Tuesday, January 31, 2012

How Significant Is The Golden Cross?

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Everyone is talking about the Golden Cross occurring today. ITZ mentioned this a few weeks ago >>READ

Stocks formed the much-heralded "golden cross" on Tuesday, but traders are waiting to see if remains there at the close before calling it a sign of an uptrend....read more...

Taking another look at some recent Golden Cross and Death Cross periods in the chart below.

John Bollinger, Bollinger Bands.com, discusses the "golden cross" and the S&P 500, saying this is the perfect case of mismatching the tool and the task.


$SPX Update 1-31-12

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Follow up to yestderday's S&P500 blog post >>Read

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Monday, January 30, 2012

Correction For The S&P 500?

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ITZ has been looking for a correction on the S&P500, looks as if it maybe beginning. Previous post on S&P direction LINK ITZ suggests the Proshares Ultra ProShort S&P 500 ETF (SPXU)

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Abigail Doolittle, Peak Theories Research, explains whether the "golden cross" on the S&P 500 is a bullish sign for the market.

Friday, January 27, 2012

ITZ Raises Price Target On Apple

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    Apple Inc. shattered expectations for fiscal 1Q12, as revenue topped the consensus estimate by $10 billion and net income exceeded $13 billion - in just 90 days. Gross margins, which a year ago were in the high 30s, came in above 44%, unheard of for a hardware company catering to consumers. Apple ended the quarter, its first full reporting period post-Steve Jobs, with about $98 billion in cash. 

The unbelieveable thing about AAPL stock is that it is not particularly expensive, even though the share price has more than doubled in recent years; that is because earnings and cash flow are growing so much faster. ITZ believes that AAPL shares are trading at reasonable multiples on estimates that now better capture Apple's earnings power.

The shares trade at 9.9xs ITZ FY12 forecast and at 9.3xs ITZ FY13 projection, compared to an average P/E of 19.6 over the past five years (FY07-FY11). This is actually a discount to the peer group as well as the broad market. ITZ believes a much higher peer-group premium is justified given Apple's ability to generate healthy demand for its products even in a feeble economy.

The fundamental valuation model points to a price above $700.

Appreciation to ITZ's target of $625 (raised from $555) LINK implies a risk-adjusted return of more than 40% from current levels.


Apple carries no debt.
Cash & short- and long-term investments totaled $98 billion at the end of 1Q12, up from $81 billion at the end of fiscal 2011, $65.8 billion at the end of 2Q11, $51 billion at the end of fiscal 2010, and $33.9 billion at the end of 2009.

Cash flow from operations was $17.5 billion for 1Q12, compared with $9.8 billlion a year earlier. Cash flow from operations was $37.5 billion in FY11, compared with $18.6 billion in FY10 and $10.2 billion in FY09.

For the first quarter of the September 2012 fiscal year, Apple recorded revenue of $46.3 billion, up 73% year-over-year and 64% sequentially. Gross margin expanded sequentially to 44.7% in 1Q12 from 40.3% in 4Q11 and was well above the 38.5% recorded a year earlier. Operating income exploded to $17.34 billion in 1Q12, up from $8.7 billion in fiscal 4Q11 and $7.83 billion a year earlier. 

Net income was $13.06 billion in 1Q12, for a 28.2% net margin. That compares with net income of $6.6 billion in 4Q11 and $6.0 billion a year earlier. GAAP earnings totaled $13.87 per diluted share in fiscal 1Q12, compared with $7.05 per diluted share in 4Q11 and $6.43 in 1Q11.

Management is projecting revenue of $32.5 billion in the post-holiday quarter, as well as earnings of $8.50 per diluted share.
Applying the 1.15 multiplier to revenue (without even considering market fundamentals), suggests revenue about $5 billion higher than management's current guidance, i.e., in the $38 billion range. ITZ expects the consensus to coalesce around this number, triggering an EPS consensus between $10 and $11 for fiscal 2Q12.
Given the huge start to the fiscal year, and even without making significant changes to the quarterly outlooks for 2Q through 4Q.

