I have been very bearish on Commercial Real Estate names in general but I just want to elaborate more on this and further explain my beliefs. I began building short positions in January, on FRT, MAC, and KIM, while being long the SRS (2x inverse of Dow Jones Commerical Real Estate Index) for some extra “juice”. I covered all of my shorts and sold the SRS towards the end of February and am just about ready to go again.
One of the biggest reasons I don’t like REITs is their dividend policy. The IRS has allowed the REITs to pay 90% of their dividends, in the form of stock. This is obviously a way to help the REITs conserve cash; however, some REITs have such high debt levels, it may not matter. In addition, if I owned a REIT, why would I want to get stock as a dividend, when most of the commercial real estate stocks have plunged 50-70%? In addition, what about the dilution of stock ownership? Even though these dividends may yield 8-10%, the dividend payment is in the form of stock. VNO is one of the REITs that has done this and I truly believe it would be better (for the investor) if the REIT would reduce the dividend. I believe SLG did this to conserve about $90 million in cash. I expect this trend to continue since commercial real estate continues to weaken and as the policy deepens; I personally believe that many investors will dump these REITs.
Another reason why I don’t like REITS is due to the heavy debt load that many REITS carry on their balance sheets. Many firms like GGP were highly levered and had very low cash levels, compared to their debt outstanding. I don’t have the numbers if front of me but I believe GGP had $140 million in cash but $24 billion in long-term debt…not good! In addition to this, refinancing much of this debt is incredibly hard to do right now. The CMBS market used to fund $150-250 billion each year and now the market has very little activity, if any. REITS may be forced to sell “prized” assets to get cash because of the weak CMBS market; however, they will have to sell at depressed prices and buyers may be difficult to find. Free cash flow and liquidity will be “key” for these REITs, in order to withstand this terrible market.
With that being said, there are several types of REITs: Industrial, Retail, Office, Hotel, Diversified, Healthcare, Senior Living, etc. I pulled together a list of REITs that are having serious problems and will set up for a nice play via short selling or put buying. However, this is “Part 1” and I will post a stock list tomorrow in “Part 2”.
Saturday, March 14, 2009
RF Position Update: TTWO
Source: StockCharts.com RT will expound on this more over the weekend, but I just wanted to address a few e-mails regarding the TTWO trade. Above is a chart, highlighting the movements as of late. The new trend (channel highlighted in blue) shows that the old trendline (red highlight) has been broken and we are on our way on a "up" trend. In addition, the RSI (Relative Strength Index) is at 56.13, and is also on a upward trend. The RSI, for a given stock, ranges between 0-100. Any stock with a RSI below 30 is to be considered "oversold" and any stock with an RSI above 70, is to be considered "overbought". Hence, the channel boundaries in the RSI section of the above graph. In addition, we are above the 50 day MA (Moving Average). MA's are a nice tool to use when evaluating trends. When the price is above the MA, it highlights an upward trend. On Friday, we hit great another great day, holding above the 50 Day MA; however, volume was light, only about 860k shares traded, compared to the normal average of 1.5M.
As for exit points, I look at the RSI. More importantly, I will keep an eye on a few price points. $7.78 seem likes the next test and if we blow through that, as well as the $8.30 high on Feb.10th, I think we have a good chance of going to $10 (given we have a fair market).
We've had a nice run since the write up on Wednesday night, up 15.67% since Thursday morning. Hopefully this will give you somewhat of a "guide" and as a someone once told me "you can't go broke by taking profits".
RT will be back later with his Analyst "hat", highlighting the fundamental scope of TTWO, I am looking forward to reading it.
Update II: Wedbush Morgan Analyst Upgrades TTWO 3/6/09
Friday, March 13, 2009
Finding Value in Healthcare
Healthcare is one of the few sectors that has kept an "overweight" rating in 2009. Today, the call options in HUM were on fire, drawing very high volume. The March $30 call went from $.05 to $.50, resulting in a 1000% return, on 21,000 contracts, with only 2,000 in open interest. That kind of volume on HUM signals that it is a "takeover target". I went to do some research, to find that HUM has nearly $26 of cash per share and the stock is trading at $24.50! what value! After seeing this, I began to research some names and below is a list of "Healthcare Value Plays" that could also be possible "takeover targets" or better yet, great long positions. Cash is king in this environment and each of these names have great cash levels.
HUM, HNT, VVUS, REGN, ARNA, AMLN, CYPB, HS, MEDX, AGP, KG, SVNT, UNH, ALKS, ISIS, ONXX, PFE, ACOR, LGND, ALGN, ISRG, IM, PPDI, BMY, AMGN, SGEN, UTHR,VRTX
HUM, HNT, VVUS, REGN, ARNA, AMLN, CYPB, HS, MEDX, AGP, KG, SVNT, UNH, ALKS, ISIS, ONXX, PFE, ACOR, LGND, ALGN, ISRG, IM, PPDI, BMY, AMGN, SGEN, UTHR,VRTX
Market Wrapup - March 13th
What a week. Financials rallied, M&A in the Pharmacutical/Biotech Industry continued, and Jon Stewart totally destroyed Jim Cramer. Into the close, I sold my FAZ position, for a tiny profit, considering it was up to $45 today. I think financials are a nice short here, since they have rallied so much. SKF and FAS are nice plays, that will get you short. If the financial index drops 5-10%, these funds rip 10-30%. I will say that the volatility on these funds are extremly high, so keep tight stops and use them as swing trades, not momentum trades. In addition, I sold all of my longs this morning except for TTWO. I still like TTWO and even PCR. I may buy back PCR later because I like the stock; however, construction is facing a tough economic environment and can get crushed in a bear market. I initiatied a small short position in VTR (healthcare REIT) and I will continue to build into that one, as well as some other REITs. I also have about 15 put contracts on the SSO ($15 March), so I will hold them (since its house money) and dump them sometime next week. Lastly, I still own SDS (cost avg. around low $90's). As for the day, my portfolio value was up $312. Right now I am in mostly cash (90ish%) because I am going out of town next week and won't be able to trade until Wednesday.
I believe Trade 247's Top Contributor, RT, will be back this weekend with some great analysis on TTWO. He had some great picks on 3/10, so I am excited and ready for the read. As requested by Dennis, I provided my e-mail on the left side on the blog. Feel free to e-mail me about any stock picks, analysis, or if you would like to provide some weekend commentary!
