Stock Market Analysis August 16, 2013

Morning Stock Market Thoughts For August 16, 2013

— Futures are pointing marginally higher this morning. But in light of yesterday’s decline, it’s hard to put too much stock in these premarket moves. I will be watching price closely at the open to see if we get a V-shaped reversal, or if things continue to slide lower. The latter wouldn’t surprise me, which is why it might not happen.

Such is the life of an asset manager, I guess… :)

In these instances it’s always good to keep a close eye on market internals, too. I’m interested to see how IWM looks to SPY and EEM. Gold will also be interesting to watch. Keep an eye out for weakness in USD and TLT, which might be front-running a move lower in equities. Better safe than sorry, right?

Trading Thoughts On Stocks I’m Watching Today:

I’m feeling a little cautious about deploying more cash because of the diminished breadth on up days, and the broad weakness on down days. However…

— If SNV comes down down into the low 3.30’s I’ll probably add to my position (you’ll recall I sold at 3.50 two days ago). Otherwise I’m going to sit on my hands for this one. It held up very well yesterday given the broad market decline. I’m hoping to see positive follow through today as well. Call me crazy.

— FMD will be interesting to watch. It’s down over 45% in the pre market, so it will be interesting to see where it opens. I’m lucky I don’t have much exposure, having cashed out of my core position on the recent run up to 1.80. So I’m licking my chops at the opportunity to average back in. By the way, if you’re not up to speed: There’s a surprisingly good FMD summary at the Yahoo Finance Message Board – obviously take this with a grain of salt, but I think the analysis hits pretty close to home. The reaction seems overdone if you ask me. The company is not worth 50% less than it was yesterday, you know?

— BRKS has really taken a haircut since it’s third quarter earnings released. I need to read through the conference call to understand why their revenue (and profitability) took such a hit. The numbers look bad. But the BRKS franchise is still quite interesting to me and I’m curious to see if CEO Steve Schwartz can give some colour on the past, and forward guidance on anticipated earnings. I’ll try to write more in-depth about BRKS later.

— There’s a new article out on STLY: Stanley Furniture Rising From The Ashes with Lower Expenses. It’s a good summary of where things stand with this premium American furniture maker. But the fact still remains: We’re going to need to see the turnaround generate more earnings, before the stock price appreciates. Maybe there will be a temporary spike in price as large scale speculators take stakes ahead of earnings. And even if EPS doesn’t improve right away, STLY has enough cash to last many quarters. But any substantial “multi-bag” improvement will have to come from increased earnings, if you ask me.

Other Thoughts and Good Articles I’ve Read Today:

–Shipping routes don’t usually come to mind when people talk about global domination. But they play a very important role. So I take interest in China’s Northeast Passage. On the other hand, slowing in China seems like a real deal. So again, cautious is the way I’m erring.

— This S&P-500 chart shows a breach of the 50 day moving average. But keep in mind it’s often the slope of the reference point that’s more important than whether or not price slices through it at any given time. Besides, when everyone is watching one thing, it might be too obvious. Food for thought.

Oppenheimer maintains 1,730 S&P-500 year-end target, citing: “We would see a near-term pullback tied to profit taking and/or investor confusion as to when, what, and how much the Fed will “taper” as opportunity for rebalancing and adding to cyclical positions in existing portfolios.”

Stock Market End of Day Summary August 16, 2013

Most of my day was focused looking at FMD. I bought in at the open and sold around 2pm for a slight gain. I still have about 0.3% of my portfolio in First Marblehead just as a lottery ticket. I think the valuation looks great and the IRA situation looks like it’s not the end of the works. But there’s a small Vance that it is – so rather than take the portfolio risk I took the quick small gain and moved on.

I’m pleased to see SNV held up pretty well – even surging in the middle of the day. However…

I’m still pretty bearish on the overall market and have about 30% of my portfolio in cash. I’m happy with the valuation of my holdings but it doesn’t mean they can’t take a beating if the market is subject to a haircut.

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