http://www.cnbc.com/id/15840232?video=1064076107&play=1
Have we bottomed? One of game's top short sellers thinks so but one of the best economists who drilled this mess, Gary Shilling, think we are going to 600 on the S&P. Who is gonna win?
Saturday, March 21, 2009
Options Action!
If there is one thing I love in life, its cheap options. Here is a list of my options holdings.
MAC June $2.50 Puts
One of my top options play is the MAC $2.50 June put options. I have been long them since $. 0.25 and with MAC being down 25% on Friday alone, I like this trade. The firm has some serious issues because their balance sheet is in shambles and raising funds is difficult due to the frozen CMBS market.
TTWO April $10 Calls
I got some of these calls between $0.25-$0.30. TTWO has been breaking out like crazy and with $10 in sight, I like the play. However, if the stock pulls back a little, I would sell the April $5 puts naked because I think the floor is in this stock.
Keep in mind, I like to play out of the money options because of the nice reward, however, from the risk perspective, these options have less volume and carry more risk. Feel free to share your ideas!
Tomorrow instead of boring you with bad commercial real estate news, I will introduce another Stock Under $10 Special!
Potential Long-Term Plays
I have had a few requests asking for some longer-term picks, with a 1-6 month time frame. I personally used to trade and hold equities with a 6-8 month time frame; however, the market has changed a lot since 2007. Below is a list longs I would buy, if I was a mutual fund manager. I consider these value plays, with rich balance sheets. Some of these are commodity ETFs, because I think it pays to have Gold or Silver. I bought tons of Silver and SLW in late 2008; however, I currently have no position. Precious Metals, in my view, should not be more than 10% of your portfolio. Lastly, I would say that given the current run up in the market, I would “scale” into these positions, meaning don’t buy all at once. Look at the lows on these names and try to compare entry points. The S&P was up 10% last week and up another 1% this week, so if we retest lows, you want to have some cash to rebuild positions. Note, I don’t have any financials because the sector is crazy but if I was forced to make a few picks, I would look at NLY for a fed GSE play, or look at V or MA, who make money on transactions, not carrying the debt. For a pair trade, I might even consider getting long V or MA and short AXP or COF. Another thing I would consider doing is writing covered calls. Let’s say I was long 100 says of Dell at $10. I would sell out of the money calls, say $12 strike for $.40 (and I get $40, .40 *100). If Dell does to $12 or above, I have to sell Dell at $12 and I get a $200 gain, plus the $40. However, if Dell stays at $10 or $9, the option expires worthless and I get to keep the $40. So, the way I look at it, the $40 is a nice dividend, but my upside is limited; however, I got a little “coin” in my pocket in case the stock doesn’t do anything. Anyways, below is the RF long portfolio and you can buy them at these prices now and will be fine for the next 3 to 6 months:
NTGR (Tech – Communication Equipment)
TTWO (Video Games)
KBR (Oil – Services)
HUM (Healthcare)
UNH (Healthcare)
PCR (Heavy Construction – tied closely to casino construction but could hit $20)
FWLT (Heavy Construction)
DELL (Tech)
FLR (Heavy Construction - be careful had 5% of backlogs canceled)
WFR (Solar)
LOGI (Tech – Computer Perp)
APPL (Tech)
MYL (Generic Drugs)
ISRG (Medical Equipment)
CSCO (Tech)
BMY (Drug Manufacturer)
ICE (Stock Exchange - I think they will get the credit default swap open exchange)
JOYG (Farm/Construction Machinery)
SLV (Silver ETF)
GLD (Gold ETF)
FXI (China ETF)
NTGR (Tech – Communication Equipment)
TTWO (Video Games)
KBR (Oil – Services)
HUM (Healthcare)
UNH (Healthcare)
PCR (Heavy Construction – tied closely to casino construction but could hit $20)
FWLT (Heavy Construction)
DELL (Tech)
FLR (Heavy Construction - be careful had 5% of backlogs canceled)
WFR (Solar)
LOGI (Tech – Computer Perp)
APPL (Tech)
MYL (Generic Drugs)
ISRG (Medical Equipment)
CSCO (Tech)
BMY (Drug Manufacturer)
ICE (Stock Exchange - I think they will get the credit default swap open exchange)
JOYG (Farm/Construction Machinery)
SLV (Silver ETF)
GLD (Gold ETF)
FXI (China ETF)
Friday, March 20, 2009
Market Wrapup
Another week in the books everyone. The S&P up 1.5% for the week. As for today I bought some TTWO april calls at $10 strike for like .25 cents, so I like the odds. I sold my TZA because I am going to be traveling Monday but will be around at lunch. For the weekend I will continue to write on commercial real estate and provide a list of longer term buys as requested. Below is my weekly trader log, I only made 5 trades this week but I got a little lucky. For price points you can check archive, add your input or ideas for next week, have a great weekend!
