Archive for July, 2006

Reading the Fundamentals

Come on people (and I don’t mean you, my very intelligent readers but all those sheep selling American Express this afternoon) read the article, not just the headline!!!

Here is the fundamental problem with Google Finance, they return the same AP article (or whatever service) as it is published in 100 different papers vs. Yahoo, who actually has human beings edit the content for relevance.

So When I put in AXP under Google Finance I see A-H headlines where A,B,C,D,F and G are the exact same AP article with the headline “American Express 2Q profit falls.” (note that by the time you click on this the page may have changed significantly).
http://finance.google.com/finance?q=axp

The article says that Amex profit fell nearly 7 percent in the second quarter, reflecting the spinoff last year of its Ameriprise Fiancial unit but it doesn’t mention that Ameriprise represented 16% of the profits last year.

Further down the article it does say that profits from continuing operations rose to $972M from $860M but nowhere in the article does it mention that last year also included a tax benefit of $87M while this quarter includes an unusual write off of $62M worth of Reward Program redemtions. In fact, last year also included $113M of 9/11 insurance claims paid to the company but I’m even willing to let that one slide as this quarter included a gain on the sale of Brazillian operations so I’m willing to say that it’s always something.

But what we really have here is a Q2 ’05 that was actually $620M (removing Amerprise and the tax bonus) vs. a Q2 ’06 of $1,034 (adding back the reward write off). One trend we can expect to continue is the company’s 17% decline in loss provisions as the change in bankruptcy laws mean collections will be up up up!

As I mentioned in the comments I grabbed both the $50s for $1.20 and the $52.50s for .25 as the stock dropped below $50 and I eagerly await tonight’s conference call where the execs can slap these silly traders around but they have only themselves to blame if they can’t take an extra 5 minutes to read the full press release instead of relying on the headlines.

http://biz.yahoo.com/bw/060724/20060724005801.html?.v=1

Also, I find it very interesting that American Express is reporting strong card usage as Amex is generally not a “credit” card per se and has…
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Monday Morning

Well nothing blew up (other than a few thousand miscellaneous shells traded by Isreal and Lebanon) so the pre markets are all excited this morning.

Oil is down a buck in Europe and gold is off a touch but most of that is due to a surge in the dollar which hit some overhead resistance as it hit key low technicals against they Euro and the Yen.

The Dow will have to contend with heavy resistance of its own at the 200 dma of 10,943 while the Nasdaq and the S&P are far enough out of the money that no one day rally can possibly put them in bull mode. Our best indicator is once againg the NYSE which is just below 200 resistance of 7,973 and also faces a death cross of the 50 dma if it heads any lower this week:
http://stockcharts.com/gallery/?nyse

The world markets are generally on hold waiting to see what we will do and it is likely we will get some kind of rebound today but in hunting for bargains this weekend I came to the terrifying conclusion that there is still a long way for many companies to fall. When we talk about the tragic drop offs we have had this year they are generally a pittance compared to what happened to certain stocks in the first half ’04.

Still I think we are ripe for a proper turnaround if we can get through this earnings season without any major disappointments. AMD’s purchase of ATI is a signal that tech is just getting too cheap and HCA is going private after dropping down to its 2004 mid-point.

We need to watch the action on the NYSE very carefully today as well as the broad indicator has been very reliable this month and looks ready to break either up or down out of the range between the moving averages. Secondary resistance will come at 8,011 and a break above that level will get me to buy things but not much else.

Only the Nasdaq currently looks really oversold (as opposed to making a mild correction) with the SOX looking way oversold so we need to look to these indicators on a turnaround. If people are ready to forgive Dell and embrace TXN we just might be able to get something going.

=====================================

Oil fell off the mark on Friday and many oil companies…
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Weekly Burial

What a mess!

Once again we were saved by my now habitual pessimism and the total lack of market interest from the very opening bell. Bad as I thought the market was, I was still dumbfounded by the action of CAT, who could not have made up better numbers and the total destruction of the SOX, who lost 5% today bringing them down 40% since March.

