Wednesday, October 26, 2011

AMZN (Small thoughts on the big picture)

There is a developing business trend beginning to gain traction. It entails acting more like entrepreneurs and focusing on the long term - at the expense of Wall Street!

As investors, we have the edge. We can sit idle while entrepreneurs work to prove their concepts.

Click for Screencast: Small Thoughts on the Big Picture

Follow @Centrifugal to fade trades in real time

Tuesday, October 25, 2011

Gameplan for AMZN Earnings (after the close today) reports earnings after the close tonight. I reduced the core position size yesterday (for the second time). I'm looking to re-increase positions on the heels (hells) of EPS, depending.

Click for Screencast: Gameplan for handling AMZN earnings after hours.

[Update: sold AMZN the morning after earnings, 201.84 average]

Follow @Centrifugal to fade trades in real time

Sunday, October 23, 2011

Hunt for Emerging Leadership (screencasts from last week)

I scanned more stocks than my eyes can bear this weekend, and smaller growth stocks are emerging from cracks. In droves.

Maybe I've been too negative lately. 

New Leadership Hunt - Newest Screencasts Oct 21 & 23:
-Part-2: Turns out, leadership is emerging in a big way
-Part-1: Keep an open mind on where leadership is emerging

Screencasts from Oct. 19th:
Europe News Becoming like Anthrax in 2001
Hunting for strength in the midst of a major sell program  

Screencasts from Oct. 17th:
Part-3 of the Psychological Tape. Explaining my now long-only stance. 
Part-2 of the Psychological Tape.
Part-1 of the Psychological Tape...Unedited  

Follow @Centrifugal to fade trades in real time

Friday, October 14, 2011

Upside Flash Crash (not out of the question)

Be afraid, be very afraid.

Bears that is.

Eventually, we should all be afraid. We're all going to be snuffed by this stuff at some point. But I'd be shitting rectangles this weekend if I were heavily short and happened to see the after-hours tape tonight.

After the futures closed, the Nasdaq QQQ's flash-crashed 2% higher in a couple seconds. Other derivative ETFs followed suit (namely QLD, QID).

My dog has known for some time we're going to get an upside flash-crash; at least at some point. I share everything with my dog - bouncing ideas of his titled little ears and see how they float. This one floats very well. Quite a few players in this business are caught under-invested and/or short right now. Machines know how to chew-up a situation like this in a hurry. Up the pipes or down the hatch, I don't see how direction has to be in a single direction. This is a dynamic.

If you're heavily short this weekend, you might go out for a nice meal, or two. Catch a movie maybe.

Here's one - Human Pets and the Machines who Adore Them

...rated PG-13

Follow @Centrifugal to fade trades in real time


Wednesday, October 12, 2011

Screening for Retail IPOs (VRA)

Using Marketsmith to hunt for emerging leadership in IPOs. Let's move onto the other hot-money industry group in this advance - (cheap and hideous) CH-Retail.

Click here for screencast

Screening for Biotech IPOs (ECYT)

Using Marketsmith to hunt for emerging leadership in IPOs (While best to avoid in a bear market, IPOs are a great source of performance protein if in a new bull run).

Click here for screencast

Wednesday, October 05, 2011

I'm Very Short Cancer Right Now

I need a nap just now, but I want to get this out while my manic phase is holding.

In the past 24 hours (perhaps and apparently) we've seen the end of the recession and the cure for cancer. You just don't feel so good about it yet.

Marches against Wall St. are only growing right now, as not nearly enough raider's dicks have been pinned to wrecking balls in these declines. I suppose that illustrates this post as a little cynical.

I won't disagree.

But I only know what I know (which is zero), and I build my gameplan from there. Here is what I know:

-Market professionals are under-performing their broad market benchmarks this year and the broad market is down YTD (an awesome combination for Q4 results)

-Of the largest positions market professionals hold, one of the largest is cash (while many pros are net-short)

-The market has exploded upward from an Early October low. It may back and fill. It may or may not re-test significantly lower levels

-Market professionals will chase performance to save their finite careers, especially near year end

-Biotechnology is an emerging/re-emerging leadership group

-As long as the market is rising, I'm buy leadership heading into the end of the year

This doesn't mean the market will go straight up, but, if it is worth owning it will go up more than under-invested professionals are comfortable with. To the degree they remain uncomfortable, I will keep pushing long. If they pine for a pullback though (for a more comfortable entry point) AND get more than a whisk-chance to get aboard, then I will hand them my shares [see Inverse Genius post from March 27th, 2009; for reference].

I don't mind a higher-low retest, but I prefer it to be over about as fast as these guys can acknowledge it is upon us. Scary news driving the decline is the best recipe for this scenario. The market refusing to pullback much at all though, or at least not until from higher (more uncomfortable levels), is preferred.

And I don't care, seriously. My march against Wall Street came at a very young age. I'm fighting as best I can, while I still can and I'm doing it with wooden teeth. I try to measure power and I try to measure foolery. When the two meet there is something special to glean.

Money is pretty powerful.

The leadership is broad on this rally and that is a positive. Of the highest-fliers right now, the most exciting on the tape are companies developing and/or selling treatments for cancer. I'm posting the list below and linking the Supplemental Screencast here.

I am long three of these just now and I expect to trade more from the list. While I may sell at any time (Follow @Centrifugal to fade trades in real time), at the moment...

I am very short cancer.

This is not a recommendation. Fading me is fine, but do not buy any of this list because of me. 

MDCO (coronary interventions)
BMRN (genetic diseases)

Fair well

Sunday, October 02, 2011

Fakedown Set-ups for Monday (ATHN)

Several healthy stocks look poised to break key moving averages. Will they break-down or fake-down?

