Simple Idea

clipped from blogs.wsj.com A Simple Way to Beat Hedge Funds Like the 4×2 system. I’ve traded this system for years, and even though it has no fancy chaos theory, it works. Basically, if a stock falls in price for four days in a row (for instance, after a bad earnings report) chances are the selling is done. Within four days, everyone’s seen the news, everyone’s had a chance to sell and most of the sellers have probably already sold. Common sense: Buy then. As an exit, wait for two up days in a row. By then, people who bought low will be willing to take profits. Let’s see how this idea has performed historically. Rule of the 4×2 System: Buy: If a stock goes down for four days in a row, buy at the close of the fourth day. Sell: If a stock you own in the 4×2 system goes up for two days in a row, sell at the close of the second day.

The Volcker Rule

clipped from www.minyanville.com For his quick take, we checked in this morning with Peter Morici, a Professor at the Smith School of Business at the University of Maryland and former Chief Economist at the US International Trade Commission. Dr. Morici argues that the President has it all very wrong: Hedge funds, private equity funds, and proprietary securities trading aren’t what got the banks into trouble. Banks went bust or required taxpayer bailouts, he says, because of poorly considered loans and the financial products created from those loans. Prohibiting securities trading by banks and limiting their size, he says, wouldn’t stop those same mistakes from being repeated. “What happened yesterday not only closes the barn door after the horse is out, but it closes the door to the house instead of the barn,” the professor tells us. “This doesn’t do anything. It just creates a nuisance.”

Goldman Sachs Buy Sell or Hold?

I recommended against buying this one on the earnings announcement and now believe it will land in the 135-145 range. No one ever got hurt waiting for a pullback.

clipped from online.barrons.com The selloff in shares of Goldman and its peers last week could represent a buying opportunity. The major firms remain highly profitable and they've already curbed their proprietary trading. Morgan Stanley and JPMorgan are largely out of proprietary trading, while Goldman is believed to have scaled back its Special Situations Group, which invests firm capital around the globe. On a sum-of-the-parts basis, Goldman looks intriguing because of the value of its nontrading operations, including Goldman Sachs Asset Management, which runs $871 billion and could be worth $15 billion. If Goldman's investment-banking advisory were spun off and got the high valuation of banking boutique Greenhill (GHL), it could be worth $15 billion, too. That suggests investors are paying about book value for the rest of the firm, whose market value is $90 billion.

MFA Option Activity

clipped from seekingalpha.com MFA Financial Inc. (MFA) – Self-advised REIT business, MFA Inc. attracted a sizeable option trade during this morning. The share price of this company, which dabbles in hybrid and adjustable rate mortgages, is lower by 1.1% at $7.96 today. One investor made a 20,000 lot option play using in-the-money call options set to expire in 12 days time. We can see a large chunk of stock trading at the same time, but can’t tell what this investor’s motivation is. The calls changed hands at 45 cents and represent three-times the current open interest in all options on this company’s shares, just to give you a sense of the magnitude of today’s activity. We are left guessing that the investor behind today’s trade is a bull and looking to lock in to buying rights on this company in the expectation they will remain in-the-money when it comes to expiration.

Retail Ahead

clipped from finance.yahoo.com Will U.S. Consumers Bite This Holiday Shopping Season? Technology. Gadgets and technology have emerged as the new fashion accessory, whether it's the latest mobile phone, music device or laptop. "I think you'll see new accessories to that one game you got last year," she says.  The trend should continue to benefit Apple, Bentz believes. Discounters still rule. Expect this trend to continue this holiday season, with heavyweights such as Wal-Mart and Target dominating in the discount space. The focus now shifts to the all-important holiday shopping season. "A lot of spare and thoughtful shopping will be back," warns Bentz, a former retail and consumer analyst for Lehman Brothers.

Insider Stampede

Coupled with rising gold price what does this say for equities a year out.

clipped from money.cnn.com Insiders sell like there's no tomorrow Insiders sell l Corporate officers and directors were buying stock when the market hit bottom. What does it say that they're selling now? nsiders be wrong? NEW YORK (Fortune) -- Can hundreds of stock-selling insiders be wrong? The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized. But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.

Retooling the Resume, For-Profit Education

Despite concerns about increasing student default rates and poor student placement, we feel the for-profit education stocks are appealing at current values. The countercyclical nature these stocks, people going back to school during a recession to improve their resumes, has resulted in record enrollments. Consumers Digest reports it as a 6.2 billion dollar industry, and many companies in this industry are producing above average revenue growth. Once called distance learning, online classrooms proliferate even at academically superior not for profit schools.

APOL, LINC, and CPLA

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MED NYSE 10.60

When using a basket approach to the market occasionally our screens and the following buys will yield some bad fruit. It is especially sweet if we get out of bad fruit with a profit. I bought Medifast (MED NYSE 10.60) on 6/25/09 at 8.84 as part of a basket strategy. The Company was one of our daily picks. The stock hasn't looked back, trading 6 times its normal volume on Friday enticing me to look a little closer. That look revealed some players who have actively run short campaigns against companies they portray to be multilevel marketing schemes.

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