Monthly Archives: November 2015

CAR

02-Nov-15 16:22 ET
Avis Budget misses by $0.02, reports revs in-line; guides FY15 EPS below consensus  (52.30 +2.36)
  • Reports Q3 (Sep) earnings of $1.98 per share, $0.02 worse than the Capital IQ Consensus of $2.00; revenues rose 1.4% year/year to $2.58 bln vs the $2.6 bln Capital IQ Consensus.
    • Americas- Revenue increased 2% primarily due to a 4% increase in volume and a 3% increase in ancillary revenue per rental day in constant currency. Pricing was unchanged in constant currency and declined 2% on a reported basis. Adjusted EBITDA increased 1% driven by increased rental volumes and lower per-unit fleet costs, partially offset by higher marketing expense and increased commissions.
    • International- Revenue was essentially unchanged despite a $134 million (17%) negative impact from movements in currency exchange rates compared to the prior year. Rental days increased 23%, and total revenue per rental day declined 2% in constant currency (comprised of a 6% increase in ancillary revenue per day and a 3% decline in pricing).
  • Co issues downside guidance for FY15, sees EPS of $3.10-3.25, includes 20 cent impact from FX headwinds, (Prior $3.15-3.45 included 15 cent impact from FX headwinds) vs. $3.36 Capital IQ Consensus Estimate. Co expects FY15 revenue to increase 1% y/y; Rental days are expected to increase approx 4%; Price is expected to be unchanged.
    • Adjusted EBITDA $900-925 mln (Prior $900-950 mln).
    • Per unit fleet costs will be apporox $300 per month, down 3% y/y (Prior $300-310).Total Company per-unit fleet costs are expected to be $280 to $285 per month in 2015 (Prior $280-290) , compared to $305 in 2014, with the decrease attributable both to movements in currency exchange rates and to lower per-unit fleet costs throughout the Company’s operations.

Courtesy of Briefing.com

This not a value trade. With guidance of 3.15 to 3.45 the value buy here will be in the 25 to 27.50 area. Based on this report and over valuation CAR has dropped from over 52 to 36.30 as of today . CAR has strong support at 35.92 with bounce potential to 41.50.

Buy between 35.75 and 36.51. Sell half or more at 38.50 and the rest at 41.00.

Good luck ladies

Dave C

Catching the Bottom

Catching the Bottom

Actually, as every broker will tell, catching the bottom is impossible. Uh- hah. When I was day trading, most of my trades were price action trades based on short term support and resistance. I was doing 30 to 50 trades a day and caught a few bottoms and tops every day. Once or twice a week I would get the bottom and top of a single trade. Even a blind hog will find an acorn now and then.

To catch tops and bottoms you need to be aware of the fundamentals, value, support or resistance, any recent news, recent being in the past three or four days, etc.

09-Nov-15 07:34 ET

ICON

Iconix Brand beats by $0.12, reports revs in-line; guides FY15 EPS in-line, revs in-line; guides FY16 EPS below consensus, revs below consensus  (7.18)

  • Reports Q3 (Sep) earnings of $0.33 per share, $0.12 better than the two analyst estimate of $0.21; revenues fell 19.4% year/year to $88.9 mln vs the $89.06 mln two analyst estimate.
  • Co issues in-line guidance for FY15, sees EPS of $1.35-1.40 vs. $1.38 two analyst estimate; sees FY15 revs of $370-380 mln vs. $375.95 mln two analyst estimate.
  • Co issues downside guidance for FY16, sees EPS of $1.35-1.50 vs. $1.99 Capital IQ Consensus Estimate; sees FY16 revs of $370-390 mln vs. $412.71 mln Capital IQ Consensus Estimate.
  • “We have gone through a difficult transition period, but Iconix continues to have significant business strengths including its diversified portfolio of consumer brands, profitable business model and strong free cash flow generation. All of us at the Company are focused on capitalizing on these strengths and addressing the issues that have impacted more recent performance to improve our results and enhance value for shareholders
Iconix Brand

Nov-15 09:42 ET

09-ICON

 : SouthernSun Asset Management discloses

10.27% passive stake in 13G filing  (8.55 +1.65)

 

 

Courtesy of Briefing.com

blog icon weekly 11-26-2015

Why on earth would you buy into this dog? It sure has a consistent pattern, down, down and down some more. But, but, but.