ATHN looks best to fake-out - click here for screencast

Saturday, October 01, 2011

Discipline (a sit down lecture)

After accounts were gently whacked late in the week, I got to thinking (typically a dangerous endeavor in my line of work).

I realized I should be warning readers more on the difficulty of trading a bear market. And specifically, that if you're relying on me to make money, I can guarantee you losing in the long run (clients not included!).

Certainly, we're capable of having similar ideas and disciplines and it is only natural that we'll be on the same trades and playing the same direction from time to time (albeit, uncomfortable for me). But I'm a trained maniac and there is no way to follow along with that, seriously. Every investor has to develop his own disciplined strategy, which is suitable for his specific skill-set, personality and purse strings. You will suffer otherwise and I would take the other side of your trades blindly, if I knew you were matching me trade for trade. I'd short myself!

I'm presenting my strategy, my principles and my individual trades (every trade since February, 2009) for specific reasons. There are some negatives to being this transparent, but it works for larger reasons. First, it's a way to communicate with clients (who tend to care about this stuff; fill-prices vs. others, whys and wherefores, etc.). But more important, I wanted a public record of my late-career machinations (blow by every blow) and I knew it would make me only more disciplined in adhering to my rules and principles - knowing that if I was to contradict those principles (holding a broken stock, for example, in hopes of exiting at a higher price), then I would have to hold that position publicly for all to see. It's much easier to bend the rules when no one is there to scrutinize. We tend to behave better in public, right? We straiten-up when presenting to an audience. We fart less when pretending our shit smells brighter, no?

This game requires behaving better.

Lately (you may have noticed), we're in a difficult market. So until the larger trend has changed for the better, if you see me attacking long (even if I'm good at picking good spots and decent stocks), I'll be fighting the larger trend and likely to lose money (especially if I am you!).

Decent people should never fight the larger trend, especially in a bear market. Leave the Jim Rose antics for the freaks. Don't swallow swords or hang cinder blocks from your nads because you see someone who can do it. You'll exhaust yourself when successful (thus, you'll still miss the easier trend when stocks finally do go higher) and you're only one hiccup from a bloody throat.

While I largely missed the month of August due to travel, I can assure you I would have leaned short into that death-bed of weakness (shorting is a hands-on endeavor, whereas a trending bull market is easier to manage when away from the desk). Sentiment was still fairly positive in August, while action resembled the plague. Today though, we have a slightly better tape, coincident to a plague in sentiment. Charts of indices suggest further weakness (this week clarified any doubts), but there remains a larger handful of individual charts I would buy today, than the number I saw in August (while inhaling volcanic dust in Iceland). Any name which can manage now a higher-low from September, and subsequently marked a higher September low compared to August AND has the support of it's larger industry group (meaning the group itself is of the highest rated, in terms of relative strength), is a candidate for future success.

If only the bear market would end.

I like this set-up at this time of year, largely because I've been rewarded so many times for attacking similar. In recent years, however (due to old age!), when volatility is high, I don't like getting ahead of the market (apparently I was feeling 60 again, getting ahead of the larger trend this last week). In the modern era (post 9-11) the reason I've cleaned-up every year since 2003 (and this one so far) is because, as volatility increased, I moved to a one-step behind approach and followed the market (while every genius in the biz remains bent on predicting where markets are headed, or beheaded!). I got off track with that discipline this week, even if for a good reason (as these stalwarts have all learned now and are fundamentally negative, coincident to signs of life under the market's surface).

Clever thinking is what cost me then, as I let go protective hedges ahead of the broad market improving and subsequently took lumps for it. This behavior endangered my better mood and importantly, the gumption necessary to continue out-performing. Hence, it's a little reckless.

The market is the mob - show some respect or else get whacked. Pretty simple really.

In 2002, before a new bull market had begun (check out April, 2003), volatility was low and trading was becoming very difficult. If you jumped onto a trend, that was when it would revert (up or down, it was only consistent in that it was going nowhere). This was the death of me and I knew my human trading days were numbered (fortunately for me, poker was very popular in 2002...suckers!).

Well, my days are numbered still and I'm no longer feeling 60 again. Volatility remains quite high, which I appreciate, as a mere human can still find opportunity. But I can't be so frisky (even if I see a better market than long-only heads appearing on CNBC, who, by nature, are supposed to see a brighter future for stocks than me. It's always exciting, when our roles are reversed).

Thus, I'm pretty sure October is going to be a smash-mouth gaining month for stocks, but I don't care. I'm 100 years old now and having a good year. I got away with a good quarter (just ended), but it took a lot of depleting energy and equity accounts were only so-so sick by Friday's close (still amply sick, compared to most and certainly the broader market, but nothing especially bloodthirsty). Futures accounts, however, those were pure evil, as I picked-off 13 out of 14 trades profitably during one run and avoided most of the bigger sets).

Smash-mouth or not then, I'm going to peel back some and wait for the market to take the lead. I'm going back to the 1-step behind approach that has printed performance for the last 9 years (pre-2000, FYI, I was always front-running the market, and could be counted on for +200% years - when I wasn't busy blowing-up instead).

This means I'll be lightening-up, everywhere necessary and largely laying LO -  before driving leadership stocks higher into the Thanksgiving holiday!

The longs left in my position (below), while in need of a hedge perhaps, were not yet necessary to sell.

Cliff notes:
Don't Do What I Do
or else, I'll bite your legs off!
Develop and manage your own discipline, based on your style. Then stick to that personal discipline.


Follow @Centrifugal to fade trades in real time

Current Position: Equity accounts long-only, 46% invested

Currently Long (according to size): LO (20.1%); ROST (7.1%), [Edit: left out 7% APKT position; 1-3 day trade only], CELG (6.9%), LQDT (4.9%)

Currently Short: no current position

Futures: no current position