Brandon Fredrickson

Our Mutual Friend Has Passed Away

2009-01-22T14:28:00.000-08:00

I've been recently made aware of the death of our mutual friend Common Sense. The wake, held in Minnesota, was not well attended because it turns out that a bus does not run well on gel.

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Minnesota now requires that all diesel run on a 2% biodeisel blend. This is a great idea except that it gets cold in Minnesota, and when it gets cold biodesil turns to GEL. Turns out, the engines on school buses wont run on gel, imagine that!

So because the buses wont run on gel when it gets cold in Minnesota several Minnesota school districts had to cancel classes. Can't start the buses, kids can't get to school if you can believe that. But, that's not actually the worst part. School nurses had to treat several children for hypothermia because they got stranded on buses who's heaters wouldn't run since the engines don't run on gel! Imagine that!

So the solution they have come up with in Minnesota is to let the buses idil. Yep, you know, run them 24/7 and use more of those evil fossil fuels that they are so bad for us that we should let our children become hypothermic and miss class.

The lawmakers in Minnesota think that this JEL is such a good idea, that they plan to eventually require all diesel sold in Minnesota to run on twnety percent blend! Yep, JENIOUS!!! With a friggin J!

Brandon

Please note that this blog will be shuttin down as I open up my new home to you all at www.ifiredwallstreet.com

New Blog

2009-01-22T09:08:00.000-08:00

Well I'm very excited and I have some great news to share with you all. I'm about to start a totally new chapter in my life, and I really can't wait.

If any of you who fought the cancer beast and beaten it, or have a family member who has, you know the effects the disease and the treatments of the disease has on your body.

In my own case I went a healthy 165lbs down to 118lbs at my worst point. I also lost a lot of hair (which is ok since I keep it short anyway), my teeth and my finger nails and toe nails fell off too. Pretty sick to look at really.

I also ended up getting flesh eating bacteria in my hip and leg as a complication of a surgery I had this summer. That was actually the closest that I ever came to dying, I was in the ICU and the doctors told my family that I was being kept as comfortable as possible but they did not have much hope for me over the next 24 hours.

Well, as both of my older brothers can attest to, I'm nothing if not fiesty and I beat that off too. Ended up spending 93 days in the hospital, all of it in Isolation because I was a danger to the other patients.

I never had my empathy for people in prison before, but I think now I can feel a little bit of the madness that such isolation causes..it aint good!

Well, some good did come out of it because the concept for my new site started to work out in my head during that time. I also did a lot of research to figure out what I need to do in order to get back on the net, help you make money, and do it right!

I'm real excited about the new site because I think that so much good can come out of it. All you need to do is look around and you can see that Wall Street and Washingon care a heck of a lot more about their own power and money then they do about us. There are a lot of surgeons I found who would cut a hole through your stomach to get to your wallet, and the guys on Wall Street and in DC are even worse!

If you want to have a secure future, your pretty much on your own to reach out and grab it! And that is where my new site, http://www.ifiredwallstreet.com is going to come in.

I've been helping traders out since 1998, and that help is needed now more then it's ever been needed before!

I Fired Wall Street though is not going to be just about making money and securing our own futures. A big part of the reason I started it was to help others who need our help.

With that in mind my goal with I fired Wall Street is going to be to raiase $100,000 over the next 18 months for St. Jude's Children's Hospital and the Wounded Warriors Project. I will do that by offering huge discounts to those of you who donate money to either of those groups. For example, my normal hourly rate for coaching and mentoring is $500, but right now if you donate $100 to either of these charities and send me the confirmation I will work with you for only $200.

That $200 will go along ways though, because not only do I gaurantee that you will mkae your investment back with a ONE YEAR MONEY BACK PROMISE, but I also will be donating $50 from each client to which ever charity, St Jude's or Wounded Warriors, that you would like me to donate it too. So, you will invest $300 in your own future, helping yourself in ways that you probably can not even imagine right now, and fully ONE HALF of that money will go to the Wounded Warriors.

In addition to offering you opportunities to save money by helping those in need I will donate $10 out of every $100 from I Fired Wall Street's Net Profits each month. You really can't go wrong since your going to be helping yourself and your family out by learning how to pull profits out of the stock market week after week, and your going to be helping those less fortunate who desperatly need the help.

Brandon

PS. Visit the new blog at http://ifiredwallstreet.blogspot.com/ and check out the new site too, http://www.ifiredwallstreet.com The site itself is not fully fuctional yet, but you can get a basic idea of what's going to be going on.

The Village Idiot

2009-01-13T10:04:00.000-08:00

Is it just me or is it starting to seem like the only people who go to Washtingon are those who had the application to be village idiot turned down? I mean seriously could there be a group of bigger floggin idiots?

Brandon

PS. I'm getting one of those fancy pants website things put up here over the next couple days and it's actually been a rather entertaining process.

Who's Gonna Bail America Out?

2009-01-10T22:13:00.001-08:00

The Jenious! of the Fed

2009-01-10T21:36:00.001-08:00

PLEASE Watch this

2009-01-10T21:28:00.000-08:00

I.O.U.S.A. – the 30-Minute Version from IOUSA the Movie on Vimeo.

AAPL Update

2009-01-02T03:43:00.000-08:00

AAPL continues to look very nice as a short, and I am considering adding to the position should it break below $84.50 per share. The stock continues to show relative weakness versus the overall market as there have been a lot of concerns about Steve Jobs. This is obviously something to keep an eye on as any news on Jobs is likely to have a huge impact on the stock. Over the last couple of days the volatility has just totally come out of this stock. Volatility always reverts to it's mean..simply what this means for us is that periods of very low volatility will be often followed by periods of high volatility, periods of very high volatility likewise will often be followed by periods of low volatility as the market works back to it's averages. This volatility cycle can be very profitable if you understand it, sadly most traders don't and they end up running around like my cat Nina when she's chasing her tail. In the end your tired and dizzy, but you did not get what you wanted.

In any event keep a close eye on AAPL. I currently have a small short position on that was opened last week, this will be an add on to that trade.

Here's to 2009!!

remote

2008-12-31T15:23:00.000-08:00

Kinda cool..This is the most remote but populated place on all of the earth. http://tinyurl.com/7k7amu

INSU, stock of the week

2008-12-29T06:21:00.000-08:00

The real secret

2008-12-29T06:14:00.000-08:00

The biggest secret that the guru's are hiding from you is simple: YOU DONT NEED THEM. I'd guess that seven out of ten time's you could eventually make money without them. You don't have to buy the latest indicator that will only be sold to 500 lucky souls for $1000, or the newest $15,000 one week mentoring program. In fact, the secret to your trading success is probably sitting on your desktop right now.

It's called a trading diary. If your not keeping one your not going to be successful. I'd venture a guess to say that 99% of people who do not keep a trading journal or log are not profitable, or if they are it is barely. Those who do manage to profit without one could see huge improvements in results simply by learning to keep one.

You see the biggest thing in trading is not learning this new thing or that new thing. It's about improvements. It's about doing the things that you do well, and staying away from those things that your not so good at. It's about making your strong points matter even more, and your weakest points matter even less. If you can simply do that, your going to make a lot of money. Let me give you a few examples.

Back when I was day trading every day I averaged about $1400. One evening I was looking very closely at all the data in my trading notebook and I made a very important discovery. I found that between 10:30am and 1:15pm CST, basically over lunch, on a typical day I would lose $350. Well, the solution to this problem was fairly simple, and the impact felt right away. I stopped trading between 10:30 and 1:15, and immediatly I was given a "raise". Three hundred and fifty dollars by itself might not sound like a huge number, but it adds up to a little over $85,000 per year. I actually got paid to do nothing! I never would have known that if I did not keep a log of my trades.

I also discovered that on days with a Fed announcement I lost, on average, about $3000. Again the solution was very simple: I stopped trading the Fed and almost immediatly was given a "raise" of about $12,000 per year. Pretty cool, I found two specific times that I should walk away and do nothing, and as a result I just "discovered" nearly $100,000 extra per year. I don't know about you, but to me that seems almost like free money.

These are just two examples out of many that I was able to use myself to increase my own success. I know for a fact that I would have never made it without my journal, and all it takes is a little effort in keeping it. I'll do another report later on exactly how to keep one.

Here are a couple more examples. A former student of mine Moe in Queens, NY discovered that in the first 15 minutes of the day, on average, he lost $500 and over the course of the rest of the day he made, on average, $350. Can you see how powerful of an impact not trading the first 15 minutes of the day had for Moe? It was the literal difference between success and failure, between paying the bills and keeping his "real job".

Again these are just a few examples, and I'm sure that many of you who do keep a trading diary can share your own. If I could point to one thing though that has been accountable for my success it would probably be a simple notebook. Start to keep that journal, because as I said I can state with near certainty that if your not keeping one, your not making money. If you are making money without keeping one, your not making nearly as much as you could be, I can say that with 100% positivity.

Good trading.

Things are different this time?

2008-12-27T14:23:00.000-08:00

Yep, they are! China is taking over the world, they have so many people they are obviously immune to the problems of global trade and slowdown. Do you remember just 6 to 9 months ago when that seemed to be the mantra of the "smart money"? Funny how things change. http://news.bbc.co.uk/2/hi/asia-pacific/7733499.stm

A critical life lesson

2008-12-26T10:08:00.001-08:00

I nearly had to die to learn this. One of the most terrible feelings in the world is to arrive at a long sought after financial goal and find that it pretty much doesnt mean anything. You go on the next day just as you had the day before. So many people think that they want the big house, the ferrari, the million $$ trading account and spare cash in the bank. They don't want any of those things in reality, rather they want the feelings they associate with those things. The thing is, if you can ID the feelings and find legit ways to generate them then the financial stuff comes pretty easily.

The Bernie Madoff Home Game is here!

2008-12-26T09:16:00.000-08:00

http://www.suitablyflip.com/suitably_flip/2008/12/the-bernie-madoff-home-game.html

$$$$ Days of Christmas

2008-12-25T20:03:00.000-08:00

As you might know I've been out of the trading educatioin world for some time due to illness. I wanted to come back wtih a splash and I think that the Christmas gift did just that. While the last is small (58members)the content is great. You would find any guru parting with anything even close for less then $1000, and that's assuming they have it. My best friend in the industry, a guy who's gut I usually trust told me it could easily have gone for $1000, but ohhhh no..father christmas put the funny sauce in my juice this morning and so I gave away a bunch of killer content for free. We will be keeping it up for the rest of the week and then it must be removed, but I hope you sure do enjoy it while its out there.

Little things big results

2008-12-23T09:09:00.000-08:00

Often it's small things that can have large effects on our bottom line. Here is an example which uses a trade I'm currently in. I shorted AAPL earlier this morning and stopped out, later it gave another entry and so I am now short AAPL again, this time from $86.80. My risk is $1.25 on this trade, and I see a strong area of support at $85 per share and then again around $80.00 per share. This type of setup has about a 50% chance (slightly less) of being profitable, but given the very favorable reward potential versus the risk potential this is a trade I would take all day long. My plan will be to take 25% of the gain off the table when/if AAPL reaches $85 per share, at that point I will adjust my stop out point to breakeven or better. The balance of the trade I will be taking off if it hits $80.00 per share. Lets look at how taking off some shares at $85 effects my outcome. I'm going to take 25% off if it hits that point. Assuming that the trade works out and goes to $80.00 I will make an average profit of $5.55 per share, or about 4 1/4 times more then my initial risk. Let's assume though that instead of taking off 25% at $85 my plan is to take 50% off. At that point making all of the same assumptions my average gain on the trade is reduced to $4.25 at closing, or about 3 1/4 times my initial risk. Still not bad, but not nearly as good.
The point of this post is not a discussion of "partialing", which is a subject half a book could be written about. It's not to suggest that you should take 1/2, 1/4, 1/3 or none off at these partialing areas, but simply to make you aware of the very real effect on your bottom line the choice you make has. Too many people do this randomly and decide in the heat of the moment how much to take off, this should not be done. Know in advance what your going to do.

wow

2008-12-23T04:47:00.000-08:00

http://tinyurl.com/a5amxh Investors in Madoff's fund who withdrew cash may be held liable for any gains or principle they removed and have to return it. This is very scare because it means if you had been a potential victim of a fraud, but for some reason had gotten your money out of there early you could now be held liable for that money. What happens if you have spent it? What if it's been put into another investment that has lost money? To me it does not look like the government cares (imagine that!). http://tinyurl.com/a5amxh A very scary story. Have a read.

Want a $1million + Net Worth? Watch this.

2008-12-22T08:20:00.000-08:00

http://www.hulu.com/watch/46487/the-david-susskind-show-how-to-become-a-millionaire#s-p1-so-i0

Dec 22nd Market Commentary

2008-12-22T04:26:00.001-08:00

So my sister got me one of those Easybuttons from Staples and I decided that I would give it a try this weekend. I decided that I was not going to do much, I'd rely on that Easybutton instead, and I'm sad to report nothing got done. Begads! Foiled again in my attempts to make something from while putting in nothing.

I wish there was an easy button, in the stock market and in life- but there just is not. So many traders, it seems, want to find that Easybutton were someone else does the work, but they keep the profits and can tell friends how much money they are taking "out of the market". These people tend to move from one expensive system to the next, from one newsletter to the next and one course to the next, always convinced that EasyMoney is just around the corner and that knowledge, experience and hard work in the stock market can be purchased for $5000, or $1000 or $500 or 3 easy installments of $19.95. Well, this weekend the easybutton didn't work for me, and even though its a nice fantasy to have, there is no easy button, either in life or the stock market. You simply have to put in the time to get the desired result.

Volume was much higher across the board on Friday with quadruple witching. The major indexes continued to have resistance in the area of the 50 day moving average on Friday as concerns about the rally build.
The amount of time that the indexes have spent under the moving average without being able to break higher is for me starting to be cause for concern. I have closed my long trade in the QQQQ and have now started to focus more on relative weakness setups instead of buying opportunities.

They were not very hard to find this weekend with a number of stocks showing poor strength over the last few weeks as the market rallied. Tip: Stocks that do not rally with the major indexes during a rally are often the names that see the largest declines when the market turns negative.

Names showing relative weakness include AAPL, MSFT, BA, BAC, IP, BNI and many others. On the upside about the only setup I found remotely interesting was in TSYS.

If you have any comments or questions please feel free to contact me.

A very good video

2008-12-21T21:16:00.000-08:00

http://thebullzandbearz.blogspot.com/

Do you want to become a millionare?

2008-12-20T21:36:00.001-08:00

This is a pretty interesting show, an episode from the David Susskind show on "How to become a millionare". This was back in 1983ish when a million dollars still was meaningful and the people who had a networth above $1million were pretty special, few and far between. Check it out. http://www.hulu.com/watch/46487/the...aire#s-p1-so-i0

The proof that they have been jacking off at the SEC all this time!

2008-12-20T08:00:00.001-08:00

Finally proof that those at the SEC have been jerking off on the job! http://tinyurl.com/4zljs5

This recession cant be real, I mean Web 2.0 is getting traffic...who needs profits????

2008-12-20T06:57:00.003-08:00

And who gives a damn if they can't make a profit no matter what. That's hardly the point, I mean the govt might just turn the printing presses on and do a Web 2.0 bailout. How can there be a recession when people keep going to free sites like crazy and those sites can't make any money! Obviously this is all fake. Guys like stocky have been right all along. What the hell are we thinking? Ok..well....maybe not.

Digg, one of the lead darlings of the Web 2.0 movement just released its financials. Horrible http://www.alleyinsider.com/2008/12/diggs-miserable-business

I really don't know what the hell is up with these people that they can't turn a profit with all the traffic they have, and the new technology etc...but they obviously don't. Web 2.0 is not a fad, it is the future of the Web and anyone who has a business and is not using Web 2.0 is going to be left behind, but these companies seem to be run by a Jenious with a capital J.

wealth and happyness

2008-12-18T22:12:00.000-08:00

Wealth and happyness really have nothing to do with money. All the studies prove that once you have about 50K a year no amount of extra money will make you happier. Happyness and wealth is having that thing that you want.Why do you want money? a big house? etc? It represents something to you, a feeling..and thats what you want. That is wealth. I plan on pontificating much more on this point later. It's been the biggest lesson of cancer.

also, im going to remove this stupid pop under thing. It's driving me nuts, but i have to figure out how.

Very interesting take on web 2.0

2008-12-17T16:19:00.000-08:00

http://finance.yahoo.com/tech-ticker/article/148141/Social-Networking-by-the-Billion?tickers=yhoo,ebay,%5Eixic,nws

Very interesting interview with one of the founders of Chinese Social Networking site FaceKoo about the future of social networking and how they are driving sales with Web 2.0

A new years message (early)

2008-12-17T09:02:00.000-08:00

Someone much wiser than me once said you can have anything you want in this life provided that you are truly willing to pay for it, but the price is rarely paid in dollars and cents.
With this being the New Year many people are taking stock of themselves and their lives. One of the things that I think everyone who wants to be successful should do is write down specifically what you would like to accomplish. Now you have to take it a few steps further. Identify how you are going to get their. What tools do you currently have at your disposal and how can you employ them to further yourself. What obstacles are standing in your way, and what must you do to overcome them? Very clearly in your minds eye see for yourself the success that you want to have, create it.
You will find this worth the effort.
For me it has been! When I was a young man dreaming of a better life for myself I could have never imagined the highs and lows I have gone through. But, along the way there have been losses along with the gains. I have lost friends because their lifestyles and goals did not mesh well with the ones I had for myself. I have lost social time with other friends and with my family. So, it is important for each person to look at what you truly want to become, and then honestly look at the price and decide if you can pay it. If you find that you can the journey will be long and hard, but in the end I think it is also wonderful. If you look at the cost of success in this business though and find that it is one you do not want to pay then I would urge you to stop. I know far too many people that look back on the time they spent trading and do not have happy memories, they look back on lost money, lost relationships and lost time. Time is something I have learned (the hard way) over the last few years is something very precious, it is one of very few resources that can never be replaced once lost.
I hope this post makes you think. Not just about your trading, but about life as we head into the new year. I plan to greatly expand upon it later, maybe even with a few videos. Taking this idea from start to finish has really been, for me, one of the most powerful things I have done for myself.

JUMP!!!!!

2008-12-17T06:14:00.001-08:00

YOU CANT BUY ME LOOOOOOOOVVEE!

2008-12-15T20:13:00.001-08:00

Interesting article, check it out. http://news.bbc.co.uk/2/hi/africa/3157570.stm

2008-12-15T20:07:00.000-08:00

I found this post on a trading message board and found it excellent and wanted to share it with you. I'm not the author.

You have but one good name in this world, and if you subject yourself to the temptations of money and fame at the expense of integrity, the dark side is unbelievably deep.

I'm sitting here trying to fathom the pain that his family, his sons, and his investors are feeling, and it is really impossible.

