St. Louis Bob
Footballguy
I put 5 grand in my account Saturday to buy DXO but it takes 3 days to clear because the stock/fund is under $5.I think I'm going to start at 1000 shares and work from there.
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My Stock Value Strategy Starts Now (1 Viewer)
- Thread starter David Dodds
- Start date
siffoin
Footballguy
Would you mind if I ask how? Not saying DXO isn't a good trader...but today seems tight. I've got DXO opening at $2.96...going up to $3.05...then down to $2.87 and closing at $2.99. And what strategy are you using to initiate buys/sells?If posted elsewhere just point me in that direction.I like OIL...and I'm in the process of making LT purchases of some secondary oil/oil service plays where I believe the upside reward FAR outweighs the downside risk.
Sand
Footballguy
Bear Sterns type leverage? Fannie type leverage?
David Dodds
Administrator
DXO opened at 2.83. I got a few at market price and then most of the rest at 2.87 and 2.88. I sold at 2.98 and 2.99
Sack Boy
Footballguy
Tanks in Gaza and "No Gas for You" did the trick last time, but not everyone can make money this way without feeling dirty.
Michael Fox Fan
Footballguy
So just to catch up, it sounds like:1) you've already given up on your strategy because after 2-3 days it wasn't working
2) you are now day trading oil ETFs
Correct?
What makes you more confident in strategy #2 than you were in strategy #1?
videoguy505
Footballguy
Past success is a great predictor of future returns.
Sack Boy
Footballguy
Wheatback pennies?
cstu
Footballguy
Care to share?
Sand
Footballguy
Can you backtest that for me?
David Dodds
Administrator
I think the thing that has me doubting strategy one is that these stocks are hard to trade because many have low volumes. So even when the price might be right to gain some profit, it's not a lock you can sell. In this marketplace I hate being forced to hold stocks. The other major problem I am having with option 1 is that I bought all of these stocks on the same day and then the Nasdaq has tanked ever since. My thoughts going into this was that 1/2 would go up, 1/2 down etc and that I could cost average down my losers to make this whole thing work nicely. That could still work, but I am just not feeling that much love with these stocks right now. They are almost all in negative sectors. They represent "value" as they have been crushed by the market. Most will likely rebound nicely, but the question remains when...
As for option #2, I feel very confident that oil ETFs are headed up longterm. So I do feel a lot safer buying these things and looking to daytrade them for a quick profit. If they drop, I also would not mind cost averaging down and holding a bigger position. Longterm, I believe oil is up....I can't say that about any of the stocks I have in option 1. I think they are undervalued, but most still seem poised to ose right now. Now oil could definitely go lower in te short-term and I fully expect that could happen tomorrow when the inventories report comes out.
Anyway, big lessens learned on this whole fiasco. Hoping tomorrow that I can lessen more positions and then just casually manage this thing going forward while selling off most of these stocks at close to average cost.
Sonny Lubick Blowup Doll
Footballguy
Dodds is one smart but crazy dude.
Michael Fox Fan
Footballguy
If you think that oil ETFs are headed up long term, then why day trade them? Why not just buy and hold them until you see a great exit point?
David Dodds
Administrator
yep, nothing to do but wait. The whole market is negative today.On a hopefully positive note I just added 5,000 shares of DXO at 2.80 today.
Ed Wood
Footballguy
That's the right play, David, IMO. I bought 250 at 3. Have an order in to buy 250 at 2.75. Gonna keep adding at 25 cent drops. If you can afford to play the waiting game, oil's the right play.
