coolhand's Account Talk

[coolhand]

There's a fair number of stocks that have fallen enough over the past few weeks to begin looking attractive again. Here's a few that I'm following:



Eli Lilly Co. may now be finding support around its 200 dma. But its technical indicators have not turned yet. It pays a 3.7% quarterly dividend. I'm still watching for entry into this one, but I do consider it a longer term buy, so I'm not overly concerned if I don't hit the bottom. Once the technicals appear to be turning, I expect to add this one to my portfolio.



Northwest Natural Gas has been a volatile stock. Playing the peaks and troughs over the past few months could have been very profitable, but we can see some large candlesticks in both directions, which can make it tricky for short term traders. I do think it's attractively priced right now, although its technicals have not turned yet either. MACD remains very weak and RSI remains moderately negative. But it seems to be finding support in the high $42 area. It pays a 4.25% quarterly dividend.



I posted this stock early in the year and it was a big winner for me. I sold it in the mid $35 area back in April, but I've been watching it for reentry. It's a utility and that sector has been struggling since early May. But it may be turning as those dividend yields have been rising again. While MACD and RSI are decidedly negative, they may now be turning.



I've already purchased PPL. I bought it in the low $29s. It's another utility. MACD and RSI may be turning now. PPL pays a quarterly dividend just north of 5% currently.



I've not posted this one before, but like so many other issues, this one has been beaten down pretty good the past few weeks. MACD has not turned yet, but the action has been positive the last two trading days. RSI is still very weak. I'm not ready to buy it quite yet, but not because it isn't attractively priced. I just want to see those indicators turn up a bit more before I add this one to my portfolio. It pays a 4.5% dividend.

I don't generally trade stocks in short time frames unless they run hard and become overbought. I prefer to hold them longer term as investments. That's why I focus on dividends, but I also try to buy them at attractive prices so that I can hopefully realize some nice capital gains too.

 

[Birchtree]

It's a good time to acquire bargains - they won't last long. Get'em while they are in waiting. I'm moving back into farm machinery.

 

[Handballer]

It's a good time to acquire bargains - they won't last long. Get'em while they are in waiting. I'm moving back into farm machinery.

I can just see you on a John Deere farm tractor plowing a field of your crops.

 

[coolhand]

While the stock market has seen some measure of a correction of late, the bond market has seen a greater sell off in general and that also presents opportunities in portfolio diversification. I've mentioned FAX more than once, and while that one is still very much on a buy, here's another bond fund that is attractive right now. Western Asset Emerging Markets Debt Fund is a closed end fund that appears to have found a bottom. But whether that remains true or not, it currently throws off a monthly dividend of about 7.5%. Price is well below the 200 dma right now. For longer term investing, this fund is looking good for both dividend generation and capital gain opportunity. The ex-dividend date is tomorrow, the 19th of June, so now may be a great time to add this one to ones portfolio.

 

[Scout333]

View attachment 24163

While the stock market has seen some measure of a correction of late, the bond market has seen a greater sell off in general and that also presents opportunities in portfolio diversification. I've mentioned FAX more than once, and while that one is still very much on a buy, here's another bond fund that is attractive right now. Western Asset Emerging Markets Debt Fund is a closed end fund that appears to have found a bottom. But whether that remains true or not, it currently throws off a monthly dividend of about 7.5%. Price is well below the 200 dma right now. For longer term investing, this fund is looking good for both dividend generation and capital gain opportunity. The ex-dividend date is tomorrow, the 19th of June, so now may be a great time to add this one to ones portfolio.

Cool, Any thoughts on where mortgage Reits are headed in this market. I.E. the American Capitals and Annalys of the world. You would expect valuation decreases when interest rates go up and we have seen some of that. Considering bailing but hard to leave 15-16% dividends.

 

[coolhand]

Cool, Any thoughts on where mortgage Reits are headed in this market. I.E. the American Capitals and Annalys of the world. You would expect valuation decreases when interest rates go up and we have seen some of that. Considering bailing but hard to leave 15-16% dividends.

I agree on the very nice dividends these instruments throw off, but most are leveraged and very susceptible to rate increases as you know. I have no idea what to expect and here's why. This is very important.

Ben Bernanke is talking about leaving the Fed. That is not a minor issue for the market. This market has been liquidity driven for some time and introducing a new Fed Chair brings with it a very high degree of uncertainty of how the new Fed Chair will manage current Fed policies. No one knows when this might actually happen, but the Fed is meeting today and tomorrow and will make their usual announcement at the meetings conclusion on Wednesday. Anything can happen depending on what is said or not said tomorrow. It's anyone's guess. I'm not saying they "will" announce a new Chair, only that it's a very real possibility. Markets hate uncertainty and no trader or investor can be sure how this will play out at this time.

 

[bmneveu]

Wow good call on FAX. 5% turn around from LOD to ending near HOD today. I'm considering it but would have loved those gains lol

 

[coolhand]

Wow good call on FAX. 5% turn around from LOD to ending near HOD today. I'm considering it but would have loved those gains lol

I saw that volatility today and was a bit surprised by how far down it fell in early trading. If I could have watched it more carefully I would have bought more today too. But by the time I saw how it was trading, the LOD was already in and that was 0.24 below the previous close, or about 3.6% down. That's okay. There's always other opportunities. And the Fed may generate some more very soon.

 

[markmars]

I agree on the very nice dividends these instruments throw off, but most are leveraged and very susceptible to rate increases as you know. I have no idea what to expect and here's why. This is very important.