I originally bought this at 7.26 after the earnings and guidance call shown above. In the picture above of the weekly chart note the support levels of 7.25-5.95-4.55 and 2.55. Also note mm 5.88 (measured move).

With the 12 cent beat on the earnings call and guidance of 1.35 to 1.50 I was sure 7.25 would hold. But but but I was wrong. At this point the trailing P/E was 5.26. It can’t go much lower, right?

I only had a couple thousand shares of a cheap stock and could afford to ride this for a while considering the potential of the recovery. With no improvement beyond the 1.35 / 1.50 guidance ICON should recover to the 15 / 20 dollar area.

So the plan was to buy more at 6.11 and 5.96.

blog icon 5 min turn 11-18-2015

In the 5 minute chart above ICON bottomed out at 6.14. Ya ya, 6.11. I know.

Fortunately I was around the computer when it bottomed and saw what was happening. Often when a stock gets this oversold (at 6.14 the FP/E was down to 4.5) there are so many buyers that it never reaches the actual support level.

The green candlestick with the long tail (called a hammer) right after 11 A M is the low for the day. ICON then bounced to 6.26, only a penny away from the upper Keltner Channel band. A touch on the opposite Keltner Channel band indicates a possible reversal.  6.26 was also the high of the first tick through the trend line before the bottom was put in. Although it didn’t touch, it was a very close thing and was worthy of paying attention to. The next low was 8 bars later at 6.15, a very big deal. This is a higher low or a double bottom, whichever you care to call it, either one is a strong indicator of a reversal. The reason this is a big deal is that if the price can’t move back to the previous low it is most certainly going higher.

When something like this (a reversal) is going on I am putting the support / resistance lines in as the pattern forms.

Now let’s take a look at all the blue trend lines on this chart. The slanting ones are trend lines and the flat horizontal ones are support and resistance lines. The upper trend line is resistance and is first broken four bars prior the bottom at 6.14.This is a minor break but does indicate a little more strength than in the past but is nothing to act on. The two trend lines immediately under the candlesticks are the lower (support) trend lines. Notice that the upper and lower trend lines would converge if this trend continued for much longer. This trend line pattern is called a descending wedge and is a good reversal signal.

When we broke out of the upper trend line ICON popped up to 6.26 (the high of the first minor break) and reversed to the top of the upper trend line. This is a very common occurrence but just as often the stock will continue straight up. At this point I entered a buy stop market order at 6.27 that would not execute until 100 shares of ICON traded at that price. When that happens my order turns into a market order an fills at the best price available. I didn’t want to add to this trade until it showed me that it wanted to go higher.

In the next panel down are two technical analysis indicators. The primary one is Slow Stochastic. It is a momentum oscillator that attempts to predict price turning points by comparing the closing price of a security to its price range. It is orange line in the panel. I use this much differently than the intended use.

The grey line in the middle is the zero line. The red line at the top is 95 and the green line at the bottom is the 10 line. (Look it up to see normal settings) When the green 10 line is pierced I am looking for a buying opportunity and when the red 95 line is pierced I am looking for a selling opportunity.

The most important and reliable signal generated by Stochastic is divergence. This occurs when you have a lower low in the price chart but you have a higher high in the Stochastic panel at the same point. This occurs in the ICON chart above. From the low at 6.14 count back 10 bars and look at Stochastic below. The 6.14 low Stochastic is higher. This is divergence, another strong signal to buy.

The blue / magenta line is Rate of Change (ROC). Let me first say that all the books tell us not to use two oscillators to measure movement on the same chart. ROC measures the percentage change between the most recent bar and “n” x number of periods ago. The default setup in TradeStation is 14 bars back. Mine is set at 6 bars. You can experiment with this measurement to get the best result for your style of trading.

The difference for me is that ROC seems to tell me of changes in buying and selling pressure in advance of movement on the chart at reversal points.

Let me say that when using Stochastic, ROC, trend lines or any other indicator used to help you understand what is going on in a chart, always look at longer time frames. Below are the 10, 15 and 30 minute charts of the same event. Notice that the longer the time frame the sooner the indicators (Stochastic and ROC) reversed. I use the 2 and 5 minute charts to determine if there is a trade and if so, where to get in.

blog icon 5 min 11-20-2015

blog icon 15 min 11-23-2015

The circled break under the trend line is a common occurrence prior to a sudden move in the opposite direction.

