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Sunday, July 31, 2011

Market Thought... oh baby

So a compromise looks to have been established, and the futures are up over 1% across the board.  Nice, hopefully it holds.

If the gains hold the SP500 will see the multiple SMA area near the1310 area. Once its voted upon, and passed :), we should see the SP500 keep pushing higher.

We should also see some interesting sell-offs in safe haven trades like the Franc (FXF), VIX and Gold, with a potential rally in the dollar.

Friday, July 29, 2011

if IP is the hill, IBM is king

If there is a new premium being placed on IP, sparked by the Nortel bidding, then IBM is one seriously undervalued mofo.

They make billions from their IP portfolio. They have a ton.  If that portfolio begins to be valued as per the Nortel price, or other bids, then there is BILLIONS of upside to IBM on patents alone.

Today Google bought a bunch of IBM patents. The reports are not clear as to what they bought, but IBM does have a lot of search and mobile related patents Google could have purchased.

112th congress

I don't think they want to be assholes. I think they will do what is best. Our system was designed to be centered around debate, no matter how ridiculous it makes America look some times, and how annoyed it makes me at times. (Imagine how this would have looked like when this level of debate was going on with wigs :) That is how the equilibrium is achieved. They will find a solution, and America will continue to pay its obligations. For this, I have very little doubt.

That is why I added today. I added to AXP, IBM, AAPL and am waiting to add to POT (but it looks like it got hit by a down grade, taking a more severe hit)

Thursday, July 28, 2011

Market Thought... here we go

As congress is debating whether or not to be the assholes that let America go under, the market is sitting on support just waiting on their decision.  There really is not much more to this thing.

The spike in the VIX via the SP500-VIX overlay suggests down side is limited here. This is of course if the 112th congress reps aren't assholes.

trades... DIS, AAPL

AAPL - Approached its 10SMA, so I added to my position. (I am building back the full position I had.)

DIS - Added to the position.

Trades... ITRI, ATI

ITRI - As I indicated when I first entered ITRI, it may take a hit after earnings, and I will add my full position. It took a hit, and I added.

ATI - Due to the technicals, I would like to get out of ATI, but the online services is going so slow I am watching myself loose money as the site is trying to connect. (And the slowness is per link, not just entering the site.) Quite frustrating to a fairly quick trader!

and I am looking for my entry prices from the previous post.

Wednesday, July 27, 2011

waiting for the end of the world, again

Is a 'black swan' a 'black swan' if everyone is expecting it?

With the end of the world coming, here is what I am looking for:

GOOG - Google touched its high, as highlighted, and if it starts approaching the 580-590 area with this market decline, I will be a buyer of the 600 Dec 2011 call options.

IBM - Everyone knows how much I love IBM, and I have been patiently waiting to re-enter.  I may enter a initial position as it is at its 10SMA. I will enter a heavy position near 178-179.

POT - Looking to re-enter an initial position near 58, and increase the position if 56 is seen.

AXP - It is oversold, but I am patiently waiting for the 76SMA to be seen to double my position.

DIS - Looking to add at current levels.

Itching to make entries

With this decline, and relative fear in the air, I am itching to make entries.  Especially  when I see articles that highlight 'to stay liquid' from media addicted analysts.

I will post a bunch of charts later today for my desired positions.  The markets may have a few more days of uncertainty left. Even though I think this whole exercise in political back-and-forth is completely asinine, the market will humble our politicians. (Especially when cantor made even Larry Kudlow laugh due to the position Cantor was taking. see link 'shit happens')

Tuesday, July 26, 2011

Market Thought... no complacency

Interesting market situation has developed. The market has come down a bit, but the VIX has spiked some 19%.

Looks like the big-boys are protecting themselves for the obvious negative out come. Worst case being the debt ceiling not raised, but more likely a potential downgrade of US debt. A downgrade will cause a temporary shock to the markets because of market mechanics.  There are too many funds that have in their by-laws to maintain specifically rated securities.

I don't think even a downgrade will happen. You don't bite the hand that feeds you, and not expect consequences.