Short WRI +22.07%
DRYS +36.34%
TTWO +16.44% this wk (up 34.44% total)
VMW +1.04%
TGA - 1.6%
TZA + 5.13%
(All made this week and are weekly returns or if closed where trade returns. Short WRI and TTWO are the only ones I own now)
Short WRI +22.07%
DRYS +36.34%
TTWO +16.44% this wk (up 34.44% total)
VMW +1.04%
TGA - 1.6%
TZA + 5.13%
(All made this week and are weekly returns or if closed where trade returns. Short WRI and TTWO are the only ones I own now)
rf sell tza
Sold 50 for $133 profit. I'm going out of town monday for work,so I want more cash, you may want to hold a piece as a hedge.
Position Update
S&P dipped under 780 which is vital support. I bought some TZA around 12:40ish at $61.33 and have a stop on it at $60.33. I'll take the risk reward on this trade, even if I lose $50. I plan on reducing this to 50% by the close or if I stop out.
I am still long TTWO and am still short WRI. I had some SSO puts but they will be worthless for a gain of $0. Today is options expiration, so volume should be heavy.
If you want to get short, I would nipple at shorting REITS. Second option would be TZA or BGZ. If you want to gamble with RT, FAZ is another option but I am not touching financials, with FAZ is up 41% since the low on Thursday. To me, TZA and BGZ seem a better value. Leveraged ETF's bite hard, so I keep short leashes on these.
I am still long TTWO and am still short WRI. I had some SSO puts but they will be worthless for a gain of $0. Today is options expiration, so volume should be heavy.
If you want to get short, I would nipple at shorting REITS. Second option would be TZA or BGZ. If you want to gamble with RT, FAZ is another option but I am not touching financials, with FAZ is up 41% since the low on Thursday. To me, TZA and BGZ seem a better value. Leveraged ETF's bite hard, so I keep short leashes on these.
TTWO update
Thanks for the kind emails and comments on the TTWO call. Im watching closely today to see if we can fill the Dec gap. If we do, next step is $10. The NPD numbers did not include TTWO's downloadable content.
As for the market, 780 is key support for the s&p,ill be watching closely.
As for the market, 780 is key support for the s&p,ill be watching closely.
RF Buy TGB
Bought 1000 at 1.18. Dice roll, very risky, but Ill roll the dice on occasion
Update sold all for $20 loss
Update sold all for $20 loss
Market Outlook - March 20th
The market seems to be tilting lower across the board, with futures representing about a 1% decline at the open. I wouldn't be suprised to have a big down day today, since we went at 800 strong on the S&P; however, failed to close above. As for S&P ranges, I see best case scenario about 12.5% up on the near term and the worst case scenario about -25%.
If I was constructing a trading portfolio and trying to snatch gains, I would have at least 30% in cash, with about 35-40% short, and 30-35% long. I have about 90% in cash because I don't want to lose my hard earned YTD gains (+127.11%). Frankly, I have had a year were I closed up well but nothing like this, so I am scared really and don't wanted to make a huge mistake and lose it.
As for longs, I would look at TTWO and other video games makers like ERTS and ATVI. ERTS has a $21 12-month price target by the Wedbush Morgan analyst; however, TTWO, in my view, is a better play.
As for shorts, I would look to sell short MAC, FRT, PLD, DRR, FR and WRI. I also don't like select regional banks like ZION, CATY, PACW, and FTBK.
I would use strength to take some profits (not all) and also as a time to build into a short position. If I was looking to short or even build into a long position (for a long period of time), I would not commit more than 40% to the position. For example, if I was buying 1,000 shares of INTC, I would not buy more than 400 shares (I wouldn't buy more than 250 but thats me)because I believe we are going lower, in due time.
