Today is the day that indexes are reconfigured. The market will see its heaviest trading day of the year and share prices will move in strange patterns. Some stocks will have large falls or increases at the end of the day.
Tread very carefully, today.
You are on the cusp of the trading range. Would you be unhappy making a penny and getting your cash out? You might want to think about that.
I don't always catch them before they happen either so don't feel bad. As to school, congrats. The total cost for four years, EVERYTHING including the parking tickets, will be $250,000-$260,000. Money well spent. I will try and be more specific in the future and maybe help you pay some of the costs.
My long time readers know that all my posts contain a Duke nugget..something hidden that is significant. Your job is to find them. My job is to make sure you don't. Think of it as a subplot in a movie. Before I went away I wrote A Midweek Math Lesson From The Duke. Here is what it said." SIRI closed at 2.89 on 12/31/12. It hit a high of $4.18. $4.18 minus 2.89 equals 1.29. The current close is 3.69. $3.69 minus $2.89 equals 80. 80 divided by $1.29 equals 62%. Say hello to Flabby, now that you see him."
So what was being conveyed. First the Fib rules have always been important in SIRI. They actually control the price movement of the stock. Second did you notice that I talked about a percentage OFF THE BOTTOM. Usually, people talk about a RETRACEMENT OFF THE TOP. Why did I do the opposite? I wanted to get a number in front of you. What number? 80 Why 80? 4.18 minus 80 equals 3.38.
So what really happened this week. JM bought his two weeks with the Barrons cover but with a bad Q looming defending the 3.66 line was untenable. The stock quickly descended to 3.38 which represents a 62% Flabby retrace of the yearly gain. When the stock hit 3.38, JM defended the price to avoid a margin call, the price rose to 3.41, the CBH attempted to break the 3.38 level a second time and when that failed the market technicians stepped in to buy. The CBH freed up another 12-15M shares and the game has begun again with a trading range between 3.36-3.62. This is the 3rd of the 5 down waves I predicted.
This week we should forget about LT projections. On WEN, the FED will issue a taper/no taper decision. I believe that will be market moving. Just before the Fed release I expect SIRI to be between 3.48-3.52. Since we just had the move down, I expect JM to defend 3.36 and the CBH to defend 3.62. I expect a retest of the upside or the downside depending on the decision. If the range holds, it will last thru the end of the year. If it fails to hold, then we will have to rethink our position.
I am sure that when you go to parties you don't discuss garbage dumps(GD). When I attend parties, GDs are one of the topics du jur. Obviously, we mingle with a different types of people. So what are GDs and why are they a hot topic at this time of the year.
Most people think that the rules that control accounting and tax treatment of income and expenses in corporations are black and white. That may be true but the way the rules are interpreted would shock you. Corporations have wide latitude in how they treat expenses and if they don't like a particular rule they may ignore it or creatively work around it. These questionable interpretations or creatively construed time bombs pile up in a garbage heap and then when we have a bear market or a company is about to have a bad quarter, the company dumps all the garbage out and cleans up the entire mess at once. Has SIRI ever done a GD. Sure, in 2009 it wrote off the entire cost of the XM acquisition and reported a $5B loss in one Q created the NOLs. Last year we had a reverse GD when SIRI reversed $3B in NOL and reported a $3B paper profit in Q2. Then you have the F6 that was just launched. If SIRI takes the most aggressive depreciation write allowed it will 15X the least aggressive method.
GDs are not done lightly. You have to review Exec Comp Agreements, bond indentures, suppliers agreements and bank loans to make sure your GD doesn't turn toxic when you violate some term. Nothing worse than a toxic GD. So why do I think SIRI might be planning a GD? Let's look at the BB agreement...the one no one understands. The LM BB was designed as a DISGUISED long term PUT. No matter how much SIRI falls LM is guaranteed $3.66 in Jan. and April. That implies that SIRI retained the ability to do a GD though the final decision would be made later in Dec. How will you spot a GD? SIRI will report almost no profit this Q and the stock will decline to an unbelievable price. That is when you want to buy because the GD has been cleaned up.
$2.98 is not the gap I am calling. You might want to go back and reread my post. Nice try. tho.
JM has so many irons in the fire it is hard to keep up. He is negotiating cable buyouts in Europe, TWC, a hotel buy in Ireland and a couple of spinoffs. Everything involves IMMENSE leverage. The guy doesn't deal in cash...ever.
One of the interesting things is that he could land all the deals within a 30/60 day time frame. This would put him at his highest leverage point in the past twenty years.
