• Oliver Jones [DOWNLOAD MP3]
  The Canadian jazz legend discussed his career trajectory, particularly the fact that even though everyone knew about his gift for music, he wanted to be a ball player. He played live in studio Q and talked about his musical education, Diana Krall and more.
• Gordon Ramsay [DOWNLOAD MP3]
  The British “Don’t Call Me a Celebrity” chef reveals what it takes to maintain three Michelin stars and what it takes to remain competitive. Reminded me of Jim Simons.
• Ornette Coleman [DOWNLOAD MP3]
  One of the few living musicians who can reliably be called a jazz legend, Coleman rejected style, harmonic and rhythmic structure by introducing “free jazz.” A special Editor’s cut of the interview.
• The Leader of Burma [DOWNLOAD MP3]
  Reports have emerged about the government of Burma making it very difficult for foreign aid to reach victims of last week’s devastating cyclone. What kind of government would have so little interest in the well being of its people?
• Lester Brown [Scroll down to Part 2]
  Perhaps Thomas Malthus will have the last laugh after all. Lester Brown is interviewed by The Current and lays out an apocalyptic view of the future. He “founded both the Worldwatch Institute and the Earth Policy Institute, and over the decades, he watched the world’s population explode and consume with abandon, oblivious to how it’s spent itself way into the red, environmentally speaking. Global warming, depleted soil and water resources, deforestation, overfishing — humanity has pushed the very natural systems that sustain our species to the breaking point.”

Last, but not least, was a post from Mark Perry’s blog about The Cultural Rut of Pessimism in the U.S. It seems to me that we North Americans tend have great expectations, high hopes that easily set us up for disappointment. (Sounds like trading, doesn’t it?) Meanwhile, back in my ancestral homeland, the people of Sichuan stoically “eat bitter” and soldier on in adversity, as they have always done.

Today we will focus on another use for our daily stock scan list: finding specific industries that might be “in play”. As a bonus, we also included a company that is experiencing ‘news/price divergence’ that might be worth watching.

• Right click ON THIS LINK and select “Save Target/Link As…” to save the MP3 file to your computer.

While going through Trading Ideas for Thursday, I noticed there was big representation in the computer storage devices industry. We spoke about Western Digital (WDC) in yesterday’s podcast and today, it seems like other fellow industry companies are following its lead. After the market, Bloomberg reported some interesting investor sentiment:

• U.S. Investors Say It’s Time to Buy Stocks; Favor Asia, Energy
  The annual Bloomberg/Los Angeles Times poll of investors found that 44 percent of those with household incomes of $100,000 or more viewed it as a good time to buy stocks, versus 15 percent who said it isn’t. The benchmark Standard & Poor’s 500 index has declined 10 percent from its record high in October. “Any time prices come down, that’s typically been the time to buy,” said Phyllis Hamm, 59, a survey participant who works at a nonprofit group in Raleigh, North Carolina. The poll results signal some Americans may be ready to shift part of the $3.5 trillion parked in money market funds into equities.

To show appreciation for our clients, Trading Ideas for tomorrow is exclusive to Portfolio Strategy subscribers.

Amex Disk Drive Index($DDX.X)

The Amex Disk Drive Index ($DDX.X) is the closest index to represent the computer storage sevices industry.

Daily bar chart with 50- and 200-day moving averages

Daily bar chart with Swing Line applied

Daily bar chart with InVivo.RMI.Stops and InVivo.RMI.Histogram applied

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The scan is designed to find stocks that are current “in play”; criteria includes price movement, range and liquidity (500,000 shares on the day, 20-day average volume of 1.5 million shares). The entire list has been ranked and sorted relative to performance against the S&P 500 and the NASDAQ 100 indexes. Please refer to the podcast for background information.

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• Right click ON THIS LINK and select “Save Target/Link As…” to save the MP3 file to your computer.

We feature Intel (INTC), SPDR S&P Semiconductor (XSD), SPDR S&P Homebuilders (XHB) and Goldman Sachs (GS) as examples of stocks that were at the bottom of the list in the recent past. As a bonus, we looked at WDC, PCP and FWLT, stocks that appeared on using our Trading Ideas for Wednesday.

We also discussed the role decision support tools play in the life of a discretionary trader. Articles referred to are as follows:

• Robot Conducts the Detroit Symphony
  ASIMO is not your typical conductor. It’s gender neutral, stands at a little over 4 feet tall and has no pulse. It’s a humanoid robot that made its conducting debut last night in Detroit.
• Robot Conductors [DOWNLOAD PODCAST]
  Robots! They’re not just for vacuuming anymore. Q speaks with the conductor who may be out of a job.

Intel Corporation (INTC)

• Intel Profit May Miss Estimates on Low PC Demand, JPMorgan Says 2-27-08
  Intel Corp., the world’s largest computer-chip maker, may earn less in the next two years than previously estimated because of weak demand for personal computers and an inventory glut, JPMorgan Chase & Co. said.
• Tech forecasts overshadow strong earnings 2-8-08
  For the tech industry, the latest earnings season has proven a long-stated maxim - stocks don’t trade on what companies have done, they trade on what they are going to do.
• Intel shares slump after disappointing report 1-16-08
  Shares of Intel Corp. plunged more than 12% early Wednesday after the blue-chip tech giant issued a disappointing outlook and reported fourth-quarter results that came up shy of expectations.