The gist of this sell off seems to be two things: The escalating war in Israel and a total lack of confidence in Ben Bernanke. After Bernanke spoke to Congress on Wednesday the markets shot up but the release of the Fed minutes on Thursday gave more of an indication that the Fed doesn’t actually have a clue what to do and that is just plain scary.

As I’ve said many times, when you have a country that’s $8,411,797,854,827.46 in debt, you really need a top financial guy you can depend on to turn it around. We no longer have that in our Fed chairman and our President doesn’t exactly seem like the kind of guy who’s going to bring in a surplus anytime soon (unless further tax cuts can do the trick). The debt is increasing at a rate of $1.64Bn per day and investors are just flat out losing confidence in our ability to come out of this without a significant economic downturn.

I will say again that the best and safest way out of this mess is inflation, the very thing the Fed is fighting! We effectively owe that money at 5% on a GPD of 12T. If we can inflate that number by 10% a year for 5 years combined with 4% average growth and a balanced budget ammendment we will have a GDP of 24T by 2011 and should have the debt paid down by 2015. So elect me in 2008 and I will make sure a gallon of milk costs you $6 by the end of my term!

Anyway, all the indices died a horrible death today and Microsoft gained just 5% on news that they are buying back 20% of the company – so pathetic. I also think it’s very sad that Microsoft can’t find anything better to do with $40Bn than buy their own stock, this really does nothing for investors in the long run and takes a big chip off the table should conditions change.…
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Finally Friday

Another week we can’t wait to get out of.

Once again the market has many reasons to rally with strength from CAT and MSFT but we can expect the focus to be more on DELL’s pathetic outlook. We had this discussion back in May on Seeking Alpha and it’s interesting to reread the comments by myself and David Jackson in light of today’s report:
http://chip.seekingalpha.com/article/10290

While Dell is keeping revenues afloat, they are doing so by pursuing this doomed cost cutting campaign which has cut earnings by a third. Of course Dell is blaming a “slowing commercial market worldwide” which is interesting since IBM, Apple and Microsoft aren’t seeing it but the market is ready to embrace any bad news and we could be in for another bad day in tech land.

Look for Dell to explore it’s 9/11 low of $18 (was $42 last year) and for AMD to be right behind them in the downhill challenge. I’m attaching this Forbes article not so much for its insight into the situation but because it has the coolest little pop-up Steve Forbes ad I’ve ever seen:
http://www.forbes.com/2006/07/20/AMD-dell-chips_cx_ck_0721amd.html?partner=yahootix

I don’t see how stocks can do much today with the war heating up and oil back to $75ish (due to the contract rollover) but we are back to where we were on Wednesday where it is possible to have a big “rally” without coming anywhere near breaking significant technicals.

Let’s keep our eye on SAP, who had revenue growth of 16% and raised guidance but will likely sell down as the p/e is 29. If the market doesn’t want this stock, then we are likely no where near done with a market adjustment.

The Chinese Central Bank increased the amount of cash banks must hold in reserve in an effort to tighten the money supply and put a little break on the economy there before they suck up all of the world’s resouces. It’s a very small move and will do little but has a psychological impact that should push the dollar down a bit.

Once again it will be very tempting to short oil into the weekend, especially if we get a good late day pump. With options expiring the premiums will be high for August puts so I will be looking at XOM Aug $65 puts and CVX Aug $65 puts if they get close to
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Thursday Wrap-Up

Well if that was a test we certainly failed it.

At least we can be thankful we didn’t get sucked into buying anything as everything went straight to hell right from the open.

I’m going to be short about this and just say yuch. Nothing worked at all today, even commodities sold off.

Gold held $629 and is right on the 50 dma again and I like it into the weekend while oil rolls into the September contract tomorrow which should add a buck or so to the price.

The Dow did manage to hold around its 200 dma at 10,941 but the S&P and the NYSE were firmly rejected from a short morning hop into their resistance levels.
http://stockcharts.com/gallery/?spx

I guess those guys selling the QQQQs yesterday did know what they were doing as the Nasdaq was beyond pathetic when you take into account Apple’s 12% gain.

