Riding The Gravy Train: September 2013

Riding The Gravy Train

Beating the market is fun and profitable. This is how we do it.

Wednesday, September 18, 2013

Short Selling Ideas - GMCR, Z, TSLA, BBY


Currently equities are very overvalued and sentiment is stretched to multi-year bullish extremes by some measures. 

Dividend yield on the Dow is currently 2.45% and the S&P is at 2.10%.  By historical standards that's terribly low, which suggests equities need to correct considerably in price to bring those yields to the high end of the historical range which is around 6%.

Today we present a few stocks that are good candidates for selling short.  We'll look to do so depending on market reaction to the Federal Reserve announcement later today.  If it looks like a market slide is beginning, that may be ideal timing. 


GMCR, Green Mountain Coffee Roasters Inc.

We shorted GMCR a month ago, and shortly thereafter were stopped out at a loss per our stated stop level. 

On a technical basis, despite the uptrend still intact the stock looks like a good target per many other factors so we're prepared to possibly take another shot at shorting at it.  We see probable resistance in the area between 90-110 per the topping process  in 2011.  If we go short, we'll cover on closes over $100



Z, Zillow Inc.

While there's not yet a technical breakdown, Zillow looks extremely overbought and appears to be having trouble getting and staying over major psychological resistance at $100.  If we go short, we'll cover in the event of its closing above $100 for three consecutive days.



TSLA, Tesla Motors Inc.

Once again there's no breakdown, yet, however the trading of late seems sluggish and various measures reveal that sentiment is at a bullish extreme.  We'd cover on closes above $175



BBY, Best Buy Inc.

This company seems like just another big box retailer, probably one that will not fare well in the longer run.  We're short already, and we'll cover on three consecutive closes over $41 which would be above the 7-year downtrend. 





Worth reading, and rest assured the reality is much worse than these reported self-assessments: Investors too optimistic for their own good.








We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or publicly traded companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, they, us and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only, and not to be taken seriously in any way. Just like "real" analyst proclamations. Thank you.


To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated materially, not if a blog entry only contains general commentary.

Tuesday, September 17, 2013

Fed Tapering Commentary, DJIA Chart, Graphite Stocks (NGC, GTI, GRPH, USGT)


Smart comments by PIMCO's Mohamed El-Erian:



We remain convinced that the Federal Reserve will begin tapering its "QE" program much sooner than most would believe.  Few believe it'll start this week, or even this year.


Yesterday we wrote that "the DJIA will probably be closing above the key trend line discussed in our last update".  It did not.  That key level is 15500 at present, and the DJIA closed at 15494 today. 

Below is an updated chart of the Dow Jones Industrial Average, only small difference from the past being that the uptrend line is now drawn along the closes rather than intraday extremes. 

We cannot become bullish unless we see consistent closes at new highs, above the horizontal red line.



A few graphite stocks worth considering.

We like the graphite/graphene story, however a bright future for the material does not mean companies purporting to be, or even actually having operations, in the business of mining graphite or developing technologies utilizing graphene will enjoy share price appreciation.  This is especially true since that sector already enjoy a relatively recent big pump and subsequent dump via all of the usual persons and outlets. 

Some stocks in that sector are enjoying a mild resurgence, and have piqued our interest.  We offer charts of a few of them.


NGC, Northern Graphite Corp. (previously featured earlier this month, and we've since gone long at $0.80 which has not been diarized in this blog):



GTI, Graphtec International Ltd. (10-year and 1-year views):



We're long GTI at an average of $8.30 (not previously diarized in this blog), and holding above the uptrend line shown in the 1-year chart seems reasonable to us.


GRPH, Graphite Corp.:


We're long GRPH at an average of $0.085 (not previously diarized in this blog) and feeling better about it now that it has closed above the highs of the previous eight weeks. 

This current spike higher could prove to be something short-lived similar to what's circled in red, however we're compelled by the broken downtrend and have no planned stop level for now.


USGT, USA Graphite Inc. (previously featured in August):










We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or publicly traded companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, they, us and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only, and not to be taken seriously in any way. Just like "real" analyst proclamations. Thank you.


To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated materially, not if a blog entry only contains general commentary.

