WLT Get’s Crushed As I Have Been Warning - Cramer Listeners Get Hammered Yet Again
August 4, 2008 9:59 PM
I have been warning about chasing WLT higher as I viewed the move higher as marginally or not at all supported. In addition, I personally view being long a coal stock with a 50 PE as complete foolishness, but that is my opinion. I posted over a month ago that I believed energy stocks were trades and not investments, and nothing has changed my view on that. In fact, most have got completely crushed since that view was posted.
On 07/31 Cramer apparently was blowing his bull horn on WLT and mentioned more coal capacity for them or something like that. What did I say - NO. I may have looked dumb when it ran up after earnings but look a little bit smarter when it plunged over $18 today and it reached a high of $109.42 on Friday. Like I have long mentioned, WHY would you be long a stock at $109.42 when it has to clear $111.99 to even consider being long? It makes no sense and today proved that view. About time the market cooperates and does as “it should”.
UPS: Avoid And or Short
July 31, 2008 1:34 AM
The UPS house of cards run may be over. It is a short and or avoid long here, IMO, with a hard stop above $64.85. This stock is a bit more difficult to predict than many as it has been rising on falling oil, obviously. It has zero points to be long, as I see things, and a clear short point, so that is the only trade here. I am not only not happy with the low on UPS on any level, I am not happy with ANY point to be long. It is a short here, IMO.
07/31 Close Update: Once again UPS held steady on drop in oil. It needs to get under $62.20 to probably apply some pressure here.
08/04 Update: Small gain on the call but SMA’s and drops in oil are holding the stock it appears. I would not be long this stock, on any level however, it is a house of cards, as I see things.
AEM: My Cramer Call Whipping Boy Revisited
July 31, 2008 1:23 AM
I have long been critical of Cramer’s call to be long AEM near the high. In addition, the stock was clearly a house of cards, to say the least. It hit a recent high of $80.29 on 07/15 and just 11 trading days later it is $55.60. This is EXACTLY why I repeatedly warn on stocks that have to clear points that are important. Why on earth would anyone be long AEM at $80 when it has to clear $83.45 to be long? Why?
Not to mention that this stock appears to be a massive bubble by any measure, but that is a different issue. Point being, If it had to clear $83.45 to be long, and you are long at $80, you are a complete knucklehead. and begging to donate your money. The stock has plunged over 35% in two weeks and there was simply no reason to even consider being long the stock in that range. This is what puzzles me about the markets. On 07/15 there was over 4 million shares traded between $75 and $80. There are buyers of 4 million shares near $80? It is mind boggling to me. If I had more time to look at 30-50 charts a day, I could warn about these. The problem is, as I have mentioned, I simply do not have time.
At any rate, AEM has to hold $52.95 here and the “trade” is long above it, IMO. I would never say invest in this silliness, but that is the trade, as I see it, if you just have to trade this bubble.
WLT: No Clarity Here
July 30, 2008 11:41 PM
WLT had made a huge move after earnings. Earnings were strong, I will concede the point. However, as I have been “pounding the table” lately, you cannot be long this range, IMO. It made a high today of $106.78. it has to clear $111.99 to even consider being long here and even then it could reverse again. Like I have long mentioned, why be the Lone Ranger? Let someone else do it. My views will never change - ever. ONLY be long or short where there is complete clarity. We do not have that here, obviously. I am not saying it will fall. I am not saying it won’t. I am saying I do not know.
The problem with this stock is there is one and only one clear point to be long, IMO, and that is probably $90.04. The gap higher after earnings was not that large, so I am not even sure of the significance of that low, long term. My views on this stock were not to short after earnings, but to avoid chasing much above $100 as the risk appears high. Not to mention that I am possibly the only person alive that is not a fan of being long coal long term. I still believe coal is exposed to many pressures from wind and nuclear energy. I simply see no reason, on any level, that coal can march higher long term considering wind power can (and will) generate power far cheaper than coal at these levels.
Point being, where is the upside in coal? I do not see it.
Market View: If You Believe The Dow Low Will Hold, PFE
July 29, 2008 12:44 AM
If you believe the Dow low will hold, and would rather not simply buy an ETF to mimic the index, then a stock worth looking at on further weakness may be Pfizer (PFE). The chart looks a bit better than many (it is almost impossible to find ANY chart that looks good right now) although it did reject the recent high of $19.25. keep in mind, the chart would look FAR better if it did not reject that high. But virtually all charts look very ugly right now - so if long, pick your medicine.
Therefore, do not chase strength on this at all. Weakness is likely to hold just under $18 - if the Dow low holds, that is. In addition, the stock will bring a 7% dividend yield on any weakness. I would have to look more into the balance sheet to know if there is ANY chance of this being cut, but if not, this pays far more than the 10 year treasury at 4%.
Looking To Be Long Energy? MTW
July 29, 2008 12:10 AM
I have harshly been critical of being long anything related to energy for far over a month and the market has proven my views correct, thus far, with a huge sell-off in energy related stocks. The energy ETF XLE has fallen 20% in 3 weeks, so my call on that sector has done well.