Did you ever wonder what could happen to all that leverage if the market and his underlying collateral took a 20/25% haircut in a short period of time. JM would find out about his true friends. My guess is he doesn't have any friends.
23.6% has always been an important number to SIRI. $3.49 is just another number along an endless continuum. That number will take some patience but I am certain it remains in the sights of the CBH.
As you said in WW's thread tomorrow has some significance. I guess we disagree as to whether 12/3112 is important. Obviously, you and I also disagree on the occurrence of chance events.
Nothing ever happens in SIRI by accident.
SIRI closed at 2.89 on 12/31/12. It hit a high of 4.18. $4.18 minus 2.89 equals 1.29. The current close is 3.69. $3.69 minus 2.89 equals 80. 80 divided by 1.29 equals 62%.
Say hello to Flabby, now that you see him.
Wish I was going to Vegas but this one is business. As for your Jets, I hope that the price action in SIRI today made up for the lose on the Jets.
So what was Barrons? My view is it was a trap but over the LONG TERM will turn profitable.
There is a three sided battle going on in SIRI. If you understand the battle you will find watching it more entertaining. You need to know everyone understands the other's strategy which makes it interesting. The players. JM's allies, the CBH and the market technicians (MT). JM's strategy is to defend the $3.66 line and to try to get the stock above the 50 DMA which is now at 3.82/3.83. The CBH are trying to crash 3.65 and will defend the 50 DMA. The MT will join whoever is winning which helps to explain the rapid sell off on Monday. Hooray for MT. JM's allies need real $ to buy while the CBH are shorting the bonds and don't need real $. Advantage CBH. JM & SIRI can plant stories. Advantage JM. The stock has stopped 3 times at the 50 DMA. 11/4, 11/15/11/18 and 11/25 with a negative MACD . Technicals favor CBH. JM gets another margin call at 3.35. There are stop loss orders lined up at 3.59, 3.54 & 3.49. Hit 3.59 and you get a waterfall effect. Hit 3.86 on volume and the MT join JM. Hope you enjoy the battle.
The Nov. auto sales will be announced this week. Forget SAARS. Look at the YOY numbers. Expected 4/5% increase. Early in the year it was always double diget increases. Smaller YOY bad for SIRI.
Last week Eagle posted his angst over my position and "conspiracy" theory. I understand my long time readers are upset and am aware of your concern. My investment strategy is based on the business cycle, SIRI's PPS and overall market conditions. None of these favor SIRI at the present moment. Your investment strategy is based on blind faith and undying love. At some point my views will change and you will see that I have covered my short and gone long. That is the beauty of visiting the Land Of The Duke. You never know when that will happen.
I will be traveling next week so I will see you in two weeks. However, my clone and his 200 posts will be here to entertain you.
A quick postmortem on Barrons Mon. I told you a few weeks ago that the CBH had lost a billion $, that they hated JM and would short SIRI into oblivion. i misjudged the INTENSITY of the hatred. They plan to short SIRI into negative numbers. If I was long I would buy some insurance so I didn't wind up like clueless. The Duke will continue to surf the waves.
Everyone waits with baited breath for the next analyst up/downgrade. But do you know what is really happening? It is a world of ACTIVE and PASSIVE DECEPTION and a language all its own. The analyst's report is not for retail. It is prepared for institutional clients who pay hundreds of thousands of $s per year for the report. Once it is circulated and the institutions have set their positions, the report is leaked to the press. If it is favorable, the public will come in and buy. This will cause the stock to rally and set a new floor under the stock. When the stock retreats, the institutions will buy everything available at the floor until the stock goes up.This protects their investment. This is one example of ACTIVE DECEPTION and you can make money. Retail was the launch pad for the move higher FOR THE INSTITUTIONS. Sometimes ACTIVE DECEPTION is used to trap retail. In the days leading up to the CC, one analyst raised his forecast to $5.80. Institutions and The Duke shorted (4.14) because we knew the CC would be bad. Retail got trapped above $3.90. What about PASSIVE DECEPTION? The Duke knew about the bad CC and tried to warn you. Every analyst knew it but no one cut their EPS or rating on SIRI before the CC. We all knew the rule on debt extingishment. YOU GOT SUCKERED.
The analysts use different language. In their world a hold equals a sell. The institutions know the code. Hence the sell off after the GS downgrade. Companies don't want retail to understand the code. If an analyst goes to sell, he loses access to the company, his invite to the CC and his firm will never get the next bond issue. Big $ losses.
Okay, so it went a little further than I expected. Remember Duke's first rule of investing. No one ever went BK taking a profit. I owe JM a double thanks. This is getting to be fairly simple. Next week should be more complicated. More on Sunday.