I hope this posts finds all of you well. I also hope that this post finds you a little bit richer. This weekend I wrote a blog post which posted this morning before market open. In it, I detailed a new screen I was trying, and the results that it produced when I ran it. Here's what happened today...
S&P 500 - +12.35, up 1.11%
Cabela's Incorporated (CAB) - +$.58, up 3.47%
Children's Place Retail Stores, Inc. (PLCE) - +$1.49, up 3.12%
True Religion Apparel, Inc. (TRLG) - +$.94, up 4.93%
Overall, if you invested in all three in equal increments, you would have seen a total return of 3.84% today, more than triple the return of the S&P 500 which returned 1.11%. I must say, I am very intrigued by the possibilities of this type of screen. As you can see, the screen identified stocks that will move higher much harder than the overall market. In an up market, this is a great thing, in a down market, it's just as bad.
If one is able to identify short periods of time where the market is likely to trend higher, this can be a very profitable strategy. I am going to keep an eye on these stocks for a while, and will look for opportunities in the future to test this stock screen further. While I myself did not buy any of these names this morning, as this was an experiment, in the future if I were to do so I would take part with near dated options. With near dated options I will have a defined risk, and the potential for a higher percentage gain will be much greater. Had I been trading such options today, odds are I would have covered those options in the same day with a substantial profit.
Monday, September 13, 2010
Are These Stocks Poised For A Short Squeeze?
Over the weekend, I used the trusty E-Trade stock screener to attempt to identify some names that are poised for a short squeeze. When a stock is shorted, the investor "borrows" the stock at a high price, with the intent of "buying" it back at a lower price. When a stock with a high short percentage of the float begins to move higher, the shorts begin to lose money and thus get "squeezed" into buying the stock back to cover their losses. As a stock begins to move higher, the move is exacerbated by such unnatural buying.
Here's the screen I used to identify where the opportunities may lie:
Criteria - S&P 500 Membership
Logic - I want stocks that are at least fairly liquid. That is, I want them to trade regularly and in a relatively high frequency, this makes getting in and out much easier.
Criteria - Beta > 1
Logic - As you know if you read this blog, I believe the market is going to trend higher in the time ahead. Beta is a measure of how a stock moves in relation to the market. A Beta of 1 indicates the stock will move in correlation to the market, < 1 indicates the moves will be less than the market, and > 1 means the stock will move more than the market. For instance, if a stock has a Beta of 1.5, and the market moves up 10%, we can expect our stock to move up 15%. By choosing a Beta of > 1, I am trying to pick stocks that are really going to move once squeezed.
Criteria - Short Percentage of Float > 25%
Logic - This means that a quarter of the float, or the percentage of all outstanding shares that are traded by the public, is currently being held short. Meaning, there are a large percentage of people who believe the stock is going down who can potentially be squeezed out if the market moves higher. A high short percentage means the squeeze upward will be even more severe.
Criteria - Price/Cash Flow Ratio < 10
Logic - If you've read my Dow Dogs post from January, you know how I feel about this metric to find undervalued companies. I am not going to bore you with the explanation again.
Results (Data per www.finviz.com, as E-Trade went down for maintenance during this writing):
Cabela's Incorporated (CAB), $16.72, Retail (Specialty)
Short Interest - 27.18%
Beta - 1.09
Price/Cash Flow Ratio -2.27
Children's Place Retail Stores, Inc. (PLCE), $47.71, Retail (Apparel)
Short Interest Ratio -24.79%
Beta - 1.12
Price/Cash Flow Ratio - 6.67
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
Short Interest - 25.07%
Beta - 1.71
Price/Cash Flow Ratio - 3.95
I am going to keep track of these names, and see how the do over the coming weeks. Maybe this will be a strategy worth following in the future, maybe not. I will write back with the results at a later date.
Here's the screen I used to identify where the opportunities may lie:
Criteria - S&P 500 Membership
Logic - I want stocks that are at least fairly liquid. That is, I want them to trade regularly and in a relatively high frequency, this makes getting in and out much easier.
