Biggest Pump and Dump in World History?

    Not everyone is in love with #Bitcoin.  I, for one, am highly suspicious of this circularly defined "commodity" oddity that is backed by ITSELF.  

How does Block-Chain Crypto work?  well, you can search the web for "Block Chain" and you'll get a lot of information; perhaps too much.  In a nutshell, Bitcoin is encrypted initially and every transaction that occurs with the coin adds to the randomization of the coin itself, and as I understand it without a server on one of the Bitcoin exchanges to decrypt the coin, it is indecipherable.

So, EVERY transaction made with a particular Bitcoin is in the history of the bitcoin and any attempt to introduce a new bitcoin to the market will be discovered by the exchange because either the originating data will be incompatible, out of sequence, or just outright unreadable.  This makes it more secure right?

Not so fast.  I'm an engineer and I can tell you that one man's bomb shelter can also double as a fire-trap and coffin/grave.  In a kind of "fight to the death" process, the exchanges upon which Bitcoin is traded get reduced from time to time; I think I read somewhere that every 6 months they cut the number of exchanges in half, keeping only the top holders.  Eventually, there will only be one exchange remaining; like the movie, Highlander.  If the few or one server is wiped out in a fire or terrorist attack, then all the Bitcoins are gone - FOREVER.

It's just money, right?  Again, not so fast.  Remember?  EVERY TRANSACTION is recorded in EVERY BITCOIN?  EVERY ONE.  Remember those RUSSIAN HACKERS and their #RansomeWare?  What was the currency they demanded for payment?  

Oh yeah, #Bitcoin!  It's almost like they were COLLECTING the fixed finite number of Bitcoins in existence, and NOW they're going to #CashIn.

Yep! The evidence of all those cyber criminals' activities, who they worked for, how they're all connected, is ALL DOCUMENTED in the Bitcoins.  While it's not officially a true commodity they might be a target for a raid and acquisition of intelligence.  But once they become a recognized commodity, they will be protected by a grand Catch-22 because it will require a Warrant to get access to any particular bitcoin's history, with evidence of the crime tied to that Bitcoin, so that it can be decrypted to reveal the evidence of criminal activity it holds, which cannot be revealed without the server that drives the exchange.  If that server is destroyed in a terrorist attack or even a "accidental" fire, then ALL THE BITCOINS on that server are GONE - FOREVER.  All the evidence of criminal activity is GONE - FOREVER.  

The money spent on those bitcoins?  ONE HUNDRED PERCENT UNRECOVERABLE.

If this doesn't scare you, you don't understand what's going on.

Oh, and Happy Pearl Harbor Day.

Paul

Friday's Bear Alert - 2016-02-12

There's always a bear market somewhere, and bears eat well.

    My last Bear Alert for this week is HR.  This may be heading into a bounce but it has broken its upward trend.  Like all the REITs I've discussed this week, and there are many more like it, it has high multiples:

    Beyond that, they have a debt-to-equity greater than one, and the EPS while expect to rise this year, is expected to fall next year, and it still trades at a P/E multiple of over 50.

The analyst target price is now lower than the current trading price.

So let's take a look at the chart:

    As you can see from here, the price has broken below the daily MA50 and has closed below it for the last 3 days.  Now this changed in after hours trading yesterday with some sizable purchases:

    There was more volume after hours than there was the rest of the day, which wasn't small either.  This might be a short seller covering, or a bull going VERY long.  The thing is, when I did some Fibonacci work on this I don't see the bottom happening until next Friday, and the overall market trends are likely to weigh on this.

    I'm seeing a price range of $26.92 - $26.97 by February 19th.  After that I expect to see a rally that but strong resistance at that Daily MA50, and certainly at the weekly MA10 (below) as it has broken its upward trend bottom.

    Good luck with your own paper trades.  I'll have to finish my special post on NIRP this weekend, but you can trust that it will be a worthwhile read.

Disclaimer: This blog is for informational purposes only.  I may or may not have positions, long or short, in any stock or security mentioned anywhere on this site or elsewhere at any time.  It is the sole responsibility of the reader to interpret the contents here, and to seek the advice of a qualified financial professional before engaging in any trade.

Thursday's Bear Alert - 2015-02-11

(** UPDATED - See Bottom **)
(** UPDATE - 2/12/2016 - See Bottom**)

My Bear Alert for today is Realty Income Inc (O - NYSE).  I can't call it a bad company, at least not yet.  But it still trades at a high premium.

P/E = 51.62
Forward P/E = 53.07
PEG = 11.39
P/Sales = 14.08

I'm going to save the compelling piece for last, the 2 things that made it today's alert.  With a market of Fed tightening, there's no way I can see that multiples like this will be sustainable.  don't kid yourself, Janet NEEDS to tighten and very soon (more on that in my special post later today).  The PEG ratio says that by this time next year the earnings will be 453% higher than what they are today.  How?

Do they expect to raise rents by that much? Will they be able to accumulate that much more realty in that time while paying out at least 90% of taxable earnings as dividends.

Call me a Descartian skeptic, but I'm not buying these share prices.  Assume you bought shares today.  If you took your portion of the sales alone as cash, it wold take 14 years to get your money back.  To me, that's priced for perfection.

So here are the two reasons it's on today's alert:

1: O is trading at it's all time highs, in a market that shuns high multiples, with looming bankruptcies in the oil market, and credit stress around the globe - risking bank failures, and economic slow-downs in many countries.

2: (The most compelling item) - The PRICE TO CASH Ratio is nearly ONE THOUSAND NINE HUNDRED AND NINETY SEVEN (Share Price = 1997 * CASH).  It almost seems ironic, no?  If there are problems, there isn't enough liquidity to help.

While I haven't looked over the balance sheet, there are plenty of reasons for this to be a short term paper-swing as a short.


As always, this blog is about PAPER TRADING, so don't go throwing your money into any investment long or short without doing your own homework and Due Diligence.

UPDATE (2/11/2016):
I just looked through last night's reported balance sheet, and need to uupdate a few pieces of information:

1) The Price to Cash ratio now looks to be only about 345 rather than the 1997 from prior to their earnings report.

2) The debt of the company has come down and the net shareholders' equity has increased by just over $900M from last year.

This certainly looks to be a well managed company, with growth - just like Netflix (NFLX).  Netflix just expanded to 130 new countries versus 3-5 expected.  Take a look at how the market reacted to their price multiples.  

So, the question is: Did last night's earnings report by O changes my bearish thesis?

