Weekly/After Stock Market Review Archives

Market In Need of Some Roger Clemens Juice; Stock of Day – Balchem (BCPC)

Leave a comment

It was a great day for bulls on the surface with a better than expected retail number (although in part fueled by rising gas prices) and not as bad as expected results from Applied Materials (AMAT).  Near the bottom, the market looks for excuses to rally and I think there was certainly some of that today but I don’t think we’re out of the woods from testing the lows of this correction. 

There continues to be no leadership.  When I’m running through my watch lists on a day the market rises nearly 200 points and have a hell of a time finding good buy candidates, I know it’s still not a healthy market.  That’s exactly what I’ve been seeing over the past few weeks.  Sure there are pockets of strength in some of the metals, railroads, coal, etc but most of the stocks moving are those that have been beaten down the most. 

The brightest red flag of the day was in the volume levels.  Institutions just aren’t putting big money to work as buy volume continues to trickle in at below average levels.  You want to see some gusto on a day like today, but it just wasn’t there.  There is a good chance of pushing a bit higher, but combine the lack of leadership with the lack of volume and the long side remains a dangerous place to play.

The Nasdaq cleared that first steep downward trend today with light volume.  Considering the Nasdaq reversed off its highs yesterday with increasing volume I was a bit surprised at today’s move and in hindsight regret closing my QLD positions   This move sets up a move to the next resistance area at the Jan highs around 2425, but given the lack of buy volume recently, we may need to pull back first and test that developing short term upward trend line (in green).  Keep an eye on the green line.  If we take that out, I think there is a very good chance of testing the lows of the correction or worse.

The S&P has yet to clear that first downward trend resistance and may have a tough time doing so given the lack of buy volume.  If it does clear, look for a retest of the next resistance level around 1400.  Also, keep an eye on the short term upward trend developing off the bottom – again, if we take that out there is a decent chance of testing the lows of the correction.

s&p 500

The Dow is a near replica of the S&P in terms of support and resistance.  Notice the downward slope of buy volume.. not what you want to see in a strong market.

 

::: Major Indices Performance – The Numbers :::

(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST – End of Day February 13th 2008

Nasdaq: UP 2.32% today with volume 7% BELOW average
Nasdaq ETF (QQQQ) 2.19%, volume 14% BELOW average
Dow: UP 1.45%, with volume 8% BELOW the average
Dow ETF (DIA): UP 1.2%, with volume 25% BELOW the average
S&P ETF (SPY): UP 1.02%,  with volume 21% BELOW the average
Russell Small Cap ETF (IWM): UP 2.05%, with volume 12% BELOW the average

::: SelflInvestors Leading Stocks :::

The Self Investors Leading Stocks Index is comprised of stocks in the Breakout Tracker, which is a database of the fastest growing companies near a breakout or having already broken out of a base.  Leading stocks performed about in line with the Nasdaq and Russell today and also saw little conviction on the buy side

Summary:

* Advancers led Decliners 197 to 34
* Advancers were up an average of 3.03% today, with volume 10% BELOW average
* Decliners were down an average of 1.37% with volume 31% above the average
* The total SI Leading Stocks Index was UP 2.38% today with volume 4% BELOW average

::: Where’s the Money Flowing :::

Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes be misleading.  The only way that I know of to gauge industry/sector strength WITH volume levels is through the analysis of ETF’s.  A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for gauging the health of the market and seeing where the money is flowing (or not flowing).  Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors/industries are seeing the greatest inflows of cash.  For a detailed look at how I go about gauging sector/industry strength please see the following post: http://selfinvestors.com/si/industry_tracking/

* Current Leading Sectors/Industries (over last 30 trading days):  
Agriculture, Commodities, US Oil, Materials, Gold
                                          
* Current Lagging Sectors/Industries (over last 30 trading days): 
Broadband, Health Care Providers, Aerospace/Defense, Utilities

* Today’s Market Moving Industries/Sectors (UP):
Clean Energy, Oil Services, Dynamic Oil & Gas, Broadband, Semis, Internet Infrastructure

* Today’s Market Moving Industries/Sectors (DOWN):
Bonds, Health Care Providers

::: Stocks :::

The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average and most likely breaking out of a base or consolidation.  It’s been quite some time (last featured Parexel (PRXL) since I featured a Stock of the Day here as the market just hasn’t yielded many quality candidates, but as the market pushes higher off a bottom, a few more leading stocks are beginning to move up with significant volume (although leadership is non existent at this point and caution is urged).  I try and highlight stocks in this section that most people aren’t talking about but "could" be talking about (hopefully after you’ve already pocketed big gains).  Today’s stock certainly fits the bill – Balchem Corp (BCPC), a diversified specialty chemical company.