I had a conversation with Dr. Bryne two nights ago, and he told me something I have believed. These guys have opened up Pandora's box. The Wall Streeters never expected this to get this out of hand. They have destroyed millions of lives, trillions of dollars. The fear and hate that are building endanger all of us. And they have put our ability to make a living in this business at great peril.

Remember Thursday for the rest of your lives. What you do does effect others, and you have to live with that.

There are plenty of riches to be had as an honest man. Avail yourself of that path, and you can sit back, enjoy, counsel others, and hold your head high.

Bernie Madoff has been living in private fear and shame for a long time. He'll be dead soon. The stress will kill him, or he'll take his own life. Of course, there is always the possibility that someone, whose life he stole, will avenge that deed. I hope not. Enough lives are already destroyed.

WHOOPS!!

2008-12-15T19:46:00.000-08:00

http://seekingalpha.com/article/110586-jpmorgan-chase-poisoned-by-bear-s-5-000-counterparties?source=from_friend

PE Profits

2008-12-15T15:31:00.000-08:00

Here is the article I promised you in my email. It was too long to send via the Aweber email program that I have. In the future there are going to be a lot of lessons and videos that you can only get by being on my list. If you find this to be
useful please refer a friend and help them out too! As always I need your feedback too! The good, the bad, the ugly!

The Price to Earnings ratio is a simple measure that takes the price a stock is trading at over the year's EPS. As an example, if a stock is trading at $10.00 per share and has earnings of $1.00, its price to earnings ratio would be 10. As a general rule, short term traders, momentum investors and others are taught that the price to earnings ratio does not matter. I think that this can be a mistake, and the longer out your time frame goes the bigger that mistake can become.

Stocks with high price to earnings ratios are generally over owned and over loved by institutional investors; this can become particularly dangerous in a market route, such as we have seen over the last few weeks, when everyone heads for the same exit at the same time. Many times a stock with a low multiple is one that is not heavily owned yet for any number of reasons: it's average volume might be too small, its sales not high enough yet, market cap considerations and any number of other reasons.

The price of a stock basically can appreciate in one of two ways: EPS expansion and or PE expansion. If you can get both of them working in your favor, I tend to think of it as a form of leverage. Let me give you an example. Let's assume we have two stocks, I'm just going to call them A and B. Both stocks are trading at $20.00 per share and will experience EPS growth of 40% over the course of the next year. Stock A is heavily owned and trades with a PE of 25, earnings of $0.80 per share. Stock B has overall sales under $100 million so it is largely overlooked by the traditional players on The Street. As a result it only carries a Price to Earnings Multiple of 10, the over all EPS being $2.00 per share.

As stated above, over the course of the next year the EPS of both companies will expand by 40%. company A will now have EPS of $1.12 per share, while company B's will have grown to $2.80. As a result of Company B's continued growth, sales are now above $100 million and certain firms that have overlooked it in the past are now covering it with buy recommendations. This has resulted in more demand for the stock, pushing up the average daily volume which has brought more attention to it and so on. Everything has remained pretty much the same with company A. It now trades at $28.00 per share, based upon earnings growth, and has given a healthy 40% return to shareholders. However, because of the increased attention company B's price to earnings ratio has grown from 10 to 12, so now with its EPS of $2.80 the stock trades at $33.60 per share, a gain of 68% on the year.

Both companies have given shareholders superior returns, and most investors would have happy to have had either company in their portfolio. Company B though had more explosive potential though, the result of being an undiscovered name to most of the street. The examples and figures used above are obviously simplifications used for the sake of example. In real life, there are a number of factors that can lead to the Price to Earnings ratio of a stock being lower then that of its peers. Careful investigation as to reason for the low PE is needed, otherwise what looks like gold today could turn out to be nothing but fool's gold tomorrow.

It is worth noting that buying a stock simply for its low PE is probably more foolish than not buying one because of a high PE. There are a number of factors that can cause the stock to trade at a low multiple, some of them favorable to you, most not. It's important to learn how to sort the gold from the fools gold. In another article I will cover what traits to look for, and what traits to avoid, in stocks with a low PE. Until then I hope this have given you some food for thought and will help you head in a more profitable direction with your own trading.

New Video

2008-12-14T18:04:00.002-08:00

Hello Traders- I just got done making a new market update video for you. In it I go over the reasons that I think the market MIGHT be forming a buyable bottom here. This could be the time to finally get back into the market! Find out why by watching the video.
Brandon
PS. I really have enjoyed making the new videos for you guys again. Please give me any feedback that you may have, good or bad so that I can continue to improve them for you.

The Bottom is in!?

2008-12-14T18:04:00.001-08:00

the morning of my birthday

2008-12-14T16:12:00.001-08:00

This is pretty funny. Last week was my birthday so I was talking to my son Brandon in the morniung. Here is how the conversation went.

Good morning Number one (He hates being called "Little B" (because he is growing every day!!!) and he really does not like to be called "Junior" because "GRRRRRRR THATS NOT MY NAAAAAMMMMEEEE!!!!" STOMP STOMP STOMP!!! So anyway it starts off as "Good morning number one!" Me: "Why thank you kind sir!" Number2 (which is the nickname he gave to himself and seems to like) :"Uhmm well Happy Birthday!" Me: "Thank you again" Number2: "Uhmm...I bet you thirty two dollars I know how old you are today" So I thought about that and said "thirty two dollars eh". He he replies that yes, that's the amount he would like to bet. So, I tell him you know, had you come up with some number opposed to $32 maybe you could have tricked me into the taking the bet, like if you said $33 or something" Number TWO: "OHHHH SHOOOOOOOTTT.....can we do this over again?" Very cute. He's in first grade. Gotta love how they work.

Sept 17th Rally

2008-09-17T05:01:00.000-07:00

I've been very suprised to see the market down so little on the AIG news. I would have expected another 500 points, but the market seems more relieved to have it out of the way than it does scared that another one bit the dust. My sense here is that if the market can take out the high that it establishes in the first 15/45 minutes of the day there could be a good rally in place, although I would not be comfortable saying its "the bottom", just rather that its "a bottom".

The Very Rare and Dangerous Black Swan Formation is here.....run for them hills!!!!!!!!

2008-09-15T14:39:00.000-07:00

I wish I could claim to be the creative genius behind this, but alas it was originally created by "blackchip" over on elitetrader. Even though I'm not the evil genius behind this funny chart, I thought it was excellent, and has more educational value to it than most of what I find on the net. Now, unfortunatly with the Lehman mess the market might just fall apart, but I think that this "chart" very clearly illustrates the sillyness behind so much indicator and fancy pattern based Technical Analysis. Hope you get a good laugh from this.

FSYS Trade

2008-08-19T09:17:00.001-07:00

Every now and then my mind slips and it feels like 1999 to me and I just have to DAYTRADE, or at least feel like I am.
Whenever you read a book on Technical Analysis they tell you that you should use multiple timeframe analysis. That's all well good and true, but then no one really bothers to explain how you go about using that multiple time frame analysis, so your left with not too much more than you had when you picked up the book.
Today I bought Fuel System Solutions, which will allow me an excellent opportunity to show you how to properly use multiple time frames in your trading.
Lets first look at FSYS the company on a very basic level. This is company that manufactures components used convert cars to run on Natural Gas. Nothing is much hotter right now than energy, and alternative energy is all the rage, especially with the expectations of an Obama Administration. Not only is Fuel Systems in a good industry for the moment it's recent past shows that management has done a much better than average job of running the company. EPS growth has been in the several hundred percentage range for the last three quarters, and sales growth has also been growing in the mid to high double digits. The company maintains low debt, high insider ownership and a still relatively modest PE of 39 (modest given the growth rates it has shown, see my prior article on Price to Earnings Ratio's)
Now for the technical end of things. As you can see in this chart Fuel Solutions has maintained a strong uptrend for the last several months. This uptrend, a price movement consisting generally of higher highs. As a general rule I favor buying stocks in uptrends since it has been my experience that simply standing in front of a train and expecting it to stop because you are standing there is foolish, its much better to just get on and ride the thing. From 7/15 until 8/5 the stock formed a nice little basing pattern, breaking higher on modestly higher volume on the 6th just ahead of earnings. Not wanting to jump into a brand new position in a stock two days head of its earnings report I have had to be content to just watch. On the 8th FSYS reported good earnings and raised Wall Street's expectations about the coming quarters, which caused a sharp move higher.
After the breakout and then the sharp rally on the 8th the stock, in my estimation, needed to cool off a bit. The best ways for this to happen is either by a period of sideways, basing price movement like you see in FSYS from Mid July until Early August, or by retracing some of the gain, forming what we call a bullish flag. That is what FSYS has done, forming the high level flag between the 14th and today. This morning I came in with FSYS on my watch list, and right away it provided an entry opportunity, which you can see on the bottom, one minute, chart. This entry was from $56 per share and allowed a small initial stop loss to be placed under $55.50. The next setup occurred as the stock broke higher out of the first and then pulled back. My entry here occurred at $57.10 with my stop on the first potion raised to $56.50 and the stop on the new entry also placed there. I now have myself in a situation where I have a lot to gain, and nothing to lose.
Using multiple timeframes in this manner is truly, in my opinion, one of the best ways to lower risk. If you can find an intraday setup for a multiday or swing type position you can risk the smaller amount that is typically found on the intraday, daytrading setup, while having all of the upside potential of the larger timeframe to boost your profits.
A few times a week I stop have time to stop by Toni Hansen's tradingfrommainstreet.com chatroom, which is free on othernet, and allow traders to see what I am doing at the instant I do it. Today was one such occassion and traders in the room got to watch live as I gave the entries on FSYS.
Disclosure: I am long FSYS from an average price of $56.60, my stop is now under the intraday support at $57.50.

Altra Holdings, Inc (AIMC)

2008-08-17T15:58:00.000-07:00

Altra Holdings, Inc (NASDAQ: AIMC) manufactures a wide variety of power transmission and motion control products such as clutches and breaks, enclosed gear drives, engineered belt drive, couplings, engineered bearing assemblies and a variety of related products. The products are used in various high volume manufacturing processes as well as in elevators as well as commercial and residential lawnmowers.
As I have explained before my process starts with technical analysis. In the case of AIMC this has been a strong stock, refusing to decline, even during the bear phase the market has gone through most of this year. One of the strongest buying patterns is a long, sideways type price “basing” move, which we see has been forming in Altra since early May. The stock has been on my radar for a few months, and I think that it's now getting close to an entry.
Altra reported very solid second quarter results that beat estimates for its revenue and EPS numbers. This occurred despite overall deterioration of Industrial conditions in its primary North American market. Altra has a history of positive EPS surprises, which is something I like to see in a company. They are also seeing solid International growth for the product line, and its overall 7.3% internal growth is better than its peers. The company has been improving margins, which hit records this quarter, and it continues to introduce new products in new markets. All of this, along with the technical picture I presented above has me bullish on AIMC if it can close above $18.25 per share on above average volume.
This is a relatively unknown stock, with only five analysts covering it and and an average daily volume of around 250k shares. With a share price of under $25, all of these factors could be contributing to the lack of coverage even though AIMC has a history of strong EPS and Revenue growth, along with very solid ROI and Cash Flows. This lack of coverage can create risks as well as benefits to an investor. If your not used to small cap stocks of course you should go slowly with any relatively unknown name, but to me, these are the kind of names, much like AFAM (although AFAM had much better traits overall and I was more aggressive with that position than I will be with this one) which offer the potential of outsized returns.

Goldman Sachs

2008-08-17T14:43:00.001-07:00

Each weekend when I do my big search for stock market idea's my first search is by relative strength and weakness. I of course notice this during the week as well, but I try to really key in on names of stocks, sectors and groups on the weekend for further study.
On July 30th the market had what technicians refer to as a follow through day, which is simply a strong rally on heavy volume at least three days after a market bottom is put in. It should ideally occur between days five and seven, and although this one occurred on day ten, its still not something to ignore. In my case two things happen in when the follow through days occurs, the first and most important thing is that I get out of my shorts. This is important, because while a follow through day certainly is not a promise of a bottom, no market bottom of any significance has ever occurred without one. I next will look at what sectors and stocks are leading the move up. In the case of this most recent rally the leadership has primarily been in areas that had been gravely beaten down in the bear move, not a good sign, and some area's of healthcare and biotechnology. Very narrow leadership.
Since we are now at some fairly significant resistance on the major averages, both price and moving average, and the rally has hardly what I would consider convincing, my focus has turned back to the short side of things. Just as I looked at strong stocks like AFAM, JNJ, EZPW, AMED, WGOV and GTIV that had gone down less than the market did during its bearish phase, I'm now looking at stocks that have not rallied as much as the market on this move higher. That provides me with the starting place for further analysis.
One of the sacred darlings of Wall Street has to be Goldman Sachs (Nyse:GS). However, over the last several weeks as the market has rallied, including a lot of financial's, Goldman has been notably absent from the party. Not only has it failed to rally, its actually declined from a peak of $190 to its current $163 over the last few weeks. There is no doubt that Goldman operates one of the tightest ships on The Street, and the trading operations are second to none. However, I do not think that Goldman has the magic immunity pill to everything that's going on in the world. The core business is suffering, as is that of every other financial institution in America. Over the last several quarters the Trading Desk has been able to bail Goldman Sachs out of the trouble's that the rest of the operations would have created for the company. This is not something that I think is going to be accepted forever, and I don't see fresh places for Goldman to derive income at this point. Asia, led by China, has been melting down for several months prior to the Olympics, Europe's slowdown, led by housing, is going to be at least as bad as ours. I would not expect Goldman to be able to continue pulling rabbits out of its hat forever.
If you are adept at Options strategies I'm sure there are a few you can use. As I have only been able to lose money over the course of my career trading options I will be sticking to a straight equity short in Goldman Sachs. For all of the reasons listed above, if Goldman trades under $160 per share I will start to accumulate a short position in the stock.

2008-08-15T10:31:00.001-07:00

I just got done reading Trader Mark's article “The Last Days of the Long Investor” on seekingalpha.com, and while generally I've enjoyed his stuff and don't find too much to disagree with, in this case I have to disagree with a good portion of it.
One point I do agree with is that managed money is good work if you can get it. Even though sites like turnkeyhedgefund and others will let you start your very own fund from your mothers basement for $5000 its doubtful that you will get many investors, so its not the easy gig that some think it is. In the past raising money was about who you know, now its becoming more and more about who knows you.
The main point though is that the market has no logic, is dominated by quants from MIT (the same type of guys who cant come up with anything more creative to do in a job hunt than hang a feed me sign around the neck like a bum and hope someone has pity on them (http://www.bloomberg.com/apps/news?pid=20601109&sid=a6h1pur72rok&refer=home) and that maybe the entire world is going to hell in a hand basket. In stating that this has been a lost decade for buy and holders he acts as though its the only time that may have happened in history, when in fact its happened a few times before and its likely it will happen again in 50 or so years. In consistent dollar terms the DOW peaked at around 3100 in the mid 1960's and declined to 850 by 1981, a 72% decline during a 15 year period. If you think that the last 10 years have stunk, just imagine how people felt during that 15 year period. Not only did investors lose a bunch of money buying and holding during the entire period from the mid 60's to the early 80's the DOW did not recover its old highs until 1995, a 30 year period before breaking even after inflation. The idea that buying and holding stocks gives you some sort of constitutional right to make money is a silly one, bought and paid for by the mutual fund and brokerage industry, but untrue never the less.
I have no intention of giving away a cow here since I still sell milk, but there is still plenty of money to be made in the market. You have to be creative, you have to have your own plan and follow it, and you can not spend your time screaming that the market is being stupid while you are the last remaining vestige of sanity, but I expect that has always been the case. Obviously one trade does not prove anything, but I'd like to use one as an example of something that still does work, and at the same time by using only one trade I don't give away too many cows.
I started out as a technician, actually as a day trader at age 19 in 1996. This was a great time in the market and I thankfully made a lot of money, enough to learn how lucky, reckless and stupid I had been in making most of it and figure out how to really do things. I still start out with the technicals though, I think that relative strength is one of the best ways to look at stocks and groups of stocks. So with this in mind each weekend Anthony Tsung and I will look for stocks that have been outperforming the market or underperforming it. What I mean is that if the market is down, I look for stocks that went sideways or up, if the market is up, I'm building a list of stocks that went up more than the market did, and also a list of stocks that couldn't do anything. From this I have my research list. Now we have to work the list down, because simply buying a stock because its “strong” is sort of like taking morphine simply because it makes you feel good, in the short term you might get something out of it, but in the long term it just makes you sick.
Almost Family Inc (NASDAQ:AFAM) is a stock that had shown excellent relative strength while the market tanked. If you look at a Point and Figure chart or a bar chart you see a very nice long base, with $25 as a breakout point. This was the first thing that attracted me to AFAM. I next used my ThomsonOneAnalystic (anything is possible in America, if I can make enough to afford Thomson there is hope for the rest of humanity, trust me on that) and discovered that only three analysts covered the stock, and barely so at that. It also had less than 10% of its shares outstanding owned by banks and funds. This for a company with an EPS growth rate of nearly 50%, a return on equity of 25% and high insider ownership in a sector that stands to benefit from demographic trends. So, you have to ask yourself, “Why would this be”, normally the reason is that for some hidden reason the stock is really a piece of crap and you should stay miles away from it just like everyone else, but on occasion you find a gem, and AFAM was, but a couple of things kept the analysts and funds away, some of them could easily be changed, some of them could not.
One of the first books I read was Peter Lynch's “One up on Wall Street”, one of the things that stuck out and was interesting to me was all the reasons a fund might not be able to buy a perfectly good stock in a perfectly good company. When I decided to leave my technical only methods and explore the fundamentals this was a key thing in my mind, find stocks that for some reason, RIGHT NOW, Wall Street CAN NOT LOVE IT, they might be watching it and wanting like crazy to love it, but for some reason they CANT. In the case of AFAM you have a small flat (5.5million shares), and there is not much you can do about that. You also had a company that at $25 per share had a market value of $203 million. In my experience talking to analysts (my business partner Anthony used to be one at Merril) they typically don't like stocks under around $250million to $500million market cap unless they have an Ibanking relationship with them. For this reason alone a lot of the Street would be unable to buy AFAM because of their own rules, however once it went above those levels they would be free to do so. The stock price being under $25 is also something that some people find unattractive, but that's fixed the instant the stock breaks out, so you don't even have to worry about that one. Last years sales total was around $133 million, under the $150 to $250 million minimum a lot of people are comfortable with, but since AFAM continues to grow revenue pretty sharply on a quarter over quarter basis you can assume that wont be a problem for too long either.
I could go on and on with the six or seven (to add some confusion to the issue I'll say or ten too) other things we look at, but again I have milk to sell, and giving away cows does nothing to help me in that department. In any case, all is not lost, hard work, rigid analytic work, getting your hands dirty and digging is still a method that works very well, thank you very much.

