This is a follow up to a previous post… I believe with the recently increased readership here at ISYN that this list may help you help yourself become a better trader, investor, and person.
I’m able to recommend every book below because I’ve read them. If you don’t read, you should… every new book I read puts me more on top of my game.
Market-Focused Books
Reminiscences of a Stock Operator
written by: Edwin Lefevre
Trader Vic II
written by: Victor Sperandeo
Market Wizards
written by: Jack Schwager
New Market Wizards
written by: Jack Schwager
Trading For A Living written by: Alexander Elder
Liar’s Poker
written by: Michael Lewis
Confessions of a Street Addict
written by: James Cramer
Other-Focused Books
How To Win Friends & Influence People
written by: Dale Carnegie
Acres of Diamonds
written by: Russell Conwell
Ten Things I Learned From Bill Porter
written by: Shelly Brady
Think & Grow Rich
written by: Napoleon Hill
Wild At Heart
written by: John Eldredge
Interludes….
Boondock Saints II is out! Go see it
Thanks to JP for the introduction to this song.
And I know this is older but it’s a hell of a video…
And finally… Chris Elliot as the caretaker in Scary Movie.
Do your own research prior to making any investment/trading decisions. Do not make any decisions based solely on the information presented below. Always assume I am biased with the information presented. I am currently long NUHC (10/14/2009).
This particular idea is not new. However I wanted to present it in a proper way, as per my previous post.
NUHC – Nu Horizons Electronics Corp
Reco: Long Target: $6.96+ Date Recommended: 10/13/2009
DESCRIPTION
NUHC distributes high technology active and passive components (memory chips, microprocessors, consumer electronics, etc).
THE STORY
NUHC represents a solid reward/risk opportunity on both a fundamental and a technical level. From a fundamental standpoint the core reasoning for this trade is the closing of the spread between the book value and the market valuation. The current market price of $4.07 per share represents an approximate 47% discount to Book Value ($7.79). Digging further, if we take the Current Assets and subtract the Total Liabilities we end up with a net valuation of $129.2mm ($6.96 per share) which is a 70%+ premium to the current market capitalization of $75mm ($4.07 per share).
Quarterly cash burn is of minimal concern at the current time due to the fact that the company has enjoyed positive free cash flow for each of the previous five quarters, albeit on a nominal level. EBITDA over the trailing twelve month period totaled $(1.86)mm.
In terms of liquidity, NUHC has access to a total of approximately $150mm through various lines of credit, the bulk of which expires in 2011. To date, they have drawn approximately $22.5mm of this total. If they decide to draw a significant portion of this I would have cause to rethink my recommendation. However at the moment I remain confident that they will not require a substantial capital infusion.
EXPECTATION I expect the market to bring NUHC’s valuation into harmony with Book Value. If the economic recovery is real and this company is able to regain profitability then we could easily see a price-to-Book multiple in excess of 1. However the primary reasoning for this play is to see it ‘back to book’. With institutional investors representing approximately 44% of the ownership and a fairly illiquid trading pattern, I have determined my profit target to be in the $6.80 – $7.00 range to account for possible selling pressure as it approaches Book value.
RECENT HEADLINES (June 2009 to October 2009)
x. Q2 2010 Earnings
Net sales for the quarter ended August 31, 2009 were $156.6mm compared to $211.8mm last year. Net income was $0.03 per diluted share as opposed to $0.01 the year prior. However this figure includes $0.07 per share of income tax benefit so the actual results showed a loss of $0.04 per share. On a sequential basis, sales rose 6.0% QOQ with North America ($9.9mm increase; 11.9%) and Asia ($2mm increase; 4.4%) overpowering the decline in Europe ($3.1mm; -16.3%). The primary takeaways here are the QOQ growth in revenue in North America and Asia.
x. NUHC signs on to become Master Distributor for Alcatel-Lucent
x. Conexant names NUHC as exclusive distributor in North America
x. NUHC announces departure of President/CEO
TECHNICAL ANALYSIS
NUHC was in a strong downtrend from mid-2007 to December 2008 where it bottomed. Since then it has steadily risen until hitting up against ~$4.00. This level has shown itself to be significant resistance to further advancement. While $4.00 has provided steady resistance since June of this year, the support line has been trending upward from $3.00 to its current level of $4.00+, forming an ascending triangle. On the recent earnings announcement the ~$4.00 resistance was broken in a significant way ($4.10+ on a close). I suspect this NUHC gravitate toward $7.00 rather quickly, which is the most recent significant historical level of resistance and support. The great thing about this particular situation is that the fundamentals support the projected move the technicals are showing. This isn’t always the case.
