Tuesday, November 23, 2010

It's Time To Buy Ireland

We nailed the downwave in the Dow Jones via the YM contract. Continuing to hold short at this time. I see substantial opportunity right now in the Irish banks--primarily in the two most beaten down, IRE and IAB. The following is a brief piece I did for another site, enjoy!

"I'll rather be screwed by the IMF" reads a line of Irish produced protest undergarments. The Irish people are angry at the condition of their government and economy. Long a land of political turmoil, the banking and credit crisis has turned the common bickering into utter chaos and fear. The European Union EU has stepped into the fray pressuring the struggling country to immediately approve an austerity budget in order to trigger an EU/IMF rescue package. Prime Minister, Brian Cowen, is fighting to allow the new budget become law on December, 7th. However, the drastic wage and other cuts demanded have infuriated the opposition who are demanding he step down. The next several weeks are going to be touch and go as the situation moves beyond the boiling point and something snaps.

There is substantial positive potential for investors in the Irish chaos. Wise investors/traders understand that the maximum profits are earned from investing into the seemingly worst of times. It is my belief that this may be one of those times for the Irish banks.

Central bank governor, Patrick Honahan, told Reuters, The banks are for sale as far as I am concerned, I've been an advocate for a number of years for small countries to have foreign owners for their banks." Wow! Combine this statement with the massive drop of the ADR's The Bank of Ireland (NYSE:IRE) and Allied Irish Bank (NYSE: AIB) and the edge is definitely on the long side with both these stocks. There may be some additional pain to come in the near term, but my bet is both these banks will be trading higher within the next year. In fact, I wouldn't be surprised at all if these two stocks tripled in value in the next 12 months. Good luck!

Monday, November 22, 2010

Healthmed Svc: In Play Now..Classic Pump& Dump?

Healthmed Services Ltd (Pink Sheets: HEME) is a development stage company with the stated goal of releasing healthcare focused applications for Apple’s iPad. The company utilizes strong facts about its market and perceived need for the iPad applications in the medical field. These stated facts include expectations that healthcare spending will reach $4.5 trillion by 2019; anticipation that iPad sales will climb to 57 million by 2015; and forecasts that 20% of all health-care professionals will incorporate the iPad into their practice.

Responding to this need, Healthmed set out to develop applications for the iPad that would permit it to interface with desktop PCs, allowing medical records to be remotely transmitted directly into the health care professional’s computer. In other words, the goal is to create remote access client software for the iPad designed for the medical field. The applications are named Virtual Vantage and Neural Vantage. By putting all of this information together, along with catchy names, it truly paints a positive future for the company. After all, how difficult could it be to develop this software?

Well, reality is far different than the perceived facts. Healthmed just filed a form 8K with the SEC stating that the company has been ripped off by its software developer, Team TFZR, which was hired for an upfront payment of $600,000 to develop the Virtual Vantage and Neural Vantage software. The payment reflects the total value of the contract.

Interestingly, it was an oral contract and Team TFZR now demands more money for the software. Something doesn’t smell right here for sure. What kind of company would enter into an oral agreement for $600,000 without anything in writing? Furthermore, paying for software development in a lump sum is an unusual practice. It is generally paid for in stages as milestones are reached.

In addition, the CEO recently stepped down and Healthmed changed PR firms. This move paints a bleak picture for the future. The stock price plummeted to $0.04 per share on the heels of this release, and Internet message boards were alive with chatter from irate investors voicing their anger and pending class action suits.

The tank in share price didn’t last long, however. This morning the company issued a dud of a press release linking back to the company’s Web site, which is void of any information regarding its supposed product launch.

Could this be another pump and dump claim? Whether it’s a sham or not, the stock has doubled in morning trading, spiking up to 75% on the “news,” and the odds that this Pink Sheet is running a legit show are seemingly slim

Saturday, November 20, 2010

One life to live but we're doing it wrong you see
Got my brother down 'cause it's nothing to me
Everyone’s saying that it's wrong to cheat
But there’s no other way to get my life on easy street.......

Friday, November 19, 2010

We Are Short & Marc Faber Agrees

Shorts were triggered when the YM dipped below the trigger price earlier. I am fully expecting this to be a long term hold short. It looks like guru Marc Faber agrees with the position. The following is a short piece I did for a research firm on faber, gurus and their broken clock way of being right.

Marc Faber: Broken Clock Guru Or Market Wizard?

