rovo's Market Journal -- 2011

[2kids10horses]

Maybe she was caught posting on this site at work?

rovo, how did you figure out that mtntigger = SBS?

[rovo]

Sept 1, 2011 19:26:29 GMT -5 2kids10horses said:

rovo, how did you figure out that mtntigger = SBS?

It was the name in her profile. Also, she PM'd me before pulling the plug and emailed me the records on the POTW data after she pulled the plug.

[2kids10horses]

POTW data? What's that?

I think I did see her posting over on the Politics forum. That can get real nasty from time to time.

Alas...


More on topic...

My long term tea leaves are drooping, meaning they're bearish. Which is counter to the regular Presidential cycle. The Presidential cycle should have the market beginning to rally. But, the news and economy (and Fed) have not cooperated with this President. Are we beginning the double part of the double dip recession? It sure feels like it. It will be an interesting Fall.

[cashflowz]

No messages for 2 weeks! What has happened? Although I am usually silent, I miss reading all of your advice and opinions. Please come back!

[rovo]

I am mourning the loss of posters I have been posting with for years.

[cashflowz]

Rovo, I know SBS left. Who else?

[ModE98]

Rovo, have noted the silence. Think the economy has dimmed most investor and posted spirits.

Just read an article, the author believes now is not a time to get completely negative. Yes, the news is not good and the economy is a worry. He claims it is at times like these it is time to get optomistic. Fortunes are made from good selections in times of gloom, and not from buying at or near tops.

Think we need some catalyst to set off a new initial up-wave, whatever it may be. Probably will happen after the next election is over and done with. But, we can hope more "regulars" will return and share their thoughts and wisdom on this board.

[uncle23]

.....

I don't post much but Rovo's Market Journal is the primary reason i'm here....

[rovo]

A more typical day today with the stock market up and metals up also. The metals and stocks had stopped going together earlier in the week. It may be significant or just an anomaly.

So far the market is holding slightly above the open. If we can close today without a big dip in the last half hour it would signify less fear in the market, IMO. For sure Europe is the wild card of the week and has been affecting our market.

One of my major holdings, AAPL, has been looking very strong this week but has not been able to break through $400 per share. It is currently making its 3rd effort of the day to crack the barrier. The 52 week high is $404.50 so while I'm hoping for the breakout, the stock is doing just fine at the current price. By fine I mean compared to the general market. This puppy, AAPL, is so under-valued as to be laughable. $600 would be much better based upon the fundamentals and $800 wouldn't even be a stretch based upon the growth rate.

Another major holding, Ford, F, is pretty much sucking wind. I suspect the market is waiting for some resolution on the labor talks taking place. A screwed up labor contract will hurt them badly, as will a strike. I would rather see no labor increases going forward. GM is also in talks with the Unions and they are a little more interesting. The Government has been supporting the Unions but also still owns a lot of GM shares. Also, with the election coming up I don't see the Obama administration talking against the Unions. A fantastic labor contract would insure the Union votes for Obama but destroy GM and Ford within a couple of years.

[ModE98]

Agree with you on F and GM.... greedy unions suck. If only the companies and unions can come to maintain a fair balance... but never seems to happen. Seems the rabblerousers in the unions are never satisfied (at least from past experience). Do leopards change their spots?
Glad to see the market hold today in positive territory... maybe next week will not turn out too bad (at least, to start.)

[livinincali]

Because of the government's bailout of GM and Chyslers the unions workers at those shops have very limited striking abilities. The GM and Chysler workers basically guaranteed they wouldn't strike if the government provided the bailout. F isn't nearly as lucky because those union workers aren't under the same contract. The union will certainly leverage this fact against F. Give us the deal we want or we strike against you but not GM and Chrysler.