MSFT had huge sales numbers and, although profits are off, the most important thing is that they still move product and I am very sorry I chickened out of that stock yesterday (although I was very glad I did this morning so go figure). I don’t know if this or Google’s odd numbers (sound good but can’t really tell) will turn the market as Apple and MOT swam against a sea of red today.

======================================

As I said in comments, I got out of SNE at $1.30 (up 85%) early as the indices started to weaken – the fact that it didn’t jump up was a real red flag right at the open.

Although YHOO didn’t really move today, we had a wild ride and the Aug $25s are still $1.30.

TGT was a great call, gaining 1.6% today and the Aug $45s are well in the money at $2.45 (up 50%). In this market you should take the money and run!

JPM also held its own today and the Aug $42.50s still look good at $1.35 (up 35%) but you should have stopped out around lunch when they were at $1.75.

MOT was indeed the play of the week with the Aug $20s topping out at $1.95 (up 300%) before dropping back to $1.15 (up a mere 150%). This may be a good time to remind you to always take at least half off the table on the initial run-up after a postive surprise as you will rarely do…
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Testy Thursday Morning

Well it looks like my Sony play is working with the Nikkei up 400 points in reaction to yesterday’s rally in our markets. All of Asia posted strong gains while Europe is having a nice, but not spectacular, follow through to yesterday.

Follow through is what we will be looking for in our markets as we have been burned before by false rallies so it will take something significant to get serious money back into the markets. DHI had a huge beat this morning and Apple was amazing with many other earning reports sounding nice enough to keep a rally going. If we don’t get a good day today then sentiment is still too negative for a rally, we are no longer oversold so we will get a more realistic idea of market direction today than yesterday when there was a lot of short covering.

This will test my conspiracy theory that the Nasdaq was forced down unnaturally and that we can ignore the very bad looking charts that show the 50 dma crossing under the 200 dma.

The Nasdaq has miles to go before retesting the 50 dma at 2,150 but let’s see how it handles 2,100 first. The Dow blew through the 200 dma at 10,939 and will hopefully make it to the 50 dma of 11,092 by tomorrow (Microsoft willing). A Dow drop back below the 50 would be devastating for the markets. The S&P is running into the cross of the 50 and 200 dma at 1,264 and that will be the one to watch today and the NYSE is just under its 50 of 8,104.

We have the potential for a huge rally from this point if we can move past these technicals. The oil patch should at least stay flat coming into the weekend and miners should have continued strengh on what looks like a strong global economy (the one I kept talking about while everyone said I was crazy) and neverending Chinese demand.

Oil should stabalize into the weekend and gold will do whatever the dollar does. The only thing we have to fear is bearish talk from one of the Fed governors who may want to cool the markets before they get too crazy or, as usual, the Mid East, Iraq, Iran, Nigeria, Hurricanes, North Korea and Bird Flu (remember that?).

We don’t have to fear those nasty stem cells curing people…
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Woopie Wednesday Wrap-Up!

Wow, that was fun! About damned time too… Dow 11,000 really took me by surprise, a very nice close on good volume with broad participation. If we get follow through tomorrow we may be able to get back to bull mode. The SOX picked up 2.3% after yesterday’s horrifying test of 395 and the oil sector was fairly flat so we may finally be getting a bit of a change of leadership (although you can’t read too much into one day’s action). What you can read into is MOT coming in with a huge (10%) beat on record revenues (I so love those guys!) and Ebay is coming in in-line but that’s pretty good since that company is an open book with analysts and is usually right on the money. INTC beat low expectations but once again gave bad guidance to ruin the party. It will be interesting to see which way the market takes this but Intel is getting slammed in the after hours while Ebay is tracking up and MOT is halted (so something else might be happening). Apple is posting lower than expected revenues but blowing earnings out the door as Macs are indeed starting to sell like Ipods, which are holding their own quite well. Guidance is not so hot for Q4 though but they usually guide low so they can have a big beat. I could kick myself for not pulling the trigger on the $52.50s we talked about on Monday! Bernanke came through for us today and set the markets on fire with soft talk on inflation and as long as nothing blows up tonight, we should get some follow through tomorrow. The real estate sector was on fire today with 4% average gains although I think RYLs 8% gain may have been a bit overdone. DHI picked up 4% driving its p/e all the way to 4.15. Oil was down again today, barely saved by a lot of quick pumping into the close to finish at $72.66 but that has to be weighed against a .8% dollar drop so it’s much worse than it looks for crude. Gold went up pretty much in line with the dollar drop but mining stocks went crazy today with 5% gains. ====================================== I am very very psyched about the MOT Aug $20s which finished the day up a mere 50% to .65 but should be an ingenious…
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Wild Wednesday

Hold onto your seat belts, today should be very interesting.

