Week 28 Performance - LiveRocket Down 1.29%

Week 28 (versus previous week)
Dow -2.08%
S&P -1.86%
NASDAQ -2.23%
LiveRocket -1.29%

YTD
Dow 3.98%
S&P 1.52%
NASDAQ -0.5%
LiveRocket 26.96%

Since Inception (Nov 4, 2005)
Dow 5.9%
S&P 3.9%
NASDAQ 1.2%
LiveRocket 39.05%

We were stopped out of all stocks except for TRID. We also added 200 shares to our TRID position.
The current portfolio is
TRID 636 shares @ $26.82 (blended price)
Cash $121,050.12
Total current value: $138,407

While I felt Friday was a re-entry day, I waited to see if the options expiration would play a role. That waiting obviously meant that we missed getting back into severl stocks especially TIE.

Will it be business as usual next week? For many stocks, yes. Money will come creeping back in. I see signs of life in some select tech stocks.

I am particularly dismayed by the energy stocks (GRP/JOYG/MDR). They continue to show signs of incredible growth (triple digit earnings growth) and they are not overpriced. I am interpreting this as a market fear that gas prices will be coming down, as evidenced by US oil inventory increases this week and by OPEC reluctance to reduce production. I don't believe that prices will be coming down anytime soon. Moreover, OPEC is looking to drill new fields, and that's great news for equipment vendors.

I see some sector rotation out of commodities and energy stocks and into alternative energy and tech. Yes, I know that the NASDAQ has lost some 5%+ in the last 2 weeks, but I think that what goes around, comes around: MRVL's solid earnings release showed life still exists in the tech sector. STX came back a few points as proof. I will watch and see. Tech usually lulls in the summer, but the massive selloff may pull that turnaround in sooner, making June a good time for tech.

Speaking of tech, TRID enjoyed a nice return this week. Circuit City announced that LCD TVs are flying off the shelves, and we know that that is great news for TRID.

I am still analyzing a few stocks, but Monday I expect to buy into a few. I may buy back into oil services/equipment precisely because they have been oversold IMHO. I will post later this weekend the stocks I will be buying.

Also, please let me know if you have any interest in a second, more aggressive portfolio. Say, LiveRocket Turbo.

Missed out today - waiting to Monday

I did not see the options impact today that I wanted to see, so I am waiting to buy Monday.
Some of our old favorites have stayed strong, and I liked seeing that.

More over the weekend

Bottom has been reached

Market has turned and bottoms are reached.
It may soften a bit at end of day as folks get nervous.

I am going to wait a bit just in case prices soften a tad
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Editted to add:
The CEO of TIE purchased 200,000 shares yesterday.

We're ready

Margin calls are exacerbating the selling. Institutions are moving in to buy.
Tomorrow is a great day to start buying.

How low can it go

I think we hit bottom today. That is not to say that the market will do a sudden reversal and race up again: a lot of fingers have been burned. I think the order of the day will be selective buying against a background of more testing of the bottoms. A lot of funds will be rolling in to snap up oversold stocks.

If I move, it will be quick. Stocks I am watching are:
GRP
JOYG
MDR
TIE
TRN
TTI
WIRE
WCC
MRVL
PCP
STX
RFMD
ISIL
DIS
AMX
PARL
ZOLT
GYMB
MEK
ltbg
gaia
ntri

Still waiting

It feels good to be sitting on cash while the market collapses around us.
I'm playing a game of cherrypicking - trying to pick some stocks closer to their bottom. I'll never get the lowest price - the market could turn positive any minute, a stock could go lower after I buy it, etc.

I am confident that many of the companies I've identified (as well as a few others) will experience strong stock price appreciation. This is a major pullback and it's ongoing - weaker hands are being shaken. We will bottom fish to our heart's delight.

Stocks to buy

I don't like that we were stopped out of many stocks and took a loss on a couple. On the flipside, we can buy more of these stocks for the same total net amount. because I look at the movements as market related and not company related.

