air pocket

goog is bumping along, trading back up to the mid 390's when one of the management (cfo) at a merrill conference mentioned the word 'slowing', well that's not good in any context and in the next 15 minutes the goog traded down almost 55 points or well over 10%. Insane. Can you imagine getting your bid hit at 393 only to watch the bid evaporate down to the low 340's in the next few minutes. Yikes.

trendless in Seattle

another week, another drift here and there. No real direction in many sectors, indices, and individual stocks. My longs are drifting sideways, I'm pumped at a .25 pop in a stock. Shorts are doing better although nothing to write home about.

How 'bout all these tools that the short-term and intermediate traders use (and probably long term traders as well, although probably not relying as much on them): Bollinger Bands, or MACD, or Williams %R, or TD Sequential, or the crazy Fibonacci numbers to predict Elliott Waves.....I think Fibonacci numbers are great when applied to mathematics but predicting price movement based on their application to charts...hmmm, not quite sure about that one. Give me some trendlines, support/resistance, some volume and a moving average or two...and access to all the financials I can consume....and that's about all I need. yeah, I'll take some info from a good buy-side desk too. That always helps to know who's buying and selling big blocks. My goal is to focus on the price. Is it higher or lower than yesterday...or the day before that....or the day before that...etc, etc.

Are banks getting ready to rock as a group? The philly bank index just broke out of a sideways trading range. Headfake or the real thing? Rates seem to have that effect on groups, can lift the banks and hammer the homies.

Happy Friday.

DJIA 11,061.85

NASDAQ 2,287.04

SP500 1,289.43

abc....123

titanium....better than steel or aluminum, and forget about carbon fiber

TIE - on the nyse - fly me to the moon...

1. find a good attorney to draw up all the docs
2. find an administrator to keep track of everything
3. find an executing/prime broker to take care of the trades
4. find a cpa to do the audit and tax work
5. find the limited partners with the money
6. run it and create alpha.

see, there you have it, it's that simple.

the icon

looks like The Icon, Carl Icahn, wields a pretty big stick. TWX agreed to control/reduce costs, appoint two independent directors, increase buyback of shares and 'seek advice' from Icahn Partners. Carl agreed to not cause a huge fight at their annual shareholders meeting. He's up to his old tricks and seems to be doing okay.

$100 oil (?), the Bernanke Effect, weak tech earnings, so much to digest and ponder - bottom line, buy what is going up and short what is going down. The Dow, S&P, and Naz climbed all week.... and what do we have to show for it? My shorts are doing better than my longs. Go figure. There's an argument for bottom-up vs. top-down investing.

Happy Friday.

DJIA 11,115.32

NASDAQ 2,282.36

SP500 1,287.24

more bounce to the ounce

the goog bounced *hard* off its 200 dma after selling off for last 3+ weeks. BLK looks like it might be pulling back after the merger was finally completed with mlim yesterday; run-up into the news, sell-off after the news. The shorts have been cooperating better than the longs lately. Keeping stops tight and looking for new opps as the market rumbles along. What about oil and gold? what's in store for those two hot commodities the next few months? taking a breather or reversing trends? As they say, "time will tell"....

Why does the market go down? Because there are more sellers than buyers.
Why does the market go up? Because there are more buyers than sellers.

I like quotes, they are succinct, direct, and make one think.

"I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have" - Paul Tudor Jones.

"Rule number one of investing is never lose money. Rule number two is never forget rule number 1" - Warren Buffet.

"The best traders have no ego. You have to swallow your pride and get out of the losses." - Tom Baldwin

"The stock doesn't know you own it." - Adam Smith

"The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance." - Ed Seykota

and finally another one from PTJ:

"The most important rule of investing is to play great defense, not great offense. Every day I assume every position I have is wrong. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead. Always maintain your sense of confidence, but keep it in check." - Paul Tudor Jones

sideways

the nasdaq is essentially exactly where it was a month ago and two month ago - check the value 30 and 60 days ago. A little up and down in between but this is the definition of a sideways market. The longs and shorts are holding tight, not doing much of anything. The real good shorts are continuing to trend lower. A few longs after making good moves have stalled. Not always a bad thing. If the market moves higher and those same stocks don't follow, that is a bad sign.

Look for the possibility of the S&P and the Dow to possibly trend down over the next few months towards the bottom of their respective trend channels. If that is the case, the 'good' stocks will continue to tread water and maybe even give up a bit of ground, however the 'bad' stocks could have great moves to the downside. Run the fundy filters and check the tech charts and have a short 'short' list ready to go.

black gold...oil or coffee?

Happy Friday. Markets are flat this week. Some disappointing earnings, some inspiring earnings. A mixed bag. We still patiently wait for the markets to let us know if they will be moving lower or higher. Overall the market (at least the naz) has been trending gently down the past month. One of the bigger news stories is the sell-off in oil and the associated sectors (i.e. the slob). Also, the contrarian indicators (covers of popular magazines - several featured gold) has caused a hiccup in the gold market (GLD), which may have caught a few off guard. It is still way up - been a champ since late summer. Most guys won't let it pull back that far though w/out taking some profits.

Value vs. Growth. Small-cap vs. Large-cap. Small-cap value wins hands down every time over the long term (by a substantial margin - around 500 basis points compared to some). The hard part is finding them when they are cheap (and unattractive/unowned/unknown) and being patient enough for them to rise and go from being value to being growth.

sbux just had it's annual shareholders meeting featuring T-Bennett. Just brokeout and is running and they are talking about huge expansion plans, anticipating China being their #2 country behind the US in several years. Also, same store sales are climbing (for stores open longer than 12 months) and that is despite the fear by some analysts of cannibalism (a store on every corner). Gotta love it when fundamentals and technicals go so well hand-in-hand.

