Browsing articles from "April, 2014"

Sell In May and Go Away?

Apr 30, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on Sell In May and Go Away?

It’s no secret that despite a little bit of a selloff as of late, many stocks are still near their all-time highs. It’s also no secret that it is almost May already. You might be able to see where I am going with this…have you ever heard of “sell in May and go away?” If not, you are sure to hear about it this year. The blog posts and financial commentators are out early with their thoughts on what you should do with your money.

First of all, let’s define this phenomenon in case some of you haven’t heard of it. According to Investopedia, Sell in May and Go Away is:

“A well-known trading adage that warns investors to sell their stock holdings in May to avoid a seasonal decline in equity markets. The “sell in May and go away” strategy is that an investor who sells his or her stock holdings in May and gets back into the equity market in November – thereby avoiding the typically volatile May-October period – would be much better off than an investor who stays in equities throughout the year.

This strategy is based on the historical underperformance of stocks in the six-month period commencing in May and ending in October, compared to the six-month period from November to April. According to the Stock Trader’s Almanac, since 1950, the Dow Jones Industrial Average has had an average return of only 0.3% during the May-October period, compared with an average gain of 7.5% during the November-April period.

There are limitations to implementing this strategy in practice, such as the added transaction costs and tax implications of the rotation in and out of equities. Another drawback is that market timing and seasonality strategies do not always work out, and the actual results may be very different from the theoretical ones.

While the exact reasons for this seasonal trading pattern are not known, lower trading volumes due to the summer vacation months and increased investment flows during the winter months are cited as contributory reasons for the discrepancy in performance during the May-October and November-April periods, respectively.”

And since Tim and the other gurus focus a lot on charts and patterns, I wanted to share this great post from another chart strategist, J.C. Parets of allstarcharts.com

In his post titled “Let’s Talk About ‘Sell in May and Go Away,'” Parets says the math behind this makes sense and we should listen to it. He looked back at the Dow Jones Industrial Average to 1950, and the statistics are “simply staggering” in his words. According to Parets, if you had invested $10,000 but only owned stocks between November 1st through April each year, on April 30th of 2013 that $10,000 would have been worth $775,055. But, if you had done the exact opposite and purchased the Dow Industrials every year on May 1 and sold on Halloween, you would have actually lost $687 over the past 63 years. Yes, you would have LOST money over 63 years!

4-22-14-10k-invested-1950-and-avg-perc1

Check out the above graphic. If that doesn’t make you take this market legend seriously, I don’t know what will.

This wasn’t always the case, but it has been since about 1950. Parets shared a one-year seasonal pattern from the Stock Traders Almanac and encouraged his readers to look at the difference between the pre-1950 period and the behavioral patterns since then. Check it out below:

4-22-14-1-yr-seasonal-since-1901

So, in summarizing this charts, mid-term election years bring even worse numbers. And hey, we’re in a mid-term election year! He also points out that this is traditionally the worst year of the 4-year Presidential Cycle. The average return during this upcoming 6-month period on midterm years is -0.43%. And as Tim would say as well, stats don’t lie. Below is the Presidential Cycle Composite chart for the S&P500 going back to 1928:

4-22-14-Presidential-Cycle

Parets says that based on the Presidential Cycle and 6-month cycle, we are entering a period of time where the US Stock market has struggled historically. However, if history is any indication, this could bring one of the best buying opportunities we’ve had in years.

In an important disclosure, Parets notes that he has been bearish about US Stocks all year long.

FBN Securities J.C. O’Hara also ran some numbers, and they are in agreement with Parets’. He looked at the past 20 years and created a chart of the returns. He told Business Insider that “The majority of the time the market was unimpressive over those summer months,” and that “the majority of the markets returns were housed in the first model that was long the months into May and the months after September.” Check out his chart below:

cotd-176

Weekly Roundup: April 21-25

Apr 29, 2014   //   by Profitly   //   Profitly  //  1 Comment

Time for another weekly roundup of guru trades on Profitly! Remember that we aren’t going to write about every single trade in this post, since that would be extremely boring. We are just covering the big, exciting trades that you all want to learn from.

Tim had yet another great week without any big losses but plenty of big profits. First up we have a $15,945 profit on ARTX. He shorted 50,000 shares on April 21 at $4.49 and bought them back on the 22nd at $4.18. Here were his trading comments: Entry comments: Shorted some as chatrooms saying Seeking Alpha expose coming tomorrow, risky though given the sector bounce today, expose apparently has CEO comments saying they won’t do batteries for electric cars, small position since this is speculative, goal is to make 30-50 cents/share. Exit comments: Locked in HUGE PROFIT, video lesson coming.