ABOUT: 

Balchem Corporation (Balchem) is engaged in the development, manufacture and marketing of specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical and medical sterilization industries. The Company has three segments: specialty products, encapsulated/nutritional products and the unencapsulated feed supplements segment (BCP Ingredients). The Company operates four subsidiaries, all of which are wholly owned: BCP Ingredients, Inc. (BCP), Balchem Minerals Corporation (BMC), BCP St. Gabriel, Inc. (BCP St. Gabriel) and Chelated Minerals Corporation (CMC). In August 2006, Balchem acquired from BioAdditives, LLC, CMB Additives, LLC and CMB Realty of Louisiana, an animal feed-grade aqueous choline chloride manufacturing facility and related assets located in St. Gabriel, Louisiana. In May 2007, the Company completed acquisition of the European-based choline chloride and methylamines businesses of Akzo Nobel Chemicals S.p.A. in Marano Ticino.

It’s a bit difficult to get a good grasp of what this company actually does but SmallCapInvestor.com recently wrote an outstanding research piece on the company.  It does require registration to read the entire article but it’s worth it if I’ve piqued your interested.
FUNDAMENTALS: 

Balchem (BCPC) is a diamond in the rough with the combination a history of strong earnings growth but virtually no Wall St. coverage.  That’s a good thing for self investors like you and I because once Wall St starts covering it with more analysts, the stock will continue to rise in my opinion.  Over nearly the last decade, this is a company that has posted year over year revenue growth in each and every year.  With the exception of 2003, it has done the same with EPS growth with an average in the 20 – 25% range.  That’s expected to continue in 08 with estimates calling for growth of 23%.  Margins have been quite good throughout it’s history, fluctuating between 10 – 13% and well above the industry average.  Return on Equity is more impressive at 19% indicating a strong management team.  All in all, this company isn’t an exceptional grower but one with exceptional consistency for such a small company. 

TECHNICAL:  

BPCP is a thin stock, trading just 70K shares a day so it will be prone to higher volatility on a day to day basis.  Over the long term though, this is a stock that has been in a steady uptrend for several years now, dating back to early 1999.  In that time, the stock has soared from just 1.50 a share to its current levels above 20.  Wow!  Taking a look at the daily chart below, you see that the stock broke out to a new all time high in December.. .then the market sell of hit and BCPC was far from immune.  It brought the stock back all the way to its long term upward trend line where once again (as it has for the past 9 years) found support and is again chugging right along.  Today, it surged again off that 200 day moving average with very heavy volume.  It probably goes on to form a new base from this point point forward but I’d be looking to add shares on any pull back from here as close to support levels as possible.  This is the kind of stock that is good for scaling into.  Adding small positions on pull backs.  Then, should the market get going again and the stock breaks out from a new base, you can add shares their as well with a nice profit cushion in the bag.

 
SELFINVESTORS RATING: With a total score of 50/60 (25/30 for fundamentals, 25/30 for technical), Balchem (BCPC) is a very good SelfInvestors leading stock and should be near the top of any watch list.

Full Disclosure/Disclaimer: The stock of the day is by no means a buy recommendation.  Please do your own research and make a personal decision based on your own tolerance for risk.  I currently do not own a position in Balchem (BCPC). 

Personal Development

Focus on the Present to Improve the Future

2 Comments

With great pleasure do I bring you the first article from Lance Chastain, a serial entrepreneur with years of insight, lessons and Observations just itching to get out.  I discuss much about investing/trading here at SelfInvestors while Lance provides a nice compliment to that  with conversations about his experiences that I think we can all learn from to achieve success not only in trading but whatever it is we do.  I know from speaking with Lance that he’s very excited about sharing his experiences to my readers and I hope that it provides a starting point for further dialogue. 

Observations by Lance Chastain

"If you pay attention to the present, you can improve upon it. And, if you improve on the present what comes later will also be better. Paulo Coelho, The Alchemist

Over the years I’ve kept substantial notes from my personal and business experiences….what I’ve come to call “Observations”. I suppose they could be called just about anything….lessons, perceptions, views, insights, considerations…but I prefer Observations. I like the term Observations because it implies a strong sense of active, continuous, hands on, engaged personal learning. I’ve come to appreciate how differing choices within similar circumstances broadened and enhanced my Observations in very subtle, almost imperceptible ways. As with the serious study of any subject, Observations require personal attention, interest and commitment and connote a more-than-casual sense of study or review…sort of like being face to face with customers, suppliers, employees in “hands on” mode vs. sitting in an office in front of a computer screen reviewing reports possibly generated by someone else. 

