Stock Market Talk

[웃 910]

Just a recap, my friends neighbor is literally the best I have ever witnessed at finding stocks before they explode. Since I started this thread he picked LEE at 60 cents which hit $2.40s yesterday (4x). He also picked MPG around 55-60 cents which hit a day high of $1.20 yesterday (2x). Now time to see what happens with CHB! Let the fun begin!

I bought 8,000 shares initially of CHB at .445 and then two days ago bought another 7,000 at .415. After the outrageous commission fees my average is .44 with 15,000 shares. Closed yesterday at 41 cents but so far had a day high of 58 cents. Last trade went through at .515 (up about 24% on the day). I actually left the house to take a jog and CHB was barely up 5% at the time. .....I bought my pops 50,000 shares with an average of 45 cents. I am going to try my hardest to hold CHB long-term because I think it will be trading around $2/share within 9 months.

BQI also breaking out after doing a whole lot of nothing the last couple weeks. Current price is 95/96 cents.

PCX last price $9.62...

[웃 910]

CHB close today at 65 cents (up 30%).......47.72% gain from my 44 cent entry

Sold PCX today at $9.08.....81.6% gain from my $5 entry

I am 42% cash and 58% invested in the market with the Dow at the highest it's been since the BLOODBATH that occurred the day after Obama was elected president.

The market rallied on Election Day, the Dow opened November 4th at 9,323.89 and closed at 9,625.28, a gain of 305.45 points or 3.28%.

Then on November 5th the Dow opened at 9,616.60 and closed at 9,139.27, a loss of 486.01 points or -5.05%.

November 5th was the last time the Dow breached 9,600 points (not counting Tuesday, two days ago).

Today's intraday high was 9,609.72 and Tuesday was the year-to-date high of 9,620.

The last time the Dow traded above 10,000 was on October 7th, 2008.

[웃 910]

S&P500 Chart Comparison (2003 to 2009). I looked at the two years and they are similar in many ways. Key difference is 2009 is a MUCH MORE INTENSIFIED version of 2003.

[웃 910]

CIT Group Declares Bankruptcy....

...Waiting for the futures to come out. Not sure how the market will react but since it was expected I'm not sure there will be that much of an affect. I looked at how the markets reacted to the GM bankruptcy which was leaked over the weekend end of May and the following Monday (June 1st) the markets rallied:

The Dow soared 2.6% or 221 points

The S&P500 climbed 2.58% or 23.73 points

The NASDAQ jumped 3.06% or 54.35 points

CIT Group files for prepackaged bankruptcy

On 5:27 pm EST, Sunday November 1, 2009

By Dan Wilchins and Elinor Comlay

NEW YORK (Reuters) - CIT Group Inc, a century old lender to hundreds of thousands and small and medium-sized businesses, filed for bankruptcy on Sunday, as the global credit crisis left it unable to fund itself and the recession clobbered its loans.

The bankruptcy, one of the largest in U.S. corporate history, has been widely expected for months and is unlikely to provide a massive near-term shock to the financial system. But CIT's failure could further constrict credit and weigh on the fragile U.S. economy.

"It takes out another source of capital for small businesses, and there are not a lot of companies anxious to make loans available to that group now," said Blake Howells, head of equity research at Becker Capital Management in Portland, Oregon.

The bankruptcy is also a stinging blow for the U.S. government, which invested $2.33 billion in CIT in December through the Troubled Asset Relief Program. Taxpayers will receive money only after bank debt and bond investors are repaid. The loss is among the biggest yet for TARP.

Most of CIT's creditors have already approved its reorganization plan. Getting through bankruptcy quickly is crucial for CIT if it wishes to keep its customers, which include Dunkin' Donuts franchisees and film producer Dark Castle Entertainment.

"The longer a financial institution stays in bankruptcy, the more the value of the business dissipates. It's faith and trust and perception that are so important for a financial institution," said Jack Williams, a bankruptcy law professor at Georgia State University College of Law.

CIT's operating subsidiaries, including CIT Bank, are not included in the bankruptcy filing, and expect to continue operating, the company said in a statement.

CIT, which filed for bankruptcy protection in the Southern District of New York, plans to reduce its total debt by about $10 billion in bankruptcy. As of the middle of this year, it had $71 billion of assets and $64.9 billion of debt.

Under the bankruptcy plan approved by bondholders, creditors will end up owning the company. Most bondholders will also end up with new CIT debt worth about 70 percent of the face value of their old debt. Preferred shareholders, including the U.S. government, will get money only after other creditors are paid back. Current common shareholders will receive nothing.

