Insider Buying

Chesapeake Insiders Continue Buying Spree; Trump Turnaround

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Beginning in May of this year, both the CEO and COO of Chesapeake Energy (CHK), snatched up just about every available share they could find.  On May 5th alone, both the COO and CEO bought nearly $3 million worth of shares in their company.  The very next day, they followed that up with total purchases of nearly $2 million and $1.5 million respectively.  The buying spree continued in June with the COO buying over 4 million worth and the CEO buying around 15 million.  The CEO upped the ante again in August by making several purchases totaling nearly 20 million!  On one day in September another 20 million purchase was made!  After a 3 month lull (time probably spent couting money), the insider buying by CEO Aubrey McClendon began again last week, with insider purchases totaling around $1.5 million.  The last time insiders made big purchases, it preceded a nearly 100% rise in the stock.  While a run like that again isn’t as likely this time around, the amount of insider buying clearly indicates the man running the show at Chesapeake sees more good times ahead for the stock. 

Currently it’s in the process of carving out a decent looking base and forming a handle.  Keep an eye on it for a breakout.

Donald Trump, master of self promotion, may soon have another reason to pat himself on the back with a turn around of his money losing casino operations. Providing most of the financing for the restructuring deal is Morgan Stanley and they must continue to believe that Trumps’ (“ no, I’m not calling him “the Donald”) casino operations will become profitable some day, because they have been very busy grabbing shares in the last couple weeks.  Since November 17th, the company has picked up nearly 370K shares for a total of around 6.7 million.  In addition, one director increased his stake in the company by 20% on November 21st. 

Note:  this is not a fundamentally superior company, but nonetheless an interesting story.. not to mention it has a  great looking stock chart (minus yesterday’s reversal from the breakout).

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State of the Stock Market

Awaiting the CPI Data

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Once again the Fed spoke and once again (as far as what was said), I could care less.  What’s important is how the market responds to the often vague wording of the Fed, which for today was ultimately positive as the volume picked up on the buy side.  Let’s see if the move today carries over into tomorrow.  I have a feeling it won’t.  I think traders will ultimately wait for the upcoming CPI data on Thursday and the PPI data next week before placing large bets either way.  I personally will remain bullishly neutral (see also, cautiously optimistic) until the market breaks out of its current trading range (meaning that I’m using margin sparingly).  Looking at the charts of the major indices, they do look beautiful up to this point.  Tight consolidations after the big runup we saw in November is very bullish action and indicate that another big leg up in the market may be on the horizon.  What happens if the Dow breaks 11,000 and all that speculative real estate money gets put to work in the market?  Hmmm…

Support and resistance in the Nasdaq isn’t as pronounced as it is in the S&P and Dow, but I think you can currently draw a rough channel of support and resistance based on the previous break out point above 2200 (support) and the highs of the mild consolidation over the past few weeks (resistance).  Based on the magnitude of the leg up, it would seem that the market needs to continue to spend time consolidating.

Support and resistance is much more clear in the Dow, with support just above 10,700 and resistance at the all so elusive Dow 11,000.  Nice bounce from support today with volume.

The S&P looks similar to the Nasdaq with a tight consolidation over the past couple weeks.  Support at 1250 with resistance at around 1270.  A break from this trading range, could indicate another sizable leg up. 

Stocks

Top ADRs

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Time again for another screen of the SelfInvestors.com database -this time around I’ve chosen to filter the database to return to me all the ADR’s i’m currently tracking, listed in order of Fundamental Rank.  Many are extended past a proper buy point, but there are a few interesting set ups I’d like to highlight on both the long and short side.

To see a screenshot of the Top 8 ADR’s currently in the system, you can click here.  If you’re not currently a free member of SelfInvestors.com you can sign up to receive the full list of ADRs via an excel spreadsheet.  Current members may access the download at this page.

So, here’s a couple on the long side I’d like to highlight – China Medical (CMED), Tenaris (TS) and Internet Initiative (IIJI).

After a tremendous run through most of November, CMED is currently carving out what looks like a decent bullish triangle pattern.  That high volume reversal at the top is a bit of a concern, but as long as the stock continues to find support around 30 and volume continues to dry up, the stock has a good chance of staging a nice break from the pattern.  Look for the stock to spend some more time filling out the pattern before making a significant move from here.

I think this chart looks great despite the fact that it is a late stage base (so prone to a higher rate of failure).  The stock broke out of a double bottom base with good volume above 120 and has been quietly consolidating around the break out point.  If the stock drops below support around 120 with heavy volume, I’d move on with just a very small loss.  Nice reward vs. risk trade here.

