Friday, December 18, 2009

Market had a small but steady gain

It's time again for me to step back, objectively see what the market accomplished for the week and plan my investing strategy for the coming week. I use BarChart for my data and the Value Line Index as my market barometer. I like the Index because it uses 1700 stocks instead of the narrower S&P 500 or very narrow Dow 30.

Value Line Index - 1700 stocks - Index up 1.06% for the week and 4.56% month to date - small but respectable gain.

  • The index closed above its 20, 50 and 100 Daily Moving Averages
  • BarChart short term rating -- 80%
  • BarChart mid term rating -- 100%
  • BarChart long term rating -- 67%
  • Overall rating -- 88% -- 11 buys and 2 holds
  • Index closed at 2207.56 almost back to its year to date high of 2239.69

BarChart market momentum -- approx. 6000 stocks -- The percentage of stocks closing above their Daily Moving Averages for various time periods. 50% closed above the DMA for all 3 time frames.

  • 20 DMA -- 61.96% closed above
  • 50 DMA -- 62.56% closed above
  • 100 DMA -- 69.01 closed above

Ratio of stocks hitting new highs to stocks hitting new lows for various time periods -- 1.0+ bullish, 1.0 neutral, under .99 bearish -- all 3 time periods above 1.0

  • 20 day new high/new low ratio -- 955/791 = 1.21
  • 65 day new high/new low ratio -- 438/291 = 1.51
  • 100 day new high/new low ratio -- 384/192 = 2.00

Summary -- The market didn't set the world on fire but I'd take the gains it made this week any day. A few bumps but up in the end. This week I'll trim any stock falling below its 50 DMA and not be afraid to recommit the funds to replace it. I do expect a little bumpiness between now and the end of the year as investors close out some positions to realize tax losses they might have in individual stocks. Because there will be downward pressure during this tax loss recognition period I don't expect the market to explode or call for any short sale covering. As always January is a month you should prepare to be fully invested.

Wall Street Survivor results -- Remember that all the contributors to Top Stocks that make stock recommendations place those recommendations into model portfolios over on Wall Street Survivor so you can track the results of the recommendations. By the S&P 500 the market was down .88% for the month to date and 7 of our 8 contributors beat that benchmark, John Reese came in 1st with a 4.5% MTD return and I came in 7th with a .46% return. Not much but I did beat the benchmark.

Disclosure: I have no positions in any of the stocks held in my Wall Street Survivor portfolio.

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

Please define: Fat Cat

Maybe I read too much in between the lines when I see political sound bites but I know that the words are well chosen and should have been vetted by several aides before being given to the President. Recently he was saying that financial fat cats didn't deserve the big bonuses. He also said that his new job bill would make it so that every person who "wanted" to work could find a job.

Am I wrong to ask why he didn't say that his job bill would provide a job for every "able bodied" person? What's with this "wanting" to work. Everyone between 21 & 62 needs to work.

I know that people dwell on the unemployment figures but at the same time we also have 12 - 20 million undocumented workers who are doing something unheard of -- working! There are actually some unfilled jobs out there. Not enough to employ everyone but lots of jobs go unfilled because "it's just not my cup of tea". Remember when President Fox of Mexico took heat because he said Mexicans were not taking away jobs from Americans, they were working at jobs Americans wouldn't take. Was he wrong?

When Hurricane Katrina hit New Orleans I remember a newscaster interviewing a woman who was just informed that the public housing project she lived in was destroyed and she couldn't return. She was crying and she didn't know what to do. She said: "How will I get by? I was born in that project, raised my babies and grand babies there. What can I do?"

4 generations on public assistance and not a single one broke out of that cycle.

Recently, our school board announced that they were starting a new alternative high school for students between the ages of 18 & 22 who were still freshman. They had to open this school because conventional schooling didn't meet the needs of these students. Did anyone ever consider that these kids weren't meeting the need of the rest of us? Most of these kids hadn't shown up enough days to learn anything.