My Top Pick: Cash. (Ok, if I had to do something and felt wild, I would take a shot and short finanicials via SKF, FAZ, short XLF, or short UYG. I think its a quick profit since financials have had a nice run and "big money" will take profits. I also heard today that Direxion is considering a reverse split on the FAS, to reduce volume but who knows. On the short side, I have some commerical real estate ideas, via REITs, as well as a few other ideas. I will elaborate later.)
Trader Disclosure: Each post on this blog, highlighting buys or sells, are personally bought and owned by RF. The blog contains RF's personal views and does not act as investment advice or recommendations, instead these are real-time purchases.
I believe Trade 247's Top Contributor, RT, will be back this weekend with some great analysis on TTWO. He had some great picks on 3/10, so I am excited and ready for the read. As requested by Dennis, I provided my e-mail on the left side on the blog. Feel free to e-mail me about any stock picks, analysis, or if you would like to provide some weekend commentary!
My Top Pick: Cash. (Ok, if I had to do something and felt wild, I would take a shot and short finanicials via SKF, FAZ, short XLF, or short UYG. I think its a quick profit since financials have had a nice run and "big money" will take profits. I also heard today that Direxion is considering a reverse split on the FAS, to reduce volume but who knows. On the short side, I have some commerical real estate ideas, via REITs, as well as a few other ideas. I will elaborate later.)
Trader Disclosure: Each post on this blog, highlighting buys or sells, are personally bought and owned by RF. The blog contains RF's personal views and does not act as investment advice or recommendations, instead these are real-time purchases.
FAZ update
I will probably sell half or all going into weekend because ill be out of town Monday for work
RF sell SSO puts (near double)
Just sold half out the SSO puts for a near double at $0.15. Holding the rest and will play with the houses money
Market Update
I have blown out of all my long positions but TTWO, even my beloved PCR position. I have seller's remorse; however, I don't like the tape and my gut tells me I can buy everything back cheaper.
I bought some FAZ today, simply because I think this run was nice but it is just about over. In addition, I want to protect my gains, so my cash position in the trading account is very high.
I might scale into SDS more and if we retest the lows, it can easily print $115. The market can go either way here, so I lean more to the short side, than the long side, and want to sit this one out.
Update II: Bought 25 more SDS @$90.30
Words of Wisdom: Bigger positions, use smaller stops. Smaller positions, use larger stops.
I bought some FAZ today, simply because I think this run was nice but it is just about over. In addition, I want to protect my gains, so my cash position in the trading account is very high.
I might scale into SDS more and if we retest the lows, it can easily print $115. The market can go either way here, so I lean more to the short side, than the long side, and want to sit this one out.
Update II: Bought 25 more SDS @$90.30
Words of Wisdom: Bigger positions, use smaller stops. Smaller positions, use larger stops.
RF Sell - KIM
All KIM sold in high $9.30's ($80 profit)
Update II: Sold remaining PCR @12.98 ($444 profit)
Update II: Sold remaining PCR @12.98 ($444 profit)
RF Buy SDS
Bought 15 @$91ish
Just want to hedge up a little.. I could be dead wrong but I feel profit taking in the air.
Just want to hedge up a little.. I could be dead wrong but I feel profit taking in the air.
RF SELLS - TXN, X, FXI, SSO Cover
I covered my SSO nakedputs, sold entire positions in TXN, X, and FXI (Combined profit of $562)
Update II 10am - Sold half of my PCR @ 12.90ish - ($440 profit)
Update II 10am - Sold half of my PCR @ 12.90ish - ($440 profit)
Market Update
We should rally but the futures are weakening....the voices in my head are telling me to short Financials..
Market Outlook - March 13th
Just wanted to thank everyone for checking out the blog, I put a site counter on the blog Tuesday at 1:30p and as of 7:00am, we have had 500 page views! Thanks for support and as always, I will do my best to bring my A game. In addition, we have some great commentators, like RT, who will continue to bring great ideas and analysis. Now for business as usual...
The S&P 500 chart is displayed above. I believe if we can hold these 750 levels, we should test 777 and if we break that, we can get to 800. However, if the test fails and we fall below where we are at now, I personally believe we will test the 700 and possibly 666 level (so lighten up the longs and build some shorts). Charts are not always accurate but frankly, this market is a technican's market and sometimes these charts DO NOT lie.
Watch volume and use the S&P as your guide...as always good luck and hope you make some $$.
Thursday, March 12, 2009
RF - SSO Options Play
I just wanted to make a post, regarding the SSO options trade, that I made and posted earlier this week. The SSO is the ultra etf (2x bull) on the S&P 500. I wrote 10 naked $15 put options on this for March, at $0.45 per contract (total proceeds collected was $450). If you followed me on this trade, you have 2 options going into options expiration, next week.
Option 1: Options expiration is next Friday and currently the SSO is at $17.85. If you are feeling bullish, you can hold this until next Friday and have a free $450; however, the SSO cannot closed below $15.
Option 2 (my plan): I will cover the SSO Naked puts in the morning, by buying 10, $15 SSO March puts at $0.15 per contract (total value of $150). That will fufill the obligation and leave me with a 66% gain and a $300 profit.
The SSO would have to drop 16% for the Option 1 to fail; however, with the volatility and uncertainity in these markets, I will give up $150, to make book a $300 profit.
Option 1: Options expiration is next Friday and currently the SSO is at $17.85. If you are feeling bullish, you can hold this until next Friday and have a free $450; however, the SSO cannot closed below $15.
Option 2 (my plan): I will cover the SSO Naked puts in the morning, by buying 10, $15 SSO March puts at $0.15 per contract (total value of $150). That will fufill the obligation and leave me with a 66% gain and a $300 profit.
The SSO would have to drop 16% for the Option 1 to fail; however, with the volatility and uncertainity in these markets, I will give up $150, to make book a $300 profit.
Market Wrapup - March 12th
A big day on the street, with the S&P breaking out and closing at 750. In addition, the DOW had triple digit gains, mostly lead by the finanicals. In my view, I think we have some ground here but we are approaching "shorting levels". I have been 100% long for about 3 weeks now but now it is time to begin looking at short positions. The S&P should test the 777 level but if we fall below 740, there is a good chance we will go much lower and retest the yearly lows on the S&P.
