Monday, March 26, 2007
If you have loaded the digital certificate, it is now clearer that you can just go ahead and run TradeRadarWeb.
There is visual feedback that shows the user that the applet is loading. You will no longer have to stare at an immobile web page and wonder what's going on.
In the TradeRadarWeb software itself, I have added the start and end dates for the historical price data to be analyzed. The interface has been cleaned up and should be easier to use. The help file has been updated to reflect only the functionality available within TradeRadarWeb.
One last note. The data is retrieved from Yahoo! Typically, they update the day's data in the evening, around 9:00 or 10:00PM eastern time. When loading data, check the End Date field to ensure you have the latest data.
Saturday, March 24, 2007
Weekly Market CallIt seems the last few weeks have each provided one day where the markets rallied strongly. In some of those weeks, there was also a day when the market fell hard. On balance, the bulls have had the best of it lately. In terms of the major averages, we are now back in positive territory with the Russell 2000 leading the way again with a 2.6% gain, the NASDAQ and the S&P 500 at 1.7 % and 1.3 % respectively and the Dow just barely getting to 0.1% year-to-date.
This week's catalyst was the Fed policy statement. The phrase "the extent and timing of any additional firming..." was removed and replaced with "(F)uture policy adjustments will depend on the evolution of the outlook for both inflation and economic growth." Investors interpreted this as meaning the Fed has now dropped their bias towards tightening and a rate cut could be in the offing. The bulls pretty much ignored the comment that inflation had not declined as expected.
As usual, there is plenty of room for interpretation. The bear argument is that inflation is still a concern and the economy is clearly slowing. The Fed is in a bind. If they lower rates, it will accelerate inflation; if they raise rates it will choke the economy. The bears point out that with the Fed, inflation always wins this tug of war; ie, don't expect that rate cut any time soon. In contrast, Fed futures are now indicating a 44% chance a rate cut could happen by end of summer.
As so many pundits said after the February market decline, fundamentally nothing had changed, why should the market go down. The Fed has now released a new statement and once again, fundamentally nothing has changed but this time the market has gone up. If there had been more follow-through after Wednesday's rally, I would be a bull, too. Instead, I am on the fence.
ETF CommentsIndexes - all of them ( and their associated ETFs: DIA, SPY, QQQQ, IWM) were up about 3% this past week. It's tough making a call here. Looking at the two-year daily charts in TradeRadar, they are still firmly flashing strong SELL signals. Looking at short term charts (daily trading over the last few months) they are now flashing potential BUY signals. The long term charts indicate a reversal in the intermediate or long term trend. The question is: will this short term potential reversal lead us back to the long term uptrend we were in prior to February's downdraft?
Commodities - Oil was up strongly this week, closing over $62 per barrel. The TradeRadar BUY signal that was tentatively flashed in early February for the US Oil ETF (USO) seems to be confirmed. The SPDR Energy ETF (XLE) closed over $60 and is not far away from a 52-week high. Likewise, Basic Materials (XLB) has also stopped flashing the SELL signal. What should we think about this? With raw materials in demand and rising in price, is the economy picking up or is inflation on the upswing? What would the Fed say?
Technology - The SPDR Tech ETF (XLK) is on the edge of swinging out of the TradeRadar SELL zone. Indeed, there are pockets of strength in the tech universe (Qualcom, Oracle) and I have tried to identify a few others in my recent posts (Cisco Systems, BigBand Networks, SanDisk). Unfortunately, it seems there are at least as many tech stocks forecasting weak quarters ahead as there are those that are expecting strength. Caution is in order here.
Housing - the SPDR Home Builders ETF (XHB) continues to look weak as the sub-prime mortgage mess refuses to go away. The iShares REIT ETF (IYR) has at least perked up again but is still in the TradeRadar SELL zone.
Biotech - XBI, the Biotech SPDR, managed to recover a bit this week but the trend is still down. Avoid this one until we see a higher low.
Financials - the SPDR Financial ETF (XLF) looks a lot like IYR, perking up but still in the SELL zone. In spite of some great earnings reports from the broker/dealer stocks, the sub-prime mortgage issue continues to be an overhang on the financial group in general. Be cautious with this one, too.
