Taking Stock: Say ... ahhhhhh ...

Just so you know, at the moment I am chanting in my head, "Break out!! Break out!! Break out!!". From my perspective, the wedge that has been forming is a BULLISH wedge, not a bearish one, you just have to adjust your trend lines a little bit. It now appears as though the market might break across the 50DMA and break out to the upside. I would love to see the bear market rally that I have been impatiently waiting for, the market going to the 200DMA. I'll look for my precious metals stocks to move to at least the 200DMA, and maybe some others. There needs to be more volume, though.

With that in mind, I actually looked at my account, and thought, "Wow, I still have some cash on the side? Let me fix that ...".

I'm still watching the Baltic Dry Index (BDI) for it to find support in the 50DMA, and then start to move higher. If it does, then Dry Bulk shippers should be a good trade. The BDI is an index of the spot market prices for dry bulk shipping, so dry bulk shipping tends to track the BDI.

I also noticed that oil prices are at least stabilizing, if not starting to move higher. I would like it to be out of sync with precious metals, which it looks as though it will do that.

In a twist of fate, my Axsys Technologies(AXYS) stop loss order did not go through. It is now moving higher.

Taking Stock: My New Wish

Working on wishes and prayers is not a good trading strategy, but I'll try it anyway.

My new wish, albeit that China is truly back in action, is to see the Baltic Dry Index find support on the 20DMA and start to move higher again. The BDI is the index to watch when trading Dry Bulk shippers, and demand from China can be a definite aid in driving the spot shipping prices higher.

From an armchair perspective, it seems as though gasoline prices have stabilized. I would actually like to see them start to move higher, which they more than likely will soon enough. Like Dan Fitzpatrick mentioned, the price of oil will definitely not go to $0. It is only a matter of time before the price of oil starts to move higher again.

From what I have read, and other observations, the stock market does not wait for the actual economy to turn around, it only waits for the conditions to be in place for it to turn around. From what I see, the stock market has already started to turn.

I'm still heavy in gold and silver, which has been moving higher lately. I'm quite sure that I have mentioned that I added to my gold and silver positions a month or so ago, which I'll trim back soon enough. It looks as though I will get one of the things that I wanted, because my energy stocks are lagging behind precious metals in turning around. I like that, because it will let me trim back precious metals after they have run for a little while, and roll it over to energy.

I still have my position in the infamous Crystallex (KRY). The way I see it, one of two things will happen with that saga:

1.) Crystallex & Rusoro will split the mine
2.) Crystallex & CVG will split the mine

Hugo Chavez has a personal problem with Tejera Paris, a UN Ambassador, having an association with Crystallex. What Hugo wants is for gold mining companies to go to a 50/50 Socialist Joint Venture model, which I am now betting that Crystallex will go along with. I had a feeling that Chavez wanted something, which I figured it was to have someone else operate the mine while he collects a portion of the gold. If Chavez really wanted to kick Crystallex out, then he probobly would have done it by now.

I had to sell my Axsys Technologies (AXYS), since it is breaking down, and I have no idea for as to if it will ever turn around. With energy and other commodities, we are in a multi-year cycle for hard assets. Energy trades with the CRB and the price of oil.

According to Stephen Leeb, and Dan Fitzpatrick has also mentioned it, there is a substantial amount of money sitting on the sidelines in Treasuries and the Stimulus packages. It comes out to being around $4T that could come flowing into the economy.

Taking Stock: I Noticed

Something that I have noticed lately is the trend changes and reversals in some stocks, or at least starting to change, for instance:

Transocean (RIG) - the 20DMA has been flattening out
Ultra Petroleum (UPL) - the same condition as Transocean

Yamana Gold (AUY) - trend reversal. It appears to have broken resistance through the 20DMA and has now found support on it as it begins to move higher.

Pan American Silver (PAAS) - the same as Yamana, and quite possibly for NovaGold (NG)

On a somewhat twisted note, depending on your perspective, I am looking forward to when inflation sets in, and commodity prices go higher.

I'm thinking that there will be a rally soon enough, but probobly only a bear market rally.

Taking Stock: Ah-Ha!

Down goes the dollar, and down goes the Fed Funds rate. If that is not a good recipe for higher precious metals prices (gold & silver), then I don't know what is.

I found out what has been driving NovaGold (NG). They apparently are going to be able to make the bridge loan that they were having difficulties with. Now, what I would like to hear, is they get the final permit issued for the Rock Creek mine that they had operational. It is still a potential good trade, but with a good stop loss of course.

It looks as though the Baltic Dry Index is going to go higher. Even if it is not true yet, I'll say it in advance anyway. Welcome back, China. We missed you, at least I did.

Maybe now commodities and the CRB will start to go higher again also.

Taking Stock: The Events That I Have Been Waiting For

The Dollar is falling, and the price of Silver and Gold is in rally mode. The price of oil has not increased at the rate that I would like, (no offense to those enjoying the price of gasoline lately) but it more than likely will soon enough. I'd like to see the precious metals mining stocks rally out of sync with the energy stocks, so that I can take advantage of it. In that case, I could trim back my gold and silver mining stocks, and roll it over into energy (I secretly wished for that to happen several months ago).

Somehing that is baffling me, along with several other people, at the moment is just exactly what is going on with NovaGold. Why the rally? I'll keep my eye on that one.

Check out the steel producers index(es) along with the China's stock market indexes. The Baltic Dry Index (BDI) has also been inching up. Welcome back China?

