How About Some Titanium?

I spend a lot of time following the US titanium companies (TIE, RTI, and ATI). Not only has TIE and ATI been some of my largest wins over the last 3-5 years, but access to some industry experts and a financial wizard on the TIE Message Board (that is IV and not Yahoo) has given me an appreciation for the true analysis of a stock.

These folks have patiently worked with each other to dig through Press Releases, technical papers, and tidbits of information from around the world to give each of us a sense of market supply and demand and pricing for the titanium products these three companies produce and allowed us to model the financials to have a sense of confidence in what the outcome of earnings may be. A lot of my profits from 2005-present I owe to them. While there is definitely not a consensus on the IV Board about what the future of the titanium cycle will be (e.g. when it ends, how it ends, etc.), we all know what the triggers will be that will dictate that the beginning of the end is near.

So when I nibbled at some TIE calls today, I did it with a strategy in mind. I bought Nov35 calls today, hoping that, once again, TIE can break through the resistance between $34 and $35.50. I think that titanium stocks (after today's Fed minutes) may run a little going into and up to ATI's earnings announcement, which I expect them to beat. ATI usually announces first and I expect the company to announce in a little more than two weeks from now.

I bought TIE instead of ATI because I believe that both stocks will run at about the same time (they tend to track each other), but TIE has more upside to run. ATI's chart actually looks better, but I believe that TIE is only a day or two behind them and that I may be catching their wave sooner.

However, this is a trade. I plan to hold through ATI's earnings or until the chart says sell. I am bullish on TIE for the mid term (next 6-9 months), but I do not want to be exposed to the stock when they report Q3 earnings in early November. Last year, Q3 was a disaster, which on paper makes for an easy comparison, but the analyst expectations make a "meet" doable but difficult. I expect the whisper number to be higher than the actual causing the potential for a sell-off. That is where I will be buying TIE again.