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My Stock Value Strategy Starts Now (3 Viewers)

I've got an average of 9.23 for quite a bit less than 6k shares...

My OIL position (which is my largest, and the one I'm longest on) is taking a BEATING... average cost of 19.30 and it's trading at 17.65 right now. Thankfully, it's less than 10% down, but I gotta be optimistic and think that OIL will bounce back at some point during spring.

 
Not the daytrader that many of you are here. Been playing in fits and starts since mid January. Representing the patient side of this equation, especially since I lean toward the greedy side of timing the market :yes: and betting on oil is still a longer term prop for me. Not happy to have not taken profit yesterday (or this morning), but the pressure to see crude higher by the supply nations is still a major factor for those long oil. May have to wade through a crappy inventory report tonight/tomorrow, but I think we'll be back in the green soon enough.

Cost averaged a little over 9.00 now (from 9.30 this morning) in UCO and still averaged at 2.50 in DXO.

David, let's get Keith to get us a RallyMonkey smilie. :lmao:

 
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The volume right now on UCO is HUGE. It's about 3X normal at 25.8 million shares traded today. The fact that the volume is at it's highest now while this price is the lowest bodes well for a bounce here before the close.

 
The Z Machine said:
I've got an average of 9.23 for quite a bit less than 6k shares...My OIL position (which is my largest, and the one I'm longest on) is taking a BEATING... average cost of 19.30 and it's trading at 17.65 right now. Thankfully, it's less than 10% down, but I gotta be optimistic and think that OIL will bounce back at some point during spring.
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I got my whole wad in at 19.50. Not much to do but wait it out.
 
David Dodds said:
The volume right now on UCO is HUGE. It's about 3X normal at 25.8 million shares traded today. The fact that the volume is at it's highest now while this price is the lowest bodes well for a bounce here before the close.
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I was taught differently vis a vis volume and lows, but I hope you are correct.
 
If I were a betting man (and clearly I am), I think OPEC announces a deeper cut before middle of March. They know it's in their best interests to try and stabilize the bottom here. Although it sucks to be down a little here (I am down 15 cents a share on 6,000 shares), but there is a side of that is giddy on the profit I stand to make on this rebound.

 
David Dodds said:
If I were a betting man (and clearly I am), I think OPEC announces a deeper cut before middle of March. They know it's in their best interests to try and stabilize the bottom here. Although it sucks to be down a little here (I am down 15 cents a share on 6,000 shares), but there is a side of that is giddy on the profit I stand to make on this rebound.
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Let's hope that rebound is high enough to eek some profit out for us that got in at the upper levels.
 
Out at $2.54 on 5K DXO. I still hold 5K at a cost of 2.67. Still hold 500 UCO at 9.30. Will keep an oil bet on, but need to lighten up on the weight. Would like to see evidence of a sustained oil rally. Closing this far below 40 isn't the harbinger I was looking for.

DOG making new highs on the day. Going to sell half of my position into the close.

 
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I guess we all wait for another day. I actually made money today (on the assets I sold), but I am upside down on everything in my portfolio. Brutal day in the market.

 
The Z Machine said:
General Malaise said:
The Z Machine said:
General Malaise said:
Actually, I'm going to keep DOG in play. Avg cost is 73.88, so this isn't anything to breakdance to...
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DOG is the S&P short, right?
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DOW Industrial
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Smart play today, but how did you know the market was gonna take a crap?
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I didn't play it today, I played it back on Jan. 23 at 73.88, so I haven't really tonned it here.I remain bearish on the markets and have been for a decade. I left a short biased hedge fund last year that essentially did nothing but short stocks, including be way out in front of the sub-prime meltdown and rolling those winners into short positions against the financials. So by nature and quite possibly nurture, I'm skepital about the health of the markets and think there remains to be some excess wrung out of the Dow, which held up better than the S&P and NASDQ since 2000.

