So what will you do in the market without me? Well we have 16 accounts we have to tighten up before we leave for this trip so you can do what I am doing. For our core equity holdings, XOM, CELG, MSFT, INFI, GWW, NUAN, MGRC, CATM, and USB, we are doing three things. Checking their Composite Ratings in the IBD to make sure there are no drastic changes of late. Then we are checking the charts (6 month daily, and 2 year weekly) to see if we need to adjust our stop orders. Hopefully I will have a chance to get mine done and send them to you before we leave. I know we will be adjusting some up as we are enjoying some nice gains since this last rally started December 21. UNFI+7%, CELG+6%, GWW+8%, NUAN+14%, And in a few accounts the USB march option which was up 47% at one time today. So we are tightening the stops to protect those profits. Then we double check all of those stops to make sure we have not missed any. With all of that in place, we should feel comfortable in sneaking away for few days.
Now as far as what we did today, the market continued its upward climb today because of people discovering just how good that Empire State manufactures report was yesterday. Plus we got good news in the producer's price index and mortgage apps were up significantly. Refi's still lead new paper, but new apps are catching up. Home interest rates continue to drop. Gold is easing its way back up to 1655. There is a lot of bullish talk and we have been easing our way back into the gold stuff by easing into a Jun 140 dollar call option on GLD. We are only doing this in the primary Salve Lucrum portfolio as an equity hedge in case is all goes whacky in the market. Please go back and revisit the post "The Three Legs Of Commodity Pricing". It was good if I do say so myself. Most of the Salve Lucrum Family accounts are fully invested so I can not add GLD to them, but the rest of you might consider offsetting your equity positions with GLD and or VXX options.
As far as actual trades, we added to our UNFI and CATM positions.
From the, "I owe you an answer.", column, one of our regular readers (BOB H) dropped a note asking about RCL Royal Caribbean Cruises Ltd. operates in the cruise vacation industry worldwide. It owns five cruise brands: Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, and CDF Croisieres de France.
They were wondering if it would be a good play in light of the bad news coming from Carnival in light of the tragedy in Italy. This may sound like ambulance chasing, but I applaud any investor looking for an angle. This one is a bit too obvious and as a result, everybody jumps to it and the casino put bosses were looking at this play before the first martini glass slid off the bar aboard the Costa Concordia.
That does not mean we should look at the stock, so we did. At face value, using FINVIZ, RCL has some debt issues that worry me, but in light of their business perhaps that is normal. I think those ships cost more than my 1986 Grady White 22' fishing boat I bought on Ebay.
When we do the stock check up on IBD, it gets a horrid rating of 35 with 99 being the best. The industry group (Leisure) is ranked 65 out of 197, and when I look at the other data points on IBD it has more red lights than La Cienaga Boulevard. (For those unfamiliar with La Cienaga, that is not a good thing.) Then when I look at the chart, there it is one of the most beautiful double bottoms (aka W) patterns seen to man. Look at the 2 year weekly chart, there it is, after the double bottom you have a a soft sell off that creates the perfect entry point of 17.98 a share. Picture perfect, if it happened to be July 24, 2009. Since then the stock had its run, never hitting an 8% stop. You had a huge downward day with volume (Brian that what you meant by huge you idiot.) and it would have been a sell trigger at 38.12, a natural double. You don't get many of those in life. However, the chart is ugly at the moment. You might be able to call the period between August and October a base, but you did not have the right set up (Usually a run up of 30% over at least 5 weeks), and if you use that base, your buy point would have been $31.09 which would create a stop at $28.60 and we hit that in November, so you would have been out at that point. Since then, nothing suggesting a buy point. No base, no cup and handle, no W, nada.
So I applaud the idea, but the stock has already seen its headline bump today with a 2.6% gain after two stinky days. My suggestion DO YOUR HOMEWORK and find a better stock. Now when I say that, I never leave you empty so here is one from the leisure group that looks ripe. RICK Rick's Cabaret International, Inc., through its subsidiaries, owns and operates upscale adult nightclubs serving primarily businessmen and professionals in the United States. Its nightclubs offer live adult entertainment, restaurant, and bar operations.
The fundamentals do not look all that bad, the chart is set up for a nice buy point at $8.08 set on October 28. It is above that by 10% double the 5% rule of not buying 5% above the buy point. Here is my thinking if you are morally open to owning shares in men's clubs, we are headed into election season. All of the state caucus's and campaigning parties result in this type of entertainment. (Historically proven.) The election cycle is good for RICK regardless who wins. If you get in here, put your stops in at $8.21. WE DO NOT OWN RICK.
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