Crocs anyone?

Clearly more work is needed but a friend forwarded this to me today.(From the Crocs (CROX-US) quarterly)

As the Company continues to re-evaluate its operating plans for 2009 and beyond, it has undertaken certain restructuring and right-sizing activities to address the potential for continued decreases in revenues. The Company's ability to continue as a going concern is dependent upon achieving a cost structure which supports the levels of revenues the Company is able to achieve. There can be no assurance that any actions taken by the Company will result in a return to profitability. As discussed in the previous paragraphs, the Company faces various uncertainties that raise substantial doubt about its ability to continue as a going concern.


I don't know the company but I do know the product and I can say that as with nearly all fashion, things come and go. Judging by the pounding this stock took it seems the market agrees and and now they are having trouble getting up off the mat, maybe a good short candidate. The stock behaves very well technically also, which makes sense if the momentum guys are on board. Maybe short with a stop just above the 50d average, and hope for a slide when Christmas sales disappoint. Life is tough when you are a one trick pony!

Disclosure: no positions

Markets. Business. Life. by LoneRngr (screen name) is licensed under a Creative Commons Attribution 2.5 Canada License. Based on a work at marketsbusinesslife.blogspot.com.
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Santa Claus Rally

Latest thinking says we could get a little Santa Claus rally here. Trying to call the trend of the overall market though is a mug's game, and nowhere is this more evident than in this blog where I have already been humbled in recent days/weeks! Unfortunately the need to make the right call on the broader markets is self-evident even if one only plays individual stocks, as we are constantly reminded that total return comprises alpha AND beta components.

Back to Santa. 2009 has been infinitely better than '08 and most money managers are still so shell shocked they chose to do nothing rather than risk blowing the gains already in the book. Seasonally we are entering the time of year when large unexplained price swings are common. At least this year we don't have to contend with huge tax loss selling as most accounts are sitting on gains for year. We bounced off the 50d average in Toronto, which is a good sign (for the longs). A major IPO in the junior resource space was canceled recently, which is indicative of selective risk appetite out there.

I will close today with this quote (and I paraphrase):
"Never has so much data been so poorly analyzed by so many people" - Norman Fosback (from the book, Stock Market Logic)

Enjoy the weekend!

Markets. Business. Life. by LoneRngr (screen name) is licensed under a Creative Commons Attribution 2.5 Canada License. Based on a work at marketsbusinesslife.blogspot.com.
Permissions beyond the scope of this license may be available at http://marketsbusinesslife.blogspot.com/.

Reversal Time?

I have been speaking to a lot of people lately about specific TSX stocks, as everyone is asking the same question: Why is the stock down? What don't we know? Thus far my answer has been mostly "profit taking" or "end of year jitters", and I will keep with this explanation until I have reason to change it. No sooner did I make my bold proclamation on this blog for the TSX to hit 12,000 then the momentum abruptly died with no staying power to follow through. While I have mixed views on technical indicators, sometimes they can adequately capture the prevailing sentiment and as a result serve as a good guide to what is happening in the market. Pictured below is the TSX daily chart with the momentum reversal.

Whether the TSX can hold support at the 50d average will be a key test for the market, and so far today is not looking so good. Another troubling indicator is the rising wedge formation on the TSX, typically a bearish indicator. This same pattern presented itself on the Dow Jones average in the late spring this year just prior to a 9% reversal.

One doesn't have to look very far to find negative sentiment indicators out there, and whether the markets keep trending up or not it probably makes sense to take some profits.

Markets. Business. Life. by LoneRngr (screen name) is licensed under a Creative Commons Attribution 2.5 Canada License. Based on a work at marketsbusinesslife.blogspot.com.
Permissions beyond the scope of this license may be available at http://marketsbusinesslife.blogspot.com/.