3SOF

You already gave 17 suggestions. I just made the following quick "dilution or not" test on them:

1) JOYG (N)
2) VSE (Y)
3) SAY (N)
4) ISIS (N)
5) NITE (N)
6) URBN (N)
7) MER (N)
8 - CHINA (N)
9) ONT (Y)
10) CELG (Y)
11) ITW (N)
12) CY (Y)
13) IBM (N)
14) CIEN (Y)
15) CBAK (N)
16) TTWO (N)
17) SFLY (Y)
18) NUAN (Y)

So, I got VSE, CELG, CY, CIEN, SFLY and NUAN as possible shorts after this test. Let me check other things on them.

Hi David,

I agree after yesterday the markets will need several days / weeks to digest and determine a new direction.  Things will be very volatile with large swings, good for daytraders not holding overnight but for general investors not an easy market and direction is in question at this point.  I've felt the markets in general have been getting ready for a correction for many months, thus I've been 50% in cash for a while and very careful on any recent longs I've started.  It will take alot to go back thru the recent highs, I think at best we go sideways for a while, but I'm tending towards the down side for a while.

Today I've been reviewing my holdings and reducing where I see the risk / reward ratio has significantly changed.  There will be margin calls today, some bottom fishers and a bounce I expect which may continue for a few days.  But yesterday did show us that the house of cards is a little shaky right now on the long side, it will be hard to make money there in the near future and there is now some significant overhead resistance in all those who were recent buyers of this rally.

Now for the daytraders watching the 1 min charts, there will be opportunities, long & short, but I can't play that game right now so will just have to sit it out.  Good luck to those who are in that game.

As far as going short, I agree I've also started in that area either directly or thru Puts or short ETF's etc.  Now with respect to 3SoF portfolio's I don't think you need to rush out and get fully invested right now.  There may be some deals to be picked right away, but I would let the dust settle a little, so we can see a little more clearly.  There will be alot of whip-saw action for several days.  Don't think there is any rule that states you must be 100% invested all the time.  In my books "cash" is also a "position" and in times of uncertainty sometimes it's the best position to have.

JMHO

Quasi

INRA on fire 

$VIX just showed strength on my intraday chart... I think we are going to go much lower soon. Market starting to show signs that it wants to go lower.

Quote from: David Randolph on February 28, 2007, 12:57:37 PM
You already gave 17 suggestions. I just made the following quick "dilution or not" test on them:

1) JOYG (N)
2) VSE (Y)
3) SAY (N)
4) ISIS (N)
5) NITE (N)
6) URBN (N)
7) MER (N)
8 - CHINA (N)
9) ONT (Y)
10) CELG (Y)
11) ITW (N)
12) CY (Y)
13) IBM (N)
14) CIEN (Y)
15) CBAK (N)
16) TTWO (N)
17) SFLY (Y)
18) NUAN (Y)

So, I got VSE, CELG, CY, CIEN, SFLY and NUAN as possible shorts after this test. Let me check other things on them.

CIEN has a PE of 4468...

Now I'll make the "balance sheet test". If the stock has a current ratio of less than 2, I say (Y), if not I say (N):

1 - VSE (N)
2 - CELG (N)
3 - CY (N)
4 - CIEN (N)
5 - SFLY (N)
6 - NUAN (Y)

Only NUAN passed the balance sheet test (from a bear's perspective). The others have strong balance sheets. But I don't know if that is such a good test to find appealing short picks.

I'll just go out for a drink and try to come up with a set of tests, a strategy or something to find nice medium term short picks. I don't think the opposite way of finding longs is an adjusted strategy, because the shorting game is different in its nature.

Quote from: nullzero on February 28, 2007, 01:11:25 PM
$VIX just showed strength on my intraday chart... I think we are going to go much lower soon. Market starting to show signs that it wants to go lower.

Holy crap I saw that spike too.  If its anything like yesterday...

Quote from: tokyopua on February 28, 2007, 01:20:15 PM

Quote from: nullzero on February 28, 2007, 01:11:25 PM
$VIX just showed strength on my intraday chart... I think we are going to go much lower soon. Market starting to show signs that it wants to go lower.

Holy crap I saw that spike too.  If its anything like yesterday...

Wierd, as I switched from 3 minute to 1 minute views and back the spike was gone...

Hi David:

I can't see any money in shorting SIGM.  Reminds me of my Put on GM a few months back.  How about Puts on the Diamonds as a hedge against long positions.  I won't short but I will buy Puts.  Shorting affects the value of the stock.  Puts do not.  I lost more than I made on Puts.  You can make money in a long tough bear market, however, I think you get eaten up in a sideways market which is probably the worst that we will have this year.

