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Thursday, January 31, 2013

mobile payment chatter... $AAPL

There have been two reports in about two weeks regarding Apple and mobile payments.

1. An e-wallet type of of web service

2. Cash transfer service (older, but made public recently)

Regardless of what these patents aim to do, the above chatter clearly has Apple thinking about mobile payments.

Apple has 500 million active accounts. 500 million users with a trigger finger that already produced $3.7Billion revenue for the quarter (at a year-over-year growth rate of +20%).

At the moment Apple  monetizes the 500 million users through:

1. iTunes Match

2. iCloud subscription

3. App/Software purchases

4. Rentals - Video/TV/Music

5. iBooks/Newsstand

(I would like to include accessories, $1.8B, in this mix, but I will exclude such revenue.)

Adding payments to the mix adds to the increased monetization capability of 500 million users. Increasing monetization through subscriptions and services. Not bad.

ps: Apple released a Map Search API for local searches. (Improved web services.)

Wonder the future... $FB

Facebook reported pretty solid mobile Ad numbers (along with the rest of the business), and continues to indicate the platform will be one of the best (if not the best) play for mobile ad monetization.

What I was really interested to hear more about was Facebook Graph and progress in search.  Zuck was pretty mum, but recent developments tell such an interesting story.

Over the last week Wonder came and went. Wonder is a natural language search, created by Yandex Labs, that utilized Facebook's existing APIs to produce a pretty nice social search app.

The app was short lived as it was pulled because it violated Facebook's terms.

The reason I mention this third party app is because if Yandex Labs can produce a fluid search function from Facebook APIs, then the probability is pretty high that Facebook will produce something very cool from Graph Search.  (Along with the obvious monetization coming from search.)

Ever since AMZN reported, I really don't know what to think about the current trading dynamic. The only thing I know is how I will trade.  This is support near 29. Ideally I would like to see Facebook decline to the 38SMA, and go heavy. But the results don't seem to merit a 17-18% decline.

After this period of consolidation, if the market players get all "Amazon" on this mofo, I am looking for FB to test 37.

(At 37, FB would be given about an $80B market cap. Doesn't seem unrealistic when considering the established growth potential. Along with the fact that the management specifically stated that the increase in 2013 operational costs is directly related to new product initiatives/hiring.  In other words, multiple catalysts.) 

Tuesday, January 29, 2013

Market Thought... it begins

The SP500 looks nice.

As the market keeps rising, looks like the new trading dynamic has begun.  The SP500, factoring in Q4 eps, has started to trade with a trailing multiple just above 15.  And so long as the SP500 keeps hugging the 5SMA, it should keep rising until it starts to test the monthly resistance.

The market should see a consolidation around the current levels. (Possibly around 1480.) If the employment numbers hold up, as the jobless claims suggests they will, the SP500 will break this resistance, and start trading with a trailing multiple above 15.

trades... $IBM, $BAC and $SU

IBM - There is so much beauty in IBM, but the prettiest part of it, at least for the current moment, is its ability to leverage a healthy financial engineering to maintain institutional interest (w/ consistent dividend increases) and increasing EPS with consistent buybacks, while maintaining a very nice free cash-flow.

Been waiting for a consolidation to get back into the name, since they reported. With VMWare disappointing this evening, an opportunity may arise. (Would love to enter between high 200/mid 202.)

BAC - A reversion to book value w/ a solid economy is at play. (Unlike Goldman, which is now an earnings story.)  Currently riding the weekly 9 SMA, but may hit the 50 SMA on the daily or a technical support near 11.

SU - The stock has been hovering around a long-term resistance.  Seems like it would like to breach it.

Saturday, January 26, 2013

the settling... $AAPL

About 10 years ago I started my attempt to trade stocks. I started with about $1,000, and made it into a little over $3,000 in a few months.  I became addicted ever since. I became a market junkie, and a current-events whore.  Throughout those 10 years, there were two distinct trades that have been seared into memory due to the damaged they caused. As of Jan 23rd 2013, there is a third.

