Riding The Gravy Train: November 2013

Riding The Gravy Train

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

Friday, November 15, 2013

Voxeljet (VJET), Buying Makism 3D Corp. (MDDD) and Vapor Corp. (VPCO), Global Gold Demand Down 21 Percent In Past Year


We announced purchasing Voxeljet (VJET) less than a month ago, writing:

"Those bullish on the 3-D printing sector will find this company especially compelling, perhaps even a value.  Volatility is a given, and while upside is tremendous initial public offerings are best participated in cautiously and by those with experience in such issues.  It could as easily be at $50 as $15 in a couple of months, perhaps a couple of weeks."

At the time it was $29.  Three weeks later it hit $50. 

Earlier this month we described our stop strategy for this holding.  Since it has gone so high so quickly, we're switching strategy and simply now raising our stop to $44.90

Yesterday VJET announced its quarterly results.  



Makism 3D Corp (MDDD), a little-known 3D printing stock, began to trade recently and we're going to open a position. 

It last closed at $1.20  We'll sell on any closes below $1.00 




Vapor Corp. (VPCO) describes itself as "a leading supplier of electronic cigarettes with a diverse product portfolio that includes the most recognized brands by both retailers and consumers in the industry. Vapor Corp. is also the only fully reporting, publicly traded electronic cigarette company in the United States."

We're also buying VPCO, as it appears that its downtrend is broken:


VPCO last closed at $0.96 and our initial stop will be to sell on any close below $0.80



News:  Global demand for physical gold totaled 868.5 metric tons during the third quarter, according to the World Gold Council, a 21% drop from the third quarter of 2012.


Here's a look at the NASDAQ:








http://www.goldpricedirection.com/results




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.

Sunday, November 10, 2013

Weekly Market Outlook and The Importance Of Long-Term Trend Lines And Sentiment. Twitter (TWTR), Container Store Group (TCS), 58 Com (WUBA), Voxeljet (VJET), Coast Wholesale Appliances (CWS), AGQ (ProShares Ultra Silver), GLD (SPDR Gold)


The market outlook expressed in our last posting remains in effect.  Short-term neutral, expecting a bearish turn soon. 

A massive "melt-up" is possible, but this hurdle would have to be cleared first:

 
The above chart reveals a 14-year trend of resistance not far above current levels. 

It's remarkable how much the latest bull run looks like the one in the late '90s.  Duration of 5 years with an approximately 8000-point rise vs. duration of just less than 5 years with an approximately 8100-point rise.  The bull run in the middle of the chart also lasted 5 years, rising approximately 7000 points.  All three enjoyed a steeper burst at the end that lasted one year each.

As we've noted recently, sentiment also resembles previous stock market peaks.  That's best expressed by the mania for the Twitter IPO.  It dropped over 7% on Friday, making it both the most talked-about IPO in years and probably the worst performing within its first two days of trading.  An unsurprising correlation for those of a contrarian mindset. 

In contrast to the massive media coverage of Twitter, have you heard a word elsewhere about these IPO's that we've recently written about?  TCS (Container Store Group) flat since its debut on November 1st, WUBA (58 Com) up 16% since its debut on October 31st, and VJET (Voxeljet) up 124% since its debut October 18th.

Getting back to the chart above, some readers doubt that there's any merit to studying trend lines drawn on a chart.  We ask what they were doing in early March of 2009.  The world was black-bearish on equities and selling everything as fast as possible in a panic to meet margin calls. 

On March 06 2009, a Friday, the DJIA hit its lowest point in 10 years at 6470 and closed the day at 6626.

Here's what we posted, before the market opened on Monday March 09 2009, effectively at the exact market bottom, by taking note of the long red trend line of support seen in the chart above, along with sentiment and other measures:

"No guts, no glory? The markets appear to be putting in a bottom. Not "the" bottom, but at least "a" bottom of some duration we believe."

