Traders Corner   27 comments

Yesterday’s dumpfest was good for the S&P 500’s daily technicals, bringing them down from overbought territory. But the weekly technicals will need a bigger and/or longer drop or sideways move to have any impact.

The S&P 500 futures are only flatly positive at the moment, so anything is possible today. If I had to pick a direction for the markets, I’d pick sideways. I don’t see enough sentiment to push it up or down significantly. A long sideways move would have the same technical impact that a large drop would have, without all the financial carnage.

From a bullish perspective, the way the S&P 500 bounced up from yesterday’s low has to be viewed as a positive sign.

The S&P 500 levels to watch today:

UPSIDE: 1833-1834 (2 data points), 1838 (December 30th’s low), 1841-1842 (4 data points), 1844-1845 (2 data points), 1849 (December 31st’s high, December’s high and the all-time high), and 1857 (top of the Bollinger Bands).
LAST CLOSE: 1831.
DOWNSIDE: 1827-1829 (3 data points), 1822-1823 (2 data points), 1810-1813 (5 data points and November’s high), 1809 (20 day moving average), 1790 (50 day moving average), 1775 (October’s high), 1767 (December’s low), and 1762 (bottom of the Bollinger Bands).

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27 responses to “Traders Corner

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  1. Technicals gained strength on the down move yesterday and continue to gain strength down on the bounce this morning. At the moment, it doesn’t look like the move up will hold. I wouldn’t place any bets yet on the long side.

    • Thanks. Looks like you got out of UCO last week at just the right time.

      Robb

      • I got lucky on that one. Then screwed up and bought back in too early. It’s a partial position so I’m not worried. I’ll hold for now. I’ll probably average down when it starts to show some strength and look to sell calls then. If bounces are weak, I’ll add SCO and play both sides. Still thinking I can average 2% a month or better on this play.

  2. Thinking about taking a position in Hawaiian Airlines (HA). Seems with fuel prices steadying and perhaps domestic economy improving and better pricing power for airlines that HA. May be attractive play. Thoughts?

    • Marshall,
      My favorite airline is one similar to that one, Alaska Air (ALK). Most airlines don’t mess with Alaska because it’s a hard route to fly. That leaves ALK fairly moated for the most part. On top of that, ALK already has some of the better margins in the airline industry.

      • Thanks Ed. I looked at ALK. I sometimes prefer to get companies that have lower margins as to me that represents an opportunity for improvement. But I will likely wait to pull the trigger as I am ok having cash position right now.

      • I flew back from Hawaii yesterday on Alaska Airlines and sat next to the CEO. He took a middle seat in coach. Took us a while to figure out who he was. The crew knew him and we figured he was another flight attendant or something. Then one of the attendants got him to sign the in flight magazine and his signature was the same as the CEO’s at the front. He had introduced himself as Brad and sure enough, the CEO’s name was Brad something or another… Turns out he had been waiting standby to get out of Hawaii for several days as all the flights were booked.

      • Tells you a lot how he runs the company. If I buy an airline that’s the one.

      • Seattle – that is a remarkable story. Thank you for sharing.

      • w_seattle,
        Thanks for sharing that!

  3. Makes sense Marshall but I hate airlines! I do however currently have a small position in GOL (in which of course, I am getting killed).

    I did sell my last tranch of PVCT yesterday for 2.63 which I bought at 2.22. 18% in a week or so. Also sold OGXI when it hit my limit sell of 8.81. Bought at 8.02. About a 10 % gain in a couple months.

    Marshall, GTAT is way up from where I bought it as well. 9.10 v a cost of 8.08. I have a full position and am thinking of selling half. Any of your thoughts?

    • Sold half my GTAT at 9.31. Bought at 7.90. 17% gain from my first buy on Dec. 12

      Having a very good day!

