My Daily Research Schedule

UPDATED: 02/12/08

When I first started trading, 9 years ago, I'd wake up at 5:30, and be in the city by 6:30 sitting in the atrium of the JP Morgan building reading the newspaper while eating my breakfast.

I didn't go into the office right away because I didn't want people to bother me.

I sat in the JP Morgan building because it made me feel more "Wall Streety."

Nowadays, I sleep until 8:00. Or, when I wake early, I piss a lot of time away on email or reading idiocy on stock market blogs.

Well, new year, new company, new market. It's time for me to take this job seriously again.

In December, I deserved to lose money because I wasn't working hard enough. If I lose money now, it's not going to be due to poor work ethic.

Some things I can't control but my work ethic is not one of them.

So here's what I'm doing. I'm going to make a strict schedule of research that I adhere to each day. It will help me focus.

However, the first thing I will do each day is to create a simple "Good Morning" blog post. This will put at least a little pressure on me to get in and get the post up each day. It would be shameful to admit to myself and my 3 readers that I lost money because I got to my desk at 9:24.

So here, is my new research schedule:

1. Morning post.
2. Read IBD Big Picture.
3. Read Bloomberg breaking news headlines.
4. Read Bloomberg "Stocks On The Move."
5. Check front page of NYTimes and WSJ.
6. Link-love post.
7. Morning stretches.
8. Breakfast and shower.
9. Watch Alphatrends daily "Stock Market Video Technical Review."
10. Read Briefing Live In Play from previous day's close.

Now for some graph work.

8. Check BigCharts' "big movers reports." Especially the largest % gain in volume.
9. Go through index graphs like SOX, XBD, XOI, etc.
10. Go through each stock on screen.
11. Write "one idea" post.

After all of that, (I figure it's 3.5 hours worth of work) I should have an excellent idea of the general tone of the day and what stocks could be moving.

If you have any other suggestions for research, please let me know via the comment section.

Stevie Wonder, "Signed, Sealed, Delivered"

Looks like Obama is winning again... Hmmm... remember this pre-primary post?

Just Missed A Big One...

At 10:00 am, I started writing my fellow office mates about ALB. All of the chemical stocks were strong. ALB had gapped up at the open and traded near $39 and then traded off on light volume to $38.50. I started to pick some up and built up 700 shares of stock by the time it traded back up to $39 by 10:15.



To be cautious, I sold 300. I figured it would trade $39 and then pull back a bit before advancing higher. Of course, I wasn't expecting the move that developed.

Shortly after the stock traded over $39, news hit that BASF, a German company might make a $4.9 billion bid for Albermarle.... I was bullish already, and this made me even more bullish, but I had just sold another 200 shares at $39.40. With only 200 shares remaining, I didn't want to buy more and completely screw up my cost basis while the stock was spiking. It was frustrating on a certain level, but nonetheless, I was happy to catch a good move.

The fact that I had 700 shares at about $38.80 and only made $494 in the stock is a little depressing since it never came back to that level. Had I bought, left my desk and closed the position at 3:59:59, I would have made about $700. Again, I screwed up my exits.

I'm working on it.

I also had a nice trade in ESI early when I just about bought the bottom. Here, I made $400 on a 500 share position, so I did much better with my exits.



And the coal short was a thing of beauty today. Check out the index. The problem is that I was a little "early" to this trade. All told, I only made $300 in my coal shorts despite the massive reversal.



I'm happy with my bounceback after 2 bad days in a row. I need to keep working hard and staying positive. I also used a higher percentage of limit orders today versus market orders.

Meanwhile, I have a couple of new ideas for the blog.

First, I'm going to update my daily research post to include stretching. If you trade all day every day, you need to stretch. Since I think this is very important, I'm including it in my research post so I make it part of my routine.

Second, I'm going to try to come up with an idea each day to trade and post it on the blog between 9:00 and 9:15. It will be a simple post with a stock or sector to watch. That's it. No buy or sell recommendations, just a stock or sector that I think will be on the move. I hope that including this post in my daily repertoire will help force me to crystalize my research into concrete ideas.

This blog is a wonderful discipline tool for me and I'll continue to use it in that manner. Hopefully, it helps you as well.

