Good morning :)
This bear market is just getting started in my opinion, as we've talked yesterday.
I still didn't write an article on the issue, but I believe gold and silver (the metals) will benefit from the economic turmoil that I foresee. The problem is mining companies look generally overvalued, when considering revenue and earnings multiples, in comparison to the market averages. Therefore I see the metals rising, but related stocks not as much. However, some stocks probably have attractive fundamentals, so I'm interested in studying gold & silver mining stocks today.
My shorts on SIGM and FRPT are going down in the pre-market. QID's are opening sharply higher.
Have a nice day :)
How about RNO...gold stock.
DOWN BIG!
The way thing are going I wouldnt be suprised to see the DOW down another -400 points.
Feels odd to be up on a day when the markets are getting crushed again. I still have my old 3SOF main picks in my watch list and :o. SYX down 10% BFLY down 11%, and on and on. Feels like 2000 all over again
how about FMCN? thanks
My CIEN suggestion from yesterday is down 12% ;)
Look at the ETF's: SLV and GLD.
This volatility is insane.
I mentioned IBM yesterday, it had a gap to fill at 88 .. the puts I bought paid off nicely this morning. Hope some others got aboard as well.
I still think this is not the real bear market, not yet ... there will be a recovery and then when everyone gets really complacent, the real bear will begin, my guess is sometime this Fall.
By then we should all be experts in shorting ;D ;D
I just got my margin account approved and would like to start shorting some stocks. I have a few questions and would really appreciate your help.
1. When I place an order to sell short, I should choose "Short" type instead of "Sell", is that right?
2. When I want to buy back the shares, should I choose "Cover" or "Buy"?
3. While I am holding the stocks, do I need to pay any interest on the shorting shares even if I have enough cash in my account?
4. Any other rules for shorting? As you know, I only have a little over $2500 on my account for now.
Thank you very much for your help.
Short is to start the short position. Cover is to buy back and close the position.
Quote from: nullzero on March 01, 2007, 10:04:02 AM
This volatility is insane.
Seriously. The market has no idea what it wants to do. Even QID is all over the place.
Looks like the best way to play it is swing trade the QID and other short plays on the volatile swings.
1. IntroductionQuote from: kslifka on March 01, 2007, 09:30:35 AM
How about RNO...gold stock.
Yep, let's take a look at RNO. I wonder if my method is appropriate for gold stocks. I guess not. I should study probable and proven reserves, ratios between ounces and land, stuff like that. I wonder if there isn't a model for that somewhere over the internet.
But since we're here, let me apply the general method of studying stocks that I have.
2. Technical analysis
2.1. Long term chart(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34013;image)
RNO's long term chart is bullish, in fact the stock is close to an all time high. This is interesting.
2.2. Short term chart(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34014;image)
RNO just crossed the $3.04 resistance level, and it is trading above the 50 and the 200 days moving averages. Technical analysis is positive on the stock.
3. Fundamental analysis3.1. Market Cap & Business DescriptionMarket cap is $510 M. Mineral resource company with operations, development projects and exploration activities in Spain and Portugal (Portugal? How funny, never heard of this company).
3.2. Share count evolutionI see dilution over the years (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=rno&lstStatement=Income&stmtView=Ann) but not at all over the latest 3 quarters (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=rno&lstStatement=Income&stmtView=Qtr).
3.3. Balance sheet analysisBalance sheet (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=rno&lstStatement=Balance&stmtView=Qtr) looks ok, but a bit on the weak side, since the current ratio is just 1.54.
3.4. RevenuesRevenues are growing nicely over the years (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=rno&lstStatement=Income&stmtView=Ann). They're expected to come in at $197 M in 2006 (http://finance.yahoo.com/q/ae?s=rno).
3.5. EarningsEPS for full year 2006 is expected at $0.28 (http://finance.yahoo.com/q/ae?s=rno), with 13 cents coming just from the 4th quarter. The stock is trading with a trailing earnings multiple of just 11.
3.6. Recent News• Rio Narcea Gold Mines, Ltd.: Aguablanca Exploration Drilling Confirms Depth Extensions of Main Mineralized Zone (http://biz.yahoo.com/iw/070222/0219016.html)
Market Wire (Thu, Feb 22)
• Rio Narcea Announces Record Fourth Quarter and Year End 2006 Production Results and Preliminary Unaudited Cash Flow (http://biz.yahoo.com/iw/070130/0209279.html)
Market Wire (Tue, Jan 30)
• Rio Narcea Increases Stake in Chariot Resources (http://biz.yahoo.com/iw/070111/0202427.html)
Market Wire (Thu, Jan 11)
4. General OverviewI must say I'm surprised about this company's numbers. Ahhhh, ok, this isn't a gold and silver mining company (I thought it was strange, since I don't know about the existence of gold in Portugal (we wish)). It is a copper and nickel mining company.
Therefore not really what I'm looking for, but thanks for the suggestion kslifka :)
5. RatingNeutral.This analysis was written by David Randolph from www.3stocksonfire.org after a very brief study. He might have missed several important issues about the stock that you may add to this message board and complete the analysis. David makes 10 new analysis per trading day on www.3stocksonfire.org member's request. He already covered 250+ stocks which you can find on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.msg87075#msg87075). This effort is also a way to find very attractive picks for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), a very concentrated Portfolio with the objective of turning $15,000 into $150,000 using small cap momentum+value stocks. To know more please read the 3 Stocks on Fire Portfolio FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8739.0). To receive our newsletter, be able to write on the message board and vote on polls, all you need to go through is a free 10 second registration process. (http://www.3stocksonfire.org/trading/index.php?action=register)
How about AUY, AIG, and SLW.
David what do you think of SRS? Also what you think of a short on CFC.
Posted these yesterday after the session ended:
----------------
I have a MSN stock scan for shorts made up now, still tweaking it, but today it gave:
MNC, SGR, BOL, ECLP, GTRC, SHFL
4 have dillution history, all have negative annual EPS growth rate per MSN, all have current ratios less than 2, all should have PEs that are high relative to their industries, and are between 250M and 5B market cap.
---------------
Quote from: sfhappyfish88 on March 01, 2007, 10:17:06 AM
I just got my margin account approved and would like to start shorting some stocks. I have a few questions and would really appreciate your help.