Although I am curious to know how many funds right now are looking to change their by-laws to ignore agencies.  With their threat, could they have inadvertently destroyed their relevance? (And this time, for real. :)

The current set-up is not projecting complacency at all, which is a good thing.

trade... AXP

With AXP touching its 28SMA, I made an initial entry.  I will double up if the 76SMA is achieved.

thoughts on ATI

I was hoping to see some follow through on ATI before they report tomorrow, but obviously that is not happening. While I did chip away at the position I had a couple of days ago, when it had the big move, I still held a position thinking it would go to 68 before earnings.

The industry trends are at its back, but the market knows it, and rewards it with a premium multiple. Earnings is a crap shoot, if the market likes what it hears it will rally. If not, regardless of the numbers it produces, it will take a hit. (This one is not for the faint of heart to trade into earnings, its volatile.)

The prudent thing to do is to start trading it after they report, regardless if it goes up or down. How I will play it: if ATI makes up intraday losses, I will unload it. If not, I will ride the position out. (But I am not as confident going into earnings as I was with GOOG or AAPL.)

Monday, July 25, 2011


DIS took a hit last quarter mainly because of a movie (Mars Need Moms) did pretty poorly.  Prior to the quarter DIS was consistently trading with a trailing PE of around 19. Since the bad quarter DIS had some pretty good movies out, and given the performance of Thor and Captain America, the movie studio looks to do pretty well over the next few month. (And into the future, seeing how DIS continues to maximize the monetizing of the Marvel characters.)

If the report is strong, this could give the green light for DIS to trade with a trailing PE of 19 again. After next week, this would suggest DIS nears 44.  Adding support to the elevated stock price, and multiple, is the Sept quarter is estimated to produce an EPS of $0.67. This would be accelerated earnings growth, and multiples expand with accelerated earnings/revenue.

Basically, over the next 2-3 months I am expecting DIS to retest its high, and by the end of the year pushing high 40s.

Technically, DIS looks pretty interesting.  The daily suggests a nice consolidation took place, while maintaining the longer-term upward trend via its 200SMA. In the very short-term, the high 40 level is obvious resistance. This also facilitated by the weekly via the SMAs.

I think this resistance will be short lived as the quarter will give the green light to the big boys. Hence, I have been buying. I purchased the 40 Jan 2012 calls in the AM today. If DIS continues to decline (toward the multiple SMAs on the daily, near 39.5), I will add to the position.

trades... DIS

Too many things to look at, and with out tic-by-tic, I can't take advantage of multiple names.

1. I got into DIS. (i'll have more detail on this tonight)

2. I am waiting on AXP. Would like to make an initial entry near 51, and a second position at the 76SMA.

3. Waiting on IBM to reach the low 180s, or 10SMA, for an initial entry position.

4. Would have day-traded AAPL this morning, hence the above comment. (I still have a position in AAPL. Not selling this position until the price is around 420 or so.)

There is more, but only so much I can look at with my current limited access. (That will change come Aug 12th.)

futures are showing a clusterfuck

We are going to have an interesting week. If the actions in the futures hold up, the market found its excuse to sell off. The excuse: 'the assholes'.

The party line folks or the freshmen Republicans (who apparently do not know squat about the market-mechanic effects of not raising the debt ceiling) or the reps 'changing the goal line' or some schmuck with a 'pledge' are going to understand very quickly what their bullshit is doing as talks appear to dissolve.

The market will bitch-slap these potential 'assholes' (along with the rest of us), and make them eat their own words.

The next few days will be interesting.

I am clearly annoyed with the political aspects of this thing. And if shit does hit the fan, I will blame those that chose to not close 'tax-loop-holes' for corporations because they wanted to cut programs designed to help the less fortunate. (Of course that is my opinion, and will be the opinion of the vast majority, as the vast majority feel they are in the 'less fortunate' camp.)

Financially, I can careless about this tit-for-tat.  I am cash heavy, as many of my trades achieved their sell points, and have been itching for declines like the one we are about to have, so I can re-enter and open new positions.  Regardless of the bickering, the debt ceiling will be raised, one way or another, which will make these declines a buying opportunity.

Sunday, July 24, 2011

Market Thought... either way

The market is at its 1340 resistance area.

But its too easy to make a bullish or bearish argument, which is a nice way of shrugging the shoulders and saying I don't know :)

The earnings story has been overwhelmingly positive, with the specific exceptions some macro-economic indications (ie CAT). IMO, the positive earnings causes a positive sentiment toward an inexpensive market facilitating an upward bias. While the SP500 can move upward, the big-boys can use any area between 1340-1365 as an excuse to sell or consolidate due to its potential resistance.

