Friday, April 30, 2010
Dow 11,008 -158 (1.4%), Nas 2,461 -58 (-2%), S&P 1,186 -20 (-1.7%).
Greece, Goldman Sachs, Gulf oil spills. Market got toppy and barfed. All day.
DNDN held on to most of its gains and closed at 54.06 (day high 57.67), up 3.88 (+7.7%). FAZ up 0.82 (+7.2%) to 12.20.
Even NBG held on for a teeny gain of 1 cent to 3.26. All other financials bombed. Goldman Sachs cratered to 145.20 (-15.04, -9.4%). They're still in a zero interest environment like any other bank or financial. Come earnings day in a couple of months, GS will blow it out. But this isn't the time to get in, not yet. That day might be a move from 125 to 150.
So why do I hold BIDU and IMAX? I can withstand the near-term shelling. BIDU (688) will zig and zag until the next catalyst, but they're still the emperor and the only royalty in China search. Float is still scant until the split in few weeks.
IMAX had very little buying help today. I theorize that today was a pocket between earnings and the upcoming giant releases (Iron Man 2, etc.), and buyers held on to their recent profits rather than dive into a hellhole today. Smart. We're getting past a lot of heavy issues. The fog may clear by Monday. Or will it be Wednesday?
I would've been smart with proper execution on Thursday morning (premarket). But I forked up, missed my window. The selling opportunity was there before IMAX announced earnings. I was crashed out. One of the challenges of being in the middle of the Pacific and trading from 2 to 10 a.m.. I've stocked up on energy drinks since.
Today, BIDU was actually up to 716 and hovered at 710 while the rest of the market was in the early stage of tankage today. The spooky thing, of course, is that BIDU's gap up from 620 to 710 this week could get filled at some point. I don't believe all gaps necessarily have to be filled, though.
Bottom line is I'm holding both. It's like the old saying: sell early or not at all. They'll be back in spite of my crappy loss-cutting discipline.
AAPL (261.09, -7.55, -2.8%) shed all of its gains from Thursday and is tilting toward the bottom of its near-term range. If it can hold that 256 area, that's relatively cheap. Greece and Portugal and Spain might spin into economic chaos, but oil drilling issues are under a microscope. I don't see more spills coming with the global media and superpowers addressing the cleanup in the Gulf. The Goldman problem will linger, but they're in no danger of closing shop. There will be scrutiny, who knows, maybe a few convictions. But that'll bring discount prices, maybe bargain prices to the financial sector.
Citigroup closed at its low for the day, 4.37 (-0.19, -4.2%). That's normally a great buying opportunity at this level.
Monday will be intriguing for DNDN traders. Is there any short interest left after today? That'll provide us outsiders some entertainment value.
But the past few days have been a painful lesson in the importance of execution and staying in cash through market chaos. Opportunities in financials and DNDN were available this week. It's not about the specific stock; it's about timing. It's not who, but when.
My when has been forked up the past few days. We need someone or something to rescue this market.
Iron Man, save us.
Thursday, April 29, 2010
> Pro: Dominant leader in 3D
> Pro: Expanding in Japan, China
> Pro: Iron Man 2 out May 7
> Con: Run-up has been huge, even with the pullback
> Summary: Long term, very good prospects, but price action always volatile. Likely to hit 23-24 soon.
AAPL 268.64 +7.04 +2.69%, low of day 262.01
> Pro: 3G iPad coming next week
> Pro: Souped-up iPhone coming this summer
> Pro: Earnings last week were fantastic (didn't include iPad sales)
> Con: Run-up has been extreme, from 192 to 271 in two months; profit-takers abound
> Summary: As safe as any growth stock in our generation. I like it better at 250-255 (pre-earnings)
> Candlestick chart analysis: Wait (today) American Bulls
• AAPL. The next catalyst, 3G iPad, is near. Anticipation is there, though this is probably baked into the stock price. Nothing, though, would've indicated a month or two ago that the iPad absolutely would have the Apple store filled to the gills like it is — at least when I'm there.
So that's in a week or two. After that, nothing, really, until the new iPhone is launched this summer. So, any breakout above 271 has to be handled carefully. Maybe a move to 280, and then 271 would become a new support level. Maybe.
Would it come with the 3G iPad? Probably. If not, AAPL will likely continue trading in this 256-271 range.
• C. Definitely ranges between 4.30 and 5.05, give or take a few cents. Discard emotion and trade this vehicle like a machine.