1. When I place an order to sell short, I should choose "Short" type instead of "Sell", is that right?
2. When I want to buy back the shares, should I choose "Cover" or "Buy"?
3. While I am holding the stocks, do I need to pay any interest on the shorting shares even if I have enough cash in my account?
4. Any other rules for shorting? As you know, I only have a little over $2500 on my account for now.
Thank you very much for your help.
1 & 2. It depends on how your broker is set up ... if they offer the option to "short" and "cover" then that is probably the correct one.
3. your broker will charge you interest on the margin loaned .. it should not affect your account that much .. but be aware if a stock you are shorting pays a dividend while you are short, then you owe the dividend. :o
4. Just be careful and observe your stops strictly .. 8)
You can also short by purchasing a put on a stock, that way your only risk is the amount of premium you pay. But if you are disciplined at observing stops, shorting can be very rewarding. Good luck. ;)
Quote from: buddjas1 on March 01, 2007, 10:24:57 AM
Quote from: nullzero on March 01, 2007, 10:04:02 AM
This volatility is insane.
Seriously. The market has no idea what it wants to do. Even QID is all over the place.
Fear versus Greed
Hi David,
I had a chance to read your analysis of the market last night, and I am very impressed with your evaluation - and agree totally with your synopsis and outlook. I liquidated my stock holdings this morning, and shorted BIDU and SIGM this morning, and opened a long position in SLV. I bought shares at $140 today, and look forward to great gains in ishares Silver Trust.
I would like to open a position in Gold, and see that the ticker GLD is referring to StreetTracks Gold Shares, which have the ticker GLD. Is the NYSE issue GLD what you are referring to in your recommendation? Just want to be sure, the shares are currently selling at $66.51.
Thank You as always for your keen and perceptive insight!
Bourbon ;)
Quote from: nullzero on March 01, 2007, 10:28:17 AM
Looks like the best way to play it is swing trade the QID and other short plays on the volatile swings.
Not at all. Been there, done that. If one tries to swing trade these things buying and selling, buying and selling, he will end up not making money at all, even if he's right in the market.
When stocks are going down, there are violent counter moves, especially on the intraday. Short covering, bargain hunting, emotional buying, all that stuff.
I will just sit tight with my short positions and ignore the short term volatility. It's the only way to survive and prosper in a bear market (although hard to do).
Good luck :)
Thanks David for your input. I will hold tight any other shorts you have been eying?
Quote from: bourbonstreet_crawdaddy on March 01, 2007, 10:36:10 AM
Hi David,
I had a chance to read your analysis of the market last night, and I am very impressed with your evaluation - and agree totally with your synopsis and outlook. I liquidated my stock holdings this morning, and shorted BIDU and SIGM this morning, and opened a long position in SLV. I bought shares at $140 today, and look forward to great gains in ishares Silver Trust.
I would like to open a position in Gold, and see that the ticker GLD is referring to StreetTracks Gold Shares, which have the ticker GLD. Is the NYSE issue GLD what you are referring to in your recommendation? Just want to be sure, the shares are currently selling at $66.51.
Thank You as always for your keen and perceptive insight!
Bourbon ;)
Thanks Bourbon. Exactly, it is GLD, I bought at $66.34.
Thanks for the analysis on RNO.
According to RNO's website it has just begun Gold Mining Interests in West Africa.
David, can you please look at CAAS if it is a good short candidate?
I see lot of dilution and rev growth is not that impressive
Thanks
Just theorizing here, but there is a lot of talk about the yen carry trade unwinding. I heard today that Japan's finance minister said that as they investigated recently the yen carry trade was 10 times larger than they had thought.
If much of the people who borrowed yen to buy foreign higher yielding assests (say US stocks) where themselves foreigners, then it makes sense that their orders come in at market open (as they put in the orders in their time zones).
What we saw this morning is a huge down open, followed by intraday buying here at home. I wouldnt be surprised to see a pattern of this for awhile if it is indeed driven by the unwinding of the yen carry trade.
Quote from: kslifka on March 01, 2007, 10:39:59 AM
Thanks for the analysis on RNO.
According to RNO's website it has just begun Gold Mining Interests in West Africa.
Can you provide a link for that news kslifka? I'm a bull in gold and silver for financial reasons, not economic reasons. Hence, I'm not a bull in other commodities like copper. So this play could be damaged by a falling price of copper, even though it may start operations in gold.
How about pure gold and silver plays?
Thanks, we have plenty of time.
Quote from: David Randolph on March 01, 2007, 10:44:04 AM
Quote from: kslifka on March 01, 2007, 10:39:59 AM
Thanks for the analysis on RNO.
According to RNO's website it has just begun Gold Mining Interests in West Africa.
Can you provide a link for that news kslifka? I'm a bull in gold and silver for financial reasons, not economic reasons. Hence, I'm not a bull in other commodities like copper. So this play could be damaged by a falling price of copper, even though it may start operations in gold.
How about pure gold and silver plays?
Thanks, we have plenty of time.
Sorry...I thought I did. I noticed the Mine is not completed but is expected to be completed during the first half of 2007
http://www.rionarcea.com/tasiast_overview.html
David, How about Gold Stock GORO.OB? Thanks.
1. IntroductionQuote from: njshiva on March 01, 2007, 10:42:04 AM
David, can you please look at CAAS if it is a good short candidate?
I see lot of dilution and rev growth is not that impressive
Thanks
2. Technical analysis
2.1. Long term chart(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34015;image)
Over the long term this stock has been trading sideways inside of a giant symmetrical pattern. It has been going south now.
2.2. Short term chart(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34016;image)
The short term trend on CAAS is bearish.
3. Fundamental analysis3.1. Market Cap & Business DescriptionMarket cap is $200 M. The Company is a holding company and has no significant business operations or assets other than its interest in Great Genesis Holding Limited. Through Genesis, the Company manufactures power steering systems and other component parts for automobiles.
3.2. Share count evolutionI don't see significant dilution over the years (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=caas&lstStatement=Income&stmtView=Ann). Also not on a quarterly basis (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=caas&lstStatement=Income&stmtView=Qtr).
