I just wanted to update the year-end bounce candidates that I posted earlier. Looks like we got the best bounce out of ETH, while the other have held steady.
Don’t know who Russell Pearce is? No particular reason why you should unless you live in Mesa Arizona or read an article on CNN.com today. You see Pearce is an Arizona state representative who sponsored a bill to crack down on illegal immigrants.
It seems that illegals are streaming out of Arizona as the state’s economy slows and a new crackdown on undocumented workers ramps up. Not surprisingly, many people are concerned that with the low-cost labor moving back to Mexico or on to other states, the Arizona economy will weaken further. What does the sponsor of the bill have to say to that?
“I’m hoping they will self-deport. They broke the law. They’re criminals.”
Ok, if that is what he intended, good for him. Rep Pearce is entitled to that black-and-white, populist view, but it he gets down right bizarre when he responses to the questions raised about the exodus’ effect on the economy.
Pearce disagreed that the Arizona economy will suffer after illegal immigrants leave, saying there will be less crime, lower taxes, less congestion, smaller classroom sizes and shorter lines in emergency rooms.
“We have a free market. It’ll adjust,” he said. “Americans will be much better off.”
Of course, Pearce is right about the crime, congestion, classroom sizes and emergency room lines. These things would happen to any community if it’s population contracted. Unfortunately, he fails to mention the other effect, which is the decrease in money (and taxable base) that will accompany that shrinking population.
Finally, I doubt that Pearce fully grasps the irony of his “free market” response. Illegals are filling a need in economy and are the epitome of a free market. His legislation is putting an artificial constraint on that market. Perhaps Pearce should call up Hugo Chavez and see how artificial market constraints are doing for Venezuela’s economy.
Barry Goldwater must be rolling over in his grave.
Story source:
Illegal immigrants packing up and leaving Arizona
As a current owner of SNCR, I’ve become concerned about it’s recent price action. The head and shoulders pattern is fairly obvious but when combined with the established TDST resistance and support levels, the bearish formation is hard to ignore.
Don’t get me wrong, I like SNCR’s fundamental story and also realize SNCR was placed on Goldman Sach’s conviction list recently, but I have seen this kind of behavior before. Look what happened to Force Protection (FRPT) after I noticed the same kind of price rejection on the right shoulder.
I don’t think SNCR is destined for FRPT’s collapse, but I do think it is important to continue watching how Synchronoss acts as it attempts to punch through the resistance it is now experiencing.
If there is going to be a year end rally on low volume, you might as well pick some stocks that have given a TD Sequential buy signal.
Here are a few. CNO, ETH, RF, and STC
Below I’m showing the most recent chart of Ely Lilly. I posted this when it gave a TD Sequential buy. I’m always amazed by how well the signal works. Remember, however, that you should play these for short term bounces. Don’t hold them too long or else you’ll just give back everything you’ve gained.
While I wait to see if many of the recent breakouts can hold up, I went out and bought a book that I found recomended on Stockbee. Before I talk about it I just want to mention how informative and no-nonsense Pradeep Bonde’s blog is. I’ve learned so much about systematic trading by reading his posts and think that his work is what financial blogs should be. If you have not seen it, take a visit and learn something.
The book that I picked up was “Beyond the random walk: A guide to stock market anomalies and low-risk investing”, by Vijay Singal. I have become very interested in the development of trading systems and I’m looking to take advantage of any exploitable inefficiency. The book covers many different long-existing anomalies that have resisted any attempts to arbitrage them away.
Most interesting to me were the chapters on short-term price drift and momentum in industrial portfolios. Singal says that short-term price drift is when “events associated with high-quality information signals tend to exhibit price continuations. The quality of the information is characterized by the magnitude of price change, volume, and public dissemination”. The momentum in industrial portfolios chapter deals with the evidence that shows that industry groups exhibit price momentum. Singal gives real numbers on well constructed market studies and clearly shows that these price movements are real.
I know that these two inefficiencies are no secret to IBD investors but it is nice to know that the method I choose to study is backed up by empirical evidence.
An interesting thing happened today. Last week I wrote about the breakout of SID. I didn’t buy intra-day and SID ran away from me a little. I didn’t chase it and just placed a limit order for 82.55, which was within the 8% of the proper buy point. I actually forgot about the order until I saw that I was filled when the market was down today. SID bounced back nicely and I’m glad that I waited.
The chart looks nice. We’ll see how the broader markets hold up.
While everyone waits for the Fed, here is an interesting little piece from Shlomi Cohen. He says he is selling his Sigma Designs (SIGM) shares because he expects a big correction and thinks that Sigma will start making some acquisitions. He also thinks they will go after Metalink (MTLK) and I tend to agree with him.
Here is a little bit from his article:
I find it difficult to envisage Sigma maintaining the rate of sales and earnings growth of the last few quarters next year. If there is a slowdown in growth, the stock will undergo a severe correction, and I will get another opportunity to re-enter it. The gorillas are unlikely to allow Sigma to remain almost on its own in the burgeoning IPTV market for much longer, and on the other hand, there is still no strong growth in its other line of business, DVD players using the new Blu-ray disc format.
Last Thursday, Sigma announced that it would be calling a shareholder’s meeting to approve an increase in the quantity of registered shares to 100 million. This would appear to imply that a stock split will be announced, but it could also be a preliminary move ahead of an acquisition of a company for shares, a move that is quite logical considering the valuable currency it currently has - a share priced at $70. If there is a field that I feel would be a logical one for Sigma to move into in order to diversify its product range, it is WiFi chips, and here I would advise it to take a look at Metalink Ltd. (Nasdaq: MTLK;TASE: MTLK) as an interesting acquisition target.
I like wallstrip. It have given me plenty of entertainment while on my train ride home and made me laugh out loud on several occasions. I especially like the Friday chats. I’ve learned a lot through watching these interviews and try to watch them each week.
This last week featured Barry Ritholtz of The Big Picture. The interview was great as Barry seemed to vent awfully hard when asked about “free-market” guys. You see, Barry is a frequent guest on the Larry Kudlow show. It is painfully obvious that Barry is one of the few rational guests that appear on the show. He is usually surrounded by Bush-cheerleaders, Bush-apologists, and perma-bulls that always seem to blur any distinction between politics and the markets. Barry is always very polite (to my amazement) and never seems to lose his cool.
Well, Barry gets a little hot under the collar in the video below as he calls these “free-market” guys (like Larry Kudlow) communists. I bet this felt good.
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