My interest in sharing Observations gained from my experiences through the opportunities and challenges of my personal and professional life is born from a genuine desire to see others prosper in every aspect of their lives. I’ve had the pleasure (and challenges for those in supervisory, management or leadership positions reading this) of leading and working with thousands of people in all kinds of situations over my 25 year business career. I’ve traveled extensively in Asia and worked there for extended periods (my wife would say I lived there from time to time). During my trips to Asia from the later 80’s and all throughout the 90’s I participated extensively as the now massive Chinese economy took its first baby steps, which quickly grew into giant leaps, towards becoming the powerhouse it is today. I’ve experienced the pleasure of being the recipient of numerous local, regional and national business awards, as well as being featured by CNN in a nationally televised segment entitled “Entrepreneurs Only”. I’ve also experienced the broken trust, painful loss, intense personal struggle and significant conflict that comes with the territory of Chapter 11 bankruptcy and losing nearly everything; and through the process developed a rather intense understanding of the old axiom “Success has many authors…failure has only one orphan.” I also know what it is to struggle through the necessary, although very difficult, inner personal work to keep proper perspective through tough times, begin again, have others believe in you (even when they have no tangible reason to) and be given the opportunity to apply all that was previously learned (for you golfers the best mulligan you could imagine) ultimately resulting in a level of success, benefits for my family and personal satisfaction occurring more rapidly than I ever thought possible.

I consider Observations to be one of the best tools, if not the very best, to help guide us through life’s experiences. Sort of like our ever present, internal, personal compass for navigating both the present, and more than likely somewhat familiar surroundings, to those situations that await all of us in the future. For some reading this, particularly tough circumstances may await you….if so, Observations can serve as critical lifelines to make it through.

And you know what? We all have them. But how many of us really take the time to carefully analyze what we’ve been through, process and record our Observations in order to apply them successfully in the appropriate circumstances later? For those of you that have, I congratulate you. I would imagine your own personal Observations may have come at a great cost and no matter what you may call them, they are treasured possessions, never to be taken away and always useful. For those of you that have not, I’m going to encourage you to begin!

By now you’ve figured out that I’m capitalizing Observations every time I use it. This may annoy some of you, so I apologize in advance. However, if you choose (and I really hope you do) to continue reading and communicating with me through the blog, my hope is that you’ll begin to think in terms of your own personal Observations and their importance (thus the capitalization) and how they’ve impacted your life for the better. For those whose blind spots have led them out into the weeds of life and possibly failure, I’ll be challenging you to work on honest, objective and constructive Observations in order to move forward right from where you are with better choices and decisions to benefit yourself and those around you.

To be continued next time….

Lance Chastain Author Bio

My entrepreneurial business career spans 25 years and is both domestic and international in scope. I quit college to co-found my first business at the age of 20 and subsequently received the education of a lifetime during the next 17 years. I was blessed with the opportunity to apply that education in my second business and am now semi-retired at 45. I’ve traveled to 27 different countries and have extensive experience in Asia involving nearly every aspect of raw material sourcing, manufacturing, operations, procurement and logistics. I’ve been the recipient of numerous local, regional and national business awards and been featured on a nationally broadcast financial news program. You can reach me at lchastain1 at cox.net but it’s best to leave comments about the article in the comments section below.

Solar

Gaiam (GAIA) to Spinoff Real Goods Solar (RSOL)

1 Comment
Late last week, Gaiam Inc (GAIA), the everything "green" retailer announced plans to spinoff its Real Goods Solar unit (to trade under RSOL on the Nasdaq) which installs residential solar energy systems in California, which claims 2/3 or the residential solar market.  If you’re a big believer in the green movement like I am and believe it can provide outstanding returns to your portfolio over the next decade (like I do), then Gaiam (GAIA) is a company to watch and this spinoff may just give the stock an additional pop over the next few months.  Yes, solar isn’t as hot as it was last summer, but a correction was needed and solar is far from dead. 

What I like most about Gaiam (GAIA) is that in addition to its investments in solar, it’s a green retailer pure play and well diversified.  The company sells yoga supplies, wellness instructional media, exercise equipment, eco friendly home and outdoor supplies and is even building a growing community health conscious, green and spiritual individuals.  You have to see this – they even offer a hooded fleece made out of recycled pop bottles. Oh yeah, ..and the company is growing and growing quickly with earnings rising more than 40% last year and expected to rise another 50% here in 2008. With just 2 analysts covering the company right now, GAIA remains relatively off of Wall St radar, but not for long.
Weekly/After Stock Market Review Archives

Technicals Improving, But Significant Risk Remains

Leave a comment

The Fed induced capitulation gave way to a quick ramp up in the market off an oversold bottom but it didn’t long for traders to lock in profits as poor economic news poured in.  Just as the conviction behind buying levels reveals much about the health of the overall market, the conviction behind the selling does the same. 