1. DNDN - mid May 2007
2. GOOG - 4rth quarter release 2010
3. AAPL - 1st quarter release 2013

DNDN was a very expense lesson in risk management.  GOOG was a kick-to-the-face to not be lazy. AAPL, I am still trying to piece together the lesson.  I got the reaction of the street so wrong, I haven't slept much since Tuesday. (Ever since my senior year in high school, I have dealt with insomnia.  I don't mind it. Lets me keep being somewhat more productive.)

Been re-playing my analysis and assessment over and over again.  The assessment included:

1. Product uptake - This is a continuous observation of the chatter to monitor product trends. Since the launch of the iPhone 5, all the data/chatter (viable chatter, not "some source" articles) suggested, and ultimately realized, a healthy uptake in the iPhone.  The iPad line sold very well.  The Mac supply issues were blatantly stated by Cook in the 3rd Q Conference Call.  The product uptake was decent. To deny the gain in global share for iPhone and strength of the iPad (9.7 and 7.9 inch) is disingenuous to the facts.

2. Flat EPS year-over-year - The comparison to last year was a known issue well before this quarter.  As such, I was not too surprised to see the trailing PE decline from 16 (in Oct) to 14.  (But from Dec to Jan, I was expecting the stock to chill around 560, not 500.)

3. Expectation of Negative Chatter - Planted stories usually hit the wire during times of quiet periods or lulls in product announcements. And since Apple just had a major product release cycle, I was expecting some level of negativity in December. I was not expecting the baseless articles to gain traction into January. (The period of negative chatter was longer than I anticipated, which helped keep the stock near 500.)

4. GM decline - A decline in GM was fairly obvious, and expected.  Last year during Q1 and Q2 fiscal quarters Apple benefited from huge declines in component costs. Margins were very very high.  The comparisons were known to be very rough. Again, adding to the justification to have a contracted PE from 16 to 13-14.

5. Street's perception - The street was at a heightened level of negativity thanks to high level of "component cut" sponsored stories.  The street was already factoring in the negativity due to AAPL's multiple already trading near historic lows. 

6. Technicals - While I was expecting the stock to channel trade in the mid 500 until they reported, they ended up channel trading at 500.  In fact the stock was acting relatively healthy, suggesting a bottoming w/higher lows. Up until the WSJ rumor release the Sunday before Jan 14th, which later remove the fictitious numbers it mentioned.

7. modeling - Because of the technicals, and the lack of pushing the multiple toward 12.5 in January, I ran a series of expectations to assume a miss in estimates and consensus. For instance, one of the assumptions was if Apple guided for around $10eps for the next quarter. That would suggest a trailing eps of 41. Slap a 11.5-to-12.5 trailing PE on 41, and that leads to a stock price of 477-to-492. (Yet AAPL is trading around 450.)

Due to Apple's position in the post PC era, and its huge cash generation potential, I certainly was not factoring a trailing PE below 11.3 (the low range).

Yet here we are.  After the report, and with the stock down, now uber bears want to call a company that had record sales and products sold, a "broken company". (Fuck, if this is the standard of broken, what the fuck is considered working?!?)

The real concerns for Apple are the following:

1. Improved UI (user interface) across its software

2. Improved web services (including iTunes, Apple Apps, Siri, etc)

3. A (more) unified iOS and OS X experience

4. Improve the iCloud experience so that it is a seamless file storage system. (For instance, if I have a file saved on my Mac Air, it would really be saved via iCloud, and I would be able to access that file via my iPad/iPhone. (For this to be seamless I think, #3 needs to be in place.)

There are many other nice-to-haves, but the above are the more critical aspects in order to shift with the evolution of mobile computing.  Back on October 29th, Tim Cook announced management reshuffling to better address the above needs

Aside from the decent quarter, the company has ALREADY positioned itself to embrace the needed evolution. Jon Ive working on UI, Eddy Cue on Apple's services, along with iOS and OS X under one roof via Craig Federighi (the trajectory here is obvious).  In fact, the only clarity we lack is how iCloud will evolve. (But I really do believe iCloud will be far different, and a productive tool, when iOS and OS X start to merge.)

