3SOF

Good morning :)

Although I believe I have sound fundamental reasons to be short GOOG (I partially work for them, as a content provider, and my pay was cut by 2/3, even though 3 Stocks has more clicks on its Google Ads - because companies are paying less and less per click), my put option selection was extremely poor and those GOOG puts are more or less worthless at this stage. I'm glad I invested less than 10% of capital in that position. What can I do now? I'll continue holding, probably pay the price of the lesson and move on.

I wish I'm wrong on my bear market call, seriously. I wish I close all short positions at a loss and start looking for long plays. I dream I'm buying stocks on fire again. I wish.

But for as long as the SPY closes below the midpoint of that big red candle ($141.69) I say the market is bearish, and the correct attitude on a bear market is to sell stocks short (options is a more tricky game, didn't buy long maturity puts because they had no volume, but who cares about volume when buying options?).

I believe that in sharing trading experiences we're all able to learn this game faster. Better learn from someone else's mistakes than from our own (although that is good too).

I had a terrible headache, but I feel better now after having a coffee. I'm willing to study stocks and talk about the general market with you.

Have a nice day :)

No Problemo David!

Let's just wait out the GOOG trade - I believe that we may still see the stock hit the wall and have a sharp reversal. If not, lesson learned.

No need to worry about what we cannot change, but rather pour our energy into the future decisions that we make that we can change!

I believe in you David, and believe that we will make many profitable trades that will more than offset the loss on a poor GOOG trade (if it turns out that way). As you have said many times, do not risk capital in risky options unless you are willing to forgo that money, and understand and assume the risks that you are taking. We will always make some bad trades, but it is best to cut losses when we can, and just move ahead!

Good Luck this week, and let's have a terrific day!

Bourbon   ;)

Dave,

Just a quick heads up that it looks like there will be buying today until noon (squeeze the weak bears) - We think sell begins late afternoon with a test of the lows tomorrow or Friday at the latest.


Best of Luck

Thanks Bourbon, you're a nice guy :)

This option experience and even bear stance reminded me of when I traded futures in a highly leveraged way. That is a game no one wants to enter.

I was quite pleased with the power of fundamental analysis and long term investing. But my fundamentally attractive stocks got clobbered in this 6 days sell off. I could have held them for longer term purposes, but these macroeconomic issues worry me a lot, especially the weakness of the US consumer.

For example, when nullzero came to me and said "David, I'm very bearish on housing, because of what I see on the ground" I told him: "but nullzero, housing stocks are already very cheap in terms of valuation multiples, everything bad that can happen is already discounted".

Not everything. People thought the risk was that house prices would go down. But after all the risk is people defaulting on their mortgage loans. Today I heard on CNBC an analyst saying financial stocks are cheap, because they're trading at an average of 10 times earnings.

Yes, they're cheap, but isn't that a sign of things to come? Why are they cheap? As with housing, I'd say financial stocks, like banks, brokerages and insurance companies are exposed to more risks than we can imagine at this stage.

At some point the $440 T derivative's economy will pose a problem.

Just letting some thoughts out.

Do you plan to hold the puts until expiratuion or are you looking for exit point. We have now gapped up two days in a row. and have moved up 25 points without a pull back. A pull back will be coming, It probably won't go back down below 440, but I beleve a pullback to 450 is probable, which would be the options should be worth at least 11. in the next couple of days. Right now the put is around the 6 area, is their any price on target price you are looking for, or should we just bail now, while we can get something for it. If we wait until option expiration they could be worthless, but if we sell in the near future we will get something.

Thanks.

Quote from: David Randolph on March 07, 2007, 09:31:03 AM
Good morning :)

Although I believe I have sound fundamental reasons to be short GOOG (I partially work for them, as a content provider, and my pay was cut by 2/3, even though 3 Stocks has more clicks on its Google Ads - because companies are paying less and less per click), my put option selection was extremely poor and those GOOG puts are more or less worthless at this stage. I'm glad I invested less than 10% of capital in that position. What can I do now? I'll continue holding, probably pay the price of the lesson and move on.

I wish I'm wrong on my bear market call, seriously. I wish I close all short positions at a loss and start looking for long plays. I dream I'm buying stocks on fire again. I wish.

But for as long as the SPY closes below the midpoint of that big red candle ($141.69) I say the market is bearish, and the correct attitude on a bear market is to sell stocks short (options is a more tricky game, didn't buy long maturity puts because they had no volume, but who cares about volume when buying options?).

I believe that in sharing trading trading experiences we're all able to learn this game faster. Better learn from someone else's mistakes than from our own (although that is good too).

I had a terrible headache, but I feel better now after having a coffee. I'm willing to study stocks and talk about the general market with you.

Have a nice day :)

ACY...is just crazy.  I unfortunately sold a few days ago after the market meltdown. >:(

hi,
so far goog looks like a "gap to crap" as melf would say.
max

David, may want to look at NMKT.  That is if 3SOF still buys stocks that are going up.   ;)

QuoteDo you plan to hold the puts until expiratuion or are you looking for exit point. We have now gapped up two days in a row. and have moved up 25 points without a pull back. A pull back will be coming, It probably won't go back down below 440, but I beleve a pullback to 450 is probable, which would be the options should be worth at least 11. in the next couple of days. Right now the put is around the 6 area, is their any price on target price you are looking for, or should we just bail now, while we can get something for it. If we wait until option expiration they could be worthless, but if we sell in the near future we will get something.

Thanks.

Hi eggman11, you're asking about the very short term, and I dislike to predict that. But you're right, if I dislike that, I shouldn't have bought such short maturity puts.

Thinking of the short term, the stock opened with a gap up today due to a nonsense upgrade and is pulling back now. I'll analyze the situation everyday, because if I can lose just 50%, I don't want to lose 100% in one trade.

As for today I'm not planning to sell those puts. Let's see how the short term plays out, volatility is high now and the chart and the fundamentals say GOOG goes down !

Quote from: David Randolph on March 07, 2007, 09:46:39 AM
Thanks Bourbon, you're a nice guy :)

This option experience and even bear stance reminded me of when I traded futures in a highly leveraged way. That is a game no one wants to enter.

I was quite pleased with the power of fundamental analysis and long term investing. But my fundamentally attractive stocks got clobbered in this 6 days sell off. I could have held them for longer term purposes, but these macroeconomic issues worry me a lot, especially the weakness of the US consumer.

For example, when nullzero came to me and said "David, I'm very bearish on housing, because of what I see on the ground" I told him: "but nullzero, housing stocks are already very cheap in terms of valuation multiples, everything bad that can happen is already discounted".

Not everything. People thought the risk was that house prices would go down. But after all the risk is people defaulting on their mortgage loans. Today I heard on CNBC an analyst saying financial stocks are cheap, because they're trading at an average of 10 times earnings.

Yes, they're cheap, but isn't that a sign of things to come? Why are they cheap? As with housing, I'd say financial stocks, like banks, brokerages and insurance companies are exposed to more risks than we can imagine at this stage.

At some point the $440 T derivative's economy will pose a problem.

Just letting some thoughts out.

I have another sense of things to come here from my prospective in California. The economy here in Orange County, CA is suffering from the layoffs in construction and all real estate related industries. Retail stores are getting hit hard as well espcially the ones that are tied into furnishing a new home. People down here are in debt over their head. Mid to High end restaurants are empty.

For those that say its ok because its fine in my part of the country and its isolated think again! California is the 6th largest economy in the world just by its self, it is also the most diverse economy in the nation. If you want to know where things are going with the economy in the U.S. look to the California economy. The number #1 economic leader in the California economy the last 5-6 years was real estate and all real estate related economic activity. Check this video out on the California economy and looming real estate bubble (it was done last year and predicted just about everything that happened so far!). http://video.google.com/videoplay?docid=-2640239019877885520&q=housing+bubble&hl=en

Thanks David,

I am still holding CPNE.ob long, and I believe that the numbers that they released were very good. Knowing what you do now, and having the benefit of having seen the financials, and the price action - what are your thoughts about the wedge that the stock is forming?

Do you believe that the stock will break out of the wedge up or down?

Thank You for sharing your insight

Bourbon   ;D

Dave do you think FMCN could close the gap at $62 on 11/20? Is there a statistic out there on how many gaps that get filled?

I bought the April GOOG puts as it was so drummed into me never to buy same month expiration .. those who think it will go back down (as I do) but not right away, you could get April puts that may well offset the March losses.  Just a thought.

David, what you do really really really well is to analyze those small cap stocks and spot the winners.  Now you seem to think that in a bear market, this skill will be fairly useless as small caps do not perform well in bear markets.

Two things:  first (as previously stated in other posts) I do not see the bear market starting now .. it will start a few months from now.  In the near term, we will go up slightly, back down, then up again and soon it will look like everything is rosy again.
Then ... in May, August, maybe Sept or October .. the real bear will begin in earnest.

But second, and more important, (as opinions are worth next to nothing - especially if mine  ;D) ... even in a prolonged bear market there are always some stocks that perform well.  Many of these will likely be small caps.  I can easily see more little TASRs and HANS rising out of even the deepest bear market.  And our best hope (maybe our only hope) to spot them early on is .. you!

