Skiracer's stock slopes

[skiracer]

I like the looks of ADAT, Ski. What was the nature of the .38 low trading day, recently? It looks like somebody lost some money on that deal.

Peanuts,
that drop occurred back in August of 2009. the only thing that i can think would make sense was if someone was selling shares and mistakenly inserted .38 instead of 1.38 as their selling price. my logic being that the stock was trading in the 1.30 to 1.40 range during that time interval. someone made out real good and someone lost some money.
I was brought to the stock by friends that know the company and mentioned it to me. they knew that the company had recently completed a stock offering in the range of $3 million to raise capital to be able to finance contracts that the company had recently signed and to take on new employees to carry the new workload brought on by these contracts. they had also issued another 3 million warrants with a strike price of $1 that had an expiration date of 90 days from the date the stock offering and warrants were consumated. so there was a time element involved for the owners of those warrants and they had to be executed within 90 days or they would become worthless. buying up 3 million shares isnt a big deal with big companys with large multimillion share floats but in this case the average daily volume is around 225,000 so it becomes a bit harder to find sellers for that number of shares. there is still about a month and a half to go before those warrants expire. last thurs. there was a big volume day where over 1 million shares were exchanged and the stock was up .06 or 18%. i'm still holding and waiting to see what is coming. i am holding a large quantity of shares and would be ecstatic to see them go up a few points. i am in around $1.05.

[skiracer]

Ski,
I don't blame you but you're not telling us some of the information you have on ADAT. Upon further DD I'm hoping to get in maybe as soon as possible. This is not your everyday speculative 1.00 medical related stock. Thanks for pounding it into my brain.

--------------billy

billy,
nothing is for sure but this company owns what has become the state of the art technology that everyone in the medical field can use to make their operations run smoother and become more cost effective. i think it will become a winner fairly soon. but please do not throw caution to the wind on my sayso.

[skiracer]

TZA, FAZ comparison http://finance.yahoo.com/echarts?s=F...volume;chartty

--------------billy

interesting chart billy. did you set that up yourself? it clearly shows how close they track one another. better that the two that i posted. thanks. it's exactly how i wanted to show their relationship.

[skiracer]

here's more on an update on the JP Morgan Chase earning report and what they plan on doing with their profit. it's a sin.


Now here's a story that's all about high finance. JPMorgan Chase & Co. (JPM) earned $11.7 billion last year and paid out $26.9 billion in compensation, up 18% from the previous year. Employees on average earn $129,000, while investment bankers earned on average $380,000.
JPMorgan said it hopes to restore its dividend to 75 cents or $1.00 per share by the middle of 2010. This means that if you're a shareholder and you were waiting for a dividend increase, forget about it. Your dividend was used up in the $26.9 billion that went to compensation.
Shareholders are probably wondering why employee compensation shot up 18%. We certainly didn't see worker compensation rise by 18% on Main Street. In fact the average worker probably earned less because he or she had to work two part-time jobs just to survive.
Shareholders are also probably miffed at the fact that they saw no dividend boost. CEO Jamie Dimon should explain to them that the extra 18% compensation amounted to $19.5 billion.
After taking our economy to the brink of disaster in 2008, isn't it wonderful to receive an extra 18% compensation this year? What is 18% compounded over the next five or ten years?
Do you believe that these bankers deserve this kind of compensation?

[skiracer]

here's a rewind of what took place in the markets last week and how the week ended. the post after this one will be what you might expect to look for this week. i'm hoping to spread some insight in how to look at what the markets are doing to help your decision making processes for deciding on trades and which direction you might be going. for those relatively new to trading stocks market direction and market trend are key in determining whether to go long or short with your trades. everyone trading short term should get used to trading with the trend or "market direction" since the much higher percentage of stocks will follow the direction of the markets in general and you will get nowhere bucking market direction.

