13 Stocks for 2013 Mid-Year Results

In the blink of an eye, 26 weeks have flashed by and we’re already at the mid-year point. At the start of the year, I posted a partially owned, partially mock-portfolio that I said I would throw out there on the “twitter-world” and let it ride. No new buys, no sells and no rules – just ride the ups and down on 13 stocks that I felt were poised for big things in the 2013.

Here are the results at the end of Week #26 for my #13for2013 portfolio:

2013_06-29_Week 26

  • 11 of the 13 stocks show a gain
  • Collectively the group of 13 stocks is up 18%
  • The 11 positive stocks are up an average of 28.54%
  • 9 of the 13 stocks have current gains above 20%
  • Comparatively, the Dow, S&P, and NASDAQ are all up between 12% and 14% so this mock buy-and-hold portfolio easily beat the market averages
  • Several of the stocks hit performance highs much greater than their current levels, for example, FLT and LNKD peaked above 60% while SLCA peaked above 50%.
  • Two stocks bombed out with RAX a total bust, currently down 49%.

All-in-all, it’s a solid portfolio of stocks as we stand here today. Take a look at the performance snapshot and daily (year-to-date) charts below. Several of these stocks will make my 2nd Half #13for2103 portfolio, because I believe their upside still has more to come.

Disclosure: as of today, I own shares in INVN, DNKN and V.

Portfolio Prices on January 1, 2013:
$DDD – 35.57
$DNKN – 33.18
$FLT – 53.65
$INVN – 11.11
$KORS – 51.03
$LNKD – 114.82
$MOV – 30.68
$NTSP – 11.82
$RAX – 74.27
$SCCO – 37.86
$SLCA – 16.73
$SSYS – 80.15
$V – 151.58

Charts:

2013_06-28_DDD

2013_06-28_DNKN

2013_06-28_FLT

2013_06-28_INVN

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New High New Low Data (NH-NL) Warns of 1987 Crash

I received a comment questioning if the 1987 Market Crash was detected by the NH-NL data following my blog post titled Nail Market Tops and Bottoms by Doing this, Guaranteed!.

When viewing the NH-NL data, much of the first half of 1987 was stable. Readings were mostly positive with a few bouts of light pink (negative readings) in April and May. Although there was some negativity in the NH-NL readings, the 30-d Differential (Diff) did not turn negative in May 1987. It did however turn negative for seven consecutive days in May 1987. The number of days with 100+ New Lows for the year up until the end of May was two (one on April 14, 1987 and one on May 20, 1987, 112 and 109 NL’s respectively).

July 1987 NH-NL Readings for NYSE:
1987_07 - July

By June, the readings were back to the positive side, averaging a +70 Differential for the summer (June, July and August) with the only negative daily reading coming on June 2, 1987 at 21 NH’s and 28 NL’s or a negative 7 Differential. The next negative day did not occur until September 2, 1987 with a 24-31 reading or negative 7 Differential.

August 1987 NH-NL Readings for NYSE:
1987_08 - August

Prior to dissecting the NH-NL data, I must iterate that all SEASONED investors should know that they must follow PRICE and VOLUME first and that the DJIA was flashing distribution days throughout the month of September. The NH-NL red flags only back-up the story that price and volume is telling (the NH-NL confirms what the market is doing). In addition to the DJIA showing multiple distribution days, the index closed below its 50-d MA in September. It attempted to cross back above the moving average late in the month but quickly crashed back below it in early October, prior to the crash.

DJIA 1987 – Distribution & NH-NL Red Flags:
2013_03-26_DJIA_1987_Crash

The first big NH-NL clue signaling weakness came in September 1987. For the month, 18 of the 21 trading days recorded a negative Differential reading (the month averaged a negative 15 Diff, marking the weakest month of readings since July 1984 when every day was negative).

September 1987 NH-NL Readings for NYSE:
1987_09 - September

The average daily Differential reading for the first 8 months of the year, through August 31, 1987 was +69.9. As mentioned, the average Diff reading in September 1987 was -15. By contrast, the average reading for October turned out to be a whopping negative 226. The average reading from October 1st through October 16th was negative 70, a complete 180 from the first 8 months.

