Digital River dumped

I sold out of my position of Digital River Inc. (DRIV). I just didn't like the price action. I know IBD says we are still in a confirmed rally but I just don't like all of the failed breakouts I'm seeing all over the place. We need some leadership!

I'm holding onto NGPS for now because it seems to be the only stock showing any strength lately. I'm also watching the steel producers for more short opportunities.

Update: 09/05/06 I'm an idiot and didn't give this one time. My weak hand was shaken out and now it is going up on big volume. Oh well, live and learn.

Flotek Industries Conference Call

The picture to the left is Jerry Dumas, Sr. He is the CEO of Flotek Industries and he gave one hell of a Q2 conference call today. He fielded some pretty tough questions from some pissed off investors and handled every one with class and honesty. He even got a little indignant about the market cap decline his company has endured since the Q1 conference call. His commitment to his company's share holders was not only demonstrated when he pulled the plug on a recent acquisition, but was also quite clear throughout the call.

I think Mr. Dumas is one of the reasons why I was drawn to Flotek in the first place. I'm a CANSLIM investor and learned about FTK earlier this year through the CANSLIM Select stock screen at Investors.com. I made a mistake by not waiting for a proper buy point, but I can tell you this, I would have never held on to this stock this long if I didn't have absolute faith in Jerry Dumas' leadership and integrity.

Here's to you and your health Jerry.

Here are some call highlights

1. Earnings guidance is still 1.35 to 1.45 EPS for the year. This means that earnings for Q3 and Q4 will be double that of Q1 and Q2.
2. Sales for Q2 were 22 million. Up 78% from last year. Half of that was organic growth.
3. Operating income was 30.7 million. Up 41%.
4. Cash flow was 3.9 million compared to 2.4 million for last year and 2.7 million for last quarter.
5. Revenue guidance has been revised from 79 million to 90 to 95 million.

Listen to the call and buy Flotek at these extremely undervalued prices!

Flotek cancelled conference call

Well it seems I was on the right track about the cancelled conference call I was worried about last week. It seems that Flotek has broken off negotiations for a new acquisition. I guess the talks went a little long and made the talk at the Enercom conference impossible. A fresh conference call will be this Thursday, August 24th.

I'm glad that Jerry Dumas (the CEO) had the discipline to break off the acquisition rather than pay too much. Looks like it is back to organic growth for a while.

Update: The conference call was fantastic! All my serious questions were addressed. I will write up a detailed review in the near future.

Still watching ATI

The recovery of Allegheny Tech. (ATI) is just giving me more confidence that it is a great short candidate. Although I covered my first ATI short the other day, I think that the chart's price and volume action is just screaming to short it again once it regains its 50 dma and then breaks down below it. Just look at the recent recovery. The price keeps going up on lower volume, which is a very bearish sign.

That last short was good for a quick 10% gain. I have a feeling the next one will be good for even more.

Market leaders of the last bull market rarely lead the next.

NovAtel Inc. (NGPS) Another buy

I have been watching NGPS for a good buy point and missed the first breakout. It is easy to see why when looking at the chart. The breakout from the double bottom base came out of nowhere and I didn't have a chance to jump on. Besides, the market was still in a confirmed downtrend at the time.

Lucky for me, stocks that make such huge moves on big volume usually pull back some. If this is done on low volume, it is a very good sign. Unfortunately, I missed the secondary buy point again yesterday (having an actual job is a real disadvantage for CANSLIM investors).

Today, I put in a limit order at 44, well below the 5% cutoff window for properly entering a new position. Low and behold, it was filled during the early morning weakness.

From a fundamental point of view, NGPS is a very interesting company. It designs GPS components and subsystems for agriculture/marine, surveying/mapping, and aerospace industries. I've read that it is in the very early stages of accelerated growth. Let's hope so.

On the long end with Digital River Inc.

Well I said I was on the lookout for a good chart and I think I found one. Digital River (DRIV) broke out of a base yesterday with strong volume. The company provides outsourced ecommerce services to companies in the software and hightech industries.

The buy point was at 47.20. I picked up some shares yesterday (8-16-06) at 47.75. I'm not really convinced about the rally so I've set a stop loss at 6% below my buy in. Wish me luck.

Better late than never...

Well the market finally followed through with its rally attempt. It took 21 days, but maybe its time to make some money on the long side.

I covered my ATI short and I'm now in the hunt for some good long-side charts.

Speaking of the long side, Flotek Industries (FTK) didn't give their planned presentation at Enercom. It was supposed to be today. They didn't bother telling any of us investors and I actually had to call the front office to get some answers. Unfortunately, I didn't get any.

First of all, the head of investor relations was not in, which I think is strange. I bugged the poor secretary so much that she went and got some senior exec. I asked why FTK had not presented at ENERCOM and if they were going to present a conference call to make up for it. They told me that Flotek had made a business decision regarding their canceling of their presentation. They also said that they would NOT be giving a conference call, also a business decision. I pushed as hard as I could and the lady would not give me any hint as to what was going on.

Looks like FTK is in the middle of some big deal and just didn't want Jerry Dumas (CEO) to run his mouth again, like he did last quarter. Sometimes he gets a little too proud about his company.

When to cover?

Caught a downgrade today from Prudential. Down another 4.4%!

Am I getting greedy? It looks like we are headed for the 200 dma (53.31). We have increasing volume on each successive down day.

I think I'll just tighten up my stop and see where we'll go.

ATI...going down

ATI closed at 58.40 on Friday. I moved my stop loss down.

Now its time to figure out when I cover this short. There seems to be serious support at 55, but the market feels like its on its way down to new lows. We shall see.

Good night.

Another Fed hike on Sept. 20th?

That didn't take long. There is talk of Bernanke losing his inflation fighting credibility already! The Fed might be forced into another tightening, like it or not. We'll have to watch the inflation data closely.

BYW, my ATI short has not yet threatened my stop-loss.

Breakdown of leading stocks

In the weekend IBD edition (Aug 7, 2006), the investor education section takes a close look at the breakdown of a market leader, Goldcorp (GG).

I'm posting this because of the similarity the chart has with the ATI chart, which I just shorted. Notice the bearish divergence or wedging indicated by point 3.

Here's a quote from the article, "When leading stocks start breaking down after huge run-ups, that often signals a shift in market direction."

I think ATI is a much better short because it is more dependent on the economy. With inflation still on the rise, gold might resume its climb and bring GG right along with it.

Short initiated today

I shorted Allegheny Technologies today. I put in a stop limit order at the 50 dma when the market gapped up this morning. I was filled at 63.09 when the market reversed itself later in the morning.

The chart has all the hallmarks of a good short, but I'm nervous about the near term reaction to the Fed meeting on Teusday. As a result, I've put in a tight stop-loss at 66 bucks. If I get stopped out I'll short it again if it crosses the 50 dma again.

Inflation!

Surprised? Think the Fed will stop with rates?

Didn't think so. Watch all those cyclicals slice through their 50 dma.