Oil - Will it ever stop?
05.17.08 (6:52 pm)
It looks like the bull run for oil won't end! I know that I may be getting in a little late, but after checking 102030 and OBV, it really doesn't look like oil is slowing down. There were even remarks by the King of Saudi Arabia that they will not be increasing production. I can't imagine the US increasing production either... after all, we don't want to run out any time soon! To me, this spells out a continued run in oil prices. With Goldman Sachs analysts estimating that prices could reach $200 a barrel, I decided not to wait any longer and got into DIG. This is an oil ETF that has been much more volatile than other ETF's such as IEZ and USO. DIG also has an inverse ETF counterpart, DUG, which can be used to hedge positions. I have created an interesting hedged "near-arb" play that involves shorting DUG (as I'm bullish in oil) and longing some puts on the ETF, "IEZ", to hedge. As these two have a -.90 correlation and DUG is far more volatile, this play can be very profitable. The spreadsheet, which you can find on the downloads section, shows the breakdown. (Note: The data is a bit old and needs to be updated).I will be using the Bloomberg later this afternoon to do some research for my technical analysis paper as well as finding a new pick. I will keep you all posted.
New Site!
05.12.08 (7:17 pm)
The new site should be up and running by now... The layout is much better looking than the old T-Blog site, http://profitprophet.tblog.com. Besides the new site, alot has been going on since my last post. I recently graduated and have begun my job search! It's much more difficult than I had originally imagined, but I'm still confident that something fitting will be out there. As far as new predictions are concerned, Manitowoc (NYSE: MTW), Apple (NSDQ: AAPL) and Visa (NYSE: V) have all been amazing picks. I don't believe the bull run for MTW is quite over yet, so get in there soon and make some money. Bull Put Spread or a Collar is the way to trade this stock. For the spread, the upper strike (short put) at 45 and lower strike (long put) at 40 should be a clean way of making some easy cash. From a fundamental standpoint, this company is beautiful. Excellent free cash flow, good growth and a low PE to boot. The technical analysis is what makes this a great buy though. 102030 is in an upward trend, with the 10 day SMA about to cross the 20 and 30 EMA's, while RSI and stochastic oscilattor are both trending up as well. I believe this stock will hit 45+ by the months end.Visa IPO!
03.18.08 (10:17 pm)Visa will be listed on the NYSE tomorrow (ticker = V) and I truly believe that this is a buy! A great international company that has no exposure to credit default risk (rather the banks that use Visa's service) IPO price will be around 40-45 bucks, so I'm going to be buying 50 shares and hopefully ride this thing to the moon. I figure that b/c its such an international company, and the earnings will be in USD, that if the USD continues to decrease, earnings will increase! Also... what the HELL has been going on? Bear Stearns getting bought out by JPM for $2 a share!! Unreal! Its funny how in Portfolio management class last week we talked about M&A's and how the 'acquired' company's stock typically increases in value right after the acquisition takes place... In the case of BSC, today (after the stock dip from 30 to 4 monday morning due to the acquisition) it went up ~30%! JPM has done well lately too... Too bad I put a limit order in on Sunday night .25 below what it opened at :( , would've made about 15% profit in 2 days. UXG and ABX have been getting reamed as of late... Gold futures are over 1000 and gold miners are getting hammered! I don't get it! Technical signs are ugly and I may have to start shorting some calls.
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Excitement!
03.13.08 (8:56 pm)I've been very busy with school lately and have not had much time to post... WHAT A WEEK its been! Markets hit levels around 11,500 and then all of the sudden the Fed pumped in $200 Billion to the credit industry and accepted mortgage backed securites as collateral for the $200B. After this news, markets rallied +417 pts (Dow) and the market has continued the upward trend since. Oil has hit record levels of $111 and gold has finally broken $1000 as a result of the dollars continued decline. This is a very volatile time in the markets, and I'm learning alot each day. Right now, I'm nervous about making any picks, but will be on the Bloomberg tomorrow and will dedicate some time finding a pick. More later...
