Lazlo Birinyi and his associates recently completed a study of the VIX. Their conclusions were that the VIX is not a very good indicator of future market movements. Instead, it is simply a mirror image of current market conditions. Their conclusions prompted me to look at the VIX over the past twenty years. Truth be told, GT made me do it. LOL He brought the study up in chat and challenged me to back up any argument for or against with real statistics. Always good advice...
First, let me state that I agree with Mr. Birinyi's conclusion. I overlayed a chart of the S & P 500 on a chart of the VIX from 1990 to present. At least on the surface, it even looks like a mirror image. Granted, I do not have the time nor the inclination to replicate his study methods. Anecdotally at least, it looks like he is on to something.
Next, I became curious if the VIX had any other uses outside of options strategies or if there was a VIX trade with a high…
Recently I purchased a small position in MannKind (MNKD) on a pullback, cost basis 10.03 a share. Seemingly went up everyday. Then, it fell off the cliff. A FDA request for additional information and it's interpretation tanked the stock. Down 24% in one day, it has continued to selloff. Currently down nearly 40% from my original buy point and it has no signs of slowing down. While I have no special insight into the workings of the FDA nor the drug, Affrezza, up for approval, I have to say that the market reaction is wrong in my opinion. I will double down if it falls to or below 5.50 a share.
I understand this is a very risky proposition, especially from a technical analysis standpoint. All I can say is I've got a very strong gut feeling that it gets approved with few if any hitches. I'm following my gut this time....
Mining stock recommendations, observations on Dollar/Gold rallies.
While running a simple screen for Cheap Growth stocks, I had something unusual happen. There was not a single stock that met the criteria. That's right, zero, zilch, nada. The screen only had three criteria; a PEG ratio of .75 or lower, a debt to equity ratio of .8 or lower, and an expected growth rate of 25% for the next 5 years. Only two possible conclusions can be drawn from this. Conclusion A, growth stocks are way over valued at this time. Conlusion B, analyst estimates for earnings growth are still very bearish, too bearish in fact.
My past experience with this screen leads to me too conclusion B. I started using this screen six months prior to the beginning of the bear market. At that time, there was no shortage of cheap growers. In fact I had to add a market cap component to reduce the number of possible candidates. Since the screen depends heavily on analyst earnings estimates and considering the events that occurred half a year later, I would conclude that…
This has a lot of good information in it. It's in pdf format so you can download it and keep it for future reference..C.pdf
I don't agree with this particular count either, but I think it's worth taking a look at. He certainly could be right...I do think the 1158 target makes sense as a short-term objective, though. http://bit.ly/cFMZ7p
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Added 3/30/10: I have discovered…
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