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Underexposed - American Stock Journal (long term)
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Underexposed - American Stock Journal (long term)

  #11 (permalink)
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regional banks

I am going to forget about First Republic Bank San Francisco California [NYSE:FRC] .

too expensive for the potential return for me.

MUCH more choice... and good choice in the regional banks. I used Return On Investments(ROI) of >25% and LTD/equity of <0.50 in several regional bank scans and came up with several (19) choices that look pretty good ....

the only sacrifice here is volumes... I specified an average volume of only 50,000 shares per day minimum. Now from a day trader this is probably not acceptable as there is not enough action to guarantee a sale when you want it , Day traders want their orders executed RFN for obvious reasons.... but for long term it is far less important.

Here are the choices that need paring down

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these are not in any particular order other than by volume for each region

this will take a day or so to look at to get down to the best 6 choices by ATR and then 3 by FA for final TA analysis

I will have them ready by Monday.... no rush right now.

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  #12 (permalink)
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well the process went faster than I anticipated...or maybe I am just getting better at doing it.

If you compare my selection program in this journal compared to the one in my Canadian Journal, you will see that I have formalized it a lot more here....and I like this method a lot.

Using this method I am more objectively paring down my choices using a combination of FA and TA. I have always believed the marriage of the two types of analysis work well together saving TA for the final selection but instead of wasting my time looking at bad prospects, my final selection is based on best of breed...at least as I see it any way.

I probably could improve my FA... I am pretty simplistic looking at debt and ROI but as an initial screener it salts out the really iffy stocks pretty quick. I really like the ATR comparisons over 5 years down to YTD portion of the testing... fast to do and so revealing in result. Ideally I want to see the ATR increase from 5 year to YTD... the worst would be the reverse as that would mean to me the company USED TO BE a good company.

Here is the table with the regional banks that made the second cut....I could not with all conscience reduce the number to 6 choices... there were too many decent choices... I could only reduce it by roughly half.

I included the comparison to Money Center banks.... frankly these don't impress me at all compared to the regional banks


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Look at the Annualized total return (ATR)... in the YTD column the Money Center Banks were single digits in the ones that made the first cut and some were negative returns ... by comparison the Regional bank second cut are mostly double digit returns...all of the negative returns were screened out in the second cut.

The 5 yr ATR for the Regional banks clearly out-strip the Money Center banks as does the Return on Investment (ROI)

This is a lot of work for me but it is instructive too in that in order to do it I had to develop a more formal procedure. Were I looking for Canadian banks I would have had a total of maybe 15 banks with global/regional banks combined... far fewer choices... as far as banking institutions goes we have a lot of local Credit unions/Caisse Populaire but these are not listed on Canadian exchanges.

Hope you find this selection procedure interesting.... I am open to suggestions for other selection criteria...especially on the FA side.

Happy New Year... may 2015 be a good one for all of us.

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  #13 (permalink)
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Regional banks after FA


well this analysis method I worked out is getting easier and easier and I am very pleased with what has salted out before doing TA for the final decisions.

Here are the final choices in Dark green

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Actually all of those in green may have merit for consideration but I have to draw the line somewhere

I sneaked a peak at the P&F charts for all 4 of those dark green choices....the final decision will be really tough... and that is a good thing.

I was daunted at first when I was faced with hundreds of banks to choose from but not so much now.

It does not surprise me though that in 2008-2009 that some of the banks in the USA failed... some don't look all that stable as I see them in my brief look now. We have a lot fewer choices in Canada (about 10 total - regional and global) and they are reasonable regulated... they are not allowed to get as "creative" in their products as seems to be allowed in the USA... I personally like it that way.

I will make my final choice here in a day or so....

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banking industry....no choice made

well I don't like any of the US banks....Money center or Regional though Regional showed promise.

here is the TA


1. P&F Charts


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All of these charts show prices are falling away from resistances.... no breakthrough in sight.

Western Alliance Bank [NYSE:WAL] shows some promise in the future in that it is traveling up a trough. Normally a double top breakout is quite bullish...not so this time.

Independant Bank Corp [NASD:IBCP] is just the opposite...we are following down a declining trough...tried to break through the resistance and is falling back.

