Archive for January 2013

January 31st: Ed’s Daily Portfolio Summary   Leave a comment

I only managed to beat 2 of the 3 indexes today, losing to the Nasdaq, which was only down 0.01%:

NNVC: 0.00 to $0.48 ( 0.00% , -7.69% overall)– bought at $0.52
PPLT: -0.57 to $164.90 ( -0.34% , -0.37% overall)– bought at $165.51
SAND: 0.25 to $12.12 ( 2.11% , 2.97% overall)– bought at $11.77
SPXU: 0.23 to $32.36 ( 0.72% , -3.75% overall)– bought at $33.62
TZA: -0.22 to $11.13 ( -1.94% , -1.07% overall)– bought at $11.25
YHOO: -0.49 to $19.63 ( -2.44% , 29.40% overall)– bought at $15.17

OVERALL: -0.18%

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Posted January 31, 2013 by edmcgon in Market Analysis, Open Thread, Portfolio

Ed’s Stockwatch List (and some buys to look for)   15 comments

For the upcoming drop in the markets, I am preparing a list of stocks which I plan to buy. Following is a list of the stocks (in alphabetical order), with their target prices:

1. Disney (DIS): $52
2. iShares MSCI South Korea Index (EWY): $59
3. Sandstorm Gold (SAND): $11 (I will add to my existing position at this price)
4. Volkswagen AG (VLKAY): $44
5. Yahoo (YHOO): $16 (I will add to my existing position at this price)

Admittedly, some of these targets may not be hit (Yahoo won’t). In the new acquisition cases (#1,2, & 4), I will start with a small position and add more if it drops further.

Speaking of the new acquisitions, I have held #1 and 2 before, and their situations haven’t changed significantly. I am just bargain shopping with Disney. As for EWY, that is actually quite close to the bottom of it’s range already, so I may go ahead and add it soon.

As for Volkswagen, it is dirt cheap at it’s current price. Considering they are the second largest auto manufacturer in China (behind GM), and the second largest in revenue in the world (behind Toyota), to get Volkswagen cheap is hard to pass up. They have strong earnings and revenue growth, free cash flow over $10 billion, book value near their share price ($41 vs. $46), and disgustingly low PE and PEG ratios (3.7 and 0.08). The beauty of Volkswagen is they can afford to ride the world’s wave of macroeconomic malfunction, because they are so darned undervalued.

Another thing to consider with Volkswagen is they aren’t JUST Volkswagen. Under the Volkswagen corporate umbrella, you also get the following subsidiaries: Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, and truck manufacturers Scania and MAN. That is a pretty impressive lineup.

The quality of the products? I use the US News Car Rankings because they are the most all-inclusive:

–For upscale small cars, Volkswagen’s GTI and the Audi A3 rank #1 and 2 respectively.
–For luxury large cars, the Audi A6 is #2.
–For super luxury cars, the Porsche Panamera is tied for #1 and the Audi A8 is #3.
–For luxury sports cars, Porsche has #1 and 3: the Cayman and the Boxster.
–For super luxury sports cars, tied for #1 are the Audi R8 and the Porsche 911 Carrera.
–In luxury convertibles, #2 is the Porsche Boxster.
–Under affordable wagons, tied at #2 is the Volkswagen Jetta SportWagen.

While I am not fond of the car manufacturers this year, Volkswagen is too good a company at a bargain basement price to possibly ignore.

Posted January 31, 2013 by edmcgon in Stocks

Traders Corner   26 comments

I am going to go out on a limb and call it: 1509 was the end of the recent bull rally. We have bounced against it 2 days in a row.

However, I am not calling for a major crash here. But we are overdue for a correction. At the moment, I am looking at 1426 as the bottom, and possibly the bottom for 2013 as a whole. But we have a lot of support levels to break through before we get there. It could literally take us into March, with more than a few dead cat bounces along the way.

The S&P 500 levels to watch today:

UPSIDE: 1502-1503 (3 data points), 1509 (2 data points), 1511 (top of the Bollinger Bands).
LAST CLOSE: 1501.
DOWNSIDE: 1500 (January 30th’s low), 1498 (January 29th’s low), 1496 (2 data points), 1494 (January 25th’s low), 1493 (10 day moving average), 1492 (January 22nd’s high), 1489 (2 data points), 1485 (2 data points), 1481 (January 22nd’s low), 1479 (20 day moving average), 1475 (January 18th’s low), 1474 (2012’s high), 1472-1473 (6 data points), 1470 (October’s high), 1461-1467 (11 data points), 1455-1458 (4 data points), 1451 (January 8th’s low), 1447 (the bottom of the Bollinger Bands), 1440 (50 day moving average), 1434 (November’s high), 1415-1426 (January 2nd’s low, April’s high, May’s high, and August’s high), and 1398 (200 day moving average).

Posted January 31, 2013 by edmcgon in Daytrading, Investing, Market Analysis

Ed’s Daily Notes for January 31st   Leave a comment

Bloomberg: Spending Cuts Including to Defense Seen to Start in March

Yesterday, we discovered that defense spending cuts was the main factor in the U.S. GDP 4th quarter contraction. Don’t expect that to get any better:

As the U.S. gross domestic product takes a hit from lower defense budgets, federal spending cuts viewed as unthinkable a few months ago — $1.2 trillion falling heavily on the Pentagon — are seen as likely starting March 1.

