My Name Is Brian Cronin, And I Am A Trader

 

They say the first step to recovery is leaving the state of denial. I fill out investment service applications and survey and when they ask, "Are you a trader or investor?" I usually say no I am a value investor. In doing forensics on our account and 11 other portfolio, it is obvious I am a trader.

 

Even though we talk about "core holdings" and 12-24 month windows of investment, in the last 10 months we have not had to worry about the difference between capital gains and ordinary gains because we have not held anything beyond 12 months. We can't with the market volatility. "They" say you shouldn't try and time the market. Probably true, but we can't sit and watch a company that we know has GREAT fundamentals take down our asset base 15-40% and say it will come back. Number one, when and number two, are you sure?

 

I am officially announcing I am a trader and not an investor. We will still do all the homework and completely understand the fundamentals before we invest. We will have predetermined buy and sell points before we get into a position. However we will put more credence on the technicals of a stock that we ever have before. After doing our initial homework, we will be looking closely at the price compared to the 270 day moving average (Actually all of the SMAs, but special attention to the 270). We will also be watching the momentum and RSI for each stock. And we will be taking some of our buy and sell cues from the MACD line changes as described here in the last few posts.

 

Don't worry we will report here what we are doing and how the progress is going, but we have chosen that buying and being patient does not work. Some of the reasons are because no one (at least the big casino managers on Wall Street) seems to care about the fundamentals; there is TOO MUCH uncertainty for think about next quarter none the less next year. Hell, there are challenges in trying to figure out what is going to happen next week. (I just finished this week's Barron's and the weekend WSJ. I assure you they do not have a clue. Will the German Bond yield continue to creep next week? Just how high will the Italian yield go?) There is so much FLUX at the moment, you as an investor really needs to manage your risk because profits are evasive.

 

So if you see us say we are buying 500 shares of XYZ and then take an 8% profits 5 days later, you will understand why we are so whacky. It is because we are whacky.

 

The Week Ahead

 

Again, after reading Barron's and doing some homework, it is difficult to get a read on which way the wind is blowing.

 

Monday

 

Home prices are still slipping a bit and rates are still low, but look for some disappointment in the new home sales numbers. More attention will be paid to the rhetoric coming out of Europe. The UK is floating an idea to save the day. (Picture Wiley Coyote opening another package from ACME. Will Wiley be fooled again?) So look for Europe to drive the Market down another 1%, but we are getting into an oversold situation.

 

Tuesday

 

The Case Shiller home price index is coming out and it could come up a bit, but that good news will be overshadowed over European concerns and Washington's lack of interest in dealing with out own debt issues. Last month's Consumer confidence was at a dismal level. From a low of 39 we should see some improvement but still well below the 50 mark. A flat low volume market for the day.

 

Wednesday

 

ADP's employment report will improve from the 110,000 level but will still be lackluster and below the expected 125,000. Look for business productivity to drop a bit. Look for the Chicago Purchasing Managers Index to be flat and possibly expanding again this month. Pending home sales were way down last month so look for an improvement this month, but still a dismal figure. Another low volume day driven by headlines in Italy, Germany and Spain. Look for a drop of 1%. At that point we will be at a very oversold situation on the S&P 500.

 

Thursday

 

Auto sales flat. Jobless claims remain just a hair below 400,000. The ISM will expand just a teeny tine bit. Construction spending will pop a bit. This is the day that the Big Money Casino PiT Bosses will wake up and realize they only have 20 or so trading day's to pretty up their funds. Look for the beginning of a 30-60 day rally today. The market will be up about 2-3%.

 

Friday

 

Its about the Jobs. The number should please and look for another 1-2 points up.

 

So look for an S&P at 1204 and the Dow at 11,624.

 

Here is our plan for the week.

 

If we see an up day in ICLR ICON plc, a contract research organization, provides outsourced development services to the pharmaceutical, biotechnology, and medical device industries primarily in Ireland, the United States, and rest of Europe, we will be going long on the stock getting it at or below 17 and looking for a 18-20% upside in two months.

 

It looks like JEF Jefferies is very oversold and the worst could be behold them. We are waiting for the MACD to cross the trend line to the upside and then we are in at about $8.00 looking for a 12 in 30-60 days.

 

AMRN Amarin Corporation Plc, a clinical-stage biopharmaceutical company, focuses on developing treatments for cardiovascular diseases. The stock is very oversold selling at 7.20 a share. The momentum and MACD lines are saying they have made a turn in the last two trading sessions. We are looking for a double by spring.

 

AEO, American Eagle Brands looks like it recently peaked and is headed for a nasty correction. We are buying January 13.00 PUTS for about a buck on their next down day.

 

BKS, Barnes and Noble has gotten pumped because of their ereader sales. Too much too little too late. We will be selling BKS short as soon as the short term MACD crosses to the down side.

 

IRE, The Bank of Ireland is looking like it has its act together and when the MACD crosses up for two days we will be in at about 4.00 looking for a nice ride to 10 in a few weeks.

 

And there you have it.

 

Salve Lucrum