Every crisis in America seems to push another financial guru to the forefront. Everyone from WD Gann & Jessie Livermore to Robert Prechter & Jim Rogers have had their moments being heralded as the present day Nostradamus of the stock market. The funny thing is, these gurus are only recognized when their calls are correct. For example, Prechter has been saying the same thing for so long, the ever changing cycles of the stock market are sure to prove him right at one time or another. When he nails a prediction, he gets tons of financial press, and then when wrong he quietly fades off into the background. Jim Rogers, although someone who has my utmost respect, is another guru who has been saying the same thing for many, many years. His mantra of buy commodities looks like it has finally proven itself correct. The current poster boy for financial gurus is Marc Faber. Faber is an uber intelligent economist, fund manager and financial newsletter writer. His Gloom, Doom and Boom report has become hugely popular recently due to a series of correct macro calls on the economy. Is this just another example of a broken clock guru having his day in the sun, or does he have exceptional insight into our economic future? Well, let's take a look at the facts.

The first thing to ask when evaluating the potential worth of any financial guru is, does this person manage money? While actually being in the fund management trenches ads credibility and distinguishes one in a positive way from the thousands of empty suit talking heads with nothing on the line, you always need to keep in mind that these money managing gurus may be talking their book. This means they are subtlety or not so subtlety promoting their positions. Jim Roger's commodity bullishness is an example of this talking of his book. Marc Faber manages money and acts as an advisor to several funds. Is he "talking his book"? I don't know, but its important to keep in mind these inherent biases when money managers become gurus.

The next thing to look at is the guru's track record. Marc Faber's track record has been uncannily accurate, save for a few major mistakes. He correctly called the run up in gold, the Federal bail out, and oil price surge. However, a call he made in 2007 on CNBC when he said that if the Fed cuts rates from 5% to 0, the DJIA would rocket to 50,000 and the US dollar would become worthless. Well, he couldn't have been more wrong. The DJIA dropped by over 50% and the US dollar rocketed higher by 20% during the interest rate cuts.

Is Marc Faber correct with his current call of a big drop in the stock market and a bubble in commodities and gold? Is he a broken clock guru or a true market wizard? We will know the answer in the fullness of time.

Thursday, November 18, 2010

Surf Alert: Time To Short !

Our system is screaming to short the DJIA via the YM very soon. 11137 is the go short level. I am projecting a sweet short term melt down should this level be breached on the downside. Government Motors IPO is whithering on the vine right now. This does not bode well, Good Luck!!

Sunday, November 07, 2010

Has Altucher Gone Off The Deep End?

James Altucher is angry and down on day trading. He recently wrote a scathing article explaining his 8 reasons not to daytrade. Let me premise this piece by stating that James is a friend of mine and I find many of his market insights to be brilliant. In addition, his "How To Trade Like A Hedge Fund" book is a classic in the field with real practical advice that actually works in the market.

With this said, Is his latest anti day trading rant simply a publicity stunt for his new website; or has he gone off the deep end in a clever design of self destruction?

Well, let's first take a look at each of his points to see if what he says even makes sense.

1. Suicide: James seems to believe that losing money forces folks to commit suicide. What? Perhaps, if you are predisposed to suicide in the first place, taking a loss in the market will push you over the edge. However, anything will if you are predisposed. That guy who cut you off in traffic, getting a divorce, just about anything can push the predisposed to suicide. James, with all due respect, this is a moronic claim.

2. You'll overeat: This is another absolutely non correlated statement. Overeating has nothing to do with trading. For someone that has made a living from finding correlations in the market, to make this kind of statement is truly bizarre. Overeaters will find reasons to overeat trading related or not.

3. Your eyes go bad:
This is more of an effect of age than of looking at screens to day trade. If your eyes are going bad, go see an eye doctor, don't quit trading.

4. Social life: James seems to believe that if you trade, you can't have a social life. This is another ridiculous statement. Many traders socialize during and after the trading day. Yes, day trading attracts its fair share of hermit types. However, they are hermits prior to day trading. If you like to socialize, trading simply adds to your social life, it does not take away from it

5. Blood pressure: I guess if you don't have the right psychological make up to handle losses, day trading may increase your blood pressure. However, any stress will raise your blood pressure if you can't handle it. This has nothing to do with trading. If you have high blood pressure, see a doctor.

6. Nothing Productive:
This could be said about anything. He intimates that building a website is a productive endeavor. How is this anymore productive than trading? It can be argued that many jobs are not productive in the traditional sense. This statement is off the mark.

7. No career:
Another ridiculous claim. Day trading is a much of a career than anything else. Sure you need to be able to adapt to survive, but that goes for most all other jobs. Can your edge end? Sure, it probably will, however you need to be able to create new edges to truly make day trading a career. Many survive in the business, you can be one of them.

8. It's Impossible: What James? If I recall, you made a nice living with trading both for your own account and for others via your fund. It's difficult, particularly in this market, but it isn’t impossible. You know this, James!

The truth is day trading is changing. You need to be able change and adapt to survive. Yes, it's a difficult way to make a living but it’s the perfect career choice if you possess the internal fortitude to make it work. My bet is Althucher's rant is simply a publicity stunt for his web site. He is simply too bright to actually believe what he has written. Come on James, your book and insights have helped many day traders succeed. Accept your contributions, don't try to destroy others dreams.