[livinincali]

Yeah the market has been on a nice run in the last week. It's at that make it or break it stage though. Either the bears are going to be wrong and we short squeeze are way back up to 1300+ on the S&P or we're going to get a repeat of 2008 action. Right now I'm leaning towards 2008 action because a lot of the same things are happening. People see optimism in the leader stocks like AAPL, AMZN, etc which are close to making new highs yet we have a lot of weakness in other stocks. If this is going to materialize into a really solid rally and not just some bear market bounce we need to see an expansion of strength in the internals. Plenty of stocks made new highs back in April 2008 because subprime was contained and the economy was still looking good. It wasn't until 4 months later that Lehman blew up and the stock market tanked. I do think this is going to play out the same way. Greece, or one of the other PIGS will be saved until one day it isn't then everything goes. AAPL will likely keep going up in anticipation of iPhone5 and then once people see it it might be a sell the news. The expectations for it are so high.

[ModE98]

Cali, believe the chances are you may be correct on your market call. It is still far from getting out of the woods, trying to find it's way, but probably is lost for the time being. Most anything can happen, whatever, perhaps we can avoid a full 2008 repeat.
Can the market really climb the proverbial "mountain of worry"? Or, is it nearly "slip time" and hope the climbing ropes will not let a catastrophe be repeated.?

[rovo]

AAPL closed above $400 at $400.50. There is nothing special about $400 other than the psychological barrier of a round number. It is also sitting at the upper Bollinger Band which usually indicates a stop in the upward movement. The bands are expanding based upon the recent trading range so it is not a certainty AAPL will reverse the recent trend. Of the two other indicators I watch, one is saying "over bought" and the other is saying "more upward movement", so, it is kind of a wash there. If we can break through the $404.50 on Monday, setting a new 52 week high, then we will just have to wait and see what happens. None of the previous comments hold any water if the entire market tanks due to European problems or some other unknown world-wide event.

[tyfighter3]

One of these days people will come to find out that the US is NOT the EU or Greece. Our economy is not theirs.

[rovo]

I was just chuckling to myself about my holdings in AAPL. I consider it to be a major holding in my account but the share count is minuscule. I'm just not used to holding a $400 per share stock. When scanning the port I see the APPL at 800 shares and think ... big whoop .. but then the 6 figure value shows.

I'm also still holding some options on Apple, 20 contracts of AAPL Jan21 2012 $450 Call. These are still in the red at $10.90 versus a buy price of $12.00. I'm fairly comfortable these will be a money maker for me but you never really know what the market will do.

[rovo]

Futures are down about 1% across the board. I wonder what is driving the downturn this evening?

[ModE98]

Believe it more ECU worries than anything on this side of the Atlantic.

[ModE98]

Deleted... should not post negative things here. Posted the garbage on the market direction thread ... Duh...should know better.

[rovo]

A very respectable day for AAPL as they set a new 52 week high today on better than average volume. Apple closed at $411.63 +$11.13 +2.78%. It is even better performance when one considers the over-all markets ended down for the day.

AAPL Jan 21 2012 450.0 Call closed with a Bid = $14.65; Ask = $14.85. This tosses this play into the green by 22% as my buy price was $12.00. My expectation is a sell price of $35 to $50 for this play.

The current price on AAPL is above the upper Bollinger Band so the odds are it will back-up a bit or go horizontal until it is back within the bands.

[rovo]

The port ended today with a few hundred dollar gain in spite of the general market action. It is in the magnitude of a rounding error but it is still nice to have a gain on a day like today. Those in the green were, AAPL, MSFT, PSTR, ZSL, & Apple options.

[rovo]

Jim Cramer had a few comments on Apple this evening. He was talking about earnings in FY 2012, next year starting in Oct 2011. Analysts are calling for $32 which I find ridiculous and I'm calling for $40. So what does Cramer call for? $45.

For the quarter ending at the end of Sept. the expectations are for $7.02, up from 6.35 expected not too long ago. Last quarter they did $7.79. I don't think $8.50 to $9.00 is out of the question. I was expecting at least $9 but the delays in the iPhone 5 are causing me to back off a bit.

