Market Observations $SPX & $NDX

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ITZ takes a look at $SPX & $NDX support levels:

Apple Earnings & Outlook

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January 27th Apple will report on what historically is its best business period of the year. ITZ sees a profit of $14.15 a share on revenue of $57.55 billion for the quarter ended in December, up from earnings of $13.87 a share on $54.5 billion in sales in the same period in 2012.

Look for Apple to report it sold about 55 million iPhones and 22 million iPads. In which they released its iPad Air tablet and expanded the release of the iPhone 5c and 5s to more than 30 countries after the initial launch on Sept. 20.

  ITZ is expecting Apple to continue to deliver with more new products & services in 2014, iPhone 6 will be the major catalyst.

Things started to rock with week when Carl Icahn TWEETED that Apple is “ doing a great disservice to shareholders by not having markedly increased its buyback.” While he chastised Apple for not increasing the amount of cash it plans on returning to its shareholders, Icahn also said he has raised his stake in Apple by $500 million, to more than $3 billion, over the last two weeks.

For the last two quarters, according to Thomson Reuters consensus, the expected EPS and revenue growth rates are 10% for 2014, 10%  in 2015 and 8% for fiscal 2016 eps  and 8%, 7%, and 7% for revenue consensus and again, this is after the Icahn and China Mobile news.

Valuation, trading at 13xs and 11xs 2014 and 2015 EPS for expected growth of 10% and 8%, means AAPL could trade up to 15xs - 18xs forward estimates and still be reasonably valued.

Price to cash-flow ex-cash, AAPL is trading at 7xs and then 10xs free-cash-flow (ex the balance sheet hoard) so the stock is a true value stock with consumer-staple like growth rates.

Carl Icahn places a valuation @ $840 as stated in his letter...

In our opinion, a great example of a “no brainer” in today’s market is Apple. The S&P 500’s price to earnings multiple is 71% higher than Apple’s, and if Apple were simply valued at the same multiple, its share price would be $840, which is 52% higher than its current price."


In the last Apple blog post ITZ wrote..."Apple's price target of $550 by Jan 2014 & a 12 month objective of  $650."  link

click on chart to expand image

 



ITZ Portfolio Positions

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Current open positions:
AAPL reports earnings 1/27

NUAN reports 2/3/14

LULU reports 3/27*correction add @ $45 not $42

Citigroup - C ...Time To Enter

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ITZ suggests taking a 1/2 position in Citigroup (C) @ $50.75. Will add on any further decline.

$1450 Gold in 2014?

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Follow up on gold: As posted on Jan 14th Gold Miners LINK

ITZ continues to favor Silver Wheaton (SLW), what appears to be a double bottom, we could see a breakout coming near term & a price objective of $30. ITZ has a Strong Buy
Michael Dudas of Sterne Agee explains why gold could mount a minor comeback in 2014

 

 

 

Gold Miners

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Frank Holmes CEO and Chief Investment Officer U.S. Global Investors: 'Continuing a Winning Formula for 2014' >LINK

 Gold Market

After shedding some 30 million ounces of gold from a high of 85 million ounces, David Rosenberg of Gluskin Sheff believes it is fair to ask whether the fire sale is done. According to Rosenberg, sentiment could scarcely be more negative, with even the good macro data looking like it is priced in. What’s most interesting to see is that gold and bonds declined in the same year – a very rare phenomenon. The most recent memories of this trend occurring have coincided with gold market bottoms, in which market players shrug their shoulders at the mention of gold.

Opportunities

The Swiss National Bank’s gold holdings are the target of a national initiative and called by citizens collecting signatures, demanding that at least 20 percent of the central bank’s assets be in the form of gold. The measure would also bar the central bank from selling any of its holdings and would require the repatriation of the SNB’s gold holdings with the Bank of Canada and the Bank of England.

Valuations of gold miners are approaching their cheapest relative to book value in at least two decades, precisely at the time when free cash flow generation has bottomed and cost reductions are kicking in. The current valuations present opportunities for junior miners to acquire mining assets, just like Northern Star Resources did by purchasing the Plutonic mine from Barrick, based solely on the value of the proven and probable reserves.

The recent shift in Canadian government policy is having a pronounced effect on the value of the “loonie,” or the Canadian dollar. The Canadian government appears to have shifted gears and decided that a weaker currency, via monetary policy accommodation, is now required to hasten the rebalancing of the Canadian economy. The implications for Canada’s exporting industries, which encompass gold producers, are enormous. We discussed earlier how a decrease in the value of the Canadian dollar could effectively erase any losses arising from declining gold prices for those producers with large, Canadian portfolios such as Agnico Eagle Mines.