So I hope you will keep doing what you do best, which is continue to analize the small cap stocks.  It may get harder to find the gems but when we find them, they could be real winners if bucking the trend.  

"If it ain't broke, don't fix it"  - and the strategy behind 3SoF is far from broke.  

I vote to continue with the original plan, even tho we can take occasional option trades or counter trades if a really good setup comes along.  I still think you are the one who will find us the next TASR or HANS .. and we only need one or two of those to make us all gazillionaires :D:D

hi Dvid,
what do you think about shorting JADE?
THX
Achim

David, you say we're in a bear...but how do tell the difference between what you call us being in a bear as opposed to us just being in a correction?

Hey Traderstar, is it possible that I 'know' you from another board, your 'writing style' seems 'familiar' to me or am I just seeing things?! :)

Hi Dave,

One of your old friend,  HEPH  seems to be on fire since a few minutes(News is leaking???), waiting for the HHS award confirmation today after 4 different delay!.

"This coming week promises to see some fun volatility as Hollis Eden's (NasdaqGM: HEPH) "tentative date" for an award under Project Bioshield on March 7th approaches."

I'm watching your video nullzero, great :)

It is a 58 minute video, but I think it is worth it.

Quote from: Se7en on March 07, 2007, 10:27:03 AM
Hey Traderstar, is it possible that I 'know' you from another board, your 'writing style' seems 'familiar' to me or am I just seeing things?! :)

I'm not on any other trading boards (usually avoid them!) the only other board I post to occasionally is a Spanish one (for people learning spanish),  I moderate that one under the name Mariposa.

Hallo Traderstar,

I am loocking for a site where you can learn spanish, can you suggest one?
The best would be with videos or at least vocal exemples.
Thanks

7 from the top ten of the nasd100 are underwater today
max

I think the jobs number could be key to stick a fork in the longs...weak hand shorts covered yesterday and the asian markets are going to slide again with fears of the US/YEN and a decline in our markets. I think Dave hit the nail on the head with a bear market  >:D unless something drastic changes.

Quote from: bourbonstreet_crawdaddy on March 07, 2007, 10:07:45 AM
Thanks David,

I am still holding CPNE.ob long, and I believe that the numbers that they released were very good. Knowing what you do now, and having the benefit of having seen the financials, and the price action - what are your thoughts about the wedge that the stock is forming?

Do you believe that the stock will break out of the wedge up or down?

Thank You for sharing your insight

Bourbon   ;D

I don't know if you read why I sold CPNE.OB, it wasn't just because I was bearish on the general market. As I study more stocks, I see how the market attaches a low earnings multiple to a company that doesn't have the prospects of repeating those earnings, because of the way they were obtained.

We all know that CPNE.OB runs what can be considered a fraudulent business, because they sell a service that in no way lives up to the expectations of consumers (I'm talking about www.onlinesupplier.com, the source of more than 80% of the company's revenues). My take was that numbers were so great, and growth was so spectacular, that the market would put a high multiple on the stock. But now I guess the market knows better. I believe there's a strong reason why CPNE.OB is trading at 12 times trailing EPS, despite the very high growth rate. That strong reason is there's not a whole lot of more fools outthere for them to sell their "dream" of financial independence. Because of the internet, consumers are getting educated much faster and they won't fall for that trick much longer.

I like CPNE's management and their aggressiveness, but until they find something with value to sell, I don't think the stock is such a great investment. They know how to sell very well, but they don't have anything to sell, at least nothing with a low churn rate, that is, a quality service.

Good luck on your decision :)

Quote from: TraderStar on March 07, 2007, 10:42:10 AM

Quote from: Se7en on March 07, 2007, 10:27:03 AM
Hey Traderstar, is it possible that I 'know' you from another board, your 'writing style' seems 'familiar' to me or am I just seeing things?! :)

I'm not on any other trading boards (usually avoid them!) the only other board I post to occasionally is a Spanish one (for people learning spanish),  I moderate that one under the name Mariposa.

Which is the link for your board? thanks

Quote from: kslifka on March 07, 2007, 09:54:13 AM
ACY...is just crazy.  I unfortunately sold a few days ago after the market meltdown. >:(

ACY's market cap is so low that anything can happen. It trades totally unrelated to the general market trend. However, the fact that people are looking into it now is a bit of a sign of speculation, which is indicative we're near the top of the general market (not because of ACY alone, but the theme of playing around very small cap stocks in general).

I say this because ACY's fundamentals are the same now as they were in the 2000 - 2002 period when the stock was going down with almost no volume.

Quote from: David Randolph on March 07, 2007, 10:30:14 AM
I'm watching your video nullzero, great :)

It is a 58 minute video, but I think it is worth it.

That video is great, I wanted to see if I could meet him in person he is an excellent public speaker and predicted everything very well. I watched it back in early spring of last year.

David,

TUTR is on Bear fire today due to bad quarterly results. Take a look. You will like to short this one

Quote from: phabrux on March 07, 2007, 11:02:08 AM
Hallo Traderstar,

I am loocking for a site where you can learn spanish, can you suggest one?
The best would be with videos or at least vocal exemples.
Thanks

Email me, [email protected], I have a ton of resources :)

Quote from: buddjas1 on March 07, 2007, 09:58:57 AM
David, may want to look at NMKT.  That is if 3SOF still buys stocks that are going up.   ;)

hehe, you're a good-humoured bull :)

I'm not sure you can say NMKT.OB is "going up". Sure, it is up 5% today, but not going up according to my chart. Every rally goes to a lower high than the previous one. That happens because the company keeps diluting shareholder's value every time there's a spike, as you can see here (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=nmkt&lstStatement=Balance&stmtView=Qtr) (those are quarterly numbers, keep that in mind).

Now they have the plan to spin off some subsidiaries in the way of stock dividends. Why? So that they can dilute shareholder's value even more, as they're able to sell shares from each stock traded. GSHF.OB, VRDM.OB and INSQ.OB had the same scheme.

I don't like the stock, but good luck if you're in :)

As for buying stocks on fire, my bear market experience tells me that when a stock is on fire, in a bear market, it means it should be sold, not bought, as rallies fizzle. In a bull market rallies continue, that is, what is up today, will go up even more tomorrow. Not the same behavior in a bear market.

If we're still in a bull market as you claim, I'll be back at buying stocks on fire. The jury is still out on that question. I believe that the market is bearish for as long as the SPY is trading below $141.69.

Quote from: prodigykid6 on March 07, 2007, 10:11:33 AM
Dave do you think FMCN could close the gap at $62 on 11/20? Is there a statistic out there on how many gaps that get filled?

I don't know about that statistic prodigykid6, but I do think FMCN will go down to close that gap (and more).

Quote from: David Randolph on March 07, 2007, 11:44:16 AM
I believe that the market is bearish for as long as the SPY is trading below $141.69.

David,

Why 141.69?

Thanks,

KC Scott

INSM was on fire ... I'm glad I didn't buy it just because of that, down 50% today :o (I hope nobody here has it). Biotechs are really dangerous.

Quote from: KCScott on March 07, 2007, 11:53:43 AM

Quote from: David Randolph on March 07, 2007, 11:44:16 AM
I believe that the market is bearish for as long as the SPY is trading below $141.69.

David,

Why 141.69?

Thanks,

KC Scott

141.69 is the midpoint of the red candle that started everything. That day had such huge volume that to me it was a key reversal day. According to the candlesticks theory, that day's indication is valid for as long as the market doesn't close above the midpoint of that big red candle (midpoint is calculated using just the open and close, that is, the body of the candle).

If the market is able to close above that midpoint that day loses significance, since there was no follow through to it. For the motives that led to that sell off to remain valid selling reasons the market can't close above that midpoint.

If it does it tells me the market shrugged off those concerns and is set to head higher. I have my theories, but above all, I listen and respect the market.

Thank you for the heads up on CPNE.ob David.

I dropped it like a hot potato with a tiny loss. I did not read your reasons for selling and need to read all of your commentary more closely.

Thanks again!

Bourbon   :D

Is there a reason whey gap likely needs to be filled? If there is a "reason" for a technical pattern, I think it will be more solid. For example, I can relay psychological behavior of people behind support/resistence etc. But I have a hard time thinking of this gap fill. >:(

Quote from: David Randolph on March 07, 2007, 11:49:55 AM

Quote from: prodigykid6 on March 07, 2007, 10:11:33 AM
Dave do you think FMCN could close the gap at $62 on 11/20? Is there a statistic out there on how many gaps that get filled?

I don't know about that statistic prodigykid6, but I do think FMCN will go down to close that gap (and more).

David,

I hope you are feeling better...please can you take a look at AHM, I am itching to short it. 

Thanks,
cctabla

Quote from: TraderStar on March 07, 2007, 10:17:46 AM
I bought the April GOOG puts as it was so drummed into me never to buy same month expiration .. those who think it will go back down (as I do) but not right away, you could get April puts that may well offset the March losses.  Just a thought.