CHARTS

Daily bar chart with 50- and 200-day moving averages

Daily bar chart with Swing Line applied

Daily bar chart with InVivo.RMI.Stops and InVivo.RMI.Histogram applied

(more…)

The scan is designed to find stocks that are current “in play”; criteria includes price movement, range and liquidity (500,000 shares on the day, 20-day average of 1.5 million). The entire list has been ranked and sorted relative to performance against the S&P 500 and the NASDAQ 100 indexes. Please refer to the podcast for background information.

(more…)

The scan is designed to find stocks that are current “in play”; criteria includes price movement, range and liquidity (500,000 shares on the day, 20-day average of 1.5 million). The entire list has been ranked and sorted relative to performance against the S&P 500 and the NASDAQ 100 indexes. Please refer to the podcast for background information.

(more…)

Rebounds by Hedge-Fund Stars Prove ‘It’s a Mulligan Industry’
Wall Street likes to consider itself a strict meritocracy, but hedge-fund managers who fail in ugly ways often convince investors to hand them piles of cash so they can give it another go.

Says Ken Phillips, who runs RCG Capital Partners, a Boulder, Colo.-based firm that invests in hedge funds: “It’s a mulligan industry,” referring to the golf term for a second chance after a poorly played shot. “That’s what makes America great.”

. . . It can be helpful to have lost loads of money, rather than a smidgen of cash.

“It’s crazy, but the guy who’s down substantially often will have a lot more options versus someone smaller who hasn’t lost much money,” says Neal Berger, who runs Eagle’s View Asset Management, LLC and invests with funds. “Some investors will say ‘lightning doesn’t strike twice in the same spot,’ or, ‘there must be something smart about him that someone gave him the opportunity to lose so much money in the first place.”‘

It will not be different this time or any other time, because the risks inherent in a manager’s approach to investing or trading remain the same: concentrated bets (go big or go home), high leverage (small setback = wipeout), arbitrage (works until it doesn’t), and the classic, simply reject reality. These are what all the losing funds have in common…

• Unregulated OTC derivatives steady in credit crisis
  [Editor: Bet you didn’t know this!] Banks worldwide have suffered billions of dollars in losses on complex mortgage-related bets in recent months, but the similarly complex off-exchange derivatives market, whose notional value of $516 trillion is nine times that of global economic output, has performed well during the upheaval. The OTC derivatives market is where businesses, pension funds, hedge funds and other professional investors go to hedge against and bet on changes in interest rates, currency values and just about any commodity from oil to oranges. For years, the sheer size of the market has fueled calls for oversight, but U.S. officials believe the hands-off approach has worked and that the market has helped fend off what could have been worse losses.
• Amaranth Founder Sets Up New Hedge Fund
  Nineteen months after his Amaranth Advisors collapsed under more than $6 billion in losses, Nicholas Maounis is back. . . . Maounis is offering something of an olive branch to his former Amaranth clients, who saw more than two-thirds of the once-$9.5 billion multi-strategy shop’s assets disappear when natural gas trades made by trader Brian Hunter went bad to the tune of $6.6 billion in losses. Investors who still had money with Amaranth when it went under in September 2006 will pay no incentive fees for three years, Bloomberg reports. In addition, the fund will charge no management fees, although all investors will share in paying the fund’s expenses.
• Downhill ride in 1st quarter
  Miller’s Value Trust portfolio reads like a roadmap to the hardest-hit segments of the economy. The fund trailed all but four of 660 funds that buy stocks of large companies, according to Morningstar data. . . . Sprint, Miller’s seventh-largest holding, turned out to be another tough loss, falling 50 percent as a worsening economy and the loss of customers to rivals hurt profit projections. Communications and technology stocks, which account for about a third of Miller’s holdings, were laggards among industry sectors. Ever the contrarian, Miller also has invested heavily in financial and housing stocks — both of which have been hammered.
• Former Shooter Employees Seek $200 Million for Currency Fund
  [Editor: So they made money when currencies were trending…] Four former employees of Shooter Fund Management LLP, the London investment manager that lost 40 percent last year, are starting their own firm to trade currencies. Founded by Mark Shooter in 2004, Shooter Fund lost money last year on equity-index trades. Its foreign-exchange portfolio, which relies on computers to buy and sell contracts, returned 34 percent in 2007 and 10 percent this year through April, according to Dacharan marketing documents. “It’s clearly not a positive to be associated with the losses, but it won’t be impossible for them to raise cash,” said Patrik Safvenblad, head of hedge-fund research in Stockholm for DnB NOR ASA, Norway’s biggest bank. “They are just going to have to work harder at gaining trust among investors,” said Safvenblad, whose company is based in Oslo.
• Hedge fund investors increase focus on risk management
  Risk management has joined the performance, philosophy and pedigree of hedge fund managers among the key criteria for investors in manager selection, according to the sixth annual Alternative Investment Survey undertaken by Deutsche Bank’s hedge fund capital group. According to Sean Capstick, the London-based global co-head of the group, risk management has been gaining in importance as an investment criterion since 2005 but its displacement of manager pedigree from third place marks the first time since 2002 that the so-called ‘three Ps’ have been joined by another key selection factor.
• Lampert, Wood Show Risk of ‘Concentrated’ Hedge Funds
  When Jon Wood opened his Monaco-based hedge fund, the former UBS AG trader told investors he’d beat the market by buying stakes in no more than 40 companies — the same way he made $2.4 billion in six years for his old employer. Instead, holdings such as failed U.K. bank Northern Rock Plc and Calabasas, California-based Countrywide Financial Corp., the largest U.S. mortgage lender, imploded. From its start in late 2006 with $3 billion, Wood’s SRM Global Fund lost about 70 percent through March 31, said two investors, who asked not to be identified because the firm doesn’t publicly disclose returns. “These concentrated funds scare the hell out of me,” said Brad Alford, head of Alpha Capital Management LLC, an investment consultant based in Atlanta. “Either the manager knocks it out of the park or he strikes out.”
• Falling Off an ETF Seesaw
  It sounded like a can’t-miss idea: a pair of exchange-traded funds developed by a celebrity economist to track crude-oil futures. One lets investors bet oil prices will rise, the other that they will fall. But in recent days, creator MacroMarkets LLC announced the funds would terminate at the end of June, cashing out shareholders. This fizzle, after a year-and-a-half run, is one of the highest-profile embarrassments for the growing ETF industry over the past year. Turns out the funds, the brainchild of famed Yale economist Robert Shiller, were too smart for their own good.
• State Street Subprime Damages May Surpass Reserve
  State Street Corp., the largest money manager for institutions, may have to pay more than the $625 million it set aside for damages from lawsuits over losses from subprime-mortgage investments made for pension funds.