As for the portfolio, the portfolio value was up $1,474, mostly from gains in PCR and TTWO, as well as sales from the UYG call options, TNA, and AXP. I am still long TTWO, PCR, FXI, X, KIM, and TXN. YTD return is +107.65%.
As for some of the longs, TTWO closed above the 50 day MA, but barely. The day traders found this one late and got in, just to dump it. I like the name, even though the firm had a Q1 loss. I like the cash levels, low debt, as well as the product porftolio. With that being said, I think it can go higher. PCR remains my top position and has done great. I like the sector for a trade and will probably hold for the next two weeks; however, I might change my mind. I should have dumped X but I at break-even, so incase we rally to 777, I will hold it. KIM is nothing more than a short squeeze trade that is working, sold half earlier, but still have 100. I like China, so I own the FXI, to get some international exposure. Lastly, to get a piece of the NASDAQ, I'm long TXN.
All in all, I liked today's rally and hope we continue. In terms of the market, I feel that it maybe time to get short soon because I feel this is not a bottom, just a bear market rally; however, I could be wrong.
I will do some homework to find some good shorts and I'll pass them along soon, Until then I am keeping high cash levels and some longs because I don't want to be caught short in the bear market rally, it's not fun (been there, done that).
Off to watch some college basketball, have a good one.
As for the portfolio, the portfolio value was up $1,474, mostly from gains in PCR and TTWO, as well as sales from the UYG call options, TNA, and AXP. I am still long TTWO, PCR, FXI, X, KIM, and TXN. YTD return is +107.65%.
As for some of the longs, TTWO closed above the 50 day MA, but barely. The day traders found this one late and got in, just to dump it. I like the name, even though the firm had a Q1 loss. I like the cash levels, low debt, as well as the product porftolio. With that being said, I think it can go higher. PCR remains my top position and has done great. I like the sector for a trade and will probably hold for the next two weeks; however, I might change my mind. I should have dumped X but I at break-even, so incase we rally to 777, I will hold it. KIM is nothing more than a short squeeze trade that is working, sold half earlier, but still have 100. I like China, so I own the FXI, to get some international exposure. Lastly, to get a piece of the NASDAQ, I'm long TXN.
All in all, I liked today's rally and hope we continue. In terms of the market, I feel that it maybe time to get short soon because I feel this is not a bottom, just a bear market rally; however, I could be wrong.
I will do some homework to find some good shorts and I'll pass them along soon, Until then I am keeping high cash levels and some longs because I don't want to be caught short in the bear market rally, it's not fun (been there, done that).
Off to watch some college basketball, have a good one.
RF Sell - UYG April $3 Call (Double)
I sold all of my UYG April $3 Calls (35 contracts) for $0.20 per contract (100% return - $350 profit)
Update II: The "Manhattan Short Squeeze" going down in the REITS, especially KIM! The bears are getting SMOKED!
Update III: Sold entire stake in AXP @ $12.75 (last 100 shares) for $105 profit
Update II: The "Manhattan Short Squeeze" going down in the REITS, especially KIM! The bears are getting SMOKED!
Update III: Sold entire stake in AXP @ $12.75 (last 100 shares) for $105 profit
Afternoon Update - March 12th
We are in an interesting phase right now, with the S&P near 740. If we break that resistance, we can get another 3-4% on the S&P. I will probably sell 30-50% of my holdings into strength.
As for an update of my holdings, everything is in the green but X. STLD reported a pathetic number, which is leading the entire steel sector down. I may sell the position today for a loss but I haven't decided yet.
If you bought TTWO today, you drilled the stock under $10 trade. The stock is now a technical breakout play (if it holds over $7.08) and if you are day trading, use the 50 day MA as a stop. I'm long 500 shares and will ride the wave home, so anotherwards, I will not take the 14% day profits. I wrote some March $15 puts on the SSO yesterday, and collected $45 per contact. We have a week until expiration, so hopefully it can work out. I still like KIM for a trade but if we turn down, KIM and the rest of COM RE names will go down fast, therefore, be careful. I'm still long around 100 shares.
I appreciate the comments, keep em coming! Be back around the close...
As for an update of my holdings, everything is in the green but X. STLD reported a pathetic number, which is leading the entire steel sector down. I may sell the position today for a loss but I haven't decided yet.
If you bought TTWO today, you drilled the stock under $10 trade. The stock is now a technical breakout play (if it holds over $7.08) and if you are day trading, use the 50 day MA as a stop. I'm long 500 shares and will ride the wave home, so anotherwards, I will not take the 14% day profits. I wrote some March $15 puts on the SSO yesterday, and collected $45 per contact. We have a week until expiration, so hopefully it can work out. I still like KIM for a trade but if we turn down, KIM and the rest of COM RE names will go down fast, therefore, be careful. I'm still long around 100 shares.
I appreciate the comments, keep em coming! Be back around the close...
RF Sell - TNA
Sold all of my TNA (100 Shares) @ $13.15, for a $95 net profit
Update II: Sold half of my KIM for $45 net profit
Update III: Solf half of AXP for $70 profit
Update II: Sold half of my KIM for $45 net profit
Update III: Solf half of AXP for $70 profit
Market Outlook - March 12th
Beautiful start to the day, I think I have 3 stocks in the green; however, I am a bull, always looking for the Larry Kudlow "mustard seeds". As for the market, the retail sales data wasn't too bad; however, the jobless claims wasn't great. As for my view, I am bullish short-term; however, bearish long term. I feel we can rally another 5-8% on the S&P but I think it can print 650, maybe 600 but frankly, I am not that bearish. I was short commerical real estate in January and covered all 3 weeks ago. I was short VNO, KIM, MAC, FRT, and long SRS; and will get back into some more of that, when the timing is right. The fundamental story hasn't changed for commerical real estate but when shorting stocks, timing is key.
As for my trades today, I bought some TTWO (bought another 250 @ $2.53). There are some bearish views on this stock but under $10 I like it and will buy, especially as it approaches its 50 Day Moving Average.
X is painful and frankly this stock should be banned for trading. This stock was at $216 last year and now its at $17! I mean analysts wrote reports on this stock last summer saying X was going to have $28 worth of earnings and put $265 price targets on this bad boy! What the hell were they thinking? Did they not see this recession coming? I guess not, its at $17!!! Its selling below 1x earnings...even if they make $6 EPS this year, its selling at 3x earnings.
PCR remains my biggest position and I still like it.
