Wednesday 31 October 2012

F - stagnating as the economy weakens

With the market open, Ford (F) reacted to its Q3 earnings, the numbers certainly weren't terrible, but they were again indicative of the weakening economy. Ford stock closed 8% higher into the low $11s. Near term trend is bullish, especially with the close above the important 200 day MA @ 10.72

F, daily


Ford was a bright spot in a relatively muted market today. With earnings coming in broadly in line, the stock surged, no doubt part of the surge was a result of a short-stop cascade higher.

Ford 'Earns 1.63bn in Q3' story

Ford - key statistics

It should be noted, Ford has a remarkably low (forward) PE of just 7-8. Relative to the main market it is undervalued by at least 50%. Yet, such low PEs don't often mean 'its a bargain'. Miles driven by Americans are starting to look weak again, not least with gasoline prices pretty much set to stay over $4

The transportation index has indeed been weak since the start of the year, and the decline in Ford has been very much reflective of the weak tranny.

From a price perspective, Ford looks set to climb for a few more days, the $12 level is a very old support level. Considering the main indexes, and broader economy, I don't believe Ford can hold over $12.

So, Ford is still very much profitable, but its in a sector that is especially vulnerable to any future consumer downturn. It will be one to keep an eye on in the days ahead, especially if it gets stuck around $11.75/12.00

Monday 29 October 2012

TZA - battling higher

With the weekly trends on the main indexes continuing to trend lower, the 3x short ETFs are starting to shine. Direxion's 3x 'small cap bear' (TZA) is approaching the next key level.

TZA, daily

IWM, weekly


The near term trend for TZA is most certainly higher. Bears should be seeking a daily close in the 17s, and a test of the August high of $20. That is 25% higher though.- and thus requires IWM to decline by around 8% in the coming days to the 75 level.

Frankly, 8% does seem a bit much, even if the market gets spooked by the resulting carnage of Hurricane Sandy.

Yet, the market indexes are weak, and as I stated over the weekend, the lower bollinger would be a very natural target in the current wave lower.

*IWM @ 75, would roughly equate to sp'1325, and dow 12500, to be hit within the next 6 trading days (assuming we open Wednesday Oct'31).

As with all the leveraged ETFs, decay is a real problem across multiple weeks (sometimes even days), and stops (even loose ones) are usually a very good thing!

Friday 26 October 2012

TVIX, UVXY - baby bull flags, ready to surge

With the weekly index charts now showing a confirmed down trend since the QE3 spike highs, the VIX is continuing to creep higher. Finally, after many months of nightmarish decay, the two big 2x (bullish) VIX instruments of TVIX and UVXY have broken the down trend..and are now presenting baby bull flags.

TVIX, daily

UVXY, daily

VIX, weekly


With the VIX closing the week +4.5%, the time of the leveraged VIX instruments is seemingly back again.

Both *TVIX and UVXY are now sporting very clear little bull flags. I'm not going to give any price targets for either, but suffice to say, both could easily jump 30/40% if the VIX can snap higher into the mid 20s.

Near term trend for the VIX is upward, next week looks set for further index downside, and a VIX >20.

*I'm still expecting TVIX to see a reverse split 'sometime soon', probably on the order of a 1 for 20 ratio

Thursday 25 October 2012

UAL - taking a nosedive

United Continental (UAL) slipped lower by 5% to $19.25 after earnings failed to please Mr Market.

UAL, daily


UAL remains in what is a giant bear flag, and it closed today sitting on the lower channel. It would seem very likely there will be further downside in the days ahead - due to sheer underlying momentum, and that will open a re-test of the August $17.50 low.

If the August low fails to hold, then a move to $15 seems likely into year end.

Wednesday 24 October 2012

FB - super short-squeeze

Facebook (FB) had earnings at the Tuesday close. Laughably, the company still posted a loss. Today though, the price action showed huge gains, with FB closing +19% @ $23.30

FB, daily


A crazy day for FB traders. The hyper-jump briefly hit $24.98 (although not shown on this chart), but we closed in the low 23s. Still, it was a massive jump, and something I was concerned about. I was sorely tempted to short in the past few days, but the daily charts said 'NO!', so I managed to avoid this bear massacre. I will certainly look to short the FB though in the days ahead though.

Unlock the shares!

In a few weeks, November'13th, FB will be unlocking around 1.3bn shares. Despite today's hyper gains, how is Mr Market going to mop up some of these shares, many of which will doubtless be sold - not least after today's price jump?

Holding to my original price targets...

Bears should seek a break of the Sept' low of $17.55. That should open up $15, and a likely floor in the 12/10 zone.

If the main market slips below sp'1300 late this year (whether due to fiscal cliff concerns, or whatever), FB could still hit single digits.