Criteria - Beta > 1
Logic - As you know if you read this blog, I believe the market is going to trend higher in the time ahead. Beta is a measure of how a stock moves in relation to the market. A Beta of 1 indicates the stock will move in correlation to the market, < 1 indicates the moves will be less than the market, and > 1 means the stock will move more than the market. For instance, if a stock has a Beta of 1.5, and the market moves up 10%, we can expect our stock to move up 15%. By choosing a Beta of > 1, I am trying to pick stocks that are really going to move once squeezed.
Criteria - Short Percentage of Float > 25%
Logic - This means that a quarter of the float, or the percentage of all outstanding shares that are traded by the public, is currently being held short. Meaning, there are a large percentage of people who believe the stock is going down who can potentially be squeezed out if the market moves higher. A high short percentage means the squeeze upward will be even more severe.
Criteria - Price/Cash Flow Ratio < 10
Logic - If you've read my Dow Dogs post from January, you know how I feel about this metric to find undervalued companies. I am not going to bore you with the explanation again.
Results (Data per www.finviz.com, as E-Trade went down for maintenance during this writing):
Cabela's Incorporated (CAB), $16.72, Retail (Specialty)
Short Interest - 27.18%
Beta - 1.09
Price/Cash Flow Ratio -2.27
Children's Place Retail Stores, Inc. (PLCE), $47.71, Retail (Apparel)
Short Interest Ratio -24.79%
Beta - 1.12
Price/Cash Flow Ratio - 6.67
True Religion Apparel, Inc (TRLG), $19.07, Apparel/Accessories
Short Interest - 25.07%
Beta - 1.71
Price/Cash Flow Ratio - 3.95
I am going to keep track of these names, and see how the do over the coming weeks. Maybe this will be a strategy worth following in the future, maybe not. I will write back with the results at a later date.
Saturday, September 11, 2010
Wal-Mart (WMT) On My Radar
This morning, I checked my E-Trade stock screener, looking to see if anything new popped up. Well, it did. My stock screener returned Wal-Mart (WMT) and Verizon (VZ). While I have talked endlessly on this blog about Verizon, and that pick is up .87% year-to-date, I am far more intrigued by Wal-Mart.
While I generally do not like retail (I worked retail for six years in a previous life), and do not follow retail stocks in particular, I find Wal-Mart to be an interesting pick. Currently, WMT is trading at $51.97, with a 2.33% yield, 13.29 P/E ratio, and a 8.37 price/cash flow ratio. I have written here about how I do not feel the economy is really that bad, and so I could see how WMT could be a consumer confidence play. As people begin to feel better about the economy, and we get to see more job creation, like we did on September 6th, certainly we will see a rise in consumer spending.
While I am not jumping on the bandwagon just yet, I certainly feel Wal-Mart is an interesting name, and one that should deserve more consideration.
While I generally do not like retail (I worked retail for six years in a previous life), and do not follow retail stocks in particular, I find Wal-Mart to be an interesting pick. Currently, WMT is trading at $51.97, with a 2.33% yield, 13.29 P/E ratio, and a 8.37 price/cash flow ratio. I have written here about how I do not feel the economy is really that bad, and so I could see how WMT could be a consumer confidence play. As people begin to feel better about the economy, and we get to see more job creation, like we did on September 6th, certainly we will see a rise in consumer spending.
While I am not jumping on the bandwagon just yet, I certainly feel Wal-Mart is an interesting name, and one that should deserve more consideration.
Wednesday, September 8, 2010
The Market Is Suggesting A Bounce Is Coming
Hello again. I am just recently back from vacation, and studying for a CPA Exam before that. I have been eager to collect all of my data, and see what the market is doing. Let's get into it...
The Wilshire 5000 closed at 11,453.30, up from 11,203.50, or 2.22%, since my post of three weeks ago on 8/15/10. The Wilshire 5000's 200-day moving average currently sits at 11,588.05, or 1.16% above today's close. The Wilshire 5000 has now closed below it's 200-day moving average every day since 8/11/10.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3%. This is in comparison to a reading of 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2% on August 10th. As you can see, the sentiment in the market has clearly turned more negative over the past few weeks. In fact, the sentiment hasn't been so negative since March of last year. The last time the market was this negative, we saw a 70% bounce upward, just saying.
The Volatility Index closed Friday at 23.25, down from 26.24 back on August 15th.
Now for the portfolio...
1) Verizon at $30.46, down .31% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.55/share, worth $52.85 to this portfolio currently.