My county will admit to a 45% high school drop out rate. If I take the number of kids in 8th grade and compare that to the number of kids graduating from high school the figure is way above a 50% drop out rate.

I am all for public assistance to the aged, mentally, physically or medically disadvantaged but not welfare for the able bodied.

My definition of a Fat Cat is not the over achiever who shows up to work every day, has a job that's a passion, works 12 -14 hours a day, is ultra productive and might get a big bonus. My Fat Cat is the person who is of sound mind and body who opts out of productive work or education but at the end of the day expects to get a handout anyway. Everyone deserves an opportunity to work but only those who work deserve a paycheck.

I agree that our country is not spreading its fruits and wealth as it should. I'd rather concentrate on making ever productive member of society give their fair share of work effort. If you are able and won't work, don't expect a hand out. If we take the money we now give out in public assistance and make sure only the deserving get it then there would be a larger piece of the pie for the needy. The disadvantaged don't need to share their assistance with those who aren't disadvantaged.

I'm still trying to figure out why our President feels only those who "want" to work are the only ones who need to work. Please help me out on my confusion.

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

Disclosure : No stocks mentioned

Thursday, December 17, 2009

Worldgate Comm - WGAT deleted

WorldGate Comm -- WGAT will have a sell order at the opening from the VMNHI portfolio . No maintaining price levels above its 50 DMA

Cedar Fair was my Christmas present to you!!

On Monday December 11 in my article Cedar Fair: Add some fun to your portfolio, I told you that there was unexplained price action in this stock and that such price action sometimes meant a favorable press release or acquisition announcement was pending. I advised buying around 9 with a protective stop loss at 8 in case something happened.

Below is today's press release. If you bought at 9 and your shares are acquired from you at 11.50 you have 2.50 per share profit. 2.50/9 = 22.78% profit. Not bad for a 10 day investment.

Merry Christmas - now pay off your credit card with these profits so you won't have to worry about how to pay for all those presents under the tree.

Press release:
Cedar Fair LP, the owner of Kings Island theme park in Mason, will be acquired by Apollo Global Management under a definitive merger agreement announced Wednesday.
Apollo, a private equity firm, will pay $11.50 in cash for each limited partnership unit, for a total of about $2.4 billion, according to a news release. Shares of Cedar Fair (NYSE: FUN) opened at $9.08 Thursday.
The deal is subject to approval by unit-holders, as well as regulatory approvals and other conditions. Pending those approvals, the deal will close by the beginning of second-quarter 2010, Cedar Fair said.
The company can also solicit other proposals from third parties for 40 days, under the terms of the agreement.
At the deal’s completion, Cedar Fair will become a private company, owned by an Apollo affiliate.
“We have considered a wide range of strategic alternatives over the past several years,” said Dick Kinzel, chairman, president and CEO of Cedar Fair, in the release. “After considering these strategic alternatives, we have concluded that the transaction with Apollo is in the best interest of our unit-holders.”
Apollo Global Management, with offices in New York, Los Angeles, London, Singapore, Frankfurt and Mumbai, has more than $51 billion in assets under management.
Cedar Fair posted third-quarter net income of $107.6 million, or $1.92 per share, compared to $91.5 million, or $1.65 per share in the year-ago quarter. Total net revenues fell to $519.9 million from $540.3 million. The company said in November that it would suspend its dividend beginning in 2010 to pay down short-term debt.
Cedar Fair (NYSE: FUN), headquartered in Sandusky, is a publicly traded partnership that owns and operates 11 amusement parks, six outdoor waterparks, one indoor waterpark and five hotels in eight states and Ontario. The company acquired Kings Island in June 2006, as part of its $1.24 billion purchase of Paramount Parks.

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

Disclosure: I hold no positions in this stock at time of publication

Wednesday, December 16, 2009

Where does President Obama get his advice?

