Monday, 23 October 2017

GE - renewed weakness

General Electric (GE) saw a powerful bullish reversal on Friday, yet that has been largely negated today, with the stock settling -6.7% at $22.24. The Friday pre-market spike low of $21.48 remains very important. A monthly close under the multi-decade key threshold of $22.00 is unlikely.


GE daily



GE monthly.



Summary

There is little to add from Friday.

Clearly, many are now awaiting the investor meeting of Nov'13th, for some clarity about what the new CEO's plan is.
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The main market is threatening a s/t top from sp'2578. If the main market is indeed finally in the very early phase of a 4% cooling wave into early November, then GE will remain under sig' pressure.

The $22.00 threshold is very important when seen on a multi-decade chart. If the stock settles Oct' or Nov' under <$22.00, and if the CEO's plan is weak, then next big target are the $13s by mid 2018... even if the main market remains hyper strong to sp'3K next spring.

To be clear, s/t bearish, but I'm leaning m/t bullish, with no monthly closes <$22.00.

Friday, 20 October 2017

GE - the important $22.00 threshold

General Electric (GE) posted Q3 results on Friday, and they weren't pretty. The stock duly imploded in pre-market to $21.48, saw a cash market low of $22.10, and settled the day +1.1% at $23.83. Now its a case of whether the stock closes above or below the key $22.00 threshold this Halloween. Its rather important!


GE daily



GE monthly



Summary

*First, a special chart note. For some reason, stockcharts is deleting the pre-market data from the closing charts. Thus the pre-market low of $21.48 no longer appears, but the stock was notably trading in the $21s for more than just a few minutes!
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see: https://www.ge.com/investor-relations/overview

see: https://www.ge.com/investor-relations/sites/default/files/ge_webcast_pressrelease_10202017.pdf
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GE has been struggling since the July 2016 high of $31.66. Note the monthly candle was spiky, and settled fractionally red, indicative of a key multi-month/year top. Despite today's bullish whipsaw, the close of $23.83 makes for a 24.7% decline across 16 months.

Today's settling daily candle is a hyper bullish engulfing candle. Those are to be taken seriously, and if GE can settle October >$22.00, it will give credence to today's massive upward swing.
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Q. Do I have faith in the new CEO Flannery?

I see a company that is struggling, but GE still decided to spend another $3.7bn in buying back shares in Q3 2017. Seriously, what the hell kind of policy is that? I'm broadly against such buy backs, but for a company that is struggling to continue this, its just plain crazy.

I will start to have some faith in Flannery if he cuts/halts the buy back. I'd rather see him do that, than cut the dividend.
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Eyes on the Halloween settlement.

The Tuesday Oct'31st settlement for GE will be VERY important. Will the stock manage a monthly close >$22.00?

To be clear, from a pure technical perspective, if GE settles Oct', Nov', or beyond, under $22.00, then it offers first soft psy level of $20.00, but a grander target of $13.00. 

Considering EPS for 2017 is now estimated to be $1.05-1.10, the $13s are a viable threat by mid 2018, even within an equity market that is broadly super strong.
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The Nov'13th meeting

GE have an investor meeting scheduled for Monday Nov'13th, and that will merit serious attention. The market will want to see a CEO with a solid plan for the mid term. If that includes a dividend cut, the market would likely not smash the stock, so long as it decides Flannery's plan as credible enough to turn the company around. 

Thursday, 19 October 2017

UAL - crashing through support

Whilst the main market saw a day of moderate swings, there was severe downside in United Continental (UAL) which settled -12.1% at $59.78. With a break of rising support from the Sept' low, s/t outlook is bearish. Despite concerns of a price war, m/t outlook is bullish.


UAL daily



UAL monthly



Summary

The day began....


.... with the CEO of UAL on CNBC. In pre-market, the stock was lower by around -2%, which (despite the main market) was a surprise, as earnings were unquestionably good.

Yet... with a moderately weak main market, the stock started to spiral. With talk of a 'price war', technical support was broken, and that saw a major washout occur. The daily candle is very bearish, and bodes for a test of the recent low in the $57s.

To be clear... earnings were good. With annual EPS of almost $9, this makes for a forward PE in the 7s. On any basis, that is crazy low.. a third of the typical main market valuation.

Unless you really believe there is set to be some kind of mid term price war between the airlines, the mid term outlook has to be bullish. The grander target for 2018 would be the giant psy' level of $100. Right now, that is a massive 67% to the upside.

yours... prefers travel via train.

Wednesday, 18 October 2017

CREE - crazy unjustified spike

Q3 earnings for CREE were lousy, with EPS of -20cents. Mr Market has somehow managed to twist that into a hyper spike, with the stock settling +16.4% at $34.16. Next big resistance are the $38s. Mid term outlook is very bearish, as the company is still unable to generate any profits.


CREE daily



CREE monthly (linear scale)



Summary

First, see: http://investor.cree.com/

http://investor.cree.com/releasedetail.cfm?ReleaseID=1044252
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There is frankly, very little good to read in there.

The new CEO is touting a focus on Power and the RF side of the business, and away from lighting. So, at least Cree is recognising that there is very little money to be made within the lighting business. That is progress... of a sort.

The company is clearly still struggling, within an economy that is in growth mode. What happens to CREE when the next recession hits, whether that is 2018, 19, or whenever?


Technically

Today's hyper spike is largely technical, and a good example of just how crazy things can get when the shorts get squeezed. I call it a 'short-stop cascade', where the higher the stock trades, the shorts have to cover at ever higher prices, which triggers more short-stops. Today's instance was a particular fierce feedback loop.

On any basis, earnings were lousy, and today's price action is unsustainable in the mid term. I will note that 'technically', the next resistance isn't until the $38s, so its possible we see those, before the 'fundamental bears' start to grind the stock back into the $20s.

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Yours... bullish LED lighting, but bearish anyone who tries to make money from it. There is little to no money to be made in domestic or industrial lighting!

Tuesday, 17 October 2017

NFLX - earnings were fine

Netflix (NFLX) earnings for Q3 were unquestionably fine. However, it was a mixed day for the stock, breaking a new historic high of $204.38, but settling -1.6% at $199.48. Near term outlook is bearish, but with higher subscriber numbers, who are set to pay more, the mid term outlook is very bullish indeed.


NFLX daily



NFLX monthly



Summary

*I shall refrain from highlighting a wide array of data, which will have been covered across a thousand other sites.
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Q3 EPS was 29cents - vs 12cents a year ago.

On a forward basis, (round up) to $1.20yr, with a current stock price of $199.48, that gives a F' PE of 166. On any basis, that is ludicrously high.

If you are extremely generous, and assume Netflix could reach 50 cents per quarter within a year - $2.00yr, that gives a F' PE of the 99s. That is still double what Nvidia is priced at, and more than 4x the main market.

To be clear, I like the company, which is creating some of the best original content the industry has ever produced. The current valuation is crazy, but as the US/world economy is growing, the company has better  pricing power, and is now confidently periodically raising prices. How long until the typical monthly fee will be $15 a month? Two years? Three? It certainly won't be more than five.

There is a sideline issue in that Disney will eventually want all of its content - especially the Marvel shows, on its own streaming service. However, this is still a few years away, and for the moment, the market doesn't much care.
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Bullish Stranger Things, just in time for Halloween.