Morning Stock Market Thoughts For August 14, 2013
— Another morning and futures are meandering around again, just shy of positive. We’ll see how they act as the open approaches, for more insight. There doesn’t seem to be any significant news items overnight, so for my stocks it’s more or less steady as she goes.
— The only thing I want to point out is the news of the Eurozone climbing out of recession. Who knows what this data really means, and if it’s at all sustainable. But just something to keep in mind. For more actionable perspective, check out ChessnWine’s new post about Europe on the back nine.
Mid-Morning Update: It looks like the market is hanging in there for now. Emerging markets (EEM) continues to look strong. And it’s always good to see IWM outperforming the SPY (even if they are both slightly negative). For now, bonds (TLT) are also stabilizing. And since the dollar hasn’t continued to fall out from under us, we might just make it through the session. There were lots of articles this morning predicting the “6th day down in the last 8 trading sessions.” So we might just see those headlines faded.
Trading Thoughts On Stocks I’m Watching Today:
I know you might be getting bored watching the same stocks everyday. But this section keeps my game plan on track. So call me selfish if you must. But understand:
I’ve invested in these stocks because of their fundamentals. I try to stay on top of the technical analysis on any given day, but I’m bullish over the longer term and comfortable owning these stocks for a few years (or until they become overvalued).
So here’s a recap of where we stand
— SNV – closed at the highs of the day yesterday. A continuation day higher would afford me the opportunity to take some gains (and rotate the money back in on a subsequent pullback) – but I’m not holding my breath and wouldn’t be surprised if daytraders push the stock lower.
Update: I sold 1/4 of my SNV this morning. We’ve previously seen strong resistance at 3.50 and I was pissed that I missed the chance to ring the bell Monday when it ticked up in the morning. Plus, the ask volume is enormous right now…. So… If the stock pulls back 2-3% I will jump back in. Otherwise my 3/4 position and call options are enough upside exposure me thinks. By the way…
This should give you an idea of my trading style. I like to follow certain stocks that I think have strong growth narratives and robust fundamentals. Then I do my best to trade in and around the price fluctuations. I guess there is some risk with this lack of diversification, but I usually have about 10-30% of my portfolio in cash, which gives me room to move around.
— FMD – held up yesterday on better than expected volume. I’m still long, but would like to see a pullback to the 1.40 level. Depending on price action I might consider adding more at 1.55ish (where the stock has had support recently) but at the end of the day I’d like to leave a bigger margin of safety between my purchase price and the NAVPS
— TINY – was disappointing to see this sell off after the conference call. Someone unloaded about 50,000 shares on the open market yesterday afternoon, sending this low volume stock careening lower. It’s only technical damage (the fundamentals remain unchanged) but it’s disappointing to see this stock get pushed around. In the meantime, management continues to make modest share purchases and seem to communicate they are frustrated with the value trap as well. But that just means misery loves company, not that anything is going to happen anytime soon. Update: I don’t put too much stock in this mid-morning move higher. I’m sure it will fade later. But for now I’ll take a couple of cents where I can get them.
Other Thoughts and Good Articles I’ve Read Today:
— This is old news by now. But I’ll weigh in anyways: I’m excited to see Icahn making a play with AAPL. I am sure there is more shareholder value to come. Long from $400.
— The producer price index data came in flat, missing expectations. The PPI acts as an indicator for commodity prices – so we’ll be on watch to see if material-related stocks are hit.
— I mentioned my interest in IAG yesterday. It’s almost unbelievable to me that the stock is continuing to make significant moves higher. I guess that’s why it is. Plus, when you’re down 50% YTD you need a 100% improvement to get back to even, so big moves should be expected. Still, lots of people are trapped in these gold stocks I imagine. And a V-shaped reversal higher seems like too easy of an answer. I’m interested and might try starting a position on the next dip.
— Stanley Furniture (NYSE: STLY) is teaching us a lesson in patience. The stock failed to impress after the last quarter. It seems like investors are impatient and don’t believe the company can ever turn around. While that presents a big buying opportunity for interested contrarians, it’s worth nothing that this process can take a number of months. You may not want to risk tying up your capital for so long trying to pick a bottom. I will wait until the technicals start to improve before deploying more cash.
Market Close Stock Analysis August 14, 2013
All in all it was another pretty boring day, to be honest. After my morning sale in SNV, I was happy to see the stock retreat. If there is more selling tomorrow I’ll likely scale back in. I see blue skies above $3.52. But sustaining a move above that level hasn’t been easy. Keep patient.
I was happy to see TINY recover losses and end the day neutral. From monitoring the bid/ask spread for half the day, I noticed a pretty consistent bid around $3.05-3.07 – for now I’ll keep this in mind as a tradable bottom.
I meant to pick up a token amount of FMD at the end of the day, but I was in a meeting and missed my entry. The company doesn’t announce earnings until after the bell tomorrow. So unless there is exuberant buying ahead of the release, I’ll try to buy a position on continued strength. I noticed that FMD has announced a new president. And I can tell you that Dan Meyers would not have left the ship in this guys hands unless he was totally comfortable. I’m not saying this signifies an immediate return to the securitization market tomorrow. But I think the positive writing is on the wall.
It was interesting to see AAPL outperform relative to the market. The relationship, YTD, has almost been inverse. Go Carl go!
As for the laggards…
STLY is decidedly a dog. And one with fleas, at that. I might consider averaging down in my position as the stock approaches the $3 mark. My cost basis is still quite good so I want to be careful about adding prematurely. This company could still require a few quarters to complete the turn around (if it all). And I don’t want to tie up capital for undue reasons. The worst part is…
I was hoping STLY was going to be a beneficiary of the housing recovery. Unfortunately, XHB and ITB have really lagged as of late. I think STLY can still benefit. But if they aren’t careful the ship will have sailed without them.
Last of all, I’m still watching gold closely. Until proven otherwise, I’m inclined to call this a bear market rally. That said, IAG had another interesting day. These huge moves up on big volume are perplexing to me. It feels like distribution but it also looks like heavy buying. I still think we have not seen the last of overhead supply.