US Markets Down, Precious Metals Sector bottoming out..

Friends,

Some recent thoughts.

General US Market Indices

So we’re seeing exactly what I had been writing since early Jan..
that US markets were fairly overbought and 10~15% corrections is needed to find more value.

In investing (and trading)
‘Right amount of Patience’ is a virtue and ‘ignoring value and sentiment saturation’ turns out to be a sin.

And following them pays off well while risk is reduced.

So now that markets are under correction, in some small healthy pullbacks in between.. we continue to wait till

NASDAQ reaches 2150~2175 levels, DJIA to 11600 levels, and S&P500 to 1300 levels.

We continue to watch for saturation and oversold conditions before making our new buying moves. However, we see that some stocks are already close to their expected technical bottom, while others continue to gradually deflate back to sentimentally healthy levels. And so we continue to make trades in between to earn some change, while waiting for any large buying decisions, till markets correct fully.

 Precious Metals Sector

In the meantime, I am starting to see that the Precious Metals and Gold sector is close to reaching its sentimental bottom. Here are some charts that kind of give me that feeling. The probability of Gold, prec metals, related tickers to bounce of these support lines are high. So we are keeping a watch and plan to add to our position.

Chart of HUI (Philadelphia Gold Miners Index), should correct to 300 range before healthy upside can be expected.

Chart of XAU (Basket of Unhedged Gold Miners), should correct to 128 range before healthy upside action becomes low-risk.

Chart of GDX : The famous ‘Gold Miners Index ETF’, should correct to 36+ range before major upside action.

This left over correction in miner,s is expected to coincide with the general market correction, so the last legs of US indices could deflate the miners some more.

And finally let’s loook at what the base metal Gold itself looks like.

Here is what ‘EndOfDay GOLD futures’ ($GOLD) indicates on long term support line basis.

Looks like, that Gold could/should correct to touch 620~625/ounce range before all upside movement becomes low risk.

I continue to keep a watch, for any premature upside action, fullness of correction.. And we will add to our positions accordingly.

Enjoy the Game.

AHM (American Home Mortgage) : A crazy stock pick

Stock Pick: AHM: 12+% dividend, Low PE, Major Insider Buying at 28+

Home Mortgage REIT, It’s dreaded sector but this stock seems like a value play. Look at profille statistics and major insider buying over last few months.

http://finance.yahoo.com/q/it?s=AHM
http://finance.yahoo.com/q/ks?s=AHM

I bought at 31.5 and some more @ 31.1 a few days ago.
This might hit ~30 on the support side.. anytime in coming weeks.
I will hold it as LongTerm dividend value play, unless it goes under 29.

I am in here for dividend and potential higher return than downside risk on this.

Some of you, you might want to consider this. esp. with stop order at 28.97. The rest might want to kill me for suggesting something in Homereality/Mortgage sector.. Let me know what you think.

Just thought of sharing.

CSCO : Overbought

So far, it was a good ride on CSCO chart for last 2 weeks.. And CSCO stock was moving up taking care of all upside resistances around 19, 20. Now, 21 has become a tough one.. and still is.. Stock is finding tough to stay above 21, for suffecient time.
At this point, despite all this upside momentum seen over last few days, the upside movement is getting tired. Profit taking and overbought situations are making it tough for it to cross 21.45 level. which was another “key” resistance point, as I posted in my last post.. So I expect CSCO to correct to 19.x levels, before it can hit 21.5+ levels (if it ever does0)..

So it may be time to take some part of your profits off the table and live in piece.. This is what I am planning to do.. if I get another opportunity to sell some part of my position @ 21.4x TODAY, I would gladly do so.. I am not very hopeful of more upside action (without downward movement) in coming few days.
Enjoy the game…

Neeraj.

Some observations

Cisco (CSCO): My call on CSCO reaped very good gains.. I sold half of my accumulation @ 19.7 and 19.9, and holding the rest for 21~22 range resistance. I expect some more resistance at 21.5 and then at 22, and then around 24.. So I plan to gradually liquidate my holdings along the way.

Alcatel (ALA): ALA chart kind of shows early signs of stock bouncing from a long down slide. Fundamentally, the Co. has downside risk of merging LU into it’s operations with a cost run rate of 1+ Billion every year, which can bring down earnings every year. But on upside, it’s making good headways into verious service provider, High Speed Data and video access markets. This might be playing in favor of it’s possible upside movement, so I plan to buy some on pull back into ~11 region. Will stop limit at <10. and shall add more if it moves higher on higher volume.

Gold: Gold is under short term correction.. and has support at 620, then @ 605 and then in 590 region.. which should offer a very good LT support point. if it falls under 600, I would recommend those accumulating gold over time, should consider buying some more coins.. as it might rally big time from these correction points.

Other stocks on my short list for keep a watch on..

EPIX, CHKP, NEM, TRE, OIH, AHM, …. <some more>

Let’s see how these offer good entry points..
Till then enjoying the game.