3.3. Balance sheet analysisBalance sheet (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=caas&lstStatement=Balance&stmtView=Qtr) is a bit weak but not terribly so.
3.4. RevenuesRevenues were growing modestly in 2004 and 2005, but they just fell in Q3 2006 (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=caas&lstStatement=Income&stmtView=Qtr). Perhaps that explains why the stock is turning bearish.
3.5. EarningsEPS is expected to come in at $0.22 in 2006 and $0.33 in 2007 (http://finance.yahoo.com/q/ae?s=CAAS). The trailing earnings multiple is 39.5 and the forward multiple (but maybe the company will fail to meet expectations), is 26.5.
It looks expensive when compared to its industry peers (http://finance.yahoo.com/q/co?s=CAAS).
4. General OverviewI guess this would be a somewhat risky short because the company is small so it can change a lot. I'm negative on it due to macroeconomic reasons, not specific company reasons.
I would prefer to short stocks that should go down even if I'm wrong in my general market assessment.
5. RatingNegative.This analysis was written by David Randolph from www.3stocksonfire.org after a very brief study. He might have missed several important issues about the stock that you may add to this message board and complete the analysis. David makes 10 new analysis per trading day on www.3stocksonfire.org member's request. He already covered 250+ stocks which you can find on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.msg87075#msg87075). This effort is also a way to find very attractive picks for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), a very concentrated Portfolio with the objective of turning $15,000 into $150,000 using small cap momentum+value stocks. To know more please read the 3 Stocks on Fire Portfolio FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8739.0). To receive our newsletter, be able to write on the message board and vote on polls, all you need to go through is a free 10 second registration process. (http://www.3stocksonfire.org/trading/index.php?action=register)
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
David, what do you think about ARM as a short? Thanks!
David, what do you think of QID?
I shorted GTRC, Guitar Center, not sure how an outlet store for guitars can have over a 1B market cap, its PE is way too high...
1. IntroductionQuote from: labatts6254 on March 01, 2007, 10:32:07 AM
How about AUY, AIG, and SLW.
Let me start by SLW.
2. Technical analysis
2.1. Long term chart(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34017;image)
SLW's long term chart resembles the $Silver chart. I guess the stock has spent the last 14 months or so consolidating the previous big bull run. Is it ready to breakout the $12 resistance level on the upside?
2.2. Short term chart(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34018;image)
Over the short term the stock in fact sold off on Tuesday's general market decline, so $Silver doesn't look to be ready yet to be a contrarian or inverse play as you wish. Maybe I'm early (or just wrong, but I don't think so).
3. Fundamental analysis3.1. Market Cap & Business DescriptionMarket cap is $2.2 B. Mining company with 100% of its revenue from silver production. It is actively pursuing further growth opportunities either by way of entering into long-term silver purchase contracts or by acquiring silver exploration, development or production assets.
3.2. Share count evolutionThere has been dilution over the last 5 quarters (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=slw&lstStatement=Income&stmtView=Qtr). Not good.
3.3. Balance sheet analysisBalance sheet (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=slw&lstStatement=Balance&stmtView=Qtr) is Ok, but "small", if you know what I mean. Book value is just $617 M, for a $2.2 B market cap.
3.4. RevenuesI see that net profit margin is very high, at 54%. It seems they're very efficient at mining or something. Revenue (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=slw&lstStatement=Income&stmtView=Qtr) declined a bit in Q3 2006.
3.5. EarningsEPS is expected at $0.52 in 2006 and to decline in 2007 to $0.44. I guess these analysts are pricing in a decline in the $silver price. I think they're wrong.
The trailing earnings multiple is 19.
3.6. Recent News• Silver Wheaton 4Q Profit Balloons (http://biz.yahoo.com/ap/070220/earns_silver_wheaton.html?.v=1)
AP (Tue, Feb 20)
4. General OverviewThe stock looks somewhat interesting, but I guess this isn't the right way to look at it. I can't tell the potential of the company with this analysis. It depends on the reserves those mines have and the estimated silver price.
I guess that now that the company is posting profits it will stop diluting shareholder's value (it didn't do it over the past 2 quarters) and I'm attracted to the very high net profit margin. It means that if $silver goes up, EPS will rise by a lot. There's a lot of leverage in this stock.
But for now I see the markets down but Gold and Silver not up yet (but not down as much), so maybe my thinking on this macro play is early, and a man can suffer as much from being wrong than from being early (they're almost the same thing).
I'll start looking for a model to evaluate mining companies, I wonder if Michael has some of that ... for now I'm neutral on SLW (but a long term bull on $silver, that is why I own SLV).
5. RatingNeutral.This analysis was written by David Randolph from www.3stocksonfire.org after a very brief study. He might have missed several important issues about the stock that you may add to this message board and complete the analysis. David makes 10 new analysis per trading day on www.3stocksonfire.org member's request. He already covered 250+ stocks which you can find on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.msg87075#msg87075). This effort is also a way to find very attractive picks for the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php), a very concentrated Portfolio with the objective of turning $15,000 into $150,000 using small cap momentum+value stocks. To know more please read the 3 Stocks on Fire Portfolio FAQ (http://www.3stocksonfire.org/trading/index.php?topic=8739.0). To receive our newsletter, be able to write on the message board and vote on polls, all you need to go through is a free 10 second registration process. (http://www.3stocksonfire.org/trading/index.php?action=register)
Hey David, I was wondering what your take is on RBY?
Rubicon Minerals Corp.
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=34019;image)
Quote from: buddjas1 on March 01, 2007, 11:33:22 AM
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
buddjas1, you will have that feeling all the way down, it's a very natural thing :)
That is a very good and useful question. My take is the market, the most prominent leading indicator, gave a clear negative sign for the global economy on Tuesday. In my view there are very good reasons why such an economic downturn would happen.
But, if the market starts rising and makes new highs, then I'll have to concede I was wrong, or at least early (which is the same as being wrong).
If I'm right I'll be short all the way down until I see in reality what my suspicion is today: a full blown worldwide economic recession (not the end of the world, in fact, quite a natural thing to happen from time to time).
TFSM is on Bear fire today. >:D
Yesterday sent a profit warning.
David you will like to short this one: Shares Dilution, negative EPS in the last couple of years....
