ParkTwain's Parlor

[ParkTwain]

Got some research time (12/8/06 data) in today

Lots of really good-looking action as to all-time high (ATH) breakouts. One thing I had been noticing during the last two weeks is a general decline in daily volume in most of the stocks I'm watching. However, for the stronger stocks shown in the 12/8/06 data, that volume decline is not so much in evidence, which is a bullish thing for those stocks, of course.

This week's and last week's action in several stocks is telling me that some market participants are taking this anti-trans fat movement seriously. Look at BG and DAR (which just reached an 8-year high on 12/8/06). See also this news: http://tinyurl.com/yxmnzo (two consecutive posts, second is "reply" to first).

NOTE: I have my own definition of "all-time high breakout" for purposes of finding candidates for a new long position. I see whether a stock that made a new ATH has done so by passing a previous ATH that must have been at least 20 trading days previous (about 1 calendar month previous). The "breakout" part usually means that at least 2X avg daily volume took place to reach the new ATH. Another variant of this approach is to take note of stocks breaking out higher but whose chart shows a high "ceiling" (let's say, headroom equivalent to a 50% gain beyond today's close) to the next area of significant technical resistance, such as with FFIV as of 12/8/06.

Here's the list of new ATH breakouts made on 12/8/06:
ATVI
BTJ
GENT
HTI (major drug deal announced 12/6/06; DO YOUR DD!)
OMTR
PAY
SLF, SMG
TRAK, TRMA

Some other stocks I'm liking for next week based on Friday's action:
ARCC
BG (trans fat tie-in)
DAR (high ceiling variant) (trans fat tie-in)
EV
FFIV (high ceiling variant), FMD, FRP, FRZ
MDCO (like GENT listed above) (see heparin drug news on 12/8/06:
http://tinyurl.com/up2xv )
ICON
LBTYA, LIZ
PSEC
SON, STLD
X

What's pleasingly amazing about one day's data like this is that a position trader like me doesn't need to juggle more than about 5 stocks at a time (risk of 5% per position with no more than 20% of capital in each position, for portfolio risk per position of no more than 1%), so the pickings appear to be really rich based on just this one day's data.

[ParkTwain]

Lots of ideas about placement of stops

Found at "Encyclopedia of Chart Patterns" author Tom Bulkowski's web site:

http://thepatternsite.com/stops.html

[billyjoe]

Park,
Lots of good stuff in the ATH post. Thanks

--------billyjoe

[ParkTwain]

Can't take a chart's accuracy for granted

This one surprised me tonight. I looked the "max" timeframe chart for SFL tonight at Yahoo Finance, then looked at more or less the same chart (3 years) at stockcharts.com. Very different data are presented. On the stockcharts.com chart I can see that the pps reached a new all-time high over 1 month ago. You don't see that on the Yahoo max chart. I don't know right now which is right or wrong.

http://finance.yahoo.com/q/bc?s=SFL&t=5y&l=on&z=m&q=l&c=

[billyjoe]

Park,
Went to several diff. charts and see all time high around 26 in late Nov. '04. See it hitting 23 twice in mid and late Nov. '06.

--------------billyjoe

[ParkTwain]

Something I typed up for myself last year

To Recover This Loss ... Requires This Gain

1% ... 1.0%
2% ... 2.0%
3% ... 3.1%
4% ... 4.2%
5% ... 5.3%
6% ... 6.4%
7% ... 7.5%
8% ... 8.7%
9% ... 9.9%

10% ... 11.1%
15% ... 17.6%
20% ... 25.0%
25% ... 33.0%
30% ... 42.9%
35% ... 53.8%
40% ... 66.7%
45% ... 81.8%
50% ... 100.0%

[IIC]

To Recover This Loss ... Requires This Gain

1% ... 1.0%
2% ... 2.0%
3% ... 3.1%
4% ... 4.2%
5% ... 5.3%
6% ... 6.4%
7% ... 7.5%
8% ... 8.7%
9% ... 9.9%

10% ... 11.1%
15% ... 17.6%
20% ... 25.0%
25% ... 33.0%
30% ... 42.9%
35% ... 53.8%
40% ... 66.7%
45% ... 81.8%
50% ... 100.0%

You didn't go far enough...What if I lose 100%?