Wachovia(WB) and the Financials

2008-07-22T15:46:00.000-07:00

In the book Street Smarts, Linda Raschke and Larry Connors talk about trading the news from page 131 to 147. They spend more time on the news than on any other situational type and for good reason.For my money news trades provide some of the easiest and most consistent profits of any setup out there. Most people will not agree with this, but that's because they do not trade the news correctly. Most of the time a person's logic works this way "Wow, XYZ has some great numbers, I'm buying". When XYZ starts to trade lower they dig in saying something like "Look at those idiots selling XYZ, don't they realize that the numbers were FREAKING GREAT!" and they buy some more. Trading in this manner is a way to almost gaurantee you won't be around long.

Today there was a great news trade opportunity in Wachovia, which I traded entered for my own and client accounts, as well as gave in Toni Hansen's free Othernet chatroom. Wachovia Reported horrible numbers last night, a loss of around $8.9 billion, and the stock gapped lower on the open with most traders probably thinking it was the start of yet another leg down in the financials. This would be the most logical guess, especially with the significant gap lower, however thats not what ultimatly happened. Wachovia did at first continue lower, but it quickly found its legs and then moved higher. Once it managed to trade over $13.00 per share WB was yelling pretty loudly that it wanted to move higher, the news be damned. I got greedy with my limit order and missed the first entry there, but as the day progressed Wachovia provided another opportunity for entry (stocks almost always offer another chance if your patient, this is another lesson that many traders do not ever learn and as a result go broke)when it based for a good part of the afternoon and then broke higher. I managed to get long shares of WB from 14.21 as it started to move higher. One of the great things about using this intraday entry to get into the swingtrade is that I'm able to use the lower daytrading stop to have the potential of a swingtrade. Wachovia went up much more than I had thought it would today, so I did something I do not often do, take partial profits on a position and daytrade. I got out of 1/3 of my position though at 16.77 and am fairly happy with the trade so far. I hope that the people in Toni's chatroom are also. If you have any questions about this trade or setup please feel free to ask.

July 18th

2008-07-18T05:57:00.001-07:00

As recently as Tuesday US Equity prices had fallen to two year lows and fear of further failures in the banking group had a lot of people fearful of what even worse times lay just around the next corner. People have been getting checks from the new IndyMac Federal Bank, however banks are not clearing the checks for long periods of time. Last night, however, I was watching the 10pm news on our local CBS affiliate and the newscasters were wondering out loud if the bear market was over, after all how could such a huge move occur if the underlying weakness was still there? It's tempting to write to them, letting them know that eight of the ten largest up days in the market resulted in nothing but losses for those who bought into them since they turned out to be nothing more then bear market rallies.
American equity markets put in solid across the board performance yesterday. The S&P500 and the Nasdsaq Composite both gained 1.2% for the day and the DOW, aided by powerful moves in AXP, BAC and JPM (who's gains made up nearly half of the entire DOW move) closed with a gain of 1.8%. With investor confidence somewhat returning on the heals of oils drop of over $10 per barrel in the last few weeks volume rose on both exchanges, up 14% on the NYSE and 10% on the Nasdsasq. Volume has been running above average now on the NYSE for over a week.
The last two days I have heard with a number of people who are upset with themselves for missing this rally, or not gaining as much from it as they thought they should. Nearly everyone seems to have convinced themselves that they should have been able to stand out and catch swords without getting hurt despite most experience saying otherwise. The worry seems to be that “the bottom” is in and “I missed it”. So what!? If this is truly “the bottom” (which I doubt, but that does not mean I can not be wrong) then there are going to be plenty of stocks that go on to produce stellar gains during the course of the move higher, and not only will there be plenty of stocks moving but you will have setups that present you with a positive reward to risk payoff. Even though looking back it's “easy” to pick out the bottom and say “I should have been in”, doing so in the real world and doing so in hindsight are two different things. Now I'm seeing people who have had bad years running around like headless chickens. It's natural to want to make up the losses by chasing momentum, but sadly your most likely to do by taking this approach is make certain that your equity and self-confidence both suffer greatly. Again, just because something is going up does not mean you should buy it. Certainly you can, but I CAN jump off a tall bridge in the middle of winter if I decided to do that, but the simple fact that I can does not mean I SHOULD. Same thing goes for chasing momentum.
I have been trading since 1996, since I was 21 years old some of the countries smartest and most wealthy individuals have trusted me to manage money for them. I've been trusted with this money because I've shown good judgment (although not good spelling) over time. I follow my rules and do not put capital at risk simply to have a position on, or because I feel bad about a missed move. I treat capital preservation as the single most important objective because I know for sure that I can't make money tomorrow if I blow up today, so during difficult market periods I have problem standing aside and waiting for better opportunities. I may not be the fastest runner on the field, but I won't take a nap in the middle of the race and I always make sure I can finish the race, usually in good time. Now, many people say “Well thats all well and good for you Brandon, your “rich” and can afford to sit in cash, waiting for the market to come to you”. That's a nice way to rationalize a trading addiction or the simple fear of missing a gain, but I can assure you that I would never have gotten the chance to get rich in the first place if I did not have a willingness to get out of the markets at certain times. Over time gains need to be made, and since people pay me well they expect not just gains, but superior ones as well. The most important aspect of doing that is capital preservation and following your rules.
So where does this leave me right now? There is no denying that the gains over the last few days have been spectacular, but the move down before it was also. I will continue to watch the market very carefully for a follow through day. I'll also be watching very closely the price and volume patterns that show themselves when the market has its first pullback from this move higher. If these things line up, then I'll go into the market more aggressively and be looking at leading names such as EZPW, CIR, MMSI, AFAM, MA, JBHT and many others that look like they do. At the same time I'm a bit like Ole Jolly Saint Nick, always making my list and checking it twice. In this case, as the market has rallied I've been paying extra close attention to former leaders like RIMM, AAPL, and GOOG that have not played along with the rally. A lot of leading commodities, both the physical commodity itself and many stocks effected by the prices of them have very weak over the last few days, several of them are in my opinion putting in important intermediate and possibly long term tops.
Any questions or comments feel free to email me brandonfredrickson1@gmail.com

Potential Bear Market Rally

2008-07-17T06:34:00.001-07:00

I used to make a pretty good living sharing hard won market lessons with other people, and though I'm no longer in that particular business I still do like sharing lessons I have learned. Here's one I hope none of you ever have to use: If you happen to be in a situation where you must see an oncologist and she says something is going to hurt a lot, BELIEVE HER! If she offers you pain medication BEFORE the painful procedure even starts, don't think that your doing yourself any favors by trying to be conservative on the pain meds!
Speaking of pain meds, how about the market huh? After falling below 11,000 on the DOW for the first time in a few years on Tuesday, yesterday the market did an about face. The small cap index was up nearly 3 ½ %, the Nasdaq gained over 3% while the DOW and the S&P500 both put in gains of just over 2 ½ % on the day. More spectacular were gains in airlines, which gained 25%, regional banks gained 17% and the beaten down financials put up a 12% on the index alone. Well's Fargo (WFC) was up 30% on earnings. Where did this come from? Pretty simply that markets do not go in one direction forever, and bounces in bear markets tend to be the most violent of all bounces. In fact 8 of the 10 largest up days ever in market history have occurred in the middle of bear markets.
Do I feel bad for missing out on a lot of the moves yesterday? Well I certainly wish I could have had today's WSJ at about 7:30am yesterday morning, but on what day is that not the case? Because neither I nor anyone else has the ability to forecast the future (hell I don't even know what I'm having for breakfast yet and its already 7am, I'm not going to beat myself up too much over. If you look at the charts of key stocks that rallied yesterday you can see that a lot of them are some of the most beaten down names in the market, and its hard to find a point to buy those. At what point during the 70% decline it has seen in the last several weeks do you step in and catching falling swords with a stock like Fannie Mae for example? I don't, and thats the only way I know how to stay profitable.
For me profits start with losses, specifically keeping them in check. I keep losses in check by following my rules. If I don't follow my rules it would have been very easy to jump into the market after the strong accumulation day that we saw on July 8th, but with in a day that moved gave way to the downside again. There is simply no gain in that for me. I have always thought that a managers true value is shown when markets are not easy, and you can see how well does the person running my money do at holding on to it while everyone else is giving it up. While Anthony and I have not produced huge gains this year, we are up, and actually would rank in the top 5% of managers this year so far. I'll take those results.
Now, all the pooh poohing above not withstanding we do have a POTENTIAL rally to keep an eye out for. I would consider yesterday to be day two of an attempted rally (Consult Investors Business Daily for the definition). I will be watching very closely for a follow through day in the next several days, and should that occur I will be a buyer. Over the last several letters I've published I've talked about down markets being the best time to isolate the very strongest names, and should we get a follow through day thats exactly when I will put that list to work. Even though I think it will be nothing more than a bear market rally, if its catchable following the rules I'd still like to catch it – bear market rallies are the strongest rallies of all in most cases.
I'll get you a pretty long list of stocks either this evening or over the weekend. Good trading.

FCN

2008-07-15T19:12:00.001-07:00

FTI Consulting (Nyse:FCN) provides litigation, forensic, restructuring, finance and economic consulting services. This is a group of stocks that have generally held up well during the resent market meltdown, and FCN is a leading stock in the group. You can see on the chart that its generally in an uptrend, making higher highs and lows. Right now its working on a cup type of pattern in an area of the prior highs, and has held up much better then the overall market the last few days as stock prices have fallen sharply. FTN's finances are strong, with EPS of 64% last quarter, 20% before that and 46% the prior quarter. In addition to strong EPS growth the company is also showing strong sales growth, which indicates that the EPS growth could continue. A return on equity of 13% shows a company that is well (though not spectacularly) run. Like CIR Institutional ownership is a little high, but the stock is showing some very good action and it should not be ignored. I'll be buying FCN if it moves above $73 on strong volume.

CIR

2008-07-15T17:16:00.000-07:00

Below this post you will find two charts, first is a standard Open, Low, High, Close (OLHC) or bar chart that many people are used to looking at. The second chart is the less commonly used, but I think at least as important, Point and Figure Chart. Point and Figure charts take into account only price, and it is plotted against certain points of movement. They can be excellent tools to shut out the noise and focus only on the trends and important breakouts.

First I will go over the charts, then the fundamentals of the stock. Lets look first at the chart directly below this post, title: CIR OLHC chart. The first point to notice is the obvious uptrend the stock has it place, that is a series of higher highs and lows. An uptrending stock is showing itself to be strong and capable of doing what buyers want it to do. The second important point is the two large gaps we see on the chart. Unfilled large gaps very often are seen in the markets very strongest names (www.brandonfredrickson.com/gaps.html). that go on to produce large gains. After the most recent gap Circor has traded in a sideways, basing manner for the past several days. This is also an idea pattern, not only after a gap, but also in light of recent market action. When a stock has a large gap up its a little bit like running a race, if you run the Boston Marathon today you are not likely to place well in another one you race in the next day. Likewise, stocks will do better if they have a slight period of sideways movement after the large gap.

The second chart, Circor P&F Chart shows a point a figure chart of Circor. As I stated earlier P&F charts are great for showing very clearly price movement only and taking a lot of noise out of the picture. We can see that CIR is a strong uptrending stock, one that has been moving up, basing, and then moving up again. It has recently cleared a long base with a powerful move to the upside and stands a decent chance of keeping its momentum.

When I look at stocks I start by looking at relative strenght, that is to say how is a given stock or group of stocks holding up versus the overall market. Thats why periods of significant weakness such as we have been seeing are often for me the most exciting times in the market, they give me a chance to see where the real leadership is at. Circor is a leading memeber of one of the markets strongest groups (Industrial Machinery). The company manufactures valves and control products. It has a superior track record of EPS growth, showing a 58% increase last quarter.

There are many good qualities to CIR, and I plan to purchase shares should it close at a new 52 week high, however there are some points of caution. First of all the stock has a large percentage of its outstanding shares owned by Banks and Funds. These groups tend to use the same risk managment parameters and often act as a herd, that means if bad news does hit CIR they will all hit the exits at the same time, potentially resulting in the stock losing value rapidly and blowing out stops. The next point of caution is that although EPS growth has been strong Sales growth has not been nearly in line with ESP growth, and EPS growth without sales growth tends to not be EPS growth that can continue.

That all said given the recent strength of this stock in the face of a terrible market it is one that is worth looking at, and as I said I will be taking a position in it upon a strong close at new 52 week highs.

CIR OLHC chart

2008-07-15T17:15:00.000-07:00

Circor P&F Chart

2008-07-15T17:14:00.001-07:00

July 15th

2008-07-15T16:32:00.000-07:00

American markets ended the day Tuesday with mixed results. The closed under 11,000 for the first time since July of 2006, it lost 92 points on the day, closing at 10,963. Meanwhile the S&P500 lost 13.39 points, closing at 1214.91 (a two year low), while the NASDAQ managed to close slightly higher, gaining 2.84 points, closing at 2215.71. Oil had a wild day, at one point futures were down nearly $10 per barrel, however lower oil prices could not ease the markets fears of a worsen situation in the financial markets as US banks start to close. Both exchanges saw a sharp increase in volume. Oil saw its largest decline in over 17 years.
A number of things are worth looking at right now. Chairman Cox of the SEC has announced that regulators plan to make it harder to short troubled financial's such as Fannie Mae, Freddie Mac, Lehman Brothers and Wachovia Bank. Mr. Cox told legislators that the SEC would issue an emergency order to stop “naked shorting” in important financial entities. It will be very interesting to see how the markets take this news. It could easily cause a sharp rebound in these names as shorts scramble to cover positions, yet at the same time it could also offer a shorting opportunity if this does not occur. A good rule to follow is this “That which should go up, had better”, because if it doe not its pretty surely going to go down. With this new rule coming into effect the most logical thing would be for the effected stocks to rally. If they do not then the SEC may learn the lesson the British learned trying to hold up the Pound over a decade ago against George Soro's and other Global Macro funds, the lesson being that the market is going to do what its going to do, regardless of what officials would like.
With the failure of Indy Mac bank many people are worried about their own banks and what the future may hold for accounts they hold. Many are worried they will lose accounts, and in some cases this fear is made worse by a poor understanding of the FDIC rules. First of all, if you have less than $100,000 in an FDIC insured bank you have nothing to worry about. Even if you have more, in some situations you still have nothing to worry about. For example a married couple can have $200,000 in a joint account and that will be insured for the entire amount. Each person can further more have a $100,000 account, bringing the total insured amount per bank up to $400,000 per married couple if the accounts are structured correctly. For any amount of money over $100,000 (or $200,000 for a joint account, $400,000 for joint and two single accounts) you will get back fifty cents on the dollar above the amount. As an example, if you have an individual account of $150,000 at IndyMac you should expect to get $125,000 back, the first $100k being fully insured, the $50,000 being covered at fifty percent. I hope this helps out as a few people have had questions about this.
Next, the dear old Fed is wanting to put “new” rules on the books that would actually require a lender to be sure a debtor has the ability to pay back the loan. It's an amazingly complex principle, I'm shocked that the government has figured it out this quickly! The only problem is that for the most part these rules are already in place, and the fact of the matter is that if anything the Fed needs to be making it easier to get loans right now rather than harder. We are in the middle of the worst real estate bust in history and most people are finding it impossible to get loans unless they have nearly perfect credit. It gets even worse if you want a jumbo, which nearly everyone living in coastal areas or a large metro area such as Boston, New York, San Fransisco, LA etc will have to get in order to buy a suitable home. Just another example of the brainiacs in DC making things so much better for the average American.
As I've been saying for some time the sharp decline in the market presents great opportunities for the astute. Leading stocks will hold up, showing better relative strength than peers during periods of market weakness. This gives us the best opportunity to isolate them from the dismal crowd. Right now there are a few stocks with superior fundamental and technicals showing up on my radar. Names include AFAM, CELG, AMED, MMSI, TRLG, PMFG, FCN, CIR and FORR. You must keep in mind that we are in the midst of earnings season, this can make risk higher. Also, keep in mind that stocks such as MMSI, for example, are well into breakout mode. In a stock like this tomorrow is not likely to be the time to buy, however as you see the stock rest by trading sideways or down slightly, then upticks from there are generally excellent entry points for traders. I'll put some charts up with details of the trade on a few of these later.
Brandon

American Healthcare

2008-06-15T11:46:00.000-07:00

I have a few thoughs on the state of Healthcare in America before I proceed again with the blog. Obviously I've been gone for some time. Today it is June 15th, I'm still in the Hospital, have been here since May 24th. On June 21st I had to have the lymph node between my leg and my crotch removed and it become infected first with strep, and then since I've been in the hospital I also contracted staff. Fun, fun! But, as much as people complain about Hospitals and insurance companies I've really not had a bad experiance with either of them. The doctors here have been great, and obviously care a great deal about about what they do. The nursing have been spectacular, and inspite of what Mike Moore would have everyone believe about Insurance companies mine (Blue Cross) has been great. Everything the doctors have wanted has been taken care of (7 MRI's, twice a day antibiotics that cost $800 each, 5 surgeries and over 3 weeks in the hospital) they have agreed to and paid for. I'm sure they regret taking me on as a client, but they have lived up to their end of the bargin in this particular case. Anyway, I should be out of the hospital sometime between between Monday and Wednesday. I'm feeling pretty good - have done a ton of research with Anthony over the last week or so, and hope to have this blog back up and running so that you are able to use it for relevent market commentary and short to intermediate term trading ideas.