Monday, September 16, 2013

Empire Industries Ltd. (EIL), Market Update


Empire Industries Ltd. (EIL) trades on the Canadian Venture Exchange.  Much info, including a recent financial fact sheet, can be found on the site. 

Our interest is in the chart:

 
A 3-year trend, shown in green, seems definitively broken.  Based on that, it seems a compelling speculation so we recently went long at an average of $0.06  (not diarized in this blog). 

Probable resistance exists around $0.10


This news has stock futures, as well as gold and silver, up roughly 1% - Summers withdraws from consideration for Fed post.  As a result the DJIA will probably be closing above the key trend line discussed in our last update, however given the Federal Reserve has a two-day meeting ending Wednesday which will result in a "Summary of Economic Projections and a press conference by the Chairman" and possibly the start of tapering of the QE program, we'll sit tight with existing positions and wait it out rather than closing market short positions or turning bullish.   








We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or publicly traded companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, they, us and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only, and not to be taken seriously in any way. Just like "real" analyst proclamations. Thank you.


To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated materially, not if a blog entry only contains general commentary.

Friday, September 13, 2013

Market, Gold and Silver Update


After some well-placed vacation time, during which the market bounced as expected, we're back at it with the DJIA at a crucial point. 

Last update, on August 30, we were warning of an imminent bounce writing: "We would not turn longer-term bullish unless the DJIA is closing above the red trend line shown on the chart."

This was the chart, and as always charts can be clicked to view a larger version:


This is an up-to-date view:



For now we remain bearish and still expect September to be a losing month for the general market.  If not, at least some of the gains so far this month are likely to be retraced very soon. 

Why do we think so?  Other than the obvious, and some no-so-obvious, technical indicators such as the trend line shown on the charts above, the put/call ratio (amount of option puts vs. calls being bought) reveals a multi-year bullish sentiment extreme.  Such extremes normally coincide with market tops.


Mid-day August 27th we posted that we were selling most of our gold and silver speculations which were bought in late June virtually at the lows.  Here's what's happened to gold (and silver) since then, as shown by a chart of GLD:


Some of the call options we sold, which at the time were up by hundreds of percent, are now not quite as profitable and that underscores the importance of good timing.  Often the best way to time a trade is to simply do the opposite of what the majority of investors is doing.

When we were buying, multi-year highs in bearish sentiment were being registered.  On the day we sold, we noted the highest bullish sentiment of the year. 

Here's another example.  Recall that on August 16 we linked to this article, which was published on August 12.  In the 11 trading days after its publication, the DJIA dropped 700 points. 

Most are still very bullish on precious metals so while we are not yet ready to short gold or silver again, neither are we in a hurry to speculate bullishly beyond holding the remaining cost-free calls we have left.

As for equities, we're currently comfortable with our outstanding short positions.


Interesting news, which if true would probably prove at least short-term bearish for gold and equities:  Obama set to name Summers as Fed chief







We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or publicly traded companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, they, us and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only, and not to be taken seriously in any way. Just like "real" analyst proclamations. Thank you.


To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated materially, not if a blog entry only contains general commentary.

Wednesday, September 04, 2013

Northern Graphite Corp. (NGC, NGPHF)


Northern Graphite Corp. trades in Canada under ticker NGC and in the U.S. under ticker NGPHF.

Here's the chart:


Over $0.95 (CAD) the stock will be above the 2-year downtrend shown in green as well as above its 200-day moving average (not shown), and above recent highs.  That'd be bullish, so it's worth keeping an eye on this one.  Below $0.50 would be very bearish.

$1.00 is an obvious psychological level of possible resistance so, if it does cross above $1.00, a reasonable speculation would be to buy above $1.00 and sell if it falls back to close below $0.95 







We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the positions we do, or for mentioning any positions or publicly traded companies in this blog. If we hold existing positions we divulge the fact. This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

Please presume that we, she, he, I, it, them, they, us and you are purely fictional characters and that everything written in this blog is satire intended for comedic amusement only, and not to be taken seriously in any way. Just like "real" analyst proclamations. Thank you.


To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated materially, not if a blog entry only contains general commentary.