[rovo]

Futures are down another 0.5% to 0.6% tonight making it look like another down day tomorrow. My gut tells me otherwise and I'll be expecting a slightly up day tomorrow. Mostly flat but just a tinge of upward movement.

Greece looks to be unsolvable. I expect a default in 10 to 20 days, mid October looks like the outer limit. Between now and then I'll be attempting to build some cash reserves if I can find something of value in my port to off-load. I currently have about $100K in cash but I would like to get it up to at least $250K.

[rovo]

Futures completely reversed during the night and are now quite green, but softening a bit going into the open.

AAPL is up another $3 in the pre-market activity. Lots of attention being given to Apple on CNBC. The charts are useless at this time on Apple. New highs and no way to tell where it will go. Totally over-bought by all indicators but that is the nature of a breakout.

[rovo]

Apple To Sell 3G IPad 2 In China From Wednesday

BEIJING (Dow Jones)--Apple Inc. (AAPL) said it will start selling a version of its iPad 2 tablet computer with third-generation cellular-network compatibility in China on Wednesday.
The move could boost Apple's iPad sales in a crucial growing market where Apple is also expanding its retail presence.
The 3G version of the iPad 2 will be available in Apple retail stores, its online store and at authorized resellers, an Apple representative said.
Apple currently offers only versions of the iPad 2 with Wi-Fi wireless compatibility in mainland China. Still, consumers in China, which according to research firm IDC surpassed the U.S. as the world's largest personal-computer market in the second quarter, have been purchasing 3G tablets through unofficial channels.
A spokeswoman for China Unicom (Hong Kong) Ltd. (CHU), the only Chinese mobile carrier to offer the iPhone, wasn't immediately able to comment. China Unicom doesn't yet offer the iPad 2 but has said it hopes to do so.
Separately, Apple plans to open its fifth retail store in China on Friday in Shanghai. Apple's four full-service stores in mainland China already receive the most traffic of any of its stores in the world.
The new stores reflect Apple's confidence in rising demand for its products such as smartphones and tablet computers. Sales in mainland China, Hong Kong and Taiwan helped boost the company's third-quarter results. Greater China revenue surged six-fold to about $3.8 billion during the three months ended June 25.
As in other countries, the iPad dominates China's tablet market. The iPad had a 74% market share by unit sales in the second quarter, according to Beijing research firm Analysys International.

-By Owen Fletcher, Dow Jones Newswires; 8610 8400 7702; [e-mail]

[rovo]

CNBC Poll on Tech Stocks

This month the technology sector has outperformed the S&P 500. Apple has hit new all-time highs, and both Oracle and Adobe Systems are set to report after-the-bell earnings Tuesday.

Today, we want to know which technology stock you think will perform best over the next six months.


Which tech stock will perform best over the next six months?
Apple ................. 78%
Oracle ................ 16%
Adobe Systems .... 6%

Total Votes: 361 Not a Scientific Survey
Results may not total 100% due to rounding. © 2011 CNBC.com

Poll is still on-going.

[rovo]

Some of the companies mentioned in the following article are of interest to some of the IBB posters.

Apple breaks out 11:26a ET September 20, 2011 (MarketWatch) LOS ANGELES (MarketWatch) -- Things have improved materially since this column's last market discussion of a dozen days ago. The seasonal sluggishness of the late-August/early September period has lifted, bringing with it the most accumulation seen in the Nasdaq Composite in months during last week's dealings.

This increased level of accumulation in the Nasdaq is evidence of a return of institutional participants to the feeding trough, albeit modest at this stage. For the position trader who seeks to position himself in growth stocks showing high relative price strength versus the average stock, this is a plus. For it is to be noted that the deep pockets of large investors is what fuels the big moves of most successful stocks.

Broad sector leadership is considered ideal if it includes financial, consumer discretionary/retail, and technology. At present, all but the former are in leadership mode; a plus.

