Tuesday, August 2, 2016

Range Broken, Now What

The market finally showed a little volatility today, the SP500 broke its 2-week range to the downside. I believe that breadth gave us a heads up that the recent range was going to resolve itself to the downside; 1-month and 3-month lows were expanding, the advance-decline was also showing less participation, you can see the charts here--> Jul. 28 at 08:24 PM and here Jul. 28 at 08:16 PM.

Here is a possible roadmap for the SP500, H/T AlphaTrends



Underneath the surface, we still have some decent swing ideas that if the market cooperates they should do well.  $MTW $ NTES $HLX $WBMD $AYI $YY $SGYP $MSM $CVGW are some of the stocks of interest on the long side if they are able to break through today's high.

My opinion and outlook are subject to change as new information comes in.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Thursday, July 21, 2016

Is It Time To Checkout ETSY

ETSY operates a marketplace to make, sell, and buy goods online.  The stock is at a level that could potentially make a decent move in the short term, I explain in detail in the video below.



My opinion and outlook are subject to change as new information comes in.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.


Tuesday, June 28, 2016

This Stock Belongs On Your Radar

TravelCenters ($TA) operates 255 rest stops, mostly located along the nation's interstate highway system, that include fuel stations, convenience stores, truck-repair services, and restaurants. On 6/15/2016 TravelCenters stock was up as much as 37% and closed the day up 24% on the news that TravelCenters rejected a $14-per-share bid from private equity firm Golden Gate Capital.

Truck-stop operator TravelCenters of America LLC rejected a $14-per-share
December bid from Golden Gate Capital, but the private-equity firm remains interested in a deal, according to people familiar with the matter.
Golden Gate hasn’t been in contact with the company since the offer was rejected, and the San Francisco firm isn’t interested in making a hostile bid, some of the people said.--WSJ
With the stock trading a shade under $8-per-share, a $14 bid is huge premium. The rejection of this bid more than likely put and will put a lot of pressure on TravelCenter's management team to make something happen to get the stock higher and justify a $14 bid rejection.  At the same time, the bid probably put TravelCenter's on the radar of other firms that perhaps had no idea who they were or that there might be some hidden value worth doing some due diligence on.


SOURCE;WSJ

My opinion and outlook are subject to change as new information comes in.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Friday, June 24, 2016

5 Things You Should Know About The Brexit Aftermath

Global markets are selling off due to Brits decision to leave the EU.


The market is reacting today like if this is a big deal, short-term everything is.  Long-term you can add this to one of the many uncertainties the market has shrugged off over time.



1. In the future, today's selloff will be an irrelevant data point in the SP500 chart just like 1987.


2. The longer your timeframe in the market the more irrelevant today's Brexit is.  The two charts below tell you the whole story.  The odds of SP500 being up in 5 years is 80%, the higher the "drop, the higher the odds of the SP500 being up. (I'm specifically talking about the SP500, not individual common stocks).




3. Pullbacks are buying opportunities in the SP500 for those who have time on their side, the bigger the correction, the better.


4. BREXIT will probably have little effect on your daily, weekly, monthly, usage of $AMZN and $FB.

5.  Live to fight another day, be patient with your buys and always consistent with your long-term plan. 

My opinion and outlook are subject to change as new information comes in.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Source; Schaeffer Research, Morgan Housel, JP Morgan.

Tuesday, June 14, 2016

Two Amazon Derivative Plays That Are Ready To Fly



Atlas Air Worldwide ($AAWW) and Air Transport Services ($ATSG), are two stocks worth keeping an eye on for the next few quarters because of their recent partnership with Amazon.
On 3/8/2016 Air Transport Services signed this deal with Amazon “ Aircraft lessor Air Transport Services Group Inc said it would lease 20 Boeing 767 freighter planes to Amazon.com Inc as the online retailer looks to operate its own air cargo network.As part of the deal, Amazon also has the right to buy up to 19.9 percent of ATSG’s stock over five years at $9.73 per share.” 
On that news, ATSG was up as much as 24% the next day and closed up 16% on the news. Since then the stocks has digested the gains by trading sideways.
On 5/4/2016 Atlas Air Worldwide signed a similar deal; “Amazon (AMZN) and Atlas Air Worldwide (AAWW) have inked a long-term air cargo services deal that gives the e-commerce titan the rights to acquire up to a total of 30% equity of the outsourced aircraft provider as Amazon fortifies its delivery capabilities.
The deals, which involve 20 B767-300 converted freighters, go into effect in the latter half of the year and will “ramp up to full service through 2018,” said Atlas Air. These include 10-year dry leases by its Titan Aviation leasing unit and 7-year crew, maintenance and insurance operations agreements.
Under the terms of the agreement, Amazon can acquire up to 20% of Atlas Air’s common shares at 37.50 a share over the course of five years, and up to another 10%  at the same price over a period of seven years.”
Atlas Air Worldwide was up as much as 50% the next day on the Amazon news and closed up 26%.  Since then the stock has settled down, and volatility has contracted.
There’s no doubt that these two stocks will be huge benefactors from Amazon’s dominance in the retail world for many quarters to come.
Source; ReutersIBD
My opinion and outlook are subject to change as new information comes in.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Thursday, May 26, 2016