David, what you do really really really well is to analyze those small cap stocks and spot the winners.  Now you seem to think that in a bear market, this skill will be fairly useless as small caps do not perform well in bear markets.

Two things:  first (as previously stated in other posts) I do not see the bear market starting now .. it will start a few months from now.  In the near term, we will go up slightly, back down, then up again and soon it will look like everything is rosy again.
Then ... in May, August, maybe Sept or October .. the real bear will begin in earnest.

But second, and more important, (as opinions are worth next to nothing - especially if mine  ;D) ... even in a prolonged bear market there are always some stocks that perform well.  Many of these will likely be small caps.  I can easily see more little TASRs and HANS rising out of even the deepest bear market.  And our best hope (maybe our only hope) to spot them early on is .. you!

So I hope you will keep doing what you do best, which is continue to analize the small cap stocks.  It may get harder to find the gems but when we find them, they could be real winners if bucking the trend. 

"If it ain't broke, don't fix it"  - and the strategy behind 3SoF is far from broke. 

I vote to continue with the original plan, even tho we can take occasional option trades or counter trades if a really good setup comes along.  I still think you are the one who will find us the next TASR or HANS .. and we only need one or two of those to make us all gazillionaires :D:D

Thanks for the nice words and support TraderStar :)

I've been thinking about it ... if, even in a bear market, the best strategy isn't to find great small cap companies that are bound to rise a lot, because of their growth in good or bad economic times. But I would need to take a much more in depth look at each stock ... it couldn't be "the chart is great, no balance sheet problems, positive and strong fundamental trends, here I go!"

It would take a lot more than that to spot those winners in their early stages. I would need to analyze the stock from a business perspective. To do that one needs to know the business very well, and I guess that takes at least 1 day of study.

Well, I could eliminate most of them by just looking at the financials, I guess, even though financials change, and it is their change or perception of change that makes stocks move on a long term basis.

It is an open debate, thank you for your contribution.

By the way, why do you have those timing thoughts about the general market? I view the current downturn as the beginning of something more serious, just as in March 2003 the "bull market" started with an 8 days bull run with huge volume. Whenever there's a very sharp one or two days move I pay attention. My experience tells me things change that way. But you're right, the market can claw back up and get stuck in a tight range again, as it waits for more information.

Hard to predict, but we had a very strong technical signal, the market is the most prominent leading indicator, so I listen to the market. On that day the market said "sell".

Quote from: realcoolhead on March 07, 2007, 12:06:47 PM
Is there a reason whey gap likely needs to be filled? If there is a "reason" for a technical pattern, I think it will be more solid. For example, I can relay psychological behavior of people behind support/resistence etc. But I have a hard time thinking of this gap fill. >:(

What I learned, there is no reason, but .. historically .. many stocks (like IBM) seem to ALWAYS fill their gaps.  This is useful to know.  I was told 4 years ago about IBM always filling gaps so I watch it, when it makes a new gap, I watch more intently for a setup that looks like it could fill it (like recent plunge to 88).  I've played it half a dozen times, always with great profit.  :)  
So if a stock you are following makes a gap, check its historical performance and you can get an idea how likely it is to fill the gap .. and how long it usually takes.  You still have to wait for the right setup unless you can afford to hold.

Quote from: 1laya1 on March 07, 2007, 10:23:48 AM
hi Dvid,
what do you think about shorting JADE?
THX
Achim

We already wrote a great deal about JADE, as you can check on the Stocks Covered List (http://www.3stocksonfire.org/trading/index.php?topic=8875.0). I have some issues with the stock, as I think it might be somewhat overvalued (basically I'm concerned about dilution), but I like the long term business opportunity of selling jewelry in China.

I wouldn't go against that one, market cap is so small that it can run a lot, it can even have another bull run, surpassing those $12.64 highs. Here's a stock that I would like to study more deeply.

But it sure can go down to touch the 50 days SMA, coming up at $7.24, good luck :)

David,

I agree with your use of options (They can definitely get us closer to $150,000), but would also suggest in the future that make a rule to buy at least 2-3 months out, the time crunch can just kill you.

I also suggest that we still use part of the money toward bullish small cap positions. Stocks that you have mentioned that you like are actually up, since you discussed them in light of the recent downtown, like EXM, BTJ (I know BTJ wasn't an official pick, but you really liked it) and WCG (these are just the ones I remember from the portfolios and recent discussionss., which is from the main portfolio and hit new highs today. (I am still holding WCG long term). I am a big fan of companies that get recurring revenues from a subscriber base i.e. WCG, MCO) as long as the revenues and profits are growing. Yes, It's harder to find small caps stocks "on fire" in a bear market. I believe if the fundamentals warrant it, we should allocated some portion to a bullish stance, we could just keep tighter stops or something. If the focus a little bit on some stock "on fire", we will only be focusing on stocks "cooling off", and forgoring some great opportunities.

If GOOG can close under 455, below its 10-day average. I see it dropping futher t0 the 448 - 450 range.

Keep up the great work

Quote from: kpunarc on March 07, 2007, 10:24:29 AM
David, you say we're in a bear...but how do tell the difference between what you call us being in a bear as opposed to us just being in a correction?

Only time can tell. If we go down more than 20% from the high it was a bear market. If the top to bottom drop is less than 20%, then it was a correction.

I say we've entered a bear market (some European folks might say we've never been out of that long term bear market that started in January 2000, at least not in Euro terms).

But there's conflicting information. For example, I was really bearish in late 2001, after the comeback of the September lows (I was a bull after September 11th, even though I was a long term bear back then). I said the market would go down and break the post September 11 lows, which it did.

But at that time economic news were very good and almost everybody was optimistic. Now there isn't such a contrary opinion setup. But I guess maybe that is happening because this is a mini bull market top, or even a second top of a secular bear market that started in January 2000.

Kind of what happened between 1966 and 1982. By the way, I need to ask Ramsburg for that long term Dow Jones chart, I know he still has it, history can be informative of things to come.

great bull run  ;D

Mortgage defaults begin to spread;

http://finance.yahoo.com/loans/article/102536/mortgage_defaults_start_to_spread

I think the market is counting on a Fed interest rate decrease. I just don't see how in the world they can do it the way things are now. They're caught between a rock and a hard place, IMO. Without a decrease, I am almost certain our economy goes into recession or worse very soon and I think the Fed knows it. However that would just put another bandaid on the situation and would just create much deeper trouble further down the road, IMO. I don't expect alot of cooperation from the Chinese or the rest of the world for that matter either.

I regularly get Credit card offers (checks to use as please) in the mail. Yesterday I received one from my National City card. Believe it or not, they are offering 2.99% fixed APR for life. Yes there is a transaction fee, but it is 3% or a maximum of $75, so not much at all if borrowing a very large amount. I haven't seen offers this low for a couple of years.

I think we should debate if and when the Fed cuts rates (can they or will they really do it?), because I think that will determine where the market is headed.

The doo doo just keeps getting deeper......

Quote from: phabrux on March 07, 2007, 10:29:46 AM
Hi Dave,

One of your old friend,  HEPH  seems to be on fire since a few minutes(News is leaking???), waiting for the HHS award confirmation today after 4 different delay!.

"This coming week promises to see some fun volatility as Hollis Eden's (NasdaqGM: HEPH) "tentative date" for an award under Project Bioshield on March 7th approaches."

Yes, I remember HEPH. Once it broke down 20 or 30% in one single day because it didn't get one of those awards or something. I remember buying it exactly on a setup like you're saying, something like "buy the rumor, sell the news". The problem was the news was negative, or, there was no news ::)

Let me make a few tests on it, just to see if one has anything to hang on if the news isn't good or not good enough. Well, the chart isn't saying much, as the stock has been stuck in a trading range. But volume is nice today, perhaps it will breakout. Let's make a few fundamental tests (not that they're very useful to predict the short term):

- Market cap is $140 M. A development-stage pharmaceutical company engaged in the discovery, development & commercialization of products for the treatment of diseases & disorders in which the body is unable to mount an appropriate immune response.
- Of course, being a biotechnology company it has an history of diluting shareholder's value (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=heph&lstStatement=10YearSummary&stmtView=Qtr).
- Balance sheet  (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=heph&lstStatement=Balance&stmtView=Qtr)looks strong at this stage, with $47.45 M in cash and just $4.5 M in debt. I say they have cash to burn for ... let me see the quarterly losses ... losing $7 M to $8 M a quarter, so enough money for about 6 quarters (of course, they'll make another private placement before running out of money, increasing the number of shares outstanding, hence increasing the market cap, without the share price rising).
- Revenues are incipient, just $255 K over the last four quarters.

The question was: is there anything to hang on to if the news is negative? My answer is no. So the reward/risk relationship doesn't look compelling to me.

But thanks :)

Quote from: David Randolph on March 07, 2007, 12:17:07 PM
It would take a lot more than that to spot those winners in their early stages. I would need to analyze the stock from a business perspective. To do that one needs to know the business very well, and I guess that takes at least 1 day of study.

