Saturday, April 30, 2011

Itz Week End Review 4-30-11

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Earnings drove the market higher this past week, with Caterpillar giving the Dow nearly a +25 point boost on Friday. The DJIA has gained more than 700 points over the past 2 weeks and the Nasdaq ended the month at a 10-year high,  Dow Transports and the Russell 2000 closed at historic highs. The market  had a good week and it is even more amazing when you consider the potential for an upset over the FOMC announcement and press conference. Instead of focusing on the lowered economic outlook from the Fed and Bernanke's view of unemployment plus the constant stream of weaker economics, investors just kept buying stocks. They looked at the weaker economics as a sign the Fed would remain on hold for an even longer "extended period" and provide a fertile environment for equities. The outlook for the declining dollar is more of the same and that means investors have to buy stocks and commodities to offset the dollar's fall. The best explanation of the Fed action came from Brian Kelly on CNBC Fast Money who said; 'the sacrificial lamb was the dollar'.
For the week ahead, on Wednesday we shift into employment mode with the ADP report, which is expected to show a gain of 200,000 jobs. However, the Non-Farm Payroll report on Friday is expected to show a smaller increase at +145,000 jobs compared to the +216,000 gain in March. So far 323 of the S&P-500 have already reported earnings and the busiest week of the Q2 cycle is now behind us.  For Q1 the earnings have been outstanding with the latest update showing 73% have beaten estimates and only 15% have missed estimates. For this year consensus estimates are for another rise to $99.31 and a new record. If you apply a discounted PE of 14 that suggests the S&P is fully valued in the 1,400 range.

 Research in Motion (RIMM) also warned on Thursday after the close that sales of their  BlackBerry product were slowing. That sales of the smartphones would be on the low side of prior estimates because consumers were going for the cheaper products. That was the second major warning in the last six weeks. Its obvious sales are going to the iPhone and Android as well. The PlayBook is also being greeted coldly despite some decent ads this week. Analysts have recommended waiting for the next version or skipping the PlayBook completely. RIMM shares fell -14% on Friday, it would be a surprise if RIMM is being eyed as a takeover, or will it end up as another Eastman Kodak? For now Itz Pix will stay with it & see how PlayBook does on next Q earnings.

Colin Gillis, BGC analyst, explains why BGC has a "sell" on Research in Motion. Gillis adds that Microsoft is still cheap, despite "somewhat disappointing" earnings.CNBC's Jon Fortt weighs in.

The Dollar broke the 74.50 support level and is now looking to retest the 2008 lows. The Fed is hoping the decline is 'orderly', but is ready to step in if it gets out of control. Does that mean below the '08 lows? Because if it breaks the next support...there's a lot of air below. Former Fed governor Wayne Angel told Larry Kudlow, that Bernanke will most like begin raising rate in September. If true, will the market begin to anticipate that this summer?

The lower dollar is pressing commodities higher. WTI oil is testing $114 level. Gold hit a 30 month high and silver is ever close to testing the $50 psychological level. The thing that gets me, is the talk from the media of silver testing the 1980 highs! Come on that was over 30 years ago...doesn't anyone adjust for inflation? Historical gold prices Inflation Calculator Gold high back in 1980 was at $615 = $2035 currently @ $1562 --while silver $50 = $135.60 currently at $47.94, as you can see we're far from those levels.
However, the trade in silver has reached a frenzy and we could see a correction if it cannot close above $50. Itz noted several times on Twitter, that the miners have underperformed the physical metal itself over the last several weeks. Why? More than likely traders are looking for a 'pure' play versus equities. There's expectation that several countries are looking to tax miners as gold & silver prices rise. Itz believes that the decline in mining stocks has created some value near term. Silver Wheaton being a favorite pick and Itz Pix holding. We continue to look for the 120 ema as highlighted in last weeks blog post, as an attractive entry level. But again, caution is warranted, after all we are trading on sentiment here and emotion. Granted there's a demand/supply issue, but this mania tends to feed on itself. Specs can turn on a dime and run for the exit very quickly, just look at the 10% drop last week, suggest one be hedged in positions. Proshares Ultrashort Silver ETF (ZSL) is on etf to consider.
One reason silver has done so well is investor demand and the largest silver etf is the SLV.  Take a look at this past Friday's trading volume 106.2 million shares with a price of $46.88. That equates to $4.98 billion. Net Assets are $13.56B and double the average volume. What this means is the turnover in days is 2.72. On Wednesday  the turnover ratio was 1.56 days. Basically this is telling us this etf is being flipped.
So going into this week, the big mover will be the Non-Farm Payrolls on May 6th.