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Second we have a $8,030 profit on XOOM. Tim bought 20,000 shares of this stock on April 23 at $23.38 and sold his shares at $23.78 the same day. Here are his comments: Entry comments: Went over this earnings winner the entire http://tim.ly/sykesmc webinar this morning, strong growth, mobile sector, terrible longterm chart, good dip buy, resistance at 23.60 which it just took out quite easily, goal is to sell int he 24s, wish it were lower priced but this is as solid an earnings winner as u can get. Exit comments: NAILED the breakout!! Wanted 24, but only got up to 23.90ish, choppy stock, spread currently 23.70 x 23.96, Congrats especially to http://tim.ly/sykesmc as I just spent basically 2 hours discussing why this stock would breakout ever since we started watching it at $23…now nearly $1/share higher mid-day, taking profits and locking it in…I know its higher priced so it’s not ideal, but STRONG mobile growth, this could keep going.

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Third we have a $5,992 profit on VDSI. Tim bought 15,000 shares at $9.29 on the 24th and sold them at $9.73 the next day. Here are his comments: Entry comments: Buying this earnings winner on late afternoon dip after it got too ahead of itself earlier, multi-year breakout over 9 so limited downside, goal is to sell int he high 9s or low 10s tomorrow, not a volatile stock, kinda like VTNR which is also breaking out to 8.40 today but no news there…gotta buy earnings winner technical breakouts…already have longterm position, goal on this short-term position is far less to sell into a morning spike tomorrow. Exit comments: Now up to $10ish on the analyst upgrade & $12/share price target I LOVE it when a good trade comes together, this stuff is predictable guys, glad you saw it happen, could go more, but I’m taking my solid profit and leaving.

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Now let’s talk about Investors Live, who also had some great trades this week! First up we have a $4,952 profit on PHOT. Nathan bought 95,000 shares of this stock at $0.16 on the 25th and sold them the same day at $0.21. That’s a 37% gain!

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Second we have a $4,131 profit on AKBA. Nathan shorted 2,000 shares of this stock at $26.74 on the 22nd and bought the shares back on the same day at $24.67.

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Third we have a $3,804 profit on SHLD. This was another short. Nathan sold 4,600 shares at $43.69 on the 24th and bought the shares back at $42.86 on the same day.

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Fourth we have a $3,352 profit on LLEN. Yet again, another short. This time Nathan shorted 23,756 shares on the 25th at $0.99 and bought them back that same day at $0.85.

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Then we have two losses we need to note. First is a $2,440 loss on BAS. Nathan shorted 3,500 shares on the 22nd at $28.45 and bought them back at $29.15 the same day.

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Then we have a $6,546 loss FB. Nathan shorted 6,000 shares of this tech stock at $60.05 on the 21st and bought them back the same day at $61.13. 

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Here are links to our previous weekly roundups:

March 30-April 4

April 7-April 11

April 14-April 18

New Feature Highlight: Introducing Karma!

Apr 26, 2014   //   by Profitly   //   Announcements, Features, Profitly  //  Comments Off on New Feature Highlight: Introducing Karma!

We recently introduced you to the Profitly “wall” feature, or “The tool that will revolutionize trading.” As we said then, we are always looking for ways to improve our users’ experience as well as keep the site relevant and useful as technology is always changing and giving us more and more ways to help our users learn to trade, so we aren’t stopping at just creating a wall for our site.

This post is all about another new feature, “Karma!” This is a great way of showing that you learned something from a trader or a piece of content, without leaving a comment. All you have to do is click the “Karma” button on a post and there you go! The trader will get a message when you send them Karma, so they can very well check out your page afterwards and return the favor if they want to.  Karma can also be used to show that you recommend a trader or content to others, so important knowledge and advice is easier and more likely to get noticed.

Karma is also used to see what the best content is out there. In the same Facebook analogy of “Likes,” adding Karma to content shows what people like more qualitatively than views. This comes from our leaderboards. For example, here is the Karama post leaderboard.

Post Karma

You can sort that leaderboard by all time, 1 year, year-to-date, 90 days and 30 days. That way, if you want to know what traders have been particularly interested in over the past 30 days rather than over the past year, you can easily sort that out.

Karma’d traders are the same way. People can see who is best to learn from and helps the community, more than just putting up big numbers. Someone may be a top trader, but if they don’t share it won’t help anyone. You can find the sortable, trader Karma leaderboard here.

Trader Karma

Below is an example of one of Tim’s posts that received a fair amount of Karma. Information like this is now so much easier to find, and we can’t wait for all of you to check it out and see the karma continue to climb.

Example Karma 

Remember that Profitly is your social hub for all things trading related, with more than 42,000 traders and growing, so there is no shortage of people to learn from and talk about the markets with. With the wall and karma features, it’s extremely easy to build your trading relationships.

The Journey To Utopia, Tesla Style

Apr 23, 2014   //   by Profitly   //   Profitly  //  Comments Off on The Journey To Utopia, Tesla Style

Tesla Motors ($TSLA) had an outstanding year last year. It was up more than 350%, that’s outstanding even by Profitly standards where we have massive trades with huge percentage wins. Even so far this year it is up more than 30% while the S&P 500 is only up about 1%.