I have shown an impressive lack of effort in regard to the quality of this website and the information contained within. The former isn’t going to change because it’s still a hobby but the latter will change starting with my next post. Prior to now I have mainly posted the idea without any form of supporting argument. All the analysis I perform on my own is not presented and there was a reason for that – I expect everyone should do their own research and not make decisions based on someone else’s thoughts or expectations. That being said, I believe it would be more beneficial to you if I included some of my analysis going forward.
You may expect more from me going forward.
-ISYN
Spend a little time welcoming Fall into the picture with Cannonball….
Do your own research prior to making any investment/trading decisions. Always assume I am biased in the ideas presented.
CNX
Showed weakness today in market other names are driving forward in. This follows significant runup in past ten days. Ripe for further downside if market shows any weakness, which I expect it to.
JOYG
I would short around $49 – $50 unless it shows weakness tomorrow and can’t make it that high, in which case I’d short tomorrow.
In honor of the hockey season starting up again and the hardest time of the year for the market I present the following…
Always do your own research prior to making any investment/trading decisions. Always assume I am biased with all the ideas presented.
TOT
This is strictly a technical play. Asian markets down almost across the board. TOT has had a very strong gapping run up from ~$58 to ~$61 following a move from ~$52 to ~$58. The volume on the recent move was less than I would have liked to see for a high-probability break out, and if it isn’t going to break out, I expect a break down.
Do your own research prior to making any investment/trading decisions. Always assume I am biased on a direct and/or indirect level with all ideas presented.
A couple interesting short setups I would like to point out. These are very high risk so do your own research.
I remain of the opinion that we’re looking for a decline in the general market. That being said, check out FUQI and ANR.
Do your own research prior to making any investment/trading decisions. Assume that I am biased directly and/or indirectly with every idea.
If you’re going to have a net short position it’s good to have some long exposure in a name you believe has upside potential despite the declining market expectation.
As of 9/2 the name had ~30% of its float short, according to Bloomberg. This is a massive proportion and the float is relatively small which presents an interesting short squeeze play. It was trading ~370mm market cap with an ~300mm book value with positive earnings. I expect shorts will start covering their positions to take profits as the name has come in from $17 to $14 and change. A good loss exit point would be $13.80 and a profit exit of ~$15 – $16 should be a worthwhile risk/reward opportunity.
Always do your own research prior to making any investment/trading decisions. Assume I am biased directly and/or indirectly with all of my ideas.
The general market has been expecting a correction for some time, myself included. On a technical basis we may finally be on the cusp and ready to drop. I use displaced moving averages instead of traditional because in trending markets it effectively and significantly lowers the amount of head fakes. The following chart is of the Nasdaq on a daily basis and shows the major DMA being hit/crossed yesterday and if there is no major rally to the upside by next Tuesday it’s go time. Also, please note that the market’s been struggling to recover following some of the steeper declines and the amount of time and distance of this current rally has been exceptional, much as the prior decline, and should be close to correcting.
Do your own research prior to making any investment/trading decisions. Always assume I am indirectly and/or directly biased in my recommendations.
Crude oil looks like it’s setting up a nice double top via USO . This one is a fairly straightforward entry/exit play… USO breaks above $40, cut your losses. In addition you could go long UNG (natural gas ETF) at the same time as the ratio mentioned here comes together (hopefully).
One (very risky) way to play an oil short is via DTO. IT IS IMPERATIVE YOU DO YOUR OWN RESEARCH ON THE RISKS ASSOCIATED WITH LEVERAGED ETF’s PRIOR TO MAKING ANY DECISIONS.
Following is a chart of USO which tracks light, sweet crude oil.
Now DTO
and finally, UNG
No relevance but had to include this…. check out the guy on rollerblades near the end
Do your own research prior to making any investment/trading decisions. Always assume I am biased through direct and/or indirect ownership in any and all names mentioned. These are not recommendations but instead points of interest you may wish to do further research on.
Into this weakness I like the following names.
MPEL
Macao gambling play. Support at ~$4… sell if it breaks. I like the prospects of this company especially for Macao exposure. As the Chinese economy goes so too will MPEL, in my opinion.
TRID
At MR10Q had ~$202m in cash with ~$55m in total liabilities. Trading at $107m market cap at the moment ($1.70). Also have other assets ~$20m. Looking for $140-$150m market cap to take profit and stop exit on break of $1.50.
ELX
Received a cash offer of $11 – trading sub-9.50 currently… something’s off about this. Looks like a decent risk/reward in my opinion as there’s an offer on the table that represents a premium of >13% from the current price ($9.35).