David Dodds
Administrator
Because the oil contango is causing these tidal waves of movement that seem more profitable to me. Crude futures are trading 55% higher for December 2009 delivery than they are right now. That to me seems like everyone expects oil to be higher going forward. But the short term is interesting because stockpiles are at record levels and many supertankers are also loaded full to play this contango. Additionally world economies are in the dump further lessening demand. So each month, prices drop as oil contracts must be received and there is no where to put the oil. Then when the markets start trading in the future contracts of the following month+, they start shooting up again. So for now I would rather day trade in and out based on the current news (gaza, OPEC cuts, storage levels, etc) with an overall long position. From my perspective, worst case is I time the bottom wrong and forced to just hold the position a longer time frame.Also ETFs with double leverage like DXO really should not be held longterm based on their degenerative properties by design.
guderian
Footballguy
I don't think the strategy has failed, however I don't think that it fit your time horizon. All of the criteria that you searched on were fundamental/valuation criteria. Unfortunately cheap stocks can get cheaper--you just have to be willing to wait it out. If you wanted a shorter-term strategy, then it should be based on technical indicators. I'm not a big proponent of technicals, but you can't expect short-term performance based on fundamentals. It will be interesting to see what you would have made on this portfolio if you'd held it for a year.
siffoin
Footballguy
Comment about DXO...
Since it is a daytrader (meaning you'll close the position most likely end of day)...long positions are not looking great at the moment. Price is sitting on support on both 60 & 120 minute charts. In addition on my indicators the 60 minute is in a Sell position, the 120 minute is rolling over to a Sell while the Daily Chart is Flat.
There is great $ to be made here on the long side. Today might be difficult for long positions. An hourly close below $2.75 would be further confirmation of a breakdown in ST price. I'm not in the position so for your sake I hope I'm wrong. The play under the current conditions and price carries significant risk imo.
I DO like OIL. I am invested LT in OIL.
Since it is a daytrader (meaning you'll close the position most likely end of day)...long positions are not looking great at the moment. Price is sitting on support on both 60 & 120 minute charts. In addition on my indicators the 60 minute is in a Sell position, the 120 minute is rolling over to a Sell while the Daily Chart is Flat.
There is great $ to be made here on the long side. Today might be difficult for long positions. An hourly close below $2.75 would be further confirmation of a breakdown in ST price. I'm not in the position so for your sake I hope I'm wrong. The play under the current conditions and price carries significant risk imo.
I DO like OIL. I am invested LT in OIL.
David Dodds
Administrator
I will average down if this drops lower. Not worried at all. Also very interested long-term in oil. and if I have to I will just hold until this goes up.
David Dodds
Administrator
and back out at 2.97. Liking the ride here (+$850). The fact that USO and OIL are trading down and this is up a smidge, I suspect the afterhours trades will push it a bit lower again tomorrow for a similar ride.
(HULK)
(Smash)
You would be way better off being an angel investor in a small fantasy football company.
Code:
PM Me!
Bonfire
Footballguy
dont want to derail this more, but it has taken a turn towards oil so thought i would ask to anyone...
why is it that everyone "knows/thinks/believes" that oil will go up significantly in the future. i think that's the way most are guessing/predicting, but as was mentioned we have declining demand and an excess of supply? it seems to me that a lot of people on that bandwaggon, are simply remembering high oil/gas prices and think that's the new standard, and therefore we will go back to that point. they were high: so they WILL be high again... whether or not they do is one thing, but it seems to me a lot of people are betting so because of past prices that weren't completely a rational picture of actual valuation.
im not trying to pick at anyone long on oil, just trying to understand better as to why?
why is it that everyone "knows/thinks/believes" that oil will go up significantly in the future. i think that's the way most are guessing/predicting, but as was mentioned we have declining demand and an excess of supply? it seems to me that a lot of people on that bandwaggon, are simply remembering high oil/gas prices and think that's the new standard, and therefore we will go back to that point. they were high: so they WILL be high again... whether or not they do is one thing, but it seems to me a lot of people are betting so because of past prices that weren't completely a rational picture of actual valuation.
im not trying to pick at anyone long on oil, just trying to understand better as to why?
David Dodds
Administrator
From tracking all of these oil ETFs I have noticed something pretty peculiar for about the last few weeks. Although these are all tracking crude to different levels), they are also influenced by purchases and US treasury notes.
DXO has incredible resistance from going lower.