    • PVCT is one wild ride! I put a low ball bid in at 2.51 to start building a new position. Stock was all the way up to 3.00 earlier today but somehow I got filled at 2.51 at the close. Half position and I will build if it moves lower by another 10%

  4. Jeff – congrats on your gains in the two recent stocks. I was so close to buying PVCT at 89 cents, I actually typed in the order, but did not execute it! GTAT has had a great run from $7.90. I still am holding the long view, so am not selling. But I can understand people taking some profits it what will undoubtedly be a bumpy ride.

  5. Just bought MET for my kids college accounts. Twice a year I put money in their accounts with an eye for stocks that I believe to be rock solid and have good long term prospects. These are in the do not sell until they are in college bucket, so I really try to be thinking five years down the road.

    • Marshall, I enjoy reading your thoughts. Why MET and why now (1.23% below its 52-week high)? Small dividend: 2.07% (note: anything under 3% I call small and I understand others have different definitions). You have to go back to early ’08 to find MET trading above today’s price — a couple of dollars.

      And of course I am always looking for Looooonnnng term buys so if I am to follow I am looking for your reasons this is a good long term buy.

      • Tom – a lot of life insurance companies will really benefit as bond prices move back to historical level. They have already seen a portion of that gain, but I believe there is still a ways to go. Then MET specifically (I believe) will get the green light from the fed to increase heir dividend (they had been constrained as a TARP recipient) and finally, I believe they got a real bargain from AIG in buying their Asian life operations when AIG was under duress and that should reap LT benefits.

      • Thanks for providing a list of good reasons. TARP is so old news I forgot about it — except when I look at BAC’s $0.01 quarterly dividend. So there is a probability MET will increase their dividend and may be a growth stock.

  6. Marshall,
    One of your picks GA is coming under selling pressure based off an article declaring fraud on the balance sheet. Did you research that at all?

    • Md – I never did note fraud on balance sheet. I did note that a fairly large component of short term investments on their balance sheet (about 100 million) was in real estate – which is in full bubble mode in China.

  7. I sold the discretionary component of my GA this afternoon (about 40% of my total position). They are under a bear attack right now and I have been through a few of these before and they are never fun. So I decided to take a small loss 2.2% and watch from the sideline. I will be disciplined though and the other shares that are in “my hold for one year”pot will remain unsold until they hit anniversary(one is May 6th and the other November 15th). To be clear, I have no idea whether allegations are true or not – but Ed has warned about Chinese stocks before here and I do not have stomach to stay in.

    • Sold my GA at 10.81 for a small 3% loss. I’m going to wait for the dust to settle and will do some additional research before I rebuy.

    • Actually, with the dividend, I am about breakeven on GA. Glad I was watching the news.

    • They are notorious for fraud. That seems a littl odd to me having 100mil in real estate through a tech company. Will be interesting to see how this pans out. Glad most got out here with small damage.

    • I did read through the Ottoman mud slinging of GA. I really felt most of it was just innuendo. He asks why they are not spending more on R&D if it is such a great business (online gaming). The fact is that online gaming is a very low capital intensive business and spins off a lot of cash to do other things with. That includes a regular semi annual dividend. He talks about the high margins for GA and says they are suspicious. In my mind, he was very selective regarding the companies he chose to compare the GA margins with. For example he excluded CYOU (even though he later refers to CYOU). And CYOU has similar margins to GA. Then he asks why the chairman would sell some of his his own shares (in the fall) at $7.25, and now offer to buy company at 11.75. While that seems a bit odd, he only sold 6% of his stake in the fall. He may have needed cash for other things. And I do not think anyone has said he is looking to take the company private all by himself, so it is possible a consortium approached him about a LBO. The real estate investment has been known for some time, and other companies have stealth real estate investments as well. So there is some smoke, but the article seems slanted and the author has said he is short GA – which if the 11.75 offer is legit is a bad place to be. I will also note that Ernst & Young are the auditors. Not to guarantee that they can not be fooled, but at least you know it is not some corner green eye shade firm.

  8. Do any of you follow ctrp? I can’t find any reason for the tank.

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