Saturday, October 24, 2009

Market momentum mildly up

Each weekend on Financial Tides I like to take stock of the market and see if the market has changed direction and I might need to rethink my strategy. I report how my portfolio on Wall Street Survivor is doing against the other participants from MSN's Top Stock blog. I try to use the same standard methodology and explain my conclusions.

I use BarChart and the various technical analysis indicators I have come to rely on for the last 5 years. Let's look at them one at a time:

Value Line Index - an index of the 1700 stocks followed by Value Line - I like this better than the S&P 500 because it contains more stocks and is not market cap weighted so that larger companies are not given greater weight. To me that's a better feel of the overall market.
  1. BarChart still ranks the index as a 32% overall buy with 7 of the indicators buy, 3 sell and 3 hold. I would point out that the 3 sells are all short term and are what I expected to see. Bullish but not big time.
  2. The Value Line Index is tracking below its 20 day moving average -- just barely, but still tracking above it's 59 & 100 DMA. Weaker than last week but still in the green. Bullish but still weak.
  3. The Index is down for the week by 1.74% but up for the month by 1.02%. The index has been up each of the last 5 months

BarChart Market momentum - are stocks trading above or below their DMAs for various periods? Follows approximately 6000 stocks - still positive, so bullish.

  1. 51% above their 20 DMA
  2. 68% above their 50 DMA
  3. 82% above their 100 DMA

Ratio of stocks hitting new highs to stocks hitting new lows for various periods: 1.0+ positive, 1.0 neutral, below .99 negative -- this week bullish

  1. 20 day new high/new low ratio -- 652/619 = 1.1 -- bullish
  2. 50 day new high/new low ratio -- 467/202 = 2.3 -- bullish
  3. 100 day new high/new low ratio -- 442/116= 3.8 -- bullish

All of the 3 areas I look at are still bullish but not as much as last week's review.

On Wall Street Survivor I compare my performance for the month since that is the only time frame we all have participated. The S&P is up 2.13% for the month but I'm down .03%. No need to panic but that puts me in 5th place out of 8 with Anthony Mirhaydari taking away top honors again this week.

Let's not expect too much from the market. Remember this is still earnings season. The market has been climbing on anticipation and earnings season is a reality check time so stocks are adjusting to the accountants earnings and away from the analysts earnings expectations.

Jim Van Meerten is an investor who blogs on financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: I hold no positions in any of the stocks in my Wall Street Survivor portfolio at the time of publication

Friday, October 23, 2009

NTX Nutritional Holdlings might be a sweet deal

On Financial Tides I usually don't look at small speculative stocks but the technicals on this are too good to pass. Please follow my stop loss recommendation.

As described on Yahoo Finance: NXT Nutritionals Holdings, Inc., (NXTH) through its subsidiary, NXT Nutritionals, Inc., develops and markets alternative sweetening systems, and other food and beverage products. Its products include SUSTA Nectar, a table top sweetener alternative; SUSTA ingredient for beverages, cereals, baked goods, dairy products, candies, and chewing gums; and NXT/SUSTA branded products, including beverages, water, nutritional bars, and supplements, as well as Healthy Dairy smoothies that are SUSTA-enhanced yogurt smoothies. SUSTA is a low glycemic index nutritional sweetening system, which is a blend of inulin fiber, fructose, botanical extracts, natural flavors, vitamins, minerals, and probiotics. The company is based in Holyoke, Massachusetts.

NXTH is new and has yet to make a profit but I have heard a marketing plug on the radio so I became interested. No analysts are following this stock.

BarChart's 13 technical indicators have this 12 out of 13 buys with only one hold. The stock has hit 20 new highs in the last 20 days and of course is 5 for 5 this week. The price appreciation has been 194% in the last 65 days.

Recommendation: This is a highly, highly speculative play and is only for someone who wants to take a gamble not an investment. Buy NTX Nutritional Holdings -- NXTH -- around 3.25 and put a moving stop loss at no less than 2.75. Monitor this one closely and protect yourself by moving that stop loss daily.

Jim Van Meerten is an investor and writes about financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: I hold no positions in NXTH at the time of this publication.

Is the economic roller coaster bottoming?