But on a serious note I also figure the opposite...If I make 50% how much do I have to lose to go back to even...33%

[ParkTwain]

from The Daily Reckoning blog - value of a nickel

//
THE FUTURE WORTH OF A NICKLE
by Mike "Mish" Shedlock

"People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday," reported USA Today last week.

"Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint…

"'The nation needs its coinage for commerce,' U.S. Mint director Ed Moy said in a statement. 'We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers'…

"Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad 'for legitimate coinage and numismatic purposes.'"

Note the irony in the mint for being concerned about those who would "take advantage of the American taxpayer," when the actual production cost for each penny is now up to 1.73 cents, according to the Houston Chronicle. Year in and year out, The U.S. Mint wastes money by coining pennies.

Notice that the Mint produced $78,612,000 worth of pennies at a cost of $135,998,760, thereby wasting $57,386,760 of taxpayer money through November 2006. Worse yet are the continued handling charges (and time wasted) by merchants and banks sorting and counting the damn things.

Following is an e-mail conversation I had with John Rubino at Dollarcollapse.com shortly after I wrote "Pennies, Nickels, and Dollars":

Mish: Oddly enough, it is quite likely that The Mint will bring upon the very conditions it hopes to prevent! Telling people 20 nickels are worth 40% more than a dollar can only invite hoarding.

Rubin Exactly! I told my 9-year-old about the nickel thing today (he's home from school with a cold) and he immediately got our change jars out and started picking out the nickels.

The Mint had to be crazy to announce that a nickel is worth 7 cents. I got to thinking about this a bit more, and a nickel is really 0.05 dollars plus a call option on the price of copper and nickel (the metals) in the nickel. If that option is ITM (in the money) enough, the mint cannot prevent people from hoarding them, which will in turn drive up the cost of producing them. In fact, the actual price does not even have to get high enough; the mere expectation that metal prices will get high enough could cause hoarding. Of course, the Mint tried to negate that call option by making it illegal to melt the coins, but that will not stop hoarding if the expected or actual price of copper and nickel gets high enough.

All the Mint really accomplished was telling everyone that a nickel is backed up by something useful, even if a dollar is not. Eventually, this is likely to force the mint to debase the nickel by replacing the copper and nickel in the nickel with steel or aluminum.

Recall that the Mint long ago replaced much of the nickel in nickels with copper, just as it removed the silver in silver dollars and replaced the copper in pennies with zinc. That is actually the process I was referring to when I suggested nickels would soon be confiscated.

In the short term, it is likely the value of a nickel drops to a nickel or less because of the falling price of copper. If there were as much nickel in nickels as there used to be, then nickels would be worth even more than today's copper nickels.

Many of you know that I have been bearish on copper for quite some time. I have been bearish on copper simply because so much of it is used in housing. I expected that symmetrical triangle to break down, and it did. Also note that I was lenient in how I redrew that triangle. The lighter blue line at the base was the lower edge of the previous triangle I was looking at.

We have since then seen a retest of support at the 320 level that seems to have failed, as well as multiple failed tests of the triangle (using previous lines). My target remains the 220 level, but 160-180 is not out of the question. Technically, copper is broken. Can it blast higher anyway? Yes, it can. I just do not think it is likely.

Exactly what are Dr. Copper and Lumber telling us? To me, it is obvious. This economy is in trouble.

Let's now return to my previous question: "In what time frame will the current (and probably soon-to-be confiscated) nickel be worth more than a dollar?"

Aaron Krowne gave a couple of possible answers to that question on AutoDogmatic.com:

"If base metal values continue to increase by 5% per year on average, and the dollar continues to depreciate by about the same, then in about 26½ years, a nickel will be worth a dollar in inherent value. If the rates are 10% per year, then in a bit over 13 years, this milestone will be reached."

Some might think Aaron is asking too much, others too little, and in the short term, I am still calling for a pullback in copper prices. But what's to lose by hoarding nickels? Oddly enough, hoarding nickels is a hedge against both hyperinflation and deflation. If hyperinflation kicks in, a nickel might be worth more than a quarter (in metal content) in no time flat. If deflation kicks in as I suspect, cash will be a good thing to have. If you are going to hold cash (change), it may as well be in nickels.