My answer is:  No.  My bearish thesis is only short term.  They are trading at a peak with high multiples in a market that is spurning such numbers.  O is Oversold.  So for a short term swing, I would paper-trade the short sell or Put options.

***********************************
UPDATE (2/11/2016):

Right now the Feb19 $60 Puts are trading at about $0.50.

Now look at this WEEKLY chart:

It looks like EVERY TIME it jumps like this for a full week, the next week is a STUNNING AND PRECIPITOUS TUMULT.  And it tends to go for WEEKS afterward.  

I'd say to set your paper-trade RIGHT NOW.  You could try it as a short, or your could paper-trade the PUT options.

Have a great long weekend everyone!

Wednesday Bear Alert - 2016-02-10

There's always a BEAR market somewhere, and I'm here to help you find it.  OK, I'm chiding Jim Cramer a little, but I do appreciate the hard work that he and his most excellent team does in finding good companies and opportunities for the investing public.  But moreover his explaining how these things work better that anyone can be expected.  Hats off to you, Jim.  You're a gentleman and a scholar.

EDIT:  I was terribly remiss!  HAPPY BIRTHDAY JIM CRAMER ! ! !

Bear Alert:

    UDR make look like a bounce play but wait a little and it will fall again.  This thing trades with a P/E multiple of over 90, a Forward P/E of almost 90, a PEG ratio of over 12, and ten times their sales.  But what struck me about THIS REIT is that it is trading at over SIX THOUSAND TIMES ITS CASH.

  That's what I'm seeing.  They just reported on Feb 2, 2016 and their Price to Cash ratio is 6735.93 as I'm reading it off of Finviz.  Now, no one keeps perfect records all the time, but it shocked me seeing this and then that they have a Dividend payout ratio of 120%.  Their Price to Free Cash Flow ratio is 621.  Their Long Term Debt to Equity ratio is 1.24 which seems a bit high given that this is a residential REIT.

    To know more about REITs, I suggest reading a little here.  If this is a Mortgage REIT they may be holding direct mortgages, or they could be holding mortgage-backed securities.  Why is proverbial bell ringing?  I suppose I don't need to tell you that aside from the government, we really don't know where all that debt from 2008 went.  People are flocking to rental units according to some recent news reports and the new home purchases are being made by the wealthy.  Let's hope we don't see a return to sub-prime mortgages, but not all of those ever really got resolved and due to a change in bankruptcy laws in 2005, there was a very sudden spike and then plummet in bankruptcy rates in the US.

    As we can see, even from corporate filings, the rates in the first quarter of 2006 dropped to all time lows, but that didn't mean that there weren't problems as we can see the sudden rise in filings immediately thereafter and leading right into the housing collapse.  Because the bankruptcy laws changed to favor indenture over relief (made it much harder to liquidate, and reorganization left far more debt on the debtor after the bankruptcy than before the change, people and businesses started walking away from their debts.  If we see a return to that, these REITs will see a very sudden drop in rents.

    So all this begs the question, why are REITs trading at such high multiples.  I have nothing against the business model.  In fact I think it's a great way to structure it, but the premiums being paid today represent a terrible risk in my opinion.

    As for UDR's chart, they've broken below their trend.  The daily chart shows a possible bounce materializing, but I think this may be short lived.

    So far, I don't see it as a broken company so much as an over-priced stock.  You might paper-trade the bounce for a little gain, but one bad news announcement could trash that trade.  I wouldn't swing trade (hold over night) UDR - not even a paper trade.

    I plan to release a special post, in addition to my theme this week, about the new NIRP environment we find ourselves in.  Warning: it won't be pretty.

Disclaimer: This blog is for informational purposes only.  I may or may not have positions, long or short, in any stock or security mentioned anywhere on this site or elsewhere at any time.  It is the sole responsibility of the reader to interpret the contents here, and to seek the advice of a qualified financial professional before engaging in any trade.

Tuesday's Bear Alert

(** UPDATE - 2/12/2016 - See Bottom **)

In keeping with this week's theme, REITs, here's my next Bear Alert:

The markets are becoming ever-more skeptical of high ratio stocks.  Just look at the tech sector and see the carnage in the FANG stocks (FB, AMZN, NFLX, GOOGL).  These are good companies and they are well run, but their share price has become to bloated for conditions where interest rates are tightening and global economies are slowing.  But one sector has been bucking this trend, or has it?

The financial sector has a large number of companies who are trading at very high multiples.  That was the basic gist of my last post.  One particular multiple I'm going to focus on today, because I think it NEEDS saying (no one publishes this ratio outright).  The ratio I'm using is the Dividend to Sales ratio.  Yep.  A company can only spend as much as it takes in, right?

I'm just a humble engineer, not a financial guru of Wall Street, so perhaps I'm just not understanding all the financial slight-of-hand at play here and perhaps there is a perfectly good explanation for what I found...

BUT...

I found ONE company that can seem to mystically pay out more in DIVIDENDS than it makes in SALES.  How is that even possible?  How do they pay their bills?  Salaries?  Nah!  Forget all that!

They're paying shareholders up to nearly 13% based on today's prices.  This company is trading at a P/E ratio of 123.27, a forward P/E of 57.07, holding a PEG ratio of 4.35, a Book/Sh of -7.29, Cash/Sh of 1.39 and pays a dividend of a whopping $2.40/share.

To me that sounds too good to be true.  SO, let's do a little math:
With a market capitalization of $2.78B and paying a dividend of 12.98% they're paying $360,844,000 in DIVIDEND annually.  They have SALES of $318,900,000 annually.  All this and with a NEGATIVE Book/Share ratio to boot.  Does the ghost of Arthur Anderson do their books?

While the Forward P/E may look a lot better than the current, do remember that future earnings are NEVER guaranteed.

So, who is this mysterious and miraculous company?  It's Communications Sales & Leasing, Inc. (CSAL [NASD]).

Let's take a look at a chart...
S H A L L    W E?

Here's a daily chart for the last year (they've only been trading publicly less than a year).

Aside from the obvious trend and the fact that every time a new moving average is introduced the stock gets hit like a glass punching bag, The missing data from the beginning of July seems to be a glitch in E-Trade Pro as FinViz has daily data from that time frame.  

Today, however, I'm concerned that the dividend to sales ratio is telling us something disturbing.  There are other REITs with high ratios (more than 0.3) but this is the ONLY company I've ever seen so far with a ratio greater than 1 (1.13 to be specific).

If this is something you're paper-trading as a long, your might want to shorten-up your bet. The 200-Day SMA has just recently been introduced and in keeping with past instances, it's shattering to all new lows again.