Update: futures turning up
If I was constructing a trading portfolio and trying to snatch gains, I would have at least 30% in cash, with about 35-40% short, and 30-35% long. I have about 90% in cash because I don't want to lose my hard earned YTD gains (+127.11%). Frankly, I have had a year were I closed up well but nothing like this, so I am scared really and don't wanted to make a huge mistake and lose it.
As for longs, I would look at TTWO and other video games makers like ERTS and ATVI. ERTS has a $21 12-month price target by the Wedbush Morgan analyst; however, TTWO, in my view, is a better play.
As for shorts, I would look to sell short MAC, FRT, PLD, DRR, FR and WRI. I also don't like select regional banks like ZION, CATY, PACW, and FTBK.
I would use strength to take some profits (not all) and also as a time to build into a short position. If I was looking to short or even build into a long position (for a long period of time), I would not commit more than 40% to the position. For example, if I was buying 1,000 shares of INTC, I would not buy more than 400 shares (I wouldn't buy more than 250 but thats me)because I believe we are going lower, in due time.
Update: futures turning up
Thursday, March 19, 2009
Market Wrapup
Don't have time for a wrap because I have to leave to go home but the portfolio did great today with the DRYS trade, WRI short, and TTWO.
Now to TTWO. Wedbush Morgan is very bullish on the stock. The analyst believes management is performing great, given the 2009 environment, however, sees them slightly profitable in 2009. 2010 is the big story with grand theft auto. The analyst believes it will outsell the last version by 50%!!! The analyst also pointed out the stock's valuation discounts this and I agree. His 2010 FY EPS estimates are $2.10!! So anotherwards the stock is trading at 3.88x 2010s earnings and has around $3 in cash per share! The company also introduced downloaded content in february as a new growth avenue.
If TTWO can deliver, this is a name to hold for a while!
Update II: Video Game Sales up 10% in February, see below...
http://www.reuters.com/article/technologyNews/idUSTRE52J01I20090320
Now to TTWO. Wedbush Morgan is very bullish on the stock. The analyst believes management is performing great, given the 2009 environment, however, sees them slightly profitable in 2009. 2010 is the big story with grand theft auto. The analyst believes it will outsell the last version by 50%!!! The analyst also pointed out the stock's valuation discounts this and I agree. His 2010 FY EPS estimates are $2.10!! So anotherwards the stock is trading at 3.88x 2010s earnings and has around $3 in cash per share! The company also introduced downloaded content in february as a new growth avenue.
If TTWO can deliver, this is a name to hold for a while!
Update II: Video Game Sales up 10% in February, see below...
http://www.reuters.com/article/technologyNews/idUSTRE52J01I20090320
TTWO Update
A lot of buzz in this name today folks. Feb NPD numbers out tonight. Q1 results were better than expected and the video game industry has been solid. Many believe their guidance is too cautious, keep an eye on this one!
Afternoon Update
The S&P is having a tough time breaking through resistance levels at 800. As mentioned earlier, I would take a little profit here, just to book some gains, in case we retrace further. As for sectors that have strength, steel is probably top on the list. Names like RIO, NUE, CLF, X, SID, SCHN, PKX, HSC, MT, AKS, TX, and CMC seem to have strength. I like CLF the best for a trade; however, none of these names have great balance sheets.
With a market like this, I want to keep high cash levels and look for firms that have great balance sheets. With that being said, value hunters are buying up TTWO, pushing it above $8. If this rally holds, I wouldn't be surprised to see TTWO print $10 by Easter. As for DRYS, I sold my entire stake. If I had to do it over again, I would have trimmed 50% and let the other 50% ride. I still have my WRI short and may build in over time; however, I don't want to get trapped in this rally.
Healthcare has pulled back and I will continue to watch and perhaps take a few positions. Use the updated Healthcare Ranker as a guide and take a look at a few of the names. I like HUM and UNH the best.
With a market like this, I want to keep high cash levels and look for firms that have great balance sheets. With that being said, value hunters are buying up TTWO, pushing it above $8. If this rally holds, I wouldn't be surprised to see TTWO print $10 by Easter. As for DRYS, I sold my entire stake. If I had to do it over again, I would have trimmed 50% and let the other 50% ride. I still have my WRI short and may build in over time; however, I don't want to get trapped in this rally.
