UAL - big bear flag

United Continental (UAL) is presenting a large bear flag for Q4. Whilst the main indexes are barely 3% from the sp'1474 high, UAL continues to look weak - although that is especially the case within the Transportation sector.


UAL, daily

Summary

First target is a break of the lower channel of 18.50, rising to 19.00 later next week. A break of this, should open up a quick of the August 17.40s low.

Considering that WTIC Oil was back below $90 this week, UAL is performing especially weak, and from a chart perspective, the current formation is a very straight forward bear flag.

The underlying momentum MACD cycle has only just gone negative cycle

Only with a break back above $21 could UAL be said to be starting a new phase. Right now, with the tranny closing the month <5000, it looks like UAL has some turbulence imminently due.

MS - general trend remains UP

Morgan Stanley (MS) was recently plagued with some rather dubious online rumours/chatter, yet its overall trend has remained upward. Despite the ongoing 8 day pullback from $18.50 into the mid 16s, its still holding up rather well.


MS, daily

Summary

Only with a break under $15, would the mid-term trend start to become bearish again. From a bullish perspective, the big $20 looks viable by end October if the sp' can break to a new high >1474.

The 'doomers' will want to see the $12 low taken out, which right now, looks simply implausible, even if the SP' pulled back to 1350.

CAT - really struggling

Caterpillar (CAT) is really starting to struggle. It has already fallen considerably since the start of the year. The recent profits warning sent the stock -4% today, and the general latter day market weakness only helped to solidify the declines.

If the global economy is indeed slipping into a secondary deflationary wave (despite the central bank printing), then CAT is going to fall considerably in the weeks and months ahead.


CAT, daily

Summary

It looks like we have a very large multi-month bear flag (pink).

First target is a break of the July low of $78. That seems viable this Autumn.

If $78 fails to hold, then next level is $70, and then the Oct'2011 low of $66.

I would be very surprised if the Oct'2011 low is taken out. However, if it is, it would be a MAJOR warning - along with the ever-weak transportation index, that the US is going to slip into a recession either Q4 2012 or no later than spring 2013.

CAT remains a very good company, and is a real favourite of mine. It makes a real product, that adds real value to the world (arguably, unlike the overhyped  iPad!).

For the moment though, CAT looks set for further downside.

FB - spooked by Barrons

Facebook (FB) was smacked lower today by 9% today, the selling inspired by someone in 'Barrons' touting fair value of $15. Well, I been touting fair value of the mid teens since the IPO. Who else was? Ohh, that's right, it seems my earlier 'crazy talk' wasn't so crazy after all. Now the mainstream are finally starting to wake up.


FB, daily

Summary

Near term target remains $15 - as I've noted every week for months. Primary target zone for FB is somewhere in the $12 to $10 range. I can't imagine the market allowing it go stay under $10 for more than a brief intra-day wash out move. That could easily occur sometime this November - around the time when another truck load of shares are unlocked.

Long term, fair value remains $4, and I would not be a buyer unless <$1.25.

FB will doubtless become a historical marker for the Bernanke paper bubble/social media hysteria era.

TVIX, UVXY - still rotting away

With the main indexes holding up very well, market volatility remains low, and those leveraged VIX instruments just continue to decay like a piece of rotting wood.


TVIX, daily

UVXY, daily

Summary

As noted, it was expected both TVIX and UVXY would see a reverse split in the near term. So far, UVXY was split 3 weeks ago - back to $40. Today's price of $29.75, again shows what happens in a mere 3 weeks to these instruments.

No doubt TVIX will also get reverse split soon, probably a 1 for 20, something of that ratio.
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With the VIX still in the low 14s, both TVIX/UVXY look tempting to many bears , after all, volatility is cheap. Yes, its cheap, but the daily decay will ruin EVERY trade, if held more than a few days.

Eventually, both TVIX/UVXY will explode higher -perhaps as much as 500-1000%, but that could be weeks away..if not even many months.

In the meantime, until the VIX begins a multi-week ramp higher, these leveraged instruments will continue to rot away..all the way to zero.