If you're trading or investing in this thing for real, you should seek the advice of a licensed financial professional immediately and make sure your trade or investment is really safe.  To me, the volume bars in that chart say a lot right at the end there (in the last week).

Update:  After looking at CSAL's Balance Sheet and Income Statement, it looks like they have 10-11 years before the assets are worth zero (rough calc).  With being a REIT, they have to pay out 90% of net income as dividends, so raising cash to replace assets may be problematic. They can only hope their assets will last longer than their expected life.  If their rents are Bonded Leases it would offset costs for repair and replacement to the tenants, but I still find the price multiples particularly unsavory.

Disclaimer: This blog is for informational purposes only.  I may or may not have positions, long or short, in any stock or security mentioned anywhere on this site or elsewhere at any time.  It is the sole responsibility of the reader to interpret the contents here, and to seek the advice of a qualified financial professional before engaging in any trade.

UPDATE (2/12/2016):
Some data on this company has been updated on FinViz this week.  The Earnings for the trailing 12 months has been updated to reflect $0.15/sh as opposed to $0.01/sh from the date this post was published.  This still reflects a 100+ P/E multiple and the dividend still exceeds the quoted sales.

Here's the updated chart with daily Heikin-Ashi candles as of the end of Friday 2/12/2016.

Have a safe and happy long weekend everyone.

This Week's Bear Alert and Focus - REITs.

I think the next segment to get it from the Bear Market, after Tech, will be REITs.  I've been looking over the fundamentals and to say the least, it's shocking to me.  I'm not a financial professional, I'm an engineer, but when there are several companies in a sector who are paying 1.14, 1.45, 3.21, 3.00, 6.36, 8.5, and 16 (that's right SIXTEEN) times earnings in dividends this simply cannot be ignored.

 The P/E ratios for the companies I've identified range from over 32 to OVER 1,600.  Their forward P/E ratios stretch well into the hundreds.  Several of them have recent insider selling happening, and many have very high institutional ownership.  I have to wonder... How many of these REITs are bundled into ETF and ETN products?  I think that when the music stops, which may be very soon, we'll find out that the properties in these REITs may very well be over-valued and the share prices will fall like comets.

I'm going to post at least one company each day this week to highlight what I see as trash in this sector - not because the company is necessarily bad, but because the stock is trading at WAY TOO HIGH a price.  If you're paper-trading these stocks, you might want to get out, short it, or just steer clear.

I'll start with REXR.
BEAR ALERT

    Let's just start with the fact that REXR is trading at a 1,690 P/E ratio.  They pay a healthy 3.23% dividend so they're good, right?  But that dividend is 34% of their sales which might be OK for a REIT, but it's 54 times their earnings.  FIFTY FOUR!

    REXR is currently trading at the top of it's channel at $16.74 and is just off of its all time high.  Not bad for a company with a book value of $12.30 per share.

With it being an industrial REIT and the World's economies slowing, how well will the property valuations hold up?  Will they still be able to get income from their tenants if we go into a recession?

    REXR may or may not be a well managed company, but with market sentiment being what it is today the valuation seems a bit too high.  I would paper-trade this as a short sell or with buying Put options. If I bought 10 of the $17.50 Puts expiring on Feb 19th for $0.81 a piece, I'm taking rather low risk, but I would gain $1000 for every dollar it drops below $16.69 at expiration or I could sell those puts when I reach a 100% profit ($1.62 per contract - doubling my money).  This is better than I could do by shorting but the position is smaller than what I would have by shorting the stock.  It's a trade-off.

    For those not familiar with options pricing, the contract price is multiplied by the number of shares in the contract (100) so the REAL price per contract is 100 times the quoted price.  10 contracts represents a lever of 1,000 shares.


Happy trading everyone.

2016 January Non-Farm Payroll Report

The Non-Farm Payroll numbers are out.  We added 151,000 jobs in January.  Unemployment is at 4.9%.  So what does this report tell us?

The good news is that there will be competition for workers and increases in minimum wage will add to many companies' earnings.  The U.S, economy is strong and growing.

The bad news is that this means that the Fed will most likely raise rates, which seems fine on the face of it, but the debt markets will likely get roiled over it.  Another rise in rates will stress the high-yield bond markets first as they are weighed with risky debt.  This will spread through oil and as we all know, as oil goes so does the market - at least for now.  Once the MLPs start cutting dividends we'll see a crash in oil stock prices, and this will drag indices down with them.

Then come the bankruptcies.  They'll start as Chapter 11 filings because the laws became much more creditor-friendly and debtor-onerous in 2005 when the laws changed.  Some companies will restructure and come out relatively OK, but most share holders will get hosed in the deal, if not completely washed out.  Then comes the really bad news when Chapter 11 restructurings get converted to Chapter 7 liquidations.  THEN we will see what those assets are REALLY worth.

We're probably 6 months from the start of the worst of this, but chapter 11 restructurings have already been going on.  If the courts get flooded all at once, there won't be enough buyers for assets at the current valuations to be a significant part of any restructuring and creditors will get skittish about taking equity to replace debt in a market where wells are being capped to help stop the crash in oil prices.

Those predictions of $10 oil may not be so far off the mark.  We may not get all the way there, but we're hardly done falling.

What we don't know yet, and what we won't know until chapter 7 filings spike, is how bad the write-offs will be, and if/how far they'll spread to other business debt.

Don't be Fooled - Oil Will Drop Again

The two-day rally we've been seeing looks suspiciously like a Wall Street Rope-A-Dope.  Someone cashed in a $600M position in DWTI (3X Inverse ETN for Oil).  Essentially, this Exchange Traded Note uses Put options to short the market and profit by more than the proportional moves in the actual securities it's trading.  This is one of those sources of the "Wag the Dog" effect we are seeing in our markets today, and is a huge source of volatility as the leverage is extreme.

An article from Reuters cites this transaction as a reason for the apparent counter-intuitive rally in oil Wednesday and Thursday.  The fact of the matter is that supply is up roughly eight million barrels, and this will affect prices negatively.   While the Dow Jones partied today, the DWTI partied as well, and that's not good for the bulls tomorrow.

If we look at the SDOW (3X Inverse ETF tracking the DJIA) we see the pullback based on the rally in the Dow.  Today, that pullback slowed a little.

Now look at the DWTI.  Sure, it pulled back on Wednesday, and the short covering I'm sure had a lot to do with sparking the rally but today's accumulation is going to show up in tomorrow's performance.  There will be a lot more short positions in oil tomorrow and this will stunt the rally.