Stocks Are About To Take Over

The market added to its gains yesterday with another decent move higher; we are now up 2.5%  since Thursday's close.  Short-term traders are probably looking for some consolidation here, and that is to be expected if it were to happen.  However, now is when we generally see more individual names start to move on their on merit, sort of a passing of the baton until we get short term overheated. In other words; stocks over indices over the next few days.

Some of the standouts from yesterday's LIST were; LGCY +11%, AREX +11%, DNR +7%, WLB +7%.

Today we have DNR, RYAM, DGI, VMW, PAA, AVH, JONE, TCK, POT, TRCO, OLLI, BTE, on the list.

The rules are simple;

  • Only get involved if they go through yesterday's high plus a few pennies.
  • Based on the chart patterns, the stops are close and clear.
  • Either the market will get you in or keep you out.
  • I only play this list one way, LONG.
  • Stocks move in momentum burst of 3-5 days (stockbee), you want to buy on the first day and start unloading on the way up and on days 3,4,5.
  • You are going to be wrong half the time.
  • Position size makes all the difference in the world.
  • I work with a price stop and a time stop.
  • Stocks in the short term move from 52-week lows, 52-week highs, all time highs, etc.
  • Contraction leads to expansion; this happens at lows, highs, middle, etc.
  • I tend to stay away from buying stocks in the first 15-minutes.




My opinion and outlook are subject to change as new information comes in. 

Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463.


              

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Wednesday, May 25, 2016

New Highs Are Inevitable, Am I right

The advance-decline line for both the NYSE and the SP500 was a big topic today on Twitter finance; one hit a high, and the other is pretty much at a high.  The discussion started when a comment was made on why so many feel miserable about the market when these two lines are making highs.  The assumption is that investors should be more optimistic or excited than they are now.  I believe that part of the disconnect is that these new highs on these advance decline lines are not translating to investors bottom line, which is returns.  Most investors don't have their entire portfolio fully invested in just the SP500; they own individual common stocks, emerging markets, different sectors, etc. A day doesn't go by that we don't hear how bad hedge funds have and are doing, they certainly are not benefiting from this.

The SP500 has been able to stay flat over the last 18 months while many sectors and stocks have tumbled. The Russell 2000 suffered a -28% drawdown, emerging markets a -36% drawdown, Energy -35%, Miners -36%, Biotechs -50%.


Behavior plays a huge role in the market; many don't sell until they can't take the pain anymore which is usually a day or two away from a major bottom.  Then they usually don't get back in until the underlying has had a huge move, by the time they get back in the move is over for the interim and the cycle begins again.


Flat, choppy markets wear people out; it makes them make more mistakes than they normally would, by trying to make something happen when there is nothing to make.  The market might be open 252 days a year, but it is not open for you to make money 252 days a year.

The last time financial Twitter made a big deal about the advance-decline line being at highs and everyone being bearish was back in August 2015, we wrote about it HERE. The gist of it was the same thing, the SP500 A/D line at highs, sentiment was bearish, the Twitter stream was whining, and the positiveness of the A/D line was not trickling down to people's portfolios. Here is the chart from August 2015.


Notice the date 8/18/15, and notice where the SP500 closed that day (2,096.92), where did it close today--2,090.  All this hurrah with nothing to show for it.

Here's what happen the days after 8/18/2015. One can argue that the majority was correct.



A few points

  • I am not discounting the validity of the A/D line, all I'm trying to do is solve part of the mystery on why so many can't relate to this "positive A/D action."
  • Part of the reason is; just like last year, the A/D effect is not trickling down to portfolios.
  • Some immediately think that if you are arguing against something that you have a bias, market breadth is all about bias they say.  As you can see from the picture below, there is no bias here; I'm not short, long and strong until further notice.
  • Don't assume what people are doing on Twitter; you have no idea, some manage their twitter account very well, they make you feel like they've caught every single move, and that every high also means a high for them as well.



My opinion and outlook are subject to change as new information comes in. 

Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463.


              

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.