Quote from: Se7en on March 01, 2007, 11:44:14 AM
David, what do you think of QID?
Well Se7en, I'm holding QID on the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) as you probably know, so I believe it will rise over time, as the Nasdaq will decline.
But, it will be a very bumpy ride, bear markets are a lot more volatile than bull markets. Also a lot faster and steeper, despite the constant rebounds and short squeezes.
I admit I said bad things about this product, and I maintain that it could go to zero and people could have had margin calls holding it. That if the bull market had continued further.
Good luck :)
Watanabe (Japan's Finance Minister) has stated that the unwinding of the Yen carry trade has yet to begin in earnest. :o
Probably not a lot of people even understand the Yen carry trade yet, but its worth learning about. I posted a bit about it earlier today.
Turns out that many of these players were heavily levered as well, I didnt even realize this. This is the main conduit for a lot of the volatility we are seeing it seems.
Chinas market drop caused the Yen to rise, giving margin calls to the levered players in the Yen carry trade, who in turn had to retract their foreign investments...
gold stocks SA KGC DROOY KRY
silver Stocks FRI.V MSV.T
dave i think china is due for a meltdown. i like the BIDU short. is there any other chinese stocks that are good shorts besides BIDU?
For now Gold & Silver are still not responding to the macroeconomic call I'm making. I guess I'm seeing too far ahead into the future, and only when the FED cuts rates will Gold & Silver breakout to new highs.
Anyway, I don't think they will go down by much, just go sideways over the next few months. So maybe too early to start researching those stocks.
The appropriate course of action now seems to be "short overvalued" stocks. Also short economic sensitive stocks. High beta stocks.
I want to make some quick tests on short candidates. You know, it isn't a problem to short the stock a bit later in the decline (preferably after a rebound - the inverse of buying the dips), because, let's see:
Imagine stock XYZ is trading at $10 and you think it will go down to $3. You plan to buy to cover at $4. If you short it right at $10, you'll make 60% on your trade. But if you short it at $8, perhaps with more certainty that the market agrees with you, you'll make a 50% profit when buying to cover at $4. So, not all that different, just 10 percentage points.
If it were the opposite, that is, a stock that you think will go up from $3 to $10, you plan to sell at $9. If you buy it at $4, you'll make 125% profit. If instead you buy it just at $6 (the same two dollar difference as in the shorting example), you'll make just 50% on your money, so, there was a 75 percentage point difference on the outcome, which is a lot.
Because of this vital difference between shorting and "longing" I believe there's plenty of time to find the right candidates for those 50% profit trades. One doesn't have to short near the top.
I'll have a coffee break now, see ya :)
Quote from: David Randolph on March 01, 2007, 12:16:57 PM
Quote from: Se7en on March 01, 2007, 11:44:14 AM
David, what do you think of QID?
Well Se7en, I'm holding QID on the 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) as you probably know...
First I thought it was there, checked it but overlooked it, that's why I asked it here! :-[
I bought QID @ 54.65$!
I think RGMI is ready to move now.
OFI - good price to buy
Quote from: buddjas1 on March 01, 2007, 11:33:22 AM
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
Today's hammer candle could indeed mark the first day of an "attempted" rally. However, to get a convincing follow through, IBD then suggests that you will then need to see a 2% up day after a rally day on heavier volume than the day before, starting on the 4th day after the rally (or if the 3 days before is each up about 1%).
Personally, I dont see it happening, I mean, what will be the catalyst? Earnings season is over, oil is going up, geopolitical instability remains, the yen carry trade hasnt yet fully unwinded, etc. So erasing the 4% decline by end of week (ie tomorrow) is a bet that I would put my whole portfolio against if I could.
amkr on fire today , right at resistance at 12
just broke 12
maxi
I believe all these little rallies are false. They are closing open gaps from Tuesday and will more than likely fall No hurry to jump back in on the long side of these tech stocks
Quote from: kslifka on March 01, 2007, 01:14:49 PM
I believe all these little rallies are false. They are closing open gaps from Tuesday and will more than likely fall No hurry to jump back in on the long side of these tech stocks
I think your right. Weak hands that are short are covering but I bet tomorrows open is down again. China has to tighten up there markets with either currency, equites, trade policies, copy right laws etc. etc....something has to happen and i think things might get ugly
I wonder why GT is still going up? Is it going to hit a target or fill a gap and then sell off hard?
Quote from: prodigykid6 on March 01, 2007, 01:20:07 PM
Quote from: kslifka on March 01, 2007, 01:14:49 PM
I believe all these little rallies are false. They are closing open gaps from Tuesday and will more than likely fall No hurry to jump back in on the long side of these tech stocks
I think your right. Weak hands that are short are covering but I bet tomorrows open is down again. China has to tighten up there markets with either currency, equites, trade policies, copy right laws etc. etc....something has to happen and i think things might get ugly
When this market drop is over with...we'll all buy these fundamentally sound stocks and make lots of money ;D.
Quote from: kslifka on March 01, 2007, 01:26:10 PM
Quote from: prodigykid6 on March 01, 2007, 01:20:07 PM
Quote from: kslifka on March 01, 2007, 01:14:49 PM
I believe all these little rallies are false. They are closing open gaps from Tuesday and will more than likely fall No hurry to jump back in on the long side of these tech stocks
I think your right. Weak hands that are short are covering but I bet tomorrows open is down again. China has to tighten up there markets with either currency, equites, trade policies, copy right laws etc. etc....something has to happen and i think things might get ugly
When this market drop is over with...we'll all buy these fundamentally sound stocks and make lots of money ;D.
I think this rally has further leg. it can run for a couple of days. For the big picture, this is only a correction. I don't think it is the start of a bear market. China is doing fine, their market is overheated, so what? I don't want to be disrepectful, but the mention of copyright laws is a joke. what is that to do with market drop?
Market turned green, tough to be a bear today considering the V bottom rally :'(
instead of worring about the market, can we have 1 long stock in the fire portofolio? I like ADBL, lucky I got it at 9.30 this am. doubled up at 10.20.
I am also keep buying ACY, think about this, if it runs to 20, the forward PE might be only 10!