Well, I could eliminate most of them by just looking at the financials, I guess, even though financials change, and it is their change or perception of change that makes stocks move on a long term basis.

Maybe just analyze one or two a day, tops, based on the chart patterns you like best.  We can focus on bringing you only small caps that have shown good relative strength in any pullback.  In a bull market, there are thousands to choose from on any given day; as the market turns bear there may be only a few, but among those may be some real winners (or they wouldn't stay strong in a down market).

Quote
By the way, why do you have those timing thoughts about the general market? I view the current downturn as the beginning of something more serious, just as in March 2003 the "bull market" started with an 8 days bull run with huge volume. Whenever there's a very sharp one or two days move I pay attention. My experience tells me things change that way. But you're right, the market can claw back up and get stuck in a tight range again, as it waits for more information.

Hard to predict, but we had a very strong technical signal, the market is the most prominent leading indicator, so I listen to the market. On that day the market said "sell".

The market's big one day drop was also due to a computer glitch, Asian markets & some other unrelated events.  Sources I have learned to trust are saying that although the market is ridiculously high & way too exuberant with respect to the reality of the US economy, still the "powers that be" (Bush....) cannot afford to allow it to tell the real story .. yet.  If possible they will try to keep it going until they can get another Republican elected.  If they feel they have no shot at that, they will let it go.  Either way, there should be one last 'Cinderella' recovery and the real drop should not occur until later this year or maybe even end of next year.  Although I'm not sure anyone can keep it going that long!
In other words, I have come to trust those who believe the US market is so heavily manipulated, nothing you see happening is real.  
So the only way 'we the sheeple' can make our fortunes is either to learn how to follow the market movers (and do not question why...)
or
use David's genius to find the small caps that could become humongous.  

If you only analyze one or two a day and it takes us 3 years to find just one that goes from 50 cents to $130 (splitting 4 times along the way) .. hey, that's good enough for me!  I can wait!  In the meantime, we can capture smaller profits with options, shorting, etc.  But we never stop looking for the next little one that is destined to make it big.  And you know there will be more .. as baby boomers retire, the hispanic market grows, China ... there are a ton of business opportunities out there that will make new billionaires.. and we just want to get their stock when it is still cheap!  ;D  >:D

That's my vote. :)

Quote from: nica33 on March 07, 2007, 11:28:08 AM

Quote from: TraderStar on March 07, 2007, 10:42:10 AM

Quote from: Se7en on March 07, 2007, 10:27:03 AM
Hey Traderstar, is it possible that I 'know' you from another board, your 'writing style' seems 'familiar' to me or am I just seeing things?! :)

I'm not on any other trading boards (usually avoid them!) the only other board I post to occasionally is a Spanish one (for people learning spanish),  I moderate that one under the name Mariposa.

Which is the link for your board? thanks

Email me (all spanish-related stuff): [email protected].
Let me know your level of studying spanish: beginner, intermediate, advanced.
Thanks :)

Quote from: Guloso on March 07, 2007, 11:32:01 AM
David,

TUTR is on Bear fire today due to bad quarterly results. Take a look. You will like to short this one

Hi Guloso, yes, TUTR is breaking down below a descending triangle pattern, declining 17% as I write. But volume is very low, just 207,000 shares traded on a 17% move, are you sure your broker has these shares to lend?

The news out today is:

• UPDATE - TABLE-Plato Learning Q1 loss widens (http://us.rd.yahoo.com/finance/external/reuters/SIG=11vg30000/*http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh66246_2007-03-06_22-47-01_bng242870_newsml)
at Reuters (Tue 5:47pm)

- Market cap is $105 M. A provider of computer and web-based instruction, curriculum planning and management, assessment, and related professional development and support services to K-12 schools.
- No recent history of dilution (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=tutr&lstStatement=Balance&stmtView=Qtr)
- Balance sheet looks just a bit weak, because current ratio is just 1.17, but cash of $33 M is interesting
- Revenues are shrinking since 2004
- Lost ($22 M) in 2006

Yep, the company looks in a seriously bad financial condition, because if they keep losing money this way, they will soon be out of cash and into making private placements.

The stock is getting killed but volume has been so low for so long that I doubt you could short it.

Good luck :)

Quote from: realcoolhead on March 07, 2007, 12:06:47 PM
Is there a reason whey gap likely needs to be filled? If there is a "reason" for a technical pattern, I think it will be more solid. For example, I can relay psychological behavior of people behind support/resistence etc. But I have a hard time thinking of this gap fill. >:(

Quote from: David Randolph on March 07, 2007, 11:49:55 AM

Quote from: prodigykid6 on March 07, 2007, 10:11:33 AM
Dave do you think FMCN could close the gap at $62 on 11/20? Is there a statistic out there on how many gaps that get filled?

I don't know about that statistic prodigykid6, but I do think FMCN will go down to close that gap (and more).

I agree realcoolhead, there isn't a sound reason behind that gaps theory. I said I expect FMCN to close the gap not because the gap exists, but because I believe the stock is way overvalued and bound to go down as advertising revenues shrink when the economy softens.

Quote from: TraderStar on March 07, 2007, 01:17:24 PM
The market's big one day drop was also due to a computer glitch,

Tradestar -

That's a BS story cooked up by the institutionals, and the media to try and "calm" the masses and prevent a full scale run on the markets.

All the while, the institutions are dumping back into retail.

I heard Cramer try and explain it as though someone added an "extra zero" and instead of selling a million shares, they sold a billion.

It's the most absurd story I think I've ever heard.

Quote from: KCScott on March 07, 2007, 02:06:04 PM

Quote from: TraderStar on March 07, 2007, 01:17:24 PM
The market's big one day drop was also due to a computer glitch,

Tradestar -

That's a BS story cooked up by the institutionals, and the media to try and "calm" the masses and prevent a full scale run on the markets.

All the while, the institutions are dumping back into retail.

I heard Cramer try and explain it as though someone added an "extra zero" and instead of selling a million shares, they sold a billion.

It's the most absurd story I think I've ever heard.

I agree Cramer is the bull of all bulls and if you read him right he is scared as well. He said 1/3 of the market has bottomed, he wont dare to call a bottom. Hes blowing smoke on his show lately.

Quote from: TraderStar on March 07, 2007, 01:17:24 PM

Quote from: David Randolph on March 07, 2007, 12:17:07 PM
It would take a lot more than that to spot those winners in their early stages. I would need to analyze the stock from a business perspective. To do that one needs to know the business very well, and I guess that takes at least 1 day of study.

Well, I could eliminate most of them by just looking at the financials, I guess, even though financials change, and it is their change or perception of change that makes stocks move on a long term basis.

Maybe just analyze one or two a day, tops, based on the chart patterns you like best.  We can focus on bringing you only small caps that have shown good relative strength in any pullback.  In a bull market, there are thousands to choose from on any given day; as the market turns bear there may be only a few, but among those may be some real winners (or they wouldn't stay strong in a down market).

Quote
By the way, why do you have those timing thoughts about the general market? I view the current downturn as the beginning of something more serious, just as in March 2003 the "bull market" started with an 8 days bull run with huge volume. Whenever there's a very sharp one or two days move I pay attention. My experience tells me things change that way. But you're right, the market can claw back up and get stuck in a tight range again, as it waits for more information.

Hard to predict, but we had a very strong technical signal, the market is the most prominent leading indicator, so I listen to the market. On that day the market said "sell".

The market's big one day drop was also due to a computer glitch, Asian markets & some other unrelated events.  Sources I have learned to trust are saying that although the market is ridiculously high & way too exuberant with respect to the reality of the US economy, still the "powers that be" (Bush....) cannot afford to allow it to tell the real story .. yet.  If possible they will try to keep it going until they can get another Republican elected.  If they feel they have no shot at that, they will let it go.  Either way, there should be one last 'Cinderella' recovery and the real drop should not occur until later this year or maybe even end of next year.  Although I'm not sure anyone can keep it going that long!
In other words, I have come to trust those who believe the US market is so heavily manipulated, nothing you see happening is real.  
So the only way 'we the sheeple' can make our fortunes is either to learn how to follow the market movers (and do not question why...)
or
use David's genius to find the small caps that could become humongous.  

If you only analyze one or two a day and it takes us 3 years to find just one that goes from 50 cents to $130 (splitting 4 times along the way) .. hey, that's good enough for me!  I can wait!  In the meantime, we can capture smaller profits with options, shorting, etc.  But we never stop looking for the next little one that is destined to make it big.  And you know there will be more .. as baby boomers retire, the hispanic market grows, China ... there are a ton of business opportunities out there that will make new billionaires.. and we just want to get their stock when it is still cheap!  ;D  >:D

That's my vote. :)

I agree with your analysis of market manipulation in the US. Bush may let it go well before the elections to put fear in voters regarding the social programs that the Dems are proposing.  

As for your suggestion regarding looking for the one or two bull case small caps, I think it is a great idea.

David, If you were to persue one or two bull case stocks based on an in depth study of the business model and industry, it would be a great deal of work, even over whelming for you. Could you assign a few volunteers from this group to each do a portion of the initial screening process? One idea would be to assign different aspects of the initial in depth fact gathering process, such as Industry, sub-industry, dilution and key ratios ,  insider activity or however you thought would be helpful.  If this were possible, you could then do a much quicker yes or no to doing further research.