So should you still buy the stock or is it too late? That is a question that has come up quote a bit lately, especially when the stock fell below $200 this past week. That is seen as a key level for the stock, and Tim often points out that big, round numbers are often important. It’s also important to point out that stocks like Tesla are hard to value, since so much of it is based off of speculation for the future rather than hard numbers with more established companies like P&G or McDonalds.

There was a great post by Josh Brown of The Reformed Broker earlier this week titled, “A funny thing happened on the way to Utopia.”

Here is a chart that he made of the stock dating back to the beginning of 2014.

Tesla-Utopia

As you can see, there was a big spike on February 25. That’s because Morgan Stanley drastically raised their price target for Tesla to $320 from $153 that day. The analyst covering TSLA for Morgan Stanley is Adam Jonas. In his note, he said “Tesla’s quest to disrupt a trillion $ car industry offers an adjacent opportunity to disrupt a trillion $ electric utility industry. If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again.”

If you look at Profitly, there have been more than 3,000 trades on TSLA with 2,385 winners, 1,511 losers, an average gain of $663 or 13.19% and total profits of more than $850,000. The largest gain was from LX21 at $49,632 on August 29.

But Tesla is a lot like 3-D printing in that there is some speculation riding on the stock, which brings risk. If the company does in fact figure out how to store green energy at a low cost, then that is a complete game changer in the auto industry. And if they then master the self-driving car, that brings the Utopia. Here is a video link to the self-driving car concept.

Here is the chart that Morgan Stanley made for Tesla’s path to Utopia.

cotd-130

The analyst at Morgan Stanley went on to say, “Beyond the practical benefits, we estimate autonomous cars can contribute $1.3 trillion in annual savings to the U.S. economy alone, with global savings over $5.6 trillion. There will undoubtedly be bumps in the road as well, including the issues of liability, infrastructure, and consumer acceptance. However, none of these issues appears insurmountable.” He then suggests through various charts that the Utopia could be reached by 2026. We could see far more in terms of gains if this is the case, but Business Insider correctly points out that these types of comments from Wall Street are often signs that we are closer to the top of the market than the bottom.

Josh Brown also points out that “investing based on this kind of thing is portfolio poison. Because eventually, valuation matters. And once it does, wishes and hopes and wild-eyed optimism about the future begin to get discounted really quickly.”

Profitly gurus like Tim often point out that evaluating your risk to reward ratio before entering a trade will help you become more profitable. If you have an equal upside and downside, it probably isn’t a good trade. But if there is far more upside potential than downside potential, it is a great trade. With stocks like Tesla, you have to look for technical levels to evaluate where the stock may be headed. Sure, it could have a huge upside, but it has also run up a lot, as we pointed out in the first part of this post. So if you do want to buy this stock, do so when it is holding support, rather than when it is failing to break out of its resistance.

Use tools on Profitly like stock searches to find out what other traders are saying and doing. Are they shorting it, buying it, staying out of it? Then maybe you can connect with other traders that are looking at the stock and see what is catching their attention. Why are they bullish or bearish? Is it a technical pattern, news that just came out, or something else?  

Weekly Round Up: April 14-18

Apr 23, 2014   //   by Profitly   //   Best Trades, Profitly, Profitly Weekly  //  Comments Off on Weekly Round Up: April 14-18

Welcome to part three of our weekly Profitly guru roundup! We all hope you are enjoying these so far and are learning a lot from our amazing gurus and the trades/comments they are posting on our site! This was a shortened trading week because of the Easter holiday (markets closed on Friday), but that didn’t stop many of our traders from making some great trades.

Our winner this week is Tim. Get this, he had ZERO losers this week! Now that is smart and disciplined trading if I’ve ever seen it! Here are the highlights:

First he had a $2,538 profit on TGRO. He shorted 35,000 shares on April 14 at $0.40 and bought them back that same day at $0.32. His comments were: Entry comments: Shorting the failed morning spike, IB & my special broker, shares going quick, goal is to cover for 20-30% gains this week. Exit comments: Closed out TGRO short, captured it on live video but video failed to download as I’m on crappy internet in a NYC hotel, ah man really pissed, it was a great live trade video lesson, oh well, I’ll do a recap now, classic morning panic on 1st red day straight out of my DVDs, LEARN PATTERN #6 FROM MY 7 STEP PENNYSTOCKING FRAMEWORK DVD http://tim.ly/ts7steps gimme setup here, glad several brokers had shares to short too.

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Second, we have a $2,270 profit on NEON. He bought 35,000 shares on April 15 at $5.03 and sold them the same day at $5.10. Here are his comments: Entry comments: Risking a bit that this Seeking Alpha NEON story about being in HP printers and Apple’s new car system will spike this to the mid 5s http://tim.ly/1gASHIh all I want to do is make 40-50 cents/share, limited risk, but definitely speculative, be careful. Exit comments: Got a spike to the 5.20s, now 5.15 but not much more, tons of sellers everywhere…probably played it too safe, decent trade for a speculative buy, tough stock, tougher market, play safe.

