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The Oxen Report: As Summer Closes, We are Loving the Shorts

Hello all. Ah the fairness of the market. Record record profits, beat revenue and EPS estimates, guide in-line moving forward, and drop 3%. Or, you can be our upcoming pick and further your losses, guide below, beat EPS estimates, and have no turn to profit in sight…and jump 4%. Makes sense right. This is one of the main reasons why I feel that buying is not for me right now. I am holding our Buy to Overnight to start the morning at least for a little bit. I want to see what it can do. 

Otherwise, we are avoiding all buys. This market is just atrocious…

 

Short Sale of the Day: Energy Conversion Devices (ENER)

Analysis: We are avoiding the buys today, and we are looking at a short that can complement what appears yet another sliding downwards day. Today, we have Energy Conversion Devices (ENER). The company is energy convertor company that supplies materials, tools, and consulting for renewable energy companies mostly in the solar industry. The company, this morning, reported an earnings beat with a loss of 0.48 per share. The company was expected to be at -0.60. One year ago, however, the company was at -0.37. Further, the company guided below what was expected mobing forward. Yet, the stock is up nearly 4% in pre-market trading. Why?

I am not sure, and that is why it is a great short sale candidate. The stock has lost a lot of value moving into earnings, and it did not have a ton more downside prior to this morning. The 4% movement puts it into a short term overvaluation, and I do not think its earnings are strong enough to support such valuation. 

The stock is definitely going to have trouble maintaining its gains because of its guidance and the fact that it is a trader’s stock. It is below $5, so a lot of institutions stay away from the stock. Therefore, I expect a lot of profit taking to be done since short term traders are involved. 

Technically, the stock was in the pits, but a gain of 3-4% will really change the short term picture of this stock. It will become a bit oversold, fair valued, and move near its 50-day moving average. All that will give it a temporary ceiling, and it will either break through or fall. I am thinking after early gains, it will fall.

Entry: We are looking to enter at 4.15 – 4.25.

Exit: We are looking to exit for a 2-3% gain.

Stop Loss: 3% on bottom.

 

Good Investing,

David Ristau

This entry was posted on Tuesday, August 31st, 2010 at 9:22 am and is filed under Uncategorized. You can leave a response, or trackback from your own site.

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Comments



  1. garbon
    August 31st, 2010 at 9:25 am | PermalinkIgnore this user

    Stop loss on bottom; should be on top for a short.

  2. garbon
    August 31st, 2010 at 9:39 am | PermalinkIgnore this user

    My Fidelity account says ENER cannot be shorted.

  3. etradingsignals
    August 31st, 2010 at 9:40 am | PermalinkIgnore this user

    out of DCI yet?

  4. garbon
    August 31st, 2010 at 9:54 am | PermalinkIgnore this user

    David
    A bizarre way to start my first day on your site. Looks like a really good call on ENER. But Fidelity will charge a 12% fee to short it because they don’t have enough shares and have to go get them themselves (??). I’m gonna have to pass on this one.
    GARBON

  5. jthoma
    August 31st, 2010 at 10:26 am | PermalinkIgnore this user

    Garbon- Fidelity is screwing you silly- the fee to borrow should be 1% or less for the time borrowed!

  6. garbon
    August 31st, 2010 at 10:28 am | PermalinkIgnore this user

    jthoma    Who do you use? GARBON

  7. jthoma
    August 31st, 2010 at 10:31 am | PermalinkIgnore this user

    I actually am a broker and we charge 1-2% for time borrowed- wish I knew who would be more reasonable with you- perhaps you could talk to a full service brokerage firm and have an account just to short with- they will give you a very fair deal if you want no help or advise but strictly executions.

  8. garbon
    August 31st, 2010 at 10:34 am | PermalinkIgnore this user

    Apparently this happens if it’s a fairly-thinly traded stock. I won’t sweat unless it happens again. Thanks for the suggestion.

  9. jthoma
    August 31st, 2010 at 10:38 am | PermalinkIgnore this user

    not a problem- if you have the same issue let me know and I will give you a contact to call- good trading!