Good trading and be back later....
Top picks: TTWO (you heard it here first last night)
As for my trades today, I bought some TTWO (bought another 250 @ $2.53). There are some bearish views on this stock but under $10 I like it and will buy, especially as it approaches its 50 Day Moving Average.
X is painful and frankly this stock should be banned for trading. This stock was at $216 last year and now its at $17! I mean analysts wrote reports on this stock last summer saying X was going to have $28 worth of earnings and put $265 price targets on this bad boy! What the hell were they thinking? Did they not see this recession coming? I guess not, its at $17!!! Its selling below 1x earnings...even if they make $6 EPS this year, its selling at 3x earnings.
PCR remains my biggest position and I still like it.
Good trading and be back later....
Top picks: TTWO (you heard it here first last night)
Wednesday, March 11, 2009
Top Stock Under $10 - TTWO
Stocks under $10 are there for a reason but everyone loves a little speculation in their portfolio.
I have been eyeing this one since they rejected the ERTS bid and in my view, this is one of the best stocks under $10, in the entire market. When the stock was in play, it was at $26ish and now is at $6ish! Video games have been said to be "recession proof" but I probably would not go that far. However, I like the fundamentals behind the firm. The balance sheet is amazing, holding $280 million in cash, with small L-T debt of only $70 million, and no S-T debt, showing nice cash flow. In addition, the firm is selling at a market cap of $497 million!! (wow!) The book value of this stock is $7.92 for heaven sake. I love the firm's cash levels, which represent nearly $3 a share, and the firm has a great product line. With solid partnerships, TTWO has games like Grand Theft Auto IV, NBA 2K9, and BioShock, that are top-sellers every year.
With that being said, I think this is a good shot for a stock under $10. Do the homework but the technicals are improving. This is worth a serious look.
I have been eyeing this one since they rejected the ERTS bid and in my view, this is one of the best stocks under $10, in the entire market. When the stock was in play, it was at $26ish and now is at $6ish! Video games have been said to be "recession proof" but I probably would not go that far. However, I like the fundamentals behind the firm. The balance sheet is amazing, holding $280 million in cash, with small L-T debt of only $70 million, and no S-T debt, showing nice cash flow. In addition, the firm is selling at a market cap of $497 million!! (wow!) The book value of this stock is $7.92 for heaven sake. I love the firm's cash levels, which represent nearly $3 a share, and the firm has a great product line. With solid partnerships, TTWO has games like Grand Theft Auto IV, NBA 2K9, and BioShock, that are top-sellers every year.
With that being said, I think this is a good shot for a stock under $10. Do the homework but the technicals are improving. This is worth a serious look.
RF - My trading "laws"
1. Buy in Increments- Nothing is more important that the price you pay for a stock. The key, obviously, is to buy low and sell high. I am not good enough to find the bottom for a stock, so what I normally do is buy in pieces of 2 or 4. Let’s say I like GE, is selling at $10, and I want to buy 1000 shares. I never buy 1000 at once, instead, I buy 250@ $10, let it come in buy another 250@ $9.50, then another 250@ $9.10, and so on. Even though you will pay a little more in commissions, you will save more and get in at a better purchase price, than if you bought all 1,000 @$10.
2. Don’t Chase the Rallies- This is tough because emotions guide the market. Two things control the market: fear and greed. If you end up buying a stock after a huge day, mostly likely there is a hedge fund standing back about to short 1,000,000 shares and wipe you broke. This, then goes back to point #1. If you have to own a stock, even on a big “up” day, buy a ¼ or ½ of your position. If it takes off, you have a position on, but more importantly if it tanks, you don’t lose as much.
3. Don’t Buy a Stock from a Recommender- The idea of the blog is give investors and traders ideas. Every posted buy, I personally make, and I will try to post when I buy/sell around to the actual time, but then again, I get tied up and can’t guarantee it. Just because Cramer or someone on CNBC has a stock trade, doesn’t mean it will go up. For all I know, a market maker or broker could have paid them to recommend a stock, just so the broker could blow out of a terrible long position. Most of the stocks I buy have a lot of research behind and trade based on technical measures or what not; however, there is no guarantee in performance. When I look at stocks, I look at various measures. A few are relative strength, charts, unusual volume, call/put activity (as well as ratios), short interest, top ownership, historical and implied volatility and also purchase analyst reports. It’s more detailed than that but that’s for starters.
4. “Buy the dips and sell the rips”- This is my own view but the quote is popular. Most of the time, I buy on down days and sell my trades into up days, or “rips” or what I refer to as “into strength”. It’s contrary to conventional wisdom but it works out well as a component of behavioral finance.
5. When in doubt, buy “insurance”- If you are buying a stock for the long-term, but are unsure about the short-term, I like to buy “put insurance” or known as “put protection”. Let’s say I want to buy some Dominion because I believe the intrinsic value is $45 and its selling at $27. I will get long 100 shares of Dominion, then I will buy some “put options” with a $25 strike, to protect my losses, in cases Dominion falls below the levels of initials purchase. Some people think this is stupid because you are buying insurance on a “piece of paper” but Rule #1 is don’t lose money and Rule#2 is don’t forget Rule #1.
6. Cut your losers – This took me years to understand but this, in opinion, is the key to trading. Never let a short-term trade turn into a long-term investment. Let’s say I bought 100 shares of C @ $10 for a quick bounce to $13. The next 3 days, C, goes to $7. Most people will hold until it gets back to $10, to breakeven, and forget the $13 but most of the time, what happens is that C goes to $3 and your loss gets wider. Keep in mind the goal of the trade ($10 – 13) and when it doesn’t go as planned, cut early, because if you stay in the game, you will make it back.
Feel free to add your trading "commandments" in the comments
2. Don’t Chase the Rallies- This is tough because emotions guide the market. Two things control the market: fear and greed. If you end up buying a stock after a huge day, mostly likely there is a hedge fund standing back about to short 1,000,000 shares and wipe you broke. This, then goes back to point #1. If you have to own a stock, even on a big “up” day, buy a ¼ or ½ of your position. If it takes off, you have a position on, but more importantly if it tanks, you don’t lose as much.
