Where to Invest March 2015

Where to Invest in 2016

March 2, 2015

Market Strategies Newsletter

Sample Issue

 Market Strategies

Covering High Return Balanced Investing Strategies To

Make Money In Up Or Down Markets

 

A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)

Contributing Staff: Michael King, Charles Moskowitz

 

Where To Invest In 2015

Stock Options Trading Newsletter Covering:

Where to Invest March 2015

Best Stocks To Buy March 2015

Stock Market Investing Strategies

Stock Options Trade Alerts

Options Trading Strategies

How To Trade Options

 

2015 Year To Date Profits $ 3,752

Over 37% Returns

 

2014 Profits = $ 20,443

Over 204% Returns

 

$20,443 Profits for $10,000 Trading Account

By Following all trades in 2014 a

$10,000 account would be worth $30,443

 


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High Return Investments Trade Alerts

Go To: PrincetonResearch.com/alerts.htm

 

NOTE: This is a Sample Issue Only!

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 Where To Invest Your Money Now March 2014 Market Strategies

Market Strategies

$10,000 Trading Account Traders Comments

 

We have five open long positions:

 

20 ARRY March 9 Calls @ 0.30

10 ARRY March 9 Calls @ 0.18

NAT March $ 10 Calls

RWM March $ 16 Calls and

VJET March 10 Calls

 

Funds in Use $ 1,880

 

Loss last week  $ 350

 

Week 8 was a small loss on TJX calls that were the topic of discussion in this space last week.

I had not followed the 50% rule and held them into the earnings report Tuesday morning.  However,

when the stock bounced up from a low of $65.51 to an intraday high of almost $70 and the options didn’t react; they were sold.  The loss of $350 was only $50 more than if I would have just gone with the rule…..The remaining open positions total $1,880 of funds in use and our YTD gain is $3,752.

 

The $100,000 account had a better week as we had an open position in SLXP from $100.80 that was

taken over at $158.  While some think that this kind of trade is “luck” I would point out that we do not trade stocks based on take-over speculation.  We do our homework and if you look at our long term record you will find that we have had a couple of take-overs every year.

 

So, without being partisan, while every politician says that their party isn’t the problem, the parties are exactly the problem. This administration wants only to “play politics” and blame everyone else for our troubles. ISIS’s destruction of religious artifacts is disgraceful and shows who and what we are dealing with in the Middle East.  Am I the only one who recalls the troubles we have brought upon ourselves by backing former enemies.  Like the stock market, this time is not different.  It’s never different. The PM of Israel, our only REAL friend in the area, has been snubbed by the administration not once or twice, but three times…

 

When will we learn that appeasement is not now, nor will it ever be the correct answer.

 

I want to draw a distinction to how we operate both of these accounts.  We are not market-timers

per se, and we do not keep a set group of stocks and look for the time to buy or sell them.  I look at literally 1000 stocks every weekend ( as well as watch the tape from 8:00 AM every morning ) and look for either those in a group that have not yet participated, or groups that have been left behind.  I try to see the rotation from group to group searching for trades with the best risk profile.

 

The rally is getting more and more narrow.  This has always been a problem as investors seek to play the momentum and are ill-equipped to see as it wanes.  Remember what I said last week about the geopolitical shifts as being the easiest way to turn market psychology.  We certainly have enough on that score.  Also, while insider selling holds less sway to me, since there are many reasons for it to occur…the main one being preset programs, I don’t feel the same way about a spot secondary to aid insider investors to cash out.

 

CYBR is the focus of this comment.  A new issue around $20 in Sept 2014, hit $70.48 and closed around $60 Friday after announcing a secondary where the Company is selling no stock.  No economic advantage to anyone other than insiders who will now sidestep the lockup… If it’s such a great Company, Why ???  Just a thought, but the kind that usually leads to the corrections that have been in short supply.