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Last but not least, we have his biggest winner of the week, a $13,716 profit on SPLI. He had both a huge position size as well as a 30% gain in the stock price, so it was a perfect trade! He bought 636,000 shares on April 15 at $0.07 and sold them the next day at $0.09. His comments were: Entry comments: WAY off of its #wolfpack pumped up highs of 40 cents, nice afternoon breakout above mid-day resistance at .064, technical support at .05 so I’m risking a penny or so, upside is 10 cents/share so nice potential gain if I’m right that tomorrow is bounce day, othr weed stocks like ERBB have gone green, VERY small position $-wise though for me since this is speculative, learn my 7-step http://tim.ly/ts7steps rules, possible #5 pattern. Exit comments: Got a nearly 50% winner from my buy alert basically just holding overnight, PERFECT gap up play, maybe it goes more, but I’m happy with my profits, congrats to everyone, be sure to lock in profits though, great video lesson coming. 

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Then InvestorsLive and Superman pretty much tied this week.

We’ll start with InvestorsLive. The first winner he had this week was a $1,218 profit on SPWR. He bought 5,502 shares on April 15 at $26.67 and sold them the same day at $26.90.

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Second we have a $867 profit on SPWR. He bought 5,000 shares on April 15 at $26.49 and sold them the same day at $26.67.

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 Third we have a $816 profit on ORMP. He shorted 2,000 shares on April 14 at $14.76 and bought them back at $14.07 later that day.
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 Fourth, we have a $1,299 loss on INSM. He bought 6,250 shares on April 16 at $12.98 and sold them at $12.78 later that day.

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Lastly we have a $1,636 loss on BAS. He shorted 11,700 shares at $28.07 on April 15 and bought them back at $28.10 later that day.

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Even though Superman had an off week, he’s still up more than $600,000 year-to-date! That’s one of the biggest reasons that you can’t expect to make the same amount each week. There will be some weeks that you do really well and others where there just aren’t any trades.

Anyways, here are his big trades for the week. Let’s start with his big winner first. Superman had a $9,400 profit on UBIC. He bought 15,000 shares at $9.74 on March 11 and sold them on April 14 at $10.37. His comments were: Entry comments: UBIC DO NOT CHASE !! THIN AND VOLATILE ! SWING – this was a $8.38 1.1m float IPO with 3.4mm o/s recently announced a 10 for 1 forward split. They do BI / Big Data for Legal http://finance.yahoo.com/news/managing-big-data-challenges-legal-204212618.html. Exit comments: may go higher but played this wrong and glad to be back.

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Then we have two losers. The first is a $2,085 loss on PESI. He bought 5,000 shares of the stock on April 9 at $5.34 and sold it on April 14 at $4.92. His comments were: Bought on Chart strength but was weakened with overall market. May still work.

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Second we have a $9,436 loss on BOSC. He bought 7,100 shares at $6.58 on April 4 and sold them on April 14 at $5.27. His comments were: Broke Rule and held into earnings. Made tons of $ on this stock last year but bad example here. Follow rules not me as I broke a rule here and lost $. SO basically this was a scratch week.

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3D printing stocks: what is 3D printing and what is it used for?

Apr 18, 2014   //   by Profitly   //   Profitly  //  Comments Off on 3D printing stocks: what is 3D printing and what is it used for?

Cube Colors 3D systems

Just last summer, 3D printing stocks were the hottest thing in town. Everyone wanted to know how to trade them and everyone thought they were going to continue to go through the roof.

But alas, they have taken quite the tumble recently. Investors are now thinking twice about buying into these companies that no longer seem to have the appeal that they once did. The last couple of weeks in particular they have been hit hard, as tech and biotech companies have gone out of favor.

“The 3-D-printing industry isn’t revolutionary, it’s evolutionary,” Andrew Left, a notable short seller and chief of Citron Research, told CNBC. “In a hot market like this, you get a good story. It just captures peoples’ imaginations, but in this case it also captures peoples’ dollars.”

Here are just a few examples, via wall street cheat sheet:

  • • 3D Systems (DDD) traded at $10 per share at the beginning of 2012, at $40 per share at the beginning of 2013, and it reached a peak of $97 per share. The company earned just $0.44 per share last year.
  • • ExOne (XONE) started trading in February of last year at about $30 per share. It reached nearly $80 per share last summer. The company is losing money, and it had sales of about $3 per share last year.
  • • Organovo (ONVO) traded at under $2 per share in 2012. It reached a peak of over $13 per share in 2013. The company has no revenues.
  • • Voxeljet went public in October of last year at about $25 per share. The stock quickly rose to $70 per share. The company has just a few million in sales despite a valuation that reached $1 billion.

