December 3, 2012 Another Word To The WHYs

BAGAKOAA; December 3, 2012 Another Word To The WHYs

Post 752

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December/2012

I just got through reading the draft of this blog tonight and it was more than 3,200 words, 3,213 to be exact. Even I was bored reading it. I got off track talking about a specific technical indicator called GAPs. I will boil it down and serve it up some other night.

Let me share another WHY I was confronted with today.

Why is it ok to give a player a touchdown when just the ball goes into the end zone? Yes the WHYs don't stop on Sunday. The WHYs will be the death of me. I can see my headstone now.

Here lies Brian

occasionally wise.

Succumbed to a case

of terminal WHYs.

To Devin's credit she Googled and Wikied it after badgering me for ten minutes and discovered that the rules had been changed in 2007 to allow a score when the ball breaks the plane of the goal.

Yesterday after making amends with so many of you weekend readers, I headed off to the studio where I banged on my drums for about an hour. I was joined by Ryan, son in law who brought over his Epiphone Guitar and amp and we jammed a few minutes. I sucked at carrying a beat, but I think we had fun.

Then Devin and I watched a few minutes of the Alabama Georgia College game, a real nail biter. Jack was heading off with Ryan and Kristin to spend the evening. That left Devin and I alone. Well, as a lone as you can get with three cats (Sebastian, Jethro, and Abbey) and four dogs Max, Jacee, Bocelli, and Mona).

So we did what any other healthy adult couple would do once a lone. We watched recorded episodes of Last Man Standing and Malibu Country. Then we went out for Sushi.

Now we were both disappointed when we went to Sake Sushi to see they were out of Toro (Fatty premium Tuna) and regular grade tuna. So we explored several other raw fish delicacies. The halibut was amazing. It was sliced thin with just a mild taste or Miso seasoning and lemon. We did a volcano roll which was great, but spent most of the night decimating the world fish stocks with sashimi. (Fish without the rice.) I closed the evening with a terrific scallop sashimi and 4 raw oysters.

We were home by 8:30 and then Devin and I satisfied our curiosity regarding shades of grey. After careful examination and intimate study we have determined that Max is greyer than Jacee, who is not as grey as Bocelli, who is slightly more grey than Sebastian, who is greyer than Mona and that leaves our two other cats Abbey and Jethro who are not great at all except for some natural markings.

Then I had the chance to finish reading the IBD, WSJ, and Barron's. So what did I learn?

Spike It Baby

Before we get into the ramblings of the writes of the fine investment publications (and they were rambling bullishly and bearishly), we wanted to tell you about a new service we mentioned hear a while back.

I discovered spiketrade.com as a result of a book by Dr. Alexander Elder. His doctorate is in psychology and he got on the investment world state with the publication of his book Trading for a Living, which critics say spends way too much time discussing the psychological nuances of the trading psyche.

The book I was reading and still access almost everyday is The New Sell & Sell Short". Don't let the title fool you it is more about understanding how to use technical indicators to identify decent entry and exit points then actually selling short.

In the book, Elder kept referenced historical trades from this group of traders called Spikers. They are a group of serious traders who share their weekly trades and you watch them develop through the week.

Each week closes and you see their performance. As a member, you to can submit picks and the community of traders on Spiketrade.com get to see your performance. Top performing traders get discounts off their annual or monthly membership.

If you performance is consistently in the top few percent over several quarters, you are invited to be a Spiker with the understanding you have to submit a pick every weekend. You entire membership in Spiketrade is then complimentary.

As you might imagine, my goal is to become a Spiker. As such I have submitted trades and I have a long way to go before I would be considered for a Spiker status.

My first two spike trades for the weeks of 1/19-11/23 and 11/26-11/30 we botch the short trades for ANF. Both ended poorly for me with a 5.8% loss and a 2.06% loss respectively.

This week I am not going to fight the green flag and have chosen a long position on URI United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It offers approximately 3,000 classes of equipment for rent to customers comprising construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities.

We mentioned this trade to you on the 28th of November, but the technicals a firming up to the point that it looks like it might be a nice play this week. It does not hurt that Forbes and Cramer pimped the stock on Friday.