Fair value remains $4, and I would not be buying under any circumstances. There are far better places for my $.

Tuesday 23 October 2012

FCX - breaks key rising support

Freeport McMoran (FCX) closed almost 4% lower to close @ $38.98. It has broken key rising support from the late July lows. There could be major downside across the next few weeks, even a test of the July $31 low.

FCX, daily


With the equity and commodity markets set for further weakness in the days..and possibly weeks ahead, FCX is similarly set for some considerable declines.

First soft target is the gap-fill of 37/36. That looks a given in the immediate term.

Secondary target is in the 34 area, this is a bit of a choppy price-action zone.

If.and it is a big 'if', the main indexes can sp'1325..then I'd assume FCX will be at least down to $34. If the SP' can break to 1200 by year end, then we are very likely looking at FCX breaking the July lows. A brief spike low of $25 even seems viable.

FCX remains one of my top 5 companies in the world, but..with global economic weakness, and a US recession now very probable, it would seem some very strong price declines are viable across the next few months.

Monday 22 October 2012

AMZN - sliding before earnings

Whilst the main indexes staged a closing hour recovery, Amazon (AMZN) failed to rally, closing -2.6% @ $233. The near term trend remains down, and with earnings later this week, price volatility looks set to increase.

AMZN, daily


We've seen a reasonably consistent decline since the QE spike of $264, falling around 10%.

First target remains the rising support of $215. It would seem very difficult to push under there, even if earnings come in lousy. $200 would be a natural second line of defence, but if 215 does fail to hold, there is a moderate chance of $170s by end November.

AMZN has severe profitability issues, with razor thin operating margins, and looks very vulnerable - although that has been the case for over a year.

At some point AMZN looks set to collapse - just as CMG, NFLX, GMCR, and even the GOOG did last week. The only issue is when.

Eventual downside target -if the world economy weakens significantly, and if AMZN management are unable to raise operating margins back to 7-10%..would be a stock price of around $100..if not even considerably lower.

*AMZN have earnings at the close, Thur' Oct25.

Friday 19 October 2012

AAPL - ends the week smashed lower

Apple (AAPL) closed down $22.61 (3.6%) @ 610, which is the lowest close since Aug'2. The close was a severely bearish one, below key support, and there is empty air until the 200 MA @ $581

AAPL, daily

AAPL, monthly


A very bearish close for AAPL indeed. They really don't come any uglier than that, and AAPL looks set for an attempt to drop below the big $600 level on Monday..which will open up a swift move to test the ultimate support of the 200 day MA in the low 580s.

Lets be clear, if the 580s fail to hold, then a VERY severe drop to the low 500s is viable across a few days.

That of course is highly unlikely, although I'd refer anyone with '100% doubt of that possibility' the GOOG chart.

Regarding the monthly chart. Don't get too fixated on the little outlook for 2013. Its just a doomer scenario, the point of the monthly chart, is to keep in mind the important 10MA support - currently @ 588.

Indeed, the 580s will be most important next week, and a possible reveal of direction for the broader market.

AAPL remains an outstandingly profitable company, with a fanatical customer base. It is cheap relative to the main market, but there IS weakness in the global economy, and if we do see AAPL <580, then the doomer-bears will really have something to get excited about.

*AAPL has results at the close, next Thursday, Oct'25.

Thursday 18 October 2012

GOOG - click click...BOOM!

Google (GOOG) created some moderate chaos today, with an earnings filing being released early. The leak (whether accidental or not) saw the stock implode across a few minutes by around 12% from the morning high of $759. GOOG closed -8% @ $695

GOOG, daily


First soft support is the March peak of $660..and then the 200 day MA @ $632. It would be somewhat surprising if GOOG breaks much below 650 in the coming weeks - baring the major indexes taking out the important low of sp'1397.

GOOG remains a strong company, but today's earnings miss, the premature press release, and the huge volume/price action will be remembered for some considerable time to come.

Wednesday 17 October 2012

IBM - big blue having 'issues'

International Business Machines (IBM) declined by almost 5% today to close @ $200. The long term trend for IBM has reflected the post-2009 equity market (not economic) 'recovery'. Things will get interesting if IBM can take out the July low of $181.

IBM, daily, 4yr


Arguably one of the most stable corporations in the western world, IBM has seen its stock double since the lows of spring 2009. That in itself is a very fair reflection of the broader market which has rallied from sp'666 to 1474 just last month.

Today's action could merely be a shakeout move, and - just like July, if we see a close back over the daily 10MA (currently $207), then it will indeed be a case of further highs to come.

If however we can take out the July low of $181, then it should in theory be a prime warning of broader market weakness.

First downside target would be $175, and a more likely $160.
Secondary levels are $140, and the $125/120 zone.
The latter targets absolutely look out of range this year.