The technical action last week was encouraging.  Some fear crept back into the market on Tuesday’s nearly 400 point Dow plunge, but as I mentioned in the after market report that day, there was a divergence between price and volume.  The selling intensity was not characteristic of institutions dumping positions left and right.  To me, it looked like healthy selling following, a V like spike up off the bottom.  Notice that over the next 3 days, the market stopped the bleeding almost immediately despite a significant futures sell off following a poor Cisco outlook.  That action on Thursday was a good indication that maybe buyers are beginning to return.  I remember reading all the doom and gloom regarding Cisco on some of the discussion boards with calls for a drop below 20.   Cisco closed in the green for the day with a massive day of capitulation.   It was significant for Cisco, for tech and the Nasdaq in general. 

Let’s take a quick look at the charts….

The Nasdaq looks mighty close to bottoming, but if in fact that is the case we need to get some big buying follow through soon.  That revesal off the lows on Thursday with heavy volume was in my mind a telling sign that bulls are resuming some control at least in the short term.  I do believe that the odds of a rally here are significantly greater than another leg down below key support of 2200 but much risk remains.  This is still a headline driven market with no leadership.  Keep that in mind when making trading decisions.  If the Nasdaq can take out 2425, look for a run to 2500.

I like the healthy retracement of the initial surge off the bottom.  Notice that buy volume has been overshadowing sell volume.  There is short term support in the S&P at 1325 so taking out that level and closing below that level would indicate that a test of the lows  around 1275 are likely.  Again, I think big buying needs to happen quickly (sometime next week) or testing the lows of this correction (or worse) becomes much more likely.

You see the Dow is about at the half way point of a retracement as well and could very well yo yo back and forth between support and resistance as the market sorts out a bottom down here.  Volume levels do indicate more bullishness, but institutions need to step in and start doing some buying soon or we’re testing the lows around 11500 – 11750.

 ::: Model Portfolio :::

** This section will now appear as a separate report to be published on most Wednesdays. 

The Self Investors Model Portolio wrapped up 2007 with a 30.2% gain.  Would you like to receive buy and sell alerts within minutes (NEW! now get them via instant messaging in near real time) of each transaction in the portfolio?  You can receive these along with ALL of the tracking tools and reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more highly profitable months here at SelfInvestors.com.

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Wholesale – Other: 2.75%
2. Medical Laboratories & Research: 2.55%
3. Medical Practitioners: 2.30%
4. Home Health Care: 2.05%
5. Drug Related Products: 1.50%
6. Drug Delivery: 1.10%
7. Entertainment Diversified:  .85%
8. Medical Instruments & Supplies: .65%
9. Medical Equipment Wholesale: .35%
10. Independent Oil & Gas: .25%

– Top 10 Worst Performing Industries For the Week –

1. Semiconductor – Memory Chips: -15.35%
2. Residential Construction: -14.45%
3. Credit Services: -11.05%
4. Recreational Vehicles: -10.70%
5. Banks – SE: -10.25%
6. Toy & Hobby Stores: -10.05%
7. Heavy Construction: -9.90%
8. Cement: -9.55%
9. Home Furnishing Stores: -9.20%
10. Farm Products: -9.10%

– Top 5 Best Performing ETFs For the Week –
 
1. US Natural Gas (UNG)  7.50%
2. Powershares Agriculture (DBA) 4.80%
3. Powershares Commodity (DBC) 4.70%
4. US Oil (USO) 3.45%
5. Ishares Silver (SLV) 2.45%

– Worst 5 Performing ETF’s –

1. SPDR Homebuilders (XHB) -14.60%
2. Ishares Home Construction (ITB) -12.60%
3. Chile Fund (CH) -10.90%
4. Market Vectors Global Alernative Energy (GEX)  -10.10%
5. iPath India (INP) -9.85%

:::  IPO’s Worth Watching for This Week :::

This section will now appear as a separate post on Mondays.

While 2008 should be a much slower year for IPO’s considering the deterioration of the market, there will continue to be some good companies coming to market here and there.  I’ll be highlighting the best IPO’s every Monday.