Healthcare has pulled back and I will continue to watch and perhaps take a few positions. Use the updated Healthcare Ranker as a guide and take a look at a few of the names. I like HUM and UNH the best.
Update
We are at a short term resistance level, I sold my vmw stake at breakeven. I would take some profits here, particularly in tech.
Market Outlook - March 19th
Futures seem to be flucuating; however, the big story will come at 8:30a, with the jobless claims number. I expected it to be bad and I don't know if this is priced in the market. I think the market could seriously tank 3-4% on any given day with some bad news; however, I am not saying it will.
As for trades, I will continue to keep the same names on my radar, and will post buys/sells. As for a trade, I might short the ultrashort long treasury fund TBT because I think it can definetly get a 30 handle, while maybe getting long the TLT. I will see how it goes but with the TBT at $45, I think we could see a nice $5-$6 dollar drop.
I will be back later..
Update II. DRYS is ripping!
As for trades, I will continue to keep the same names on my radar, and will post buys/sells. As for a trade, I might short the ultrashort long treasury fund TBT because I think it can definetly get a 30 handle, while maybe getting long the TLT. I will see how it goes but with the TBT at $45, I think we could see a nice $5-$6 dollar drop.
I will be back later..
Update II. DRYS is ripping!
Wednesday, March 18, 2009
Updated Healthcare Rank
Above is the new Healthcare specific ranker. I ranked the picks by cash per share/ price ratio. The short as % of float indicates the short interest in the shares outstanding. Lastly the rank is a 0-5 score that contains various factors, but consider it as a compiled ranking that repsents 0 -5 "stars".
Market Wrapup - March 18th
Another “up” day, with the S&P leading the rally, closing at 793. Surprisingly, my views toward the market haven’t changed. We took out 777 during the first two days of trading, broke above 800 today, causing the shorts to run for cover. I remain bearish, particularly on commercial real estate, however, I think it’s possible that we could see another 60 points on the S&P. The key is to get selective and don’t get greedy.
I rarely beat down the table, but I am telling you, LOOK AT HEALTHCARE. Last Friday, the calls in HUM were on fire and now today CI call options were on fire! CI March call options (keep in mind they expire Friday) took off, with the $15 strike up 158%, $17.50 strike up 200%, and $20 strike up 100%. I pointed this out this morning; however, they are taking off faster than I thought. CI up 7.25%, HUM up 5.36%, and UNH 1.95%. UNH is still very cheap at these levels and there is some serious noise in HUM and now today, CI. HUM and UNH have better balance sheets than AET or CI. Dennis asked a good question in the comment section, regarding the Healthcare Value List. Those names consist of Pharma, Healthcare, Biotech, and other various HC. These are ranked on a valuation metric that I use, so I don’t list them by my preference. My goal is to provide a list and let you find which ones you like, but keep in mind, biotech is very risky and I would buy a basket when playing, or by the XBI (Biotech ETF). Ok, I will leave Healthcare alone, but at these valuations, these can be trades or even long-term plays, just don’t go all in at once.
As for my account, I ended up a few percent, with big gains in TTWO, VMW, and DRYS; however, my WRI short fell rather hard. I did not cover and plan on keeping it as a hedge. As for financials, I have no position and I rather not be long or short. As for the FAS, I bought in the mid $2’s and sold way to early around $4, now its near $7. FAZ has fallen from $100 on March 6 to $26 now. For all I know, FAS and FAZ might touch each other soon, haha. Financials are beyond crazy and I rather not play.
I off for the night, I need to fill out my NCAA basketball bracket .
I rarely beat down the table, but I am telling you, LOOK AT HEALTHCARE. Last Friday, the calls in HUM were on fire and now today CI call options were on fire! CI March call options (keep in mind they expire Friday) took off, with the $15 strike up 158%, $17.50 strike up 200%, and $20 strike up 100%. I pointed this out this morning; however, they are taking off faster than I thought. CI up 7.25%, HUM up 5.36%, and UNH 1.95%. UNH is still very cheap at these levels and there is some serious noise in HUM and now today, CI. HUM and UNH have better balance sheets than AET or CI. Dennis asked a good question in the comment section, regarding the Healthcare Value List. Those names consist of Pharma, Healthcare, Biotech, and other various HC. These are ranked on a valuation metric that I use, so I don’t list them by my preference. My goal is to provide a list and let you find which ones you like, but keep in mind, biotech is very risky and I would buy a basket when playing, or by the XBI (Biotech ETF). Ok, I will leave Healthcare alone, but at these valuations, these can be trades or even long-term plays, just don’t go all in at once.