The thing that bothers me, and I even took a defensive stance in my own 401k over it, is this:

The tops in the Dow's chart are not making a bullish long term pattern, but the lows and the averages are telling me that this is likely to be a protracted trend rather than the sharp but quick painful ripping off of a band-aid.  This is more of a sprained ankle or worse.  The biggest problem is that we have people talking about "buying opportunities" just a day or two after cautioning people to, "sell the rallies."  I do hope my readers a PAPER TRADING right now because this is going to get ugly.

Reasons?

1) European banks are under funded (liquidity is seriously low).

2) Collateralized debt has valuations that may be suspect (A spike in BK filings may reveal far lower asset values than we're assuming in Oil as well as other sectors like Commercial Retail who seem to think they'll spin off their properties into REITs.  Really?

3) A lot of cash left the market over the last year and it seems to be appearing in ETFs.

4) ETFs loaded full of High Yield Bonds will have great troubles if the banks in Europe become ground zero of the next Lehman Brothers Event (like the TNT that sets off the plutonium in the Fat Man bomb).

5) I still wonder where all the CDOs went from 2008.  ??

For anyone still hanging on to HOPE in this rally, I'll leave you with this image:

This is the Daily plot of the DJIA over the last 100 trading days.  Those last two candles are looking pretty hopeful, but I'm not putting money on it - not even a paper-trade.

Disclaimer: This blog is for informational purposes only.  I may or may not have positions, long or short, in any stock or security mentioned anywhere on this site or elsewhere at any time.  It is the sole responsibility of the reader to interpret the contents here, and to seek the advice of a qualified financial professional before engaging in any trade.

Update on KITE Bear Alert and Others

KITE:
I had previously alerted that KITE was due for a fall.  Here's how that panned out:

On November 18, I published a post about turning bear on these markets.  I found a particularly frothy stock in a company called Kite Pharma (KITE).  You can read the details here.

So how did this call turn out?

Had I shorted this at $87.55 at the open on Thursday Nov 19, 2015 (Paper Trade), then I could buy to cover today at $44.98 for a profit of 51% or $42.57 per share (Net Profit $4,257 per Put Contract minus Premium).  The main problem was the over-valuation of the stock with no real sales and a looming possible rate hike from the Fed which did come to pass.

CMG:
On Twitter, I had warned in a tweet on Friday November 13 that Chipotle Mexican Grill (CMG), based on weekly candles, had fallen firmly into bear territory.  I doubted myself over the following days and weeks, but I did note that $470 was likely support and could go as low as $430.  I even pointed out some suspicious behaviors in the trading of that stock here, and here.  I don't know if any of that is part of the newly expanded criminal investigation, but I'll be waiting to see.

Here's what's happened since:

Until they resolve their issues, CMG is for me a toxic stock, and I plan to wait until I know more about what they're doing to prevent illness (beyond blanching onions or sending tomatoes and onions to a central location for chopping and processing).  I would HIGHLY recommend to the company to adopt the use of the Process Failure Modes and Effects Analysis (PFMEA) as a tool for evaluating rick in their process as a restaurant chain.  One cannot inspect quality into any product.  This is why we have "Process Control."  The PFMEA and a detailed Process Control Plan are used together to insure the quality of products in many industries including the manufacture of automobiles.  The Automotive Industry Action Group (AIAG) has training materials and classes for this.  I used to write  and update these things (they are living documents) for manufacturing processes on a daily basis when I was a manufacturing engineer some years ago.  I'd even be happy to help them learn how to use this tool assess risk and get ahead of future outbreaks.  Even NASA uses the FMEA.

Possible New Bear Alert (Watch):
UPS:

UPS is setting up as a POSSIBLE Evening Star formation.  This is a three-candle pattern and today is the third day.  Depending on how today goes, UPS could be in for a big drop.  They have significant debt both long term and near term, and the Fed seems to be happily marching on to auto-mechanical rate-hikes.  I expect that this is due to them seeing the data that we may be headed for a REAL recession and they desperately need to reload their toolbox before it REALLY hits.  With Amazon stating that they plan to have their own fleet of trucks, and new Brick & Mortar stores, will UPS get cut out of their own future?


"New" Alert:
S&P 500:

While I've tweeted about the major stock indices last summer and recently, I think I NEED to make this Bear Alert (although a little late).  The markets are overdue for a significant correction; we all know that.  If you haven't re-balanced your paper-portfolio (recall that this blog is about paper-trading), you should do that as soon as possible.  I told Jim Cramer in a tweet on September 1 that the Dow Jones could hit as low as $12,500 before this pullback is over.

This 25-year chart of the S&P 500 (SPX) using monthly candles shows a worrying pattern for bulls:

Looking at this chart, we can see that it's time for that full pull back.  There are 3 price-confluence zones illustrated:
1) $1,760 - $1,765
2) $1,450 - $1,462
3) $1,034 - $1,039

This makes cash look like an appealing position for the volatility-averse.

There are geopolitical concerns well discussed in the media (Saudi & Iranian oil surplus as well as US oil glut and now international selling of US oil, High Yield Debt in Oil, Russian aggression, Chinese markets slowing, Russian and Chinese state-sponsored data security breaches, North Korea detonating their "Q-Bomb" (sic - RE: The Mouse that Roared), European Debt in the banking industry, currency deflation around the World while the US Dollar strengthens perhaps too much, too quickly, ...   and the list goes on).

All this leads me to ask some questions (ESPECIALLY given the release of the movie "The Big Short" which I HIGHLY RECOMMEND seeing):

1) What ever happened to all that debt from 2008 that was crushing our economy?
2) In 2013 CDOs came back on the scene in banking; does anyone remember MORAL HAZARD?
3) If CDOs were the last way to launder risk, what NEW instruments have these financial engineers devised?
4) Have CDOs found their way to foreign shores?  If so, can they re-infect our markets?
5) With the emergence and popularity of ETFs and Inverse ETFs, is there something lurking?
6) Are World currencies headed toward a Global-Weimar-Republic?  Could DEFLATION actually be ... GOOD???

I'm going to have a string of posts over the coming weeks discussing what I'm finding about these questions and how this might impact your paper-trading.

Look for it.


Disclaimer: This blog is for informational purposes only.  I may or may not have positions, long or short, in any stock or security mentioned anywhere on this site or elsewhere at any time.  It is the sole responsibility of the reader to interpret the contents here, and to seek the advice of a qualified financial professional before engaging in any trade.