::: Upcoming Economic Reports (2/11/2008– 2/15/2008) :::

Monday:         None
Tuesday:       Treasury Budget
Wednesday:  Retail Sales, Business Inventories, Crude Inventories
Thursday:      Trade Balance, Initial Claims
Friday:            Export/Import Prices, Capacity Utilization, Industrial Production, Mich. Sentiment

::: Earnings I’m Watching This Week :::

Monday:
Qiagen (QGEN)

Tuesday:
Rick’s Cabaret (RICK)

Wednesday:
Nvidia (NVDA), First Solar (FSLR), The Navigators (NAVG), Baidu.com (BIDU), Healthcare Services Group (HCSG), Genzyme (GENZ), Rio Tinto (RTP), Millicom Intl (MICC)

Thursday:
Bucyrus (BUCY), Capella Education (CPLA), Chipotle Mexican Grill (CMG), Strayer Education (STRA), Hittite Microwave (HITT)

Friday:
Abercrombie and Fitch (ANF), Diana Shipping (DSX), Yingli Green Energy (YGE)

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Not So Super Tuesday But Selling Constructive

2. Solera Holdings (SLH) One To Watch After Strong Earnings

3. Model Portfolio Update: Big Tech Is Killing Me

4. WMS Industries (WMS) Breaks out to All Time Highs On Earnings

5. China Oil Perspective – CNOOC (CEO), Petrochina (PTR) & China Petroleum (SNP)

6. Vanguard Mutual Funds Tops in 07

News

Yahoo Rejects Microsoft, Google Wins

Leave a comment

We’ll see books  written about this epic battle of  the  3 tech behemoths – Microsoft, Yahoo and Google.  Another chapter was written this morning as Yahoo defiantly rejected Microsoft’s bid indicating it "massively undervalued" the company and that the company isn’t likely to consider an offer below 40.  There has been talk of Yahoo partnering with Google and using their advertising platform but I don’t see how they’re going to get around the regulators on that one.  Google CEO Eric Schmidt whined about a Yahoo/Microsoft merge as monopolistic… I’d have to say Yahoo + Google in any capacity is more so.  Sure Yahoo retains its pride with this rejection and stirs some excitement amongst employees in their battle with the much hated Microsoft, but is it a good business decision?  Time will tell, but I don’t think Yahoo is in any position to playing chicken with Ballmer.  A couple things are certain though.  This fight just got a whole lot more interesting and whichever way this plays out Google benefits big time.  Long Google and looking to get longer.

The Seattle Times has a good rundown of what might happen next.

News

Vanguard Mutual Funds Tops in 07

Leave a comment

vanguard mutual fundsAccording to Reuters, Vanguard Mutual Funds pulled in the most money to its stock and bonds mutual funds in 2007, eclipsing American Funds which held the top spot since 2002.  Vanguard saw net inflows of 76.2 billion last year compared to 42.7 billion in 2006 as investors poured money into its safer money market accounts and ETF’s.  According to the Financial Times, ETF’s provided a major boost with assets growing from 23 to 42 billion last year.  It expects to add more ETF’s this year after adding 10 new ones last year and is seeking regulatory for actively traded ETF’s (a subject for another post). 

The biggest percentage increase of inflows were to State Street Global Advisors, a unit of State Street Corp (STT) with a huge jump to 49.2 billion in assets from just 3.4 billion the year before mostly due to the popularity of its growing list of ETF offerings.  Wow!  No wonder STT is trading near all time highs. 

I personally would like to see companies close out more and more of their most unpopular ETF offerings and come up with more unique offerings in niche segments such as Platinum or Solar (I know PBW comes close).. I would guess we’ll see these ETF’s soon.  How many big cap, or mid cap or global diversified funds do we need!  It’s getting ridiculous and this industry is due for a shakeout.

Industry Spotlight

China Oil Perspective – CNOOC (CEO), Petrochina (PTR) & China Petroleum (SNP)

2 Comments
A major international oil/gas industry perspective is that Exxon Mobil, British Petroleum, Royal Dutch Shell, Chevron, Total, ENI, etc. historically prevailed in global exploration and production developments. However, this perspective must now be amended to include the national oil companies of Brazil, Russia and China. Relatively new majors are Gazprom (Russia); Petrobras (Brazil) and three Chinese companies namely: 1) China National Offshore Oil Company, CNOOC, (SNP. NYSE); 2) China Petroleum & Chemical, Sinopec, (SNP.NYSE); and 3) PetroChina Corporation Ltd., (PTR.NYSE). The three Chinese oil companies is the thrust of this fourth oil/gas industry perspective. Please note that only the NYSE stock symbols are provided although these Chinese Corporations are also listed in Shanghai, and/or Hong Kong and/or London. SNP is listed on all four exchanges.
 
