Paul Ebeling on Wall Street
Paul Ebeling on Wall Street
Last Friday the Oversold rebound came into focus. A reversal signal, some selling, then a recovery into the close on some Short covering ahead of a shortened and perhaps uncertain week ahead.
Monday’s action will tell if there is same oversold pressure that turned stocks higher Friday, as we look for a gauge of staying power of the notion that stocks will going to stage a significant relief bounce in here. Perhaps we will see a rally ahead of the Thanksgiving holiday in the US, that would be a pleasant event for sure as the primer is set for the bounce IMO, though it will likely be a short one if it comes.
This week features Thanksgiving on Thursday, markets closed, and a half day Friday closing at 1:00 p EDT.
If you are going to play, play the leaders, and remember the markets climb walls of worry, there is a lot of worry now; the EUs continuing crisis, the heightened tension in the Middle East, and the Fiscal Cliff in the USA, this is the time to be ready and in position for an upside move.
Red’s Option Trade Alert: Apple NASDAQ:AAPL
See them daily at www.livetradingnews.com
Paul Ebeling on Wall Street…
Last Friday the indexes Oversold condition came into focus, we saw a reversal signal, some selling, then a recovery into the close on some Short covering ahead of a shortened and perhaps uncertain week ahead.
Monday’s action will tell if there is same oversold pressure that turned stocks higher Friday, as we look for a gauge of staying power on the notion that stocks will stage a significant relief bounce in here.
Perhaps we will see a rally ahead of the Thanksgiving holiday in the US, that would be a pleasant event for sure as the primer is set for the bounce IMO, though it will likely be a short one if it comes.
This week features Thanksgiving on Thursday, markets closed, and a half day Friday closing at 1:00 p EDT.
If you are going to play, play the leaders, and remember the markets climb walls of worry, there is a lot of worry now; the EUs continuing crisis, the heightened tension in the Middle East, and the Fiscal Cliff in the USA, this is the time to be ready and in position for an upside move.
Have a terrific week and a Happy Thanksgiving to my US readers.
All the best,
Paul A. Ebeling, Jnr.
Re-cap of the US Markets for the Week ended 16 November 2012
DJIA 12588.31 +45.93 (0.37%) NAS 2853.13 +16.19 (0.57%) S&P 5001359.88 +6.55 (0.48%) 10-yr T-Note +2/32 1.588
NYSE Adv 2281 Dec 800 Vol 948.6-M NAS Adv 1448 Dec 999 Vol 2.12-B
Strong: Consumer Staples, Consumer Discretionary, Health Care, Utilities
Weak: Telecoms, Energy
High-yielding telecom stocks continued seeing weakness as the country nears the Fiscal Cliff.
Morning reports indicated the White House is considering a package which would delay the mandatory spending cuts scheduled to go into effect on 1 January 2013. This was received as a delay of the decision, rather than a step towards a concrete solution.
The telecommunications sector slid 0.6% and AT&T NYSE:T 33.14, -0.28, Sprint Nextel NYSE:S 5.48, -0.06, and Verizon NYSE:VZ 41.40, -0.30 all lost between 0.7% and 1.1%.
Among technology stocks, Apple NASDAQ:AAPL 527.68, +2.06) registered a gain of 0.4%.
A handful of notable technology companies have reported earnings since yesterday’s close.
Dell NASDAQ:DELL 8.86, -0.70) settled lower by 7.3% after missing on earnings and revenue. During the Q-3, the computer manufacturer saw its top line decline 10.7% Y-Y, to $13.72-B. In addition, the company issued downside fourth quarter revenue guidance and reaffirmed its Y 2013 earnings expectations
Applied Materials NASDAQ:AMAT 10.15, -0.15 reported strong results, but issued cautious guidance. The semiconductor manufacturer earned 0.06 on $1.65-B in revenue, which beat the consensus estimates. Forward guidance was a point of concern as the company expects Q-1 earnings and revenue below consensus.
Lastly, Autodesk NASDAQ:ADSK 31.48, +0.98 rose by 3.2% after reporting mixed earnings. The software provider’s earnings exceeded estimates by 0.04, while its revenue of $548-M fell short of estimates. Similar to Applied Materials, Autodesk is cautious about its upcoming quarter as it expects earnings and revenue to miss consensus estimates.
Looking at the financial sector, the SPDR Financial Select Sector ETF (XLF 15.28, +0.10) added 0.7%. Even though the proxy ETF traded ahead of the broader market, major financials were mixed.
JPMorgan Chase NYSE:JPM 39.53, +0.14) added 0.4% after reaching a settlement with the Securities and Exchange Commission regarding Bear Stearns and JPMorgan residential mortgage-backed securities. As part of the settlement, JPMorgan will pay approximately $297-M in penalties. Credit Suisse NYSE:CS 21.94, -0.43 was also named in the settlement and will pay approximately $120-M in fines. Looking at other majors, Citigroup NYSE:C 34.98, -0.23) slid 0.7% while Wells Fargo NYSE:WFC 31.94, +0.37 outperformed with a gain of 1.2%.
The Dow Jones Transportation Average underperformed the industrial average and settled lower by 0.5%. Out of the 5 airlines which are part of the transportation average, 4 saw notable losses.
Delta Air Lines NYSE:DAL 9.33, -0.16) fell 1.7%, and JetBlue Airways NASDAQ:JBLU 4.96, -0.07 lost 1.4%. Meanwhile, Southwest Airlines NYSE:LUV 8.93, +0.09 outperformed and added 1.0%. As 17 out of 20 transportation stocks settled lower, two listings connected to the trucking industry saw strength. JB Hunt NASDAQ:JBHT 59.32, +0.22 and Ryder System NYSE:R 44.22, +0.45 added 0.4% and 1.0%, respectively.
Casino stocks were broadly stronger after Penn National Gaming NASDAQ:PENN 48.23, +10.62 announced plans to split its real estate and gaming assets into two separate companies. Under the new structure, a newly-established PropCo will be the 1st real investment trust focused solely on gaming. Penn National surged 28.2% while peers Ameristar Casinos NASDAQ:ASCA 19.52, +2.67), Pinnacle Entertainment NYSE:PNK 12.65, +0.84), and Las Vegas Sands NYSE:LVS 42.27, +1.71) all gained between 4.2% and 15.9%.
In economic news, the September net long-term TIC flows report indicated a $3.3-B inflow of foreign capital into UA denominated assets. This follows the prior month’s $90.0-B inflow.
Industrial production decreased during October by 0.4%, which was worse than the 0.1% increase that had been expected by the Briefing.com consensus. The reading follows the revised 0.2% increase recorded during the prior month.
Capacity utilization hit 77.8%, which was worse than the 78.3% expected by the consensus, and down from the revised prior month reading of 78.2%.
US Major Market Indexes Technical Analysis
|16 Nov 2012||QQQ||62.3||Bearish (-0.46)||62.12||62.63|
|16 Nov 2012||DIA||125.6||Bearish (-0.38)||125.21||125.73|
|16 Nov 2012||SPY||136.37||Bearish (-0.34)||135.49||137.32|
Red’s Options Trade Alert: Apple NASDAQ:AAPL
Apple options established a new 90-day record for trade in Call and Put contracts.