My macro view coming into 2009 was that oil, gold, silver and a handful of other commodities would rally hard as inflation and fear drove people to safety and out of a market of equities that burned the hell out of them last year. I think the Dow will not only test but will break its closing low of 7552 set on Nov. 20, 2008 and if it does, think it could go quite a bit lower. We don't get back to back down Dow years, so I think this is the year we do get one.

So, short Dow, long oil, gold and silver.

Once Lehman and the like are done selling Uranium into a very thin market, I will begin accumulating Uranium in the form of Uranium Participation Fund (U.TO).

 
Profit Today = $1,240 (UCO) - $400 (DRYS) - $24 commissions = $816 profit

Year to date profit = $17,117

I hold these positions into tomorrow:

6,000 shares of UCO @8.86

1,000 shares of PRGN @5.73

1,000 shares of ESEA @5.49

2,500 shares of EXM @8.25

3,000 shares of SBLK @3.04

At current prices, I am upside down on these securities to the tune of $3,870. I love the sectors and am not going to panic here.

 
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adonis said:
Are any of you doing this as a primary job, or is this with discretionary income, or retirement...?
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Not my job, 100% discretionary income.I used to basically trade for a living (back in 1999-2000), but I aged 10 years in the 10 months I did it full time and wouldn't do it again (or recommend it to anyone)
 
General Malaise said:
The Z Machine said:
General Malaise said:
The Z Machine said:
General Malaise said:
Actually, I'm going to keep DOG in play. Avg cost is 73.88, so this isn't anything to breakdance to...
Click to expand...
DOG is the S&P short, right?
Click to expand...
DOW Industrial
Click to expand...
Smart play today, but how did you know the market was gonna take a crap?
Click to expand...
I didn't play it today, I played it back on Jan. 23 at 73.88, so I haven't really tonned it here.I remain bearish on the markets and have been for a decade. I left a short biased hedge fund last year that essentially did nothing but short stocks, including be way out in front of the sub-prime meltdown and rolling those winners into short positions against the financials. So by nature and quite possibly nurture, I'm skepital about the health of the markets and think there remains to be some excess wrung out of the Dow, which held up better than the S&P and NASDQ since 2000.

My macro view coming into 2009 was that oil, gold, silver and a handful of other commodities would rally hard as inflation and fear drove people to safety and out of a market of equities that burned the hell out of them last year. I think the Dow will not only test but will break its closing low of 7552 set on Nov. 20, 2008 and if it does, think it could go quite a bit lower. We don't get back to back down Dow years, so I think this is the year we do get one.

So, short Dow, long oil, gold and silver.

Once Lehman and the like are done selling Uranium into a very thin market, I will begin accumulating Uranium in the form of Uranium Participation Fund (U.TO).
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I have a similar view. I've made money writing puts on GLD, lost most of that back in USO and DBO, just getting in on SLV. I'm up a bit in my SEP IRA for these trades. That's where the majority of my money is going right now.The UCO I traded today was on a smaller Scottrade account and I also have a small ThinkorSwim account for my other small speculative plays.

 
adonis said:
Are any of you doing this as a primary job, or is this with discretionary income, or retirement...?
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I have a bunch of money set aside to buy a house. But the Real Estate market where I am at makes buying now very foolish. So I am gambling with this money while I wait. Alternative was to put into a CD or something and that seemed silly too.
 
OK the more I look into the oil stuff, the more I think this sell off is goofy:

Here is where the market sits at the close today:

March crude: $37.55/barrel

April: 43.76/barrel

May: 46.76/barrel

June: 48.41/barrel

July: 49.70/barrel

The March to April swing is a whopping $6.20/barrel. That makes NO SENSE. The 5 month contango is $12,but you would get half of that back to take possession of the oil and then selling it back. Oil tankers charge about $1.25/barrel to store it on their Super Tankers. This seems like an easy opportunity for a rich investor to buy up this month's oil, hold for less than 30 days and make a small fortune (about $5/barrel)

OPEC is cutting production again.