My Retail Naughty & Nice Lists

Of late, I've had a very bearish view on the markets.  For the most part, I still do.  However, in the near term, I think the post-holiday earnings season will have some upside surprises as well as some well-deserved precipitous falls.  After reviewing some conference call transcripts, earnings reports, trends within those, and some personal observations, I think the wheat and the chaff will get distinctly separated in the next round.

Among retail, I think the following companies (by no means a complete list) will surprise to the upside in their next quarterly earnings reports (in no particular order):

Kohl's (KSS)
Macy's (M)
Target (TGT)
Walmart (WMT)
JC Penney (JCP)
Best Buy (BBY)

The following is my Naughty List.  These are companies late to the on-line migration game and poorly managed such that they are, in my opinion, in a free-fall.

Nordstrom (JWN)
Sears (SHLD)

I know there are lots of reports of Walmart and Target having lack-luster crowds, but the Target stores in West Michigan that I saw had full parking lots when I passed them.  Walmart seemed eerily quiet, but their online shopping site was so burdened with traffic that they had problems keeping it working properly.  That likely means that traffic merely shifted to on-line.  Given the history of Walmart on Black Fridays Past, I certainly understand the sentiment - great deals, but unruly crowds.  JC Penney is reporting better than average e-sales, and their stores in West Michigan appear plenty busy.  They's been turning their operations around for some time now and it's showing.  Even their on-line presence is easy to navigate and they offer the brands my family likes to buy.

I was actually shocked at how full the Macy's (M) parking lots were.  They were getting slammed at 10:00 Saturday morning, and Best Buy was almost equally busy.  Nordstrom Rack had an anemic showing at that same time with an all-but-baron parking lot.  The only parking lot more empty was our local Chipotle (CMG) who I don't think was open for business yet, but I typically find that Chipotle low on traffic (in all fairness - location is likely the issue there).  Nordstrom Rack near my home is typically a ghost town, and it seemed even lighter on "Small Business Saturday."  Ouch!

As for Nordstrom proper, nearly everything they offer is either cheaper elsewhere.  They didn't even discount the Fitbit (FIT) Surge that is $199.95 everywhere else on the net (WMT, TGT, KSS, AMZN, etc.).  It's full price ($249.95) at Nordstrom (JWN).  Their management says they've noticed a slowdown in sales and foresee a continuation in these trends.  As for what's working and what's not, they've, "got nothing to point to.  It's just foot traffic."  As to what led to the foot traffic slowdown, They admitted to not knowing why.

I have a few ideas.  They are bested by the likes of Macy's, JC Penney, L Brands, Hudson's Bay, and others.  For goodness sake, herroom.com is better equipped on line.  Listen to the Q&A session.

Sears has been on a downward slide for some time now.  A look at their online trend data compared to others, it's apparent that they're just not functioning toward an ongoing future.

While Kohl's is getting its footing in the e-commerce arena, they are VERY well managed.  I've noticed a general drop in foot-traffic over the years, but in looking at their financial data I can see that their management has done a great job at managing costs while still managing a competitive retail environment.

So those are my lists, naughty and nice.

Disclaimer:  I trade stocks and options so I may at any time have positions, long or short or equivalent, in any of the companies mentioned in this piece.

I've Had It With All The Bull. I'm Turning Bear!

That's it.  My identity crisis is over.  I'm officially a BEAR.  I've made higher gains in 2 weeks of trading PUT options than all the years I've had trying to buy and sell stocks as a Bull.  If you ask me, it's all a BUNCH OF BULL.  It's all hype.  It's all smoke and mirrors until you get a look under the hood and learn to see what's really going on.

Good companies will show themselves when we look at their books and bad ones will look odd.

SO, here's my BEAR ALERT for this week:

KITE

I'm not really of a mood to trust analyst ratings, especially when they all seem to be TOO in love with a company.

If you want to know more about what the company does, here's a link to their web site:
http://www.kitepharma.com/

It's an interesting thesis for sure, and I for one would hope and pray that there is real promise in what they say they are doing.  BUT I'm not in this for hope and prayer, I'm looking at a business and the trends in the business here disturb me.

If you look up KITE's information at your broker or on sites like Finviz (Images in this article are from FinViz), you will see that the price to sales ratio is over 487.  That means that the price of the stock is more than 487 times the the gross sales of the company.  The price to book ratio is 9.35.  Bristol Meyers' is only 7.06.  But WAIT!  It gets better.  The Price to FREE CASH FLOW ratio is 1077.75.  That means that you, the buyer of the stock at over $80/share are paying more that 1000 times the free cash flow of the company.

But the cash of the company is $8.98/share.  So, the free cash flow of the company is less than 1 cent per share.  They appear to have no debt, so at least they're not heavily leveraged.  But then when I started looking at the mechanics of the ownership of this company, I saw something rather odd:

If you look at the Annual Earnings of KITE in 2012, 2013, and 2014, you'll see that it goes from -0.48/share to -1.43/share to -1.91/share in 2014.  For a startup company developing a new product, this may seem normal and the acceleration may seem to be slowing, BUT there's another part to what's going on.

Recall that the earnings are being quoted on a PER SHARE basis.  That means that the total losses are really a function of the shares outstanding.  If that number were constant, there would be no problem, but unlike good companies like Disney (DIS), Schlumberger (SLB), or others who buy back their share and INCREASE value to the share holders, KITE has been increasing shares.

In 2012 they had 5.31 million shares outstanding with that -0.48/share loss.
In 2013 they had 5.47 million shares outstanding with the -1.43/ share loss.
In 2014 they had 22.82 million shares outstanding with their -1.91/share loss.
Currently, they stand at 43.73 million shares outstanding with authorization for 200 million shares.

So where are all these shares coming from?  I would normally figure that it's from the sale of stock to raise cash for operations until they get FDA approval for their product and/or service.  But something seems to have emerged this year and I think people are beginning to take notice.

If the prospects of this company are REALLY as good as the promoters of its stock would have you believe, then the directors and officers of the company would be buying as the opportunity presented itself.  They would even retain some of the shares they get in options as pert of their compensation packages.  However, looking at the insider transactions of KITE, I can see that it's quite the opposite.  The officers of this company have REDUCED their personal stakes in the company and at every turn, and it seems quite frequent, they are cashing in on options and dumping the shares on the market.  In fact, they have done NO buying at all except to execute AUTOMATIC SALES to the market.

