Sunday, September 23, 2012

Worrying about market direction ?

Everybody is hyper focused on where markets are headed on Monday, Tuesday or end of the week.

This worry does not make sense as we have come a long way from June 2012.

So.. we have moved from 1266.74 in early June to 1474.51 in 2nd week of Sep, 2012.....that is a gain of 207.77 points or 16.40% in less than 3.5 months......

SO what should be the strategy after such a huge move ?

It is all about strategy in this new market TAPE.

Same traders were focused on when the next correction is all the way from 1266.74?

Market TAPE has changed for the better......

It does not pay to be hyper focused on market...

One needs to be extremely diligent in selection of stocks & booking profit......that is the real theme of this market.....

SO..market may go down 60 S&P points.......

OR..market may CHURN for next two weeks....

Either way, one needs to define a game plan.....

It is never the same strategy 365 days of the year.....

Strategy needs tinkering based on where we are & where we may be headed......

My strategy has been to reduce exposure as we head higher....i have done it couple of times in a big way...

My strategy also entails to be in the market with better performing stocks....

It is all about comfort level, mine is @ reduced exposure of 70%

Predicting market is almost impossible......

Either we know our stocks or not IS the-issue......

It is knowing about fundamental & technical of stocks which may be the next leader....

We need to develop conviction about stocks which IS in a defined uptrend.

SO..do not even attempt to be a "market guru" but try to be a good stock picker......

I have not met anyone who could predict market in more than one cycle, because market TAPE is extremely unpredictable for anybody including Granville, Prechter, Rosenberg, Roubini, Abby Joseph Cohen etc

So relax...& focus on next movers in stock universe......

Yes... it may involve stocks going down for a while or if you get lucky..you may be seen a "genius" in picking stock...but know that one cannot beat market gyration.......

Good luck in your new focus on "picking stocks"....some stocks do get oversold / overbought or some are ready to move UP.....knowing that will keep you in the right arena....

BLOG does NOT give buy or sell.

Saleem

14 comments:

stocktrader_1996 said...

Hey Saleem,

Great commentary! As we get more into this defined bull market, a stock picking strategy will outperform greatly. Based on the lack of market participants still, I think there's a lot of room left to the upside in coming years.

Stocktrader

Stocks100 said...

Hi Stocktrader,

Thanks for your feedback.

Market is firmly in an uptrend with usual digestive process.

We are looking @ all time highs even in Nasdaq as we go forward...2013 could be more exciting....

Saleem

c said...

SALEEM

Look at APPLE fall in price

I am looking at NYMT a divi play and REM...

Good Luck

C

Stocks100 said...

Hi C,

I saw AAPL down $15......

Good luck with your buys.

Saleem

stocktrader_1996 said...

Hey Saleem,

Z will be a feature on Mad Money tonight. I might want to sell tomorrow?? Just kidding :)

Stocktrader

Stocks100 said...

Hi Stocktrader,

Zillow is a good one....keep it going & going.....

Saleem

c said...

SALEEM

LEN
Down .86 cents --yet earning were GREAT see attached:

Lennar Reports Third Quarter EPS of $0.40
MIAMI, Sept. 24, 2012 /PRNewswire/ --

Net earnings of $87.1 million, or $0.40 per diluted share, compared to net earnings of $20.7 million, or $0.11 per diluted share
Deliveries of 3,655 homes – up 28%
New orders of 4,198 homes – up 44%; cancellation rate of 17%
Backlog of 4,513 homes – up 79%; backlog dollar value of $1.3 billion – up 95%
Revenues of $1.1 billion – up 34%
Gross margin on home sales of 23.2% – improved 210 basis points
S,G&A expenses as a % of revenues from home sales of 12.0% – improved 230 basis points
Operating margin on home sales of 11.2% – improved 440 basis points
Lennar Homebuilding operating earnings of $71.3 million, compared to $27.1 million
Lennar Financial Services operating earnings of $25.3 million, compared to $8.0 million
Rialto Investments operating earnings totaled $7.7 million (including $13.4 million of net loss attributable to noncontrolling interests), compared to $5.7 million (net of $6.1 million of net earnings attributable to noncontrolling interests)
Lennar Homebuilding cash and cash equivalents of $692.0 million
Issued $400 million of 4.75% senior notes due 2017
Completed the repurchase of $204.7 million aggregate principal amount of 5.95% senior notes due 2013 through a tender offer, resulting in a $6.5 million pre-tax loss
No outstanding borrowings under the $525 million credit facility
Lennar Homebuilding debt to total capital, net of cash and cash equivalents, of 47.7%

Is this a case of sell the news???
C

Stocks100 said...

Hi C

No it is stupidity by Wall Street..

Saleem

stocktrader_1996 said...

Hey c,

Some of the comments coming out of their conference call are great.
***
Lennar says homebuilding business beginning to revert to normal

Lennar CEO says inventories of distressed homes, foreclosures are declining

Lennar CEO says optimistic of "real recovery" in housing, further improvement
***

Stocktrader

stocktrader_1996 said...

Hey Saleem,

I read some scary stuff about OCZ over the weekend. This is definitely a troubled little company. I'll be watching support closely.

Stocktrader

Stocks100 said...

Hi Stocktrader,

Thanks for your recap of LEN cc...i heard last Q & was quite impressed with housing trendline.

OCZ..my suggestion..not worth the pain.....

Saleem

stocktrader_1996 said...

Hey Saleem,

Yes, I will probably get rid of it. I'm just looking for maybe some technical bounce before I do. I'm not sure it's a good sell at 3.93 when it was 4.40+ Friday morning.

Stocktrader

c said...

Hey Saleem

I got some AUY at $18.95

C

Stocks100 said...

Hi C,

Good move in AUY.....

Saleem