May Day

2008-05-01T06:17:00.000-07:00

Sometime, long ago, before time was even timed I ticked off the wrong darned person. The worst thing is that this guy is still holding some kind of grudge after all this time. Back off man! I do see positive things coming from all this, I have a lot more empathy for those around me, and I realize for the first time since I was in 6th Grade that its not really money that makes the world go around but relationships. Anyway I'm up and out of the hospital. I had a pretty routine operation on Wednesday to remove a lymph node on my inner thigh. It all went well until the time came to “Clean the dressing”, unfortunate for my ever so often unfortunate body the dress (cotton) had coagulated and made a bond to a fairly important blood vein the shoots off the femoral artery, when I pulled at the cotton the blood was then broken. My bathroom looked like something out of the great horror show of all time. I decided to do what I could with it until the local clinic here open (cheaper than the ER and faster than the ER) in about 20 minutes. When I got to the clinic they called the Hospital and they chucked my merry ass down to the hospital. They always seem so cool and collected on TV, but in real life some are and some defiantly are not. In any case, I got some blood and stayed in the hospital a few days. They have 3 star meals and HGTV so what I can really complain about. This is really I think a great reminder though to keep an eye on what you don't see coming. This entire time I've been worried about cancer, and I was about 15 to 30 minutes from “bleeding out” ( I think that is the polite medical way to say you bleed to deal). It came from another direction. This applies in life and fiance equally, its the one you don't see coming that will take your wind way.
Also to hold your own life, and your vital relationships close to your heart, you don't have any idea when you will need them, and like I said above you have idea where it's coming from. Back in 1996 I had a brain surgery and the Docs and they Mayo Clinic had about a 60% chance of removing it, the other alternative was 100%, so I went to with sixty and made it out whole. I was nine-teen at the time. Then around 1998 of 1999 I sat on a nail and figured since Id had a tetnis shot I was fine (shows what you get for relying on me for medical advice) And now most recently this, but it was not cancer could have, should have and was actively working kill me Thursday, it was severe blood loss. I don't know how much of this it take as truth and also how much was me still being in shock, but the surgeon in the ER told me I probably had about 15/20 minutes of “good time” left, whatever that is. I'll have to track him down and ask.
The second point is that I really find myself feeling terrible to be agreeing with Barack Obama on anything. What do I agree with him on? The Fed Tax Holiday on gasoline is nothing but a scam. It's robbing Peter to pay Paul. The tax put on fuel is supposed to go to maintaining our roads and bridges. Well, ask the good people of Minneapolis how the project has gone over the last several years. Take way money and we will see more erosion of critical infrastructure. Not only that, but we will see a large pool of unemployed summer labor. A healthy portion of Americans Workforce is made up of construction crews who depend upon season a hefty part of this nations road work being done in the summer. In an already struggling economy, what do we do with these men and woman? I wish things could always be as cutsie and easy as the pols want you to think they are, but usually bleeding to death kills you before cancer. In this instance we need to address the core problem. So many things could be done even engineering wise before we have to star digging up ANWAR(which make no mistake, we will) and drilling off the west coast of Florida (and again we will) . Economy standards used to move higher every year, but then somehow subburn dad's thought they needed to look like farmers or contruction crew members and started buying picks, then all hell broke lose. At that time oil was under $10 per barrel. We in fact where giving tons of aid to those very seem middle eastern countries we now hate, the who's who through thick and thin (cept that one time so they could show off how buff their arms have gotten) have kept us with a good supply of oil, regardless of the economic hardship or benefit they got from doing so. So....Thats all that.
Just the Facts
S&P500 records a loss of 5.35 points, closing at 1385.59.
The Nasdaq lost 13.3 points, closing at 2412.8.
The Dow ended up closing the day down down 13.30 points, in spite of having been up nearly 180 points earlier.
Thats what we technically inclined traders would call an ugly reversal...more on that later.
The S&P600 (small cap) was down 1.18 points, closing at 378.90.
On the Nasdaq we saw 1457 issues advance on 785 milion shares, while 1460 issues rallied on more than 1.22 billion shares. 83 news where put in vs only 35, showing us that internals remain clearly negative in Nasdaqsville.
On the Nyse the volume numbers where not as pronounced, but still not good. We saw 1641 advancing issues on 651 million shares while the 1499 declining issues put in 684 miilion shares. New Highs led New Lows on the Nyse 53 to 23.
Yesterdays market action, as I mentioneed earlier is what we would normally term a downside correction day. For this to occur all you need is to have the major indexes up heavily going into the afternoon but for something to cause that gain to be reversed and brought into negative territory, and for that something to cause volume to be heavy. We had exacty that, and so the odds are that an important short to intermediate term trading low has been put in. I'd caution against getting too cocky with this though because in spite of itself some areas of the market are holding really well. Several names have been showing strong downside leadership the last few days/weeks as the market has been posotive. Among them MMM, MAS, NWS and KB. On the potential upside ITU had a massive breakout yesterday, as did PNRA (my favorite place to eat) and BRMN is worth watching as well.

2008-04-22T17:48:00.000-07:00

In any case, I've picked a hell of a week to hide out on my pitty pot, which is pretty much what I've been doing I guess. Have a lymph node on my inner thigh that is about twice the size of my thumb and hurts like a mother. I've been pretending it wasnt there for about 5 or 6 weeks, I thought my doctor was ready to strangle me when I finally told her, but she's just a little Thai lady. Anyway, so I go in for surgery tomorrow to have another nymho node taken out. I swear by the time this is all done I wont have any sex drive at all. It's a quick in and out thing, so i should be back by the end of the day whining, bitching, complaining..the usual.

Wednesday

2008-04-16T04:06:00.000-07:00

Just the Facts

The S&P500 gained 6.11 points, closing at 1334.43.

The Nasdaq gained 10.22 points, closing at 2286.04

The Small Cap S&P600 gained 2.86, closing at 365.53

Nasdaq Volume came in around 1.8 billion shares, substantially higher than on Monday.

NYSE Volume also increased, to around 1.14 billion shares. Most of the increase in volume on both exchanges occured later in the day after the markets had rebounded off lows, a bullish sign.

We saw 77 new Highs and 79 new Lows on the NYSE and 19 new highs alongside 174 new lows in the Nasdaq.

The Random Rants

Stocks started the day trading mostly lower until late morning/early afternoon buyers came in and bid the market up. It is worth noting that this movement to the upside occured on heavier volume then the prior moves to the downside. This tends to suggest more accumulation in a market than distribution. I know, This sucks and that sucks, and Food inflation is the worst it's been in 17 years and oil prices and gas prices are killing us and..and...and. In the big picture right now though, none of that matters. How do I know this? The market is telling me so, in fact it's telling all of us, rather loudly, that these numbers do not matter at this point. That's not to say that a bad economy with terrible fundamentals won't eventually catch up with the market and bring the entire thing down, thats for people smarter than me to figure out, but what I can see is that in the short term names are getting bid up and there seems to be more buying interest compaired to selling interest.

I've made the point very clear since earlier in the year that I do not think this is the best market to go out and try to accumulate massive profits, instead the order of the day is more along the lines of the preservation of capital. I still feel that way, have a heavy cash position and my accounts are at new high water marks. This has been done while taking very little market risk, and hiding out in the chicken coup an awful lot of the time. (If I start to strut around like a rooster you'll know why).

There are some good looking stocks out there, a couple of them we have picked up. Apache continues to produce gains since April 2nd, and Lindsay Corp broke out again from a new high level flag giving aggressive traders a buying opportunity. I'm watching CSX closely and should it move too much higher on any volume I will be picking up shares. Finally the Buckle (BKE) keeps showing good strength as it builds its flag, and any breakout is, in my opinion, a buying opportunity.

Finally I want to look at PVA, which is a stock that was mentioned in yesterdays post as a stock that might be setting up. While PVA did clear the high of its flag, the setup was negated on the gap, and I apologize to anyone who I have not made this more clear to earlier.

Gap rule is very simple. If any stock gaps up (or down) to produce a "setup" on the very first trade of the day, that is to be ignored. The stock must show additional strength in the move by breaking out above the high established in the first 30 minutes of the day. This one simple rule has saved me countless hundreds of thousands of dollars.

As mentioned yesterday Steel stocks continue to look pretty sharp. SCHN is forming a high level flag, while X looks like it has a ticket to $200. Other stocks such as MT, GGB and SUTR also are showing strength and should be watched closely and considered for buying opportunities on appopriate setups.

2008-04-15T05:29:00.000-07:00

http://www.nytimes.com/2008/04/15/business/worldbusiness/15food.html?ei=5065&en=9e715f242c497f48&ex=1208923200&partner=MYWAY&pagewanted=print

2008-04-15T05:22:00.000-07:00

Just the Facts
The S&P500 lost 4.51 points for the day, closing at 1328.32
The NASDAQ lost 14.42 points on the day, closing at 2275.82
The Small cap S&P600 was down 1.32, ending the day at 362.67.
Nasdaq Volume came in around 1.5 billion shares, with declining issues clearly in the lead. We saw 13 New Highs made and 166 New Lows made.
NYSE volume came in about 1.05 billion shares, declining issues beat out advancing issues on the NYSE as well. We saw 49 New Highs and 87 New Lows.

Random Rants and a few Rational Thoughts.

On March 20th the major market averages put in a follow through day. A follow through day is a pretty simple concept that everyone should be aware of. Briefly, a follow through days occurs when, four to seven days after a market puts in a bottom the indexes close significantly higher on significant volume. This tends to confirm that the prior bear phase has ended for the time being and its time for investors and trades to look for leading stocks in leading groups to buy. A follow through day, it's important to note, does not mean that a new leg up has begun, but no significant move to the upside has occurred without one.

So, on March 20th the market delivered us a FTD, but I gotta say it's not acted well at all. Typically after a follow through day I'd like to see new names breaking out of bases and leading the market into higher ground. At the very least I'd like to be seeing old names breaking into higher ground and carrying the market back to higher levels. We have seen old leaders re-establish themselves, especially Ags, Fertilizers and other commodity backed names. These types of names are likely to remain in a bull market until we realize how stupid it is to burn our food for energy while half the world starves (oops day I say that?) and the dollar stops its decline. To me the biggest problem with this rally has been the lack of participation at any real level by the financial stocks, I've never seen a meaningful rally begin without them coming out to the park to play as well, but with lingering fears over write downs in the Sub Prime situation, confidence in that group is likely some time away.

As I scanned the markets meager offers this morning and last night I have not been able to come up with very many groups or stocks to catch my eye. Like I said the Ags have their own little thing going on, but the air is getting pretty thin up there by now and we are just now starting to see the rumblings of backlash against biofuels. I have maintained very limited exposure to the market, remaining still around 80% in cash with my accounts at their high water mark currently. As one of my money management clients recently told me “You sure are not the most exciting guy around, but I sleep well when the market is going crazy knowing that you will take care of my money”.

A few stocks are worth mentioning for possible longs including LNN and CSX. Both of these I would only take as add on positions if I already owned them from the breakouts last week. APA and other oil stocks continue to put in superior performance and are likely to offer good buying opportunity on the first pullback so long as volume remains light and the decline orderly. PVA is a small oil and gas company that might be setting up here. The Buckle (BKE) is certainly one of the stronger names in retail land and I plan to pick up some of it myself should it break above the high of this flag its currently forming on the daily charts.

On the short side I only have a few names. I like IWM (small caps) as well as AUY should they break lower at this point. Should that happen I will be a seller of both of them.

2008-04-13T05:40:00.000-07:00

You'd think that when the CEO of a major corporation, especially one as importance as GE comes out and says "We are going to have great earnings, its going to be a blow" he wouldn't have worded it incorrectly and instead said "Our earnings are going to blow", but that's just what he did. Jack Welsh, Immulet is not.

S&P500 was down 27.72 points (2.04%) and closed at 1332.83

The NASAQ triggered a trap, closing down 61.46 points (2.61%) and closed at 2290.24

S&P600 Small Cap Index also had a difficult day losing 9.44 points (2.53%) closing at 363.99

NASDAQ Volume was around 1.8billion shares, a decent dip from yesterday
We saw 10 New Highs and 122 New Lows on the NASDQ
NYSE Volume also dropped slightly to 1.17 Billion Share
The Big Board saw 24 New Highs and 50 new lows.

As I stated at the start of today's commentary General Electric's terrible earnings surprise yesterday thew the market into fits. The CEO of a major corporation does not just come out and promise blowout numbers then screw the pooch when the actual numbers come out. This caused a lot of worry, especially when that particular company is seen as being a barometer to the overall economy. Rising oil prices. I'm going to give today a pass because of volume, but also due to the fact that leading stocks held up pretty well overall, and we had a situation where they could have very easily fallen apart, but I'd say overall its held decently.

My involved in the market has remained very tepid. I just read the other day that the average mutual fund is down around 14% for the year and the average hedge fund over 10%. All year I have really been fretting the fact that maybe my clients would be unhappy with me for having such a large cash position (we've averaged about 80% thus far for 2008) and not producing huge gains, but all have expressed great pleasure with what I'm doing. One of the key things to trading, which I learned long ago, is simply not to go broke, nor allow yourself the opportunity to suffer a drawdown you can not recover from. This is the most important thing, everything else really is secondary. There will come times ago where you can grab 20% + quarterly returns, but for me right now is one of them, so I'm taking very few but carefully selected trades, most of which I have explained here on my blog.

Apache

2008-04-13T00:41:00.000-07:00

Point and Figure charts are one of my favorite ways of getting a good look at a stock or index. By the very nature of how they are setup most of the noise is taken out of the picture and you get a good view of what the price action on a stock is. I always start off looking at my bar charts (Most people use Candlesticks now I suppose, but the data is the same in either case, it really comes down to visual preferance between the two) and that brings me to the list of names I might like to be looking into further.

The commodity related groups have been in a bull market for a long time now, led by Ags and Fertilizers, Oil and Gas, Coal and anyplace else you can think of that we are suffering from inflation due to the US Peso's (err I mean Dollar) fall from grace. Apache gave me my entry single on March 27th and I paid an average of $121.04per share (the breakout point was above $120.65 to give an idea how much I was willing to "chase" in this particular case. On Friday I sold half of my shares as APA declined under $133, but really this has been a pretty orderly decline in a strong sector, so I would anticipate buying them back at some point and holding onto APA for larger and longer term profits.

DELL Computer Trade

2008-04-13T00:36:00.000-07:00

I just wanted to put up this chart example of DELL for you guys to look at and get something of an idea of what I'm doing and looking for. All of my scanning starts out with technical analysis, and from that I build further lists based upon additional fundamental and technical criteria. For whatever reason though I do find that I'm not as profitable on the short side, especially when its with individual stocks, so the majority of my shorts these days (68% to be exact) are in ETF's not a single stock. The shorts are almost always at least 90% technically based, which is a bias I would never give towards T/A on the buy side. In any even, attatched is a daily chart of Dell Computer showing the daily chart for the past several months. The thing that to me stood out immediatly on DELL is that long period of sideways movement, a base for lack of a better word. It continued to make this base, trading sideways, even when the overal market would rally. We'd get a market rally and good ole DELL just sat on its butt and did nothing. This is a strong cue to a trader that he/she should put a stock on their christmas list and be looking for opportunity. I finally took my on April 4th @ $19.76 per share. Obviously this hasnt turned into a huge winner yet, but for a stock that I was able to get into risking about 30 cents, I'll take that every day and sunday. Any questions feel free to ask.

April 11

2008-04-11T06:11:00.000-07:00

Nasdaq Composite: +29.27 to close out at 2351.70
S&P600 (Smallcap Index) +3.53, closing at 373.53
Nasdaq Market Volume of 2.13 Billion shares, an increase of 17% vs. Wednesday
NYSE Market Volume of 1.228 Billion shares, up 8%.

New Highs on the NYSE came in at 37 vs. 40 new lows, although over in Nasdaq'svill the figure was not so pretty with 12 new highs being made and 93 new highs being made.

Markets opened on Thursday with a good deal of bad news, certainly enough that even just one week ago the indexes would have been sent tumbling. Oil is back over $110 per barrel, and it looks likely to settle in the $80 to $120 range for quit some time to come. UPS came out with bad news, and predictably they placed the blame right at the foot of higher energy costs. This did lead to a good number of Transportation stocks, both Truckers and Rails having a less then stellar day. Novellus (Nasdaq: NVLS) came out and said things are getting worse with new end in sight: What did the broad based semi-conductor do? It rallied, a decent rally even..this coming from one of the markets weakest overall sectors as of late. The Dollar is crashing and CNBC has even started to bring people on the network to remind us all how bad the great depression was ( I remember the great depression too, I once told my mom I didnt have to eat the Sh** she cooked, and so I was grounded to my bedroom for 10 days with nothing in there but a book, a pencil and paper...Now THAT is the depression!) and that the next one is just around the corner. We can of course take relief in the fact that the Great Depression Guru's CNBC keeps bringing out are the same idiots who have stayed bearish since the 1907 Financial meltdown almost destroyed American's young financial system.

So, in a nutshell here is what we see: The market is getting hammered, I mean pounded like my older brothers used to pound me, every single day with this company or groups bad news, or this jackass self important idiot in Washington thinking he's gonna fix the system. Overall the market has had very little but bad news through its way, but somehow it has managed to hold together very well: Not that it has gone up much, but most important is that it has not really gone down at all. A weak market, or even an average market, would have been beaten silly buy all this news, yet here we are. Now, I know a lot of people like to argue with the market: “You idiots, can't you see that all the numbers are coming out bad? Cant you see that the Fed has lost control of their mandate and they are printing dollars like they are Reichmarc's. Can't you see? You people are fools!!!”. Now you may ask how I'm so familiar with that psychosis, and the truthful answer is that I've been afflicted by it myself In the past.

Right now though I think that the market is speaking to us, and hat it might be saying is that its stronger than every one things it is. A few stocks you may want to watch on the long side LUV, RIMM, RIO, HAL (only on a pullback), CHK, EWZ, BA, PCU. The next group are all oils and steel stocks which need to pullback first in order to get a decent entry: APA (A note of disclosure I was in Toni Hansen's Free Mainstreet chatroom on April 2nd , gave the idea to the group and took it myself. I'm still long some APA from $120.35, in this case I will be looking to add exposure rather then to take on new exposure with this stock, in any even a pullback will present a nice opportunity IMO). Also on the list of stocks needing pullbacks NBL, MT, X. On the short side of the market there are fewer setups then I had thought we might have, but in particular WM, SIVA, PFE, GM and RF.

Also, please note that on the right hand side of my blog near the top I've added several RSS feeds so that you can be alerted as soon as I post something new. As always if you have any comments or questions please let me know.

Thats what you get for thinking

2008-04-10T08:50:00.000-07:00

My grandfather was great with sayings. "Your digging yourself a hole you cant get out of, you better through that shovel down" he'd say, or "That aligator mouth of yours is going to get your tadpole ass in some trouble kiddo" and his favorite "Thats what you get for thinking!"

Well sometimes Gramps old advice is relevent to me in the market. Today I'd probably have to pick "Thats what you get for thinking". The majority of my longs are going down, my shorts are going up. The great thing though is that I still think the rally here is suspect, my own idea is that it will turn out to be not much more than a good sized rally in a bear market. These certainly offer trading opportunities, but not nearly as many or as good as a full on bull market would. For the time being I'm barely invested and sitting heavy in cash. Trying not to overthink things, I'd hate for Gramps to have to yell @ me from the grave.

April 10th

2008-04-10T05:19:00.000-07:00

The markets started off with a bit of a double whammy today with higher oil and commodity costs as well as poor news from UPS which carried over to other Transportation names. The Retail tracking indexes hit the top of their most recent ranges and backed off from there, bringing those stocks lower. Likewise Financial groups had a hard day as well. Certainly this is not the type of market action you want to see if you are long. In fact, even though the DOW was only down 50 points for the day, the underlying action was much worse than the numbers on the index would have you think. Up/Down Volume was heavily in favor of the downside. The only area's retaining strength seem to be commodity and commodity related markets.
The Dow closed down 49.44 points for the day, settling at 12527, while the S&P500 was off by 11.05, closing at 1354.49. The Nasdaq closed down over 1%, losing 26.64 points, coming to rest at 2322.12. Smallcap stocks though took the worst of it, the S&P600 losing nearly 2% on day, losing 7.03 points and closing at 369.9. Volume was significantly higher on the Nasdaq than the prior day, up nearly 12% for the day. Over on the NYSE volume also rose, but not as much, climbing about 2% above Wednesday's levels. Yesterday marked a distribution day for the Nasdaq, the second such day since the rally was confirmed on March 20th. This is a pretty high number of them for the market to be having so soon after the FTD, not to mention that as stated its hard to find any real leadership outside the commodities and related areas. My own personal opinion would be that at best the market is seriously strained right now, and in a worst case scenario its backed to the chicken coup for chicken little as the bear market resumes.
There are a few stocks out there worth having a look at, the majority of them are on the short side. We did very well with the breakout from April 2nd in Apache Corp (NYSE: APA), with my own average entry point being 120.35. I will be watching it closely on any pullback to see if an opportunity presents itself to get bigger in this clear leaders. Lindsay Corp. (NYSE: LNN) has also been a stellar performance generator for me since the April 1st entry of 103.86. I was able to get into this one on a nice daytrading setup which significantly reduced my overall risk, but I slightly mismanaged the trade, getting out with a profit, but before I probably should have done so.