• DNDN. Great day for all supporters of Dendreon and prostate cancer patients. But emotion has no stake in these new levels, 51-52. I first bought DNDN at 7, saw it sink to 4 with the FDA's rejection of Provenge in 2007. There must be some folks who had the same experience, but let their shares sit still for the past three years. Hat's off to them. Not touching DNDN here, though it could start moving again with any kind of partnership or takeover talk.
• F. Ford moved nicely today (2.5%) to 13.60. It's stabilized at 13 plus and worth exploring again as a swing trade.
• GS. Closed at 160 today, up from 152 earlier in the week during the public flogging by Congress. With interest rates still basically zero, GS and the banks are printing money, making easy profits. So why am I not in GS or C?
• IMAX. Not happy about this morning's blunder, but I am expecting a run to 23 or 24 as Iron Man 2 premiere day nears (May 7). This is not a long-ter hold for me. It's strictly in and out, maybe even from week to week. Buy Thursday or Friday; sell Monday. Rinse and repeat all of May and June.
• NFLX. Up to 103 today, but smells too much like Blue Nile to me in price action. Too much competition coming soon. A day trade at best.
• PCLN. Have never studied this.
• SBUX. Howard Schultz is king of all coffee. Missed this comeback.
Specs like JMBA and NBG are on the backburner. I'd love to toy with them, but I've got to make some solid profits first.
Allocation comfort zone
I'm almost 100% in equities right now. My game plan was to be out of IMAX and BIDU by the opening bell this morning. Fail.
I'd rather be in 60% cash (and still 40% long AAPL). I'm leaning toward short-term trades in stuff I can rely on, like AAPL. Speaking of which ...
Stocks that have both good growth and relative stability.
1. AAPL. New stores to open in Europe and China. Coolest products on Earth.
2. C. Pandit has cleaned house, cut toxic assets and plays the PR game astoundingly well.
3. F. On a roll. Earnings were superb. Mullaly is king.
4. GS. The worst is over. Higher-percentage move more likely in C, however.
5. BIDU. No real competition and serious China penetration is still in the early stage.
There are a ton of good stocks I don't mention. That's fine. I'm interested in narrowing down to a group of vehicles that I can get comfortable with and understand well. I don't need a list of 100 stocks to make a good profit every day. And when I'm interested in going outside the box, there are great traders with great ideas I can glance at.
No, it's just good time to start sharing and learning through this blog again. Since returning to the trading world in January, I've been reading and hearing a lot, absorbing many new ideas and fundamentals that I unconsciously boycotted in years past. It's that "more I learn, less I know" thing.
So, after walking away last June or July (after making around 35% in early 2009, then losing most of it back in the downturn), I spent most of my free time doing something new. I took care of some basic heath issues, nothing serious, yet I knew it was time to get some of the flab off my sad, middle-aged body. Working out after work in the midnight hour did me wonders physically and mentally. So did sleeping in during market hours (3:30-10 a.m. here). So I skipped early-morning Hawaiian time Squawk Box, opening bells and even Fast Money and Mad Money.
Staying out of the market for seven or so months was all to my detriment as the market roared ahead the rest of '09. So I've been back, learning, trading cautiously, then not so cautiously ... trying to trade with more discipline, then failing, then more. It's a battle that has been worthwhile to this point despite my floundering ways at times. Between actualized and paper profits, up about 18% since January. Again, should be much higher if not for 1) profits I left on the table waiting too long to rein them in, and 2) issues like oversleeping (re: early hours) through premarket.
Classic example was this morning. The game plan was to sell IMAX before earnings (2:30 a.m. Hawaii time) for a quick profit after scaling in on Wednesday at 20.28. Shares reached 21.60 premarket, then earnings news came out and the stock took a dive.
I didn't sell. I was in bed, having turned off my alarm (I guess?) at 1:40 a.m. By the time I was up, IMAX was down below 20.
The solution is simple: Never go to bed after midnight. (Normally, I'm usually up until and through the opening bell anyway.) And pop open my favorite energy drink(s) once it's past midnight, especially if my strategy for the day involves premarket selling.
So there I go. Trying to narrow down mistakes and challenges while boosting profit. I will tend to dwell on my screw-ups. It's a habit. But more importantly, I hope folks can give me solid, constructive information beyond what I've read and listened to.
Ultimately, trading is a skill in itself that no book can do for me. All tips and shared knowledge, though, are always, always welcome and appreciated. See, all the journaling I do, all the record-keeping I keep on every trade, every thought of a possible trade ... it helps a lot. But at some point, feedback is crucial to really expand and grow. Maybe it's a form of accountability. Or maybe it's just that two heads are usually better than one.
And now, the focus is on execution, which requires discipline, a game plan and more discipline.