2) AT&T closed at $26.87, up 2.40% for the year, inclusive of dividends.
3) GE closed at $15.70, up by 4.38% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.90, down by 26.93% since my buy.
5) FXP, the doubleshort China ETF, closed at $36.05, down by 17.08% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.38, down 19.53% since I purchased them this past week
7) NLY closed at $17.70, up by 2.76% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $262.92 up by 35.70% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $147.54, up by 8.41% since my buy.
Overall, the portfolio is down by .59% (3.96% for the DOW Dogs), versus -.38% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 8.82% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .21% underperform Most of this underperformance is directly attributable to my movement into ~20% options. These investments are going to be much more volatile than actual stocks. However, with the two securities I am holding options in right now, I believe the payoff will be significant by the time their expiration comes due.
I have stated that I believe we are due for a bounce. Certainly the political environment is hanging over the market a bit, and some of that will be cleared up in November. However, the market can only become so negative given the fact that the economy is not going to fall of the face of the Earth anytime soon. This morning, I saw a quote for the 10-year at 2.58%. From 1962 when I could get data, to the present, the average yield is 6.85%. The 2010 daily average yield is close to 3.5%, and the average for the past decade back to 2000 (recall the events of the tech bubble, Enron, the credit crisis, 9/11, etc.) is 4.46%. The yield on the 10-year, the benchmark risk free rate, is a good indicator of just how negative things are. At some point, money has to flow out of the bond market, and into equities.
The Wilshire 5000 closed at 11,453.30, up from 11,203.50, or 2.22%, since my post of three weeks ago on 8/15/10. The Wilshire 5000's 200-day moving average currently sits at 11,588.05, or 1.16% above today's close. The Wilshire 5000 has now closed below it's 200-day moving average every day since 8/11/10.
The Investor's Intelligence Survey was released on Thursday night. This week's reading was 29.4% BULLS, and 37.7% BEARS, for a spread of -8.3%. This is in comparison to a reading of 41.7% BULLS, and 27.5% BEARS, for a spread of 14.2% on August 10th. As you can see, the sentiment in the market has clearly turned more negative over the past few weeks. In fact, the sentiment hasn't been so negative since March of last year. The last time the market was this negative, we saw a 70% bounce upward, just saying.
The Volatility Index closed Friday at 23.25, down from 26.24 back on August 15th.
Now for the portfolio...
1) Verizon at $30.46, down .31% for the year, inclusive of dividends. FTR, the recent spinoff, recently closed at $7.55/share, worth $52.85 to this portfolio currently.
2) AT&T closed at $26.87, up 2.40% for the year, inclusive of dividends.
3) GE closed at $15.70, up by 4.38% for the year, inclusive of dividends.
4) TBT, the doubleshort U.S. Treasury ETF closed at $31.90, down by 26.93% since my buy.
5) FXP, the doubleshort China ETF, closed at $36.05, down by 17.08% since my buy, and after a 1:5 reverse split.
6) December 18, 2010 SPY $102 Calls closed at $10.38, down 19.53% since I purchased them this past week
7) NLY closed at $17.70, up by 2.76% since my buy, inclusive of a reinvested dividends
8) AAPL closed at $262.92 up by 35.70% since my buy.
9) January '12 Citigroup Calls closed at $.14, down by 68.18% since my buy. Still long-term bullish on Citi, and I will reiterate this from now until January 2012.
10) GS closed at $147.54, up by 8.41% since my buy.
Overall, the portfolio is down by .59% (3.96% for the DOW Dogs), versus -.38% for the Wilshire 5000. The current basket of ten stocks and options that I am currently invested in, including dividends, is down 8.82% year-to-date. The spread between my performance and the overall market (Wilshire 5000) is at .21% underperform Most of this underperformance is directly attributable to my movement into ~20% options. These investments are going to be much more volatile than actual stocks. However, with the two securities I am holding options in right now, I believe the payoff will be significant by the time their expiration comes due.
