Archive for January 2012

Ed’s Daily Summary and Open Thread for January 31st   3 comments

I broke down today and added James River Coal Company (JRCC) to my portfolio. It is more of a “several days play”, so don’t assume I am recommending it.

JRCC: -0.15 to $6.29 (-2.33%, -2.33% overall)–bought at $6.44
NNVC: 0.04 to $0.63 (6.78%, -18.18% overall)–bought at $0.77

OVERALL: +0.07%

Posted January 31, 2012 by edmcgon in Open Thread, Portfolio, Portfolio Moves

Daytraders corner   34 comments

After yesterday’s drop and then climb back, it becomes hard to say what the markets want to do. However, I will predict that if we get the “golden cross” (where the 50 day moving average crosses above the 200 day moving average) either today or tomorrow, be prepared to go long for awhile. Following are the charts for the last 3 golden crosses.

2010:

2009:

2006:

In other words, we may be in for a few months of bullishness very soon.

Posted January 31, 2012 by edmcgon in Daytrading

Ed’s Daily Notes for January 31st   2 comments

If any of you see any stories that I don’t have posted in my “daily notes”, or if you see a different Media take on the same story, feel free to add links in the comments. The only thing I would remind you is to only post one link in each comment (multiple links in one comment will automatically send the comment to the site’s spam filter).

One of my favorite banks to follow, Banco Santander (STD), dropped a HUGE earnings miss today:

Net income fell to 47 million euros ($61.9 million) from 2.1 billion euros a year earlier, the bank said in a filing to regulators today. That compared with the average 1.78 billion- euro estimate in a Bloomberg survey of 10 analysts.

However, the miss was due to declining earnings in Brazil and Britain, as well as one-time charges as Santander added to it’s real estate reserves to protect against losses:

Santander and other Spanish banks are under pressure from Mariano Rajoy’s new government to recognize more losses on building land and apartments that have piled up on their balance sheets as a result of the country’s property crash. The lender booked 1.81 billion euros in charges for Spanish real-estate provisions and a 600 million-euro goodwill charge at its Portuguese unit as profit sagged in its biggest markets.

I would put Santander back on my investment radar, although I would wait to see if it drops some more, as well as for other events in Europe to unfold.

If you wanted to invest in the American tourism industry, here is your chance:

Obama signed an executive order Jan. 19 giving the Department of Homeland Security and Department of State 60 days to come up with a plan to process visa applications from China and Brazil more quickly. The order recommends shortening the process to three weeks from four months. Visa processing capacity in China and Brazil must be increased by 40 percent in the next year, according to the order.

The resulting increase in U.S. tourism could create 1.3 million jobs and add $850 billion to the economy by 2020, the National Retail Federation said in a Jan. 19 report, citing the U.S. Travel Association.

While I think the numbers above could be overly optimistic, especially if the world economy hits another recession as expected, there could still be growth in U.S. tourism.

The above link is to a good article on gold purchasing in China. Note that I would not read the article as an indicator to buy gold now, but rather as an indicator of rough times to come in the Chinese economy. I would label any Chinese investment now as an extreme “invest with caution”.

I don’t normally spend too much time delving into the defense sector, but the railgun does have intriguing potential. It could be the biggest development in conventional weaponry since the stealth bomber. Even more importantly, it is investable:

Military supply company Raytheon announced Monday that it had been awarded a $10 million naval contract to develop a way to supply enough juice to power the whopping gun — which could someday reshape naval warfare.

Raytheon (RTN) has some fairly clean financials, pays a decent dividend (3.5%), and is fairly priced where it is. If the railgun does turn out to be profitable for them, it could be argued they are underpriced right now. Just remember, it could take many years for this system to be fully developed and operational. This is most likely a 10-year play. But you get a good dividend along the way, so it might be worthwhile.