3. Don’t Buy a Stock from a Recommender- The idea of the blog is give investors and traders ideas. Every posted buy, I personally make, and I will try to post when I buy/sell around to the actual time, but then again, I get tied up and can’t guarantee it. Just because Cramer or someone on CNBC has a stock trade, doesn’t mean it will go up. For all I know, a market maker or broker could have paid them to recommend a stock, just so the broker could blow out of a terrible long position. Most of the stocks I buy have a lot of research behind and trade based on technical measures or what not; however, there is no guarantee in performance. When I look at stocks, I look at various measures. A few are relative strength, charts, unusual volume, call/put activity (as well as ratios), short interest, top ownership, historical and implied volatility and also purchase analyst reports. It’s more detailed than that but that’s for starters.
4. “Buy the dips and sell the rips”- This is my own view but the quote is popular. Most of the time, I buy on down days and sell my trades into up days, or “rips” or what I refer to as “into strength”. It’s contrary to conventional wisdom but it works out well as a component of behavioral finance.
5. When in doubt, buy “insurance”- If you are buying a stock for the long-term, but are unsure about the short-term, I like to buy “put insurance” or known as “put protection”. Let’s say I want to buy some Dominion because I believe the intrinsic value is $45 and its selling at $27. I will get long 100 shares of Dominion, then I will buy some “put options” with a $25 strike, to protect my losses, in cases Dominion falls below the levels of initials purchase. Some people think this is stupid because you are buying insurance on a “piece of paper” but Rule #1 is don’t lose money and Rule#2 is don’t forget Rule #1.
6. Cut your losers – This took me years to understand but this, in opinion, is the key to trading. Never let a short-term trade turn into a long-term investment. Let’s say I bought 100 shares of C @ $10 for a quick bounce to $13. The next 3 days, C, goes to $7. Most people will hold until it gets back to $10, to breakeven, and forget the $13 but most of the time, what happens is that C goes to $3 and your loss gets wider. Keep in mind the goal of the trade ($10 – 13) and when it doesn’t go as planned, cut early, because if you stay in the game, you will make it back.
Feel free to add your trading "commandments" in the comments
Market Wrapup - March 11
Another fun day on the street, with the indexes barely making it in the green. Short sellers sat back til 1030a then began attacking, leaving no buyers in sight.The portfolio ended up $98 for the day, with gains in AXP,TXN, X, and the FAS sale. KIM is a pain in my side but I still think its possible for a short squeeze if we get a few more up days.
The nasdaq is doing well, so ill do some homework to find some names to play. I bought TXN today.
I owe some puts on the spy but have no short position. I still think we can catch another 3-5% rally but we need buyers to fight the "short tests". My biggest position is still cash and I still don't want to short,just to be safe but if that changes
Ill post.
Have a good one
The nasdaq is doing well, so ill do some homework to find some names to play. I bought TXN today.
I owe some puts on the spy but have no short position. I still think we can catch another 3-5% rally but we need buyers to fight the "short tests". My biggest position is still cash and I still don't want to short,just to be safe but if that changes
Ill post.
Have a good one
RF Buy - TXN
Bought 100 TXN @ $15.66
Update: Sold entire position of UA @ $13.70 for $44 net profit
Update II: Bought 75 more TXN in the high $15.50s
Update: Sold entire position of UA @ $13.70 for $44 net profit
Update II: Bought 75 more TXN in the high $15.50s
Afternoon Update
I finally have a quick minute. The market seems weak, with volume is relatively light and short sellers coming back. In addition, the "Gold Bugs" have came out of hibernation and buying up gold. Personally, from a technical perspective, Gold needs to break and close above $1004, for me to get super bullish, but with the printing press going on in Washington, it might be worth something.
As for my positions, I am down in just about everything. I sold the last of my FAS position today for a $695 profit. In addition, I tried to catch a trade in MAC but broke even. To elaborate more, I hate REITs. I mean seriously, I can't stand them, but there are heavily shorted and this is chances for squeezes but not with this volume. Personally, I wouldn't be surpised to see MAC go to $0 because its a big mall REIT, that has $1 billion in debt due in 2010, with only $150 million in cash and a small credit line. If the CMBS market comes back around, they should fair but with the weaker retail space and weak CMBS market, it doesn't look good. With that being said, I see why it has a 39% short interest BUT some of those are "weak" short sellers and a squeeze it possible. Currently, I have no position but maybe be back.
AXP started slow today but I bought more in premarket, to average down my cost basis. The credit card area could be the next shoe to fall and it will hurt AXP (since they carry debt, where Visa and Mastercard don't); however, I like it for a trade. I also opened up a position on X. RT highlighted the technicals very well but I think it is very cheap compared to its peers, particularly NUE.
In addition, I sold some $15 SSO puts for $0.45. I will also probably buy TXN today and may take some profits in various names, but its too early to tell.
In markets like this, its important to "scale" into positions by buying in increments. It will save and make you alot...
As for my positions, I am down in just about everything. I sold the last of my FAS position today for a $695 profit. In addition, I tried to catch a trade in MAC but broke even. To elaborate more, I hate REITs. I mean seriously, I can't stand them, but there are heavily shorted and this is chances for squeezes but not with this volume. Personally, I wouldn't be surpised to see MAC go to $0 because its a big mall REIT, that has $1 billion in debt due in 2010, with only $150 million in cash and a small credit line. If the CMBS market comes back around, they should fair but with the weaker retail space and weak CMBS market, it doesn't look good. With that being said, I see why it has a 39% short interest BUT some of those are "weak" short sellers and a squeeze it possible. Currently, I have no position but maybe be back.
AXP started slow today but I bought more in premarket, to average down my cost basis. The credit card area could be the next shoe to fall and it will hurt AXP (since they carry debt, where Visa and Mastercard don't); however, I like it for a trade. I also opened up a position on X. RT highlighted the technicals very well but I think it is very cheap compared to its peers, particularly NUE.
In addition, I sold some $15 SSO puts for $0.45. I will also probably buy TXN today and may take some profits in various names, but its too early to tell.
In markets like this, its important to "scale" into positions by buying in increments. It will save and make you alot...
RF sell MAC
Sold half @$9.25 for $45 profit
Update: Stopped out of rest for loss of $40 haha go figure
Update: Stopped out of rest for loss of $40 haha go figure
rf buy mac
Bought 500 mac @ 9.15
Update: this will be a day trade. If you are wondering why AXP is down, its because goldman downgraded them to sell. Please note goldman's conviction buy list has been a great short list
Update: this will be a day trade. If you are wondering why AXP is down, its because goldman downgraded them to sell. Please note goldman's conviction buy list has been a great short list
RF Buys premarket
Doubled up on AXP at 808am @ $11.20, cost avg $11.60.