The market struggled most of last week, especially on Tuesday and Friday. It wasn't all that surprising either. After Monday's gain across the major indices, the equity only put call ratio -- one of our major sentiment gauges -- fell to .47, indicative of growing complacency in the market. This is generally a very strong signal that the advance is growing "long in the tooth". At that point, we had advanced the first 6 trading days of 2010 on the S&P 500 and that came on top of the considerable gains we saw in December 2009, especially on the NASDAQ and Russell 2000. In addition, our proprietary "relative complacency ratio has jumped to nearly 16%, a level associated with short-term market tops. So picture the love fest that was brewing with equities prior to Alcoa (AA) releasing its 4th quarter 2009 results after the bell on Monday.
To our surprise, AA reported results that fell way short of expectations and AA took an 11% drubbing on Tuesday. The drop wasn't as surprising as the disappointing results. We were convinced that AA would report excellent results on the heels of a December in which the stock gained approximately 30%. That excellent report never materialized, however, the AA kicked off earnings season with what we like to refer as a "miss wide right" (football analogy). On Tuesday, the market took its cue from this earnings miss and all of the major indices fell. The NASDAQ and the Russell 2000 -- leaders throughout December -- were the indices that absorbed the biggest blows.
Wednesday came and all was forgiven. The indices led a steady march to the upside and appeared to really be bolstered by the release of the Fed's Beige Book that afternoon, which indicated primarily that economic momentum was building in many of the Fed districts. The bulls used this report to send equity prices back up by Thursday's close to test the highs reached earlier on Monday, before AA's earnings were released. Everything appeared fine, except that complacency issues had not gone away.
Then two big earnings reports were released, one on Thursday after the bell -- Intel Corp (INTC) -- and the other was JP Morgan (JPM) released on Friday morning, before the bell. While INTC posted what appeared to be great news with record gross margins, JPM disappointed traders and investors on Friday, so much so that INTC lost the buying momentum that it had experienced moments after releasing its earnings on Thursday. At that point on Friday, the slight negative divergence on the SOX kicked in and we saw steady and increasing selling pressure mount throughout the day on Friday to end the week.
Economically, the market received little positive news to trade off of. Retail sales for December were minus 0.3% while everyone was expecting a 0.5% rise. Then consumer sentiment on Friday rose much less than forecast, putting a rather bleak spin on the action Friday as trading unfolded. Last week saw the NASDAQ fall more than 1% in a day twice, the first such time we've seen that since late October.
Historically, we just completed the most bullish period of the year. Late October to mid-January represents, by far, the strongest three month period of the year. So as the bulls prepare to attempt to take the major indices to loftier levels, they'll have to do it without the historical tailwinds they've grown accustomed to over the past few months.
Despite the weakness that we saw last week, there have been no significant technical violations of price support on any of the major indices. So while sentiment may still be complacent and raising red flags, we've yet to experience confirmation of an impending downturn. The first thing technically that must happen would be the loss of key short-term moving averages like the 20 day EMA. All of our major indices finished above this moving average last week, although a few key sectors did close beneath that level, such as the semiconductor group. Also, last week marked the first week in a very long time that all 3 defensive groups -- Utilities (XLU), Healthcare (XLV) and Consumer Staples (XLP) - finished higher while the other 6 aggressive sectors finished lower. This could be an early warning sign that money is beginning to rotate away from riskier investments and is now looking for a bit more safety. This is a change in strategy that should be monitored closely as the second half of January awaits.

[skiracer]

and here are some thoughts on what you might expect from the market this week.