..CAM

Where to Invest March 2015

Balanced Investing Strategies

Market Strategies $10,000 Trading Account Trade Table

 

New Trades:

 

1) Buy 6 April AA ( Alcoa )  $ 15 Calls @ $ 0.55

 

2) Buy 4 March S&P 209 Puts @ Mkt

 

DATE
TRADES
PRICE
COST
PROCEEDS
RESULTS
02/25
Bought 10 ARRY March 9 Calls
0.18
180
02/24
Sold 10 TJX March 72.50 Calls
0.25
        250
      350 Loss
02/23
Bought 20 ARRY March 9 Calls
0.30
600
02/19
Bought 8 VJET March 10 Calls
0.40
320
02/18
Sold 5 TLT February 126.50 Calls
1.10
        550
      130 Gain
02/18
Bought 5 TLT February 126.50 Calls
0.84
420
02/17
Bought 10 TJX March 72.50 Calls
0.60
600
02/13
Bought 8 NAT March 10 Calls
0.60
600
02/06
Bought 10 RWM March 16 Calls
0.30
300

 

Remember, these trades are based on your participation in the

Subscriber Members Only

TEXTING SERVICE TO RECEIVE ALL UPDATES.

 

Previous closed out trades not listed here may be seen in previous market letters in the

VIP Subscribers Members Area.

 

NOTE: In texting we have a limited amount of words. In the interest of brevity:

 

The Quantity and Strike Price for each trade is specific. 1=January, 2=February

 

Trading is hypothetical. We may trade weekly options and they are noted: SPY 1/25 147 for SPY Jan 25th 147 Calls or Puts.

 

How To Trade Options

Stock Market News Today

MARKET Laboratory – Weekly Changes

Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect.

Dow

18,132.70

-7.74

-0.04%

Nasdaq

4963.53

+7.56
+0.15%

S&P 500

2104.50

-5.80

-0.27%

Transportation

9024.52

-106.64

-1.17%

Russell 2000

1233.37
+1.58

+0.13%

Nasdaq100

4440.67

-2.38

-0.05%

Gold (spot)

1212.60

+8.20

+0.7%

  Silver

1651.3

+24.0

+1.5%

Crude

49.76

-0.58

-1.2%

Heating Oil

197.37

+6.36

+3.3%

Unleaded Gas

1.9779

+0.1362

+7.4%

Natural Gas

2.734

-0.238

-8.1%

VIX

13.34

-0.96

-6.7%

Put/Call Ratios

S&P 100

148/100’s

+34/100’s

Put/Call Ratios

CBOE Equity

63/100’s

+7/100’s

 

Bonds

147-01 +3-00

2.60%  -0.12%

10 Yr. Note

128-134+1-004     2.01%-0.10%

 

Copper

269.15

+10.05

+4.1%

CRB Inflation

Index

224.08

-0.68

-0.3%

Barron’s* Confidence

78.0%

-0.4%

S&P100

925.47

-1.16

-0.13%

5 Yr. Note

119-317 +18

1.52% -0.07 %

Dollar

95.26

+1.01

+1.1%

DJ Utilities

594.17

-5.89

-0.98%

AAII

Confidence

Index

Bullish

45.4%

-1.6%

Bearish

20.3%

+2.4%

Neutral

34.3%

-0.8%

M1 Money  Supply

+10.72%

February 16th

M-2 Money

Supply

+6.05%

February 16th

 

 

* Component Change in the Confidence Index

 

M1…all money in hands of the public, Time Deposits Traveler’s Checks, Demand Deposits
M2.. adds Savings and Money Market Accounts both compared with the previous year.

 

For Free Where To Invest Your Money Now

High Return Investments Trade Alerts

Go To: PrincetonResearch.com/alerts.htm

Options Trading Newsletter

Stock Market Investing Strategies

Market Strategies Technical Information

Support Levels S&P 500        2074

Resistance S&P 500              2135

 

Support Levels DOW          17,780

Resistance DOW                18,185

 

Support Levels QQQ            105.00

Resistance QQQ                  109.50

 

Support Levels NASDAQ      4860

Resistance NASDAQ            5010

 

Closes below support triggers sales/above highs buys

Where To Invest $10000

$100,000 Trading Portfolio Stock Positions and

 

Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.