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Bloombergs R Kool.
03.05.08 (1:24 pm)I'm on the terminal right now, grinding away and finding some new picks. I was just looking at a Crude Oil ETF, USO US (now at 82.93), which looks like an interesting pick in the future. After checking the security characteristic line vs the SPX, it seems that this moves inversely with the market (although, at low confidence), as the RAW beta of the SCL is negative. After running a 102030 test (which I now have preset into the terminal) and putting the Fibonacci retracement annotation in place, I can see that USO US may retrace to the 72-77 range before beginning a C to D leg movement. Assuming a 100% projection (matching A to B movement) after point C is formed, I expect roughly a 20% gain. So, using simple averages, I expect this ETF to be at ((72+77)/2)*1.20=89.40 by next month. Note: I feel that today's big gains in commodities can be attributed to the fact that yesterday was so terrible. Without going into any detail, GSPG is a good penny stock buy right now.
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Bloomberg Terminal
03.04.08 (12:30 am)So the other day, my friend showed me that we have a Bloomberg Terminal (professional trader setup) in the Business School... After screwing around with it twice now, I must say, it is one of the most amazing/useful/functional investment tools I have ever seen. EVERY function is at your fingertips with all sorts of information. Even better, if you have any type of question, there is live help instantly available! Supposedly, the terminal monthly costs are around 1,800, but since Janus donated it to the Leeds school, its free for me! I'll be logging onto the Bloomberg in the morning and plan on posting some cool screenshots/graphs. My goal is to figure out how to find some legitimate arb opportunities... More later.
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Precious Metals, Baby.
02.27.08 (9:18 pm)Bernanke came out today and said that another rate cut is imminent, giving us even further proof of what we've been saying all along. The funny thing is that he's going to lower it DESPITE our current inflationary state! Whats the effect here? It doesn't take a genius to figure this one out! EURUSD hit a new high today of 1.51! Unfortunately, it's starting to look like my trip to Europe this summer is going to be pretty costly. Last year around this time when I was in Europe, EURUSD was at 1.34 and I was complaining!
What does increasing inflation and weak dollar spell out? G-O-L-D! Now is the time, folks. If you aren't already in it or any precious metals, don't wait any longer! UXG is about to explode (it's been building cause for a while)... and so is my new favorite, ABX ! Take a look at this graph. It's a thing of beauty. (If you don't understand what I'm looking for, just read my older posts) From a more fundamental investor standpoint, they just announced tonight that they will be going through with a 2.6 billion dollar expansion project in the Dominican Republic where "Barrick estimates that the mine will yield 20.4 million ounces of gold, along with more than 400 million pounds of copper and more than 100 million ounces of silver." PLEASE do yourself a favor and make some money! Buy order limit 50.75 is what we want here! Risky but profitable option strategy: Long an April 55 Call and short an April 50 Put. If you want to hedge by shorting the underlying, be my guest!
On another note, PAAS has broken 41, meaning I was dead on with another stock (big surprise, right?) 16% in 2 weeks isn't bad... Set stops around 39.5 to be safe, but this thing is bursting through resistance levels with massive volume, meaning we could easily see it reach 44 before a retracement.
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It's been a while... Let's Recap.
02.26.08 (8:45 pm)We've just had two GREAT days in the market... Especially great for my picks! (bull market?!!) However, due to the low interest rates and continued speculation that rates will go even lower, this has resulted in a weak dollar. Well, good news for all of my stock picks because Gold, Silver and other commodities can be used as a hedge against the weak dollar and inflation!
Maybe the Fed will eventually figure out a way to fix our current state of Stag-flation (increasing inflation with decreasing GDP) and add more stability to other segments of the market... But until then im bullish commodities and bearish tech/retail/banking! (besides stocks with good technical signals, *cough cough* my pick, AMAT *cough cough*)
For example, take a quick look at GOOG. This stock is down below 500 and even touched below 450 today! All signs point to the downtrend to continue. I believe we could see Google go beneath 400. The volume isnt lightening up and Fibonacci analysis shows its got a ways to go before reaching a bottom.