IIJI staged an impressive breakout on Dec 1st, then reversed sharply  the very next day.  I haven’t been able to determine exactly why the reverse happened, but it’s probably a combination of the secondary offering, a bearish "Cramer" call and general weakness within the industry.  Notice that the selling hasn’t been particulary intense as sell volume continues to decrease.  I’m typically a little wary of stocks that make wild swings like this, but if the stock can find support at the 50 day moving average and bounce with good volume, it might provide a nice swing trade for a quick profit.

I’ve noticed a few decent looking short set ups amongst the ADR’s too.

It’s amazing how similar the charts of PKX and MBT look.  Both appear to be on the verge of another breakdown if they can’t hold current support levels (as outlined in the charts below).   

CBI has bounced back after the selloff due to alleged accounting improprieties which led to a delay in reporting results.  These kinds of problems tend to linger for a long time, holding the stock price down.  The stock is currently meeting resistance of the 50 day moving average as buy volume wanes.. setting up an interesting short trade.  I’d probably wait and see how it does with potential support at the 200 day moving average (25/share) before making any decision on a short trade.

Stocks

Top Breakouts – Oil Stocks Surging

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I’m still alive:)  I’ve been preoccupied with unexpected events recently… and I apologize for the lack of posts.  This blog is important to me and I want to be consistent about posting here and keep readers on top of the market.  With that said, I’d like to highlight breakouts of the past couple weeks as well as list the top 10 breakout opportunities right now in the market.   However, I’d like to caution that now is the time to be fairly conservative.  We’ve had a tremendous run over the past couple weeks. 

As always, click here to a larger screenshot of the database, filtered to show the top breakouts (total fundamental + technical score of 50/60 or above) of the past 2 weeks. 

Running through the breakouts and scanning through the several hundred stocks that I track, I’ve been noticing that commodities (specifically oil) have been doing particularily well of late.  In fact, nearly half of the top 15 breakouts of the past 2 weeks come from the oil and metals groups.  Let’s have a look.

It’s been a bit of a mixed bag in terms of breakout success over the past 2 weeks – 39 breakouts, 14 with a gain, 9 with a loss and 6 with no gain.  The biggest winners include Core Molding Technologies (CMT) with a 12% gain (a stock highlighted in a report to free and premium members of SelfInvestors.com), OraSure Technologies (OSUR) with a 17% gain and The Pantry (PTRY), also with a 12% gain.  The biggest loser (although it remains above support with today’s reversal) was Miller Industries (MLR), down -6% from its breakout point.

Here’s my top ten list of stocks that have already broken out, but remain in a buyable range:

1) Allergan (AGN)

2) Joy Global (JOYG)

3) PetroChina (PTR)

4) Grant Prideco (GRP)

5) ChinaMobile (CHL)
6) Gildan Activewear (GIL)

7) CE Franklin (CFK)

8) Perficient (PRFT)

9) BHP Billiton (BHP)

10) Diamond Offshore Drilling (DO)

As always please do your own research.  These are ideas for further research.. Happy Trading and Good Luck!

Mail Bag

Performance of Portfolio? How Many Positions?

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Question:

What annual performance did your portfolio have in the last 2-3 years and YTD? Is this a real portfolio that your members can follow or just a hypothetical? What is the minimum number of securities in your portfolio? BTW: great webite!

My Response:

Thx for the compliment!  Yes, the model portfolio is a real portfolio, no hype here.  You’ll see the great trades as well as the bad ones.  For each trade I make in the portfolio I issue an alert within a couple minutes of the trade along with detailed notes, including the sell and updates during the holding period if warranted. 
 
The performance from the beginning of tracking is up around 55% which is around triple the S&P 500.  2004 performance was up 32% vs. S&P500 up 9%.  YTD I’m up 9% vs. 4% in the S&P, despite a difficult year.  The portfolio took a hit in the first couple days this year, much of it on news of the Taser SEC investigation.  The portfolio was actually down nearly 11% to start the year.. so the portfolio is up 20% since that time.
There will never be a minimum number of positions…  I let the market dictate how many stocks I hold at a time and whether I’m primarily long or short.  For example, I began to fill out the portfolio 100% on the long side towards the end of October and have been fully invested with 8-10 securities since.  I remain that way for the most part now, but have put on one short trade to take advantage of any profit taking .. which hasn’t been much! What a year end rally! I will never be entirely in cash because I believe there are always opportunities to profit, both on the long and short side.  Hope that answers your question.

 

 
The model portfolio is just one of many features of the premium service.  I also offer a database of the fastest growing companies that I have built from the ground up, email alerts, custom screening, stock watch reports, personal support, ETF tracking, etc…  Let me know if you have any further question.  Happy Trading!
Mail Bag

I’m Looking for Top Stocks, What’s the Best Way to Find Them In the Breakout Tracker?

