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SOMETHING TO CONSIDER: IS ZILLOW A SHORTSALE?

SOMETHING TO CONSIDER: IS ZILLOW A SHORTSALE?

Zillow's recent purchase of Trulia for $3.5 billion left many analysts shaking their collective head. Zillow paid a lot in its attempt to monopolize internet real estate search advertising. Suddenly Zillow's stock began to falter.

Did Zillow pay too much? Or is its price decline a fear that another housing crash might rob Zillow of the opportunity to cash in on its recent purchase?

We are getting an EMV ASP shortsale signal on Zillow today.

EMV ASP is the red line in the pane second from the top; this is our trade trigger. When EMV ASP goes positive, as in Z above, but the two longer-term trends are negative, then we get a shortsell signal. The bottom pane is one of those longer-term trends, T11 Sunmarry. The pane above, T5 Simple, is a short-term trend that we essentially ignore in this grading system. If we wait for this term to go negative we usually miss our entry point near the top.

Technically speaking, Zillow is a mixed picture. We'd love to have Zillow technically overbought -- but our orange indicator in the top pane, CGTS 112, is not overbought (+7). It's two most recent run-ups have been very weak (no buyers), which is a good sign for shorting the stock. It ticked up yesterday; this suggests there might be more buyers than we'd like. But this should make no difference to us in the longer term.

Our EMV ASP Trading System is up 6% from 10/24/14.

Zillow has traded very effectively in the past, using our EMV (Ease-of Movement) Variable ASP trading system:

Test Range: 8/18/11 to 11/3/14 Column1 Column2
     
Net P&L: 256.23    
Percent Net P&L: 1,068.09%  
     
Number of Trades: 27    
Average P&L per Trade: 9.49  
Percent Winning Trades: 92.59%  
     
Total Days in Test: 785    
Percent Days in Market: 49.17%  
Average P&L per Day: 0.33  
     
Max Drawdown: 13.79  
Reward/Risk Ratio: 18.581  
     
Buy & Hold P&L: 83.88    
vs. B&H P&L: 172.35    
vs. B&H Percent P&L: 718.44%  
vs. B&H Reward/Risk Ratio: 17.183  
     
Current Position: Short    
Open Trade P&L: 0.00    
Traded Last Day: Enter Short  

Current EMV ASP Portfolio:

Symbol Close Position Profit/ Purchase Cost Sale Sales
      Loss Date   Date Price
               