As for my account, I ended up a few percent, with big gains in TTWO, VMW, and DRYS; however, my WRI short fell rather hard. I did not cover and plan on keeping it as a hedge. As for financials, I have no position and I rather not be long or short. As for the FAS, I bought in the mid $2’s and sold way to early around $4, now its near $7. FAZ has fallen from $100 on March 6 to $26 now. For all I know, FAS and FAZ might touch each other soon, haha. Financials are beyond crazy and I rather not play.
I off for the night, I need to fill out my NCAA basketball bracket .
Market Update
The market is holding well today, with the S&P now in the green; however, it can change quickly when a govt offical speaks.
I am watching the dow resistance level at 7400 closely. This is a key point that can bring in some shorts. I still am bearish; however, this rally seems to have legs and can last a while.
I made some new buys today as u see and I tried shorting FR and MAC but once again no shares to borrow! Healthcare names are smoking hot and TTWO is still truckin!
The fed statement is coming so as always protect yourself!
I am watching the dow resistance level at 7400 closely. This is a key point that can bring in some shorts. I still am bearish; however, this rally seems to have legs and can last a while.
I made some new buys today as u see and I tried shorting FR and MAC but once again no shares to borrow! Healthcare names are smoking hot and TTWO is still truckin!
The fed statement is coming so as always protect yourself!
Healthcare update
HUM is off the races. Keep an eye on UNH and the rest of the healthcare value picks (last week archive)
CNBC Alert: RF is back
I am finally able to trade again and the corporate meetings are on hold.
I have done some analysis this morning, to get back in groove. As you know I have about 92% of my portfolio in cash, but look to put most of that to work in the next few weeks. As for the short side, I will continue to sell short select commercial real estate REITs. As for the long side, I like the following:
Healthcare: I like this sector for a trade and even for a longer time horizon. HUM, CI, and UNH (the names on the healthcare value list are also valuable). HUM's net cash per share is $ 25.68, according to my calculations, and is currently selling at $25. UNH also has a nice balance sheet, with great cash levels. Roughly $6.62 of the stock is cash, representing 31% of the stock price. CI's balance sheet is not as strong; however, if the others run, this should run. These stocks have a nice 20-25% run since their lows; however, they are not expensive. I would "scale" into these and buy on dips.
Trade the Consumer: If this rally continues, trades on the consumer can work because it will squeeze the shorts out. If you want to play the short squeeze, names like JCG, BKE, MW, JWN, ANF, HOTT, and PLCE will work for a trade.
If I jump on this trade, I will look at: HOTT, JOSB, WFMI, NFLX, or LL.
I also like China on dips, my play is the FXI but BIDU is showing some "call interest".
Lastly, I must warn you, I have been away from the desk for a few days and I am excited to get to trading. I may be a little impatient because of this; however, I will snap into it. I have some orders in and once filled, I will post them on here. Good luck out there.
I have done some analysis this morning, to get back in groove. As you know I have about 92% of my portfolio in cash, but look to put most of that to work in the next few weeks. As for the short side, I will continue to sell short select commercial real estate REITs. As for the long side, I like the following:
Healthcare: I like this sector for a trade and even for a longer time horizon. HUM, CI, and UNH (the names on the healthcare value list are also valuable). HUM's net cash per share is $ 25.68, according to my calculations, and is currently selling at $25. UNH also has a nice balance sheet, with great cash levels. Roughly $6.62 of the stock is cash, representing 31% of the stock price. CI's balance sheet is not as strong; however, if the others run, this should run. These stocks have a nice 20-25% run since their lows; however, they are not expensive. I would "scale" into these and buy on dips.
Trade the Consumer: If this rally continues, trades on the consumer can work because it will squeeze the shorts out. If you want to play the short squeeze, names like JCG, BKE, MW, JWN, ANF, HOTT, and PLCE will work for a trade.
If I jump on this trade, I will look at: HOTT, JOSB, WFMI, NFLX, or LL.
I also like China on dips, my play is the FXI but BIDU is showing some "call interest".
