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Tuesday, July 29, 2008

VLNC: Valence Green Techonlogy Update

The price of oil has corrected significantly off its recent highs. One reason I liked Valence as an energy hedge is it has technology that will be required to reduce carbon emissions. That means there will be demand for its products even if gasoline returns to $20 a barrel!

Long term, I expect Valence Technology to do well (see "Products Using Valence Batteries Today" below) but it can be a great trading stock too. That means I expect to continue trading Valence around my core long position to generate cash much like an ATM!

Click charts courtesy of stockcharts.com to see full size images

Today I took profits in Valence Technology (VLNC Charts) after it surged to my "Auto Sell" profit taking level of $4.45 where I automatically sold 500 shares per the "Auto Sell" listed on the "Explore Portfolio Auto Buy and Sell Table" on page 11 of the current newsletter. These were some shares I purchased earlier in the month at $3.42 as I trade around a core position.

We made $491 or 28.5% on the buy made earlier this month (see table below) when VLNC corrected to the lower support level (dashed blue line shown on pg 27 of the August Newsletter) and we repurchased some of the profit taking shares at $3.42.
Profit = [($2213 - $1722) / $1722] x 100%
Profit = 491 / 1722 x 100% = 28.5%
A nice little gain in a bear market!

Valence Buy/Sell History in my "Explore Portfolio"
Date
Action
Shares
Price
$
Amount
$
Running
$ Total
Shares
Held
Avg $/
share
12/31/04
BUY
1,000
3.13
-3,145
-3,145 1,000
3.13
08/21/05
BUY
1,000 2.51
-2,522
-5,667
2,000 2.84
12/20/05
BUY
1,000 1.78
-1,792
-7,459
3,000 2.49
12/30/05
BUY
1,000 1.42
-1,432
-8,891
4,000 2.22
01/10/07
BUY
1,000 1.37
-1,382
-10,273
5,000 2.05
10/22/07
SELL 1,000
1.97
+1,958
-8,315
4,000
2.08
01/08/08
BUY
1,000 1.64
-1,652
-9,967
5,000 1.99
02/12/08
SELL 1,000
2.49
+2,478
-7,489
4,000
1.87
03/26/08
SELL 1,000
4.79
+4,778
-2,711
3,000
0.93
04/09/08
SELL 1,000
3.75
+3,738
+1,027 2,000
All Profit
07/02/08
BUY
500 3.42
-1,722
-695
2,500 0.28
07/29/08
SELL 500
4.45
+2,213
+1,518 2,000
All Profit

=> As of 7/29/08 I hold 2,000 shares on "house money" with $1,518 in profits

We can feel good about these gains in our "higher energy price hedge" to help pay for the more expensive gasoline.


Products Using Valence Batteries Today:

Segway Personal Transporters improved their rage from 10 miles to 24 miles with Valence Lithium Phosphate technology. The security force at Stanford Shopping Center in California (near me) use these to patrol the outdoor mall and parking lots. I've also seen "caravans" of them around the Google complex in Mountain View, CA


Enova Systems delivered California’s first plug-in hybrid school bus to the Napa Valley Unified School District. The bus cost $249,000, two-to-three times more than a conventional school bus, but it will reduce diesel engine emissions by up to 90 percent and be far more fuel efficient and save money on fuel!

EnergyCS: "Toyota Prius powered by Valence Lithium Phosphate batteries wins innovation award." You can see "Valence Technology" on the battery in the photo.


Brammo: The first first production, zero-emissions and battery powered plug-in electric motorcycle. The chassis integrates six Lithium Phosphate batteries from Valence Technology. The Enertia has a top speed of over 50 mph."


Kegel builds automatic bowling alley cleaning and conditioning machines that use Valence Lithium Phosphate Rechargeable batteries to greatly exceeded the performance and usability Lead Acid Batteries without using a power cord.



For more information, see "Valence Technology: A Green Stock with Potential ." Valence is a member of the Russell 3000 index. The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market.

Monday, July 28, 2008

CNBC Million Dollar Portfolio Challenge Results

CNBC announced the overall winner of their "Million Dollar Portfolio Challenge" today. Edward Burke of Shippensburg, PA is the $500,000 Grand Prize winner!

Congratulations Ed!