Here's the stats:
P&L, $1286
Best, ALB, $494
Worst, ACI, -$167

23,400 shares traded.
16 stocks traded. 10 winners, 16 losers.

Virtual Office, $7131. SPX, +12.30, 1350.50

Evolution, $2653 on 91,000 shares traded.
Me, $1286 on 23,400 shares traded.
Dehtrader, $1180 on 4430 shares traded.
Sanglucci, $1027 on 26,400 shares traded.
Equine, $430 on 5600 shares traded.
Ducati, $302 on 3200 shares traded.
OBAT, $243 on 12,200 shares traded.
Wincity, $10 on 200 shares traded.
Misstrade, no trades.
Retardo, no trades.
Timmay!, -$150 on 700 shares traded.

I think my metrics for figuring out if it's a good day or not, volume and volatility, are somewhat imperfect. Today we traded less than 1.5 billion and the VIX dropped, yet most people in my real office and in our virtual one, made decent money. Go figure.

Perhaps it has something to do with Ducati joining the VO.

Despite the somewhat lackluster volume, the indexes had nice moves. The Dow dropped 150 points from 3 to 3:30 and then bounced hard. The coal stocks ripped in the morning and then had complete reversals... there just seemed to be good movement.

Guys in my office were looking forward to tomorrow. They expect the volatility to come back. We'll see. I hope they're right.

Ducati Joins The VO

Much to "the Fly's" chagrin.

Check the exclusive footage of his first day, below.


Old man his way of getting rid of a little stress - Watch more free videos

Meanwhile, if you haven't checked it out already, you can see plenty of dry analysis at Ducky's blog here. I'm happy a member of IBC has joined the VO. In time, I will annex all of the "tabbers" from that shithole of a blog.

Eventually, "the Fly" be reduced to a weekend blogger here. Except I'll only let him write posts on Saturdays. Sundays I'll hold multiple votes where my esteemed and rapidly growing readership can vote to "shitcan" him, over and over...

Trading And GOD (not to be confused with Mike Huckabee)

I didn't realize that Boomer was adding to this thread each day. I think this is really interesting. He's taking a month off from trading and posting his insights over at "the Fly's" blog.

Good stuff.

Art Cashin's Comments

I only caught the end, but here's a brief paraphrase:

On testing the lows of January:

I believe a retest of the lows is still in order. It would be better for the market as it would give people more courage to really buy in here.

On Buffet buying the muni bond portfolio of MBIA:

It's reminiscent of JP Morgan during the Panic of 1907. If it works out, it's a great deal for him.

Obama's Picture

I've moved it to the bottom of the right hand toolbar. Not because I no longer support him, quite the opposite really. Instead, it's clear that my support has propelled him into "front-runner status."

He doesn't need me as much. It's sad in a way, but fulfilling in another.

Meanwhile, does anyone know how I can unlock the sweetness of that huge blue area on the left of my page? Seems like lots of wasted space.

Morning Link-Love

• Ragin Cajun has a hit song!
• Credit Suisse relatively unscathed by the "dirty subprimers."
• "Project Lifeline," "Hope Now," how about "Read the small print and live within your means, idiot!"
• FED's Poole, "There's not going to be a fucking recession, okay?"
• The "dirty subprimers" make everything dirty and subprimish.
• Option Addict's Weekly Watchlist (one day late)
  

Good Morning

Time: 6:32
Mood: Positive

Red Hot Chili Peppers, "Knock Me Down"

Fighting Frustration

My day was spent trading stocks in the coal sector, and in the insurance sector.

I traded the coal sector because, once again, those stocks are on fire.



I traded the insurance sector because AIG pretty much "shit the shower."



In the end, I lost money. However, I did learn another important lesson. One that's much more important for me than for you. A lesson that is really untranslatable. Pretty much, I "felt" myself go "on tilt" in the afternoon. I started throwing market orders in and pretty much was trading desperate to try to make back the $300 I was down. As it turned out, I nearly doubled that loss in the last 30 minutes.

I'm starting to get a real feel for when I'm in a bad frame of mind to trade.