A total of 782,461 Put and 1,013,364 Call contracts were traded raising a 0.77 Put/Call Ratio PCR on shares of AAPL
The PCR can be regarded as a predictor of investment sentiment, signaling what experienced investors are doing ahead of a move of an underlying equity.
A high PCR suggests that the investor sentiment is Bearish and that investors are expecting the underlying stock price to decrease.
A low PCR implies that the investor sentiment is Bullish and that investors are expecting the underlying stock price to increase. So, unusual volume provides reliable clues that the stock is expected to make a move.
Volume: 44-M/shrs is above the 90 day average volume of 18-M/shrs.
Shares of Apple edged up 2.06 (+0.39%) to 527.68 Friday.
The price of the stock on the day traded between a low of 505.75 and 530.00.
AAPL is trading below its 20, 50 and 200-D MAs
Earnings Date: 25 October 2012
Analysts Recommendation: Buy, (Early Call)
1 yr Price Target Estimate: 763.90
Week Month Quarter Half Year Year
-2.26% -16.82% -16.30% -2.89% +39.82%
Analysis: Overall Short Intermediate Long
Very Bearish (-0.52) Very Bearish (-0.66) Very Bearish (-0.56) Bearish (-0.35)
Recent CandleStick Analysis Bearish
|14 Nov 2012||Bearish Engulfing|
|down||7 Nov 2012||580.09 to 574.54|
|down||18 Oct 2012||644 to 642.06|
|down||8 Oct 2012||651.28 to 647.56|
|down||26 Sept 2012||673 to 672.69|
|down||24 Sept 2012||699.36 to 695.12|
|VBu=Very Bullish, Bu=Bullish
Be=Bearish, VBe=Very Bearish
Disclaimer: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates are responsible for any errors or for results obtained from the use of this information. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in Good Faith, are subject to change without notice. Before acting on any information contained on the website, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
This Week on the Economic Front in the USA
19 November- Monday
Existing Home Sales, October (10:00): 4.75 past
NAHB Housing Market Index, November (10:00): 41 past
20 November- Tuesday
Housing Starts, October (8:30): 872-K past
Building Permits, October (8:30): 894-K past
21 November- Wednesday
MBA Mortgage Index, 11/17 (7:00): 12.6% past
Initial Jobs Claims, 11/17 (8:30): 439-K past
Continuing Claims, 11/10 (8:30): 3334-K past
Michigan Sentiment – Final, November (9:55): 84.9 past
Leading Indicators, October (10:00): 0.6% past
Crude Oil Inventories, 11/17 (10:30): 1.089-M past
22 November- Thursday US Thanksgiving Holiday
23 November- Friday
This Week on the Earnings Front in the USA
Tyson Foods NYSE:TNS is scheduled to report its Q-4 results Monday morning. Analysts expect the Arkansas-based meat producer to say that earnings rose about 41%, relative to last year, to 0.44 per share, but that revenues were up only marginally to $8.49-B. The full-year forecast calls for EPS of 1.78 down almost 6% on revenue of $33.35-B up more than 3%.
Campbell Soup NYSE: CPB, HJ Heinz NYSE: HNZ and Hormel Foods NYSE: HRL Report. Consensus estimates indicate year-over-year growth in EPS and sales for all 3.
Campbell is expected to post 0.85 per share on $2.37-B, up from 0.82 per share on $2.16-B. The forecast for Heinz calls for EPS of 0.88 and revenues of $2.85-B, up from 0.81 per share on $2.83-B.
And analysts expect Hormel to report per-share earnings of 0.50 per share on $2.23-B, which compares with 0.43 per share on $2.10-B in sales in the same period of last year.
None of these companies have fallen short of consensus estimates in the past four quarters.
Most of the big retailers already have shared their most recent quarterly results, this week we will see what Best Buy NYSE: BBY, Lowe’s Companies NYSE: LOW and Urban Outfitters NASDAQ: URBN have to offer for their Q-3 results
Best Buy the consumer electronics retailer is expected to say that its EPS fell more than 74 percent year-over-year to 0.12. That is down from a consensus estimate of 0.36 per share some 60 days ago. The consensus revenue estimate of $10.73-B is more than 11% lower than the year-ago sales.
Analysts expect the Lowe’s home improvement store chain to post EPS of 0.35, or the same as a year ago. That consensus estimate has not changed in the past 60 days. Revenue is expected to be up marginally to $11.91-B, relative to last year.
The forecast for Urban Outfitters, the hip apparel retailer calls for EPS of 0.41 and revenues of $692.38-M, up from 0.33 per share on $609.95-M. The positive earnings surprise was more than 27%in the previous quarter.
Retailers Chico’ FAS NYSE: CHS, DSW NYSE: DSW and Signet Jewelers NYSE: SIG also are expected to report earnings growth this week.
Analysts are looking for a net loss from Kirkland’s NYSE: KIRK and Zale NYSE: ZLC.
Hewlett-Packard NYSE: HPQ highlights this week’s tech earnings reports. Analysts on average expect the Palo Alto, California-based company to say Tuesday morning that its per-share earnings slipped from 1.17 a year ago to 1.14 in F-Q-4, and from 4.88 to 4.04 for the full fiscal year. Quarterly revenue is expected to have fallen more than five percent to $30.45-B, and for the full year about five percent to $120.92-B. Analysts have underestimate HP’s EPS in the past 8 Quarters,
Scientific equipment maker Agilent Technologies NYSE:A, and software company Salesforce.com NYSE: CRM are expected to say that quarterly earnings declined more than 4%, though revenue grew. Analysts predict medical device maker Medtronic NYSE: MDT will say that its EPS grew more than 4% while its revenue declined about 2%.
Deere NYSE: DE is scheduled to report F-Q-4 and fiscal year results Wednesday morning. The consensus forecast for the Quarter calls for EPS growth of more than 13% Y-Y to 1.88 and sales up more than 11% to $8.82-B. Note: the consensus EPS estimate has slipped in the past 60 days from 1.89 per share, and Deere fell short of earnings expectations by about 14% in the prior Quarter.
For the complete list go here: http://biz.yahoo.com/research/earncal/20121119.html
The Most Asked Question last Week
The Big Q: Red, what is the reason that US President is coming to Asia so soon after his re-election?
Big A: US President Obama Saturday flew off to the ASEAN nations of Thailand, Burma and Cambodia, Obama’s whirlwind Asian tour has China’s attention…
When there Obama will meet Thailand’s much revered King, an Army General turned President and a man who fought for the Khmer Rouge.
Throughout his 4-day tour, another Asian country looms large.
This trip appears to be to reinforce the US “Pivot” toward Asia, a strategic shift since Y 2011 that China views as being pointed squarely at countering its influence and containing its growth in Asia.
The 3 countries on Obama’s visit schedule have close China ties, although Burma, in a dramatic reform away from military dictatorship, indicated it wishes to reduce its dependence on China.