Lately I'm having a very hard time trying to figure out who is prioritizing the Administration's missions and goals. The President told the bankers that they had a duty to fund mortgages and make small business loans to simulate the economy. He holds press conferences to urge everyone to fund public health care and start spending. Every time he holds a press conference it is either about spending money the government doesn't have or taking away the incentive to produce goods and services by taxing to death the people he is counting on to kick start the economy.

Someone needs to tell him that most of the behavior he is demanding is the very behavior that got us into this mess. What happened is evident. It's not really rocket surgery!

I can tell the President how to fix the economy. First make mandatory reading of every one in his administration Dr. Stanley's book "The Millionaire Next Door". Dr Stanley, a GSU professor has made a life's work studying how people get rich. Most had a very simple plan: 1 -- spend less money than you make and invest the difference and 2 -- don't have any consumer debt, only borrow to invest in productive assets.

Second is to ask bankers to make consumer loans for mortgages only to people that can pay them back. Any one who can put 20% down , buy a home that is no more than 3 times their income and with that loan has a debt service of less than 30% of their take home pay deserves a mortgage -- the rest don't.

Third, make loans to small businesses that need to buy productive assets to fill orders they have in hand but do not have the present capacity to fill. The other night when flipping channels I hit a reality show who's name I can't remember. People with small business ideas pitched investing in their company to venture capitalists. Most came in with a product, market research, focus group results and a well prepared pitch book. One of these guys always asked the same question: " Besides all your research, how may orders do you have?" He turned down every pitch that didn't have orders in hand. What a novel idea? Sales of products not pitching of ideas. Isn't that what bankers are supposed to look for?

We need to get back to both governmental and personal fiscal responsibility. The President has to understand that it is not the duty of the CEOs of the banks to fund the needs of society. The duty of the banking CEOs is a fiduciary responsibility to their stockholders to gather assets and use those assets to make profitable loans and investments. Their duty is to maximize profits for the shareholders.

The business of America is business and the goal of a business is to make a profit. Any idea that will make a profit should be funded; the rest need to become case studies on how not to run a business.

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

Tuesday, December 15, 2009

A closed-end energy play

I still have some room in my VMSLO fund and after screening on BarChart for stocks hitting new highs that trade below 100K per day came up with Energy Income & Growth Fund -- FEN. Not all my plays are for price appreciation only. Sometimes you need to look at total return. This stock has doubled in price this year and still pays a 7.50% dividend. Energy is where it's at.

The fund is a closed-end fund which invests in Master Limited Partnerships of energy related companies. Some of what you are paying for is expertise in this area.

On a technical side BarChart show this stock has had price appreciation in 15 of the last 20 trading sessions and is 5 for 5 recently. It has had a 17.25% price appreciation in the last 65 days and almost doubled in price this year. There are buy signals on 13 of BarChart's 13 technical indicators for a 100% buy rating.

Over on Motley Fool CAPS members think the fund will beat the S&P 500 by a vote of 48 to 8 with the All Stars in agreement 13 to 1.

Recommendation: I'm adding Energy Income & Growth -- FEN to my Marketocracy portfolio VMSLO around 23.80 with a stop loss no lower than 22.

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

Disclosure: no positions in FEN at time of publication

Monday, December 14, 2009

Cooing up with Presto

I needed a stock for my more speculative Financial Tides/BarChart model portfolio VMSLO on Marketocracy so I used BarChart to screen for stocks hitting the most new highs trading under 100K shares per day. After doing some screening National Presto Industries -- NPK came up as my pick.

National Presto Industries manufactures and distributes small electrical appliances and housewares, including comfort appliances, pressure cookers and canners, private label and premium sales products. Electrical appliances and housewares sold by the company include pressure cookers and canners; the Presto Control Master heat control single thermostatic control line of fry pans in several sizes, griddles and combination griddle/warmers and multi-purpose cookers; deep fryers of various sizes; can openers, slicer/shredders; electric heaters; corn poppers. I don't know about you but over the years I've acquired several of their gadgets.

On BarChart NPK has had price appreciation in 14 of the last 20 trading sessions and more recently 5 of the last 5. It has enjoyed a 30.58% price appreciation in the last 65 days. BarChart's technical indicators have 13 of 13 buy signals for a 100% buy rating.