Taking Stock: A Quick Note

If, by some chance, you got in on the Eagle Bulk (EGLE) or Excel Maritime (EXM)on my behalf ...

Congratulations, and you are welcome. I quite honestly was not really expecting that much of a run to happen so quickly! Wow! I primarily had the yield in mind, and was taking into consideration that the economy (namely China) will turn around soon enough (I was thinking several months from now). For example, DryShips went from ~$4 per share to almost $11 per share.

11/4 = ??

I'm still in the camp of getting a major market rally soon. My first thought when I heard that the NBER had announced that we were in a recession was "Wow, maybe now the market will turn around and go higher for a little while, at least a bear market rally". We shall see.

One of the things that I have noticed with stocks is that the majority of them have a tendency to follow a very similar pattern to the broad market. Not necessarily an exact pattern, but very close. That is probobly why quite a few people trade the S&P 500 indexes rather than individual stocks.

Taking Stock: My Wish Come True?

Am I finally going to get my wish, and the Dollar will drop like it should be dropping? I'm very well aware of all of the deleveraging going on, and being the primary cause of the dollar index climbing, but we also have the Fed and Treasury persistently printing money. First Fannie and Freddie, then AIG, then TARP, and now Citigroup.

We have been having a very nice bull run in the price of gold! Finally! I love it!

The bad part of gold moving higher is that NovaGold took a massive dump this morning. They are having some issues with financing and meeting the conditions of their permit. I still have Yamana Gold (AUY) to take advantage of the run in gold.

The elections are being held in Venezuela, and I would like nothing more than to see Hugo Chavez ousted from office. Maybe they will elect a leader that is capable and willing to grant that gold mining permit that I have been anxiously waiting for. Also, a leader that is not necessarily biased toward going deeply into debt and buying weapons from Russia. It is just my personal opinion. I'm not concerned about politics, but just the permit. Just read some recent news about gold mining in Venezuela as it relates to Crystallex, and you will understand what I am referring to. I am taking the risky and gonadal approach in my interpretation of what will occur regarding that situation. According to Rodolfo Sanz (for some strange reason, I have had dreams of him being asassinated), they are going to start production of the Las Cristinas mine at the beginning of next year. So, we shall see, and the saga continues.

I was looking into the bulk shippers, and they are apparently being faced with the problem of the value(s) of their ships dropping and causing them problems in regards to financing. So, that is my cautionary note on Excel Maritime and Eagle Bulk and their dividend. Ultimately, there needs to be fundamental strength in

I still keep thinking about the economic stimulus package that China came up with, and all of the money that is on the sidelines right now. T-bills are yielding little or nothing now (negative?), and the majority of the risk in stocks is virtually nil. It would be better to park cash in a stock like Intel than to buy Treasuries.

Taking Stock: Wow ...

I think I am stuck in the middle of selling and just hanging in there, but I am just hanging in there for the time being. It seems as though the action in the market has not being driven by anything at all, not news, macroeconomic indicators, or anything else.

Here's what I have been doing lately:

Stare at the screen, shake my head, and ... :-o

We still have all of the fundamental bases upcoming, so I am not extremely worried, but I am still in awe of what is going on. There are still several things that could occur, such as the Dollar dropping (the US Government continues to take on debt and such), the VIX unwinding to low levels, Treasuries selling back off and people getting back in the market, and people coming off of the sidelines with their cash. Also, the price of gold goes up, and the gold mining stocks go down. The stimulus package in China could start to take effect. The market is also over 30% below the 200DMA, which is extreme.

I can't help but wonder...

Is the demand for oil and gasoline really that low? I find it difficult to fathom.

I'm wary of the balance between inflation and deflation also.

Taking Stock: Ta-Da!!

Told ya so!! It went up ... way up!

Dan "The Man" Fitzpatrick!!

Taking Stock: The Waiting Game

I have been anxiously waiting for the US Dollar to finish its' bull run, and fall to wherever it may end, or maybe even come to an end. Once that happens, gold, other commodities, and the market in general should rally. My understanding is that the next resistance level for the Dollar is around 90, and as today it is 87 plus change.

If you are aware of the "box" that Dan Fitzpatrick refers to, the market is close to the bottom of the box now. Next stop ... UP!! As Dan mentions in his videos, there are usually 3 days down, then the market rallies. So, we shall see where it goes from here. If you notice, the market has just been marking time the past couple of weeks. This time, I'll put in some stop loss orders after it rallies, and wait for the cycle. I just watched Dan "The Man" Fitzpatrick's video for today, and his sentiment is leaning toward a sort of head-fake fall through support tomorrow, so beware. I don't really buy in to the recession taking hold of the market and driving it extremely lower (granted, it could happen), because the way I see it ... the market has already taken into account the now passed possibility of a depression and priced it in.

It is also nice to see the 3-Month LIBOR down to close to 2%.

So, the credit market is virtually unfrozen and the Dollar is likely to start falling soon. I recently read an article that says the market tends to turn around in the middle of a recession. It goes to show that you have to think counterintuitively when you are in the market. I'm still rooting for the bear market rally to the 200DMA.

Just food for thought, the yields for Excel Maritime (EXM) and Eagle Bulk (EGE) are VERY good. Check them out, and see what you think. (19% & 23% is a good incentive for waiting, and recessions are not eternal)

On a side note, I was joking with a friend of mine about gasoline prices. Say, for instance, sometime around last year people would be complaining about the price of gasoline going to $3.00/gal. or so. This year, and recently, people are excited to be paying only $3.00/gal. (which it is less now) of gasoline! Imagine the irony.

