“It Looks Like A Friggin’ Picasso!”

When looking at an especially appealing stock chart, my former boss used to rant half sarcastically “Look at this thing – it looks like a friggin’ PICASSO!”  Which was especially funny, because we weren’t technical analysts at heart.  Still, it doesn’t take Charlie Chartist to tell you that the chart of silver (depicted here via $SLV) is, in a word, beautiful:

The Trend Is Your Friend

 

A friggin’ Picasso indeed.  I’ve written in the past about how one of the hardest things for traders to learn is to abandon that hard wired mean reversion mindset.  Instead of buying low and selling high, buy high and sell higher. The trend is your friend! That’s what guys like Howard Lindzon were preaching when they talked about $OPEN and $LULU last year.  I mean, just look at the byline on Howard’s blog: “TRENDS – Find them, ride them, and get off! Stocks, ventures and civilization.”  Howard’s quote on the LULU  post will frustrate value investors, but it’s been sage advice:

“Most will argue that LULU is too expensive, they have a $2.5 billion market cap, the stock has run from $4 to $50 and so it is too late. It probably is all three.

That does not mean it won’t go to $150 in 5 years before going to $25.”

And indeed, LULU (aka: “The Facebook of Ladies’ Behinds) is up another smooth 100% since then.

"The Facebook of Ladies' Behinds" - Howard Lindzon

Of course, knowing when to get off the train is the hard part, as these things can get re-priced in a hurry, and that’s what makes the game so tricky.  All I can tell you is that SLV isn’t broken yet.  LULU isn’t broken yet.  $OPEN isn’t broken yet.  There are lots more of these, including $CMG, $PCLN, even $NFLX.  These things are all friggin’ Picassos.   I only wish I had the good sense to listen to my own lessons and get long any of these stocks (I have no positions in any of the above stocks except for SLV, which I am long).  That’s the other side of what makes it so hard…

-KD

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