Here are the details on the trade I submitted to spiketrade.com:

This email is to confirm your SpikeTrade pick for week #49, 2012 has been submitted.

Traded My Pick Last Week: No

Traded Other Picks Last Week: No

Other Spiker Picks Traded:

Comments about last week's trade(s):

Symbol: URI

Direction: Long

Order Type: Limit

Price Entry: $41.75

Protective Stop: $40.25

Price Target: $43.70

Size: 100%

Discussion: Daily swing Trade

Stock #1

United Rentals (URI) hit an all-time high at $48.06 in 1998 and dropped to $2.52 in 2009. The subsequent recovery reached within a few cents of the high in July of this year and stalled, yielding a bowl-shaped correction that found support in the upper $20s. The stock has been ticking higher since July and is now consolidating a few points from the breakout level. This price action is completing a multiyear cup-and-handle pattern.

United Rentals (URI) -- Chart 1

There are two setups here. First, short-term traders can buy a breakout above three-week resistance near $41.70 and sell the rally into resistance. Longer-term traders can stand aside and wait for the monthly pattern to complete. That could take into the first quarter of 2013. A combination of both entry strategies could yield a low cost basis position, ahead of a breakout into the $50s.

United Rentals (URI) -- Chart 2

Nov 28, 2012

Triple Moving Average Crossover (4-day 9-day 18-day)

Nov 28, 2012 Momentum Short-Term Bullish

Nov 28, 2012 Price Crosses Moving Average (21-day)

Dec 1 Forbes: The Zacks Consensus Estimate for 2013 is at $4.78, an advance of more than 3% in 60 days and suggesting improvement of 35.4% from the previous year.

Dec 1 Forbes Valuation

United Rentals, Inc. is currently trading at a price-to-earnings (P/E) ratio of 11.3, compared with the peer group average of 29.8. On a P/S basis, shares trade at 1.0x, versus the peer group average of 0.9x. The company offers an attractive ROE of 34.7% much higher than the peer group average of 7.1%.

United Rentals, Inc. is based in Greenwich, Connecticut, and was incorporated in 1997. The largest among the rental companies in the world, it operates primarily through its North American subsidiary. It has as many as 848 rental locations in 48 states and 10 Canadian provinces. It currently has a market capitalization of approximately $3.69 billion.

Nov 29 Cramer: I believe that the destruction will provide a level of business to the home construction products that could shock people, said Cramer. I am talking about the very basic companies like URI.

Now I know I have bored you to death, but my reasoning in sharing this with you is the discipline that this website forces on you before making a trade. I can honestly say that this site has kept me from making knee jerk, un-researched, emotional trades. It actually takes most of your emotions out of play as it forces you to determine entry points, target exit points, strategies or reason for entry, and forensics on the trades afterwords.

Could I do all of this without spiketrade? Yes, and in fact I am very proud of my record keeping and research. Spiketrade allows a consistent data entry format that is prepopulated with market and strategy information that makes it easier for entry and review. It is also done in an arena of competition.

The all inclusive membership is $980 a year or 98 a month. I joined for two months in my first four trades using spike trade NTAP, PETM, CTCT, and KBR, I was up $1,928 an average gain of 5.25% of the funds invested. In fairness the market was up 3.3% over the same period of time. Needless to say I feel the membership is valuable and look forward to getting invited to be a Spiker someday.

The Week Ahead

We are over the hump in the earning season but we have a few bell weathers to watch this week. Here they are as well as the key economic indicators to keep an eye on.

Monday

PBY Pep Boys Many Moe and Jack report looking to beat last years earnings of 13 cents for the quarter. Historically you can wait and read all about it then react. We will be looking at the results tomorrow ans then looking at the chart to decide whether we see a trade opp.

I read a good article a while back about the seismic measuring equipment sector and the name that keeps popping up is GEOS Geospace technology. It is reporting on Monday and should do well according to all my info. The fundamentals look good but a series of new highs stalled in November. The charts imply it could be oversold a bit, but a nice earnings above 60 cents could move this to 80 in a hurry.

Look for the PMI to be up a bit indicating another month of growth, while the ISM report will be flat or down.