Posts Tagged ‘IM’

Fall-Back Thursday – Time To Get Real?

Do you REALLY think this will go on forever?

On the right is the AAPL quarterly chart but it could also be the quarterly chart of SHLD, NFLX, FOSL, STX or PCLN (Bespoke Chart), all of whom are up more than AAPL (which is up 50%) in 2012.  We've discussed PCLN as one of my favorite shorts and we had a good discussion in Member chat last night comparing PCLN to EXPE, who drop the same amount of cash to the bottom line (before buybacks and dividends) but have just 1/8th of the market cap of PCLN.   

Sure you can say that PCLN is twice as good as EXPE (it isn't, but you can say it) but can you say it's 4 times as good?  How about 8 times?  EXPE nets $500M a year – 8 times that is $4Bn – more money than the entire travel sector makes!  How, exactly, will PCLN grow into that valuation?  Eliminate all competition and then grow the sector by 50%?  Well, that's pretty much what AAPL did but how many AAPLs can you have in one market?  

THAT is the problem my friends.  Aside from the macro concerns we discussed in yesterday's post, we have a sort of value mania that is driven by the very real success of one company, much the way we had a dot com boom in the late 90s driven by the very real success of just a few companies.  Back then, everyone was the next QCOM, YHOO, MSFT, CSCO – whichever category you were supposed to be the best.  Qualcomm, in fact, was the best performing tech stock of 1999, gaining 2,619% that year and finishing right about $100.  By the end of July, 2002, they were trading at $10 but hey, what a ride!  

In fact, here's the CNet story from Dec 29th, 1999 titled "Qualcomm Jumps on $1,000 Price Target" and coming on the heels of "Qualcomm to offer Net2Phone services in Eudora" it's no wonder people were super-excited!  AMZN was "only" up 25% that year to $100 but Jeff Bezos was Time's Man of the Year and yes, their business has been growing at an amazing rate for the past 12 years and they have crushed their competition and dominated the sector – and gained less than 6%…
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Dark Horse Hedge is Rocking On

By Scott at Sabrient and Ilene 


Screen shot 2011-03-07 at 11.15.05 AM Stand up and be counted
For what you are about to receive
We are the (primary) dealers
We’ll give you everything you need (free money!)
Hail, Hail to the good times’
Cause rock has got the right of way
We ain’t no legend, aint no cause
We’re just livin for today (the Fed)

For those about to rock, we salute you – AC/DC

Dark Horse Hedge is Rocking On

With February and the most of earnings season passing, we decided to "stand up and be counted" with a summary article on the VIRTUAL Dark Horse Traders’ Hedge (DHH) virtual portfolio.  

Our mission has been to generate absolute returns through the use of a tilted Long/Short strategy that remains market neutral, but with a partial bias towards momentum (as defined by measuring the S&P 500 relative to its 50 and 200 day Moving Averages). We have been tilted to the long side since October 2010.  

Over the long term, reasons for using such a strategy include being positioned to take advantage of both bull and bear runs. As evidenced by the near zero returns of the market over the last 10 years, buy-and-hold strategies are majorly flawed. The market also teaches hard lessons to those who attempt to predict direction, and has forced many retail investors to reconsider their strategies after being pounded in 2001 and 2008.  

Alpha is a measure of a return over and above a benchmark index’s return, and Beta is a measure of the virtual portfolio’s performance as it is correlated to movements of the market.  With DHH, we strive to optimize Alpha while minimizing Beta to protect our virtual portfolio in up and down markets. Beta is reduced by holding both Long and Short positions and using a rules-based approach to determine which stocks have the best chacteristics to benefit when the market is rising, and conversely to determine which stocks are most apt to perform poorly when the market is falling. In other words, we want to be long stocks of the best companies and short stocks of the worst companies – we want to identify the "tails" of a market, index, sector or basket of stocks.

Once a virtual portfolio of Long and Short stocks is established, then it is a matter of gaining the desired exposure using the available…
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DARK HORSE HEDGE – Any way the wind blows, doesn’t really matter

Housing-keeping note: Thanks to WordPress’s destruction of Phil’s Favorites site (and replacement with an invite to sign up for its service!), I’ve been relocating my blog to TypePad.  Benefits: it looks better, is very user friendly and offers an easy way to search archives for any topic. One unique feature is that while exploring the internet, I can simply click on a button to post an excerpt of an interesting article with a link to the full article. That ability allows me to post links to articles that are worth reading when I do not have reprinting permission, such as articles from major news sources. 