Lastly, I must warn you, I have been away from the desk for a few days and I am excited to get to trading. I may be a little impatient because of this; however, I will snap into it. I have some orders in and once filled, I will post them on here. Good luck out there.
Tuesday, March 17, 2009
RF vs CNBC
Ok, I rarely rant but here I go. I just went to CNBC's website and the first link reads "Economy shows signs of recovery". I'd like to know what the hell they are looking at. I'm not a brillant guy but forreal what data are they looking at? Jobs are falling monthly, consumers seem to be saving, not spending, and housing supplies are still very high! In addition, I guess they missed AXP's warning on credit card defaults yesterday. Meredith Whitney believes that's the next shoe to fall and she's been dead right all along, why bet against her now?
I mean we have a bear market rally that could last a bit but I really don't think this is a bottom. I wouldn't be surprised to see this rally push the S&P to 800+ or even last 6 weeks until the "sell in may and go away" trade goes down. This may setup for the best short selling opportunity in a long time, in my personal view.
To be continued-
I mean we have a bear market rally that could last a bit but I really don't think this is a bottom. I wouldn't be surprised to see this rally push the S&P to 800+ or even last 6 weeks until the "sell in may and go away" trade goes down. This may setup for the best short selling opportunity in a long time, in my personal view.
To be continued-
RF Position Update
I have a break at the conference and just logged into my acct. My vtr cover order went in at the open, around 23, for a $223 profit. I'm still short WRI and don't plan on covering. I'm long TTWO as well. The bear market rally continues and wouldn't be surprised to see the SP print 800. Regardless I'm bearish and will short doomed REITs.
Ill check emails tonight, sorry for delay, busy at conference but ill be back at it tomorrow
Ill check emails tonight, sorry for delay, busy at conference but ill be back at it tomorrow
Market Outlook for Tuesday
Futures seem to be pointing higher today but as you knpw they can change on a dime. My views haven't really changed, I am bearish; however, we are still in bear market rally territory until we close below 740 on the S&P. The market is doing weird things; therefore, I would sit on cash and make smaller trades. If I forced to buy long, I would look at cheap healthcare names but that is only if I was forced to buy. As you know, I am bearish on commercial real estate and on many REITs, not all though. I am short VTR and WRI. I will probably cover VTR today because the trade is up 12% since Friday. I will hold my WRI short while looking at other canidates like FRT,PLD,DRE,AIV. Ill have another com re report coming saturday
Ill be back trading tomorrow, take care
RF
Ill be back trading tomorrow, take care
RF
Monday, March 16, 2009
Market Update
Just got to my destination, to see the market in the red! I think the dow was at 174 when I posted at 2,haha. I mean when people are now buying FAS, up already 100% in a week, it is a bit ridlicous! I rather not play than be late and lose money.
As for the portfolio, it looks as if TTWO fell a bit but it remains my only long. My short positions in VTR and WRI did great. As for options Im long SSO and MAC puts.
I'm apathetic on financials here,leaning more to the bear side for a short term trade but if with mark to market rumors and big talk from bank ceos, buyer may flood in. I still remain bearish on select REITS and will stick to my guns.
Off to a dinner, have a good one.
As for the portfolio, it looks as if TTWO fell a bit but it remains my only long. My short positions in VTR and WRI did great. As for options Im long SSO and MAC puts.
I'm apathetic on financials here,leaning more to the bear side for a short term trade but if with mark to market rumors and big talk from bank ceos, buyer may flood in. I still remain bearish on select REITS and will stick to my guns.
Off to a dinner, have a good one.
Market Update
The market seems to be steady going, however, action in commercial real estate names are terrible. I initiated a short position on WRI this morning and plan to hold and build. If you don't have a margin acct the best way to play is long SRS which is twice the inverse of the IYR.I would scale into this though. Its a broader play but if you can short, take a look at the list from yesterday.
RF Sell Short- WRI
Sold short 175 shars of WRI at 10.72
Off to catch my train. Have a 12 stop in case.
Note my broker has no MAC to borrow. I bought june $2.50 puts @ $0.25
Off to catch my train. Have a 12 stop in case.