CEO (CNOOC Ltd.) is an independent offshore oil and gas exploration and production company with four offshore China production areas namely, Bohai Bay, Eastern, Western and Southern South China Sea. CEO is an offshore producer in Indonesia, Australia and Africa. In 2006 CEO acquired offshore licenses in Nigeria. Market Capitalization is $67,120 millions with estimated P/E of 16.7.
 
PTR (PetroChina Ltd.) activities include petroleum and natural gas within four business segments; 1) Exploration and Production, 2) Refining and Marketing, 3) Chemicals and Marketing, and 4) Natural Gas and Pipelines. PTR was established as a joint stock company as part of the restructuring of the China National Petroleum Corp. (CNPC). CNPC is the controlling shareholder of PTR with 88.21% shares. Market Capitalization is $274,350 millions with estimated P/E of 13.9.
 
SNP (China Petroleum & Chemical Co.) is an integrated oil, gas and chemical company with operating segments for exploration, production, refining, marketing, distribution and chemical manufacturing/distribution. Market Capitalization is $98,477 millions with estimated P/E of 12.4.  SNP was setup in February, 2000 by China Petrochemical Corporation as the sole initiator, pursuant to the Company Law of the People’s Republic of China. SNP issued 16.78 billion H shares in Hong Kong, New York and London in October, 2000. The Company floated 2.8 billion A shares in Shanghai in July 2001. As of end 2006, The Company’s total number of shares was 86.7 billion, of which 75.84% was held by the State through Sinopec Group, 19.35% by H share holders and 4.81% by investors in China. SNP website provides stock quotations for all exchanges they are listed on. CEO, PTR and SNP company names above are hyperlinked to each company’s website.  [A shares are principally for mainland China; H shares are listed on Hong Kong, New York and London]

PS

The following company is not included in the above perspectives but is of interest because of their Chinese exploration and development activities. Ivanhoe Energy (IVAN) is an independent international heavy oil development and production company. Core operations are in the United States and China. IVAN currently has oil production at the Dagang Project, in northern China and a production sharing contract for an exploration and production block in the Sichuan Basin.

Ivanhoe Energy Inc. (IVAN) plans to start the second phase of gas exploration at the Sichuan project in China through its subsidiary Sunwing Zitong Energy Ltd. The company says the new phase has drawn interest from Mitsubishi Gas Chemical Company Inc., which has a 10 per cent holding in the project. IVAN has a partnership with Mitsubishi Gas Chemical Co. and a 30-year production-sharing contract with PTR. IVAN recent stock price was 1.38 +0.03 (2.22%)  Jan 28 4:00pm ET. Long term traders may consider this stock as a long term small cap investment which would be considered highly speculative.
 

Industry Perspectives
1)     The Chinese government in November, 2007 ordered the nation’s refiners to run their plants at full capacity to increase supplies and end fuel shortages. Local governments were urged to set up an early warning system to ensure sufficient oil supplies at filling stations. SNP has almost 29,000 retail fuel outlets, according to its Web site.

2)     SNP, a sponsor of this year’s Beijing Olympic Games, supplied almost two-thirds of China’s refined oil products in 2006, according to its Web site. China’s economy expanded 11.5 percent in the first nine months of last year, spurring demand for fuels and chemicals to run automobiles and factories.

3)     PTR’s service stations totaled 18,846, an increase of 912 stations, or 5.09 percent increase from the same period last year.

4)     For the period from January to September this year, the Company processed a total of 611 million barrels of crude oil, representing an increase of 30.4 million barrels, or 5.2 percent increase from the same period in 2006. Additionally, PTR’s capability to produce gasoline and diesel complying with the National Phase III and IV Motor Vehicle Emission Standards has been continuously developed.

5)     CEO Limited announced its business strategy and development plan for 2008 with targeted net production of 195-199 million barrels of oil equivalent compared with the estimated net production of 169-171 million barrels for 2007. During 2008 ten new projects are expected to come on stream, including major offshore China projects. Source: Rigzone

6)     Following the completion of the Lanzhou-Yinchuan Gas Pipeline, linking the West-East Gas Pipeline and Sebei-Xining-Lanzhou Gas Pipeline, PTR’s four key natural gas regions – Tarim, Changqing, Qinghai and Southwest – have been successfully connected,

7)     There are four energy laws in China covering coal, electricity, energy conservation and renewable energy, but none on petroleum, natural gas and nuclear energy. Draft energy legislation won’t be ready in time for lawmakers to read at the annual session of the National People’s Congress ruling out discussion on a unified national energy body at the parliamentary session in March, 2008. The draft law emphasizes a unified management system to plan, run and supervise China’s energy sector, which is currently managed by a number of government departments and agencies.

