and looks like it is ready for the up leg ...
Since the uptrend started Sept last year, market has not made any significant pull back. One day we will get a more than 5-10% correction and even a bear market, the current market condition still looks solid and healthy. One negative is that the bullishness among investors are getting very frothy, it is however not an accurate indicator to ping point a market top.
There are several high profile Chinese IPOs over the last couple of months. One of them is Dang Dang, the Chinese version of Amazon; the other is Youku, the Chinese version of Netflix or Youtube. Chinese new issues tend to be volatile and are among the highest number of fraud in accounting (take a look of RINO, for example). It is prudent to be cautious when investing in Chinese new issues.
You never want to buy IPOs on the first day, because it is gambling, period. Well, unless your dad works as CEO or COO for that company ... (still I think that is gambling ... )
It is much safer to wait for a new IPO to consolidate its gains and establish a price range. Carefully observe the price and vol pattern. Study the fundamentals and decide if the stock present a compelling story. Then when the time is right, you pull the trigger.
Let's first look at YOKU. YOKU's market capital is 4 Billion. What is Netflix's market capital? 10 Billion. How much is Netflix's annual revenue? 2 Billion. How much is Youku's sales over the 1 year period? 20 Million!!!!!!!! With 20 Million sales, Youku is priced with a market cap of 4 Billion. Would you buy this hype? I won't. YOKU is a junk in my opinion. Once the bear market returns, YOKU will be among the first to drain into the rat hole. Could YOKU have explosive growth in the future? who knows. I don't bet on unknowns. Show me the money first!
Now let's look at Dang Dang, Dang Dang made 300 Million sales last year. Sale growth has been between 50% - 100% over the last 7 quarters. Dang Dang's PE ratio is 400!!!! Once PE ratio gets that high, you know the market is getting frothy. High PE does not mean it won't go even higher, it only means your purchase gets a lot riskier.
Looking at the price vol action of Dang Dang since IPO, it finished 6 week consolidation and the price is breaking out to the new high. During the 4th week, Dang sold off with very little vol indicating selling pressure drying up. Starting this week, vol comes in and price got steadily bid up.
Dang is buy right here right now in my opinion. Your cut loss should be set at 31-32 area. Never lose your line ... If it goes up as planned, ride it ... otherwise cut loss and let it go.
Thursday, January 13, 2011
Wednesday, November 3, 2010
GOOGLE ｉｓ ｓｈｏｗｉｎｇ ｕｐ ｗｉｔｈ ａ ｇｒｅａｔ ｃｈａｒｔ ｐａｔｔｅｒｎ ．．．
Market continues its uptrend started from Sept 1st. Top growth stocks, such as BIDU, AAPL, NFLX, CMG, PCLN, ARUN, FFIV etc, have handily beaten the index. As of today, top growth leaders are all holding the line tough, calling for more market appreciation. Well, anything could happen in the market, trend followers only trade based on what they see, not what they think the market will do tomorrow.
One stock which has been lagging badly since 07 market top could re-vindicate itself if the market uptrend continues. Google, being a growth leader for years, seemed to have reclaimed its growth leadership, with top and bottom line growth running hot again. The latest sales are growing at 23% and EPS around 30%.
GOOG is showing up very tightly in its chart, which essentially has traded sideways in a tight range for about 3 weeks after its huge earning induced gap up. If google can break out of the little 3 week tight range in vol, then the next target is its old high of $750.
One stock which has been lagging badly since 07 market top could re-vindicate itself if the market uptrend continues. Google, being a growth leader for years, seemed to have reclaimed its growth leadership, with top and bottom line growth running hot again. The latest sales are growing at 23% and EPS around 30%.
GOOG is showing up very tightly in its chart, which essentially has traded sideways in a tight range for about 3 weeks after its huge earning induced gap up. If google can break out of the little 3 week tight range in vol, then the next target is its old high of $750.
Friday, October 22, 2010
An Uncanny Similarity between the 1930s and 2000s
A great chart you probably want to look at is the comparison of the 1930s with 2000s. You see the uncanny similarity between the two?
If things play out exactly like the 30s, that means we will have a painful down turn ahead of us followed by a great bull market ...
History never repeats itself, but it often rhymes -- Mark Twain.
If things play out exactly like the 30s, that means we will have a painful down turn ahead of us followed by a great bull market ...
History never repeats itself, but it often rhymes -- Mark Twain.
Friday, October 15, 2010
As market uptrend continues, it is perfect time to review what Jess Livermore thinks what we should do at this very juncture ...
Here is my favorite excerpt from Reminisces of a Stock Operator, the biography of the life of legendary trader JESSE LIVERMORE.
Is this the right time to review what a classic trader he is? and on how we should handle stocks at this juncture?