Now in the Brandon is a Financial genius we simply look back to yesterdays newsletter where I noted that I thought the Ag groups might be topping out and advocated a spread, DBA short and MOO long. It's just such a wonderful feeling when your longs go down and your shorts go up. Probably the market teaching me a lesson about trying to be too cute with things. Simplicity almost always works better.

As I said at the onset of today's report yesterday's market action was much worse then that of a down 50 point's DOW Day. Plenty of stocks and sectors are looking like the south side of a north bound donkey, while very few outside of the commodities and agriculture have much to write home to mom about. On the short side we have plenty of stocks to look at. Wendy's (NYSE: WEN) has over the course of the last several months been the picture perfect example of both a basing stock and of a stock that has a lot of relative weakness. Why? Well, during the entire time that the market did rally WEN was never even able to attempt to breakout of the channel its in. It has remained a dog for the entire time the market was offering buying opportunity and should the market turn lower I'd expect a name like WEN to be a clear leader. Wendy's is very similar to the setup we have seen in DELL, which I shorted on April 4th. In the troubled financial's sector I think that stocks like BAC, ZION, CORS and LM should certainly be on your radar as names worth following and potentially trading as well. One final stock I will give you to look at is Casey's General Stores (NASDAQ: CASY). The setup in CASY is actually pretty similar to the one in WEN, this simply being a stock that, even when the market did give it an opportunity to get a bid during the rally it could still not get out of its own way and remains trading near the lows. A break lower will trigger a short setup in this stock.

April 9

2008-04-09T05:00:00.000-07:00

Despite a drubing of bad news the major US market indexes managed to put in relatively good performance. Led off by Alcoa several other stocks reported earnings under pressure currently and for the foreseeable future. Then the International Monetary Fund got in on the game, noting that Global Markets, particular American Financial Markets, remain under considerable strain. They stated that banks are likely sitting on nearly $1TRILLION in credit losses. But wait, wait, there's more fun to come. Later in the day the Fed minutes came out, and in that the wise men at the Fed mused about a severe and protracted downtrend in the US Economy over the coming year. All in all the news was pretty ugly. If I had not seen the markets action myself and some-one had just told me all of these things came out, I'd be expecting to see a several hundred point down move in the market. However, Mr. Market does not agree with my assessment at this time, and its better to be riding his coattails than standing in front of the avalanche.
This is a key principle that is responsible for a HUGE portion of the success I have enjoyed over the last 10 years, and its very simple. That which should go up, better go up. That which should go down, had better go down. If everything is terribly bearish but the markets continue to move higher, its not a sign of “idiots who dont understand how bad things are”, its a sign that the news that's come out has already been baked into the cake and the market does not mind what its seeing.

So, our markets. The Nasdaq closed down 16.07 points to 2348.76. This was on light volume, my main worry here is that we saw only 15 new Nasdaq Highs Vs 64 new Nasdaq lows. This goes right along with the theme I've been discussing that its been pretty hard to find quality setups out there. Declining issues lead Advancing issues slightly, 1678 to 1226. The more broadly based S&P500 lost 7 points, closing at 1365.54. Thirty seven new highs were made on the NYSE, while only 19 new lows appeared. Declining issues still lead advancing issues by a ratio of 1816 to 1325, but again we had a pullback on pretty tepid volume, so this is not something I'm going to spend a lot of time worrying about.

I generally like to have some trading idea's in here for you all, but as of late they have been few and far between even with a volatile market. Only a few stocks are really standing out to me at this time. In the agriculture arena the DBA looks like its putting in a decent top and could be shorted. I'm considering that along with a buy in the MOO to hedge myself a bit until a clear direction shows itself in the group.

The financial group continues to look like the south end of a north bound donkey, and this is of major concern because I have never seen a meaningful rally without this key groups participation. One stock that is making a nice base and looks ready to be coming out of it is MA. We purchased Visa the other day and already have nice gains on that, and MA is looking pretty good at this point. Oil stocks have been fairly strong of late as well, but I think we will want to wait for a pullback in them as they are up in the thin air right now. In Big Cap land IBM has held up nicely and looks ready for a decent run if it can break this base its in right now.

TUP Trade. March 31st to April 3rd

2008-04-03T20:27:00.000-07:00

The prior two posts show a daily and intraday chart for Tupperware Brands (TUP) which I purchased on March 31st for an average price of $38.68 per share and again on April 1st for and average price of $39.77. I ended up selling it today near the open @ and average price of $40.93. Overall this was a nice, profitable trade, though the length of time I was able to stay with the stock before my trailing stops hit was less than I'd like to see. The markets right now though are anything but a sure bet, so I'm keeping everything on a very tight leash.
I started my life in the markets as a daytrader. My first dream was to become a pit trader in Chicago's Ag markets, but as technology progressed it became fairly evident that the days of the pit were numbered. I did come across a site though one evening about some new fangled thing called "Daytrading Stocks" and being a "SOES Bandit". The idea was that you could buy at the bid and sell at the ask. EUREKA!!!! Thats exactly the edge I wanted to have in the pits, so I contributed my money to the market god of tuition over the course of several months.
Eventually I learned that short term trading in the volatile markets of the late 90's could indeed be very profitable, but holding onto a stock for more than the simple bid/ask spread was the only way for me to become profitable. At first my approach was 100% technical, and to this day T/A and risk/money managment remain by far my better skills.

As time progressed I became more and more involved in managing other peoples money, and less involved in education. My style evolved into one that included both Technical and Fundamental criteria's, and generally a timeframe that is measured in a timeframe of weeks and often months. As I said earlier though the markets right now are not exactly in prime condition, so I'm keeping everything very close to the vest.

The setups that I got in TUP is by far, in my opinion, the best way to get into swing/position trades. I love nothing more than to have a daytrade entry that allows me to get in for less risk, but hold on for the potential gains of a swingtrade or position trade. You can see in the case of TUP that several months ago it had a very powerful move to the upside, then as the overall markets collapsed TUP held itself together fairly well. This is the very definition of relative strength, which is in my opinion the only technical tool that provides consistent superior returns. So, we now basically have the daily chart covered. Once I have isolated a daily chart that I like I go to work on the fundamentals, reading the annual reports, looking at the data provided by daily graphs and occassionally having Anthony call investor relations if I plan to hold onto a stock for a long period of time.

I was very pleased with the technical condition of TUP, given that it performed so well during the markets snit fit. Aside from a very high debt load, the fundamentals are also pretty appealing. The stock has a relatively low Price to Earnings Ratio, its EPS rating is 87 according to IBD, which means that its done a better job at growing EPS than 87% of all the stocks in the market over the last several quarters. Last quarter the stock saw EPS increase by 26%, just over the 25%+ that I like to ideally see. One thing I also liked is that its Revenue growth is fairly consistent with its EPS growh, so I dont have to worry too much that the growth is manufactured and not organic.

Now the intraday charts. As I said, the best situation you can find yourself in is to have a potential swingtrade or position trade that you are able to get a daytrading type entry on. The reason for this is simply that you have to risk much less when placing your stop loss on an intraday setup than you do using the daily. The downside of this is a slight increase in the number of stop outs you will have, but you simply need to be willing to get back in if the stock/market signals to you that this is the thing to do.

You can see that the first breakout entry occured late in the day on the 31st, and the second one around mid day on April 1st. Both of these daytrade entries allowed me to enter the stock with very low initial risk, and also to be moving my stops up fairly aggressively as well. On my first entry my risk was about 20 cents, and on the second it was around 35 cents. For this very small risk I was able to close the trade out with an average gain of $1.89 per share, which works out to a very nice risk/reward tradeoff.

Not every trade presents the opportunity to get into a longer term idea on a short term setup, but those that do should never be ignored as they can add substantially to your bottom line.
If you have any questions please feel free to ask away.

LNN Specifics

2008-04-03T05:15:00.000-07:00

Attatched you will find a chart of Lindsay Corp which trades on the NYSE under the ticker Symbol LNN. Lindsey manufactures self propelled irrigation systems for the global agriculture industry. This is a group that, obviously, as world populations continue to grow, and the ranks of the middle class explode, is a very in depend group and area. When I look for a stock to buy or sell I always start off with a chart. For the first six and a half years of my trading career I was a 100% technical trader, and while I now incorperate a lot of fundamental analysis (Anthony) into what I do, T/A remains by far my strongest skill. Each evening I will download TC2000 data onto my computer and scan through the 2000/2500 most actively traded issues of the day. This gives me a good broad look at the market, something you wont get looking at only a few setup based scanned patterns, or even by looking at the indexes themselves. What I'm always looking for is relative strength in an upmarket and relative weakness in a down market. Once I have isolated that I start watching for patterns to show up that give me clues about what a stock might be doing. We can see here on LNN that on March 19th it had a HUGE up gap. That gap was not filled, which is very important. Most gaps try to fill in, those that do not often represent the very strongest names in the market. A few days after its large gap LNN did what most stocks will do in this type of situation and it rested. Stocks can rest in a variety of ways, they can trade sideways, or slightly down (such as LNN did) forming a flag. This high level and very tight flag that LNN formed is one of the very strongest patterns you are likely to see. After I look at the chart I want to have a basic look at the fundamentals. In this case I see that LNN is part of an industry that is having a global expansion due to fundamental shifts in world population trends that are likely to continue. The stock has had solid earnings and revenue growth going back the last three quarters. The most recent qtr saw EPS increase by 276%, which is well above the 25% I like to see. Not only is EPS growing nicely but this is a company with very little debt, decent cashflow and a respectable 12% return on Equity. So, when I combine these things with the technical I have a picture I like IF the stock confirms my opinion is a valid one. For me the only way for a stock to prove its validity is to trigger an entry. In the case of LNN I had my buy order placed above 103.50 and had an average entry of 104.11. In more "ordinary" market conditions I'd be inclined to give a stock like this a lot of room to move around once I got in, but in the case of LNN that was not the case. My first concern came about on the very day I bought the stock in that volume was not all that heavy. Yesterday the stock started off very strong, but pretty quickly turned to the downside and triggered my trialing stop loss around 109.50.

LNN Trade

2008-04-03T05:14:00.001-07:00

april3

2008-04-03T04:35:00.001-07:00

Yesterday the market did a pretty good job of digesting the gains from the large moves that occurred on Wednesday. There was not a whole lot of action, though the general trend was lower. The NASDAQ lost 1.35 points to 2361.4, the S&P500 was off 2.65 points to 1367.53 while the Dow Jones Industrials lost 45.36 points and closed at 12,609. Volume was light across the board, which is what you want to see in an uptrend. The ideal pattern is up days on heavier volume and down days on lighter volume. So long as we see this I will stay cautiously optimistic about the market going forward.

April 2

2008-04-02T04:54:00.001-07:00

On Tuesday, for the first time in awhile, the financial issues jumped into the drivers seat on a rally. Indexes ended the day much higher across the board. The Nasdaq Composite jumped 83.65 points (a gain of 3.67%) and closed at 2362.75. The more broadly based S&P500 rose 47.48 points (3.59%), closing at 1370.18, while the Small Cap S&P600 Index rallied a strong 3.27%. Not only did we see large gains across the board, we saw some leadership names appear, which has been lacking on prior rally attempts, and we saw volume jump across the board. This should be seen as nothing but a bullish follow through day to the upside. It's important to note that no significant rally has ever taken place with out a follow through day, although a follow through day in and of itself does not always lead to a sustained rally. As we have seen over the last several weeks upside follow through days have quickly been followed by distribution on heavy volume, so, I'd say caution is still somewhat in order, but I will certainly not be sitting 70 to 90% in cash anymore. All in all, I must say it's not a bad start to the second quarter, especially after the drubbings of the first.
Today I started building positions in LNN (I wish volume had been better), ISRG which gave a great intraday entry point that I will cover in another article this evening, TUP (again I wish it had more volume behind it, but I'll also be doing an article on this trade for your educational enjoyments), OI and CSX. I've owned AMPH for some time, but it's a fairly low volume name so I have not followed it closely here. It would appear that for the time being we are “out of the woods” so to speak in terms of the downside in the market. Still play a bit cautiously though because if this is truly “the” bottom there will be plenty of opportunities to get on board the trend.

March 31

2008-03-30T10:46:00.001-07:00

I want to be bullish. I terribly want to believe with rational cause that everything is going to be fine and the markets will see new highs soon, or at the very least that some decent and important sectors will. Much to my displeasure though, I cant say that with a straight face. We had a nice follow through day on the 20th with high volume and nice price action in all major indexes. That would be the good news I suppose. The bad news is that there where very few strong stocks that actually partook in that rally, new names breaking out of bases that could provide us with leadership and the like. Worse still it's only taken 4 days for a negative distribution day on heavy volume to occur after the follow through day to the upside. Important sectors such as the financials continue to look rather putrid, and the same could be said of retailers, semicondutors and utilities. Even the Agriculture related groups are starting to show some signs of strain. Not exactly the pretty picture you'd have in mind for the market to be showing right after a follow through day to the upside off a bottom. And, did I mention I really wanted to be bullish?
Because I wanted to be bullish I decided to look at a lot of stocks this weekend, hoping I could find some gem hidden someplace that had so far escaped my eye. No dice! I looked at the 2887 most heavily traded issues on the NYSE, Nasdaq and AMEX (yes all of them) before I gave up in in disgust. For all the looking I did, I was able to find exactly nine, yep you read it correctly NINE stocks that I thought had decent charts and management, enough so that if maybe the market would cooperate I'd be willing to put some of my own and my clients hard earned money into them. On the other hand, I had three pages worth of stocks that looked mighty fine to short, forty four that look excellent. Steel stocks and some oil companies look good (some oil companies also look terrible though). Horay for the incredibly shrinking dollar?!?!
So, where do we go from here? I dunno, a bar with good drinks maybe? About the only good thing I can think of to say about Friday was that the volume was the lowest of the year, but that's not the most unusual thing in the world to have happen after a heavy volume distribution day such as we saw on Thursday.
What to do, what to do? Well if your like me your picking up your toys and going home. My oldest brother is 6-5 and over 200lbs, I learned a long time ago that big kids who want to whop your butt have no problem doing so, and the only recourse you really have is hiding out with mom. So, my money, my clients money is basically still sitting in cash. I'm still working on getting some positive return out of the market. The accounts remain at their high water mark, but there is not much upside movement going on for us. The good news I suppose is that there is no downside movement which should make it easier for me to get paid when things do turn around and opportunities present themselves, which will happen.

Hillary is Only Human ya know

2008-03-25T15:46:00.001-07:00

It's been a bit of time since I've posted here. I've become pretty bullish which I'll explain later on this evening or early tomorrow morning. In the mean time I will give you some humor.

When confronted with her lies about being under fire in Bosnia in the mid 90's,
Clinton told reporters in Pennsylvania on Tuesday: "So I made a mistake. That happens. It shows I'm human, which for some people is a revelation."

Now, I dont know about ya'll, but I've never been fired on by anything but my brother with his BB gun after my cousin and I sunk him with our BB guns in his blow up dingy where he was hanging out with his girlfriend in the shit slew. I was scared for my life, not just the gun...I was also afraid me might tear me apart limb by limb. He knew my only hope was either my mom or my gramma, so he kept the paths to them pretty well covered in his field of fire. In any case, you can damn well bet if I'd ever in my life had to be ducking sniper fire and run my ass to the armoured car Id remember the time and fucking place. I guess I just dont lead an interesting enough life!!!!

Do not trust yesterdays rally

2008-03-19T11:03:00.001-07:00

Yesterday the Fed broughtt he big dope ship into harbor again and lowered rates by 3/4 of a point after having already lowered them 1/4 of a point on Sunday. The junkies threw a party, but the problem is that fewer and fewer of them are actually showing up at the party. The market had its largest up day in several years yesterday, yet Nasdaq volume was about 2% under Monday's levels, while NYSE volume shrunk by over 5%. Hardly the type of action I'd like to see on a rally. Not only that, but there are still far more stocks in bearish patterns and showing relative weakness than there are stocks showing relative strength. Look at names such as DELL, CREE, BIDU..the list could go on and on. The clear leadership in this market remains to the downside, and as such heavy investments in cash and some small short positions remains the best course of action IMHO.