Pretty crazy, right? Profitly guru Super_trades made two massive trades with 3D printing companies. One for a $94,613 profit and another for a $140,122 profit. Those are actually two of his biggest winners (although other trades were even more profitable).

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So let’s explain what exactly 3D printing is. A 3D printer is a type of industrial robot that can carry out an additive process under computer control. The technology has actually been around since the 1980’s, but these printers were not widely available until 2010, hence why they never really had much attention until recently.

What is 3D printing technology used for? Well, the big uses are prototyping and distributed manufacturing with applications in areas such as architecture, construction, industrial design, automotive, aerospace, military, engineering, dental and medical industries, biotech, fashion, footwear, jewelry, eyewear, education, geographic information systems, food, and many other fields, according to Wikipedia. 3D printing is a process of making a three-dimensional solid object of virtually any shape from a digital model. 3D printing is achieved using an additive process, where successive layers of material are laid down in different shapes. 3D printing is also considered distinct from traditional machining techniques, which mostly rely on the removal of material by methods such as cutting or drilling (subtractive processes).

Here is a video example of a 3D printer in action: https://www.youtube.com/watch?v=8aghzpO_UZE

So last summer, investors believed 3D printers were going to revolutionize manufacturing, as these companies had hopes of printing things like car parts, shoes, etc. Now investors are more weary, and the stock prices reflect that.

We are not saying whether you should or should not buy a 3D printing stock, we are just urging caution like we do with any stock. When people get carried away, they don’t look at things like earnings, sales, expenses, or growth prospects. They just view the companies as a “must own.”

You need to look for the companies that have more than just a story with hype, look for secured patents that aren’t expiring in the near future or pending and perhaps wait until the stock goes down a bit and then holds a support level so you have a good chance of “buying on the dip” especially since these stocks are known for their volatility.

So essentially, the upward run of 3D printing stocks can largely be attributed to hype rather than to an imminent revolution in consumer technology.

3D printer maker Voxeljet saw its stock price rally fivefold to $70 a share about a month after its October initial public offering. But the company sold 3 million shares for $15 each just last week, according to the WSJ.

Through last Thursday’s close, their stock had plunged 74% from its Nov. 18 post-IPO high. By some measures, the pricing was among the weakest for U.S.-listed follow-on offerings this year. The $15 price is 42% below Voxeljet’s close on March 27, the day it registered to sell the shares. Ouch. This is the perfect examples of why you need to be careful trading these stocks. It is also one of the biggest reasons you need to follow the gurus and learn how to trade before jumping right in to the stock market. You can be easily burned if you are not properly prepared.

 

The tool that will revolutionize trading

Apr 16, 2014   //   by Profitly   //   Features, Profitly  //  Comments Off on The tool that will revolutionize trading

There have been some very exciting developments at Profitly lately! We have revamped a lot of the features on the site and added plenty of new ones as well. We are always looking for ways to improve our users’ experience as well as keep the site relevant and useful as technology is always changing and giving us more and more ways to help our users learn to trade.

tim wall

One of our newest features is a “wall” (example posted above) for all of the users and the gurus on the site. Now you can do things like give karma to posts and users that you like, comment on posts that you like, reply to comments on different posts, share charts and photos, and share posts and trades on your own wall.

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This is your social hub for all things trading related! Profitly has 42k+ traders and growing, so there is no shortage of people to learn from and talk about the markets with. It’s now easier than ever to build trading relationship, which are extremely important for both those that are just starting out as well as the more experienced traders. A newbie can learn from others and avoid making mistakes that they likely would have otherwise, and experienced traders can continuously remind themselves of the basics and continue to better understand trading by teaching others their techniques.

For example, user “Fat bee trader” posts a ton of charts that can be extremely helpful to people that have the same trading style as him.

.fatbee

By having the wall, you will also be able to interact with traders on the site or find other traders to follow. When you click follow, you will be notified when they post on their wall. You will also be notified when someone comments on your post or mentions you. You can click on a users’ link to see their wall, trades and other information they have posted on Profitly. This has made it easier than ever to help you learn how to trade and better understand various trading techniques. There is an extremely wide variety of traders on Profitly; from short sellers to options traders to long term investors. Now it’s easy to follow the ones that you want to hear from and block out the ones that you don’t want to listen to.

And last but not least, we’re sticking with the social trend and you can set up posts to automatically share on your twitter feed. That way, you won’t have to do posts twice and you will get more followers both on Profitly and Twitter. Before, just trades would be posted by most users rather than commentary.

 

Weekly Round Up: April 7-11

Apr 14, 2014   //   by Profitly   //   Profitly  //  Comments Off on Weekly Round Up: April 7-11

Time for the second weekly roundup of guru trades on Profitly! Last week it was Superman that was the most profitable, but this week we have a new leader! It’s our very own Tim Sykes. Remember that we aren’t going to write about every single trade in this post, since that would be extremely boring. We are just covering the big, exciting trades that you all want to learn from.