ITZ is raising FY12 forecast to $45 per diluted share with a 14 pe and a price objective of $625. ITZ is also raising the forecast for FY13 to $48. ITZ long-term EPS growth rate forecast for AAPL is 15%.

Tara Hedlund, Turner Investments, weighs in on the Apple phenomenon.

Thursday, January 26, 2012

Time To Take Some Profits On This Silver Stock

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At the end of December 2011 Read Post, ITZ suggested entering Silver Wheaton SLW @ $27.50. Silver the commodity as well as Silver Wheaton have had a nice run in 4 weeks. ITZ highlighted silver as well as gold and crude oil yesterday, post the Fed decision to extend low interest rates until the end of 2014. LINK

With the run up in SLW, it would be prudent to take some money off the table here, perhaps a 1/4 position or sell some out-of-the-money call options.

S&P 500...Does It Go Higher?

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Insight on why a six to ten percent drop from the current level of 1320 in the S&P is on the way, with Gina Sanchez, Roubini Global Economics (RGE) director of equity and asset allocation strategy.

Carter Worth, Oppenheimer Asset Management chief market strategist, checks the charts to get a read on whether technical indicators are signaling stocks are set for a breakout, or sell-off.

Euro Testing Resistance

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 As noted in prior ITZ blog post that the Euro was set to move higher towards 1.32 READ

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Wednesday, January 25, 2012

This Index Says Oil Could Go Lower

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One of the ratio indexes ITZ tracks is the $Gold ~ $WTIC Ratio which broke above a key level today and raises a caution flag...read more

CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks at where oil and precious metals are likely headed tomorrow. The risk-on trade, it seems, is back.

Commodity Update: Oil- Gold-Silver 1-25-12

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Itz observations on Oil, Gold and Silver. Click on charts to expand image

Tuesday, January 24, 2012

Apple Crushes Profit Estimates as iPhone, iPad Sales Soar

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Apple reported Q1 2012 earnings after the close Tuesday...and well they just crushed them...blowing away street estimates on earnings revenues and units sales.

Fiscal first-quarter earnings excluding items of $13.87 a share, double the $6.43 a share recorded in the year-earlier period.
Revenue jumped 73% to $46.3 billion from $26.74 billion a year ago.
Analysts had expected earnings excluding items of $10.10 per share on revenue of $38.9 billion, according to a consensus estimate from Thomson Reuters. The company also said it ended the quarter with $97.6 billion in cash.

It sold 37 million iPhones, 15.4 million iPads and 5.2 million Macs during the quarter — all new records and all beating analysts' expectations.

These results off of iPad 2 and iPhone 4S and with the passing of CEO Steve Jobs. ITZ expects 2012 to deliver the same as Apple plans on delivering several new products iPad 3, iPhone 5 and perhaps iTV.

Ahead of Apple Earnings...What To Do?

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Apple reports Q1 earnings after the close today, the stock has had a big move since ITZ suggested entry. >>READ and when ITZ noted an Island Top formation >>READ

Past earnings releases LINK

Here's a current chart and past earnings releases, the yellow are represents following 2 weeks.
Jim Cramer is spot on...if you trade Apple then sell, but as an investor hold and buy any pullback.
ITZ continues to hold to the $555 year end price objective.

Mad Money host Jim Cramer says investors need to be prepared for Apple to selloff when it reports earnings on Tuesday, but then be prepared to buy it the next day, but only if the stock is down.

Apple is out with earnings today after the bell on the same day in 1984 the very first Mac was introduced. Insight on whether the stock will see a correction, with Brian Marshall, ISI Group IT hardware/data networking analyst.

Monday, January 23, 2012

Time to Short the S&P 500

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ITZ suggests entering Proshares Ultra Pro Short S&P500 etf ticker symbol SPXU. Lets place a half-position @ $11.30 with a stop at $11.20. ITZ has target 1325 on the S&P500 as a nearterm top and looking for a pullback toward 1285. For up todate trade moves follow ITZ on Twitter $SPX Chart