THE GUN: 3 POSSIBLE TRADES IN 3 MAGNIFICENT STOCKS
After a week of sleep waiting for setups, The Gun has 3 new candidates that look to be preparing for some long side gains. Here they are: click on the charts below to enlarge
5 CHARTS THAT PROVIDE SOME EYE CANDY FOR THE WEEK AHEAD
click on the charts below to enlarge
$250 OIL AND DOW 16,000? REALLY?
I came across this headline on Drudge this weekend: Dull Market Could Get Rocked if Oil Keeps Rising It's a CNBC article that I didn't read for fear of turning into a mouth-breather, which seems to be what happens when overexposure to certain financial media outlets occurs for more than a few minutes. The title of the article says it all, without having to read a single paragraph. There seems to be a vast consensus that believes rising oil prices means that stocks HAVE to go down. There is no going around it. If crude oil gets above $120, a bear market will be upon us. Above $150 is Dow 9,000. And above $200 is guns, caves and canned food time. This traditional thinking with respect to negative correlations of the past is going to be challenged in the months and years ahead. Just as we learned recently that major financial institutions can go under and the markets can be at multi-year highs a relatively short time later. We've also learned that consumer spending can thrive without home equity loans serving as a piggy bank for Wal-Mart happy individuals. And only recently are investors beginning to realize that $1,400 gold doesn't necessarily mean the end of the world. Let's pretend that it's 2006. I'm a psychic. You come to me for financial advice and ask about the state of the world markets come 2011. I tell you the following: - Home prices will be down 30% from their peak - Lehman Brothers has been vaporized...bankrupt - Bear Stearns no longer exists. Roughly the same fate as Lehman...just a different road to get there - AIG is effectively a shell of its former self. Down 90% plus from its peak - Gold is nearing $1500 - Crude oil is over $100 - Unemployment is near 10%...they say The first thing you would do is go buy firearms. This would be followed by a shovel and cement in order to fortify your bunker against rabid mutants of the former world we once knew. Then you would gather your family and tell them that in 5 years, the world has effectively come to an end. You would take your kids out of school. Then you would quit your job. To this day you would still be in your bunker, thinking how wise you are to be surviving Armageddon. All the meanwhile, your neighbors are getting rich off of silver and gold investments. The Dow is nearing an all-time high. The Nasdaq is nearing a 10 year high. And your new nickname around town is Loony Larry. The point I am trying to...
THE 3 REASONS NFLX IS GOING REPORT BLOWOUT NUMBERS
This article featured on TheStreet.com, Fidelity, and MSN Money. A couple months back I wrote an article that said NFLX would outperform AAPL during any market correction. What I should have wrote, at the time, was that NFLX would outperform AAPL period. The point of the article was missed by most. I take full responsibility as I probably mixed in too many distracting points and topics. It's not about an AAPL versus NFLX war of technology, executives or each companies place within this technology driven world. The point of the article was that market psychology drives stock price, irrespective of fundamentals. When a momentum driven trend begins in a company that is under a tremendous amount of scrutiny and doubt, it creates a support dynamic for the stock. It allows the stock to continue to a share price and market cap that not even the founders of the company could have imagined would be possible. NFLX is a prime example of this dynamic at work. I wrote about it in detail months ago. It's such a difficult concept for even seasoned investors to understand. It's a prime example of how the rational mind has no place in speculation. AAPL is simply a popular stock that provides an excellent benchmark to illustrate the power of this dynamic. The rational mind will be challenged once again when NFLX releases earnings on April 25th. It will be a blowout number that sends the stock price to new highs and will only serve to draw more ire and criticism towards the stock, creating a further support dynamic that the bears will refuse to understand. I base my guess of a blowout earnings number on the following: 1. Price action: momentum driven names that are plagued by skepticism have a tendency to rise into a positive earnings report. It is rare that they will reward a large group of bears by closing near all-time highs and then plunging 20 or 30 percent on an earnings debacle. It happens, but the incidences are rare. 2. Company life-cycle: when we look back on NFLX ten years from now, whether the company is a leader in entertainment technology or a bankrupt penny stock, we will view this period of time as the point where NFLX took on big media/entertainment companies and won. Alternatively, it can also turn into the point where big media took a stand and turned the company into the next Blockbuster. NFLX management is well aware of the importance of this point and time in the companies life-cycle. A less than enthusiastic assessment of future earnings and the resulting plunge in the price of...
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. BUBBLE WATCH: SILVER 2. 11 P.M. THOUGHTS 3. VOLUME SPIKES GALORE IN SILVER...