For example as I type this, here are the oil related ETFs, their current price and +/- daily change:
OIL, $20.85, -2.16%
USO, 31.14, -2.26%
DXO (2X multiplier), 2.97, +.68%
SCO (-2X multiplier), 32.82, +3.4%
DTO (-2X multiplier), 164.0, +2.23%
So the shorts (SCO and DTO) are up about 1.5% if you discount the multiplier. Oil stocks are down about 2% so one would expect DXO to be off by 3-4%. But instead it is UP. This has been going on for a bit of time now with the heavy volume. I suspect though that afterhours trades will bring this back closer to normal and then we can play this game again tomorrow.
DXO has incredible resistance from going lower.
For example as I type this, here are the oil related ETFs, their current price and +/- daily change:
OIL, $20.85, -2.16%
USO, 31.14, -2.26%
DXO (2X multiplier), 2.97, +.68%
SCO (-2X multiplier), 32.82, +3.4%
DTO (-2X multiplier), 164.0, +2.23%
So the shorts (SCO and DTO) are up about 1.5% if you discount the multiplier. Oil stocks are down about 2% so one would expect DXO to be off by 3-4%. But instead it is UP. This has been going on for a bit of time now with the heavy volume. I suspect though that afterhours trades will bring this back closer to normal and then we can play this game again tomorrow.
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David Dodds
Administrator
There is a futures market that trades oil. February 2010 contracts right now TRADE for 55% higher than the price right now. So people trading on both sides of that contract have equalized the price to be 55% higher than it is right now.In a nutshell, people believe oil will be up by then because of these things:1. Countries like Iran, Russia, Saudi Arabia, Mexico depend on higher oil to keep their countries from running large deficits.2. Exotic production methods have been stopped (shale, oil sands, etc) at current prices3. OPEC has lowered quotas and will do all it can to create higher oil prices 4. China is stockpiling oil at these low costs5. The world's economy will likely start to break from the recession and increase demand going forward6. Wars/conflicts that threaten supply channels would force prices higher.
(HULK)
(Smash)
I'm only half kidding here.Can send you a business plan by mid February. Think of the synergy potential.
(HULK)
(Smash)
Oh, and I serious, non stock related note, my partner and I already decided that we will create a live scoring program for the suscriber contest for free. I've gotten so much out of this site over the years, just want to give a little bit back, and it would cost us nothing but some time/effort since we already pay for a live stat feed anyways.
David Dodds
Administrator
So why is oil so low, if everyone knows that it will be 55% higher on average in a year? The following factors are leading to the price lowering:
1. World's recession. Everyone is using less oil. No real indicators that any country is coming out of this yet.
2. Huge stockpiles of oil that are increasing. Every Wednesday a new report comes out that tells about the stockpiles of crude oil and gasoline. These are trending in the wrong directions and have been for months.
3. No less than 10 to 20 supertankers have been filled with crude that do not yet appear in these reports as well. They are being rented holding oil for a higher price. Cost to rent a supertanker is approximately 90 cents a barrel/month. This oil will hit the reserve piles at some time.
1. World's recession. Everyone is using less oil. No real indicators that any country is coming out of this yet.
2. Huge stockpiles of oil that are increasing. Every Wednesday a new report comes out that tells about the stockpiles of crude oil and gasoline. These are trending in the wrong directions and have been for months.
3. No less than 10 to 20 supertankers have been filled with crude that do not yet appear in these reports as well. They are being rented holding oil for a higher price. Cost to rent a supertanker is approximately 90 cents a barrel/month. This oil will hit the reserve piles at some time.
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David Dodds
Administrator
This is a really good oil article published today:
Wall Street Journal
I think we see lower prices soon on these oil stocks before they head higher.
Oil inventories in the week ended Jan. 9 hit a record 33 million barrels at Cushing, Okla., the Nymex contract's delivery point, according to the U.S. Energy Information Administration. Fuel inventories also grew by more than expected, with gasoline stocks rising by 2.1 million barrels, compared with an average forecast of a 1.4-million-barrel build, while distillates, including heating oil and diesel, rose by 6.3 million barrels, far exceeding an expected 800,000-barrel increase.