Perhaps it's not as nefarious as I'm reading into it, but it looks to me that the officers and directors of KITE are lining their pockets with money from the people buying the stock from the market, and the money never goes into the books of the company, and the shareholder value is HEAVILY diluted.  Meanwhile, the stock is at ALL TIME HIGHS for it's price.

I may currently or at any time have or close a short or equivalent position in this or any other security, but for now, I see trouble ahead as people get wise to the shareholder dilution and the accelerating losses that are being masked in PER SHARE comparisons to analyst estimates when in fact it looks a little more like a shell game.

If one wants to look at this as being a time for a normal retracement, then let's look at the Fibonacci ratios:

I'd say this thing could EASILY hit $60 in the coming week to 2 weeks.

My rating for this company is SELL!  This company is bloated and frothy even if their technology will EVENTUALLY pan out.  For now, it's an expensive piece of BLUE SKY.

I'm not an accountant, and I'm not a financial professional, so you need to do your own due diligence, but these do not look to me like the books of a "best in breed" company.

Schlumberger - The NEW Belle of the Ball?

Jim Cramer is saying that Schlumberger (SLB) is de-risked.  It's hard to argue with that logic.  After all, SLB gave an abysmal earnings report, stated that supply is weakening as the dramatic cuts in E&P investments are STARTING to take effect., stated that revenue is dropping due to persistent pricing pressure, and on and on and on.  The company through all this managed to still turn a healthy profit and beat analyst estimates by one cent, but the revenue trend is not doing well (no pun intended).

The overall O&G market is plagued by a glut in supply, and an ever-decreasing capacity for storage.  This earnings season is showing an overall trend toward a slowing economy and that means FEWER truck on the roads, both here an abroad as international companies are getting hit harder.  Fewer trucks on the road means less demand for diesel.  Less demand for oil and a glut of supply spells trouble for oil producers.  The heavily leveraged companies like Sandridge (SD) or Magnum Hunter (MHR) are likely in deep trouble.

I even pointed out the long-term Head-and-Shoulders pattern I see in the 10-year chart.  Over the last 3 years SLB and other oil companies like Halliburton (HAL) have formed this same pattern:

The Head and Shoulders in the OIH was considerably more abbreviated in time:

This, I'm sure, has a lot to do with the many sectors and components to this index fund.  Natural gas, pipelines, tankers, producers, explorers, and others all make up this fund.  So it should be no surprise that this fund may very well be finding a bottom as industry focus shifts from one sub-sector to another.

With all this going for it (sic), SLB share price barely flinched and even seemed to rally on Monday after HAL reported similar dismal revenue numbers.    I have to wonder, though, how far those revenues can erode before dividends get reduced or altogether cut.

Yesterday at the close of trading, we learned that SLB has LEASED the exclusive rights to a fracking technology from Energy Recovery (ERII) for the next 15 years which sent ERII shares soaring over 100% in after-hours trading.  No doubt this is a short squeeze as the last reported Short interest in ERII was more than 3.5M shares, representing 35 days to cover at their A.D.V.

For SLB, this means that there is a near-term cash outflow over the next year of $125M JUST for the rights to use this technology.  SLB STILL has to actually invest in the execution of the technology and that will likely be far more than the licensing costs.  That plus the costs of the CAM merger, means that SLB's CEO was not kidding when he said that the next TWO YEARS were going to be rough.  SLB's CEO is taking a huge risk investing so much into fracking when natural gas is selling at its current prices.  I'm a little surprised that he isn't going after pipeline exposure as a glut of natural gas will not effect the pipeline revenues as much as it will for producers.  He might be better off making a play to buy up Magnum Hunter (MHR) as part of a restructuring of that company.

Anyway, with a forecast as ugly as SLB's I suppose it's just Wall Street logic that the prices should finally rebound.  I wouldn't my breath for a dividend after December, though; at least not for the next 2 years.

Schlumberger & Halliburton, A Double Tap to Oil & Gas?

     Tweets just don't give enough characters for an intelligent one-liner, let alone a detailed review of a topic like the 2015 Q3 earnings for Schlumberger (SLB) and Halliburton (HAL).  These are admittedly two well-run companies (no pun intended) in the Oil & Gas sector, but are suffering from the decline in commodity prices of the products they service.  Thursday, after market close, SLB posted financial numbers indicating that they beat by one cent per share on earnings, but missed on revenue.  This is definitely a testament to the quality of the management at SLB because they suffered greatly on revenue, but still managed to keep costs down to a level where they beat the estimates, if only by one cent per share, but ALSO managed to maintain a share buyback program as maximum allowable amounts, lowered long term debt, and negotiated an acquisition of another company to compliment their own corporate offerings long into the future (Cameron International - CAM).

    With all this going for SLB, what could possibly go wrong?  Well, for starters, in that same set of numbers, and confirmed by the phone conference Friday morning, SLB is lowering guidance well into the future.  They will have to, by law, stop their share buy-back until after the CAM shareholder vote; currently the next annual meeting is May 6 of 2016, so saying that the merger will be completed in Q1 of 2016 when the next scheduled vote is in Q2 of 2016 seems odd.  Clearly, there will need to be a hasty shareholder meeting put together if SLB's timeline is to be kept.

    Where SLB is concerned, their report and their history shows a progressive decline in revenue.  That sits at the heart of their problems right now.  HAL is due to report Monday morning, releasing numbers at 7:30 AM EDST and their conference call is at 8:30 AM EDST.  Analysts have already cut expectations for Oil & Gas companies based on the depressed prices for the commodity.  SLB managed to beat on earnings via a skilled use of cost control, but their revenues were a miss.  If HAL reports a similar miss on revenue and a similar dark outlook for O&G services then the entire sector will likely take a hit in the near term.  If HAL manages to beat on revenue then it will say a lot about SLB's report.  If SLB is reporting deteriorating revenue and HAL is improving or at least not deteriorating then we will likely know where SLB's revenue has gone...   From AMD to INTC.  

That's right, I'm saying it.  If HAL beats on revenues after the report and guidance we got from SLB on Friday then it likely means that SLB is losing market share.  Let me be clear in stating that I do not expect this, but we won't know HAL's numbers until they are published.  If HAL shows similar numbers both top and bottom line but has a more optimistic outlook, then it's probably just optimism.  Whether that optimism is well placed, only the passage of time and proven results, or the lack thereof, will be able to tell us.

