Sarge, I try not to attempt to read the daily moves, but Apple looks like its run up to the 200 dma has failed. I think it is going lower, maybe 105 or 100 where there is decent support. A 50% fibonnaci retracement would be (133-75 = 58, 58/2= 29; 133-29= 104). I'll see you there.
BTW, I think you have to use both fundamentals and technicals. The issue is that neither one tells the complete story, and reversals can occur.
Stagg, I agree with you that all fundamentals (not just reported earnings) contribute to the movement in a stock. But earnings are only released 4 times each year and there is much that occurs in between earnings releases. Even earnings guidance can change within a quarter. If stocks only moved upon the release of earnings, then they would be flat after earnings were released and digested by the market and not move until the next earnings release. Of course there are other factors like the economy, interest rates, political and other factors.
Technicals try to capture the supply and demand for the stock, which determines the price. They give a view as to the levels where investors are more willing to buy or sell. They can be somewhat self-fulfilling because many investors use certain moving averages (and other metrics) to decide where they will come in to buy or sell.
As to HTGC, you are correct that the earnings "broke" the downward channel. But we did not know that HTGC was going to report those earnings until they did. In other words, there has to be a change to the fundamental outlook before a stock can change direction, and the technicals tell you whether the market believes whether an earnings report was a real change, as opposed to just a relief rally. In contrast, PSEC keeps going down after each earnings (little rallies aside). To me, that means that there has been no fundamental change in the market's perception. People keep getting off the exit ramp on the PSEC highway because they still see congestion ahead. They get back on the highway for a bit, but then they get off.
Looks to still be in a downward channel to me. I see the top of the channel at $10.20 and the 50 dma above at 10.31 That wouldn't be a bad gain if it materialized, but who would have the discipline to take that gain and book it and not be greedy for more? Previously, the stock has broken through the 50 dma on rallies, but reversed back down -- from July 6 to 20 and then from July 27.
One can make money trading rallies in the channels (I don't try to play this game) but this is a high dividend stock and the retail crowd typically plays these for divies, which means they tend to hold too long trying to capture the next divy while the shorts pounce.
Stagg, there is a fine line between determining if a stock is really reversing course or if it is just a dead cat bounce. The only way to judge is from the technicals, not because the technicals are 100% predictive (Keebon can hold his reply for now), but because they can give a view as to the supply and demand for the stock. Think of it like a highway with many exits and on ramps. The technicals won't tell you whether there is an accident ahead or what caused it, but they might tell you where everyone is getting off or on. The hard part is trying to apply that going forward.
All patterns eventually are reversed, whether it is a stock that has been going up or a stock that has been going down (unless the company is going into bankruptcy). I have seen the bottoming out process unfold in many ways -- sometimes the stock goes sideways for a long time (usually meaning that everyone has sold and all future sales are bought up without needing a price decline to entice buyers), or sometimes there is an almost violent spike up, usually based on some new fundamental news, that breaks the impression that the company's fundamentals were deteriorating (I hope that is what is happening with HTGC).
With financial stocks like BDCs and mREITs, it is much harder to detect the inflection points in their underlying businesses, compared to something like a restaurant stock or energy stock, where some of the key factors are more readily viewed by us. So that is one reason why technicals can be helpful for these stocks. BDCs and mREITs have a lot of dividend chasing, retail investors who generally don't pay as much attention to technicals, so they are loathe to sell a stock with a big divy that starts to turn down. They keep hoping for a reversal and that keeps them "trapped" in the stock, even when it bounces. Better traders learn to sell the bounces. I continue to re-learn this lesson (although I am getting a little better).
As for PSEC, it looks trapped by the 50 dma.
Sarge, on WMC, check out the seeking alpha article on July 31 and read the comments of Steve Fulton. Steve posts on the WMC board as gracieblackbelt and he was the former chief investment officer of WMC. mREITs are incredibly complicated and there are plenty of smart people (not me) with experience in this area.
Looks like we may open down big on news of China's devaluation. Remember that currency moves drive the market. Gold getting a bounce on the devaluation. Who said it was dead and had no purpose as an investment? Anyone who believes that the world's central banks have a handle on what ails the economy and won't print any fiat currency to try to address these problems, please raise your hand.