 

Stock Purchase Price Purchase Date Stop/Loss   Price/Date Sold   Profit/

(Loss)

ARRY 500   8.02
CALM 150 37.17       02/23
UWTI 1200 3.55       02/17  2.87 sco 2.84 02/26 ( $ 852 )
FORM 500 8.56       02/13
NAT  500 10.16       02/13
ENZ 1200 3.39       02/06 2.89 2.89 02/23 ( $ 600 )
BAC. Wts 5,000 lots 0.7411      12/26
BSBR  500 4.84      12/18
BCRH  300 16.84      12/18
SAN  600 8.40      12/16
SLXP  50 100.80      11/25 156.36 02/23 $ 2778
FB  100 74.18      11/24
XCO 1200 3.10      11/28
INO  500 9.92      11/17
AA  500 14.21      10/16
FCX 150 34.99      09/09
NBG 300   2.95      05/19
XRGYF 5000* 0.407      03/14
RPTP 400 15.37      01/16
NBG 300 4.08 8/12
TEXQY* 200 6.56 7/11
REPR* 5000 0.22 10/22/12 .12 sco

 

Remember, these trades are based on your participation in the

Subscriber Members Only

TEXTING SERVICE TO RECEIVE ALL UPDATES.

 

Previous closed out trades not listed here may be seen in previous market letters in the

VIP Subscribers Members Area.


For those of you who do not buy puts to protect your portfolio, there are many ETF’s that are the inverse of the DOW. The symbols are DOG, DXD, SDS,TZA and RWM, which go up when the  DOW, S&P 500 and Russell 2000 go down and down when they go up. The DZZ goes up double when gold goes down.

 

Best Stocks To Buy March 2015

Market Strategies $100,000 Trading Account

New Options Trades :

1) Buy 12 AA ( Alcoa ) April $ 15 Calls @ $ 0.55   ( Or Better )

2) Buy 8 March S&P 209 Puts @ MKT

 

There was one closed long option position, the TJX losing $700.

 

There were three closed long stock positions:

 

The Enzo losing $600, the UWTI lost $ 852.

The 50 shares of SLXP  gained $ 2,778

 

The net gain for the week including the option loss was $ $ 626.

 

One new position was added, the CALM.

 

For the full year to date, we have gains of $ 13,490.

 

Open position losses increased to $ 10,315.

 

There are five long Open Options positions:

 

Two separate positions of ARRY, one of 40 lots, the other 20; the NAT March 10 Calls

RWM March 16 Calls and the VJET March 10 Calls

 

The Stock table has the following 20 positions:

 

AA,  ARRY, BAC.B.WS, BCRH, BSBR, CALM, FB, FCX, FORM;  INO,

NAT; NBG (3),  REPR, RPTP,  SAN,  TEXQY,  XCO, XRGYF

 

The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless otherwise specifically stated.

 

We are basing money management on a hypothetical

$ 100,000 and are using a total of

$   77,160 for 20 open stock positions plus five option long positions requiring

$     3,760 totaling

$   80,920 leaving

$   19,080 in cash.

 

These figures are approximate and there might be errors.

 

We have not counted the dividends received from Apple, JP Morgan, BSBR ( Brazil ), Santander, Blue Capital Reinsurance and others.

 

Blue Capital issued a special extra dividend of $ 0.66 per share which enabled us to reduce our cost by that amount. In addition it pays about 7% per year in regular dividends.

 

We do not count commission costs and all trading once again is hypothetical.

 

Executions that have occurred at or near the open or close of trading sometimes vary from our actual numbers.  For example, when something opens down and it is through our price, we take the next trade whether it is an uptick or continues lower.  This sometimes results in a 50% trade that is slightly above or below the exact number.

 

For Free Where To Invest Your Money Now

High Return Investments Trade Alerts

Go To: PrincetonResearch.com/alerts.htm

 

Options Trading Strategies

Previous Week’s Recommendations and

Rules for the Market Strategies

$100,000 Portfolio Trading Account

 

  • All options count for about $ 2,500.00 for model portfolio calculations unless

otherwise stated

 

  • When the option has doubled sell half the position

 

  • Stop Loss protection is either half or offered with each trade

 

  • The cost of the option is the asking price (or the price between the bid and ask,

whichever is more realistic)

 

  • The options will be followed until closed out.

 

  • Option Symbols are stock symbol with expiration month and strike price

 

Option Cost Date Sold Date Profit/

(Loss)

ARRY March 9

20 lots

Calls

0.18

02/25/15
ARRY March 9

40 lots

Calls

0.30

02/23/15
VJET March 10

16 lots

Calls

0.40

02/19/15
TJX March 72.50

20 lots

Calls

0.60

02/17/15 0.25 02/24/15 ( $ 700 )
NAT March 10

16 lots

Calls

0.60

02/13/15
RWM March 16

20 lots

Calls

0.30

02/06/15

 

Remember, these trades are based on your participation in the

Subscriber Members Only

TEXTING SERVICE TO RECEIVE ALL UPDATES.