I have stated that I believe we are due for a bounce. Certainly the political environment is hanging over the market a bit, and some of that will be cleared up in November. However, the market can only become so negative given the fact that the economy is not going to fall of the face of the Earth anytime soon. This morning, I saw a quote for the 10-year at 2.58%. From 1962 when I could get data, to the present, the average yield is 6.85%. The 2010 daily average yield is close to 3.5%, and the average for the past decade back to 2000 (recall the events of the tech bubble, Enron, the credit crisis, 9/11, etc.) is 4.46%. The yield on the 10-year, the benchmark risk free rate, is a good indicator of just how negative things are. At some point, money has to flow out of the bond market, and into equities.
Wall Street Journal Subscription Discount
Much of the information that you read on this blog is news found in "The Journal". I thought you guys might like this post by a paid sponsor about discounts on the publication that everybody in the world of finance reads. I have been a subscriber for a few years and love it. Read on...
SOURCE: FedPrimeRate.com
SOURCE: FedPrimeRate.com
Sep 29, 2009 03:51 ET
Prime Rate Website Offers Wall Street Journal Subscription Discounts
"We've added lots of new content, including new blogs and charts," said content manager Steve Brown. "We're excited to offer website visitors the best possible pricing for the Wall Street Journal®. It's very widely accepted as America's premier business and finance newspaper. As a source of first-class journalism covering the world of business and the global economy, the Journal is a vital staple in the information diet of knowledge-hungry individuals all over the world, and from all walks of life. It's an indispensable resource."
New subscribers can get access to the online version of the Wall Street Journal for $1.99 per week. Those who are interested in receiving the print version alone can get the Journal delivered six days per week at $2.29 per week. A third discount subscription option is to get both the print and online versions of the Journal at $2.99 per week.
The FedPrimeRate.com website also features discounts for subscriptions to the online and/or print editions of Barron's Magazine and Investor's Business Daily (IBD).
Recently, a graph which compares the target fed funds rate to the U.S. Prime Rate, the one-month LIBOR rate and the three-month LIBOR rate was added to the site. It's a fascinating and telling chart which essentially chronicles the history of the global credit crisis. As numerous banks in the industrialized world were failing as a result of exposure to toxic debt, the Federal Reserve aggressively cut short-term rates to record-low levels. Commercial banks, on the other hand, responded to the same financial havoc by raising rates on unsecured, short-term interbank loans, because the risk associated with such loans increased dramatically. The resultant and precipitous decline in interbank lending produced a domino effect which led to a chocking off of lending to businesses and consumers in the U.S. and other developed nations.
About FedPrimeRate.com
The website at www.FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and personal finance.
No Exam Life Insurance
Here is an interesting article by a paid sponsor on no exam life insurance. As somebody who had to buy such coverage for both of his parents because it was too late for them to pass an exam, I can tell you that it really is a great (and useful) product. Life insurance, unfortunately, is often one of those necessary evils. Read on...
SOURCE: FedPrimeRate.com
SOURCE: FedPrimeRate.com
Jun 20, 2010 19:48 ET
No Medical Exam Life Insurance Page Added to FedPrimeRate.com Website
"The addition of a life insurance information page is a natural step forward for us as we pursue our goal of being the most useful and unique finance site on the Internet," said content manager Steve Brown. "Our new life insurance page is very unique. It's not just a bunch of dry content about life insurance. We've included highly instructive, real-world stories related to life insurance, stories that anyone can relate to. There's also a rich and carefully crafted life insurance frequently asked questions section which will be expanded indefinitely."
FedPrimeRate.com is already the Internet authority on the United States Prime Rate, LIBOR and other key market rates like the benchmark fed funds target rate. Establish in 2005, FedPrimeRate.com has expanded considerably over the last five years to include blogs about car insurance, consumer and business credit cards, and interest rates. The site also has in-depth information about controversial loan products like online payday loans. Other popular features on the site include an impressive number of detailed and regularly updated charts, a U.S. Prime Rate frequently asked questions page and an entire section dedicated to housing and foreclosures.
Consumers with dependents know how important it is to have life insurance. However, many aren't comfortable with the idea of dealing with pushy insurance salesmen or having a paramedical visit their home to draw blood. No medical exam term life insurance is very popular due to the simplicity of the application process, and, of course, because the premiums are very affordable when compared to other life products like whole, variable, universal, permanent and hybrid plans.