The continued negative trend in the semis makes me think resistance will be seen.

But there is a sense that the negative trend may be broken. If the negative trend is broken, this could be an indication that the market will melt through the potential resistance of 1340-1365.

Thursday, July 21, 2011

Market Thought... nothing new except for POT, ATI and ITRI

There seems to be continued follow through, as highlighted in my appropriately named Market Though post 'follow through' :) The weekly SP500 chart suggest a bounce off of the SMAs it currently is sitting on.

Basically, I do not see anything new, with the exception of the political side removing two big certainties. First, being the EU and the handling of Greece. Second, the debt ceiling being raised. (Looks like no one wants to be the asshole.)

Although I am still bullish, I did take some trades off the table. For instance, POT reached the 61 mark after breaking out of its negative trend.  I will re-enter on a consolidation.

I also took some ATI off, but will not sell the remaining until 68 is seen. (I think it gets there fairly quickly considering the plane orders coming through.)

Some interesting smart-grid news came out of Europe yesterday. A huge level of growth will be seen though 2016 due to EU energy targets. This bodes very well for ITRI, and the stock has moved a few points since highlighted. (IMO, this one could be a buy-and-hold for at least 2-3 years, but of course I will be actively trading it.)

Wednesday, July 20, 2011

AXP getting more social

I haven't actively traded AXP for a few months now because was concerned over the increased regulation on the payment networks, but ever since AmEx announced a deal with Foursquare I started to pay more attention to their attempt at 'getting social'.  Then, what got me really focused on AmEx again is their deal with Facebook (like, love, link)

I think their 'GoSocial' campaign is producing some really interesting concepts, which I think can carry increased usage with the social-age of the web.

Historically, AXP usually trades with a trailing PE between 14-15, but the regulatory back-drop created a discount. So I am factoring AXP trades between a trailing PE of 14-14.5, which would suggests a price range of 54-56 over the next three months.

However, without a supporting market, AXP should decline to uptrend support areas, and this is when I plan on pouncing.

The 76SMA acts as support on the daily, and when AXP approaches this level I will enter solid position in the Jan 2012 50 (strike) calls.

Similar supports are also shown within the weekly.
If investors love all things social, they will learn to appreciate AXP if their efforts show traction.  It will be nice to get ahead of this momentum.

AAPL trade

My plan this morning was going to unload my current position, then wait for a decline intraday to enter the 400 Jan Calls, but the pop this morning was weaker than I thought.

Instead I just rolled the options over to the Jan calls. Apple is too undervalued here, and if Intel reports good numbers and we have solid info coming out of the EU, the markets will have a rally.

Tuesday, July 19, 2011

more thoughts on AAPL

I am looking to let AAPL ride until the slow stoch's red line on the weekly rise above the 80 mark, and chills there for a week or two, before actively trading the position.

I will most likely replace my current options with the 400 Jan 2012 calls.

Also, something I found interesting while reading up on the quarter is that due to iCloud Apple will deffer some revenue for iPhone and iPads ($16per device), Macs ($22/device) and iPod Touch ($11/device) which may attribute for the lower than expected guidance.

Market Thought... follow through

The SP500 tested its 28/32 SMAs, but as highlighted (in the 'MN' post) strong earnings have propelled the market higher.

There are subtleties within the indexes that I follow that would suggest the market sees some follow through. The SP500 itself also suggests this.

The only blatantly negative index is the semi. But this may change when Intel reports.

(The daily on the transports looks shaky, but the weekly is very much intact.)

Of course this assumes the EU leaders don't sneeze the wrong way causing Itay's debt to rise :)

AAPL is all out of bubble gum

A few points to take away from this report:

1. The momentum whores are going to comeback to AAPL soon. (With such a clear opportunity for revenue growth still very present from all their product lines, it is hard for them not to.)

2. The clear path of revenue growth opportunity will also drive the value boys back in. I did the math, and with this EPS under its belt and disturbingly awesome free-cash-flow growth, with an ex-cash trailing PE of 14.5, AAPL will have a stock price of 449. Basically, the value of its businesses are just TOO LOW!!!!