This is how my 5 portfolios fared:

NameTotal Value*Gain/Loss, Overall
Newsletter Explore 1$1,505,106.14505,106 (+50.5%)
Newsletter Explore 2$1,541,633.08541,633 (+54.2%)
Newsletter Explore 3$1,581,312.32581,312 (+58.1%)
Core Conservative 1$1,584,879.41584,879 (+58.5%)
Momentum Stocks $1,572,000.00572,000 (+57.2%)

* Value as of 7/18/08 at 4pm EST.

Unfortunately, CNBC does now show how my portfolios ranked but I believe all five were in the top 1%.

Saturday, July 26, 2008

Market Update for July 26, 2008

US Treasury Rates plus weekly, YTD and returns since the markets peaked on October 7, 2007

Index (1)
Started Week Ended Week Change % Change YTD
DJIA 11496.57 11370.69 -125.88 -1.1 % -14.3 %
Nasdaq 2282.78 2310.53 27.75 1.2 % -12.9 %
S&P 500 1260.68 1257.76 -2.92 -0.2 % -14.3 %
Russell 2000 693.08 710.33 17.25 2.5 % -7.3 %

Note 1: Index returns do not include dividends.

Click Charts Courtesy of Stockcharts.com to see full size versions

Returns YTD


Returns since October 7, 2007:

U.S. Treasury Rates


COUPON
%
MATURITY
DATE
CURRENT
PRICE/YIELD
3-Month0.00010/23/20081-22 / 1.73%
6-Month0.00001/22/20091-29 / 1.95%
12-Month0.00007/02/20092-07 / 2.30%
2-Year2.75007/31/2010100-02+ / 2.70%
3-Year4.87507/31/2011105-11+ / 3.00%
5-Year3.37507/31/201399-23 / 3.44%
10-Year3.87505/15/201898-07 / 4.10%
30-Year4.37502/15/203895-01+ / 4.69%

More Reading:

Saturday, July 19, 2008

Video of KG-22 Natural Gas Flare in Krishna Godavari Basin

KG-22: GSPC Gas Discovery at Krishna Godavari Basin Block - 22

Video of KG-22 Natural Gas flare


Gujarat government-owned Gujarat State Petroleum Corporation (GSPC) is the operator and holds an 80% stake in the block, awarded for exploration to GSPC along with its partners Jubilant Enpro and Canada's GeoGlobal Resourcea (GGR) in 2003. GGR has a 5% carried interest in the discovery.

Narendra Modi, Gujarat Chief Minister, on Thursday July 17 said the Gujarat State Petroleum Corporation discovered approximately three trillion cubic feet (tcf) gas from the KG-22 well in the Deendayal Upadhyay block off the coast of Andhra Pradesh. Modi addressed the media through video conferencing to say:
  • This discovery substantiates the huge reserve potential of the Deendayal block. Based on the drilling reports test results analysed by GSPC and feedback received from various independent consultants abroad, we are confident that reserves in the Krishna Godavari basin will be more than 20 Tcf."
  • "The discovery of KG-22 will make it one of the highest gas generating well in the country."
  • "It was a challenge for the state-run GSPC, since the gas was discovered at high pressure."
  • "Earlier find of the KG-8 well, Deendayal west, was a success with a gas flow of 10 MMCF per day. Last month we have submitted the declaraton of commerciality report to the Director General of Hydro Carbon for Deendayal west."
More Long-term and Intraday GGR Charts

Disclaimer: I purchased GGR for my newsletter portfolio between $0.94 and 2.25 in 2004 and I have shares purchased as low as 12¢ in my personal portfolio. I took a TON of profits when the stock was high, including twice in the $13s in late 2005, so I have huge profits in this already which may allow me to trade this more aggressively including my most recent purchase at $2.65. For my specific buy and sell targets, you need to Subscribe to Kirk's Investment Newsletter.

Wednesday, July 16, 2008

Geoglobal Resources Up 24% on Major New Discovery in Krishna-Godavari Basin

Geoglobal Resources (GGR Charts) was up 24% today on good news from the Krishna-Godavari basin, a major natural gas field off the east coast of India in the Bay of Bengal. Testing of the KG-22 well has indicated a major new natural gas discovery. After making a low at $1.76, GGR was up significantly in the past week as it appears news of the discovery leaked out to drive the stock to $2.40 before the news was announced.