I have $10.78 stop
I'm researching MAC now
I have $10.78 stop
I'm researching MAC now
Outlook for March 11th
First, I have to say that RT brought his "A" game to the blog and had some great commentary.
As for today, futures look good (6:50 am) but as you know they can turn on a dime. I am still a believer in this rally and think we can hold. For you S&P traders out there, I think there is a possible trade out of this.
I would sell the March $16 puts on the SSO, buy the SSO, and buy an out-of-the money put of the SPY, just in case anything blows up. Right now you will collect about $80 per contract you write and there is a chance we hold this. Another idea, with less risk, is to write the $15 puts on the SSO instead, which gives you more safety and right now you will recieve $44 per contract.
Note: In my view, S&P support looks to be 685 and the key resistance points are 740 and 763. You can use this as a channel and use support as long points and resistance as possible short points, but keep tight stops and look at the action if it approach resistance points.
As always, good luck out there, and ill be back later.
As for today, futures look good (6:50 am) but as you know they can turn on a dime. I am still a believer in this rally and think we can hold. For you S&P traders out there, I think there is a possible trade out of this.
I would sell the March $16 puts on the SSO, buy the SSO, and buy an out-of-the money put of the SPY, just in case anything blows up. Right now you will collect about $80 per contract you write and there is a chance we hold this. Another idea, with less risk, is to write the $15 puts on the SSO instead, which gives you more safety and right now you will recieve $44 per contract.
Note: In my view, S&P support looks to be 685 and the key resistance points are 740 and 763. You can use this as a channel and use support as long points and resistance as possible short points, but keep tight stops and look at the action if it approach resistance points.
As always, good luck out there, and ill be back later.
Tuesday, March 10, 2009
Analysis from Trade 247's Guest Contributor RT
What a day! Financials had a great run, C up 38.1%! The 740 test on the SP is critical to whether or not this run is sustained or the typical bearish "bounce" we have seen all too often this past year. As such, I like X, BIG, and FAS as quick plays on this market "bounce". (Please click charts to view in larger format).
X - X's fundamentals are just ridiculous - .99 PE, .09 PS, and .42 P/B. That is about the textbook definition of a value play! Solid dividend yields (6.89%), ROA, ROE, and
ROI all signifcantly above industry comparables. Technicals look great for the stock as well - we had a significant breakout at $20 today, the next resistance is at $30.
Technical V movement and resistance break at $18, next resistance at $30
BIG - BIG is another one to watch for - very strong ROA, ROE, and ROI in terms of industry comparables. Great looking technicals (see charts), strong earnings, superior business model for economic crisis. 21% short interest - tough bullish setup for shorts. Short term upside to $22.50.
Solid upward trading channel, on strong volume. Short interest is 21% - bad for shorts in near term. Superior business plan for current crisis. Should test next resistance level of $22.5
FAS - today's ATM machine. As long as the bulls are in charge of the market, FAS will print money. As of 8:00, 3.91 in after hours trading. $5 looks very realistic in short term (by end of week), longer term FAS can easily print $10. Highly recommend short leash on this volatile ETF. Volatility is 259%, this one doesn't won't fit into everyone's portfolio - but a great "juicer" indeed. JPM, BAC, C, WFC - all of these stocks have another 15% short term price movement in them, and that equates to approximately 45% more in the FAS. That puts us slightly over $5.
Boxes represent next resistance levels for FAS – approximately $5 and 8.50. FAS technical breakout highlighted by arrow, strong volume movement break at $3.25
RT Position Disclosure: None
RF Position Update - Options Buys
I really didn't know if I should post my options trades but since a few have asked, I will provide.
I bought 35 April $3 Call Options on the UYG for $0.10 per contract. I do not plan to exercise, but I like the possibility for nice move here.
I bought some March $70 Puts on the SPY has well for $1.50 (small in size but just a hedge)
RF Top Positions Update (Position size in order from top to bottom, top being biggest position) :
PCR
FXI
KIM
UA
TNA
AXP
FAS
YTD Return + 88.22% (Returns are Pre-Tax, include dividends/option proceeds through naked writing, some trades made on margin, and have fees/commissions deducted)
Portfolio Volatility - 92.18% (S&P 42%)
If you got in on the financials trade posted Sunday (check archives) then things looked good today. I wish I didn't covered my SKF short at $240 but oh well, life goes on. I'm still long 500 shares of FAS but I have sold 1,100 shares within the past few days. If we blow through the $175 on the SKF chart, I believe it will shoot all the way to $125. So for those who are in, my view would be to cover 30-50% here and cover the rest at $125 levels, if we get that low.
My top position is financials. I am bullish because I believe the bears have raided these banks into the ground. Restoring the uptick rule is a big plus and will hopefully reduce the bear raids but I guess they can always try in the CDS market. There is a strong march against mark-to-market, however, I doubt it will be banned anytime soon. If you are bullish, I like NITE, JPM, AXP, MS, GS. If you want to play a short squeeze in commerical real estate, I like KIM, URE, SPG, and VNO.
If you have more risk, believe in the rally, and want a nice trade (not investment), look at these financials for the "Manhattan Short Squeeze" (all trade over 500k in volume, have fair or above average technicals)
MAC (32.40% short interest)
CBL (27% short interst)
SKT (22% short interest)
ESS (22% short interest)
FR (21.5% short interest)
SLG (21% short interest)
CATY (20% short interest)
The way I look at it is just because a stock is at $5 and will probably go to $0, doesn't mean it can't go to $10 in between...
We will have a guest commentator on tonight. RT is a good friend of mine, has been frequently posting in the comments, and has some good commentary on FAS, X, and BIG. RT has some great ideas, so look for this coming up later..
Disclosure: RT's views do not reflect my personal investment views or the blog's.
I bought 35 April $3 Call Options on the UYG for $0.10 per contract. I do not plan to exercise, but I like the possibility for nice move here.
