Will return in June

Due to a variety of factors I am going to put this website on hold until June. I am going to leave you all with a new theory that I am going to try an implement and profit from: As I have detailed in numerous posts there exists in what I can observe a way to profit from extremely overbought stocks. Typically there is a four day move in a stock followed by an pullback. I feel like the close on that fourth day is the optimal time to attempt to profit from this. Now this four day move I am talking about is a big move, not a four day move that the stock goes up 10%, Im talking things like what TZOO did recently and UARM did in Dec-Jan. A 30%+ move in four days at least will qualify for this type of trade. Just watch out for it and try to get a feel for how stocks act and see if this has any validity. Maybe it does maybe not, its mostly just an observation.

During my break from writing if anyone has any questions or thoughts on how I can improve this site on my return, stock questions or basically anything in general send them my way @

randommarketthoughts@gmail.com

I hope you all return in a month and continue to read what I put together here on this site. Also if anyone wants to click on the ads on the right feel freee, just kidding. Thank you all for reading.

And before I go I must warn the 14% short interest on VLCM - you are probably going to lose some money in the coming days, may want to cover some of that. They are looking much better than I anticipated heading into Q2. And with that I am signing off until I start to write again. Best of luck trading to all.

Initial Thoughts on Volcom

VLCM - Reported earnings today that blew out estimates. It was nice to see. However, they lowered the outlook below consensus for next quarter. I haven't listened to the call yet so I am not as informed as I would like to be at this time, but my inital thoughts from the other items on the press release are as follows. Gross margins down = Bad. I believe this was partially due to the company working through alot of its excess inventory. With a $3 mil downtick from Q4 in inventory I think they have got inventories at a much better level. Also look at the cash flow generation this quarter - Incredible. Even though the stock may get clipped a bit tomorrow, I think they are in a much better position than in Q4. Overall, not bad. Will update once I read the call.

Slow to Post

I will be posting vey infrequently over the next month as I spend the majority of my time studying for the CFA. So I apologize for that. Thursday I have VLCM and WEN reporting, the way this week has treated me so far they will both probably burn me too. This hasn't been the most profitable week to say the least. I have had a few move against me despite reporting good numbers. That really bothers me. By the way I am rolling whats left of my flipping profits into VIMC for tomorrow. I don't feel as good about this one, but it is essentially good for a 20% swing either way so we shall see. Why do I do some of these things....

Flippin

I rolled the profits from flipping stocks on earnings into DTG. I am a little worried, as the one analyst who covers them has them at the high end of their own guidance for the year. But we shall see.

One of the key things I look for when coming up with stocks to flip is a low number of analysts covering a stock. It improves the odds that maybe that guy isnt right and the company can blow out.

I hate to gloat...but

Post from Feb 13, 2006

DELL
Breaking news everyone! Citigroup came out with their best idea for 2006! Brace yourself for this: DELL. Yeah thats right, Dell, is what they came up with. I would hate for them to have done research and attempted to come up with a new idea as opposed to a stock that has done nothing for 3 years and can't generate enough growth to drive the stock any longer, but apparently I am all wrong with my way of thinking. Yes, maybe if this was 1998 Citigroup would be brilliant, but its not and this type of outdated thinking is essentially a waste of everyone's time. The price at the begining of the year was $29.95, my money is that the price at the end of the year is +/- 5% of that and that at some point in time Citigroup does a deal with Dell. Thanks for your insight guys!


Feb 22, 2006:

Ohh yeah and by the way for those of you who read the DELL post below and also get Citigroup research can you maybe put in a phone call to them tomorrow and just compliment them on their exceptional analytical abilities. Lets see from the time I put up my sarcastic post until the close yesterday DELL has returned a whopping -5.8%!!!!! Keep those picks coming Citigroup!

Right Now:


21-Apr-06 Citigroup Downgrade from Buy to Sell

What, hold on now. Did they really do that? One of their best ideas. This cant be right. Not even to hold, straight to sell.

They had some great comments such as:

"Our revised ests assume a 200bp drop in gross margin beginning in 2FQ. This
suggests near term downside to the low $20's, but a $28 twelve-month target."

"The slow, steady erosion of Dell’s cost advantage combined with the company’s heavy
exposure to saturated portions of the global market explain the recent collapse in Dell’s
unit growth premium versus the global PC market.We believe that the days of Dell
growing at 2-3X the rate of the market while maintaining a 500-1000 basis point
operating margin premium versus competitors are gone forever."

"Our revised estimates suggest a fair value of $21-23, well below the current price of the
shares."

And my personal favorites:


Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12
months from Dell Inc.
Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services
from Dell Inc. in the past 12 months.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following company(ies) as investment banking client(s):
Dell Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following company(ies) as clients, and the services
provided were non-investment-banking, securities-related: Dell Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following company(ies) as clients, and the services
provided were non-investment-banking, non-securities-related: Dell Inc.


Yeah thanks guys, where does that put us? Down a nice 3 from taking your advice at the begining of the year, assuming we took your advice and bought then and sold on Friday. Because your downgrade knocked the stock another 5% and no individual would have been able to sell out at a better price. Thanks Citigroup for losing me 10% in 4 months, keep up the good work. Maybe we could get an upgrade on GM now to give people a good place to short them.

