The sector rotation is now in full swing effect. Look at AG, OIL, COMMODITIES, RAW MATERIAL stocks. ALL CRATERING off the expectation the fed is done with cutting rates and thus the dollar have seen the bottom. Don't know about that...but for now money is pouring out of those names.
Look at MOS and POT...absolutely annihilated the past 4-5 sessions. POT dove from 215 to right now at 176. MOS from 140 to 116 right now. I honestly hope no one bought at the top due the media hype.
Because from technicals it was just way overstretched. I saw that from a mile away.
But now, they are getting close to hitting their 50DMA. And that has proven to be very strong support. Observe
Mosiac have been a huge winner. But people that have been following my blog knows I've been selling this hand over fist when it was nearing its peak at the 130+ levels. It has now corrected sharply but watch for the key level at around ~$110. That would be its 50DMA level and for the past 2 years it has not fallen below that level.
I still believe there a major food shortage in the world because I see it myself when I buy groceries. Rice prices have skyrocketed, same with wheat, same with dairy products. Everything is going up. And the fed's continuation to cut rates certainly isn't going to do it any favors.
I am a buyer of my MOS position again anywhere below $110. BE PATIENT WITH IT.
The same holds true with POT. 50DMA is at high 160's. We can probably pick it up at 165.
The tech trade continues to work...I'm a little concerned now about apple though...but guess I'll jump ship when everyone else jumps. For now I'm going to enjoy it.
PWRD is up nearly 6% intraday! I'm adding the other half of my short position in now at $30.35
My stop loss isn't far away though tank baby tank!
-DL
Disclosure
Long AAPL, GOOG, 25% MOS
Short PWRD
Update 1: I am getting ready to buy more Visa (V) for a long term play. I forgot to blog this but I have decided if I'm going to own a financial stock, this one will be it. Reason being
1) It is purely a paper to plastic play
2) It has long term global growth potential
3) It is twice the size of Mastercard (MA) which have now more than quintupled since it's IPO
4) During recessionary eras, people will try to defer payments as much as possible. So they will swipe their cards. And what will they be using? A Visa or Mastercard.
5) I was a former employee of Visa. And I know their business models are very successful.
Yes, it is a little high now because it has ran up huge. But this one is not done going up. I believe it'll at least double by the end of the year. So it's time to take a stance. I waited initially for this at the 50's, 60's, and the only opportunity I got to buy this was during the selloff window it had after its earnings report. But this one should keep performing nicely. For those of you that are patient, you can wait for it to return to ~70 before buying. That is where the 20DMA is.
Disclosure:
Long V
6 comments:
I'm following your blog with interest - and even following you on one or two trades. (I think you are a bit optimistic on PWRD, I suspect it will reverse, but possibly around 32 or 33).
What do you think of CRM (Salesforce) from a technical point of view?
best wishes
V,
Thanks for the comment. As for the PWRD trade yea I could be a little early...but PWRD fluctuates with very wide scales so it can give back gains just as quick as it gets them. We will see how it turns out. I might have to increase my stop by another buck though at this rate...
As for CRM, it is definitely in a bullish pattern. I'd say if you want to get it for the long haul then it should be just fine. But if you are trying to jump in for a trade, perhaps try to initiate long positions when it gets to about $60
Actually CRM was on my watch list too...the only issue (and hopefully the xman can throw in his 2 cents) is the P/E ratio...at what point do you think you should pay up for a stock. Obviously the earnings are well behind the price run up, isn't the best that can happen is the earnings catch up with the price to give it a more respectable ratio? Do traders tend to ignore the P/E more, vs. longs who have to wonder if it's already extended?
TA question...you mention that MOS had it's run up and hope nobody bought it high. However, a lot of TA folks would have said that if it broke out of the 120ish price point that would mean a break out from resistance and off to the races. Why is it sometimes breaking from resistance signifies a buy, but at the same time a run up isn't good even though it blew past resistance?
annoymous,
I don't doubt mosiac will regain traction. This is why I'm hoping it will continue to consolidate down.
The thing is you have to factor in how much a certain stock has ran up relative to its last correction. When that margin gets stretched out too far, you know there will be a selloff coming. Now this is not to say the stock will retrace back to its correction level (note mosiac last time around corrected to about 89 dollars, then shot up to 140~.) Even with the selloff now, mosiac will probably not revisit that 89 level again. So there's still a gain involved.
But for traders like me, When I see stocks make such huge runs, I am ready to take profits. Keep in mind now the equation is a little more interesting now. We got lower interest rate, there seems to be a transition to buy tech/financial. But all the media talk is just a mask for what's really happening beneath - the technicals of the stock.
I am a buyer of Mosiac again when the stock retraces to its 50DMA. I have learned to be patient with ag stocks and I'm confident it will pay off.
With the exception of retail and financials sectors, stocks are starting to look more fair in value now. Market is still very bullish. How much higher can we go???
Sun micro just got pwned. Yikes. Blaming the economy. Probably not dipping enough into foreign markets (like goog, intel, ibm)? A sobering reminder. GDP for Q2 is forecasted to be less than Q1 (save the rebate program success)
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