Stocks for January 28, 2008

Quite the roller coaster this week. But our list continues, for your reading and trading pleasure.

An interesting facet of the weekly filter data is that we no IBD Supply/Demand companies. In other words, there was little institutional buying last week. Also, I noticed that the IBD rankings were significantly lower than last week. Stocks that were rated A were bumped to B, and those at B were bumped to C. (Those rated B or C will not appear below.)

Symbol	BB	Zacks	PEG	SuppDem	VL	IBD Stock checkup
LIFC	1	1	2		1	A+
ESRX	1	1	1		1	A
BIDU	1	1	2			A+
CME	1	1	2			A+
DE	1		1		1	A+
GME		1	1		1	A+
MATK	1	1	1			A+
MOS	1		1		1	A+
ORCL	1		1		1	A+
POT	1		1		1	A+
SWN	1		2		1	A+
TISI	1	1	1			A+
TNE	1	1	1			A+
VIP	1	1	1			A+
AMTD	1	1	1			A
APOL		1	2		1	A
CLB	1		1		1	A
FLS	1		1		1	A
NDAQ	1		1		1	A
STRA	1		2		1	A
FLR	1		1		1	A-
IVGN		1	2		1	A-
WFR		1	1		1	A-

I added three companies to the core list and dropped four. TD Ameritrade (AMTD) is a discount broker. Oracle (ORCL) is that big database company that Microsoft can't seem to dislodge. MEMC Electronic Materials (WFR) produces wafers for the semiconductor industry worldwide. I suppose the stock symbol refers to "wafer."

SYNA, KCI, LOGI, and SXE have been dropped from the core list.

Core list (with n of 10 weeks passing):

Symbol	Passing weeks	Earnings
ESRX	10
FLS	10
LIFC	10
MOS	10
NDAQ	10
VIP	10
AAPL	9
GOOG	9
NOK	9
NOV	9
ACO	9
ISRG	8
PCLN	8
PCP	8
CLB	8
DE	8	Div 31-Jan
BOOM	7
AG	7
AMZN	7	Earn 30-Jan
GME	7
JASO	7	Split 8-Feb
VMI	7
CNH	6
OTEX	6
RIMM	6
SPWR	6
CF	6
FTI	6
MATK	6
BGC	5
PSEM	5
SLB	5
AMTD	5
ORCL	5
WFR	5

While the US markets took off Monday for the Martin Luther King holiday, foreign stocks tumbled. Not to be outdone, the US futures had a huge selloff before the market open on Tuesday, with the Dow expected to fall around five hundred points. The Fed swooped in with a rate cut, and gave investors the confidence to pare the losses to 150 points. Wednesday saw a swing from 300 points down to 300 points up.

Pundits are changing their tune from asking if a recession will happen to wondering if we're already in it.

Just to remind you, a recession is "called" by the National Bureau of Economic Research (NBER). Here is their definition:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.Note that the news for whether we are in a recession will, by necessity, be delayed for several months as the data are gathered.

Bank of America and Wachovia both announced awful quarters, but jumped on the announcement. (If you want to know why, think of the Wall Street adage, "Buy the rumor, sell the news." In this case, speculators did the converse, knowing that bad news was coming. So they sold the stock in advance of bad earnings, and bought on the news.)

The condition that John Hussman described in his December 17 column is coming about:

That would be if we see a relatively uninterrupted series of declines that breaks cleanly through the August and November lows, followed by a one-day advance of 200-400 Dow points.

I am not sure if Wednesday qualified for the one-day advance, but it certainly seems to. I was thinking that the market might rally to its 20-day moving average, but I am going to let it tell me what it's doing, rather than me call the shots.

Here is a graph of the CBOE Volatility Index, known by its symbol, VIX. You can see that it touched this volatility in August of last year, when the market was in a sharp downdraft. Since the volatility of the market is so high, it would make sense to sell options. I think a bearish call spread would make sense at this point. That would entail selling a call above the current price and buying a call further out for protection.

I hope you're having fun. I feel like I'm just beginning to figure out how the puzzle pieces fit together. Trade well!

Stocks for January 21, 2008

Another difficult week for the markets. Here's the weekly list.