It is very important to note, we hadn't been guessing incorrectly at a bottom for months like many others had been.  On January 09 2009 we'd written: "The markets could go either way, but appear to us to wish to go downwards."

February 2009 was the worst month in the markets since 1933.

On February 23 2009 we wrote: "We believe the banks are in much worse shape than is claimed, and that this will be painfully evident to everyone soon. We believe any rally could be very short-lived and met with equally quick selling.

We are not comfortable holding any unhedged long positions overnight, and especially not comfortable having any significant long speculative holdings merely hoping for a protracted market rally. We sleep well with effective shorts in place, believing the markets will be much lower within months if not imminently."


Between that February 23 2009 posting and our March 09 2009 bullish call, the Dow Jones Industrial Average dropped a whopping 10% and Citibank shares dropped 57%, Bank of America dropped 26%, Wells Fargo dropped 26% and US Bancorp dropped 22%. 

Those types of moves seem incredible now, but had almost become normal at the time as many readers will recall.  Consider that in the month from February 09 to March 08 of 2009, the DJIA dropped 1800 points!  Trying to turn bullish during that time proved disastrous for most, who then tried turning short at the bottom when we were turning bullish.

As we may have noted back then, and which we were certainly aware of, brokers were fielding record calls from novice speculators to open new margin shorting accounts in the days and weeks leading into the market bottom.  Of course many of these clients were the same ones who'd been wrong consistently on the way down, while trying to time the bottom and "buy the dips".  Their zeal for turning short was one of the main things that caused us to turn bullish, along with that very long-term trend line of support we cited above.

That the markets eventually rebounded fully is of no consequence.  Anyone can look at the volume on charts and see that most people were bailing out at the bottom.  Many did not participate in the rally since then, and in fact some of them are only now going "all in" long at what could prove to be a lasting market top.  If so, we'll see if 2009 was "the" bottom or not. 


Turning to metals now, regular readers will recall that we cited extreme bearish sentiment and novice shorting of gold and silver shares in late June of this year as our reasons to turn bullish.  For the previous two years we'd been correctly and very profitably stridently bearish, while everyone from "rock star" hedge fund chiefs to novice rubes had been rabidly bullish.  In the two months after we turned bullish, we turned massive profits on our holdings. 

We did so on the exact day of the peak (so far?), as gold and silver have gone much lower since our August 27 announcement that we were booking gains of hundreds of percent after a mere 8-10 weeks of holding those positions. 

Note also on that same day we bought CWA (Coast Wholesale Appliances), again with trend lines factoring a large part in our decision.  A month later it was 19% higher.

There's a point in all of this, beyond reminding readers of what's consistently possible - if doubters must continue to send us petty hate mail, we wish they'd offer links to their public record. 

Getting back to trend lines, here's an update on AGQ (ProShares Ultra Silver) which we most recently entered earlier this week

As can be seen, that nearly 5-month uptrend in red seems broken.  No method is perfect and perhaps we were too aggressive in drawing that line. In any case our stop at $19.20 was hit on Friday. 

Ultimately an effective levered silver position in AGQ is really a play on gold.  As can be seen in this chart of GLD below, gold appears to still be holding above its short-term uptrend:


We suggest that if you're long, keep holding gold or silver as long as GLD is above that line or above the October lows.  We'll probably re-enter AGQ if it's over $20 again, though it might be prudent to wait until both of these issues are above the green downtrend lines.

Why wait?  For years gold and silver have essentially tracked equities higher, though for the past couple years they've been lagging far behind.  Precious metals, bullion or related shares, are definitely not the hedge against stock market losses that many purport them to be.  These are just more bullish speculations, usually on margin and blind irrational faith, same as in equities. 

When equities turn lower, as we believe they will per the commentary above and in other recent postings, we have every belief that gold and silver, as well as related shares, will outpace equities downward. 

You may not believe it, but you'd certainly better fear it. 

