Van Meerten's picks

As always I start my quest for the next great stock by taking the new high list on Barchart and sorting for frequency. I then take the top 10 and look for something interesting. Yesterday when all the major banks were getting hit on the chin the smaller and regional banks seemed to be doing better. Sandy Spring seems to be that small bank I'm looking for.

SANDY SPRING ( SASR ) is a bank holding company for Sandy Spring National Bank of Maryland. The bank is community oriented, and conducts a full-service commercial banking business through community offices located in Montgomery, Howard, Prince George's and Anne Arundel counties in Maryland. Looks like they are in a very strategic geographic region.

The analysts are beginning to take note and Janney Montgomery Scott, FBR Capital and Robert W. Baird have all recently upgraded their recommendations on this stock. In the last 7 days there has been 5 upward EPS revisions and the consensus is that there will be an increase in revenue of 6.7% plus an EPS improvement from a 28 cent loss this year to a profit of 83 cents. Nice EPS improvement.

On the technical side Barchart has 4 of the 5 short term technical indicators as a buy with one hold for an 80% short term rating. The stock had 13 new price appreciations the last month for a 48% price gain.

Now I'm not sure which banks are going to survive but I do know that the industry as a whole will survive. The industry is just too vital to the economy and the way we all do business everyday not to have a place in our communities. Small community banks will survive and Obama has promised to make that happen and give them support.

I'm taking a flyer on this one and adding Sandy Springs ( SASR ) to my VMSLO portfolio. This is the more risky of my 2 model portfolios but it goes in the risky portfolio because the trading volume recently has been below 100K shares per day.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please make a comment below or email JimVanMeerten@gmail.com

Disclosure: I hold no positions in SASR at the time of publication.

Comments: View Comments |  Tuesday February 9, 2010

I just returned from a week in Orlando at the Money Show. The speakers were terrific and I came back with a lot of good ideas that I'll share in the coming weeks. I'm not sure what happened to your portfolio but I came back to a lot of triggered stop losses. My Wall Street Survivor portfolio is down 1.97% for the month which puts me back in 6th place behind this months winner so far, Tobin Smith who has a 1.56% gain.

Most speakers at the Money Show had different opinions on the market, how to play it and what's in store for the next 6 months but one thing they all agreed on was that earnings, the economy and job numbers are not being properly factored into this market. Things are improving but every time someone in Washington opens their mouth the hot air deflates the market. Is the hot air deflating your portfolio?

Let's take a step back and see how the market did. As usual I'll use Barchart for my data.

Value Line Index -- I use this index because it contains 1700 stocks making it broader than the narrower Dow 30 or the S&P 500 -- this week down by .95%

1 - Barchart's technical indicators signal a 40% sell signal -- 3 buys, 2 holds and 8 sells
2 - The index closed Friday below its 20, 50 & 100 day moving averages for the first time in many months

Barchart's market momentum indicator -- approximately 6000 stock are used -- the percentage of stocks closing above their daily moving averages for various time frames -- above 50% good but below 50% bad -- this week all 3 looked bad

1 - 20 DMA -- only 20.08% closed above
2 - 50 DMA -- only 35.45% closed above
3 - 100 DMA -- only 45.78 closed above

Ratio of stocks hitting new highs to stocks hitting new lows for various time periods -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- this week all 3 time frames were very bearish

1 - 20 day ratio of new highs to new lows -- 278/3660 = .08
2 - 50 day ration of new highs to new lows -- 152/1733 = .09
3 - 100 day ratio of new highs to new lows -- 74/962 = .08

Summary -- The market is reacting very negatively to the hot air spewing out of Washington. The improving economy, job numbers and earnings are being overshadowed by the threats coming out of the White House. Isn't it ironic that Obama took all the campaign handouts from Wall Street, the banks and hedge fund managers and now spends his time demonizing them and telling the common folk how he will punish them. This week I'll trim non-performing stocks from my portfolios but I'll hold up replacing them till I see a little bit of support in the market numbers.

Alternative strategy -- At the Money Show I ran into 2 of my all time Wall Street heroes -- Robert Stovall and Paul Kangas. Both these guys are going strong and still giving us all some productive and sane advice. Since it's Super Bowl Sunday it might be time to give a return visit to Mister Stovall's Super Bowl indicator. He's observed that the winner of the Super Bowl predicts the performance of the market for the rest of the year. If the NFL wins he can look forward to an up market, if the AFL wins the market will perform poorly. Don't laugh; the indicator has been correct for 34 of the last 43 Super Bowls. Before you go to bed tonight the Bowl game winner will be determined and you'll know how to play the market. I'm not taking sides, I just want to know whether to go long or short.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com
Disclosure: I have no positions in the stock in my Wall Street Survivor portfolio

Comments: View Comments |  Sunday February 7, 2010

I like to analyze the market by using a combination of fundamental and technical analysis. Normally using that combination keeps me on the right side of the market. Lately the market seems to act irrationally every time a President or other politician opens their mouths. Somewhere back in a high school civics class I thought I remembered a teacher saying the purpose of government was to make and enforce laws and provide the common services that public and private companies couldn't provide.