The sharp move from 6.40 to 7.03 invites a selloff. Large moves will usually be sold off.

blog icon 30 min 11-27-2015

Well, that’s my story and I’m sticking to it. I missed the bottom by three cents and entered at 6.26, a twelve cent miss. Four or five months from now when ICON is at 15 /16 I can look back and say I caught the bottom in ICON.

Hope this is helpful

Dave C

 

FOSL

Sells 75 % of FOSL position at 37.24 for a 3.63 profit.

If I hadn’t been impatient to get in and bought early I would have done much better.

That early buy also stopped me from adding to my position when FOSL dropped to 31. It would have made my position to large and thus put me at too great a risk. Next good support was at 26.

Dave C

Selecting a Trade 1

Selecting a Trade———– Part 1

Just how do we go about finding a great trade?

If you’re getting your trading ideas from friends, your barber or individuals you meet in your everyday life you are up the creek without a bank account.

The next place on the list of worst places to get trading ideas would be free financial chat rooms. Most of these are either the blind leading the blind or a pump and dump scheme.

The blind leading the blind is a room full of neophyte traders (also called green peas) getting ideas from financial websites, magazines, their brokers, etc. Some of these may actually be good trades but nobody in the room knows where the entry, stop loss or exit should be.

The very worst are the penny stock trading rooms. These may be chat rooms, email alerts, newsletters or whatever. The slower the notification system the worse they are.

Penny stocks are worthless stocks. That’s two words. Worth—less. Most often worth less after you buy them. The reason they are a dime or a quarter or even a buck is for a good reason. They don’t have a viable competitive product, terrible management, not enough cash to run the business or a myriad of other fatal business problems.

Yes, occasionally one will take off, but that is attributable to a change in circumstance within the company. If you find one of these before everyone else knows, please let me know and I will join you in that trade.

These are favorites of the pump and dump crowd. If a stock is only a dime a share even someone with only a few hundred bucks in a trading account will buy thousands of shares. Pump and dump is not limited to penny stocks. If you can’t verify a story through normal news channels it’s probably bogus.

If the pumper is highly followed all they have to do is say they bought and everyone else jumps in. Normally they heard a rumor, an employee told them things are about to pop, (blowup???) or as many reasons as you can dream up. Your buys, and hundreds or even thousands of others, drive the price higher, usually very swiftly.  While you’re buying the pumper is selling you his shares.

Brokers want you fully invested so they can draw their commissions. Fully invested means all your capital is in the market. They also believe that you cannot time your entries and exits and thus believe you should stay in the market even if the indices fall by 50 % or more. They seem to think that if the market is down 25 % and your account is only down 22 % you are doing well. They also are true believers in a diversified portfolio. Whether you are in an index fund (Dow Jones-S&P-Nasdaq or many others) or in a diversified portfolio (15 to 100’s of stocks) the broker’s primary concern are their commissions.

All this and more before you ever make a trade.

As a value trader I may have eight or ten positions open but there is no relationship to diversification.

In this series of posts I will attempt to explain to you the various factors I am paying attention to as I enter and exit a trade. These will not be real time trades but the entries will have been posted in real time.

2-Fundamentals

3-P/E relative to Market and Sector Performance

4-Strenght of Support / Resistance

5- Market / Trader Sentiment

5-Price Action / Panic- Euphoria

7- Sizing / Quantity

8- Scale in / out

9-Sympathy Trades

10-Patiences

11-Lists / Alerts

I would have liked to make this one post for the 10 separate categories above but at least three or four categories apply to each trade. I will try to make this as simple as possible.

O.K. Let’s take a look at a real trade. Bear in mind that I am a real trader. I make mistakes just like everyone else. The difference in this blog is that you get to see my mistakes. You should learn as much from them as the rest of the blog.

27-Oct-15 06:10 ET

SAVE

Spirit Airlines beats by $0.03, reports revs in-line; authorizes $100 new share repurchase program  (37.87)

  • Reports Q3 (Sep) earnings of $1.35 per share, $0.03 better than the Capital IQ Consensus of $1.32; revenues rose 10.6% year/year to $574.8 mln vs the $571.84 mln Capital IQ Consensus.
    • Adjusted pre-tax margin for the third quarter 2015 increased 560 basis points to 26.9 percent. On a GAAP basis, pre-tax margin for the third quarter 2015 increased 760 basis points to 26.9 percent.