The Dow is 138 points below its 200 dma of 10,937 so there is a ton of room to fly without even being a decent bounce while the S&P and the Nasdaq are hopelessly out of the money. The NYSE is the only index that really has a good shot of making a comeback but is 69 points from its 200 dma of 7,967. The Dow and the NYSE are the only indices that haven’t had their 50s cross their 200s but both look to be heading that way. If they don’t recover soon we could be heading into a major collapse.

Tokyo was not much help as the Nikkei pulled an anemic bounce last night. LG Electronics hurt tech more than Yahoo with a loss for the quarter where management is blaming declining margins on mobile phones and flat panel TVs. Let’s understand what is really happening here, sales are up 20% but they are losing money because they are selling them too cheap. Sounds more like bad management to me but we will see what good management (MOT) can do in this environment later today.

I’m putting a lot more weight into IBM’s positive numbers than Yahoo’s disappointment because it is possible that Google is just kicking their butts or that they are simply failing to execute the best monetization of their search engine as they have done for 10 straight years. I love Yahoo, I think they’re a great company but Google has clearly demonstrated what Yahoo could and should have been doing back when their stock was over $100 in 1999.

It’s all about the CPI this morning and it will be all about the Fed this afternoon with an oil inventory report thrown in for good measure at 10:30 so, if you don’t like the direction of the market, just wait an hour and it will likely change.

Oil will test $73 today but another drawdown will send it back towards $75 where we will test that. The 50 dma is $72 but recent dollar strength makes that meaningless as the dollar is up close to 5% since last week. Gold is down pretty much the same as the dollar is up but the last 2 days’ action have tempered buying in Asia and it will be up to US traders to set direction.

On…
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Tuesday Wrap-Up

Did we have a good day? Tomorrow will tell us whether we did or whether we just set up for a power dive. I was very encouraged by the way the market double tested a bottom and ultimately shook off scary inflation news to rise towards the end of the day but the 14% after hours collapse of Yahoo has me very very nervous. Yahoo met expectations on profits, although expectations were low but this is another one of those earnings reports that sound much worse in the headlines (78% drop) than in reality (last year included a one-time gain of $552M from Yahoo’s sale of Google stock). Revenue was up 28% but market share (whatever that means in a search engine) was down 7%. So Yahoo’s earnings were disappointing but in no way deserved the shelling the stock took and Google is getting slammed as well in sympathy. This is following another down day for the SOX so we will have to wait and see how tomorrow shakes out. IBM had a great report with profits up 11% on cost cutting and tomorrow we hear from Apple, MOT, Ebay, B of A (hopefully did better than Citibank) and JP Morgan. Thursday gives us Google, Microsoft, Nokia, and Pfizer and by then we will know for sure where we stand but the spotlight is on the CPI and Ben Bernanke’s testimony before Congress which should have the markets flip flopping all day. Oil went down again and will test $75 tomorrow while gold dropped $22 for the day, testing the 50 dma at $632. I did buy those SNE calls so I will be watching Japan tonight, hopefully they can shake off the Yahoo news and focus on the good news from IBM.





Tuesday Morning

Sorry no time for big post today – massive project underway at work.

Yesterday was blah and oil sell off shows just how crazy that market is, going down $1.75 on the rumor of peace (back up $1 today as no actual peace happened). Gold is in the same boat but on a real long-term uptrend – still liking NAK.

