10/18/2008 - Long & Short Ideas for Monday (Update 1)

Long Ideas :

1. Level 3 Communications Inc. (LVLT)
   
   The LVLT daily chart below shows that recently the prices form a falling wedge pattern, it usually will be followed by a reversal movement. Both the W%R and RSI form a positive divergence as well after about one month oversold condition. The over all options implied volatility of 138 is above its 26-week average of 82, it's suggesting larger price movement. The trading volume has increased for three consecutive days.
   
   Chart courtesy of Stockchart (Click to enlarge)


2. Yingli Green Energy Holding Co. Ltd. (YGE)
   
   A nice double bottom chart! But we should still wait for a confirmation candle tomorrow. The Company announced that its principal operating subsidiary in China, Baoding Tianwei Yingli New Energy Resources Co., Ltd., has won a bid to supply approximately 1.5MW of PV modules to China Mobile Communications Corp., the largest mobile phone operator in China. The bid accounted for over 31% of China Mobile's total recent PV module procurement. Tianwei Yingli expects to enter into a definitive supply contract with China Mobile in late October or early November 2008.
   
   Chart courtesy of Stockchart (Click to enlarge)


3. Ultra Financials ProShares (UYG) and Ultra Basic Materials ProShares (UYM)
   
   Buffett said, "Buy American!"
   
   Tightening credit market has been eased by the global action to print money. The fed actually has power to print money and then he floods the market by money just to prove that his research about depression was correct. He is actually insane.
   
   Image courtesy of Jesse's Café Américain
   Lets print money! Buy UYG & UYM
   
   Chart courtesy of Stockchart (Click to enlarge)
   Chart courtesy of Stockchart (Click to enlarge)


4. NGAS Resources Inc. (NGAS)
   
   The sixth well has been on line for over 30 days, with average daily production rates of 246 Mcf. NGAS announced that it began flowing gas from its New Albany shale prospect into the Texas Gas interstate pipeline. Look at the nice support. The prices are leaving the lowest level area by increasing volume.
   
   Chart courtesy of Stockchart (Click to enlarge)


5. Zoltek Companies Inc. (ZOLT)
   
   The Company reported the successful start-up of acrylic precursor and carbon fibers manufacturing operations at its Zoltek de Mexico facility and provided updates on recent results and its business outlook in achieving its strategic objective of commercializing carbon fibers as a widely used building material. The chart already shows the nice gap up.
   
   Chart courtesy of Stockchart (Click to enlarge)

Short Ideas :

1. UAL Corporation (UAUA)
   
   Die air transportation service! Recession suddenly already evaporates consumer's wallets. The recent pullback will be rejected immediately. The triple top candidate will be formed.
   
   Chart courtesy of Stockchart (Click to enlarge)


2. Intuitive Surgical, Inc. (ISRG)
   
   The company reported better than expected Q3 results but is being punished Friday on concerns of a difficult economic environment going forward. The recent candle formation is bearish evening star, it's a strong signal while W%R and RSI indicate a double top bearish pattern, it's a strong signal, too.
   
   Chart courtesy of Stockchart (Click to enlarge)

Related Posts :

1. 10/17/2008 Market Recap - Another Extremely Volatile Trading Session (Update 2)
2. Overnight Libor Starting to Look Like Overnight Libor Again

Source :

Theflyonthewall.com

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

Credit Do's and Don'ts

Image courtesy of USA Today (Click to enlarge)
Moody’s Investors Service, said credit card charge-offs rose 48 percent in August, on Friday. And according to USA Today, Tighter credit standards are forcing many car buyers to put down more cash up front to get a loan. The average down payment last month was $3,108, up 42% from $2,194 in the same month two years ago as reported by Edmunds.com.

Image courtesy of Union-Tribune (Click to enlarge)
Here is some tips from Jennifer Davies and John Wilkens that suggest to the gentle readers what should be done and not be done as credit standard is being more tightened meanwhile consumer spending is getting squeeze :

1. Do keep your monthly credit card balances below 50 percent of your credit limits. Thirty percent is even better.


2. Don't be late on your credit card payments. If you are even a day late, it can damage your credit score in these tough economic times.


3. Don't hastily cancel bank credit cards. Fewer credit cards mean a lower credit limit, which could hurt your debt-to-credit ratio and shorten your credit history. The longer your (good) credit history, the better.


4. Do play hardball with credit card companies, pushing for better rates and higher limits. Threaten to take your business elsewhere (if you really can) to get the best deal.