I lost a little over a $1,000 in my IRA yesterday and now I have it back today.  I am new so I only had CPNE, OFI, ETLT, AMKR, BFLY and MCZ from 3SOF and a few of my own in the IRA.

How about some income producing investments if a Bear Market is coming:  LCM, AINV, AGUNF, ARCC, DSX, EGLE.  These pay around 10% and appreciate about 10% to 25% a year.

I think I will sell BFLY today and watch the rest.

Thanks for your great analysis of the stocks you have covered.

I have to say, I am really shocked at the knee jerk reaction to yesterdays market action by David with the portfolio.  What happened to the trend (our friend)?  One day doesn't break a trend.  I have relatively little experience, but shouldn't we be abiding by that Golden Rule?  Doesn't there need to be some kind of confirmation?  Worldwide economical data doesn't suggest a major reversal.  How can a comment made by a retired guy make such waves around the world?  Seems very unwarranted, at least here in the states.  Like Bourbon (I think) said, and I feel the same, I'm really stunned how David goes from incredibly optimistic to suddenly very pessimistic.  It seems all that awesome, incredible analysis was thrown out the window.  Did the underlying fundamental of these companies change yesterday?  Certainly not - and if the picks are as good as I believe they are/were, it doesn't matter what the stocks held in the Dow or the S&P are doing.  They are their own entities.

As for QID, didn't you (David) say just a couple days ago that that was in your opinion one of the worst picks - given its nature?

Now I hope we all make money and/or learn something from this, but it seems to early to throw in the towel.  To early to sell the towel. 

Derek

SGR - PE 280, Current Ratio 1.5, chart looks ready to drop

The short term charts on the nasdaq and qqqq are really 'oversold'.  Look at these charts...

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID897936&cmd=show[s62386618]&disp=O

Quote from: dnickers on February 28, 2007, 01:32:23 PM
I have to say, I am really shocked at the knee jerk reaction to yesterdays market action by David with the portfolio.  What happened to the trend (our friend)?  One day doesn't break a trend.  I have relatively little experience, but shouldn't we be abiding by that Golden Rule?  Doesn't there need to be some kind of confirmation?  Worldwide economical data doesn't suggest a major reversal.  How can a comment made by a retired guy make such waves around the world?  Seems very unwarranted, at least here in the states.  Like Bourbon (I think) said, and I feel the same, I'm really stunned how David goes from incredibly optimistic to suddenly very pessimistic.  It seems all that awesome, incredible analysis was thrown out the window.  Did the underlying fundamental of these companies change yesterday?  Certainly not - and if the picks are as good as I believe they are/were, it doesn't matter what the stocks held in the Dow or the S&P are doing.  They are their own entities.

As for QID, didn't you (David) say just a couple days ago that that was in your opinion one of the worst picks - given its nature?

Now I hope we all make money and/or learn something from this, but it seems to early to throw in the towel.  To early to sell the towel. 

Derek

It is the technicals here that say the trend is broken, not necessarily the fundamentals.  And the action yesterday had more to do with China than just Greenspans comments.    But regardless of what exactly caused it, a drop of the magnitude we saw yesterday, with the volume we saw yesterday, simply has to change the nature of the market until the trend changes and tells you that it is back to being a bull market.  Closes by the major indexes back above their 20 and 50sma would be a step in that direction.

I can understand how it seems strange from one day to the next, but when I was arguing 2 weeks ago that a correction might be coming, David was correct in saying that you had to be a bull until you were told not to be a bull.  Yesterday we were told not to be bulls...

Call me crazy but I have did a little comparision to the movement yesterday and right where we are now looks very close to where it was before the big boom in the VIX. Take a look at the VIX.PDF intraday chart.

I think we may see some intense bear activity in the last 2 hours of the market. Beware the VIX is moving up if it breaks above its channel...

Quote from: dnickers on February 28, 2007, 01:32:23 PM
I have to say, I am really shocked at the knee jerk reaction to yesterdays market action by David with the portfolio.  What happened to the trend (our friend)?  One day doesn't break a trend.  I have relatively little experience, but shouldn't we be abiding by that Golden Rule?  Doesn't there need to be some kind of confirmation?  Worldwide economical data doesn't suggest a major reversal.  How can a comment made by a retired guy make such waves around the world? 

I very much enjoy David's picks and his daily updates. I do not follow 3SOF strategy but I try to follow the stocks that I like the best and wait for better entry points if necessary and in 2007 it has worked great (well until yesterday  ). I actually recommended to quite a few friends to start paying for member's section of 3SOF. After David decided to sell everything no matter what the stock, its current price and its fundamentals are based on one day of major sell off most of them question the consistency of 3SOF strategy.