In fact, I wrote the VO post so shortly after the close because I was in a rush that I can tell that I was in a bad state of mind. If I'm not in control of my emotions, I just can't trade right. Anyway, I was angry at myself towards the end of the day because I had given back early gains (AGAIN) and went negative.

You can't trade angry and expect to make good trades, plain and simple.

Interestingly enough, in the morning, when I was making money and trading in control, I was using mostly limit orders. Towards the afternoon, I was using "angry market orders." Tomorrow I am going to make it my goal to use only limit orders to enter positions.

Anyway, my best stock of the day was ACE, although I gave back half of my gains in the stock in the late afternoon.



I short early on and made a half point when the stock was dropping in sympathy with AIG. I short again when it was about to break $56 and covered near the lows. This was totally a sell momentum play off the AIG. No pretty patterns unfortunately. Just quick, ugly trades that worked.

But guess what? My worst stock of the day, was another insurer, MET. The trade in these stocks was early. After that, they all just chopped around in a tight range for the remainder of the day. Often, I'll get mentally sucked into a sector if they move early (especially if I largely missed the move) and overtrade the stocks later in the day. This is what happened with me and MET. Pretty much, I was trading a trendless stock in the afternoon and I took a small loss.

I allowed myself to get discouraged today because I started thinking about the money I've given back in the last week. I've had a -$800, a -$600 and now a -$500 day in the last 4 days. Very depressing. However, I can't allow myself to get negative as that will get me nowhere. So tomorrow, I'll just get up, do my research and try to be more disciplined during the day and trade smarter. No market orders to enter positions, especially if I'm down on the day.

Anyway, here's the stats:

P&L, -$543
Best, ACE, $224
Worst, MET, -$161

33,000 shares traded.
20 stocks traded, 8 winners, 12 losers.

Virtual Office, $1365. SPX, +8.70, 1339.00.

Dehtrader, $820 on 6020 shares traded.
Sanglucci, $454 on 42,400 shares traded.
Equine, $445 on 7800 shares traded.
Timmay!, $137 on 600 shares traded.
OBAT, $67 on 5600 shares traded.
Wincity, $62 on 600 shares traded.
Misstrade, no trades.
Denarii, -$77 on 1000 shares traded.
Me, -$543 on 33,000 shares traded.

I have to say that I'm a little discouraged by the volume in the market these last few sessions. We traded less than 1.4 billion shares today on the NYSE and the VIX moved down a bit.

Meanwhile, lawsuits notwithstanding, it was a good day for our new VO member Equine Trader. Despite the fact that I hate horses, (a horse bit my great-aunt Bessie to death) I let her into the VO.

In other VO member news, I suck.

Well, I have some familial obligations to attend to immediately after the close so I'm keeping this short. Any VOer who didn't get their P&L in, just throw it in the comment section.

Obama's Momentum

As if things weren't going good already, now he has the added benefit of being attacked by President Bush... on a foreign policy matter no less! Can you say, slam dunk?

Equine Trader Breaks The VO Gender Barrier

In an odd twist, Equinetrader joins the VO and almost immediately afterwards, sues Dehtrader for sexual harassment because of this post.

Here is some exclusive footage of her from her past employer's Christmas party... needless to say, it's pretty clear why she moved on...



Anyway, please welcome our first female member of the VO.

Morning Link-Love

• More credit problems on the horizon. This time, the "dirty subprimers" have nothing to do with it.
• I was hoping for a little more from the Great Recession of 2008. However, the Treauries have already written its obituary.
• Obama winning in all kinds of weird states. Isn't Ragin from Louisiana?
• Exxon slaps Chavez like a whiny little bitch.
• Cash is King, But In Which Currency? Chaiman Mao Says The Renminbi.

And finally, masked hoodies. Anti-social or wave of the future?

Good Morning

Time: 7:11
Mood Thankful

Thanks to BDC for doing such a "first-tier" job of blogging around here this weekend. Seriously excellent.

Russell Peters & Naruto anime

This mix of part of comedian Russell Peters' set with Naruto is just hilarious:



For his whole set from this show, click here.

Deep Relative Value: SMTC Corp. (SMTX)

I know it's a boring, tight industry, but has anyone noticed that the EMS (Electronics Manufacturing Services) sector has been on fire lately?