Symbol	BB	Zacks	PEG	SuppDem	VL	IBD Stock checkup
ESRX	1	1	1		1	A+
LIFC	1	1	2		1	A+
FLS	1	1	1		1	A
NOV	1	1	1		1	A-
AMTD	1	1	1			A+
BIDU	1	1	2			A+
CF	1		1	1		A+
DE	1		1		1	A+
MATK	1	1	1			A+
MOS	1		1		1	A+
ORCL	1		1		1	A+
POT	1		1		1	A+
SWN	1		2		1	A+
TNE	1	1	1			A+
VIP	1	1	1			A+
AAPL	1		2		1	A
ACO	1		1		1	A
AG	1		1		1	A
CLB	1		1		1	A
GOOG	1		1		1	A
JASO	1	1	1			A-
NDAQ	1		1		1	A-
NE	1		1		1	A-
NOK		1	1		1	A-

Martek Biosciences is new to the core list. It sells novel products from microalgae, fungi, and other microbes (yum!). It sells a vegetarian source of the omega-3 fatty acid DHA for use as a vitamin supplement.

Core list (with n of 10 weeks passing):

Symbol	Passing weeks	Earnings
AAPL	10
ESRX	10
GOOG	10
LIFC	10
MOS	10
NDAQ	10
NOK	10
NOV	10
VIP	10
FLS	10
ISRG	9
PCLN	9
PCP	9
ACO	9
BOOM	8
CLB	8
CNH	7
GME	7
RIMM	7
SPWR	7
AMZN	7	Earn 30-Jan
OTEX	7
VMI	7
AG	7
DE	7	Div 31-Jan
JASO	7	Split 8-Feb
BGC	6
PSEM	6
SLB	6
FTI	6
CF	6
KCI	5
LOGI	5	Earn 17-Jan
SXE	5
SYNA	5
MATK	5

The IBD is agreeing with me that the markets are in a correction. Most of the major indices are below their 200-day Simple Moving Average. While I believe the stocks on the core list to be among the best from which you can choose, their price movement is largely influenced by the movement of the market, which is dismal.

The market is waiting with bated breath to see not if, but by how much Fed chair Bernanke will cut rates. As I write, he is testifying before Congress, and the news is not good. He is urging Congress to pass a stimulus package, and quickly. (It reminds me of the medical shows when they keep on zapping the patient with a flat ECG. After the third or fourth try, one of the doctors has to "call it," that is, declare the time of death.)

In 2002, before he was nominated to the august position, he had given a speech about deflation in Japan, and how to prevent it from happening here. He also came up with a colorful analogy: If a helicopter came and dropped on each person the cash they already owned, doubling the number of dollars they had in their possession, then all prices would double the next day.

I remain skeptical that anyone would be able to reverse fiscal and monetary excess, especially the central bank that caused the latter. I will try to post a list of short candidates soon.

Bonus question about home prices

An economics professor forced his grad students to do a lot of research of house prices (the terms grunt work and slave labor come to mind), and the Case-Shiller index was born. The index measures different housing markets (e.g., Atlanta, New York, Charlotte) and compares the price of willing buyer and a willing seller for a certain configuration of house. You can read about it at this Standard & Poor site.

I have selected a handful of markets (and included Charlotte).



Charlotte is the one at the bottom, with a slow rise from 73.32 in Jan '91 to 133.98 in Dec '07. There is a composite of 20 markets thrown in for good measure. You may click on the image to get a bigger picture. I created the graph by downloading the Case-Shiller Historical Values and playing with Excel.

OK, now here are a few questions for you.

1. Which market had the highest rise?
2. When did it peak?
3. Are any of the markets still rising?
   
4. If this were a technical chart of stock charts, which ones would you buy?
5. Which ones would you sell short?
   

Stocks for January 14, 2008

That was one rough week! Here are the stocks from the weekly list that passed at least three filters.

Symbol	BB	Zacks	PEG	SuppDem	VL	IBD Stock checkup
ESRX	1	1	1		1	A+
NOV	1	1	1		1	A+
FLS	1	1	1		1	A
GME	1	1	1		1	A
LIFC	1	1	2		1	A
SPWR	1	1	1		1	A
NOK	1	1	1		1	A-
BIDU	1	1	2			A+
CF	1		1	1		A+
CLB	1		1		1	A+
DE	1		1		1	A+
MA		1	1	1		A+
MOS	1		1		1	A+
NDAQ	1		1		1	A+
ORCL	1		1		1	A+
POT	1		1		1	A+
SWN	1		2		1	A+
VIP	1	1	1			A+
AAPL	1		2		1	A
ACO	1		1		1	A
AG	1		1		1	A
AMTD	1	1	1			A
AMZN	1		1		1	A
ARTC		1	2		1	A
CNH	1		1		1	A
ESV	1	1	1			A
GOOG	1		1		1	A
ISRG	1		1		1	A
JASO	1	1	2			A
MATK	1	1	1			A
PCLN	1		1		1	A
PCP	1		1		1	A-
RIMM	1		1		1	A-
WFR		1	1		1	A-
WMB		1	2		1	A-

