Wednesday, June 30, 2010

S&P500 Breaks 1,040...Heading Lower

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Well...the line in the sand finally gave way as last hour selling plunged the markets lower this afternoon. As the charts called for, but was to be expected with an ADP report of 13,000 jobs created in prelude to Friday's Jobs Report from the BLS. Along with end-of-quarter selling and a 3 day holiday weekend. As I type more bearish news hitting the wires...Chinese PMI comes in slightly disappointing, futures are down eight link Expect the next few days to be volatile and brutal...but it does present opportunity.

The gang at Fast Money are looking at materials, energy & financials in the second half of 2010 to outperform. Love it, Itz Pix is weighted toward those sectors with RIG,PDE,SU,PGH,PWE,WLT,UCO,FCX,SLW, AUY,JPM,C,& LNC.
Suggest everyone read a report posted today from my Twitter friend Doug Kass >>READ

Tuesday, June 29, 2010

Line In The Sand

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The S&P 500 briefly broke below the all important 1,040 support level late Tuesday afternoon, but managed to close above. The $CPCE Equity Put/Call Ratio 50 & 200 ema's are rising, any continuance in the moving averages may send the $SPX lower. The Volatility Index $VIX is also rising- bearish. Stocks trading over their 50 day moving average is at a low (contrarian bullish signal), but the longer term 200 day $SPXA200R  continues to decline (bearish). The S&P posted its lowest close since October at 1041.24.  S&P 1043 is the 50% retracement level of the July to May rally. June 2009 was the first material decline after the March bounce. The 1042 level is two standard deviations away from the normal S&P trend. Lastly, the 1040 low in May was book ended with a 1044 low in February and a 1042 low in early June. To put it simply the 1040 level has been a key pivotal point on three prior dips and the tide was turned. A breakdown below 1040 would be a major sentiment change from minor correction of -14% to a return to a bear market. So 1040 is the 'Line in the sand' some technicians are calling the triple bottom a bullish head fake. With that said the Q2 earnings reports will be key as well as several all important economic reports: Jobs Report.
As Abby Joseph Cohen stated this week on CNBC, the markets have priced in a 'slow-down' and valuations have never been better.


Another possibility is the Head & Shoulders Pattern.

Same Zell was a guest host on CNBC Tuesday morning, he said " The November election is the most important ever in my life time." Mr. Zell is spot on...midterm elections, will be a defining referendum between the progressives and their more fiscally conservative counterparts. If the progressives “win,” That will place a big headwind into the economy and the markets. Should the conservatives win, we'll most likely see a 'Clinton' style shift to the middle from Obama, which will be very favorable for Wall Street.

S&P500 Flirting with 1,040

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Double-Dip, slowdown or end of quarter selling or is it the upcoming June Jobs Report on Friday? Lots to worry aboutas traders/investors sell this market. Just listened to James Cramer talking to Erin on CNBC, he said that this market is overvalued??? WHAT!? trading at 12 times is overvalued, Abby Joseph Cohen just yesterday (see video below) stated that the market is a good buy and a better value than the previous decline. She has a year end target on the S&P500 of 1,250. As I type the $SPX is trading at 1,038. I would say that even if it closes under 1,040 it needs to stay ther for at least 24 hours. Next key levels of support are 1025 & 980.

Silver Wheaton SLW & Research In Motion RIMM

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China Slowing Down

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Futures are pointing to a substaintial decline as news from
The Conference Board Leading Economic Index (LEI) for China increased 0.3% in April to 145.0, following a 1.2% increase in March and a 0.4% increase in February. Three of the six components contributed positively to the index in April. >>link

WATCH the 1040 level on the S&P500.
Key levels to Watch:
$INDU 9,800; $SPX 1,040; $COMPQ 2.150; $WLSH 11,000 see charts

Monday, June 28, 2010

Itz Video Pix

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Itz Video Pix worth watching: CNBC had a few excellent reports today on the markets & commodities...

