Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

Walter 2009 Outlook

On first glance, the graphs indicate that there is slightly more yield than risk for the 2009 year.  The momentum starts off with ever decreasing risk and moving into a position of having more yield.  As the year progresses, the core values decrease but, not enough to push it into risk although, it is just above the equilibrium point (0).


This comparision between the WLT stock price chart and the Delta Core/Transient brings out a few subtle points.  While the Delta Core/Transient graph does not have a 400+ movement into Yield, it does have a 400+ movement when you consider the move from Risk into Yield.  In this case, the graph suggests taking an entry at the 0 equilibrium point at the 5/1 period and exiting at the peak between 7/15 (core peak) and 8/1 (transient peak) but, most definately before the 10/15 transient 200 move into risk. This would have captured most of the dramatic move (100%) up while leaving the up & sideways (50%) movement near the end of the year. 

Walter Industries 2008 Risk/Yield Graph
Walter Energy along with many other commodity companies experienced skyrocketing values during 2008. The escalation stopped and a sudden downturn occurred in the summer. Walter Energy is one of the energy companies (amoung others) whose graphs tend to highlight commodity changes.


This comparison between the WLT 2008 Delta Core/Transient and the WLT stock price graph offers a few distinct examples.  The first is that the stock steadily progressed higher thru the first half of the year while the Core was staying very high into the yield portion of the graph but, did not have a 400+ move into the area — as noted previously, it is not possible to determine from the graph itself whether this adherence to the yield area indicates a continuing momentum that will drive the price higher or a drifting type of motion that might result in sideways or downward motion. In this case, the stock price rose higher.

The other example is the sharp movement by core from yield into risk starting at 7/15.  The core drop is followed by the transient drop into risk at 8/1.  Both of these are indicators that should signal caution and as the stock price chart displays, the price went from 105 to about 20.

Not all signals are as clear as this but, a sharp movement into risk of both the core and transient would at least indicate more caution and a higher watch level.