If the value boys and momentum whores comeback in, we can see AAPL have a trailing PE of 21 (w/cash) again very very soon.

some thoughts... AAPL, IBM

AAPL - Intraday activity most likely suggests the big boys are questioning whether Apple can meet the whisper numbers of $26.5B in revenue and $7.09eps. (These are some pretty sizable whisper numbers.) IMO, potential weakness is short-sighted, as any number higher then the current (normal) consensus will pin AAPL at a very favorable valuation.  So even if it does sell off after they report, I will be a buyer. I will not wait for dust to settle, I will just be a buyer because valuation is still very very attractive (despite its move) and the one division where growth is a concern for investors has an $80B opportunity in China Mobile and China Telcom alone.

IBM - Its seeing a well deserved appreciation from the street. I will not be a chaser, and will be patient. I have been in this stock, one-way-or-another, since it was in the low 120s to the low 170s. There will always be an opportunity to re-enter this name. (IMO, the only way it keeps rising, from its current appreciation, is if the street rewards it with an immediate and sizable multiple expansion.)

Monday, July 18, 2011

IBM kicked ass

Enough said.

Revenue growth was present, so the stock popped and with it's efficient operations, upside in earnings followed. Next quarter should see continued EPS acceleration, which should cause the stock to trade higher.

As per the chart, the new low-end range for is 174. (Upside is the unknown because it will test its all time high :)

Historically, before the 2008 credit crisis, it has traded with a trailing PE of near 17, and over the past few weeks, all indications suggest it will eventually get there.  The last few weeks, I have been touting the new trading dynamic with IBM, and how it is seeing multiple expansion. If we take into account the multiples currently seen this quarter, and project out (via my forward PE), its new upper trading range should be around 190.

I will let it consolidate around 178, and will not hesitate to re-enter a position when I feel comfortable with the consolidation.

AXPW.ob - added

I added to my position to AXPW.ob. This brings me to 5,000 shares at an average price of $0.646.

IMO, once investors start realizing that stop-start is a viable market, they will look into the components that make it tick. Axion is one of those players. Its just a matter of time. Obviously still speculative, hence a mere 5,000 share position.

Market Thought... MN

The wifey and I spent the weekend in Minnesota, visiting my brother and his wifey, and was only able to do a brief review of my charts today. (It was an event filled weekend, and got back an hour ago.)

There is an interesting dichotomy forming. Leadership has clearly formed in the names of GOOG, AAPL and IBM, to name a few. (Although IBM has been a leader for a while now.) And with earnings this week, most notably with AAPL and IBM, I do not want to be in the bearish camp.  I mean, IBM's trading dynamic has shifted, and if they show decent revenue growth, the stock should follow through to the upside.  AAPL is at an ex-cash trailing PE of 13.8 with solid numbers coming in, and a potential $80B market for the iPhone (via China Mobile and China Telecom). Anyone want to bet against inexpensive valuation and growth prospects, good luck. (Just ask the Google shorts how they handled it.)

Earnings should be a driving factor in the market, but left on its own, the SP500 looks to want to test the 28 or 32 SMAs via the daily.

I am already positioned to ride through earnings with AAPL. I am debating a light position in IBM, but I would much rather wait until after they report to get back into the name.  In the meantime, I will see what opportunities are created as congress debates and votes to raise the debt ceiling. (We are about to find out if anyone of our leaders wants to be the 'asshole' :)

FYI... Since the new iPhone software is going to have deep Twitter integration with an easier notification system, I set-up my blog to automatically send a shortened link of each post to twitter. This way anyone can be notified, via twitter, when a post is published. I will maintain my Tumblr blog to post real-time events that I think merit highlighting, and will look to integrate these posts into twitter as well. Basically, Twitter can become the unifying hub linking to all the posts, and easily notifying everyone 'following' when things are posted. Or at least, that is my hope.  My twitter profile is @echotoall.

Friday, July 15, 2011

twitter test

I tried to activate the feed, from this blog, to go straight to twitter. Hopefully it works.

I have an account (@echotoall), but since now, only used twitter as an information gathering source.


Google simply crushed it. I think it speaks to the undervalued nature of many individual names (ie AAPL).  If the after hours action holds up, GOOG will open around 595.

