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Dr. Kris
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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Intraday Market Notes: Airlines, Financials Getting Some Luv -- January 4 6 comments
    Jan 4, 2013 3:49 PM | about stocks: KBE, XLF, STT, GS, OKSB, AEG, AFSI, PTP, PRI, BOFI, PROV

    12:40 pm ET: Another day and the bulls are twisting and shouting. Small-cap index RUT (Russell 2000) put in a new all-time high as the market-leading Dow Transport index (DTX) tests its all-time high. A break through this level would signal another leg up in the rally. The only possible cloud in the sky is that the volatility index (VIX) has fallen from a bearish level of 22 to a bullish contrarian level of under 14 in just four days. Historically, a close below 14 signals a turnaround in the market meaning that Monday's open could be met with selling pressure.

    But for now, let the good times roll! As we've mentioned previously, the sector to watch is the financials. Financials have been oversold for so long and are one of the last sectors to rebound. The New Yearly Highs list today was predominately populated by members of this sector especially those in the capital markets (investment banks and brokerages) and insurance industries. The most undervalued issues (as measured by their price/earnings ratio) hitting new highs today in the financial sector are the following. (The P/E's are all under 13.)

    Capital Markets: State Street (STT, $49), Goldman Sachs (GS, $134)
    Commercial Banks: Southwest Bank (OKSB, $12)
    Insurance: Aegon (AEG, $7), Amtrust Financial (AFSI, $30), Primerica (PRI, $32), Platinum Underwriters (PTP, $48)
    Thrifts & mortgages: BOFI Holdings (BOFI, $29), Provident Financial (PROV, $19)

    If you're looking to add some financial issues to your holdings, start your research with some of these. It should also be noted that both the financial etf (NYSEARCA:XLF) and a bank etf (NYSEARCA:KBE) also put in new highs.

    In other news, airlines continue to soar. Judging from their recent bullish movement, it appears is if they have a lot more room to run (although I personally have never been a fan of this industry.) One particularly compelling company in this space is Hawaiian Airlines (NASDAQ:HA). It just broke $7 major resistance and is looking to test the $8 level. I do think it'll pass that and from there it could easily go to $9. It's also one of the lowest P/E members in its group with a P/E of under 5.

    That's it for now. Have a good weekend!

    Themes: long ideas, airlines, financials Stocks: KBE, XLF, STT, GS, OKSB, AEG, AFSI, PTP, PRI, BOFI, PROV
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Comments (6)
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  • Chris DeMuth Jr.
    , contributor
    Comments (4339) | Send Message
     
    We like the airlines equities, especially due to our bearishness on oil prices this year. In particular, we like Spirit Airlines (SAVE). To clarify, we like the stock based on their excellent business model. Flying on it, however, sounds like pure misery!
    6 Jan 2013, 12:27 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (329) | Send Message
     
    Author’s reply » Chris,

     

    I agree with your analysis on why airlines are rallying (due to lower expected oil prices). Flying on most domestic carriers is a miserable experience. The last flight I was on there was no padding in the seat--it was like being benched for five hours. Ow!

     

    Thanks for your comments!

     

    Dr. K
    7 Jan 2013, 11:02 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4339) | Send Message
     
    International, especially some of the Asian, airlines are much less terrible experiences as a customer. Here are my favorite tricks, in case you're interested: http://seekingalpha.co...
    7 Jan 2013, 11:22 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (329) | Send Message
     
    Author’s reply » Velly interesting! Are airlines still so generous with their bumping policies? I thought they greatly reduced benefits...

     

    Sounds like a lot of work to figure out if you'll actually get bumped and it would be a bummer if you're counting on it and it doesn't happen. I do admire your ingenuity, though!

     

    Dr. K
    7 Jan 2013, 11:44 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4339) | Send Message
     
    Thank you, Dr. K.

     

    We've been pretty fortunate, but only when we hold tickets during a real supply crunch (typically when other airlines are on strike). It was some amount of work to figure out when we'd get bumped. Mostly good fun.

     

    I just started writing these up over the past month in part because business/family/etc. increases the opportunity cost and I thought I would pass on ideas that other, possibly younger, people could pick up -- odd lots, everyday arbitrage, and other opportunities that have positive expected values but more transaction costs than I can always bother with.
    7 Jan 2013, 11:55 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (329) | Send Message
     
    Author’s reply » Chris,

     

    Keep up the good work--I love your "odd lot" ideas! You might want to consider expanding your article a bit (including more "how-to" tips) and submitting it to travel magazines and the travel sections of newspapers. This is something that I think would interest the Wall Street Journal (plus they pay pretty well, too).

     

    Best of luck!

     

    Dr. K
    7 Jan 2013, 01:25 PM Reply Like
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