Buzz on the Street: Yes, We're Sick of the Fiscal Cliff, Too
A look back at the happenings on Wall Street this week, as seen by Minyanville's Buzz & Banter.
All day and every day, some of the stock market's best and brightest traders and money managers share their ideas, insights, and analysis in real-time on Minyanville's Buzz & Banter. Below are some excerpts from this week's Buzz. Click here for a 14 day free trial.
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Monday, December 24, 2012
Apple: What the 10-Year Monthly Chart Says
I was reviewing some select tech stock charts and found myself hung up on Apple (NASDAQ:AAPL). Yeah, I know. It's everyone's pet project. But I was having some trouble deciphering the near-term action, so I decided to zoom out… a lot. I ended up with a 10-year monthly chart that, in the end, I found quite refreshing. And my brain thanked me for the relief.
Here are a couple key takeaways:
1. Apple's recent undercut of the $500 mark touched and bounced off the 20-month moving average support. Over the past 10 years, this moving average has been broken once (confirming a deeper sell-off) and has been supportive twice (in 2006 and 2008). But I like the comparison to 2008 better; it held initially, producing a nice "backtest" rally, before failing and confirming the aforementioned deeper sell off. Either way, the 500 mark looks like an important toggle to watch on a closing basis.
2. The stock has room down to $425-$450 long-term uptrend support. This doesn't mean that it is magnetized to this level on an immediate basis, but the trend line is there and rising… for now or later. If a break of $500 is sustained, then anything can happen. I have a rather small long position in AAPL (initiated today), but will look to add closer to $500, with the idea of catching an oversold rally that could give the stock some breathing room and put some change in my pocket.
The market is still sending mixed signals, so I am keeping positions small looking to add or cut bait as the price action dictates. Trade safe, trade disciplined.
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Herbalife Strikes Back, Will They Guide Up?
Herbalife (NYSE:HLF) is trading higher on news that it is going to be buying back more stock than previously expected, and a hint at a possible guidance increase:
The company will hold an analyst day on January 10, 2013, at which time management will discuss the following points:
1) Comprehensive response to investor questions on its business model;
2) Regulatory perspectives;
3) Update on the business and strong growth prospects.
Does 'update on the business' mean they will announce better-than-expected Q4 earnings?
Herbalife also said it "expects to exceed its previously announced quarterly guidance of $50 million of the repurchase authorization in upcoming quarters." (note: company has $950 million to go on its share repurchase program.
And finally, Herbalife said it has retained investment bank Moelis & Company has a strategic advisor. Note, Ken Moelis is a big-time LBO guy, and this has to have the Herbalife shorts worried about the company going private. Smart move by Herbalife here, even if it's just a scare tactic.
It will be interesting to see how the stock reacts today.
Tuesday, December 25, 2012
MARKET CLOSED FOR HOLIDAY
Wednesday, December 26, 2012
Top Techs -- Facebook Makes Both Lists
Facebook (NASDAQ:FB) -- Facebook makes my High-Conviction List and also makes my Top Spec list. I certainly believe FB will retake the $38 IPO range and that would imply a gain in the 30%+ range, which could get it onto my Top Spec list. However, I don't see the stock stopping in the $33-38 area where many analysts do. Frankly, I see the stock getting to 50% of total revenues being mobility-based by the end of 2013 (and likely earlier) and to me, that means the stock should be closer to $50 than that $38 IPO price. Thus, a potential near-100% move should be enough to get FB on both lists.
As an aside, by the time I reach 10 names on each list, GOOG might just be on both too. Right now, I'm not sure Google (NASDAQ:GOOG) makes my Top Spec list.
No Ire in Ireland
Back from the Brink in Brogue?
The Pogues Sang Some Upbeat Songs As Well ("Fiesta")?
Off the Radar Screen and Off the Charts?
I had more potential titles than I knew what to do with for this one little chart, but thought it would be a nice chart for the holiday, as it is upbeat. The performance of the Irish 5% of 2020 bond is almost extraordinary. Not only did you get a total return of 35% over the course of the year, it was with virtually no volatility. It doesn't seem as though it was ever down more than 3 points in any sell-off. A simply exceptional return and a pleasant reminder that many of the best risk/reward opportunities come where you least expect. I totally focused too much on Greece, Spain, and Italy, only to really miss this trade.