TradeRadar Stock PicksWith the market moving up this past week, our short pick, the ProShares UltraShort QQQ (QID) has taken a beating. Our gain has gone from 8.0% down to 0.2% on one week. Ouch! Nevertheless, with QQQQ still in the TradeRadar SELL zone, we'll hang on a while longer.
Having unloaded PacificNet (now beginning to admit there was something funny going on with backdating of options) and Tarragon (who reported horrible earnings this past week) the only stock we have been following for a while is Generex (GNBT). They managed to close up a few cents at $1.68 to leave us exactly one cent below the price at which we recommended it.
On to the new slate of picks. First off, Cisco Systems (CSCO), recommended at $25.79 and closing the week at $26.19, provided a gain of 1.6%. BigBand Networks (BBND) was recommended at $17.45 and, after immediately falling to a loss, had a wild week. Hitting an intraday high of $18.69, it eventually closed at $17.10. Our loss is now 2%.
SanDisk (SNDK) is a stock I used to own and I still keep an eye on it. It looks like a strong reversal is underway and the TradeRadar BUY signal was announced this week in a short post. SNDK closed the week strongly at $44.88 for a gain of 3.5% since being recommended at $43.38
Thursday, March 22, 2007
If you're running Microsoft Internet Explorer, click here to try it out!
As always, this service is free. See how TradeRadarWeb can help you generate your own BUY/SELL signals online.
Wednesday, March 21, 2007
A case in point is SanDisk (SNDK). With the bottom falling out of flash memory prices, SanDisk began a long slide that started last November. It appears to be over now. Several analysts have recommended the stock, quoting an expected pick up in sales later in the year with that higher volume driving higher prices. In addition, there have been announcements that SanDisk, in partnership with Hynix, may be rolling out a new fabrication process that could double the amount of data per chip and lower manufacturing costs. There is a perception that we have seen the bottom in SanDisk's share price and that now is the time to get in. The stock has already shot up from the mid-30's to 43.38.
The TradeRadar chart below confirms this outlook and shows a clear BUY signal generated just within the last couple of days.
Click chart to view larger image
Saturday, March 17, 2007
This week the big down day was Tuesday when markets fell almost 2% again. The rest of the week was spent in modest recovery mode. We have essentially ended up back where we started two weeks ago. Does no progress mean we have established a bottom? My feeling is that there is further to go on the downside.
As has been the norm lately, the economic news was mixed at best. Delinquencies on sub-prime mortgage loans hit 13.3%, the highest since the third quarter of 2002. The words "liquidity crisis" are beginning to be heard and more market participants are beginning to think the sub-prime problems could spill over into other financial sectors. Other news this week (manufacturing reports, PPI, CPI) portrayed the economy as plodding along but certainly gave investors nothing to boast about.
Market sentiment at this point remains nervous. A new negative factor coming into play would send the indexes to new lows. A little hedging with some of the inverse ETFs might not be a bad idea.
Indexes - all ETFs that track the major indexes continue to flash the TradeRadar SELL signal. SPY, DIA and QQQQ are all in the same boat with IWM, representing the Russell 2000, in the least bad shape, only down 1.1% year-to-date.
Commodities - XLE has been flashing a TradeRadar SELL signal since early January and has continued to move essentially sideways for the past month. This week, though, the price of oil moved down to around $57 a barrel. Looking at the chart of USO, you would now wonder why XLE didn't followed it down. TradeRadar, which had been flashing a potential BUY signal on USO since mid-February has now gone neutral. The Basic Materials SPDR, XLB, didn't sustain too much damage this week but still stays mired in bear territory according to TradeRadar.
Technology - same as last week, the TradeRadar signal for the Technology SPDR, XLK, looks very much like that for QQQQ: a sloppy SELL. There are still good individual tech stocks out there (see my Pick o' the Month post) but my advice is to avoid XLK.