Note my broker has no MAC to borrow. I bought june $2.50 puts @ $0.25
Sunday, March 15, 2009
Market Outlook for the Week of March 16th
This week will be a very interesting week, especially for the S&P 500. The S&P has been up 4 days in a row and was up 10.71% last week alone. I honestly feel like this is similar to the last part of November however, the volatility has dropped. During the last week of November, we closed up 4 days in a row, however, it was a holiday week (a lot of short covering goes on during holiday weeks). I want to see if the S&P can get above 777 for the first half of the week. Currently, it looks as if the S&P is in a resistance level, until about 777, and if we break through with strong volume, 800 on the S&P looks probable. I would keep a close eye on volume because if volume is relatively light, we could retrace quickly. Even if we get to 800, there are still strong resistance levels at 815, 850, and 870. Therefore, I am more bearish than bullish, at these levels.
I bought some small pieces of SDS to protect my long position but I have over 90% of my trading account in cash. I mentioned I purchased some FAZ Friday; however, I sold it because I am heading out of town. Keep in mind FAZ could drop 10 pts or gap up 10 pts in a day or two; however, it seems oversold and I would look to nibble at these levels. Also know that if you buy a $2000 position in the FAZ, you are really playing with $6000 because it’s triple leverage. Also, I rarely ever hold leveraged ETF’s longer than a few weeks because they track intraday averages and the volatility can eat away at your returns. Another option would be the EEV, which is the 2x inverse of the EEM (emerging markets ETF). The key is to scale slowly into the position and don’t use all of your bullets at once. I feel like we are approaching a retracing period, therefore, I lightened my longs and have some short positions on the table.
However, if we do break through resistance and look to be heading towards a 8 handle on the S&P, there is some opportunity. I have some of those healthcare value plays (archive) from Friday on my watch list. HUM is still cheap, regardless of the takeover speculation, as well as UNH. In addition, I would be watching UYM, POT, CREE, MS, and TTWO. Also, I would look at old longs like TXN and PCR. Of course I would have some “dice rolls” on the list like ANAD, CENX, or MU. Semiconductors starting getting hot after I sold my CY stake, the "RF" holding curse is over. All of these for trades only, for the long side. As for the short side, I will look to short commercial real estate names, by shorting the common or through buying puts. The list from Commercial Real Estate Part 2 is a nice watchlist. In addition, I would be looking to scale in some SKF. One thing I might add is to be careful shorting hard to borrow stocks. Recently I talked to a few friends who use Tradestation and they have been blown out of short positions quickly, without an e-mail or a call from their broker. Instead, they log-in to their account and poof, they have cash and a loss.
I will be back Thursday; however, I should be trading Wednesday or maybe Monday if I can get my internet connection working through the blackberry, while riding on the train. I will also try to post. As always, have a good one and I will be in touch.
I bought some small pieces of SDS to protect my long position but I have over 90% of my trading account in cash. I mentioned I purchased some FAZ Friday; however, I sold it because I am heading out of town. Keep in mind FAZ could drop 10 pts or gap up 10 pts in a day or two; however, it seems oversold and I would look to nibble at these levels. Also know that if you buy a $2000 position in the FAZ, you are really playing with $6000 because it’s triple leverage. Also, I rarely ever hold leveraged ETF’s longer than a few weeks because they track intraday averages and the volatility can eat away at your returns. Another option would be the EEV, which is the 2x inverse of the EEM (emerging markets ETF). The key is to scale slowly into the position and don’t use all of your bullets at once. I feel like we are approaching a retracing period, therefore, I lightened my longs and have some short positions on the table.
However, if we do break through resistance and look to be heading towards a 8 handle on the S&P, there is some opportunity. I have some of those healthcare value plays (archive) from Friday on my watch list. HUM is still cheap, regardless of the takeover speculation, as well as UNH. In addition, I would be watching UYM, POT, CREE, MS, and TTWO. Also, I would look at old longs like TXN and PCR. Of course I would have some “dice rolls” on the list like ANAD, CENX, or MU. Semiconductors starting getting hot after I sold my CY stake, the "RF" holding curse is over. All of these for trades only, for the long side. As for the short side, I will look to short commercial real estate names, by shorting the common or through buying puts. The list from Commercial Real Estate Part 2 is a nice watchlist. In addition, I would be looking to scale in some SKF. One thing I might add is to be careful shorting hard to borrow stocks. Recently I talked to a few friends who use Tradestation and they have been blown out of short positions quickly, without an e-mail or a call from their broker. Instead, they log-in to their account and poof, they have cash and a loss.
