Heavy Insider Buying In Gran Tierra Energy

There has been heavy insider buying in Gran Tierra Energy that began on November 9, 2016. On November 29, 2016, Director David Smith bought $90,000 worth of stock. Also on November 29, 2016, Susan Mawdsley bought $60,000 worth of stock. Again on November 29, 2016, Officer (VP, Investor Relations) Rodger Trimble bought $37,500 worth of stock.

Gran Tierra Energy Stock Chart

Comments: Nice swing trading chart. Short-term swing target price is $3.08 or higher. The insider buying came after Gran Tierra submitted winning bids totaling a combined $30.4 million for two blocks which Ecopetrol S.A. (“Ecopetrol”), Colombia’s national oil company, offered as part of the Ronda Campos Ecopetrol 2016 (“Bid Round”) in an electronic live auction held on November 25, 2016. Gran Tierra’s winning bids are for the Santana and Nancy-Burdine-Maxine Blocks, which are located in the Putumayo Basin.

Disclosure: I do not hold any position in this stock.

Insider Buying In Spark Energy

Spark Energy has had heavy insider buying over the last few weeks. The Director Maxwell W Keith III bought $273,564 worth of stock on November 23, 2016. Two days earlier, on November 21, 2016, Vice President and General Counsel Melman Gil bought $14,922 worth of stock.

Spark Energy operates as an independent retail energy services company in the US. It operates through two segments, Retail Natural Gas, and Retail Electricity. The company is involved in the retail distribution of natural gas and electricity to residential, commercial, and industrial customers. As of December 31, 2015, it operated in 66 utility service territories across 16 states and had approximately 328,000 residential customers and 19,000 commercial customers. Description from Finviz.

Spark Energy Stock Chart

Comments: Lots of resistance above the current price. There is 200-day moving average resistance at $26.86 and then 150-day moving average resistance at $28.25. The Twiggs Money Flow is below the 0% line which suggests weakness in the stock.

The stock trades at an excellent forward P/E ratio of 9.7 and has fantastic quarterly revenue growth of 73.2% YoY.

Disclosure: I do not have any position in SPKE.

3D Printing Stocks For Playing Trump Trade War With China

A trade war between the US and China is likely going to start next year with a key promise of Trump to declare China a “currency manipulator” on day one of his Presidency and to enact a 45% tariff on certain Chinese produced products sold in US markets.

China has threatened to retaliate by dumping Boeing and instead ordering from Airbus. China has said it will block sales of US automobiles and iPhones in China and that US soybeans and maize imports will be halted.

To better understand why I think 3D printing stocks are a good play on a trade war with China, we have to go back in history and use macroeconomic analysis to see how we got to where we are today.

China Joins the WTO

In 2001 China joined the World Trade Organization and began flooding America with illegally subsidized exports. Over the next ten years, the US would shut down over 60,000 factories, lose more than 5 million manufacturing jobs and see it’s historical annual rate of GDP growth cut by two-thirds.

Trade Deficits and Offshoring Subtract From GDP Growth

As a result of China joining the WTO, structural problems hit the US, Europe, and other major economies like Japan and South Korea.

If a country like the US runs a trade deficit, this directly subtract’s from its GDP growth. From that observation, you can see what the two most important structure drags on growth for many developed nations like the US have been.

The first has been the drag of the large trade deficits. The second has been the drag on lower domestic investment growth, as multinational corporations like Caterpillar, General Electric, and General Motors, have built more plants in other countries and fewer plants in the US.

Where have most of the offshoring of productions gone? The answer is China.

It’s no accident that the start of America’s era of slow growth in 2001 coincided with China joining the World Trade Organization or WTO, which gave China full access to American markets.

Contrary to the rules of the WTO, China began to flood the US with cheap, often illegally subsidized exports, and over the next decade and a half; the US would see the loss of over 60,000 factories and more than 5,000,000 manufacturing jobs.

The Emergence of Structural Trade Imbalances

During this time the economies of Europe, India, Brazil, among others, would likewise begin to have significant growth-sapping trade deficits with China and this would reduce global growth below what it would otherwise be.

The result would be the structural emergence of a growth-sapping global trade imbalance, as illustrated in the following set of figures.

Here, we see chronic annual trade deficits on the order of 200 to 400 billion dollars annually, with the heavily exported China.

By the year 2012, these deficits would help slow growth dramatically in both Europe and the US, and as a result, China’s two biggest customers would thereby be too weak to sustain China’s export-dependent growth.

In a ripple effect, slow growth in China, in turn, would lead to slower growth in so-called commodity countries like Australia, Brazil, and Canada, whose economies depend heavily on the sale of natural resources like coal, iron ore, and soybeans to China. More broadly, these structural trade relationships would lead to a new type of butterfly effect the world had not yet seen.

