Seeking Alpha

Maximizing Profits: 3 Of 30 Bearish Valuations With 30+% Projected Profits

Includes: HFC, MNK, NYC, QQQ, SPY, WNR
by: Steven Bauer

This missive is about investing wisely in the stock market. That means that in certain time frames, there are companies with extraordinary profit probabilities to take advantage of. Those companies can always be identified well ahead of their bullish or bearish inflection point. Valuation is the only analytic process to know the "WHAT." The analytics processes are basic, and the same as those used by most financial analysts.

Index charts support this way of investing to maximize profit. I use the SPDR, S&P 500 ETF (NYSEARCA:SPY) chart, but other indices charts, such as the NY Composite (NYSEARCA:NYC) and Nasdaq Composite (NASDAQ:QQQ), also work well. Then I review the index charts of sectors, industry groups. These charts, along with the general stock market, are nearly always in sync. In bullish or bearish markets, investing in companies that have rich or poor valuations, are technically in sync with these indices and indexes can be quantified. Those with the best risk to reward ratio often are the most profitable.

Professors Logic

An axiom of the stock market says: "the influence of price movement of companies is weighted or influenced by the market indices (60%), sectors and industry groups (20%), and the company by only (20%)." Logic suggests that if a general market forecast for a bullish or bearish cycle is accurate, then identifying the current companies, with the 3%, top most favorable (excellent) or 3%, bottom most unfavorable (very poor) fundamental valuations, and technical charts make sense. I believe this supports my statement above that this is a missive about indices, indexes and not about the specific companies.

I maintain valuation data on a number of companies. That produces a matrix of excellent, middle range and very poor projections of the future price of companies. I suggest that this analytic process provides crystal-clear support of the above axiom in this missive.

I have found that conservative companies produce rich and poor valuations. I am often surprised at the names of the companies that pop-up on my bullish or bearish lists. So, don't get locked into companies with familiar names.

Three companies with very poor valuations and technical charts are presented for your review.

Fundamental - Valuations

Name Symbol


Projected Price

Holly Frontier Corp.(NYSE:HFC)


plus 5+% / minus 30+%

Questcor Pharma, Inc. (QCOR)


plus 5+% / minus 30+%

Western Refining, Inc. (NYSE:WNR)


plus 5+% / minus 30+%

Source of raw data: Finviz.

Projected Price is calculated and produces a probable range of the current price over the coming one to three months. The percentage figures in the above table are from peak to trough. See the below Report Card. I often suggest cash and patience as an alternative to taking short positions.

Valuation notes are the same for these three companies: My focus in this article is on extremely bearish companies. Therefore, it is good that they have very poor Target Price Projections. When I do further fundamental studies, the results neither improves nor declines. Company projected earning's growth is very poor through 2013 and beyond. My technicals are currently graded as, "very poor" (or worse) as are my consensus opinions.

These valuations should obviously suggest that they will continue to decline for a time.

Securities' valuations must be updated and studied as frequently as possible. This work may or may not offer positive support, or perhaps a further negative warning! Do not short these companies without talking to an experienced financial analyst or contacting me by Email.

Report Card

Company Symbol

Fundamental - weighting (40%)

Technical - weighting (35%)

Consensus Opinion - weighting (25%)

Report Card - Grade: ( 0 - 100 / A - F )





68 / D



Very Poor


65 / D




Very Poor

59 / F

My weighted Fundamental, Technical and Consensus Opinion ratings range from Excellent to Very Poor. Grades below 90 / A are not current (never are) candidates for buying. Grades above 60 / F are not current (never are) candidates for short selling. Information and data are ever changing, so be alert. Every company's "Grade" can be from a neutral grade (60 to 90 / D to B) to a buy (greater than 90) or short sale (less than 60) in a very short time.

Further support for the above notes can be read in my Instablog article on "My Rotation Model."

Market Status

The general market is currently fundamentally overvalued and technically overbought, and its consensus opinion is much too bullish. It is showing signs of serious deterioration, especially in the area of breadth. This means that you must consider holding cash, or perhaps take bearish positions in the coming weeks.

My analytic focus is investing wisely, e.g. taking advantage of the bull / bear cycles as they occur within the overall marketplace. The valuation of securities within these cycles is vital. This means maintaining a process of the thorough analytics of many companies, their sectors and industry groups. This, of course, is only true if you are seeking consistent annual profits.

I use several indices in my focus to identify the ongoing bullish and bearish inflection points. The NY and Nasdaq Composite Indexes are represented very well by the NY ETF, NYC and the Nasdaq ETF, QQQ. Identification of bullish and bearish inflection points is important. I also emphasize and use market breadth indices. 'Breadth' does not have a tracking ETF; therefore, I have created my own excel charts.

Comparing the SPDR, S&P 500 ETF, SPY tells a very compelling story about these companies.

Further support for my guidance for the general market can be read in my Instablog article on "Wednesday - General Market Update & Commentary."

Professor's Opinion

I expect these three companies to be under moderate to heavy pressure in the coming weeks. I now have over 30 such companies on my longer-term short list. Currently, these companies all look quite similar and that is very negative!


I am bearish on both the world economies and the general market. My more recent Instablog postings are focused on securities that should not be currently held in your portfolio. It is important for you to understand that holding cash during questionable time frames is a wise choice. (This is definitely a "questionable" time frame). Further and on-going support for these companies will begin this coming Saturday. My "Saturday Update" can be read weekly in my Instablog article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.