IBM stats -forward P/E is only 12, which is 'reasonable', even when considering the wider global economy.

IBM remains the ultimate tech stock, and will be a good one to monitor in the weeks ahead. All those bears looking for a break below secondary rising support (currently in the sp'1350s), will need to see IBM take out the $181 level, and stay under it!

Tuesday 16 October 2012

HPQ - still struggling

Whilst the main indexes have seen some significant gains in the last two days, Hewlett-Packard (HPQ) is continuing to show its underlying weakness. The broad trend remains strongly downward, and there is absolutely no sign of this changing any time soon.

HPQ, daily


With the $15 target achieved, I'm now seeking $10. That is still possible by the end of this year, if the main market falls to pieces, with the SP somewhere in the low 1200s.

HPQ is certainly not on the list of likely bankruptcies, but it does have massive structural problems. Problems that the CEO is failing to address, although Mr Market is certainly reflecting such problems in the declining stock price.

Long term trend remains down, $10 looks a given, the only issue is whether the stock will slip into single digits...and not be able to break back back higher.

Monday 15 October 2012

TVIX, UVXY - another day of decay

With the main indexes closing moderately higher, the VIX slipped 5.5% into the low 15s. For those 2x leveraged VIX trading instruments, it was just another typical day of decay.

TVIX, daily

UVXY, daily


With the VIX closing 5% lower, the TVIX and UVXY had another lousy trading day.

The long term trend of terminal decline continues.

A reminder on the VIX

It is notable that whilst the VIX is still somewhat above its August lows (13s), the leveraged VIX instruments are doing what they do best...decay.

As it says on page'1 of the prospectus..these are for short term trading only.

*It is kinda surprising that Velocity Shares - those who run the TVIX, have not yet done another reverse split. Doubtless one is coming, probably 1 for 10..or even 1 for 20.. We'll see that price kicked back up into the 30s or 40s..only to see it decay away.

If there is one other constant in the market these days (in addition to the 'high level' manipulation) is the statistical decay of those leveraged derivatives.

Friday 12 October 2012

FB - perpetually on the slide

Facebook (FB) closed the week down another 1%, and is back in the mid 19s. With many truck loads of shares still to be unlocked, the downward pressure is likely to persist all the way into year end.

FB, daily


Primary target remains $15 within 3-6 weeks, and the target floor zone for 2012 of $12- $10 seems very likely this November. There could even be a brief wash-out move into single digits, but we'll probably need the broader market to be somewhere in the low sp'1200s to reach that.

FB still remains over-hyped..and overvalued.

Fair value remains $4

I would not be a buyer until $1.25, and even then I can think of far better places for my dollars.

Thursday 11 October 2012

AAPL - bearish engulfing candle, set to snap lower

Apple (AAPL) saw a very strong bounce on rising support on Tuesday, yet the bounce now seems complete, and AAPL today closed 2% lower to sit just a touch above this very important support trend.

A break <620 would be a major event tomorrow, and would open a fast decline to the 200 day MA @ $574

AAPL, daily

AAPL, monthly


An interesting market day for the AAPL traders, and the bearish engulfing candle was a major victory for the bears. A break <620 should at least see the big $600 quickly hit, and considering the importance of this support trend, I'd guess its highly probably a fast drop to test of the 200 day MA @ 574 will be tested.

This drop could be a one-day 'major event', and would make for a very nice short-term capitulation floor in the broader market.

The monthly chart

I've added a monthly chart, and it even includes a 'doomer outlook'. Please be clear, that's just an example of what a parallel move from 2007-9 would be.

Its important to keep in mind that AAPL has grown massively as a company since the last market collapse, it now has an even larger customer fan base, and a cash pile that rivals the size of many nation states! AAPL remains 'cheap' relative to the main indexes, and is unquestionably last in the line of individual stocks to be shorting.

So, lets see if AAPL can break <620 tomorrow..or early next week. As noted, if that happens, then a fast drop to the 200 day looks very feasible. That would give the NASDAQ index an added whack lower (below the important 3000 level), and might help the Sp'500 test the recent cycle low of 1397.

Wednesday 10 October 2012

AA - breaks key support

Alcoa (AA) dropped 4.6% to close @ 8.71. With a somewhat doomy outlook, and what are weak earnings, the stock is continuing to fall away from the recent QE spike high in the upper 9s.

AA, daily


With the underlying global economy slowing, and the threat of the US moving into recession in Q4 or early 2013, AA is a typical example of what might be ahead for the broader market.

Today's drop broke key rising support, and the next obvious target is a re-test of the July low.

If the July low is taken out, the next key level is none other than the March 2009 low of ...$5.00

Tuesday 9 October 2012

EBAY - bidding down into the low 40s

Ebay (EBAY) slumped lower by over 3.5% today to close in the low 46s.

