Click chart to enlargeApologies to all the tree huggers out there, but this chart is screaming "short me!". It's a chart of TSL (Trina Solar). It's formed a descending triangle with its support at all time lows. Several other solars have already broken down, such as STP, SPWRA and JASO.
Some solars have not broken support yet, such as FSLR, LDK and YGE, so it is not a foregone conclusion that TSL will join that half of the pack that has already taken the dive.
Of course the broader market will decide its fate more than anything else short term, but this chart is a great short candidate. Just bringing it to your attention, but as always, do your own DD.
52 comments:
TSL reports on the 18th. You think it will take a dive before then? I'm sure TSL will beat. Same goes for LDK. Snot, please answer this question, tomorrow walmart is reporting, and then we have a whole bunch of economic number coming out this Friday. How are you preparing for it?
So here we are at the bottom of the DDM channel and it looks very much like it won't hold. After all, why would it? As expensive as ETF's like QID or DXD look, I think after a short breather pre weekend, those indexes are going to keep going up. I think we are at the cusp of the next big down-turn. Hold on, folks, it's gonna get real bumpy from here on.
Disc: up 1.8% ytd., but looking to improve that in the near term.
Here's a strange one: Tyson Foods (TSN). One of the largest, longest running meat processors in the country. I'm sure just about everybody reading this has eaten a Tyson chicken. Can they too be headed for the big B?
Hope DOW hold 8255
Just bought some SSO at 25. Feels like we're completely alone in this. sbbuilder, it does look like the support may not hold because so many stocks are breaking their individual support levels. The reasonably priced hedges are a good idea to protect against the worst case scenario that may be unfolding.
Anon, we're ill-prepared for the days ahead if they're ugly. The only defense we really have is a sliver of FXP and EEV, and more than 50% of our portfolio is in cash, so we can average down.
If we break the October lows, we'll be looking to buy much lower in an attempt to break even... once again. At some point, the market will hit a low and this will actually work. Until then, we're trying to just not lose too much.
Anon,
Yesterday i said that the solars were all at such a low price point that it was impossible to imagine what they could say in thier results or quidance that would justify anything other than a screaming buy.
Today, JASO announced a $100m Loss, said the Solar market was in Panic stage and forcasted only breaking even in the future IF they can renegotiate thier poly costs down by 20% (From LDK Incidentially). So much for impossible to disappoint..
Trina is in a dire position with financing, owing more than thier market cap and there is a lot of potential for nasty announcements in the con call. For my money only YGE and LDK are safe financially and i wouldnt touich the others, and am re evaluating both of those companies on the back of JASOs trainwreck this morning..
Snotwheel 1
Conor & Lightsource 0
I know one of the VP's at GMAC Res Cap. He said that they have begun the winding down process. He figures that in the next 2-3 weeks he'll be out of a job.
I hope this doesn't constitute insider info!
Wow, that TSN chart is really ugly! Looks like a bankruptcy in the making. Hard time offsetting the high feed costs this past year, perhaps? Maybe the gov will bail them out.
CEO of Chevron said on CNBC that he sees $60 oil as being high. It only looks low compared to recent prices, but it is historically high.
Snot,
Is it possible EEV, FXP will be sell-off along with the extremely panic sell-off of market. People want to sell anything in a panic. Why they hold a short ETF if the world is ending.
Hi Snot,
Why do you keep everage down on DDM and SSO. My new target for DDM is around $22.50. I will wait and buy from there. Look at market today all the big name are making new low: GE, AXP, and GOOG and if these stocks can not rally then market will make new low very soon. TARGET for DOW 7880
Sean,
If the market sells off in panic FXP is going to skyrocket because thats how it moves. Its a reverse ETF.
You need to do some research before u get into into it.
http://www.proshares.com/funds/fxp.html
Good Luck.
I just came home from work. What a sell off!
I should have listened to Snot to not bottom-fish JASO yesterday. Well, now that I am a trader-turned-investor, I know they lost $100M due to "Lehman impairment" ... they invested their cash in Lehman and lost it all. Other than that, their earnings are good. Guidance for next quarter bad but for next year reasonable.