I have been busy the past few weeks, digesting what has been occurring in the market and the economy, and essentially learning more new things.

I have been watching Dan Fitzpatrick's videos, and gaining confidence in what he has been saying about the volatility and how to guage the range of movement in the broad market. I realize that I could be trading the volatility, and essentially making a wad of cash in the process. Up until the near future, I have only been doing some mental trading so that I can get a feel for how and when I should be buying and selling shares, and for at what price.

I'm going to wait for the top of the coming rally, then put in some modest stop loss orders, possibly along with some shares of either SH or SDS.

Taking Stock: Things Learned

(note: this is subject to further editing)

I have learned a TON of things about investing and trading this year!

Trading and investing, while not necessarily difficult, takes time, patience, and plenty of learning. You have to be ready, willing, and motivated to keep learning new things.

One of the things that I have noticed about investing that can be difficult is knowing what to learn and from whom, or even if there is any one set of topics to learn. I think it is something that can prevent people from getting interested and involved.

Granted, I take Jim Cramer with a grain of salt, he can be a good starting point for getting interested in investing and learning more. My problem with Cramer is that he is too erratic. One week he will be for something, and the next he will be against it. He is great for ideas, which is what I use him for, along with a sort of secondary opinion.

-I started learning about and using Technical Analysis indicators earlier this year.

I like quite a few of IBD's list of rules:

I don't like most of Jim Cramer's rules, but there are a few good ones:
1.) Buy damaged stocks, not damaged companies

I have found some of his pointers to be helpful:
1.) "Penny stocks are penny stocks for a reason"

There are a portion of Warren Buffet's guidelines that I like:
1.) Don't buy it if you do not understand it. - If you don't understand the company and what it does, then it will be difficult to follow the story.

I have learned some things from Dan Fitzpatrick, and his pointers are helpful:
1.) "Don't lose your dough"
2.) "Don't be the first one out of the foxhole"

"Buy and Hold" does not necessarily work anymore. You have to trade in order to make money. That is what I used to do. While I luckily did not lose much, I didn't really make much either (financial/credit crisis and deflationary period excluded).

-How to spot, watch, and be patient with trends in a stock

I learned to watch volume, and recognize patterns (flags, pennants, etc.). The price of a stock is not necessarily directly proportionate to the number of buyers. Patterns are not hocus-pocus, but only resultant of something called crowd psychology.

-IBD (William O'Neil) trading signals (2X volume, Confirmation, 200DMA, etc.)

-200DMA rule examples (ADM, BEAV, BUCY, CTV, UPL, RIG)

-Have been made a believer out of the necessity of using T/A
-describe money management
-There will be times in which an event will occur, but you won't realize it until after the stock has sold off considerably

-Find, recognize, and use the opinions of others that know more than you, then use that to learn from.
-When knowledgeable people start yelling "fire!", you should pay attention and investigate further. Having the ability to effectively read and understand balance sheets aids that invesigation.


New Cardinal rules:
-When in a bear market, you should be mostly in cash and only make short-term trades. I realize the difference in how much more I could have made if I had been mostly in cash, and possibly earning interest on that cash.

I already had at least one Cardinal rule, which is to ALWAYS have some cash on the side (10%?), regardless of what kind of state the market is in. There will be times when a stock sells off for an irrational reason, and you will need some cash on the side in order to take advantage of the opportunity.


I'll probobly remember this bear market for the rest of my life.

Things yet to learn, or learn more about:
-Placement and use of Stop Loss and Stop Limits. There is a proper way of placing and using them. I see it as being a form of art-form, and extremely important.

-The Financial System, and associated parts.

-Becoming more savvy at reading & understanding balance sheets. I started a couple of years ago, but never finished. I have found that it even if I don't make cohesive sense of the balance sheet, I can a least glean information and insight from the other portion of the either quarterly or annual report.

Taking Stock: ??

Turnaround? Did I say turnaround? Wow ...

One thing that I can definitely hold up on for this year is that I have learned a considerable amount of new things.

Taking Stock: As the Market Turns

Just in case anyone is wondering, the commodities rally is far from
done. First, I took a beating from the bear market, then the brutal
sell-a-thon in January, and now the commodities correction. I just
can't seem to win this year! UGH! One of my consolations during this
ordeal is the fact that I have been learning a considerable amount of
new things in the midst of my follies, and now another is that the
overall economy is beginning to improve in some areas (financials &
housing). The upside to the fall in oil prices is that it helps fuel
the economy. Although, cheaper oil is not here to stay. I'm heavily
invested in gold and commodities, but mostly gold because of the high
rate of inflation. Granted, gold has suffered a correction, but
inflation will resume because of low interest rates. I agree with some
of the authors of the articles that I have been reading lately, in
that the FOMC is not going to raise the Fed Funds rate anytime soon,
mostly because it could cause the mortgage rates to increase and
therefore hinder the decrease of housing inventories. In other words,
since gold is a hedge against inflation, gold and other precious
metals are not done going up either. Therefore, I'm weathering the
sell-off and keeping my positions. The Economy is a mess, but I see
hints of a turnaround in things such as the positive GDP and the
increase in home sales. I'm still a firm believer in that we are in
the tail-end of a sort of "soft" recession, and that we would have
been in much more trouble if it had not been for the growth in
emerging markets and namely China. China's economy is having a pause
because the Olympics are being hosted in Beijing, which is likely to
continue growing at a breakneck pace after the games have been
completed.

