With Massey Energy (MEE) we bought a lot going into earnings late yesterday and now ONLY because the market is horrid and if crude falls a few bucks this will go right back to the low $70s, I am going to sell some of what I bought yesterday to lock in a quick 10% gain. If this market had any sense and saw the long term potential for the stock I would not do this, but hey oil is up slightly so its ok to buy commodities again -- unlike yesterday when you had to sell them because oil was down -- unlike Wednesday when you had to buy them because oil was down -- unlike Tuesday you had to sell them because oil was up. See how inane this market is? I keep saying this is a trendless market and the only people making money are people who did what I just did. Buy whatever is beaten down, knowing the market will reverse 180 degrees within 24-48 hours. And then sell it immediately. Because in the next 24-48 hours the market will turn another 180 degrees. And your gains will be vaporized.
It sounds pathetic but it is what it is. We'll lock in a few gains and once sense returns to the market we'll be loading back up on this name. I cut Massey Energy (MEE) back down to a 1.5% stake (from 2.5%) with sales in low $81s (we bought yesterday @ $73). Note - I did not sell off the full stake I bought yesterday because the story here is simply too good. I expect if oil drops a few bucks for Massey to lose its entire 10% gain, and I can buy it back in low $70s. Because crude oil prices determine the fate of all the world. Or so say the quant hedge funds. And they rule the market.
One day this pattern will break. And we can actually hold a stock for more than 24-48 hours before watching all our gains disappear. I'll be happy to be wrong if Massey just runs up and up and up as it should. If the stock can get back over $85 maybe we'll see a divergence in coal from crude, since a higher high will have been formed. We'll see - I don't go against a pattern until the pattern breaks.
I repeat - this current market only works for daytraders. No one else.
Long Massey Energy in fund; no personal position
10 comments:
Mark,
After a few days of struggling with the idea that the market is capable of punishing excellent fundamentals..I realize I am powerless to stop it. Now, I am decidedly bearish on energy/ferts until I see otherwise.
It appears the global slowdown story has legs. As long as that thesis is intact, we gotta expect commodity prices to pullback and that will take all coal and fertilizers with it.
I guess the real question is..whats the catalyst to spark new buyers in the coming months if global slowdown is going to be the story of the day?
Mark,
What do you think of the nat gas plays now - XTO, CHK? It looks like nat gas is stabalizing around $9; high volume in XTO recently on the 10 year scale; support is at $45. XTO is on an acquisition spree (now is a good time to buy, IMO) which is diluting shares, but I think it makes strategic sense. I'm also looking at VLO and FTO now. VLO purchased shares in Feb 08, which is a good sign. Buy on the cheap, increase s-holder value.
Cheers,
BD
I'm not having luck buying and holding much of anything. Nat gas is popping today but whats to say they wont give it all back Monday? Look at the charts the past week or two. They are range bound at best.
Until they begin to put together a string of success it is just a useful group for those who daytrade within a range (such as Bluedog) :)
I tell you what, I'm much more comfortable buying and holding a swing trade versus daytrading. But this market is ridiculous. Same reason you sold MEE today. We're playing in chop right now.
BD
Mark,
China faces power shortages. The government has asked coal producers to increase deliveries to power stations to help ease a sixth year of electricity shortages ... Which company will ship coal to china? Any best guess?
Its not really about who ships to China. BTU has Australian operations so will be direct beneficiery
You have to think of everything as connected
As China pulls in demand from say Australia, that leaves less for Europe, so Europe needs to pull in more from somewhere and they go to Eastern US
So its all connected - everyone benefits.
Just amazing to watch this stock lose almost all the gains as they day wears on.
Fundamentals are truly useless right now.
Mark,
Agreed.
Although, if the market continue to sell off the coal/ferts in the coming weeks/month(s), it could setup for nice buys going into the next round of earnings, assuming the fundamentals stay intact.
But for now, I think the majority of investors are extremely uncertain as to what the "real" bull markets are for the upcoming weeks/months.
Will dropping U.S. consumption fuel a slowdown in China? Will that slowdown spill over to coal/fert pricing power? I imagine those are questions that many investors are PROBABLY asking and will continue to ask as the quarter continue.
Mike - I understand that, But where is money GOING then. If you tell me the US I tell you - thats a failure waiting to happen as the economy recoils.
Restaurants? Homebuilders? Retail? What can you buy?
All the US industrials are thriving due to weak dollar and exports
Tech? Have you seen the results being put out there? Most are awful. Charts are terrible for leaders like Apple Google
I dont have a problem changing themes. But I need a new theme. I don't see anything workout outside of small and mid cap healthcare where many of these grow 12-13% and now have a PE of 25+. Just because thats where people are hiding.
So all these trillions are going to hide in the same 80 small and mid cap healthcare? Or financials? And call it a day for the next 12 months?
Seems incredulous to me.
Excellent perspective Mark.
I'll be looking around the beach next week to see if I can find where the money is hiding :)
In the meantime, good luck!
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