We respectfully suggest that if you're not shorting or hedging, at least be prudent in reducing major long positions in equities.  New entries should only be pure speculations, or reliable dividend-paying stocks.

Markets have seldom in history been so easy to predict and take advantage of as in the past few years, despite all of the incessant political drama and economic uncertainty.  That good fortune is not statistically likely to continue.

If you're somehow in a losing position in 2013, in equities or metals, it's best you exit from speculating entirely and remain out at least until historic market drops are again front-page news.

Look again at the DJIA chart above.  It's virtually an uninterrupted multi-year bull run that looks nearly vertical on a long-term chart.  It's been a bull run rivalling the greatest bull runs of our lifetimes, indeed in all of history.

Accounts should be at record highs and prudent amounts withdrawn from risk to put to good use or into real, stable investments. 

Book, at the very least, the profits that have accrued so far in recent months or in 2013. 


Articles:

What To Buy At Market Tops

US Stocks Rise After Strong Jobs Report

Comedic content from that article:

"Wilson described the initial selloff on the jobs report as a “good news is bad news market,” meaning some investors selling on economic strength that could reduce the Fed’s stimulus measures. That selloff was followed by a “bad news is good news” reaction to the soft sentiment report, leading to gains for the main stock indexes, he said.

But Wilson also said it’s possible that more market participants are just upbeat after the jobs report, believing that good news is simply good news. “Even for those who fear the taper, there has to be some faction who believe that the healing of the patient in the long run will be a good thing,” the analyst told MarketWatch. Wilson said he’s “a believer that good news is good news.” "

What Were Tesla Investors Expecting?








http://www.goldpricedirection.com/results




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, November 08, 2013

Market Outlook, Update and Commentary. Best Buy (BBY) Short. Twitter (TWTR), Zillow (Z), Tesla (TSLA), Green Mountain Coffee Roasters (GMCR), TNA, TZA and Gold


On August 30th, after having been correctly bearish during the previous few weeks, we wrote:

"Markets are closed Monday per the Labor Day holiday in North America, and we remain longer-term bearish while still expecting a near-term bounce.  That bounce 'should' begin Tuesday..."

That Tuesday a rally began which took the DJIA 850 points higher over the following dozen trading days. 

The rally ended mid-day on September 18.  Earlier that morning, we offered some short sale ideas and wrote:

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

Over the following thirteen trading sessions, the market fell almost 800 points from the September 18 high. 

Here's a look at those four short sale suggestions, with the red arrows showing when we made the short call:






Thirteen sessions later, on October 08, we wrote:

"GMCR fell as much as 19%, Z fell as much as 18%, BBY fell 5% while TSLA has gone higher and well above our suggested stop.  We did participate in all of these ideas, mostly utilizing put options, and on net have come out well ahead.  As of yesterday, Monday the 7th October, we've closed these effective shorts as we now expect a market bounce."

We once again called the turn exactly.  Here's a look:


Now after a 1079-point rally, the market may have turned down again.

That'd be very lucky for us, given we swapped out of levered market longs and into an additional levered market short recently

We wrote that "if $70 is hit [on TNA] we'll sell.  At the same time we'd roll the profits into the inverse, TZA, circa $20."

Here's the charts, with exit and entry marked:



TZA is already 9% higher. 

We don't just mention all this to celebrate incredibly lucky and consistent timing, or to gloat about compounding winnings into winnings and into more winnings. 

It's all a lead-up to this exciting chart of TZA, which shows that a downtrend that's been in effect the entire calendar year could soon be broken:


The potential upside is tremendous, so we're happy to hold this position. 

It's also worthwhile to note that the suggested short sale stocks above did not bounce with the market, with the exception of Best Buy (BBY).  In our view it's still a good candidate to short again, with a stop on any closes at new highs above $44.25 

The reason we reviewed these stocks is to show that internally the market is much weaker than the lofty indexes reveal.

