Archive for October, 2010

*Blue Plate Specials* Portfolio – 10/15/10

Saturday, October 16th, 2010

Market Notes
Although the Dow Industrials (DJIA), the SPX, and the DTX remained rangebound for much of Friday, the Nasdaq danced to a different drummer. It gapped through minor resistance at 2450 on the open and closed at a new high not seen since April. The VIX responded by falling back under 20, the bull/bear dividing line. Judging by the velocity of its late-day decline, I’d say that it’s going to fall further meaning that the market is poised to go higher.

Next resistance levels
Friday saw the SPX straddling 1175 resistance. Assuming it clears that, the next hurdle won’t be until the 1218-1225 range. The DTX and the DJIA are both looking to topple their recent highs of 480 and 11200 respectively. I’m predicting that the star of the pack, the Snazzie Nazzie, will surpass its previous 2530 high in the next week or so.

[Possible Trade: A moderately speculative play would be to buy the TQQQ, the ultra-long QQQQ. This is a high-return alternative to playing futures or options.  Expert options players might want to consider a synthetic long (buy a call and sell a put at the same strike) on the OEX or the Q’s.  This is an extremely bullish and low-cost trade, but not without risk.]

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out to new highs on lower volume (1), Low-Priced Leaders (2), and Darlings of the Day (2).

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Today’s portfolio close-out
The 9/30 portfolio was exited today for a 3.9% gain thanks mostly to speculative component XPO. The 10/01 portfolio will be closed out on Monday.

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** Important Portfolio Note **
Dr. Kris began these portfolios to illustrate how the stocks given in the daily *Blue Plate Specials* can be used to create or enhance your own stock portfolio. This was meant as a short-term exercise only and frankly Dr. Kris is looking forward to doing other things besides spending several hours a day managing portfolios. In particular, this website will shortly have an entirely new, streamlined look and a companion website focused mainly on investing strategies will be also be unveiled. I’m very excited about this and so I’ve decided that October 29 will be the last *Blue Plate Specials* portfolio.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/14/10

Thursday, October 14th, 2010

Market Notes
As the market was tanking this morning, the Half-Time Fast Money chatterboxes on CNBC were all gloom and doom. Guess they don’t bother to check out the broader market because even though the averages were down, stocks were lookin’ good, especially the Chinese stocks that trade on US markets.

On queue, the market retaliated, marching back up to close still under par but lookin’ good. Although the VIX technically closed above 20, it fell below that after hours as the tracking stocks of the major averages (QQQQ, SPY, DIA) rose.

Hard to say what’s going to happen on tomorrow’s open but I think the action will continue to be bullish. Even CNBC noted that volume has noticeably increased. So there!

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (7), Breaking out to new highs on lower volume (2), and Darlings of the Day (1). I’m glad that Universal Display (PANL) made the cut because it’s an interesting company in the organic LED field (OLED) which could well be the wave of the future. (See 4/3/09 blog for more details, and no I didn’t select this company because I liked it but because of its chart pattern.)

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Today’s portfolio close-out
The 9/29 portfolio was exited today for a 1.9% gain. The 9/30 portfolio will be closed out tomorrow.

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Portfolio Notes
Unusual occurrences in several of the 10/11 portfolio members today. Most interesting is the instantaneous drop in Taseko Mines (TGB) from $7 to $4.62 at exactly 2:33pm ET. Was this a spurious trade or is some large shareholder trying to unload his/her position in a hurry? This was definitely an eyebrow-raising event and one for which the company had no official answer.

MLP Targa Resources (NGLS) took a 3% drop today. The only news out was that it is involved in a partnership deal with ConocoPhilips (COP) and Devon Energy (DVN). Doesn’t sound like a negative to me but I don’t wear ten gallon hats and cowboy boots so what do I know?

Shares of Golden Minerals (AUMN) were off almost 4% today on no news. Could be that the stock is just taking a breather after tripling in price (from $8 to $24) in little more than a month.

If any of these stocks slide much further, they will be closed out.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/13/10

Wednesday, October 13th, 2010

Market Notes
The major averages took out resistance today luring investors back into the market. If you’re not long, you’re wrong!

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (4), Darlings of the Day (1), and Low-priced Leaders (5).

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Today’s portfolio close-outThe 9/28 portfolio was exited today for a respectible 4.3% gain. The 9/29 portfolio will be closed out tomorrow.

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[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/12/10

Tuesday, October 12th, 2010

Market Notes
The market opened on a continuation of yesterday’s downer close. Judging from the lowered Trin, it was not at all surprising to see the market reverse course and march upwards. I I was hoping for a close over 462 in the DTX but we didn’t get that. We did, however, see the Dow Industrials stay above the 11000 mark and the VIX below 20—both bullish signs. Also, the SPX and the Nasdaq pulled their weight and closed at new yearly highs—woo-hoo!

Besides an uncooperating DTX, the Trin is at an extremely low level which could prevent further rallying tomorrow. Overall, though, the air is humming with bullish notes and if there is a correction in the offing, it’ll be a but a blip on the radar screen.