5. Don't tell credit card companies you lost your job or have other hardships. “They don't care, and anything you say can and will be held against you,” says Scott Bilker, founder of debtsmart.com.


6. Do pick a credit repair company carefully. Most credit fixes you can do by yourself, but if you want the extra help go to ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm for some tips on how to steer clear of potentially shady credit repair companies.


7. Don't take a 401(k) loan to pay down debt or make new purchases. If you get laid off, for instance, you'll have to pay the entire debt immediately. Plus, the funds in your 401(k) are protected from creditors but once you pull out cash, it's not.


8. Do lower your expectations when it comes to car loans. You may not be able to get a brand new BMW but you could qualify for a pre-owned Honda Accord.


9. Do file the free application for student aid at fafsa.ed.gov to find out your eligibility for student loans through the federal government as a first step.

Image courtesy of Union-Tribune (Click to enlarge)
Related Posts :

1. 10/17/2008 Market Recap - Another Extremely Volatile Trading Session (Update 1)
2. The Next Meltdown: $950 bn Worth of Outstanding Credit-Card Debt—Much of it toxic

Sources :

1. USA Today: Car dealers demand more cash for down payments, October 17, 2008
2. The Union-Tribune: Credit squeeze literally hits home as card limits, equity lines pared, October 12, 2008

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

10/17/2008 Market Recap - Another Extremely Volatile Trading Session (Update 2)

Chart courtesy of http://finance.google.com (Click to enlarge)
The market spent the first half of Friday's session moving between gains and losses after the government said negatively to a report from the Commerce Department showing a steep drop in housing starts in the month of September to the lowest pace since early 1991. The Dow fell 127.04, or 1.41 percent, Friday to 8,852.22, after falling 261 points in the early going and rising 302 points - a 563 points range. Broader stock indicators also showed more modest declines. The Dow posted a weekly gain of 4.7 percent, while the Nasdaq and the S&P 500 closed up 3.7 percent and 4.6 percent, respectively.

Investors' mood seemed to pick up later in the session as lending rates for bank-to-bank loans edged lower, indicating that some bank fears about not being repaid by borrowers are easing. Demand for safe-haven investments like Treasury bills also decreased. Economic readings that appeared to trouble the market early in the session seemed to lose their importance as investors looked to improvement in the credit markets. The final hour of trading again proved pivotal as in much of October; stocks fluctuated as investors squared away positions for the week.

Demand remains high for Treasury bills, regarded as the safest assets around, an indication that there is uncertainty lingering in the markets. The three-month Treasury bill Friday yielded 0.82 percent, up from 0.47 percent on Thursday. That indicates a let-up in demand, though the yield has not surpassed 1 percent in more than a week.

Table courtesy of The Big Picture (Click to enlarge)
The yield on the benchmark 10-year Treasury note fell to 3.93 percent from 3.97 percent late Thursday. The Commerce Department reported that housing starts fell more than 6 percent in September to an annual rate of 817,000 units. The figure is lower than the 880,000 units forecast by Wall Street economists surveyed by Thomson/IFR. Building permits also sank.
The report was yet another piece of evidence that the nation is struggling with a weak economy that, if the financial crisis is not solved, could weaken.

According to The New York Times, Moody’s Investors Service, the ratings agency, said credit card charge-offs rose 48 percent in August, according to the latest data on $435 billion in credit card loans that back securities that Moody’s rates. Moody’s said Thursday that it expected charge-offs, or loans written off as not being repaid, to continue to rise throughout 2009, eventually surpassing the peak rates seen during past recessions.

Table courtesy of http://www.creditcards.com
The August charge-off rate — which measures the amount of balances written off as uncollectible as an annualized percentage of total loans outstanding — surged 48 percent, to 6.82 percent, compared with 4.61 percent in the same month a year earlier, Moody’s said in a report. It was the 20th consecutive year-over-year increase in the charge-off rate. The charge-off rate was 6.36 percent in July.

Here is the summary of this week: the Dow soaring 936 points on Monday, slipping moderately Tuesday, sinking 733 points Wednesday, rallying 401 points Thursday and then slipping moderately again on Friday.

Chart courtesy of Stockcharts (Click to enlarge)
The last week low was tested successfully yesterday and a double bottom bullish reversal was formed but a follow through is still needed.