A broken company? Far from it.

I obviously gauged the psyche of the market pretty poorly on Tuesday, and underestimated how severe the level of negativity would drive the stock. But the more and more I think about how I assessed the company and stock, I still do not think I would have traded any differently.

With the current sentiment, I really do not know what to think. Apple is already at stupidly low levels, most likely due to a superficial analysis perspective. And obvious sentiment can take the stock between the 350-425 level.

Where ever the stock goes is any one's guess cause of the poor sentiment. But there was some interesting intraday action, where the stock actually caught bids (around 12:30), and firmed up. (However, about a min before the close, there was some funny business.)

Curious as to who is stepping up? Could institutions be coming back or is Apple stepping up and loading up on their $10billion stock buy back?  Why wait three years to make the purchases, when so much can be bought now for such a low price.

Wednesday, January 23, 2013

build you up, to tear you down... $AAPL

What went wrong?

Pick a reason, any reason, and let it be so.  Ignoring the arbitrary opinions of the many, lets look at the numbers.

Q1 2013:

1. Revenues miss the consensus expectations by $300M.

Although Apple beat their own guidance by +2 Billion, for a company that just produced $54 BILLION in one quarter, that is a 0.5% miss. Which means a sneeze in the currency market could have caused it to "miss". Also:

-iMac sales were low, too low. Here were the real supply issues. This is an obvious factor that caused analysts to miss consensus revenue estimates.

-iPad mini constraints. If Apple was able to improve supply constraints on the iPad Mini (to which it is still constrained by a 1week shipping time), Apple would have beat on revenue.

Does this level of miss merit a 10% decline?

2. Product expectations.  Apple has been declining for the past 3 months due to vague, obviously bullshit, "factory order cuts".  Analysts started declining their expectations since the order cuts started to be made.  They then raised their iPhone expectations because the actual numbers from Verizon came in pretty strong.  The negative sentiment was already being factored in, and should not have had a big effect on earnings. (I liked how Cook called major media outlets idiots, in far more political terms, but idiots non-the-less.)

Whatever the twist to product expectations, record sales are record sales.  The numbers were decent. (Especially for a stock, prior to this report, trading at the very low-end of its trailing PE.)

3. Gross Margins were around expectations. Again, decent. (Especially for a stock, prior to this report, trading at the very low-end of its trailing PE.)

4. Beat earnings (eps) consensus estimates. Obviously good. (Especially for a stock, prior to this report, trading at the very low-end of its trailing PE.)

5. Next quarter expectations.  Apple obviously lowers expectations.  The consensus was $45billion, they lowered it to $41-43billion.  Around a 10% decline, but is it anything any Apple investor is not accustom to?

Apple introduced two new expectation management tools during the CC:

a. No eps guidance. 
b. Blatantly squashing the notion of "softball guidance" expectation. (I believe it was at this time the stock started to really break down.) 

Everyone already knew earnings in general were not going to keep growing at +85% clip.  And that EPS, from last year, was going to be flat. Wall street never rewarded that level of growth, and now wall street is punishing decent revenue growth. (But the stock, prior to this report, was trading at the very low-end of its trailing PE.)

Does a new level of expectation merit a $50 billion decline in market capitalization of a company that grew their cash position by $16billion?  Maybe, if the stock was trading near 600 prior to the report.

Whatever the reason, the stock declined and now we wait for price discovery, albeit painfully.  Where will the street get interested? Prior to after hours decline, Apple was already trading at that 'interest level'. Apple's low-end trailing multiple was around 11.5.  