In other news, I finished the Excel worksheet of all the Alt Energy comapnies and will HOPEFULLY find some webspace soon. Its still a busy week, as I have a huge test in Portfolio Management tomorrow, but expect more posts after that. Time for me to run back to the library...
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My picks: So far, so good.
02.20.08 (2:26 pm)After a HUGE day yesterday with my stock picks (despite the Dow closing down), today has been another good day. Yesterday, PAAS closed up over 7% while BTU was up around 6%. Both ROY and UXG were up around 3-4% as well. Today, PAAS, ROY, BTU and UXG all finished the day up in smaller amounts. I just went through and checked the charts for thee stocks again and continue to believe that these stocks still have ways to go. ROY and PAAS look like they are about to break out, EVEN WITH the huge gains they have seen in recent days. BTU has been rising faster than expected, so I could expect a slow down. UXG, well.. we will just wait on this, because it hasn't received the volume needed to break through 3.5.
Another interesting pick I had a while ago (before this website) was CF Industries. In mid january this stock hit a low of around 90 and has since rebounded to 125! Charts look like this trend may continue a while longer before a retraction. I will keep my eyes on this in hopes of seeing formation of a new low point to buy at.
As far as the fuel cell portfolio is concerned, I have decided to integrate other green-energy companies to this as well. My hope is to find enough closely correlated stocks, that I can end up shorting some of the portfolio to create a hedged portfolio with low sigma. I will continue to be working on this for a while, so don't expect anything soon.
In other news, I have been working on my music production and now have a pretty 'legit' studio here in my room. After purchasing a new MIDI controller and downloading tons of new samples, my Ableton Live set-up is starting to function pretty nicely. As soon as I find some FTP space, I'll upload some of my latest tracks.
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New Ideas...
02.15.08 (3:46 pm)I'll start out by saying how rough the market today was today. Although nothing was down a substantial amount, each of my picks got 'owned'. Partially due to the fact that US consumer confidence fell, and also in part to the fact that there is still risk of additional write-downs from the big banks. These signs all mean that markets are still volatile, yet, I am still very bullish on BTU, UXG and PAAS. (Note, for you worried, long term investors: check out the US Treasury yield curve.. for you guys, we only have 3 more years until we reach stability!)
Today in portfolio management lab, we were calculating optimal risky portfolios. I found this exercise very useful, and now am going to apply my new knowledge of how to calculate the optimal risky portfolio among stocks of a sector, which I feel will be very profitable into the future, of Fuel Cell companies (thanks GEI board!) I will be working this weekend to create an excel spreadsheet, with graphs, showing the optimal fuel cell portfolio. I also plan on taking notes of the performance of this portfolio. In the mean time, it's Friday... I'm outta here.
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Bullish Day - Dow up 1.45%, S&P up 1.36%
02.13.08 (5:57 pm)Overall great bullish day in the markets. All of my current favorites (VIP, ROY, UXG, PBR, NOV, AMAT, BTU, PAAS) were up.
I was especially impressed with the fact that AMAT was up 10% for the day, after news on Bloomberg was released early this morning (when it was only up 6%). My father took my advice on AMAT a while ago and bought some 17 April calls, which have increased in value quite a bit since the purchase date. After applying some Fibonacci ratios to the ABC structure that AMAT has seen from its low of 16.13. I believe that the C to D leg, which we have just seen, has reached its peak. Point A (16.13) to B (18.9) was a total gain of 2.77, after a small price retraction to 17.1, we are up 2.8 to point D (19.91). A retraction would not surprise me at all, however, from analysis based off of historical data (102030 Test/RSI/Stoch/MACD) it seems like AMAT will still continue to go up.