The Stimulus will jumpstart some projects

China's economy is already showing some signs of slight recovery.

All the exotic deep drilling, etc have been halted.

The same issues that drove oil to $147/barrel still exist now (yet we don't feel it because the world economy is down.

I don't have a lot more room to maneuver (unless I buy on margin), But I may very well be adding to my oil shares in the morning.

 
"China's economy is already showing some signs of slight recovery."

I have some concern about the trade numbers that come out tomorrow morning. If China's exports are significantly down, that could have a huge effect on prices of oil. I am long oil, but wouldn't be suprised in the immediate short term if oil decreases further.

 
It seems things are correcting a tad in the after-market (if it holds):

UCO is now at 8.90 (+2.19% in the after-market). The significant gap between March to April while the remaining months are tightening makes zero sense. UCO is definitely the best play of the oil related stocks too, based on the aftermarket numbers:

UCO (+2.19%)

DXO (+0.80%)

OIL (+0.17%)

USO (+0.63%)

 
I found a blurb embedded in an article that was interesting and could be pertinent to your observations, David. I found this on seekingalpha.com:

The United States Oil Fund (USO) is now so large, it contains more than 20% of the outstanding March crude oil futures contracts (West Texas Intermediate, or WTI). Now, being an ETF, it does NOT want to take physical delivery of that oil. So at some point each month – and that would be the 5th, 6th and 7th business days of the month – it rolls over their entire set of contracts to the next month – putting undue, abnormal pressure on the oil price those days. The Goldman Sachs Commodity Index does the same thing every month, but on the 6th, 7th and 8th business days. Roll dates are usually published in advance – USO provides theirs on their website.
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Today was the 7th business day of the month. I tracked USO back 6 months or so and it seemed there were significant drops on or around the 5th-7th day each month. (caveat = this thing is so volitile you could likely pick any 3-day period of the month and find some drop correlation)This leads me to believe that we should expect a dumping around this time every month.I don't have time right now, but it would be interesting to research the % of contracts the other ETF's have, and the dates that they roll-over. Those numbers likely correlate well with drop in oil prices and drops in other oil ETF's and other oil related stocks. Presuming those drops are short lived (from the dumping of oil contracts) buying opportunities await.
 
Good article from Bloomberg

I am holding out to see the inventory report:

The industry-funded American Petroleum Institute reported that U.S. supplies declined 2 million barrels to 344.3 million last week. The API published its weekly report on oil inventories at 4:30 p.m. in Washington on Tuesday.

Energy Department figures, to be released at 10:30 a.m. in Washington on Wednesday, may show that crude-oil stockpiles increased 2.75 million barrels in the week ended Feb. 6 from 346.1 million the week before, according to the median of 14 analyst estimates. It would be the 18th gain in 20 weeks. All of the analysts said supplies rose.

-------------------------------------------

For those scoring at home, API stated that there would be a huge gain while the analysts had said it would be this same 2-3 million gain for last week. The EIA report confirmed the API report when the official report was released. If stockpiles reduced this could lead to a big rally for oil today. Also watch the news regarding the stimulus plan. If that looks like it will get through the HOUSE soon then that also could cause a bump. I think we are in for a great rally today. My only question now is where do I set my sell targets at if we get a great inventory report?

 
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The Dry Shippers and Why I Love SBLK and EXM

Shipping rates are determined based on the Baltic Dry Index (BDI). This index has been on the move lately and is generally seen as a precursor to economic recovery. This index has risen 17 straight days and now sits at 1,978. This is a far cry from it's May peak last year when it topped 11,000, but it's also moved up considerably from it's December 5th bottom of 663. The BDI was last around the 1,978 level on October 13th when it closed at 1,974.