We would all benefit from the learning experience and maybe even find that one in a million stock opportunity.  ;D    

What I heard is that the system was overloaded so that it didn't spit out data fast enough, yet the calculation is accurate. Therefore instead of showing a gradual drop from -300 to -500, it suddenly showed a sharp down to -500.

Quote from: KCScott on March 07, 2007, 02:06:04 PM

Quote from: TraderStar on March 07, 2007, 01:17:24 PM
The market's big one day drop was also due to a computer glitch,

Tradestar -

That's a BS story cooked up by the institutionals, and the media to try and "calm" the masses and prevent a full scale run on the markets.

All the while, the institutions are dumping back into retail.

I heard Cramer try and explain it as though someone added an "extra zero" and instead of selling a million shares, they sold a billion.

It's the most absurd story I think I've ever heard.

Quote from: cctabla on March 07, 2007, 12:09:32 PM
David,

I hope you are feeling better...please can you take a look at AHM, I am itching to short it. 

Thanks,
cctabla

Volume picked up quite a lot recently. The stock has been moving down, but I'm suspicious about this amount of volume, it looks like the lower prices are attracting buyers.

- Market cap is $1.29 B. The Company is in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans that its subsidiaries originate and service.
- They have preferred shares, I don't like preferred shares
- Its interesting how receivables grew a lot in Q4 2006 (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=ahm&lstStatement=Balance&stmtView=Qtr) and long term debt is also increased by 32% sequentially in Q4 2006.
- Revenues are growing nicely over the years, but net income declined in Q4 2006.
- EPS for the last four quarters was $4.96 :o. This means the trailing earnings multiple is 5.2.

My take is many things can go wrong with this company, but if they don't, the stock will triple, since the earnings multiple is just 5. This is a risky short, since the price is already discounting a bleak scenario. I guess many people are shorting the stock since it is a mortgage related business and that could spark a shot covering rally if the news isn't as bad as everybody is thinking. I try to look for less obvious things.

Anyway, the balance sheet shows problems arising, the depth of those problems is the real issue.

Good luck :)

Sold CPNE and BFLY this morning.  I still hold OFI with a tight stop loss.  Bought some CNE (14%+ dividend) MCGC (9.5% dividend).  However, this is boring.

Small cap gold stocks are starting to look good again: MRB, EGI, MNG.                                                                                     

SLW is still a buy, but you need to sell it when it gets goes up because is a rolling stock. Some extra excitement if you buy the options.  Fairly safe in this market if you trade within the range.

AMD put still looks good.  Fairly safe because INTC will have the upper hand for at least a year and they should not shoot up in this market.

Quote from: eggman11 on March 07, 2007, 12:32:00 PM
David,

I agree with your use of options (They can definitely get us closer to $150,000), but would also suggest in the future that make a rule to buy at least 2-3 months out, the time crunch can just kill you.

I also suggest that we still use part of the money toward bullish small cap positions. Stocks that you have mentioned that you like are actually up, since you discussed them in light of the recent downtown, like EXM, BTJ (I know BTJ wasn't an official pick, but you really liked it) and WCG (these are just the ones I remember from the portfolios and recent discussionss., which is from the main portfolio and hit new highs today. (I am still holding WCG long term). I am a big fan of companies that get recurring revenues from a subscriber base i.e. WCG, MCO) as long as the revenues and profits are growing. Yes, It's harder to find small caps stocks "on fire" in a bear market. I believe if the fundamentals warrant it, we should allocated some portion to a bullish stance, we could just keep tighter stops or something. If the focus a little bit on some stock "on fire", we will only be focusing on stocks "cooling off", and forgoring some great opportunities.

If GOOG can close under 455, below its 10-day average. I see it dropping futher t0 the 448 - 450 range.

Keep up the great work

Thanks eggman11, I agree with everything you said. I should have kept WCG, at least that one, great defensive + growth stock.

Quote from: ket1390 on March 07, 2007, 12:45:33 PM
great bull run  ;D

Yep, volume is picking up nicely ZROS. Chart looks good too. Let's see what else.

- Market cap is $85 M. The Company is a holding company focused on identifying and developing different media-based technologies, media assets, and strategic partnerships, and bringing those together to deliver next-generation commercial and consumer solutions.
- Balance sheet is awful, it says the company is worth ($1.3 M)
- $0 in revenues over the last five quarters
- Losing money every quarter

Given this, what's up with the stock?

They say they have a new and great software, capable of amazing things:

«Named after the company, RocketStream is a software-based product suite providing customers with a powerful, yet user-friendly, method of transferring large files and rich media faster and more securely than traditional alternatives. Over high-speed broadband links with measurable latency, RocketStream is capable of delivering files at speeds up to 100 times faster than FTP, thereby drastically reducing data transmission times. Unlike many existing WAN acceleration solutions, RocketStream requires no additional hardware to install, will be priced an order of magnitude below competing solutions, and is ideally suited for commercial installations where high-speed connectivity is available.»
http://www.rocketstream.com/

I don't know if the software really does what they claim, but I know the stock isn't worth nowhere near $85 M, because with the balance sheet problems the company has, it will use any rally to dilute shareholder's value.

I would avoid ZROS.OB for now, don't like companies selling $0 delivering great promises, even more so when they have just 1 employee ???

I am sure there is some level of attempted manipulation by goverments of stock markets, but they cant stop the real forces of the market.  Otherwise wouldnt Bush have stopped the bear market that started in his early years as president?  Wouldnt all presidents simply manipulate the market up?  I dont know, I find that hard to swallow.  I doubt this market can be pinned up till election day 2008.  Better for them to let it drop till 2008 and have it roar back in 2008, assuming they had the power to do that.

As for the computer error, everything I have heard suggests it was many orders that overwhelmed the system, so they had to go to a backup system.  The other system processing all the other orders at once showed where the market was really supposed to be.  Why would there have been so many sell orders in the first place?  That volume was huge and there has been no revision of the volume.  If they revised downward I think the move would have less significance.  But come on, its computers here, when was the last time a computer accidentally added another zero?  They wont boot up sometimes, but they do calculations flawlessly.

rptn.ob nice breakout good volume

Quote from: BigSully1 on March 07, 2007, 12:52:00 PM
Mortgage defaults begin to spread;

http://finance.yahoo.com/loans/article/102536/mortgage_defaults_start_to_spread

I think the market is counting on a Fed interest rate decrease. I just don't see how in the world they can do it the way things are now. They're caught between a rock and a hard place, IMO. Without a decrease, I am almost certain our economy goes into recession or worse very soon and I think the Fed knows it. However that would just put another bandaid on the situation and would just create much deeper trouble further down the road, IMO. I don't expect alot of cooperation from the Chinese or the rest of the world for that matter either.

I regularly get Credit card offers (checks to use as please) in the mail. Yesterday I received one from my National City card. Believe it or not, they are offering 2.99% fixed APR for life. Yes there is a transaction fee, but it is 3% or a maximum of $75, so not much at all if borrowing a very large amount. I haven't seen offers this low for a couple of years.

I think we should debate if and when the Fed cuts rates (can they or will they really do it?), because I think that will determine where the market is headed.

The doo doo just keeps getting deeper......

I agree BigSully1, the FED will cut rates. But it will only be able to do it after stocks go down 15 to 20% from their peek. Bernanke will ease credit again, but I agree with you, that doesn't solve the long term problem of the US consumer, which is its negative savings rate. In fact, it would solve the matter easier if it rose rates, that way the incentive to save would be greater (but it would also cause a Worldwide recession). I think there's no way out of the situation without some pain. The more the FED delays the pain, the greater it will be.

I believe all these anti cyclical monetary and fiscal policies expand cycles in both ways. Just look at Japan. Interest rates are close to zero there, and that doesn't change the fact that the economy continues depressive and the Nikkei 225 is still more than 50% below its all time high set 17 years ago.

In 1936 John Maynard Keynes wrote in his book, "General Theory of Employment, Interest and Capital" (something like that), that although a liquidity trap never existed in history, it could happen, when interest rates are so low that additional cuts fail to stimulate consumption or investment  ;)

Quote
I would avoid ZROS.OB for now, don't like companies selling $0 delivering great promises, even more so when they have just 1 employee ???

they have more than one employee

http://www.zerosones.com/company/team/default.aspx

QuoteI am sure there is some level of attempted manipulation by goverments of stock markets, but they cant stop the real forces of the market.  Otherwise wouldnt Bush have stopped the bear market that started in his early years as president?  Wouldnt all presidents simply manipulate the market up?  I dont know, I find that hard to swallow.  I doubt this market can be pinned up till election day 2008.  Better for them to let it drop till 2008 and have it roar back in 2008, assuming they had the power to do that.

I agree with Tokyopua, the market is just too BIIGGG for anyone to try to manipulate it, even for the President. Just the NYSE total market cap is $26 trillion dollars. The US economy is about half of that. No government can move it one way or another for more than a few days.