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Question:

I like what you have put together at SI and it seems thru the breakout center and alerts I can more easily get what I am looking for.   I would like to spend less than 30 minutes each night and 2 hours on the weekends finding candidates, review existing positions, journal trades, etc.  All orders would be entered after market close as a buy stop limit order. What I am looking for are stocks that generally meet the following criteria.  What’s the best way to find them using your site?:

Fundamentally strong (i.e. 80 or > EPS rank, C+ or better sales/margin/roe rank, etc.)
  • 200K or greater average daily volume
  • Base of at least 6- 8 weeks
  • Leading group (top third of all groups)
  • RS of 70 or greater – or at least rapidly increasing for the last month before breakout
  • Huge volume breakouts, 2-3 times for small caps and 1.5 times for large caps

My Response:

My fundamental score combines earnings/sales growth, margins, roe, management into one score.  I recommend sticking to stocks that are ranked 23 and above.  I don’t currently list daily trading volumes [update: daily avg trading volume is now provided in the Breakout Tracker.  You can filter the tables by Top Industries by clicking the button under the search field (this will display stocks that are part of top groups for 10, 20 and 30 day performance.  As for high volume breakouts, you can set your breakout alerts to above a certain % ,but I recommend not limiting yourself too much here. 

The stocks that meet all of your requirements will be found in the Breakout Watch and Hot Stocks tables, with the best near the top.  The power of this system is that it allows you to stay on top of stocks that have already broken out and returned to the pivot.  Don’t forget about these opportunities.  Notice that I don’t ofen purchase at the initial breakout and prefer to wait for the first pullback, especially in a choppy market.  Before creating this system, I noticed I was watching the breakout and then forgetting about it and moving on to the next set of "breakouts".   I wasn’t paying attention to the breakouts that were pulling back to the pivot.  This system has helped me tremendously to stay on top of these opportunities.
 
In addition, sign up for the premarket reports that give you a list of these stocks in your email box, in addition to the breakout alerts.
 
What I do is just start quickly going through the charts starting at the top with Hot Stocks, then Breakout Watch, then Play the 50 Day.  If you have a dual monitor setup (which I highly recommend) you can have your SI tables on one screen and entering the symbols quickly into your charting software on the other.  After going through the lists I may have a list of 20 stocks that i’m really focusing on.  What do I do from here?  Put that cream of the crop in my real time watchlist charting package (i use TCNET currently) so i can track in real time at certain times of the day.  I will also set real time alerts on those stocks that are near a breakout or pulling back to buyable range.
 
While I use real time alerts, I find the email alerts from the SI system very beneficial because once they are in the system I don’t have to set the alert.  There are certainly times when I have missed a stock in my research, forgotten to set an alert or my real time alerts just weren’t working.  In this business redundancy is very important.

State of the Stock Market

5 Pictures Worth 5 Thousand Words

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.. I think my math is correct there.  Let’s see, 5 pictures.  One picture is worth a thousand words. So… I knew that math degree would come in handy at some point.  Yep, the market is ripe for some consolidation as major resistance comes into play after a steep run up in the past few weeks.  But a big move up may be on the horizon.  The Q’s are breaking out of a 2 year consolidation and sitting at multi year highs.  Very bullish indeed.

Mail Bag

Will You Add a Forum?

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Question:

I think you talked of starting a user forum, is there interest for this?

My Response:

There was little enthusiasm for this when I took an informal poll last year.  I believe my time is better spent elswhere right now.  There are so many stock forums out there.. i didn’t want to add to the mix.   I am  toying with the idea of setting up either an internal live chat system or setting one up on yahoo so SI users can chat with each other .. i would join in at times as well, time permitting.  But this probably won’t happen until early ’06 if I decide to go ahead with it.
[update: 1/7/2007 – soon selfinvestor traders will be able to come together in a real time charting setting!)

Company Earnings

Notable Earnings: Hansen Natural (HANS) – Another Monster Quarter

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Hansen Natural (HANS) [29/30], maker of alternative sodas, fruit juices, smoothies and iced tea, posted anothe monster quarter, lifted by a continued surge of sales in its Monster energy drinks and rising margins.  The company smashed estimates of .60/share by .23/share,  which is good for an increase of 246% over the year ago quarter.  Revenues rose 100% over the same period.

The company said results were boosted by strong sales of its energy drinks, including Monster Energy drinks, ‘Assault’ drinks and Monster Energy Khaos drinks. The sales increase was partially off-set by lower sales of smoothies and natural sodas.  The stock broke out last week from a nice looking base, helped by a Citigroup upgrade.  It’s up over 15% in premarket trading.

ETF, IPO & Breakout Stocks Analysis, Tracking & Research