This is not about china this is about the U.S. the potential for a slowing economy. The negative housing market and collapse of the subprime market.
I am fully down with the correction theory. however, the subprime and carry trade story is already played enough. by now everybody knows it already. we might have 5% more downside, but the economy is fine as of now.
Just a thought but it was rumored Greenspans comments on the "R" word triggered the China sell off. Hilary Clintons words that are being repeated on CNBC should hit China hard again if thats the case. Is there a overall China pure play such as a ETF that we can short?
If China has another down day I think margin calls will send them in a tail spin
Chinese auto sales jump 28th February 2007
Int 2006 FC Thumb.jpg (6.0k)
Read more about the platinum group metals markets in Johnson Matthey's bi-annual reviews click here.
It has been suggested that there will be a substantial increase in the sale of vehicles in China this year.
Statistics quoted to Bloomberg by an analyst from Beijing Antaike Information Development have indicated that demand in the Chinese market is set to flourish in 2007, as the country's economy has made car ownership more affordable for many people.
Over the past ten years, the Chinese economy has grown by nine per cent per year and during 2006 sales at automakers such as General Motors (GM) and Volkswagon increased by around 25 per cent compared to the previous year.
Vehicle sales in China surpassed Japan for the first time during 2006 and it is anticipated that such growth will continue, with the China Association of Automobile Manufacturers expecting sales to rise by 18 per cent across the vehicle sector during 2007.
Commenting on the growth, Beijing Antaike Information Development analyst, Jin Xiangyun, told Bloomberg: "The market share of diesel vehicles will grow rapidly as more rigid standards for emissions are in place or are to be implemented worldwide on environmental concerns."
Quote from: makingmoney on March 01, 2007, 02:12:17 PM
I am fully down with the correction theory. however, the subprime and carry trade story is already played enough. by now everybody knows it already. we might have 5% more downside, but the economy is fine as of now.
I am also not worried about the subprime story per se, but it appears the yen carry trade issue has been underestimated and will continue to be an issue.
China stock can go down 10% more, but that will have less effect on US market than when it first went down. since when Hillary Clinton is an economist? Greenspan already changed his remarks, he just said in Japan: Reccesion is not probable! on top of this, today's numbers suggest a still solid economy. on top of this again, market recovered from the steep drop at the open. put one more thing on the top, if you are looking at a regular chart, you have to draw a bull conclusion, at least short term. So I sold all my shorts and going long exclusively. But only for a couple of days.
this is just my thinking. I might lose shirt on this thinking though.
Quote from: prodigykid6 on March 01, 2007, 02:18:47 PM
Just a thought but it was rumored Greenspans comments on the "R" word triggered the China sell off. Hilary Clintons words that are being repeated on CNBC should hit China hard again if thats the case. Is there a overall China pure play such as a ETF that we can short?
If China has another down day I think margin calls will send them in a tail spin
PowerShares Golden Dragon Halter PGJ
Quote from: Windsurfer on March 01, 2007, 02:19:27 PM
Chinese auto sales jump 28th February 2007
Int 2006 FC Thumb.jpg (6.0k)
Read more about the platinum group metals markets in Johnson Matthey's bi-annual reviews click here.
It has been suggested that there will be a substantial increase in the sale of vehicles in China this year.
Statistics quoted to Bloomberg by an analyst from Beijing Antaike Information Development have indicated that demand in the Chinese market is set to flourish in 2007, as the country's economy has made car ownership more affordable for many people.
Over the past ten years, the Chinese economy has grown by nine per cent per year and during 2006 sales at automakers such as General Motors (GM) and Volkswagon increased by around 25 per cent compared to the previous year.
Vehicle sales in China surpassed Japan for the first time during 2006 and it is anticipated that such growth will continue, with the China Association of Automobile Manufacturers expecting sales to rise by 18 per cent across the vehicle sector during 2007.
Commenting on the growth, Beijing Antaike Information Development analyst, Jin Xiangyun, told Bloomberg: "The market share of diesel vehicles will grow rapidly as more rigid standards for emissions are in place or are to be implemented worldwide on environmental concerns."
Could that be another reason why Goodyear GT is up so much? I was considering a short at $27.
Quote from: nullzero on March 01, 2007, 02:08:47 PM
This is not about china this is about the U.S. the potential for a slowing economy. The negative housing market and collapse of the subprime market.
I agree - this is not and should not be about China. Further, the housing market decline is already known and figured in. The housing market is also just correcting. You think the housing market will ever get cheaper? Maybe a little, but definitely not over time. The population worldwide is growing exponentially! There are only so many places that people want to be, and the demand for those prime locations around the US/world will never go down significantly. Nor do I believe there will be a
collapse in anything - that is really a dramatic sounding word that implies complete failure. People have access to so much information these days - and the investing body is very well informed...how can one think a total collapse in anything is possible? The last couple days around here have made it seem like the sky is falling. I think we just need to slow down and let the market digest what is going on. Then we can evaluate the situation. All this seems a bit premature.
Full blown recession? Collapse? Not likely. Slowing? So what. ;)
Quote from: makingmoney on March 01, 2007, 02:04:35 PM
Quote from: kslifka on March 01, 2007, 01:26:10 PM
Quote from: prodigykid6 on March 01, 2007, 01:20:07 PM
Quote from: kslifka on March 01, 2007, 01:14:49 PM
I believe all these little rallies are false. They are closing open gaps from Tuesday and will more than likely fall No hurry to jump back in on the long side of these tech stocks
I think your right. Weak hands that are short are covering but I bet tomorrows open is down again. China has to tighten up there markets with either currency, equites, trade policies, copy right laws etc. etc....something has to happen and i think things might get ugly
When this market drop is over with...we'll all buy these fundamentally sound stocks and make lots of money ;D.
I think this rally has further leg. it can run for a couple of days. For the big picture, this is only a correction. I don't think it is the start of a bear market. China is doing fine, their market is overheated, so what? I don't want to be disrepectful, but the mention of copyright laws is a joke. what is that to do with market drop?
stealing patents is a very serious situation in china. american corporations are losing millions because china steals everything. the point i was trying to make is markets dont like it when policies tighten up. the bottom line is china needs to tighten its policies and i think its a lose lose "short term" for our markets
Quote from: dnickers on March 01, 2007, 02:34:56 PM
Quote from: nullzero on March 01, 2007, 02:08:47 PM
This is not about china this is about the U.S. the potential for a slowing economy. The negative housing market and collapse of the subprime market.