ITZ favorite play in the metals sector in the past has been Silver Wheaton SLW, $21 attractive entry level.... targeting 200ma near term & $30 long term price objective. chart

Market Sentiment 1-12-14

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Since the March 2009 lows the S&P500 has rallied 175%,  its been over 2 years with a 10% correction in the market.  David Bianco- Now Has The Most Cautious Outlook For Stocks >LINK

Most are looking for a correction, 2013 saw a 32.15% gain in the S&P500. As we started out 2014, the first five days are not bullish, now we need to see how the month goes. ITZ looks at years where the S&P500 closed +30% and how the following year performed. From 1928 to date... there were 11 years that the S&P500 closed up 30% or more. The average gain was 37.63% while the following year's performance averaged +9.2%. If that's applied to 2013's +32.15%, should give the S&P a 7.86% gain or place the SPX @ 1994.

December 30th Post :Link

ITZ also takes a look at several other sentiment indicators:

 

Getting Back Into LULU

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ITZ has re-entered Lululemon this afternoon, after being stopped out earlier this week. LINK

First Trade of 2014: Re-entering UCO

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WTI Crude Oil has pulled back after touching its 200-ma $100ish December 26th. ITZ was stopped out of Proshares UCO on 12/27 @ $32.90. Let's start legging into @ $30.75 with a 1/4 position.

~ ITZ 2013 YEAR END RECAP ~

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Below are ITZ Trades by stock ticker, dates & position 1/4, 1/2 etc... 

2012 CLOSED TRADES

SLW   1/4/13 (1/4 position) $35.10; 2/20/13 (1/4) $32.75 & 2/25/13 (1/4) $32.30 Sold 3/5/13 $37 +10.85%; 6/27 (full position) $18.00 - Sold 8/28 (1/2) $27.00 +50% & 8/29/13 (1/2) $26.00 +45%; 9/18 (1/4) $24.75 - Sold 9/19 $26.50 +7.11%; 9/25 (1/4) $24.50 - Sold 9/26 $24.60 +0.4%; 10/8 (1/4) $23.25 + 10/9 (1/4) $22 + 10/17 (1/4) $23 + 10/22 (1/4) $24 - Sold full position 10/25 $23.96 +3.9% ---- +61.42% Cumulative Return

SCO    1/29/13 (1/4) $36 - Sold 3/13/13 $39.65 +10.1%; 1/23/13 (1/4) $37 - Sold 3/1/13 $41.80 +13%; 2/8/13 (1/4) $36.60 - Sold 3/13/13 $41 +12%; /15/13 (1/4) $39.30 - Sold 3/18 $40.00 +1.8%;  3/8 (1/4) $39.50 -Sold 3/8 $39.10 -1%; 3/19 (1/2) $39.25- Sold 3/19 $39.70 +1.1%; 3/19 (1/4) $39.70- Sold $40.17 +1.2%;  3/21 (1/4) $40.15- Sold 3/21 $40 -0.4%; 3/25 (1/2) $38.45- Sold 3/25 $38 -1.17%;  3/25 (1/2) $38.25- Sold $38.50 +0.6%;  4/1 (1/2) $37.20 - Sold 4/1 $37 -0.05%; 4/3 (1/2) $37 -Sold 4/4 $39.50 +6.76%; 4/10 (1/2) $39.00 - Sold 4/10 $38.40 -1.54%;  4/11 (1/2) $39.10 - Sold 4/11 $39.15 0%;  4/8 (1/2) $40.04- Sold 4/8 $39.40 -1.6%; 4/12 (1/4) $40.75 & 4/11 (1/2) $39.30 -Sold position 4/12 $41.20 +3.57%; 5/17 (1/4) $36.70 -Sold 5/17 $37.25 +1.5%; 5/17 (1/2) $36.80 -Sold 5/20 $36.86  0%; 5/28 (1/2) $37.25 - Sold 5/28 $37.35 +0.4%;  6/11 (1/4) $37.25, 6/12 (1/4) $36.50 & 6/13 )1/4) $36 -Sold 6/17 $35 -4.55%;  6/19 (1/4) $34.80 & (1/4) $35 -Sold 6/19 $35.20 +0.9%;  6/28 (1/2) $35.80 & 7/2 (1/4) $34 - Sold 8/27 $27.35 -21%; 8/29 (1/4) $27.35 -Sold 8/30 $27.50 +0.5%; 9/4 (1/4) $27.25 & 9/9 (1/4) $27.80 -Sold 10.28 $31.85 +15.7%; 9/30 (1/4) $30.75 & 10/25 (1/4) $31.80 -Sold 10.30 $31.80 -1% ---- +4.2% Cumulative Return

