17 December 2010 When the moon is in the 7th House
Now the song, from the musical Hair, was written by three guys you have never heard of, but what the heck does it mean. Someone told me that the markets are moving sideways because the Astrological signs are in regression. Heck I’m game as I even have started making sense of some of the technicals on stock charts.
So I looked at the astrological indicators for today and tomorrow and they are burgeoning with tension. (Their words not mine. Not sure I even know what that means. But I know someone- a reader who might explain.) The reason is simple. You see the Sun is in Sagittarius and Jupiter is aligned with Pisces (I’ll bet big bucks you were expecting me to say Mars.) Now what is cool is our star, (I assume that means our sun) is making it annual union with the Galactic Center today and tomorrow. So there you have it the market was flat AGAIN.
Ironically or perhaps not, today was a quadruple witching day. (No I am not talking about four rude ladies who would not let me out of the parking spot in front of Borders Books. Interesting, I actually saw a person today in Border’s with a Kindle and I actually think they were down loading books they liked to their Kindle. Note to self, BUY MORE AMZN. But I digress.) Triple witching for those that are not familiar with the term is a day when contracts for stock index options, stock index futures, and stock options all happen on the same day. In order for it to be a quadruple witching day, you have all three of those occurrences happen as well as single stock futures expire. The last hour of trading (which I missed today as Devin Jack and I were celebrating making it through the pre Christmas dramas and we are just about ready to jump in the big F-250 with the 5 dogs and head our place in Utah for the Holidays. We enjoyed a great lunch at my favorites place Hanna’s.) is typically very volatile as traders have to close out positions and take losses or lock in gains. Anyway I missed the action although from what I am reading there was not that much action.
So it was ANOTHER sideways day.
Despite the triple witching we got a new two year high for the S & P 500. (Remember my post about too many people in the pool.) Oracle and RIMM had great earnings report and helped the bulk of the tech sector. Volume in the market was heavier than the slow days we have been having, but that has to be related to the quadruple witching more than investor enthusiasm. The debt bugaboo in Europe prettied up the dollar but oil and gold both did well today. My big investment in the VXX, a volatility play is down about 18% as people are feeling pretty good about the market. I will be adding to the VXX position probably next week. Next week, pre-Christmas is typically a slow week. It is a good time to look at your core holdings. Ask yourself a few questions. Why did I buy this stock? Are those reasons still valid? What did their last earnings report say about why I should keep the stock, take a profit, or add to the position? (No excuses, Boys and Girls, here is the link to the SEC search page where you can find ALL of their filings:
It is a great time to review all the press releases for the last couple of months for each of your holdings. Just go to finviz.com and type in the ticker and you will see very relevant article about your company going back months. Each one will have link so you are a click away for all you need to know.
Then to get the nitty gritty of what is going on in a company, look up where they are headquartered, go to Google, find out the name of the local newspaper where the company is HQ’d, go to the newspaper website, and search for local news about the company. Amazingly enough, there are juicy little tidbits about the company, the executives, and the unions that never get picked up by the financial press. I remember once finding out that the CEO of a very recognizable firm was also the Chairman of a local bank that did not meet the FDIC stress test and was near being closed. Despite some strong financials and interesting growth initiatives, we chose not to get in the stock. I just check it and from 18 months ago (aprox) the stock is up 7%. No dividends to calculate so the return would have been about 4.5% and they were recently down graded. Good call.
If you have done all of that, enjoy your walk around the malls or your drive to grandmothers house, but keep alert to the stock ideas you see everyday. Are there a line of kids hanging out at Gamestop GME? What video Games and gaming systems are they buying? Did it take you way too long to get your delicious sandwich at Panera Bread PNRA? Are all of your friends wearing the new cutaway Uggs (owned by) DECK? What retailer seems to have the most boxes under the trees of homes you visited? Macy’s M, Target TGT, Wal-Mart, WMT. All around you everyday there are great opportunities to find a new play in the game. Good luck and do your homework.
If you are short of ideas, go back to finviz.com. On the home page, you will see a gold mine of companies that might have some nice growth and good value. There at the top left you will see the top gainers. The beauty of finviz.com is all the information is right there in front of you. You can quickly glean the basic fundamentals of the stock and decide how much more homework you want to do. Here is one quick example.
The top of the list today is ITMN. Go ahead and click on it so you can play along. The company is Intermune Inc. Scroll down and you will see that it is a biotech company, focuses on developing and commercializing therapies in pulmonology and hepatology primarily in the United States and Europe. You can read on for more info. Does your portfolio need a bio play? If so let’s go back up to the fundamentals. It has a 2 Billion market cap which is decent size. It has had negative earning so it has no P\E ratio. (Not unusual for a bio start up) With the 144% jump today its historical price performance looks real good. You’d have to tear apart the SEC filings to see what is going on with this company. I poked around a couple of press releases just now and the pop was the result of the Committee for Medicinal Products for Human Use approving a drug that treats idiopathic pulmonary fibrosis (IPF). The FDA did not pass the drug earlier this year and requested more testing. This approval is a green light for sales and distribution in Europe. The FDA will probably follow in a year or so. If you’re willing to wait another year or two as the drug won’t hit the street till 2012, you could see the stock head up to recent analysts expectations of 55 a share. Or the FDA could say no again and back at 15 a share. Too speculative for my blood and we don’t need a spec bio in the portfolio at the moment. It took about 5 minutes to that homework to decide to move on. You can do this to.
On the road again.
As I mentioned, tommorow at O dark Thirty we leave for the beauty and serenity of Draper Utah. My daughter and her beau will be joining us for Christmas. Then we have some friends coming up after the big day. We will also be joined by some other good friends who have a place up there. That would be Dennis and Jerene, readers of the blog so I wanted to say Hi and congratulations to Jerene who is retiring next week after, I don’t know exactly how long she has worked for US Customs. I think she started during the Adams Administration. Congrats to you Jerene and try not to spend too much time with Dennis, he will drive you batty. Love them both.