Many Chinese are concerned about American diplomatic competition for friends around the periphery of China, said Shi Yinhong, an international relations expert at People’s University of China in Beijing.
The US president’s visit will “embed the U.S. presence and future power projection in the region in the context of China’s rising influence,” wrote Kavi Chongkittavorn, a Thai commentator on Southeast Asian affairs, in The Nation newspaper. “It will also turn ASEAN into an arena where the world’s 2 super powers can persuade, co-operate and compete.”
From Saturday to Sunday, Obama visits Bangkok to meet Thailand’s King and its prime minister, Yingluck Shinawatra.
The country is among America’s oldest allies in Asia, but tensions exist, including disagreement over the US-led Trans-Pacific Partnership that Thailand may join, Thailand’s refusal to allow NASA to use an airfield for atmospheric monitoring, and its AML deficiencies, including adequately criminalizing terrorist financing, establishing and implementing adequate procedures to identify and freeze terrorist assets; and strengthening AML/CFT, Anti-money laundering and counter terrorist financing supervision.
Monday, Air Force One flies to Rangoon, Burma, also known as Myanmar, to begin the 1st ever visit by a sitting US President. The White House eased trade sanctions in recent months against the regime, and it has come under fire from human rights groups for visiting Burma while ethnic conflicts continue, and rights abuses are said to remain widespread.
Obama will give a speech on Democracy and meet both President Thein Sein and Aung San Suu Kyi, the opposition leader and democracy icon who is now a sitting MP, although Burma’s parliament is positioned to ensure the ruling party and military strong position in the government.
The last leg of the trip, Cambodia, also marks a 1st visit by a sitting US President. Obama will share the stage with other world leaders including Russia’s Vladimir Putin and China’s Wen Jiabao, as Cambodian Prime Minister Hun Sen hosts the annual ASEAN summit and 7th East Asia Summit.
Beijing’s focus will be on the Summit’s most sensitive topics, Maritime security and disputes in the South and East China seas. Washington argues for a multi-lateral approach and a regional code of conduct, Beijing insists on bi-lateral negotiations. Stay tuned…
PS: We here at LTN are focused on natural resources, agriculture, the Singapore $, and quality stocks that offer steady returns and high dividends, we call them Aristocrat Stocks (and the events that shape the market prices) and profile them weekly on www.livetradingnews.com . They are not priced to make investors a fortune, but they are priced to give approximately 4 to 5% real return on capital, that beat the bank deposit rates soundly and risk is avoided. Pay attention and Cheer up.
Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power!
Red’s Edge and in the Trenches
Reflect and Resolve to Make Money
The area that I believe to be of great importance to those of us who have a keen interest in trading markets is how to better Play the Game of trading and investing.
The 1st thing to do, IMO, is to reflect on what was done last year and how well it was done. I believe it will be the common denominator that some stuff was done well and some not so well. That said it would be a good plan to work to be better at what was not done so well in this New Year.
Looking into the past may be helpful to put together Resolutions that will bring positive changes that bode well for future action in the markets, in order to set up for continuing success.
The common areas that most all traders/players work on to improve in order to continuously post good Percentage and Money records are:
1. Formulate a Trading Plan for their business; this is a business, though many of refer to it as a Game.
2. Follow and fine-tune the Trading Plan along the way.
3. Learn to Cut Losses
4. Stop Cutting Profits
5. Manage your money; remember Your Money and Your Responsibility.
6. Education, Education and more Education, Knowledge is Power.
7. Last but not least are; never enter a position without a Way Out (aka Exit Strategy)
Lumped into 1 Key Trader/Player Resolution and followed will likely lead to improved trading results.
That said, always strive to do your best, use the best tools, be patient with yourself and be happy.
Each new day comes with new opportunities, challenges, and changes.
All the best,
Paul A. Ebeling, Jnr.
PS: if you look at yourself as a player/trader, and you like doing it, then it is Key to understand what makes you “tick”; plus it is very helpful to understand the motivations for your actions and their timing in the entering and exiting positions. It is very important to strive to remove the emotion and focus on the business of trading the markets to win. When you acquire the discipline and the tools to remove the emotion you are on the way to winning and perhaps winning Big. PE
To succeed in trading, a Player needs Knowledge; Gain it and use it wisely
The Key to Stock Market Understanding
We all know that markets and stocks go up and they go down. Players will have winning trades and losing trades.
Individual trades do not determine if a trader is a success or failure. A losing trade can be a successful trade if the trader has followed the disciplined Plan and cut a loss timely.
So, that being said, and knowing that there will be times of drawdown for even the best trader, how is success measured in this business?
Well, one way is to go back and look at steps along the path that brought you to trading. This will likely help you understand how well you are doing.
Example: one of the first steps along the path to trading success was your learning how to use the computer, a basic skill that makes the work easier, faster and hopefully better, and it follows that improvements made in the steps along the path would likely improve overall success.
Next is, have you completed and do you use a well-defined and controlled trading plan? And have you learned strategies to trade up down or sideways markets? Have you developed an exit strategy, whether you have a discipline to cut losses-whether you are dedicating time to education through reading, or seminars and/or have you structured your time to permit regularly attending to the business of trading? Hopefully you are getting more knowledgeable, as knowledge is Key.
So, then take the time to look back from where you are now, so you can analyze the steps that you have taken so far, looking at what you have done you can see what you have not done as well and that may lead you to improve our trading.
You might look back and see that you have closed losing positions only after losses have mounted to the point where you feel hopeless.
That revelation could lead you to establishing a more disciplined exit strategy. Instead of waiting for hopeless, instead decide to use the reversal of some indicator, or the break through a moving average as a more disciplined way to cut losses more quickly and more efficiently. I tell people this all the time when they call to ask.
So, if you are not satisfied with your trading, look and see what actions can be improved going forward?
Success is not static and can become better than you ever thought when you are willing to examine how you got where you are, with a look to how you can make the necessary changes to get where you want to be.
Again, there are many ways to make and lose money in the markets. It is clearly worthwhile to learn how to make money and how to reduce or avoid losses if one is going to venture into this game.
For if you are not armed with Knowledge, it is better to forget the possibility of financial gain in the markets and simply live life on the sidelines. The risks for the ignorant are huge, and in this action, Ignorance is not bliss.
Safety is an illusion. You have all heard and experienced that, ask yourself, Is it safe to walk down steps, take a walk, cross the street, drive your car, sail your boat, swim in the ocean, fly your plane, ski and scuba dive, etc, etc, etc. So it is fair to say that it is not likely to have complete safety in life.
In the investment world, highly rated bonds were considered safe in the past, but that has been proved not necessarily so.
In the world of stock trading, safety is established with the exit strategy, and like most safety, it is imperfect at best. But it does work pretty well if you have established a good plan. And as a player/trader, you must begin with a clear understanding what is adequate safety for you. This column talks about the “Plan” throughout the year, Plan Your Work and Work Your Plan is a recurring theme here. It is your money, so for sure it is your responsibility.
Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power!