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Financials Consolidation Healthy Thus Far
Last week, I buzzed about the Financials' (NYSEARCA:XLF) need for continuation/follow through...
Well, we've now seen some healthy consolidation (rest), but are still waiting on the follow through.
To keep the consolidation in perspective (and under a proper risk lens), I am focusing on the breakout level as initial support, with stronger support coming in around $16. Below that, and we get a yellow flag.
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Thursday, December 27, 2012
This morning, Bloomberg has a story on goodwill writedowns and what companies are most likely to take them.
I would note this comment from the story:
A goodwill writedown "calls into question managers' strategic plans and the way they went about executing those plans," said Patrick Hopkins, an accounting professor at Indiana University in Bloomington and a member of a Financial Accounting Standards Board advisory council. "If you start to call into question that, then you're starting to call into question management's vision."
Maybe it,s just me, but it sure feels like the tide is turning on goodwill writedowns.
As I look out into 2013, companies are going to have a much harder time suggesting that goodwill writedowns should be ignored because they are just "noncash accounting charges."
Then again, I have never thought that.
Chicken Soup for the Soul, er, Stock Market
They say be careful for what you 'say' for it might come true; and indeed it has. In one of my Buzzes last week, I wrote, "Jamie had pneumonia, Ruby had croup, Mug had bronchitis and Gavin a nasal infection; anyone wanna guess whose up next?" The answer, of course, is me; I've pretty much spent the last six days in bed with something that feels like a truck hit me. It's fine, really; not gonna complain about sleeping 15 hours a day.
We got ahead of the pullback in Research In Motion (NASDAQ:RIMM) prior to the post-earnings whack, offering:
RIM reports on Thursday, and should the stock gets smacked -- which wouldn't be a shocker given the 130% rally since September (which was when Apple topped, by the way) -- I would be a buyer (at the right price) into the January 30 launch of the new operating system, and perhaps beyond.
What I wanted to share on Monday--after the almost 25% decline in the shares--but missed the market close by a few minutes--was that Research in Motion ran from $6 to $14 in a few months--quite the move--and the $10 level was a 50% Fibonacci retracement that would likely provide support. The stock pretty much got there--$10.60, anyway--and subsequently bounced 14%. I don't like rear-view mirrors either but it's a level to monitor, particularly as January 30th launch of the BB10 edges closer.
(In full disclosure, I do not own the stock as we are involved with the company and I prefer to err on the side of caution as perception is reality in the marketplace).
Away from that fray, S&P (INDEXSP:.INX) 1400 (1390) and NDX ((INDEXNASDAQ:.IXIC) "right here" (per the chart below) are levels to monitor as the Fiscal Cliff concerns drag on the market. Worse, T-3 is approaching, so any efforts to (cough) help prop up the market could be nearing an end. If you're still trading, chances are it's more of a need than a want (through the eyes of a fund manager). All I can say is be careful both ways, as emotional tapes are tricky tapes.
Still long some cannabis plays, with some S&P February out-of-the-money puts against it. House money--but real money--either way, and I figure this could/should be the last time we speak before baby new year arrives. I hope you had/have a healthy and happy holiday stretch, and that 2013 is our best year yet.
May peace be with you.
Is the Fear Index Finally Registering Fear?
The VIX (^VIX) has broken out of the June-Dec portion of its base pattern as its hurdles the prior rally high at 19.64 on the way to today's intraday high at 20.90.
The ability of the VIX to close today's session above 18.00 will preserve its budding "buy signal," and increase potential for additional weakness in the cash SPX towards a test of its rising 200 EMA, now at 1385.
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Friday, December 28, 2012
ES View: Buy Channel
ES VIEW: This buy channel failure measures to 1376.75. Due to Washington Whipsaw, we do not believe it will get there today and are trading from the long side this morning.
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Buzz Op-Ed: Facebook Breaking Out (LOL)
Just when I thought it was safe to put away the zit cream; Facebook (NASDAQ:FB) appears poised to break out in the next few sessions.
The 60-minute chart shows a bull pennant having formed over the last two months. For this formation to be validated, a breakout (LOL) must occur in the next few sessions before 2/3rds of the pennant is reached.
A measured move projection targets approximately the $40 area over the coming weeks. I have no position in FB at the time of writing, but will be watching for opportunities to initiate, long or short.
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