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Wednesday, February 26, 2014

Trades - $tsla $fb $amzn $ebay

TSLA: I have not been shy to call out quick shorts, and when it was selling off, I was looking to go long. But my biggest mistake was using the wrong Moving Average. A few months back I was looking toward the weekly 50sma, when it was really the 38sma.

TSLA has momentum written all over this sucker, and today's pump by Morgan ain't helping. But there is fundamental validity to the stock. Around March 2013, tsla started to see revenue and deliveries break out.

The fundamental trend should continue, which should allow the stock to continue its rise. The Morgan upgrade was a bit annoying as it used the premise of alternative energy storage as catalyst. Here, I take issues. Unless Tesla can bring down the cost of Li-ion batteries, the cost structure is not viable compared to other technologies. I would rather stick to the auto thesis for Tesla. The auto thesis can take tsla to a +$100b market cap, considering their growth, margins and quality  (Market Cap. is currently at $25b.)

Barring a hiccup, tsla should keep riding the 5sma, on the weekly. A solid consolidation will have it retest the 190 level, allowing for a good buy-hold type entry. And negative chatter, like the fires seen late last year, may allow for it to see the 38 sma, on the weekly, allowing for a price pount to go in heavy. While waiting for the major consolidations, the plays are around the 5-10sma of the weekly.

FB: A super bull when no one wanted the stock, now very cautious because the pundits seeno wrong in a very questionable, expensive acquisition. Desktop ads are projected to flatline this year. 

Maybe this takes some of the shine off of this $170b company with $8b in revenue. (A bit of history, goog consolidated growth for about 3-4 years where revenue grew from $20-$40b and had a market cap ranging from $150-200b.)

Looking for a hiccup, and wanting to enter at the weekly 38 sma.

AMZN: looks interesting here. Revenue growth trends are still on the side of longs. Next levels of support, or entries, ars the 50 and 90 sma on the weekly.

Ebay: waiting for a quick retest near 52. Or it breaks out.

Monday, February 24, 2014

WhatsApp or WhatTF - $fb


With this deal, the chatter has been endless. All the potential is inspiring. I remember another huge deal so 'inspiring' AOL-TimeWarner. That eventually ended fairly well, after they split again, I guess.

Messaging, engagement and the next Billion Users are a big deal. But that is not new. These things have always been a big deal. Except now, messaging is being whispered as the 'new' platform.

Influencers are suggesting its a new means of 'discovery', others are calling it the 'glue'.

My biggest WTF about all these 'what-ifs' on this deal: Facebook was/is all these things, and did not materialize as the 'glue' and yet to be used for true 'discovery'.

Fact is, a silo'd WhatsApp, as a pure messaging service will not be worth $19b based on current business model. For all of Facebook's attempts of being something more, its simply riding the wave of Ads in the News Feed. (They are also benefiting from the fact that desktop ad prices are not deteriorating as fast as mobile ads, via saturation and pricing, rise.  Hence the accelerated revenue growth.)

A WhatsApp, going against the founders values, will morph to look like WeChat or one of the other popular Asian social-messaging services.  But even if WhatsApp can morph into something more, outside of advertising, Facebook does not have a good record of taking advantage.  Outside of advertising, much of their other home-grown initiatives have not been so hot. (ie Credits, gifts, retail etc)

If this deal was simply to maintain a level of user engagement, Facebook stock should be going down. After all, $16billion in  stock is a pretty penny to absorb. Accretive it is not. If this deal was completed to morph WhatsApp into something more, Facebook's history tells me to be concerned.

In the mean time, the stock will continue to benefit from the stabile desktop pricing, saturated mobile ads and rising mobile ad prices. (That is until desktop pricing starts eroding, and growth isn't accelerating.) But I'll wait for a hiccup.

Thursday, February 20, 2014

Value per User - $yhoo

The Street values Yahoo's core business around $11billion. Late last year Yahoo stated they have over 400 million mobile users. Yahoo is valued at $27.4/mobile user.

Value-per-User is a nice bullshit metric the power brokers and pundits preach to convince others of an asset worth. Its when the players justify the story with data, instead of letting data tell the story. This is how Whatsapp purchase was justified. 'Messaging is the new mobile platform', and for only $xx/user!! At the end of the day, these metrics get drowned-out and the only thing that gets heard is growth. 

True catalyst remain:

1. Alibaba ipo. Seeing how the markets are valuing mobile and social, Alibaba is an Amazon, Facebook and Paypal valuation combo. Its the kind of company, when publically traded can exceed $300b market cap. (Most recent valuation pegs it near $128b.)

Yahoo owns 24%.

