With Relative Flatness in the Macro-Money FLOWS - Let's Examine Internal Flows to Specific Stock Concerns within Our Coalition
Friday, October 17, 2014 by Scott Fraser
At this moment and even in the midst of current major-market index volatility, our Macro Components within our FLOWS Indicator are showing a stable flatness. The sentiment among tracked company insiders, which recently peaked in mid-June then completed a correction in early October, has begun a gradual recovery. The accompanying emotions of individual investors, as reflected by their holding patterns across the mutual fund universe, are also reflecting a relative calm. Over the previous two comparative months, the combined assets of the U.S. mutual fund industry increased by another calm amount of 2.5% [$384 billion] for a current total of almost $16 trillion.
Ok then, we Contrarians have officially checked the "weather and traffic reports" on the institutional, insider, and individual investing herds. We can now collectively venture forth with expanded consciousness of our current macro-market environment. Today, we are going to apply our FLOWS [Fundamental Line of Windfall Symbiosis] Indicator to increase our awareness on the internal flows within specific stock situations. Our intention is to shed some light to benefit pending investment decisions.
Your collective submission of external-stock selections about which you are most concerned now enables us to fulfill our obligation to the entire Contrarian Wealth Coalition. Granted, these external stocks were not selected by our proprietary strategies, yet our Contrarian & Compass investment disciplines can now be applied for proper direction going forward. The input of stock symbols was substantial and almost all of them are connected to companies in highly fluctuating situations both positive and negative. Although I will be rendering a relative FLOWS Indicator on all the stock situations to fulfill my promise to all my fellow members, here are the sentiment ratings for the top 4 stocks in terms of extreme internal movements of share-price impacting components:
ITT Educational Services (ESI): CAUTION
In the aftermath of the company's well publicized accounting flaws within two of its private education PEAKS loan programs, the influx of class-action law suits toward the management of ITT Educational Services has been steadily increasing for over eight weeks. The most significant fundamental outflow from ITT-Ed is its number of student enrollments which dropped 9.5% in Q3. Although ESI shares doubled after today's market open to over $9, shareholders as of January 2014 have seen steady declines from a peak of over $45. The lessons learned from similar situations of flawed accounting requiring restatement amidst regulatory and legal turmoil tells the wise to avoid accumulation and consider complete detachment.
Inovio Pharmaceuticals (INO): TRANSITION
This company's public profile has been the recent beneficiary of the overwhelming influx of Ebola-related news coverage across all major media channels. The outflow of information from Inovio's CEO on testing the potential pipeline of Ebola vaccines has pushed the INO share price from $9.80 to over $12.25 in the last four weeks from the reactive press-release buying. At this point, it is vital to keep in mind that Inovio does not currently have an Ebola vaccine in the market, and the time required to develop one is much longer than the attention span of our national news outlets. When our next "constant crisis" arrives, we will likely see the INO spotlight dissipate, so consider taking your recent gains beforehand.
Stellar Biotechnologies (SBOTF): CAUTION
The influx of Spike & Crash trading volume and share-price pattern in August through September is the most concerning flow within the current SBOTF stock situation. Since then, the combined press-release outflow of the ill-advised "we don't know why" on unusual trading activity followed by the hollow filler-announcement of plans to attend an investment conference provides even more warning signals. The 90-day price pattern for SBOTF is more reflective of post-spike short covering than it is of a fundamental rebound. With ongoing volume decrease to pre-spike levels of spring 2014 and the continuance of filler press releases, SBOTF does not qualify as a Spike & Crash to Cash recommendation so let's move on.
Silver Crest Mines (SVLC): MOMENTUM
During the previous 90 days, the company has achieved an influx of strong, fundamental increases in capacity and recovery rates from its lead gold and silver production sites. The outflow of news from Silver Crest reflects steady expansion of its core business model. The share-price ranges for SVLC, which have fluctuated widely between $2.50 and the near-current $1.30 level, are primarily influenced by the hybrid-impact of both the gold and silver commodity markets. From this moment forward, SVLC appears to be back at its cyclic bottom phase, and its continued operational progress supports re-accumulation strategies from previous profit-taking back in January 2014.