11 P.M. THOUGHTS
As we head into Friday's trading session I am thinking the following: - This market (mainly the QQQ) smells of an animal that is looking to break out of its cage to the upside. Nothing has changed from my posting a couple days back. I think we're going above 58 on the QQQ and I think it will be fast once it begins. - PSTR is looking like it's beginning to consolidate perfectly right near its highs. Still early...needs a few more days to confirm. It's much stronger than I ever expected. Investors are seeing the light....and rightfully so. - Speaking of PSTR and the natural gas sector that it's involved in...the GAZ (natural gas) etf that I mentioned a couple weeks back is looking like it's attracting some attention from investors. Volume has been picking up. The price pattern looks ripe for a move up. I'll be watching it since it relates to my investment in PSTR. - Lots of Chinese stocks are coming up on my scans as movers of note. Still trying to figure out what it means. It smells of speculation, however. Are these the new phase 4 stocks? - I haven't been seeing a lot of opportunity either short or long in the markets for "The Gun". And I'm not the type to try to make up trades where there are none. I am fine sitting tight...you should be too dummy. - The move up in silver is reaching insane proportions. At the same time, it is a picture perfect example of the perils involved in attempting to catch market tops. Yes, I believe silver is in a bubble. However, I've come up with better means of extracting profits out of the markets than trying to catch tops in enormous macro power trends. In college I used to stay up until 5am. Some years later I can barely stay awake past 11. It's 11:05....
5 ELEMENTS THAT MAKE FOR A SUCCESSFUL INVESTMENT
You guys know that the bread and butter of my investing strategy comes from the research I do and the long-term positions I take as a result. I take on a few short-term trades each month, but they make up a small fraction of our gains come year end. I'm not a short-term trader. I like doing research. I like taking on large positions. I like concentrating my portfolio. I like hitting home-runs. Believe me, I've attempted to take on large, concentrated positions looking for home-run stocks that are short-term trades way long ago. It's a ticket to a prescription to xanax and a nervous twitch that scares small children. Not my thing...real simple. I wanted to take a look at what has been going right recently. Both as a reminder to myself of what I need to be on the lookout for and as an educational experience so that you can search out these opportunities yourself. PSTR is a good example of an investment that has treated us well since I took the position more than a month ago. There are several important elements at play within PSTR. They do not come around very often. But when they do they make for an explosive combination of drivers for a companies stock price: 1. A restructuring angle. This is so important. Why? It's a catalyst. It has nothing to do with the fact that a company reduced debt on its balance sheet by X amount. It has nothing to do with the fact that there are new members of the board. It has nothing to do with the fact that certain pieces of a business are spun-off or sold. It has everything to do with the fact that it renews interest in the stock. Certain groups of investors (usually the investors you want to be holding hands with) will begin taking positions in companies that have been restructured and other groups will follow. It begins a positive life cycle for the stock, if you want to call it that. It is a way of removing the bad and bringing in the good. It insures that the stock isn't moving sideways for months or even years. It's a catalyst...bottom line. 2. Technical perfection. What is technical perfection? It's a basing pattern that begins blossoming into an uptrend with volume to match. That's my idea of technical perfection. When the right people start becoming involved in a company, it shows in the price action. You see their tracks. It creates a healthy base with which the stock price can appreciate. 3. A value angle. This creates a sense of confidence amongst...
QQQ AND USO SITTING IN A TREE
You know the rest of that schoolyard classic. I'm bullish on both. Charts below will explain: click on chart to enlarge
QUICK THOUGHTS
Not really much to do at these levels in the market. It is always at the beginning of turning points (if we are indeed facing one) where opportunities begin exhibiting risk/reward characteristics that favor doing absolutely nothing. Any long setups have, for the most part, been invalidated. Short setups I am actively searching for, but have yet to come across anything that meets my requirements. I am somewhat "tighter" than most when it comes to filtering out potential trades, as I prefer getting into positions that offer outstanding risk/reward setups. They do come, but not every single day. PSTR is seeing its fair share of volatility today on some heavy volume. I am looking to make a final addition into the stock and will likely do so when I see a favorable pattern emerge. For the time being, it's not there yet. I did mention last week that we're at a point where I feel that oil and equities will begin a positive correlation. It's all part of the inflation trade that will see asset prices rise across the board. We're seeing it today with the first substantial down day in oil being tailed by the first substantial down day in equities in sometime. I think this trend will become more pervasive throughout the year. That's it for now. I'll be updating the website if any trading ideas fall from the...
VOLUME SPIKES GALORE IN SILVER DERIVATIVES
Interesting that today saw the biggest volume day ever in the ZSL. ZSL is the ultrashort, leveraged ETF on silver. It has gone from 50 to 20 in the past couple of months. SLV, the silver ETF, experienced its second largest volume day ever today. Charts are below. In addition, there comes this news article describing a trader betting $1 million on some way out of the money puts for July expiration. In my past experience, these types of volume anomalies have typically marked, at a minimum, a period of increased volatility where the general trend - in this case uptrend - begins to become much more volatile and treacherous to bulls and bears. I have also seen these types of volume anomalies indicate market tops. I have rarely seen these types of volume anomalies mark continuation patterns for an uptrend. click on charts to...