From a chart perspective, I see HAL looking a bit bearish:

The Fibonacci retract in the downward direction seems to be consistent with a reversal from the long term bullish trend HAL has enjoyed for the last few years.  Further, there is the look of a possible Head and Shoulders pattern in that monthly chart.  The knowledge of a glut of oil and increasing reports of well shut downs and cutbacks, only further supports the notion of this being a bearish pattern worthy of careful consideration.  If you're long this stock, or any other on the O&G services sector, then I recommend either taking some profits or hedging with some Put options to cover your position.

When I look at the 10 year monthly chart for SLB:

I definitely see the Head and Shoulders pattern, but I also see that the retrace on the run-up from early 2009 has hit the 63% marker, and is currently a little over it.  If it breaks below this, then the H&S will be confirmed and SLB will likely see mid to low $50's before it's over.

If we look at the near term chart for CAM, the company being acquired by SLB we might get a feel for what is being anticipated by the share holders there.

    This seemingly bullish consolidation looks pretty good except for the hanging man candle from Friday.  High volume, but no movement and the price is at a peak.  This means that someone, or several, are selling at a pace that is overcoming the growth in price for this stock.  As a company, they seem well managed, feel free to review any of the analysts' reports on CAM, but to me, they look like a healthy company with a stock about to get a temporary knock-down.  The gap-up from the news of the buy-out will likely need to be covered in a retrace before this stock moves much higher.  I'd say wait for a better price to get in, or cover with Puts if you own it and don't want to give it up.

This is going to be a busy week for earnings reports, and HAL is either going to provide a little lift to the O&G sector (but at the demise of SLB's share price), or the entire sector is about to start off this coming week with a double tap to the Head & Shoulders.

How to Spot a Pernicious Short-Seller

Spotting a Pernicious Short Seller

I'm not here to pump any stock, but I have to find this story interesting.  I've been stalking a company for over a year called Medical Marijuana, Inc (MJNA).  The reason for my interest in them has been that they have publicly stated that they will not engage in the manufacture or sale of marijuana in violation of Federal law.  This is a hallmark of a responsible management - obeying the law and not testing the will of law enforcement.      

The CEO recently stated in a letter to shareholders,

"I feel it is important for me to make perfectly clear that although Medical Marijuana, Inc. is not in the business of directly selling or dispensing marijuana while it remains a federally controlled substance. However, we are poised and consider ourselves well-positioned for eventual cannabis legalization. We have a plan for that eventuality, and intend to leverage our relationships and expertise to help advance a truly legal cannabis industry when the day comes. Once legalization occurs or becomes better defined regarding states rights – we can quickly implement entry into this new market. Rescheduling – if not full de-scheduling – from the Controlled Substances Act would signal the clear demarcation point of our entry into the space.

Similarly, the Company also has plans for a repeal of Industrial Hemp Farming Prohibition. The numerous uses involving biomass-to-fuel, building and construction materials, textiles, bio-plastics and others – will all be part of the future of the company. Various Congressional bills are under consideration by our nation’s lawmakers. If for no other reason than to clean up toxic soils and provide an agricultural rotational crop – the Federal Prohibition of Industrial Hemp farming needs to end. The ancillary businesses, clean, renewable and sustainable – will create a huge number of new entrepreneurial enterprises and potentially a revitalization of our overall U.S. economy. It will be interesting to see the increase in overall national GDP numbers, should we allow hemp to be grown nationwide by our agricultural industry."

I feel it is important for me to make perfectly clear that although Medical Marijuana, Inc. is not in the business of directly selling or dispensing marijuana while it remains a federally controlled substance. However, we are poised and consider ourselves well-positioned for eventual cannabis legalization. We have a plan for that eventuality, and intend to leverage our relationships and expertise to help advance a truly legal cannabis industry when the day comes. Once legalization occurs or becomes better defined regarding states rights – we can quickly implement entry into this new market. Rescheduling – if not full de-scheduling – from the Controlled Substances Act would signal the clear demarcation point of our entry into the space.
Similarly, the Company also has plans for a repeal of Industrial Hemp Farming Prohibition. The numerous uses involving biomass-to-fuel, building and construction materials, textiles, bio-plastics and others – will all be part of the future of the company. Various Congressional bills are under consideration by our nation’s lawmakers. If for no other reason than to clean up toxic soils and provide an agricultural rotational crop – the Federal Prohibition of Industrial Hemp farming needs to end. The ancillary businesses, clean, renewable and sustainable – will create a huge number of new entrepreneurial enterprises and potentially a revitalization of our overall U.S. economy. It will be interesting to see the increase in overall national GDP numbers, should we allow hemp to be grown nationwide by our agricultural industry. - See more at: http://medicalmarijuanainc.com/letter-to-shareholders-by-ceo-stuart-titus-2014-annual-report/#sthash.CbzDGY25.dpuf

Now the second part of that I fond very interesting because the Composites industry is just getting started as the tools to engineer products with optimized composite structures have hit the scene as of 7 years ago and continue to mature (See Altair Engineering for more).  The potential uses for industrial hemp are enormous, and there are already hemp-fiber reinforced polymers manufactured today.

There was an article published entitled "Hemp Oil Hustlers" that purported itself as an expose of MJNA.  The company has come out swinging over this and has filed a libel suit over the article.  This might seem like banter, but 2 of the several parties involved have settled and one has given a public statement and supplied  a video with details about the misrepresented facts.  The fact that 2 parties have settled, and these details make it pretty clear that the argument by MJNA has teeth.

Further, they have secured approval from the government of Brazil to sell their products there.  The sales story for this company seems to be getting better and better.  So what does this have to do with spotting a pernicious short seller?

While the stock price for MJNA has risen over the last several days, the growth has been HIGHLY controlled by selling from a market maker, VNDM - Vandham Securities Corp of Woodcliff Lake, NJ.  These guys are special.  They ONLY appear on the ASK side of the Level 2.  Is it possible that they have purchased 100M shares of the company while it dropped to $0.06 over the last few months?  Perhaps, but with the news above, why wouldn't they be allowing the stock to rise more and why would they be pressuring the stock lower and lower as the price fails to move forward, only ever showing 20k, 25k, 50k, shares for sale, but with volumes of 50k, 100k, 150k, 350k shares NEVER make a dent in the selling from VNDM - the price never goes up.   However, when a 10M share dump barely makes a dimple in the price of the stock, clearly someone needed to buy shares and not kill the cow.  That's how short selling works; once the upward movement gets killed, the short seller sits back and buys panicked shares and closes his position and pockets a tidy profit at the expense of average traders and investors hoping to get a lift from good and proper news.