Posted January 31, 2012 by edmcgon in Economy, Market Analysis

Ed’s Daily Summary for January 30th   7 comments

This is too easy…

NNVC: 0.00 to $0.59 (0.00%, -23.38% overall)–bought at $0.77

OVERALL: -0.02%

Posted January 30, 2012 by edmcgon in Portfolio

Daytraders corner   38 comments

Today, it looks like we might finally get the correction for which I have been waiting. Index futures are pointing to around a 1% drop at the open in the S&P 500. Don’t be surprised if we fall as far as 1295 (the midrange on the Bollinger Bands), or 1292 (the high from October).

On top of that, we are likely to get a golden cross today, as the 50 day moving average (1255) meets the 200 day moving average (1257).

Regardless of that, if we can get a decent correction, I might dip a toe into the long-term investing pool. The U.S. markets seem to have disconnected from Europe, but even the bullish analysts I have heard lately seem convinced there is a correction coming, and the technicals, specifically the McCLelland Indicators, seem to agree.

Posted January 30, 2012 by edmcgon in Daytrading

Ed’s Daily Notes for January 30th   6 comments

In the week ahead, the big economic reports will be the U.S. employment reports:

WEDNESDAY: ADP Employment Change
THURSDAY: Challenger Job Cuts
FRIDAY: Nonfarm Payrolls and the Unemployment Rate

Also, don’t forget we are at January month-end, as well as the start of February. Expect some odd market activity as fund managers get into and out of positions, trying to make their portfolios look prettier.

Bloomberg: Portugal May Get Little Relief From Greek Debt Deal: Euro Credit
The Greek chickens are coming home to roost in Portugal, as the private bond holders of Portuguese sovereign debt are beginning to read the writing on the wall, that they will be in store for a bond haircut in the future. Currently, Portuguese 10-year bonds yield 15.78%.

GPB News: Freddie Mac Betting Against Struggling Homeowners
I love stories about government-owned agencies making investments, especially when the investments run in direct opposition to their purpose:

Freddie Mac, formally called the Federal Home Loan Mortgage Corporation, was chartered by Congress in 1970. On its website, it says it has “a public mission to stabilize the nation’s residential mortgage markets and expand opportunities for homeownership.” The company is owned by U.S. taxpayers and overseen by a regulator, the Federal Housing Finance Agency (FHFA).

In December, Freddie’s chief executive Charles Haldeman assured Congress his company is “helping financially strapped families reduce their mortgage costs through refinancing their mortgages.”

But public documents show that in 2010 and 2011, Freddie Mac set out to make gains for its own investment portfolio by using complex mortgage securities that brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing.

Remind me again why we bailed them out?

Financial Times: Greek fury at plan for EU budget control
I got a chuckle out of this story’s opening paragraph:

Greece’s finance minister angrily rejected a German plan for the eurozone to impose a budget overseer onto Athens in return for a new €130bn bail-out, saying it would improperly force his country to choose between “financial assistance” and “national dignity”.

Greece still has “national dignity”? Who knew?

In all seriousness, the Greek finance minister has forgotten the old saying, “He who pays the piper calls the tune.” Right now, Germany gets to make all the song requests…

Sky News: Sarkozy announces sales tax rise
What I found most revealing in French President Sarkozy’s announcement of an increase in France’s VAT (value-added tax, which does exactly the opposite of it’s name) was this comment:

“This measure will not come into effect until October 1. We hope it will lead to increased sales (before that date) and boost growth,” Sarkozy said in a television interview.

Exactly what does Sarkozy expect will happen after October 1st? Unintentionally, he just revealed the an economic truth, which basically states the higher you raise taxes, the more people avoid them by reducing the activity which leads to the taxes. While I won’t suggest a 1.6 percentage point increase in the French VAT (to 21.2%) will kill the French economy, it won’t help it either.

Posted January 30, 2012 by edmcgon in Economy, Market Analysis

Open thread   47 comments

I will add my portfolio results sometime after the close, but for now…time for the open thread!

For this weekend’s open thread, I offer my top 3 favorite cartoons from a website called “See Mike Draw“, which I highly recommend as the funniest cartoons since “The Far Side” ended. I will warn you, some of the site’s cartoons are R-rated, but still quite funny.

Enjoy:

PORTFOLIO SUMMARY: My results for Friday were negligible, but on the negative side.

Posted January 27, 2012 by edmcgon in Open Thread