A BROKEN MODEL

CIT financed itself mainly by borrowing from bond markets, which has proven to be a flawed strategy as the credit crunch that began in 2007 has made it much more expensive for troubled companies to fund themselves.

Numerous other financial companies that relied heavily on bond investors to fund themselves -- including Fannie Mae, Freddie Mac, and Lehman Brothers -- have failed.

CIT has historically been one of the biggest lenders to small and mid-sized businesses, a sector that is starved for credit now. U.S. President Barack Obama is offering taxpayer money to community banks in an effort to kickstart lending to these companies, which employ about half of the U.S. work force.

CIT had hoped that its status as a major lender to small businesses would help it win more political support. But in July, the Federal Deposit Insurance Corp refused to guarantee CIT debt issuances, and the company scrambled to find other ways to fund itself.

A group of CIT bondholders lent it $3 billion in July, on a secured basis, and the company found bond holders willing to exchange $1 billion of old debt for new securities.

Those moves bought CIT some time, but it still had about $800 million of unsecured debt maturing in the beginning of November, and more than $3 billion of unsecured debt maturing by the end of March.

CIT has said it hopes to move some of its businesses, including small business lending and vendor finance, to its bank subsidiary and to eventually fund new loans from the bank.

[웃 910]

Dow futures up 29 points after taking in the news. I sense a rally similar but not quite as great as when GM declared bankruptcy. So not quite +220 but probably +50.

Now, if you don't already know the markets are completely inverse of the US Dollar. So for the markets to go up, the dollar should come down. Here are some charts of the dollar:

My long-term winner pick IMO is a little hidden gem in the refinery sector; WNR (Western Refining). There is a symmetrical triangle pattern right now on WNR and if it breaks north out of the triangle it should move an equivalent amount to the highest/lowest point of the triangle which is $11 drawn with the vertical black line. Since WNR is right at support and the markets are volatile up and down it could go much lower but I think that $5.61 (even anything under $7) is a great entry. Earnings are due out on November 9th (a Monday) so it could be a deciding factor. You can read more about the symmetrical triangle at THIS LINK.

My short-term quick play is STSA. I got in when the stock was down 14/15 days in a row (went from over $2 to 62 cents in just a few weeks). I got in at 64 cents. It's at 80 cents right now and I might add more because I sense (based on the chart) that it will move over $1 this week. The technical setup is called a pincher play. Don't feel like explaining it in this post but I'll explain what it is when STSA makes a move higher (easier to point out on the chart after the fact).

WNR: last trade $5.61

STSA: last trade $0.80

BEE: last trade $1.77 <-----picked up BEE last week at $1.51 so figure I might as well throw that one in here as well, will bump this thread maybe a little later this week or next

Edited November 2, 2009 by Confucian

[웃 910]

Quick update:

1) Got out of STSA for a very very small loss

2) Got out of BEE for a small profit

3) Holding WNR long-term which has turned out to be a dud (but will eventually move north, just matter of time)

4) Got into PARD yesterday $1.70s and went in very heavy. Sold today for one of my largest overnight gains ever!!!

As noted above I said "if you don't already know the markets are completely inverse of the US Dollar. So for the markets to go up, the dollar should come down."

Interestingly enough November 1st was the high for the USD and the low for the markets. And in the $USD charts posted above the USD was right on key lines of resistance. Here is an update of the chart of the USD:

The dollar broke below $75 but closed above $75 today. There is some positive MACD divergence on the USD. This means that the dollar keeps making lower lows while the MACD makes higher highs at the same spot. The underlines on the chart show this happening. It is a bullish (good) predictor of future price action. My gut tells me dollar breaks out of the downward channel and the markets come down. The 50 day moving average (green line) is waiting right above the resistance line as even more resistance around $76. Close was $75.30 and it should be interesting to see what happens....

So...the USD hit lows the 2nd of the month and kept dropping and the rest of the market soared like crazy!! Check out the gains for the month....

Monthly charts for the Dow, S&P500, and the NASDAQ. Each up >7% this month!!!

I know November is historically a strong month but WOW!!!! 725 points on the Dow in 12 sessions!

Luckily with my last monster trade on PARD I am outperforming even the NASDAQ, now just need to be extra smart and stay a step ahead! Bought some DIA $104 puts for pullback rest of week

Trying to keep in the back of my mind that Wall Street absolutely adores double digit unemployment so will be careful with puts / shorts!

Edited November 18, 2009 by Confucian

[Heracles 417]

As noted above I said "if you don't already know the markets are completely inverse of the US Dollar. So for the markets to go up, the dollar should come down."