This week, we see the departure of DO and TISI from the core list. CF Industries (CF) distributes fertilizers, such as ammonium nitrate and various nitrogen fertilizers. As a side note, it is interesting how many agriculture stocks have gotten on the core list of late. Could this be a fallout from ethanol manufacture?

Core list (with n of 10 weeks passing):

Symbol	Passing weeks	Earnings
AAPL	10
ESRX	10
GOOG	10
ISRG	10
LIFC	10
MOS	10
NDAQ	10
NOK	10
NOV	10
PCLN	10
PCP	10
VIP	10
BOOM	9
FLS	9
CLB	8
CNH	8
GME	8
RIMM	8
SPWR	8
ACO	8
SLB	7
VMI	7	Div 14-Jan
BGC	7
OTEX	7
PSEM	7
AMZN	7	Earn 30-Jan
KCI	6
SYNA	6
FTI	6
LOGI	6	Earn 17-Jan
SXE	6
AG	6
DE	6	Div 31-Jan
JASO	6	Split 8-Feb
CF	5

I am almost finished with one of my Christmas gifts, Financial Reckoning Day: Surviving the Soft Depression of the 21st Century by William Bonner with Addison Wiggin. The thesis of the book is:

• The Fed can't fix every problem in the economy
• We have spent ourselves deeply into debt, both fiscally and personally,
• The population is getting older and will stop spending like drunken sailors,
• In the past, this has caused protected recessions (as recently as Japan a couple of years ago).

Really cheery reading. But at least they write in an amusing and engaging way!

The scenario I described is unfolding: the Nasdaq and Dow are making a double bottom at their lows from last summer. There will be a possible penetration of these lows, a possible sucker's rally of 200-400 Dow points, and then a fall in earnest. Stay sharp and be willing to cut losses, hold cash, or go short.

Stocks for January 7, 2008

Hope you had a happy new year. Ours was a quiet one at home, watching movies with the kids. Here are the stocks from the weekly list that passed at least three filters.

Symbol	BB	Zacks	PEG	SuppDem	VL	IBD Stock checkup
AAPL	1		2	1	1	A+
ESRX	1	1	1		1	A+
FLS	1	1	1		1	A+
LIFC	1	1	2		1	A+
NOK	1	1	1		1	A+
NOV	1	1	1		1	A+
PCLN	1		1	1	1	A+
SPWR	1	1	1		1	A+
AMTD	1	1	1			A+
AMZN	1		1		1	A+
BIDU	1	1	2			A+
BOOM	1		2		1	A+
CF	1		1	1		A+
CLB	1		1		1	A+
CNH	1		1		1	A+
DE	1		1		1	A+
DLLR	1	1	1			A+
GME	1		1		1	A+
GOOG	1		2		1	A+
ISRG	1			1	1	A+
JASO	1	1	2			A+
MA		1	1	1		A+
MOS	1		1		1	A+
NDAQ	1		1		1	A+
ORCL	1		1		1	A+
PCP	1		1		1	A+
RATE	1	1		1		A+
RIMM	1		1		1	A+
SWN	1		2		1	A+
VIP	1	1	1			A+
ACO	1		1		1	A
AG	1		1		1	A
BBY	1		2		1	A
CME	1	1	2			A
DECK			2	1	1	A
MATK	1	1	1			A
STRA	1		2		1	A
VMI	1		1		1	A
WFR		1	1		1	A
ARTC		1	2		1	A-

This week, we have three stocks on (AG, DE, and JASO) and three stocks off (ICLR, NVDA, and SIGM). Agco (AG) manufactures and distributes agricultural equipment and related replacement parts, world-wide. Deere (DE) does the same. Ja Solar Holdings (JASO) manufactures solar cells and is based in China.