March 12

2008-03-11T21:18:00.000-07:00

First I want to thank everyone who has written to me over the last several days and wished me well with my health. I will email each person back individually to say thank you, but it will take some time, more than I want to have pass before you hear from me. So again, Thank you.
Next, it's going to sound like I'm talking out of both sides of my mouth here in this commentary, typical guru crap, it might go up and then it might go down, but that's the place we find ourselves in.
The Dow Jones Industrial Average experienced its single largest one day move in nearly five years, closing 416 points higher at 12,156.81. The broadly based S&P500 rallied 47.28 points to 1320.65, while the Nasdaq gained a rather staggering 4% for the day, up over 86 points, closing at 2255.76. Volume was much higher across the board, up 14% on the Nasdaq and climbing nearly 18% on the NYSE.
So why all the fuss? Well, on Tuesday the Federal Reserve rode into town with more heroin and the addicts, led by the financial indexes, rallied strongly on the news that the dry spell might be ending. Not only did the Fed ride into town, but it came calling with its friends from the Bank of England, the Bank of Canada and the European Central Bank. The Fed announced that it would be adding more liquidity to the system, $200billion in Treasuries to banks in exchange for their debt. Now, in normal times requires good collateral in order to loan this money to the banks, but, as they did in August the first time they tried this trick, they will be accepting any crap the bank would like to get off its own books and transfer to the Fed (ie. Your's and mine) account. This move comes just ahead of next weeks policy meeting where the spoiled children are kicking and screaming and demanding a new round of rate cuts since the other ones have proven so helpful.
So, now that I've gotten all that off my chest, lets have an objective look at the state the market is in at this point, the good, the bad and the ugly. Each of the major indexes gapped up significantly on the open today, in fact each of them trapped. A trap occurs when on the prior day you have a very strong directional move, with the market opening in this case at the days high and selling off all day to close at or near the lows. The next day, if the market goes over that strong selling days highs a trap is created. This tends to lead to very strong short term moves to the upside, and sometimes it starts off something more significant. Today each major index had created the trap on its open, which is an even stronger trap. Traps that occur on heavy volume are something you ignore at your own peril.
Now with that said lets come back up a little and try to understand what is going on overall. First, this is not the first time the Fed has ridden to the rescue and allowed banks to unload all their junk on them. In fact, they did it back in August as well. The fact that they are having to do it again is not a good sign for the overall health of the market. The fact that they had to recruit all of the major central banks in Europe and Canada is to my way of thinking an even worse sign. Typically when the Fed is lowering rates and adding liquidity to the system markets will rally (thus the saying “never fight the fed”). Right now though the problem is that the cuts and excess liquidity themselves are the culprits to our problem. Adding more of the problem to try to fix a problem is about as smart as, well adding more of your problems to try and fix your problems.
The liquidity infusion and rate cuts that started in August have been unsuccessful to this point, and there is little reason to think that this time will be too much different. I do suspect that we are in for some upside from this point, maybe even substantial upside, however I do not see it as long lasting. In the end none of the problems have been fixed, only added too. What the fed is doing is kind of like offering a kid extra recess time if he stops misbehaving in class, sure he will behave until recess, but you have probably harmed him greatly by giving him the expectation that bed behavior begets rewards. One of the most important thinks I look at are setups. What do I mean? Very simply, each evening as I manually scan about 4000 equities I simply take note of how many stocks are breaking out to the upside and the downside. I also try to get an idea of how many bullish setups (even bad ones) there are compared to bearish ones. Typically when the market is in good shape there are a lot of good setups, even when the market is coming off of a low. This is not the case right now, in fact in the S*P100 I only found 19 stocks I'd classify as having anything remotely close to a buy setup, and most of those were not very good setups. So, that's how I see the market technically.
I also think that the fact of the Fed having to bring in the Bank of England, The Bank of Canada and the ECB is not a good sign at all. I mean, if our banking system is solid and sound, why do we have to rely on CANADA, England and the friggin ECB to bail us out. Does not bode well.
So, what to do from here. I'm personally staying very cautious. If this is a rally that has legs to it that will show up soon enough and there will be plenty of time to make profits off the upside. I have some small long positions in the QQQQ, DIA, URBN, APA. I will try to find some other stocks I can add to my portfolio as the rally moves on, but each of them will have a very tight leash on them, and when the market turns back to the downside, which I think it will in a few weeks, I'll buy some QID and SDS and sit on those for awhile as this all unwinds.

MIA

2008-03-04T04:28:00.001-08:00

I know that there are a number of people who enjoy reading this thread and I want to apologize for not updating it over the last several days. On Wednesday night I started to come down with shakes, a fever and body aches. Since Weds. up until now my temp has not dropped below 102 degrees, and has been as high as 104.1. I finally decided I should go to the doctor yesterday since I'm due to have the boobs I never knew I had in the first place taken off on Friday and they said I'm just sick from that, but its also possible I have some kind of infection so they put me on antibiotics. I'll keep you all updated as to how I'm coming along after friday. The surgeon has told me that the mesectomy is not too terrible for men and I can probably go home late the day of the surgery or early the next afternoon if I want so long as it's draining correctly and the pain is under control.

Market Comments

2008-02-28T05:51:00.000-08:00

On Wednesday US Markets ended the day mixed, while having mostly traded entirely with-in the range of Tuesday's trading action. Federal Reserve Chairman Helicopter Ben Bernake signed that with the most recently released economic data showing a slowdown in the American Economy the Fed is set for more rate cuts. (ADD moment here: What happens when things are still bad and the Fed has cut rates to zero? What ammunition do they then have, rates are already effectively negative if you factor in inflation...Yes, I am including Food and Energy here. I know that Cosmopolitan Magazine is trying its best to make all of the worlds woman anorexic, but most still eat) The Dow closed 9 points higher, ending the day at 12,694, the Nasdaq climbed just under 9 points to close at 2352.78, while the broadly based S&P500 closed down 1.27 points, ending the day at 1380.02. Volume was down slightly on both exchanges.
Those of you who follow my blog or have me managing your money know that so far this year I have approached the market with a large dose of caution, staying mostly in cash. This has allowed for the preservation of both capital and confidence when conditions change and are more favorable for putting the money to work.
When I'm looking at any market one of the most important things I look at is the news. Not what specifically the news was, or any type of play off that news itself, what I find to be much more important is the markets reaction to any news. For example, it takes a strong market to shrug off bad news and not move lower. I know a lot of people will spend their energy in that type of situation screaming and yelling about how stupid everyone else must be, but in the end they often end up being the one's broken and fooled. Over the last several days/weeks the market has encountered really nothing but bad news, however the general markets, and even the specific sectors effected by the news are more often then not shrugging and moving on, higher. Again, this is a significant sign of strength, one that shouldn't be ignored.
So, whats the plan of action at this point: Investor's Business Daily, for the firs period of time in 2008, has the market listed as being in a confirmed rally. This suggests that traders and investors should start building positions in stocks coming out of sound bases and showing good relative strength. Although William O'neil and IBD's work and method have strongly effected the way I approach the market, there are some significant differences. For example, I will not consider the market to be in any confirmed rally until the first pullback. To my way of thinking this is the first important test and it gives some more evidence in favor of the upside. The psychology of a bear market is dominated much more by fear then that of a bull market, one effect of this is that most of the biggest single day up moves have occurred during bear markets, and as a general rule bear market rallies can be very strong.
Over the course of the next few days I'll be building a lists, both of relative strength and weakness, to be prepared for which ever direction the market takes from here.

Cash Trades

2008-02-27T08:03:00.000-08:00

Over the last few days several people have questioned, and a few even challenged me on the relatively large cash position I have been holding for most of this month. As I write this the S&P500 is down 3.8% for the year, the Small Cap Russell2000 index is off by 6.2%, the S&P500 is down nearly 6.2%, while the Nasdaq is down over 15%. At the worst levels the S&P500 had shed 15.5% for the year, the Nasdsaq 19.8% and the Russell2000 just over 16%. Since most Mutual Funds and Hedge Funds actually put in worse performance than the Indexes its likely that the majority of them are down more. With all this pain present in the market positive numbers are hard to come by, and those who are lucky enough to have competent individuals handling their money (be it themselves or a paid profession) are happy indeed. My own accounts, both managed and personal are up just under 5% for the year, so while many on message boards complain, I've not had a single client express anything but pleasure in the performance so for this year.
Having spent a large part of my childhood in what could be seen as extreme poverty I'm very aware of the value of money. The effect of this is that I've always been much more focused on the worst case scenario than on the best. This has protected both myself and my managed clients on a number of occasions, including this year so far. The biggest danger that an investor faces is that of large losses, either generated by reckless trading or a bear market. In either case the effect can be devastating and very hard to recover from. A loss of 20% requires a gain of 25% just to get back to your starting point, while a 50% drawdown would require stunning performance to generate the 100% gain needed to get back to even. These are numbers you should BURN into your brain and always be considered. Note also that the losses generated from a bear market can take a heck of a long time to recover from, especially when you consider the inflation adjusted returns. The losses of the Nasdaq in this decade provide an excellent example of the damage a bear market can inflict upon investors. The Nasdaq 100 is up over 120% from its 2002 lows, but in spite of this spectacular gain it is still down nearly 64% from its 2000 highs. Long term investors in the Nasdaq will not find themselves BREAKING EVEN from 2000 levels until the market rallies yet another 175%. This is in real, not inflation adjusted terms. It's likely going to be several years until the Nasdaq finds itself back above water, and several more before it does so in real terms. Investors who bought DOW stocks in the mid 60's found themselves waiting nearly THIRTY YEARS, until the early 1990's to recover from the hit they took in a brutal bear market. Can you wait 30 years on your investments JUST TO BREAK EVEN? Even if you can, do you want to?
So what is the solution to this rather scary situation? In my mind trading into cash during periods of extreme uncertainty and declines. I charge no management fee's which means I only get paid for positive performance, doing better on a relative basis does me no good at all if the result is still a loss. So, even though being cautious might cost me a few percentage points on my overall performance, causing me to be paid less, its better in my mind than the alternative. Yes, maybe my gains, and as a result my paycheck, will be smaller for a short period of time. But, compared to suffering large, unrecoverable gains I'm a happy camper, and so are the clients put their own hard earned money in my hands to manage.

Feb 27

2008-02-27T05:48:00.001-08:00

American Stock Markets started off lower on Tuesday after the Conference Board's Consumer Confidence Index fell sharply to 75, following an 87 reading in January. Next came the Core CPI, the Core CPI excludes food and energy costs since none of us really needs food and driving is bad for the planet so we should not do that either, which rose to 0.4% which was double the expected 0.2%. By late morning though the market was looking better after IBM announced a share buyback program and a talking head from the Fed had some dovish remarks suggesting they are less worried about inflation. This makes a lot of sense, because as I pointed out earlier obviously we don't need food, and Oil is evil and bad anyway. The Nasdaq gained 17.5 points, closing at 2344.99, the Dow Industrials gained 114 points, closing at 12,685, while the more broadly based S&P500 gained 9.5 points, closing at 1381.29. Volume was slightly higher on both exchanges, up about 1% on the NYSE and a bit over 8% on the Nasdaq. For the first time in awhile New Highs led new lows on the NYSE, though on the Nasdaq New Lows still outnumbered NH.
Investors Business Daily has already called the market as being one that is now in a confirmed rally. This suggests that Investors and Traders should be looking to add exposure to the long side of the market to partake in a bullish phase. While I've been a bit more cautious overall I can not ignore that the market has now started to rally on bad news, often the best signal of strength. I'm still heavily invested in cash, which is appropriate I feel until we see how the markets handle the inevitable pullback after this rally. Should that pullback be one that occurs with light volume then the obvious play is to be a buyer of strong stocks. I will at that point start building larger positions in leading names to take advantage of an up market.
Periods of weakness present traders with the very best opportunities out there for isolating pockets of strength in the market, similarly periods of strength allow for the isolation of the weaker names. With relative strength being one of the few technical measurements that holds up to vigorous testing this is very important. On the long side of the market Housing and related types of names have shown some very impressive strength. Names such as NLY and TOL are doing very well. Transport stocks too, especially the railroads, are performing nicely. Names like BNI, CSX, UNP and GWR have shown leadership even when the market itself was not. Finally some retailers have also shown some good strength in spite of a lot more bad news than good. Stocks like BKE, TJX, URBN. The Euro too has broken out of a long base, while the US Dollar has fallen. Investors and Traders can easily take advantage of the weak dollar with a long position in the FXE which represents ownership of Euro.
Isolating area's of trouble and weakness has also proven easy the last few days, and a number of important stocks are not taking part in the rally. They should be watched closely for shorting opportunities, because as I said earlier I do not buy into rallies until after they prove themselves by performing well on the first pullback after the follow through day. Since by my own set of rules then the overall market is still bearish until after this first pullback is well taken, I continue to look for short positions. Names like FRE and FNM, MRO, ADI, BUD, SNDK and GS all have shown poor gains even with the stronger market. Additionally the long bond is looking as though it could break down from these levels. This is playable with an ETF called the TLT.
Disclosure. My portfolio is currently about 82% cash. Stocks mentioned here that I have positions in are BNI, GWR, FXE, TOL, GS and SNDK.

Still hanging out with the Chickens

2008-02-26T06:54:00.001-08:00

On Monday US markets across the board closed higher after a strong rally in the last 90 minutes of the day. The DOW gained just under 190 points, while the S*P500 was up about 1.4% and the Nasdaq was up around 1%. Volume was higher on the NYSE, beating out Fridays volume levels by about 8%, while on the Nasdasq volume retreated eight percent.
I tend to follow Investors Business Daily very closely, especially the Market Pulse and Big Picture. They are now calling this market as one being in a confirmed rally after having had a follow through day in the Nasdasq on February 13th (IMO A weak one) and then the follow through day today for the NYSE. Typically I try not to fight with IBD, but in this particular case I do not find myself strongly agreeing with them.
As I see things we have had very weak follow through days that did not not lead to any new leadership or strong market moves. In fact after the Nasdasq's February 13th follow through day the Nasdaq suffered a distribution day the very next trading session. Additionally, although volume did spike on the Nasdaq and the NYSE's follow through days it did so very slightly. Finally I get to market leadership. What leadership you may ask? Well, I have the same question. I see plenty of stocks that are coming off of lows, thats all well and good, but stocks coming off lows do not ignite bull moves. You need to have area's of strength in the market that can lead higher and generate excitement on the part of the crowd. This is sorely lacking right now.
So, for the time being I remain mostly in cash and on the sidelines. If this does turn out to be the real deal and we get a strong rally there will be plenty of opportunities to get on board. No market goes straight up or down for too long. My plan will be that if we do now get a pullback on light volume I'll start tip toeing into a few positions on the long side. For the time being cash is king as far as I can tell.

Politics from a childs point of view

2008-02-21T18:39:00.000-08:00

A little boy goes to his dad and asks, 'What isPolitics?'Dad says, 'Well son, let me try to explain it thisway:I am the head of the family , so call me ThePresident.Your mother is the administrator of the money, so wecall her the Government.We are here to take care of your needs, so we willcall you the People.The nanny, we will consider her the Working Class.And your baby brother, we will call him the Future.Now think about that and see if it makes sense.'So the little boy goes off to bed thinking about whatDad has said.Later that night, he hears his baby brother crying, sohe gets up and finds that the baby has severely soiledhis diaper.He then goes to his parent's room and finds his motherasleep. Not wanting to wake her, he goes to thenanny's room. Finding the door locked, he peeks in thekeyhole and sees his father in bed with the nanny. Hegives up and goes back to bed.The next morning, the little boy says to his father,'Dad, I think I understand the concept of politicsnow.'The father says, 'Good, son, tell me in your own wordswhat you think politics is all about.'The little boy replies, 'The President is screwing theWorking Class while the Government is sound asleep.The People are being ignored and the Future is in deepshit.

Chicken Little Says in the Chicken Coup

2008-02-21T06:11:00.001-08:00

Wednesday was essentially the mirror image of what we had on Tuesday, markets gapped lower across the board on worries of inflation, highlighted by the oil closing above $100 and various other commodities breaking to new all time highs. By the end of the day though, the market had shrugged off the bad news and moved higher. The Dow closed up 90 points to 12,427.26, while the Nasdaq gained about 21 points, closing at 2327.10. Volume was higher on both exchanges, particularly so on the Nasdaq, where it surged 18% from the prior days level. Advancing issues led declining ones by 21 to 13 on the Big Board, while they led 17 to 13 on the Nasdaq.
Given the higher volume totals on the exchanges, and particularly the fact that the market rallied inspite strongly off its lows in spite of bad news traders could take this as a positive sign and start looking for leadership issues to get involved with. They are pretty easy to find and summed by this way: Commodities, Commodities, Commodities! I myself am watching Natural Gas (ETF: UNG) for a pullback to offfer a small buying opportunity. For the most part, however, I've been very cautious thus far in 2008 and will remain so. At this point I am 90% in cash, but willing to put some of it to work if the right opportunity presents itself.
This type of market can be very frustrating for traders and investors, back and forth, back and forth. Up one day and then down equally the next, then up slightly the next etc, etc and on it goes. This type of whipsawing action can quickly take capital if you do not have sound money and risk management principles in place. (I will put up an article on risk and money management this weekend, If I can figure out how to do a podcast I will also do that). As difficult as this type of market can be, I really love it because it is during these harder times that a good trader/manager is able to shine. During a bull market anyone can and generally does make decent money, but during times like this I am able to show my clients exactly why they have trusted me with their money. Nothing fancy, just good old capital preservation, and when the good setups come available again we are there for them without the lost capital and confidence that many suffer.
I'm not going to give any setups today as I will not be able to follow them. I have a doctors apointment at the University of Iowa at 3, which means I will have to leave here around 11. I suspect that the appointment will take all day, so I'm probably just going to stay overnight with friends in Iowa City, which is where I went to college. I will likely be back late morning or early afternoon tomorrow.
If you have any questions or comments feel free to email me @ bfredrickson76@gmail.com

Feb 20

2008-02-20T04:59:00.001-08:00

Tuesday was the first day of US Trading this week due to the Presidents Day holiday. The American markets started off on a good footing, with the Nasdasq up as much as 1.3% early on, but as has often been the case recently investor fears crept in, and by the end of the day all major markets closed with losses, the Dow Industrials lost about 11 points after earlier 100 point plus gains, and closed at 12,337.22. The Nasdaq closed at 2306.20, down 0.7% after the early gains. Volume was off slightly on both exchanges from Fridays levels.
I believe that the weak follow through day we experienced recently can safely be discounted at this point. We continue to trade in a mode that is classic of bear markets, and recent activities and reports do not offer a whole lot of hope going forward. The recent H3 report by the Fed shows just how badly the situation has gotten for American Banks and Financial Institutions, and in aggregate our banks have now gone through their own capital and are forced to borrow reserves from the Fed in order to keep lending. The H3 report is available at http://www.federalreserve.gov/releases/h3/Current/. This is not something that is going to be easily fixed, and I would expect to see continued unease in the credit markets. Things have gotten so bad that the Port Authority of New York recently could not get buyers for its bond issue until its rates hit 20%, six months ago it probably would have had to pay less than 6% on the same note. The same thing is happening to companies, municipalities and government agencies across the board. Not only is the level of fear high, there is simply no money to put to work even if they wanted to. We have gone from what was initially a liquidity crisis, and quickly see a very real solvency issue arising.
Energy and Food inflation continue to be major themes in American and Global markets. The very best sectors have been those related to Agriculture business and mining, with ETFs such as DBA, JJG (grains), USO (Oil), and SLV and GLD (silver and gold) putting in strong performances recently.
At this point in time there is not much of an edge to be found with heavy commitment to US equities. I continue to maintain a mostly cash position and do not see that changing any time soon. As the election cycle heats up those running for President have a lot of incentive to talk about how “bad” things are for the “average American”. In our consumer based economy this can only make things worse, and with the likely winner Obama's solution being more government, bigger government and higher taxes investor fears are not likely to be eased. We continue to see the effects of Globalization, which is a force that I don't think can be turned back.
Last note, I realize this is not the best and most put together article I have ever written, but I'm still recovering from some rather bad personal news and it's likely to take me a few days to adjust.

The Myth of Long Term Investing

2008-02-17T10:51:00.000-08:00

Everyone knows that in the long run stocks always go up. Our brokers and the smart people on TV have fancy graphs they show us that prove that over the long term, stocks only go up. They tell us that yes, from time to time there will be this nasty thing called a bear market, but if you just hold on in the "long run" You'll be just fine.

Well, in real terms that long run is an awfully long time. What brokers like to show you is the nominal value on the S&P500 or the Dow. What none of them would be willing to show you is the inflation adjusted chart, because if they did no one would believe in buy and hold investing. The chart I have posted here shows the Inflation Adjusted price of the S*P500 from 1967 until 1996. You will notice that after the peak in 1969 it was 23 years (1992) until the buy and hold faithful got back to breakeven. After the 1969 peak real gains did not exceed that of T-Bills until 1996. A part of the graph I do not have here is the peak in 1929. After that peak it was 37 years in inflation adjusted terms until a long term investor got back to breakeven. In more recent times Nasdaq investors are still nowhere near breakeven even in nominal terms, let alone inflation adjusted terms, since the peak in March of 2000.