The Fed is not raising rates in Sept. If they do, it could be a huge mistake, not because 25 bps matters to businesses, but because it can roll the currency markets.
But don't think because rates will not be raised that it time to pile into all high yield stocks that have declined recently. Many of the high yield mortgage plays made money when their subprime assets soared in value. A softening economy is not necessarily a good thing for credit-sensitive assets.
bob, there's a profile of Wes Edens on the front page of today's WSJ. I hope this is not a sign of a top in the market and the value of NRZ.
Well is Cooperman not a trader because he certainly was listening to the cc. How do you know what most traders do unless you worked at several different shops and know their practice? Are you lying or are you just guessing with this "opinion?"
My comments are my opinion, but they are based in part on the historical conduct of this management. Again, review the disclosure on ATLS projection of the distribution after the TRGP merger announcement to see if there is a pattern of overpromising when they should have known better.
The part about Cohen not knowing what the board will do is bs. Anyone who has ever worked at a publicly traded company (and I have) knows that management proposes to the Board what they think the distribution should be and they argue for their position. Sometimes Boards will object, but only when they have strong outside directors. The GP of ARP makes the decisions on ARPs distribution. ARP Management is the Board of the GP.
And reasonable minds can differ as to why this is. Is it because of profit taking by those who bought at $2, which would be normal. Or is it because people are taking what may be the last exit?
Compare the chart of ARP and something like EVEP which has had a similar decline (except EVEP doesn't have ARP's debt issues. EVEP just reported today, so you need to see how it reacts tomorrow.)
There is much resistance on the ARP chart at the current level and all the way up. Stocks that are breaking through resistance levels, usually break through and then retest. If they stay above the broken resistance, they go on to test the next resistance level. Those that can't hold become short targets (again).
There's still nearly 2 hours left, but ARP is turning negative. To me, this means that no one believes Cohen comments on the call. The charts don't lie.
jr, have you looked up each of the filings to see when was the last time mgt actually used their own money to buy shares? You have to go back to 2014 to find the last time Ed Cohen bought shares with his own money and that was a measly 20k shares (and great timing at that, with the price at $20). Schumacher converted preferred shares into common, and that explains his July 2015 Form 4 filing.
It is a rookie mistake to just read a yahee compilation without diving deeper into understanding the difference between buying shares with your own money and reporting grants or option exercises.
And don't even try to mention the excuse that they were in a blackout period. If the stock is such a bargain, they should be loading up. In fact, all of their pay should be in shares.
Bob, I haven't looked at STON's financials, but I caution you not to just accept Management's rosy picture in their earnings release. With any company, you have to dive deeper and look at the debt, when the debt comes due, the debt covenants etc. and how much cash they have etc.
The previous knock on STON was that they were dependent on acquisitions funded by debt to keep their revenues up and their ability to pay distributions. An 8% yield may not be a high enough yield to accept that risk.
Good luck and be careful.
Well I will answer the comments about the distrust of management. First, a fair analysis of any MLP management can't hide by comparison to other MLPs. The model of MLPs is to hedge cashflows so that they can pay a sustainable distribution. That involves not becoming overleveraged or not hedging enough, and it is no excuse that other MLPs were doing that. Similarly , overpaying for assets at the wrong time, is not an excuse just because others have done so, and are now paying the price. If the primary purpose for e&p MLPs is to provide a sustainable distribution, then those must be the primary goals. We invest because we are assuming that these guys know the supply/demand balance and by studying the forward curves, know what the future prices are telling them.
Now to the specifics for the distrust. First, management owns almost 0 ARP shares. Why don't they put their $ where their mouth is. Second, with each of the ARP, APL and ATLS companies, Cohen projected higher distribution growth that failed. You have to look at the history. They cut ARP's by 50% without warning about the debt problems. APL faired a little better, but they overpaid for 2 systems there and the dist. growth tapered off. With ATLS, I have repeated the history in several posts on both boards. I'll do it again: At the time of the TRGP deal, they projected a dist of $1.35, then two weeks later it was reduced to $1.10, then they did the reverse, then it was reduced to 55 cents, then it was suspended for Q2 and then suspended to 2016. No wonder Cooperman was upset on the conference call.