Core list (with n of 10 weeks passing):

Symbol	Passing weeks	Earnings
AAPL	10
ESRX	10
GOOG	10
ISRG	10
LIFC	10
MOS	10	Earn 9-Jan
NOK	10
NOV	10
PCLN	10
PCP	10
VIP	10
BOOM	10
NDAQ	10
SLB	8
CLB	8
CNH	8
GME	8
RIMM	8
SPWR	8
VMI	8	Div 14-Jan
FLS	8	Div 8-Jan
SYNA	7
BGC	7
KCI	7
OTEX	7
PSEM	7
ACO	7
SXE	6
FTI	6
LOGI	6	Earn 17-Jan
AMZN	6	Earn 30-Jan
DO	5
TISI	5
AG	5
DE	5	Div 31-Jan
JASO	5

January has started out much lower, so the short positions and short calls are of course doing well.

The scenario that may occur (and my crystal ball is often wrong) is to have some resistance at this point (Nasdaq and Dow are making a double bottom), penetrate through the reistance, rally 200-400 Dow points, and then fall in earnest.Stay sharp and be willing to cut losses, hold cash, or go short.

Stocks for 31 Dec 2007

I will continue my postings to blogspot. Here are the stocks from the weekly list that passed at least three filters.

Symbol	BB	Zacks	PEG	SuppDem	VL	IBD Stock checkup
AAPL	1		2	1	1	A+
ESRX	1	1	1		1	A+
FLS	1	1	1		1	A+
NOK	1	1	1		1	A+
NOV	1	1	1		1	A+
PCLN	1		1	1	1	A+
RIMM	1		1	1	1	A+
WFR	1	1	1		1	A+
AMTD	1	1	1			A+
AMZN	1		1		1	A+
BOOM	1		2		1	A+
CF	1		1	1		A+
CNH	1		1		1	A+
DE	1		1		1	A+
DECK	1			1	1	A+
GOOG	1		2		1	A+
ISRG	1			1	1	A+
JASO	1	1	2			A+
MOS	1		1		1	A+
NDAQ	1		1		1	A+
ORCL	1		1		1	A+
OTEX	1	1	1			A+
PCP	1		1		1	A+
SPWR	1		1		1	A+
VIP	1	1	1			A+
VMI	1		1		1	A+
ACO	1		1		1	A
AG	1		1		1	A
BGC	1	1	1			A
CLB	1		1		1	A
EBAY		1	1		1	A
FTI	1	1	1			A
GRMN	1	1			1	A
LIFC	1		2		1	A
MATK	1	1	1			A-

There is one new stock on the core list, Amazon (AMZN). In case you haven't heard, they sell books, electronics, and music using the Internet. (But you still can't find a Wii.) I value it with a P/E/G of 0.57 this year and 1.31 next year. (I have a cutoff of a P/E/G less than 1.7, and the smaller the P/E/G the more company you get for the money.) It has a book value per share of 1.4 cents (tiny!). I will be watching this one with interest. I personally like the company, and have found them to have excellent customer service. But I'm not buying the customer service, I'm buying the stock.

Core list (with n of 10 weeks passing):

Symbol	Passing weeks	Earnings
AAPL	10
ESRX	10
LIFC	10
MOS	10	Earn 9-Jan
PCLN	10
PCP	10
GOOG	10
ISRG	10
NOK	10
NOV	10
VIP	10
SLB	9
BOOM	9
NDAQ	9
GME	8
SYNA	8
CLB	8
CNH	8
RIMM	8
SPWR	8
VMI	8
KCI	7
PSEM	7
SXE	7
BGC	7
FLS	7
OTEX	7
DO	6
LOGI	6	Earn 17-Jan
ACO	6
FTI	6
NVDA	5
ICLR	5
SIGM	5
TISI	5
AMZN	5	Earn 30-Jan

Some of the core stocks that I am long now are BOOM, CLB, KCI, and SYNA. My employer is requiring that I hold these (and any other stocks) for at least 30 days. In order to lay off some of the risk of having to hold the stock, I am also selling calls that when they have at least 30 days before expiration. Several of these have fallen, but the covered call is providing some downside protection. For example, SYNA has fallen sharply, 8%, while the Jan 45 calls on it have also fallen sharply, cushioning my loss. (In an ideal world, I would have offset my loss completely, but that's not how the world works.)