Housing - the SPDR Home Builders ETF (XHB) is looking even worse than last week as the sub-prime mortgage mess expands. The iShares REITs ETF (IYR), is down slightly this week as compared to the previous week and is still flashing a solid SELL signal. It seems that IYR has not been tarnished with the sub-prime lending problem and is holding up decently. Still, there's no rush to put money into IYR.
Biotech - XBI, the biotech SPDR is a mess and the trend is down. Stay away from this one for while.
Financial - The Financials SPDR, XLF, also lost a bit this week and the signal remains a screaming SELL. In spite of a strong earnings report this week by Goldman Sachs and a decent showing from Lehman Brothers and Bear Stearns, the financials remain vulnerable to the mortgage situation, problems with the carry trade (though that seems to get a little less press these days) and the feeling that interest rates won't be coming down anytime soon.
TradeRadar Stock Picks
With the NASDAQ 100 dropping a few cents this week, the ProShares Ultra Short QQQ (QID) gained a bit. At $59.92, we are now showing a gain of 8% since our recommendation went out.
We continue to hold Generex (GNBT) even though it is going nowhere. It lost six cents this week to close at $1.65. We are showing a slight loss of 2.4%. TradeRadar is showing a weak SELL signal and we may be dumping this one during the coming week.
As mentioned last week, Tarragon Corp. (TARR) suddenly took a dive and it was sold Monday of this past week at $10.57, wacking us with a 9.7% loss.
As investors, though, we remain ever hopeful and so I add two new stocks to track in this section: Cisco Systems (CSCO) and BigBand Networks (BBND). They were both recommended Friday before the opening bell (see the full post). With one day under our belts, CSCO is up twenty cents, having been purchased at the opening at $25.79. As for BBND, it is a recent IPO and Friday was only its second day of trading. Opening at $17.45 and closing at $16.66, we immediately incur a 4.5% loss. Ah, the excitement of trading IPOs...
Friday, March 16, 2007
With the rising tide of video, music and movies downloaded over the Internet and cable companies offering bundled TV, phone and Internet, we have finally absorbed the glut of network capacity created during the Internet bubble. This deluge of multimedia is changing service providers’ business models, and the ways they manage and develop networks. The focus now is on how to move, manage and monetize content that is richer and more complex than ever before.
In response, as telecommunications companies ramp up newer, faster networks to handle all this traffic, Cisco Systems is a prime beneficiary. As the dominant player in network infrastructure, it has already seen profits begin to increase. The recent market downturn has only served to make the shares more attractive. As a bonus, Cisco's recent acquisitions have provided diversification and revenue streams not directly tied to its core business. Cisco's product offerings, always extensive, now run the gamut from equipment for the home to equipment for the Internet backbone, optical to wireless, hardware to software. If it has to do with digital communication, Cisco is there. The recently announced acquisition of WebEx adds yet another piece to the puzzle. One of Cisco's strengths thus far has been their ability to shrewdly choose acquisition targets and successfully integrate them.
As can be seen in the chart below, the stock has been strong in the last two quarters though it is now enduring some of the same downward pressure the rest of the market has seen. Usually I strictly employ the TradeRadar software to guide my trading but in this case, I am more interested in the market position and fundamentals of the company. Look for CSCO to recover its momentum as I believe the wind is now at their backs.
As a small cap selection, I would like to mention yesterday's IPO, BigBand Networks (BBND). They sit in the sweet spot of convergence around bundled video, voice and data; ie, TV, phone (VOIP) and Internet service. Their customer base includes some of the biggest cable and telecom companies and they are already profitable.
BigBand is an Israeli company based in Redwood, CA. The company’s solutions are designed to process, optimize, and deliver services such as broadband Internet, VoIP, digital broadcast television, HDTV, transport of high quality video, local advertising, VOD, interactive TV and IPTV through any network. Service providers use BigBand Networks’ platforms in efforts to cost-effectively expand revenue-generating offerings of rich content and advanced interactive services.
BigBand has won eight of the top 10 U.S. multi-system operators (MSOs) as customers. They provide a strong platform for video processing and distribution for telco IPTV networks. Outside the U.S., BigBand has made some notable headway in Europe and Latin America and especially in China.