  10. David Ristau
    August 31st, 2010 at 11:15 am | PermalinkIgnore this user

    Oxen Alert – Position Update

    The world may be righting itself a little bit. 

    DCI – After what was looking to be a horrible start to the morning, I believed in the earnings report. It was a strong one. It paid off as DCI went to 42.73. I took myself out at 42.64. for a 1.25% loss.

    ENER – We got involved at 4.25 this morning and the stock quickly dropped to 4.14, so I was able to take a 2% gain at 4.17. It was literally a flash trade. At its current levels, in the 4.30s, this stock is still a nice short for sure.

    Good Investing!

  11. David Ristau
    August 31st, 2010 at 11:16 am | PermalinkIgnore this user

    Jthoma -

    Thanks for the help with Garbon. Definitely should avoid buying things with that kind of bull****.

  12. jthoma
    August 31st, 2010 at 11:45 am | PermalinkIgnore this user

    Not a problem- glad to help anytime as I do have insight into the brokerage industry and what should and should not be

  13. David Ristau
    August 31st, 2010 at 11:58 am | PermalinkIgnore this user

    Jthoma -

    That will definitely be helpful. You can help us convince people that they get a good deal on sites like this.

  14. David Ristau
    August 31st, 2010 at 12:06 pm | PermalinkIgnore this user

    Narrowed down an OT!!!

  15. David Ristau
    August 31st, 2010 at 12:06 pm | PermalinkIgnore this user

    LTXC

  16. garbon
    August 31st, 2010 at 12:14 pm | PermalinkIgnore this user

    David,
    Another thing that would be helpful to know is how you managed to get the entry/exit prices you quoted at (I guess at 0931 when there was a 4.25-4.14 spike).  Did you have the entry/exit limit orders set before the market opened?

  17. jthoma
    August 31st, 2010 at 12:28 pm | PermalinkIgnore this user

    We all can thank FINRA and the SEC for our cost of trading. It used to be you could have a fee based account and unlimted trading, which for active people was absolutely the way to go. In their wisdom to protect you they have said all fee based accounts must be "advisory" in nature- therefore we can no longer let the public trade for a flat fee as if they enter their orders themselves we are not fullfilling or "fiduciary requirement " to advise them- regulators are our doom!

  18. etradingsignals
    August 31st, 2010 at 12:34 pm | PermalinkIgnore this user

    David, along the lines of garbon’s question, I would also like to get more insight into your entries and exits. Your original entry point for the ENER trade was the 4.25 which was at the higher end of the range you had suggested. Given that, I would have expected u to set a soft profit target at around 3%. But you chose to close out the trade with 2% (within a matter of seconds). Why did u choose that? Why did u think that the market wasn’t going to drop more?
    This is a trade where the entry time and exit time, are such that even couple of seconds could make it unprofitable. It would have very much helped if you had an alert sent out that u have already exited.

  19. David Ristau
    August 31st, 2010 at 12:52 pm | PermalinkIgnore this user

    Oxen Alert – Overnight Trade

    To preface this stock pick, this is HIGH RISK. The stock that I am taking a look at today is one that I have been waiting to report earnings for some time because the reward could be outstanding. The problem is that the price is so low that it definitely has significant risk attached with it. Reward could be great, however.

     

    Overnight Trade: LTX-Credence Corp. (LTXC)

    Analysis: Has semiconductor equipment steered us wrong yet? Not at all. It has been very good to us (I’m knocking on wood). Today, I think we have found another very solid semiconductor equipment company poised to report some very solid earnings and actually be able to give us a solid return. One that we have not seen for some time it appears.

    The stock is LTX-Credence Corp. (LTXC). The company designs test equipment for semiconductors in the automotive, wireless, consumer electronics, and computing industries. There are a few attractive things about LTXC: the industry’s success so far in this reporting season, the company’s undervaluation, and the company’s turn to profit from one year ago.

    First, LTXC is set to report an EPS of 0.10 vs. a loss of 0.07 one year ago. One of the most powerful movers in any industry is the turn to profit. All five analysts that cover LTXC believe that the company will hit a 0.10, so the turn to profit seem extremely likely. The industry, itself, has had unbelievable success in turning success this past reporting season. Since the beginning of July, 28/31 companies have reported better than expected EPS.