Looking at the after hours decline (near 460), Apple has the following multiples:

Trailing PE: 10.45
Forward PE: 9.5 (assuming a 10% eps growth from 2012)

Cash position: $137.1billion
Cash per share: $144.7
Share price (ex cash): $315
Trailing PE (ex cash): 7.15 (eps of $44.1)

I am not expecting crazy growth, but I am expecting wall street to give credit where credit is due, and give Apple a proper multiple. (All considering their forefront position into the Post PC era.)

Apple may need to take a page from IBM's play book. Being so large, Apple needs to get more involved with healthy financial engineering.  I thought the dividend and buybacks announced last year would have been enough to maintain between 12.5 - 14. Since the stock is no longer being rewarded for its cash growth, Apple needs to put that cash to work. ($16 billion growth in cash! 16. Billion.)

$AAPL didn't give eps guidance

Interesting. Usually they give revenue and eps guidance in the press release, but they didn't give eps guidance this go around.

Last quarter their diluted share count was 948.1M. This quarter it was 947.2M.

Curious if the lack of guidance on eps suggests a heavier buy back this quarter?

More on the report later tonight.

Tuesday, January 22, 2013

$GOOG and $IBM

Nice action in after hours.

GOOG: (Larry still sound a bit off, hope he is okay.) Going over Google's number, they beat the street from a revenue and non-gap eps perspective, and adding fuel to the excitement is the overall margins increased. However, the quality of the margin increase seems to have come from:

1. reduction in Administration
2. reduction in R&D
3. lower tax rate (18%)

Although Google beat from a non-gap, I was expecting a bit more from a GAAP perspective. And frankly, I do not understand why they would issue a cautionary note so late into the quarter, via their blog, if they knew Revenue was going to do well.

Google's trailing GAAP eps is now $34.12. The stock at  737 leaves the trailing multiple at 21.6.

Since Google is trading on the higher side of its 2yr multiple range, I am a still cautious. Although the action in the current quarter is suggesting the street is getting over the CPC issue.

Paid click” growth was 24%, year over year, and 19%, quarter to quarter, the company said.
The “cost per click,” the rate Google makes money on those clicks, fell 6%, year over year, and rose 2% from Q3′s level, Google said.
I still would like to start trading Google again, but on a pull back toward 680 or so.

IBM:  Rocked it. Expanded margins, beat on non-gaap and GAAP and revenue (while currency was a head wind).

With the market entering a new trading dynamic, and IBM's continued share holder friendly stance, I would expect IBM's trailing multiple to retest the high 14s/low 15.  This would mean IBM should re-test 207. (Then re-test it high.)

Since I am trading Call options in IBM, I will look to capture the volatility benefit tomorrow or over the next two days.  Then re-enter on any form of consolidation.

Sunday, January 20, 2013

trades... $BAC, $FB, $GOOG and $AAPL

BAC - Looking for an entry near the 50SMA. IMO, the play is a reversion to book value, especially as the economy and housing improves. (Near 17-20)

FB - Ideally looking for 26 or the 62SMA. With a current market cap of $64B, I am uncertain as to how the stock will react to the earnings report. When the stock was at 19, the trade, playing the transition to mobile, was a fairly easy one.

GOOG - Even though I am a fan, I already highlighted it should chronically under perform until they begin to make profits from their hardware or mobile ad rates rise enough to offset desk top ads. (And, what I think is a first, Google told analysts via a blog post their revenue was gonna come in light.)

I would like to play an oversold bounce, when the conditions are right. And look to play GOOG between mid-to-high 600s.

AAPL - Too much has already been said. Wed will be interesting. I am looking to sell some of the position near 560, which is the upper trend line resistance, on the weekly.

Market Thought... new dynamic

Earlier in the month I highlighted that the market would start to trade with a multiple between 15-17 going forward. (A multiple normally seen before the credit crisis.) The market maybe on the verge of this trading dynamic.

The market is having a nice rally, generally supported by most stocks.

What has had me concerned the past couple of days, was the Vix level via the SP500-VIX overlay. Generally, caution was merited when, during this overlay, the VIX approached the lowest red horizontal dotted line.