The product builds came despite refiners running at a seasonally low 85.2% of capacity, according to the EIA.
"Refineries are loading up barges and tankers and just having them sit full of crude oil," said Darin Newsom, a senior analyst at DTN, a market-information service. "This is an indication of just how bearish this market actually is."
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My plan is to keep jumping in and out in this market for small gains with a longer strategy of buying low and holding once these supply numbers start to trend the other way. But right now OPEC's cuts seem to just be noise to the overall downturn that the world's economies are experiencing. And if supplies continue to grow, prices are not likely to rise in the very short-term. I think we will see crude selling for around $32 in a few days as we approach the new month. Should be extremely volatile market starting next week in my opinion.
Wall Street Journal
I think we see lower prices soon on these oil stocks before they head higher.
Oil inventories in the week ended Jan. 9 hit a record 33 million barrels at Cushing, Okla., the Nymex contract's delivery point, according to the U.S. Energy Information Administration. Fuel inventories also grew by more than expected, with gasoline stocks rising by 2.1 million barrels, compared with an average forecast of a 1.4-million-barrel build, while distillates, including heating oil and diesel, rose by 6.3 million barrels, far exceeding an expected 800,000-barrel increase.
The product builds came despite refiners running at a seasonally low 85.2% of capacity, according to the EIA.
"Refineries are loading up barges and tankers and just having them sit full of crude oil," said Darin Newsom, a senior analyst at DTN, a market-information service. "This is an indication of just how bearish this market actually is."
------------------------------------------
My plan is to keep jumping in and out in this market for small gains with a longer strategy of buying low and holding once these supply numbers start to trend the other way. But right now OPEC's cuts seem to just be noise to the overall downturn that the world's economies are experiencing. And if supplies continue to grow, prices are not likely to rise in the very short-term. I think we will see crude selling for around $32 in a few days as we approach the new month. Should be extremely volatile market starting next week in my opinion.
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Sand
Footballguy
I've been on record a few times in this thread stating the opposite. I would not be surprised to see $20-25 oil soon.
Michael Fox Fan
Footballguy
It's been awhile since I studied for CFA exams, but isn't there an easy opportunity to lock in a risk-free profit if this is true? Why couldn't you sell a futures contract, buy oil, and invest the price difference in treasuries? Why wouldn't I borrow billions of dollars to do this trade repeatedly right now? Obviously I'm missing something, but a 55% automatic profit seems pretty nice.
gordon gekko
Footballguy
sorry, but this reads like a trainwreck...
at least 5 flaws i see (and that's in the first few paragraphs of the first post of the thread)...
1. In my opinion there is deep value in this market as some of these companies have solid fundamentals that were just caught in the stampede.
2. With that in mind, I used Google Stock Screener to parse out stocks
3. I plan to buy 1000 shares of all the stocks that met this criteria the first thing Friday morning
4. Estimated cost is approximately $97,460.
5. Here will be my no-thought strategy:
risking a significant bankroll with a "no-thought" strategy of purchasing "deep value", "google-picked" companies ALL ON THE SAME DAY!!!! PRICELESS!!!
at least 5 flaws i see (and that's in the first few paragraphs of the first post of the thread)...
1. In my opinion there is deep value in this market as some of these companies have solid fundamentals that were just caught in the stampede.
2. With that in mind, I used Google Stock Screener to parse out stocks
3. I plan to buy 1000 shares of all the stocks that met this criteria the first thing Friday morning
4. Estimated cost is approximately $97,460.
5. Here will be my no-thought strategy:
risking a significant bankroll with a "no-thought" strategy of purchasing "deep value", "google-picked" companies ALL ON THE SAME DAY!!!! PRICELESS!!!
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David Dodds
Administrator
Yes this is it in a nutshell. Seems pretty damn stupid in hindsight.