Below are the key dates that pop out waiving red flags for the longer term trader:

  • On September 2, 1987: The NH-NL Differential (Diff) goes red
  • On September 10, 1987: The 10d Average Diff goes red
  • On October 7, 1987: The 30d diff goes red
  • On October 12, 1987: The 1st 100+ New Low (NL) day is recorded
  • On October 16, 1987: The NH-NL Diff goes DARK RED which means more than 300+ NL’s

The October 16, 1987 NH-NL reading of 5-327 or a negative 322 was the weakest NL reading since Monday, September 28, 1981 when 590 NL’s were recorded (with only 1 new high).

This was a MAJOR RED FLAG – but was it too late because data is recorded “end of day”?

We all know what happened the following Monday – markets crashed and NH-NL reading settled in at 10 NH’s and 1,068 NL’s for a -1,058 Diff. Tuesday, October 20, 1987 was even worse as the Diff closed at 1 NH’s and 1,174 NL’s for a Diff reading of -1,173.

October 1987 NH-NL Readings for NYSE:
1987_10 - October

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Identify Market Tops and Bottoms by Doing this, Guaranteed!

Can major market tops and bottoms be identified with accuracy? Yes, they can! And I will present data that will argue that identifying “major” market bottoms is easier than any other change in market direction. Market tops can also be identified but it’s a bit more difficult than bottoms.

No one can guarantee an “exact top or bottom” but this data will pinpoint an overall change in trend. There’s plenty of time to get out of the market before a devastating fall and even more time to jump on a new up-trend after a bottom.

To support my findings, I will use extensive New High and New Low (NH-NL) data extracted from the NYSE in 2008 and 2009. This data phenomenon is not exclusive to the market bottom of 2009 as studies will show the exact, yes exact, same results can be extracted from every other major market bottom stretching back as far as the NH-NL data is available.

New High – New Low data is historically the most accurate indicator for identifying a major change in trend by highlighting extreme readings and the change in underlying market breadth.

The images contained in this article will identify the following data points:

  1. NYSE New Highs: The number of stocks making New Highs on a specific date
  2. NYSE New Lows: The number of stocks making New Lows on a specific date
  3. New High –New Low Differential: This is simply the number of stocks making new highs minus the number of stocks making new lows.
  4. NH-NL 10d Diff: This is a simple 10-day moving average representing the number of stocks making new highs minus the number of stocks making new lows.
  5. NH-NL 30d Diff: This is a simple 30-day moving average representing the number of stocks making new highs minus the number of stocks making new lows.
  6. NH-NL % Ratio: To calculate the percentage correctly, use this formula: (New Highs – New Lows) / (New Highs + New Lows) * 100 = X%
  7. NH-NL % Ratio 10d Ave: This is a simple 10-day moving average representing the percentages listed in the column terms #6 in this list

I follow the progress of stocks making new highs and new lows on the NASDAQ and NYSE and pay specific attention to turning points in the differentials and ratios. I am particularly interested in the extreme highs and lows of the readings, especially after a long trend, as they start to drop hints of an impending change of trend (positive to negative and negative to positive).

The image below shows that New Lows had dominated the market for nearly 18 months when extreme readings started to appear in October 2008. In fact, the readings in October 2008 were the most extreme that my NYSE NH-NL data contains which goes back to the early 1980’s.

010509_NHNL_wkly_18months

October 2008 NH-NL Readings for NYSE:
2008_10 - October

As the second image shows, the daily New Low readings were well above 1,000 with a peak of 2,901 on Friday, October 10, 2008. The market was screaming exhaustion as the selling pressure of the past 18 months was hitting its max. All other readings were in extreme territory including the basic NH-NL differential, the 10d & 30d differentials and the % ratio. The extreme readings continued through the end of November 2008 when they final subsided in December but remained negative.