Ben Bernanke is talking about leaving the Fed. That is not a minor issue for the market. This market has been liquidity driven for some time and introducing a new Fed Chair brings with it a very high degree of uncertainty of how the new Fed Chair will manage current Fed policies. No one knows when this might actually happen, but the Fed is meeting today and tomorrow and will make their usual announcement at the meetings conclusion on Wednesday. Anything can happen depending on what is said or not said tomorrow. It's anyone's guess. I'm not saying they "will" announce a new Chair, only that it's a very real possibility. Markets hate uncertainty and no trader or investor can be sure how this will play out at this time.

When they do name the new chair I don’t think we will see a radical change from what has been going on.
The Fed is creating a bubble with these low interest rates. If and when the bubble burst is anybody's guess.

 

[coolhand]

I checked the auto-tracker positions this morning just to see where folks are leaning. The Total Tracker is showing a modest dip in stock allocations (close to 2%), while the Top 50 has a modest increase (about 2%) in stock allocations. Nothing out of the ordinary and certainly no signal to be gleaned other than the continued drop in Total Tracker allocations is longer term bullish. But the intermediate term is very questionable and in fact I'd call it bearish right now. The short term appears okay, but today's Fed announcement has the potential to change things quickly. I know Wall Street is carefully watching this announcement, perhaps more than usual, but it could turn out to be a non-event if nothing out of the usual is announced. We'll see soon enough.

 

[Birchtree]

When they do name the new chair I don’t think we will see a radical change from what has been going on.
The Fed is creating a bubble with these low interest rates. If and when the bubble burst is anybody's guess.

The bubble is in the bond market and air is already being released. There was $17.672 billion that exited bond funds in two weeks - most of it is hiding in money market funds for now. Eventually more money will flow to stocks - there is no better choice.

 

[coolhand]

When they do name the new chair I don’t think we will see a radical change from what has been going on.
The Fed is creating a bubble with these low interest rates. If and when the bubble burst is anybody's guess.

One would think. But yields have risen in recent action and that has the market a bit on edge. If we were to have a continuation of the current correction, I'd like to be properly positioned for it. That's why I'm currently 40/60 stocks/cash. I have one IFT left this month, so I can reenter stocks should conditions warrant such.

 

[coolhand]

The bubble is in the bond market and air is already being released. There was $17.672 billion that exited bond funds in two weeks - most of it is hiding in money market funds for now. Eventually more money will flow to stocks - there is no better choice.

It does have to find a home and obviously the money market is only a temporary position for most. But you can't deflate the bond market without raising the specter of inflation either. And this economy is hardly robust enough to endure that scenario without negative consequences. I have no idea how it plays out, but it will be interesting and I've got positions in both stocks and bonds, so I'm ready for anything.

 

[Birchtree]

Low interest rates and low inflation are like rocket fuel for the stock market. At some point there will come a recognition and if money is to be made going forward you have to own the risk trade. If the current round of QE remains open ended, that raises the probability that QE 3 fueled rally may surpass in length the previous rallies - how high is the sky.

 

[tsptalk]

Low interest rates and low inflation are like rocket fuel for the stock market.

Then why has Japan been in a bear market for 20+ years?

 

[MrJohnRoss]

Good question. I think "in a normal economic environment" low interest rates and low inflation sound like a good thing. But Japan is staring down the barrel of deflation, and there is nothing that they can do to defeat it. Obviously a trillion bucks thrown at it did nothing. Maybe they should summon Godzilla.

BTW, I think we're a year or two away from becoming Japan's economy.

 

[coolhand]

As much as the sell off in equities was a bit unnerving for the bulls, I find the sell off in bonds even more so.



That long, red candlestick makes me think there's more where that came from. RSI is oversold, but so what.

 

[Birchtree]

The bond market fear is that the economy is slowly rebounding and the Fed will eventually be forced to ease up on QE - then interest rates will rise and bonds will tank. The safest place to be is in good equities and I continue to like the large cap I fund.

 

[coolhand]

Some of my stuff turned back down again yesterday. The intermediate term remained on a sell regardless. I know that as of Tuesday liquidity was moderately high, but it's been getting injected at much lower levels the past month or so, so underlying support for price has not been nearly as robust as most of the rest of the year. The recent selling pressure in the bond market will generate some measure of fear, but I'm not embracing any notions of where that's going. The fact is that bonds and stocks are both selling off and tells me that uncertainty is becoming a part of market character. And uncertainty is not what the market wants.

Futures are pointing to a big drop at the open, so we're almost certainly going to see some follow through downside action. How does this affect sentiment? That will be interesting. We are on a buy for this week with our last sentiment survey, so that's a plus for the bulls to this point, but I did notice we were slowly reigning in stock exposure on Tuesday. Technically, the S&P and Wilshire charts are still trading above their 50 dma and lower trend lines. But those look to get tested in today's trading. And it is OPEX, so current volatility is not unusual. And we're winding down the quarter too, which can often be supportive of price, but seasonality is negative.

No easy answers in the very short term. I'm leaning bearish in that time frame, but I'll be quick to change my sentiment depending on how things play out.

I did manage to buy ESD yesterday, but only got a partial fill at the low of the day's price of $18.72.

 

[coolhand]

Gaps lower and broken trend lines are showing up in a lot charts. Note where price is on this intermediate term chart of the Wilshire 4500. If we close below that lower trend line, there's a good chance lower prices are coming. And I note that AGG picked up where it left off yesterday and is down over 0.5% already. If the powers that be don't step in soon, this could get uglier.