Archive for September, 2010

  • AlphaTrends Weekly Wrap with Brian Shannon (09/24/10)
    Posted by on September 24th, 2010 at 4:51 pm, Comments: 0

  • Rising Three Methods – In Real Life
    Posted by on September 24th, 2010 at 2:01 pm, Comments: 0

    There are lots of great names for Japanese Candlestick patterns, 3 White Advancing Soldiers, Marubozu, Hanging Man, Hammer and my favorite Dragonfly Doji. We have seen a lot of them lately but this week presented a very bullish pattern that we have no…

  • Is the Gold Run Done?
    Posted by on September 23rd, 2010 at 2:38 pm, Comments: 0

    There has been much debate about whether Gold has been rising due to it being a caveat currency or an inflation hedge or a deflation hedge. Allow me to posit that there is some evidence that Gold’s rise is at least partially due to current and expecte…

  • Bond/Stock Ratio
    Posted by on September 23rd, 2010 at 1:54 pm, Comments: 0

    Are we on the cusp of a major breakout in the equity market?  @gtotoy made a great video today with the Chart.ly Screenr looking at [...]

  • For-Profit Colleges: Don’t Bet on Uncle Sam Being Too Tough
    Posted by on September 22nd, 2010 at 7:53 am, Comments: 0

    The for-profit education industry has gotten shellacked in recent months, even as companies’ earnings have been strong.

    ESI, EDMC, COCO, DV, CECO Chart

    The cause: proposed new rules by the Department of Education, whose loans and grants supply most of the industry’s revenues. The changes would tie schools’ access to federal funds to former students’ success in landing jobs with income adequate to repay their borrowings. Sounds reasonable enough, but quite a fracas has ensued.

    The agency wants 45% or more of students to be actively paying down their student loans, not just making minimum interest payments; or, it wants the loan payments to represent 8% or less of a former student’s income. Otherwise a school’s access to federal loans could be restricted, or even cut off entirely if performance against these standards falls far short of the mark.

    Enrollment has boomed to 1.8 million at for-profit colleges in recent years, and those students soak up more than $20 billion of federal loans and more than $4 billion in grants. Without that money, it would be a tiny industry, not the growth business that you see here.

    ESI, EDMC, COCO, DV, CECO Chart

    With the feds threatening to clamp down, some short sellers smell blood and have encouraged the view that the for-profit industry is toast. The shorts, as always, have been active in presenting their case.

    Others are critical, too. A recent report by the Government Accountability Office, the watchdog arm of Congress, uncovered fraudulent enrollment practices at some schools. More troubling – though less sensational – was a set of price comparisons the GAO did that showed some for-profit schools’ courses to be crummy deals when compared to, say, community colleges.

    The for-profit colleges say they educate a tougher group of students, less well-prepared for higher education and having fewer family resources to help them repay loans. That accounts for the low graduation rates and higher loan-default rates, the industry says. The industry, lobbying against the new rules, has hired some pricey consultants to help it try to beat back the Education Department. It has also taken out ads making the claims that one million students would lose access to schooling. Carolyn, the young dental assistant touting her Everest College (a Corinthian unit) experience in a full-page ad in the Sunday New York Times, didn’t share with us whether she borrowed and, if so, how the payments are going.

    Corinthian (COCO), however, noted last month in reporting fiscal 2010 earnings per share more than doubled to $1.65 that its 2008 and 2009 graduates are suffering rising default rates. Corinthian said it can’t be sanctioned under a new default-rate measurement system until 2014, but investors have clearly caught wind of the problems. Corinthian’s p/e ratio is below 4, a sign of strong disbelief in future earnings. And it’s not alone in the low p/e department.

    ESI, EDMC, COCO, DV, CECO Chart

    Apollo (APOL), the largest company by market capitalization, has been hammered, too, in recent months. But its p/e is still above 12.

    APOL Stock Chart

    What’s likely to happen? History suggests that industries screaming bloody murder about onerous regulations, whether the complaints are valid or not, tend to get cut some slack. Especially if the industry has made friends in Congress.

    Wall Street’s yelping helped to significantly water down the recent round of banking re-regulation. And 20 years ago, the utility industry, warnings of huge losses from the Clean Air Act, won concessions greatly reducing their obligations to install scrubbers on coal-fired power plants. The utility warnings turned out to be highly exaggerated. Count on the for-profit schools softening up some congressman, and maybe even regulators, too.

    What’s more, strained capacity among some states’ community colleges and four-year schools also argues for having a healthy for-profit college industry.

    For investors with strong stomachs, then, the beaten-down shares of for-profit schools could represent an opportunity. How much of one exists won’t be clear until the Education Department issues its final rules, and Congress decides whether to get involved. Stay tuned.

    Disclosure: No Positions

  • Chart.ly TV 9/20/10
    Posted by on September 21st, 2010 at 9:20 am, Comments: 0

    Last night on Chart.ly TV I sat down with @stevenplace @gtotoy and @zortrades to discuss the market.  We spent a good deal of time talking [...]

  • Don’t Complicate JASO
    Posted by on September 21st, 2010 at 8:17 am, Comments: 0

    For those of us who use a tactical approach to markets, it’s extremely important that our entries to positions are done so with a great risk/reward setup.  Part of that is understanding where the major market averages are in terms of uptrend/downtrend, or overbought/oversold.  Loading up on momentum names as the market is trending below

  • Zortology with Zortrades (09/20/10)
    Posted by on September 20th, 2010 at 11:42 pm, Comments: 0

  • The $NYMO and $NAMO: Easing Off of Overbought Levels
    Posted by on September 18th, 2010 at 6:57 pm, Comments: 0

    Here I’m taking a look at the NYSE and NASDAQ McClellan Oscillators. So far, they’re been fairly reliable (but not perfect as with any other indicator). They’re good for estimations and potential warning signs that the market may be overbought or oversold. The NYMO currently has a reading of 24.97 while the NAMO has a [...]

  • StockTwits Brunch with Steven Place (09/18/10)
    Posted by on September 18th, 2010 at 1:58 pm, Comments: 0