15 February 2011 No Money To Be Made
We got caught up with some preconstruction backyard chores early this morning and only got a quick glance on the opening today. By closing we were head on into a 4 and half hour Board meeting. The meeting went well and tonight we discovered there was little pin action in the market. Another slow day with some pleasant constriction. Don’t get me wrong I do not like down days, but when their not chaotic and a bit expected, there is nothing wrong with some tightening of the portfolios. It’s kinda like the waves crashing on the beach then the gentle roll of the water back to sea.
We called the retail sales all wrong. As expected they were down even lower than the adjusted expectations. Apparently that out a damper on the market early on. Energy stocks that had surged on Monday because of the big Chinese export report cooled and collected today putting even more burden on the market. Eventually the numbers got low enough for some big fund monies to get in the party and pick up the market of their low points of the day. We expected the Empire State Report to do miss expectations and it beat by an intsy teenie weenie bit. Business inventories did come in better than expected as we suggested.
The S & P is waffling at the 1332 level. We think it might be a psychological number as it is times two the March 2009 Low. (Thanks Guys at Schwab for that observation.)
Since we were busy today, we had not trades. We did injoy a few dividend payments hitting the account and we made the following plays tonight. We are adding to our BWC position as they have been bumped a bit by IBD and they are seeing some more institutional buying. We have closed out our MSFT position with a 7.1% gain and we will be waiting for a better buy point. WE are adding to ur NATI position as this looks like one that is dressed up and sittin on ready. In the category “TIPS are for the race track, I am playing some fun money on a very speculative mining company in AZ called Tuffnel LTD. It is a 90 cent stock and if half of the hype is true it could be a 3-4 dollar stock. It could also be a 30 cent stock. I DO NOT SUGGEST THIS STOCK unless your trip to Vegas fell through and you have the urge to loose some dough. WE added to our WCRX position as we continue to like what we see. (So does IBD and VectorVest.)
Averaging Lower Is A Great Plan
In the 1980s and even in the mid 1990s I always though it was a good idea to buy more stock when the price adjusts downward. My thinking as most people think that I would hang on to it and eventually it will go back up. Well that happens once in a while, but as the IBD and a all of O’Neils books tells us, historical pricing disproves that theory about 8 times out of ten. Cramer even suggest it is not a good strategy. Don’t confuse averaging down with buying on dips. If you have done your homework and you see a slight stall in the pricing momentum and it happens to be a down day for the stock, yes pick up a few more shares. However if you buy into a 50 dollar stock and it goes to 48 right away, it is not wise to buy more. Watch the price and watch the volume. If there is downward pressure and medium to high volume, don’t buy any more and when the stock hits 46 (8% down from 50), get out of there. You will have a strong tendancy to buy more at the 46 because you picked the stock you can’t be wrong. Forget that 8% rule that is for the common man not the master of the market you know you are. Buy more when it gets to 40 because when it get to 60 a share baby, you will have much lower average cost. Think how low your average cost is going to be when it gets to 34 dollars a share you are really gonna make money when that dog come back. You get the point.
Remember there is no shame in taking a small loss. People who invest loose money. It happens. Get over it and move on. If the stock is tugging on your heart strings, put it on a watch list and pick a better entry point.
PICK of The Day
You have all been patient with us and our pick of the days. Many have been chip companies or internet companies or cloud computing companies. Today we wanted to bring you something a little more earthy. HOC Holly Corporation, together with its subsidiaries, operates as a petroleum refiner in the United States. The company process sour crude oils into light petroleum products, including gasoline, diesel fuel, jet fuel, fuel oils, specialty lubricant products, gas oil/intermediates, carbon black oil, and liquid petroleum gas (LPG) and other products at its three refineries located in Artesia and Lovington, New Mexico; Woods Cross, Utah; and Tulsa, Oklahoma. It also manufactures and markets specialty and modified asphalt products from various terminals in Arizona, New Mexico, and Texas. In addition, the company owns interests in a 12-inch refined products pipeline project from Salt Lake City, Utah to Las Vegas, Nevada, together with terminal facilities in the Cedar City, Utah, and North Las Vegas areas. Further, it holds 34% interests in Holly Energy Partners, L.P., which owns and operates approximately 2,500 miles of petroleum product and crude oil pipelines located principally in west Texas and New Mexico; ten refined product terminals; a jet fuel terminal; four refinery loading rack facilities; a refined products tank farm facility; and on-site crude oil tanks at its refineries, an on-site refined product tankage at Tulsa refinery, and a 25% interest in a 95-mile crude oil pipeline joint venture. Holly Corporation markets its gasoline to other refiners, convenience store chains, independent marketers, and retailers; diesel fuel to other refiners, truck stop chains, wholesalers and railroads; jet fuel to military and commercial airlines; specialty lubricant products to commercial and specialty markets; asphalt to governmental entities or contractors; and LPG's to LPG wholesalers and LPG retailers, as well as carbon black oil for further processing or blended into fuel oil. The company offers its products primarily in the Southwestern, Rocky Mountain, and Mid-Continent regions of the United States. Holly Corporation was founded in 1947 and is based in Dallas, Texas.
This caught our attention because it reports next week and from all expectations it should be a good report. Fundamentals could be a little better, but the EPS growth is pretty nice and It is getting a lot of attention. Look at the chart.
You can see the narrow trading range from April til Mid October. It broke out of that range the week of October 15. See the three little dots which were consecutive highs. Those highs were on very heavy volume days. From there you see a nice upward trend on heavy volume until it takes a little rest, then you see a little cup with a handle, then up we go again. Now look at the volume (Circled on the bottom.) If you go into the SEC filings you’ll see and Edward C. Johnson the 3rd bought 7 million shares worth of the stock which was a 13% stake in the company. Shortly their after Navajo Holding bought a gob of the stock. EC Johnson III was the founder of Fidelity funds. His worth is estimated at 8 billion. He knows how to pick em. Here is how we will play this. WAIT for the oil inventory report tomorrow. Look for an entry point at 58 or below. (The ask is at 52.92 so that confuses us so wait for the oil inventory report. If you can get well below that 58, We put in a limit order of 53 to see what will happen. Once you get in, watch the volume as well as the direction. This has 65 written all over it. There is a wiggler that could cause a spike in oil prices tomorrow. There are some pipeline problems on the Trans-Alaska Pipeline and the Department of Transportation and Department of Interior might shut the pipeline down until repairs can be made. Keep an eye on this story and we will tell you where we got into HOC.
From the Busted At The White House Gallery