Courtesy of Briefing.com
blog save 15 min 10-27-2015

This is actually a pretty good report. The problem seems to be folks are worried about competition lower the margins. My research tells me Spirit has the best cost structure of all the South American airlines. In my opinion, because of this they will retain their customers. Even with a small compression of the margins their growth will keep their earnings level to slightly higher.

Spirit Airlines (SAVE) has trailing earnings of 4.14 per share with about a 10 percent growth rate. At 34 bucks their trailing P/E (TPE) is 8.2.In a

blog save 120 min 10-27-2015

 

continually rising market I would have bought this at a 20 P/E, but after our little 2000 plus point correction in the DOW things have changed.

Folks are much more cautious and that translates into lower prices and P/E’s. Now I am looking for a P/E in the 8 to 10 area to see this as a value based trade.

In the 15 minute chart above you see SAVE dropping for two days prior to earnings. The folks were expecting bad news. I have no idea why it dropped after the report. But it gave me the perfect buying opportunity. You would be surprised at how often these opportunities occur.

All this is done in context of the history of the stock and the fundamentals. Take a look at the weekly chart below. SAVE has dropped from the 85 area to 34, a pretty healthy correction. What caused this was a slowdown in their growth two years ago in the mid 20’s to growth in the 10 percent area today.

On the 15 minute chart the circled area shows us panic, capitulation or weak hands getting out of a bad position or whatever you may want to call it. The extreme acceleration and heavy volume is a great indicator of a change in direction for the stock.

In the two days prior to the sudden drop you see a steady decline in prices on the 15 minute chart. I would never (who knows about never)  avoid buying any steady decline because it will probably continue for some time.

In the 120 minute chart above you see the fall from 44 to 34. The first two days were leading into earnings and final day where it hit 33.80. The final day is obvious capitulation. This is where a stock changes hands to stronger hands (willing holders). These folks are in at the right level and are much more willing to tolerate a small paper loss on their position because the fundamentals are on their side in this trade. I got in at 34.88 because of a bounce from 34.47 that I mistakenly thought was the bottom since I couldn’t believe it was going this low on that earnings report. The support level was 34.20 and I often see buying pressure build as the stock approaches the support level to the point that it never gets there.  I could (should) have added more at 34.20 or lower but felt I was OK in my position at that time.

I sold a quarter of the position at 38.00 for a 3.12 profit and then watched SAVE sink to a new low. Taking a good profit is never a bad thing. You should have a target sell price on a stock before you ever get in a trade. Once you’re in the trade you need to determine where you would like to sell some part of your position. I try to split the sell into 3 or 4 parts. I usually use the resistance levels on the chart or a 10 to 15 percent move.

When SAVE broke to a new low I was hoping (always a good trading strategy-NOT) it would hit the next support level at 32.10 but bottomed out at 32.78. I had orders in at 32.51.

Today SAVE broke through resistance at 36.87 but the 100 SMA (simple moving average) is right above here at 37.26 and will probably stop a further rise for a day or two.

blog save daily 10-27-2015

 

As you can see on the daily chart above I write everything I need to know on the daily and weekly charts so I have no doubt about what I based my decisions on. Being senile does make trading a little harder.

As you can see by this chart patience is definitely a virtue in trading. My ultimate target on this trade is 42.34. It may take 3 or 4 more weeks or even a couple of months before I finally reach my target.

I know that all the lines on the chart are confusing to new traders and even many old hands, but over the years I have found all to be important.

blog save weekly 10-27-2015

The main function of the weekly chart for me is to give me a historic look back at what the stock has done in the past. Some folks say the past makes no difference but I assure it does in trading.

The other useful tool on the weekly chart is the support and resistance levels. When you are in doubt about the strength of an S/R level  compare the levels on a daily and weekly chart. You will find that there are many fewer levels on a weekly chart than there are on a daily chart. I look at the levels on a weekly chart as the stronger levels, much stronger. You can do the same thing with a monthly chart. Those levels there will be stronger than a weekly chart.

 

I hope this is helpful. Good luck

Dave C