A Thought

Feeling Good <--> Looking Good

Translation:
When you look good, you feel good. When you feel good, you look good.

Taking Stock: Market Outlook

It appears to me as though the overall market could turn around from
here, for multiple reasons:

1. The price of oil has been falling
2. Some of the banks have been stabilizing, such as US Bancorp and
Wells-Fargo reporting good earnings, along with Citigroup
3. IndyMac was taken over by the FDIC (another stabilized bank)
4. The mortgage industry appears to be getting some of their issues
worked out, such as Fannie and Freddie being rescued (roughly 50% of
the mortgage industry)
5. Pending home sales, existing home sales, housing starts, and
building permits have all been rising, along with the mortgage
percentage rate
6. Housing affordabilty is very high now, but housing prices could
still fall a little more.
7. The interest rate cuts by the FOMC should be working their way
through the economy and the banking system.

I'm interested in seeing what the US GDP will do this quarter. The
unemployment rate has not been incredibly high, but it would be nice
to see it come back down. Unemployment insurance claims have come back
below the 400K mark, which is good.

I'm looking forward to earnings season this quarter.

A Thought

Could there be pleasure without pain?

Taking Stock: See?

Just to note that today is a perfect example for as to why I sold as
much as I did last week. There was a broad market selloff today.

I did buy Axsys Technologies (AXYS) back, due to the extremely large
volume turnaround it had on 06/27/08. Hopefully it doesn't start a
downtrend now, which I will find out very soon. To my knowledge,
nothing in the fundamentals of the company has changed.

Some of my other positions sold off today, but I am not incredibly
concerned about them.

Taking Stock: Confirmation

Today definitely confirms that we are going to have a major correction
and/or selloff in the market, with the major indices falling through
support. I am proud to say that I have som stocks that have been in an
uptrend through the market selling off. I sold anything and everything
that has, or had in the previous selloff, any kind of weakness or
downtrend (HSC, AXYS, BEAV, BUCY). I'll buy them back when the overall
market bottoms out, which can be difficult to determine.

I have noticed that some of the macroeconomic indicators have been
showing some promise. I have noticed the pending home sales have
increased, along with the existing home sales. So, it seems as though
houses are getting affordable enough for them to be bought. There is
still a belief that houses will continue to get cheaper. I really do
not think that the FOMC will raise interest rates until at least the
housing market is safely out of trouble.

I still have gold via Yamana Gold (AUY) and dry bulk shipping in
DryShips (DRYS). Some of the names that are on my watch list are ADM,
MEMC Electronics Materials (WFR), along with what I just sold.

Close To Breaking Support

I have noticed that the major market indices have been in a downtrend
in the past few months. It doesn't always necessarily matter that the
overall market goes down, because the stock(s) that you buy of the
companies that you are invested in may or may not follow suit.
Although, with days like today in a broad market selloff, you have to
take heed and pay attention to what is going on. As of the past week
or two, the indices (DJIA, Nasdaq, S&P 500) have come within range of
breaking through support levels, and ultimately going much lower. I
learned from January what happens when that happens, and we have an
enduring broad market sell-a-thon, and I am subsequently taking heed
this time. I see it as a possible opportunity to make up for lost
ground resulting from January. I was hearing in the news about
something to the effect of "DOW breaks the key 12,000 mark". I think
that is slightly skewed, considering that the DJIA was down to around
11,600-11,700 n March. It could go either way at this point.

In regards to the overall economy, at least at this point, we are only
experiencing a period of slow growth. Granted, oil has quickly gone to
much higher prices, but it will ultimately go even higher. People are
just going to have to learn to adjust and conserve. I am very glad to
see and hear that Chinese officials are raising the price of gasoline
in China. That will ease some pressure on gasoline and oil prices, but
I am not sure how long that will take. I get the feeling that there
has been a level of expectation for either one or both MBIA and Ambac
to go under, so the market isn't necessarily surprised by it.
Apparently all of the sub-prime mortgage woes have yet to be worked
out of the financial system.

I noticed some common characteristics in the charts of some of the
stocks that I am invested in. For instance, both Ultra Petroleum (UPL)
and Bucyrus (BUCY) ended up touching their 200DMA at the end of the
January selloff, and I'll have to check some of the others. Those, for
example, sold off today with less than average volume, so I am not
concerned about positions like those. Since the market could go either
way, what I'll do is put in some stop orders in positions like those
at or slightly above their 50DMA in order cover myself. Then, if there
is indeed a selloff, I can let it run and buy back in near the 200DMA.

Taking Stock

I have a new place to go for stock ideas:

StockCharts Stock Scan

I like a handful of the lists:
-New 52-week highs
-Strong volume gainers
-Bullish 50/200-day MA Crossovers
-Gap Ups

A Phrase

The more you own, the more you are owned.

Someone told me this phrase a long time ago, and I find it to be quite true.

Taking Stock

This week, I learned what a classic bull flag and a bull pennant
pattern is. I also noticed that on of the positions I have, Hexcel(HXL), is forming a classic bull flag pattern.

