Month: February 2010

TS.B , Torstar, feb 2010

Hamilton

Not sure what this one will do but I was asked the question. Here is my take, these people own the Toronto Star, the paper with by far the highest circulation in Toronto and surrounding area, all others are too capitalist to do home delivery outside the city proper. They also own assets like Harlequin, a  lightly sexy  romance series aimed at house wives who are still deploring the extinction of the mail man. The main competitor, apart  from the Globe and Mail, in the form of the Financial Post , is losing its touch, or at least its readership, and is barely surviving with one leg in the grave. So there is hope for Torstar even if it is not exactly our cup of tee. Here is the chart.

TS.B feb 2010

TSO, Tesoro, Feb 2010

Hamilton

Tesoro, Spanish for treasure, is one of those oil companies you might want to look at. It is mostly in the business of refining, much like a chemical plant. I do not claim to understand any part of the business but apparently it used to be that if you took in heavy oil (At a lower price!) and were able to crack it, you would , in a manner of speaking, pocket the difference. Apparently those days are over as too many off-shore competitors can do the same. This has put a crimp on their earnings lately. But, they are down and refining in Texas is not about to end, so perhaps there is upside. Here is the picture.

tso

From 90 to 5 is a pretty good bear market by any measure, but this one has crawled along the bottom suggesting that it may find its composure. Wait for a 60% retracement of the first up leg from say 5 to 18, which is at about 10.50. Buy with a stop at say 8 and wait for $20.

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LQD , Investment grade corporate bond ETF, Feb 2010.

Hamilton

Bonds are assumed to be the safe part of the portfolio, however we tend to forget that, just using a few examples, on the morning of Oct 19 ,1987, Government bonds in the US moved 22 full points in an hour or two, enough to wipe out good number of participants. It did almost immediately retrace half of that. We also tend to forget that both Enron in the US and Confederation Life here in Canada were AAA corporate entities the very morning they failed.

Bond trading has two main components, one is duration risk and the other credit risk. It may seem tough to guess where interest rates are going but it is a lot easier than guessing where an individual credit might go, which is perhaps why the individual bond trader tends to stay with the Government bonds. It is on the retail side that arguments are made why corporate bonds are a good buy. Here is the chart;

LQD

Notice that both RSI and MACD (not shown) are already negative and have been for sometime. Notice also that the lows occurred at the time of the Lehman problems back in October and did not coincide with the stock market lows in March of last year. This rally is now approaching 1 and 1/2 year. From an EW perspective the entire rally could be an a-b-c irregular correction (not shown), or a last 5 waves up to complete a 32 years bond rally to zero. In the latter case a small triangle could be forming allowing for one more push to about 107 (see the pink pattern). I doubt it. In terms of buying low and selling high, this definitely does not fit the bill.

FXI and FXP, XinhuaChina 25 ETF, and the Ultrashort, both iShares.

Hamilton

Earlier I suggested the Shanghai index (DJSH index ) might be ready for a substantial drop. So far it did drop but not that much. Here is the FXI which is 46% banks which may presently be more to the point as , after all it is the banks that are lending as if there is no tomorrow, even if they are doing it on command. The FXP is the equivalent short, ultra short (3x) which may be a good hedge for any commodity position. here are the charts.

 FXI Feb 2010fxp feb 2010

The FXP looks a little like the heart beat of a patient that did not make it, but then it comes from $200 not that long ago , so evidently there is some potential here.