In the last report of Sept. 8, it was mentioned that "growth-stock leadership is not ubiquitous, but ample enough for speculation in a limited manner. This is consistent with this column's belief, expressed a couple of weeks ago, that the aggressive, long-only speculator could begin to wade back into the water from the safety of a 100% cash position." See: The vaudeville market

Among the names, Apple, the "it stock" of the last few years, broke out of an eight-week base Monday on volume that was 35% above normal. The stock is as good of a stock as any with which to judge institutional sentiment. For volume to be 35% above average in a mega-capitalization leader on a breakout day -- and on a Monday, a typically slow day -- may say more about the sentiment of large players than anything else. This was not to be confused with the blowout levels of volume seen early in a brand new bull market. Good, not great. The depth of the base, at 13%, was constructive. The stock could potentially be entered right here with a junior-sized position (to be added to should the stock prove itself in days and weeks ahead), and a 5% protective stop loss placed beneath the Aug. 31 high of 391.84.

It is important to recognize that AAPL is not the company that ran up over 300% from early 2009 to early this year. Nowadays, earnings growth estimates are lower, at 18% for the September 2012 fiscal year. This compares with 2009 earnings growth of 34%, 2010 growth of 67%, and expected 2011 growth of 82%.

AAPL's price-to-earnings multiple is just 16. Clearly, the negligible premium the market is placing on the company's growth prospects is signaling that the "it stock's" best days may be behind it. This is not to say AAPL will not outperform in any market advance, just that it may not be one of the handful of outstanding leaders. Still, large growth investors must own the title if they want exposure to one of the large-capitalization plays in the growth space.

Technically, a common spot for large investors to add to their positions is during an uptrend when price pulls back to the 50-day moving average. The below chart shows this occurring several times recently; a plus.

Athenahealth, mentioned in previous columns, followed through on its Sept. 8 breakout of a six-week base, as the below chart shows. The stock is extended above its most recent support area (the top of its base, as denoted by the horizontal line) and does not represent attractive entry at current levels.

Amazon.com busted out of a seven-week base on Friday, a feather in the market's cap due to this stock being an institutional "must-own" among growth stock managers. Volume, at 97% above normal on the breakout day, reflects the heightened attention placed on technical chart patterns, such as base tops.

Individual investors may feel as though they do not possess the depth of fundamental research with which to compete with the big boys. Bill O'Neil's classic book, How To Make Money In Stocks, dismantled this myth. The book, by far the best of any read by this participant, shows exactly how an individual investor can take advantage of flexibility and nimbleness to do what institutions cannot: 1) entering positions at the most opportune moment as a leading stock clears a pivot point, and 2) limiting losses at 5%-8%. See the Bill O'Neil two-part interview: Conversation with a maverick investor; William O'Neil, part deux.

These are things of which institutions can only dream. By virtue of its large size, an institution getting in and out of a stock is like an oil tanker doing a 180-degree turn in the ocean. It takes time, perhaps weeks or months to build and break down a position, if you are a large investor. The large investor is going to leave footprints all across the tape on a day like Friday in a stock like AMZN. The observant individual investor can capitalize on this information.

Chipotle Mexican Grill vaulted out of an eight-week pattern Monday on strong, confirming volume that was 69% above normal. The operator of fast casual Mexican restaurants is expected to post earnings growth of 21%/27% for 2011/2012, according to most analysts. Technically, price is about 5% above the nearest logical support area, the Sept. 14 high of 319.66. Entry for a position trader could potentially be taken at a level close to Monday's close, using a junior-sized position (half of normal) and a stop below the 319.66 level.

Green Mountain Coffee Roasters, mentioned numerous times, poked out of the top of its six-week base last week on volume 38% above average. It sits right around this level, and could potentially be taken on a decisive, volume-backed move above the 9/13 high of 114.00. For aggressive, nimble players only.