Tim had a great week without any big losses but plenty of big profits. First up we have a $4,365 profit on MDBX (http://profit.ly/1MolQC). He shorted 4,000 shares on the 11th at $23.25 and exited his position that same day at $22.10. His comments were: Entry comments: Reshorted after the COO quit this morning, this tweet http://tim.ly/1kQCeiK meaning a new expose is coming likely next week; the stock took out 23.80 two-month support, goal is to make $1-3/share, same author who I shorted ICLD at 10.60 due to his expose before it dropped to the 6s. Exit comments: Got my $1/share goal, could drop more, but mid-day trades are scary, I only shorted because of that tweet that just came out about a new expose coming.

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Second we have a $2,050 profit on GOGO (http://profit.ly/1MokNn). Tim bought 5,000 shares of the stock at $18.45 on the 9th and sold it at $18.86 later that day. His comments were: Entry comments: As I said in chat I might buy given the contract with Air Canada today, this is at the bottom of its recent range, if it starts spiking on this news, it can jump $1-2/share quickly, good risk/reward although by no means a gimme given the chart pattern. Exit comments: Got a nice breakout past the day high and it could keep going, but I’m taking my nearly 50 cents/share and going as I don’t trust this stock, now 19 as I type this so played it a bit too safe again, but more important to teach u to buy contract winners on intraday dips.

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Third we have a $4,340 profit on MY (http://profit.ly/1Mok9W). Tim bought 65, 265 shares at $2.97 on the 8th and sold them the next day at $3.03. His comments were: Entry comments: Bought this earnings winner on afternoon consolidation 15 cents/share off its 3.10ish higher, goal is to sell at those highs or ideally if it can break it tomorrow morning in a spike like it had today, next resistance at 3.10-3.15 is 3.30ish so that’s my ultimate goal, cheap play in hot alternative energy sector, not gonna be a huge winner, but only like 5-10 cents/share of risk if I’m wrong given the news; price action. Exit comments: Got a puny gap up/morning spike so I play it safe and get out, no0w 3.06 so I played it too safe, it might very well spike more but it might not, I want to teach you to be methodical with your trades, go into trades with a thesis, if it doesn’t play out, get out and cut losses quickly….yesterday’s big spike was RIGHT at the open so no go today I’m out…congrats to those who get it.

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Last but not least, we have a $2,897 profit on ITKG (http://profit.ly/1Mojsn). Tim bought 75,000 shares of the stock at $0.34 on the 7th and sold them the same day at $0.38 for a nice 10% gain. His comments were: Entry comments: Added a short-term position on top of my longterm position on news today with Hanwha expanding their upcoming revolutionary plastic, LQMT gets all the press/rumors but this company has the big contracts, goal is to sell in the .40s. Exit comments: Stock spiked a bit, but overall market is VERY weak and smallcaps especially like YOD, SMSI, EKSO are getting wrecked…not the time to be speculative, taking safe profits here, still holding longterm position though.

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Next up we have InvestorsLive. The first trade we’ll cover is a $3,052 profit on ISR (http://profit.ly/1Mok61). He shorted 40,000 shares of the stock on the 7th at $3.22 and bought them back later that day at $3.14.

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Next up we have a $8,369 profit on PBR (http://profit.ly/1MokMj). He shorted 20,000 shares of the stock at $14.42 on the 8th and bought them back at $14 later that day.

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Third we have a $4,230 profit on FB (http://profit.ly/1MolOr). Nathan shorted 4,000 shares of the popular social network on the 10th at $62.86 and bought them back that day at $61.80.

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Then we have two losses. First is a $2,415 loss on BAS (http://profit.ly/1MokwC). He shorted 4000 shares at $26.70 on the 9th and bought them back on the same day at $27.29.

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And his second loss was a $8,917 one on FB (http://profit.ly/1MokwA). He shorted 17000 shares on the 9th at $61.10 and bought them back at $61.62 that same day.

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Last but not lease we come to Superman. He’s still averaging a $20,000 weekly profit over the past two weeks, so I’d say he’s doing pretty dang well. He had other stuff gong on this week and there just weren’t as many plays so he wasn’t trading as much. That’s smart since if you try to trade when you have too much going on in other parts of your life, you can easily step away from the computer and miss a key entry or exit point and lose money. Make sure you focus on your trades, especially if they are large positions. There is also a major lesson in this: some weeks there are tons of trading opportunities while others there are very few. Many people go into trading thinking that they will make roughly the same amount each week, and that is far from the case. For example: last week Superman made around $40,000, while this week he made about $1,000. I also remember a week around Thanksgiving where he made something like $100,000. You have to have patience in this business and let the opportunities show themselves rather than forcing trades.