The ultra-long QQQQ tracking stock, TQQQ, could be a profitable short-term vehicle for those of you looking for some speculative, high-return long ideas not involving options or futures.

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (2), Breaking out to new highs on lower volume (3), Darlings of the Day (1), Speculative Leaders (1), and Low-priced Leaders (3).

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Today’s portfolio close-out
The 9/27 portfolio was exited today. It would have actually done fine if it weren’t for the government trying to meddle into the accounting affairs of public companies. News of an SEC probe into some of Green Mountain Coffee Roaster’s (GMCR) accounting practices caused the stock to plummet on 9/29 forcing us to exit the position for a nasty loss.

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The 9/28 portfolio will be closed out tomorrow.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/11/10

Monday, October 11th, 2010

VIX Alert!
The volatility index (VIX) broke the magic 20 mark which is the line of demarcation between bull and bear territory. I suppose we could get that much ballyhooed double dip but it ain’t gonna happen on this watch. The last time the VIX broke below 20 was this past March when the market staged a spectacular run (8% on the SPX) that, unfortunately, lasted only until the beginning of May.

Now would be a good time to pull out the stops and place your long bets on the table. Unless the Dems win in November, I think we’re going to rally all the way until Christmas and perhaps beyond. Start making your holiday gift lists!

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out to new highs on lower volume (1), Breaking out (1), Darlings of the Day (2), and Low-priced Leaders (1).

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Today’s portfolio close-out
The 9/24 portfolio was closed out today for a slight loss. Entropic Communications (ENTR) and Savvis (SVVS) were the biggest losers. Entropic sprinted from 50 cents to $10 in less than 2 years and was due to take a breather. Just sorry it chose now to do it. Savvis lost ground after it lowered revenue guidance on 10/6.  The stock has been consolidating since. Nothing we could have done about that, but it just shows to go you the dangers of holding a stock over earnings.

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Portfolio Notes
10/4 portfolio component KGS changed its symbol to CMLP today. Everything else about the stock remains the same.

The 9/27 portfolio will be closed out tomorrow.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/08/10

Sunday, October 10th, 2010

Market Notes
Indeed, a lackluster jobs report did not stop the markets on Friday as the SPX, DJIA, DTX, and Nasdaq closed above resistance. We’ll have to wait and see if next week’s economic numbers can move the market: Economic optimism on Tuesday, Core PPI on Thursday, and Michigan Consumer Sentiment on Friday.

Concomitantly, a new earnings season is blossoming. Reporting next week are major proxies for the following industries:

Tuesday
Semiconductors: Intel (INTC)

Wednesday
Banks/Brokerages: JP Morgan/Chase (JPM)
Hotel REITs: Host Hotels (HST)

Thursday
Internet software, search, & whatever: Google (GOOG)
Grocery Stores: Safeway (SWY)
Industrial Equipment: W.W. Grainger (GWW)
Regional Banks: First Horizon (FHN)

Friday
Newspapers: Gannett (GCI)
Everything under the sun (conglomerates & small countries): General Electric (GE)
Toys: Mattel (MAT)

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out to new highs on lower volume (1), Darlings of the Day (1), and Low-priced Leaders (3).

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Today’s portfolio close-out
Despite the 60% winners versus losers, the portfolio managed to return 9.3%. Annualized over 250 trading days, the return on investment (ROI) amounts to more than 200%. The large percentage gains in the microcaps indicates the power of a strong rally. Assuming everyone has the same fundamental knowledge, technical timing truly is everything…um, not that I have a formed opinion on the subject.

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Portfolio Notes
10/5 portfolio component Balchem (BCPC) broke recent support and shows no signs of reversing direction. The position was closed out at $29.15 for an 8.4% loss.

The 9/24 portfolio will be closed out on Monday.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Thursday, October 7th, 2010

Market Notes
Everyone’s just hanging out until the jobs report tomorrow. Maybe my glasses tint is a bit too rosy but the lowering VIX and the bottoming tails on the major averages today suggest a rally tomorrow, even if the jobs report is lackluster. (If it’s terrible then all bets are off.)

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (3), Breaking out to new highs on lower volume (3), Darlings of the Day (3), and Speculative Leaders (3).

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Today’s portfolio close-out
Who picked these turkeys??? Okay, so we got hurt by the pull-back in gold today (not my fault) but I’m taking the blame for picking LOOK. I must have been partially asleep when I looked at it. I seem to have been lured into its breakout pattern while ignoring its price history. This stock likes to rally spasmodically followed long periods of consolidation. Stocks with this type of behavior either belong in a very short swing trade portfolio or a long-term buy and hold one—those in-between (like this one) will suffer the consequences.

Even Dr. Kris forgets the rules occasionally.

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The 9/23 portfolio will be closed out tomorrow.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/06/10

Wednesday, October 6th, 2010

Market Notes
Unless we get some good news, technicals suggest a short-term market top. Why? Because the following major averages are having a bit of trouble breaking local resistance: SPX 1160, DTX 460, DJIA 11000, Nasdaq 2400, OEX 525.