Enterprise Financial Services [NASD:EFSC] this is a little better...a long recovery since Oct but looks like it will peter out before it reaches the resistance at $28.50

Seacoast Banking Corp of Florida not bad but its recent run in Dec has ended and now has fallen to a test of its support... will the support be strong enough???


2. Trigger Charts


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Well the new year is starting bearish for all. the charts for each is quite similar for all... cresting BBwidth, as well as for Slow Sto and MACD...just the beginning IMHO. All have reached for the 20daySMA so we are talking consolidation after a run.


3. Sentiment Charts


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same here ... all charts showing bear...the worst one is [EFSC] then [IBCP], [SBCF] and [WAL]... in that order
The ADX DI+/- in all shows a bearish cross pending, the RSI in all but [WAL] is declining...WAL is flat hence neutral.


3. Ichimoku Charts


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the CCI in all cases has turned mildly bearish, the only decent OnBal Vol is for [IBCP]. I did like the Ichimoku for [IBCP] until today but that huge drop changes that attitude... [SBCF] and [WAL] look decent from the Ichi POV

Conclusion

These stocks are only good for a watch....none look good for a long term play or swing at this time.

I spent a long time on this but came up dry.... I am starting to understand the difficulties of dealing with the American market. I don't understand it as I do the Canadian exchanges.

good trading

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  #15 (permalink)
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I have looked at the charts of the other potential banks in that regional bank list and all have similar P&F charts.

in addition to the ones I listed in the previous post I sort of like, the following:


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See what I mean....they have all risen in tandem to their respective high levels and then oscillated up/down for about a year.

I have to wonder since these stocks have been a good long term hold since 2009...have they run their course and on the downturn...or are they staging themselves for another attempt at breaking through their resistance levels.

I would not touch these stocks at the moment since there is no indication of their direction and the clues for their current direction are bearish as I described in the previous post. I will keep this DD and refer to it periodically to see if they assaulted their resistance and broken above....but it is GoodBye for now.

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  #16 (permalink)
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well, I am rapidly discovering why I have not been successful in the American market place.... there is a huge difference between Canadian Stocks and American stocks.

In Canadian markets stocks with prices in the $10 - $50 /share prices are mature stocks. In fact if you want to find good stock opportunities, you can find them in the $1 - $5 level.

Not so for American stocks, I now understand why they see $5 as penny stocks.

I have definitely under capitalized my American portfolio and hunted in price ranges suitable for Canadian stocks but absolutely useless for American stocks.

I decided to see how many stocks were available for each price range for each exchange


Price .............. TSXV ......... TSX ..... Total ....... % .....|... AMEX ... NASDQ ... NYSE ..... Total ..... %

>$50 .............. 0 ............... 54 ......... 54 ...... 2.0 ....|..... 17 ......... 319 .... 1017 ..... 1353 ..... 21.5

$10 - 50 ......... 6 ............. 246 ....... 252 ...... 9.3 ....|... 115 ....... 1201 ..... 2155 ..... 3471 ..... 55.3

$5 - 10 ........... 5 ............. 106 ....... 111 ...... 4.1.....|..... 45 ......... 362 ....... 226 ...... 633 ..... 10.1

$1 - 5 ........... 81 ............. 196 ....... 277 .... 10.2 ....|... 215 ......... 381 ......... 99 ...... 695 ..... 11.1

$0.01 - 1... 1769 ............. 244 ..... 2013 .... 74.4.....|..... 49 ........... 68 ........... 7 ....... 124 ... ... 2.0
.................................................... _____ ................|................................................. ____
Total ............................................ 2707 .................|................................................ 6276

Doing this bit of analysis between the two countries is an eyeopener to me.

In Canada, I have found stocks over $5 to be reasonably stable... there is also opportunity in the $1 - $5 range as these are emerging from the approximately 75% of Canadian stocks that are $0.01 - $1.0 which we (or at least I) consider penny stocks. Even there if you are careful in your FA and TA you can find opportunity in this range as many O&G and Mining start-ups are in this range.

But it is obvious that stocks under $5 do not get a lot of attention from serious investors as they make up less than 15% of all decent stocks (of course if you want absolute crap in American stocks you look in the OTCB and Pink markets)

My normal hunting ground for 75% of my holdings is in the $0.50 - $10.... this the price range where the majority of the Canadian stocks lie.