Here, we see that weak demand for Chinese exports from Europe and the US leads to weak import demand from China for commodities and other natural resources. In this way, chronic trade imbalances between China and other countries around the world would make it very difficult for a robust, global economic recovery.

Why Keynesian Stimulus Failed

From this butterfly effect, you can see why expansionary, Keynesian fiscal and monetary stimulus in the US and Europe, did not have the full effects anticipated. Indeed, this short-run Keynesian approach did nothing to address the underlying, chronic, long-term structural trade imbalances, acting as a drag on both the U.S. and European economies and by extension, much of the rest of the world.

3D Printing and China Manufacturing

China is rapidly losing ground to 3D printing technology. The business model of it being cheaper to manufacture goods in China could come to an end over the next ten years.

US companies will soon be able to make most things in small 3D printer factories right in your neighborhood or town. Factories, as we know them today, will get broken up and made smaller and local. Newsweek writes

In the distributed manufacturing scenario, the carbon footprint, so to speak, of each shoe drops precipitously. Asian manufacturing is toast, probably upsetting the global balance of power. And factory jobs—well, they’re likely never coming “back.” 3-D printing automates a lot of what factory workers would’ve done. The hope is that distributed manufacturing creates a whole new set of opportunities for middle-class workers and keeps money local instead of funneling it overseas.

Coming Trade War With China

A Trump Administration will be placing tariffs on Chinese-produced goods effectively penalizing US corporations that manufacture products in China. China will retaliate by blocking the sale of US goods inside of China.

This trade war with China will only speed up the adoption of cheaper and faster 3D printing facilities inside the US IMO.

Many US businesses could increase their purchases of 3D printing machines as a result of the worsening trade relationship with China as well as the public outcry over the loss of millions of US jobs to China.

The earnings recession which began in Q1 2015 prevented businesses from buying 3D printers as consumer demand was uncertain. This last quarter we saw an end to the earnings recession, and if corporate earnings continue to rise, we could see more companies buying 3D printers.

Big Players and Big Money Flowing Into 3D Printing Technology

In September of 2016, General Electric acquired Arcam for $1.4 billion as it makes a major move into 3D printing.

In May of 2016, the 2D printing giant HP revealed that it has been spending billions of dollars developing 3D printing technology and announced the release of its Jet Fusion 3D 3200 and 4200 printers. The more powerful 4200 was slated to begin shipping in the fall of 2016, while the 3200 will be available in 2017. HP claims these polymer 3D printers are up to 10 times as fast and twice as cost-efficient as current 3D printers powered by the leading technologies. HP sees the incredible future for 3D printing and aims to become the leading 3D printing company.

3D Printing Stock Chart

Chart Comments: Not a great looking chart. Twiggs Money Flow is rising but still below the 0% line. The 50-day moving average (blue line) at $15.21 is currently being tested, and a breakout above this level would be bullish.

Stratasys Stock Chart

Chart Comments: Stratasys’ chart looks even worse than DDD. The Twiggs Money Flow is rising nicely, but it is still below the 0% line.

HP Inc Stock Chart

Chart Comments: Twiggs Money Flow falls below 0% line after missing on revenue; however, overall, the strongest looking chart of the 3D printing stocks. Fantastic valuation at P/E 9.9 and forward P/E 9.2. Wait for candle over candle bounce before taking a long entry.

Disclosure: I do not hold any stocks mentioned in this article.

Heavy Insider Buying on Franklin Financial Network

Franklin Financial Network provides various banking and related financial services to small businesses, corporate entities, local governments, and individuals.

Franklin Financial Stock Chart

Chart Comments: Testing previous resistance at around $38. Inverted hammer with long upper shadow is bearish and may indicate a pullback is coming. Wait for close above $38 before long entry. Twiggs Money Flow is pulling back a little but still above 0% line. Watch where next low on Twiggs Money Flow forms, bullish if following low forms above 0% line. Big insider buying on November 21, 2016, this is the first insider buying since May of 2015. Excellent revenue and earnings growth. Attractive valuation of P/E 16.7 and forward P/E 13.4. Piper Jaffray just began coverage on November 22, 2016, with an Outperform rating.

Disclosure: I do not hold any position in this stock.

How Will Globalists Respond To Trump and The US

We know what Trump is bringing to the globalists brawl that has already begun with shots like China threatening a trade war against the US. Globalists are not going just to roll over quietly for a Trump Administration.

Lisa Haven thinks that globalists could crash the US economy in response to Trump’s win. Lisa thinks globalists could even try to assassinate Trump.

I think Lisa Haven is a bit too far on the side of paranoia, but I like hearing alternative views and some of the excellent points she makes. Regardless if you agree with Lisa Haven or not, one thing is clear that we can all agree on. Stock prices are not up because of fundamentals but on risky speculation on a Trump win which begs the question. Are we being set up for a big stock market crash?

