followed what I recommended in the post yesterday and every Overnight Trade, you would not have lost as much.

Its not matter of me warning. I understand and perhaps an earlier warning would have been helpful. However, if this would have gone from 2% to 20%. I still would have only gotten 2%. Its the way the Overnight Trade works. I always sell at market price at the second the market opens because I know that typically these trades lose value right away. Now, I have done a number of these and every time my exit is at 9:30 AM…on every single one. That warning I guess could have come earlier, but honestly, I have no idea how the market will take earnings. Sometimes they are brilliant and its great. I have as much guess at them as you do. That is why I ALWAYS ALWAYS recommend to exit right at market open. Now, we both learned the hard way. In the future, I will be more verbose about exiting on these right at market open, and I think you will be too. I don’t want anyone to lose money, and I do my best to make sure that does not happen. I will do a better job making sure you know my strategy.

wayne
March 12th, 2010 at 11:06 am | PermalinkIgnore this user

Something else you might want to talk about David is playing your picks with options. I don’t know if it’s typical, but I played the HRBN pick by buying puts. However, once the excitement died down, I’m assuming the volatility dropped because the puts I bought when the stock was 25.50 were worth much less with the stock at 25.25.

iprosper20
March 12th, 2010 at 11:20 am | PermalinkIgnore this user

what do you see fcx doing?
thanks, pete

jere.wood
March 12th, 2010 at 11:37 am | PermalinkIgnore this user

David,
Just so I am clear, on overnight trades you are saying put on a sell at market order after the close so it is executed the next morning at the open at whatever price the market gives? I have always used limit orders, but what you say makes sense.
Thanks
Jere

David Ristau
March 12th, 2010 at 11:37 am | PermalinkIgnore this user

Wayne -

To be honest, I know very little about options. Phil is kind of the options guy, and I make all my recommendations for stocks. I really make my picks based on stocks, so if you want to play them with options by all means go ahead. However, I making my recommendations always with a sort of stock focus. Not sure if that helps, but I don’t know how much advice I can lend on options.

Pete -

FCX is always a good play as a hedge to inflation and follows the market. I am definitely in a bearish camp esp. after the way we could not gain more on this morning’s very bullish retail news considering how horrible weather conditions were. I think, in the short term, it will probably be a 3-4% decline over next week if the market declines. However, it has low beta and so it won’t ever have major drops or gains. For that reason, I tend to avoid it because I play volatile stocks and ETFs for day trades. On the long term, it is a solid pick up for any portfolio. We are going to be moving into an area, in my opinion, later this year where we have some definite inflation conversations again and FCX could test 100 again if that happens.

David Ristau
March 12th, 2010 at 11:39 am | PermalinkIgnore this user

Yeah that is what I would do. I am sorry if I did not spell that out correctly. Now, I will adjust it with plenty of time if it needs adjusting. But that is what I thought I had recommended in the past and was recommending for these Overnight Trades. I am sorry if I have not gotten that message across approriately, but that is what I am trying to do with these.

fuzz
March 12th, 2010 at 11:41 am | PermalinkIgnore this user

Something that David didn’t say explicitly and what may help someone with little trading experience. Place your exit trade before the market opens. I am not sure if all brokers will do that, but I’ve used 3 so far and never had a problem. Note, I am not recommending to do it in pre/after hours (those require a bit of practice), just log in and place a market order to buy/sell (whatever the exit is) at 9.15AM. It will go into the queue and will get executed right away as the market opens. That’s what I usually do when in doubt. It’s only when I think that the earnings were superb/horrible (long/short) that I would watch the price as it opens, if in doubt (and David mentioned that the results are mixed and market could react either way in his comments) just place the order before the market opens, don’t do limits – could mess you up big time.

fuzz
March 12th, 2010 at 11:43 am | PermalinkIgnore this user

btw, David, I am not sure what you use for your picks, but here is a resource (although you are probably aware of it anyways) that seems to complement your style of trading and provide a pick every once in awhile.
http://notablecalls.blogspot.com/

philisit
March 12th, 2010 at 12:07 pm | PermalinkIgnore this user

DR- Thanks for the GMXR call- do you know anything about the ‘mattress’ play I see in comments sometimes?

David Ristau
March 12th, 2010 at 12:18 pm | PermalinkIgnore this user

Fuzz -

All my picks are researched on my own using my own system and criteria. I will look into this blog, however. Thanks for the link.