2. Core business revenue picks up. Revenues start growing again, hence the street respects its core business, and it can easily see a market cap of $30-40b. 

Technically, yhoo looks good here.

Wednesday, February 19, 2014

Trade - $bac

With a solid housing recovery and decent US economy, BAC has no business below book value. In the mean time, the trade is around the 9sma and 20 sma. It can very well keep riding the 9sma, but it can also test near the 20 sma (thats the time to go heavy).

Friday, February 14, 2014

Trade - $gs

With optimistic estimates for the SP500, GS should approach the +170 level again.

If previous trends hold up, it should push up from the 20sma over the next week or so. 

Thursday, February 13, 2014

Trades - $aet $ebay

Interesting setups have emerged for AET and EBAY (although, fundamentally, i debate the ebay trade). 

AET prime for an oversold bounce. In 2013, its multiple came in line to its 10year average. So a trailing PE between 12-14 is realistic, despite the lack of eps growth. Looking for a flush near 64.

Ebay's seemingly inability to grow the retail ops as well as Amazon has me a bit concerned, along with their inability to beat the last few quarterly reports. Makes an investor question why the market allows for the elavated multiple. Despite the fundamental concern, technically, the setup is interesting. If it can push to 52, near the 20sma, the trade is to play the pop. IMO, the only thing that gets ebay to have a leg higher from here is if they execute their 'virtual mall' (designed to unify the enterprise offering and better compete with Amazon) well. Looking to cautiously and actively trade around the 20sma.

Wednesday, February 12, 2014

Market Thought... consolidating

The SP500 saw a nice move off the 150sma.

Nearly correlating with the Yen's pull back from its negative trend breakout.

The market probably got an extra boost from Yellen's commitment to the current plan, but realistically the extra boost prob can from China. The FXI is either seeing a potental break from its negative trend or a head fake. (Strongly breaching the 14sma, only to continue downward.)

China's export numbers came in pretty good tonight, but really, it not their economy that is producing fear. Its their threat of a financial crisis.

Frankly, the emerging market "threat" is bullshit. There are issues with the EM that will cause the EMs to underperform, but the underperformance will not take global GDP with it. The only real concern is how much pain the Chinese central government will allow the china banks and investors to swallow. This will then dictate how high the Yen will reach, and how low the SP500 can go.

The downside for the SP500 seems limited to around 1650 or the 14smaon the monthly.

The upside here seems limited too. Above 1800s, the trailing PE on the SP500 is above the historical highs.  For the past couple of months the SP500 decided to trade with a multiple at and above 18 (via Reported EPS). Thats high. Below is a chart highlighting the market with its multiple high. 

With the market above 1810, fully pricing a high-multiple SP500 for a June target price, and the anxiety from one-of-these-days waking up to a China that will simply decides to punish bad debt behavior, I am cautious again.

(Fundamentally, the downside will be limited because China will only allow a manageable level of pain. And the Bank of Japan will kick in its purchases (stimulus) to keep their economy humming.)

Update: SP500 estimates were revised, and they were an interesting leap forward. Standard and Poor's now have about a 20% eps growth. The new estimates, and with much of Q4 2013 reported, the market target price and trailing multiples were updated. 

If the new estimates are to be realized, upside is not as capped as previously expected. Although the China issues are still very real.

Saturday, February 8, 2014

$xom looks interesting

If the market holds up with its elevated multiple, xom looks like a buy here.

If the market doesn't hold up, xom may revert to  a multiple around 10-11, which would test the 200sma on the weekly.

$amzn - clockwork

Wednesday, February 5, 2014

$twtr - blah, good revenue

Twitter has a usage problem. Or at least in the traditional sense of usage.

Looks good, left-to-right, but it's decelerating. (Especially when compared to other social-esque services.)

Twitter may need to do something about those who only want to consume information. Make the service for newbies far more friendlier, and a gateway to Twitter. (Note, Yahoo is doing this via their mobile apps.)

Ad rates are doing well.

But Gross Margins and Operating Margins went the wrong way this quarter. 

Monday, February 3, 2014

Market Thought...10am

Poor US manufacturing data apparently sparked a deeper market sell off. Naturally the 10yr yield came in.

But the Yen kept its rally going too, at 10am.

The weakness started Prior to 10am as the Nikkie started to show structural weakness.

The US ISM and construction data seemed like a nice catalyst for a sell off but not the real reason.

The SP500 has come in some 5-6%, and the Vix is at a year high. I would like to think the market is at an attractive entry point, but the weekly suggests there is a potential that the 62 sma can be achieved. 

$ibm - higher low or new low

Focal point. Either its gonna makr a higher low, which will be bullish. Or a new low.

Considering the perception, gonna wait for a new low before entering a long trade.