On a troubling note, the VIX closed lower while the major averages stood still. Even more troubling is that the institutions seemed to have left the party at least until Friday when the jobs report is coming out. The fact was made apparent by the precipitous drop in the VWAPs.

So what’s a person supposed to do? If you’ve been gun shy about dipping your toes into this market, wait until resistance is breached in the SPX at the 1175 level. Even more conservative investors may want to wait until the SPX closes above the 1250 level or when the VIX drops below 20 which is the region ruled by the perma-bulls.

Trading Note: If you’d like to play the upside with minimal risk, consider buying LEAPs (2-3 year options) on an index tracking stock (SPY for the SPX, DIA for the Dow Industrials, etc.) and writing front-month calls against the position at relative highs. This is called a Calendar Spread and is an effective way of generating income into your regular or retirement portfolio. Check with your broker for further details and as with all options strategies, paper trade them first!

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (1), Breaking out to new highs on lower volume (1), Darlings of the Day (5), and Low-Priced Leaders (3).

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Today’s portfolio close-out
QUIK was the best performer mainly due to a few nice up-moves. It’s been consolidating for the past week and looks like it’s ready to take a short breather. Good thing we’re getting out now!

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The 9/22 portfolio will be closed out tomorrow.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/05/10

Tuesday, October 5th, 2010

Market Notes
Those green shoots must have been bamboo because they sure sprouted today—yowza! Not to throw a divot on the shindig but not everything is coming up roses in market land. That pesky VIX refuses, I mean R-E-F-U-S-E-S, to hit a new low! But as I postulated before, that could be a blessing in disguise as that gives the market a lot more room to grow.

The Trin closed under 0.50 which is horrendously negative, EXCEPT when it isn’t. Sometimes at the beginning of a massive bull run the Trin will just hang out at very low levels, whistling Dixie, slowly rising as investor enthusiasm unwinds. It’s when a rally is in its maturing phase that one has to be alert to these hyper-low values and take them as important signs of an impending reversal. In this case I’m casting my vote for the former explanation instead of the latter.

Although the market made a tremendous gain today, the major averages closed on a downer note. The DTX and the Nazzie were the biggest bummers as neither were able to break their next resistance levels at 460 and 2400 respectively. Perhaps tomorrow.

I’m unsure what caused this unexpected spurt of investor enthusiasm (I don’t think it was all entirely due to today’s economic data—did someone get a peek at Friday’s jobs report?) but I do think it will continue. The industrial and energy sectors (XLU, XLE) staged convincing breakouts with the tech sector (XLK) tagging not far behind. Lagging are those lazy-arsed financials but at least the XLF is showing some signs of life. More positive economic news will surely help it bloom into the beautiful rose it was meant to be.

Okay, enough of the sickening gardening metaphors and on to today’s *Blue Plate Specials* portfolio wrap-up.

New Long Portfolio
Today’s ten portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (8), Breaking out to new highs on lower volume (1), and Darlings of the Day (1).

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Yesterday’s portfolio close-out
Today I was able to gracefully exit the last constituent of the 9/4 portfolio. As mentioned yesterday, VRAZ did a 1:5 reverse split and emerged from its 10/1 merger with a new symbol DLGC. Good thing I waited until today because yesterday’s closing price was at a spurious level of $5.30 which would have given the portfolio a loss of -1.6% instead of a +1.6% gain. Whew!

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Today’s portfolio close-out
It’s not surprising that the grandest gains in today’s closed out portfolio (9/20) came from the smaller priced spreads. At the beginning of a major rally, it’s the small-cap stocks that outperform the broader market, something to keep in mind when foraging for candidates for your own portfolios.

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Tomorrow the 9/21 portfolio will be closed out.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

*Blue Plate Specials* Portfolio – 10/04/10

Monday, October 4th, 2010

Market Notes
Further downside movement was suggested by the negative internals last Friday and today’s action came as no surprise. Earnings season is kicking off Thursday and the all-important jobs report is due Friday so I’m betting the market most likely will be stuck in a trading range until then…but what with the market becoming perpetually stalled in this low volume trading environment, any market moving piece of news can be artificially magnified, so watch out.

New Long Portfolio
Today’s portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (7), Breaking out to new highs on lower volume (1), and Low-priced Leaders (2).

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Today’s portfolio close-out
Nine of the ten components of the 9/17 portfolio were cashed out. The last one, Veraz Networks (VRAZ) completed its merger with a 1:5 reverse split. The new company is named Dialogic (DLGC). Today was the first day of trading for the new issue and only two disparate trades were executed which made me think that it will be wiser to exit the trade tomorrow. Ergo, the portfolio will be shown tomorrow with a loss estimated to be around 1.7%.

Tomorrow the 9/20 portfolio will be closed out.

[See 4/21/10 blog for further details on how these portfolios are constructed.]