Sunday, June 27, 2010

Itz Weekend Review

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The week gone by started out with the Q1 GDP revision coming in at +2.7%, estimates had called for 3%, Q2 numbers due out July 30th. U.S. debt will top $13.6 trillion in 2010 and rise to 102% of GDP by 2015. By 2015 the interest payments alone will be more than $1 trillion a year and 30% of U.S. government revenue. On top of that the Bush tax cuts will expire and the Obama administration is most likely not going to extend them. So expect investors to take any capital gains profits before the year's out.
We did have some good news though, as Consumer Sentiment for June the number improved to 76.0 from the first June reading of 75.5, the highest since it bottomed in November of '08.
Banks stocks rallied Friday as financial regulation reform bill looks like it will pass this week. The Volcker rule is in the bill but it was watered down slightly to allow banks some leeway in trading for their own benefit. They can speculate with up to 3% of their capital in private equity and hedge funds. Banks are also allowed to deal in derivatives in order to hedge their own risk but not to speculate on risk as a trade.
The risk of a possible hurricane was credited with pushing crude oil prices +3% higher to close just under $79, helping the Itz Pix UCO position. Earnings will be in force after the Fourth of July holiday, the honeymoon is over.

Research in Motion (RIMM) reported Thursday, beating on earnings per share but disappointing on revenue and sales. The stock took a big hit - falling below the support level of $55. The company now needs to bring to market it's new OS & touch screen products and compete with Apple & Android phones if it expects to recoup it's share price. The valuation is half of Apple's but many investors believe it cannot compete as it once did. I'm giving them one more quarter to prove if they have what it takes. Don't count them out just yet, there also is rumor of a possible take over?

Itz Pix favorite performer year to date has been Silver Wheaton (SLW) which appears to be set to breaking out of resistance soon. The Point & Figure (PnF) chart has a bullish price objective of $27.50.


Friday, June 25, 2010

Silver Wheaton Review

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Itz Stock Chartz has been bullish on Silver Wheaton (SLW) and silver over gold for 2010 based on the metals value as a precious metal & also on its industrial usage...the best of both worlds. A new ETF came to market this week SIL & Silver Wheaton is ranked as it's 2nd largest holding. The stock has held above it's 13-ema near term and is once again approaching the $21.50 resistance level. Itz believes it will breakout here and rally higher, the Point & Figure chart (PnF) price objective is $27.50.
From Wall Street Journal: Silver Expected To Follow Gold Prices And To Rally Faster: Industrial Use Of Silver To Be The Price Foundation As World Economies Pickup ~link~

Analysts Lower Price Target For Research In Motion (RIMM)

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Below is a report from Barron's Tech Trader Daily link

Research In Motion: The Street Is Getting Increasingly Worried ~ By Eric Savitz

Research In Motion (RIMM) shares are going to lose considerable ground today after the company provided a May quarter earnings report that the Street did not like very much. While the company reported EPS that beat estimates, and gross margin exceeded expectations, the company missed at the top line, and came in at the bottom of the guidance range on both units sold and new subscribers added. Further irritating matters, the company said that it has significant new phones coming in the current quarter, but gave few details. But RIMM is not Apple; rather than adding intrigue, the lack of information makes investors in the company even more anxious about the ability of the BlackBerry to hold market share in an increasingly competitive smart phone sector.

Here’s a quick round-up of some of what the Street is saying about the stock this morning:

James Faucette, Pacific Crest: “The increased competitive environment is beginning to inflict measurable tolls, including rapidly falling replacement rates and a flattening of international shipment growth,” he writes. “We believe the replacement rate has fallen precipitously over the past two quarters while international growth has flattened…Unless the company is able to at least maintain share at the high end of the mobile phone market, it will see rapid margin deterioration. Meanwhile, early previews of the new products have pointed to less revolutionary improvements.” He keeps his Sector Perform rating, but warns that “risks mount.”
Simona Jankowski, Goldman Sachs: She repeats her Sell rating. “RIM has now missed top-line expectations for three of the last four quarters, in our view demonstrating the building competitive pressures on its business from the iPhone and more recently from Android,” she writes. “We estimate that net subscriber additions in North America declined on a sequential basis, which we attribute primarily to the success of Android-based phones, such as the Motorola Droid and the HTC Incredible at Verizon.”