Again, the Reminder on Risk
Risk is everywhere including trading the markets; you must learn to manage risk.
When you seek profits in trading markets there is a certain factor that creeps in; it is the “Greed” factor; then come the Risk factors that give rise to the Fear factor in trading.
Likely, many bad trades are the results of a misunderstanding of/or an initial failure to pay attention to risk.
Once that risk becomes real for many folks, it can turn into fear and panic. Risk means we can lose something we have, and often, traders fail to realize just how much is at risk until it is too late for them
One of the most compelling facts regarding risk of loss in the market is that if a position loses 50%, it must then double, i.e. move up 100% to get back to even.
It is important to note that risk in the buying of stock in the market is one of the riskiest things on the planet.
When buying a stock, the total investment is at risk. And as we have seen recently, formerly great companies can fall to Zero.
You ask: Red, Are there ways to reduce the risk of losing my entire investment when buying stocks?
Sure, we have discussed them in previous articles. One is employ stop loss orders in place or trailing stop loss orders.
In most situations, these orders can work to prevent losing everything. It is unlikely that a stock will drop from USUS$50 to US$ Zero overnight, and most stocks that fail often post warning signs; and while they often fall fast, they usually take a bit of time to hit Zero bottom. In such circumstances, the stop loss may work to preserve capital.
Here is another way to protect an asset (some of us call it Insurance). That is to buy a protective Put. A Put option is a contract whereby the buyer of the Put has the right, but not the obligation, to force someone to buy his stock at a pre-determined price, called the strike price, any time before the option expires.
To obtain that right, the buyer of a Put pays a premium. The situation is at least analogous to an insurance policy where the insured (stock owner) pays a premium in order to assure that a loss is limited to the premium, plus any deductible.
You can learn about managing risk with options, but the major risk in options strategies is that options expire, so your puts and calls only have value until expiration; and assuming no change in the price of the stock, the call becomes less and less valuable as time passes, until there is no time left. Insurance…
Another thought that is often espoused is to diversify. There are differing schools of thought regarding diversification and there are many ways to diversify.
The above discussion lists some of the ways traders reduce and manage risk in a stock purchase transaction.
All of the above is intended to motivate you to seek a greater understanding of Risk and in doing so help you Win.
Again, think Education First.
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My pal Wally Stein’s Words of Wisdom
Buy Low, Sell High or at least in the Middle; that’s Wally’s Lullaby
Sooner or later, those who win are those who believe they can!
Red’s Favorite Wall Street adages for this Week: Don’t fight the Fed, Don’t fight the tape, and Don’t marry your stocks. —Wise Wall Street Gurus
See all of the Latest World News on www.livetradingnews.com up-dated hourly 24/7
In View: Big US Banks likely to pass Stress tests, raise Dividends
Investment returns on large banks’ stocks are expected to rise next year as the Fed’s stress test, which is the key hurdle to clear for companies to increase dividends and share buybacks, is largely considered surmountable.
Late Thursday, the US Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency announced the guidelines for the latest round of “comprehensive capital analysis and review,” which requires the nation’s 19 largest banks to be able to withstand a global economic downturn.
Grim scenarios of high unemployment, tumbling stock markets and falling real estate values laid out in the latest stress test aren’t any more burdensome than last year’s, according to analysts, while bank earnings and capital positions have improved.
The latest test gauges bank strength based on Q-3 Y 2012 financials and the results will be revealed in March.
For the majority of banks the scenarios laid out for the capital analysis and review for Y 2013 are modestly more optimistic as the one used in Y 2012. A number of banks, including JP Morgan Chase & Co. NYSE:JPM and Wells Fargo & Co. NYSE:WFC, the nation’s largest by assets, respectively, will return the majority of their Y 2013 net income to shareholders in dividends and buyback next year.
Bank stocks rose in afternoon trading, with large regional banks outperforming both the sector and the market overall.
The KBW regional bank index was up 0.6% during the afternoon, while the Standard & Poor’s 500 was up 0.25% intra-day.
The new test standards are good news, particularly for banks that have managed to generate enough capital to boost dividends and share buybacks in recent years, such as Citigroup Inc. NYSE:C, Regions Financial Corp. NYSE:RF, and SunTrust Banks Inc. NYSE:STI, according to several analyst reports Friday.
The analysts expect PNC Financial Services Group Inc. NYSE:PNC to continue with “modest” buybacks; the Pittsburgh bank is expected by BMO to pay 38% of its earnings as dividends and buybacks next year, compared to 36% this year. The BMO analysts expect Regions, meanwhile, to ask for approval to begin buying back stock for the first time since 2007, and to boost its dividend. All told, BMO expects Regions to pay out 45% of its earnings, compared with 5% this year.
SunTrust is expected to boost its dividend meaningfully” BMO said; it is expected to pay out 23% of earnings, compared to 6% this year. SunTrust and Regions have lagged many regional banks in returning capital for shareholders, because they have struggled with delinquent real estate loans in their southern markets hit hard by the housing crisis.
For next year’s stress test, regulators are demanding that the nation’s largest banks predict the effects on their revenue and loan books if the gross national product were to contract by as much as 6% and unemployment were to climb as high as 12.1%, among other assumptions that are all key factors that would drive delinquencies and subsequent loan losses at banks. The parameters of the stress test aren’t predictions of a severe downturn, but regulators want banks to be prepared for one.
Next year’s assumptions are “slightly more benign” than the model for a potential economic downturn for this year’s test.
Some twists in next year’s test might make life more complicated for some of the nation’s largest banks: The regulators modeled a severe slowdown in emerging markets of Asia, where Citigroup and JP Morgan Chase have large operations and big hopes of generating larger profits. Those international assumptions are “more onerous” than last year’s test.
Citi in particular had already been punished for its loans made to customers abroad, and sources at the bank and analysts had seen this as a major reason why Citi was denied its request to buy back stock this year.
But, many analysts predict Citi will win approval for share buybacks and a sizeable increase in the 0.04 a-year dividend it’s been paying since Y 2011, after regulators complete next year’s test in the spring.
Most analysts expect JP Morgan to spend the most on stock repurchases. With a market capitalization of $150-B, JP Morgan is the nation’s most valuable bank, and KBW estimates the bank will spend $12.4-B on buying back its stock.
ASEAN Watch: OECD, Indonesia will lead Southeast Asian growth
Strong domestic demand will drive Southeast Asian economies to grow as fast in the next 5 yrs as they did before the latest global financial crisis, governments in the region will need to strengthen their revenue bases and navigate the challenge of volatile capital flows, the Organization for Economic Cooperation and Development said in a report Sunday.
“The global financial crisis has underscored the need for Asian economies to rethink their past growth models,” the OECD said in its Y 2013 economic outlook for Southeast Asia, China and India. “Domestic demand growth, particularly private consumption and investment, will be the main driver of growth in most cases. Growth will be less reliant on net exports than in the past.”
The report comes as developing Asia has maintained some of the fastest growth rates in the world, despite a drop-off in Western demand for Asian exports as Europe struggles with its debt crisis and the US struggles to gain traction in its economic recovery.