The new Favorites site is here.  I’ve also created a website for Dark Horse Hedge, here.  - Ilene 

DARK HORSE HEDGE – Any Way the Wind Blows, Doesn’t Really Matter

By Scott Brown at Sabrient & Ilene at Phil’s Stock World

Is this the real life? 
Is this just fantasy? 
Caught in a landslide 
No escape from reality 
Open your eyes 
Look up to the skies and see 
I’m just a poor boy (Poor boy) 
I need no sympathy 
Because I’m easy come, easy go 
Little high, little low 
Any way the wind blows 
Doesn’t really matter to me, to me

Queen, Bohemian Rhapsody

 *****

Ilene and I started the Dark Horse Hedge on July 1, 2010 with the goal of helping self-directed investors weather any storm, no matter which way the wind was blowing.  Today completes the second month of publishing the Dark Horse Hedge and we thought it would be a good time to review.  

 

September 1976:  British rock group Queen at Les Ambassadeurs, where they were presented with silver, gold and platinum discs for sales in excess of one million of their hit single 'Bohemian Rhapsody'. The band are, from left to right, John Deacon, Freddie Mercury (Frederick Bulsara, 1946 - 1991), Roger Taylor and Brian May.  (Photo by Keystone/Getty Images)

The
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DARK HORSE HEDGE

DARK HORSE HEDGE Weekend Catch-Up 

By Scott at Sabrient and Ilene at Phil’s Stock World

Hedging into the week of August 2nd, the Dark Horse Hedge (DHH) is in a BALANCED tilt (long to short ratio) with 8 LONG and 8 SHORT positions. We used Phil’s BUY/WRITE strategy to enter two of our LONG positions (IM and GCI) at a 10-20% discount to the market.  As you can see from the chart, the SPX wandered between the 50 and 200 day moving averages (MAs) all week before whimpering towards the bottom of the channel Thursday and Friday. The 12-26-9 MACD which is the faster of the 2 technical direction signals we follow has flat-lined at just above +6 and the slower RSI 14-day still remains just below 50.

Without some impressive economic reports coming this week or much better than expected earnings reports, we believe the market will drift down towards and test the 50 day MA. If a bullish tone sets back in, it is doubtful that it could easily push through the 200 day MA.  Resistance points as well as the 50 and 200 day MAs all which fit into a fairly narrow trading channel.

[chart from FreeStockCharts.com]

We are happy with the positions we put on in DHH’s first 30 days of existence and we look forward to capturing more profit as the companies report earnings this week.  We will continue to take profits "after the news" and rotate into newer, fresher positions while keeping an eye on the overall market to adjust our tilt for maximum Alpha*, which is why we all write and read DHH. 

Summary of DHH positions in the virtual portfolio

LONG: XRTX, WDC, GCI, IM, DLX, GME, FRZ, and TEO  

SHORT: AIV, STI, HUSA, USG, CLDA, TEX, RAIL, and JOE 
 
Read previous DHH actions and follow our latest portfolio moves here. > 
 
*We are aiming to be hedged in our market exposure by being long stocks with the greatest potential to rise and short stocks with the greatest potential to decline.  To identify these winner and loser stocks, we use Sabrient’s Value Change Up (VCU) assessment system. Sabrient’s VCU system is a multi-factor quantitative ranking system that scores over 2,000 stocks and allows us to enter LONG positions in the best ranking stocks and SHORT positions in worst ranking


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DARK HORSE HEDGE – After the BOOM!

DARK HORSE HEDGE – After the BOOM! 

Add Clinical Data, Inc. (CLDA) SHORT at the market, 7/30/10

Silhouette of Horses Jumping a Steeplchase

Clinical Data, Inc. operates as a global biotechnology company developing early and late stage targeted therapeutics, as well as genetic and pharmacogenomic tests that detect serious diseases and help predict drug safety, tolerability, and efficacy.

After taking profits on earnings sell-offs from AMAG and BOOM, we are adding Clinical Data, Inc. (CLDA) as the 8th SHORT in our currently BALANCED tilt.  CLDA is rated a STRONGSELL by Sabrient with a BALANCE SHEET score barely registering at 1.1 (out of 100) and almost non-existent FUNDAMENTALS score of 0.3 (out of 100).  These rosy figures combine with five analysts forecasting a second quarter loss of -$.63. That is coming off a mind-numbing first quarter loss of -$1.44 per share, compared with expectations for only losing -$.63.  These negatives provide us with a heavy dose of “preponderance of evidence” to believe CLDA is a reasonable SHORT at the market, Friday July 30, 2010.    

***** 

EARNINGS UPDATE: Ingram Micro (IM)

 

Ingram Micro (IM): LONG with Phil’s Buy/Write strategy in DHH virtual portfolio

As expected in our July 26, 2010 post, IM posted better than expected results and higher revenues after the market closed on Thursday.  Analysts had been forecasting a profit of +$.37 per share and revenue of $7.9B, but IM delivered a healthy +$.44 per share and revenue of $8.2B.  "Every region performed well, with our two largest regions doubling and tripling operating profits on double-digit sales growth," Ingram Micro Chief Executive Gregory Spierkel said in a statement.  That is the type of BOOM! (see BOOM! article this morning) statement we like to hear from our long stocks. 