TBT
I’m still a huge believer in high inflation coming through the pipeline. This is an ETF that shorts long Treasuries.
And finally, a throwback interlude.
This interlude is for the start of the next swing upward that (hopefully) starts Monday.
I neglected to mention this as part of my previous post. One of the core reasons I’m bullish in the face of the 2-3 month rally/consolidation period is because there remains a minority of market participants who trust in the rally/bullish recovery. This is one of the best indicators out there and it’s only available by immersing yourself in current events in the markets and infusing intuition. Barring an unforeseen event such as North Korea doing some real damage, I expect we hold the 875 – 880 level on the S&P.
As always you have to remain willing to adapt if conditions change.
In an interview the other day I was reminded of this speech. Well worth the time.
I’m no permabull, in fact, I prefer finding names to short because I’m a realist. However we’ve been due for a correction and we’re now on the receiving end of one. The realist in me is saying that we have been successful in our attempts to inflate our way out of full-on depression. The realist in me also feels there are great opportunities in companies with balance sheets that exceed their current valuations, on a relative and real basis. True value opportunities mainly occur in the Spring of an economic cycle. Forget the ‘green shoots’ talk and focus on real valuations, which at this point, are the true golden children of the next three-six months. Embrace the Spring and heed the wisdom within the above interlude – I can’t think of a better man (Rocky) to provide it.
Oh, and please remember (though I know the vast majority never do nor will) that Nature tends to hit us in the Northeast with one final, surprise snowstorm before Spring is truly ushered in. Don’t be surprised if it happens soon… and you won’t be if you position yourself in proper risk/reward names.
As always do your own research prior to making any investment/trading decisions.
Following are some charts of potential breakouts/high-probability long trades. Be sure to implement intelligent exit strategies as the market has seen an excellent run thus far.
On a side note, a few books I’ve recently read that I have found interesting.
Do your own research prior to making any investment/trading decisions.
This is a swing trade with a 4-8 week time frame based solely on a technical setup. In this particular case I’ve chosen to ignore the fundamentals (at my own peril, perhaps).
PSMT – The chart below shows significant resistance in the $15 – $16 range. There are four periods worthy of note with each marked by a circle. The initial two represent resistance. PSMT then broke out to the upside on increasing volume (great thing to see/be a part of). The resistance points then became support. January and early March saw the testing of this support hold strong which is exactly what one wants to see when using support/resistance. Since the breakout PSMT has been trading in two ranges: $15 – $19 and $15 – $21. As it stands now the name is coming back down to retest support. Adding to the mix is a head-and-shoulders setup taking place from March to May.
In my opinion this provides for a buyer to initiate a position in this name in the low-$15s with a target of $19 and a stop loss/exit point of $14.50. Assuming a conservative entry of $15.50 this yields an expected reward of $3.50 with anticipated risk of $1.00. What’s great about this situation is that if your long position is proven incorrect you can play the shortside head-and-shoulders confirmation.
Do your own research prior to making any investment/trading decisions.
GILD is offering a nice range trade. Look for stop placement around 43.25 and take profits around 47.75. While the potential reward is less than amazing this opportunity may provide some respectable short term profit while providing for relatively limited normal downside risk. If you’re looking to build a position in GILD for the long term this is a great opportunity as well. You’ll know if you’re idea is wrong somewhat quickly based on the direction of GILD’s eventual breakout/breakdown from this range.
As always do your own research prior to making any investment/trading decisions.
Check out the chart below. This is a solid shorting opportunity in my opinion.
***5/8/09 update***
The business proposal has been sidelined for the time being. I’m going to focus on working as a desk analyst/trader which is what I was doing until February.
The S&P 500 has risen approximately 33% over the past two months. You should be protecting your portfolios from a pullback. I’m looking at TZA/BGZ which are ETFs focused on 3x the daily inverse of small cap and large cap stocks (respectively).
Below are a few books I’ve read recently which I believe are well worth your time.
Market Insight
Reminiscences of a Stock Operator
written by: Edwin Lefevre
The single best book I’ve read on the markets and speculation in general. It’s in story form so it’s an easy read but incredibly useful. HIGHLY recommended.
Market Wizards
written by: Jack Schwager
A solid collection of interviews with great traders and investors. Garnered some invaluable thought process from this one.
***Update***
Trading For A Living written by: Alexander Elder
About 50% of the way through this one… very very useful for thought process and technical analysis basics thus far. Highly recommended reading just on the first half.