Indonesia will likely pace the region over the next 5 yrs, growing about 6.3% a year from Ys 2013-2017 as it reaps the rewards of economic reforms and infrastructure investment, the group said.
When China and India are included, the OECD expects emerging Asia to grow 7.4% by Y 2017, a bit slower than in the years leading up to the financial crisis. China’s economy should continue to grow by more than 8% a year despite slowing demand for Chinese exports, slower expansion of the workforce and decreasing productivity gains, the report said.
The report predicts capital inflows will pose “significant macroeconomic policy challenges” to Southeast Asian governments.
“Emerging Asian countries have made considerable progress since the global crisis in strengthening the financial soundness and governance of their banking systems,” the OECD said. “Over the longer term, however, further development of domestic capital markets is very important to realizing the benefits of capital inflows and containing their risks.”
The growth of the middle class across Southeast Asia will have powerful effects on these societies, driving a broadening of financial and government services and forcing governments to improve social safety nets, the report said.
The report says high savings rates in Singapore, Malaysia, the Philippines and Thailand should drive robust growth, but these countries risk falling into a “middle-income trap” as they find it more difficult to maintain the rapid productivity gains of recent years. Cambodia and Vietnam, for their part, could face dwindling demand from the West for their textile exports, the OECD said.
Fiscal deficits in most countries will fall, improving their public debt-to-GDP ratios, but strengthening revenue bases and making tax collection more efficient will also be Key, the OECD said.
It also noted the special difficulties faced by Cambodia, Laos and Vietnam due to the widespread dollarization of their economies, which blunts authorities’ abilities to influence their economies through monetary and exchange-rate policy.
BRICS Watch: China’s challenges and opportunities
In an interview Saturday, CNN Beijing Bureau Chief Jaime FlorCruz said the new Chinese leadership faces the challenge of maintaining high economic growth in wake of the global economic downturn, as well as better projecting itself to the world.
As a journalist who has extensively covered China for over 30 yrs, Mr. FlorCruz said the new Chinese leaders inherit a situation in which China has enjoyed rapid economic growth in the past 20 yrs and emerged as the world’s 2nd biggest economy.
“But China faces the challenge of keeping this high economic growth and creating millions of jobs, because it needs to be done at a time when there is an economic downturn in China and overseas,” he said.
In Q-3, China’s GDP grew 7.4% compared to the previous year. It was the 7th consecutive Quarter of slowing growth, against the backdrop of China’s aim to tame inflation and its real estate bubble.
To cope with the slowing economic growth, Mr. FlorCruz believes the mid-to-long-term solution lies in the development of the service sector.
“There needs to be more encouragement for the growth in the private sector, and especially in the service sector, because China can no longer rely on the manufacturing.
“China needs to shift its economic model from being the factory of the world to the innovator of the world. So it needs more development in the service sector, and that could be the next growth area for China,” he said.
A report by the Ministry of Agriculture said in the first three quarters of this year, the urban-rural income ratio has narrowed to 2.72 to 1, down from 2.77 to 1 in the same period last year, and the gap has been on the decline for three consecutive years.
The overall wealth gap in China has given rise to social conflicts in recent years, and Mr. FlorCruz sees it as a major obstacle for China’s economic reform.
“It’ s probably unavoidable to have gaps, but China cannot tolerate this growing gap,” he said, adding that taxation and greater investment in the western part of the country could help alleviate problems stemming from income disparities.
FlorCruz arrived in China in Y 1971 and has stayed, thus witnessing the country’s gradual opening up and its efforts to be understood by the world. But even today he says China needs to project and explain itself better to be understood overseas.
“Without such understanding, China is either depicted as very dark or very rosy. The truth is somewhere in the middle. China needs to be looked at as a whole. China has its redeeming virtues and values, but China also has its set of problems. China has made a lot of successes, but China also faces a lot of challenges,” he said. He added that a strong and stable China is beneficial for the world.
“What the world doesn’t want to see is an unstable China, nor a China that’s in chaos. Because we’ve seen what it’s like before, and it’s not pretty. I think the world hopes that China will be a positive force as a strong power,” he said.
US Economy Watch: US Credit Rating Could Be Downgraded in 1-H of Y 2013
In Y 2011, the United States emerged from a Congressional budget battle with a downgrade of it AAA rating for the 1st time in history.
In Y 2013, it could see a larger downgrade. The battle over avoiding the Fiscal Cliff is the 1st of a series of partisan confrontations in Washington in the coming year that, sans timely resolved, could cause more downgrades of the US credit rating.
“The rating is in the hands of policymakers,” said John Chambers, chairman of Standard & Poor’s sovereign rating committee, the agency that downgraded the United States in August 2011.
In interviews with Reuters recently, the 3 major rating agencies said cutting the US debt rating is highly likely if next year’s budget process replays 2011′s debt ceiling debacle or if the seemingly simple goal of cutting deficits goes unmet.
Should that happen, it could have a damaging effect on the country’s cost of borrowing and could also shift some investment away from the United States, though the country’s big markets and attractiveness as a safe haven are likely to limit those effects.
In the absence of a sustainable, coherent medium-term vision for the US federal budget, which has produced deficits above $1-T in each of the last 4 yrs, the rating will fall. The Fiscal Cliff is a step in that process, but the possibility of a downgrade will still loom over Washington throughout the year.
“If no budget deal is reached in the early part of next year and the debt trajectory just continues to rise … then we’d be looking at a downgrade of a notch to Aa1,” said Bart Oosterveld, managing director at Moody’s sovereign risk group.
Automatic spending cuts in January coupled with significant tax increases could take an estimated $600-B out of the US economy and push it into recession, according to the non-partisan Congressional Budget Office’s assessment of the fiscal cliff.
The effects will be gradual, but significant, with the unemployment rate possibly rising to 9% or higher.
If Congress goes over the Cliff, Moody’s said it will watch how the economy deals with the abrupt shock and will maintain the current negative outlook it holds on the United States.
Ultimately, if Congress and the President cannot reach a deal to stabilize and eventually reduce the debt, now at $16-T, Moody’s will probably cut the United States’ current Aaa rating.
Fitch, meanwhile, said even a deal to avert the Cliff might not be enough to save the nations Aaa rating.
Temporary measures to stave off the budget shock without a credible strategy for the years beyond could earn the country a downgrade, said David Riley, managing director for sovereign ratings at Fitch.
“We’re going to find out over the coming months if that a compromise will be the case or not,” Mr. Riley said. “There isn’t that much time.”
The US needs a combination of increased revenue and reduced spending, Mr. Riley said. That plan needs to be bi-partisan and credible over the medium-term, he added, calling a Cliff-induced recession “wholly unnecessary.”
Rating agencies will also be watching talks on raising the debt ceiling next year. S&P cut the United States to AA-plus from AAA on 5 August 2011, blaming bitter debt debates that threatened to plunge the country into default and Republican obstruction during a process that was for years a formality.
If the same happens this time, Riley said, Fitch could slash its rating during the first half of the year.
That could cause more turmoil for uncertain markets.
