Then & now;
Had you chosen the middle target it would have resulted in a 25% gain. If you forgot all about it there is still a small gain left!
Month: September 2012
TSO, Tesoro update
Some of the best results are obtained when you forget about a stock. It takes away the nervous finger on the trigger stuff, and gives you tons of patients that you normally do not have. This , by the way, is a side-product of a stop-loss as it allows you to forget.
Last time we commented on Tesoro was in Febr. of 2010. I was familiar with the company from earlier experiences as a credit officer; my bank lent it a lot of money a long time ago. Here are the then and now;
4 months after suggesting $10.50 as an ideal entry point (based on Fibo relationships), the stock actually makes a low of $10.37, hits the first target of $20 and keeps going as indicated in the picture to a level of just under $30. That could have done the trick for all we knew so we would have exited the position. Now, with hindsight, it is clear that that was only one half of the correction! Here we are at a little over $40. If you still hold it , it is now definitely a sell, see below.
Not everyone will necessarily agree with the A-B-C count right into the 62% retracement level. After all it also counts nicely as a 5-wave impulse wave up in a new bull market. At this point it really does not matter as first waves are typically retraced rather deeply and certainly to the bottom of the 4th of previous degree, in this case well below $20. A sell either way! No wonder they say that ignorance is bliss.
IS/LM curve, Economics made easy.
The above is a standard IS/LM model. What it pretends to show is that there is an equilibrium between Investment and Savings on the one hand and Liquidity and Money on the other. Think of it as 4 variables interacting on each other to find an equilibrium. (This one is from Wikipedia). How it all works precisely can be found on the internet if you are interested. For our purposes now, it is important to see that in this (Keynesian) model GDP (Y) and with it employment grows as interest rates rise. One can quarrel about the dynamics and so on but this is the main lesson. The transfer mechanism is primarily confidence. This is what Charles Plosser of the Philly Fed said today in a speech. He is an academic having spent a lot of his time on studying business cycles in macroeconomic terms, having even written a textbook on the subject. He things his boss is barking up the wrong tree and is willing not to tow the company line (very Un-American) in the process. The beginning of the end of the Fed???
NGQ update
Then and now charts;
Then was in May of this year. We would have bought this at about $1.90 following our own advice. Obviously a little too early as the stock did get to $1.60 in July and again in August. Timing is never the strong suit with EW, but even so you would be up about 50% and that does matter. We are out and have no idea where this stock is going. Better yet we have no idea what this company does.