We feel very comfortable with the position we put on using Phil’s Buy/Write Strategy. IM is trading +1.67% today at $16.44.  Recall that we took in $2.50 in option premium on Monday by selling the December 2010 $17.50 calls and puts.  On Monday, we wrote

Add LONG Ingram Micro (IM) at the market Monday July 26.

We like IM leading into its earnings announcement on July 29, 2010.  The 10 analysts covering


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DARK HORSE HEDGE’S BALANCING ACT II

DARK HORSE HEDGE’S BALANCING ACT II

By Scott Brown at Sabrient and Ilene at Phil’s Stock World

Close-up of a discount coupon

How do we explain our shift towards Long/Short balance when the economic news appears so discouraging?  There’s an interesting article in TIME discussing why multinational companies may be doing well their worldly operations, even though our U.S. economic appears terminally ill.  As Zachary Karabell writes in "With Stocks, It’s Not the Economy:

Stocks are no longer mirrors of national economies; they are not — as is so commonly said — magical forecasting mechanisms. They are small slices of ownership in specific companies, and today, those companies have less connection to any one national economy than ever before.

As a result, stocks are not proxies for the U.S. economy, or that of the European Union or China, and markets are deeply unreliable gauges of anything but the underlying strength of the companies they represent and the schizophrenic mind-set of the traders who buy and sell the shares. There has always been a question about just how much of a forecasting mechanism markets are. Hence the saying that stocks have correctly predicted 15 of the past nine recessions. At times, stocks soar as the economy sours (in 1975, for instance) or sour when the economy soars (as with China’s stock market, the Shanghai stock exchange, in the past year).

Decoupling, of course is a matter of degree.  In the long run, the world economy is affected by the economies of all the nations that make up the world, and businesses do not conduct themselves in a vacuum.  Some special cases may thrive in the worst of conditions, but most companies probably will not, and eventually the world’s economies will have some impact on the multinational corporations. Thus, we have not changed our tepid view of the U.S. economy and the stock market’s prospects for the longer term. As David Rosenberg writes in his market thoughts earlier today, at Zero Hedge, "Ever Wondered How You Know You Are In A Depression?":  

Everyone seems to be basing their view on the economic outlook from what the stock market is telling them – so one week it is a return to recession, and now that the market is surging, we must be in some sort of boom. Coincident indicators out of Europe has everyone convinced that the


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Zero Hedge

Trump's $50 Billion Farm Deal Is Fantasy After Trade War Market Shifts

Courtesy of ZeroHedge View original post here.

Industry insiders have told South China Morning Post (SCMP) that President Trump's alleged $50 billion agriculture deal with China is merely a fantasy, used to stimulate his Farm Belt supporters ahead of an election year, and even used as a communication tool to drive the stock market to new highs. Still, the likelihood of it actually happening is very low.

SCMP notes that China has never confirmed the $50 to ...



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Phil's Favorites

What is an oligarch?

 

What is an oligarch?

Boris Yeltsin shakes hands with Russia’s most powerful businessmen in Moscow. AP Photo

Courtesy of Joel Samuels, University of South Carolina

With the impeachment hearings for President Donald Trump under way, several American diplomats and ...



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The Technical Traders

When Oil Collapses Below $40 What Happens? PART III

Courtesy of Technical Traders

This, the final section of this multi-part research article, will continue our exploration of the consequences that may result from our ADL predictive modeling system’s suggestion that Oil may continue to fall to levels below $40 over the next few months. 

In Part I and ...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Insider Scoop

Glass House Group Appoints Graham Farrar As President

Courtesy of Benzinga

Glass House Group, a California-based cannabis and hemp company, earlier this week appointed Graham Farrar as president.

In his new role, Graham will oversee the company’s short and long-term business strategies, budgets and operations, and report up to Glass House Group CEO Kyle Kazan.

A long-time entrepreneur and an original team member of both Sonos (NASDAQ: SONO...



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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Kimble Charting Solutions

Silver Testing This Support For The First Time In 8-Years!

Courtesy of Chris Kimble

Its been a good while since Silver bulls could say that it is testing support. Well, this week that can be said! Will this support test hold? Silver Bulls sure hope so!

This chart looks at Silver Futures over the past 10-years. Silver has spent the majority of the past 8-years inside of the pink shaded falling channel, as it has created lower highs and lower lows.

Silver broke above the top of this falling channel around 90-days ago at (1). It quickly rallied over 15%, before creating a large bearish reversal pattern, around 5-weeks after the bre...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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