How To Turn Trash Into Cash

Individual stocks that are considered “Junk Stocks”, “Trash” etc., have been on a tear lately. Buying heavily shorted stocks has become the new thing to do. You talk to seasoned veterans and they will tell you that this is exactly what you see before a correction starts.

With QE infinity you just never know how long the insanity of stocks like Eagle Bulk Shipping (EGLE), China Sunergy (CSUN), Real Goods Solar (RSOL), or JA Solar Holdings (JASO) going up over 50% in one day will last. One thing that I do know is that one of Pradeep Bonde’s trusted breadth indicators has reached extreme levels that in the past has led to corrections, and based on that breadth indicator I can confidently say that this market is now over heated.

The question becomes what does overheated mean, what should I do, does it mean we are heading into a bear market etc..? What it means to me is this: we are at a point where you can really step on the gas and make huge gains in select stocks (junk) if you are familiar on how to play them and realize that you are playing musical chairs and that music will surely soon stop.

You’ve been warned, for now lets continue to dance, here is my list for today; Arch Coal (ACI), AK Steel (AKS), Clean Energy Fuels (CLNE), Constant Contact (CTCT), Endeavour International (END), Fuel Systems Solutions (FSYS), ManTech International (MANT), Matress Firm Holding (MFRM), Maxwell Technologies (MXWL), Bankrate (RATE), RPC (RES), SandRidge Energy (SD), Take-Two Interactive Software (TTWO) and Yanzou Coal Mining (YZC).

Honorable mention goes to the Miners.






Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.