Geoglobal has a 5% carried interest in the discovery while the Gujarat government-owned Gujarat State Petroleum Corporation (GSPC) has the majority stake in the discovery. Jubilant Anpro also has a share.

Geoglobal and GSPC found a large natural gas field in the
Krishna-Godavari basin in 2005 but delays in getting the gas out caused the stock to return to levels lower than before the natural gas was discovered! Now there are two large discoveries in the KG basin which could drive the stock back to prior highs, if not higher.

Excerpts from News reports coming over the wires:

Financial Express: Major GSPC gas find in K-G basin
“Given the huge size of the discovery, Gujarat chief minister Narendra Modi is visiting the well site on Thursday to make a formal announcement,” said a senior company official.

This is the sixth gas discovery by GSPC in its K-G basin block so far. Given the flow of gas, estimated at the rate of 27.3 million cubic feet a day, the discovery is being considered a gigantic one.
The Times of India: Huge gas discovery by GSPC
There was a buzz of excitement all around Sachivalaya on Wednesday as the news of the discovery spread. Officials said the GSPC's success is bigger than any other wells it dug so far. Officials said the GSPC's success is bigger than any other wells it dug so far.

So far, the GSPC has drilled 10 wells in a 120 sq km off-shore area, called Deen Dayal. Gas has been struck in six of these wells. The discovery in KG-22 is believed to be the biggest so far and drilling had taken up at a depth of 6,000 metres — the deepest so far.
Press Trust of India: GSPC strikes gas field off AP coast
"During initial testing gas flowed at the rate of 23-27 million cubic feet per day...It is a good reservoir," he said.
Reuters: India's GSPC finds more gas in east coast block
A GSPC official confirmed the find. "We have found gas in the KG-22 well. Initial flow has been 27.3 mmscfd (million cubic feet a day) through a choke size of 28/64 inches," GSPC General Manager M.Y. Farooqui told Reuters.
Disclaimer: I purchased GGR for my newsletter portfolio between $0.94 and 2.25 in 2004 and I have shares purchased as low as 12¢ in my personal portfolio. I took a TON of profits when the stock was high, including twice in the $13s in late 2005, so I have huge profits in this already which may allow me to trade this more aggressively. For my specific buy and sell targets, you need to Subscribe to Kirk's Investment Newsletter

7/19/08 Update: GGR has more than doubled since making a low on July 2.


We are posting related news stories about GGR at Facebook's "Investing for the Long Term" discussion board titled "GGR - GeoGlobal Resources."

Tuesday, July 15, 2008

David Tice To Sell Prudent Bear Fund

Today it was announced that long time bear David Tice is selling his $1.2 billion "Prudent Bear" and $507 million "Global Income" funds to Federated Investors Inc. Tice founded the funds in 1995.
Doug Noland, who has overseen much of the day-to-day management of both funds, will serve as senior vice president and senior portfolio manager of both funds. David W. Tice, who founded the Prudent Bear funds, will join Federated as a chief portfolio strategist. Patrick Ryan Bend will also join Federated from Tice as vice president and portfolio manager for the Federated Prudent Bear Fund.
The purchase price includes an initial $43 million payment and future contingent payments of up to $99.5 million over the next four years. The deal is expected to close in the fourth quarter of 2008. David Tice will join Federated as a chief portfolio strategist. Federated will change the names of the funds to "Federated Prudent Bear Fund" and the "Federated Prudent Global Income Fund

Price paid for the assets under management:
  • Total Assets = $1,200M + $507M = 1,707M

  • Initial Payment = $43M / $1,707M x 100% = 2.52%

  • Additional Payments = $99.5M / $1,707M x 100% = 5.83%

  • Total Payments = $43M+ $99.5M = $142.5M for $1.7B in assets
This means Federated will pay up to 8.35% [2.52% + 5.83%] of the roughly $1.7 billion in assets under management to David Tice for the ability to extract future management fees from the account holders. [I recommend you learn to manage assets yourself using the "core and explore" approach explained in "Kirk Lindstrom's Investment Newsletter."]