Any sane person would take profits after a +60 point move, especially if that move is leveraged to in the money call options.  But, attempting an unbiased perspective, the chart and valuation may suggest other wise.

Google's high is near 625. So technically, the stock can push to this level before seeing worthy resistance.

A stock price of 595 places Google's trailing PE (excluding cash) is approximately 16.5. The type of quarter Google just produced, with the prospects of mobile, social and display hitting all cylinders suggests the trailing PE needs to expand. At 17 the price is near 613.

I will be far too tempted to take profits from this sizable move tomorrow, but there appears to be more appreciation in the cards. I think GOOG tests its high during this earnings season.

(With a move like this, it makes one think how the street will reward a rapidly growing company with a ex-cash trailing PE of 13.8, with a potential untapped revenue market of $80B?)

Thursday, July 14, 2011

trade... ITRI

Entered the position in ITRI common shares. I will enter a second position if it declines next week after they report.

some thoughts... AAPL, GOOG

1. AAPL - another report about the potential expansion in China. First it was China Mobile presenting a $70B revenue opportunity. Now its China Telcom presenting a $9B opportunity.  Apple has an $80B revenue opportunity in China alone. (I do not know how investors who question the company's growth potential can maintain a straight face.)

2. GOOG - I am actively trading the second position on GOOG. While I will hold onto the initial position through out earnings. (I got burned a long time ago holding too many call options in GOOG into earnings, and I will not find myself in that position again.) If GOOG does take a hit after they report today, I will enter on Friday. If they don't, I will let the position I hold into earnings ride toward 560 or so.

Tuesday, July 12, 2011

ITRI, getting ready

ITRI looks to be gravitating down to retest high 45/low 46.

About two month ago I highlighted ITRI, and my interest in it due to the smart-grid deployment. (A few weeks later, I established a new target price of around mid 40s.)

Since my original post, the smart-grid standardization chatter has been getting louder. Most recently the Canadian Electricity Association has released its standards guidelinesCalifornia has accepted the plans of its largest utilities. The National Action Plan Coalition issued its guidance.

Growth in this sector is only a matter of time, which IMO, is rapidly approaching. With a potential price decline, I will enter a common stock position in ITRI around low 46. (They report on July 26th, and I am not expecting a great report. If it takes a high from this report, I will add a second position.)

Google, i heart thee

First off, to get the relevant stuff out of the way, I entered more GOOG in the AM. (I was/am prepared, and waiting for it to test low 520s to add, but after I entered it kept pushing higher.)

Now, the irrelevant, and the reason I heart Google...

I was testing the search function between Google and Bing, to see the variation in results. I used the phrase "techcrunch google plus financial assessment".  Bing had a series of links all associated, with one or two relevant to a financial assessment of Google+. (Bing query) When I did the query with Google, my blog post came up first (woo-hoo :). Bing didn't even produce my blog :(

Market Thought... apocalypse now

Here-we-go.  Apocalypse all over again.  Earlier in the day, I posted my thoughts on tumblr, and here about the bond-boys basically controlling the economic world at the moment.  Its frustrating to watch the magnitude of this action. I was a bit annoyed because Italy's CDS rose to a new yearly high.

The high was hit today, not last week or two weeks ago.  Weeks ago, with Greece at the precipice of defaulting which would have caused the very real domino effect, Italy's CDS' were below its high.

So with Greece austerity in place (just like all of the municipalities of The States are doing), and bailout funds given, the bond-boys and hedgies simply 'decided' to act on Italy?  This begs the question, what happened in a week that sparked this move?

I have a hard time honestly answering that question. (I have my speculation, but as stated in my tumblr post, I'll keep that to myself.) And with a VIX move of +15%, plenty of others felt that way too.

Italy's problems are well known for some time now. Here is a link of an article highlighting many of the issues, originally published in late May.  Any one reason highlighted in the article could be used to justify the current spike in yield. But why now?  Again, here is where theories run rampant.  But I have this crazy notion that this 'threat' will end as suddenly and as illogically as it began.

Over the weekend, I highlighted why I was expecting a consolidation. (But I was not expecting almost a 2% decline in one day.)

The market has a series of supports via the daily SMAs (the 14, 28 and 32). It also has the weekly support near current levels.

