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Thursday, February 26, 2015

$bac front-running or institution-unload

On the day headline CPI goes to deflation, some morning negativity to the banks seemed expected. But the treasuries shook-it-off!!


While the rest if the banks were shaking-it-off!!, bac was crap. All. Fucking. Day.


BAC is in limbo, technically. Its obvious assessment is negative because its below its 62sma support.


But with firming rates, I was expecting bac to start breaching the resistence, and test 17.25. Instead we got selling on higher volume. Almost as if an institution wanted to make the sales obvious. 

Hopefully the stress test acts as a catalyst to maintain the longer-term trends. If not, todays action is very suspicious.





Market Thought... Red Flashing $spy

Reported estimates have come down quite a bit, and so have operational earnings. This is not currently discounted in the SP500.

Over the last few years the market has seen a gradual multiple expansion, as the economy got healthier. In 2014 the multiple started to plateau. But actual earnings came in pretty low in Q4 2014 and estimates are low going forward. After 12/31/2014, in the chart below, the estimated trailing multiple will be in the 20s if earnings estimates hold up. That's high, too high.


The lower earnings could just be from write-downs and a lower earnings from energy. But the fact that market multiples are at atypically high levels remain. When fear sets in, normalization be damned.

This condition sets up the market for a hefty fall when the catalyst comes. Will it be the change in Fed language? Russian escalation? China shadow banking system? 

Catalysts remain to be seen, but the wider standard deviation multiple has me cautious.

Wednesday, February 18, 2015

Charts $bac

Its itching to run to 20. Its whispering so.


The last 5 years the stock was relegated to tangible book because of lawsuit liability uncertainties. Allowing it to follow rates with more of a correlation. Now the liabilities are known, and its wants to track intangible book value.


If geopolitical uncertainties truly ease, and European QE kicks in (along with the solid US economy, Japan stimulus and China's easing) will rates stay this low? The thesis bac is whispering, is that as rates appraoch recent trading band, bac will push 18-20.

Sunday, February 15, 2015

$aapl 'secret' sauce

While I enjoy momentum whoring, I am pretty obsessive with understanding the fundamentals of the companies whose stocks I trade. Obsessive. 

Leads to a seemingly endless supply of case studies, and new found knowledge. 

I try to understand the management, their decisions, the company processes, the market opportunity, the market strategy, the effects of macro/micro economics on that strategy / product, competition, etc. This leads to an addiction of chatter monitoring to observe shifts in the level of understanding and market inefficiencies. (The chatter also includes some trickle of information to better understand a company's process. That's always a pleasant surprise.)

Turns out this persistent defect is great for trading. But it's also where I am a subject matter expert. For realz: out side of my money managing life, I am a industrial (if-you-fuck-up-people-get-hurt) risk manager.

Finance industry has pseudo risk management. In the technology sector the concept is non existent. Except, I think, at Apple. What is typically known as a technology company, the common understanding is that they move fast and okay to fuck up. Leads to beta releases and incremental improvements. 

Not completely true with Apple. Apple originated as a fully integrated (software and hardware) technology company, at a time when computer replacement cycles were non-existent. Their goal, as is today, was to make a device that lasted a long time. This requires a grueling thought process to minimize failures. How they preform this thought process is basically a risk assessment.

Apple products last a really long time, with high resell value. This means they minimized failure points. They have been too consistent at this to attribute it to luck. There is a well defined process to which they follow, that allows them to minimize the failures.

This process can be established anywhere, but it's the context around how they minimize those failure. As Steve Jobs consistently explained, and Tim Cook continues to echo the words, it's about making the best products.

The product process starts with an idea. A small team develops the whisper to a tangible object. That object is iterated upon, with the 'risk thought process' to create an awesome product.

Once the product is finalized the 'risk thought process' is most likely applied to component construction and manufacturing. (Their level of efficiency indicates Lean Principles are applied well in advance.)

Basically, seems like Apple's secret sauce is disciple to its promise to consumers and the process to which it created to maintain that promise. Or I'm completely off base, but that's my guess.

Thursday, February 12, 2015

Market Thought... Ukraine and Greece $spy

An apparent cease fire in Ukraine and a very likely compromise with Greece between the Euro elites. Removing two powerful market detriments. (Even though Putin can not be trusted for shit, unfortunately markets simply care about perception of improvement.)

If Russia is legit with the cease fire, sanctions will soon be lifted, and the economies of Germany and France will improve. If a deal is worked out with Greece, and possibly the other peripheral economies, the EU private-public fiscal stimulus can begin. China will most likely continue their easing, as will Japan. 

We will find ourselves in the midst of global fiscal stimulus, while the US economy is firing away. The largest risk to the market will become the effect of incremental rate increases from the Fed, leaving the market open to multiple contraction with continued earnings growth.

An environment where the Vix should hit its lower-end.


This should lead to market highs.

Saturday, February 7, 2015

$twtr momentum in fundamentals

1. New product lauches, iterating on the product. Hopefully the new on boarding technique (improved timeline for new users), coupled with improved direct messaging and video capability will improve mau/dau.

2. Better than expected revenue growth


3. Margin improvements (hopefully this will continue bringing gaap profits one step closer). Also, R&D expenses seem to be slowing.


As for @dickc, I have always been a fan of his ability to operate Twitter. My biggest frustration with him was his selling of share in the high 30s, showing a lack of conviction toward future prospects. (An investor can only see so many consecutive sells before getting annoyed.)

I wanted to get more color on Frabric, and how pervasive its become within the developer community. 


Thursday, February 5, 2015

Charts $twtr

Twitter developed momentum with a bunch of product releases. TWTR is gonna battle through a series of resistances.


The report will let it jump through the weekly 20sma resistance. And the weekly suggests 50 is the next target price. But there are some gaps to fill via the daily: 46-48.


Since I am a believer in that Twitter is a +$50B company, I like 50 being the short term target price for $twtr.