What I don't want this article to make you think is that its hopeless to try to make money over the long term in the stock market. Myself and many other traders and investors are living proof that this is not true. However, you should always be concerned about your downside. The very best trader is not the one with the best return, but with the best risk adjusted return. You also need to be open to other asset classes, not just stocks.

Ari Kiev

2008-02-14T04:15:00.000-08:00

I just wanted to make a quick note that I have added Ari Kiev's blog and his Podcast links to the links available from this site. Most who know me know that I think the majority of trading psychology info is, frankly BS. Kiev, however, is of another calibre. He has worked with Olympic Athletes and the Top Hedge Fund Portfolio Managers and Traders in the World. The Free Podcast lessons he offers are excellent and I hope that all of you will find the time to listen to them.

Feb 14th Market Commets

2008-02-14T04:05:00.000-08:00

Markets were strong across the board on Wednesday after news that Warren Buffet might be riding in on a white horse to save some insurance companies. January retail sales came in at a dismal +0.3%, but it was enough to cheer up traders who had been expecting a fall of about that much after December's drop of 0.4%. The markets also showed pleasure with Washington finally passing the bill should stimulate China's economy when American's go hold wild with their $600 checks that the Government will take out a loan from China to give them. These consumers will then likely go to Walmart or some other type store to buy goods made in China. Score China +1!
The Federal Reserves Head Idiot at the helm is set to testify before the Senate Banking committee today. Several of the Regional Fed Heads have been openly talking about the risks of recession being high. Fed Fund futures are currently showing a 50% chance of another drop in Fed lending rates in March. Selfishly, I wish they would just stick to baseball – at least then they can not be tinkering with something they know nothing about and screwing me, you, my children, yours and several generations of American's to come. Of course we should not worry about the very real infection that has taken hold of our minds and economies, Obama is hope monger and makes us all feel warm and fuzzy inside!
The Dow Jones Industrials closed up 178.83 points to close at 12,552.24, while the more broadly based S&P500 closed up 18.35 points and closed at 1367.21. The Nasdaq recorded the best gains, adding 53.89 points, for a total gain of 2.32%. It closed at 2373.93. Small cap stocks also fared pretty well with the Small-Cap S&P600 rising 2.05%, closing the day at 380.17. Investors Business Daily is calling yesterdays action a follow through day because Nasdaq Volume rose about 1% compared to Tuesday's levels. My own personal stance is going to remain very cautionary, mostly in cash. The 1% in Nasdaq Volume seems rather meaningless to me, and NYSE volume actually pulled in around 7%. In addition to that, my own scanning reveals very few stocks that are coming out of a sound bases to provide the leadership for a new leg up. Several stocks are coming off bottoming type patterns, but this very rarely fuels sustained upside moves. A few stocks are showing good patterns, among them Watson Wyatt Worldwide (NYSE:WW) which started its sharp move a week ago and has continued to add on gains since then. Several Latin American Issues have also been strong, examples include ECH (Chile Holder) and Mexican Coca-Cola bottler Femsa (NYSE: KOF).
Strength in Latin America is actually a theme I trust more than strength and growth here in the United States. Record numbers of migrants, both legal and illegal, are going back home to Mexico because there simply are no longer jobs outside of Agriculture for them in the United States at this time. Mexico experienced a net gain of 25% in foreign investments last year, and FOR THE FIRST TIME IN HISTORY experienced lower inflation than we did in the United States. Other parts of Latin America are seeing similarly positive situations develop for astute investors to take advantage of.
New Market Corporation (NYSE: NEU) has broken out of a decent base on good volume, low volume pullbacks should provide a buying opportunity of the market also cooperates, the same thing also applies to Femsa (NYSE: KOF) and Wyatt Worldwide (NYSE: WW). New names to watch would include BKE on a breakout, SLH on a breakout and UDRL on a low volume pullback should the market to the same. The homebuilders continue to have strong patterns that should offer buying opportunities in the future.
On a more personal note I'm going to try to keep this blog/thread active on a daily basis. I'm trying to figure out how to make a podcast, and if I do figure that out we will have 15 to 20 minute daily podcasts on the market. Over the next several weeks though my writing may be erratic since I am tomorrow as I am schedualed for a Mastectomy tomorrow, having found a lump in my right breast. The good news is that this is has been found very early, and at this point they have said the Mastectomy will
have better than a 90% chance of preventing any mastization of the disease. I'm set to have the surgery in a small local hospital, which I'm more nervous about than anything else I guess, so If I do end up not having it Friday it would only because I have decided to go to Iowa City and have it treated there rather than have it treated here. I mention this not so that anyone can worry, the doctors have all given me pretty good assurance that the Mastectomy will remove the tumor and prevent it from spreading. I should be able to avoid radiation treatments and chemo as well, but to explain in advance that I may not have something to say every day, or as often per day, as I have wanted to with the relaunch of my blog and money management business. If you would like to contact me I can be reached at bfredrickson76@gmail.com
Disclosure: Long Femsa (KOF), ECH (Chilean ECN as part of my theory on Latin American Growth) and Wyatt Worldwide (WW) I no longer have short positions and am still just over 80% in cash. Should the market show me better signs of strength I will have no problem bringing that number up, but with the Political Economy such as it is I do not really except much real strength to show up anytime soon.

Have we lost our minds?

2008-02-13T19:55:00.000-08:00

I don't agree with Mike Huckabee on much, but when he said that this rebate is foolish he is spot on. We are going to borrow billions of dollars from China, that we have to pay interest on, to send it out. Consumers will then go out and buy stuff, probably not stuff made in America, but more likely stuff made in China. I'm glad the experts figured out a way to stimulate the economy a bit - unfortunatly its not ours!

Lee Iaccca on America

2008-02-12T17:19:00.000-08:00

"Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder. We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, "Stay the course" Stay the course? You've got to be kidding. This is America , not the damned "Titanic". I'll give you a sound bite: "Throw all the bums out!" You might think I'm getting senile, that I've gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore. The most famous business leaders are not the innovators but the guys in handcuffs. While we're fiddling in Iraq , the Middle East is burning and nobody seems to know what to do. And the press is waving 'pom-poms' instead of asking hard questions. That's not the promise of the " America" my parents and yours traveled across the ocean for. I've had enough. How about you? I'll go a step further. You can't call yourself a patriot if you're not outraged. This is a fight I'm ready and willing to have. The Biggest "C" is Crisis!Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself. It's another thing to lead when your world comes tumbling down.On September 11, 2001, we needed a strong leader more than any other time in our history. We needed a steady hand to guide us out of the ashes. A Hell of a Mess So here's where we stand. We're immersed in a bloody war with no plan for winning and no plan for leaving. We're running the biggest deficit in the history of the country. We're losing the manufacturing edge to Asia , while our once-great companies are getting slaughtered by health care costs. Gas prices are skyrocketing, and nobody in power has a coherent energy policy. Our schools are in trouble. Our borders are like sieves. The middle class is being squeezed every which way. These are times that cry out for leadership. But when you look around, you've got to ask: "Where have all the leaders gone?" Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense? I may be a sucker for alliteration, but I think you get the point. Name me a leader who has a better idea for homeland security than making us take off our shoes in airports and throw away our shampoo? We've spent billions of dollars building a huge new bureaucracy, and all we know how to do is react to things that have already happened. Name me one leader who emerged from the crisis of Hurricane Katrina. Congress has yet to spend a single day evaluating the response to the hurricane, or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time. Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. Who would have believed that there could ever be a time when "The Big Three" referred to Japanese car companies? How did this happen, and more important, what are wegoing to do about it? Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening. But these are the crises that are eating away at our country and milking the middle class dry. I have news for the gang in Congress. We didn't elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness is being replaced with mediocrity. What is everybody so afraid of? That some bonehead on Fox News will call them a name? Give me a break. Why don't you guys show some spine for a change? Had Enough? Hey, I'm not trying to be the voice of gloom and doom here. I'm trying to light a fire. I'm speaking out because I have hope, I believe in America . In my lifetime I've had the privilege of living through some of America 's greatest moments. I've also experienced some of our worst crises: the "Great Depression", "World War II", the "Korean War", the "Kennedy Assassination", the "Vietnam War", the 1970s oil crisis, and the struggles of recent years culminating with 9/11. If I've learned one thing, it's this: "You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play. That's the challenge I'm raising in this book. It's a call to "Action" for people who, like me, believe in America . It's not too late, but it's getting pretty close. So let's shake off the crap and go to work. Let's tell 'em all we've had "enough." Excerpted from "Where Have All the Leaders Gone?". Copyright (c) 2007 by Lee Iacocca. All rights reserved

re: JBHT Chart

2008-02-11T09:24:00.000-08:00

JB Hunt is one of the leading stocks in the trucking group. Over the last several weeks Transports, including Rails and Truckers, have been trying to carve out a bottom in the market and move higher. JBHT has been one of the leaders. As you can see on the chart it has a large gap up that occured on Jan 30th that has yet to fill. This is a sign of strength, as most gaps will fill. Instead of filling though JBHT has stayed in a narrowly defined range with in the range of the gap day. As I said, this is often the sign of a very strong stock. This can hold especially true in an uncertain market such as we are seeeing right now. Fundamentally JBHT is not the best stock out there to be sure, and this will limit my exposure to about 1/3 of my normal size (which is already reduced due to the market market phase we are in). I'll continue to watch the intraday timeframe on JBHT and see if it offers a breakout setup. These are ideal because it lets you get into a swingtrade/position trade type setup, while only taking on the risk of a daytrade. This allows you to increase size, but keep your risk relatively the same. If you have any questions or comments on any of the posts or the blog in general please feel free to ask.

JBHT Chart

2008-02-11T09:23:00.002-08:00

American Gladiators

2008-02-09T17:17:00.000-08:00

These primaries are turning into a longer version of American Gladiators. I wonder how good it is for America for them to be played out over a long period of time. I suppose that most people do not come here to read about politics, but it is politics and how they effect the world around me that first got me interested in the markets, so we could say it's my first love.

First of all I will let ya'll know my affiliaton. I'm a Socially Liberal, Fiscally Conservative Republican, I guess some would say a Country Club Republican, but obviously those people have never seen me play golf. I volunteered for Mitt Romney's campaign here in Iowa as much as I was able too, and was sad to see the one person who truely understands the economy, economics and turning around a sinking ship leave the race. Ok, thats more than enough about me.

Where do I see things. Let's start with the Democrats, to me they are alot more interesting. What we are finding is that for the most part African American's and more educated Whites tend to swing in favor of Obama. In some place this is a large swing, in others closer to 55/45 type, but in any case Obama is winning this group. Hillary tends to fair well with blue color workers (think manual labor, unions etc) Among Hispanics and Asians Billary has a clear lead, which is not too hard to understand given the historical anamosity that is yet to be resolved between the African American community and the Hispanic and Asian Communties. As I see Mrs Clinton is going to come into the convention a few votes behind Mr Obama, however she has two tricks up her sleave. FIRST, I cant imagine a situation in which the delegation from Michigan and my second home state of Florida will not be allowed to partake. If you thought Bush/Gore was a bloody mess, this would make that look like a picnic. It would cause a huge crisis, not only in the democratic party, but for America as a whole. So, once the folks from Michigan and Florida have been counted and the "super delegates" have had a say, I think Hillary Clinton will come out as the nominee for President. This is not going to come easy though, and Obama is not going to conseed for nothing, and I suspect she will nominate him as VP. This will actually work out very well for Obama, follow me here. One of the biggest "strikes" he has against him is that he wont be ready to take on the job "from day one" (really is anyone??). Well serving as Hillary Clinton's VP for 4 or 8 years will certainly take care of that. He is also young enough (44??? I think) that serving 8 years as Hillaries VP will have no effect on his ability to next become President.

As for the Republicans, I wish I thought McCain had a chance to win, but between the far right wing, who will just pack up the toys and stay home, and the historical ticket of Hillary/Obama, I'm afraid he will not have a chance. As republicans our best bet will be to put everything we have into winning back our seats in the House and Senate. This, in theory, should not be too hard as the Congress, at 20%, has an even lower job approval rating than Mr. Bush at about 30%.

In most countries when the numbers get this low tanks roll into the capital and the Milatary takes over. Be thankfull then that at least we are Americans for that. We may not like the government we have, but we do have the opportunity every four years to change it.

If you want to be rich

2008-02-09T17:15:00.000-08:00

http://www.timesonline.co.uk/article/0,,2092-2291061,00.html

A great article in the UK's TimesOnline by Felix Dennis. I hope that everyone takes the time to read and learn it.

Stocks

2008-02-08T10:39:00.000-08:00

The market is still having a hard time staying in gear. I remain long WW, and its acting abot as I would expect. New additions to my list are CAT and DE as potential shorts on a break to new daily lows. Also watching the dollar for some strength to buy on, and XOM as a possible short.

Econ Lesson #1

2008-02-08T08:30:00.001-08:00

Understanding Liquidity, and Manipulations in Modern Economies.
Economics is a social science that concerns itself with the study of the production, consumption and distribution of goods and services. Pretty simple definition, but it will work well for us to start out.
For our purposes today I want to create an Island Economy. The purpose of this is going to be to illustrate how an economy free of disturbances and manipulations might act, and then show how our modern, meddling central bankers and others create disruptions and manipulations in the economy. Hopefully it will help you understand how to spot them, and profit from the likely result of said manipulation.
Our Island Economy is just going to be called Brandon's Island to inflate my own sense of importance, hey if the bankers and politicians can name bills and whatnot after themselves, I can name my own damn fake island Brandon. To shorten things up though, from now on it'll just be the Island. We are going to be sort of like the cast of Lost on this Island, except we will get along better, won't have monsters coming after us and all the assorted things that make for great TV drama.
Ten of you are going to join me on our little boat as we set off to sea, after a few days we are over joied to finally be out of the sea and back on land. Since I was your capable captain, your all very greatful and as I said, we name it Brandon's Island..I just want to make sure we all know where we are is all :)
When we land on the Island we have some basic goods with us, and we each have $100. The total value of the Islands Economy then is $1000, after all we need to start off being fair, everyone should be the same here! At least in the beginning. So, once we assess our situation we find that certain things are going to be required. We need fresh water, food, shelter and the like. We divide ourselves up into a labor pool and trade amongst ourselves. The economy at no time will be worth more than $1000, since that's all we have between us. So, if the price of say water went up, other prices would have to fall, maybe shelter. That's all well and good until one of our fellow adventures, just for fun we will call him Uncle Al happens to be out on his daily hike rounding up fruits and seeds and whatnot for us. Well, slick uncle Al happens to come across $500 that washed up on shore. He doe not tell us about this though, he just slowly starts to spend a few dollars more here, a few more there. Pretty soon he has spent an additional $200 of the new loot. Well at this point we realize something is up. Because more dollars are competing for the same goods and services prices will go up. Well the rate of inflation is now 20% because the sum of everything has gone up $200, or 200/1000. We now have a $1200 economy.
Well obviously we are steaming hot mad about this and we sit down for a survivor type “Tribal Council” to get to the bottom of our inflation problem. We try and try to get someone to admit to being the culprit, heck someone even suggests water boarding our lead suspect, Uncle Al, but one of us used to be a writer for the NY Times and threatens to expose us all as heathens when we get back to America if we resort to such dastardly deeds. So, we sit and try to think of a solution. Even though Uncle Al is our lead suspect, he is also the most worthless and unproductive person on the Island, so we decide to create a new job for him. So real economists reading this don't feel bad we won't call him an Economist, we will call him...I dunno, lets say the head of the Fed.
Uncle Al, the Fed Head, sits down and tries to figure out how he can solve his problem. He decides that what he will do is focus on the price of Coconuts, since we all use Coconuts as a source of food, water, building and clothing. We all agree this is a brilliant idea, since we all need to use coconuts, surely the dasdardly bandit who has put this extra money into our little economy will be caught this way.
But, our old Uncle Al knows that we are now excessively focused on the price of Coconuts, which he has decided to call CPI for short. What does Uncle Al Do? Well, he decides that as he continues to spend his hidden loot, the one thing he certainly wont be buying is coconuts. He pours another $100 into our economy, so the real inflation rate is going to be another 8.3%, that is $100/$1200. Total economy is now worth $1300, but the price of coconuts did not go up, so he reports that inflation is under control and all is well.
Now, the way the US government avoids actually reporting inflation is even more deceptive than Uncle Al bamboozeled us all with on Brandon. They will say that well yes, the price of XYZ has gone up, but its sooooooo much better now, it doesnt really even count. And also, well yes I know something you need to have like..say gasoline and food, has gone up a lot in the last few years, the price of Big Screen TV's and Laptops sure has come down. Now, assuming we had a real economy free of uncle Al and his $500 extra dollars that would be fine because as I said all goods and services can only be worth $1000. The effect of this inflation though is that everyones dollar is worth less and less every day. So, when the Fed talks about increasing the money supply, hell they dont even report M3 anymore, what they are really doing is making you poorer in real terms. Don't believe me? Go to Europe and see how much your vacation in Europe costs now compared to what it was even 5 years ago. There are actually tour groups being setup in Europe for people to come to the US now to shop because its so cheap for them to buy stuff at our stores, since the dollar is worth less and less. The results of inflation have led to the dollar being worth 5 cents, thats correct, FIVE CENTS in 1913 dollar terms. If you have $1.00 now, it's about the same as 5 cents in 1913.
This is a lot to digest, so I'm going to end here for now and continue with the balance of it another time. If you would like to know more about the liquidity cycle and how economies work and are effected by government programs and “interventions” I'd suggest reading Ludwig von Mises, Frederick Bastiat, or Friedrich Hayek.

CHRW

2008-02-07T10:38:00.000-08:00

CHRW is very similar to WW, I'll have more to say about it this evening.

2008-02-07T10:29:00.000-08:00

WW Buy Setup

2008-02-07T10:27:00.000-08:00

Today Toni Hansen asked me to help her out with her Tradingfrommainstreet chatroom on othernet. One of the trades I was watching with the group was WW, and here is the reasoning behind it as well as the chart. If anyone has questions please feel free to ask away.

