Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Archive for February 2010

another AIG bailout?

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If the weary taxpayers have to pour more money into AIG (or, more accurately, AIG’s counterparties) to bailout Greek shareholders of Greek banks owning Greek debt, then I predict a run on pitchforks at the hardware store.
Denninger’s commentary here.
Original German article in F.A.Z. linked here.
Translation to English here.

Written by heyercapital

February 23, 2010 at 1:29 pm

Resistance becomes support

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Reviewing charts this morning, I noticed a concept that was worth sharing with you.  After Bucyrus broke out of a base in early Oct 09, it hit resistance at around $50, at Point A.  Rebuffed, it tread water for a couple weeks, before pressing through.  That $50 price level (drawn with a crayon, and not a fine line sharpie) then acted as a hammock through November and December (Point B).

Even after the stock advances and peaks in January, it retraces its move all the way back down to that $50 (Point C. )

lines of resistance can become support as bases develop

Where does it go from here? I’d like to see it form a cup and handle, with a handle peak up near $65-66. The stock, like many others, has been through the wringer the past two years, and it will take sound base formations to work through those emotional excesses.

It’s also helpful to note for investors using 50 day moving averages as buy/sell signals, BUCY just yesterday crossed over its 50 day simple moving average (SMA).

Written by heyercapital

February 17, 2010 at 9:50 am

Posted in charting, stock ideas

exclamation points

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As you scan through charts of fundamentally sound stocks, be sure to note the ones that jump in high volume.  I call these indicators “exclamation points.”

Below is an example, Panera Bread Company from Oct. 2009.  The stock carved a cup with a handle pattern from mid-Sept through the handle beginning at point A.   A proper buy point is ten cents above the high price at the start of the handle, at A.

At point B, PNRA announced earnings, beginning a four month, $12 per share move.

Also note that PNRA clung to the 50 day moving average (green line) through the base forming in October (point C.) That’s a good sign of institutional support of a stock as it carves a pattern.

PNRA Panera Bread making an exclamation point in Oct '09

Written by heyercapital

February 12, 2010 at 10:51 am

Identifying the start of a stock rally

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Our good friends at the “Investor’s Business Daily” newspaper print their outlook on the stock market right on the front page each day .  (I think it’s the most expense daily newspaper in America, and worth every penny. Get a free two week trial subscription here. And, no, they haven’t paid me to say this.  I just want smart readers.)

On to business…

IBD’s research of all the stocks market rallies over the past century, show that they all start the same way: with a “follow through day” of a stock index leaping up at least 1.8%.

Rally's "Follow Through Day" in July '09

The rally Follow Through Day must occur on Day 4 or later from the bottom of the correction.   You can see at the end of June in the chart above, there was a big day of gains, BUT that didn’t come on Day 4 or after.

It’s important to know that “Follow Through Days” are not blind green lights to buy anything and everything.  Wait to buy stocks at good breakout points from sound chart patterns on heavier volume.  Don’t fall in love with a stock because “it’s cheap.”  Cheap stocks can get cheaper.

Since we’re still in a correction at this point, use this “down time” to research, research, research stocks.   Today, Feb 10, we’re on Day 3 of the rally attempt (after the lows in this move put in on the big reversal day Feb. 5) keep your watch lists ready for the Follow Through Day which could come as soon as tomorrow -Day 4.)

Written by heyercapital

February 10, 2010 at 11:52 am