Tuesday, May 16, 2006

Some Ideas to Gnaw On

A pretty ho-hum day on the market today, but that's no big surprise. A look at the past few years of the S&P 500 indicates there's ample room on the downside still, even within the confines of the ascending wedge pattern. The Fibonacci retracement levels aren't really worth considering at this stage, since we're still in the uncertain zone.


I've got a few short recommendations to consider. The first is CSX, which is a Transports component. This is sky-high and seems to have lost steam. This is optionable and, to my way of thinking, presents a very positive risk to reward ratio.


As cruel as Hansen Natural has been to us poor bears, I can't resist suggesting it - - this one is just insane, folks. Bananas. Late 90s style "this time it's different" Internet mania. Tulip country. You get the idea. Put in a stop at $202. (And could someone please explain to me why there are no options on this one? Please?)


A tip of the paw to buddy Michael Kahn for suggesting Marvel Technology (MRVL) a few days ago in his own column. This looks like a beauty. It's also been clobbered the past couple of days.


Union Pacific (UNP) looks awfully toppy too. This one to me seems a slam-dunk.


Lastly, in the same spirit as my Time Warner question last week - - - could someone tell me who trades Sun? And why? This has been about a $4.50 stock for years, and trades ten million shares a day. Someone responded to my TWX question by suggesting it was for capital preservation. Excuse me? I can introduce you to some good certificates of deposit that are safe and throw off similar gains (better, actually). So what's the deal?

8 comments:

Super Bull said...

Tim,

I also want to short HANS but I would prefer shorting it using options. But this darn thing doesn't trade options. How strange and frustrating!

costas1966 said...

A little help for Hurricane5. Don't get into the trouble writting today Hurricane5. Whatever you could possibly can say I wrote it below. Actually you can use my writting as a template for any future things that you may have say.


Hansen will go to $400. Csx is on its way to $100 and MRVL is a great buy since the money will rotate back to technology stocks. I Don't understand why you want to short stocks in a bull market. In a bull market 4 out of 5 stocks are going up, so buy ntri as soon as possible. By the way I followed your advice and shorted hans at $97.00 and I lost more thab 100% on my money.

mike said...

I have a question about how long you hold your shorts (or how long you hold the puts if you buy them) as your short list seemed to change a fair amount between posting your lists.

Do you plan to hold for a longer period waiting for a large drop/retracement? or you play until a resistance line or some other factor is hit; get out; then re-enter later?

costas1966 said...

All jokes aside, hans could very well have had a blow off top. You want to short this as close as possible to 202 and the volume needs to contract as it gets up there. The stop should be a little above $202.

mike said...

Tim:

One other question... I've looked at various longer term shorting strategies and they often talk about shorting when things break under a 30 week or 200 day moving average. Obviously you lose some of the initial short but many percieve this "safer." You obviously like to jump in it seems as stocks top rather than after a topping pattern has been established. Can you comment on why that is from your perspective?

Thanks

Hurricane5 said...

The only reason to short HANS is if you believe they will not earn $4 a share in 2006. Period. You do not short a stock because it goes up over a long period of time. The only reason to short a stock is if you believe they will miss expectations. Stocks trade based on earnings. Period. HANS has earnings. A company growing at 75% over the last 5 years will not trade at 5 or 10 times earnings. You have to pay a premium for that growth. That is why it will go higher. That is why GOOG will go to $600. That is why NTRI is going to $120 as a weigh-station to $200. End of story.

PB said...

Hurricane5 has never heard of stocks getting ahead of themselves! I guess you seem to think that HANS can keep growing at 75% for the next five years. If that's the case, then I just saw Elvis at the mall!!!

Super Bull said...

I think Hurricane5 has a point. Stocks are traded based on earnings. Unless you are buying or selling indices, it doesn't really pay to figure out whether it is bull or bear markets. If you think a company is going to earn lots of money, then buy it. On the other hand, if you think a company is going to lose money , then short it. It maybe as simple as that. So today, I covered all my shorts and am looking for buying opportunities.