Stagg, I know I sound like a broken record but that's why you have to use both fundamental analysis and technical analysis together. Investing performance depends on buying the right stocks, but also at the right time. The "pros" will say that the average investor cannot time the market, but what tools do they have that are not available now to the average investor? To me, it's just another ploy to keep investors chained to fee-seeking advisors. However, there is much to learn from the "pros" and now there are plenty of outlets to get their varied opinions.
I spend a lot of time posting that many stocks that are recommended on these boards seem to be overbought and the record is pretty clear. However, I have not been very good at predicting bottoms once a stock starts a downward channel and have bought plenty of "falling knives" in my time. We have seen that once a stock turns down, like SDRL did, it typically bounces up to the downtrend line, and that's what SDRL did. The next support seems to be at $32 and below that at $29 from way back in June 2012 from where it began a nice run. There's nothing wrong with "averaging in" to a stock and there are some advantages if the stock pays a good dividend (but note that if the dividend is several months off, that will not be much of a bolster to the stock until it is about 4-6 weeks out from the next payment). It can seem stylish to be a "contrarian" investor and buy out of favor stocks, but sometimes there is a time lag in the transformation of a stock from overvalued to undervalued and unloved.
Gambler, the search for yield has been going on since 2009 so it is nothing new. Depending on what stats you want to believe, there is a perception that the economy is getting stronger and that perception will put added pressure on rates to increase. If rates stay steady or decline, I see the case for mREITs, but I see the risks if rates move higher. We saw in the spring how quickly mREITs can turn south. Right now the 10 yr pulled back from its move to 2.8%, but it is holding the 2.6% support line. But each move up was higher. It looks like there is resistance around 2.82% so we could ping pong between those two levels and you could do well with mREITs. I still have some residual MTGE which should still be under book value.
Stagg, When we talk about interest rates rising, that could mean either the 10 year Treasury rate rising or short-term Libor rates rising, or both. Borrowing costs are tied to short term rates like Libor, which is different from the Fed funds rate that the Fed controls, but generally the Fed funds rate influences Libor (even though all of these rates are manipulated). The 10 year rate is used to value mortgage assets so a rise in the 10 year rate is negative for agency mortgage valuations which would hurt agency mREIT book values. Non-agency mortgages are credit instruments which trade at a spread to Treasuries so a rising 10 year is often a sign that the credit is improving, and nonagency mortgages tend to perform better than agencies in a rising rate environment. The same goes for commercial mortgages and real estate properties. Because rising rates usually means that the economy is improving and demand for credit is increasing, that translates into increasing property values which makes it easier for finance firms to lend. So rising rates are good for nonagency mREITs, property REITs and BDCs. However, the downside is rising rates bring competition, which initially results in forcing asset prices up as more competitors bid for assets, but also leads to shrinking margins and eventually worse and worse credit underwriting (i.e. chasing yield at the expense of credit).
Of course, there are many different subsectors of REITs (commercial, industrial, multifamily, malls, medical, hotels, speciality etc) and the dynamics of each can be different.
One other point. BDCs are somewhat dependent on the stock market for exit strategies for their portfolio loans which can be accompanied with warrants. So a bear market could hit BDCs more than it would hit property REITs. I have not studied the correlation between the stock market and property markets, but sometimes money can flow out of stocks into property which would keep property REITs up.
Gambler, you have your facts mixed up. KMI is Kinder Morgan and owns KMP. You are thinking of CVI. 5% for a GP is higher than comparative GP's.
As for mREITS, they have had a nice move, but do you really think that that move is going to continue if the economy strengthens and the 10 year increases? If you think the economy will continue to weaken and the 10 year will decline, then I understand your bet, but trends change all of the time.
Out with dividend guidance of $1.72 which is an 8% increase. While the growth is less than the double digits that other GPs have (like TRGP and WGP), this stock has been beaten senseless by Barrons and is scraping the bottom of its downward channel. I don't own it yet but am considering it.
You could be on to something here. The refiners can be volatile, both up and down. Not all of the stocks mentioned have the same chart pattern -- some look to be going up and some are not. Does that mean that the ones going up are going to benefit and the ones that haven't moved are not, or does it mean that the market is overlooking the ones that haven't started to move up?
turbo, I agree that the market seems to NOT be discounting the recent news in Ukraine and China as well as it had previously discounted all of the other distractions of past periods (e.g. the debt ceiling, tax cliff, etc. etc.). On the other hand, the bounce off of S&P 1737 was pretty strong and quick, so a pullback is normal. The 50 dma is at 1829, so even if we break below support at 1840, there is another support level below. That 1829 level corresponds with the fibonacci 38.5% retracement of the move up from 1737 to 1880 (1880-1737=143 x .385 = 55; 1880 - 55 = 1824). That may look like voodoo to most, but the fibonacci numbers are followed by most technicians so they can be self-fulfilling.
Lots of the stocks followed on this board had nice up moves followed by pullbacks which is to be expected. The trick is determining whether the moves will continue higher after this resting period or whether those moves were flameouts.
I flipped through it quickly to see the reserve report. I could be wrong, but the PV-10 is in the $6 range. Let's see if someone posts an analysis on seeking alpha. I sold out of my puts a couple of weeks ago when it appeared the stock was not dropping and reversing up. May have to reconsider. There may be a disconnect here in that the news about higher nat gas prices, inventory, cold weather etc. combined with the upcoming dividend run is keeping the price up. But we know from experience that one negative seeking alpha article or brokerage firm report could knock a few points off of this easily. Long holders beware and consider adding some protection.