We're not seeing the market in any different light this week than we did a week ago. Clouds are on the horizon and more selling could be on the way near-term. We don't see anything that would suggest the potential short-term weakness will compound into anything more severe, but that is always a possibility. Let's face the facts. The NASDAQ hit 2326.28 last week, which represents almost a doubling of the 1265 low that printed on March 9, 2009. And at that 2326.28 level, the NASDAQ has climbed nearly 15% just in the last two and a half months. A pullback at this stage of the advance would not be a horrible thing technically.
Historically, we've got a totally different ballgame now. From the close on October 27 to the close on January 19, the NASDAQ enjoys 58 calendar days that are part of a Bowley Trend bullish period. There are 84 calendar days during this period. There are only 7 calendar days during this period that are part of a Bowley Trend bearish period. That leaves 19 days that are neutral.
As we look forward from an historical perspective to the next 11 weeks, there are only 17 calendar days that are part of a Bowley Trend bullish period. So in the previous 12 weeks, roughly 70% of the days fell during bullish historical periods. But as we look out over the next 11 weeks, just a little more than 20% of the days fall during bullish historical periods. Please keep in mind that history is just one small part of the equation at Invested Central, but it's important to note that the historical backdrop has now changed as we approach the months of February and March. Since 1971 on the NASDAQ, February has provided annualized returns of just 1.61%. Only July and September have performed more poorly.
In the marketREWIND section of this week's report, we noted the outperformance last week by the more defensive sectors. That is never a good thing because it sends a message that investors and traders do not want to take the additional risks associated with owning more aggressive sectors. While one week doesn't make a trend, it does make us pause for a minute to assess the bearish possibilities. We already know the market is somewhat complacent, believing that the current uptrend will go on forever. As we highlighted in last week's marketJOURNAL section for Plus and Premier members, this complacency is often times associated with short-term market tops and is extremely valuable knowledge for the short-term or swing trader. If you consider yourself something other than a buy-and-hold investor, you might consider checking out our Plus membership.
This week, we're featuring a chart of the VIX in the marketJOURNAL section of this report, another key sentiment indicator that we like to follow. The VIX has been on a steady decline, which is not a problem since a downtrending VIX is synonymous with an uptrending market. However, the VIX is significantly stretched to the downside currently and a quick pop up into the multi-month downchannel could accompany a short-term pullback to alleviate the complacency issues facing the market.
We must continue to respect the intermediate-term trend, which is higher. Do not mistake our message here. We are not bearish at this point in time. We simply understand that conditions have changed in the short-term that increase the odds of near-term stock market weakness. These same conditions were present in late August and mid-September, prior to 4-6% pullbacks. This same type of correction, within the context of a longer-term uptrend, could be on tap for us. We use this information to our advantage as we scale back stock market exposure during these periods. We don't mind being wrong if inherent risks in the market are on the rise. In our minds, capital preservation is paramount. We don't have a "need for greed". Greed is exactly what's driving the equity only put call ratio to such low levels. That doesn't continue forever as many options traders have found out in the past.
Right or wrong, we always respect the message of the market. We do our extensive historical research to help guide us using current indicators. Nothing in the stock market EVER guarantees success. But everyone can assess the risk of the market and adjust their trading or investing strategies accordingly. That's what we'd consider now -- an adjustment of your strategy short-term to acknowledge the higher risks present in the market currently.
This will be a huge week for earnings reports. Please make sure you check for the earnings dates of any stocks you own. Our philosophy is not to hold onto any stock into an earnings report as technical conditions can be thrown out the window. Obviously, the decision to hold onto stocks into their earnings reports is yours. Just be sure you know when the reports are so you can make a decision on whether to hold or not.

[steelman]

trading with the trend

Ski,

I read somewhere that when the indexes go up, they pull about 70% off all stocks up with them, and when they move down, they take 90% of stocks down with them. I am definitely going to try and short this when the trend is down but it's a new concept and it seems so counter intuitive. Thanks for the write up.

Steel

[Lyehopper]

we,we,weeee all the way home....

Ski... who is the "we" that wrote that market report?

[peanuts]