If there is one economic report I look forward to every month, it's the Conference Board's Leading Economic Index. Most of the stuff written by economist is so full of statistics, formulas, tables and graphs that by the time you weed through it all you forgot what the information says; the Conference Board's report is different. They use only 3 major categories:
  1. Leading Economic Index -- LEI -- 10 indicators
  2. Coincident Economic Index -- CEI -- 4 indicators
  3. Lagging Economic Index -- LAG -- 7 indicators

This month I'll sum up the report by this quote: "All in all, the behavior of the composite indexes suggests that the recession is bottoming out and that economic conditions will continue to improve in the near term." Pretty simple to understand, straight forward and to the point.

Let's look for some gems in the report:

LEI - 8 of 10 increased. The 2 that were down were average work week and building permits. We all know we have excess housing inventory and both present and future foreclosure inventory to work through. What I thought was interesting was supplier deliveries, and manufacturer's orders of nondefense capital goods and new orders for consumer goods and materials were up - more on this in just a minute.

CEI - Unchanged - Industrial production is up with the nonagricultural payroll down. Let's go back to Accounting 101. Industrial production up, supplier deliveries up, manufacturer's orders up, average work week down, nonagricultural payroll down; sounds like improving margins are in store for the manufactures. That is a very good sign.

LAG - Improvement in labor cost per unit of output; again a good sign of future profit margins.

At least this report makes me feel better. Orders, production and deliveries up with labor costs down -- I like that. It seems like the roller coaster may have reached the bottom and all the bad news that hasn't already hit the fan at least has been discussed and accounted for. I think that we can be confident that a year from now the economy will be better than it is today.

Jim Van Meerten is an investor and writes about financial matters here and on Financial Tides. Please leave a comment below or email to

Don't ignore the analysts

Before you read too much into the headline notice I didn't say listen to the analysts; I said don't ignore them. Let me explain the difference. My own blog is called Financial Tides for a reason; I don't recommend swimming against the tide.

I think analysts and astrologists have a lot in common. They both claim they can foretell the future by interpreting the signs better than anyone else and are willing to share their insight with you for a price. Most of the analysts are young MBAs with CFAs so they have 2 little pieces of paper to certify how much better they are than you at reading the tea leaves. Their job is to produce reports that will give their brokers something to talk to you about.

Most brokerage firms do not allow their sale reps to do their own research. That would open them up to liability so they use these young MBA/CFAs to peruse all the published info on a company to document why they are making a buy/sell recommendation. How can you lose an arbitration hearing if your recommendations are well documented and produced using a standardized methodology?

We are now in the middle of earnings season and have you noticed that most stocks either beat expectations or did not meet consensus? That's the wordsmith way analysts use to justify that they totally missed the mark with their projections. The estimate wasn't wrong, it's the companies' performance that is the reason for the bad estimate.

I always use my own technical analysis research to come up with my buy recommendations but the last thing I do before I push the buy button is to check the analysts recommendations. It's not that I'm looking for them to agree with me, I'm making sure they don't disagree with me; big difference.

If I notice a stock has hit new highs 50% of the time in the last 20 day, I like that and would probably buy it. If however, several of the major brokerage firms have a sell recommendation I've got to realize that there are probably 50,000 brokers out there telling all their clients to sell that stock. I would be hard pressed to think that the stock would continue to climb if there are that many brokers each calling their top 250 clients saying:" The sky is falling, our analyst recommends selling this stock immediately".

Do your own research but don't be foolish enough to think you can swim against the tide. Don't ignore the analysts.

Jim Van Meerten is an investor who writes about financial matters here and on his blog Financial Tides. Please leave a comment below or email

Thursday, October 22, 2009

When in doubt buy the best of the best

On my blog Financial Tides I'm always looking for something to buy even when times are tough. Don't get me wrong, there are times when you should not be fully invested. Only buy when a stock meets all of your criteria. When times are rough, take your time and try to find the best sector and then find the best stock or two in that sector. It's not that hard.

I screen for stocks with BarChart because its simple to use, very reliable and relatively inexpensive. Many of the features are even free.