Itz Pix Videos

A look at what the Fed's QE2 has done for the economy and stocks, with Gordon Charlop, Rosenblatt Securities; Vincent Reinhart, Fed's Division of Monetary Affairs former director and CNBC's Steve Liesman & Rick Santelli.

Rising crude oil prices will drive the American public to push for a national energy policy, Mark Fisher, founder and CEO, MBF Asset Management

Dennis Gartman,The Gartman Letter, and the Fast Money traders parse out what they heard from Bernanke's statement today, and the affect on the markets.

Discussing where to put your money, Don Luskin, Trend Macro; Lee Munson, Portfolio; and Jim Lacamp, Macro-Portfolio Advisors.

Matt Hougan, IndexUniverse, assesses whether a bubble is forming in silver ETFs.

Insight on whether there is more room to run for silver, with Matt Shapiro, MWS Capital and Jim Iuorio, TJM Institutional Services.

Will silver break over $50 & head to $60?

A look at the top business stories this week, and which stock picks the pros are recommending, including blue-chip plays, silver & more, with CNBC's JeeYeon Park.

Tuesday, April 26, 2011

Silver Wheaton Nearing BUY Level

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Readers of this blog know that silver has and continues to be one of ITZ's favorite suggested investment sectors. Silver Wheaton (SLW) more specifically the 'Best of Breed' stock to be in. Recently, Itz began to warn of silver's parabolic move and the divergence from the metal versus the silver miners/stocks. Also suggested protecting gains and that the upcoming correction/pullback will present an opportunity to load up again. Longer term silver has more upside, Itz has noted on Twitter and on this blog how adjusted for inflation silver to equal it's 1980 peak needs to more than double from current levels. Silver is in short supply, the fundamentals are strong and one can expect in coming years that silver prices will continue to rise. Importantly  the advantage of silver over gold, that it has a dual advantage being a precious as well as an industrial metal. Here's a repost of a video you'll find of interest LINK

ITZ is suggesting that Silver Wheaton should be entered @ $37 level. The last time SLW presented an entry point was earlier this year and ITZ suggested to enter then as well. The 12 month price target remains @ $65. Recently several brokerages have raised their price targets Scotia raised to $58 from $47, UBS $49 from $45 & RBC $57 from $51.

Saturday, April 23, 2011

Itz Week End Review 4-23-11

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Bad economic reports this past week were off set by some outstanding earnings reports from companies like Apple, Shlumberger and Honeywell. The biggest economic surprise came from the Philly Fed Manufacturing report. The headline number dropped from a 27 year high in March at 43.4 to a five month low at 18.5. Jobless Claims came in at 403,000 and the second week over 400K. This Wednesday will be the FOMC Announcement & the Ben Bernanke Press Conference, reporters will likely quiz the chairman on growth, inflation and monetary policy. He will probably talk about the success of QE2 and confirm it will end on schedule. Remark on the spike in oil prices is temporary, deflect questions on the dollar, the timing for the next rate hike and the debate on the debt ceiling. Q1 GDP is Thursday. The earnings calendar for next week is the busiest yet with more than 175 S&P companies (34%) reporting....AMZN, MMM, F, COP, BP, EBAY, MSFT. CAT & MRK.
Apple (AAPL) gained +8 on Thursday to $350 after beating estimates after the close on Wednesday. Apple has sold 19.5 million iPads since the first release through the end of Q1. Net income was $6.40 per share compared to analyst estimates of $5.37 per share. Revenue rose +83% to $24.7 billion for the quarter.
On the commodities sector, ITZ believe that gold & silver maybe putting in a near term top. No doubt that the US Dollars fee fall is to blame for higher commodities. Talk of gold going to $2000 should remind investors of the tech bubble mania, we may see $2000 but  not for a few years. Morningstar released a report this weekend saying gold prices could decline to $1200 within three years. When you begin to get opposing views, that should raise a warning flag and one should protect their gains. With gold so expensive investors are turning to silver, ITZ preferred metal for sometime now. Silver is closing in on $50 and what would be a 30:1 ratio to gold. Precious metals investors continue to repeat the common ratio silver used to have to gold was more in the ratio of 20:1 and that would put silver over $75 an ounce. Again as with gold, I'd be cautious nearterm, we could see a reversal @ $50. That said, any correction should be bought.
Itz is starting to see the lower dollar trade as becoming crowded, I know that sounds contrarian, however...we maybe seeing a reversal coming. Itz maybe be early on the call but it comes down to this country either becoming Greece and letting our trillion in debt take us down along with the dollar. Or take action to save the dollar. Foreign central banks are reducing their dollar holdings for the simple reason the U.S. is monetizing its debt and the U.S. is continuing to go into debt at the rate of $1.6 trillion per year. The choice will have to be made in what direction this country wants to head to remain the global economic leader and keep the dollar as the reserve currency.
Bottom line, there's allot on the plate next week between earnings reports, economic events and geopolitical tensions. Will the old adage hold true this May and investors sell and go away?
Best wishes to those celebrating Easter Holiday.