JCP - latter day nonsense

JC Penney (JCP) saw a latter day surge as comments from the CEO that the new store type are doing significantly better than the older style, yet that hyper ramp sure didn't last..after subsequent comments that the earnings outlook is unchanged.


JCP, 1min

JCP, daily

Summary

This afternoons JCP hyper ramp - and collapse, is exactly the sort of reason any normal person should steer clear of this insane market.

Regardless of what any clown/PR friendly CEO might tout, JCP still has serious structural problems - as do all the brick/mortar retailers. It remains one to watch (along with SHLD) merely for entertainment purposes.

FDX - warning of trouble

FedEx Corp (FDX) cut its earnings outlook, and Mr Market was understandably not pleased, with FDX closing 3% lower in the mid $86s. There was some significant sell side volume today.


FDX, daily

Summary

FDX is a great barometer of the wider economy. After all, EVERYTHING is transported at some stage, and if the couriers aren't doing well, its a strong sign that the underlying economy is having issues.

FDX remains a very profitable company, yet today's warning is something to reflect upon as we approach the start of Q4. What sort of Christmas sales season will we have? That will certainly be a key issue for margin-fragile companies like AMZN.

From a price perspective, first downside target is the June low in the high 83s. That is certainly in range within the next 2-5 trading days.

For those who follow the transports index closely, you can clearly see that FDX is sporting an almost identical chart to its mother-index. If the transports index closes September <5000, and if FDX breaks the June low in the coming days, then that will be a real red flag for this Autumn.

For further details on today's announcement see: Bloomberg
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FCX - a little weakness

Freeport McMoran (FCX) slipped almost 3% today, back into the $41s. The broad uptrend remains strongly higher though.


FCX, daily

Summary

A natural pullback to 40, if not 38 seems very likely in the immediate term.

FCX remains a great company, and considering QE3 is now underway, a move back to the June low of $31 now seems completely out of range.

AAPL - new closing high

Apple (AAPL) closed at a new historic high today, +2% to $683.






AAPL, daily

Summary

With the main indexes climbing over 1.5% today, AAPL lead the surge, and closed at a new high. It again must be noted, that relative to the main market, the stock is still under-valued around 35% or so.

It all comes down to valuations, and despite the underlying economic gloom out there, AAPL is cheap relative to the main market.

First upside target is obviously the big $700 level. There are a lot of analysts target 'highs' in the 720/750 zone.

AAPL could comfortably fall to $650, without making any damage to the near and longer term trends.

FB - the Zuckerberg effect

Facebook (FB) had a very strong day, closing higher by around 7.5%, and is clearly higher after the appearance of the CEO.  Much of the rise is doubtless due to some traders chasing the stock higher, and also a lot of short-stops getting triggered.

Considering the HUGE amount of shares still to be dumped this November, FB remains extremely vulnerable to a further signficant wave lower across the next few months.


FB, daily

Summary

Primary trend remains down..holding to all targets.

Seeking at least $15 near term, if not 12/10 by late November.
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Good company, - if only a 'website', but nothing justifies even the current P/E valuation.

..and that again, reminds me of AMZN. 

F - Ford looking toppy

Ford (F) has seen a pretty reasonable rally from its late July low $8.78, it can sustain a week of marginal weakness, but it needs to close September in the $10.00s


Ford, daily

Summary

The bulls will be looking for a break over $10.75, that seems viable, so long as the main market holds together - although I'm guessing we'll see some general index weakness by the end of September.

The bears should look for Ford to be under $10 by the end of the month, if that is the case, its possible this multi-month up wave is complete, and then the first obvious target is $7. Of course, that would probably equate to sp'1200, and right now, that would be a very bold bearish outlook.

From a MACD cycle perspective, we're pretty high, and certainly due a pullback of some kind - perhaps putting in another bull flag, like we saw in late August.

Ford remains the last genuine car company in the US, GM could certainly a few things from them, not that that GM wants to learn anything from anyone. 