November 2008 NH-NL Readings for NYSE:
2008_11 - November

December 2008 NH-NL Readings for NYSE:
2008_12 - December

Heading into early 2009, “blood was running in the streets” as Baron Rothschild once declared and most investors had been knocked to their knees while two of the most prestigious investment banking firms in America disappeared. The greatest value investors of all time state that the best time to buy is when this type of extreme environment occurs. The problem with that statement is that it’s based purely on fundamentals and I just can’t blindly jump-in and grab shares without some form of technical guidance. Think about that for a second, blood had been running in the street for the duration of 2008 so I suspect that many value investors were buying and saw more pain before the market decided to turn. Buyers in early to mid 2008 had to endure quite a ride before the market turned up in the spring of 2009. I prefer to catch a trend on the up-swing, not the bottom; besides, pinpointing the exact bottom is virtually impossible.

January 2009 NH-NL Readings for NYSE:
2009_01 - January

Bernard Baruch was quoted as saying: “Don’t try to buy at the bottom and sell at the top. This can’t be done–except by liars.”

January 2009 was much like December 2008 as the market remained negative. Then in February 2009, the market dropped again as the NH-NL readings started to head back towards more extreme levels. However, they didn’t reach the levels of October 2008 so this signified a “higher low” for the readings, a second clue that the market may be looking to reverse direction.

February 2009 NH-NL Readings for NYSE:
2009_02 - February

NH-NL Readings making higher lows for NYSE:
040609_NH_NL_trend change

March 2009 was the turning point. The extreme readings subsided (light red and dark red readings on my graphics) and the FIRST positive reading was registered since May 2008 (represented by “blue figures” on my graphics). On March 26, 2008, the NYSE logged a reading of 10 New Highs and 0 New lows, the first time a “0” New Low reading was logged since February 27, 2004. By contrast, the NYSE logged 11 additional days with “0” New Lows in 2009 and 20 days with “1” New Low for that same year. The year 2008 had one day with “1” New Low and the years 2005, 2006 and 2007 had zero days with “1” New Low. Amazing stats!

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Top 10 Stock Market Stocking Stuffer Books

Fantastic Stocking Stuffers for the Stock Market Enthusiast in your family or circle of friends:

1. How to Make Money in Stocks (4th edition) by William J. O’Neil (1988)
2. Reminiscences of a Stock Operator by Edwin Lefevre (1923)
3. The Nature of Risk by Justin Mamis (1991)
4. Trader Vic: Methods of a Wall Street Master by Victor Sperandeo (1991)
5. Trade Your Way to Financial Freedom by Van K. Tharp (1999)
6. The Battle for Investment Survival by Gerald M. Loeb (1935)
7. Martin Zweig’s Winning on Wall Street by Martin Zweig (1986)
8. How to Trade in Stocks by Jesse Livermore (1940)
9. Market Wizards: Interviews with Top Traders by Jack D. Schwager (1988)
10. When to Sell: Inside Strategies for Stock-Market Profits by Justin Mamis (1994)

**Original copyright dates are listed even though many of the books linked are newer editions**

 

 

 

The Future (Opportunity) of 3D Printing

What if you could print the broken piece on your coffee maker rather than make a trip to the repair shop? What about skipping Black Friday madness by printing the latest toy for your child? How about printing that new pair of jeans you tried on at the mall but didn’t fit quite right (your body scanned for a perfect fit)?

Would you say that’s “crazy”?

Perhaps but that’s the direction the world is headed.

“Printing goes beyond product that you can see and touch”. Guitars, tables, board games — those objects can be printed today. But food, organs, bones, houses? Those “will take probably 10 years to come,” – says Geomagic’s Ping Fu

General Electric is “So Stoked About 3D Printing, They’re Using It To Make Parts For Jet Engines”

As Business Insider noted: “CONFIRMATION as to how seriously some companies are taking additive manufacturing, popularly known as 3D printing, came on November 20th when GE Aviation, part of the world’s biggest manufacturing group, bought a privately owned company called Morris Technologies.

