The Profit Prophet

Bernanke came out today and said that another rate cut is imminent, giving us even further proof of what we've been saying all along. The funny thing is that he's going to lower it DESPITE our current inflationary state! Whats the effect here? It doesn't take a genius to figure this one out! EURUSD hit a new high today of 1.51! Unfortunately, it's starting to look like my trip to Europe this summer is going to be pretty costly. Last year around this time when I was in Europe, EURUSD was at 1.34 and I was complaining!

What does increasing inflation and weak dollar spell out? G-O-L-D! Now is the time, folks. If you aren't already in it or any precious metals, don't wait any longer! UXG is about to explode (it's been building cause for a while)... and so is my new favorite, ABX ! Take a look at this graph. It's a thing of beauty. (If you don't understand what I'm looking for, just read my older posts) From a more fundamental investor standpoint, they just announced tonight that they will be going through with a 2.6 billion dollar expansion project in the Dominican Republic where "Barrick estimates that the mine will yield 20.4 million ounces of gold, along with more than 400 million pounds of copper and more than 100 million ounces of silver." PLEASE do yourself a favor and make some money! Buy order limit 50.75 is what we want here! Risky but profitable option strategy: Long an April 55 Call and short an April 50 Put. If you want to hedge by shorting the underlying, be my guest!

On another note, PAAS has broken 41, meaning I was dead on with another stock (big surprise, right?) 16% in 2 weeks isn't bad... Set stops around 39.5 to be safe, but this thing is bursting through resistance levels with massive volume, meaning we could easily see it reach 44 before a retracement.

We've just had two GREAT days in the market... Especially great for my picks! (bull market?!!) However, due to the low interest rates and continued speculation that rates will go even lower, this has resulted in a weak dollar. Well, good news for all of my stock picks because Gold, Silver and other commodities can be used as a hedge against the weak dollar and inflation!

Maybe the Fed will eventually figure out a way to fix our current state of Stag-flation (increasing inflation with decreasing GDP) and add more stability to other segments of the market... But until then im bullish commodities and bearish tech/retail/banking! (besides stocks with good technical signals, *cough cough* my pick, AMAT *cough cough*)

For example, take a quick look at GOOG. This stock is down below 500 and even touched below 450 today! All signs point to the downtrend to continue. I believe we could see Google go beneath 400. The volume isnt lightening up and Fibonacci analysis shows its got a ways to go before reaching a bottom.

In other news, I finished the Excel worksheet of all the Alt Energy comapnies and will HOPEFULLY find some webspace soon. Its still a busy week, as I have a huge test in Portfolio Management tomorrow, but expect more posts after that. Time for me to run back to the library...

After a HUGE day yesterday with my stock picks (despite the Dow closing down), today has been another good day. Yesterday, PAAS closed up over 7% while BTU was up around 6%. Both ROY and UXG were up around 3-4% as well. Today, PAAS, ROY, BTU and UXG all finished the day up in smaller amounts. I just went through and checked the charts for thee stocks again and continue to believe that these stocks still have ways to go. ROY and PAAS look like they are about to break out, EVEN WITH the huge gains they have seen in recent days. BTU has been rising faster than expected, so I could expect a slow down. UXG, well.. we will just wait on this, because it hasn't received the volume needed to break through 3.5.

Another interesting pick I had a while ago (before this website) was CF Industries. In mid january this stock hit a low of around 90 and has since rebounded to 125! Charts look like this trend may continue a while longer before a retraction. I will keep my eyes on this in hopes of seeing formation of a new low point to buy at.

As far as the fuel cell portfolio is concerned, I have decided to integrate other green-energy companies to this as well. My hope is to find enough closely correlated stocks, that I can end up shorting some of the portfolio to create a hedged portfolio with low sigma. I will continue to be working on this for a while, so don't expect anything soon.

