1 February 2011 I Hear That Gain A Comin
Ok we managed a 10.4% realized gain in January in the Salve Lucrum Portfolio. That would be our 5th month of realized gains and our average is 11.7% per month. This is one of the best strings we have put together since 2006. If we had to answer what we are doing differently, it would be two things. Really paying attention to the direction of the market and using and abusing call options.
Regarding the market direction, we are looking real close at the economic data points and see how good we can get at measuring the movement in the markets. Once we track the movements in the market via S & P 500 movements, Nasdaq movements, IBD accumulation/distribution ratings, NYSE 200 day moving averages, we can get a feel for where the market has been and where it might be going.
Here is a question for you to think about. Out of any 100 randomly chosen stocks, how many will move upwards on a day when all three of the major indexes move upwards? How many will move upwards on in a month when all three of the major indexes move upwards? How many will move upwards on in a year when all three of the major indexes move upwards? According to a webinar I enjoyed last weekend and on IBD.com and in the O’Neil Book, “How to Make Money In Stocks”, and In all of the Cramer books the answer would be about 75.
That’s right you can do all the homework you want and if the market and or market segment is not going your way, you won’t get there. That is why we bore you with so much economic data. The economic data, earnings reports, and geopolitical issues impact the overall direction of the segments and the market.
It’s kind of like body surfing. When you are trying to get out into the surf zone, you go with the return of the wave out to the ocean then you go with the wave coming in. You do not fight the current or the wave. You actually use that energy. Many of you are having visions of me body surfing so I will end this analogy.
Since many of you do not have the time interest or inclination to do so, we will work on a weekly post of market undercurrents. We will post it on Sunday Nights with the Barron’s review and the week ahead. We will even prognosticate where the S & P 500 will end the week.
Until then let’s look at what happened in the market today. The Millions March in Egypt did not disturb our market as PFE Pfizer (WE OWN) and UPS beat big and more positive economic data points continued to roll in. As we suggested the ISM beat. The S & P 500 made it through the 1,300 and DJIA closed above 12,000. On a day like today, 80 out of 100 stocks went up. The advancers versus decliners were 5 to 1. Ya see I don’t make this stuff up. In reading all the squawking about the new highs, resistance, overbought, and correction have quickly jumped back into everyone’s vernacular.
Here is some of the pin action in the SL portfolio over the last few days. We closed out our position in VIFL Food Technology Service, Inc. owns and operates an irradiation facility in Mulberry, Florida after a 15.1% loss. I know it was more than 8%. Do as I say, not as I do.
We added to our CVX position. We feel the market is trending well and the energy sector is doing very well. Earning growth is very healthy and analyst’s revisions seem to be improving. Sales, Margins and ROE all look good.
The chart looks pretty as well. With a nice glass of red wine or two you can see a couple of cups with handles while noticing the drop in volume after words. The experts say that is regrouping and then the stock takes off again. CVX has done that. Recent increases have been supported by increase volume.
On or about December 10 we told you about PLL PALL Corporation manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. We bought some March $50 Calls and we cashed them out yesterday with a 30% gain.
We added some more AMZN yesterday. We also bought back some PUTs we had sold for a wee bit of a gain.
Pick of the day
WE DO NOT OWN, BUT HAVE ON A WATCH LIST Warner Chilcott plc, a specialty pharmaceutical company, focuses on the development, manufacture, and promotion of branded pharmaceutical products in gastroenterology, women's healthcare, dermatology, and urology segments in North America and western Europe markets. The company primarily offers ASACOL for the treatment of ulcerative colitis for orally administered 5-aminosalicylic acid products; ASACOL HD that provides dosing advantages for patients in the treatment of moderately active ulcerative colitis; ACTONEL for the prevention and treatment of postmenopausal osteoporosis; FEMCON Fe, OVCON 35, OVCON 50, and ESTROSTEP Fe, which are oral contraceptives for the prevention of pregnancy; ESTRACE cream for treatment of urogenital symptoms of menopause; and FEMHRT, a systemic therapy for the treatment of menopausal symptoms. It also provides DORYX, a tetracycline-class oral antibiotic for the treatment of severe acne; and ENABLEX for the treatment of symptoms of overactive bladder. The company markets its products and services through wholesale pharmaceutical distributors, and retail drug and grocery store chains. Warner Chilcott plc was formerly known as Warner Chilcott Limited and changed its name on August 21, 2009. The company was founded in 1968 and is based in Dublin, Ireland.
As you can tell we like the pharms, or at least trying to find a good one. In 09 we chased swine flu and sars and did well with several of the big pharms. In continuing our research (on PFE) we tripped over WCRX. IBD likes this pick. It is rated a 95 which like a wine of the same rating is outstanding. The fundamentals are very nice almost flawless. We want to look at the SEC filings to understand the margin pressure.
The chart is a little fuzzy. (That might be the wine Dave Hanna forced on me tonight.), but you can see a bottom in Nov-Dec with a lightening of volume followed by an upswing. If we can get 2-3 more positive days above the 2 million shares mark, we will be in it for a new position. DO YOUR HOMEWORK, but we like it.
Muve Over Mubarak We Have The Jerkgyptian