I think it is too dangerous to short solars. At least hedge with call options if you insist on shorting. If you are mildly bearish on them, buy puts. My problem with buying the options now is that they are very expensive due to the high VIX.
I am actually bullish on solars at these price levels. The sky is not falling and tomorrow is yet another day.
I think if we open much lower tomorrow, and if the open is bought, that could be THE bottom.
Lightsource
hk22,
Thanks. I know eev and fxp. I used them to hedge my mutual funds in my IRA. I was reluctant to sell the funds because of the transaction fee. Last time when the DJI at this level the eev was at 150. Now eev is 105. In normal case FXP moves opposite the market. But I am thinking if the market is tanking big time, say down to 6000, people may sell everything including the double short ETF to save cash.
Anon, good question. We probably should just be on the sidelines, or making small trades with the Ultrashorts only. Unfortunately, we cannot short individual stocks, so our accounts have always had a long bias. This long bias is detrimental in this market, but it's hard to just turn it off.
We're working on getting short privileges, which will put us back to our older model of long strength short weakness, much like Gary is doing. Until then, we're swimming upstream and the current is basically making sure we don't make any progress.
Hi Snot,
With the Intel news after hours, do you think market is going to tank big time tomorrow morning ? Looking at the way Intel was trading for the past few days, the news I guess is already baked in. Market has almost lost 20% since election day.
BTW, I made a big mistake of selling off my EEV hedge today and my portfolio is like a 'sitting duck' with holdings of BGU, SSO and DDM. Just keeping my fingers crossed :(
Anon, you should always have a small amount of EEV just in case the market completely plunges.
Every time the market drops, we feel afraid to be long. It's human nature. There is a good possibility that on top of the fear that exists, Walmart disappoints, Friday's numbers are horrid, we break the lows, etc etc. The possibility for armegeddon make going long a very hard thing to do. Of course once the market rallies 1,000 points, you wonder why you didn't buy more aggressively at the bottom, seeing as how you knew it was the bottom when it was happening.
Human nature makes trading a very difficult thing to do. We're buying here (and will continue to) because we've learned to shut our emotions off, for the most part, and buy when fear spikes.
The problem with this, of course, is that if the fear is drawn out by a string of bad news (mentioned above) the lows could be a lot lower than those from October. The only defense you have in that case is the other 60% of your account, plus the 10% that's in the Ultrashorts. That 70% cash is very important because even if the worst case scenario happens (a 1987 crash of 22% in one day), you load up on the cheap shares and break even on a small bounce. The leverage you have by keeping a 70% cash position for those really, really cheap shares is phenomenal. Along with some EEV, this preventative measure removes a lot of the risk of being long in these very psychologically trying times. Once you fully understand the dynamic of how much protection these measures can afford your portfolio, it is much easier to weather the psychological part of the storm.
We went long DDM at the worst possible time (Oct 3rd) at the bottom of the Dow's channel. Since then, we've revisited our break even point. If that's possible, then why worry about a 2,000 point drop at all?
What you do not want to do is put your entire account into a small handful of individual stocks (all long) and hope and pray. That kind of approach to this market would make anyone nervous, and rightly so.
"What you do not want to do is put your entire account into a small handful of individual stocks (all long) and hope and pray. That kind of approach to this market would make anyone nervous, and rightly so."
I did that! :D I learned the lesson. I bought just uptrending stocks like Gary, but you are absolutely right. My loss was not big (~10%), but it's very frustrating to keep your eyes open over 6-8 stocks, especially when they swing between the range of +8% and -8% from day to day (stoploss doesn't works), so today I sold out everything except the DTO.
From now on I will buy just ETFs and ETNs.
We all make mistakes. We bought GE a few weeks ago at about 22 because of Buffett, the dividend, etc. the purchase went totally against our own rules. Luckily, we sold it at a small loss. Now it's 16 or so, headed to 12.