I agree - this is not and should not be about China. Further, the housing market decline is already known and figured in. The housing market is also just correcting. You think the housing market will ever get cheaper? Maybe a little, but definitely not over time. The population worldwide is growing exponentially! There are only so many places that people want to be, and the demand for those prime locations around the US/world will never go down significantly. Nor do I believe there will be a collapse in anything - that is really a dramatic sounding word that implies complete failure. People have access to so much information these days - and the investing body is very well informed...how can one think a total collapse in anything is possible? The last couple days around here have made it seem like the sky is falling. I think we just need to slow down and let the market digest what is going on. Then we can evaluate the situation. All this seems a bit premature.
Full blown recession? Collapse? Not likely. Slowing? So what. ;)
Your comments are breath of fresh air. Nothing wrong with taking a cautious wait and see attitude.
Quote from: tokyopua on March 01, 2007, 01:08:17 PM
Quote from: buddjas1 on March 01, 2007, 11:33:22 AM
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
...Personally, I dont see it happening, I mean, what will be the catalyst? Earnings season is over, oil is going up, geopolitical instability remains, the yen carry trade hasnt yet fully unwinded, etc. So erasing the 4% decline by end of week (ie tomorrow) is a bet that I would put my whole portfolio against if I could.
The catalyst is that there was no legitimate catalyst for the downswing in the first place. Once people realize that (and I think it is happening) our little bull run will continue.
A ETF Chinese play you could short would be the [FXI] The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/Xinhua China 25 index.
Also here is one for Hong Kong
[EWH] The investment seeks to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the Hong Kong market, as measured by the MSCI Hong Kong index.
from Kyodonews International:
Nippon Steel, JFE (steelmaker) and KOBE Steel, which are Japans big three steel producers, all announced upwardly revised 07 estimates (9.6, 9.5 and 18.3 % respectively).
This doesn't sound like they are anticipating an asian recession this year.
Quote from: buddjas1 on March 01, 2007, 02:49:18 PM
Quote from: tokyopua on March 01, 2007, 01:08:17 PM
Quote from: buddjas1 on March 01, 2007, 11:33:22 AM
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
...Personally, I dont see it happening, I mean, what will be the catalyst? Earnings season is over, oil is going up, geopolitical instability remains, the yen carry trade hasnt yet fully unwinded, etc. So erasing the 4% decline by end of week (ie tomorrow) is a bet that I would put my whole portfolio against if I could.
The catalyst is that there was no legitimate catalyst for the downswing in the first place. Once people realize that (and I think it is happening) our little bull run will continue.
Hmm, I see your point, though that still is unlikely to cause a rally back to original levels by end of tomorrow. Next week, maybe. Still, while a full on rally is possible, but I dont think we can say there was no legitimate catalyst in the first place. The market was overdue for a correction which was a catalyst in itself to the downside.
Gotta admit I am in new territory here, but I just think its premature to call it either way. What I will continue to believe is that we are in a correction until a follow through day happens. If it does, the shorts I have will torch me pretty bad, but I will have learned a lesson. If it doesnt and we keep going down, I will make money, fairly straightforward.
Quote from: buddjas1 on March 01, 2007, 02:49:18 PM
Quote from: tokyopua on March 01, 2007, 01:08:17 PM
Quote from: buddjas1 on March 01, 2007, 11:33:22 AM
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
...Personally, I dont see it happening, I mean, what will be the catalyst? Earnings season is over, oil is going up, geopolitical instability remains, the yen carry trade hasnt yet fully unwinded, etc. So erasing the 4% decline by end of week (ie tomorrow) is a bet that I would put my whole portfolio against if I could.
The catalyst is that there was no legitimate catalyst for the downswing in the first place. Once people realize that (and I think it is happening) our little bull run will continue.
Yes there was a good catalyst the market was way overbought since the lows in the summer of 06. The market is still over bought even with the nasty hair cut. The next 6 months dont seem to rosesy for the economy anyway you look at it. All this buyout action propelling the stock market to new highs the last few months is mostly done on high leverage borrowing. Add in the fact that the global market boom was fueled by borrowing from Japan using the Yen and investing in other places. This yen carry trade may cause huge problems, watch the yen closely it may show where the global markets are going if the Yen spikes up more then we can be in for a world of pain across the global markets.
Quote from: tokyopua on March 01, 2007, 02:07:19 PM
Market turned green, tough to be a bear today considering the V bottom rally :'(
Not for me Tokyopua.
You see, I've been bear in the Dax from about 7,000 until 2,400 in the 2000 - 2003 period. Do you know how many "V bottoms" happened during that time?
I don't know either, but I can assure you there were many, especially near the top.
You can and will naturally think: "but I could have sold my QID with a 4% profit and buy back now at the same price I bought".
Yes, you could, but if one goes that path, 6 months from now the market would have made a 30% move and one could lose money even if he's right on the market.
I know how you feel ... I felt that way too 6 or 7 years ago. I also feel you're on the right path. Keep up and thanks for your post.
Quote from: nullzero on March 01, 2007, 02:59:50 PM
Quote from: buddjas1 on March 01, 2007, 02:49:18 PM
Quote from: tokyopua on March 01, 2007, 01:08:17 PM
Quote from: buddjas1 on March 01, 2007, 11:33:22 AM
David, I have a feeling that the market is going to end positive today and maybe even erase the 4% or so decline by the end of the week. In fact, SP just went green as I write this. At what point would you have to change your mind and become a bull again?
...Personally, I dont see it happening, I mean, what will be the catalyst? Earnings season is over, oil is going up, geopolitical instability remains, the yen carry trade hasnt yet fully unwinded, etc. So erasing the 4% decline by end of week (ie tomorrow) is a bet that I would put my whole portfolio against if I could.
The catalyst is that there was no legitimate catalyst for the downswing in the first place. Once people realize that (and I think it is happening) our little bull run will continue.