8)     Author has consulting engineering experience with China National Petroleum Company (CNPC) involved in the construction of a diesel oil pipeline in Pakistan. Consulting experience included coordination meetings in Beijing, Dubai and London. Gambay
 
9)     CNPC has cooperated with Canadian counterparts in oil sands, including oil sands development, pipeline transportation, trading and technology exchanges, etc. The company has made an extensive study in terms of oil sands resources, market and technology and acquired 11 leases auctioned by provincial government of Alberta early this year. CNPC will further cooperate with the Canadian petroleum sector and jointly explore collaboration in oil sands development, crude oil pipeline construction and downstream upgrading.

10) Chen Tonghai, former general manager of the China Petroleum and Chemical Group (SNP), has been expelled from the Chinese Communist Party (CCP) and the government and officially charged with corruption. The CCP Central Commission for Discipline Inspection and the Ministry of Supervision announced the moves in a statement after a joint investigation on Chen, who was also the Sinopec Party chief, which began in June last year. Chen had been accused of taking bribes to help others, including his mistress, make unlawful profits, and he also led a "corrupt life," according to the authorities. Source: Rigzone.
 
11) China plans to speed up construction of oil and gas pipeline networks to enable more efficient delivery and better allocation of storage in the country, according to the country’s cabinet, known as the State Council. The national plan may coordinate separate plans set by China’s two oil majors – PTR and SNP and will likely speed up building of strategic and commercial oil reserves. PTR and SNP existing and planned domestic oil and gas pipeline joint ventures total more than 10, including a flagship west-east gas pipeline and a Sichuan-Shanghai gas pipeline. Source: Downstream Today.
 
12) China plans to expand natural gas consumption from 3% (2006) to 5.3% (2010). Natural gas will be transported from Western China and also imported from Russia, Turkmenistan and other Central Asian countries.
13) Similar to international companies, SNP has set up a standardized structure of corporate governance and adopted a management system of centralized decision-making, delegated authorities in management and business operations handled by specialized business units.

14) Coal accounts for 70% of China’s total energy consumption with reserves of over 1 trillion tons, or at least 100 years.

15) November 30, 2007, Anchorage, Alaska – Governor Sarah Palin announced that five companies had submitted applications for the exclusive right to build a natural gas pipeline to transport North Slope gas to market. The applicants are Alaska Gasline Port Authority, AEnergia LLC, TransCanada, Sinopec (SNP) and Alaska Natural Gas Development Authority. Source: State of Alaska website The Alaska gas pipeline project and its history will be the subject of a future Industry Perspective since the author was involved in the 1980 feasibility study, definitive cost estimates and frost heave test sites instrumentation and data acquisition.
 
16) China delivers oil revenue to Sudan as well as Chinese military equipment, including fighter planes and helicopters. Diplomatic support is also delivered, especially in the United Nations. Sudan is accused internationally of genocide in Darfur. Human rights groups claim Sudan systematically massacre civilians for clearing oil-producing areas. US companies are prohibited from investing in Sudan.

17) Last year China signed a $70 billion oil deal with Iran. Iran/Chinese business relationships will impact UN activities to isolate Iran diplomatically.
18)  Is China democratizing? What are the prospects for democracy in China? Chinese leaders do not think of democracy as people in the West generally do, but they are increasingly backing local elections, judicial independence, and oversight of Chinese Communist Party officials. How far China’s liberalization will ultimately go and what Chinese politics will look when it stops are open questions. For Professor John L. Thornton paper addressing this subject please use this Council of Foreign Affairs link. Professor Thornton is at the School of Public Policy and Management at Beijing University.
 
Summary
The above perspectives include both financial and political considerations. Trading these three Chinese stocks is at each trader’s discretion based on their fundamental and technical analysis and their political conscience. Technically the charts above have responded to overall global economic weakening but others could consider the present pricing as potential trades.
 
Is this a conundrum or what? To invest or not to invest, that is the question. My suggestion is to add these stocks to your watch list to see if any upwards trends develop. Your personalized trading strategy and plan will define short and long term trends periodicity and let your plan’s money management take care of any down trends. That is, if you are not in a politically correct trading mode.
 
The more experienced may wish to consult Mr. Elliott and Mr. Fibonacci for guidance as to where and when to trade these stocks. If Mr. Elliott and Mr. Fibonacci are kind enough to provide such guidance we would be most pleased if you could share such guidance with us. It would be most interesting to determine if waves and retracements apply in these complex global scenarios.
 