If you really don't know what is going to happen with the price of oil and NG, mgt should say that upfront. They shouldn't hide behind the protection of legal forward looking statements. Remember, they said in an SEC registration statement that ATLS would pay 55 cents and then TWO WEEKS after that filing, they suspended. What happened in those 2 weeks that surprised them?
I will answer the former question. The reason is that some of us still have some shares and have ridden this down from all the promises that mgt made that you mention. Asset sales? They couldn't sell the Utica when oil was over $100, what makes you think they can do it now. They can't even do a jv. Eagle Ford and UEO were the last sales probably for awhile. Acquisition? Nothing. Other jv's. Nothing.
The cash left after the UEO sale was supposed to be closer to $75 mm (just look back at the presentations) and they now reported $60mm. Where did the other $15mm go?
How's that been working out for you so far? Stock down from $20 to $4 while you collected $6 in distributions. Distribution cut 50%. Debt pushing the 5x covenant limit.
Enough of the name calling. There can be a difference of opinion. If you believe you are "winning" because you collected $6 while the stock fell from $20 to $4, good luck with that line of thinking.
Ken, many of us our trapped longs in ARP who bought when things were better in the sector. Actually, many of us are recipients of spin off shares. ARP shares were spun out in the $20s and while they grew the distribution initially to near $2.40, it has now been cut 50%. Meanwhile the record is clear that they overpaid for some assets and their timing was terrible. Those are management errors.
Second, there was absolutely no discussion of the debt covenants before the 50% distribution cut at ARP, but many actually delved into the documents to see that the debt covenant ratio made it impossible to sustain the former distribution level. You probably don't even remember how ATLS projected distributions of $1.35, then 1.10, the 80 cents, then suspended for Q2, then suspended to 2016, which Cooperman pointed out on the conference call. But I digress.
The issue is not that the debt is due until years from now, but there are covenants that can impact the distribution (just as it did in March).
True, these issues are not solely affecting ARP as many of the e&p MLPs are dealing with the same issues. MLPs were supposed to have hedged their cashflows so that movements in commodity prices would not affect their distributions, yet most MLPs are cutting. Why is that?
Finally, you say that no one can project oil and gas prices out several years, but then are confident that LNG exports are going to rescue the NG industry. Seems you just contradicted yourself there.
First, one can be long a stock and still be critical of the (mis)steps that management has taken. For example, many of us have held on way too long with EVEP because their management promised a sale of their Utica assets for several years which was supposed to be worth over $1billion (some estimated over $40 per share). Managements screw up all the time.
Second, the stock price speaks for itself. Yes, many of us did make out on the sale of APL but you are forgetting the part of the story where they had promised distribution growth and did not deliver, not to mention the overpaying for midstream systems in south Texas. APL was sold much below its previous highs.
Then you have to look at the history of ATLS and ARP.. ARP was spun out in the mid $20s, and despite raising their distribution, they also ended up curbing distribution growth prospects. I have repeated the overstatements if not outright lies about ATLS distribution projections after the TRGP deal. Did you not see Cooperman's remarks to Cohen in the conference call about how Cohen projected the ATLS distribution at 80 cents and now it is suspended for how long? Thankfully I too sold ATLS at $32.
As for the bounce up in ARP last week, if you bought in the $2s, then congratulations for the nice trade, but let's not declare "mission accomplished" just yet. See if the stock gets back to $5, or $7 or $9 (nevermind the level where is was spun out) before you declare victory.
First, there is no requirement that MLPs have to pay out 90% of income. You must be confusing with REITs. The requirement for MLPs is that they derive 90% of their income from certain types of assets, generally in the natural resources area, but that has been expanded through private letter rulings.
Second, the great debate is whether they will be able to continue to pay the distribution that they are currently paying. They are hedged, but not 100% forever. They don't have a lot of room on their debt limits and issuing equity is too expensive. They keep saying that they are working on strategies, but that could be all talk.