So unknowingly I assumed the same hunting ground would be equally good for American stocks and have been shocked at the amount of crap that I found there when compared to Canadian stocks of the same value

This has been a revelation to this Canadian Investor

So from now on I will concentrate my search in the $10-$50 range and MAYBE up to $100.

In Canadian stocks I like to make purchases in lots of 500 - 1000's blocks. I won't be able to do that upper range... I will have to get used to that.

This is also why I see IPO's of dicey American stocks start in the $30-$40 range they would not be noticed much. I used to laugh at stocks like Facebook that IPO'd at $44 and fell to $18 in weeks.... what do you expect from stocks with no visible means of support??? A year later it showed some so it climbed up. I see it often with USA energy companies too.... IPO's sky high where in Canada they would rate an IPO of less than $1

Yep, at $10,000 I naively under capitalized that portfolio by a mile.... it was only a mad-money account and I stopped being serious about it early after many failures.... maybe someday I will recapitalize that account with a decent amount..... NOT now though as I take a 15% hit on the exchange... and obviously I am not ready for that market place.

So much to learn {sigh}

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  #17 (permalink)
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I guess this will sound funny after my last post but I found a decent play less than $5.

Radiant Logistics [NYSE:RLGT] at a current closing price of $4.35/Share

I won't go through the details of how I found this one as you should have an idea of that by now

here are the quarterly financials

Stock Market Quotes | Company Financials, Financial Information

the company has no debt, decent revenues, makes money and their Annual total Return is excellent.

Here is the TA


1. P&F Chart


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broke through a diagonal resistance and headed into the stratosphere ... upper target unknown except for the P&F target of $5.15 which I take with a grain of salt....could be more or less {shrug}


2. Trigger Chart


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Very nice...caught it at the beginning of a bullish run... Note the rising Slow Sto headed for 80 ... the MACD headed for higher high and finally the BBwidth showing some movement... on the last day you see the price spiked to $4.45 and pulled back... this is normal as it was far above the upper BB... you can see this is normal for this stock on bullish runs in the green circles.


3. Sentiment Chart


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this is a bullish chart.... the CMF is reaching for higher levels, the RSI has a pos slope over 50 and the ADX DI+/- is bullishly diverging again



4. Ichimoku Chart


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After using the tops of that green cloud as a support for a couple of months the price has soared...Blue line pulling away from the red (green circle)

The On Bal Vol and CCI are definitely bullish.


Conclusion

Well the FA and TA indications are full on bullish no signs of a bear anywhere.

I will place a limit order to Buy 4000 shares of Radiant Logistics [NYSE:RLGT] at a price of $4.35 on Monday


I was wondering if I would ever find something decent....

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This was an interesting screening process.

It's been a very long time since I traded stocks, but I am very familiar with the difficulty of finding something, out of the enormous number of possible candidates. Frankly, this process seems as good as any, and its value is, in part, in being systematic... you know at the end why you picked what you did. Oddly, I'm not sure that's always true when people select a stock. (I'm not sure why people pick what they do, either....)

In the past, I would usually start out looking at stronger industry groups, then narrow it down within the groups to the better candidates and then look more closely at their technicals. This gives a quick initial top-down screening, and it quickly cuts down on what you have to look at. There are, of course, many things that will work, and what matters is that, at the end of the search, you have something that meets your criteria.

It will be interesting to see how your new portfolio is fleshed out, and how it does over time.

Bob.

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bobwest View Post
This was an interesting screening process.

It's been a very long time since I traded stocks, but I am very familiar with the difficulty of finding something, out of the enormous number of possible candidates. Frankly, this process seems as good as any, and its value is, in part, in being systematic... you know at the end why you picked what you did. Oddly, I'm not sure that's always true when people select a stock. (I'm not sure why people pick what they do, either....)

This is true. I don't think much thought is put into what stocks are being selected for trading. Of course, the reasons vary with the objectives of the investor.

I would not use this approach if I were a day-trader. Actually, I don't know how I would go about doing so other than the fact I would look for something that was very volatile on a daily basis... I would care less about fundamentals since I would not have owned the stock long enough to care.