Dividend + Value Stocks

Here’s a list of some Dividend + Value Stocks I found last weekend, using the following criteria:

• P/E Ratio: Current <= 15 Price/Cash Flow Ratio <= 15
  
• EPS Growth Qtr vs Qtr >= 20 EPS Growth Year vs Year >= 20
  
• Institutional Ownership Increased Since <In The Last Year> % Institutional Ownership >= 50
  
• Return on Equity >= 12 Net Profit Margin >= 12
  
• Current Dividend Yield >= 3
  
• S&P Index Membership

This criteria gave a big list, which I trimmed down based on Chart Tech analysis, where I think to buy on Long Term Support Line, is a good low risk high reward entry point..
1. NDE
Very good Value short list.. Perfect chart.. Needs to correct to ~42 range before it can be bought for low risk entry point.
My Plan: Buy 25 @ 42 and Buy 25 later @ 38~40 range if it corrects

2. ZNT
Very good value short-list. Sitting on long term weekly+daily chart support line. Good low risk entry point. ZNT is a buy now esp. if it breaks out of it’s resistance line above 40.
My Plan: Buy 100 shares long term @ ~40

3. LRY
REIT: Self-administered and self-managed real estate investment trust that has an ownership interest in and operates 426 industrial and 292 office properties located primarily in the Mid-Atlantic, Southeastern and Midwestern United States. Offers wonderful value anmd dividend.. A good buy in 42~45 range for long term holding.
My Plan: Buy 100 shares in 42~43 range, for long term holding.

4. TKC

Good Fundamentals, and Technicals. A good buy (entry point) with 4.6% div. and Large Cap value play.
My Plan: Buy 200 shares on short term pullback to 10

5. AHR
Tech Analysis: What a beautiful cyclic stock. Has moved between ~10 and ~13 in last 5 years. Sitting around top resistance line at this time. A wonderful short candidate at 12.5+. OR a wonderful buy at ~10 with 9.6% dividend yield. Wonderful short candidate in 12.5~13 range.
My Plan: Great Long term Buy at ~10. Short 200 @ 12.5~13 AND/OR Buy at ~10+ later

You might want to consider them for your Low Risk, Value Stock, Dividend Portfolio.

This very filter, criteria gave me my earlier hold-and-wait winners: AHM (@ $27), SLG (@ $70), OXY (@ $80).
So thought of sharing.
Neeraj.

Stable, Good Return US Mutual Funds

Last weekend I ran a screener for good return US MFs.. And here is my ‘kind of ‘ strict screened short list. Note the criteria I have chosen and the nature of stocks that came of it..
Search Criteria:
Fund Perf:
Year To Date >= 10%, Fund Perf: 1 yr >= 10%, Fund Perf: 3 yr >= 10%, Fund Perf: 5 yr >= 10%, Fund Perf: 10 yr >= 10%,
Open Funds, NTF,
Overall 4 Stars or Higher,
Expense Ratio: <=1.50%, No Load,
Sharpe Ratio – 3 yr: >=1.25,
Beta: .50-1.00

Fund Name                                             Investment Category         Load Adjusted Returns1         Net Assets
Returns                                                                                             YTD 1 Yr 5 Yr 10 Yr/LOF
1 Fidelity Real Estate Investment Portfolio ( FRESX) Specialty-Real Estate 12.11% 21.02% 19.79% 16.04% $6,659.0M
1 American Cent Real Estate Inv CL (REACX ) Specialty-Real Estate 13.50% 23.12% 20.65% 16.49% $975.0M
2 Cohen & Steers Realty Shares (CSRSX ) Specialty-Real Estate 14.54% 22.74% 20.65% 16.31% $2,041.5M
3 Fidelity Real Estate Investment Portfolio ( FRESX) Specialty-Real Estate 12.11% 21.02% 19.79% 16.04% $6,659.0M

The majority of these might look like Real Estate Funds, which is a dreaded sector right now..

But if you look under the covers, there is value in their holdings and stability of decent return in these REITs. So U might want to consider.

If these funds don’t sit on your 401k or IRA plan, then ignore the funds selections, but do consider a similar criteria to find high shape ratio, decent return, stable Funds.

Enjoy the game..

My Portfolio Holdings

Stocks:CHK GSS MNG NSU PHO RGLD SLG TFC TRE TWN TRID

Options:
- Call Options on:
CCJ – Comeco Corporation (Major Uranium Miner and Reserves)
CHK – Chaeseapeake Energy
NEM – Newmont Mining
MRVL – Marvel Semiconductor
STX – Seagate Systems (Major HardDrive Vendor)
- Put Options on:
QQQQ, XLF 

Mutual Funds (in Retirement Accounts) :

FIGRX – FIDELITY INTERNATIONAL DISCOVERY

SSMVX – WFA SMALL CAP VAL Z

EKWCX – EVERGREEN PRECIOUS METALS CL C

EUROX – US GLOBAL REGION EAST EUROPEAN

- FIDELITY BGI EXTENDED Equity Market Index Fund

- FIDELITY MSI Large Cap Relative Value A

FCNTX – FIDELITY CONTRAFUND

FEMKX – FIDELITY EMERGING MARKETS

FSENX – FIDELITY SELECT ENERGY

PRLAX – T ROWE PRICE LATIN AMERICA FUND

REACX – AMERICAN CENTURY REAL ESTATE

UNWPX – US WORLD PRECIOUS MINERALS

URPIX – ULTRA BEAR PRO FUND INVESTORS SHARES (200% inverse of S&P500 return)
15% CASH