Sand
Footballguy
This whole thing seemed to me to be like the high roller who sits down and starts playing at the .5/1 tables.If you want to delve into this stuff, there are proven mechanical strategies out there that do work. Take your blow off money from this and look at www.decisionmoose.com, for example. I and others have developed similar strategies with higher return profiles - backtested ans shown to work after discovery. The subject is long and deep - and unfortunately this effort was essentially skipping a piece of slate across the water.The DM site is a good place to start, though.
David Dodds
Administrator
I think crushing online poker is pretty damn hard these days as a cash ring player. I still win, but the win rate is pretty damn bad for the hours it requires. I was Supernova last year and logged almost all of my profits from the FPP bonus program. I was actually doing pretty well trading stocks earlier in the year, before I tried this random screener value type approach. I am still up considerably for the year even with this disaster and spending a ton less time than poker would require.I still enjoy a nice live game, but poker online has become tough to be a consistent big winner (at least for me). Others that can pull it off...Great for them.
Dentist
***Official FBG Dentist***
interesting. so UIGEA and possibly players getting better worsened those ring games considerably
gordon gekko
Footballguy
Dodds - Company valuations the past couple years have been a mirage. They were financed by DEBT spending. Consumers are broke. The US Government is broke.
"We simply cannot print or borrow our way out of this mess; the mathematics of the matter cannot be argued with. Prudent Americans who are not in debt will not take on debt to over-consume any longer, and those who are not prudent are unable to borrow to over-consume as the ability to foist off securitized toilet paper on suckers by the banks has permanently ended."
This does not bode well for the United States as a nation, much less what it says about the stock maket.
"We simply cannot print or borrow our way out of this mess; the mathematics of the matter cannot be argued with. Prudent Americans who are not in debt will not take on debt to over-consume any longer, and those who are not prudent are unable to borrow to over-consume as the ability to foist off securitized toilet paper on suckers by the banks has permanently ended."
This does not bode well for the United States as a nation, much less what it says about the stock maket.
Alias
Footballguy
so in summary, blue horseshoe no likes DD's stock picks?
Getinthemix
Footballguy
Are you referring to the 0.75% yearly investor fee? Something else? The potential high volatility due it being a double long?
David Dodds
Administrator
Bought 5,000 DXO at 2.80 as this sucker dived as I suspected. I will buy in more if this continues to slide downward
David Dodds
Administrator
Added another 5,000 DXO at $2.70
Sand
Footballguy
These leveraged funds all use an option strategy to try and duplicate the appropriate leverage on a daily basis. In reality what this leads to is a lot of trading activity (trading costs and slippage) and the funds typically don't track very well. Not to mention there can be tax consequences - you could have a big loss on the ETF and still be hit with big internal capital gains bills (all short term, of course).So a double long really isn't a double long. You're probably better off buying the regular ETF and levering it up yourself if you want to trade like this.Are you referring to the 0.75% yearly investor fee? Something else? The potential high volatility due it being a double long?
David Dodds
Administrator
and out with all 10,000 shares at 2.93. Damn this is like taking candy from a baby here.
Profit = 5000 (.23) + 5000 (.13) = $1,800. Not bad at all for doing absolutely nothing.
Profit = 5000 (.23) + 5000 (.13) = $1,800. Not bad at all for doing absolutely nothing.
Alias
Footballguy
looks like your strategy shares have turned it around today as well, I have not recorded any other purchases or sales since your original investment and my ticker is showing them only being down $655 on the day compared to about down $3k earlier.
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MrPhoenix
Ron Paul Soldier
Blue Horseshoe loves PowerShares DB Crude Oil Double Long ETN
Michael Fox Fan
Footballguy
What's your gameplan when, for the first time, you end the day down? Or do you have a set price target where you will sell each day?
David Dodds
Administrator
I think oil will go higher in the longterm. If it's down, I will just hold (or add shares) until it rebounds. That's why these trades feel right to me. I can't think of another stock that I believe will be up 60% by year's end. But oil futures are trading up 65+% at year's end right now. So I buy on the dips and if it rebounds fast enough I take the profit. I have just been lucky that I have been able to do these transactions all within a day. Some will likely take weeks to cover going forward, but I still expect these oil transactions will keep making me money.