I bought some March $70 Puts on the SPY has well for $1.50 (small in size but just a hedge)
RF Top Positions Update (Position size in order from top to bottom, top being biggest position) :
PCR
FXI
KIM
UA
TNA
AXP
FAS
YTD Return + 88.22% (Returns are Pre-Tax, include dividends/option proceeds through naked writing, some trades made on margin, and have fees/commissions deducted)
Portfolio Volatility - 92.18% (S&P 42%)
If you got in on the financials trade posted Sunday (check archives) then things looked good today. I wish I didn't covered my SKF short at $240 but oh well, life goes on. I'm still long 500 shares of FAS but I have sold 1,100 shares within the past few days. If we blow through the $175 on the SKF chart, I believe it will shoot all the way to $125. So for those who are in, my view would be to cover 30-50% here and cover the rest at $125 levels, if we get that low.
My top position is financials. I am bullish because I believe the bears have raided these banks into the ground. Restoring the uptick rule is a big plus and will hopefully reduce the bear raids but I guess they can always try in the CDS market. There is a strong march against mark-to-market, however, I doubt it will be banned anytime soon. If you are bullish, I like NITE, JPM, AXP, MS, GS. If you want to play a short squeeze in commerical real estate, I like KIM, URE, SPG, and VNO.
If you have more risk, believe in the rally, and want a nice trade (not investment), look at these financials for the "Manhattan Short Squeeze" (all trade over 500k in volume, have fair or above average technicals)
MAC (32.40% short interest)
CBL (27% short interst)
SKT (22% short interest)
ESS (22% short interest)
FR (21.5% short interest)
SLG (21% short interest)
CATY (20% short interest)
The way I look at it is just because a stock is at $5 and will probably go to $0, doesn't mean it can't go to $10 in between...
We will have a guest commentator on tonight. RT is a good friend of mine, has been frequently posting in the comments, and has some good commentary on FAS, X, and BIG. RT has some great ideas, so look for this coming up later..
Disclosure: RT's views do not reflect my personal investment views or the blog's.
Market Update - March 10th
Huge day today, the market scared the hell out of the shorts. I don't know if this is the "Doug Kass" rally but its a bear market rally and I think we are going to test 740 on the S&P.
I got lucky and had a huge day, up $1837. I had $561 in net realized/closed gains from some sales in CY, FAS, and UA. As for unrealized/open gains, I had $1276, mostly from FAS and my top position PCR.
I posted new buys as well. KIM is a short squeeze play til $10ish but keep stop losses due to 123% volatility. AXP and TNA are bets on a continued rally and other reasons. I gotta run,will post more tonight. Hope noone was short, have a good night.
Feel free to leave comments!
I got lucky and had a huge day, up $1837. I had $561 in net realized/closed gains from some sales in CY, FAS, and UA. As for unrealized/open gains, I had $1276, mostly from FAS and my top position PCR.
I posted new buys as well. KIM is a short squeeze play til $10ish but keep stop losses due to 123% volatility. AXP and TNA are bets on a continued rally and other reasons. I gotta run,will post more tonight. Hope noone was short, have a good night.
Feel free to leave comments!
RF Buy I
Bought 200 KIM@ 8.45
This is only a trade, I hate reits but the short squeeze can take this to 10+
This is only a trade, I hate reits but the short squeeze can take this to 10+
Value in the Nikkei?
I recently read that 85% of the Nikkei is trading below book value. Japan has some serious problems with strong declines in exports and the yen, however, these stocks and price to book ratios are worth a look!
Nsany (.39)
Hit (.41)
Fuji (.48)
Nmr (.49)
Sne (.56)
Tdk (.62)
Mfg (.64)
Mtu (.64)
Pc (.66)
Ntt (.71)
Tm (.81)
Hmc (.88)
Caj (.99)
Kub (1.03)
Dcm (1.47)
Nj (1.83)
Nsany (.39)
Hit (.41)
Fuji (.48)
Nmr (.49)
Sne (.56)
Tdk (.62)
Mfg (.64)
Mtu (.64)
Pc (.66)
Ntt (.71)
Tm (.81)
Hmc (.88)
Caj (.99)
Kub (1.03)
Dcm (1.47)
Nj (1.83)
RF sells II
Sold 100 UA @ 13.88 ($102 net profit). Kept my last 100. Nice short squeze going with 29% short interest.
Sold 300 FAS @$3.41. Still long 500
Sold 300 FAS @$3.41. Still long 500
RF Sells - March 10th
Sold 400 FAS in Premarket @ $3.10 ($212 net profit)...still long 800 FAS
Note this is up 26% in a day, don't get greedy.
Note this is up 26% in a day, don't get greedy.
Monday, March 9, 2009
Market Wrapup - March 9th
The tape was terrible today. We gapped down strong at the open, then shot up sharply in the early morning, just to fall all the way back down at the close. The market has direction but unfortunately its to the downside. I mean think about it, today was a "Merger Monday" from 2007...3 big deals went down today and traders just ignored them. In 2007, the DOW would be up 200+ points.
As for today's trading, I netted (capital gains minus commission fees) +$242, from realized/closed day trades. As for unrealized/open positions, I was up $228, with strong gains in FAS & PCR; however, FXI and CY are slacking.
Tomorrow will be interesting but in defense you can either buy the dollar (UUP), gold (GLD), short equities, or hold cash. I choose the latter; however, I wish I would have went long UUP early this year. I think the market is getting very thin to short; however, the shorts are making a killing, so just in case I have a few targets to go after. My focus will be on REITs, more specifically on Retail and Industrial REITs. If you believe in the European crash, DRR, will get you short the Euro (2x the inverse of the euro). EEV, is an ultrashort that will get you 2x the inverse of EEM, which is an emerging markets ETF. The thought here of course is the when the U.S. sneezes, the rest of the world catches a cold. I believe that 99% of the way but I like China and the China stimulus. However, China will need to have 7% GDP growth and the stimulus seems focused on consumers, investors (no capital gains tax), and business (especially banks with lending). I will be interested on seeing China's inflation data tonight.
I currently have no short positions but will post positions/names soon; however, as you know, I like cash better.
As for today's trading, I netted (capital gains minus commission fees) +$242, from realized/closed day trades. As for unrealized/open positions, I was up $228, with strong gains in FAS & PCR; however, FXI and CY are slacking.