With the above said, I did start re-entering traded positions in POT and AAPL.  Still waiting on GOOG and others.

Monday, July 11, 2011

quick thought... bond-boys

All markets are in the hands of the 'bond-boys' (or at least that is what I am calling them) manhandling the EU right now. The bond-boys are just picking away at Europe, forcing the countries to get their act together. If not, the Euro experiment goes. The new target is Italy. (The spike in yield and CDS says it all.)  But this go around, the EU leaders are not sitting on their hands. They are acting fairly quickly to discuss the issue

Ironically, the ease at which the EU is being manhandled is creating a nice demand for treasuries, despite the Fed no longer purchasing them.

Hopefully, a solid plan is being worked out, a plan that would make the EU far less vulnerable to a small group of traders. We need stability, especially in a region of the world whose combined GDP is larger than the United States of America.

Sunday, July 10, 2011

TechCrunch, stick to tech

Everyone has their strong suite. TechCrunch is one of the best technology blogs out there. But when they try to do financial assessments, they suck. They recently wrote an article about how Google+ added some $20B to Google's valuation.  (The article was as superficial as they come, and that is why they need to stick to what they do best, and leave the financial assessments to blogs like mine.)

Here is the real financial assessment:

From the low-to-the current rally high (477-550) Google appreciated some 14.8%.

Quite a move. But looking past the obvious, the market (in this case the Nasdaq which better represents Google) had a +10% appreciation in the same time frame.

Google saw a market differential of approximately 4-5%. So 15% of that $20B was purely due to the overall market movement, which leaves 5% (or $1B) to company specific data.

Basically, the market maybe placing a $1B due to Google+.  And despite the nice move on GOOG, the market is currently pricing Google's businesses with an ex-cash multiple of 16.5. Considering its growth, and prospects, not pricey by any stretch of the imagination.

TechCrunch, stick to what you do best, providing information and access to insight like the video embedded below, not financial fluff.

Saturday, July 9, 2011

Market Thought... bias

Obviously the market did not take too kindly to the non-farm payrolls, but after all was said and done, the market held its own and even showed a positive bias.

Supports held, and the SP500 bounced off its intraday low. Although the positive bias exists, there are multiple indications that the market will consolidate here.  The most obvious being the semis

The negative trend is still intact, and I do not know how much of a positive bias the market can have with out the support of the semis.

Combining these factors makes me think the market chills around here for the time being until a positive catalyst is presented.  I am hoping this set up will provide a nice buying opportunity for stocks that have been running.

Some trading thoughts with the current market set up...

1. POT may be isolated from this consolidation as it broke-out on Friday, with a very bullish undertone via the DMI. I am thinking it approaches mid 61 quickly.

2. As advertised, I did unload some AAPL as it hovered at 360. I am thinking it keeps rallying due to its weekly chart set-up, and the fact that its growth is still grossly under appreciated by the street.  Apple is projected to growth Rev at some 40% is trading with an ex-cash multiple of 13.8! If the street wants to treat it like every other solidly growing company it should trade between 15-16. (If the street does this, AAPL will be trading at 400 within 2 months. If a China Mobile deal is announced, the street will give it a higher multiple, far quicker than 2 months.)

I will re-enter the positions I unloaded upon any, and I mean any, pull back.

3. After GOOG reports, it should trade between 530-580 over the next three months. (As per its trailing PE trading range, and affects of it 'getting' social.) I entered a very light position on Friday, with the downgrade. I will add to the near the low/mid 520s.

Friday, July 8, 2011

US jobs

The market is obvious taking a hit due to the headline number. I am not a fan of the report either, but for me the biggest take away was how the report does not jive with the retail and ADP data.

(report breakdown)

1. +57K private secotor

2. There is little record of growth for the auto hires (+0.9K) that took place. (Adds to the not jiving thesis)

3. Not a fan of the Ave weekly Earnings. It declined from $791.20 to $788.56.

The market has every reason to go down today. (Hopefully I can get back into IBM, GOOG and others with this move.  Remembering this is one piece of the equation. Its Global GDP that matters for stocks, not just US GDP.)

Thursday, July 7, 2011

some thoughts... GOOG, AAPL and IBM

Been doing a lot of thinking regarding these names with respect to their current moves and technical set ups, and how to play them going forward.