Core Labs (CLB) is doing better, overall. If it hits the top Bollinger band, then I will sell some calls on it as well. Have a Happy New Year and trade well during this shortened week.

Stocks for Christmas week

This is my first post on Blogspot. It looks like 360.yahoo.com is going through a sea change, and I have had some trouble getting technical support to answer my questions. So let my try some posts here and see how the blogs compare. I will cross post on my old blog as well.

Here are the stocks from the weekly list that passed at least three filters.

Symbol	BB	Zacks	PEG	SuppDem	VL	IBD Stock checkup
ESRX	1	1	1		1	A+
FLS	1	1	1		1	A+
LIFC	1	1	2		1	A+
PCLN	1		1	1	1	A+
NOK	1	1	1		1	A
NOV	1	1	1		1	A
NVDA	1	1	1		1	A-
AAPL	1		2		1	A+
AMZN	1		1		1	A+
BOOM	1		2		1	A+
CF	1		1	1		A+
CLB	1		1		1	A+
CNH	1		1		1	A+
DE	1		1		1	A+
GOOG	1		2		1	A+
ISRG	1			1	1	A+
JASO	1	1	2			A+
MOS	1		1		1	A+
NDAQ	1		1		1	A+
OTEX	1	1	1			A+
PCP	1		1		1	A+
SPWR	1		1		1	A+
VIP	1	1	1			A+
VMI	1		1		1	A+
WFR	1	1	1			A+
AG	1		1		1	A
BGC	1	1	1			A
FLIR		1	1		1	A
GRMN	1	1			1	A
PSEM	1	1	1			A
SIGM	1	1			1	A
SLB	1		1		1	A
ACO	1		1		1	A-
FTI	1	1	1			A-
MATK	1	1	1			A-
WDC		1	1		1	A-

There are three new stocks on the core list, ACO, FTI, and SIGM.

• Amcol International Corp. (ACO) provides additives for detergents, skin care products, and
  cat litter.
  
• FMC Technologies, Inc. (FTI) manufactures systems for offshore energy, airports, and foods.
  
• Sigma Designs Inc. (SIGM) provides digital video products and web streaming.
  

EBAY and HANS are off the core list.

Core list (with n of 10 weeks passing):

Symbol	Passing weeks	Earnings
AAPL	10
ESRX	10
LIFC	10
PCLN	10
PCP	10
SLB	10
MOS	10	Earn 9-Jan
SYNA	9
GME	9
GOOG	9
ISRG	9
NOK	9
NOV	9
VIP	9
RIMM	8
CLB	8
CNH	8
VMI	8
BOOM	8
NDAQ	8
SPWR	8
KCI	7
SXE	7
PSEM	7
DO	6
LOGI	6	Earn 17-Jan
NVDA	6
BGC	6
FLS	6
OTEX	6
ICLR	5
TISI	5
ACO	5
FTI	5
SIGM	5

IBD is now saying the rally is under pressure. Now that's more like it! I have noticed IBD's asymmetry when it comes to declaring a market bullish or bearish: it seems hard to get them to say the market is falling, and they switch quickly to the rally side. I wonder when they will stop calling a rally after a fall a follow-through day and start calling it a sucker's rally.

Mike R. sent me an article entitled "The Blow-up Artist," by John Cassidy in The New Yorker (October 15, 2007). Great story about Victor Niederhoffer, a famed speculator who had a dramatic undoing in 1997. He had an equally dramatic comeback. But judging by the emotional tone and his bias toward believing in a bullish market, he is in serious trouble now.

Taleb had something to say about Niederhoffer.

Niederhoffer's publicized hiccup came from his selling naked options based on his testing and assuming that what he saw in the past was an exact generalization about what could happen in the future. He relied on the statement "The market has never done this before," so he sold puts that made a small income if the statement was true and lost hugely in the event of it turning out to be wrong. When he blew up, close to a couple of decades of performance were overshadowed by a single event that only lasted a few minutes.

(Nassim Taleb, Fooled by Randomness p. 120)

I bought some CLB based on one of my favorite technical indicators. Note that it hit one of the local minima in late November (28Nov) and tested the low again on 18 Dec. However, the MACD rose from a bottom to a higher point. That is a classic bullish divergence.

Development on the lot continues unabated. We hit rock but were given a go-ahead by a soil engineer. You can read about it at chackobuild.blogspot.com

Have a Merry Christmas and trade well this week.