Taking Stock

I was a little surprised yesterday when the FOMC cut the fed funds rate by 25 basis points, because I don't see where the economy really needed it. Although, it is nice because it looks as though the DJIA could break out and go up another 500-1000 points. It is highly unlikely that the FOMC will cut rates again at the next meeting. I ought to see if I can find out how the consumer confidence indicators are calculated, because I bet that it has been affected by the media ranting about the domestic economy being in a recession. I was also a little surprised to see the GDP growth rate in positive territory, although it helps support the thesis that we are NOT in a recession. What I need now is for the media to start ranting about inflation going rampant, because that would give the price of gold a boost.

Taking Stock

It looks as though I bought more one day too soon. oops. My sentiment is that it is only a little consolidation, but we shall see after tomorrow because of all of the economic data coming out. Tomorrow, the ADP jobs report, advanced GDP, PMI, crude inventories, and the FOMC statement are all important indicators that can move the market.

There was some more big movement in Dryships (DRYS) today, but ultimately not a big deal. I don't expect MEMC Electronics Materials (WFR) to go in any kind of an uptrend, but quite the opposite. Most commodities prices dropped today, so quite a few of my positions took a slight beating. Anything in natural gas is a good buy, which my personal favorite is Ultra Petroleum (UPL). It looks as though Ultra is touching the 50DMA, which is a good support level and buy point. I'm loving the after-hours action (+7%) in my favorite communications infrastructure play, CommScope (CTV), due to a good earnings report. I also still like B/E Aerospace (BEAV), which I think will start back on an upwards trend. I'm still keeping my eye out on Yamana Gold (AUY), because of inflation rising and the price of gold has been dropping.

One of the positions that I have is CE Franklin (CFK). Admittedly, I bought it a few years ago when I didn't have a clue for as to what I was doing, so I have no idea for as to why I bought it. oops. Yet now, as it stands, the price of oil is such that it makes extracting oil from oil tar sands profitable. CE Franklin is involved with the sale of petroleum related equipment throughout Alberta, Canada. Alberta is known for the extensive amount of oil tar sands that it has.

Taking Stock

I'm going to be keeping my eye on Yamana Gold (AUY) now, because it
trades virtually in lockstep with the gold futures index. At the high, when gold futures were ~$1K/oz., Yamana was trading at around $19 per share. It is now down at around $13 per share. Gold, with interest rates low and inflation running incredibly high, gold will not stay at the levels that they are at now. Yamana, and the gold futures, will go back to the levels that they were at. The chart looks good for some upside soon, partially because the slow stochastics are indicating that the shares are oversold.

Simple math:
19 - 13 = $6 potential upside
6/13 = 46% potential profit, possibly more

I sold my MEMC Electronics Materials (WFR), because they reported a quarter with negative earnings. I'll keep my eye out on that on also, because the business that they are in is still a good one to be in. Over the next few days, I'll see what the price action does and if it starts a negative trend. I keep hearing from people that have more experience than me, that WFR is done, and/or is a good short sale.

I'll admit that I was shaken out of DryShips (DRYS) for a point or two, but I am back in and as confident with it as ever. I was a little worried about it a week or two ago, when it appeared to be starting a negative trend, and looked as though the 50 and 200 day moving averages were about to make a bearish cross. I consequently put in a GTC (Good 'Til Cancelled) stop-limit order to cover the possible downside, which ended up being executed because of the $5 intraday price movement it had. Once everything was in the clear, I put in my limit order for $83 per share. I picked my two quibbles back up, and it closed at $83.98. Now, I would like nothing more than to see it break resistance and go to par ($100).

I still like CommScope (CTV), because they are involved with communications infrastructure. They acquired Andrews Wireless a few months ago, and the stock price has been in a downtrend ever since the internal costs of the acquisition were weighing down on the earnings. I'm looking forward to seeing what happens after they report earnings next week. During the past week or two, the stock has been putting in higher highs and higher lows, so I put in a GTC limit order for another quibble at about $40 per share. I had trimmed my shares back because of the downtrend.

I'm very excited about Hexcel (HXL), because they had a fantastic quarter. Now, it would be nice if both Airbus and Boeing would get their act together in getting into production with the A380 and the 787, respectively. I was very happy to see in their annual report that more and more portions of aircraft are being constructed out of composite materials. Also, in their Q1 conference call, they indicated that some aircraft are being retrofitted with composite replacement parts. My limit order is in for 1.5 quibbles at $22.50. I had a limit order in for $19.50, but I don't think I will get that now because of the earnings report.

A Thought

Regardless of how bad your situation is or has been, there is or was someone out there that either has it or has had it just as bad, if not much worse, than you have. So, when the going gets tough, keep your head up and don't wimp out.

Taking Stock

I'm happy to see that the majority of the negative sentiment has been worked out of the overall market now. To me, it seems as though the markets have been developing a base for what I hope will be an upward trend. It seems as though they have been putting in higher highs and higher lows, which is a good sign. The homebuilders have been in an uptrend, along with the Transports and the Industrials. I noticed that the unemployment rate and the unemployment insurance claims increased, but they are more than likely short-term and are far from recessionary.

I was a little worried this past thursday morning when I was watching CNBC, because MEMC Electronics Materials (WFR) reported guidance of lower revenues for the coming quarter. Hence, the stock was down by around 11% at the open in the morning. Luckily, as it turns out, the decrease in revenues was simply due to a temporary shutdown of one of their production facilities. I took the opportunity to buy more shares, like I have been wanting to do fo quite some time, and the stock has since recovered the majority of that downside. My only concern for this company and the stock is the increasing development and production of thin-film solar cells. Silicon based PV cells still have over 90% of the market share of solar cells, but there is the possibility for that to change.