When S&P cut the United States last year, markets reacted badly. The benchmark S&P 500 index slumped the Monday following, falling 6.7% to an 11-month low.
Paradoxically, US Treasury yields plunged as spooked investors stampeded to safe havens. The yield on the benchmark 10-yr T-Note fell to 2.32% on 8 August from 2.56% on 5 August and is now around 1.6%.
That same knee-jerk response may well be repeated. Investors need to hold billions and billions of dollars. Where else can they go? Noise out of a rating agency is not going to change that.
That’s particularly the case with the Eurozone in continued turmoil. The area’s 3 yrs and still going debt crisis is far from resolution.
Investors will likely have plenty of time to digest a downgrade. Countries that lose their AAA status typically take years to get the top rating back
S&P downgraded Australia in December 1986, and it took until February 2003 for its triple-A to be restored. Canada took from Y 1992 to 2002. Denmark was cut to AA-plus in Y 1983 and did not get upgraded back to AAA until Y 2001.
That is because sovereign cuts at the AAA level are relatively rare, coming on issues that take years to resolve.
There is a reason why countries lose top ratings only with difficulty. If the United States does indeed hold onto its AAA from Fitch and its Aaa from Moody’s, and its one-notch lower rating of AA-plus from S&P it could happen because the world’s biggest economy proves its resilience once again.
“When you’re looking at the U.S. from this side of the Atlantic, you say the outlook looks quite good compared to the UK and the rest of Europe,” Fitch’s Riley said.
US GDP is expected to rise at a 2.2% annual rate in Y 2013, compared with 0.3% annual growth in the Eurozone and 1.1% in the United Kingdom, according to Thomson Reuters.
“If you can resolve this gridlock in Congress and provide some clarity, there’s probably upside to the US economy,” Mr. Riley added.
At the Movies with Monica Petrucci from Tinsel Town
Box Office Report: ‘Breaking Dawn 2′ takes $162.2-M Worldwide through Friday
The final film in the female-fueled franchise will not break records domestically, but is still a Powerhouse; Steven Spielberg’s “Lincoln” expands nicely.
Summit Entertainment’s Twilight: Breaking Dawn; Part 2 already has taken in $162.2-M at the worldwide box office and is very strong internationally.
This, the last film in the franchise bowed Friday in North America, taking in $71.2-M from 4,070 theaters to top the list.
Breaking Dawn 2 may not open ahead of last year’s Breaking Dawn; Part 1 or Y 2009′s New Moon, the 2nd film in the series.
Overseas, Breaking Dawn 2 has earned $91-M in 3 days of play. The film is tracking ahead of previous Twilight films in most territories.
Friday’s domestically tally of $71.2-M, includes $30.4-M from Thursday night runs, slightly trails the $71.6-M earned last year by Breaking Dawn 1 and the $72.7-M taken in by New Moon. It is the 6th-highest opening day in history.
Summit is predicting a $135-M weekend for Breaking Dawn 2, which is directed by Bill Condon and returns Kristen Stewart, Robert Pattinson and Taylor Lautner in the lead roles. The pic earned an A CinemaScore.
Also, at the domestic box office, Steven Spielberg‘s awards contender Lincoln is doing good business as it expands nationwide after opening last weekend in just 15 theaters in select cities. The DreamWorks film, distributed by Disney, grossed $6.4-M from 1,775 theaters to come in # 3 behind Breaking Dawn 2 and the James Bond’s Skyfall.
Lincoln, starring Daniel Day Lewis, is expected to gross a strong $20-M for the weekend, even with its modest theater count.
MGM and Sony’s Skyfall grossed $12.4-M on its 2nd Friday for a domestic take of $132.2-M so far.
Have some fun, see a movie this weekend.
All the Best,
Monica Petrucci from Tinsel Town
US Major Markets Support and Resistance
DJIA Close: 12,588.31
12,716 the Apr 2012 closing low
The 200-Day SMA: 12,992
13,056 the Feb 2012 high
13,058 the May 2008 high
The 50-Day EMA: 13,124
13,297 the Apr 2012 high
13,331 the Aug 2012 high
13,653 the Sept 2012 high
13662 the Oct 2012 intra-day high
13,668 from the Dec 2007 high
13,692 from the Jun 2007 high
14,022 from the Jul 2007 high
12,524 from 1-H range of Y 2012
12,391 the Feb 2011 high
12,369 from May 2012
12,284 the Oct 2011 high
12,258 the Dec 2011 high
12,110 the Mar 2007 closing low
12,094 the Apr 2011 low
12,035 from the Jun 2012 lows
11,897 from the Jun 2011 closing low
11,734 from the Nov 1998 high
11,717 the late Aug 2011 high
S&P 500 Close: 1359.88
1359 the Apr 2012 low
1363 the Jun 2012 high
1371 the May 2011 high
1375 the early Jul 2012 high
1378 the Feb 2012 high
The 200-Day SMA: 1382
1402 the Aug 2012 lateral consolidation closing low
1406 the early May 2012 high
The 50-Day EMA: 1411
1422.38 is March 2012 high
1425 the Oct 2012 low
1427 the Aug 2012 high
1433 from the Aug 2007 closing lows
1440 from the Nov 2007 closing lows
1466 is the Sept 2012 closing high
1471 the Oct 2012 intra-day high
1475 the Sept 2012 high
1499 from Jan 2008
1539 from Jun 2007
1357 the Jul 2011 high
1344 the Feb 2011 high
1340 the early Apr 2011 high
1332 the early Mar 2011 high
1325 the Jul 2012 intra-day low
1309 from a Jun 2012 low
1295 the Apr 2011 low
1293 the Oct 2011 high
1275 the early Jan 2011 high
1267 is the Dec 2011 high
1266 a Jun 2012 low
NAS Close: 2853.13
2858 the late Jul 2011 high
2900 the Mar 2012 intra-day low
The 10-Day EMA: 2898
2942 the mid-Jun 2012 high
2950 the mid-Apr 2012 closing low
2962 the Apr 2012 low
2977 from an Oct 2012 low
The 200-Day SMA: 2985
2988 the Jul 2012 high
2999 from the Aug 2012 consolidation
3000 the Feb 2012 high
The 50-Day EMA: 3003
3024 the Gap mark from early May 2012
3026 from the Oct 2000 low
3042 from the May 2000 low
3076 the late Apr 2012 high
3090 the mid-Mar 2012 interim high
3037 the October 2012 low
3101 the Aug 2012 high
3134 the Mar 2012 high
3171 the Oct 2012 intra-day high
3197 the Sept 2012 high
3227 the Apr 2000 intra-day low
3401 the May 2000 closing low
2847 the a May 2012 low
2838 from the Jul 2012 lows
2778 from the May 2012 low.
2747 the Jun 2012 closing low
2726 the Jun 2012 intra-day low
US Market Sentiment
US Major Market Sentiment: The Bulls Vs The Bears
VIX: 16.41; -1.58
VXN: 18.13; -1.1
VXO: 17.66; -1.62
Put/Call Ratio (CBOE): 1.03; -0.21. The 3rd day above 1.0.