Yes there was a good catalyst the market was way overbought since the lows in the summer of 06. The market is still over bought even with the nasty hair cut. The next 6 months dont seem to rosesy for the economy anyway you look at it. All this buyout action propelling the stock market to new highs the last few months is mostly done on high leverage borrowing.
There is a good case for a correction, maybe continuing for a while, but I remain uncertain and somewhat doubtful yet as to wether or not this is a full blown bear market. I have gone to 40% cash. One of the stocks I sold sent up 18% today. ::)
QuoteThe catalyst is that there was no legitimate catalyst for the downswing in the first place. Once people realize that (and I think it is happening) our little bull run will continue.
There never is. Or tell me, do you expect a recession to start and
then the market goes down? Would a terrorist attack be a legitimate catalyst? (not for me).
What was the catalyst for the bear market that started in January 14th, 2000? What were the news on that month, or in February, that could lead to such a huge sell off?
There were none. The reasons came after.
DSTI On Fire! I will be requesting this tomorrow ::)
Quote from: David Randolph on March 01, 2007, 03:13:48 PM
QuoteThe catalyst is that there was no legitimate catalyst for the downswing in the first place. Once people realize that (and I think it is happening) our little bull run will continue.
There never is. Or tell me, do you expect a recession to start and then the market goes down? Would a terrorist attack be a legitimate catalyst? (not for me).
What was the catalyst for the bear market that started in January 14th, 2000? What were the news on that month, or in February, that could lead to such a huge sell off?
There were none. The reasons came after.
So true the market leads the way to a recession. Once the market responds it can set the rest into play. The market was the catalyst to the great depression it was lead on buy HIGH debt taken on by consumers and stock market players highly leverage we are close to the same situation today. The debt for consumers is higher then before the 1929 stock crash.
http://www.marketoracle.co.uk/Article307.html
Quote from: makingmoney on March 01, 2007, 02:12:17 PM
I am fully down with the correction theory. however, the subprime and carry trade story is already played enough. by now everybody knows it already. we might have 5% more downside, but the economy is fine as of now.
Sure the economy is fine. If it were bad I would be a bull. And that is my plan, to be a bull when the economy is bad and stock valuations are very attractive.
The market is always looking ahead, into the future, not to the present. The present is past for the market.
Quote from: David Randolph on March 01, 2007, 03:13:48 PM
...What was the catalyst for the bear market that started in January 14th, 2000? What were the news on that month, or in February, that could lead to such a huge sell off?
There were none. The reasons came after.
The catalyst was that the market was overvalued. Incredibly so based on historical valuations. Everybody knew what was coming, the only question was when.
QuoteThere were none. The reasons came after.
But David, it seems as if everyone is claiming to know the reasons right now. Recession, housing market, subprime lending market, geopolitical instability. Aren't these the reasons we're considering a switch to a bear market? Doesn't that mean we already know them? Wouldn't they be priced in?
And wasn't the sell off in 2000 due to the incredibly overinflated multiples stocks were carrying? It doesn't seem like that is the case now. ???
Quote from: David Randolph on March 01, 2007, 03:21:33 PM
Quote from: makingmoney on March 01, 2007, 02:12:17 PM
I am fully down with the correction theory. however, the subprime and carry trade story is already played enough. by now everybody knows it already. we might have 5% more downside, but the economy is fine as of now.
Sure the economy is fine. If it were bad I would be a bull. And that is my plan, to be a bull when the economy is bad and stock valuations are very attractive.
The market is always looking ahead, into the future, not to the present. The present is past for the market.
David...why would you be 'bull' if the economy was bad??
Quote from: metrom129 on March 01, 2007, 03:18:36 PM
DSTI On Fire! I will be requesting this tomorrow ::)
Good observation metrom129!
Despite the market movements and possible turning point, which always causes a lot of nervousness, I should just keep doing my job of covering stocks. There are 11,000 or so stocks outthere that I want to know or know better.
Everybody here read my article and knows my position, so I don't need to keep pressing the same button. And everybody feel free to disagree and take opposite views (of course), that is what makes a market!
So, starting tomorrow we'll go back to those polls and I'll just cover stocks. Maybe not 10 because I'm afraid that way I wont know the companies well enough. But 5 analysis per day sounds great!
I just want to say that right or wrong, win or lose, I feel great joy in talking to you about the markets.
For all, thank you :)
Quote from: David Randolph on March 01, 2007, 03:27:43 PM
Quote from: metrom129 on March 01, 2007, 03:18:36 PM
DSTI On Fire! I will be requesting this tomorrow ::)
Good observation metrom129!
Despite the market movements and possible turning point, which always causes a lot of nervousness, I should just keep doing my job of covering stocks. There are 11,000 or so stocks outthere that I want to know or know better.
Everybody here read my article and knows my position, so I don't need to keep pressing the same button. And everybody feel free to disagree and take opposite views (of course), that is what makes a market!
So, starting tomorrow we'll go back to those polls and I'll just cover stocks. Maybe not 10 because I'm afraid that way I wont know the companies well enough. But 5 analysis per day sounds great!
I just want to say that right or wrong, win or lose, I feel great joy in talking to you about the markets.
For all, thank you :)
ASTI is also on fire
QuoteDavid...why would you be 'bull' if the economy was bad??
Kpunarc, market history explains that. Let me give you 3 examples:
1) Russia, 1998. The Russian market there went from 700 points to 40 points!!! At 40 points, there was a run for the banks and the economy entered a deep recession.
My God, I wish I bought when the economy was that bad, right on when people were on the streets and at bank doors to take the money out and put it under the mattress. The Russian stock index is above 2,000 points now :o
2) USA, 1991. Recession. War in Irak. Bottom of the market, shot up 300% in the following 9 years.
3) Germany, recession in 2003. The DAX was at 2,200 then. Now? At 6,700 or so ...
Be a bull when the economy is in a recession.
Let me try to answer this first and see if David agrees with me or not:
1. What doesn't seem overinflated multiple now might be indeed overinflated when companies start to report downward future earnings.
2. If we agree the bull marketed started in 2002/2003 is a cyclical bull in a large secular bear market context, the next bear market wouldn't need to start at a very high valuation.
3. The last recession never brought earning multiple down to its historical low and I think the next bear market will do the trick.