    So, one would assume that LTXC would be soaring moving into earnings. It is not. The stock is sitting at a 30% decline since the beginning of August. It is down the day before it reports earnings. Are we setting ourselves up? Does no one else see what I see? 

    The stock is literally a penny stock now that is mostly traded in very short term. A penny here makes money and a sell takes place. There are not a lot of investors in this one. Is that a problem? In some ways, yes, if we wanted to hold onto this stock. At the same time, it will help drive the price up significantly on a good earnings report because traders are likely to hold out for short term gains and it is not heavily institutionalized. 

    In the past quarter, the company has had a quiet one, but they did receive initiation from DA Davidson that rated it as a buy. The company gave a number of semiconductor equipment companies buy ratings at the beginning of July before the earnings season as it saw opportunities for great growth. The company got a target of $5. The company also was included in the Russell 3000. 

    LTXC is most closely competing with Teradyne (TER). If you remember Terdayne, you remember the money you made off of them. I think LTXC is going to have an easy time making a solid bounce tomorrow given its valuation compared to prospects for very positive earnings. Get in!

    Entry: We are looking for entry at 2.20 – 2.25.

    Exit: We are looking to exit tomorrow morning.

    Stop Loss: None.

     

    Good Investing,

    David Ristau

  20. David Ristau
    August 31st, 2010 at 12:56 pm | PermalinkIgnore this user

    Garbon and Etrading -

    Well, I always go to towards the high end of my ranges for a short sale, mostly because of my greed but also because stocks tend to jump to the high end. I saw it jump from 4.25 to 4.14, put in a market order and it filled. I am not sure what’s so complicated about it? I set the ranges, so you can put in orders before or right when the market opens. That way you get filled at a place I like instead of way too low or too high. Then, when I saw it drop to a 3% gain, I filled my order just like my exit range suggested. I apologize for not sending the entry/exit alert.

    Jthoma -

    Thanks for the interesting insight from the real world of investing.

  21. jthoma
    August 31st, 2010 at 12:59 pm | PermalinkIgnore this user

    david- love the play win lose or draw

  22. David Ristau
    August 31st, 2010 at 1:01 pm | PermalinkIgnore this user

    Jthoma -

    In LTXC?

  23. jthoma
    August 31st, 2010 at 1:28 pm | PermalinkIgnore this user

    yes- trading this one fairly big so cross our fingers and sai our prayers!

  24. David Ristau
    August 31st, 2010 at 1:43 pm | PermalinkIgnore this user

    Jthoma -

    Only cross one finger.

  25. jthoma
    August 31st, 2010 at 1:47 pm | PermalinkIgnore this user

    I think a beautiful play in this type of market as it takes somthing significant to fight the recent tape trend

  26. David Ristau
    August 31st, 2010 at 1:57 pm | PermalinkIgnore this user

    Jthoma -

    Yep definitely.

  27. SaiRam
    August 31st, 2010 at 2:13 pm | PermalinkIgnore this user

    David,
    Are you in for LTXC?

  28. David Ristau
    August 31st, 2010 at 2:20 pm | PermalinkIgnore this user

     Sai -

    I am in at 2.20.

  29. sydney99
    August 31st, 2010 at 2:30 pm | PermalinkIgnore this user

    David
    I have been looking at  HLF  buying sept. 55 calls at 6.20 or less
    This has been a recommendation from Schaffer
    I have never bought short term calls i usually sell calls or puts
    Any thoughts
    Syd

  30. David Ristau
    August 31st, 2010 at 2:48 pm | PermalinkIgnore this user

    Sydney -

    Market is definitely probably going to rebound over the next couple weeks after a significant drop off. The stock has had some strong movement, but it has tapered off. In another bull run, it definitely has upside. Not much on its own however. It will do well if we can get some green days.

  31. SaiRam
    August 31st, 2010 at 3:12 pm | PermalinkIgnore this user

    David,
    I have JCG Sep.32.5 calls.I need your suggestion to hold this one.