***end update***
Market Entertainment
Liar’s Poker
written by: Michael Lewis
Confessions of a Street Addict
written by: James Cramer (yes, Jim Cramer, I know I know, but it’s a solid read)
Following up on THIS ARTICLE I’m going to highlight some equity plays which I expect will provide significant outperformance. As always you must do you own research prior to making any investment/trading decisions.
2009 Top Two Picks
MPEL
Macau Gaming Play
Will all the financial troubles plaguing the domestic casino operators this company offers an international option. Already controlling a high rollers’ property in Macau (island Vegas just outside China) they are working on the ‘City of Dreams’ which will be a casino for the people. ISYN is a huge fan of this name for the remainder of 2009 and perhaps beyond. Check it out.
TBT
US Inflation Play
TBT is the ProShares UltraShort 20+ Year Treasury ETF. I am of the opinion that a steep increase in inflation is on the horizon. Economic cycles are nearly always interfered with by government and this one has been no different. The Federal Reserve has undertaken quantitative easing as well as lowered the Fed Funds rate to the range of 0-25 bps. There are always ways in which the private sector can damper the impact of actions such as these but in this case, with such large quantities of dollars being printed and spent, I expect we’ll enjoy a large increase in the rate of inflation over the next two-five years. That being said I expect institutions will start piling in to the inflation hedge trades (commodities, short Treasuries, forex, etc) over the next year as evidence begins to suggest the accuracy of this opinion (if it doesn’t disprove it first!). There are plenty of smarter men than I who have written articles on the subject of inflation and the current economic conditions – go read them. Also TBT has been consolidating nicely between $44 – $48 as the market awaits confirmation in either direction.
I’m still a fan of the Loonie (Canadian dollar) due to it’s backing by natural resources. FXC is the CurrencyShares Canadian Dollar Trust you can invest in to gain exposure.
Look for some new names over the coming weeks. And as always, please enjoy the interlude.
I know many people (novice and otherwise) are concerned about putting their money to work in the stock market right now. If you’re new to investing/trading please allow me to recommend a website where you can practice your strategery (still classic) without risking your hard earned cash. I manage a portfolio on the website for fun and it’s one of the websites I’ve used to actively educate myself on the stock market.
You receive one million virtual dollars you can use to short or go long ADRs, ETFs, and stocks. If you’re able to beat the market you can earn some actual money but you’ll never be liable for any losses. There are also plenty of competitions you can compete in.
Hope this helps some of you become more comfortable with trading and investing.
UNC capped off their great win this past Monday night and due to such ISYN won $4,o00 in cold, hard cash for a 2nd place finish and a $25 investment!!! That’s almost a 16,000% ROI in one month! I highly recommend everyone joining next year’s competition…check out THIS WEBSITE to find out how it works… and no, I don’t receive any money for referring you. As a side note, 1st place won $10,000!
Finally putting the finishing touches on the packet I’ll be sending out to raise capital in the ‘Friends & Family’ round of financing. This is in reference to the recommendation I made HERE to go out on a limb and start your own business, whether full time or part. I figured it might be prudent to walk what I talk, eh? If I’m unable to raise the necessary funds I will be headed back into the corporate world. If and when I am able – so begins the self-employed life.
Following is a sharply abbreviated list of my top picks for the next few years. My expectations of forward macro trends has continued to lead me to these names for several months. A man who understands whether the tide is coming or going will never be stranded. It is always best to grasp the bigger picture while focusing on what’s in front of you. Do your own research prior to making any investment decisions.
TBT
This is an inflation hedge – it shorts some of the longer US Treasury paper.
Inflation rises, yields rise, Treasury prices decline, TBT rises.
This is my number one must-have.
MPEL
Macau-based gaming. Current focus on
high-rollers segment while expanding
into regular segment.
FXC
Long Canadian Loonie.
Different inflation hedge.
Don’t forget, there’s always a bull market somewhere.
And how could I leave you without another interlude?
Get out there and put your money (if you have any left) to work. If you closed down your hedge fund because 2008 kicked your ass go start another one – give it 6 months and you’ll look like a genius. There’s still a ton of dough on the sidelines.
I’m talking commodities (platinum and oil) and high quality stocks (solid quick ratios in non-financial companies). Buy some real estate but stick to the fundamentals – location: where populations are rising and the school systems are SOLID. Short the sh*t out of Treasuries as steep inflation is all but a guarantee at this point.
Finally – the time of small but fast companies beating out the larger, less nimble ones has come upon us – we were founded as a nation of business owners, not employees, and the intelligent are headed back in that direction. Go start your own business in your spare time – use that gift between your ears to put some financial dignity back into your own hands. Doesn’t matter if it fails – keep at it and innovate/think/brainstorm/try until you get it right. I’m starting up a project right now – you should consider doing so too.
