Kaboom!..Look at MRO

I've been liking MRO for a month now, and this morning it exploded.  Great fundamentals with an excellent technical pattern.  I haven't had a chance to read the details on the split up that was announced this morning, but I'd be willing to bet that there's still some value left in this one.  Check out today's volume:

Keep an eye on this one.

TLT

C.O.T. Spells Continued Trouble for the Euro

The Commitment of Traders Report is not the tell all "perfect indicator" but it is something to keep an eye on and use as part of the mix in your analysis.  It gives you an inside look into what the big boys are doing and right now it spells trouble for the Eur/Usd.  Here's the daily chart with the C.O.T.:

If you're interested in using the C.O.T. here is an excellent website that you should check out.  So, as much as I want to fade the move in the Euro because I believe that it will trade higher, the trend, the recent break of resistance and the C.O.T. readings all say that buying the Euro right now is a very bad idea.  That means I will fade my subjective feelings and follow the charts and the objective factors listed above. 

TLT

Is $ATPG on Your Radar?

If it's not already on your watch list, you should add this one.  $ATPG has been a powerful play and it's picking up momentum.  I believe there's still room for this stock to run as it is slowly trending higher, as opposed to a parabolic rise (i.e. HERO, MPET, GEOI).  I know some value guys that were scooping this up in the sub $10 levels and most of them are still holding and buying on dips.  I've been waiting for the signal to get in and will likely hop on this trend with the next significant pull back.  Here's the chart:

As you can see, the weekly chart has been consistently heading higher and with the political mess surrounding drillers like ATP, there's likely going to be explosive up moves with any news that is percieved to be favorable.

It is important to have a good watch list of some potential energy and commodity stocks that you can follow on a daily and weekly basis.  Mine consists of:  HAWK, ATPG, GEOI, MXE, HERO, , CWEI, MRO, XOM, SLB, EP, ABX, NEM, FCX...and a few others.  Over the past couple of weeks, we have seen the dollar strengthen quite a bit which is significant.  Why?  Because stocks are slightly overbought in general, commodities have risen quickly, especially coal, aluminum, gold and silver and longer term treasuries have fallen substantially.  This sets the stage for a pullback in general but with the Eur/Usd falling below 1.2950, market participants will likely cut their exposure to risk and commodities, bonds and stocks will react to this.

I don't believe that it will be a huge reversal and will likely be a healthy pullback that will be percieved as a good buying opportunity.  That's just my opinion and if some substantial global macro shift occures (like the EU splitting up) then all of this is null and void and I'll have to adjust my analysis.  But without a substantial event like a sovereign default, a wave a municipal defaults, or some horrendous economic data any dip will likely just be a dip.  That's why having the watchlist of good pre-planned trade candidates is so important.  When everyone else is panicking, you can go in a sweep up ATPG at a good price that allows for a lower risk entry. 

Time and price action will tell.  Hope everyone's having a great start to the new year!

TLT

Excellent Excerpt

Here is an excellent excerpt from a book that I'm currently reading.  It's amazing to think that in 1991, Ed Thorp called it, saying that Madoff had to be a fraud.

He [Ed Thorp] also worked as a consultant for pension funds and endowments.  In 1991, a company asked Thorp to look over its investment portfolio.  As he combed through the various holdings, he noticed one particular investment vehicle that had produced stunning returns throughout the 1980s.  Every single year, it put up returns of 20 percent or more, far outpacing anything Thorp had ever seen--even Princeton/Newport [Thorp's hedgefund].  Intrigued, and a bit dubious, he delved further into the fund's strategies, requesting documents that listed its trading activities.  The fund, based in New York's famed Lipstick Building on Third Avenue, supposedly traded stock options on a rapid-fire basis, benefiting from a secret formula that allowed it to buy low and sell high...

It took Thorp about a day to realize the fund was a fraud. ... He told the firm that made the investment to pull its money out of the fund, which was called Bernard L. Madoff Investment Securities.

 

The above excerpt is from The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It  by Scott Patterson.