Stocks do not go up forever and Massey Energy is about to become a testament of that old adage as well as what you might call a bubble showing signs of weakness. You might want to call it good old profit taking but the time is now to short Massey Energy (NYSE: MEE)
Study the chart below if you are so inclined and tell me what you see if you wish.
I see emotion. I see emotion that got way ahead of itself. The P/E is now way out of balance. This is a screaming sell. I remember how the experts were telling everyone to go into the emerging markets in October of 2007. Now the experts or most of them try to sell the safety of the energy sector. There are a few that are telling the truth, that a bubble has now formed in the energy sector. A safe haven is NOT one where everyone has flocked to and where an overbought state exists on heavy desperate emotion. It's as if the energy sector has become an island of security. I want to profit from that island of safety as the majority are snug in the thought they are safe from the sharks of the market. When too many people are crammed on an island I say short it as it becomes every-ones favorite island.
I have said in the past to take profit from Massey Energy and yes to have done so would have left a lot of profit on the table and yes I sold way to soon as well, BUT, I have never ever said short MEE, Massey Energy. There is also NEVER anything wrong with taking profit regardless of what people might say. How dare I even think such a thing, SHORT MASSEY ENERGY, MEE, say it ain't so. Well, light the fireworks because this holiday season, July 4Th, MEE gets sent off with the bottle rockets of profit taking. We will see MEE get sold off to the $62 mark within the next four months. Yes, that's my prediction and yes that is my opinion.
The future headlines, not far down the road will go something like this, read the bold print below.
"COAL DEMAND SLOWS AS WORLD ECONOMY SLOWS"
It will slow but not that much, but the human emotion factor will take MEE down as fast it took it up and with good reason. There are huge sums of money to be taken off the table by investors. I am talking fund managers that will fleece the market first and ask questions later so their performance is kept in check and they are providing huge returns for the portfolios they manage. I am not talking about small time investors. Massey now has a market cap over $7 Billion Dollars. There will be a couple of billion shaved off the top as profit taking begins. Those who take first will be the big winners.
So Massey, I will cover you at $62.
V.
7 comments:
V,
Where do you think the money will flow after the funds exit energy? I'm hearing health care, maybe financials...
BD
First off, PLEASE stop using the yahoo charts. They suck. Second off, until it breaks support, there is no reason to short here. Use stockcharts.com, and show us why it is technically smart to short this stock. Just like NCC which has yet to break it's resistance, it is not smart to short a stock until it breaks it's support. Your reason for shorting should be better then "what goes up, must come down." That my friend, is lunacy. You have a 50% chance of being right, and a 50% chance of being wrong. If you are right, I am sure you will beat your chest and proclaim to the world your vast insight and knowledge as you usually do (we are all aware of your intelligence and don't need to be reminded of it everytime one of your predictions is correct).
I'll give you a technically sound stock to short...ICE. Head and shoulders. I would wait for a bounce, then I would short. It is technically and fundamentally a good short.
http://stockcharts.com/h-sc/ui?s=ICE&p=D&yr=0&mn=3&dy=0&id=p95223816506
Cut and paste. Now pull the candlesticks. Now take it out one year. See that little hump on the left, big hump in the middle and little hump on the right. That is called GOOD RISK REWARD. If we get the oversold bounce I suspect we will, you may be able to catch yourself some at 120-125 for the ride down. This stock is doomed IMO.
MEE on the otherhand, if it falls WITH VOLUME below it's 20 ema and CLOSES under it, that is when you take this chance. Not now, on a whim. So what if you miss 10 points. At least you know a pattern has developed. Too risky too short here, just as NCC is too risky to go long here. Averaging up or down is throwing good money at bad. That tied up money can be used in other trades until your play is set up better.
Once again, I am not saying you are wrong, I am saying it is UNWISE to do what you are saying here. Quit trying to be a hero by picking tops and bottoms. No one EVER does it consistently. Just like it is unwise to catch a falling knife, it is also unwise to get in the way of a shooting star. Peace, and don't publish this please.
DWRD
I'm not a TA but I appreciate those that are good at it. Keep posting DWRD as I'd like to see how ICE develops and how your other calls fare. Thanks.