You can bet that if the bear market continues that Federated will send advertisements about the bear fund performance to all its account holders who have been long. The real value to Federated may be in having a good performing fund for unhappy customers. The small investor often chases performance:
For the 19 year period ending in Sept. 2003, the average return for the average investor was 2.6% per year, inflation was 3.1% and the S&P500 gained 12.2%. See "Winning on the zigs, losing on the zags" for full details.
As of March 31, 2008 Federated had $338.5 billion in assets under management.

BEARX - Prudent Bear Fund Chart courtesy of BigCharts.com

PSAFX - Prudent Global Income Fund Chart courtesy of BigCharts.com

Is Tice Selling at the bottom of a bear market for maximum value?


This news reminds me of when the husband and wife owners of World Savings Bank sold out near the very top of the banking and housing bubble. Wachovia Corp. acquired Golden West Financial Corp., parent company of World Savings Bank, in October 2006. Sure Tice will stay on as a portfolio manager but he gets a big chunk of the selling price up front.


One thing for sure, there is a lot of money to be made managing assets! This is why I recommend you learn to do it yourself using the "core and explore" approach explained in "Kirk Lindstrom's Investment Newsletter."

Kirk's Investment Newsletter
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Monday, July 14, 2008

CNBC Bonus Bucks Trivia Answers: Week 10

CNBC's Million Dollar Portfolio Challenge: Contestants have the opportunity to earn extra money for their portfolio by answering "Bonus Bucks Trivia Questions." Daily answers to the trivia questions will be posted when available at:
Weekly Question for week 10:
  • Forcing trades is sometimes referred to as ____-trading

Kirk's Investment Newsletter
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Weekly Answer for week #10:

  • over

To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!
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==> Daily CNBC Bonus Bucks Trivia Answers

Saturday, July 12, 2008

Bear Market Statistics

2007-2008 Bear Market Statistics through 07/11/08

We are currently in a bear market. (See numerical data below the chart.) We had similar bear markets with just over 20% declines in 1990 and 1998 but the average bear market is more like 30% because that includes the 2000 to 2002 bear market where the S&P500 fell 50% and the great depression where the markets fell much more.


2007-2008 Bear Market Statistics 07/12/08

S&P500 Chart

Last Market High 10/11/07 at 1,576.09
Last Market low 07/11/08 at 1,225.35
Current S&P500 Price 1,239.49
Decline in Pts 336.60
Decline in % 21.4%
Max Decline 22.3%
  • =>This means the correction from intraday high to intraday low is 22.3% and we are currently 21.4% off the peak.
  • =>The decline in the S&P500 from the closing high to the closing low was 20.8%

DJIA Charts

Last Market High 10/11/07 at 14,279.96
Last Market Low 07/07/08 at 11,120.74
Current DJIA Price 11,100.54
Decline in Pts 3,179.42
Decline in % 22.3%
Max Decline 22.1%
  • =>This means the correction from high to low has been 22.1% and we are currently 22.3% off the peak.
  • =>The decline in the DOW off the closing high to the closing low was 21.6%

NASDAQ Charts

Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,239.08
Decline in Pts 622.43
Decline in % 21.8%
Max Decline 24.7%
  • =>This means the correction from intraday high to intraday low is 24.7% and we are currently 0.217518024 21.8% off the peak.
  • =>The decline in the NASDAQ off the closing high to the closing low was 24.1%
The good news is the charts are showing some divergence with lower prices while CMF and RSI have turned up. These indicators along with the "Investors’ Intelligence Bull Bear sentimetn survey data" and "proprietary VIX" charts I recently updated and will send to my newsletter subscribers this weekend are signaling that a bottom "may" be close at hand. These chart indicators are far from perfect at predicting the future, but they have been reliable at identifying reasonable times to take profits and later buy back shares in the past.

Note: I don't recommend trying to time the markets with anything more than a few percent of your overall portfolio. With that said, these charts can be helpful for picking great times to "rebalance" your portfolios when markets are stretched to extremes rather than wait to do it once a year. Make sure you read my article "Using Asset Allocation to make money in a Flat Market" to get an idea what I mean.

For us mere mortals who KNOW we can't read the future with a crystal ball, a well diversified basked of index funds for our core portfolios, such as the ones I recommend in "Kirk Lindstrom's Investment Newsletter" for the majority of your assets is the way to go.
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To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!
  • Since 1/1/1999 through 6/31/08 my "explore" portfolio is up 175% while the S&P500 is only up 20% and Warren Buffett's Berkshire Hathaway is only up 71%
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Friday, July 11, 2008

Crude Oil Testing 2008 Support Levels

This chart, courtesy of Chart of the Day, shows the current trend of West Texas Intermediate crude oil (WTIC) was up and the price was testing support two days ago.