Parabolic Move

Look at a 5 day chart of TZOO (http://finance.yahoo.com/q/bc?s=TZOO&t=5d). Over 100% in 5 days. WOW!. Now I dont know why I feel the need to mess around with a stock like this but something tells me it needs to pull back. The cause of this rally was a combination of factors. First the stock had a 38% short ratio, which is insanely high. Then they reported a much better than expected quarter on the stock took off like a rocket ship. Now everyone who is short the stock is trying like hell to buy it back so that they wont get run over, this is a classic short covering rally. So it begs the question: Is this stock shortable now? In general a 4 days ralley signals a pullback. However, given its high short ratio it may have another day in there, after that it could pullback somewhere in the vicinity of 10% or more. Timing is the key to this one though. I just thought I would bring it to your attention.

The Results are In

GOOG +36.80 + (8.96%)
NDAQ -1.54 (3.52%) +0.01 (0.02%)
SYNA -0.97 (3.80%) - 0.86 (3.39%)

Well Looks like a double, a walk and a fly out. In all if it stays that way tomorrow, I will be happy. I was hoping for an apple related homerun from SYNA, didn't happen, it could get hit tomorrow. I need an upgrade from someone, I don't know how they can justify it with the dismal financials they reported but we shall see.

3 Random Earnings Picks

Due to my gains on VMI, I have a little extra money to play with. I am spreading an earnings based flip trade over 3 stocks: GOOG, NDAQ and SYNA. I do not recomend anyone do this as it is essentially gambling, but sometimes you gotta keep it interesting. We will revisit after the close.

What a Day

Now lets see if the markets tendencies stick and the it falls back down tomorrow.

YHOO beat, so I would feel comfortable holding some GOOG into earnings tomorrow. I loved every moment of the UNH fall today. All I am interested in after the close are AAPL and INTC, not because I am invested in them but purely for entertainment purposes.

VMI - I bought this stock to flip for earnings today. One analyst covers it and his estimate was beaten by roughly $0.17 on a $0.35 estimate. I don't know what the stock will do once it opens up but if it does go down I think I may have to quit for a while.

WEN - the Wendy's short is not exactly working out with the market running like it is, I am holding though for now...

Earnings Time

Its that time of year again, earnings. This is what will drive the market from day to day. Up and down we shall go, with what I imagine to be no discernible trend. Through this its hard not to like energy stocks, as oil goes higher I don't see many negatives out there for them. I have my eye on UNH in the morning. Deep down I want them to miss, although they will probably meet and raise slightly. I want them to miss purely out of revenge as I lost money owning them earlier this year and now want a little vindication from a miss now that I sold. YHOO will be interesting after the close as I have noticed a trend for the last year that I hope to take advantage of this earnings season. Here it is: if YHOO beats GOOG beats if they miss GOOG will miss as well. I expect this relationship to hold and will take my cue from YHOO on my next GOOG trade. Also this time of year it is really tough for me to avoid flipping stocks and essentially gambling on misses and beats. I will still do it but with a small portion of the portfolio as to not hurt my returns.

Send me an Email

Anyone has any thoughts send me an email @

randommarketthoughts@gmail.com

Taking a Break

This will be my last post for about 5 days as I take a break for the world of investing. One trade that upset me that I didn't take advantage of this week was PEIX. THe stock ran up about 50% in 4 days and would have been a prime candidate for a short for the next two days. Typically when stocks make parabolic moves you can either buy puts or short the stock and make a nice little 10%. The difficult part is timing it correctly. Ususally its after 3 big up days. Usually the last one is a big gap up. I would venture to say that if it is down again tomorrow that it would be a good buy. It may already be ready to reverse. It should mellow out after this though. Take a look back at the UARM trade I did back in January, same sort of a set up.

On a side note, I can't wait until gas gets to $3.00 a gallon. Thanks for that Iran.

Slacking

I have been slacking on my postings lately, I am guessing that I have been busy. I also haven't seen alot that interests me out there. The stocks I own are pretty much what whipsaw dreams are made of. Take VIMC for example. I bought it on friday then on Monday it was up 14%, pretty sweet huh. Then Tuesday morning I wake up check the quote, get sidetracked with other things and come back to see it down 8% at which point I sold and watched it finish the day pretty darn close to my original basis. I probably could have bought it back but I didnt see the sense in riding the roller coaster again. Also take my short in WEN, it was up today while everything else got hammered...not promising. In essence it is tough out there and I am standing aside and letting the other people battle it out, for now I will wait.

Well, Well, Well

Apparently the market can go down. I must say alot of the momentum names really took a hit today, in fact of all the stocks I actively follow only 3 were flashing green today. Now given the fickelness of the market I really don't expect today to hold and I think stocks will continue to trade higher up until the next FED meeting, and then the sell in May theory will come into play. Although given my propensity to make mistakes I may be wrong on this as well. I initiated a very small position in VIMC today, but I will keep a very tight stop on that stock given current turbulent market.