DWRD,
I don't really understand you. You give about a page worth of analysis on V's and my picks yet you wont post on the front. Now I know you mentioned Converted Organics (COIN) out of Boston to me a couple weeks ago and yesterday it was up 27%. If you had posted on the front instead of on the comments page you could have made people money. Stop picking apart our picks and lets hear yours. I am not trying to be a wise ass its just that you really ought to post on the front. You are already a valuable contributor. You should get the visibility you deserve. Thats what I told my buddy from the blog Insights and Intimations. He used to write really in depth posts in the forum but not enough people were seeing them. Now he posts on here and has his own blog. Now that we are in the Forbes Network your post could be featured at forbes.com. Posting is easy and you can even make money. Let me know why you would rather post in the comments section rather than the front? If you have any concerns I am sure we can address them.
Sorry if it sounds as if I am picking apart your stock picks. I am a technical trader and do not try to pick tops and bottoms as that is a very dangerous game. I get a little fluxed when someone as intelligent as V calls these tops/bottoms. If I sounded rude, I apologize. I got thrashed when I began trading years back trying to do the same thing. I am just not good at it. I try to let the market decide tops and bottoms for me and I like to get in after the initial moves with proper chart set ups. This has more to do with MEE and NCC then any of the stocks you go over in your posts 50billion. You are just providing fundamental info on companies and I have tried a few times to give good technical points concerning these stocks.
Like V will admit his wrongs, I will admit my wrong on MEE. If you read over my post, I did not deny it would correct. I said I would not touch it unless it closed with volume under its 20ema. As it looks now @ close to noon on Wednesday, it may very well do so. So if I do decide to short it it will be a sounder technical set up under the 20 ema. I missed the first 10, but there is less risk under these technical indicators. That being said, V, you made an awesome call. I wish I had your ability to make those types of calls but I do not. From here on in, I will only try provide a technical view and not sound so condesending.
I traded ICE the same way I am recommending trading MEE. I missed the exact top, but caught it on 5/20@ $148 and change...the day AFTER it closed under it's 20ema. I covered it on 6/11 @ 119 and reentered 6/26 @ 125, when it failed to hold it's attempt at a bullish reset. So I missed the first 16 points. I gained 6 of them back covering low (119) and reshorting high (125). In the meantime, I had my profit and I used the money for other trades (win or lose) while it set up again.
As far as COIN goes, I would not have felt comfortable reccomending a buy when I posted. I still do not reccomend a buy until it sets up properly. I saw the pop yesterday, waited for a pullback on the 5 minute chart to the 9ema and made my day trade. I had a tight stop and the momentum took me up. If it did not, I would have stopped out for a 5% loss. As you can see today, it has given back 10% (so far, it is only noon). When the technical indicators tell me to go long, I will do so, and I will post my buy here (if it occurs). Price usually follows volume, but on a parbolic panic buy move like it had yesterday, it may need a week or 2 to set up properly (if it does so at all).
As far as why I do not want to post, I am not a guru. I'm just a trader. I do not feel comfortable recommending stocks. I am just a good chart reader and if I can help someone make their OWN decisions by posting my insight concerning technical set ups, I may consider posting.
Once again, I apologoze if I sound a little pissy at times, it has nothing to do with anyone here, only to do with my own past bad experiences and not wanting to see anyone else experience the same. I hope you guys understand.
Your partner in trading,
DWRD
Dude,
its not about being a Guru or recommending picks its about sharing your thought process. This is really a glorified message board. V and I both were sick of Yahoo censorship so we made our own forum. Your welcome to post any time . Everyone is welcome to post. I enjoy your analysis so its alright if its cutting. I hope you take up the offer.
Covered ICE this morning @ $105.07. Not going to be here the beginning of next week. $125.04 - $105.07 = about 19%. 25% first go round. Looks like it may consolodate here anyway. It stll has further to go though. Pull out a 2 year weekly chart and make it candlesticks. It is now working on support from the week of 12/04/06 and the stick in the middle of October (Big volume that week). Market weakness, it may slice right through it. However, if there is a bounce off of today's weak attempt (Nasdaq's turn), it may offer another opportunity for those interested in a short position. Once again, I reiterate, this stock is technically doomed.
DWRD
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