UCO  4/16 (1/4) $25.85 - Sold 4/26 $28.50 +9.19%;  4/17 (1/4) $24.85 - Sold 4/30 $28.75 +15.7%; 4/29 (1/4) $29.38 - Sold $28.75 -2.14%; 5/2 (1/4) $27.60 - Sold $28.50 +3.26%; 5/7/(1/4) $29.75 - Sold 5/7 $30.10 +1.17%; 5/8 (1/4) $30.50 -Sold 5/8 $30.70 +0.7%; 5/10 (1/4) $29 & (1/4) $29.50 -Sold 5/13 $29.89 +2.18%; 5/13 (1/4) $29.50 - Sold 5/13 $29.90 +1.35%; 5/15 (1/4) $28.25 - Sold 5/15 $29 +2.56%; 5/23 (1/2) $28.25 -Sold 5/24 $28.90 +2.3%; 5/28 (1/2) $29.50 - Sold 5/28 $29.60 +0.35%; 5/29 (1/2) $29 & (1/2) $28.50 - Sold 5/30 $28.75 0%; 5/31 (1/2) $28.25 & (1/4) $27.70 - Sold 6/3 $28.45 +1.35%; 6/4 (1/4) $28 & (1/4) $28.25 - Sold 6/4 $29 +3.11%; 6/4 (1/4) $28.25 - Sold 6/7 $30.05 +2.73%;  6/7 (1/4) $28.25 & (1/4) $28.85 - Sold 6/7 $30 +5.4%; 6/20 (1/4) $29.40 - Sold 6/21 $29 -1.36%; 11/6 (1/4) $29 & 11/21 (1/4) $30.30 - Sold 12/13 $31 +4.3%; 12/19 (1/2) $31.50 - Sold 12/27 $32.90 +4.44% ---- +20.4% Cumulative Return

NOV  2/1/13 (1/4) $70.50, 1/23/13 (1/4) $66, 3/15/13 (1/4) $70 & 3/26/13 (1/4) $70; Sold 9/3/13 (full) $75.50 +9.7%     +9.7% Cumulative Return

KOG 4/5/13 (1/4) $8.30 & 4/9 (1/4) $8.50 - Sold 4/10 $8.70 +3%; 4/15 (1/4) $7.85 & 4/16 (1/4) $7.50 - Sold 4/17 $7.70 0% +1.5% Cumulative Return

HK 4/15 (1/4) $7.10 + (1/4) $6.80 + (1/4) $6.50 - Sold 4/17 $6.60 -2.9%   -2.9 % Cumulative Return

ALK 9/10 (1/4) $60 - Sold 9/27 $63  +5%  +5% Cumulative Return

SDS 9/26 (1/4) $35.90 - Sold 10/9 $37.50 +4.45%; 11/13 (full position) $33 - Sold 11/14 $32 -3%; 11/19 (1/2) $32 - Sold 11/21 $32 0%   -1.9% Cumulative Return

BAC 9/27 (1/4) $13.90 + 9/30 (1/4) $13.65 - Sold 10/11 $14.14 +3.6%; 10/16 (1/2) $14.40 + 10/16 (1/4) $14.51 - Sold 10/16 $14.55 +1.3%; 10/17 (1/2) $14.45 -Sold 12/11 $15.31 +5.95%; 10/18 (1/2) $15.00 - Sold 12/3 $15.60 +4%   +6.86% Cumulative Return

AAPL 7/23/13 (full position) $400 - Sold 12/18 (1/2) $558.50 +39.6% & 12/19 (1/2) $548.20+37%  +38.3% Cumulative Return 

ERY 10/25 (full position) $22 - Sold 11/22 $20.70 -5.9%  -5.9% Cumulative Return

ERX 12/18 (full) $79.50 - Sold 12/30 $88 +10.7%  +10.7% Cumulative Return

CLF 11/16 (full) $27 - Sold 11/22 $25.50 -5.5%   -5.5% Cumulative Return

EBAY 11/29 (3/4) $48.50 - Sold 12/4 $51 +3%     +3% Cumulative Return

YHOO 11/3 (1/2) $33 + 11/12 (1/2) $34 - Sold 12/18 $39 +16.4%  +16.4 % Cumulative Return



CURRENT OPEN POSITIONS:

HIMX 11/8/13 (1/4) $8.20 + 11/26/13 (1/4) $9.40 --- closed 12/31 @ $14.71 +67.2%

LULU 12/17/13 (1/2) $58.50 + 12/26/13 (1/2) $59.40 ---- closed 12/31 @ $59.03 +0.4%

KOG  12/18/13 (1/4) $10.80 ---- Closed 12/31 @ $11.21 +3.8%

NUAN  12/5/13 (full position) $14 ---- closed 12/31 @ $15.20  +8.6%

ERY  12/30/13 (full position) $20.50 ---- closed 12/31 @ $20.12 -1.86%

*** Wishing Everyone A Happy & Healthy 2014 ****