First I go to the sector section and sort for the sector that had the largest percentage gain in the last month. I want to know what is happening now not last quarter. Today the Gold sector has the highest percentage with a 102% gain last month. Next I sort for the 14 day relative strength so I have the gold sector ranked by positive movement in the last 14 trading days. I then consider only the top 10.

BarChart uses 13 technical indicators to come up with their buy and sell recommendations and since I only want the best I look for stocks rated a buy of 80 or 100%; lower than that and I won't take the risk. Today just 2 stocks make my screening criteria so Nevsun Resources -- NSU and Gold Reserve -- GRZ are the only ones I'll look at. Both stocks rate buy on 12 of 13 indicators with only 1 hold.

I next want to know about the number of highs they have hit recently. NSU has hit 8 new highs in the last 20 trading sessions with 4 new highs in the last 5 days and a 65 day price appreciation of 109%. GRZ has hit 6 new highs in the last 20 session and 4 new highs in the last 5 session with 119% price appreciation in the last 65 days.

I'd take a flyer on these 2 but never with more than a 5% portion of my portfolio. These are very volatile stocks in a volatile market so I'll use stop losses to protect my downside.

Recommendation: Buy Nevsun Resources -- NSU at 3.04 with a stop loss at 2.50 and Gold Reserves -- GRZ at 1.03 with a stop loss at 90 cents.

Jim Van Meerten is an investor who writes about financial matters here and on Financial Tides. Please leave a comment below or email to

Disclosure: I do not hold position in NSU or GRZ at the time of this publication

Run with Skechers USA -- SKX

If there is anyone under 30 in your household just ask them about Skechers USA -- SKX. This company has captured the hearts and minds of the youth of America and should catch your interest too. They make shoes that kids (and the young at heart) want. They market through Nordstrom, Macy's, Dillard's, J C Penny and Foot Locker. Just look at any sales circular in the newspaper and you will see ads for their product.

Analysts like this stock too. There are 4 analyst following this stock and they continue to increase the earnings expectations for this company with all 4 upgrading the estimate in the last 30 days. This years estimate of 49 cents goes up top $1.11 for next year, better than double!

BarChart likes SKX too with all 13 technical indicators giving a 100% BUY. Hitting 16 new highs in the last 20 trading sessions shows momentum you can appreciate. The last 65 day have seen an 84% price appreciation.

Recommendation: BUY SKX around 25 with a protective stop loss at 20.

Jim Van Meerten blogs about financial matters here and on Financial Tides. Pleased comment below or email to

Disclosure: I hold no position in SKX at the time of publication

Expand pay czar's role

So the word is out that Kenneth Feinberg, the Obama hatchet man, is going to have the pay of the top 25 executives at 7 of the companies who have not paid back the TARP money, by as much as 90%. If that's a good idea for those companies why not look at the rest of the people who got us into this mess. What's good for the goose is good for the gander, right? There are more than just these 175 executives who deserve pay cuts.

Let's cut the pay of the top 25 executives at the SEC and FDIC, they were asleep at the wheel. Next cut the pay of the 25 top ranking members of both the House and Senate Banking Committees, they didn't create legislation to keep us out of this mess. How about the top 25 executives of the external accounting firms of those 7 companies, they certified financial statements that didn't reflect the true worth of the companies?

While we are on a roll let's cut the pay of the top 25 executives of Standard & Poor's, Moody's, Fitch and A M Best they didn't have proper ratings on these companies. Oh, and let's not forget the top 25 analyst at all the brokerage firms who failed to warn us by downgrading these companies when they should have.

There is a a lot of blame to be spread around and a lot of small investors who took big hits because they listened to the investment advice of people who they trusted, people who they thought were looking out for the little guys.

Little guys of America, unite! Let's hear your comments on who else should take a pay cut. You and I have already taken ours.

Jim Van Meerten is an investor and blogs about financial concerns here and on Financial Tides. Please leave your comments below or email

Wednesday, October 21, 2009

Max out with CarMax KMX

I doubt is there is anyone reading this that doesn't know what CarMax -- KMX does. Personally, I've bought all my cars from them during the last 15 years. You get a great car for an average price, no lemons and always at or below Bule Book, no hassle. I'm adding this stock to my Marketocracy S&P 400 fund for mainly technical reasons.