QuoteDavid, If you were to persue one or two bull case stocks based on an in depth study of the business model and industry, it would be a great deal of work, even over whelming for you. Could you assign a few volunteers from this group to each do a portion of the initial screening process? One idea would be to assign different aspects of the initial in depth fact gathering process, such as Industry, sub-industry, dilution and key ratios ,  insider activity or however you thought would be helpful.  If this were possible, you could then do a much quicker yes or no to doing further research.

We would all benefit from the learning experience and maybe even find that one in a million stock opportunity. ;D

Yep, that could be a cool exercise, leveraging the power of the Community. I'll think about a way, a few tests you could make to find those outstanding winners. CPNE.OB looked like one of those ... but unfortunately it isn't, at least not with the current business model, since it is based on consumer's ignorance. 

Quote from: ket1390 on March 07, 2007, 02:54:06 PM

Quote
I would avoid ZROS.OB for now, don't like companies selling $0 delivering great promises, even more so when they have just 1 employee ???

they have more than one employee

http://www.zerosones.com/company/team/default.aspx

Thanks for the information ket1390, my fundamental service wasn't updated. Good luck on that one, but beware with the negative book value.

Are you a beta tester of their software? It would be nice to have one review.

David,
I am a newbie ...and am learning a great deal looking at each of your analysis.

Just was wondering what it would take to reach with current rate of gains to go from 15K to 150K.

SOF has a gain > 50% in the past 2 months. If similar gains can be sustained than for a 10X gain, 47% gain every 2 months for a year would be 10.09.
1.47*1.47*1.47*1.47*1.47*.1.47=10.09

As a newbie, even if it can be done over the next 5 to 10 years is a GREAT GOAL !!!

But with David, SOF is on fast track.. that makes it very very exciting !!!

George

Quote

Thanks for the information ket1390, my fundamental service wasn't updated. Good luck on that one, but beware with the negative book value.

Are you a beta tester of their software? It would be nice to have one review.

thanks david for the analyse...the big speculation here is expected to happen  at the end of march....i didnt test the software yet...maybe:)

The beta software module made available today is RocketStream Station, a Windows-compatible Peer-to-Peer module of the RocketStream software suite that enables accelerated point-to-point file transfers without the need for an interim server. The product will be commercially available near the end of the current quarter (Q1 2007), along with the release of two additional products: RocketStream Uplink -- a client-only version -- and RocketStream Server -- a multi-threaded server capable of handling many simultaneous transfers.

ket

QuoteDavid,
I am a newbie ...and am learning a great deal looking at each of your analysis.

Thanks, I'm learning a good deal too.

QuoteJust was wondering what it would take to reach with current rate of gains to go from 15K to 150K.

SOF has a gain > 50% in the past 2 months. If similar gains can be sustained than for a 10X gain, 47% gain every 2 months for a year would be 10.09.
1.47*1.47*1.47*1.47*1.47*.1.47=10.09

Actually it would be less than a year. The math you need to do to make that calculus is:

Current capital = $22,710
2 months rate of increase = 51%
Final goal = $150,000

$22,710*(1.51^X) = $150,000 <=> 1.51^X = 6.6 <=> .... hmmm, I stumbled here, can't quite remember how to solve this equation, any math expert in the house?

QuoteAs a newbie, even if it can be done over the next 5 to 10 years is a GREAT GOAL !!!

But with David, SOF is on fast track.. that makes it very very exciting !!!

George

Well, thanks, but the thing will be very hard to pull out. It can't be done shorting stocks, because the maximum potential is 100% if the share price goes to zero, and it never does, or it takes a whole lot of time. Options could be a way, but the risk is so high it wouldn't be a long term sustainable strategy.

Maybe the finding of those outstanding, bear market proof stocks is the way. We'll keep working on that, keeping the dream alive :)

Quote from: KCScott on March 07, 2007, 02:06:04 PM
I heard Cramer try and explain it as though someone added an "extra zero" and instead of selling a million shares, they sold a billion.
It's the most absurd story I think I've ever heard.

Yah, especially when they would need to add three extra zeros (not just one) to get from a million to a billion.  Cramer knows that he will not have much of a show in a bear market.

QuoteThe beta software module made available today is RocketStream Station, a Windows-compatible Peer-to-Peer module of the RocketStream software suite that enables accelerated point-to-point file transfers without the need for an interim server. The product will be commercially available near the end of the current quarter (Q1 2007), along with the release of two additional products: RocketStream Uplink -- a client-only version -- and RocketStream Server -- a multi-threaded server capable of handling many simultaneous transfers.

ket

Yes Ket, the problem is the market cap of $85 M already reflects all that. Moreover, the balance sheet shows liquidity is almost zero, and if the company has 6 or 7 employees, someone has to pay their salaries, guess who's going to be? People buying shares.

Anyway, I love software companies, and that software seems like a powerful tool. But is it worth $85 M before selling 1 copy? Hard to know, but I wouldn't bet on that.

Dave

for this analyse, thanks for your "HEPH"

About shorting GOOG, I love the idea, just find the timing a bit early.
Your position is just a few days early to see the stock coming back to the 50ema level.

From watching different bearish charts, I notice that stocks have this tendencies to come back to the 5OEma level before falling back to news lows.

So I expect GOOG to do the same.
About derivatives, I am just wetting my feed,  so have to go gentle with it

Wish me good luck.

Quote$22,710*(1.51^X) = $150,000 <=> 1.51^X = 6.6 <=> .... hmmm, I stumbled here, can't quite remember how to solve this equation, any math expert in the house?

Take the natural log of both sides of the equation (ln):

ln(1.51^X)=ln(6.6)
x(ln1.51)=(ln6.6)
x=ln6.6/ln1.51
x=1.89/.41
x=4.6

So 2 months times 4.6 = 9.2 months.

(I think this is right...)

looking forward ..... uranium stocks ...  slx.au    jnn.v   txm.to    uuu.v  pxp.v

Quote from: phabrux on March 07, 2007, 03:27:49 PM
Dave

for this analyse, thanks for your "HEPH"

About shorting GOOG, I love the idea, just find the timing a bit early.
Your position is just a few days early to see the stock coming back to the 50ema level.

From watching different bearish charts, I notice that stocks have this tendencies to come back to the 5OEma level before falling back to news lows.

So I expect GOOG to do the same.
About derivatives, I am just wetting my feed,  so have to go gentle with it

Wish me good luck.

Good luck phabrux :)

You're right, I was early on my GOOG short. But you know I'm also short the stock, and there I don't have such timing problems as with put options (at least my put options). GOOG is just 2.2% above my short sale of 100 shares, so I don't have a problem with these short term fluctuations. Of course, I'm a fan of the company, but not a fan of the stock trading at 14 times revenues, since I expect revenues to go down or at least don't grow by much in 2007.

Looks like the bears snuck in during these last 20 minutes to attempt to take the market down to red numbers.  As I posted in the correction/bear market thread, I expected a basically flat day today.  Actually it would have been better for the bear case I think if the market was just up slightly on today and tomorrow, as the jobs number will likely create a distribution day on Friday.  As always, just have to wait and see.

Actually it would be less than a year. The math you need to do to make that calculus is:

Current capital = $22,710
2 months rate of increase = 51%
Final goal = $150,000

$22,710*(1.51^X) = $150,000 <=> 1.51^X = 6.6 <=> .... hmmm, I stumbled here, can't quite remember how to solve this equation, any math expert in the house?


Hello David,
The 47% gain was the minimum % gain required every 2 months
And assumption is a constant 2 month period over 1 year.

Using the actuals which is higher by 4%, the new calculation would be
1.51*1.46*1.46*1.46*46*1.46*1.46=10.02

Its interesting the ways we can look at numbers ...two different ways here are :
Either we can assume the same % growth to decrease the number of months to reach the goal in which case as you had mentioned it will be sooner. 9.2months from now it will be reached.
The second case would be to keep the number of months the same and change the future gains required based on actual performance. So in this case the minimum gain required is lower by 1% because of the SOF performance of 51% in the  first two months.

Again the key aspect w.r.t. these numbers is DAVID and SUSTAINED GROWTH !!


George

History repeated itself on HEPH, but this time it didn't caught me, I feel good :)

Thanks for your feedback, David.

It is possible to short TUTR.  I have a short position. I am using IB.

Quote from: David Randolph on March 07, 2007, 03:55:43 PM
History repeated itself on HEPH, but this time it didn't caught me, I feel good :)

Applauds for that David, nice call!

QuoteThe second case would be to keep the number of months the same and change the future gains required based on actual performance. So in this case the minimum gain required is lower by 1% because of the SOF performance of 51% in the  first two months.

Hi George - The problem is that you can't change the future gains because we don't know them...we can only use data that we already have.  One can look at it many ways I suppose, but the correct way was the calculation David stated.

Either way though....nice.   >:D

Great call on HEPH David - good memory  :o

Quote from: David Randolph on March 07, 2007, 11:44:16 AM
If we're still in a bull market as you claim, I'll be back at buying stocks on fire. The jury is still out on that question. I believe that the market is bearish for as long as the SPY is trading below $141.69.