Chart courtesy of Cobra's Market View (Click to enlarge)
If the risk-aversion continues, investors will liquidate their positions. Unwinding the carry trade benefits the yen, and in turn, this fund. Some experts and strategists feel that the yen will continue to be the strongest currency in the world. We should watch out while the yen has “safe haven” appeal, it’s not like other safe havens in that there’s no explicit guarantee backing a currency. The yen is backed by Japan’s account surplus, which remains strong, although it’s shrinking.

Chart courtesy of ETF Trends (Click to enlarge)
Accordingly, CurrencyShares Japanese Yen Trust ETF (FXY) can be considered to be bought.


Related Posts :

1. 10/16/08 Market Recap-Extremely Volatile Trading Day(Update 1)
2. Never Fight the Fed, Treasury, ECB, BOE and Bank of Japan!
3. Overnight Libor Starting to Look Like Overnight Libor Again
4. Warren Buffet : Buy American. I Am
5. The Next Meltdown: $950 bn Worth of Outstanding Credit-Card Debt—Much of it toxic

Sources :

1. The New York Times: Credit Card Charge-Offs Rise 48% in August, October 17 2008
2. ETF Trends: ETF Spotlight: CurrencyShares Japanese Yen (FXY), October 17, 2008 03:00 pm

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

Never Fight the Fed, Treasury, ECB, BOE and Bank of Japan!

Image Source Unknown
I summarize what John Mauldin has written on his article yesterday. If you try to evaluate your investments using the same metrics you've always relied on - P/E ratios, market share, interest rates, etc. - you're going to be as successful as a football-turned-baseball coach evaluating a pitcher by the number of touchdowns he throws. The rules are changing, gentle reader, changing at least for awhile from market-driven inputs to government-driven inputs. If you try to apply what you know from the "old game" without understanding that you're playing a "new game," the rules might not make sense.

How George Friedman and his company Stratfor looks at economics is how they look at Political Economy. And from here on out, it's political economy that's going to be driving markets. If the old rule was "Never fight the Fed." It's now, "Never fight the Fed. And the Treasury. And the ECB. And the Bank of England. And the Bank of Japan...." You get the point.

Economics, war and politics are not separate spheres. They are a single entity together constituting the reality of the nation-state. There are those who argue that economic life should be left alone, not interfered with by political or military power. We won't engage in that argument. What we know, empirically, is that political and military power constantly impinge on economic life, and vice versa. It is impossible to imagine war without taking into account politics and economics. It is impossible to think of domestic or foreign policy without considering economic and military issues. By the same token, it is also impossible to think about economics without thinking about military and political matters. If it can be made otherwise, then someone will do so and then we will change our opinion. Until then, we cannot think of the free market as a meaningful independent reality. It is always shaped by other factors. Perhaps it should be otherwise. It isn't.

A general who tries to wage war without consideration of political ends and economic means is going to fail. An economist who tries to understand and predict the behavior of the economy without a comprehensive understanding of the political and military realities which shape the economy will not do particularly well.

A convoy of Russian troops makes its way through the Caucasus Mountains toward the armed conflict between Georgian troops and separatist South Ossetian troops, in the South Ossetian village of Dzhaba on August 9, 2008. Georgian President Mikheil Saakashvili declared a "state of war" as his troops battled it out with Russian forces over the breakaway province of South Ossetia. (Dmitry Kostyukov/AFP)

Stratfor's focus is on geopolitics. That means that it focuses on the behavior of human societies organized into complex, geographically defined systems. In our time, that means that we study nation-states. In order to understand the behavior of nation-states, it is necessary to focus on three major dimensions: economics, war and politics. The nation has to be studied in terms of producing wealth, defending (and stealing) wealth, and the internal and external relations by which humans shape their lives. The price that the Geopolitician pays for a comprehensive view of reality is a forced simplification: there is just too much happening to state it comprehensively. Geopolitics is the search for the center of gravity of reality, those overwhelming forces that drive the system in the direction it is going to take. These forces are never solely political, military or economic in nature. Usually, they are in plain sight and are overlooked because, being simple, they appear insufficient. Indeed, they may be insufficient, but others can add the details. Our goal is to lay bare the essentials and identify the general direction in which things are moving.


Related Posts :

1. Overnight Libor Starting to Look Like Overnight Libor Again
2. Chiming in On the Baltic Dry Index
3. Warren Buffet : Buy American. I Am

Sources :

John Mauldin & John Friedman of Stratfor: The International Economic Crisis and Stratfor's Methodology, October 16, 2008

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.