Only one Wall Street brokerage firm has a recommendation on the stock and they have a strong buy recommendation. They estimate a 11.3% increase in sales and a 6.4% increase in EPS. By the way 2 other analysts have raised their EPS estimates in the last 30 days.

Both Wall Street Survivor and Motley Fool's members agree with my research. On Wall Street Survivor Mark's checklist has a Survivor rating of 5/5, a fundamental rating of 5.5, a technical rating of of 4/5 for an overall rating of 85%. Motley Fool members think the stock will out perform the market by a vote of 215 to 6 with the All Stars in agreement 81 to 3.

The stock meets my criteria:
  • Hitting new highs better than 50% of the recent trading sessions
  • If Wall Street brokerages are following it -- no trash talking
  • Confirmation of the BarChart ratings on other sites.

Recommendation: I'm adding National Presto Industries -- NPK to my Financial Tides/BarChart model portfolio VMSLO around 98.37 with a protective stop loss no lower than 92.

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

Disclosure: no positions in NPK at the time of publication.

TARP confuses me

I've tried to follow this TARP fiasco but I get so confused. For a while I thought I must be the dumbest air head in the country till I started to get emails from other people who said they were just as confused as I was. I'm trying to learn something from this mess but when I try to make a list I get writer's block.

Back in my internal auditing days I used to analyze a department by asking:
  • What is the mission of the department?
  • If the department didn't exist how would that hurt the company?
  • What are the measurements in place to evaluate the department's effectiveness?
  • Does the department have the tools and resources to complete their mission?
  • Are the benchmarks effective in evaluating the department?
  • If the department is not completing it's mission how do we fix that?
  • How much will the fix cost?
  • Will it cost more to fix it than the benefit the company will receive?
  • How can we tell if the plan to fix it was wrong or the plan was just poorly executed?
  • Should personnel changes be made?

Have we answered or even asked these basic questions for TARP?

When this whole mess came about our President promised 2 things: First, this was not a bailout. It was an investment by the taxpayers because the financial institutions would transfer an equity ownership to the taxpayers, pay interest and fees and eventually we would sell the assets at a profit. This was not corporate welfare that would never be paid back. Now he says it will not cost as much as he thought. What happened to the profit he talked about?

The second thing this administration promised was transparency. I don't know about you but to me transparency means everything out in the open, an honest accounting and explanation that the general public would understand.

The legislative branch and the SEC and who knows who else is investigating the banks but who is investigating them?

My questions before TARP were:

  • Why didn't the external auditors value the assets properly?
  • Why didn't the SEC publish warning flags?
  • How did all the rating agencies like Moody's Standard & Poor's and Fitch miss the credit problems?
  • How could all the analysts at the Wall Street brokerage firms fail to see the warning signs?
  • Why didn't the FDIC have these institutions on a Credit Watch list?
  • When the toxic assets were packaged as investment grade was there a conspiracy to defraud the public - was it salesmanship puffing or outright fraud?
  • Were the laws and regulations inadequate to protect us or can it be blamed on lack of enforcement?

None of these questions have been answered!

My questions on TARP are:

  • How much money was really needed?
  • Who made the decisions and what data were they using?
  • How was the money used?
  • Everyone says loans to the public were not made so what was the money used for?
  • Citi wants to pay back the money. Since they haven't made a profit in years and they aren't making loans to generate interest income where are they getting the money to pay back the program? Did they even need the money in the first place?

TARP should be a case study in business schools for years to come on how not to regulate an economy. TARP should have it's letters rearranged to TRAP.

There are lessons to be learned but the Administration is not asking for the accountability of the funds so I'm not sure if we will ever learn anything from this recession.

Pollsters tell us investor confidence is up but I'm still not sure who is adequately protecting me from "the beasties and ghoulies and things that go bump in the night" in the financial world? My confidence isn't up how about yours'??

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