I will be back Thursday; however, I should be trading Wednesday or maybe Monday if I can get my internet connection working through the blackberry, while riding on the train. I will also try to post. As always, have a good one and I will be in touch.
Commercial Real Estate - Part #2
It is now time for Part 2 of the Commercial Real Estate discussion. I elaborated on some of the reasons why I don't like Commercial Real Estate (archive 3/15/09) and now I want to provide some names, for discussion. This analysis focuses primarily on the financial health and liquidity of these REITs. The analysis considered the following REITs: Healthcare, Industrial, Diversified, Retail, Office, and Hotel/Motel. My overall goal was to determine which REIT's had the biggest liquidity issues, concentrating around cash levels and short-term/long-term debt obligations. The key metric I used was Cash per Share / Current Market Price and used a filter to include any REIT that had a ratio -0.10 (or worse). The first 10 on the list are in big trouble; however, the list is comprised of about 65 REITs. A few that catch my eye (as challenged) are WRI, AIV, and MAC.
I tried plowing into MAC this week, in hopes to catch a short squeeze, and as a result, I flat out failed. This stock is heavily shorted and for probably the right reasons. MAC doesn't seem to have a great balance sheet. As of the 12-31-2008 balance sheet, the firm had only $66 million in cash on their balance sheet. I believe now that cash level is higher, around $166 million; however, the debt is very heavy. MAC’s debt levels were astronomical, possessing about $5.6-5.8 billion in debt. According to the balance sheet, $2.3 billion of that is short-term and $3.7 billion is long-term debt. MAC has no short-term investments and have only $1.2 billion in long-term investments. MAC does have a line of credit, valued around $400 million, but the problem comes with the debt owed. This year alone, MAC has nearly $600 million worth of debt due and additional $775 million due in 2010. After 2010, MAC has nearly $3 billion in debt due for the next 2-3 years. With that being said, MAC will have a challenging time and will probably sell great assets to cover, for the lack of cash. If they are able to get equity financing, it will be very dilutive, leaving the firm to have a tough future.
The link below will provide you with a list of the REITs in the analysis, ranked by the metric. Feel free to leave a comment or e-mail.
http://www.docstoc.com/docs/4951704/?key=Mjg2MWQwZDQt&pass=NjBkZi00ZDU4
I tried plowing into MAC this week, in hopes to catch a short squeeze, and as a result, I flat out failed. This stock is heavily shorted and for probably the right reasons. MAC doesn't seem to have a great balance sheet. As of the 12-31-2008 balance sheet, the firm had only $66 million in cash on their balance sheet. I believe now that cash level is higher, around $166 million; however, the debt is very heavy. MAC’s debt levels were astronomical, possessing about $5.6-5.8 billion in debt. According to the balance sheet, $2.3 billion of that is short-term and $3.7 billion is long-term debt. MAC has no short-term investments and have only $1.2 billion in long-term investments. MAC does have a line of credit, valued around $400 million, but the problem comes with the debt owed. This year alone, MAC has nearly $600 million worth of debt due and additional $775 million due in 2010. After 2010, MAC has nearly $3 billion in debt due for the next 2-3 years. With that being said, MAC will have a challenging time and will probably sell great assets to cover, for the lack of cash. If they are able to get equity financing, it will be very dilutive, leaving the firm to have a tough future.
The link below will provide you with a list of the REITs in the analysis, ranked by the metric. Feel free to leave a comment or e-mail.
http://www.docstoc.com/docs/4951704/?key=Mjg2MWQwZDQt&pass=NjBkZi00ZDU4
Trade 247's Top Contributor RT - Weekend Review
RT is back with a great fundamental analysis on TTWO. The document is a detailed analysis, highlighting the industry and TTWO's business model. Thanks RT and enjoy!
http://www.docstoc.com/docs/4951440/TTWO-FA
Disclaimer/Disclosure: RT's analysis reflects his personal views. These views do not reflect RF or Trade 247. The analysis is for educational purposes, not for investment recommendations. RT is long TTWO at the time of this post.
http://www.docstoc.com/docs/4951440/TTWO-FA
Disclaimer/Disclosure: RT's analysis reflects his personal views. These views do not reflect RF or Trade 247. The analysis is for educational purposes, not for investment recommendations. RT is long TTWO at the time of this post.
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