ITZ On The Radar (NOV)

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ITZ has National Oilwell Varco (NOV) on the radar. Berkshire Hathaway took a stake in National Oilwell Varco Inc. (NOV) as billionaire Chairman Warren Buffett made more funds available for the portfolios managed by deputy stock-pickers. read

The company have proposed a $2.5 billion buyout of Robbins & Myers. The latter has set a special meeting of shareholders on December 27 to discuss the proposed transaction. Expect the deal to close in early 2013.

AAII Bearish Percentage Continues To Head Lower

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This week's AAII Survey - Bearish Sentiment continues to drop, Bullish for equity markets. LINK

Bullish	40.9%
Neutral	24.7%
Bearish	34.4%

click on chart to expand image

New Position

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Entering a new trade today First Solar FSLR @ $27 PT $35 ; half-position add on break above $30.

 

Possible 50% Upside For This Oil Stock

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All across North Dakota, Montana, and parts of Canada, the Bakken formation is one of the most prolific shale plays ever discovered in North America. According to a 2008 study by the U.S. Geological Survey, it could contain reserves totaling 3.6 billion barrels of recoverable oil.

ITZ play on this sector is Kodiak Oil & Gas (KOG), Looking to take a 1/4 position around $8.50... with a $12.00 price objective in 2013. Read More

ITZ Update: S&P 500

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S&P500 has put in a quick rally since the November 16th reversal, we could see a near term pullback towards it's 200-dma.

click on chart to expand image

Index Chart Observartions

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ITZ observations on several index charts

AAII Bearish Sentiment Declines From Multi-Month High

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This week's AAII Sentiment Survey reversed after nearing 50% on Bearish Sentiment last week, closing down 8% to 40.8; while the S&P500 rose 38 points.  LINK

Bullish	35.8%
Neutral	23.4%
Bearish	40.8%

Link to last week's chart

Apple: Over Sold Bounce?

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Nice reversal on Apple as noted last week Link

Was Friday's reversal an oversold bounce or a generational low? ITZ believes the later... Apple was insanely oversold and trading at a cheap valuation pe & ex-cash. Below ITZ has highlighted upside resistance levels.

Update: ITZ Portfolio

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Update ITZ Suggested Trades:

Back on October 15th ITZ posted this follow up LINK  *read comments section

Current positions in stocks are as follows:

Apple (AAPL) entered 1/4 positions  $539 on 5/17; $588 on 7/23; $572 on 7/25 & $626 on 10/9

ITZ has also been trading call options: Read comment section LINK --- currently fully invested in AAPL April $650 Call leaps entered 1/4 position @ $11.30, $10, $8.30 & $9 avg cost $9.65  closed Friday @ $11/$11.65 lets raise stop to $10.

Proshares Ultra Crude Oil (UCO) entered 1/4 positions $32 on 9/19 & $31 on 10/11 & 1/2 position @ $29.75 on 10/15

Follow ITZ on Twitter for upto date trades

Summation Index

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Markets could see another volatile week as investors remain anxious about the “fiscal cliff” and watch escalating tensions in the Middle East. Bernanke speaks Tuesday at the Economics Club of New York, could also elaborate more on the Fed’s effort to change its communications policy. The Fed has been discussing more definitively connecting its interest rate policy to specific levels for unemployment and inflation.

Then  housing data Monday and Tuesday, and jobless claims and consumer sentiment Wednesday, ahead of the Thanksgiving holiday Thursday.  Stocks closed higher Friday after Congressional leaders made encouraging comments about negotiations on the fiscal cliff.

The question remains however...has a bottom been put in? ITZ noted several indicators last week and in today's post takes a look at the Summation Index. Link

 The original "classic' SI maintained that +1000 neutral level -  the modern version  Ratio Adjusted Summation Index (RASI) uses the more natural zero level as the neutral level. The RASI factors out changes in the number of issues traded, making it better for longer term comparisons and analysis.

When the Summation Index crossed down through +1000 back in May 2012, the price bottom marked by that event was a bit early for the final bottom, but it was a bottom nonetheless.  
Now we are seeing another downward crossing through the +1000 neutral level, just as the market seems to be reaching the conclusion that taxes are going higher, and earnings are going to fall, and money will dry up, and the economy is driving off a cliff!!!  

As for the RASI, we need to not only see a reversal, but a cross above the +500 to confirm any rally.

Below are the NYSE & NASDAQ Summation Indexes both original & Ratio adjusted.

Apple At Pivotal Level

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ITZ posted the following Apple Ex-Cash chart this past weekend Link

Below is a weekly Apple chart, noting the earnings, high & low p/es as well as the Ex-Cash ranges as noted in the above link. Apple tested a key support level today around the $520 / $525 area.

Bottom line we could see some more downside, but the risk-reward is favorable for +50% gains in 2013. ITZ has suggested entry levels as well as trading call option leaps. Current market sell off due to uncertainty over the 'Fiscal Cliff' has presented extreme over sold conditions. Pessimism is high as noted in AAII survey this week LINK

Bearish Sentiment at Multi-Month High

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This week's AAII Sentiment Survey is nearing 50% on Bearish Sentiment. The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Link

Bullish	28.8%
Neutral	22.4%
Bearish	48.8%

Bearish % is closing in on 50%, an extreme reading, having done so a half-dozen times over the last 4 years. At the market bottom back in 2009 with the S&P500 at 666 the Bearish indicator hit 70%. Is this the bottom? Well I wouldn't suggest now is the best time to short the market.

"The time of maximum pessimism is the best time to buy" Sir John Templeton

Apple...Back Up The Truck!...BUY!!!!

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Apple’s revenues –which it recently forecast would grow to $52 billion – makes its fundamentals attractive enough to lure back skeptical investors. For that reason, Brian White, analyst at Topeka Capital Markets, thinks the stock could soon vault above $1000 per share once the pessimism lifts. Read More

Doug Kass: Time to Buy Apple Again link 
UBS hardware analyst Steve Millunovich today reiterates a Buy rating on shares of Apple link

ITZ has suggested buying Apple at several levels since May as a long term core holding in 1/4 position increments: May 17th $539; July 23rd $588; July 25th $572 & recently Oct 9th $626.
Also having traded call options.

Chart below looks at Apple's cash position & ex-cash valuation, currently at extreme low valuations.

click on chart to expand image

Past ITZ Apple posts:
 Apple Update: Q4 Earnings Report
Apple Pre-Earnings Outlook 10-6-12
Apple Misses Earnings...Now What?