GOOG - My earlier post, itching, still stands. I much prefer to enter near 525 with a consolidation, but here is where the 'thinking' comes to play.  With today's close, the lower probability scenario looks to be playing out for Google.

With a stable market, and a functioning society, Google is still relatively cheap (ex-cash), but what makes this interesting is Google+. The social feature is Google's unknown variable, that will allow Google to participate in the next phase of the web, and allow GOOG to maintain an elevated multiple. (Something Microsoft was unable to do in the first stage of the web.)

Basically, I am looking to make an initial enter on any consolidation from this move (my upper target of 580 remains for now).  Here is my thinking: if Google's expenses this quarter are in check, they will most likely beat estimates and the big-boys should appreciate its revenue growth.  If the big-boys decide to punish the stock, for whatever reason, I think the punishment will be short lived because the headway in social, with Google+, will overshadow short-term negatives.  Two scenarios that suggest GOOG will be higher from here by the end of the year.

AAPL - With the obvious resistance approaching (560 level), the obvious perception is that it needs juice to breach it. (Basically, Apple is at it's lower-probability trade.)

Re-confirming the big-boy perception is the discussion on Fast Money, where all the traders agree.

I have been saying I was going to ease up above the 360 level for sometime now, and I will. But seeing the action with others near their resistance levels, the contrary play would be for AAPL to breach it.  A near term catalyst could be the anticipation of China Mobile getting the iPhone. (IMO, the growth opportunity will allow AAPL to have a trailing multiple of 19-20 again.)

IBM - Although I sold this, I am eagerly waiting to get back in with an initial entry.  Historically, IBM runs up just prior to earnings, then sells-off after they report.  But historical tendencies may not apply anymore.  IBM is seeing a shift in trading-dynamic with an increasing multiple.  IMO, the market is anticipating increased revenue growth. (The market already knows it will see nice earnings growth.) If IBM sees revenue growth it may rally after earnings, and continue its multiple expansion at a faster rate. If not, IBM will see its usual sell off, but continue its multiple expansion at a slower rate.

Looking for an initial entry again near 172 or at the 10 SMA.


I am just itching to get into GOOG, but I have to remind myself to be disciplined. I see the potential for breakouts in various stocks, and I am playing the 'potential'. I am also 'letting trades ride'. Both strategies I am not a fan of.  (My strategy is to see a the move, play it, then get out. Continuing the cycle with high quality companies/stocks. I do not like overwhelming my portfolios with lower probability trades. This is why I unloaded IBM around 172. At 172 it became a lower probability trade, but I also missed 6 points to the upside on its break out.)

That is how I define GOOG right now. Its a lower probability trade, that has the potential to break out here, but battling heavy resistance. (Not just from the daily chart, but the weekly as well.)

Ideally, I am looking to enter GOOG near mid/low 520s. (Use a portion of the position to trade around this consolidation level, and let the rest exposed to the potential breakout near the 550-570 level.)

Wednesday, July 6, 2011

Market Thought... nothing new

Since the last market thought post, happy 4th, nothing has changed.  The themes that should facilitate market activity are stronger economic data, now that the supply shortages are worked out, and earnings. (But again, these themes are not new.)  In the mean time, the SP 500 is still at its resistance.

The one thing I would like to point out is the strong action in names like IBM, CAT and DD. (There are others, but these three get the point across.) They CAT and DD are seeing interesting reversals of negativity, along with multiple expansion via IBM.  If these stocks are used as market indicators, the market will break this resistance soon-rather-than-later, and will begin to see a multiple expansion.

Tuesday, July 5, 2011

some thoughts... AAPL, POT, ATI and GOOG

AAPL - A couple of days ago I highlighted a technical note on AAPL regarding its potential break out. Today AAPL broke out.

The daily chart indicates levels of resistance, despite the negative trend breaking. I think the current levels of resistance will be relatively weak because the longer-term trend via the weekly chart looks really nice.

What I would like to see, as a sell signal, would be the red line of the slow stoch oscillator to go above 80. (But I still plan on selling some above 360 due to my forward PE assessment.)

POT - It is very near its negative trend.