I recieved the annual report for Hexcel (HXL) in the mail yesterday. I thought it was interesting that composite materials have been increasingly being used in the construction of aircraft, and in larger proportions. In fact, the Boeing 787 Dreamliner will have about 50% of its' weight composed of composite materials, and similar proportions for the Airbus A380. I'm looking forward to the A380 and the 787 going into production, and hopefully that will be soon. Boeing and Airbus make up around 50% of the revenues for Hexcel.

Q: Credit Spreads?

What are Credit Spreads, and how do they work? What are they used for?

House Values

An example of the relative cost of living versus places outside of California:

In Ohio, you can buy a house for $150K.

In California, the average cost of a house is around $600K.

The rule of thumb for total wages in California in comparison to
places outside of state is that you earn twice as much in California. So, if you make $100K/yr. in California, the rule of thumb is that you would make $50K/yr. out of state.

So, even though you would only make half as much outside of California, houses only cost a quarter as much. So, in a sense, only making $50K/yr. out of state is virtually the same as making $100K/yr within California.

Just think of what the difference would be if you were able to buy the house outright out of state. The amount needed for a 20% downpayment for a house in California would do that for many places outside of California.

Taking Stock

Consensus is that we are at the beginning of the next economic cycle. That is good to know, and it makes me smile. I'm glad to see the speculators bail out of commodities the way they did, and especially crude oil. With a little luck, gasoline prices will take a break between now and the end of summer.

An Article To Share

I read an interesting article recently in the March 2008 issue of Scientific American, which started on page 54. The focus of my interest in the article was myelination, and it being a correlation between things such as ADD/ADHD, Depression, and Schizophrenia. A brain cell consists of dendrites, a cell body, a nucleus, an axon, and axon terminals. The myelin sheath surrounds the axon and acts as an insulator, to help prevent the electro-chemical pulses from shorting out from one adjacent cell to another. The outer gray matter of a brain is said to be the cell body and dendrites of brain cells, and the white matter within is said to be myelin and axons.

I saw a TV show on a PBS channel by the author of the book, "Change Your Brain, Change Your Life". One of the things that he mentioned was the use of fish oil supplements for the health of your brain. He said that brain matter is essentially a lump of fatty tissues. I had already read from another source that fish oil (an omega-3 fatty acid) can be used as an aid to treat ADD/ADHD. Does the omega-3 fatty acid contribute to myelination?

I'm interested in as to if there is a possibility of brain cells and/or myelin being degraded from the prolonged release of adrenal cortisol (stress).

Taking Stock

I should have put in some stop limit orders last night. Nuts. I still have quite a bit of cash left, and most of my buy points are decent, except for Pan American Silver Corp. (PAAS). We are having a modest slide in commodities prices, which isn't necessarily all bad, especially for oil. Some power companies are switching to natural gas, which is one of the catalysts for the price of the commodity.

Taking Stock

Very nice day today, but the overall market has yet to bottom. The consensus is that the market indexes have to crash before we get a true bottom. I think some trimming is in order with the nice short-term gains I got today. The one thing that I can say for tomorrow is the Visa IPO.

An Indicator for Percentage of Income

I wonder if it would be possible to create a fairly accurate number or percentage, based on the average income and house prices, to indicate the amount of income that would be required to live in a given area. I haven't given it much thought, but I think it is a good idea. It also might be a relatively simple indicator to show if it would be cheaper to rent an apartment or to own a house.

Q: Margin Calls?

What are Margin Calls, and how do they work? Who uses them, and why?

The Anti-Recession Movement

One of the things that I have made it a point to do over the past year or two has been to focus on what I could invest in to help avoid an impending recession. Those beings things that are not dependent on consumers spending money in order to maintain their earnings growth. Unfortunately, those stocks also get hit in a broad-based selloff like the ones that we have had lately. On a more positive note, they are also the ones that seem to go up the fastest in a rally.

I'm also aware of momentum stocks, but I'll point out Google (GOOG) and Apple (AAPL) in regards to those. When they go wrong, they REALLY go wrong. I'm not a fan of momentum stocks.

Taking Stock

DryShips (DRYS) now has EPS of over $13 and a P/E of 5, along with institutional ownership at around 30%. If you ask me, that is absolutely incredible, especially considering the demand coming from China for dry goods like iron ore. The Baltic Dry Index has also been rising back toward where it was before the iron ore price negotiations with BaoSteel. Those fundamentals are incredible. It is a potential double from these levels.

It looks as though I might get my limit order for more MEMC Electronics Materials (WFR) filled. They are increasing capacity of their solar wafer production, and the demand for solar wafers will be good for quite some time.

I bought more Ultra Petroleum (UPL) recently, partially because they have been increasing production and the price of natural gas has been going up.

I'm cursing Boeing's name today, because it seems as though they might yet again delay the production of the 787. It is partially the cause of the drop of B/E Aerospace (BEAV). They will produce the jet sooner or later though.

I'll probobly get my limit order for Crystallex (KRY) filled before Hugo Chavez approves the mining permit.

I, along with others, would like to see the GDP stay in positive territory at the end of this month. It will be the final report for
the first quarter of the year, and would probobly ease fears of an immediate recession. The fact that the unemployment rate and the UICs both decreased is a good sign. Consumers are not losing their jobs. Inflation is on the rise, which it will be interesting to see what the Fed does with interest rates once the mortgage folly is worked off.