Anyways, like I said he made about $1,000 this past week according to Profit.ly, and that came from this trade on VTNR (http://profit.ly/1Moiqy). He bought 10,000 shares at $7.32 on April 3 and sold them at $7.45 on Monday April 7. His comments were: Entry comments: TRADE – personal stop loss around 7 and i will sell if it goes against me ….personal target 7.75-8 plus if it keeps going…former watch list pick from 5’s. Exit comments: was underwater 6k and made small profit may very well still go higher as chart in play.

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What is “BRIC” and why should you care?

Apr 11, 2014   //   by Profitly   //   Profitly  //  Comments Off on What is “BRIC” and why should you care?

Over the past five years, the average return for the funds in the Investment Management Association’s Global Emerging Markets sector was 65.7 per cent. They underperformed the MSCI Emerging Markets Index, which rose by 69 per cent over the same period.

Nothing new here, you might well think – the average active manager underperforms the benchmark, often owning so many shares that the fund becomes a “closet index tracker”, replicating the performance of the index but with the added drag of fees and dealing costs. Far from being a surprise, underperformance is a near-certainty.

You could avoid it by investing in an index fund instead. Had you bought a fund that tracked the MSCI EM Index you would indeed have fared better over the past few years.

But you would still have done significantly worse than if you had bought a fund that tracks a developed-world benchmark; the FTSE 100 is up by 102 per cent and the S&P 500 by 124 per cent over the same period. Faced with this experience, it must be tempting for investors to conclude that the assumption of superior returns from emerging markets is just plain wrong.

But the peak of disappointment would be if you had bought into one of the most popular themes of emerging market investing over the past decade and put money into a Bric fund. The acronym Bric was coined by Jim O’Neill, then an economist at Goldman Sachs, in 2001 and stands for Brazil, Russia, India and China. It was supposed to identify the four economic powerhouses of the future, and plenty of passive and active products have been constructed and promoted around it.

Surely few EM investments can have performed better than a Bric fund? Wrong again. First off, in economics BRIC stands for the countries of Brazil, Russia, India and China.

Why group all of these countries together? Well, they are all deemed to be at a similar stage of newly advanced economic development. Jim O’Neill, an economist at Goldman Sachs, coined the term in a 2001 paper “Building Better Global Economic BRICs”. The thesis of his paper was that the economic potential of Brazil, Russia, India and China is such that they could become among the four most dominant economies by the year 2050. These four countries are among the biggest and fastest growing emerging markets, and the term has continued to be used as a symbol of the seeming shift in global economic power away from the developed G7 economies towards the developing world.

They have taken steps to increase their political cooperation, mainly as a way of influencing the United States position on major trade accords, or, through the implicit threat of political cooperation, as a way of extracting political concessions from the United States, such as the proposed nuclear cooperation with India.

The projections for the future of the BRIC countries has quite the variance, however. Some suggest that they might overtake the G7 economies by 2027. Goldman Sachs has argued that, although BRICs are seeing rapid development, we shouldn’t see their combined economies eclipsing the combined economies of the current richest countries in the world.

South Africa later joined the bloc despite economists at the Reuters 2011 Investment Outlook Summit dismissing the prospects of South African success . O’Neill actually told the summit that South Africa, at a population of under 50 million people, was just too small an economy to join the BRIC ranks. But after the BRIC countries formed a political organization among themselves, they later expanded to include South Africa, becoming the BRICS.  On June 16, 2009, the leaders of the BRIC countries held their first summit in Yekaterinburg. Since then they have met in Brasília in 2010, met in Sanya in 2011 and in New Delhi, India in 2012.

Following O’Neill’s report, the BRICs received increasing attention. The FTSE BRIC Index is below:

Year-on-Year Performance – Total Return
Index % (USD) 2009 2010 2011 2012 2013
FTSE BRIC 50 94.4 9.1 -19.5 12.7 -2.5
FTSE All-World BRIC 99.5 11.7 -22.9 14.0 -4.1
FTSE Emerging 82.6 19.8 -19.0 17.9 -3.5
FTSE All-World 36.2 13.2 -7.3 17.1 23.3

 

As you can see, their performance in 2009 was absolutely outstanding, especially compared to the Dow Jones Industrial Average, which returned 19% that year.  But when looking at the other years, it hasn’t done as well. And this has caused many to leave these funds focusing on BRICs behind.

Even though it looks like the BRICs will account for almost a third of the world economy by 2020, up from 20 percent now, applying the concept to equity investments has proved less rewarding. In indices, there are just certain companies in those countries that are in the fund, so you can’t just pick and choose which companies or sectors within those countries that you think will do well and buy them.

So let’s go back and look at some returns. From 2001 to 2007, MSCI’s BRIC index returned over 500 percent, which was a significant outperformance versus emerging markets. Then, over the past 10 years, MSCI’s BRIC index has returned 450 percent, according to Thomson Reuters. That is outstanding compared to 320 percent on emerging markets and 98 percent on developed markets. But when you start digging into the data, you realize that much of those gains came from early on in the cycle, just like the table above for the FTSE Indices.