"In Fullerton's there were the usual crowd. All grades! Well, there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered advice and never bragged of his winnings. He was a great hand for listening very attentively to the others. He did not seem very keen to get tips that is, he never asked the talkers what they'd heard or what they knew. But when somebody gave him one he always thanked the tipster very politely. Sometimes he thanked the tipster again when the tip turned out O.K. But if it went wrong he never whined, so that nobody could tell whether he followed it or let it slide by. It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn't donating much to the firm in the way of commissions; at least not that anyone could see. His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast.
The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had not done with the tip so he would tell them what they ought to do. But whether the tip they had was to buy or to sell, the old chap's answer was always the same.
The customer would finish the tale of his perplexity and then ask: "What do you think I ought to do?"
Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, "You know, it's a bull market!"
Time and again I heard him say, "Well, this is a bull market, you know!" as though he were giving to you a priceless talisman wrapped up in a million-dollar accident insurance policy. And of course I did not get his meaning.
One day a fellow named Elmer Harwood rushed into the office, wrote out an order and gave it to the clerk. Then he rushed over to where Mr. Partridge was listening politely to John Fanning's story of the time he overheard Keene give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he heard it.
Well, Elmer made for the old man and, without a word of apology to John Fanning, told Turkey, "Mr. Partridge, I have just sold my Climax Motors. My people say the market is entitled to a reaction and that I'll be able to buy it back cheaper. So you'd better do likewise. That is, if you've still got yours."
Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur, or gratuitous, tipster always thinks he owns the receiver of his tip body and soul, even before he knows how the tip is going to turn out.
"Yes, Mr. Harwood, I still have it. Of course!" said Turkey gratefully. It was nice of Elmer to think of the old chap. "Well, now is the time to take your profit and get in again on the next dip," said Elmer, as if he had just made out the deposit slip for the old man. Failing to perceive enthusiastic gratitude in the beneficiary's face Elmer went on: "I have just sold every share I owned!"
From his voice and manner you would have conservatively estimated it at ten thousand shares. But Mr. Partridge shook his head regretfully and whined, "No! No! I can't do that!"
"What?" yelled Elmer.
"I simply can't!" said Mr. Partridge. He was in great trouble.
"Didn't I give you the tip to buy it?"
"You did, Mr. Harwood, and I am very grateful to you. Indeed, I am, sir. But "
"Hold on! Let me talk! And didn't that stock go up seven points in ten days? Didn't it?"
"It did, and I am much obliged to you, my dear boy. But I couldn't think of selling that stock."
"You couldn't?" asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers.
"No, I couldn't."
"Why not?" And Elmer drew nearer.
"Why, this is a bull market!" The old fellow said it as though he had given a long and detailed explanation.
"That's all right," said Elmer, looking angry because of his disappointment. "I know this is a bull market as well as you do. But you'd better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself."
"My dear boy," said old Partridge, in great distress "my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"
Elmer Harwood threw up his hands, shook his head and walked over to me to get sympathy: "Can you beat it?" he asked me in a stage whisper. "I ask you!"
I didn't say anything. So he went on: "I give him a tip on Climax Motors. He buys five hundred shares. He's got seven points' profit and I advise him to get out and buy 'em back on the reaction that's overdue even now. And what does he say when I tell him? He says that if he sells he'll lose his job. What do you know about that?"
"I beg your pardon, Mr. Harwood; I didn't say I'd lose my job," cut in old Turkey. "I said I'd lose my position. And when you are as old as I am and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It's a bull market, you know." And he strutted away, leaving Elmer dazed.
What old Mr. Partridge said did not mean much to me until I began to think about my own numerous failures to make as much money as I ought to when I was so right on the general market. The more I studied the more I realized how wise that old chap was. He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me.
I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.
And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Old Turkey was dead right in doing and saying what he did. He had not only the courage of his convictions but the intelligent patience to sit tight."
Is this the right time to review what a classic trader he is? and on how we should handle stocks at this juncture?
"In Fullerton's there were the usual crowd. All grades! Well, there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered advice and never bragged of his winnings. He was a great hand for listening very attentively to the others. He did not seem very keen to get tips that is, he never asked the talkers what they'd heard or what they knew. But when somebody gave him one he always thanked the tipster very politely. Sometimes he thanked the tipster again when the tip turned out O.K. But if it went wrong he never whined, so that nobody could tell whether he followed it or let it slide by. It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn't donating much to the firm in the way of commissions; at least not that anyone could see. His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast.
The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had not done with the tip so he would tell them what they ought to do. But whether the tip they had was to buy or to sell, the old chap's answer was always the same.
The customer would finish the tale of his perplexity and then ask: "What do you think I ought to do?"
Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, "You know, it's a bull market!"
Time and again I heard him say, "Well, this is a bull market, you know!" as though he were giving to you a priceless talisman wrapped up in a million-dollar accident insurance policy. And of course I did not get his meaning.
One day a fellow named Elmer Harwood rushed into the office, wrote out an order and gave it to the clerk. Then he rushed over to where Mr. Partridge was listening politely to John Fanning's story of the time he overheard Keene give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he heard it.
Well, Elmer made for the old man and, without a word of apology to John Fanning, told Turkey, "Mr. Partridge, I have just sold my Climax Motors. My people say the market is entitled to a reaction and that I'll be able to buy it back cheaper. So you'd better do likewise. That is, if you've still got yours."
Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur, or gratuitous, tipster always thinks he owns the receiver of his tip body and soul, even before he knows how the tip is going to turn out.
"Yes, Mr. Harwood, I still have it. Of course!" said Turkey gratefully. It was nice of Elmer to think of the old chap. "Well, now is the time to take your profit and get in again on the next dip," said Elmer, as if he had just made out the deposit slip for the old man. Failing to perceive enthusiastic gratitude in the beneficiary's face Elmer went on: "I have just sold every share I owned!"
From his voice and manner you would have conservatively estimated it at ten thousand shares. But Mr. Partridge shook his head regretfully and whined, "No! No! I can't do that!"
"What?" yelled Elmer.
"I simply can't!" said Mr. Partridge. He was in great trouble.
"Didn't I give you the tip to buy it?"
"You did, Mr. Harwood, and I am very grateful to you. Indeed, I am, sir. But "
"Hold on! Let me talk! And didn't that stock go up seven points in ten days? Didn't it?"
"It did, and I am much obliged to you, my dear boy. But I couldn't think of selling that stock."
"You couldn't?" asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers.
"No, I couldn't."
"Why not?" And Elmer drew nearer.
"Why, this is a bull market!" The old fellow said it as though he had given a long and detailed explanation.
"That's all right," said Elmer, looking angry because of his disappointment. "I know this is a bull market as well as you do. But you'd better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself."
"My dear boy," said old Partridge, in great distress "my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"
Elmer Harwood threw up his hands, shook his head and walked over to me to get sympathy: "Can you beat it?" he asked me in a stage whisper. "I ask you!"
I didn't say anything. So he went on: "I give him a tip on Climax Motors. He buys five hundred shares. He's got seven points' profit and I advise him to get out and buy 'em back on the reaction that's overdue even now. And what does he say when I tell him? He says that if he sells he'll lose his job. What do you know about that?"
"I beg your pardon, Mr. Harwood; I didn't say I'd lose my job," cut in old Turkey. "I said I'd lose my position. And when you are as old as I am and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It's a bull market, you know." And he strutted away, leaving Elmer dazed.
What old Mr. Partridge said did not mean much to me until I began to think about my own numerous failures to make as much money as I ought to when I was so right on the general market. The more I studied the more I realized how wise that old chap was. He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me.
I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.
And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Old Turkey was dead right in doing and saying what he did. He had not only the courage of his convictions but the intelligent patience to sit tight."
Sunday, September 26, 2010
With Nasdaq 100 taking the lead and broadending growth leaders making new highs, this rally could have legs
Market usually turns when it is least expected. When everyone was thinking market could turn ugly in the late August when S&P-500 hang dearly above the important 1040 support level, it followed though with conviction to the upside on Sept 1st.
Since September 1st, Nasdaq has run up 12%, followed by Russell 2000 11%, SP-500 and NYSE 9%; Dow Jones 8%. Nasdaq 100 is the strongest running up 15% with fund managers continue to pump money into the most liquid names. All major indices close above their corresponding Aug high, bolting the market to a solid intermediate uptrend.
Top notched growth stocks are running hot with big cap growth leaders, such as AAPL, BIDU, PCLN making all time highs. Leadership are broadening with participation from various industry group such as Leisure, retail, computer software, computer hardware, internet, telecom, construction machinery, fertilizer. Semi conductors are playing a catch up game while the financials continue to labor. The negative divergence from the financials will eventually come back to haunt the market.
In Livermore's book, he often talks about Wall Street Suckers. One suckers' play is to short the high flyers in a bull market. In finance discussion board, I see people start to short NFLX, AMZN etc. If you do, you better think twice. The following stocks, which I own, have very big short interest. Those who short these are the ones being screwed to provide the fume to stocks' furious price gains when the trend turns solidly higher. Don't short the high fliers, stupid!