This is one of thos time periods that I don't like to go and look at my portfolio. ick.

Taking Stock

I'll also add that the GDP growth rate has yet to go into negative
territory. Granted, it has been less than 1% this quarter, but it is still not negative. Although, in contrast to that, it was a little over 4% last quarter. It is my understanding, fom watching numerous economists and other market professionals (I like watching to see what the consensus is) that it takes time for all of the fed funds rate cuts and capital infusions to take effect and work their way through the economy. So, that being the case, there should be some growth in the domestic economy in the later half of this year. After that, I'm not taking my chances, unless the long-term outlook changes.

One of the things that I learned from reading numerous business and finance related articles is that the FOMC can only have one of two things happen in a recession, either house prices decrease or equity prices contract. They cannot and/or will not let both occur simultaneously. American consumers need to have an alternative source of income, which is usually one of those two things. The domestic economy is in a deflationary period, because house values are decreasing as much as they have (I have been looking for something that says how house values equate into the gross GDP).

I just noticed that there is buying action going on in the after-hours today. I'm not sure if that is short sellers covering, or if it is bargain hunters taking advantage of the sell-off today.

Taking Stock

I figured this week was going to be a bad one for the market, unless you are a short seller. It would be nice if Ambac and MBIA could get their issues sorted out, because I think it would help remove quite a bit of the volatility and downside from the market. On the surface, it appears as though the economy is on the mend, because the ISM Services indicator was not as bad as predicted and the UIC (Unemployment Insurance Claims) were a little higher this time. That, to my understanding, is a large portion of the economy. UICs being low is important because it says that consumers have jobs. Tomorrow will be a big day with the unemployment rate being announced. I still think we are in a "soft" recession. The thing that is keeping us afloat and out of a "hard" recession is the global growth.

As the infamous Jim Cramer indicated not long ago, some of the banks have to fail and have some consolidation in the banking sector. It is on some of the business news now, so that appears to be in the works.

I'm still betting on the FOMC lowering the fed funds rate on the 18th of March, which could be a turn in the market.

A Thought

No matter how bad you have it or have had it, there is someone out there that has it or has had it worse than you.

Hooray for Stock Market Blood!

There was a very nice 300 point drop on the DJIA today. Why am I pleased about it? I have been becoming somewhat savvy with trading over the past few weeks, that's why. I pull up the charts on Yahoo Finance, see where the support and resistance levels are, and make a hypothesis for as to what the price of the stock could go to. I have been reading lately, articles by people that are more knowledgeable than I, that there is going to be volatility in the market for quite some time. So, in anticipation of the market dropping off again, I put in some GTC (Good 'Til Canceled) stop limit orders and limit orders for my more volatile positions (DRYS, WFR, UPL), and just limit orders for positions that I wanted more shares of (BEAV). We will go into a bull market soon enough, which might be as soon as the next FOMC meeting (03/18/08).

I knew yesterday that the move on Crystallex was just hype, so I put in a stop limit order for it, which ended up selling some of my shares. I now have a limit order for it at the price that I bought it last time. I'm confident that it will get there, unless Hugo signs the permit before then.

A Ray of Hope

The never ending Crystallex (KRY) saga continues today. Crystallex is
a Canadian miner that has been preparing the Las Cristinas gold mine in Venezuela for an extensive period of time now. From what I understand, they have everything in place and have all of the permits they need but one. That last permit is in the hands of none other than Hugo Chavez himself. There is quite a bit of support for the development and production of the gold mine, because of the economic impact of the mine due to the creation of jobs and inflow of revenues to the country. I also read something about the military pushing out illegal miners from a territory nearby, which is apparently a good sign. I think if there is a significant outcry from the people to open it, and when Hugo sees a good opportunity to score some political brownie points with it, then he will sign it.

Taking Stock

I have been learning a few more things in regards to becoming a hybrid investor/trader, such as support, resistance, and breakouts. They are simply phenomenons that occur due to the psychology and irrationality of traders. I saw some videos about support and resistance on www.thestreet.com by Dan Fitzpatrick, and read about them in a book that I have been reading, "Way of the Turtle".

A Thought

It seems as though some things are so heavily dependent on random factors that they cannot be planned, no matter how hard you try. Just expect some random possibility becoming a reality.

Decision-Making Process

This is a highly specialized decision-making process that took many
years to develop:

Step 1: Close your eyes.

Step 2: Take a deep breath.

Step 3: Spin in place three times (more than that if you want to)

Step 4: Open your eyes.

Step 5: Wing it.

This process also works well in conjunction with the
eenie-meenie-mynie-moe method. Enjoy :-)

A Thought

Sometimes, the simplest things make the biggest difference.

Technically Speaking

I have found some technical indicators for stocks that have been
helping me considerably lately:

- Stochastics
- Relative Strength Index (RSI)
- Bollinger Bands
- Exponential Moving Average (use the 50 day average)

These indicators can be found on Yahoo! Finance's interactive charts.

These are playing a part in my quest to make a shift from being 100% investor to becoming 75% investor and 25% trader. It is just a simple matter of making an educated assessment of whether or not a stock is overbought/oversold, and having an idea as to what price to set my limit order(s) and my trailing stop limit orders at. It is an improvement on my buy/sell points.

I am still learning about analyzing share volume and the overall market. It is a matter of making it a point to persist in learning and improving as I go. In fact, my investigation of the OBV and CVI is still in progress.