When Will the Stock Market Crash?

When I expressed caution to a trader last week and that the market exists to ruin the greatest number of amateur traders at any given time, the trader replied I don’t believe that. Another trader I expressed caution to about this market told me I have to just ride the wave higher.

Folks, your goal should be to “anticipate,” not “react.” If your big plan at getting rich from trading is to just “ride the wave higher,” you are in for some serious disappointment. Trading is harder than that. Riding the wave higher is a trading strategy of buy high and sell even higher. In other words, you are always chasing. Chasing as a strategy is ok until it’s not.

The wise Djellala trader has this to say about when will the stock market crash.

You will hear some people online always talk about how the stock market will crash. They don’t know. They just say the words that the stock market will crash. If the crash happens after a few days or one month or two they will say oh, didn’t I tell you the market was going to crash? If the market is still going up and up and up and up those people will change their mind and they begin to speak about the market is going up, so it means they don’t know people because no one knows if the market will crash.

I love listening to Djellala. He’s a funny, no-nonsense guy.

Don’t Double Down On Wrong Prediction, Just Move On

Whether we are talking about individual stocks, the stock market, or the economy, when you’re wrong just admit it and then move on. The goal is to make money, not to be right 100% of the time so you can stroke your ego.

AM TV and Peter Schiff predicted that the Federal Reserve could not stop their monthly QE injections into the economy. Even though the Fed kept cutting the monthly injection all the way down to zero, alternative media outlets AM TV and Peter Schiff kept saying the Fed wouldn’t stop the monthly infusions because they couldn’t as the patient (the economy) would die. Peter Schiff then went on to say that the Fed was not going to hike rates in December 2015 but instead actually cut rates. The Fed increased rates a quarter point right on schedule. For all of 2016, Peter Schiff has been saying that the Fed isn’t going to hike rates again but instead reverse course and lower rates. In December of 2016, the Fed will likely increase rates another quarter point.

Most alternative media outfits think they have to be crazed perma-bears to get viewers. Maybe they do. Rather than AM TV and Peter Schiff admitting they were wrong about the Federal Reserve, they double down on their wrong predictions and do another “interview” together, check it out.

There are some really good points in this interview, don’t get me wrong. However, to be a successful traders and investor, you can never be a perma-bear. You can never be a perma-bull. You have to adapt and respond to market conditions. That adaptation means you have to be willing to admit when you’re wrong and then to just move on.

Folks, watch out for fear mongering. Fear drives viewership and video view counts on YouTube but being forever fearful is a great way to lose all your money at trading. Some parts of the economy will no doubt suffer under a Trump Administration and higher interest rates; however, higher rates will be good for other parts of the economy like Banking. A Trump Administration will be bad for multinationals and the Dow and parts of the S&P 500; however, Trump will be great for domestic businesses and the Russell 2000.

Stocks With Bullish Money Flow 11-23-16

Stocks that have a positive divergence between the Twiggs Money Flow and price. Today’s stocks include DAR, GME, MMS, OPHT, PEIX.

Darling Ingredients Stock Chart

Comments: BlackRock, EMINENCE CAPITAL, and SOUTHERNSUN ASSET MANAGEMENT have been accumulators of DAR during 2016. Solid valuation at P/E 16.4, and forward P/E 19.6. Huge buy side volume on 11/23/16, more than 500% higher volume than the average volume.

GameStop Stock Chart

Comments: Awesome valuation P/E 6.8, forward P/E 6.7. Lower taxes and an increase in consumer discretionary income will result in better demand for video games. Still, I like this for a short term swing trade to 200-day MA resistance at $28.44.

MAXIMUS Stock Chart

Comments: Wall Street is expecting 54% YoY EPS growth for Maximus. Maximus has cleared all its moving average resistance levels. My concern with this stock would be its exposure to the Affordable Care Act and how much changes from a Trump Administration would impact earnings and profits.

Ophthotech Corporation Stock Chart

Comments: Rising Twiggs Money Flow but still below 0% line. Somebody is buying this biotech stock.

Pacific Ethanol Stock Chart

Comments: Boom! Beautiful revenue growth over the last four years.

Disclosure: I do not have any positions in any stocks mentioned.

Small Cap Stocks Will Outperform In a Trump Administration

Small cap stocks are the place to be in a Trump Administration. Trump’s economic policies will negatively impact large multinational corporations like Apple. Small cap stocks are all about domestic companies.

Small cap stocks generate most of their profits inside the US, exactly where Trump’s economic agenda is targeting.

Since Election Day, small cap stocks on the Russell 2000 Index have surged 12.3%, far better than the 3.05% gain for the large-company S&P 500 stock index, and the 3.6% gain for the Nasdaq.

A massive amount of money is moving into small caps. The Russell 2000 has closed up for 14 days straight since Trump won the election.