LiveRocket Performance Week - Up 5.9%

A nice move this week as the market began a slow return to sanity.
I like the move especially considering 30% of our portfolio depends on TRID and TIE - and they have been lead weights for months, and more so recently.

I set up some boundaries for this portfolio that restrict some our defensive and offensive options.
* Long only
* No margins
* No calls
It is especially hard to be long during a volatile or bearish period. Sometimes there are contrarian long plays, like buying a company that benefits in downturns. Failing that, the only defensive move open to us is selling and working to limit the downside. I use STOP orders to apply that selling discipline, and sadly I took those off a few months back. (Imagine our performance if we'd sold early and then jumped back in when I sensed a return on Monday.) I simply couldn't have STOPs in place if I couldn't also pay enough attention to time a re-entry.

Well, STOPs are back. And I am going one step further: I am adding SELL prices to lock in gains when stocks get ahead of themselves. Each month I will update a SELL price to catch over-excitement. I think this will be particular key next month because I see a short squeeze coming up. The timing of a squeeze during a positive earnings cycle will tend to make prices overshoot.

So we have the trading back in order, lets move onto the next order of business: our portfolio mix. I reviewed the technical aspects of these stocks against the background of a long selloff.
I liked what I saw: almost all stocks showed strong upward signals. Many were oversold and were showing a reversal.

Some standouts:
NUAN - very strong interest
UCTT - Pretty strong interest
ATW/MDR - Looking neutral
CLB - Strong interest turning down
CTSH - Accelerating disinterest

Yep: TRID and TIE are showing positive signs.

Now that we finished earnings season, I have been reviewing performance. I try to find companies that are either bargain growth (better opportunities for beating earnings) or demonstrate a gap between future growth and current expectations. An example of the latter is AKAM in 2005 where it was clear that iTune downloading was skyrocketing and AKAM was going explosive.

What is interesting about my analysis so far is that most companies that keep outperforming are in the exact sectors we are in: oil services/equipment, planes, and biotech.

Meanwhile, within our own portfolio, I see housecleaning. I'd like to unload ESV a bit higher. CTSH will probably move back to $80 and I will dump it.
I see doubling down on NUAN & maybe MDR.

As always, we have to consider movements with TRID and TIE.
The serious negative sentiment around these companies is remarkable. TRID deserved negativity in light of the options fiasco, but not TIE. It's possible that negativity remains because prices were pushed up in the hopes of a now-delayed buyout. Except that the prices for TIE and TRID never moved up.
* TIE short interest increased 1M shares to 7.5M shares. Given only 30M shares floated, that's 25% of the shares shorted. Someone, likely a hedge fund, has moved in with abig position.
* TRID shorts dropped 1M shares but still around 18% of float

When will they break out?
Sad to say, TIE is in the worse position if you're looking for some upside surprise. The metals market continues to go from strength to strength (AKS is raising steel prices). Demand for titanium remains super strong. Raising production or getting bought out are the keys to a higher price. Production growth could come from expansions or acquisitions. TIE is supposed to increase production in ~5 months.

Given my conclusion that a major hedgie is shorting and given that TIE did nothing on a major up day while competitors ATI and RTI rose (up 3% and 2% respectively), I see issues beyond market sentiment and business fundamentals. Yep, manipulation.

Worse, after being in the dumps so long, a lot of selling pressure will hit as soon as it hits $35.

TRID may not have upside surprises per se, but they have a few aces up their sleeve. Now that we have a clear financial picture, they are trading at ~30 P/E and that includes the one time legal fees and accounting associated with the options fiasco. Fast forward another quarter and that P/E drops to the 20s. That will get them noticed pretty fast.
Another upside is a buyout opportunity. This would be significantly accretive to any company: no debt, $100M+ in cash, earnings booming and projected to continue to boom, and undervalued to boot (based on P/E and P/S). A chip company also in the TV market might see great opportunities for adding to TV chip share.