 

Previous closed out trades not listed here may be seen in previous market letters in the

VIP Subscribers Members Area.

 

Stock Options Trade Alerts

This Weeks’ Economic Numbers and Media Data

 

Earnings Reports Before the Open on Top of the Row; After the Close are Below the Economics Numbers.

 

Monday Core-Mark ( CORE 0.61 vs 1.28 ) JinkoSolar ( JKS ( 0.91 vs 1.28 ) Magnum Hunter ( MHR -0.21 vs -0.14 ) Ocwen Financial ( 0.42 vs 0.74 ) Scorpio Tankers ( STNG 0.12 vs -0.08 ) Sothebys ( BID 1.28 vs 1.30 )

08:30 hrs  Personal Income Jan ( 0.4% vs 0.3% )

Personal Spending ( -0.1% vs -0.3% )

CORE PCE-Prices ( 0.2% vs 0.0% )

10:00 hrs  ISM Index Feb ( 53.0 vs 53.5 )

10:00 hrs  Construction Spending Jan ( 0.2% vs 0.4% )

Caesars Ent ( CZR -1.84 vs -12.83 ) Molycorp ( MCP -0.26 vs -0.28 ) Mylan Labs ( MYL 1.05 vs 0.78 ) Nabors ( NBR 0.39 vs 0.42 ) Palo Alto ( PANW 0.17 vs 0.10 )

Tuesday Best Buy ( BBY 1.35 vs 1.24 ) Navistar ( NAV -1.17 vs -3.07 )  

14:00 hrs Auto Sales Feb ( NA vs 5.5 Mln Units )

Truck Sales Feb ( NA vs 8.1 Mln Units )

Dynamic Materials ( BOOM 0.17 vs 0.02 ) Smith Wesson ( SWHC 0.12 vs 0.35 )

Wednesday Brown Forman (BF.B 0.87 vs 0.82 ) Diana Shipping ( DSX -0.07 vs -0.12 ) Pet Smart ( PETM 1.38 vs 1.28 ) Trina Solar ( TSL 0.13 vs 0.13 )

07:00 hrs MBA Mortgage Index 02/28 ( NA vs NA )

08:15 hrs ADP Employment Change Report ( 220K vs 215K )

10:00 hrs ISM Services Feb ( 56.5 vs 56.7 )

10:30 hrs Crude Inventrories 02/28 ( NA vs 8.427 Mln Bbls )

14:00 hrs Fed’s Beige Book March ( NA )

HR Block ( HRB -0.13 vs -0.77 ) Embraer SA ( ERJ 0.92 ) Polypore ( 0.45 vs 0.31 )

Thursday Costco ( COST 1.18 vs 1.05 ) Joy ( 0.36 vs 0.49 )  Kroger ( KR 0.90 vs 0.78 )

08:30 hrs Initial Claims 02/28 ( 295K vs 313K )

Continuing Claims 02/21 ( 2403K vs 2401K )

08:30 hrs CPI Jan ( -0.6% vs -0.4% )

CORE CPI ( 0.1% vs 0.0% )

08:30 hrs Productivity-Rev 4th Qtr  ( – 2.3% vs -1.8% )

08:30 hrs Unit Labor Costs – Rev 4th Qtr ( 2.9% vs 2.7% )

10:00 hrs Factory Orders Jan ( 0.7% vs -3.4% )

10:30 hrs Natural Gas Inventories 02/28 ( NA vs -219bcf )

Cooper ( COO 1.56 vs 1.47 ) Korn Ferry ( KFY 0.46 vs 0.43 ) Willbros WG .02 vs 00

Friday Foot Locker ( FL 0.91 vs 0.82 ) Staples ( SPLS 0.30 vs 0.33 )

08:30 hrs Nonfarm Payrolls Feb ( 240K vs 257K )

Nonfarm Private Payrolls Feb ( 230K vs 267K )

Unemployment Rate Feb ( 5.6% vs 5.7% )

Hourly Earnings Feb ( +0.2% vs +0.5% )

Workweek Ave Hours ( 34.6 hrs vs Same )

08:30 hrs Trade Balance Jan ( -$42.0Bln vs -$46.6Bln )

15:00 hrs Consumer Credit Jan  ( $13.0Bln vs $ 14.8Bln )

 

Market Strategies Fundamentals

  

Last week the dollar was the best performer climbing to 95.25, its best close since August 2003, up 1.1%.