Why don't you just short a few downtrending stocks and otherwise also trade the ETF's? If we could do that, we would. There's no shortage of great charts to short, that's for sure.
I think DOW will head south big time and will not turn back until market know exactly what gov't will do and their plan. We are still in the state of PANIC. One bad new will send all index go south...As I predict earlier if GOOG broke 300 then this market is DEAD. We have no leader in any sectors left. All of the big names are making new today. Only Capitalism will lead us out. The more gov't get involve in private sectors, the deeper hole that going to be...Market will works ifself out. TARGET DOW will hit new low in NOV. or early DEC is between 6350-7280 on my technical analysis. I use elliot wave...
Can those "anonymous"'s please sign your name under the comments?
Respectfully yours,
Lightsource
Yes, please, sign your name. It would be helpful for the rest of us to be able to track your comments. You can still maintain your anonymity, just leave us a handle.
Look, the government's probably got your home phone wiretapped, and has key-stroke recognition on your home computer, so you may as well fess up. Oh-look! Is that the ATF at your door already?
With Asia tanking tonight, no doubt Europe will follow. Tomorrow's open should be pretty ugly.
Guys! learn this before you say anything: Elliott Wave Theory. It is very accurate to predict the market...
lol at another anon ignoring all the please sign your name comments..
Snot,
if you could short individual stocks (which I think you did in the case of LDK - at least you wrote that) - which ones would you short?
Can't help it - but Europe seems to resist a selloff. Despite the fact that GER is officially in a recession. Maybe it's the end of hedge fund redemptions (for now).
newfrankyboy
Franky, when Gary chose his portfolio, he found it hard to find any uptrending stocks. Almost every stock is a short by definition right now. Any stock in a downtrend (trading below a downtrending moving average) is a good short candidate.
If you want to improve your odds, choose the ones that have dropped below $10 because many of those companies will not survive. Larger companies (the ones that have dropped from $200 to $70) are far more likely to survive.
If you want to improve your odds of timing the shorts well, short the stock
1.) when it returns to its moving average, preferably after the market has rallied OR
2.) when it is resting on support, threatening to break down to a new low.
It helps if you choose a stock in an unfavorable industry, like retail. CROX was the best short for '07 and '08 in our opinion. We'd feel far safer shorting a shoe fad than a major international bank like Citigroup. Just go with your gut.
Could someone please advise why both DDM and FXP are going down at the same time premarket? Thought FXP was a hedge for DDM.
Thanks
Anony
They are not the same,
FXP represents China, DDM represents the Dow
So yes FXP is a hedge, but its not 100% exact
And you are also wrong in that they are both going lower. FXP has gone from 88 to 79
DDM has come up from 28 to 30
ldk says they are operating at full capacity and still can't make enough poly. 2009 totally booked. solar is shining for next 8 years.
888888
Why the big drop of EEV? It proved my theory that EEV,FXP can drop along with the DJI.
Just sold FXP. At some point, we have to make our portfolio choose a direction. What better time than near the lows? We only have a small amount of EEV, otherwise we're long.
The only real defense we have now, other than EEV, is that we're 70% in cash. Nevertheless, we have substantial positions in DDM and SSO.
Whole market is bottom. Shanghai index was up 68.5 points, but cnbc said it's up 15 points, that means dow will be up 200 points today. Fxp will be 50 in one month
Hi Snot,
FXP has gotten unexplainably ridiculous. There's no rhyme or reason for why the price of FXP is so low right now, following totally irrational drops in price recently. I'm requesting and FXI/FXP post where you show a chart of FXI and Chart of FXP for the past year, which clearly points out how FXP is for some reason not working the way it should. Even my Ameritrade info is totally skewed right now, showing the 52 week high of FXP as $88.25. I have a Yahoo Chart which clearly shows a high of $183.01 back on October 27, 2008, when FXI had a corresponding low of about $19.35 per Yahoo. In fact, I recall clearly that in the pre-market on one of those bad days, FXP actually jumped as high as about $208 or $210, but it sold off, and that didn't count on the charts.