These days the main purpose of the government seems to be to control the capital and equity markets, lower your taxes by limiting your bonuses, spend money they don't have on stimulus packages that don't create new jobs ( which increases the deficit) and scare the heck out of the stock market whenever it seems things are going great.

So far the scoreboard for the middle class is you are either unemployed or taking home less money because you've lost your bonus, the balance on your 401K or IRA is half of what it was 2 years ago, your house is underwater because the value is down but the mortgage balance isn't and if you need a loan to tide your small business over till the recession ends no bank will loan you money.

Yes Obama has made good on his promise to lower the tax bill of the middle class but he forgot to tell us he would do it by lowering the numbers on your W-2.

Well it's the weekend again and time to take a look on what the market did. As usual I go to Barchart for my data and I look at the Value Line Index because it is contains 1700 stocks and is broader than the narrower S&P 500 or Dow 30.

Value Line Index -- 1700 stocks -- down 2.3 % for the week. That makes us down 3 weeks in a row and down for the month by 2.89%. Remember we were up in November by 3.74% and December up by 7.01%. Is that a correction or change of direction?

1 - The Index closed below it's 20 & 50 day moving average but still managed to trade above its 100 DMA
2 - Barchart's technical indicators gives the Index a 24% sell signal with 4 buys, 2 holds and 7 sells

Barchart market momentum -- approximately 6000 stocks -- the percentage of stocks trading above their daily moving averages for various time periods --short term reversal but still up for the long term

1 - 20 DMA -- only 23.87% above
2 - 50DMA -- only 43.56% above
3 - 100 DMA -- 51.43% above

Ratio of stocks hitting new highs to stocks hitting new lows for various time frames -- 1.0+ bullish, 1.0 neutral, under .99 bearish -- looks bad for all 3 time frames

1 - 20 day new high/new low ratio -- 382/2092 = .18
2 - 65 day new high/new low ratio -- 211/516 = .41
3 - 100 day new high/new low ratio -- 148/374 = .48

Strategy for the next week -- The economy according to the Conference Board's Leading Economic Indicators seems to be mending, fundamentals of the companies that made it through the recession seem to be improving but the market is showing signs of nervousness from the political instability that Washington is creating. I'm going to sit on the side lines and trim a few non-performing stocks this week but not replace them till I see more support in the market.

I'm taking the week off and going down to the Money Show in Orlando to hear what the big boys are saying. The list of speakers is impressive: Steve Forbes, Howard Gold, Jim Jubak and two of my all time favorites Paul Kangas and Robert Stovall. There will be educational seminars by Jamie Dlugosch, Kelly Wright, Tobin Smith and Louis Navellier I'm really looking forward to talking to Jim Rohrback, Ken Kam, Michael Shulman, Nicholas Vardy and the always entertaining Jon Markman. If this sounds like a commercial, it's totally unsolicited. I've attended and spoke at 3 of these and really enjoyed each time. See you there.

Well, I've put off the bad news till last. My Wall Street Survivor portfolio is in the toilet. The S&P 500 was down 3.72% for the month but I'm down 7.09% mainly because I'm margined out. Hats off to Anthony Mirhaydari for calling the market sentiment properly and being up 3.72% while I came in 8th place out of 8.

See you at the Money Show.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

Comments: View Comments |  Saturday January 30, 2010

Office Depot (ODP) is being cut for my Marketocracy S&P 500 portfolio. I've got some rules that I follow religiously and ODP violates them all. Very simply put my investments must meet some basic criteria:

1 - They must have current price appreciation in recent trading sessions
2 - Barchart's technical indicators must show a positive buy consensus
3 - The stock must be trading above it's 20, 50 and 100 day moving average
4 - The analysts should have a consensus of increasing sales and earnings projected for the future

Well how do the criteria stack up?

1 - In the last month the stock has closed lower 8 times and lost 20.76%
2 - Barchart's technical indicators have 12 of 13 sell signals
3 - The stock is trading below it's 20, 50 and 100 day moving average
4 - Analysts predict lower sales, operating profit and net earning for next year
5 - The nail in the coffin -- Analysts consensus is a 5 year compounded EPS loss of -24.9%

Recommendation - Despite some other sites having a hold recommendation I'm dropping ODP like a hot potato. They are too many companies out there making money for me to invest in a wing and a prayer.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

Disclosure: no positions at the time of publication

Comments: View Comments |  Thursday January 28, 2010

I just ran an hourly chart on the Value line Index - an arithmetic index of 1700 stock followed by Value Line. The index shows trading below its 20, 50 and 100 hourly moving averages.

The index is trading at 2235.80 with resistance at 2267.55 and support at 2214.83.

My advice is to trim stocks trading below their 50 day moving averages but I'd not replace them until I see some support in the market.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

Comments: View Comments |  Thursday January 28, 2010