DJIA 10,919.05

NASDAQ 2,261.88

SP500 1,266.99

a bit of detail

In selecting securities for the Fund, Rubicon performs a detailed analysis of company financials using a proprietary Price/Performance Model. The Price/Performance Model focuses on two main valuation components: estimates of a company's return on equity versus the forward price-to-earnings ratio as a measure of a current value and on a company's earnings growth versus the forward price-to-earnings ratio. The objective of these strategies is to outperform the appropriate benchmark over the long term and track the growth companies we believe represent the best opportunities in the market. Conversely, by identifying companies with weakened fundamentals that have faltered either through execution of strategy, management, product mix or external factors, the company is now over valued and may be shorted to create positive absolute returns for the portfolio. By shorting these overvalued companies relative to their fundamentals and peer group, attractive returns may be achieved while minimizing risk to the overall portfolio. Our philosophy takes advantage of the market inefficiencies that exist within the US equity markets. These inefficiencies include the fact that few institutions have the portfolio structure which allows them to dynamically hedge their portfolio to this extent and take advantage of rising and falling values of companies. We have the ability to capitalize on that lack of versatility, because of the rigorous fundamental research we do to uncover that information and take the actions necessary to capture the alpha generated by the specific movements in select stocks. Though Rubicon does not incorporate top-down analysis in its stock-specific investment process, it does incorporate knowledge of broad economic themes and overall market trends to provide a backdrop for its bottom-up research.

fallin' down the mountain

isrg - when the buyers head for the exits, watch out cuz it gets nasty.

not amzn'ing

Amzn announced after the close yesterday. Disappointed on top line and bottom line numbers. The stocked traded lower during yesterday's session and traded much lower after-hours. Opened this a.m. down around 5 pts from yesterday's range. Trading today about 37-38. It gapped down below its 200 dma, it gapped down below a short term upward trend line that had been holding since early '05 and it is now back into the top of a downward trend channel that has been well defined since late '03. Pick a stop anywhere between 40-42 depending on the tolerance for risk. If it heads to the bottom of this channel, which is highly possible, the stock could trade into the mid 20's. So put your 'shorts' on, grab a good book, and be patient.

What will big Al's successor leave as his legacy as Chairman of the fed when we look back years from now upon his body of work?

DJIA 10,825.00

NASDAQ 2,264.70

SP500 1,266.83

Happy Friday.

long bias

Long bias on Nasdaq Comp if it can stay above approx 2240 and stay above shallow upward trend line that has been forming since Jan '02. If it can't hold above the upper trendline, the pattern shows it may retreat back to approx 2050 which would be the bottom of the upward trend channel. Around about a 10% pullback from these current levels. Portfolio is long 11 stocks and short 6 stocks, equal starting amounts in each. As always, we stay reactionary, not predictive. We are prepared to put on additional longs or shorts depending on what the market does over the next week.

dawn of a new era

Feb 1

Today is the day that requires funds be in compliance with 'mandatory' registration at the state or federal level (SEC) for 'hedge funds'. Under $25M works with state regulators, over $25M works with the SEC. Response and registration has been 'tepid' at best.

There are several loopholes. For the very large, very established funds that have the credibility, they can choose a lockup period greater than 24 months. "page 23 of the new SEC rule: Any fund that requires investors to commit their money for more than two years does not have to register with the SEC. "

The other loophole, whether under or over $25M, if there are less than 15 investors (ie. limited partners), the fund is exempt from registration. However, this may hurt funds both large and small as they may not be able to use the "we're registered" slogan as part of their pitch to new investors.

Top managers under 40:
Kenneth Griffin, Citadel
William von Mueffling, Cantillon
Lee Ainslie, Maverick, (okay he's 41)
Lawrence Robbins, Glenview
The Ziff brothers - yeah they inherited it but they are also making $ too

'hedgehogging' - Barton Biggs, read it, over and over. Good passages and good lessons from a guy who's been in the trenches for 40 years. He's seen pretty much everything and still going to work every day. Lots of fluff and name-dropping but there are some words to live by in there too.

Canslim works, trend-following work, technical analyis to identify entry and exit points work. Using the following methods for idea generation and trade execution/management teamed with a strict disipline to stick to one's stops and identify exit points before they arrive are the keys to survival and out-performing the masses. Take the best of fundamental analyis and the best of technical analyis and there is a winning approach.

mantra: 'Trend-following/canslim/discipline'....repeat...

long oil? - then go long the hottest stocks in the oil sector. Find the best stocks in the best performing sector. Find them early and be patient. Short the worst stocks in the worst sectors.

Often things crumble further and faster than they climb.

To go long, accentuate the performance with calls on the index or the individual stock. Or if you are truly hedging your position, buy puts as a hedge. For calls, either in-the-$ or out-of-the-$ will do.

3 trading blogs to catch from day to day.
one is a trend trader
one is a fund over-sight guy
the other is a CT-based short-term/swing trader

I'll post links later.

fyi, greenwich is mecca.

stocks in play:
xle
slb
goog (what's *your* cost basis?)
do
brcm
utx
sbux

sh-sh-sh-short?:
intc
jnpr
amzn
pfcb
tyc

Anyone who is anybody watches the 200 dma.

Log is better than linear in most cases. A $1 move in a $5 stock is different than a $1 move in a $50 stock.

Can someone be both a value investor that goes long undervalued stocks and also a growth investor who buys strong expensive companies with high growth rates and lots of momentum?

Short over-valued or just plain fraud.

Losers average losers. - Paul Tudor Jones

Again, read 'hedgehogging' by Barton Biggs, a very accurate portrayal of the ups/downs and challenges of starting and subsequently managing a fund and surviving the industry.

rubiconcap.com