The past couple of days were interesting because the VIX started to cleanly trade below the 'cautious' level.  This maybe a extension of positive sentiment, allowing for a retest of a long-term monthly resistance near 1500.

Or the current market action could be an indication of the new market trading dynamic that will give the SP500 a new trading range.

The history of the VIX does suggest it can bottom out near 10.

Fundamentally, two main considerations  suggest the VIX can test a lower level:

1. a more stable financial macro environment (ie unwavering support from global Central Banks)

2. US employment outlook looks pretty healthy

The Jobless Claims this past week set a new low, and in a few short weeks overcoming the spike from Sandy.

There is also the more real-time indication of Jobless Claims from Google Trends, which clearly reveal a shift.

The recent trend is the lowest since 2009, and if the trend continues, it would suggest a lower real-unemployment number.

The employment number is important because the weakness of the employment numbers is what caused the 10yr to break down and the equity markets to swoon in April 2012. The equity markets did not recover until the employment numbers improved. The 10year yield has still not yet fully recovered, but it will as employment keeps improving.

Central banks have made their commitments clear all throughout 2012. So the only uncertainty is the employment number. For now, things look good

Thursday, January 17, 2013


A few months ago I was really into the banks to take advantage of the below-discount-to-tangible-book. As the economy rallied, and housing held up, the value of the banks were realized. The few major banks trading below book are BAC and C. (As the economy continues to improve, value of these companies will also approach book.)

Most major banks are trading slightly above book, the valuation method turns to earnings.  Today, GS brought the earnings. But just because this quarter was kick-ass, how should GS be valued?

Here is what I'm thinking:

1. Despite the solid earnings, a predictable profit center is lacking or yet to be broadly realized.  This may keep the trailing PE to the lower side.  A look at the last 10 years gives a skewed picture for bank multiples (for obvious reasons). During the ramp-up of the housing bubble, banks had accelerated earnings power due to pumping out MBS securitization. As the underwriting started to level off, so did the multiples. As more uncertainty emerged to their earnings power, the multiple declined further. (All hell broke loose with the financial crisis, and trailing PE past 2008-to-present were omitted from this assessment. IMO, the time frame fits with the current environment could be between 2005 and 2007. This would assume the market will allow the banks to have a multiple between 9.5 - to - 11.5.

2. Looking forward, analyst will most likely be raising their numbers to reflect the favorable compensation ratio of 37% instead of 42%. But the comparisons may still be tough.  Next quarter, GS is currently projected to produce an EPS of $3.78. This will be replacing an EPS of $3.92.  Even with potential upgrades, the trailing total EPS will be flat. (Not justifying a higher trailing multiple.)

The trailing 12 month EPS is 14.15. With a trailing PE between 9.5-to-11.5, the stock can potentially trade between $134 -to- $162.

3. Technically, the stock has set out for a new trading range.

Clearly, the chart is bullish. But I do not like to chase.  I am patiently waiting for a re-entery. As the sentiment begins to ease, I am expecting GS to retest its 28SMA before pushing upward.

Although an aggressive trader would enter on any weakness between the intraday price action and the 10 SMA, with a tight stop just below the 10 SMA. Once the 10 SMA is breached, GS will most likely test the 28SMA.  (I tried entering on weakness today, and execute this strategy, but degree of intraday weakness did not entice me to take on the trade.)

Wednesday, January 16, 2013

$GS kicked ass

The report was impressive. There should be a new trading range coming, prob between 130 to (potentially) 160.

A more in depth assessment will be posted tonight.

Monday, January 14, 2013

under the radar chatter to expand market share... $AAPL

While a bullshit WSJ "rumor", who's numbers really did not make any sense, controlled the chatter today, few interesting items, that test new ways to expand market share (while maintaining margins) received little traction:

For 1, 3, 6 and 12 installment options, there’s no interest, but the 18-payment choice comes with 6.5% interest, and the 24-installment plan charges 8.5%.
2. Wal-Mart, and StraightTalk, to sell no contract plans where the data plan is $45 a month, but the cost of the phone will be built into a monthly plan. (Equating to $70/mth, less costly than the major carriers.)
The program, which requires a Walmart Credit Card, allows customers to pay off their iPhones for $25 a month on top of the $45 unlimited prepaid plan.
The above are obviously not as juicy as no-lines for an iPhone5 in China, which later prove to be misleading and give completely false perception of actual events.  But the above items are an interesting approach to expand the market for the iPhone to people who thought were unable to obtain it, while maintaining margins.