Note, after yesterday's down day, BTU made a strong comeback up 5.5% for the day.
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Silver Bull - Buy PAAS!
02.11.08 (10:59 pm)Silver futures prices have been in a steady upward trend since Mid-December, and with continued fed rate cuts still a strong possibility, I see silver's momentum to continue with a few retracements along the way. I checked over some silver stocks and found 'PAAS' which has a VERY strong correlation to silver futures prices, so I believe this will be strong well into atleast mid-2008. After running several technical tests on PAAS, it is apparent that this stock will go up. 102030 shows that the 10 day SMA is about to cross through the EMAs, while RSI, MACD and Stochastics show that bulls are taking over the price of the stock. I believe that last week's low of around 32.70 is the bottom of a new ABC trend. From mid-Dec until mid-Jan, this stock gained 9 points, so I believe that we will see something similar. I expect that PAAS is currently in the A to B leg of the ABC structure. Volume has been rising with price increases, so look for strong volume to drive the the price. As soon as there is a price retraction, I will use Fibonacci ratio analysis to predict the retracement and the C to D leg of the price. This is a BUY and HOLD.
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Markets are up, BTU is way up.
02.11.08 (2:05 pm)It looks as if I overestimated yesterday's G7 news, because markets are ending the day up around 50 points. Comments by Hugo Chavez threatening US oil cut off, sent oil prices upward, leading to gains for oil/energy companies. Needless to say, included in this group of gainers was BTU, up over 5% for the day. So far, BTU is up 7.6% from my initial prediction less than a week ago. IPSU closed down 1.21%, while ROY, AMAT and UXG all finished with gains for the day.
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G7 Growth Warning
02.10.08 (9:56 pm)It will be interesting to see how the markets play out tomorrow after comments made by today by G7 officials, warning of further financial market turmoil. Right now, Asian markets are getting slammed on this news, and I expect the same to happen to US stocks. G7 officials have mentioned there will be more rate cuts and tax reductions in order to spark economic growth. I expect a large down day tomorrow.
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Tragic Explosion at Imperial Sugar refinery :(
02.08.08 (5:05 pm)IPSU is now one of my favorite picks to sell! Today, there was a disaster at one of Imperial Sugar's refineries in Georgia where, sadly, 6 people died.
The factory downtime caused by this event could have a serious effect on overall sugar production, as this refinery was IPSU's largest. I believe that sugar prices will increase, which will in turn raise expected earnings for all sugar companies, however, in IPSU's case I believe that the costs will outweigh the benefits, atleast for the short term, and result in the stock's price falling to around 16 by late March. 102030 test shows that IPSU is beginning a downtrend, and RSI, MACD and Stochastics are all trending down. I believe that a smart play would be to sell Feb 17.5 calls for 2.35 premium, and use that premium to simultaneously buy Mar 20 puts.
Also, BTU (my top pick right now) was up 2.22% for the day.
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New Pick - BTU
02.07.08 (1:17 pm)After running through a bunch of different coal stocks (which is a strong industry right now), I found a good buy in BTU. It is showing quality volume, with high volume being a sign of a upward movement and light volume being the sign of downward movement. If we infer that ABC signs are an accurate predictor, we can place position A around Jan 22 B at Jan 28, C at Feb 6, so D must be 54+ in a week or so. After running the 102030 test, graphs show we are at a point of convergence. Although stochastic indicator is aiming downward, I believe a reversal is in order (see mid November's STO), as RSI is pointing up and MACD is on top of the signal line. (see graph below) A good strategy on this stock would be to short a 50 put and 70 call and use the premiums to long a 55 call.
I am working on an Excel document that will track all of my picks with projected price, which I will put on the website as soon as I get my FTP up and running.
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Still a volatile market...