BarChart rates it as a 100% BUY with all 13 technical indicators saying BUY. The stock has hit 8 new highs in the last 20 trading sessions and is recently 5 new highs in the last 5 days.

There are 11 analyst following this stock and I think they are under rating what is happening here. No analyst ratings have changed since mid-June and I think that used car sales is where it's at right now.

Recommendation: BUY at around 23 with a stop loss at 19

Jim Van Meerten is an investor and blogs about financial matters on Financial Tides. Please make comments below or email to

Disclosure: I hold no physical position in KMX at the publication of this blog.

Help me be a crook or I'll sue

I was going through the stack of newspapers that accumulated while I was on vacation and on the front page of The Charlotte Observer was the headline "Cameron Harris sues Wachovia". Since his family sold their insurance company to First Union, Wachovia's predecessor that's big news here in Charlotte. Friends just don't sue friends in Charlotte, bless his heart.

His suit claims that while on a hunting trip with Ken Thompson, Wachovia's then CEO he pumped Mr. Thompson for information about what was really going on in Wachovia. He asserts Ken Thompson's failure to give him what would have been unpublished insider information caused him to keep his stock and incur a large financial loss.. He might have gotten out at $55 instead of riding it down to what ever he owns now. He and his family owned around a million shares so the pony ride down cost him some real dough.

I'm no legal genius but if Ken Thompson had told him about what was really going on and he sold his stock before the swan dive wouldn't he be guilty of insider trading? Wouldn't both he and Ken Thompson be eligible of a free trip to Club Fed down at Ft. Walton Beach, Florida? Hasn't he heard of Martha Stewart.

We all remember how Martha acted on a tip from her friend Sam Waksal and did some time for insider trading. Her trade only gained a few hundred thousand, Cameron Harris' gain would have been around 50 million.

This is a suit I'll have to follow. Can you really sue for failure to receive and act on insider trading information?

Jim Van Meerten is an investor and blogs on financial matters at Financial Tides. Please comment below or email to

Disclosure: I am a former employee of Wachovia and have family members working for Wells Fargo and they have an interest in Wells Fargo stock and vested and unvested stock options.

Tuesday, October 20, 2009

Rovi Corp - ROVI - sold on technical weakness

Today I sold Rovi Corp - ROVI from my S&P 400 fund on Marketocracy. The stock has shown technical weakness and presently sells below both its 20 & 50 DMA.

BarChart rates it as a 60% short term sell, 50% mid term sell and a 32% sell overall. Cut the losses and replace at a later date.

Market is fine and so is my portfolio

I'm back from a little vacation, had to go to a reunion of my alma mater, Fort Lauderdale High School - Home of the Mighty Flying L's. The market did fine without me. As always I look at the same market momentum indicators on BarChart to get a sense of the trend of the market.

Value Line Index - an index of 1700 stock followed by Value Line -- Bullish
  1. BarChart has 12 of its 13 technical indicators as buy with only one hold
  2. The index is plotting above its 20, 50 and 100 day moving averages

BarChart Market Momentum -- what percentage of stocks are trading above their Daily Moving Averages? Approximately 5800 stocks tracked -- Bullish

  1. 20 DMA -- 67% above
  2. 50 DMA -- 77% above
  3. 100 DMA -- 86% above

Ratio of stocks hitting new highs to new lows for various periods -- above 1.1 Bullish, 1.0 Neutral, below .9 Bearish -- This week -- Bullish

  1. 20 day new high/new low ratio 691/239 = 2.9
  2. 65 day new high/new low ratio 519/71 = 7.3
  3. 100 day new high/new low ratio 490/216 = 2.3

All three ways I evaluate the market show that at the present time the market is trending upward and no reason to panic. As always have protective stop losses for unexpected bad news.

On my Wall Street Survivor portfolio all of my positions are trading above their 50 day moving averages so I'm not making any changes at this time. My month to date return is 5.69% good enough to put me in second place among the other Top Stock bloggers. I pick the month to date because that is the longest time period that we were all in the contest at the same time.

Jim Van Meerten is a full time investor and blogs here and on Financial Tides. Please comment below or email to

Disclosure: I do not hold any positions in the stocks contained in my Wall Street Survivor portfolio