For Example,
Date, Price of : FXI.......FXP
Oct 30, 2008...$25.65....$87.03
Oct 27, 2008...$19.42...$183.01
Oct 20, 2008...$29.67....$90.00
Oct 10, 2008...$27.43...$133.00
Oct 1, 2008....$34.25....$92.50
Sep 17, 2008...$30.88...$144.00
The way I see it, FXP ought to be in the range of $155.00 to $160.00 as we speak, but somehow, this whole price relationship has become irrationaly skewed. Do you have any understanding of what has happened here? It's as though FXP some went through a transitional re-evaluation.
Agr8gem57
Could the price inequities I have shown in the above post have happened as a result of naked short selling and then buying to cover? Agr8gem57
The next one in the list could well be SKF and SRS. At some point they too will start behaving like FXP and EEV.
AK
Kay,
FXP tracks the daily inverse of FXI, so it gets skewed over time. Still, though, you're right that it is acting irrationally lately. There is no reason for it to be down on a day when the Dow is down following a 5% drop overnight in Hong Kong. Something is manipulating FXP, and we'd rather steer clear of it alltogether than play in a game that is unbalanced.
Others have correctly said in the past on this blog that recently SKF and SRS were better hedges and they were right. Wish we had taken that advice, as we would have lost less on the way down.
Anyway, it's in the past. Now we're just looking to load up on longs anticipating the next oversold bounce. Hopefully it isn't a bounce off of Dow 1,800:)
We wouldn't touch it, but GE below $15 has a yield of 8.27%
Not too bad if they actually pay it.
GM and F both look like charts that are headed lower, F especially. If they weren't at the center of such controversy and on the edge of an inevitable bailout of some kind, we'd say these are great shorts.
Amazing action in Citigroup and the unwavering GS lately.
C looks like another chart heading for zero. Too late for shorts on a short term basis, though.
Simply amazing how much wealth is being wiped out every day. It's unfathomable, really. How long can this keep up? At what point do we have to start doing the math to see if we can afford to buy Citi ourselves? Where is Prince Alaweed now?
everybody is waiting the market to reverse and then load up DDM, SSO. This is too obvious. It never works if it is obvious to everybody. My bet the market will be down more from here. At least the DJI will take out the Oct low 7882.
Buying more SSO @ 24 here...also got filled @ 25 yesterday...buy when in fear!
Here's a thought for all the folks looking for the inevitable 'bounce': maybe the market gets so beat up that when we do hit bottom, there just isn't any enthusiasm left to drive the market back up. Apart from some bargain hunting trades, my guess is that it will take some time before any semblance of faith or trust in the market returns. How many companies are at or near bankruptcy? How much capital and valuation has been wiped out? For the time being, I'm sticking with QID and SKF. At least these track real indexes and have a measure of predictability.
23 would be gravy on the SSO. C'mon pussies, sellsellsell!!
Anonynony
There's my 23.00 fill on SSO. Like a hot knife through butta. Wow. Anyone else out there buying at this point? This is getting Scary Spice.
it's time to buy. MMs are scaring small investors and covering their short position. imho.
I wonder how that person is doing on their FAS (3X Long ETF Financials) buy of last week. That must sting by now.
Only for the brave souls though! Short SRS/SKF for some decent returns. If history is any guide, look at EEV and FXP. Both are down 50% from their highs.
AK
Tomorrow is setting up to be a fine morning for a GM-Chrysler-Ford bailout pre market announcement.
Are ya adding any more DDM Snot? You got your sub 28.
Glad to see we're not the only ones buying here. Well, actually, we didn't buy anything today, but we sold all of our FXP so we have a much stronger bias to the long side. We added yesterday, and are looking only to add if the market breaks the magic 7882. The S&P and Naz already have broken their Oct lows.
This is first time to post 2 msgs. on the blog.
1. I predicated dow would be up 200 points because CNBC lied
2. When dow was down 300 points. I posted "it's time to buy ....."
not bad.
I bought some solar stocks today, such as stp, ldk, sol,and dig I will hold them until next week because whole market is reversal to uptrend now
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