Many manufacturers already use 3D printing to make prototypes of parts, because it is cheaper and more flexible than tooling up to produce just one or two items. But the technology is now good enough for it to be used to make production items too.

GE sees the purchase as an investment in an important new manufacturing technology. “Our ability to develop state of the art manufacturing processes for emerging materials and complex design geometry is critical to our future,”

Printing parts for jet engines is already here but the jeans, well, that may take some more time before its commonplace but it’s not out of the question.

So how can you invest to capitalize on this new industry?

Two stocks catch my eye in the world of 3D printing and rapid prototyping:

  1. Stratasys, Inc., SSYS
  2. 3D Systems Corporation, DDD

I don’t intend on spending this blog post describing the detail of the technology itself as plenty of that exists through a simple Google search, however, I will include basic company descriptions from Yahoo Finance (see bottom of post).

Several things stand out while researching these two stocks (see charts):

  1. Year-over-year EPS growth
  2. Double digit quarterly growth for sales and earnings (going back 8 quarters)
  3. Increasing Intuitional Sponsorship

In addition to the fundamental items above, the daily and weekly charts for both SSYS and DDD show some solid technical setups for the long term (I am not writing this post from a short term perspective). We’re talking 2-5 years out as this game is only in its infancy with Wall Street.

SSYS has been trending higher for the past year showing a 170% gain since last November. The recent weekly pattern clearly shows a breakout point to new highs above $73.32. Considering the overall environment of the market, I would prefer a better risk-to-reward buying opportunity closer to the 50-day or 200-day moving average. Due to its technical strength, the 50-day moving average looks to be the ideal pullback area for accumulation.

DDD has pulled back more than SSYS and may provide investors with an opportunity sooner as it trades just above the 50-d moving average. Like SSYS, DDD has given early investors a great return on investment with a 193% gain over the past 12 months. I’d be suspect of the large distribution week, two weeks back, but as long as the 200-d moving average is not violated, an initial entry could be warranted.

As of this post, I do not own shares in either company but I plan to accumulate both as we head into 2013. Both the action of the individual stocks and the general market will dictate when I start the accumulation so please perform your own due-diligence. Follow me on twitter for my latest updates.

Lastly, as Stratasys notes on its home page, 3D printing is “ADVANCING INDUSTRIES” to which it highlights the following:

  1. Aerospace 3D Printing
  2. Automotive 3D Printing
  3. Commercial Products 3D Prototyping
  4. Consumer Products 3D Prototyping
  5. Educational 3D Printing
  6. Medical Device Prototyping
  7. Military 3D Printing

Yahoo Finance:

Stratasys, Inc., together with its subsidiaries, engages in the development, manufacture, marketing, and servicing of three-dimensional (3D) printers, rapid prototyping (RP) systems, and related consumable materials for office-based RP and direct digital manufacturing (DDM) markets. The company offers its products as integrated systems consisting of an RP machine and the software to convert the CAD designs into a machine compatible format, and modeling and support materials. Its products enable engineers and designers to create physical models, tooling, jigs, fixtures, prototypes, and end use parts out of production grade thermoplastic directly from a CAD workstation. The company also offers rapid prototyping and production part manufacturing services; and maintenance, leasing/renting, training, and contract engineering services for 3D production systems and 3D printers.

3D Systems Corporation, through its subsidiaries, engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. The company’s principle print engines comprise stereolithography, selective laser sintering, multi-jet modeling, film transfer imaging, selective laser melting, and plastic jet printers. Its 3D printers convert data input from computer-aided design software or 3D scanning and sculpting devices to produce physical objects from engineered plastic, metal, and composite print materials. The company also blends, markets, sells, and distributes various consumables, engineered plastics, metal materials, and composites; and offers various software tools, as well as pre-sale and post-sale services, including applications development, installation, warranty, and maintenance. In addition, it provides custom parts services, such as precision plastic and metal parts service and assembly capabilities. The company markets its stereolithography materials under the Accura and RenShape; laser sintering materials under the DuraForm, CastForm, and LaserForm; and materials for professional printers under the VisiJet brands.