One would think, those media outlets that keep harping on Apple to produce a low-end worthless cheap phone, would pick up stories like the above that begin to address under served market segments. But I am not holding my breath.

where is the SEC?

Apparently the SEC started to look into these Apple "channel checks" analysts a few years ago, what happened?

Is it a coincidence that a week before option expiration yet another "channel "check" article hits the wsj using "sources familiar with the matter". (But only suggesting weak demand as the cause.)

It's crap like this, that gets allowed to happen, that cause the retail investor to give the finger to Wall Street.

Trading, in any market base product, is no place for the faint of heart, but the obviousness of last night's wsj article spits in the face of all those trying to regulate the market.

Thursday, January 10, 2013

Web Services chatter... $AAPL

"When Maps for iOS fails, the iPhone fails with it."

This line best sums up the perception of the elevated negative chatter related to Apple.  Suffice it to say, when Apple Map was introduced, the fever pitch emotional chatter simply took off.  

The chatter is gaining traction again, with analysts highlighting the the poor web services as a correlation to the stock's decline.

Looking at a chart overlaying GOOG and AAPL, one is inclined to see an interesting correlation. The rise of a web services company vs one that is perceived to lack it. (The chart is of Google, and the red line is AAPL.)

Web Services, with all its vague meaning, is a weak spot for Apple. Fortunately for Apple, the weak spot from a financial perspective is not detrimental, and will not be for the next few years. Simply because their current strategy of 'great hardware merged with great operating-system software, and an easily accessible third party ecosystem' dwarfs whatever revenue they will ever make from Web Services. 

Web Services differentiates a product.  Currently, for Apple, it adds intangible value to the iPhone.  (Web Services drives revenue for Google because Google depends on the advertisements from its Web Services.)  Phone users want a service that works. Users want to use Google Drive or Drop Box to store files and access them anywhere.  Again, there is no monetary value for Google or Drop Box, as the vast majority of users are free users. 

So the lack of a service that currently adds no tangible value to a company is the cause for about a $100BILLION loss in market capitalization. 

I am very critical of all companies I trade, and I completely agree in that Apple needs to improve their Web Services, but the fundamentals do not make sense with the perception.

Many want to point out Apple's attempts and failures at the web (ie Ping, MobileMe etc), but those very critics are forgetting Google's strategy in Web Services.  The level of failures at Google are monumental. They were and are willing to try and fail, vs never trying at all. (Thats a good thing.)  

Despite letting pesky facts get in the way of a nice argument, Apple is moving to improve services. Case in point:

1. iTunes 11 - critically haled as a vast improvement. Obviously more can be done to improve it, but its a very good step in the right direction. (Although, achieving 40Billion downloads and the highest level of revenue for developers, and has been doing so prior to the version 11 upgrade, is pretty impressive.  At least to me.)

2. Apple Maps - It was crapy at first, but it has improved.  And Apple is actively improving it with Eddy Cue.  Despite this, I did not find it to be a $100billion dollar mistake. In fact, I thought it to add value.  It did not hurt sales of the iPhone, as current data suggest, and it forced Google's hand to produce a Map App with navigation, that is by all accounts kick-ass. (Although I find myself using Apple Maps more now. The constant request to login to Google Maps frustrates me.)

Apple's mere attempt at web services upped the ante, and forced a better user experience on the user. (IMO, whether the improved experience on the iPhone comes from Apple or a competitor is irrelevant.) 

All-in-all, I think the web services argument is a bullshit one from a fundamental perspective. But the chart above supports the perceived trading dynamic. 