Regards,

Mike Shedlock ~ "Mish"

Editor's Note: Michael Shedlock (Mish) worked in the financial services industry for 20 years at some of the top institutions in the country including Harris Bank, the Bank of Montreal, Bank One, First National Bank of Chicago, and First Data Corp. Mish is currently doing economic and investment research for a number of clients. In addition, Mish runs one of the more popular stock boards on the Motley Fool, Investment Analysis Clubs/Mishedlo and one of the more popular boards on Silicon Investor as well, Mish's Global Economic Trend Analysis.
//

[ParkTwain]

bot BVX today, sold ICON

holding THI, DISCA

may still buy HTI going forward

My trading acct will probably end the CY with a measly +12% or so gain. I lost track of the market early in the summer due to major problems at work and never got my mojo back.

[mimo_100]

The Future Worth Of A Nickle

//
THE FUTURE WORTH OF A NICKLE
by Mike "Mish" Shedlock

"People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday," reported USA Today last week.

"Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint…

"'The nation needs its coinage for commerce,' U.S. Mint director Ed Moy said in a statement. 'We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers'…

"Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad 'for legitimate coinage and numismatic purposes.'"

Note the irony in the mint for being concerned about those who would "take advantage of the American taxpayer," when the actual production cost for each penny is now up to 1.73 cents, according to the Houston Chronicle. Year in and year out, The U.S. Mint wastes money by coining pennies.

Notice that the Mint produced $78,612,000 worth of pennies at a cost of $135,998,760, thereby wasting $57,386,760 of taxpayer money through November 2006. Worse yet are the continued handling charges (and time wasted) by merchants and banks sorting and counting the damn things.

Following is an e-mail conversation I had with John Rubino at Dollarcollapse.com shortly after I wrote "Pennies, Nickels, and Dollars":

Mish: Oddly enough, it is quite likely that The Mint will bring upon the very conditions it hopes to prevent! Telling people 20 nickels are worth 40% more than a dollar can only invite hoarding.

Rubin Exactly! I told my 9-year-old about the nickel thing today (he's home from school with a cold) and he immediately got our change jars out and started picking out the nickels.

The Mint had to be crazy to announce that a nickel is worth 7 cents. I got to thinking about this a bit more, and a nickel is really 0.05 dollars plus a call option on the price of copper and nickel (the metals) in the nickel. If that option is ITM (in the money) enough, the mint cannot prevent people from hoarding them, which will in turn drive up the cost of producing them. In fact, the actual price does not even have to get high enough; the mere expectation that metal prices will get high enough could cause hoarding. Of course, the Mint tried to negate that call option by making it illegal to melt the coins, but that will not stop hoarding if the expected or actual price of copper and nickel gets high enough.

All the Mint really accomplished was telling everyone that a nickel is backed up by something useful, even if a dollar is not. Eventually, this is likely to force the mint to debase the nickel by replacing the copper and nickel in the nickel with steel or aluminum.

Recall that the Mint long ago replaced much of the nickel in nickels with copper, just as it removed the silver in silver dollars and replaced the copper in pennies with zinc. That is actually the process I was referring to when I suggested nickels would soon be confiscated.

In the short term, it is likely the value of a nickel drops to a nickel or less because of the falling price of copper. If there were as much nickel in nickels as there used to be, then nickels would be worth even more than today's copper nickels.

Many of you know that I have been bearish on copper for quite some time. I have been bearish on copper simply because so much of it is used in housing. I expected that symmetrical triangle to break down, and it did. Also note that I was lenient in how I redrew that triangle. The lighter blue line at the base was the lower edge of the previous triangle I was looking at.

We have since then seen a retest of support at the 320 level that seems to have failed, as well as multiple failed tests of the triangle (using previous lines). My target remains the 220 level, but 160-180 is not out of the question. Technically, copper is broken. Can it blast higher anyway? Yes, it can. I just do not think it is likely.

Exactly what are Dr. Copper and Lumber telling us? To me, it is obvious. This economy is in trouble.

Let's now return to my previous question: "In what time frame will the current (and probably soon-to-be confiscated) nickel be worth more than a dollar?"

Aaron Krowne gave a couple of possible answers to that question on AutoDogmatic.com:

"If base metal values continue to increase by 5% per year on average, and the dollar continues to depreciate by about the same, then in about 26½ years, a nickel will be worth a dollar in inherent value. If the rates are 10% per year, then in a bit over 13 years, this milestone will be reached."