I did not see a separate press release on the dividend announcement and had to look through the earnings release to find it. Their i.r. person should be reprimanded for not doing a separate release. Do they not know that the HFT algorithms pick up headlines, not to mention hedge funds and everyone else looking for positive news. Why bury it in the earnings release? I hope the conference call is more positive. Besides possibly being a negative reaction to the loss number that was in the earnings release, the other negative could be that they have only closed 1 of the acquisitions in this quarter. I would like to think that the snow contributed to the delays in the closings and that there is other positive news to come soon, why else would they draw the accordion feature of the credit line.
As for the amount of the dividend being a disappointment, I'm sure others were hoping for more, but the initial amount should not matter as much if they give guidance backed by acquisition completions that lead investors to see the amount growing over time. You can put any yield number on it to get to the stock price you want to get to, but it is much easier to do so if there is growth.
Sarge, the double top on SDRL is simply two peaks at the same price. It is easily seen on the chart in the Feb and March period. Now the limit of technical analysis is that when the second of these double tops was forming, we did not know whether it was a second top, but now that it is there, that will act as substantial resistance. In other words, when SDRL was bouncing back up, the fact that it did not take out this $36+ level means that it was a good bet to go lower. This technical analysis is tough and I don't have a good enough handle on it to base my investment decisions on t.a. alone. Everyone knows by now that the one rule that I go by and that has proven to be very accurate is not to buy a stock with an RSI over 70. The list is growing of all of the stocks mentioned on this board that hit RSI 70 when they were mentioned, and subsequently sold off.
The GLNG chart is almost straight up, leading me to believe that the move is primarily in response to Ukraine and its POTENTIAL gas shortage IF Russia should turn off the spigot. Stocks that go up vertically usually come back. They need another catalyst to continue upward.
Gambler, SFL has now retraced nearly all of the big move up from late February that took it over the upperbound of its trend. This is why I don't chase stocks hitting RSI 70 levels. We will see if it finds support soon. On SDRL it seems to be going lower again after the strong defense that was mounted when it reported earnings. The downtrend line projects lower and it has a double-top just over $36. The smart money that that bought the earlier oversold condition are probably gone now. Wonder if we get a rally into May so that we can sell in May and go away.
GPT declared a first quarter divy of .035 per share. I've owned this since last year after reading a s.a article that detailed the transformation of the company from a finance REIT into a triple net lease REIT. It has taken some time to pay the accrued preferreds and now they are back to paying a dividend. Based on a previous experience with an industrial REIT, First Industrial, I bought GPT expecting that the market would price the stock at a 2% yield to begin with because of the reinstatement of the divy and potential for growth. That would be $7 based on an annual 14 cent dividend. Let's see how it goes.
They will probably try to grow the divy over the year. Let's see if market prices it at a 2% yield similar to other REITS (like FR) that restarted their divies.
Sarge, yes I think the BDCs can bounce back, but as others mentioned, this volatility may last longer than a couple of weeks. That's why you have to look at the charts to see when the chances are greater that the stocks may have reached support.
But be careful. Whenever any sector gets too popular (which anecdotally can be measured just by how many different posts that are now mentioning BDCs, their dividends, and their great (past) appreciation -- how many BDCs have been mentioned when their RSI's get to 70, but were hardly ever mentioned before?) usually means that they have now moved on to a different stage, from undervalued and unknown to known and popular, on their way to overvalued and ready for a fall. Most stocks follow this same pattern, but the difficulty is knowing when each stage will last and how to find a tool to help one see that.
And let's think back to what happens when banks start getting aggressive into new areas. Where does that eventually lead?
Stagg, as I have been reminded, in the 2008 collapse, oil declined to $40. Never say never, especially when geopolitics is involved.
The article is "Why 2014 is Beginning to look a lot like 2008" and its on the peak prosperity blog. There's also a good article out today by David Stockman which includes some current ratios and facts that are not mentioned much.
I'm not so sure it is a weak sister, but rather it was just another of the long list of victims of the RSI overbought level. Really, is there anyone who doubts that buying a stock with an RSI level over 70 is a sure fire way to lose money in the short term.
There is a great article by Charles Hugh Smith on zerohedge that compares prior periods with today. A must read.
I think we could still be in an uptrend. The sign that we have reached an inflection point will be only after we get a selloff and the bounce does not get us back on track with higher highs.
Your comment about the "bus that we see" could have equally applied to 2008 and prior to that 2002. Everyone knew housing was in a bubble in 2008, we just didn't know what would burst the bubble and how leveraged many of the players were. Similarly in 2002, we knew the dot.coms were overvalued, but it was hard to fight the "this time it's different" mantra. I can't say when the next bust will occur and whether it will be like 2002 or 2008, but it will come -- they always do. Also, the declines are seldom straight rides down, especially now with circuit breakers. The first leg down will be met with the "buy the dip, nothing has really changed" rationale and "things are now not overvalued." It will be followed with a bounce. The second leg down will be more problematic, although it will be met with the "certainly the Fed will start another round of QE" logic. Even those who are looking for these breaks will still miss them and lose some money.
The market climbs a wall of worry, but it also can fall when it gets the proverbial last straw. Current worries are China and their credit/property bubble, the response to the situation in Ukraine, and the continuing Fed tapering.
Looking at a chart of the S&P, it touched the upper line of its channel, and backed off, but it is still holding in the middle of the channel. It has done this in past moves up that hit the upperbound.
Interestingly, there has been some commentary that what would hurt Putin the most is a decline in oil prices as Russia's budget is dependent on oil revenues. Do you think someone could engineer a collapse in oil prices?