I’m not sure what people are expecting… Will the headline be “Condi brings peace with a sarcastic comment” or “Prez Bush brokers brilliant peace accord”? I’m not holding my breath…

Friday’s oil split of taking OXY $105 puts for $4 against the OIH $150s for $1.75 worked well as they OXYs are now $6.50 while the OIHs are down to .25 for a net of $1 or 15% which is as good as you can hope to do in a crappy market like this (of course you should have stopped out of the OIH long ago and done much better…).

All the indices were unimpressive yesterday and the NYSE gave us no reason to believe any of the Dow’s little jumps as it went down and stayed down all day. With all the indexes way off the mark, today is a good day to sit out as we wait for tomorrow’s CPI report and a statement from Bernanke.

There is inflation as it is becoming harder and harder to “strip out” food and energy from the numbers as the logic for stripping it out is that the prices are volatile but at some point you have to admit that they just aren’t going down. If the CPI number reflects the same danger signs as the PPI then we are in for a rough week despite some pretty good corporate earnings so far.

I don’t hold out much hope for the day but watch GE, AAPL, MOT and TXN to gauge market sentiment. All those stocks are way too cheap in a halfway decent economy and if they can’t recover there is little hope for the rest. I’m also watching MCD which should continue with momentum but may have a hard time fighting the tide of the markets.

The Nikkei lost 400 points last night as the Japanese are seeing this global mess in a lot worse light than our press is presenting it in. They are also concerned about our economy collapsing (not slowing down, collapsing) so export companies are…
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Kimble Charting Solutions

Wilshire 5000 Creating A Triple Top? An Important Breakout Test Is In Play!

Courtesy of Chris Kimble.

The stock market has been on fire of late, rallying up to the edge of price resistance on several indexes. Today, we look at one of those stock market indexes: the Wilshire 5000.

The Wilshire 5000 tracks all of the stocks in the US market, so it is a broad-based index that carries significant importance when gauging the health of the overall US stock market.

Looking at the long-term “weekly” chart above, it is pretty clear that the index is at an important price juncture.

The Wilshire 5000 spent the last 25 years trading within a rising price channel (1)...



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Phil's Favorites

Will it hold?

 

Will it hold?

Courtesy of 

My Chart o’ the Day this weekend comes to us from Jonathan Krinsky at Baycrest Partners, who’s out with some significant insights about the week that was.

He looks at the possibility that both the dollar and bond prices have hit a high and are now about to roll over. A drop in USD below support, which appears to be imminent, would have all sorts of implications for the recent breakout in gold extending and for the potential of emerging markets stocks outperforming US stocks. A drop in bond prices (rates going up) could mean a reversion in the bond proxy rally (REITs and Utes) and a boost for the banks and brok...



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Zero Hedge

Draghi 'Out'ed By ECB Insiders As Liar And Schemer

Courtesy of ZeroHedge. View original post here.

Authored by Wolf Richter via WolfStreet.com,

Draghi’s shenanigans get hilarious, months before his term ends.

So here’s ECB President Mario Draghi, whose term ends in October, and he’s at the ECB Forum in Portugal, and in a speech on Tuesday titled innocuously, “Twenty Years of ...



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Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

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ValueWalk

The "Tesla Killer" Car Is Nowhere In Sight

 

The “Tesla Killer” Car Is Nowhere In Sight

By Jacob Wolinsky, ValueWalk

Here’s some catnip for the Tesla bulls on this email list: my analyst, Kevin DeCamp, a longtime TSLA shareholder and car owner, took a test drive of the Jaguar I-PACE and, while it “looks great and is fun to drive… it is lacking in a few areas where Tesla really shines.” He concludes that “Tesla may end up killing itself, but the “Tesla killer” car is nowhere in sight.”

The Tesla Killer Hasn’t Arrived Yet: My Test Drive of the Jaguar I-PACE

By Kevin DeCamp

As a long-time, devoted Tesla...



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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Insider Scoop

What To Expect From The S&P 500 Over The Next 20 Years

Courtesy of Benzinga.

The volatility of the SPDR S&P 500 ETF Trust (NYSE:SPY) so far in 2019 is enough to highlight just how unpredictable the S&P 500 can be.

It may seem impossible to predict what’s coming for the market over the next 20 years, but DataTrek Research co-founder Nicholas Colas recently ma...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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