The positive move today caused me to take my gains. However, the technical set-up, does suggest a potential to break the negative trend during this go around. (I may have sold too soon, but If it doesn't, and comes in, I will re-enter, with the expectation that the next move will breach the negative resistance.)

ATI - During the recent move I traded it as it was approaching the 64-66 resistance. With its push back from the resistance, I re-entered and am looking for ATI to re-approach 66 and breach it.  As the end of the year gets nearer, ATI should revisit its highs.

GOOG - I originally wanted to get into GOOG as it approached high 400s with a declining market. But I hesitated because I thought the pending Facebook IPO would cause fund managers to sell Google and enter Facebook. But the more I read about Google+ the more we begin to realize Google 'gets' social. And when looking at Google+ as the glue to many Google offerings, this is a very powerful combination that merits renewed interest in GOOG.  Technically, GOOG is shifting from its negative trend, and I am looking to actively trade it upon a consolidation.

I am hoping it consolidates around the current level, then push toward 570-580 level.

Monday, July 4, 2011

Market Thought... happy 4th

Happy 4th of July everyone. The markets simply had an awesome week, raising about 6% is 5 sessions. (To use the most played-out line of the week, 'the market gave us fireworks early' :)

A lot of the move was removing the 'systemic-risk' discount seen in the market, that I highlighted prior to the austerity vote. I thought it would see more resistance near the 62SMA, but it simply melted through it.

Looking at the 2011 earnings estimates, we can deduce the market has removed the 'systemic-risk' discount. Recent 2011 estimates has the SP500 at a median EPS estimate of $96. The market has consistently traded with a PE range between 14-15 during this market rally (starting in March 2009). This give the SP500 an estimated price range of 1344-1440. We are already near the low-end of the price range.

I think the positive (global) economic data and company earnings will provide a reason for the market to start trading near the 15 multiple range. IMO, it should get there is a more stable manner.

If the market needed a reason to consolidate, it could be from realization that the discount has been removed, a lack of news, a pretty overbought market and at a solid resistance level.

 Any downside should be limited because of the fundamentals, and the longer-term trend being re-established via the weekly.

With a steadily rising market, we should begin to hear about the decline in the VIX and how that could be an indicator to sell stocks. I think this assessment will be wrong, as the VIX will begin to trade with a new low-end range near 10-11.

A few side notes:

1. IBM - As per my 'forward PE' assessment I modeled IBM to be trading between 172-178 for their next quarter.  Friday was the first time since the 2008 crash that IBM has closed with a trailing PE above 14.5, as well as a high. Further supporting the thesis that IBM is expanding its multiple trading range, and would suggest IBM start trading at the higher end.  It is currently pretty overbought, and I am simply waiting on a consolidation to get back in. I will begin re-entering on any weakness, and go heavy if 170 is ever broken.

2. GOOG - Google is shifting pretty quickly to become more social. I really like the concept of Google+, and when all the services are combined (iGoogle, Gmail, Gchat, mobile, etc) GOOG gets really interesting, really fast.

3. AAPL - Despite its solid move from rock bottom valuations, it is still under-appreciated. Assuming AAPL's new trailing PE is 15.5-16.5 (due to large numbers), my 'forward PE' assessment still gives AAPL a trading range between high 360 to 380 (when factoring in the coming quarter).  But this is being conservative. It should have a trailing PE of 18-19 because Apple still has accelerated earnings two quarters out, and about to release the iPhone 5 in Sept and maybe even the iPad 3 by December.

Friday, July 1, 2011

BMW 5 series w/stop-start

Curious as to why AXPW.ob is seeing a +5% jump today, I did some digging. Turns out, BMW announced their new 5 series with 62.8mpg, utilizing stop-start.

I am left to strongly assume a car using stop-start from BMW will have the PbC technology in its lead-acid battery. Considering their joint presentation in Nov 2010, and Axion's progress getting the PbC line up and running. (No hard evidence just yet, until we see some figure coming from Axion, but I think its fairly realistic speculation.)

some trades

1. Unloaded IBM. It is between, what I think will be the next quarter's trading range (170-178) via my 'forward PE' assessment (see link in top right corner). I am still loving the name, but it is also over extended technically. I will start loading up again on any weakness, and will go heavy again if that weakness pushes it below 170.

2. Re-entered ATI with its push back from the 64-66 resistance.