The AAPL trade that I recomended a few days ago really worked out, albeit not according to my plan. But hey you can't go wrong as long as the stock goes up...

and

The TS trade hit 209.5, pretty damn close to the 10 point run I predicted, its amazing how predictable some things are.

???????

Its strange I can't even remember the last time the market went down. I took a small hit on my short hedges but covered them all. The only stock I am still short is WEN. I guess if I had more patience I would hold out for a pullback but unfortunatly at this time I really don't want to anticipate what the market will do anymore. Its going to be more reactionary right now. Below there is a question about what oil stocks I like. Right nowI have to say that you basically cant go wrong with any oil stocks but I am a holder of SLB and TTI. I also like an oil related steel company TS. These stocks are pretty extended right now so its tough to buy them but if you want to roll with the momentum these guys have it. One last thing. TS is right above 200. It just cracked it and typically when you see a stock go through whole numbers like 100 200 300... you can get another 10 points out of them almost automatically before they pull back. Watch for this trend it happens really quite often, kind of a self fulfilling prophecy if you will.

When Oil Companies Have Made Too Much Money

There comes a time in every cycle that companies hit when they have invested all they can in their own business. They have aquired anyone cheap. And expanded as much as they can. Then with nothing left to do within their own competency they branch out. Sometimes these bets pay off and sometimes they seem to make no sense and end up hurting companies for years. Now while I am not judging Valero here I think its an interesting article to point out what to do when you have made more money than you can handle:

Valero creates new line of private-label sodasTuesday April 4, 12:06 pm ET
Valero Energy Corp. launched a new line of flavored soda that will be sold in more than 1,000 company-operated Valero and Diamond Shamrock Corner Stores nationwide.
The company is selling the 20-ounce bottles of soda, which come in orange, strawberry, grape, blue cream and peach, for 99 cents each.
Valero (NYSE: VLO - News) has been working to expand its private-label products business ever since the company bought Ultramar Diamond Shamrock Corp. in 2001.
Through that purchase, Valero gained Ultramar Diamond Shamrock's vast network of retail-gasoline stores -- making it one of the country's largest service-station operators with more than 5,000 stores today.
Gary Arthur, senior vice president of retail and specialty products marketing, says flavored soda is the latest line under the company's Fresh Choices private-label business, which now includes chips, bottled water, cold sandwiches and salads.
The soda, which is also being sold under the Fresh Choices brand, is being distributed by Valero's new retail distribution center. That distribution facility opened in 2005 at the Tri-County Business Park in Schertz.

By the way here is a business description of Valero in case you arent familiar with what they do:

Valero Energy Corporation operates as a refining and retailing company in the United States. Its refining business includes refining operations, wholesale marketing, product supply and distribution, and transportation operations. The company’s products include reformulated gasoline, diesel fuel, and low-sulfur diesel fuel and oxygenates. It also produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products. As of December 31, 2005, the company operated 18 refineries in the United States, Canada, and Aruba. Valero Energy’s retailing activities include sale of transportation fuels; and home heating oil to residential customers primarily in company-operated convenience stores, Canadian dealers/jobbers, truckstop facilities, and cardlock facilities. Its company-operated convenience stores also sell snacks, candy, beer, fast foods, cigarettes, and fountain drinks. The company had approximately 1,008 company-operated sites; and approximately 5,000 retail and wholesale outlets, as of the above date. Valero Energy was founded in 1955. It was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in 1997. The company is headquartered in San Antonio, Texas.

Holding Steady

Despite the fact that the market is up yet substantially today, I am not covering any of my short positions. I am holding out purely for one reason: Oil. It is up a dollar and nobody cares. I feel like it deserves some sort of recognition and the market should pull back some from here. This is especially true given the Feds stance that higher commodity prices = inflation which equals more rate hikes. Seems to make sense to me.

My Biggest Problem

I often times find that I have no direction when I write on this blog, hence the name, but over the weekend I did some thinking about what my biggest problem investing has been. I have decided that it is complicated in many ways but it essentially boils down to a disconnect between doing what I know works and my actual actions. I know for a fact that the most money will be made on a trade over time. Sitting and waiting is probably the single most important part to being a good trader. However, what I enjoy most is trading stocks frequently. Take for example my short positions I have on right now. If the market goes up on Monday I will lose money on them when I cover them. Where as my other positions that I intend on holding for some time will go down on Monday and they will live to see another day. Maybe I will make a few dollars on my shorts. But in the end it will pale in comparison to the money I will make holding a stock for 6 months or a year. The difficulty for me is finding a balance between trading and investing. I can do both. But when I am bored I turn to trading and in turn over-trade and end up on the losing end of the P&L column. I need to start to look at the bigger picture, have patience and I think we may make some money here in April. Good Luck to All!

New Google Sites

http://www.google.com/romance/index.html

http://www.google.com/googlegulp/

http://www.google.com/jobs/lunar_job.html

http://www.google.com/technology/pigeonrank.html

http://www.google.com/mentalplex/

Enjoy!