Philisit -

No problem. Mattress play is basically setting a limit and stop for yourself so that you can avoid losses. It involves options, which I have little experience with, so you would want to ask Phil for more details. I think it is where you buy a put and a call at two different prices to give yourself a range to hedge against losses.

jere.wood
March 12th, 2010 at 12:33 pm | PermalinkIgnore this user

David and Fuzz,
Yeah, I am just learning and doing this at work so I get burned sometimes. I thought the general rule was to always use a limit order so you don’t get taken advantage of. I bought a stock with an open market order one day when I first started and paid $1 per share more than the price. That is when I learned about using limit orders. Obviously there is a time and place to use each.
Are over night trades a specific case where market orders are useful or are there other times to use them. I assume we should ordinarily use limit orders to buy and sell?
I appreciate the help.
Jere

David Ristau
March 12th, 2010 at 1:12 pm | PermalinkIgnore this user

It really depends on the case. You want to use limits when you are buying if you have a specific range set. When you are selling, if you can’t pay careful attention intraday then I say use a limit. Also, you want to use stops to avoid heavy losses. On Overnight Trades since we don’t really know what we will get in the morning, I use a market order to get out right away. If you use a limit, you may be wanting 3%. You could have gotten 1.5%, but a limit makes it diminish to a 5% loss.

I also use market orders if a stock gets below my range. So, if I wanted to buy something and its even cheaper than I had expected than I will just use the market order to buy it at that lower price, unless I want to set an even lower limit.

Some tips.

lflantheman
March 12th, 2010 at 1:35 pm | PermalinkIgnore this user

I’ve read the comments from today with interest. Some are expressing dissatisfaction with the way David has communicated his trades to members. David has responded with explanations of how it’s to be done. I’ve a bit of a different take on this than many. I use this site, as well as Phil’s and others for learning trading methodology and for trading IDEAS. I don’t use these sites for TRADES. There is a huge difference. We all have different circumstances. Some of us are full-time traders, some are not. Some are at the computer constantly, some are not. It’s unrealistic to beleive that we can duplicate the trade of David or any other person. It simply cannot be done. As you’ve seen, a stock can rise and fall within minutes, squashing the recommended trade. I would encourage everyone here to be less critical of David’s management of the site. I think he’s doing us all a great service just demonstrating how he thinks and how he carries out these trades. We need to learn to think like he does on some of these matters. We don’t need to follow his every trade advice to the letter. In fact we shouldn’t. When he posts a trade idea, my first instinct is to pick it apart. I look for what could be wrong with his logic. I reject a number of his trades as illogical, and I’m often right. But he’s obviously right most of the time, as per his record. So I learn from him. But I don’t always follow him. Nuff said.

David Ristau
March 12th, 2010 at 1:46 pm | PermalinkIgnore this user

Lflan -

Appreciate the commentary. It shows some great insight.

jromeha
March 12th, 2010 at 2:01 pm | PermalinkIgnore this user

As a person who FOLLOWS most the trades, I will second the support for D. Everybody is always quick to complain when things go wrong but no one hits 100% of the time. Remember INFY or BIG? Sh!t, if you just bought 10-20 options on his big lots trade would wouldve make 5-10k….

David Ristau
March 12th, 2010 at 2:06 pm | PermalinkIgnore this user

Jro -

Thanks for the support as well. Did you make some cash on that HRBN Short Sale yesterday?

David Ristau
March 12th, 2010 at 2:20 pm | PermalinkIgnore this user

Hey all,

I will be out for the rest of the afternoon. Good discussion today. I will have a post up over the weekend.

Have a nice weekend.

fuzz
March 12th, 2010 at 2:21 pm | PermalinkIgnore this user

lflantheman
Even though I am using this in a similar manner as you do and I don’t necessarily get into all of David’s picks due to my own judgement (like I just couldn’t force myself to get into GMXR yesterday even though I watched it for some time). I would probably disagree that this can not be used as a place to get trades from. David sets pretty precise rules for his trades, his picks are pretty liquid 95% of the time and have sufficient volume for several subscribers to get in/out without affecting the price significantly. So I don’t really see the reason why one can’t replicate his trades for the most part. They won’t be exact to a penny, but you can get pretty damn close imo.
A few things to consider though, like … schedule. This is the biggest thing for me, day picks often require "babysitting", so don’t do those if you think you might be unavailable to do so. Overall though – set your stops, pay attention and it won’t be bad.
I don’t disagree with the learning value of David’s posts, however, we gotta realize that not all of us are full time traders (I’d guess that almost none are). And even if we do learn to do what David is doing right now (which is still fairly tough without him giving out his analysis process, rather than a product of that analysis) - a lot of us simply don’t have time to do it. I know I am busy most of the time (hell, I sleep 4-5 hrs /day) and I don’t think I can squeeze in another couple of hrs / day to search for stocks for day trades. I’d rather settle with my favorites as I do most of the time (stocks that I think I can predict) and trade those. That’s why this service exists in the first place. If you really want to learn the analysis and techniques there are probably more direct ways of getting this information.
jromeha
Haha, big lots … I was sitting at the airport coming back from a vacation when I sold em and was thinking that I just paid for entire vacation + have enough left to take another one.

David Ristau
March 15th, 2010 at 1:07 pm | PermalinkIgnore this user

Sorry I didn’t have a post today. I was traveling yesterday and was not able to post today. I will get back on top of this tomorrow, and I apologize for the inconvenience.

David

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