I switched from a bull to undecided this afternoon.  The close in the US markets gives me caution.  I am all cash now, except for a position in QID.  I'll be on the sidelines until I figure out where this market is heading.

By the way, it looks like E*Trade soon will offer trading in select foreign markets (Canada, France, Germany, Hong Kong, Japan, and the United Kingdom).  Time for 3SOF to go global?

Quote from: dnickers on March 07, 2007, 04:00:45 PM

QuoteThe second case would be to keep the number of months the same and change the future gains required based on actual performance. So in this case the minimum gain required is lower by 1% because of the SOF performance of 51% in the  first two months.

Hi George - The problem is that you can't change the future gains because we don't know them...we can only use data that we already have.  One can look at it many ways I suppose, but the correct way was the calculation David stated.

Either way though....nice.   >:D

Right dnickers. I would like to achieve that goal, but also to do it in a sound strategic way, in a way that could be repeated in the future. If it is done with a lot of risk, it was just luck. If it is done with a lot of trades, I guess it would have the help of the people that followed the Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) (at least in the beginning), so, also no merit in that path.

To make 10 times his money, one only has to double it 3.25 times. Doesn't look all that difficult. Diversification can be a hurdle when one thinks of it this way.

Quote from: AKgirl on March 07, 2007, 03:38:02 PM
looking forward ..... uranium stocks ...  slx.au    jnn.v   txm.to    uuu.v  pxp.v

Hi AKgirl :)

Unfortunately I don't have technical or fundamental data on stocks traded outside the US exchanges, NYSE, Nasdaq, AMEX and OTCBB. But they can be great investments, good luck :) (even though I'm a bear on metal prices going forward)

who was it that said short HMIN? what is your opinion on the earnings release today? send me a private message if Dave closes the board...Thanks

this looks powerful  :o

Quote from: buddjas1 on March 07, 2007, 04:07:46 PM

Quote from: David Randolph on March 07, 2007, 11:44:16 AM
If we're still in a bull market as you claim, I'll be back at buying stocks on fire. The jury is still out on that question. I believe that the market is bearish for as long as the SPY is trading below $141.69.

I switched from a bull to undecided this afternoon.  The close in the US markets gives me caution.  I am all cash now, except for a position in QID.  I'll be on the sidelines until I figure out where this market is heading.

By the way, it looks like E*Trade soon will offer trading in select foreign markets (Canada, France, Germany, Hong Kong, Japan, and the United Kingdom).  Time for 3SOF to go global?

I plan to play around with some trading in Japan when Etrade rolls that out, their market is beat up right now but I think their fundamentals are better than those in the US, the only thing they will have to do is deal with a strong yen, but they have done that before.

Quote from: buddjas1 on March 07, 2007, 04:07:46 PM

Quote from: David Randolph on March 07, 2007, 11:44:16 AM
If we're still in a bull market as you claim, I'll be back at buying stocks on fire. The jury is still out on that question. I believe that the market is bearish for as long as the SPY is trading below $141.69.

I switched from a bull to undecided this afternoon.  The close in the US markets gives me caution.  I am all cash now, except for a position in QID.  I'll be on the sidelines until I figure out where this market is heading.

By the way, it looks like E*Trade soon will offer trading in select foreign markets (Canada, France, Germany, Hong Kong, Japan, and the United Kingdom).  Time for 3SOF to go global?

Wow, are you sure buddjas1? Now that you're all cash (even a bit short), we're all bears here, who is left to sell then? ;D

Nah, I won't fall for that one ... the market is much, much bigger than we here at 3 Stocks, or even people writing on internet websites for that matter. The people that really move money (I can't disclose whom I'm talking about or my wife would be fired) bought all the chips they still had left (I'm talking billions - managed by people that don't have a clue of what they're doing - doesn't mean they're necessarily wrong this time) on the first correction day, thinking "this is just a correction, prices are so cheap now" ;)

Quote from: prodigykid6 on March 07, 2007, 04:15:17 PM
who was it that said short HMIN? what is your opinion on the earnings release today? send me a private message if Dave closes the board...Thanks

I guess I can leave it open from now on, just start a new thread each day. I'll just turn off the computer (I have kids, and a wife, and would like to keep her :-*) but will leave the board open, no need to close it each day if you want to continue talking (if someone posts porno stuff I guess one of the moderator's will delete it ;D)

The Fire Portfolio (http://www.3stocksonfire.org/3stocksonfire_3sof.php) was up on the day, but just a tiny 2.5% compared to the 9% set back yesterday.

I'll be here tomorrow, see you :)

Quote from: David Randolph on March 07, 2007, 04:20:48 PM

Quote from: buddjas1 on March 07, 2007, 04:07:46 PM

Quote from: David Randolph on March 07, 2007, 11:44:16 AM
If we're still in a bull market as you claim, I'll be back at buying stocks on fire. The jury is still out on that question. I believe that the market is bearish for as long as the SPY is trading below $141.69.

I switched from a bull to undecided this afternoon.  The close in the US markets gives me caution.  I am all cash now, except for a position in QID.  I'll be on the sidelines until I figure out where this market is heading.

By the way, it looks like E*Trade soon will offer trading in select foreign markets (Canada, France, Germany, Hong Kong, Japan, and the United Kingdom).  Time for 3SOF to go global?

Wow, are you sure buddjas1? Now that you're all cash (even a bit short), we're all bears here, who is left to sell then? ;D

Nah, I won't fall for that one ... the market is much, much bigger than we here at 3 Stocks, or even people writing on internet websites for that matter. The people that really move money (I can't disclose whom I'm talking about or my wife would be fired) bought all the chips they still had left (I'm talking billions - managed by people that don't have a clue of what they're doing - doesn't mean they're necessarily wrong this time) on the first correction day, thinking "this is just a correction, prices are so cheap now" ;)

David, I am not sure I understand you. Are You sugesting that atleast some money bought heavily into the pull back?

David, won't you forget to ask Ramsburg if it's possible to reinstall the 3SOF chatroom? Would be nice to have it back! thx!

Quote from: Se7en on March 07, 2007, 04:52:32 PM
David, won't you forget to ask Ramsburg if it's possible to reinstall the 3SOF chatroom? Would be nice to have it back! thx!

I'm working on that Se7en ;)

Quote from: Ramsburg on March 07, 2007, 05:03:26 PM

Quote from: Se7en on March 07, 2007, 04:52:32 PM
David, won't you forget to ask Ramsburg if it's possible to reinstall the 3SOF chatroom? Would be nice to have it back! thx!

I'm working on that Se7en ;)

Thx! 8)
If it's ready, could you send a notification mail to all our members so everybody will be aware of it, the more participants we'll have the better!  :)
Thx again!

Quote from: ravenquork on March 07, 2007, 04:28:51 PMAre You sugesting that atleast some money bought heavily into the pull back?

Quite a bit of Retail money bought into that weak bounce we had last Wednesday. While Institutions were unloading their risk (High P/E, Large Profit, Etc.) the major brokerage houses were advising their clients to "Buy the Dip".

This has been the same mantra this market has used since it became oversold (at least on the charts) back in Nov / Dec. Even now among many traders there is a huge debate on if this is a normal IT pullback (see chart)  or the start of a true Bear market.

(http://img.photobucket.com/albums/v11/kcscott/SPX3-7-07.png)

I'm in the camp of the Bear's unless the tape tells me otherwise.

But I will be watching these support levels on the SPX

Thanks KCScott,

I agree fully with your explanation and I am also now in the bear camp (as of last Thursday).  I did not understand David's post and my reply left out one critical word.  What I meant to say was - Are You sugesting that at least some BIG money bought ...
I guess he meant that the big boys cashed out, but I wanted to check to make sure.

Short on MA is looking good right now. What is the rest of the boards take on it?

I think what David was trying to say is the "Big Players" put whatever they had left into the market. When there is no more new money going in the market then that's a top and the only way to go is down. 

These big boys like to play games and don't lose money. If they realize the market wont go up or were in the beginning of a bear market they will buy puts sell calls then pull the plug on the money they have in the market thus making there options worth money. This is typical hedge fund behavior. Nothing but manipulation and games but everyone is waiting to see which directions were going. Right now the market is acting like a teeter totter trying to decide which way it's going. IMO if a couple of "Big Players" pull there money this market is going to be hurting.

Everybody thinks were going to be higher at the end of the year and only a few are whispering the start of a bear market. I think a lot of longs are scared and on the edge of they're seats with the finger on the sell button. All we need is one more trigger or catalyst to confirm a bear market in my opinion. The jobs number could do it. The Yen carry over trade could do it. China regulations could do it etc. etc. 

