Another MANDA Addition + Market Potpourri

I was hoping to post the results of my stop-loss analysis of shorts but there was another software snafu as typically happens when I really want to get something out so I’m hastily kluging together a short blog for today. Earlier this morning I picked up shares of Bluegreen Corporation (BXG) which has signed a non-binding letter of intent to be sold to Diamond Resorts International later this year. The $15 a share offer represents an 132% increase over yesterday’s closing price of $6.44. None of the press releases mention if it’s a cash-only offer but I’m assuming so since Diamond is privately held. Needless to say the Bluegreen board was thrilled with the magnanimous offer, and so was I since the $15 price represents a 25% increase over the $11.99 price at which I purchased the stock for the MANDA portfolio as well as my own privately managed one. (Both companies are in the vacation resort business.)

Market: Is it a Bull? Is it a Bear?
With the VIX spiking over 30 last week, a breather from the bear was in order. But will this recent rally last? On the bullish side, the VIX only two days ago broke its 20dma which provided solid support. It’s now sitting at 22 and a break below 20 would be a signal to exit short positions. The Dow Transports, a leading indicator of market direction, handily broke overhead resistance today at 500. The other indices are following suit as they’re all trading in the green. But the bears still have some roar left. Consider the Buy/Sell ratio (BSR). A value over 1.0 is considered bullish as there are more buyers than sellers (my apologies for the no-brainer). However, the BSR is still sitting in the basement at 0.21, although it’s up from its 0.12 relative low last week. In my opinion, it has a long ways to go before I’ll come out of hiberation.

A few market musings
Glancing at the new highs list today, I see that Finish Line (FINL), the athletic footwear retailer, is on it. In fact this stock has gained over 500% since this January! Could this be the start of a turnaround that was forecast for retail? (See blog on 2/13 for info on the retail sector.) Also making the list are Identix Pharmaceuticals (IDIX) and Cyberonics (CYBX), both in the rising healthcare sector, some of which we looked at in the July 8-10 blogs. Identix, a biotech specializing in viruses and infectious disease treatments, is trading just over $8–a rise of nearly 300% since last December. The stock didn’t quite make it on my biotech buy list because at the time is was caught in a trading range. Yesterday it broke out of that range and is looking to make a run towards its next resistance at $8.50. I’ll be very interested to see how it performs after it reports earnings before the bell next Tuesday. If investors like what they hear, it might be a good time to get in on it. Cyberonics makes treatment devices for epilepsy and depression (good news for the aching bulls!). Its stock has rocketed from under $10 in February to over $27. Apparently, it’s doing something right because institutions have become heavy buyers in recent weeks. The stock has a tendency to bounce off its 20dma and I’d wait for it to come back to that level before I’d jump in. (In the $24-$25 range.)

That’s about for today. One of my goals in writing this blog is to offer my readers something they can dig their teeth into–you know, something more than just exposition. Not that that doesn’t have its place, but it’s information that is available on hundreds of websites. So my apologies for coming up short today. But if the gods are smiling on me, I’ll be able to publish the results of my stop-loss testing for short positions in tomorrow’s blog. Same bat-time, same bat-channel!

Leave a Reply

You must be logged in to post a comment.