In an attempt to diversify risk, the industry steers investors toward funds of funds. But the question is this: what’s left for investors after fees paid to fund managers and fund of fund managers?

Hedge Fund Fees Shrink as U.S. Pensions Make Direct Investments
A fund of funds generally charges 1 percent of assets and 10 percent of any investment profits for selecting managers. That comes on top of the 2 percent of assets and 20 percent of profits the underlying managers collect. Hedge funds are private, largely unregulated pools of capital that can buy or sell any assets, betting on falling as well as rising prices.

It seems like people are catching on and going back to basics.

The scan is designed to find stocks that are current “in play”; criteria includes price movement, range and liquidity (500,000 shares on the day, 20-day average of 1.5 million). The entire list has been ranked and sorted relative to performance against the S&P 500 and the NASDAQ 100 indexes. Please refer to the podcast for background information.

(more…)

• Right click ON THIS LINK and select “Save Target/Link As…” to save the MP3 file to your computer.

We covered GOOG, DELL, EBAY, ANN, NKE, VFC, LULU and UA. We touched on sentiment in the oil markets and, as usual, included a few un-PC observations. Last, but not least, we revealed our new theme song, Money Don’t Matter 2 Night. Lyrics and video at MTV. There is also an unedited version of the video by Spike Lee at MTV Canada.

Market Sentiment

Pay attention to what Sharon Epperson said (in the video below) about trying to pick a top in oil: this has got to be the “to infinity and beyond” phase.

• The Big Picture for Investors
  Discussing what the message is from the markets and economy, with CNBC’s Bob Pisani, Sharon Epperson and Rick Santelli
• Consumers Feel Pinched, But Market Isn’t Worried
  [Editor: More “look across the valley” talk…] Oil prices continued to rise at a breakneck pace, and there was fresh evidence that consumers were sticking to the bare necessities, and increasingly using credit cards to fund those purchases. But the market doesn’t seem to be worried. Instead, it’s betting that consumers–on who’s back two-third of all economic activity rests–will make it through this rough patch.
• Capitalizing on Crude
  [Editor: Nothing but glowing good news…] Capitalizing on crude, with Eitan Bernstein, of FBR, and Byron King, of the Outstanding Investments newsletter

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Daniel
I have a question to know if it is possible. If one wants to “catch” a peak although you would not recommend on it how would I know what the band would be on the upside. I mean I have the band on the lower side obviously because it would still be a long position, but what I have seen in the charts it does not seem simply a matter of reversing the difference from the Close or Open to the band.

Teresa
If you wish to ‘pick tops”, there are two types mentioned in The Ultimate Trading Course: the spike top (after a parabolic rise) and the test of top (Trader Vic 2B). These are anti-trend hit and run trade setups, and generally, the InVivo.Stops would still be UNDER the price action.

WYNN was a particularly elegant Trader Vic 2B Test of Top

WM was a particularly elegant spike bottom

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