02.06.08 (2:13 pm)After the short lived rally last week, the beatings on the market have resumed with the dow being down 370 yesterday and 60 today. The blame for the latest stream of smacks to the market is new recession worries, as an unexpected contraction of the service sector served as a signal of fear for investors. Today, the main reason for the drop in stocks was due to falling oil prices, which had a negative effect on oil stocks. Gold futures rose on speculation that there will possibly be another rate cut, leading to a weaker USD relative to other currencies. How did this play out for my picks? Fairly sideways day with UXG, VIP and ROY having a small up day and AMAT and IPSU having a small down day. I will be going through new candidates tonight and will post as soon as I find something worthwhile.
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Why the 102030 test is effective
02.03.08 (8:37 pm)One of the primary tests that I use and frequently talk about is the 102030 test. I discovered this test in 'Generate Thousands' written by Dr Samir Elias, and have seen great success since adopting it in my technical analysis of stocks. To gain further understanding of exactly WHY this test seems to work so well, I sent an e-mail to Dr Elias inquiring the techical reason for the success, which he kindly responded, "While one of the reasons that the 102030 test works is that many traders use either the SMA(10) or EMA(20) as a criterion for buying or selling, there is a logical reason why the 102030 test works well. Exponential moving averages place more weight on latest data so they are a reflection of a shorter term trend, while the SMA weighs all data points equally reflecting a longer term trend. Due to volatility of shorter term moves using only the EMA(20) or EMA(30) will result in false signals. When both are used they tend to reinforce each other resulting in much less likelihood of being fooled by volatility and false signals. Combining the three together indicates that both the shorter term and longer term trend are coherent giving much better results. I have tested several moving average combinations using a trade simulation program I setup and found this to be one of the best" The combo of this test on stocks with a strong industry group as well as upward trending stochastic movement has proved itself successful thus far. I will continue to use this to time my trades, and hope that there is something as good in the book I just ordered, Tom O'Brien's "Timing the Trade".
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ISRG up 52 points in 1 day!!
02.02.08 (10:21 pm)So it looks like I NAILED ISRG as hard as possible... I was busy Friday and didn't have time to check my stock picks until now. ISRG closed on Friday up 51.61 pts. Yep, that is 20.32% in 1 day, folks. I would advise a stop loss on this at 300. Let's see this happen with UGX this week. So far, The Profit Prophet is on target :) I have attached a chart as well.
-as a side note, I want to test my technical prediction ability... I think VIP looks very attractive (short term) from a technical standpoint. 10 day SMA is curving upwards and MACD line is growing further from the signal line. I predict to see VIP hit 38-40 range within the week... (note: at 35.80 as of 2/2) Although I am not officially endorsing this stock as a BUY, I believe that there will be an upward movement and want to test my hypothesis.-
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Gold/Mining/Drilling Bull
01.28.08 (4:16 pm)I'm bullish on gold, mining and drilling companies all together. The reason behind this is thus; low interest rates in the US will cause USD to weaken (relative to other currencies) resulting in a flight from US fixed income investment into inflationary hedges such as gold. I believe that gold will see new highs over $1,000 per oz. If history repeats itself, some experts believe that gold will reach up to $1,150 at the end of this bull cycle. I believe that with the hike in gold/mining/oil prices, we will see more of these companies expanding their business due to the low borrowing costs. I will take a more detailed look into some of these companies over the next few days and should have some bullish picks by the weeks end.
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ISRG = Buy
01.28.08 (12:31 pm)It's been a while since I have had a chance to search for some new picks, but I found some time today to search through various industries and found a promising one in Medical Equipment & Supplies. I chose this industry because of the recent flight of money from institutional investors. This industry was basically silent a few weeks ago, but recently has achieved a 'green' investools rating, and looks as if it will only get stronger in the weeks to come. I have been running 102030 tests on all the stocks in this industry group and found a winner in ISRG, which has just recently started an upward movement. ISRG is well under resistance and slightly above a critical support level, leading me to give this a STRONG BUY rating. I will additionally check the Morningstar ratings when I get into work tomorrow, however the only downside that I see with this stock is that insiders are selling their shares. I feel as if the high PE could be scaring insiders, who want to ensure profit now by selling. The high PE could also signal that there is room for future growth. I found what seems to be an anomaly in EZEM, which has been moving completely sideways since November. I'm not sure of the reasoning behind this, and will ask around on the GEI board to find the answer, which I will post as soon as I find out. As far as overall market condition, we've seen a nice +110 day thus far, and I can only hope that we will see more upward movement in the days to come, but I still expect volatility until the rate cut on Wednesday.