GMCR is a fairly unique issue, in that both top- and bottom-line growth are growing quarterly at triple-digit rates, yet earnings stability is better than most. Earnings are expected by Wall Street to grow by 123% in September 2011 and 58% in September 2012.

Lululemon Athletica rose 5% Monday on volume 45% above normal, as it closes in on the top of its base. The retailer of athletic apparel has seen impressive increases in the number of mutual funds owning its shares recently. In the past three quarters, this figure has jumped from 261 to 391.

Watson Pharmaceuticals, not shown here, on Monday lifted past a short-term high on volume 132% above average, and is now just 3% below the top of its eight-week base. Wall Street expects the developer of branded and generic drugs to record earnings growth of 30%/27% in 2011/2012. Earnings stability over the past five years has been high (standard deviation of 9% is low versus that of most companies) and the number of mutual funds has increased from 980 to 1,120 over the past three quarters.

A logical entry for WPI would be above the July 26 high of 71.50 on confirming volume. A protective stop could be placed below the Sept. 8 high at 68.64. The risk/potential reward is believed to be relatively attractive as this possible stop would be slightly more than 4% from the potential entry.

Over the past several weeks, most of the names mentioned in this column's watch lists have outperformed and established themselves as leaders. This is an indication of market health. Institutions will tend to stocks like these should their view of the market begin to change for the worse. Therefore, participants should view these as position trades, i.e. intermediate-term vehicles, not long-term holdings. Protective sell stops are imperative. Thursday's column will include an updated list.

In summation, the intermediate-term trend remains up. Following a fortnight of seasonal slowness, large investors have begun returning to the feeding trough, though not en masse. This is evidenced by two accumulation days in the Nasdaq last week and buying in fundamentally sound growth issues. Negative news items out of Europe hit the wires and cause less stress to the tape with each ensuing day. This could all change tomorrow. But at the moment, the climate is ripe for speculation.

And that is all one can ask for.

Charts created using. �TradeStation Technologies, 2001-2011. All rights reserved. All mutual fund ownership and earnings estimate data provided by Thomson Reuters.

At the time of this writing, of the stocks mentioned in this report, Kevin Marder or an affiliate thereof held no positions, though positions are subject to change at any time and without notice.

[livinincali]

Pretty major intraday reversal today. Typically I would look at this action as some kind of short term top but with the fed coming tomorrow we'll see. Gap ups that end up closing on the lows of the day are one of my favorite daily reversal candles. The fact that leaders like AAPL and CMG are leading the way down gives further evidence that we might have just hit a top on this bear market rally.

[rovo]

Both Oracle and Adobe reported after today's close. In both cases they met or beat expectations and are both trading above the closing price. This may bode well for the tech sector in tomorrows market.

re; Cali's comment in previous post. All of my indicators are also indicating we had just had a local high and we are beginning a decline.

[rovo]

After the markets closed yesterday, Microsoft announced an increase in the dividend from $0.16 to $0.20 per quarter.

Microsoft Announces 25 Percent Increase in Quarterly Dividend
6:00p ET September 20, 2011 (PR NewsWire)

Microsoft Corp. today announced that its board of directors declared a quarterly dividend of $0.20 per share, reflecting a 4 cent or 25 percent increase over the previous quarter's dividend. The dividend is payable December 8, 2011 to shareholders of record on November 17, 2011. The ex-dividend date will be November 15, 2011.

"Our strong financial results enable us to increase our dividend as part of our ongoing commitment to return capital to our shareholders," said Peter Klein, chief financial officer of Microsoft.

The company is continuing its $40 billion share repurchase program approved by the board of directors in September 2008. The repurchase program, which expires on September 30, 2013, had approximately $12.2 billion remaining as of June 30, 2011.

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

SOURCE Microsoft Corp.


I have shares of Microsoft in my portfolio and they have been for sale at $29.00. Based upon the increased dividend I have raised the sell price to $32.00. This sale price is just an estimate of where I think MSFT may go within the next month.