Come again?

When a market is doing well, both should rise.

Edited November 18, 2009 by Booyah!

[웃 910]

As noted above I said "if you don't already know the markets are completely inverse of the US Dollar. So for the markets to go up, the dollar should come down."

Come again?

When a market is doing well, both should rise.

The past couple years the markets and the $ have been going completely inverse of each other.

Imagine flipping that dollar chart over and laying it on top of the Dow chart. You'd almost get a perfect match!

Edited November 18, 2009 by Confucian

[SuperDuper! 230]

So... the market is still going sideways.

Go short at 9,000-ish, long at 8,000-ish. Lather, rinse, repeat ad infinitum.

I'm out of commodities for now.

GLD ETF is great. Sorry you sold out so soon. The train is just leaving the station. Buy dollars and strike it rich might be a plan B for ya!

Edited November 18, 2009 by Hopp

[DEDixon 39]

Confucian, just wondering, do you put aside some cash for your capital gains?

i have a huge gain on BAC and C and don't want to sell because of capital gains. i keep thinking I should buy sell, buy sell (good time to do it) but i like the multiple on the financial stocks that i have coz my money doubles every time they go up 4.25 (bac) and 2.12 ©. i know the financials are up against the wall now, but i can see that long term, given the take overs and thus the size of these companies, they'll eventually skyrocket. i think better to let what i have sit.

it is a good time to buy, sell, buy sell, but after the market goes up and starts going sideways, i don't really like the pressure of buy sell, buy sell. i mean, if i get out of bac and c, i lose the low multiple just to buy sell buy sell (and pay capital gains)... then in a few years the market goes flat.

[웃 910]

Confucian, just wondering, do you put aside some cash for your capital gains?

Yes. If you hold longer than 1 year you will pay a less % in cap gains come tax time. So if you sell now (I'm assuming you bought around March-April) you'd pay even more taxes cause you'd be taxed for short-term gains.

hold > 1 year = long-term gains at better tax rate

It's nice to have some for really long-term. Just think, C and BAC aren't going anywhere and they will eventually bring back a dividend (or in BAC's case, raise it).

So you paid $2 for C. Imagine if in 2-5 years they bring back a 10, 15, or 20 cent quarterly dividend. You can add 5-10% of your principle every 3 months! <they paid a 54 cent quarterly dividend in 2007>

BAC paid a quarterly divy as high as 64 cents in September 2008. They will bring it back eventually. I'd imagine it will one day return to 50 cents a quarter and you'll make almost 50% your principle each year when it happens considering you are in at about $4/share.

[mawilson 2,133]

So you paid $2 for C. Imagine if in 2-5 years they bring back a 10, 15, or 20 cent quarterly dividend. You can add 5-10% of your principle every 3 months! <they paid a 54 cent quarterly dividend in 2007>

NYB pays a 25c quarterly dividend. It's a $10-12 stock and a good, solid bank with virtually

no toxic exposure. In fact, they were one of the few banks that said 'no' to TARP in the

midst of the crisis.

[DEDixon 39]

BAC:

http://www.foxbusiness.com/story/markets/i...-says-b-double/

I'm better off waiting it out.

[웃 910]

Some ETFs that are setting record lows:

GLL 2x gold bear at $8.51 w/ all-time low set today at $8.49

EDZ 3x emerging markets bear last price $5.01 w/ all-time low $4.89

DRV 3x real estate bear last $14.37 w/ all-time low $14.06

UNG natural gas ETF last $8.51 w/ all-time low $8.51 set today

Not in any of them and probably won't get in any. I like the gold bear the best for a short-term 2-20 day hold.

My biggest holding right now is RMIX with 40K shares at an avg. price of about 77 cents. Hoping for an early Xmas gift...

[웃 910]

My biggest holding right now is RMIX with 40K shares at an avg. price of about 77 cents. Hoping for an early Xmas gift...

Pretty damn sure I'll get that Xmas present I wanted.

I was speaking of the "pincher setup". It is the best bottom play technique out there in my opinion. It is when the PPO (black line) and the ADX (black line) begin to pinch together. What happens is all of a sudden the stock will get a huge bounce. I'll show some examples later today but here is an example with RMIX (and this is just the beginning of the reversal). I am looking for $1.25 on RMIX...Here is a timeline of the stock chart (NOV 21, DEC 4, DEC 7). Watch how the lines pinch together and then diverge. Hopefully I can show a chart of RMIX over $1 later this week or even later today....