Dave was on to something when he was talking about the FED wont cut unless the market corrects. It's a lose lose for longs and a win win to prove the bear market theory. There is no denying that the two economic powers of the world, China and US, are slowing. If US slows China will fall apart. It just doesn't make any sense on how a communist government can have PE Ratios higher than the US example, BIDU, FMCN, HMIN, SOLF to name a few. China is due for a huge correction. For god sakes people in China are buying stocks with credit cards! If that's not a signal for a correction I don't know what is. And its like everyone thinks ok we went down one day now everything is cheap get back in. Well Dave is right...psychologically you are attracted to stocks and tell yourself they're cheap but they will only go down again. Typical bear market.

Dave I don't know if you will read this but if we get confirmation of a beginning of a bear market I think we should short some ETF's like FXI and PGJ. The reason is you don't have to wait for an up tick to short so you can literally pound these things into the ground by shorting. Also these ETF's poorly reflect the underlying asset because they trade at a higher value. If there is a flight to quality it will be individual stocks not a bloated basket.

There I vented...good night  ;D

I don't necessarily disagree with your points in general, but the following is not true. I came from China 14 years ago and I regularly visits China. People in China DO NOT have real credit card, what they have are really debt cards, as in they have to have money in the bank accounts to use the so-called credit card.

The stock market in China is heavily influenced by government regulations. For example capital gain tax is exempted in China and any hint of new regulation to levy capital gain tax will induce a massive selling in the stock market. Some "unique" characteristics in Chinese stock market are: you can not short, you can not sell on the same day you buy (ie. no T+0) etc. Whatever conclusions you may draw from this.

I personally think Chinese stock market has not peeked yet because the government will try all kinds of methods to keep it up until the summer Olympic Games next year. The volatility we have in China now has a lot to do with the fact that they will begin to trade stock market futures soon. At its earliest the peak may occur the end of 2007, that's when all the constructions for Olympics will be done and assuming the stock market looks forwards 6 months ahead.

Quote from: prodigykid6 on March 07, 2007, 08:25:24 PM
China is due for a huge correction. For god sakes people in China are buying stocks with credit cards! If that's not a signal for a correction I don't know what is.

Quote from: realcoolhead on March 07, 2007, 09:15:45 PM
I don't necessarily disagree with your points in general, but the following is not true. I came from China 14 years ago and I regularly visits China. People in China DO NOT have real credit card, what they have are really debt cards, as in they have to have money in the bank accounts to use the so-called credit card.

The stock market in China is heavily influenced by government regulations. For example capital gain tax is exempted in China and any hint of new regulation to levy capital gain tax will induce a massive selling in the stock market. Some "unique" characteristics in Chinese stock market are: you can not short, you can not sell on the same day you buy (ie. no T+0) etc. Whatever conclusions you may draw from this.

I personally think Chinese stock market has not peeked yet because the government will try all kinds of methods to keep it up until the summer Olympic Games next year. The volatility we have in China now has a lot to do with the fact that they will begin to trade stock market futures soon. At its earliest the peak may occur the end of 2007, that's when all the constructions for Olympics will be done and assuming the stock market looks forwards 6 months ahead.

Quote from: prodigykid6 on March 07, 2007, 08:25:24 PM
China is due for a huge correction. For god sakes people in China are buying stocks with credit cards! If that's not a signal for a correction I don't know what is.

Great to have the perspective of someone actually from China! 

There is another related rumor we hear in the US, namely that people are mortgaging their houses to buy stocks.  Do you think there is any truth to that?  The other Urban legend type stock-bubble-indicator we hear is that dimsum shop owners and taxi cab drivers are giving out stock advice.

Anyway, their chart is parabolic, seems the government would have to work double time to keep it proped up for another year, but I guess if stocks cant be shorted maybe it can just go on indefinitely. ::)

Quote from: tokyopua on March 07, 2007, 10:01:52 PM

Quote from: realcoolhead on March 07, 2007, 09:15:45 PM
I don't necessarily disagree with your points in general, but the following is not true. I came from China 14 years ago and I regularly visits China. People in China DO NOT have real credit card, what they have are really debt cards, as in they have to have money in the bank accounts to use the so-called credit card.

The stock market in China is heavily influenced by government regulations. For example capital gain tax is exempted in China and any hint of new regulation to levy capital gain tax will induce a massive selling in the stock market. Some "unique" characteristics in Chinese stock market are: you can not short, you can not sell on the same day you buy (ie. no T+0) etc. Whatever conclusions you may draw from this.

I personally think Chinese stock market has not peeked yet because the government will try all kinds of methods to keep it up until the summer Olympic Games next year. The volatility we have in China now has a lot to do with the fact that they will begin to trade stock market futures soon. At its earliest the peak may occur the end of 2007, that's when all the constructions for Olympics will be done and assuming the stock market looks forwards 6 months ahead.

Quote from: prodigykid6 on March 07, 2007, 08:25:24 PM
China is due for a huge correction. For god sakes people in China are buying stocks with credit cards! If that's not a signal for a correction I don't know what is.

Great to have the perspective of someone actually from China! 

There is another related rumor we hear in the US, namely that people are mortgaging their houses to buy stocks.  Do you think there is any truth to that?  The other Urban legend type stock-bubble-indicator we hear is that dimsum shop owners and taxi cab drivers are giving out stock advice.

Anyway, their chart is parabolic, seems the government would have to work double time to keep it proped up for another year, but I guess if stocks cant be shorted maybe it can just go on indefinitely. ::)

dont you think thats a problem that there markets are so regulated. the government is pumping there own stock market! what happens when it turns. i think it could go down in history because it could be so ugly

"...I think what David was trying to say is the "Big Players" put whatever they had left into the market. When there is no more new money going in the market then that's a top and the only way to go is down.

These big boys like to play games and don't lose money. If they realize the market wont go up or were in the beginning of a bear market they will buy puts sell calls then pull the plug on the money they have in the market thus making there options worth money. This is typical hedge fund behavior. Nothing but manipulation and games but everyone is waiting to see which directions were going. Right now the market is acting like a teeter totter trying to decide which way it's going. IMO if a couple of "Big Players" pull there money this market is going to be hurting."

Makes sense.

Thanks

That's not true. Because there is NO refinance activity whatsoever in China. But there are certain element of truth in this, let me explain:

People in China are "trained" to be very speculative, they "invest" in things that can bring them huge returns in short period of time. A year ago it was all about real estate, people bought apartments like mad (the stock market was hugely depressed back then after the crash in 2004). In many cases they only put down deposits and flip them a couple months later, never mind owning the apartments (Not much difference from some hot areas in US a year or two ago).  Along the way real estate in big cities on east coast skyrocketed. An ordinary apartment in Shanghai could fetch $200K, that's US dollar! Some luxury ones are selling for half million US dollars! Not much less than the price in US, is it?

Now the government is very worried about the outragous housing price. Why? Because it is out of reach to 70% of the population and social unrest could burst out, and that's the only thing goverment cares as far as I can see. So they tried many ways to cool down the housing market. It partially worked, in the sense that in most areas housing price stopped going up, yet they didn't crash, for the reasons I will explain later. Anyhow, as soon as the housing market began to cool down, hot money started to flee, and much of it went to stock market. That's the element of truth I referred to.

Why is that the housing market didn't crash? In some cities like HangZhou (a city famous for its tourism indusitry) and Beijing the housing price is still going up. Keep in mind, China is a very corrupted society right now. Some people still think of China as a Communist country. No, it is maybe 1% of Communism on the cover and 99% of a very corrupted Capitalist country! Hey, I am not saying Capitalism is the sin, but I have to say that, a capitalist system lacking matured law and order is one of the worst scenarios you can immagine. Back to the topic: with corrupted system, those "lucky" builders bought land from government (land was owned by the government in a Communist country, remember?) at token price, they hoard the aparments, they could keep as much as 80% vacancy rate without feeling a pinch in their bottom lines, there is no market force to bring housing price down!

So lots of ordinary people (By ordinary I mean people who make on average $10K-$20K a year. There ARE some filthy rich people in China these days ...) either give up the "dream" of owning their own houses (more accurate, apartments), or they save a lot to pay the downpayment and struggle to make big mortgage payments. That brings up the most fascinating data: with all these years of rapid economic growth, the rate of consumer expenditure vs. GDP actually went down in China! Can you imagine, people in China now consume 5% less relative to GDP than 20 years ago? Do you see how weak internal demand is in China? Exporting is the lifeline of Chinese economy! I totally agree with David's theory of how a recession in US will affect China, not the other way around.

Quote from: tokyopua on March 07, 2007, 10:01:52 PM

There is another related rumor we hear in the US, namely that people are mortgaging their houses to buy stocks.  Do you think there is any truth to that?  The other Urban legend type stock-bubble-indicator we hear is that dimsum shop owners and taxi cab drivers are giving out stock advice.

Speaking of which, Chinese Shanghai index closed it morning session up 0.58%:

http://finance.sina.com.cn/realstock/company/sh000001/bc.shtml

I won't be surprised to see that it makes new high soon. Someday it will crash, but don't hold your breath for it in the near future yet ...

Quote from: nullzero on March 07, 2007, 08:21:10 PM
Short on MA is looking good right now. What is the rest of the boards take on it?

i think MA is going down too..had asked David abt it yday..if consumer spending drops, MA will be impacted directly..and its had a very strong run last few months..