 

The performance came concomitantly, despite an estimate reduction in GDP to 2.2% from 2.6% for the fourth quarter. Stocks were mixed following new all-time highs in both the Dow and S&P. The Dow reached 18,244, and the S&P 500 2,119.59. Both closed slightly lower, however, the Dow minus 7.74 to 18,132 and the S&P off 5.80 to 2104.50. The Russell 2000 made a new all-time high at 1233.37 and held its gains, closing up 0.13% or 1.58 for the week. Nasdaq was up slightly 7.56 pts or 0.15% but remains below the all-time high of 5,132 reached in May of 2000.

 

It was a decent week for stocks, mired in deflation led by another decline on oil and resisting headwinds from the ever strengthening greenback. Volatility declined 6.7% back down to the lower levels of the year the VIX closing at 13.34.

 

The Blue Capital Reinsurance Holdings Company’s Board of Directors has declared a special dividend of $0.66 per common share, which is payable on March 13, 2015 to all shareholders of record as of February 27, 2015. This special dividend, coupled with the regular dividends declared during each of the first three quarters of 2014, represents 90.4% of the Company’s “Distributable Income” with respect to 2014. Distributable Income, a non-GAAP measure, has been defined within the Company’s dividend policy to be its net income plus (minus) non-cash expenses (revenues) recorded in net income for the period.

 

For Free Where To Invest Your Money Now

High Return Investments Trade Alerts

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Market Strategies Economic Data

 

This was the first reported contraction in the Chicago region since April 2013 and the largest contraction since the index dropped to 42.7 in July 2009. Readings throughout the report were abysmal, and every index, with the exception of supplier deliveries (58.3 from 54.9), contracted in February.

 

The stronger dollar together with severe inclement weather  has had a negative effect on U.S. production levels ( especially dominant in the Midwest  ) which contracted as the related index fell to 44.8 in February from 64.1 in January, and ordering conditions do not seem set for a reversal in production growth next month.

 

The New Orders Index fell to 42.0 in February from 61.6 in January. Unfilled order levels contracted for the second time in three months, falling to 41.1 in February from 51.9 in January. The Employment Index declined to 49.8 in February from 60.1 in January.

 

The Chicago Purchasing Manager’s Index comes out a day before the ISM Index, which is a picture of the entire country. If it is even close to this, the markets will open quite a bit lower.

 

Category FEB JAN DEC NOV OCT
Chicago PMI 45.8 59.4 58.8 60.7 64.5
New Orders 42.0 61.6 59.8 61.6 69.2
Production 44.8 64.1 62.7 66.2 67.8
Employment 49.8 60.1 56.4 56.3 58.9
Prices Paid 47.8 44.2 58.1 59.6 60.7

 

Stocks and ETF’s bought over the past few weeks:

 

Notice the Flexibility  is gone now as there is no longer positions in the VXX, SPXU or UDOW  Both the VIX and SPXU protect against declines while the UDOW and various stocks reflect the long side.  We have shown this table for the purpose of being both profitable and somewhat protected for much of the time while maintaining profitable long positions.  Please check on the previous weekly market letters if there are questions.

 

We would sell the UAL on a rally to 71 or a stop below 66.60.  Alcoa AA was stopped out. We would like to be long Alcoa . Try to buy a scale down on this move. We remain long  Mosaic. Sell the Smith and Wesson  on the open Monday.

 

We remain long the XLV,  the Health Care spider with the stop relatively  close. In addition we are long the DSX and Scorpio Shippers. ( All trading is hypothetical  and intended as guidance)

 

Symbol Name Business Description PE P/S MV mln Price Buy Limit Stop Loss

Or sold

XLV Health Care Spider ETF 72.24 70 68.20sco
SWHC Smith and Wesson Holding Corp Firearms; Handguns Metal Processing 8.5 0.93 527.37 13.53 9.81
AA Alcoa Aluminum and Metals 14.30 0.8 17.53B 14.79 14.57 and again at

14 17

12.90sco
DSX Diana Shipping Dry Cargo Shipping N/A 3.7 611 6.93 6.60 5.90
STNG Scorpio Tankers Oil Transportation 26 5.6 1.47B 8.66 7.46 7.48
UAL United Cont Hld Transportation 16 1.2 18.1K 65.18 46 63.45sco
VXX VIX Volatility Hedge Portfolio 27.62 30.97 stopped out @ 32.50

 

32.50sco
MOS Mosaic Company Agriculture Chemicals 70 2.10 15.3K 53.26 42.28 43.70

 

 

Undervalued Small Cap Stocks

 

RMS Medical Systems, Inc ( REPR 0.40)* 

 

Has doubled this year already and can double again.

