The Daily Kill Sheet Picking Off Profits One Stock At A Time!

April 17, 2013

Daily Kill Sheet For April 17, 2013

Filed under: Advice,Industrial,Industrials,Shorts,Take Profits — Administrator @ 10:09 am

I am closing out my short position in Cummins Inc. (CMI, $108.15) for a 6.3% gain. These shares are very volatile, and with the markets beginning to look near-term oversold I want to cover here and look for an entry point after a bounce.

April 16, 2013

Daily Kill Sheet For April 16, 2013

Filed under: Advice,Industrial,Industrials,Shorts,Take Profits — Administrator @ 8:15 am

I am taking profits on two of our short positions here after yesterday’s big decline. With that said, I am closing out our 1/31 short on Kennametal (KMT, $36.17) with a 12.5% gain. I am also closing out my 3/21 short on Parker Hannifin (PH, $85.96) with an 8.5% gain. Both stocks have had solid declines and are trading near our short-term price targets, thus I will take profits off the table here.

March 21, 2013

Daily Kill Sheet For March 21, 2013

Filed under: Industrials,Shorts,Uncategorized — Administrator @ 2:47 pm

Take a look at Parker Hannifin (PH, $93.24) on the short side. This one is a bit of a no brainer. We are going to take advantage of the stock’s seasonal bias coupled with its deteriorating technicals and its weakening fundamentals.

On a fundamental basis, the shares are trading near the higher end of their traditional valuation range even though orders have turned negative across most of their business segments and earnings are down on a year over year basis. Aerospace has been the only segment where sales have remained strong, but with the impact of sequestration still an unknown PH shares at the current quote are a questionable long.

Typically the March to June time frame is a poor time to hold Parker Hannifin shares. Indeed, if you had shorted the stock on March first and bought the shares back at the June low, you would have had a profitable trade in 21 out of the past 27 years. In other words, you would have made money 77.7% of the time. A popular saying is the trend is your friend and in this case it’s your best friend! Indeed, in nine out of the past twenty-seven years having a short over this time frame has garnered a double-digit return. That’s a double-digit return in one out of every three years on average!

On a technical basis, PH shares look over bought and are at a dangerous level on two fronts. To start, the stock is in the process of forming a double top with its April 2011 high. Last time the shares had pulled back nearly 40% in six months after reaching its peak. Parker shares fell through their 50-day moving average today after Goldman Sachs resumed a Sell rating on the shares. Now that that key support level has fallen, there is no real support until about $86 a share, about the mid point of an unfilled gap in its chart from the beginning of January. Typically all gaps get filled at one point or another, thus its a good bet that this one will too. At this juncture, the 200-day moving average sits just below $84 a share. I suspect that fear of weakening orders, coupled with fears about the banking crisis in Europe and the slowing of Asian economies will be enough to push the shares toward their 200-day moving average. With that said, my near-term price target is $84, implying an 11% gain to my target. For the record, the lat decline from the top was halted when the stock hit its long-term 200-period moving average.

February 26, 2013

The Daily Kill Sheet For February 26, 2013

Filed under: Industrial,Industrials,Shorts,Take Profits,Uncategorized — Administrator @ 10:03 am

Time to take profits on our 1/25 Caterpillar Inc. (CAT, $88.80) short position. The shares have weakened substantially since reporting earnings on 1/31. Although the consensus estimate has dropped $0.59 a share over the past four weeks, it still remains well above my $6.50 estimate. Looking ahead, I expect estimates for the year to continue to fall. However, the stock is approaching its 200-day moving average and I am expecting a dead-cat bounce here. Thus, we will take a 7.1% return on our short position here and look to reshort the name on a bounce or break below the 200-day moving average.

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