A Quote

You cannot find something if you do not know what you are looking for.

A Quote

I read about a quote recently made by Napoleon Bonaparte:

"Men are moved by two levers only: Fear and Self Interest"

I like it.

A Quote

The recent activity in the domestic stock market reminded me of a
famous quote, which I think originated from the infamous Ben Graham:

"Be greedy when others are fearful, and be fearful when others are greedy"

If that is not the exact quote, it is at least close enough.

A Ray of Hope

One of the stock positions that I have is Crystallex (KRY), which is a Canadian gold mining company. The gold deposit that they have been developing is one of the largest left in the world, but is located in Venezuela. All of their plans have been laid out, the tests have been done, the equipment is ready, and everything is apparently in order. They have all of the permits required in order to start mining the gold, except one. That last permit that they need, of course, has to be approved by none other than Hugo Chavez. They have been waiting and preparing for the permit approval for quite some time. I was reading something recently that the infamous Hugo Chavez has been having some political problems, tough opposition, and unrest among the people lately. So, considering the number of jobs and income the gold mine would bring, hopefully Hugo will use the mine permit as leverage to help earn the approval of the people.

Q: Foreclosures

I think it is interesting as to the number of foreclosure 'get rich quick' programs there are these days. I'm very curious as to what the implications and the motivations are. I think that if there was an alternate and viable solution for consolidating the number of foreclosures, then we would not be seeing those programs on TV. I'm aware of the abundance of foreclosures that have occurred within the recent past.

What are the mechanics of foreclosures? How do they affect the overall economy?

I'm on the Lookout

I have been looking for a viable bank, mobile or even brick & mortar that operates and is located in Africa. A publicly traded bank, that is. I would like to have a small speculative position in one, and not necessarily via an ETF. Any developing economy needs a financial system in place.

Africa is Next

China has obviously been growing at a rapid rate for quite some time now, and is projected to grow their GDP at a 6-7% rate for years to come, and similar with India. Now that people in China have been producing more and the demand for workers has been growing, people are demanding that they should be paid more. So, that results in comapnies' margins being squeezed to the point in which they have to charge more for their products. One of the main reasons China is (was?) such a good place for American companies to build manufacturing plants and produce goods is because of cheap labor.

I think Africa will be the next big labor market, to produce cheap products much like China has done for years. Their population is growing fast, and is relatively young. Their political issues need to be resolved first.

The only other solution that I can think of would be to move further inland in China. They do have the largest population in the world at the present time.

A Quote

We ride a fine line between success and our own destruction.

Q: Why Not Go To College?

I'm curious as to what all of the majority reasons are for as to why
people don't go to college.

Personally, I think that some people just don't have the opportunity
to go, for whatever the multitude of reasons could be. I think that
there are quite a few people out there that have the ability to do it.

To me, it seems as though you need four things:
1.) means
2.) ability
3.) opportunity
4.) desire

Q: Spot Market Prices?

What are spot market prices, and how do they work?

A Thought

I think if you beat the odds, you'll be and feel like an oddball.

Q: Relationship Between Mortgage Rates & Fed Rates?

One of the questions that I have been asking myself is what the
relationship is and the mechanics are between the Fed Funds rate and
long-term mortgage rates?

I have some idea as to what the answer is, but I need to find
something definitive.

Taking Stock

Anyone that knows me already knows what some of my favorite subjects to talk about are:

Economics & the stock market.

I consider myself to be an investor, and I think that pure traders are crazy. I at least wouldn't be a trader myself. I'm more of a fundamentals and macro-economic indicators kind of guy, but have been trying to find some reliable market breadth technical indicators. The CVI and the Advance/Decline indicators are very enticing, but only as a supplement to the fundamentals.

It takes quite a bit of time and energy to be a good investor and make any money at it.

One of the things that I do is look for reliable commentators and sources of information. The way I see it, it is virtually impossible to have a bead on every aspect of the market and economic events.

I have learned quite a bit and have improved at investing over the past few years:

before 2005 - I only had mutual funds, and didn't have much of a clue about stocks, and was actually a little afraid of them.

2005 - I had been toying with stocks, but still didn't have much direction and my picks were uncalculated and somewhat blatant. If I broke even, then I was very lucky to do so. I had discovered Jim Cramer and his "Mad Money" TV show, which I loved.

2006 - I had been watching Cramer for awhile and had learned to take him with a grain of salt, but some of his ideas were good and made sense to me. I bought Cramer's book also, which helped me out quite a bit. My picks started getting much better and more calculated. I at least broke even, if not made a little money.

2007 - I more or less stopped piggy-backing on Cramer, partially because I wanted to be able to get my own picks. I also discovered Dr. Stephen Leeb and his Market Forecasts, which I read religiously(www.completeinvestor.com). I made some money. Granted, it wasn't much, but I at least made some.

2008 - The DJIA dropping from 13,500 to around 12,000 hasn't helped me much so far this year.

I keep learning more and improving as I go.

House Value Multiple?

I wonder if a house could have a multiple, based on the price that it is being sold for versus what the raw cost of the material would be. To me, it would seem as though the material cost of a house would depreciate at a relatively slow rate, but would still depreciate over time. Take that cost, or at least an estimated cost, and divide the selling price by that cost. I would be very interested in the results and the possible implications of this method.

It would be virtually the same concept as a P/E ratio of a stock.

Intro

I'm new to blogging.

"Hello, world"