Just my 2 (or 3?) cents. >:D
Quote from: dnickers on March 01, 2007, 03:23:14 PM
QuoteThere were none. The reasons came after.
And wasn't the sell off in 2000 due to the incredibly overinflated multiples stocks were carrying? It doesn't seem like that is the case now. ???
Quote from: David Randolph on March 01, 2007, 03:27:43 PM
I just want to say that right or wrong, win or lose, I feel great joy in talking to you about the markets.
For all, thank you :)
No problem David, maybe you can give everyone an applaud! ;D >:D
This way I'll sooner make it to 100! 8)
I wanted to add that despite my gut feeling about where the market is headed (I'm not convinced we're in a bear market yet), I have nevertheless followed David's recommendations thus far and have a lot of respect regarding his opinions. Thanks again David - and keep up the great work.
SVN is on fire today.
Quote from: dnickers on March 01, 2007, 03:23:14 PM
QuoteThere were none. The reasons came after.
But David, it seems as if everyone is claiming to know the reasons right now. Recession, housing market, subprime lending market, geopolitical instability. Aren't these the reasons we're considering a switch to a bear market? Doesn't that mean we already know them? Wouldn't they be priced in?
And wasn't the sell off in 2000 due to the incredibly overinflated multiples stocks were carrying? It doesn't seem like that is the case now. ???
Those aren't the reasons. At least not my reasons.
People are bullish due to the strong growth the global economy is having. That strong growth is highly based on the BRIC countries, Brazil, Russia, India and China. The problem is, especially India and China, are growing at this very fast rate for more than 20 years now (at least China is, I'm not so sure about India, which is a lot poorer than China).
If China falters, the whole theory of a strong world economy and strong profit growth will go down the tube. And why would China have a recession? For two reasons:
1) It has been growing at an average annual rate of 10% a year for more than 20 years. All economies have boom and bust cycles, especially a new "capitalist" economy.
2) China relies heavily on the US consumer, since roughly 40% of China's GDP is based on exports. The US consumer is too far stretched into debt, there's no disposable income growth to keep things going without a washout.
But the primary reason is the market itself. It tipped its hand with that one day big sell off on huge volume. To me it was a key reversal day.
But I can be wrong. Time will tell :)
VII is also on fire, rising as I write.
David,
As you are bull on gold, can you see CGR?
Thanks,
Shorted GT at $26.37. Wish me luck.
Some stocks are on fire, of course. But there's a problem with most rallies if we're in a bear market: they're selling opportunities.
This "stocks on fire strategy" to make great percentage returns with a small capital starting base is not new. In 1998 I made 300 or 400% in 3 or 4 months just switching from one stock on fire to the other (not in the US).
But suddenly the stocks on fire that I was buying went down after I bought them. I couldn't understand why. I knew there was a bear market, but I didn't think I would have to change my individual stock selection strategy. I lost those 300% profits pretty quickly, almost as quickly as I had made them.
It is a very different thing, a rebound in a bearish trend than a bullish breakout.
The US stock market is so big, there are so many stocks, that some will indeed breakout and rise a lot. But most rallies will fail to continue, and stocks will go down after the rally.
Quote from: dhiraj19 on March 01, 2007, 03:58:49 PM
David,
As you are bull on gold, can you see CGR?
Thanks,
I'm still not sure if I'm a bull on gold, I have some fear that it is too early. I have to think and study more on that subject. Please suggest CGR for tomorrow's poll, I'll be glad to write an analysis on it.
Thanks.
David, let's assume that you were spot on and that the coming weeks/months will be more red than anything else, so we would be in a bear market!
What will your strategy be like? I know you said you maybe want to go for a 70/30 short/long but I assume that a bear market goes with ups and downs all the way down! Would you also play this bearisch trend pure technical on the charts, in other words, after several weeks of a huge drop, when the market starts to recover a bit, would you 'go long' again for a short time, if you know what I mean?! So trying to get the maximum out of the trend or is it almost impossible to play it this way? Tia!
Quote from: Se7en on March 01, 2007, 04:04:02 PM
David, let's assume that you were spot on and that the coming weeks will be more red than anything else, so we would be in a bear market!
What will your strategy be like? I know you said you maybe want to go for a 70/30 short/long but I assume that a bear market goes with ups and downs all the way down! Would you also play this bearisch trend pure technical on the charts, in other words, after several weeks of a huge drop, when the market starts to recover a bit, would you 'go long' again for a short time, if you know what I mean?! So trying to get the maximum out of the trend or is this almost impossible to play it this way? Tia!
My experience tells me it is a gamble to try to buy stocks for a counter-trend rebound. There's a big difference between gambling and speculating. I'm speculating there will be a worldwide recession in 6 - 12 months time. I need to be short for that outcome until it indeed happens (in that case I'll cover with a nice profit and probably go long), or else I'm proven wrong, and in that case I'll pay the price.
Livermore said the following about that particular issue:
«That is about all I have learned - to study general conditions, to take a position and stick to it. I can wait without a twinge of impatience. I can see a setback without being shaken, knowing that it is only temporary. I have been short one hundred thousand shares and I have seen a big rally coming. I have figured - and figured correctly - that such a rally as I felt was inevitable, and even wholesome, would make a difference of one million dollars in my paper profits. And I nevertheless stood pat and seen half my paper profit wiped out, without once considering the advisability of covering my shorts to put them out again on the rally. I knew that if I did I might lose my position and with it the certainty of a big killing. It is the big swing that makes the big money for you.»
Going long would be very risky to try to catch the little upside in a downtrending market. It would be best going with the trend and possibly swing trading a portion portfolio. I was thinking of adding main core bear positions and swing trading like 25% of the portfolio on the short side. For instance the stock XYZ goes down 10% with the market I have 1000shrs in stock XYZ. I would cover 250shrs of XYZ and let the rest ride up then reserve cash to re enter a position of 250shrs on the next uptrend that fizzles.
The 3 Stocks on Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) rose 2% today.
I'm still undecided if you want to study individual stocks or the general market trend? Or just brief technical studies on stocks on fire, disregarding the fundamentals? Or random talk, covering everything at the same time?
Will think about it, and perhaps even make a poll on that. Anyway, time to rest now, see you tomorrow :)