Non-Industry Perspectives
A non-financial recommendation to those would-be Great Wall visitors is to use the cable car (see ticket thumbnail photo) which will not stress your calf muscles since portions of the wall are very steep, without steps, and easier traversed
 
 
 

 
Author Bio
 
Robert is a valued contributor to Self Investors and provides great insight into the oil industry.  He has 40 years of experience which includes oil/gas engineering in crude oil/petroleum products/natural gas, refining, processing and pipelines on all continents, except South America and Antarctica, from Alaska and Australia pipelines to S.E. Asia offshore, from UK North Sea to Los Angeles fuel truck racks and from Romanian pipelines to West Africa FPSO.
 
Chinese Proverbs
 
“Leave a good name in history; be remembered”
 
“Let every individual give full play to his or her talent”
 
“An outstanding man gives an air of sanctity to his birthplace; a fair place tends to produce outstanding people

Disclaimer:  Author has no position in the companies mentioned above

Company Earnings

WMS Industries (WMS) Breaks out to All Time Highs On Earnings

Leave a comment

Today’s SelfInvestors Leading Stocks Moving on Earnings

getting this out too late again.. one of those weeks

UP

• Watson & Wyatt (WW) Business & Management Servicees, fundamental rank [25/30],  up 11%, working on the right side of new base

• WMS Industries (WMS) Diversified Electronics, fundamental rank [25/30],  up 9%, breaking out of a base on base with heavy volume to new all time highs – these kinds of moves are few and far in between these days!  One to watch

• Alcon (ACL) Medical Instruments & Supplies, fundamental rank [25/30],  up 6%, nice high volume gap up off the 200 day moving average and carving out right side of base with a breakout above 155

DOWN

no leading stocks moving down on earnings with volume today

Model Portfolio

Model Portfolio Update: Big Tech Is Killing Me

Leave a comment

It’s been one of the worst starts to a year ever for the market and it certainly caught me off guard a bit.  If I thought I could coast a bit for a couple weeks after a somewhat grueling 2007, I was sorely mistaken.  Admittedly I haven’t been as prepared as I should have been while dealing with a move and a constant cold and it’s resulted in being out of synch with the market.  It’s been one of the worst starts to a year for me.

I’m getting the feel back though and beginning to trade more in synch with the market but man these big cap techs are killing me!  I managed to dump most of my Google near the top but didn’t do the same with my Cisco or Microsoft.  It’s clear that whenever I attempt to deviate from the strategy that has been successful for me over the years (trading momentum) and move to more of a buy and hold strategy in "good companies" that are good long term holds, my performance suffers.  It happened in 2006 with a purchase of Yahoo and again to begin this year.  It looks like Cisco is going to get crushed yet again after the bell, so I’ll be digging out of larger hole from tomorrow on.

Despite Cisco and Microsoft being significant portions of the portfolio, I’m still ahead of the S&P and well ahead of the down and out Nasdaq with a loss of 9.2% this year (compared to a 14% loss for the Nasdaq – yowza!).  Yes, it’s unacceptable but at the same time I recognize I’ll have bad months and great months and that by the end of the year, continuing with my strategy, sticking to my rules and remaining confident WILL result in great returns once again.  It’s a long year and I’m not concerned. 

I’ve initiated several new shorts in the past few days, all of which (except for one) are profitable, but will cover and lock in gains quickly as we get closer to the lows of this correction.  Today, my short in DR Horton (DHI) was covered for a quick 10% gain ahead of its earnings report tomorrow morning but I’m still holding my Toll Brothers (TOL) short and think I can squeeze a few more percent out of that one over the next few days, particularly if DHI misses expectations by a wide margin in the morning.  Soon, it will be time to start thinking about the long side but it’s still too early.  I put on a very small position in COIN after it broke out of a bullish triangle formation yesterday, but closed it quickly today after yet another reversal off the highs.  There just isn’t much working on the long side right now and until new leadership emerges I’m not willing to get aggressive.

The biggest mistake that traders make is trying to make up for losses by taking on even more risk.  They begin averaging down, taking on excessive risk or trading penny stocks to try and recoup losses quickly and regain their pride.  If you are doing that now, STOP!!  Think about why you have the losses you do.  Did you get into a buy and hold mentality in "good" companies like Apple, Baidu, Google, Garmin, Research in Motion, etc after getting in near the top?  Did you not cut losses quickly?  Were you bottom fishing?  Rather than trying to make it all back in one trade, get more conservative and take this time to learn what you can do better next time.  There will be ample opportunity to recoup the losses and make extraordinary games, so preserve capital and learn, learn, learn.

ETF, IPO & Breakout Stocks Analysis, Tracking & Research