Wednesday, December 12, 2007
Tuesday, December 11, 2007
The Star Trek Stock Picker
One of the topics we hope to expand on in the future is how many inventions we saw on Star Trek 30 years ago that have come to pass. How many of us imagined we would all be talking into communicators (flip phones) a decade and half ago. If we had this vision we probably would have made a lot of money buying stocks like WCOM, MOT and QCOM assuming we knew when to sell, eh.
Well once again Star Trek is giving us an idea of how the market or in this case how the economy may turn in the future. You may be familiar with the hemline indicator, as the economy goes so goes skirt hemlines. If short skirts are in fashion then normally you will see a bullish market. The inverse is also true, if longer skirts are in fashion the market tends to be bearish. We also know that there is a 90% correlation with lipstick sales and a recession. During a recession lipstick sales will rise (I don't know if that is a result of money being tight and so women are forced to cut back on fashion and use lipstick as a substiute of self expression, or maybe it is a number of men who have been emasculated by the markets and are hiding in dark rooms questioning their manhood.)
In the original Star Trek series in order to make the crew members look more uniform in thier uh, uniforms, breast enhancements were placed in the costumes so the actresses would have similar shape and size. Of course, this has been a money maker for many astute surgeons and silicon producers. Mentor MNT a breast enhancement producer has been oscillating sidways for about two years now. Recently we have began to see it, dare I say, sag.
MNT
Could it be that inversely to lipstick sales rising in a recession that cosmetic surgery would fall. If that is the case you will want to check out this recent article. I'm not sure what I would call this indicator, I'm a little afraid to go down that road.
Well once again Star Trek is giving us an idea of how the market or in this case how the economy may turn in the future. You may be familiar with the hemline indicator, as the economy goes so goes skirt hemlines. If short skirts are in fashion then normally you will see a bullish market. The inverse is also true, if longer skirts are in fashion the market tends to be bearish. We also know that there is a 90% correlation with lipstick sales and a recession. During a recession lipstick sales will rise (I don't know if that is a result of money being tight and so women are forced to cut back on fashion and use lipstick as a substiute of self expression, or maybe it is a number of men who have been emasculated by the markets and are hiding in dark rooms questioning their manhood.)
In the original Star Trek series in order to make the crew members look more uniform in thier uh, uniforms, breast enhancements were placed in the costumes so the actresses would have similar shape and size. Of course, this has been a money maker for many astute surgeons and silicon producers. Mentor MNT a breast enhancement producer has been oscillating sidways for about two years now. Recently we have began to see it, dare I say, sag.
MNT
Could it be that inversely to lipstick sales rising in a recession that cosmetic surgery would fall. If that is the case you will want to check out this recent article. I'm not sure what I would call this indicator, I'm a little afraid to go down that road.
Friday, December 7, 2007
Using your Lobes on Job Numbers
Today market participants and conservative politicos were excited about what they saw as a positive job reports. Wiser commentators downplayed the significance of the report and here is why. The job report doesn't account for illegal migrant workers. Construction jobs are taking the brunt of the bearish housing market which has been perhaps the largest employer of illegal workers. Housing start are so slow now that contractors no longer need to take on the risk of hiring these workers. Therefore, these workers don't go in and apply for unemployment for obvious reasons. So in a reporting sense they don't count.
The unemployment records have been screwed for sometime. First of all we haven't been accounting for the the number of illeagal workers in the past. This means those already low unemployment numbers not only had us at full-employment but over-employment. This was a very inflationary sign through all of last year. Wages on "lower tier" jobs were pressed higher because we were "growing" at a fast pace (Or at least we thought we were and kept building on those inflated expectations.) We Ferengi agree with business owners that paying higher wages is hard on the bottom line.
Sales people who were working in the housing and mortgage fields are also left somewhat an accounted. They may very well be looking for work or they may be dying on the vine. Commission based salesman may hold out for some time because of the nature of the sale business. You cannot be in sales and have a defeatist attitude so many salesman will stay at much longer then they can afford. In the end many people should be looking for some type of back up plan and that takes training.
The point that I am making here is to assess the Economic numbers with a grain of salt. I have only pointed out a few weaknesses in the numbers right now. Perhaps the biggest discretion in the numbers is after a person has been unemployed for so long we just quit counting them. If we had counted unemployment like that in the 1930s then the Great Depression would've been the Fairly Big Recession. In the end many people should be looking for some type of back up plan and that takes training.
