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risk manager jeff's  Instablog

I'm not really a Risk Manager, but I play one in real life
My blog:
The Yuppie Pig
  • A Sector Short - Restaurants
    A Sector Short - Restaurants
    One sector I've been watching over the past few months is the restaurant sector. I'll quickly bullet the highlights that I see as reasons to be bearish on this sector.
     
    • Generally poor reactions to earnings lately.
    • It seems like only PNRA (Panera Bread) has generated a favorable response, and is the last General in the sector standing. CMG (Chipotle - the other General) failed to inspire, and I believe its growth rate is in question, which is going to put serious downside pressure on the stock despite its good fundamentals. Longer term, I still like this stock. But not this quarter!
    • Unlike retailers, much of the restaurant business is domestic and levered to the consumer. As long as jobs are continually lost, this sector is going to suffer. I'll note that I don't consider MCD (McDonalds) as part of this sector, as its more of a recessionary stock, in my opinion.
    • Commodity inflation is back. Two quarters ago, this sector saw huge year over year declines in commodity prices. Those easy compares are over, and in fact, have been rising recently - although the agricultural sector has lagged somewhat. Gasoline rising, is again, going to pressure the sector.
    • Terrible charts! If the market indeed, is rolling over here, there is very little support in these stocks! Downward volume has generally been decreasing (excluding the Generals) and there have been some major selling volume spikes.






     
    Disclosure - Long MCD in retirement account; No other positions
     
    Tags: CMG, PNRA, EAT, CAKE, RT, DRI, restaurants
    Nov 02 01:48 am | Link | Comment!
  • Trading Idea - Platinum
    Here's an interesting trade that should be out of the ordinary. Platinum - the forgotten precious metal recently broke out on high volume on this ETN. It's rather illiquid, thus perhaps it wont be as reliable as a more heavily traded ETN or ETF.

    The metal is typically used as a catalyst in the auto industry, so this is a derivative play on 3 things. Cyclicals (auto industry), the "green" movement as this is needed to make fuels burn cleaner, and precious metals; all of which are currently on upswings in the market.

    Right now, it appears to be back testing the broken resistance, now support. There is some constructive volume patterns and the 50 day EMA should provide good support. An entry at 32.5 should be a good risk:reward ratio. first target would be back to its highs at about 35.3, but the pattern does measure to around 38.5 over time.


    FYI - From Wikipedia

    Of the 239 tonnes of platinum sold in 2006, 130 tonnes were used for automobile emissions control devices, 49 tonnes were used for jewelry, 13.3 tonnes were used in electronics, and 11.2 tonnes were used by the chemical industry as a catalyst. The remaining 35.5 tonnes produced were used in various other minor applications, such as electrodes, anticancer drugs, oxygen sensors, spark plugs and turbine engines.

    Disclosure: No position
    Tags: PGM, Platinum
    Oct 23 04:55 am | Link | Comment!
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CAKE, CMG, DRI, EAT, PGM, PNRA, RT
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Platinum, restaurants
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