  32. SaiRam
    August 31st, 2010 at 3:26 pm | PermalinkIgnore this user

    Sorry JCG Dec 32.5 calls

  33. David Ristau
    August 31st, 2010 at 3:55 pm | PermalinkIgnore this user

    Sai -

    How are you doing with them? Up or down?

  34. SaiRam
    August 31st, 2010 at 4:01 pm | PermalinkIgnore this user

    50% down

  35. David Ristau
    August 31st, 2010 at 4:06 pm | PermalinkIgnore this user

    Sai -

    Well you just held it through an awful bear market. Give it two weeks, and you will recoup a lot.

  36. SaiRam
    September 1st, 2010 at 9:10 am | PermalinkIgnore this user

    David,
    Why LTXC is down in the premarket?

  37. SaiRam
    September 1st, 2010 at 9:24 am | PermalinkIgnore this user

    David,
    Are you selling LTXC in the market open?

  38. SaiRam
    September 1st, 2010 at 9:37 am | PermalinkIgnore this user

    David,
    We need your help this panic time.Where are you?

  39. SaiRam
    September 1st, 2010 at 9:52 am | PermalinkIgnore this user

    David,
    Are you holding LTXC for Earnings call?

  40. David Ristau
    September 1st, 2010 at 10:21 am | PermalinkIgnore this user

    Sai -

    What’s the rule? We always get out at open. I got out at 2.20. Cmon man you know the rules.

  41. SaiRam
    September 1st, 2010 at 10:23 am | PermalinkIgnore this user

    Some trades you are holding if the market is green,if earnings are good.

  42. SaiRam
    September 1st, 2010 at 10:27 am | PermalinkIgnore this user

    Do you want me to sell @ 2.10.Is there any chance that the stock goes up?

  43. bobhu
    September 1st, 2010 at 10:31 am | PermalinkIgnore this user

    Good morning David,
     
    Out my CAAS at 14,93 with a nice 3%…  Thanks.

  44. David Ristau
    September 1st, 2010 at 10:33 am | PermalinkIgnore this user

    Sai -

    If you are still holding onto this one, then I would jsut get rid of it. It can’t even advance on the best day we have seen in months.

    I don’t know what is going on right now. I can’t catch a break. Again an earnings and revenue beat and good guidance. Why the drop? I can’t explain it.

    Just sell.

  45. garbon
    September 1st, 2010 at 11:07 am | PermalinkIgnore this user

    Maybe it was caused by this: "But the company’s forecast for the quarter ending in October suggested the company could fall short of Wall Street expectations." (http://finance.yahoo.com/news/LTXCredence-posts-4Q-profit-apf-1858832860.html?x=0&.v=1)

  46. David Ristau
    September 1st, 2010 at 11:18 am | PermalinkIgnore this user

    Garbon -

    Maybe…but the company should not see such a decline when already so undervalued. Its not financially correct, but that is the market for you.

  47. jeanc
    September 1st, 2010 at 11:33 am | PermalinkIgnore this user

    Hi David,
    CSIQ seems to be on a roll. Earnings tomorrow.
    Do you have any expectations from here on?

  48. David Ristau
    September 1st, 2010 at 11:41 am | PermalinkIgnore this user

    Jean -

    Where you get that info? CSIQ announced their earnings on August 19. Check this: http://finance.yahoo.com/q/ce?s=CSIQ+Company+Events

  49. jeanc
    September 1st, 2010 at 11:53 am | PermalinkIgnore this user

    Apologies!
    saw conference call announcement for Sep 2nd and made wrong assumption  at http://biz.yahoo.com/cc/7/116577.html

  50. David Ristau
    September 1st, 2010 at 11:57 am | PermalinkIgnore this user

    CSIQ is one of the shadiest companies ever. They have "earnings" coming out all the time…

  51. David Ristau
    September 1st, 2010 at 12:02 pm | PermalinkIgnore this user

    Hey all,

    I have just got done posting a new story about my portfolio that tracks our picks through August. We ended the month up 62% on the year from the beginning with our portfolio. We had a 5% increase month-over-month. Our Short Sale Portfolio was lights out with a 10% growth to make it 21% growth on the year. 

    Check it out here!

     

    Good Investing! 

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