I decided to look at the various shipping companies through these stock closing data points (yesterday's close, Oct 13th, and the bottom on Dec 5th). I am hopeful this will indicate the companies that likely could see the biggest gains as we approach the likely BDI peak this year in May/June. I also decided to compare these companies to SEA (the Dry shipping ETF that holds all of these companies)

SEA (This ETF Index by definition is correctly valued)

Feb 10th - 11.11

Oct 13th - 13.20

Dec 5th - 8.63

EXM (Very Undervalued)

Feb 10th - 7.48

Oct 13th - 14.75

Dec 5th - 3.70

SBLK (Very undervalued)

Feb 10th - 2.77

Oct 13th - 6.01

Dec 5th - 1.80

PRGN (Correctly priced)

Feb 10th - 6.00

Oct 13th - 6.55

Dec 5th - 3.85

ESEA (Slightly undervalued)

Feb 10th - 4.98

Oct 13th - 6.42

Dec 5th - 3.99

GNK (Correctly priced)

Feb 10th - 18.69

Oct 13th - 19.36

Dec 5th - 7.50

DSX (Correctly priced)

Feb 10th - 15.03

Oct 13th - 15.37

Dec 5th - 8.09

In my opinion, EXM and SBLK look to be the big winners in this space going forward. I plan to look for a spot to sell ESEA and PRGN while adding to my EXM and SBLK positions going forward. I expect both of these companies to double in price before May (assuming the BDI continues to move upward as expected).

 
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Doing some complex algebra and 5 data points for EXM and SBLK compared to the BDI, I value these companies at the following levels right now:

EXM = 10.86

SBLK = 4.38

This does get a bit messy though as dividends have been canceled for most of the Dry Shippers. I suspect they will be turned back on though once we get through the bad earnings reports over the next few months when BDI was at/near it's bottom.

But even if we discount the above stocks at 20% due to dividend change, then EXM would be valued at 8.69 and SBLK = 3.50. And guess what, this is close to where these companies were trading at on Feb 9th before the massive selloff. If the BDI is up in the morning, I will be tempted to buy more of both of these companies as I think this rally is going to be super aggressive (and profitable).

 
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If the stock price of these companies can so easily be predicted by a single variable (the BDI), then why haven't more people discovered this and affected the value accordingly? IMO, any time there is a single variable that explains the value of a particular stock, it's probably too simple and the system is far more complex with more variables at play.

How has the BDI tracked with the value of these companies in the past? Is it a better indicator that the market as a whole, or the transportation sector as a whole?

There's a lot of people spending a lot of time investigating a better predictor for certain stocks, sectors, and the market as a whole. What make you think that this simple prediction can out-do them?

BTW, I'm with you and already own a bunch of OIL and SBLK.

 
The Z Machine said:
If the stock price of these companies can so easily be predicted by a single variable (the BDI), then why haven't more people discovered this and affected the value accordingly? IMO, any time there is a single variable that explains the value of a particular stock, it's probably too simple and the system is far more complex with more variables at play.How has the BDI tracked with the value of these companies in the past? Is it a better indicator that the market as a whole, or the transportation sector as a whole?There's a lot of people spending a lot of time investigating a better predictor for certain stocks, sectors, and the market as a whole. What make you think that this simple prediction can out-do them?BTW, I'm with you and already own a bunch of OIL and SBLK.
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The BDI just sets shipping rates. Companies can still lose money by locking in contracts at the wrong times, how they manage their company, etc. The BDI represents the daily spot rate for these companies. It is influenced by demand. When it goes up, profits should rise (assuming close to fixed costs), but this far from exact of course.
 
The Sniper said:
"China's economy is already showing some signs of slight recovery."I have some concern about the trade numbers that come out tomorrow morning. If China's exports are significantly down, that could have a huge effect on prices of oil. I am long oil, but wouldn't be suprised in the immediate short term if oil decreases further.
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China January exports came in -17.5% year over year. Consensus was +14%. I think oil is going to get killed today. I hope I'm wrong.
 
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