Every now and again there come some very big days in a man's life. One of those days is coming on Saturday. I will be receiving the smallest handcuffs. j/k :)
My wedding day is tomorrow, and there-after will be on my honeymoon :)
Past couple of days I have been too busy and unfortunately missed some day trading opportunities (ie AAPL as it approached 300, etc)
The rate of posts will be light for the next two week. I come back Nov. 13th.
(Knowing my passion for this stuff, I will most likely be checking on the markets in the wee hours of the night, as my soon-to-be wifey is fast asleep, and may sneak in a few posts :)
My market thesis has not changed since the Market Thought posts starting from 'giddy' (Oct 7th onward). Best of luck!
happy trading
Friday, October 29, 2010
Tuesday, October 26, 2010
Market Thought... round bottom
girls, you make the rocking world go round :)
The 1o year yield is acting interesting. IMO, it is developing a bottom, and looks to want to break its down trend.
In a previous Market Thought post 'always thinking', I suggested this development was needed to facilitate an upward push for the market into year end.
At this time, I am not as giddy as I was when I indicated the continuous market push upward due to entering the initial area of weekly resistance, but I am looking to purchase on a pullback.
The 1o year yield is acting interesting. IMO, it is developing a bottom, and looks to want to break its down trend.
In a previous Market Thought post 'always thinking', I suggested this development was needed to facilitate an upward push for the market into year end. At this time, I am not as giddy as I was when I indicated the continuous market push upward due to entering the initial area of weekly resistance, but I am looking to purchase on a pullback.
Hard not to really like IBM
IBM authorized an additional 10B buy back, and issued their dividend today.
Seeing how they only have $2.3B remaining from the previous buyback, IBM is a rare company that actually buys its shares when they say they will. But with a such a discounted PE (12.63) in relation to its earnings growth rate (15%), and with respect to the overall SP500, I can see why they want to buy back as many shares as possible.
IBM has the right product mix. The correct transformation strategy. The correct cash allocation scheme. With all these things, it is really hard not to like IBM as an investment, regardless as to where the market may or may not go.
Seeing how they only have $2.3B remaining from the previous buyback, IBM is a rare company that actually buys its shares when they say they will. But with a such a discounted PE (12.63) in relation to its earnings growth rate (15%), and with respect to the overall SP500, I can see why they want to buy back as many shares as possible.
IBM has the right product mix. The correct transformation strategy. The correct cash allocation scheme. With all these things, it is really hard not to like IBM as an investment, regardless as to where the market may or may not go.
Monday, October 25, 2010
Market Thought... getting interesting
To my friend going into surgery tomorrow, my prayers are with you and I wish you well.
The market is getting interesting here. A strong case can be made to start protecting against an SP 500 correction. But on the other hand, there can still be room to run to 1210 or so.
The weekly SP500 charts indicates to begin capturing profits or start protecting.
The SP500 is very near the 200SMA.
However, when looking at the monthly, the 62 SMA indicates the resistance is closer to the weekly 320 SMA.
Regardless, we are near a point to ease up on the giddiness, and add some caution.
The daily chart needs to thrust past its current area to get a move near the upper end of the weekly/monthly resistance (ie 1200).
A look at the pre-market (at 12:40AM eastern) indicates a strong open. China is up +1%, so there must be really good China data out. If we can get the thrust past the daily resistance, we may get 12o0 on the SP 500.
With this potential thrust, I am looking to take some profits and add a protective position via the 120 SPY Puts.
(Keep in mind, any potential correction IMO is very limited due to valuations. I am hard pressed to find a scenario to which the SPS500 breaks through the 1150 level.)
The market is getting interesting here. A strong case can be made to start protecting against an SP 500 correction. But on the other hand, there can still be room to run to 1210 or so.
The weekly SP500 charts indicates to begin capturing profits or start protecting.
The SP500 is very near the 200SMA.
However, when looking at the monthly, the 62 SMA indicates the resistance is closer to the weekly 320 SMA.
Regardless, we are near a point to ease up on the giddiness, and add some caution.
The daily chart needs to thrust past its current area to get a move near the upper end of the weekly/monthly resistance (ie 1200).
A look at the pre-market (at 12:40AM eastern) indicates a strong open. China is up +1%, so there must be really good China data out. If we can get the thrust past the daily resistance, we may get 12o0 on the SP 500.
With this potential thrust, I am looking to take some profits and add a protective position via the 120 SPY Puts.
(Keep in mind, any potential correction IMO is very limited due to valuations. I am hard pressed to find a scenario to which the SPS500 breaks through the 1150 level.)
Saturday, October 23, 2010
A quick word on AAPL
Any metric you look at AAPL, one can see it is not in a bubble. In relation to EPS growth, throw any metric you want, they are all very reasonable, and when backing out the unproductive cash, very inexpensive.
A recent article in www.seekalpha.com used free-cash-flow (FCF) and market cap as a means to justify a bubble status.
FCF is defined by 'net income+amort/depreciation-working cap.- capital expenditures'. AAPL's trailing 12 FCF is (14.013B+1.027-1.212-2.121) 11.707B.
AAPL currently has a market cap of $280.89B. They have about $51B in cash total. So basically, their market cap, as a business and excluding unproductive cash, is worth $229.65B.
They are generating a 5.1% FCF on the worth of the business (11.7/229.6). With treasuries well below 3%. That sounds pretty good. Especially when you compare it to IBM. IBM's FCF/market cap is 7.9%. (I did not back out the cash for IBM because they have a very heavy cash allocation scheme, and does not sit unproductively for them like AAPL.)