The one area of "web services" I really would like to see Apple improve, is the developer interaction in iCloud.   

As for this being the battle ground, that may be true. But the Maps fiasco also taught us that competitors will come back stronger, and make the user experience better.  So long as Apple can continue to drive the best experience on their device is the paramount issue.

(The irony is that blogger, a google cloud web service, is acting up and not letting me save or publish the post. Brilliant.)

The real low-cost new Apple product

It's the CentiPad! "I believe in You!".

The video is just as ridiculous as the argument for a low-cost iPhone for the sake of market share.  Apple will only offer a lower priced product only if that product has a true purpose and sense of premium.

Developed markets already have a free iPhone alternative (the iPhone 4).  A lower priced product does not make any sense in developed markets. (And given the nice market share gains in the US, a lower tiered iPhone makes anyone making the argument sound very silly.) Within specific emerging markets (ie India and China), a lower priced premium product tailored for specific markets makes sense.  Making a product for specific regions of the world is not in Apple's supply chain nature. (Although there has been increased chatter in a shift in manufacturing strategy. Could be a faster product release cycle or new products. Time will tell.)

Tuesday, January 8, 2013

Market Thought... few uncertainties left

Ever since 2008, the SP500 has been consistently trading below a four quarter trailing PE of 15.  Looking back, the main cause of this was the financial strain first with the US and then Europe.  Thanks to the FED and ECB, the potential for a new financial shock from the western economies seems to have been mitigated.  Albeit the issues in Europe are still being worked out, but by and large, the all-in approach of the ECB will mitigate new shocks from Europe. (This is also corroborated by the improvements in Ireland entering the bond markets and the declining rates in Greece.)  The only real potential shock left is the Debt-Ceiling debate.

As the debt ceiling concern comes off the table, I am left pondering, what will be the issue that keeps the SP500 trading at a trailing PE below 15?

As earnings descend upon us, the true market driver will reveal friend or foe.  If earnings can continue to grow at a steady pace, then there is little to justify the market to trade at a discount to pre-2008 historic norm.

Q1 should bring the trailing PE of the SP500 near $101. With a multiple of 15, the market can potentially trade to 1515.

While the debt debacle gets worked out, the technicals have me a bit cautious here due to the decline of the VIX in relation to the SP500.

On the flip-side to cautiousness, QCOM looks like it is breaking out. (Not thrilled about their release at CES with respect to Snapdragon, but Intel did not release anything disruptive either. So QCOM's position in mobile seems safe for the next 6-12 months. IMO, meriting a re-test of a multiple in the low 20s.)

Wednesday, January 2, 2013

So many pretty charts - updated

Today's action is giving beauty to a lot of charts. I'll update this post later in the day with charts.

QCOM, FB, GS, JPM, AAPL, SLB, SP500 and 10yr to name a few.

chart update:

AAPL - The 38SMA acted as resistance during the last run, and that was breached today.  The intraday push back came from the weekly upward trend line.  This is the second test to the resistance. Looking for the AAPL to re-test the 570 area.

FB - The bounce off the 38SMA continues, and it has recaptured its positive bias. Not sure it can breach the 28 resistance level without an earnings catalyst.

GS - The 150SMA is being broken, it is quickly approaching the 200SMA on the weekly. The daily chart looks so pretty, but I am not chasing. I am looking for a consolidation between 128 and 133 before playing GS again.

IBM - Breaking its down draft. Its just pretty. It may consolidate here as the SMAs on the weekly are still resistance.

QCOM - A weekly consolidating triangle is breaking. Looks like QCOM wants to re-test its highs.  If Intel does not have much up its sleeve at CES next week, QCOM can make new highs.

SP500 - IMO, what should have been a year end rally took place in one day. Near resistance, but given the number of votes in the house for the cliff issue, the debt ceiling issue does not seem as uncertain.

A near term concern - The VIX lost 40% in 2 days. It is now approaching a level that makes me cautious.