 

RMS designs, markets, manufactures portable easy to operate infusion devices, including needles and tubing. It is easy to handle by patients. The Freedom 60 is being marketed in Europe as well as gaining a footing among home-care professionals in America. The RescueVac is used in ambulances and planes for emergency suction.

 

Southern ITS  (SITS: $ 0.125 )*

Southern ITS delivers proprietary innovative electronic security systems to highly regulated market sectors. Such installations include Gaming Properties, Medical Marijuana (MMJ) dispensaries and similar businesses with high compliance mandates. Their systems go beyond simple security and are designed to support their clients in dealing with the expanding burden of compliance and financial auditing. Greeniosk is complete system that allows Medical Marijuana (MMJ) Dispensaries and Recreational Marijuana (MJ) Dispensaries to document and provide an audit and verification trail of each individual MMJ/MJ dispensary transaction.

The majority of MMJ Dispensaries have limited bank service access mainly due to requirements of the Racketeer Influenced and Corrupt Organizations Act (RICO). The Greeniosk system incorporates a large physical ATM Kiosk, with a state of the art CRM reporting system that provides a detailed financial transaction audit trail and addresses and resolves issues of the propriety of the dispensary operations. MMJ Dispensaries currently transact between $250,000 and $5,000,000 in annual revenues.  The majority consist of cash transactions, however small numbers of dispensaries accept debit card payments.  Because RICO concerns cause the majority of banks to decline dispensary deposits, they also miss out on potential MMJ credit card transactions.

    

The Grilled Cheese Truck, Inc. (OTCQB: GRLD $ 3.95 )*

 

Cooks, sells, serves and promotes specialty grilled cheese sandwiches. Since 2009, The Grilled Cheese Truck has been serving areas of Southern California and Phoenix, AZ.

 

David Danhi is an Executive Chef and began the company after spending thirty years in the food industry.

 

Grilled cheese is gaining popularity as a classic comfort food right along with pizza. The Grilled Cheese Truck is the only known gourmet food truck that has gone public and is the first and one of the largest gourmet grilled cheese truck in the U.S.

 

The Company has 13 trucks and growing The Company has 13 trucks and its growth is legendary in L.A.

 

The Grilled Cheese Truck was one of the premier gourmet food trucks to appear on the L.A. scene 5 years ago. Chef Danhi wanted to capitalize on the growing demand for food trucks and is recognized for his food crafting and grill cheese creations, such as the signature sandwich, “Cheesy Mac and RIB”. The grilled cheese sandwiches are slowly toasted, buttered and crispy, touted as the “ultimate grilled cheese sandwich”.

 

January ends with the commencement of the Company trading on OTCQB and the introduction of new CEO, Al Hodges. Hodges brings 35 yrs. of operations, management and restaurant experience. He has a track record for success as a performance driven executive who implements successful business plans. From concept to expansion, Hodges has built a series of successful businesses and driven up company value. The Grilled Cheese Truck has become a widely recognized name and has

 

 

Enzo Biochem ( ENZ: NYSE: $ 3.06 ) 

 

We bought Enzo and got stopped out last week. I would be stubborn and try to buy it again basing my belief that the fundamentals will overcome the technical pattern.  $ 3.06 is the 13-day moving average. If it can’t close above this number, we can’t be long the stock. F2015 (July) got off to a solid start with Q1 (Oct) results continuing to affirm our belief that Enzo’s core businesses are improving. Once again, revenue, gross profit and adjusted EBITDA were all better than projected, with revenue growth in both the clinical lab and life sciences businesses. Gross margin in both businesses continued to improve, as the ongoing shift toward higher value molecular testing and efforts to improve operational efficiency continue to bolster margins. The company’s balance sheet remains on good footing while catalysts in the form of new products and litigation remain in play. Accordingly, we reiterate our Buy rating and $7 price target.