Additional evidence of this appeared Thursday when despite what would normally be considered very bullish news out in both the U.S. and Europe, along with feverish buying of the Twitter IPO, markets tanked with the NASDAQ leading the way down almost 2% on the day. 

In the U.S. official GDP estimates came in well above all expectations and consumer credit again made new highs.  In Europe the European Central Bank announced a surprise rate cut as well as using very aggressive language to describe ongoing intent and options to spur economies


Below is a "big picture" look at the market, expressed via the Dow Jones Industrial Average, in which we can clearly see the recent consistency of swings in both time and amplitude.  We also see a trend of established resistance directly above current levels, and that the market has been trading in a channel the past six months. 

It looks like the next major swing will be downward, and has already begun:

 
We're further encouraged in our stance by the bearish points we noted last posting.


Thursday the Twitter IPO began trading, not Wednesday as we'd mistakenly asserted.  It traded at utterly ridiculous levels, far above our generous and highly speculative entry limit suggested yesterday

As a result we're withdrawing our bid on Twitter and any other long positions, for at least the time being, given we believe that this expression of wildly imprudent bullish mania, on top of the many other warning signals mentioned above, could mark the end of the overall market's bull run that began last December. 

If we're wrong, that's fine.  We won't always enjoy near-perfect timing.  The important thing for us is to always position against sentiment extremes and to limit risk in case that doesn't work out.  Should markets rebound and begin closing consistently at new highs, we'll reconsider and perhaps close our TZA position. 


In closing, a word about gold.  Because of the surprise ECB decision to cut rates mentioned above, the Euro dropped and the U.S. dollar popped while gold plunged in dollars and remained flat in euros. 

Many are puzzled by this and cry "manipulation".  The real reason that gold didn't soar on this news is simple and always the same.  Very little of gold's price is based on purported central bank actions or currency devaluation. 

Precious metals and related items enjoyed a decade-long mania of incredible hype and those who foolishly kept on buying, while we were very successfully selling and selling short, often bought on margin. 

Most of those still holding gold and silver, and most of those who tried to time a bounce, are in the red on their holdings and in debt in their margin accounts.  These positions will continue to unwind over time, no matter what, with bounces along the way, same as every bubble deflates after it pops.

Any talk beyond that fact is simply evidence of "The Psychology Of Gold And Silver Investing (Seven Stages Of Grief)" we've mentioned so many times before

 




Eventually the strident voicing of blame and conspiracy fantasy will withdraw and mercifully silence, then the few who focus instead on reflection and acceptance might do much better next time. 

There is always a next time, for those who don't go broke, however typically the same majority lose their shirts in the exact same way while the same minority makes a killing. 

It's your choice which side you're on.  Our posting "Clutching At Straws, Still Drowning" is worth review to help you decide.








http://www.goldpricedirection.com/results




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, November 06, 2013

Buying Twitter (TWTR) and Silver (AGQ). Plus: Graftech (GTI), USA Graphite (USGT), Voxeljet (VJET), 58 Com (WUBA), Container Store (TCS), TZA and Possible Dollar Bottom


Recently we made reference to a mid-September posting entitled "A Few Graphite Stocks Worth Considering".  At the time we wrote that "USGT has been the stand-out, at one point almost doubling."

In the past few days, GTI jumped 40% and is now 33% higher than when we featured it:

 
If not holding for the long run, consider selling some or all of GTI if you had the good fortune of purchasing it at close to $8.  Typically a stock enjoying such a sharp and rapid price appreciation ends up back at or near the starting price before long. 

Witness USGT, which we also wrote about on September 17.  It doubled over the next couple weeks, then fell nearly all the way back:




On October 21 we discussed purchasing 3D Printing IPO Voxeljet (VJET).  It opened that morning just below $33 and has already offered up to 20% gains. 