Tomorrow will be interesting but in defense you can either buy the dollar (UUP), gold (GLD), short equities, or hold cash. I choose the latter; however, I wish I would have went long UUP early this year. I think the market is getting very thin to short; however, the shorts are making a killing, so just in case I have a few targets to go after. My focus will be on REITs, more specifically on Retail and Industrial REITs. If you believe in the European crash, DRR, will get you short the Euro (2x the inverse of the euro). EEV, is an ultrashort that will get you 2x the inverse of EEM, which is an emerging markets ETF. The thought here of course is the when the U.S. sneezes, the rest of the world catches a cold. I believe that 99% of the way but I like China and the China stimulus. However, China will need to have 7% GDP growth and the stimulus seems focused on consumers, investors (no capital gains tax), and business (especially banks with lending). I will be interested on seeing China's inflation data tonight.
I currently have no short positions but will post positions/names soon; however, as you know, I like cash better.
Update: Sells
Sold 400 FAS @ $2.70 ($72 profit) - Still long 1,200 shares
Sold 200 CY @ $5.36 (-$10 loss) - Still long 200 shares (Don't know why)
I want higher cash levels
Note: If you want to see a fund straight printing $$ - check GOE (up 1147% ytd)
Sold 200 CY @ $5.36 (-$10 loss) - Still long 200 shares (Don't know why)
I want higher cash levels
Note: If you want to see a fund straight printing $$ - check GOE (up 1147% ytd)
Lunch Time Update
I am hoping that GE, BAC, and WFC can lead us to the green. It is rather interesting to see the market completely shrug off the Merck bid for Schering Plough...
As for my positions, I have initiated a new position in PCR, averaging in around $10.60. I like the construction services sector for a trade and fellow peers like FWLT and SGR are performing well. In addition, I bulked up my FAS position to 1,600 shares, averaging in around $2.52. I am hoping to make some loot on the short covering in the financials. I also covered my SKF short, to allocate more capital away from the financials.
The market looks pretty pathetic but I am still a believer in the rally. I have a huge watchlist but my biggest position remains cash. I rather not short at these levels because the market is very oversold and I am a bear market rally believer; however, if you are bearish and believe the s&p is going to 650 or even 600, SDS is a fair way to play it.
Technical Breakouts: NFLX and FDO
These names have had a huge run; however, both have high short interest. NFLX has a 27.9% short interest and FDO has a 8.8% short interest, so the run could continue. These two names are worth a look, especially with these bullish charts!
As for my positions, I have initiated a new position in PCR, averaging in around $10.60. I like the construction services sector for a trade and fellow peers like FWLT and SGR are performing well. In addition, I bulked up my FAS position to 1,600 shares, averaging in around $2.52. I am hoping to make some loot on the short covering in the financials. I also covered my SKF short, to allocate more capital away from the financials.
The market looks pretty pathetic but I am still a believer in the rally. I have a huge watchlist but my biggest position remains cash. I rather not short at these levels because the market is very oversold and I am a bear market rally believer; however, if you are bearish and believe the s&p is going to 650 or even 600, SDS is a fair way to play it.
Technical Breakouts: NFLX and FDO
These names have had a huge run; however, both have high short interest. NFLX has a 27.9% short interest and FDO has a 8.8% short interest, so the run could continue. These two names are worth a look, especially with these bullish charts!
Action for March 9th
Bought some FAS in pre-market to lower my cost basis to $2.60, may cover some or all my SKF to raise cash..
Update Buys: Bought 400 more FAS @ 2.47 and 475 PCR @ 10.33
Update II: I appreciate the two text messages this morning saying "I've Lost It"
Update III: Covered my 25 share short of SKF at 240 (Gain $200) - Still long FAS
Update IV: Keep an eye on basic materials and industrials here. If we start going hard, X, AA, UYM, JOYG, and BUCY can roll...
Update V: Sold my entire TNA position, 150 shares, (Gain $60 profit). I still like it here but with the cash I bought 175 PCR @ 1o.80
Update Buys: Bought 400 more FAS @ 2.47 and 475 PCR @ 10.33
Update II: I appreciate the two text messages this morning saying "I've Lost It"
Update III: Covered my 25 share short of SKF at 240 (Gain $200) - Still long FAS
Update IV: Keep an eye on basic materials and industrials here. If we start going hard, X, AA, UYM, JOYG, and BUCY can roll...
Update V: Sold my entire TNA position, 150 shares, (Gain $60 profit). I still like it here but with the cash I bought 175 PCR @ 1o.80
Sunday, March 8, 2009
Trading the Financials - Week of March 9, 2009
Seen above (second from top) is the FAS (Direxion Triple Bull Financial ETF). The FAS seeks daily investment results (intraday prices movements) of 300% of the Russell 1000 Finanical Services Index. In warning, this is an EXTREMELY risky investment and in my view, should NOT be a long-term investment, with an implied volatility of 266%. However, I am a trader and keep "short leashes" on leveraged ETF's with about a 8% stop loss. In addition, I look at the ATR (Average True Range) to get a better idea of the stock's volatility. Note, this measure does not give me an idea of price direction but it does give me an idea of price movement. 1.46 on a $2.64 stock is enough to give someone a heart attack but sometimes it comes a point where the shorts will get burned. The SKF (Proshares Ultrashort Double Bear, chart at very top) is the 200% inverse of the XLF (basic financials etf). The SKF was up 40.61% last week alone. If you look at a 6 month chart on the SKF, you will see that it hit its top on 11/20/08 at $262.80 and it retested that resistance Friday, broke through to $268, then fell during the last 30 minutes of trading to close at $250, failing to close above its 11/20/08 resistance point. To me, it looks like a double top.
At the end of Friday, I got long FAS at $2.66 and got short SKF @248. I like this trade for a few reasons. One reason is that the financial sector is extremely "overshort" and is setting up for a massive "Manhattan short squeeze". The second reason is that the SKF did not close above its resistance point. I will use the $268 (11/20/08 close) as a stop for my short cover but I think the chart pattern will repeat its self, like in November, leading the SKF much lower. The third reason I like this trade is that the mark to market meeting is Thursday and the rumor mill will be running. Frankly, if I was short finanicals, I would cover most or all of my position ahead of this meeting because if mark to market gets suspended, the "game" changes.
All in all, this trade is very risky and should be a very small portion of the portfolio. I like the risk/reward here and am putting my neck out on this one. I will post updates with any stop outs or short covers. In addition, you can look to end this trade before the meeting on Thursday; however, I believe the bottom is in the financials. As always, do your homework on this one and feel free to leave comments...
Full Disclosure: Long FAS, Short SKF
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