Most of the majors have already released their 4Q07 results and they were surprisingly good for the usually bland sector.

For example, Singapore-based Flextronics nicely beat profit estimates and maintained its forecast , Canada's Celestica exceeded on revenue while profit was at the high end of consensus and Wisconsin's Plexus' net income increased 81% from 4Q06 and guided higher.

Meanwhile, smaller PCB maker Multi-Fineline absolutely crushed revenue and earnings estimates with large orders from Apple and the stock took an immediate 40% jump. That jump to the $18 level from $13 has held.

There are, however, a few even smaller and hence riskier players in the industry that haven't caught the attention of analysts or investors at large. This leaves a relative value gap as those companies with solid fundamentals play catch up. One small company, which is the subject of this research piece, is Toronto-based SMTC Corp. (Nasdaq: SMTX).

SMTC is not a small company by most measures, as it does about $250 million in revenue annually. But the market cap is an astonishingly low $19 million.

In reviewing the numbers you can't help but be puzzled as to why the market is valuing SMTX so badly - the stock is near an all-time low - as the company appears to be in better financial shape than ever before. The valuation is especially strange since the other EMS players have been reporting such great results.

Look these comparative valuation ratios for some color into the value gap:

Ticker	Market Cap	P/S	P/E	EV/EBITDA
FLEX	$9.2 billion	0.38	N/A	10.9
JBL	$2.9 billion	0.23	29.9	6.35
CLS	$1.4 billion	0.18	N/A	4.49
PLXS	$1.0 billion	0.63	13.37	6.51
MFLX	$457 million	0.90	153.14	15.17
TTMI	$445 million	0.64	15.93	5.90
DDIC	$98 million	0.53	N/A	4.57
MERX	$57 million	0.15	N/A	5.0
SIMC	$27 million	0.20	8.18	5.72
SMTX	$19 million	0.07	5.00	3.18

Notice on these valuation ratios that SMTX is lagging very far behind the group among all measures? Just to get to their nearest competitor valuation-wise, SIMC, the stock would have to double. And even then its valuation wouldn't be close to the average.

Meanwhile, on the fundamentals side, current/short-term plus long-term debt stands at $25 million at the end of the 3rd quarter, reported by the CFO as the company's lowest in eight years. Total debt at December 31, 2006 had been $43 million.

And importantly (also not surprising given the debt pay-down), cash flow from operations has been coming in at a strong clip, with the last 4 quarters seeing $24 million -- with $9.8 million the last quarter alone.

Note that $24 million in twelve months operating cash flow is greater than the current market cap!

Despite the revenue and earnings hiccup in the third quarter, the CEO stated the following in the last release:

"'For the fourth quarter, we expect to substantially increase sequential revenue, although we are unlikely to attain the record level in the fourth quarter of 2006. We also expect to return to satisfactory margin and profitability levels', stated John Caldwell."

The fourth quarter's numbers are due to be released on March 6.

But don't listen to him.

Listen instead to Ingenico, SMTC's largest customer, which reported record 4th quarter growth of almost 30% compared to the same period last year.

And to Harris Corp (NYSE: HRS), SMTC's second-largest customer, who also just reported something huge.

And finally to an institution who not only doubled its position at the end of December but has continued picking up shares lately through open market purchases while the stock remains under the radar.

In general, BDC believes that EMS companies should be relatively stable, at least in the early stages of a flagging economy, because more tech companies should move to outsourcing in order to lower their own cost structure.

SMTC in particular has been badly beaten up compared to its peers and thus represents an extreme relative value play within the group.

Of course, any investment has a degree of risk, so if you invest in this stock you may lose money.

Original Spree: Best Candy Ever.

If, for some unimaginable reason, you happened to find yourself over at MtM this evening, you were treated to 14 fucked-up facts about Richard.


-the team of bloggers at movethemarkets. Richard is the guy in the middle.

Many were disturbing, as MtM readers might expect. However, one in particular really drew my ire.

He said... *pausing to control anger while I type*, that chewy Spree are better than the original.

What kind of sick fuck is this "Richard" guy anyway? And what's his agenda?

NOTE: Apologies to BDC for stepping on his territory here. I just had to vent...