Some might think Aaron is asking too much, others too little, and in the short term, I am still calling for a pullback in copper prices. But what's to lose by hoarding nickels? Oddly enough, hoarding nickels is a hedge against both hyperinflation and deflation. If hyperinflation kicks in, a nickel might be worth more than a quarter (in metal content) in no time flat. If deflation kicks in as I suspect, cash will be a good thing to have. If you are going to hold cash (change), it may as well be in nickels.

Regards,

Mike Shedlock ~ "Mish"

Editor's Note: Michael Shedlock (Mish) worked in the financial services industry for 20 years at some of the top institutions in the country including Harris Bank, the Bank of Montreal, Bank One, First National Bank of Chicago, and First Data Corp. Mish is currently doing economic and investment research for a number of clients. In addition, Mish runs one of the more popular stock boards on the Motley Fool, Investment Analysis Clubs/Mishedlo and one of the more popular boards on Silicon Investor as well, Mish's Global Economic Trend Analysis.
//

Rob usually catches spelling anomalies.

THE FUTURE WORTH OF A NICKLE
by Mike "Mish" Shedlock

I believe that nickel is the accepted spelling of the US coin, although nickle is a variant listed in Webster.

[ParkTwain]

Gann's How to Make Profits in Commodities

Just picked up a used copy for $10.00 in hardcover at a local used bookstore. This is a tough book to find at a low price. See Amazon.com, Alibris.com, and Abebooks.com to get my point.

[ParkTwain]

Israel is behind nuke rhetoric on Iran

Other non-Israel experts say Iran is "at least half a decade away" from being able to operate large numbers of cascading centrifuges for purifying uranium for bomb-making purposes.

Article by the Manchester Guardian (UK):

http://observer.guardian.co.uk/world/story/0,,2000303,00.html

//
Peter Beaumont, foreign affairs editor
Sunday January 28, 2007

Iran's efforts to produce highly enriched uranium, the material used to make nuclear bombs, are in chaos and the country is still years from mastering the required technology.

Iran's uranium enrichment programme has been plagued by constant technical problems, lack of access to outside technology and knowhow, and a failure to master the complex production-engineering processes involved. The country denies developing weapons, saying its pursuit of uranium enrichment is for energy purposes.

Despite Iran being presented as an urgent threat to nuclear non-proliferation and regional and world peace - in particular by an increasingly bellicose Israel and its closest ally, the US - a number of Western diplomats and technical experts close to the Iranian programme have told The Observer it is archaic, prone to breakdown and lacks the materials for industrial-scale production.

The disclosures come as Iran has told the UN nuclear watchdog, the International Atomic Energy Agency [IAEA], that it plans to install a new 'cascade' of 3,000 high-speed centrifuges at its controversial underground facility at Natanz in central Iran next month.

The centrifuges were supposed to have been installed almost a year ago and many experts are extremely doubtful that Iran has yet mastered the skills to install and run it. Instead, they argue, the 'installation' will more probably be about propaganda than reality.

The detailed descriptions of Iran's problems in enriching more than a few grams of uranium using high-speed centrifuges - 50kg is required for two nuclear devices - comes in stark contrast to the apocalyptic picture being painted of Iran's imminent acquisition of a nuclear weapon with which to attack Israel. Instead, say experts, the break-up of the nuclear smuggling organisation of the Pakistani scientist Abdul Qadheer Khan has massively set back an Iran heavily dependent on his network.

A key case in point is that Tehran originally procured the extremely high-quality bearings required for the centrifuges' carbon-fibre 'top rotors' - spinning dishes within the machines - from foreign companies in Malaysia.

With that source closed down two years ago, Iran is making the bearings itself with only limited success. It is the repeated failure of these crucial bearings, say some sources, that has been one of the programme's biggest setbacks.

Iran is also believed to be critically short of key materials for producing a centrifuge production line to highly enrich uranium - in particular the so-called maraging steel, able to be used at high temperatures and under high stress without deforming - and specialist carbon fibre products. In this light, say some experts, its insistence that it will install 3,000 new centrifuges at the underground Natanz facility in the coming months is as much about domestic PR as reality.

The growing recognition, in expert circles at least, of how far Iran is from mastering centrifuge technology was underlined on Friday by comments by the head of the IAEA, whose inspectors have been attempting to monitor the Iranian nuclear programme.