Bulls Vs Bears
The Bulls are at 38.3% Vs 43.6 last. A big drop in Bulls as they are getting close to the 35% mark that is Bullish for the market.
For your reference: 35% is the mark that suggests Bullishness, to be really Bearish it needs to get up to the 60-65% mark.
The Bears are at 28.7% Vs 27.7% last. Out of the range but below the 35% considered Bullish for stocks, when the Bears are at of over 35% it is a good Northside indicator.
For your reference: Bearishness hit a 5 year high at 54.4% the last week of October 2008. That move over 50 took Bearish sentiment to its highest level since Y 1995. Extreme negative sentiment for sure.
NB: Watching the VIX. It always tells us when we are moving back to a more rational market. *The VIX measures the volatility of the market. A recent news story described it as “the options market’s gauge of investor fear.” Traders use VIX as a general inverse indicator of market volatility and sentiment. High numbers mean that there’s excess bearishness, and low numbers indicate excess bullishness. The VIX is updated intra-day by the Chicago Board Options Exchange (CBOE), using Standard & Poor’s 500 Index (SPX) bid/ask quotes. It was created in 19**The CBOE NAS Volatility Index (VXN) employs the same formula used to calculate US$VIX, which is based on the implied volatility of S&P 500 index options. This formula is derived from a basket of put and call options. Some are out of the money, some in the money, and some at the money. The resulting US$VXN represents the implied volatility of a hypothetical 30-day option that is at the money.
***The VXO is the ticker created to track the “original VIX” that was calculated using the prices of S&P 100 options. The new VIX uses the ticker US$VIX and is calculated using the prices of S&P 500 options. The fundamental nature of the VXO is the same as the VIX, but it is less robust and not as simple as the VIX.
Focus on FX: EUR/USD Pair
EUR/USD turns from 1.28, breaks correction channel
1.28, Flag pattern: the correction rally in EUR/USD continued during the 15 November session, to the Key 1.28 level.
The 1-H chart below shows the decline break below a correction channel, fall back below the 200-hr SMA and push the RSI reading below 40.
The Channel could be interpreted as a Flag pattern when compared to the Bearish price action since October.
The respect of 1.28 and breakout shows inability to maintain Bullish momentum. There are pivots at 1.2717 and 1.2689 that can provide intra-session support, but if EUR/USD holds below the 1.2760 near-term pivot, the focus is to the Southside, with 1.2660 in sight.
A break below 1.2660, the next support pivot to monitor is around the 1.26 handle. And, if there is a pullback above 1.2760 pivot then the focus could be back to the 1.28 level in the short-term.
In the medium term the market remains Bearish until a break above the 1.28 pivot, in which case it becomes unclear. A break above 1.2880 however introduces a Bullish outlook.
Focus on Precious Metals and Energy
The Overall Fundamentals
Market sentiment was mildly Bearish last week as economic data disappointed and the focus, after Obama’s re-election, has been re-directed to the “Fiscal Cliff” in the US and sovereign debt crisis in the Eurozone.
PGMs gained and Gold and Silver slipped last week. PGM prices were driven by the report from Johnson Matthey that both Platinum and Palladium would likely record deficit this year.
Gains were pared later in the week.
For Platinum, prices retreated as Anglo American Platinum announced a resolution with the workers. Representatives of the labor group said they had accepted the company’s offer, but would still request a wage increase to ZAR16-K. The company stated that it had lost 191-K ozs of Platinum and it would take at least a week to resume production at the operations. The benchmark contract for Platinum rose to a 3-month high of 1603.3 Wednesday but gains faded over the subsequent days and settled at 1561.8 oz Friday. Palladium also experienced similar trading pattern but was able to secure more than a +2% gainer on weekly basis. Speculative interest in Platinum has been higher than that of Palladium which relies less on investment demand flows.
Gold’s rally in the beginning of November was short lived and a trading range has developed at 1700-1750. Despite this, Gold has maintained a premium of around 100 oz above Platinum. Concerns over US Fiscal Cliff and geopolitical tensions should remain supportive to Gold price. The latest report by the World Gold Council indicated that demand from China slipped in Q-3 of the year which was offset by growth in India. For Y 2012 as a whole, it is hard to determine which of the 2 Asian countries is the largest Gold buyer. The Council expects China to consume 750-800 tons and India to consume 700-750 tons.
The spread between WTI Crude and Brent Crude widened above 26 Thursday, the widest level since October 2011 as traders appeared to have adopted Long Brent/Short WTI strategy.
Investors long Brent Crude are concerned that escalated tensions between Israel and Palestine might affect supply. This upstages possible disruption on WTI Crude output due to a fire on a Gulf of Mexico energy platform.
WTI-Brent spread has been widening over the past few months. The bottleneck at Cushing should be one of the reasons while BP’s refinery closure in Indiana only worsened the situation. But, as pipeline reversal projects in the Midwest begin, the situation would improve.
For instance: Seaway pipeline and Canada’s Enbridge were reversed in June to carry oil from the north to the south of the United States, suggesting that 150-K BPD of Crude Oil is being moved out of Cushing and down to the Gulf Coast. Capacity of Seaway pipeline is expected to reach 850-K BPD in Y 2014. Other reversal projects such as the Longhorn pipeline and the Keystone XL southern leg are expected to start operation 1-H of next year.
The DOE/EIA reported that Nat Gas storage fell -18 BCF to 3 911 BCF in the week ended 9 November. Stocks were +71 BDF higher than the same period last year and +209 BCF above the 5-yr average of 3 702 BCF.
The Baker Hughes NYSE:BHI reported that the number of Nat Gas rigs gained +4 units to 417 in the week ended 15 November. Crude Oil rigs increased +1 unit to 1 390 and Miscellaneous rigs slipped -2 units and the total number of rigs added +3 units to 1 809. Directionally oriented combined Oil, Gas, and Miscellaneous rigs stayed flat at 194 units while horizontal rigs rose +1 unit to 1 105 and vertical rigs gained +2 units to 510 during the week.
The Overall Technicals
Comex Gold (GC)
Gold lost momentum after tapping 1739.4 and moving lower from there.
Initial bias is Neutral this week for some more sideway trading, but we may see another rise remain as long as the minor support to 1703.0 minor support holds. A move above 1739.4 will extend the rebound from 1672.5. Expect to see strong resistance ahead of 1798.1 bring on another decline. A move below the minor support at 1703 turn the bias back to the Southside for 50% fibo retracement of 1526.7 to 1798.1 at 1662.4 and below.
The Big Picture: price actions from the high at 1923.7 are seen as a medium term consolidation pattern. There is no indication that such consolidation is done, and more range trading could be seen. The downside of any falling leg should be contained by 1478.3/1577.4 support zone and bring on a rebound. A break of the resistance zone at 1792.7/1804.4 argues that the long term up trend is possibly resuming for a new high above 1923.7 and higher.