Itz Charts

ITZ Videos

Questions, Larry Kudlow would like to ask Ben Bernanke at next week's Federal Reserve press conference, with Lee Hoskins, former Cleveland Fed president, and Wayne Angell, Former Federal Reserve governor.

Dennis Gartman, of The Gartman Letter, takes a look at the latest market mystery. What's behind the dollar's decline?

Gold is at new highs, at over $1500 an ounce. A look at the best way to go, if collecting gold with Nick Barisheff, Bullion Management Group president/CEO

A look at the S&P 500, with Carter Worth, Oppenheimer Asset Management.

Joe Petrowski, Gulf Oil LLP CEO, discusses oil demand destruction, as prices rise.

Anthony Neglia of Tower Trading reveals how he's handling silver's volatile trading range.

Don't Like a Weak Dollar? Might as Well Get Used to It

Wednesday, April 20, 2011

WTI Crude Oil Update

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Itz Stock Chartz in Itz Pix portfolio has traded in-and-out of the Proshares Ultra ETFs SCO & UCO. Recently having shorted oil via SCO, currently on sidelines. However, not being long via UCO at the moment doesn't mean ITZ is not in energy. The ITZ PIX portfolio is long PGH, PWE, RIG, SU & WLT which have moved nicely higher recently. However, as indicated below ITZ is watching WTI crude oil closely and is in the Goldman Sachs camp, that oil, fundamentals show that supplies are not the problem. This is a fear/speculative driven market and that a major pullback is ahead. ITZ however sees the pullback as an opportunity to add/buy for another move higher in September, targeting $120 on WTI. Watch that Gold/Oil Ratio *13 Level....
click for past posts

Saturday, April 16, 2011

Itz Week End Review 4-15-11

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Again, the market rallied even as Google, Bank America earnings disappointed. Several key economic reports this past week, CPI, PPI, Manufacturing Survey, Consumer Sentiment all managed to be positive and offset the negative earnings news. The upcoming week will be light on economic reports, with housing reports and Philly Fed, market is closed for Good Friday/Easter weekend. The real news for next week will be the earnings calendar with more than 20% of the S&P500 reporting.Companies already disappointing include JP Morgan, Bank America, Google, and Alcoa. Next week is heavy in tech and financial earnings and those are the two biggest market sectors. this past Friday was not only April 15th Tax deadline, it was option expiration week and the normal period of volatility ahead of expiration is either the Friday of the preceding week or the Mon/Tue of expiration week. It just happens to be exactly when the market was weak. There is a historical trend for the market to be weak on the week before tax day.
Bottom line, the two fundamental movers for the weeks ahead will be oil & earnings.
Click Here for more Itz Blog Posts Brand New Silver Bars and Rounds

Itz Stock Chartz

Itz Pix Videos

Randy Smallwood, CEO of Silver Wheaton, the world's largest reseller of silver, weighs in on the future of silver.

Brand New Silver Bars and Rounds

Speculators drove oil prices higher; not the fundamentals of supply and demand, says Michael Masters, Masters Capital Management.

Oil is experiencing an uptrend correction. A look at why this is a trend market, with Jeff deGraaf, Renaissance Macro Research.

Will rising oil prices fuel inflation? A look at how investors can break through the "wall of worry," with David Kudla, Mainstay Capital Management, and Tom Porcelli, RBC Capital Markets.

Rich Ross, Auerbach Grayson global technical strategist with a plan for investors to take advantage of high oil prices.

Oil rises on an improving economic outlook, consumer sentiment and industrial data. Meanwhile, gold and silver continue to rise due to fear.

Bernanke Liquidity Bubble? Kudlow

1 oz Gold Buffalo Coins