What keeps us excited about ENZ is (1) a clinical lab which is highly attractive to numerous strategic buyers; (2) a proprietary molecular diagnostic technology that could cut the cost of molecular testing by about 50%; and (3) IP litigation that could yield hundreds of millions of dollars over time

 

Market Strategies Cycles

 

Seasonal: Bullish. Normally a decent performing market month, March performs even better in pre-election years. In pre-election years March ranks: 4th best for DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000 (January, April and December are better). Pre-election year March has been up 13 in a row for DJIA and 9 in a row for Russell 1000 & 2000. In fact, since inception in 1979, the Russell indices have a perfect, 9-for-9 winning record. Turbulent March markets tend to drive prices up early in the month and batter stocks at month end. Julius Caesar failed to heed the famous warning to “beware the Ides of March” but investors have been served well when they have. Stock prices have a propensity to decline, sometimes rather precipitously, during the latter days of the month. In March 2001, DJIA plunged 1469 points (-11.8%) from March 9 to the 22.

 

March packs a rather busy docket. It is the end of the first quarter, which brings with it Triple Witching and an abundance of portfolio maneuvers from The Street. March Triple-Witching Weeks have been quite bullish in recent years. But the week after is the exact opposite, DJIA down 17 of the last 27 years—and frequently down sharply for an average drop of 0.44%. Notable gains during the week after for DJIA of 4.9% in 2000, 3.1% in 2007, 6.8% in 2009, and 3.1% in 2011 are the rare exceptions to this historically poor performing timeframe.

 

 

Saint Patrick’s Day is March’s sole recurring cultural event. Gains the day before Saint Patrick’s Day have proved to be greater than the day itself and the day after. Perhaps it’s the anticipation of the patron saint’s holiday that boosts the market and the distraction from the parade down Fifth Avenue that causes equity markets to languish. Or maybe it’s the fact that Saint Pat’s usually falls in historically bullish Triple-Witching Week.

 

Normally a decent performing market month, March performs even better in pre-election years (see Vital Statistics table below). In pre-election years March ranks: 4th best for DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000 (January, April and December are better). Pre-election year March has been up 13 in a row for DJIA and 9 in a row for Russell 1000 & 2000. In fact, since inception in 1979, the Russell indices have a perfect, 9-for-9 winning record.

 

Whatever the case, since 1950, the S&P 500 posts an average gain of 0.22% on Saint Patrick’s Day (or the next trading day when it falls on a weekend), a gain of 0.11% the day after and the day before also averages a 0.22% advance. S&P 500 median values are 0.16% on the day before, 0.23% on Saint Patrick’s Day and 0.03% on the day after. In the nine years when St. Patrick’s Day falls on a Tuesday, like this year, since 1950, the day before (Monday) produced an average loss of 0.06%, while Tuesday advanced an average 0.77% and Wednesday 0.29%.

 

 

March (1950-2014)
  DJI SP500 NASDAQ Russell 1K Russell 2K
Rank 5 4 6 4 6
# Up 43 43 28 25 26
# Down 22 22 16 11 10
Average % 1.1 1.2 0.8 1.1 1.3
4-Year Presidential Election Cycle Performance by %
Post-Election 0.4 0.6 -0.3 0.8 1.2
Mid-Term 1.3 1.3 1.7 2.0 2.8
Pre-Election 2.2 2.1 3.5 2.4 3.2
Election 0.6 0.8 -1.6 -0.6 -2.1
Best & Worst March by %
Best 2000 7.8 2000 9.7 2009 10.9 2000 8.9 1979 9.7
Worst 1980 -9.0 1980 -10.2 1980 -17.1 1980 -11.5 1980 -18.5
March Weeks by %
Best 3/13/09 9.0 3/13/09 10.7 3/13/09 10.6 3/13/09 10.7 3/13/09 12.0
Worst 3/16/01 -7.7 3/6/09 -7.0 3/16/01 -7.9 3/6/09 -7.1 3/6/09 -9.8
March Days by %
Best 3/23/09 6.8 3/23/09 7.1 3/10/09 7.1 3/23/09 7.0 3/23/09 8.4
Worst 3/2/09 -4.2 3/2/09 -4.7 3/12/01 -6.3 3/2/09 -4.8 3/27/80 -6.6

 

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