But here, I want to buy stocks that will be owned for months, if not years. You can see that in my fantasy Canadian portfolio where I have 4 stocks there now that are 6 - 10 month holds now. Enbridge Income Fund [TSX:ENF] has blossomed now to a 35% gain so far with an excellent monthly dividend which if I factored those gains in would make it a 40% or so gain. I have it in 2 of my real portfolios since July because of its performance in this fantasy portfolio.

If you are looking for such long term holds ... You cannot hold crap ... That may sound obvious but not many have the tools to sort out the good/bad/butt ugly. That is why I like to understand fundamentals better... to figure out that good stock.


bobwest View Post
In the past, I would usually start out looking at stronger industry groups, then narrow it down within the groups to the better candidates and then look more closely at their technicals. This gives a quick initial top-down screening, and it quickly cuts down on what you have to look at. There are, of course, many things that will work, and what matters is that, at the end of the search, you have something that meets your criteria.

This formalized process is a recent development of mine. I needed it because I am unfamiliar with the US markets, as can be seen in a post a few days ago, I now know that the Canadian and US markets are vastly different. I always knew that the physical makeup of the markets were different (more commodities in O&G and Mining in the Canadian market, more big business and Hi-Tec in the American) but what astonished me was the pricing profile!!!!

It is no wonder that investors in the USA treat $5 stocks with contempt and most of the sub-$5 stocks are crap in the American market...a cheap stock for them basically starts near $20, whereas in Canada that is an expensive stock. Believe it or not I have a stock worth currently $0.28/share in two of my real portfolios. and this is the second time in 10 years I have owned it. The first time it went from $0.15 to $1.20 when the ore body was discovered (it is a lead, zinc, copper mine now) but it takes 5-10 years to become a producing mine so interest fades for a long time. But I am back in at $0.20 - $0.24 /share and it is JUST emerging as a producing mine.... at $0.28/share I have a nice gain so far and if the demand for base metals increases I will do very well on that stock again.

You can find such stocks in the Canadian market place if you are good at reading fundamentals.... but in American stocks I have not found a single one under $5 in the O&G and mining sectors worth holding and basically gave up on that real portfolio ... until now that is.

you have such a range to contend with in American stocks within a sector. We have similar sector breakdown but relatively few stocks to sort out...after 10+ years of sorting through them I am pretty up on most of them and can make decent choices (though I have bought my share of Canadian crap over time too.

I wish we had a screening tool like Fin-Viz.com for Canadian stocks. It makes my searching pretty easy now... by setting ROI and LT Debt/equity, choosing an industry and seeing what salts out. I play with the ROI starting at at least a positive number or zero (try it...it is amazing how many stocks have a negative ROI... Why would I want a long term stock that makes no positive return???) same with debt... there should at least be low debt to equity but when it approaches 1:1 is this a good long term prospect... I don't think so.

BTW I DO like some debt in an O&G or mining Junior.... if a stock is a start-up operation but no debt... are they serious about the company??? I don't think so.... but as a start-up becomes a producer then that debt should decrease as revenues increase...that is a start-up I like long term.


bobwest View Post
It will be interesting to see how your new portfolio is fleshed out, and how it does over time.

Yes, it will be interesting. I imagine I will have teething problems at first here.... the Canadian Journal on this site has a portfolio that has settled in nicely though I recently stopped out of Badger Daylighting which is too bad as that is an excellent company that I have been interested in for 10 years.... it will rise again when this oil fiasco sorts itself out.

It is difficult for a Canadian to have a US dollar account because right now it would cost me 15% in exchange to transfer money into it.... But this exercise is good as By the time when our two dollars reach parity I should have a good idea what I want to do with that account... or who knows I may find something that can boost the few shekels I have in it now and make something decent of it.

Good trading Bob....always enjoy your comments.

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Underexposed View Post

Why would I want a long term stock that makes no positive return???) same with debt... there should at least be low debt to equity but when it approaches 1:1 is this a good long term prospect... I don't think so.

The joke about Amazon for years was that someday it will actually have a profit. It was regarded by many as a ridiculous company, pouring money into a big hole with no profits for it.

Someday, it did....

People were willing to buy it based on their idea of its prospects, when it had done nothing but lose money. That doesn't mean this is, in general a good idea -- many companies seem to have good prospects at some point, but few prove out in the end.

But there was a reason some investors liked it, and it worked out. No particular point to this, other than there is more than one way to slice things, and it depends on what you're looking for.

Bob.

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