"First the sheep are right, then they become PermaBulls, then they get slaughttteeerrreeedddd!" That should be Jim Cramer's slogan instead of "Bulls make money, Bears make money, and Pigs get slaughttteeerreddd!" I'm not interested in just making money, I'm interested in making it, keeping it, and making more of it. Not just making it when the rest of the sheeple are easily making it too. Remember in 2005 - 2007 during the housing bubble? Everyone was making money. All you had to do was be a sheep, then become a perma bull, then you would be broke today. But we are talking housing, and making money in a rising market in housing is much different from making money in a rising market in stocks. You can be profitable at any given time in a stock position, but the question is when you are up, when do you take profits, and when do you get back in? Some would argue that its best to buy a position and never sell it and look out at least 3 years. And maybe they are right, but that would be the equivalent of buying a house, renting it out, paying the mortgage and collecting the remaining equity after expenses as your return on investment. That would be worth waiting 3 years for I guess.
But here we are talking the stock market and in this profession of trading, some industry phonies who do nothing more than pretend to educate you and spew out content regardless of its value have secretly turned the stock market into a game of drawing charts and indicators. Everyone is guilty of it, and when you think about it, it's really quite odd. All the brokerage houses give you programs that allow you to see bids and offers, provide you with the most up to date charting with 1000's of indicators, and made buying and selling so cheap that they want you to think that prices move based on some voo doo indicator. And everyone is guilty of at-least theorizing. New or novice, everyone is getting suckered into taking shorter and shorter trades and use more and more indicators to guide his strategy and spot these points of entry and exits. It's absolutely ridiculously and everyone should just stop right now. These widely followed indicators like the 50 day EMA and 200 day EMA have over a hundred years of history behind them so their self fulfilling prophecy is almost ingrained in the minds of wall streeters. No matter how advanced the game gets, fund managers and retail investors alike, will obsess over these tracing paper indicators to help guide their entries and exits. One such trader who has unsuccessfully been navigating these markets for the past 10 years with essentially a 0% to negative return on his Charitable trust portfolio is a man by the name of Jim Cramer.
Just please look at his tweet yesterday as he explains that the reason he wants to buy stocks is because we are "real oversold." Ok Cramer, keep talking to your puppy trained "technical strategist" Stephanie Link as she stares at here 50 day ema and tells you that she thinks this is a good time to buy. Why? because of some moving line on a chart!? LOLOLOLOL! ok lets match up the tweet and the chart.
Now that the self fulfillers are out and about trying to get involved in this rally because they probably missed the huge run up over the past 6 months, I believe we have a two type scenario that could occur in the S&P 500 but regardless of both scenarios, both lead to lower prices without a breach of market highs.
Scenario 1 would be if the $SPY 50 EMA worked and these permabulls will be right for 1 week or so then we will turn back lower. It's why I started this article "First they are right"
Scenario 2 would be a bearish Engulfing candle that would swallow todays candle from open to close onto the downside. This would spark a further sell off in the following weeks. Either way the sell off is in these cards, it's just a matter of when.
IN THE END IS A TARGET OF $155 on the $SPY at the least.
THE $SODA Stream trade - My 1 REGRET
There is 1 trade that I am afraid that has already began to run considerably past my purchase price of marginal safety. I contemplated buying this stock at $60 but geeezzz does this all make sense now. So Pepsi co. was rumored to have been in talks to buy $SODA stream.Of course, why wouldn't Coca Cola or Pepsi be either in talks or be developing their own line of make it yourself sodas. I can imagine the international demand could get crazy as I know personally that when people use the machine they don't turn back to buying bottles from the supermarket anymore. This industry is here to stay and its the same mistake that these large tobacco companies are making by not making electric cigarettes. I have a target of $98 for this stock but I may try to enter this stock on an overall correction if the market resolves into my scenario 2 situation. Then I believe $SODA could try to tread lower and actually hold up and base which could give us a second point of entry back in the $60's.
I can make you 50% inside weeks and months, and sometimes even days. 70, 100% , even 200% are regulars for me. So losing 10 - 15% on a position 2-3 out of 10 times is perfectly fine with me. I go for HOME RUNS and GRAND SLAMS. I'm not interested in your stupid buy and hold for 3 years strategy to make 25% or your 1 day hyped up bullshit pump and dump that your daytrading. This is stupid, people need to look back at their charts and understand the bigger picture of every trade. Stop being stuck in time frames and trying to create all these different confluent indicator strategies. It's really all about keeping it simple and money management. I'm not even kidding! It's do you want to make money or not. Some people really do want to lose their money, subconsciously. I know this for a fact and don't take that lightly. When you want to make money you will.
I want you to know that I have an advantage over most that occupy this profession. When Jesse Livermore said that if a doctor studies close to 10 years before getting his license, that a trader should expect no less, I know that this man knew more than stock markets. He understood psychology, history, time, numbers, and most importantly he was awake to his surroundings and learned from his mistakes. Every element to a person determines his fate. If you miss one then that is your handicap.
Let me leave you off with some stock picks that are going higher tomorrow. Remember that whenever I put out charts, it means I think they are a buy unless I state a price point or say that I am watching this one.
Zale Corporation $ZLC
I would say that I like the company for one reason or another but I wold be lying. I like $ZLC for two reasons. One its competitor Tiffany's is at near all time highs and the second reason is because Zales's is busting out of 4 and half year pattern which I really like. It reminds me of $PZZI and how it will most likely go up over 50% before coming back down to reality. target is $14 and change.
The ExOne Company $XONE
It's nice to know this name is in the 3D printing sector as this sector has been hot lately. Names that are hot usually stay hot for sometime as the name cycles in and out of bull and mini bear corrections. It looks like $XONE is setting up for a big price spike higher, as we still own $DDD and believe the 3d sector as a whole could go parabolic in 2013 the way $TSLA and $NFLX did this year.
Doral Financial Corporation $DRL
Chart says it all except the target price. I would put atleatst a $1.50 target on this at the least. $DRL
James River Coal Co. $JRCC
UPDATE PREMARKET 6/7/2013 - DO NOT PURCHASE $JRCC due the DILUTION OFFERING ANNOUNCED AFTER HOURS LAST NIGHT.
I'm sure many of you remember this old wallstreet darling of the 2008 era when coal names were going through the roof as commodity prices were booming. Well right not we seem to be in a correction phase to the upside from a 4 year depressed bear cycle. Although I am not promising a $5 target as I'm sure no mutual funds even care to look at the direction of this stocks future unless they can get consistent with they're earnings again. So for now I'll keep a conservative $4 target.
Orchard Supply Hardware Stores Corporation $OSH
Although I don't believe $OSH is a purchase right now, I do see that this stock has received some trading interest in it lately. Usually when bars this volatile and volume this large come in, I stand up and take notice. I want to see some action into $4.30 area and $4.50 for a nice breakout that could send this name soaring to $8.
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