What’s known as budget sequestration, designed to be so draconian that it would push Democrats and Republicans to compromise on taxes and spending, has hardened the parties’ positions. If the cuts occur, they would require $600 billion in across-the-board military spending reductions over a decade that Defense Secretary Leon Panetta called “devastating.”

While leaders of both parties and President Barack Obama pledged that the cuts wouldn’t happen, they haven’t been able to reach an agreement to prevent it. That may have economic consequences. A 22.2 percent decline in defense spending contributed to yesterday’s Commerce Department estimate that the gross domestic product shrank at a 0.1 percent annual rate.

House Republican leaders, weakened by Obama’s re-election and Democratic gains in the House and Senate, are resigned to accepting the cuts rather than risking a deal with Obama that would mean higher taxes. Democrats see little political benefit in accepting Republican offers to forestall the reductions in exchange for cuts to entitlement programs such as Medicare.

Basically, the Democrats have pushed the Republicans into a corner, where the best choice for the Republicans is to do nothing. It is safe to say the Democrats won’t budge until around March 1st, if they budge at all. The sequestration cuts will go through most likely, leaving the U.S. in a Greek-style austerity, with tax increases and spending cuts combining to suck life out of the U.S. economy. How much damage this does remains to be seen. It is also possible the two parties may decide to kick the can down the road, which may be the only economic salvation the U.S. will get from Washington.

But all is not lost! Somewhere, Helicopter Ben Bernanke is revving up his money-printing machine…

Fox News: BlackBerry unveils new smartphones, drops RIM name

BlackBerry, formerly Research in Motion (RIMM), is an intriguing problem as stocks go. The financials are clean, and there is even value there (book value per share of $18.15 on a share price of $13.78). The problem has been their margins are negative, as well as the earnings and revenue growth. In spite of these, they still have positive free cash flow on over $12 billion of revenue, plus a nice cash hoard of $2.7 billion. They are well-positioned to make a comeback.

But can they? They are in a hyper-competitive market. They are up against some of the best companies in the world, including Samsung, Google, Apple, and Microsoft. This is like trying to judge a boxer in the 1970’s who still hasn’t fought Ali, Frazier, or Foreman. As good as BlackBerry looks on paper now, they will have to show that they can steal market share before I will give their stock a look, because they don’t have the financial strength to last forever against the tech heavyweights they have to fight.

Posted January 31, 2013 by edmcgon in Economy, Market Analysis, News, Politics

January 30th: Ed’s Daily Portfolio Summary   1 comment

It took me long enough, but I finally beat the indexes:

NNVC: 0.00 to $0.48 ( 0.00% , -7.69% overall)– bought at $0.52
PPLT: 0.65 to $165.47 ( 0.39% , -0.02% overall)– bought at $165.51
SAND: 0.16 to $11.87 ( 1.37% , 0.85% overall)– bought at $11.77
SPXU: 0.37 to $32.13 ( 1.16% , -4.43% overall)– bought at $33.62
TZA: 0.39 to $11.35 ( 3.56% , 0.89% overall)– bought at $11.25
YHOO: 0.42 to $20.12 ( 2.13% , 32.63% overall)– bought at $15.17

OVERALL: +0.86%

Posted January 30, 2013 by edmcgon in Market Analysis, Open Thread, Portfolio

Update: Linn Energy (LINE)   16 comments

As Linn Energy (LINE) approaches it’s 52 week high, and the markets start to look overbought, I am putting in a limit sell order at $40 for it. Truth be told, I think I can buy it at a cheaper price on a pullback. This is a one-day order only, and I will review it again tomorrow.

UPDATE: I sold Linn at $38.75. It doesn’t look like it has any strength, and with earnings coming up, I am frankly concerned. Here is the final line:
LINE: -0.58 today, -0.76 overall to $38.75 (-1.47% today, -1.92% overall)–bought at $39.51

Posted January 30, 2013 by edmcgon in Portfolio Moves

Traders Corner   45 comments

The markets just got blindsided by the U.S. GDP report this morning. Nobody was expecting a negative number. Although futures dropped on the news, it is still unclear whether this will create a big drop, or even no drop at all. Remember, bad economic news can be read as more QE from the Federal Reserve. However, if the Fed comes out this afternoon with even a hint they might tighten, look out below!

The S&P 500 levels to watch today:

UPSIDE: 1509 (January 29th’s high), 1514 (top of the Bollinger Bands).
LAST CLOSE: 1507.
DOWNSIDE: 1502-1503 (3 data points), 1498 (January 29th’s low), 1496 (2 data points), 1494 (January 25th’s low), 1492 (January 22nd’s high), 1490 (10 day moving average), 1489 (2 data points), 1485 (2 data points), 1481 (January 22nd’s low), 1475 (January 18th’s low and the 20 day moving average), 1474 (2012’s high), 1472-1473 (6 data points), 1470 (October’s high), 1461-1467 (11 data points), 1455-1458 (4 data points), 1451 (January 8th’s low), 1437 (50 day moving average and the bootom of the Bollinger Bands), 1434 (November’s high), 1415-1426 (January 2nd’s low, April’s high, May’s high, and August’s high), and 1397 (200 day moving average).

Posted January 30, 2013 by edmcgon in Daytrading, Economy, Investing, Market Analysis