MS - overbought, and still slightly suspect

Morgan Stanley (MS) was one of the leading decliners today, slipping 2.75% and closing back in the mid 16s. Clearly, it was not a massive decline, and its still holding onto half of Fridays big gain.


MS, daily

Summary

Considering the big jump on Friday, today's decline is not entirely unexpected, and certainly it is declining from what is a very key resistance level.

There remains a significant amount of chatter out there about MS. Most of it is probably utter nonsense, entirely baseless, and nothing less than the usual 'world is going to end' doom chatter.

The technical levels are clear, MS needs to put in a few closes over the $17 level, that would open up a challenge of the March high of $21. Considering MS was in the low 12s just recently, that would make for one hell of a rally, almost a double!

I'll refrain from delving into any of the MS rumours, so many sites have already covered it across the last few weeks. Suffice to say, I won't be buying the MS dip.

A few more closes with MS stuck under $17 would be bearish, at least for a minor down cycle into the $14.50/15.00 zone.

FCX - major breakout

Freeport McMoran (FCX) gained 8.5% today, closing at levels not seen since March. Clearly, we're back to the 'green shoots of Springtime'. The gain itself was largely inline with the rest of the mining sector.


FCX, daily

Summary

A clear breakout, next key level is around 40-41. That seems very viable next week. Only with a break back below $36 could I get bearish on FCX and the broader mining sector.

Despite today's ramp, the underlying global economy IS slowing, commodity prices are arguably only ramping because of the 'hopes of QE'. Even if QE happens in the next week, what then? Is it almost already all priced into stocks like FCX ?
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FCX remains one of the best companies out there, and will be important to watch next week. It will be a good indication of where the broader market might be headed this Autumn.

TVIX, UVXY - the horror...of the decay

With the indexs breaking above key resistance, and the VIX falling 12% into the mid 15s, both the 2x leveraged VIX (long) instruments felt the hammer of destruction today.


TVIX, daily

UVXY, daily

Summary

What more can be said..other than....'urgh'.
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The decay remains an absolute horror story for both of these leveraged stocks, and again I'd refer anyone to page'1 of the prospectus for both TVIX and UVXY.

*A reverse split seems likely at some 'imminent' time, probably a 1 for 10.

Both TVIX and UVXY have their legitimate uses in this market, but arguably for 'day traders' only. 

UAL - engines restarted

United Continental (UAL) had one mighty strong day, climbing more than 5% to the low 19s. This is however still a long down from the lofty heights of early July when the stock was flirting with a breakout over $25.


UAL, daily

Summary

Airlines remain one of the most turbulent sectors to meddle in. I've certainly not traded UAL in over a year, and even now I think its too unstable to be meddling with.

Yet in terms of entertainment, its proving to be quite good.

It is very difficult to say how long this new up cycle will last. The last one stalled after just a day, maybe this next one will get to 20/21, but it really is a tricky one to guess.

Considering the broader macro-economic picture - especially in the US economy, with the threat of recession in Q4/early 2013, the airlines seem the very last place where investors should be getting involved in right now.

ANR, BTU - deeper and deeper for the miners

Even though the broader market was mixed, the coal miners had another lousy day, and are continuing their horrific never-ending collapse. Clearly, they're not going to zero, but at the current rate of decline, 'zero' will be hit by summer 2013.


ANR - Alpha Natural Resources

BTU - Peabody Energy

Summary

Both ANR and BTU sum up the sector, and both significantly declined by around 7% and 3% respectively.

Considering that the US economy is not even in an official recession yet, it is remarkable to see the low valuations on what are unquestionably 'reasonable' companies, companies that actually provide a real resource that is useful for the global economy.

At some point they will floor in price, but it sure doesn't seem like it'll be this side of Christmas.

The sector as a whole is certainly one to continue monitoring, not least if there is a major Sept/November market correction - even if its just 7-10%.

How low can they go?  BTU still looks set to hit the 2008 low of $15, with ANR likely to end up somewhere in the 4s.

At those prices, it sure will be tempting.