Jim Suva, Citigroup: Repeats his Sell rating, while cutting his target to $50, from $55. “May could very well mark the peak quarter for RIMM’s EPS,” he contends. “While almost all other technology companies are facing decreasing EPS growth rates, we believe RIMM will soon face declining EPS.”

William Power, Baird: Cuts rating to Neutral from Outperform; target cut to $59, from $88. “Based on our store visit findings and product roadmaps, we expect further share gains from Android-based devices, as well as the iPhone,” he writes. “New BlackBerry devices should help, but we increasingly fear it may be too little too late to turn the tide in the U.S. Despite what appears to be an attractive valuation level, we expect competitive concerns to continue to overhang the shares.”

Matthew Sheerin, Thomas Weisel Partners: Maintains Overweight rating, but cuts target to $82, from $94. “Given its recent track record…we can see why many investors remain skeptical, especially in light of continued competition from Apple and increased pressure from the Android camps. Still, while we are taking a more conservative stance on unit and margin assumptions, and thus trimming our forward estimates, the stock appears still quite inexpensive.”

Phil Cusick, Macquarie: Keep Neutral rating, but cuts target to $72, from $80. “We expect to see a new slider device, an OS refresh and possibly a tablet device in [the 2010 calendar second half], but expect shares to remain range-bound until investors can see what [CEO] Jim [Balsillie] sees to gain confidence that high-end products can stabilize metrics.”

Mike Abramsky, RBC Capital: Maintains the stock’s Top Pick status, but cuts target to $90, from $120. “The onus is on RIM to execute and regain investor confidence; we expect valuation to remain rangebound near term on competitive concerns, but for sentiment to improve with rising visibility to improved competitive position and execution,” he writes. “We are trimming our target to reflect market revaluation of RIM’s stock into a peer group of handset vendors facing similar pressures.”

Ittai Kidron, Oppenheimer: Maintains Outperform rating, but asserts that “If RIMM stumbles, we see a long, unattractive journey of playing catch-up.”

Kulbinder Garcha, Credit Suisse: Keeps Outperform rating, but cuts target to $75, from $100. He asserts that falling prices will be offset in the months ahead by accelerating sales volumes.

Brian Modoff, Deutsche Bank: Keep his Hold rating, cuts target to $65, from $75. “The company has yet to address the growing gap in functionality between the Blackberry and true smart phones,” he writes. “While there is still time for them to come up with something new, we see growing interest from consumers in more capable platforms. Moreover, we see many signs of growing enterprise interest as well, threatening RIMM’s core customer base with time.”

Thursday, June 24, 2010

RIMM Reports

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BlackBerry maker Research In Motion Ltd. (RIMM) on Thursday posted a 20% increase in first-quarter profit, but sales and handset shipments fell below Wall Street's forecast. READ MORE>> updated news

The smartphone sector has become even more competitive with Apple & Android based phones. RIM continues to maintain a 70% share of the IT market, but many believe that Apple & Android phones are taking market share. However, RIM  plans on introducing new products incorporating touch screen and a new OS.  Itz believes that the smartphone market has room for competition and of the top companies, RIMM presents the best valuation.
Lets just do a side by side comparison of Apple to Research in Motion:

                          RIMM:                                AAPL:
EPS                     $3.96                                     $11.80
P/E                      15.06                                      22.96
Forward P/E        10.79                                      19.70
5 year EPS
Growth                18.98%                                   17.8%
Profit Margin          17.1%                                   19.2%
Cash Flow Margin 19.8%                                   20.98%
Price/Cash Flow     15.41                                    27.40
Price/Sales              3.05                                      5.75

Itz Video Pix

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