[11:57] well here is the realtick chart of WW
[11:57] ill give people a few more minutes
[11:57] as i can see people are still clicking too it
[11:58] looks like Romney dropped out
[11:58] that stinks, I worked for his campaign in Iowa the didicated little democrat that i am
[11:58] awright
[11:58] here is WW
[11:59] my trading is really influenced by several things
[11:59] first is just classic T/A and chart reading
[12:00] as I was saying
[12:00] my trading started out based purely on TA
[12:01] I learned a lot from what Linda Rashke does and has written
[12:01] Edwards and Magee
[12:01] then I become friends with Chris Terry and he helped my chart reading ability a ton
[12:01] so when im looking for a stock to buy or short
12:02] in early 2000 I was interviewed for innerworth
[12:02] and Peter Moon who was funding it really liked my interview
[12:03] he was one of the first commodity managers in Europe in the 80s to go over 100million AUM
[12:03] but he wanted me to not trade purely technically
[12:03] so I had to learn about some fundamentals
[12:03] I started off reading William Oneils book
[12:03] Brandon you need to pod cast this stuff
[12:03] and also listening to Gary Kaultbaums Radio program ( i still listen to it from time to time)
[12:04] if someone shows me how to i will
[12:04] and probably the strongest outside of the basic T/A is Mark Bouchers work
[12:04] I would strongly urge anyone who is serious about managing money to read his book the hedge fund edge
[12:04] and get to know mark if you can
[12:04] so anyway
[12:05] all of this is just to give background
[12:05] I hate it when people claim to have invented the wheel
[12:05] coz no one has
[12:05] you just put the wheel together in your own way
[12:05] so
[12:05] I start off with my scanning
[12:05] Im looking all the time for relative strenght and relative weakness
[12:05] what does that mean?
[12:05] when the market is up, im looking for stocks that cant get going
[12:06] when the market sinks
[12:06] im looking for stocks that it cant shake down
[12:06] and WW is one such stock
[12:06] now for a lot of people
[12:06] the T/A is all that matters
[12:06] for example Stan Weinstein would say sector and stock
[12:06] just go with the charts and thats all you need
[12:06] and its an effective way to go
[12:06] * cduncan has joined #mainstreet
[12:06] but Im more comfortable wtih more info
[12:06] speaking of which ...could you share with us the relative stength weakness formula
[12:07] and i know from my own experience it works better
[12:07] in my scanning I found WW to be stronger than the market in its declines
[12:07] and also as you can see in the weekly chart
[12:07] it was making a nice pullback
[12:07] and its breaking that downtrend line
[12:07] so there you are geting the buy setup
[12:08] as i said, i then look at the fundamentals
[12:08] now im not as in depth as my anthoney is
[12:08] but i look at the basics that Daily Graphs gives u
[12:08] and when I do that I see a few things about WW that make me happy
[12:08] first its got a good return on equity
[12:08] 16%
[12:08] thats better than most investors are able to do
[12:08] so it shows us an effeciently run company
[12:09] next its debt is relatively low at 13%
[12:09] the group also has a decent RS rating at 70
[12:09] next I look at its earnings
[12:09] specifically the last 30 qtrs
[12:09] 3 qtrs
[12:09] not 30 sorry
[12:09] the last three qtrs
[12:09] I see that the last reporteed qtrs are +41, +38 and +22
[12:10] going back four that was was +10
[12:10] so here we have a company with four consecutive qtrs of earnings accelerting
[12:10] that is excellent
[12:10] I then look at sales
[12:10] heres what i hate to see
[12:10] a company does 40% EPS growth
[12:10] but its sales are flat or barely up
[12:10] because when you see that
[12:10] you know they have to be doing something with the numbers thats not real and long lasting
[12:10] laying people off
[12:10] doing share buybacks
[12:11] stupid stuff that makes the EPS look good
[12:11] but might not be the best long term kinda thing
[12:11] in this case with WW
[12:11] that is not the case
[12:11] Sales growht is relativelly solid as well
[12:11] 22, 20, 12,15
[12:11] not as solid as earnings
[12:11] but its close to those numbers
[12:11] and most important its not flat
[12:11] or way far away from the earnings
[12:11] next i like to have a low relaive PE
[12:11] and this stock has that as well
[12:12] the PE is 15
[12:12] I did an article on why the PE can be so important
[12:12] you can find it on my blog or on seeking alpha
[12:12] and maybe tradingmarkets too
[12:12] but i know its on seekingalpha and my blog
[12:12] a low PE gives you additional leverage in a stock
[12:12] I dont want to go into the exact formula i use
[12:12] but this one fits it
[12:12] so we are good there
[12:12] so now we have the weekly setup
[12:13] daily too but i dont have that chart up
[12:13] now
[12:13] we go down to this weekly timeframe
[12:13] and its great
[12:13] daily rather
[12:13] sorry
[12:13] im not all with it today as I had my nipple tore off and put back on yesterday
[12:13] so you will have to forgive little mistakes here and there
[12:13] anyway
[12:13] on the 15 minute chart
[12:13] you can see that WW was very strong out of the gate
[12:13] good volume
[12:13] then it made its base
[12:14] that is the best entry
[12:14] when it broke over 49.50
[12:14] the daily setup is 50
[12:14] but what you will have happen in many many cases is this
[12:14] the momentum that is created by the daytrade setup
[12:14] will carry it over to the swingtrade setup
[12:14] and then the swing crowd gets in etc
[12:14] brings it up more
[12:14] and also in this case
[12:14] what your also able to do
[12:14] is put your stop lower
[12:15] you dont have to risk as much
[12:15] so you can have more shares
[12:15] you have more freedom to move around with it etc
[12:15] so thats it
[12:15] any questions?
[12:15] if someone could PM me and tell me how to do a podcast id love to do them
[12:15] im just a tech idiot
[12:15] i only know how to turn my computer on

Kinda Funny

2008-02-07T09:29:00.001-08:00

THE SPOILED UNDER-30 CROWD!!!If you are 30 or older, you will think this is hilarious!!!!When I was a kid, adults used to bore me to tears with their tedious diatribes about how hard things were when they were growing up; what, with walking twenty-five miles to school every morning... uphill BOTH ways yada, yada, yada! And I remember promising myself that when I grew up, there was no way in hell I was going to lay a bunch of crap like that on kids about how hard I had it and how easy they've got it!
But now that... I'm over the ripe old age of thirty, I can't help but look around and notice the youth of today. You've got it so easy! I mean, compared to my childhood, you live in a damn Utopia!
And I hate to say it but you kids today you don't know how good you've got it!
I mean, when I was a kid we didn't have The Internet. If we wanted to know something, we had to go to the damn library and look it up ourselves, in the card catalog!! *or the WORLD BOOK ENCYCLOPEDIA*
There was no email! We had to actually write somebody a letter...with a pen! Then you had to walk all the way across the street and put it in the mailbox and it would take like a week to get there! DON’T FORGET POSTAGE!
There were no MP3's or Napsters! You wanted to steal music, you had to hitchhike to the damn record store and shoplift it yourself! Or you had to wait around all day to tape it off the radio and the DJ'd usually talk over the beginning and @#*% it all up!

We didn't have fancy crap like Call Waiting! If you were on the phone and somebody else called they got a busy signal, that's it! And we didn't have fancy Caller ID Boxes either! When the phone rang, you had no idea who it was! It could be your school, your mom, your boss, your bookie, your drug dealer, a collections agent, you just didn't know!!! You had to pick it up and take your chances mister!
We didn't have any fancy Sony Playstation video games with high-resolution 3-D graphics! We had the Atari 2600! With games like 'Space Invaders' and 'asteroids' and the graphics sucked! Your guy was a little square! You actually had to use your imagination! And there were no multiple levels or screens, it was just one screen forever! And you could never win. The game just kept getting harder and harder and faster and faster until you died! Just like LIFE!
When you went to the movie theater there no such thing as stadium seating! All the seats were the same height! If a tall guy or some old broad with a hat sat in front of you and you couldn't see, you were just screwed!
Sure, we had cable television, but back then that was only like 15 channels and there was no onscreen menu and no remote control! You had to use a little book called a TV Guide to find out what was on! You were screwed when it came to channel surfing! You had to get off your a$$ and walk over to the TV to change the channel and there was no Cartoon Network either! You could only get cartoons on Saturday morning. Do you hear what I'm saying!?! We had to wait ALL WEEK for cartoons, you spoiled little bastards! And we didn't have microwaves, if we wanted to heat something up we had to use the stove or go build a frigging fire.... imagine that!
If we wanted popcorn, we had to use that stupid Jiffy Pop thing and shake it over the stove forever like an idiot.
That's exactly what I'm talking about! You kids today have got it too easy. You're spoiled!!!!!!!!!
You guys wouldn't have lasted five minutes back in 1980! Oh yea, and a seatbelt was Mom throwing her arm across your chest every time she hit the brakes. Regards, The over 30 Crowd

MIT

2008-02-05T18:22:00.000-08:00

I was just crawling around the web a bit and came acrossed something that I think would be of interest to a lot of people. MIT offers a bunch of course outlines, lectures and exams from past courses online for free to the general public. http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/index.htm Here is the link to the courses from the Sloan School of Business.

Confessions of a flip flopper

2008-02-05T16:33:00.000-08:00

On Tuesday surprisingly bad service sector data did the market in before it really even had a change to get going. American markets joined their global cousins in a route. The Dow Industrials lost 370 points, closing at 12,265.13, while the Nasdaq lost over three percentage points, down 73.28 points, closing at 2309.57. The more broadly based S*P500 also got hit hard, losing a little over 44 points and closing at 1336.64. Unlike yesterdays decline on light volume, volume was heavy across the board today. This would suggest that the Bear Market in Equities remains alive and well at this point. Long term and short and intermediate term investors/traders should remain heavily invested in cash, though some sectors are starting to show some signs of being “sold out”.

Just the other day I commented that I thought we might be getting ready for a rally of some duration. I based this upon volume patterns and starting to see what looked liked bottoms forming in some financials, transports, housing and semiconductor names. While some of these still are showing decent relative strength at this point, the overall tone of the market is obviously still bearish. As stated above caution should remain the order of the day.
Specifics: One of the most bullish signals in any stock is when bad news comes out, yet the equity continues to rally. This tends to show that the sellers are “sold out”, or that the news was not as bad as the big money thought It was going to be, only the media and public was surprised. A similar situation is starting to develop in the US Dollar. Everywhere you look it's doom and gloom about the incredibly shrinking dollar. I have myself commented on it a number of times. The dollar has, however, started to ignore traditionally bearish events and data, for example the Federal Reserves running around like a bunch of clucking chickens and reducing interest rates twice in one month. Equity traders should watch UUP, which is the ETF that is based upon strength in the US Dollar. Rydex also has a dollar fund, either of these bear watching, I have a small dollar position on right now that will increase if the market continues to move in my favor. Another group that looks to be losing steam in spite of media and political clucking is Oil, both the commodity and the stocks that are dependent on the commodity. OIH, or DUG (short energy) look pretty nice do me, as do individual stocks such as XOM. Finally, while losing some ground today, the homebuilders did manage to put in a better performance than the overall market, as did truckers.
In wrapping this up, the order of the day remains caution and discipline. With all of the available equities, commodities and ETFs out there now investors and traders can easily get carried away. There is a common misconception that being a trader means always being “in the action”. I can tell you for certain after 11 years that if I had continued to hold onto that belief, which I also held earlier in my career, I certainly would not be here today managing money for clients and writing this commentary for you. It's perfectly ok to sit on the sidelines, CASH is a trade, you actually get paid a little bit for having it, so don't fret too much. Easier times will find us again, periods of time that do not require taking larger risks for smaller gains. Remember that if you lose 20% of your account you have to gain 25% to get it back, and if you suffer a 50% drawdown you are required to make 100% on remaining capital just to get back to the starting line. It's just not fair!, but that's the way it is. Always keep your eye's open to opportunity, but remain cautious in this difficult enviornment.

Say it aint so joe

2008-02-05T11:34:00.001-08:00

So the economists finally come around to realize what hey!!! We have a ressesion going on. They could have just talked to my dad about that, things in his business have been going downhill for nearly a year. My dad is a contractor. First of all he was hit by commodity prices rising at levels never seen before. He was able to adjust to that though by doing what most other contractors did, which is to not gaurantee the price of copper and other metals. That worked out okey and the world spun just as it should. About six months ago though people stopped paying. A lot of the construction business is done on credit, and contractors depend upon the credit worthyness of their clients, and construction supply stores depend upon the credit worthyness of the constractors. The clients my dad has are mostly business, clients like Sour Danfass, Ball Corp, Pella Windows, Barilla and a host of local business. About six months ago he started to notice that more and more of his clients had accounts past due, about 1/3 of them. Well its gotten even worse and now over half of his clients are at least 90 days past due in payments that they owe him. Some are trying to arrange to pay less, others just ignore his calls all together. His situation is not unique, every one of his friends in the same business are experiencing the exact same thing. This is not in a place that got overheated like Florida, or a state in an obvious recession like Michigan. This is in Iowa, rural Iowa where the ethonol boom is still making some people wealthy beyond what they ever thought could happen to them. So, its good to see the economists finally come around to see what businessmen have known for some time. Another friend of mine owns a t-shirt store near Siesta Beach in Florida, his sales are the worst they have been since the late 80's, he is thinking about just closing the store and finding something else to do.

AAPL

2008-02-04T17:59:00.000-08:00

One of the most powerful tools available to a trader who watches chart patterns is something we call relative strenght. Relative Stregth is a pretty simple concept: How well does this stock, or group of stocks, peform when compared to the major market indexes over the same period of time. A popular method of finding trading opportunities is to look for the stocks that do not pullback much when the market declines, or to look for stocks that do not rally as much when the overall market does. Attatched you will see a chart of AAPL, which over the last several days has shown a strong degree of relative weakness even as the overall market rallied. I will be looking to short it should it trade lower and break the current base.

A chart of AAPL

2008-02-04T17:57:00.000-08:00

The Greeen Budget

2008-02-04T08:12:00.000-08:00

Well GWB and his team have been working real hard this morning. How do I know this? Well he just came out and told us so. Not only has he been working real hard, but that three trillion dollar abomination they call a "budget", well its all on a laptop, so its Green. They saved hundreds of trees with this Green budget. Boy I feel good about that. Your robbing me blind, and my children even blinder, but that damn budget didnt kill any trees!

Three Trillion in Crack

2008-02-03T19:53:00.000-08:00

In the nation's first-ever $3 trillion budget, President Bush seeks to seal his legacy of promoting a strong defense to fight terrorism and tax cuts to spur the economy. Democrats, who control Congress, are pledging fierce opposition to Bush's final spending plan - perhaps even until the next president takes office.

What the hell are they thinking? The republican party has lost its friggin soul. 3 trillion dollars, well lets try to be positive, its only about $150 billion in 1913 currency.

I hate to bring in politics, and political ideas, but politics, economics, markets...they often mix. So while everyone is out there offering to throw us all a bone ($600 I think it is) to "stimulate the economy", I thought I'd take a couple minutes and pretend I was running for office. If I was, what would I do?

This should offend plenty of people on both sides and give us plenty to talk about. I'd be curious to see what type of feedback I generate on these solutions though, and also see what you guys think could be done to fix any number of our problems.

1) Overall spending has to be cut. So called "earmarks" and "pork spending" should not be allowed to be put in as a rider on major legislation. If a senator or congressman wants a particular project and money for his district, it must be able to pass as a stand alone measure.

2)BRING OUR TROOPS HOME from nonessential places in Europe, Asia etc. They can get their own damn armies and fight their wars, should one occur. We have our own fight right now, and we can not afford to continue being the entire Western World's army.

3) Raise the retirement age to at least 68, preferably 70. People are living much longer and healthier lives than when SSI was introduced. I would not change Medicare benefits at all because older and sick people generally have a hard time finding affordable coverage , so this part of the system would remain as it is as far as payouts go.

4)Remove the maximum income cutoff on SSI taxes, currently you stop paying SSI tax around $105,000 in income. I would keep the current tax rate on all income under about $80,000 per year, and on income over $80,000 I would tax at half of the rate taxxed under $80K.

5) Cut corp. tax rates by at least 25%. American companies are cuttently amongst the most taxxed in the world, its no wonder good jobs are leaving America, the suprising part is that more have not.

6) Cut long term capital gains in half and have no taxation on dividends. I would also change the definition of a short term capital gain to anything held for less than 1 quarter (ie 3 months). I would, however, raise the short term capital gains tax by about 10%, with exemptions made to critical liquidity providers such as Market Makers, Floor Traders, Specialists and other market professionals (Ie those claiming trader status)

7) Combine many federal agencies. Why do we need an FBI, ATF and DEA who largely do the same things and then fued amongst each other about it. Combine these into one Federal Force under a single adminstrative and command structure. Similarly I would combine the various branches of our Milatary in a manner similar to what Isreal has with the IDF, Canada with its milatary etc. I would cut overall milatary spending very little, if at all, however the admininstrative and other expense savings would probably be substantial by doing this. With the savings from this move I would increase the number of soldiers in critical combat arms, intel and logistical jobs such as Infantry, Special Forces, Logistics, armour etc. I would also use parts of the savings to add more funding for better training of our soldiers and better technology. Any amount left over would be used to increase the pay and benefits available to members of the armed forces, who are overall terribly underpaid.

So, there you have it. I have more than enough things in here to piss off people on both sides of the isle I suspect. However, I do think that these ideas represent reasonable and practical solutions to very real problems. Of course our political parties seem more interested in their own agenda's, so its doubtful any type of program such as this would ever pass - but if this or something similar was done I think we would be in much better shape for it. Like I said, if any of you have additional ideas or thoughts on mine I'd like to see them. I am very proud to be an American and have always thought our country, people and system to be the best the world has- but this has been achieved over time by us working together to make the USA better. With the way politics are these days I sometimes find myself fearful of our future.

Probably an unelectable fool!

Brandon

Hungry and Mad

2008-02-03T18:26:00.000-08:00

What in the world is it that makes us think that a bunch of power hungry Washington Political types and money mad financiers could get together and create anything other than a mess? Well obviously we, the people of the good ole USA do. It's worked out so well that our dollar today is worth about 5 cents in 1913 terms (1913 being when we got a central bank). Here is the ramblings of some nut job Randite in 1966 : In the absence of a gold standard, there is no way to protect savings from confiscation via inflation. The financial policy of the welfare state requires there be no way for the owners of wealth to protect themselves.

Of course later in life this Randite discovered that real power lay in DC, he went on to serve as an Economic Adviser to President Ford, and of course later he became the Maestro, and master currency deflater we all know as Mr Greenspan. Mr Bernanke seems to be eager to follow in his steps, and why not? No one is paying attention that they no longer report M3, it did go from $6.6 trillion in January of 2000 to $10.2 Trillion on March 23rd 2006. Another trillion to trillion and a half has been added since then, but because they don't report it maybe its more, maybe its less.

Why is price fixing a crime when business does it, but thats what the Fed is chartered to do? Questions, Questions, Questions...but not much for good answers.

Oh, I've changed my stance on the market now after all this fun. I had become very bearish in November and have spent the entire time from then till now heavily in cash with a few shorts. Overall I'm pleased with the performance.

Over the last few days though we have started to see some beaten down sectors pick up, and started to see decent moves on decent volume. I'll be picking up small amounts of Homebuilders, Semis, Truckers and the like. Small shares for now. The real test will be on the pullback. Internationally both Chile (ECH) and Malaysia (EWM) look like good places to have some money. I also suspect, though I'm not yet prepared to put money on it, that the dollars decline is done for the time being, and that oil is not going to continue going up, that its topped for the near to intermediate term. (USO)