COCO 0.17 long 37.35% 10/24/14 $0.14 10/27/14 $0.19
EOC 46.78 short -3.11% 10/27/14 $45.08 10/29/14 $46.42
1288.HK 3.59 long 1.86% 10/27/14 $3.50 10/30/14 $3.57
OREX 4.12 long -5.83% 10/24/14 $4.38 10/30/14 $4.13
CZR 12.19 long 2.17% 10/28/14 $11.73 10/30/14 $12.00
HOT 76.48 long 0.83% 10/28/14 $76.44 10/30/14 $77.17
SSRI 4.69 short 13.70% 10/28/14 $5.57 10/30/14 $4.80
MXWL 11.5 long 9.45% 10/24/14 $10.64 10/31/14 $11.66
DUST 40.93 long 60.92% 10/24/14 $29.33 10/31/14 $47.25
CYH 55.43 long -2.99% 10/24/14 $56.59 10/31/14 $54.97
BZQ 67.44 long -10.00% 10/24/14 $71.26 10/31/14 $64.22
SHLD 33.25 long 10.33% 10/27/14 $39.00 10/31/14 $34.92
XOMA 4.29 long -0.35% 10/24/14 $4.30 11/3/14 $4.29
SRPT 16.4 short -4.40% 10/30/14 $15.73 11/3/14 $16.40
AXPW 1.77 short 20.50% 10/27/14 $2.23 11/3/14 $1.77
IDI 0.63 long 1.55% 10/28/14 $0.62   $0.00
LXRX 1.42 long -1.46% 10/30/14 $1.44   $0.00
IES.DE 2.31 long 3.01% 10/30/14 $2.24   $0.00
TNK 4.31 long 13.35% 10/24/14 $3.80   $0.00
3988.HK 3.7 long 2.99% 10/24/14 $3.59   $0.00
1398.HK 5.09 long 1.93% 10/24/14 $4.99   $0.00
AFFX 9.18 long 19.30% 10/24/14 $7.69   $0.00
SLM 9.72 long 5.24% 10/27/14 $9.23   $0.00
BBRY 10.25 long -1.51% 10/27/14 $10.40   $0.00
JBLU 11.74 long 3.09% 10/28/14 $11.38   $0.00
BSX 13.3 long 0.61% 10/28/14 $13.21   $0.00
SFL 17.26 long 3.34% 10/24/14 $16.69   $0.00
BAC 17.27 long 1.34% 10/30/14 $17.03   $0.00
ETFC 22.44 long 3.34% 10/30/14 $21.70   $0.00
RVBD 18.84 long -1.38% 10/30/14 $19.09   $0.00
XLF 23.93 long 2.28% 10/28/14 $23.38   $0.00
SAH 24.8 long 0.74% 10/30/14 $24.60   $0.00
CA 29.17 long 1.82% 10/28/14 $28.63   $0.00
EMC 29.07 long 2.07% 10/30/14 $28.46   $0.00
FLIR 33.77 long 5.30% 10/27/14 $32.05   $0.00
NSM 35.71 long 6.72% 10/27/14 $33.44   $0.00
PPA 33.5931 long 1.42% 10/28/14 $33.10   $0.00
AMTD 33.98 long 2.56% 10/30/14 $33.11   $0.00
GVA 34.09 long -0.30% 10/24/14 $34.17   $0.00
POL 36.76 long 3.07% 10/27/14 $35.64   $0.00
GME 42.71 long 2.08% 10/27/14 $41.81   $0.00
TXT 41.41 long 2.20% 10/28/14 $40.49   $0.00
TXN 50.08 long 3.19% 10/28/14 $48.50   $0.00
UAL 54.28 long 9.31% 10/24/14 $49.62   $0.00
BMY 57.8 long 7.91% 10/27/14 $53.53   $0.00
OUTR 61.71 long 11.28% 10/24/14 $55.42   $0.00
CRL 64.43 long 0.54% 10/28/14 $64.05   $0.00
CBPO 65 long 8.90% 10/30/14 $59.65   $0.00
JPM 60.88 long 2.45% 10/30/14 $59.39   $0.00
AFG 59.94 long 0.69% 10/28/14 $59.49   $0.00
DATA 81.3 long 4.30% 10/24/14 $77.90   $0.00
AHGP 69.56 long 4.23% 10/24/14 $66.69   $0.00
MA 84.13 long 13.45% 10/27/14 $74.11   $0.00
FISV 69.67 long 3.51% 10/28/14 $67.26   $0.00
BMO 72.01 long -0.84% 10/30/14 $72.57   $0.00
^BKX 72.25 long 1.42% 10/30/14 $71.19   $0.00
YCS 81.09 long 8.08% 10/30/14 $74.98   $0.00
XRT 88.3 long 0.97% 10/28/14 $87.40   $0.00
BABA 101.8 long 4.03% 10/27/14 $97.79   $0.00
HON 95.66 long 2.02% 10/27/14 $93.70   $0.00
IYJ 104.531 long 2.92% 10/27/14 $101.50   $0.00
RTN 103.38 long 3.96% 10/27/14 $99.37   $0.00
UPS 105.64 long 2.59% 10/28/14 $102.90   $0.00
IYW 102 long 1.39% 10/28/14 $100.53   $0.00
CELG 107.41 long 1.55% 10/28/14 $105.70   $0.00
HSIC 119.71 long 0.76% 10/28/14 $118.73   $0.00
LLL 121.46 long 1.28% 10/30/14 $119.85   $0.00
SNA 132.62 long 3.34% 10/24/14 $128.24   $0.00
ALGT 134.59 long 7.07% 10/27/14 $125.62   $0.00
FDS 131.31 long 2.53% 10/27/14 $127.98   $0.00
GD 139.72 long 4.91% 10/27/14 $133.09   $0.00
NOC 136.96 long 1.99% 10/28/14 $134.20   $0.00
VRX 132.85 long 0.95% 10/30/14 $131.51   $0.00
ROP 158.61 long 5.01% 10/27/14 $150.94   $0.00
MMM 153.3 long 1.41% 10/28/14 $151.06   $0.00
IYT 156.99 long 1.48% 10/27/14 $154.59   $0.00
LMT 190.75 long 2.74% 10/28/14 $185.55   $0.00
ILMN 194.33 long 1.86% 10/28/14 $190.65   $0.00
GS 190.83 long 2.00% 10/30/14 $186.97   $0.00
^HGX 200.121 long -0.13% 10/24/14 $200.24   $0.00
IBB 296.31 long 0.73% 10/28/14 $293.95   $0.00
^DRG 530.092 long 0.31% 10/30/14 $528.12   $0.00
^AORD 5,485.00 long 1.52% 10/24/14 $5,399.30   $0.00
^DJT 8,767.83 long 1.57% 10/27/14 $8,626.70   $0.00
^SSMI 8,751.67 long 0.31% 10/30/14 $8,719.03   $0.00
Z 107.87 short -0.06% 11/3/14 $107.87   $0.00
MZZ 44.32 short 3.10% 10/28/14 $45.77   $0.00
SIJ 45.2799 short 2.45% 10/28/14 $46.45   $0.00
AGQ 41.139 short 11.13% 10/27/14 $46.32   $0.00
TWM 42.79 short 3.78% 10/28/14 $44.50   $0.00
SDD 42.11 short 4.28% 10/28/14 $44.02   $0.00
SMN 30.06 short 2.53% 10/30/14 $30.86   $0.00
AEM 23.99 short 3.00% 10/30/14 $24.75   $0.00
EZCH 21.95 short -0.06% 11/3/14 $21.95   $0.00
JCP 7.56 short -0.06% 11/3/14 $7.56   $0.00

Something to consider.

Michael J. Clark, CGTS

Eugene, Oregon