I am hard pressed to find stocks with the performance of these companies. I look at most recent quarterly results and see:
ET - Sales up 36%, earnings up 55%
GHL - Sales up 130% and earnings up 162%
TRID - Sales up 177%, Earnings up N/A (well, they went from negative to hugely positive)

Stocks we were stopped out of:
GRP - Sales up 42%, earnings up 152%.
JLG - Sales up 40%, earnings up 266% (earnings release the 24th). But even CAT reported sales up 13% and earnings up 45% (note the huge margins there)
JOYG - Sales up 49%, earnings up 169% (earnings release the 25th)
MDR - Sales up 48%, earnings up 141%
NTRI - Sales up 292%, earnings up 592%
TIE - Sales up 85%, earnings up 42% (higher after the tax event is taken into account)

New stocks I like:
AMX - Sales up 31%, earnings up 121%
DIS - I like the Pixar move and this is a gamble that CARS will be a hit movie
PCP - Sales up 18%, Earnings up 52%

In other words, these companies have solid growth and are not overpriced. (TIE got a bit of a bubble burst, and we exited near the top, so we can re-enter.) Every single one continues to clobber expectations and raise guidance. We buy on pullbacks like this and do our best to get out nearer the top.

I am looking for the following
GRP/JLG/JOYG/MDR - We were stopped out and the weakness continues. So we will wait for a bottom and get back in. I am especially drooling over GRP and JLG.
NTRI - I am thinking that a split announcement is coming, so I'd like to get in before they split.
TIE - It touched its 20 day moving average. I expect it to spring off of it tomorrow.
AMX/DIS/PCP - I'm being patient with them.
TRID - We bought more. This is obscene at this price

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Editted to correct the TIE moving average: it likes to stay above the 20dma NOT the 50 dma. That's a big difference in this case

Adding to TRID

Buying 200 shares of TRID @ 25.68

Dead cat bounce

A fantastic report came out about mining and production.
It should have pushed JLG, MDR and especially JOYG over the top. Instead, they briefly rallied and sank more. That is a sign of market negativity which makes me hold off for now.

If we were to jump back into the same stocks, what would we see:
GRP - out at 48, now at 47
JLG - out at 24, now at 23.9
JOYG - out at 61, now at 58
MDR - out at 67, now at 64
ntri - out at 64, now at 65
stx - out at 24, now at 23
TIE - out at 43, now at 35

We could get back in and own the same number of shares at lower prices (including transaction fees). Or buy more shares. I am not rushing in yet - the options expiration this week coupled with the rest of the markets nervousness suggests to me that deeper prices may be possible.

I want to see how cheap we can buy.

While I am incr

Stopped out

We were stopped out of most stocks yesterday.
In our portfolio we have only
ET
GHL
TRID

And a lot of cash.

Things to keep in mind for this week

Last week saw a massive 4% swing in the Dow. As we head into this week, I am thinking these thoughts.
1. Fact#1 The World economy is strong - For a long time the world has been a plane flying on one engine: the United States. Now we have Japan looking stronger, and India and China already strong. Interest rates were raised in the US and in China because the economy is doing too well, not because of recession.
2. Fact #2 - End of the US loose money policy. As monetary policy shifts and loose money disappears, asset valuation will deflate. That means housing most of all. We are returning to normalcy, not belt tightening. Notice that the deficit is dropping despite incredibly higher oil prices.
3. fact # 3 - Housing is the biggest cloud in the US sky. It has been the biggest employer, the biggest GDP driver, and the biggest source of wealth and consumer spending. And demand is slowing as speculative buying is finally disappearing and real demand is emerging and showing signs that, well, the demand for housing is actually a lot lower than folks thought. With rates high and trillions of mortgages getting re-written in 2007, the economy can be hurt. But it also works for the positive - banks will enjoy writing new loans, falling housing prices will help renters and new homeowners. A few folks will be burned, but mostly it will be speculators - folks who have plenty of income and wealth already. Losing money on a real estate investment will not be the thing that makes them think twice about buying a $2000 flat screen TV.
4. Opinion #1 - Commodities are in demand and will remain in demand. This is not just a shift of manufacturing to China, this is growth in major new economies like India and China, as well as growth in smaller regional economies like Brazil, Eastern Europe, and so forth. Infrastructure spending is continuing.
5. Opinion #2 - Few investment alternatives to the US stock market. Money chasing opportunities in Dubai got burned. Money will continue to flow away from shakier investments and into the US stock markets

This week is options week. A lot of shorts will be dumping shares, putting downward pressure on the market.