Peanuts,
that drop occurred back in August of 2009. the only thing that i can think would make sense was if someone was selling shares and mistakenly inserted .38 instead of 1.38 as their selling price. my logic being that the stock was trading in the 1.30 to 1.40 range during that time interval. someone made out real good and someone lost some money.
I was brought to the stock by friends that know the company and mentioned it to me. they knew that the company had recently completed a stock offering in the range of $3 million to raise capital to be able to finance contracts that the company had recently signed and to take on new employees to carry the new workload brought on by these contracts. they had also issued another 3 million warrants with a strike price of $1 that had an expiration date of 90 days from the date the stock offering and warrants were consumated. so there was a time element involved for the owners of those warrants and they had to be executed within 90 days or they would become worthless. buying up 3 million shares isnt a big deal with big companys with large multimillion share floats but in this case the average daily volume is around 225,000 so it becomes a bit harder to find sellers for that number of shares. there is still about a month and a half to go before those warrants expire. last thurs. there was a big volume day where over 1 million shares were exchanged and the stock was up .06 or 18%. i'm still holding and waiting to see what is coming. i am holding a large quantity of shares and would be ecstatic to see them go up a few points. i am in around $1.05.

Is there a specific deadline date for these warrants? It seems to me like we won't get much concrete news from the company until the warrant conversion date passes. After that, those who got the warrants are either handsomely rewarded, or really screwed. What your friends have told you about the new hires is encouraging, but perhaps it could just be a ruse to give the contract rewarder the impression that the company can meet the obligations of the contract. Can you give any more info about the company? I like the industry that it is in, as healthcare will be a bubble industry sometime within the next few years.

The PnF chart has a bullish price objective of $3.56

[skiracer]

Ski... who is the "we" that wrote that market report?

Lye,
I subscribe to an investment service called "Invested Central. you can look them up at www.investedcentral.com if your curious or interested.
Lye, are you still holding FAZ? I actually like it the other day and almost bought it.

[skiracer]

Is there a specific deadline date for these warrants? It seems to me like we won't get much concrete news from the company until the warrant conversion date passes. After that, those who got the warrants are either handsomely rewarded, or really screwed. What your friends have told you about the new hires is encouraging, but perhaps it could just be a ruse to give the contract rewarder the impression that the company can meet the obligations of the contract. Can you give any more info about the company? I like the industry that it is in, as healthcare will be a bubble industry sometime within the next few years.

The PnF chart has a bullish price objective of $3.56

Peanuts,
all my friends did was give me the stock. the only info they know of is that they have received some decent contracts for their services and are expecting alot of business to come this year. also that Liberty Health has renegotiated and resigned their contract with them again. the news regarding the warrants has been on the internet for awhile now and you're right about them either going to make a killing or end up losing it all. I'm holding around 65000 shares right now between myself and the 3 guys that I trade for. I'm in at $1.05 and to be honest I thought that it would have made a move by now but I am still up a few bucks and still holding. I still believe the stock will make the move I expect it to.

[skiracer]

Ski,

I read somewhere that when the indexes go up, they pull about 70% off all stocks up with them, and when they move down, they take 90% of stocks down with them. I am definitely going to try and short this when the trend is down but it's a new concept and it seems so counter intuitive. Thanks for the write up.

Steel

you're right about most stock following the market trend. the point I was trying to make was that it doesnt pay to buck the trend. go long whent the markets are moving up and go short when they are going down. and stay out when they are range bound and moving horizontally. it makes sense to follow those rules most of the time. there are always going to be exceptions to the rule but you will definitely make the edge in your favor by following that simple rule. but again there are a number of other factors that govern the movement of stocks in general but market trend is a key one.

[wooish]

I really like the analysis of all your picks so I bought 4k shares of ADAT @ 1.07. In your opinion would you hold this stock more than 2 months if it doesn't reach your target? Would you continue to accumulate if it falls below $1? My thinking is that if the stock has decent fundamental I wouldn't mind averaging down.

[wooish]

So I read these articles about ADAT, what Ski has been telling us is true and the author gave convincing evidence that something big is about to happen. There's insider buying and investors are putting over $3 million into the company. The bet is on.

http://www.thestreet.com/story/10644200/1/authentidate-big-bet-on-a-small-company.html

http://www.thestreet.com/story/10661579/1/authentidate-trading-volume-spikes.html

[Lyehopper]

Faz....

Ski... nope, I exited my FAZ position @ 18.89 (average).... lost -3%-ish

So much fer my "FAZ will see $27 before it sees $17" prediction. lol

It do look tempting down here below $17 now don't it?