EBAY, daily


Today's move was pretty impressive for the bears, and the close was certainly bearish. First target is $43, and then $41 - where there is strong trend/channel support. The 200 day MA @ $39.86 will add extra support to the 40/41 zone in the coming days.

Ebay remains a superb company, and is arguably not only recession proof, but might even be said to benefit from a recession. After all, in bad times people want to sell their unwanted things for much needed cash. If there is one company that will benefit from a US recession that deepens into 2013...its Ebay.

If the main market somehow manages to see some significant Oct/Nov falls, to at least the sp'1250/00 range, then Ebay will probably move down to $34. At that price, it sure would be a tempting buy ahead of any Santa rally/bounce into 2013.

Monday 8 October 2012

FCX - bear flag

Freeport McMoran Copper and Gold (FCX) remains one of the worlds greatest mining companies. In terms of price action, it is closely mirroring the broader Sp'500 index. There is currently a pretty obvious bear flag, a break under $39 will confirm it.

FCX, daily


Great company, but that is a pretty clear bear flag on the daily chart.

A break under $39 would threaten the trend/channel, June rally from $31.

There will be VERY strong support around the $37/38 level though, with the 200 day MA.

If we see FCX break into the 36s or lower, it might be a leading indicator of trouble in the broader market this autumn.

Friday 5 October 2012

ZNGA, FB - on their way to fair value

Zynga (ZNGA) and Facebook (FB) continue on their merry way to fair value. With Zynga's lousy earnings, the FB is back in focus once again. Just how can FB be valued at anything over $5 ? There is no doubt, FB will also hit new lows, and probably within the next month or two.

ZNGA, daily, 1yr

FB, daily, 8mth


I've very little to note on ZNGA, after all, what needs to be said. A business model based on virtual animals and virtual money. They have made some simple games they have entertained probably a few hundred million people or so, but that's all they've got...simple games, that people don't pay for. merely one to watch for entertaiment. No doubt, either it will go back to being held privately, or maybe even the FB will buy it out, now that would be rather fitting.

As for FB, fair value in the $12 to $10 range seems very likely, this could easily happen before the end of the year, even as early as middle November. There remain a truck load of new shares due to be unlocked..and they'll get dumped on the market at wash-out prices.

Fair Value will also be seen for the broader equity market, its just going to take some years for that to occur.

Thursday 4 October 2012

CAT - still a very large bear flag

Caterpillar (CAT) remains within a giant bear flag, and price action is still very weak. This is despite the main indexes a mere 1% from the mid September spike high of sp'1474.

CAT, daily


With the transports closing badly in September, and the underlying econ-data increasingly warning of a US recession in late 2012/early 2013, CAT is clearly one stock that is actually reflecting reality.

First downside target is a break of the flag, by end October, bears should seek somewhere in the 84s, although it will be a lot more decisive with a break of the July low <$80.

Only with a clear break over 97.50 - and preferably the big $100, could bulls justifiably get bullish on this engineering monster.

CAT remains a good company, but near term, the outlook remains very suspect.

Wednesday 3 October 2012

HPQ - crashes

Hewlett-Packard (HPQ) crashed almost 13% lower today to close @ $14.92. The market does not like the CEO, and it most definitely does not like outlook for either the short, mid, or long term. HPQ remains lacking direction, in a technological corporate world that is filled with piranha.

HPQ, daily


We now have one of the secondary targets being hit.. $15. With the close <15, I certainly believe $10 is going to also be hit, probably within the next 2 months. If the main indexes can manage to rally into Christmas though - with SP'1550, then I'd delay that $10 target until late Spring 2013.

So...what now for HPQ?

I certainly would never suggest the company is in danger of going under. No, that won't happen, but as I've noted a few times over the past few months, it is entirely lacking in leadership (the CEO is entirely incompetent, and the market KNOWS it!).

Given a few years, and a decent young CEO who understands how to operate a smartphone and how to program a toaster, I'd guess HPQ will be a great long term recovery stock.

..that time is certainly not yet though!

First, lets see HPQ cycle lower to hit the big $10.

*there was one analyst on clown network'1 today, touting HPQ @ $7. I could envision that, but that certainly seems like something to see in the latter half of 2013.

Tuesday 2 October 2012

AAPL - a bounce off the 50 day

Apple (AAPL) battled back to close a touch higher late today. After declines of around $8 earlier, AAPL still managed to close above the important 50day MA of $549

AAPL, daily


It remains a bit of a messy picture in the near term. The long term trend is still clearly upward. Until we break the lower channel/trend - currently $620, AAPL is still comfortably cruising higher.

If earnings for Q3 come in at least reasonable, a re-challenge of $700 is very likely, and that would be suggestive that the broader market has another good chance of hitting sp'1500 in the next month or two.