The Long Term Picture: with support in place at 1478.3, there is no change in the long term Bullish outlook in Gold. While some more medium term consolidation cannot be ruled out, I still anticipate an eventual break of 2000 psych mark in the long run. Stay tuned…
Comex Silver (SI)
Silver lose momentum after tapping 32.93 and initial bias is Neutral this week for some sideway trading.
Note: a further rise remains in favor as long as minor support at 31.63 holds. Break of 32.93 will extend the rebound from 30.65 short term bottom to 55-Days EMA now at 33.18 and above.
On the downside: A break below the minor support at 31.63 will turn bias back to the Southside. A clear break of 30.65 will target 61.8% Fibo retracement at 29.651 and below.
The Big Picture: as long as resistance holds at 37.58, price actions from 26.105 are viewed as a consolidation pattern, meaning the down trend from 49.82 high is not over yet and an new low below 26.105 is favored. A break of 37.58 will dampen this Bearish POV and could bring stronger raise back to the high at 49.82.
The Long Term Picture; the Big Q remains, is 49.82 is a medium term or long term top? With 61.8% Fibo retracement of 8.4 to 49.82 at 24.22 intact, price actions from 49.82 could eventually be a consolidation only. And a break of the Key resistance at 37.58 significantly increases the odds of a new high above 49.82. Stay tuned…
Nymex Crude Oil (CL)
Crude Oil was in sideway trading above 84.05 last week and outlook is unchanged.
More consolidations would be seen in near term, but it is staying well inside near term falling channel. And after all, as long as 89.22 minor resistance holds, deeper decline is still in favor. A move below 84.05 will target 80 psych mark next. I do expect strong support ahead of 77.28 to bring rebound. A clear break of 89.22 should indicate short term reversal and target 93.66, the resistance, and higher.
The Big Picture, the current development suggests that price actions from 114.83 are a triangle consolidation pattern. The fall from 100.42 is likely the 5th and the final leg of the consolidation. And the downside should be contained above 77.28 and bring an upside breakout. A break of 110.55 strongly suggest that whole rebound from 33.29 has resumed for a move above 114.83.
The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with 1st wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it is the 2nd wave of the pattern. Crude Oil could make another high above 114.83, I still see strong resistance ahead of 147.24 to bring reversal of the consolidation pattern. Stay tuned…
LTN Hot List
The LTN “Hot List” contains potential investment opportunities suitable small, mini and micro cap portfolios.
American Estates Management Company (PK: AEMC) provides mining and mineral processing engineering services; geological and environmental services; marketing, project development, project management, and mineral resource management services. American Estates Management Company markets mineral and metal products and equity in mineral and metal projects, and partners in the development of mineral assets and metal production facilities. American Estates Management Company has developed business activity in North America, South America and Asia.
Marketing Mineral Real Estate & Mineral Resources
Mineral Lease & Mineral Resource Sale Negotiation
Mineral Lease Management
Monitor Exploration & Mining Activity
Verify Royalty Payments
Develop Real Estate & Mineral Resource Databases, Estimates & Maps
Valuation of Mineral Real Estate & Mineral Resources
Target Price: 0.50
Trai Thien USA Inc (PINK: TRTH)
Trai Thien USA is a fast-growing Vietnam-based dry bulk shipping company operating a 21,990 DWT fleet comprised of six geared bulk vessels specializing in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.
After China, the primary sources of future bulk demand are India, Brazil and Vietnam. The region contains three of the four global BRICs (Brazil, Russia, India, China), seen by economists as the future growth leaders in the world economy.
The Asia Pacific region accounts for 60% of the world’s population and almost 70% of world sea-borne trade in bulk commodities.
In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia.
The Company’s Vietnam-based operations are located in Ho Chi Minh City, which together with the surrounding areas, accounts for more than seventy percent of Vietnam’s total annual cargo traffic.
Pink Sheets: TRTH
Current Price: 0.10
Current PE: 4.0
Revenue Growth: 148%
1 yr Target Price: 1.00
Analysts Rating: Strong Buy
Red’s Bull Trade Alerts and Option’s Alerts are suitable for Big Cap portfolios
See them daily at www.liveradingnews.com
Red’s Rules to always play by…
Do what they do on Wall St. and not what they say; that means tune out the “Noise”.
Some folks like to buy stocks because they are upgraded, or sell stocks because they are downgraded; that’s the wrong approach. Learn how to evaluate stocks for yourself. It is not a difficult process; the steps are 1) check the volume for a buying or selling patterns, 2) recognize support and resistance levels and utilizing key charting patterns. I use www.stockta.com for my data. Knowledge is Power (and Money)
Over my 30+ yrs playing the stock market in earnest, I have learned that there are winning stocks that most traders and investors completely ignore and abhor. And when played right, these overly unappreciated issues often lead to huge gains, but it is all about timing.
There is no mystery here; you all know and/or have heard about “penny stocks” i.e. those that trade under USUS$5.00/shr on US markets (10’s of thousands of stocks trade on other world markets under USUS$5.00/shr and are not referred to in the same pejorative manner). This is just a label (designed to diminish their value and keep you away, IMO).
The fact is that there are many, many studies made over the years that prove that these stocks outperform the overall market, and when there is a steady new Bull Market, the little stocks (small caps, micro and mini caps) lead the Charge.
As a class, they are the most undiscovered and underappreciated sector of stocks and the sector where the biggest chance ends up big winners on a consistent basis. I call them Little Gems; they are indeed Wall Street’s buried treasure for those who wish to go treasure hunting.
Here, in the RedRoadmaster, I work to uncover solid, moneymaking companies whose shares are grossly undervalued and virtually undiscovered, and they sell for USUS$5 or less a share.
And do not forget to always include some small, mini and micro cap (pennies and juniors) sues in your sights; they can give you explosive percentage returns like no others.
Savvy traders do not wait for the stock market to hit bottom, recover or get toppy; they do not double down or resort to tricky, desperation moves. They make simple moves on good data and bank some gains.
Do not think get rich – think get rich slowly; it works.
Even if you know absolutely nothing about how to start making a living in the stock market, and want to learn how to do it, the first step is to learn from someone who knows how to do it successfully. The stock market is about success, and the lifestyle that comes with it, but it must be done carefully, both by picking the issues and in the trading of them, because one wants to make money doing it independently and without stress.
You can’t reverse your “bad plays”. Breathe through your nose, count to 10 and move ahead. Go forward, and only focus on what the opportunities are in front of you to win in the stock market game. You do not live in the scrapbook, and always take what the market gives.
A journey of a thousand miles begins with the first step (Confucius); Download and read and study “Knowledge is Power,” my e-Book, its Free.
Always remember that we look at the risk first and decide how to manage it before ever entering a position. Yes, losses will be incurred; it is part of this and any business, and not a bad thing if they are controlled.
Again, think “get rich steady” and not “get rich quick” and think Education!
The Bull is charging, and this perhaps this the best investing scenario since the early 80′s. It is happening now and savvy players and investors are positioned and in the action. Remember to always be nimble and take what the market gives.
Have a great week, and stay tuned.
Heffernan Capital Management
Business Development Director – Private Client Group,
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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