"We like and respect other finance-related websites like BankRate. Our mission, however, is to provide web surfers with the most unique and useful finance-related info that they simply won't be able to find anywhere else. We're very proud of what we've accomplished over the last five years, and we have no plans on slowing down," added Brown.
About FedPrimeRate.com
The website at FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and personal finance.
Small Business Credit Cards Are Back
Hello again, folks. I have returned to the blogosphere after a few week sabbatical to study for the CPA exam, as well as a long Labor Day Weekend vacation.
Anybody have a business credit card? I do. Below is a really interesting article by a paid sponsor on the subprime crisis that we are just now climbing out of, and it's impact on credit and small businesses. Personally, I work for a medium-sized company that uses a corporate card. As my business is heavily reliant on travel and client entertainment, I am not sure how we would get buy without them.
SOURCE: FedPrimeRate.com
Anybody have a business credit card? I do. Below is a really interesting article by a paid sponsor on the subprime crisis that we are just now climbing out of, and it's impact on credit and small businesses. Personally, I work for a medium-sized company that uses a corporate card. As my business is heavily reliant on travel and client entertainment, I am not sure how we would get buy without them.
SOURCE: FedPrimeRate.com
Jul 15, 2010 22:13 ET
FedPrimeRate.com Now Recommending Small Business Credit Cards
"We're really glad to see business credit cards coming back," said Steve Brown, content manager at FedPrimeRate.com. "Small business owners all across America have been struggling to get access to loans as banks continue to hoard cash. Though the American economy is growing again, the banking sector is still hurting, with many banks still facing closure by the FDIC."
To date, the Federal Deposit Insurance Corporation (FDIC) has closed 90 banks in 2010, which, so far, is a faster pace of bank closures when compared to 2009. Between the beginning of 2009 and July 17, 2009, the FDIC closed 57 banks. The FDIC closed a total of 139 banks during all of 2009. Another troubling fact: unnumbered banks across the country are defaulting on their TARP payments.
"We like the new Ink line of business credit cards from Chase because they offer great rates, reasonable terms and conditions, and they have a very strong bank behind them," continued Brown. "Chase is on an extremely short list of banks that emerged from the banking crisis virtually unscathed. We believe that a bank as strong and responsible as Chase has the financial strength and corporate culture necessary to provide some of the most consumer and business-owner friendly credit products around."
Many factors have contributed to banks scaling back on lending to small businesses. Since the subprime mortgage-inspired financial crisis unfolded two years ago, banks have had to operate within a powerfully negative economic environment: a severe banking crisis, a devastating recession, rising unemployment and defaults, disinflation and the very real threat of deflation. As a result, the credit card industry contracted sharply. Another major factor: the market for credit-card receivables completely dried up. During the credit boom years, banks would bundle up all kinds of credit-card debt, including business-credit card debt, and sell this debt to investors on Wall Street -- very similar to the way mortgages were packaged and sold to investors. Credit-card securitization contributed much to the ready flow of credit to all types of consumers and businesses, as banks were more than happy to pass the risk associated with unsecured debt onto Wall Street. However, the fate of this market was to become another domino felled by one of the many financial shockwaves created by the subprime-mortgage crisis. Business credit cards became so risky and unprofitable for banks that many business card accounts were either closed or had their credit lines severely limited.
Advanta, a company that specialized in small business credit cards, closed all of its card accounts on May 30, 2009. Advanta Corporation filed for bankruptcy relief in November, 2009. The FDIC closed Advanta Bank Corporation in March of 2010.
Chase emerged from the global banking crisis and subsequent Great Recession as one of America's strongest and most resilient banks.
"Have you seen how complicated it is to get a Small Business Administration loan?" quipped Brown. "Business credit cards are not just a great way to get quick and easy access to short-term financing. Small businesses owners can benefit from the rewards programs that come with many business cards, and they can also stay more organized with monthly and yearly expense reports that many business credit card issuers provide. A business credit card also helps a business build its credit rating, making it more likely to get approved for a traditional bank loan in the future."
The typical small business owner who uses a business credit card for short-term financing is a responsible borrower. According to the Federal Reserve, less than 20% of small business credit card holders carry a balance.
About FedPrimeRate.com
The website at FedPrimeRate.com is the Internet's premier information space dedicated to interest rates and finance.
Subscribe to:
Posts (Atom)