Over the past five years, the MSCI BRIC Index is up just 44 percent, which is underperforming both emerging markets generally and developed markets such as the US and UK.

Obviously, this has taken a toll since 2001, with the funds’ asset base being nearly cut in half from the peak in 2007 to around 12 billion euros, according to data from Lipper. There were also outflows of $1.1 billion from the funds in 2012, extending last year’s $5.4 billion loss, according to EPFR Global.

Comparatively, broader emerging funds still have plenty of interest, taking in $18 billion this year.

So is this the time to buy? No one is saying for sure, but with disappointing economic reports continuing to come out of China, you may think about putting your money in something else.

 

Earnings Season: How to Play It Like The Gurus

Apr 9, 2014   //   by Profitly   //   Profitly  //  Comments Off on Earnings Season: How to Play It Like The Gurus

Even though many of the Profitly gurus go by technical analysis rather than fundamental analysis, they love playing earnings. Why? Because stocks can become very volatile during earnings season! That means they will have bigger movements and there’s huge potential for profit. The stocks are also likely to move past technical levels like support and resistance, so trading on technicals comes in to play.

So what exactly do earnings represent and why can they cause such volatility? Below is a primer on earnings that comes from several websites including Investopedia and The Street.

First things first: earnings are essentially the company’s profits in a given quarter, so it comes four times a year. Think of it as their report card. Take their revenue from selling something, subtract all the costs to produce that product, and you have earnings. This gets more complicated once you dive deeper into it, but we’re going to keep it simple for this post. Earnings=how much money they make. The confusion often comes from terms that get thrown around like bottom line, net income, and profit. These are all synonyms of earnings, according to Investopedia.

So let’s talk about another earnings measure: earnings per share. EPS is a common ratio used by analysts when comparing companies. In order to get EPS, you take the earnings left over for shareholders and divide by the number of shares outstanding. Since every company has a different number of shares, comparing only companies’ earnings figures does not indicate how much money each company made for each of its shares.

Example:

ABC and XYZ each have earnings of $2 million. ABC has 500,000 shares outstanding while XYZ has 1 million outstanding. ABC has earnings of $4 per share while XYZ has earnings of $2 per share.

Before earnings are reported, analysts have estimates on what they think any given company is going to report. This is then compiled into a “consensus” that many look at as the target for earnings. When a company comes out with a number that is higher than the estimate, it is known as “beating estimates” or an “earnings surprise” and the stock usually moves higher (although guidance is a huge part of the report as well). If a company releases earnings below these estimates it is said to be an “earnings disappointment,” and the price typically moves lower. Earnings season is all about expectations, both for the numbers they report as well as the guidance for the future. One of the biggest mistakes people make is not paying attention to the future, and we’ll dive into that a little later.

When a company has cash from making money, it can do one of two things. It can improve products and/or develop new ones, or it can send that money directly to shareholders in the forms of a dividend or buyback. There are pros and cons to each. If they send the money directly to shareholders, you obviously make money, but it can also signal that the company doesn’t have anything better to do with the money itself (running out of ideas). So, more mature companies typically send out dividends or do buybacks, while younger and growing companies tend to reinvest their profits.

But as you dive into this report, keep in mind that because it is such an important document, and because it is released by the company itself, it is in the company’s best interest to present as rosy a picture as possible without violating any Securities and Exchange Commission (SEC) regulations.

So what are the different sections you’ll find in the report? First, take a look at the press release. Then, here are components of the quarterly 10-Q filing:

Part I: Financial Information

  • Item 1: Condensed Consolidated Financial Information
  • Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
  • Item 3: Quantitative and Qualitative Disclosures About Market Risk
  • Item 4: Controls and Procedures

Part II: Other Information

  • Item 1: Legal Proceedings
  • Item 1A: Risk Factors
  • Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
  • Item 3: Defaults Upon Senior Securities
  • Item 4: (Removed and Reserved)
  • Item 5: Other Information
  • Item 6: Exhibits

There are several ways to go about looking at this report. Some skip the financial data to read about management’s take on the market and the risks facing the company while others jump right into the numbers.

When looking at the financial information, keep the following questions in mind:

  • How did the company perform over the last quarter?
  • How did the performance compare to the previous quarter, or to the same quarter in previous years?
  • Have revenues improved or taken a hit?
  • Is the cost of sales increasing, meaning that it is more expensive to bring in revenue?

You’ll also need to get a feel for risks the company may face in the future. Check out things like legal proceedings. Outstanding lawsuits have to be reported along with a brief description of what the lawsuits are about. Also review Item 1A (Risk Factors). Information here will be detailed and straight to the point, primarily because this is a document filed with the SEC and companies have to be honest and forthcoming.

 

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