Talking to the World Economic Forum at Davos, Switzerland, Mohamed El Baradei appealed for all sides to take a 'time out' under which Iranian enrichment and UN sanctions would be suspended simultaneously, adding that the point at which Iran is able to produce a nuclear weapon is at least half a decade away. In pointed comments aimed at the US and Israel, the Nobel Peace prize winner warned that an attack on Iran would have 'catastrophic consequences'.

Yet some involved in the increasingly aggressive standoff over Iran fear tensions will reach snapping point between March and June this year, with a likely scenario being Israeli air strikes on symbolic Iranian nuclear plants.

The sense of imminent crisis has been driven by statements from Israel, not least from Prime Minister Ehud Olmert, who has insisted that 2007 is make-or-break time over Iran's nuclear programme.

Recent months have seen leaks and background briefings reminiscent of the softening up of public opinion for the war against Iraq which have presented a series of allegations regarding Iran's meddling in Iraq and Lebanon, the 'genocidal' intentions of its president, Mahmoud Ahmadinejad, and its 'connections' with North Korea's nuclear weapons programme.

It also emerged last week in the Israeli media that the country's private diplomatic efforts to convince the world of the need for tough action on Iran were being co-ordinated by Meir Dagan, the head of Israel's foreign intelligence service, Mossad.

The escalating sense of crisis is being driven by two imminent events, the 'installation' of 3,000 centrifuges at Natanz and the scheduled delivery of fuel from Russia for Iran's Busheyr civil nuclear reactor, due to start up this autumn. Both are regarded as potential trigger points for an Israeli attack.

'The reality is that they have got to the stage where they can run a small experimental centrifuge cascade intermittently,' said one Western source familiar with the Iranian programme. 'They simply have not got to the stage where they can run 3,000 centrifuges There is no evidence either that they have been stockpiling low-enriched uranium which could be highly enriched quickly and which would give an idea of a malevolent intent.'

Another source with familiarity with the Iranian programme said: 'Iran has put all this money into this huge hole in the ground at Natanz; it has put a huge amount of money in these P-1 centrifuges, the model rejected by Urenco. It is like the Model T Ford compared to a Prius. That is not to say they will not master the technology eventually, but they are trying to master very challenging technology without access to everything that they require.'
//

[ParkTwain]

Now, go make some money!

"New Research: If a Stock Drops 5 Days in a Row, Should You Buy It?"

http://biz.yahoo.com/tm/070126/15384.html

//
Avg 1-week return of stocks that close down 5+ consecutive days: 0.98%
//

http://www.trade-ideas.com/StockInfo/more_down_days.html

//
Description

This list shows which stocks have gone down for more than 5 consecutive days. This is based strictly on the closing price of the stock each day.

The symbol with the longest losing streak are on top. After that they are sorted by volume.
//

[ParkTwain]

Comparing large oil co. stocks to the XOI

The XOI is a tradeable index of large oil company stocks.

Only four stocks that are XOI components outperformed the XOI in the last 12 months: REP, CVX, MRO, and XOM. The other components either underperformed or pretty much tracked the index.

http://finance.yahoo.com/q/bc?s=%5EXOI&t=1y&l=on&z=l&q=l&c=cvx,mro,rep,xom

You can type the stock symbol of any other stock (such as another oil stock) into the "Compare" field to see whether has performed better or worse than these.

Maybe some of the other smaller oil companies have done even better.

MRO performed with this crowd over the last 12 months, but has outperformed them over the last 24 months and over the last 5 years. I did a quick check on MRO's geographic areas of operations (sources of its oil/gas) and practically none of it is from the Middle East. Seems to me this would be an advantage if Iran and Iraq go cuckoo later this year. What good is a high price for oil if you can't get yours shipped out of the Gulf (like CVX and XOM)? I wonder whether this accounts for MRO's outperformance.

This is how I would start to find the right oil stock to own going forward. I don't want big exposure to a Mid East source or to shipments that go through the Persian Gulf.

A lot of the oil stocks move in lockstep with each other, so owning any one of those is an equivalent play (at least with regard to past price performance).

[ParkTwain]

Presently long CHAP and TPX

Bought these a few days ago and feeling OK about it ... How can we not make any $$$ right now in this market?