Jack's latest tips on the stock market: Wealthcast
Whenever the boys at CNBC shout out loud about the DJIA making new all time highs it is typically the kiss of death. Bull markets tend to turn after the last of the flow of funds flows into the DJIA causing a rise in price points. The last of the Bull Run a move into large cap DJIA type stocks while the broader market struggles to maintain the necessary spark nudging it along a path heading north. The spark is gone and the market is doing its thing in May as it comes in across the board across the globe. Notice the meaningful hit the NIKKEI 225 has taken. Quite a hit and perhaps a good chance to get involved The top formed by the Japanese market is merely corrective action in what appears to be a new secular bull environment. The NIKKEI has fallen below its 50 day line and its 10 day line and into a short and intermediate term slump. Japan is currently slumping and those with a long term view are provided with a chance to grab shares as it comes in. It is oversold and like our market ought to bounce. In the case of the NIKKEI 225 it is corrective action in a bullish space. Same goes for energy and metals. I bought more silver yesterday adding to the position carried in SSRI. I sold my gold stocks prior to leaving for the coast but maintain a position in GLD. That took a hit yesterday along with silver and the hit taken is merely a correction in a secular bullish space.
The overall US equity market is turning bearish. That is what is happening right now as no longer are the boys in suits on CNBC speaking in confident tones as the market loses its luster and turns dark. Futures are currently down and markets are down across the globe. This morning out on the left coast I will get into a few stocks that I am committing to as long as they remain in a bullish price pattern as depicted on its chart. Let’s get into a few longs and shorts and examine the favorable odds as expressed by their respective charts.
Cisco Systems (CSCO) 20.56
I like the current action in the stock and will admit that I loaded up in it after it dropped and it is down over 5% in the last 5 trading days. It is up the last two trading days so it is moving in the opposite direction of the NDX. That is a good sign as NASDAQ and the NDX are down over the last few days and may turn today after the 200 day line gets another test. NASDAQ acted well yesterday as it bounced and closed firmly above its 200 day line after trading below that important inflection point most of the day. CSCO will pop nicely in a dead cat bounce and is a trading vehicle right now. Nothing more then that. I am selling into strength and will be selling short into strength as well. CSCO is a bouncing stock in this current lame rally that this market is attempting to form. It will not be a quality rally. It will disappoint and investors will head for the hills after the fade.
Free Scale Semiconductor. (FSL) 30.36
I am involved in FSL and is the big bet I am making relative to the semi conductor space. It is a powerful large cap leader in the space and the tale of the tape clearly expresses that reality over the course of the year and is still up over 20% year to date although the last 5 days depicts a stock that maintains its bullish streak and will bounce nicely with the market when the market provides a solid bounce and that ought to come right now. FSL is down over 5% in the last 5 days and still maintains a bullish technical chart pattern over the intermediate and long stretch. It is currently short term negative and a bounce to test the recent highs will justify adding to the position when it fell. I will sell it up into its recent all time high.
Transocean (RIG) 82.88
RIG has come in nicely and is hugging its 50 day line. If you are bullish on energy then what better time to get involved then after a correction. The overall market may turn bearish but energy and metals are in a bull market correction. It is appropriate to maintain and add to positions that express intermediate and long term bullish charts after they come in. RIG hugs the 50 day line. It fell from 88 and change to its current level in period of less then 5 days. Violent drop down to the 50 day line and if it rises in firm fashion today then look for a test back to the recent highs and to eventually cross those near highs and head for par. It is still up over 18% this year and 82% year over year and another correction in the space of a month and another buying chance unless it breaks the 50 day line in which case it pays to cut and run. It could fall to 70 and still maintain a long term bullish trend. Therefore it is still extended even at current levels after a violent fall over the last few days. RIG is down almost 6% in the last 5 days making it attractive.
Tiffany (TIF)32.66
This is the one and only short I will get into right now and will tell you that I intend to cover the rest of the position booking the gain sometime today. It along with the other shorts conveyed over the last month have worked delightfully well. I will cover the last of the TIF short. I will get into shorts only later because that is where the money will be made, at least the bulk of the money will be gained on the short side over the next 6 months. There are so many chances to take advantage of on the short side and TIF is merely one. It is down with everything else over the last 5 days but it is oversold right now and is likely to bounce to test the 33-35 zones. A rise to 35 and another chance on the short side comes into play. It trades well below all key inflection points and is oversold.
Yes I am on the left coast where the lemon is tastier and the tea is organic and more flavorful. I come to the best part of the day, while the world sleeps it is a peaceful and tranquil moment, to take a moment, to breath deeply the sea air and take in the fragrance of the salt and let it penetrate the senses all of the senses and from that objective reality come to a calm and sober mind, as the day on the street begins. I am ready and willing to do battle today. In the battle that I have been waging for the last 22 years and that is the battle for investment survival. It is quite the battle I will tell you this and on Thursday when the Eagle flies into town and it will be one hell of an exciting moment as the eagle and the horse come together with the RAM and conspire to succeed in the intention of making money. That is where I will be when this market opens today.In front and center perched like an Eagle high on a peak eyes wide open, never eyes wide shut, always open and watching and taking it all in. Right now it is the best time of the day. A time to sit back and kick back and breathe the air of the Pacific Ocean and let that fresh sea air penetrate the lungs and bathe the entire system with positive energy and balance. and later today that balance will be found doing the stairs and shvitzing at a Russian room on Pico near Fairfax. That is it in a nutshell.
Rothstein Asset Management, L.P.
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Email: Jack@ramhedge.com Jrothstein@jrmoney.com
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