Short selling only happens on the ask (the rules are that one cannot short onto the bid side legally in order to crush a stock).  The rules are such that the short seller needs to account for where the shares were borrowed by the time the transaction closes (3 days).  If by the time the transaction settles that shares are not delivered (term used for this accounting) then there is a violation of SEC rules.  One would have to call it awkward if the short float for a stock were to exceed the number of shares available for sale.  Clearly someone wouldn't be borrowing shares when this gets discovered.

If one could simply short-sell a stock without limit, they would have the ability to crush the desire for investors to make an investment (especially long-term) in that company.  Who would do such a thing?  For starters, anyone with enough money to manipulate the price of a stock via short-selling so as to gain by buying to close those positions when support finally fails due to a lack of price movement.   Other motivations could include competitors looking to undermine their competition so that they could try to gain market share by getting their competition landed on the side lines at a critical time.  I've no idea if either of these are the reasoning behind the short selling, but my inquiry to VNDM about the fees to short a penny stock have gone unanswered.  If that changes I'll update this article to reflect that.

From the SEC's web site there is an article containing the following:

• Selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security’s price. This manipulative activity, in general, would violate various securities laws, including Rule 10b-5 under the Exchange Act.

While not all short selling is manipulative, what I've seen here looks VERY suspicious.  It certainly has had the effect of keeping the price under TIGHT control.

FINRA is a group that is supposed to investigate issues like this, but apparently there would seem to be no one there who actually cares, and so this seemingly manipulative short selling goes on with impunity.

I won't recommend any stock for long term investment, but for myself, I'm still a believer in what this CEO seems to be trying to do.  His results are those of one who takes the job seriously, and that warrants a closer look and a proper bit of research.  Anyone else who would consider investing in any stock traded on the OTC markets should be sure to do his/her own due diligence, and know that stocks in this market sector are volatile and can present high risk to the money invested.  This is not something to be taken lightly.

One can only hope that market makers who short sell without having shares to deliver (naked shorting) will eventually get caught in their own cross-hairs.  The one thing that seems clear to me is that when you find a market maker who is only ever on the ask side of a stock and sells many times more shares than what is shown in the level 2, then you've probably found a pernicious short-seller.  Market makers get to have a "Level 3" where they can see the shares for sale and bids being hidden by other market makers.  This is information the public is NOT privy to, so they have a certain level of "inside information" and shorting like this is clearly trading on information not available to the average trader.

It's all part of the culture on Wall Street.  The home trader is playing blind, and the market makers get to see the whole playing field.

Monday April 13 Weekly Watch List

My first look-at stock for this week is PDLI

PDL Biopharma just recently took out a debt facility due by next year and this immediately dipped the stock until Friday April 10 when it popped up far enough to cross the 20 and 50 day moving averages in a single session on higher than average volume.

This tripped the MACD to cross upward and the RSI to cross the 50 line.

The weekly candles show a distinct hammer candle and this may bode well for the week(s) to come.

The weekly charts seem to have the 13 and 20-week moving averages as lines of resistance.  If these are broken in the coming week, then this may very well signal a reversal of the downward trend for this stock.  Friday's move was so strong that the A/D line on the weekly chart was also tipped upward after the previous 4 days were all in distribution.

SO, the trade plan for Monday is to try to acquire 1,000 shares of PDLI at $7.10 on a dip from the high, and then start looking for the exit around $7.80.  I would set a $0.10 moving stop once it passes $7.50 so that it would not require constant monitoring. 

PGN

I'm holding a little PGN into next week after it broke above its 20-day moving average on Thursday and then held support during the Friday sell-off from the traders.  That seems to indicate investor support and during after hours trading on Friday someone bought 56,600 shares on the ask price in 4 transactions.  This was either a short-seller getting out of the way or someone willing to make an $87,730 bet with premium transaction fees for after-hours trading.  If someone has got money like that to put into this with those premium fees, I bet he knows something.

I'm not planning on necessarily keeping this one for the whole week, but we'll see how the performance pans out.  There's a lot of room for this one to run if the trend actually reverses.

Week of 4/6/2015 - Friday Roundup

SGI Paper Trade - Friday 4/10/2015 Results

So here's the summary of the performance for Silicon Graphics for this week (4/6 - 4/10/2015):

SGI
               Open        Close       High        Low
Monday:        8.74        9.03        9.11        8.74
Tuesday:       9.03        9.01        9.12        8.94
Wednesday:     9.00        9.06        9.12        8.65
Thursday:      9.03        9.23        9.28        8.87
Friday:        9.27        5.25        9.41        9.07

The open, close, and low values over the week have a dip in them on either Tuesday or Wednesday, and the highs for the various days show steady progress upward.

Friday's intra-day prices show a long stretch at the 9.39-9.41 range (hours - note the exit signals in the plot above).  It's reasonable to assume that a patient trader could have taken profits at 9.40 but certainly at 9.39.  SO, if we assume, conservatively that we took profits on Friday per the plan then buying on Monday 1,000 x 8.83 at the open and then adding on the dip another 1,000 at 8.70, and then selling 2,000 x 9.39 we would have a profit of $1,250.  If I didn't add more on the dip, then I would still have made a $560 profit.

It might be worth holding SGI longer.  If it breaks $10 then it certainly has some room to run,  but for now I would call this trade closed and a success.

Not bad for letting the money do the work.  It just requires a good General to put that money to work properly.  That is the point of this blog - finding the best methods to put that money to work properly.

From last week, JIVE had a better week.  Perhaps I was just a little early to the show.

JIVE
               Open        Close       High        Low
Monday:        5.20        5.13        5.27        5.11
Tuesday:       5.09        5.13        5.25        5.04
Wednesday:     5.11        5.19        5.21        5.05
Thursday:      5.21        5.17        5.31        5.16

Monday:        5.14        5.17        5.21        5.11
Tuesday:       5.19        5.22        5.26        5.17
Wednesday:     5.21        5.25        5.26        5.20
Thursday:      5.24        5.31        5.33        5.24
Friday:        5.34        5.31        5.36        5.29

Certainly this one progressed better, but much slower.  I suppose this may be a company worth looking into the SEC filings and the books to see if it's worth a speculative investment.  In that case I would not hold more than 100-200 shares because the risk would be too high to hold more than that long term.  From the Weekly candles it does look like JIVE has plenty of room to run.

We'll check in on JIVE next week.and see how they fare for another week.  That's part of studying these picks; just because I may miss on one week, it's worth noting what happens in the weeks that follow because I'm using both Daily and Weekly data to make my decisions and for the sake of investment I would also look at monthly data (candles).