We've raised our stop to just below $35 and will keep raising it to just below the red line seen on this chart: 



Another IPO that's done well in the past week is WUBA, which we own at a cost of $23.60 per share (not previously diarized): 


Stops on WUBA are best placed initially under $24, or at the lowest under $21.  Our stop is currently at our entry price of $23.60

The Container Store (TCS) is also new to market.  Stops would best go below $32.


Twitter's IPO will begin trading today, under the ticker symbol TWTR on the New York Stock Exchange. 

We plan to pay up to $35 for it, then simply cross our fingers.  Forced to guess what pricing will be, and with no price trend history to use as a guide, we'll simply guess and put an initial stop below $18.

Twitter does not turn a profit, and may never do so, so to say it is extremely overpriced is an extreme understatement.  The risk is also extreme.  This is pure speculation on our part that the current mania-like appetite for stocks, particularly recent IPO issues, continues for at least a few more hours or days. 


Earlier this week, of gold we wrote: "For now, the bounce that began in late June seems likely to continue."

Today we'll purchase AGQ, the ProShares Ultra Silver ETF, expecting silver to move higher along with gold.  In the chart below we see a downtrend broken and a possible uptrend establishing:


Our initial stop will be at $19.20 in an attempt to limit risk to roughly 5%.


For balance, we maintain the market short positions we've past detailed, which most recently includes TZA which we entered per this posting. 

Those unfamiliar with our market timing may wish to read that post and the links therein.


News: Dollar Bottom Detected in Biggest Flows Since 2009

Might that news be a contrarian signal?










http://www.goldpricedirection.com/results






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, November 04, 2013

Weekly Market Outlook, Gold Update



For many reasons, for us it's difficult to be bullish right now. 

Bearish sentiment is near record lows while margin debt is near record highs.  Underwriting of junk debt is at an all-time high.

Another sign of incredible complacency - bad economic news is commonly considered good news because, so the prevailing "logic" goes, it means that "QE" programs will continue thus pumping equities even higher. 

We rhetorically ask if that should be the basis for rising markets.  In truth it often is - markets move on sentiment, logic and fundamentals be damned.  We've seen it over and over again from the dot-coms to real estate.  We've also seen how it ends each time.

Sentiment normally turns very rapidly, and a turn seems overdue so we're comfortable among the few bears that remain.

The DOW is +19% in 2013 and +138% since its 2009 low 4.5 years ago. The NASDAQ is +30% in 2013 and +209% since its 2009 low, while the S&P is +23% this year and +160% since its 2009 low.

Financials, arguably the key sector to overall market health, are breaking long-term uptrends. 

In the charts below we show, respectively, Bank Of America (BAC), Citigroup (C), Goldman Sachs (GS), J.P. Morgan Chase (JPM), and Wells Fargo (WFC):






What's described above is not at all an ideal technical backdrop for buying equities, so we're neutral and expecting a turn downward soon.

There's at least one more reason, the S&P500 in relation to its Bollinger Bands.  The chart below shows in red circles the times in the past decade that the S&P500 has closed a calendar month above its upper Bollinger Band.  What often happens next isn't bullish:




Article:  10 Ways To Wipe Out Your Retirement Savings.

Pay special attention to this fact excerpted from the article, while keeping in mind the non-stop assertions by many in the past couple of years that gold had not yet peaked because many speculators supposedly remained on the sidelines:

"In 2011, gold became the investment fad of choice. Once again, everyone that came to see me began asking about gold — just about the time it reached its peak price."

We've been adamant for over two years that indeed gold had already been bought en-masse, and on margin.  We also warned stridently that buying by central banks typically occurs at the peak, ergo central bank buying was not bullish as the gold touts were asserting but rather a bearish indicator.  It is now reported that the world's central banks have lost over $500 billion on their gold holdings, so far, yet continue to purchase more bullion. 

When the bottom in gold does occur, history suggests that central banks will be selling the last of their reserves thus the end of gold's ongoing bear market remains a long way off.  For now, the bounce that began in late June seems likely to continue.







http://www.goldpricedirection.com/results





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.