In other news, I have been working on my music production and now have a pretty 'legit' studio here in my room. After purchasing a new MIDI controller and downloading tons of new samples, my Ableton Live set-up is starting to function pretty nicely. As soon as I find some FTP space, I'll upload some of my latest tracks.

I'll start out by saying how rough the market today was today. Although nothing was down a substantial amount, each of my picks got 'owned'. Partially due to the fact that US consumer confidence fell, and also in part to the fact that there is still risk of additional write-downs from the big banks. These signs all mean that markets are still volatile, yet, I am still very bullish on BTU, UXG and PAAS. (Note, for you worried, long term investors: check out the US Treasury yield curve.. for you guys, we only have 3 more years until we reach stability!)

Today in portfolio management lab, we were calculating optimal risky portfolios. I found this exercise very useful, and now am going to apply my new knowledge of how to calculate the optimal risky portfolio among stocks of a sector, which I feel will be very profitable into the future, of Fuel Cell companies (thanks GEI board!) I will be working this weekend to create an excel spreadsheet, with graphs, showing the optimal fuel cell portfolio. I also plan on taking notes of the performance of this portfolio. In the mean time, it's Friday... I'm outta here.

Overall great bullish day in the markets. All of my current favorites (VIP, ROY, UXG, PBR, NOV, AMAT, BTU, PAAS) were up.

I was especially impressed with the fact that AMAT was up 10% for the day, after news on Bloomberg was released early this morning (when it was only up 6%). My father took my advice on AMAT a while ago and bought some 17 April calls, which have increased in value quite a bit since the purchase date. After applying some Fibonacci ratios to the ABC structure that AMAT has seen from its low of 16.13. I believe that the C to D leg, which we have just seen, has reached its peak. Point A (16.13) to B (18.9) was a total gain of 2.77, after a small price retraction to 17.1, we are up 2.8 to point D (19.91). A retraction would not surprise me at all, however, from analysis based off of historical data (102030 Test/RSI/Stoch/MACD) it seems like AMAT will still continue to go up.

Note, after yesterday's down day, BTU made a strong comeback up 5.5% for the day.

Silver futures prices have been in a steady upward trend since Mid-December, and with continued fed rate cuts still a strong possibility, I see silver's momentum to continue with a few retracements along the way. I checked over some silver stocks and found 'PAAS' which has a VERY strong correlation to silver futures prices, so I believe this will be strong well into atleast mid-2008. After running several technical tests on PAAS, it is apparent that this stock will go up. 102030 shows that the 10 day SMA is about to cross through the EMAs, while RSI, MACD and Stochastics show that bulls are taking over the price of the stock. I believe that last week's low of around 32.70 is the bottom of a new ABC trend. From mid-Dec until mid-Jan, this stock gained 9 points, so I believe that we will see something similar. I expect that PAAS is currently in the A to B leg of the ABC structure. Volume has been rising with price increases, so look for strong volume to drive the the price. As soon as there is a price retraction, I will use Fibonacci ratio analysis to predict the retracement and the C to D leg of the price. This is a BUY and HOLD.

It looks as if I overestimated yesterday's G7 news, because markets are ending the day up around 50 points. Comments by Hugo Chavez threatening US oil cut off, sent oil prices upward, leading to gains for oil/energy companies. Needless to say, included in this group of gainers was BTU, up over 5% for the day. So far, BTU is up 7.6% from my initial prediction less than a week ago. IPSU closed down 1.21%, while ROY, AMAT and UXG all finished with gains for the day.

It will be interesting to see how the markets play out tomorrow after comments made by today by G7 officials, warning of further financial market turmoil. Right now, Asian markets are getting slammed on this news, and I expect the same to happen to US stocks. G7 officials have mentioned there will be more rate cuts and tax reductions in order to spark economic growth. I expect a large down day tomorrow.