Click charts to see full sized images

The last two days oil has rallied over $10 from $135 to its current price of $145.48!


If oil holds support and rallies to new highs, then a point and figure chart courtesy of Stockcharts.com, projects $172!
If oil breaks support (the green line on the first graph) then we could expect oil to find minor support (via PnF chart above) at $118, $110 and $99.

This chart suggests support for oil prices at $100 and then major support at $80. Destroy enough demand for oil with a global recession or increase supply by drilling for more oil or with a serious effort to bring alternative energy sources online and the next major support level is $37!

Let us look at the US Dollar to get a clue which way oil will go on the long term.


It appears the US Dollar has stopped its decline since bottoming earlier in the year. Perhaps we will see a reverse of this decline if the Fed raises rates a symbolic 25 or 50 basis points to show it is serious about fighting inflation.

This next chart, courtesy of clevelandfed.org, shows 50% of people think rates will remain at 2.00% through September and over 25% think rates will be higher.

This greater than 75% expectation that the Fed will not cut interest rates further has given the dollar reason to stop falling. For oil to continue to rally exponentially means it is doing so without the aid of a falling dollar.

Note: I am only saying what the charts show as major resistance and support levels. I am not predicting these prices!

Wednesday, July 02, 2008

DOW In Secular Bear Market When Priced in Ounces of Gold

With today's close of the Dow Jones Industrial Average (DJIA) at 12,251.11, the DOW is now officially in a "bear market" when defined as down 20% or more on a closing basis. The DOW is now lower than its 11,750 peak in 1999!

Using Intraday prices:
Last Market High 10/11/07 at 14,279.96
Last Market Low 06/27/08 at 11,214.37
Current DJIA Price 11,215.51
Decline in Pts 3064.45
Decline in % 21.5%
Max Decline 21.5%
and
Using closing prices:
Date of last high 10/09/07
Last Market High 14,164.53
Date of last low 07/02/08
Correction Low 11,215.51
Decline in Pts 2949.02
Decline in % 20.8%
More DJIA Charts
  • This means the correction from high to low has been 21.5% and we are currently 21.5% off the peak.
  • The decline in the DOW off the high on a closing basis has been 20.8%
DJIA IN OZ of GOLD

When measured in ounces of Gold, the DOW has been in a secular bear market since peaking in late 1999.

A chart of the DOW Jones Industrial Average (DJIA) priced in gold shows the markets are not as healthy as one might think due to the decline of the US dollar.
  • Back in 1999, it took 45 ounces of gold to buy the DJIA.

  • Today it only takes 12.05 ounces of gold to buy the DOW!

Cutting the Fed Funds target rate from 6.50% in January 2001 to 1.0% in June 2003 may have inflated the US stock market out of its bear market when priced in dollars but it had consequences that we are feeling today.

Cutting interest rates to get the US out of a recession may have worked but the inflation in commodities and devaluation of the US dollar it caused has caused pain for the US consumer. This pain is often blamed on president Bush who took office just as the DOW/Gold ratio broke out of the "symmetrical triangle" pattern, explained below.

More, older Dow/Gold Charts courtesy of www.kitco.com and www.marketoracle.co.uk


With the DOW:Gold ratio now at 12, it is trading at the bottom of the green zone in the second chart.

More on "Symetrical Triangle" chart patterns:

The Bible for technical analysis, Technical Analysis of Stock Trends, by Robert Edwards and John Magee, says about 75% of symmetrical triangles are continuation patterns and the rest mark reversals. This book makes a great Father's Day Gift!

The "return to the apex" of the Gold/DOW ratio in late 2001, early 2002 confirmed the technical breakdown of this chart pattern.

For more information, read chapter eight "Important Reversal Patterns - The Triangles."

Kirk's Investment Newsletter
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  • Since 1/1/1999 through 6/1/08 my "explore" portfolio is up 199% while the S&P500 is only up 31% and Warren Buffett's Berkshire Hathaway is only up 91%
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