If you are looking to be long something energy related, Manitowoc (MTW) appears to be long after earnings- at some point. The PE is very low, but more importantly guidance was solid and we have chart confirmation to be long above $25.37. Unfortunately, it is likely to gap a bit higher at the open. If it gaps, watch the early high to make sure you aren’t buying into a reversal as a key SMA is near the likely open. But if you want to be long the space to hedge your bets on energy, MTW seems to be long here. I see no issues with the chart well into the $40 area. Therefore, I suspect it will attempt that area at some point.
Keep in mind, it could be tough sledding near term as the SMA’s are clearly pointed down. While I am not a huge follower of them, some people are. It could reject the $35 area and check down. If it stays above $32 range for several days and does reject an area first, then the trade will likely be long check-downs. I would rather wait until the reaction after earnings can be seen to be safe. But watching it intraday may solve that concern.
Keep in mind that I think the overall outlook on energy related stocks is a rotation out of them, in general. So it is unlikely there will be a hurry here, but not certain. What I am saying is “if” you like the sector and you disagree with my take on the sector in general, MTW is worth a hard look here.
Update: MTW reversed at the open and is an avoid until further notice, IMO. This is why I mentioned the safe play was to either wait, or watch the intraday open. It wasn’t good.
07/29 Close Update: My call to avoid it as the open was clearly sold was correct as it fell the rest of the day. I made the call within about 30 mins of the open and the stock was about $29 or so. It closed at $27.43. I understand that the sentiment is clearly negative on energy, but WLT rallying and MTW falling, makes no sense at all. MTW gave solid guidance, has a 7 PE and WLT has a PE in bubble territory. But I have long mentioned, if you think the markets are “efficient and rational” as taught in college, you would be strongly mistaken.
Earnings: WLT Beats After Hours - Avoid Chasing
July 28, 2008 11:30 PM
Walter Industries soundly beat estimates after hours with earnings of $.94 a share. That is a huge number compared to the consensus of $.57. My first question is how ridiculous the so called well trained analysts are. If there was ANY chance of them rolling in with 57 cents a share the stock would have been halved overnight. Obviously the market knew there was almost no chance of that happening.
At any rate, there is no clarity on WLT for a variety of reasons. The chart clearly says avoid strength below $111.99 and $103.90. In addition, are these earnings likely to continue to accelerate if coal prices go flat to down? I do not know enough about their business, so I can not logically comment. However, it seems to me that long term coal (and energy prices in general) must go lower, as I have long held. Either prices fall because of a weakening economy or they fall because higher prices cause a weak economy. I see no other possible outcome. Cramer will likely be blowing his bull horn on WLT after earnings, but haven’t watched it ( I rarely ever do). But it is an avoid much higher, IMO.
In addition, I view coal as exceptionally vulnerable to alternative energy - far more than oil. This is because it is primarily used to generate electricity. Major wind generation power is coming, along with the possibility of nuclear. If the run in coal isn’t over, it likely soon will be. I would not be a long term investor in anything coal related. Wind and nuclear is likely 2-3 years out, possibly longer, but one or the other or both is coming eventually.
07/29 Close Update: Well, the size of the move surprised me. The fact that it rallied did not as the open was clearly bought. I still say extreme caution much higher near the numbers posted as that was the intent of this post to begin with. I just didn’t think it would make it near $100 in 1 day. Today’s 15% spike to $99.26 makes it appear that i am wrong on this stock. Perhaps I am. But I am leaving this view up as I still believe it is correct and I do not want to be confused with a Monday Morning QB. We will see soon enough.
Stock Watch: GOOG Competitor? Cuil
July 28, 2008 10:52 PM
Former employees of Google have launched what may prove to be the stongest bid yet to make serious inroads into GOOG’s strength - search. The company is named Cuil and is pronounced “cool”. They claim to be a far superior search than GOOG in both pages indexed and quality of output (this begs the question why MSFT cannot do this, but that’s another topic). They claim that they will index 120 billion web pages. The last count of GOOG’s index was just over 8 billion, but they will not disclose how many pages they index currently.
An article on Cuil can be read on CNN Money by clicking HERE.
If any of this pans out, GOOG investors are likely to get very nervous, but that is way too early to know. GOOG clearly is the king of search. My concern - long term - is even is Cuil is not the answer, there will be more comers. Someone will eventually make an inroad, most likely. The chart clearly says avoid it anyhow for now. But longer term, this could be an issue if another player takes significant share. I would personally run from GOOG stock as the chart clearly says avoid. Long term, who knows.
Cuil’s site is: Here
MRK: Avoid Value Trap
July 27, 2008 8:20 PM
On 07/22, Merck (MRK) gapped lower and has since risen slightly. In fact, it has slightly exceeded the gap down high. There is no clear indication of a low and the gap “might” fill all the way, or it may reverse prior to the fill. Some may be confused as to whether this gap was bought, or sold. This gap was sold and is an avoid anything long, IMO.
It is clearly a short below $38.34, but I would be very surprised if it even comes close to that area before falling back. I am not saying it is a flat out short, as if it goes higher, some shorts may cover. However, you clearly cannot be long it with no clear reference point, IMO.
Remember my motto: clarity and agreement. We have neither on this stock as it is rising after a gap that was sold. Therefore, it is an avoid.
AAPL Gap Low Was Bought
July 22, 2008 11:04 AM
AAPL has done much the same as the market. The opening lows were bought. Today’s low is likely key for the day. Traders are “likely” to buy above that low, IMO. But that is similar to the overall market.
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