Point being, even on a FCF basis, in relation to AAPL's Market Cap, AAPL is very reasonable. Especially considering the type of product mix and demand they have. And just looking out a few years, their product cycles and respective demand can last at least 3 years, with the enterprise space and Verizon entering as their customer base.
(Albeit, this metric proves IBM is a disgusting and substantial value here.)
A recent article in www.seekalpha.com used free-cash-flow (FCF) and market cap as a means to justify a bubble status.
FCF is defined by 'net income+amort/depreciation-working cap.- capital expenditures'. AAPL's trailing 12 FCF is (14.013B+1.027-1.212-2.121) 11.707B.
AAPL currently has a market cap of $280.89B. They have about $51B in cash total. So basically, their market cap, as a business and excluding unproductive cash, is worth $229.65B.
They are generating a 5.1% FCF on the worth of the business (11.7/229.6). With treasuries well below 3%. That sounds pretty good. Especially when you compare it to IBM. IBM's FCF/market cap is 7.9%. (I did not back out the cash for IBM because they have a very heavy cash allocation scheme, and does not sit unproductively for them like AAPL.)
Point being, even on a FCF basis, in relation to AAPL's Market Cap, AAPL is very reasonable. Especially considering the type of product mix and demand they have. And just looking out a few years, their product cycles and respective demand can last at least 3 years, with the enterprise space and Verizon entering as their customer base.
(Albeit, this metric proves IBM is a disgusting and substantial value here.)
Wednesday, October 20, 2010
Market Thought... :)
Is this real? Will the SP500 keep rising? etc
These are the questions hedgies not expecting this move are pondering. They do not know what to do, except follow the tape. Its nice to be one step ahead of these people.
The SP500 bounced off the 14SMA, and looks to want to test the 1200 level.
Play it smart. Take profits on the way up (between 1195 to 1210). Buy into the eventual correction. (That's the trader in me. But many many stock are still awesomely cheap.)
These are the questions hedgies not expecting this move are pondering. They do not know what to do, except follow the tape. Its nice to be one step ahead of these people.
The SP500 bounced off the 14SMA, and looks to want to test the 1200 level.
Play it smart. Take profits on the way up (between 1195 to 1210). Buy into the eventual correction. (That's the trader in me. But many many stock are still awesomely cheap.)
Monday, October 18, 2010
Market Thought... scared?
Look in the mirror, and say 'No'. AAPL and IBM are taking a hit in AH. Take a step back, and assess the situation.
AAPL has major support via the daily 10SMA and 295 level. Also, valuation is on their side now. With the current AH decline, AAPL at 300 is trading with a trailing PE of low 19. LOW 19!!!!!!! They have the product with the fastest consumer adoption EVER! (The exclamations are not from me being upset, I indicated to take some profits, and I am very happy w/my trading.)
IBM simply had a kick ass quarter. The company is so big that analyst can target any aspect of the report to justify a sell off. This is exactly what analyst are doing right now. Justifying the decline with the service contract decline. (They apparently like to overlook the kick ass numbers, and inexpensive aspect of the stock.)
The obvious support are the SMAs, and various support anywhere from between 134 to 138. IBM now has a trailing earnings of 10.99. Slap whatever multiple you want on it, and defend it, because that is all that analysts will do to justify a target price on IBM. Prior to the crash, IBM has been trading with a trailing PE between 14-16. They keep proving themselves over-and-over again. (Oracle now wants to mimic them.) I think IBM is a premium name and deserves a 16 multiple, but I will settle for the 14.
When I was thinking about the market tonight, I just kept thinking of the above. If I feel the way I do above, I can not possible think the market breaks down here. It would be a contradiction.
Tonight's earnings obviously takes some juice out of the market, but that gives credence to the light resistance we are still in. I still think the 'always thinking' post is still in play.
If anyone is nervous, use the 120 Jan 2011 SPY puts for protection. The market support is the 14SMA. IF that breaks, the 1150 is strong support.
AAPL has major support via the daily 10SMA and 295 level. Also, valuation is on their side now. With the current AH decline, AAPL at 300 is trading with a trailing PE of low 19. LOW 19!!!!!!! They have the product with the fastest consumer adoption EVER! (The exclamations are not from me being upset, I indicated to take some profits, and I am very happy w/my trading.)
IBM simply had a kick ass quarter. The company is so big that analyst can target any aspect of the report to justify a sell off. This is exactly what analyst are doing right now. Justifying the decline with the service contract decline. (They apparently like to overlook the kick ass numbers, and inexpensive aspect of the stock.)
The obvious support are the SMAs, and various support anywhere from between 134 to 138. IBM now has a trailing earnings of 10.99. Slap whatever multiple you want on it, and defend it, because that is all that analysts will do to justify a target price on IBM. Prior to the crash, IBM has been trading with a trailing PE between 14-16. They keep proving themselves over-and-over again. (Oracle now wants to mimic them.) I think IBM is a premium name and deserves a 16 multiple, but I will settle for the 14.
When I was thinking about the market tonight, I just kept thinking of the above. If I feel the way I do above, I can not possible think the market breaks down here. It would be a contradiction.
Tonight's earnings obviously takes some juice out of the market, but that gives credence to the light resistance we are still in. I still think the 'always thinking' post is still in play.
If anyone is nervous, use the 120 Jan 2011 SPY puts for protection. The market support is the 14SMA. IF that breaks, the 1150 is strong support.
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