The market will once again give us the truth of what is going on. We find this by using our relative strength tool. This time we will examine the Education stocks. These are stocks like Apollo Colleges (APOL) whose subsidiary University of Phoenix you are probably most familiar with. Also ITT Technical Institutions (ESI), Corinthian Colleges (COCO), and finally Career Education (CECO) to name a few that lead the markets back in 2001-2003. We can see in our graph here that money has been flowing into this industry group for about a year. This tells me that the "Smart Money" believes that unemployment and/or underemployment (having a job that doesn't cover your needs) are a much bigger concern then what the economic numbers are telling us.
The unemployment records have been screwed for sometime. First of all we haven't been accounting for the the number of illeagal workers in the past. This means those already low unemployment numbers not only had us at full-employment but over-employment. This was a very inflationary sign through all of last year. Wages on "lower tier" jobs were pressed higher because we were "growing" at a fast pace (Or at least we thought we were and kept building on those inflated expectations.) We Ferengi agree with business owners that paying higher wages is hard on the bottom line.
Sales people who were working in the housing and mortgage fields are also left somewhat an accounted. They may very well be looking for work or they may be dying on the vine. Commission based salesman may hold out for some time because of the nature of the sale business. You cannot be in sales and have a defeatist attitude so many salesman will stay at much longer then they can afford. In the end many people should be looking for some type of back up plan and that takes training.
The point that I am making here is to assess the Economic numbers with a grain of salt. I have only pointed out a few weaknesses in the numbers right now. Perhaps the biggest discretion in the numbers is after a person has been unemployed for so long we just quit counting them. If we had counted unemployment like that in the 1930s then the Great Depression would've been the Fairly Big Recession. In the end many people should be looking for some type of back up plan and that takes training.
The market will once again give us the truth of what is going on. We find this by using our relative strength tool. This time we will examine the Education stocks. These are stocks like Apollo Colleges (APOL) whose subsidiary University of Phoenix you are probably most familiar with. Also ITT Technical Institutions (ESI), Corinthian Colleges (COCO), and finally Career Education (CECO) to name a few that lead the markets back in 2001-2003. We can see in our graph here that money has been flowing into this industry group for about a year. This tells me that the "Smart Money" believes that unemployment and/or underemployment (having a job that doesn't cover your needs) are a much bigger concern then what the economic numbers are telling us.
Monday, December 3, 2007
Insurance Surveillance
Chances are this week aren't going to see much action in the markets as far as buying and selling. We Ferengi always keep an eye on the lunar cycle and the lunar cycle is moving into its consolidation phase, but that is a topic for a different time. I my post Finding Stocks the Ferengi Way I highlighted Insurance (Accident & Health) so I will highlight a few stocks in which I the Bajoran Profit am keeping my lobes alert for.
Long term chart of UNH
In the 2 year weekly chart of UNH we see the downward trend has been broken although we are definitely cautious since see another resistance level at 56. Our oscillators at the bottom both gave us bullish divergences as a an alert to the recent movement and the trend reversal. With the new found uptrend in the industry group we are bullish on this stock's ability to break resistance. This is probably not the entry for a swing trader but the trend trader should consider a small position here.
Short term chart of UNH
The next stock in this group is WLP or Wellpoint Inc. The long-term chart of WLP shows a downward consolidation that was recently broken. The trend trade could entry here with a stop around $82 and then scale into a larger position if and when the stock breaks the $86 resistance level.
Long term chart of WLP
The shorter term play would be the channel itself. No doubt the break a few weeks ago would've been the best entry but we are half way through the $10 move now. Entering now with a stop at the quarter mark ($82.50) can still allow us to make a little off them move here and keep at least a 2 to 1 reward to risk ratio.
Short term chart of WLP
Long term chart of UNH
In the 2 year weekly chart of UNH we see the downward trend has been broken although we are definitely cautious since see another resistance level at 56. Our oscillators at the bottom both gave us bullish divergences as a an alert to the recent movement and the trend reversal. With the new found uptrend in the industry group we are bullish on this stock's ability to break resistance. This is probably not the entry for a swing trader but the trend trader should consider a small position here.
Short term chart of UNH
The next stock in this group is WLP or Wellpoint Inc. The long-term chart of WLP shows a downward consolidation that was recently broken. The trend trade could entry here with a stop around $82 and then scale into a larger position if and when the stock breaks the $86 resistance level.
Long term chart of WLP
The shorter term play would be the channel itself. No doubt the break a few weeks ago would've been the best entry but we are half way through the $10 move now. Entering now with a stop at the quarter mark ($82.50) can still allow us to make a little off them move here and keep at least a 2 to 1 reward to risk ratio.
Short term chart of WLP
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