Direction - Be wary. Look for possible dead-cat bounces in-between the overselling. In general, very few stocks are oversold - they contracted after a major run-up.

Week 27 - LiveRocket Performance -1.56%

Week 27 (versus previous week)
Dow -1.7%
S&P -2.64%
NASDAQ -4.23%
LiveRocket -1.55%

YTD
Dow 6.2%
S&P 3.45%
NASDAQ 1.77%
LiveRocket 28.63%

Since Inception (Nov 4, 2005)
Dow 8.2%
S&P 5.9%
NASDAQ 3.5%
LiveRocket 40.86%

I don't see what the fuss is all about. On May 3rd I said http://liverocket.blogspot.com/2006_04_30_liverocket_archive.html :
"The market hit 11,300 and is catching it's breath. I expect the market to close up 16% for the year, which is 1.5% growth per month. A lot of spurts followed by consolidation."
This week's activity was exactly that - a spurt followed by consolidation.

And on May 7th I cautioned http://liverocket.blogspot.com/2006_05_07_liverocket_archive.html :
"I think the market has seriously forgotten that rate hikes will happen."

Interest rates were raised and the stock market came down. This is axiomatic. The drop should not have been a surprise. What made it startling was the degree of drop after a significant run-up.
I also think that this was a sign of massive profit taking and overselling. Which means that this week will see some hesitancy until powerfully positive news develops. I don't think that we are through the bad weather yet, but I do see opportunities on panic days to buy in. I continue to focus on the direction of the market

The DOW simply returned a bit of its gains - pulling back to last month's levels.
NASDAQ, however, is decidedly bearish - losing about 3 months of gains and trading at November/December levels.

FINANCIALS
ET – Down 6% after racing up 5% the previous week. All trading houses were hit - the perception that somehow a 0.25% increase in the interest rate will dramatically affect their business. It's down 10% from its high which was established when they released earnings.Since that time, ET has been bouncing around $25~$26.

GHL – Up 3%. Interest rate changes don't affect the M&A business. Off 8% from its high which was established this week. I like that it ended up for the week.

COMMODITIES & EQUIPMENT
GRP – Down 2%. Erased last week's gain. GRP is down ~8% from this week's high. Trading volume is incredibly low relative to where they have been, which is not a positive sign. GRP seems to dive post earnings, consolidate for a month, and then move up. I return to their earnings release and am ready to wait this out.

JLG - Down 20% for the week. Down 26% from its high. Massive selling this week. Technically, this is an incredibly broken stock: it has fallen below the 50 day moving average, 100 dma and 200 dma. For no reason. CAT released incredible earnings, so I see no reason for concern. Earnings release May 24. Some folks have said that JLG had a P/E that was higher than CAT and so should have fallen. JLG is growing 3X as fast as CAT and has a much lower PEG ratio.

JOYG - Down 3%. As with other stocks in our portfolio, this one raced up dramatically this week and then came down.

MDR - Down 1% after racing up 15.8% last week.

TIE – Up 3% for the week. We were stopped out at $86, enjoying a 10% gain for the week. We will b getting back in - I want to see the post split reaction.

HIGH TECH - A bloodbath. NASDAQ was previously outpacing the DOW, and is now falling far behind. Sector rotation due to fears about consumer spending. And they may be correct. Dell is embarking on a massive PC Price War to keep consumer spending up. I think the real issue is that big ticket sales will not be as frequent because folks have already upgraded most items. Our exposure here was limited, but we were affectde.

STX – Down 10%. We were stopped out at $24. I strongly believe in STX but market sentiment is not there.

TRID - Down 5% although it was actually up 1% on a down day (Friday). I remain bullish on TRID.

HEALTH
NTRI – Down 5%. I still want to keep a tight STOP.

TEVA – Down 13%. They missed earnings. No looking back. We got stopped out at $37.7 and are taking a 9% loss. Ouch. We did get $15.40 from dividends.