As long as another man signs your paycheck you’ll be a slave. If you don’t try you’ve got nobody but yourself to blame for where you end up/are.
Go out and GET SOME!!!!!!!
-ISYN
(I’ll keep you updated on my progress as I consider entrepreneurship to be an important part of investing/trading/securing one’s financial future)
ISYN is back. Here’s the new site structure – look for opportunities in the FX, commodity, and equity markets.
My goal is to show you potential trade and investment ideas that offer great risk/reward profiles. If you have something to say, toss it in the comments or email me at SchraderTrader@gmail.com. As always do your own research prior to participating in any of these opportunities.
Do your own research prior to investing/trading in any of these names. All ideas expressed here are my own opinion and should not be relied upon or taken as investment advice. Also please recognize the high level of risk present in leveraged-financial instruments and small-to-micro-capitalization stocks.
A couple names I like here are MPEL (Macau gaming) and DXO (leveraged oil).
First, I believe oil is undervalued at this level. DXO offers an excellent way to have a leveraged-long position in oil. Crude went from ~$140+ to ~$36 very quickly following a path of $140 to $70, then $70 to $36. Those are essentially the inverse of two-100% moves… 100% of 100% is a level at which I’ve been told many significant moves end. I expect the main risk here is missing upside instead of losing on the downside.
Second, MPEL has recently come down hard and may be worth looking for the long side. This is something to think about.
Third, I made tons of green (%-wise) on the GBPUSD short and lost tons of green (%-wise) on the USDCAD short. The micro-fx experiment continues…
Added another trade. Short GBPUSD. Same applies – this is not a recommendation. These trades have already been placed and this is merely an exercise in getting to know currencies. Chart below.
Thought I’d post a trade I’m currently in within a mini-forex account. We’re talking peanuts here but I wanted to get some experience trading some pairs and figuring out the various trade setups.
First – the spreads on mini accounts are HORRENDOUS… I’m paying about a 4-7 pip spread on every USDCAD trade I do… that means to hit the breakeven point I need the pair to go in my direction 4-7 pips. I don’t recommend opening a mini account for any reason other than to try out forex trading and get a feel for how the various pairs move. Second - this is a cheap way to give forex a try…. you can initiate a position in microlots of $1k. Mistakes can be made without breaking the bank. Third – forex is extremely risky. This is more to feed my curiosity and try out a new asset class than anything else. I don’t expect to see large profit from it as I’m only risking a few hundred dollars.
The following information is NOT a recommendation to trade and/or invest. This is an after/during-the-fact trade example that I thought may be helpful to some.
Now that that’s all out of the way, here is a chart of the USDCAD.
My thought process is two-fold. A fundamental argument can be made that the CAD has depreciated against the USD too much too quickly. The US is going through some economic issues that I suspect outweigh our neighbors to the North to a significant extent. They’ve also got their hands on ample quantities of natural resources which have enjoyed a very steep decline in recent months. Those resources will bottom soon if they have not already. Also I suspect some of the USD’s appreciation stems from the massive rally in Treasuries over the past month. As these positions unwind and people become less risk-averse capital should flow out from USD into other instruments.
The technical argument is a fairly strong one as far as technical analysis is concerned. The daily trend’s direction is down (which means the CAD is getting stronger against the USD). I’ve drawn in two simple trendlines to evidence this. I also completed some simple Fibonacci work using two admittedly questionable points for A and B (A = 1 thick line, B = 2 thick lines). Based on the information provided below, our resistance levels were 1.1986 and 1.2123. The (hopeful) completion of point C ended up being in between the two @ 1.2079. From there our profit points look to be 1.1719, 1.1496, and 1.1136. After factoring in the overall trend I suspect USDCAD will retest the ~1.1500 low made at the beginning of November. If things go well I’ll be taking profits in that area. If not I’ll close out the position.
Finally, click on the picture of the Bacon & Cheese Roll below for the ingredients/directions on how to make the best meal EVER!
I believe we’re still headed higher – this looks like a healthy correction (Wed & Thu). I’d be buying this dip while paying close attention to the global political environment (Israel & Gaza, Russia & everyone, India & Pakistan & Fraud).
Also, oil’s come WAY off in one day – probably an exaggerated move… might be worth opening a long position today via DXO or short DTO.
I Short You Not is a blog focused on three things:
1- Keeping its readers up-to-date with insight on current events which have an impact on the world markets/economies.
2- Having some fun with an otherwise dry subject matter.
3- Helping readers educate themselves on stock market analysis and the thought process used ... Continue reading »
Do
As always do your own research prior to making any investment/trading decisions.
