Session of 03/07/2007

[TraderStar]

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

[David Randolph]

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
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
- 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

[David Randolph]

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.

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.

[KCScott]

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.

[WallStreetnBio]

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.

[ravenquork]

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).

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!   

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.      

[realcoolhead]

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.

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.

[David Randolph]

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 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 . 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

[Windsurfer]

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.

[David Randolph]

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.

[David Randolph]

great bull run 

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

[tokyopua]

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.

[Stocky2000]

rptn.ob nice breakout good volume

[David Randolph]

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 

[Stocky2000]

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