IPSU is now one of my favorite picks to sell! Today, there was a disaster at one of Imperial Sugar's refineries in Georgia where, sadly, 6 people died. The factory downtime caused by this event could have a serious effect on overall sugar production, as this refinery was IPSU's largest. I believe that sugar prices will increase, which will in turn raise expected earnings for all sugar companies, however, in IPSU's case I believe that the costs will outweigh the benefits, atleast for the short term, and result in the stock's price falling to around 16 by late March. 102030 test shows that IPSU is beginning a downtrend, and RSI, MACD and Stochastics are all trending down. I believe that a smart play would be to sell Feb 17.5 calls for 2.35 premium, and use that premium to simultaneously buy Mar 20 puts.

Also, BTU (my top pick right now) was up 2.22% for the day. 

 

After running through a bunch of different coal stocks (which is a strong industry right now), I found a good buy in BTU. It is showing quality volume, with high volume being a sign of a upward movement and light volume being the sign of downward movement. If we infer that ABC signs are an accurate predictor, we can place position A around Jan 22 B at Jan 28, C at Feb 6, so D must be 54+ in a week or so. After running the 102030 test, graphs show we are at a point of convergence. Although stochastic indicator is aiming downward, I believe a reversal is in order (see mid November's STO), as RSI is pointing up and MACD is on top of the signal line. (see graph below) A good strategy on this stock would be to short a 50 put and 70 call and use the premiums to long a 55 call. I am working on an Excel document that will track all of my picks with projected price, which I will put on the website as soon as I get my FTP up and running.

After the short lived rally last week, the beatings on the market have resumed with the dow being down 370 yesterday and 60 today. The blame for the latest stream of smacks to the market is new recession worries, as an unexpected contraction of the service sector served as a signal of fear for investors. Today, the main reason for the drop in stocks was due to falling oil prices, which had a negative effect on oil stocks. Gold futures rose on speculation that there will possibly be another rate cut, leading to a weaker USD relative to other currencies. How did this play out for my picks? Fairly sideways day with UXG, VIP and ROY having a small up day and AMAT and IPSU having a small down day. I will be going through new candidates tonight and will post as soon as I find something worthwhile.

One of the primary tests that I use and frequently talk about is the 102030 test. I discovered this test in 'Generate Thousands' written by Dr Samir Elias, and have seen great success since adopting it in my technical analysis of stocks. To gain further understanding of exactly WHY this test seems to work so well, I sent an e-mail to Dr Elias inquiring the techical reason for the success, which he kindly responded, "While one of the reasons that the 102030 test works is that many traders use either the SMA(10) or EMA(20) as a criterion for buying or selling, there is a logical reason why the 102030 test works well. Exponential moving averages place more weight on latest data so they are a reflection of a shorter term trend, while the SMA weighs all data points equally reflecting a longer term trend. Due to volatility of shorter term moves using only the EMA(20) or EMA(30) will result in false signals. When both are used they tend to reinforce each other resulting in much less likelihood of being fooled by volatility and false signals. Combining the three together indicates that both the shorter term and longer term trend are coherent giving much better results. I have tested several moving average combinations using a trade simulation program I setup and found this to be one of the best" The combo of this test on stocks with a strong industry group as well as upward trending stochastic movement has proved itself successful thus far. I will continue to use this to time my trades, and hope that there is something as good in the book I just ordered, Tom O'Brien's "Timing the Trade".

So it looks like I NAILED ISRG as hard as possible... I was busy Friday and didn't have time to check my stock picks until now. ISRG closed on Friday up 51.61 pts. Yep, that is 20.32% in 1 day, folks. I would advise a stop loss on this at 300. Let's see this happen with UGX this week. So far, The Profit Prophet is on target :) I have attached a chart as well. -as a side note, I want to test my technical prediction ability... I think VIP looks very attractive (short term) from a technical standpoint. 10 day SMA is curving upwards and MACD line is growing further from the signal line. I predict to see VIP hit 38-40 range within the week... (note: at 35.80 as of 2/2) Although I am not officially endorsing this stock as a BUY, I believe that there will be an upward movement and want to test my hypothesis.-