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Recession Outlook
01.25.08 (12:04 pm)This is an excerpt from Bloomberg, "Jan. 25 (Bloomberg) -- U.S. stocks dropped for the first time in three days, led by financial companies, on concern banks will be saddled with more credit-market losses and the Federal Reserve won't cut interest rates enough to stimulate growth." This is even more evidence of how markets are going to stay volatile until the next rate cuts. Assuming that investors don't believe recession outlook is very serious, I'm expecting the Dow to hit 13000 by mid summer (at the latest). Commodity indices have started to trend upwards, yet are still 10% below any resistance, showing that there is potential growth there. On another note, I'm going to begin searching for jobs/intern positions for after graduation. I will start searching for Energy trading jobs, hedge fund groups, fund management and other risk management type jobs. For the meantime, I'm going to Aspen this weekend for the X-games! Maybe I'll post once while there.
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Another up day!
01.24.08 (11:47 am)So far, so good. The market is staying afloat at +14 pts and maintaining levels over 12000. I'm beginning to believe that the rate cut has put the market in a state of paralysis, atleast until the next rate cut on wednesday. From there, we will see what will happen. I believe that Bush's tax rebate stimulus plan has something to do with the stabilized markets. As we wait for the next job report, expect some volatility (VIX still at 29 afterall), but don't expect a huge market sell out. In other words, I think indexes and most large cap stocks will be safe from here on how. (Maybe the time to buy some calls?) Many investors feel the job situation is fine right now, and that will play a huge role in determining the market's behavior.
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Just a thought...
01.23.08 (7:32 pm)As I was sitting at my dining room table, feeding my face with Wendy's, I couldn't help but ponder how much money fast food makes off of Coca Cola products... then i started to think about how much Coca Cola must make. Do these international super-corporations (like Coca-Cola and McDonalds) be used as recession hedges? I looked at the charts, and unfortunately I have a feeling that due to the fact they are international, and international markets are taking a pounding lately, that they are NOT. Perhaps I'll look into finding a truer 'recession hedge' stock.
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WTF?
01.23.08 (4:46 pm)
So this morning, I posted when the Dow was down ~200. Later this afternoon, to my surprise, the Dow is up 298... Unbelievable. It looks like IPSU (a Sugar stock I have been frequently checking, that I heard about from GEI) is doing well. I started thinking it could be a buy back when it was around 18, and as of today, its sitting over 21. Today as additionally a good day for Countrywide, as they closed up nearly 15% for the day. Apple and Google continue to get REAMED. I remember just a few days ago thinking that selling some 150 apple puts would be a good idea! (Thank god i didnt do it... apples at 130 now) My rationale was that there was support around 150. If I was forced to buy at 150, I figured it would just go back up! On the bright side, I guess this is a learning experience which is showing me how unpredictable the market can be. Taking a closer look at Apple, it looks like it hasn't seen the bottom yet. For the first time in a year, things look like they are trending downwards. RSI is at an all-time low, the 10 week SMA is trending downward on the 102030 test and stochastics show that bears are controlling the price of this stock. I'm under the impression that this stock will go down a bit more (not immediately, however... I would guess a small rebound tomorrow) before turning around. I'd still wait a bit before buying into AAPL or GOOG. Since tech stocks are slowly losing strength, week by week, I want to see signs of a reversal before recommending any buys.