Short interest:
EBIX: 40% (11 million out of 27 million float)
NFLX: 30% (12.5 million out of 40.8 million float)
ARUN: 29% (17.7 million out of 61.2 million float)
GMCR: 20% (22 million out of 108 million float)
CMG: 13% (3.9 million out of 30.2 million float)
Learn the market before you put up your trade.
Since September 1st, Nasdaq has run up 12%, followed by Russell 2000 11%, SP-500 and NYSE 9%; Dow Jones 8%. Nasdaq 100 is the strongest running up 15% with fund managers continue to pump money into the most liquid names. All major indices close above their corresponding Aug high, bolting the market to a solid intermediate uptrend.
Top notched growth stocks are running hot with big cap growth leaders, such as AAPL, BIDU, PCLN making all time highs. Leadership are broadening with participation from various industry group such as Leisure, retail, computer software, computer hardware, internet, telecom, construction machinery, fertilizer. Semi conductors are playing a catch up game while the financials continue to labor. The negative divergence from the financials will eventually come back to haunt the market.
In Livermore's book, he often talks about Wall Street Suckers. One suckers' play is to short the high flyers in a bull market. In finance discussion board, I see people start to short NFLX, AMZN etc. If you do, you better think twice. The following stocks, which I own, have very big short interest. Those who short these are the ones being screwed to provide the fume to stocks' furious price gains when the trend turns solidly higher. Don't short the high fliers, stupid!
Short interest:
EBIX: 40% (11 million out of 27 million float)
NFLX: 30% (12.5 million out of 40.8 million float)
ARUN: 29% (17.7 million out of 61.2 million float)
GMCR: 20% (22 million out of 108 million float)
CMG: 13% (3.9 million out of 30.2 million float)
Learn the market before you put up your trade.
Friday, September 10, 2010
Stock market is a discounting mechnism of the future
you know my philosophy on stock market is always price/volume is your first indicator, everything else is secondary ... including economic numbers ...
Stock market is a discounting mechanism of the future, not the present ... price/vol are always ahead of macro economic indicators. You can talk a load of how bad the economic numbers are ... or you can show extreme enthusiasm on economic knowhows ... In the end ... you can't base on the economic information today to RELIABLY infer the market direction tomorrow ... The reason is SIMPLE. Stock market is always ahead.
Always react to the market, not predict the market. Always know what the market is doing and react accordingly.
Will the market crap out on Monday? Sure, if it does, simply hit eject button ...
Here we go, my top gainers as of today's close
NFLX 11% (first buy intra-day of 01Sep2010)
TNA 7% (first buy close of 01Sep2010)
ARUN 6% (first buy 30Aug2010)
CMG 6% (first buy intra-day of 01Sep2010)
BORN 5% (first buy market open 03Sep2010)
CRM 3% (first buy intra-day of 01Sep2010)
I am also holding GMCR, HLF, GLD, EGO
BORN is about to burst out. I am expect it to be another JKS. Someone is accumulating a big lot of BORN
Stock market is a discounting mechanism of the future, not the present ... price/vol are always ahead of macro economic indicators. You can talk a load of how bad the economic numbers are ... or you can show extreme enthusiasm on economic knowhows ... In the end ... you can't base on the economic information today to RELIABLY infer the market direction tomorrow ... The reason is SIMPLE. Stock market is always ahead.
Always react to the market, not predict the market. Always know what the market is doing and react accordingly.
Will the market crap out on Monday? Sure, if it does, simply hit eject button ...
Here we go, my top gainers as of today's close
NFLX 11% (first buy intra-day of 01Sep2010)
TNA 7% (first buy close of 01Sep2010)
ARUN 6% (first buy 30Aug2010)
CMG 6% (first buy intra-day of 01Sep2010)
BORN 5% (first buy market open 03Sep2010)
CRM 3% (first buy intra-day of 01Sep2010)
I am also holding GMCR, HLF, GLD, EGO
BORN is about to burst out. I am expect it to be another JKS. Someone is accumulating a big lot of BORN
Wednesday, September 1, 2010
Can we get a tradable rally?
This market followed through to the upside indicating a possible tradable rally ... I am getting back to the market, currently holding the following,
TNA
ARUN
CMG
CRM
NFLX
GLD
EGO,
If this rally can hold, meaning I need to see my current buys continue to march forward ... I will add more positions ...
What we should care is not what the Friday's job number is or Sept is the worst month of the year. Listening to Pundits' prediction is a loser's game.
Today the market says big and loud, get back to the market and buy the best stocks !
TNA
ARUN
CMG
CRM
NFLX
GLD
EGO,
If this rally can hold, meaning I need to see my current buys continue to march forward ... I will add more positions ...
What we should care is not what the Friday's job number is or Sept is the worst month of the year. Listening to Pundits' prediction is a loser's game.
Today the market says big and loud, get back to the market and buy the best stocks !
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