Finally, as cable MSOs start to embrace switched IP video as an architecture that can compete with upcoming telco TV offerings, BigBand will be one of the few vendors in the space with the ability to sell into both sets of network architectures. Look for Cisco to absorb them soon.
Tuesday, March 13, 2007
On another note, I have beefed up the Tools page on the Trade-Radar.com web site. I have added a number of new stock screeners, some that are unique and are definitely worth a try. Unfortunately, I had to remove the link to the Business Week screener as they are no longer offering that feature on their site.
On still another note, I know I am late with the March Pick o' the Month. I am in the middle of some kitchen renovation and my time has been limited. I will work on it as soon as possible.
Sunday, March 11, 2007
I thought readers of this blog might be interested in a post that discusses the action in QID as a contrary indicator.
Click here to read the post at SeekingAlpha.
Saturday, March 10, 2007
What about those stocks that move up nicely and then run out gas, dropping little by little until the profits are all gone? I have just seen this happen with PacificNet (PACT) and TradeRadar never flashed a solid SELL signal.
I believe the issue here is that the TradeRadar engine generates its best signals when there are more than eight months of daily data available. When you have less data to work with, the solution is to reduce the amount of filtering. The default value is 5 days. Try 3 or 4 days. Not only will the Signal Strength increase, the Kurtosis will also increase. At that point the Dashboard may flash the three green lights that indicate a solid, actionable signal.
As two examples, I have been reporting on Tarragon Corp. (TARR) and the SPDR S&P Homebuilders ETF (XHB). If you analyze the data over the last six to eight months, setting the filter to 2 days from 5 days transforms a weak SELL signal into a very strong SELL signal.
A note about Kurtosis: when there is less data, the peaks tend to be wider in relation to the amount of data in the period. Even though the Dashboard light for Kurtosis is set to yellow, for a lesser amount of data it might better be interpreted as green.
If your gut is telling you that you should sell but TradeRadar is telling you to hang on, try these analysis techniques. After I do a bit more research, I will be getting an update out for the TradeRadar software that will do some of these adjustments for you.
Weekly Market CallThe week began with another selloff followed on Tuesday with a big up day. The remainder of the week the averages moved in a fairly tight range. Sentiment seems to have evened out with bulls remaining optimistic but saying that caution is in order and bears expecting a retest of the recent lows.
The only reasonably important economic news related to jobs and wages. February job growth came in just shy of expectations. Investors chose to believe this provided some assurance the economy was still in decent shape even though the number was the lowest in two years. Wages increased more than productivity did. On the one hand, higher wages support consumer spending but, coupled with a slower rate of productivity growth, it tends to compress company margins. Investors went with the bullish interpretation.
TradeRadar signals at the end of this week sit pretty much where they were at the end of last week: all indexes still flashing the SELL signal. In this first chart, you can see how SPY is displaying the classic TradeRadar reversal peak in spite of the 1% recovery in the S&P 500 this week.
In this next chart, you can see how QQQQ has had several false SELL signals but sits now in firmly bearish territory.
All in all, the economy seems to be in a slowing trend and the market is finally beginning to reflect that fact. My opinion is that we will retest the recent lows this coming week or the following week and the outcome will determine the course the market will take over the next several months.
ETF CommentsIndexes - as discussed above, all the indexes are flashing the TradeRadar SELL signal.
Commodities - XLE has been flashing a TradeRadar SELL signal since early January but it stubbornly refuses to capitulate. If you look at the price of oil as represented by a chart of USO, you will see why: oil hit an intermediate low in mid-January but has been moving up since then. Indeed, TradeRadar has been flashing a potential BUY signal on USO since mid-February.
Technology - the TradeRadar signal for XLK looks very much like that for QQQQ: a sloppy SELL
Housing - the home builders ETF (XHB) is looking very weak here and appears to be succumbing to the sub-prime mortgage mess. The REITs ETF (IYR), in spite of recovering somewhat this week, is still flashing a solid SELL signal as a result of last week's smackdown.
Biotech - XBI now appears weaker than the home builders.
Financial - XLF also recovered somewhat this week but the signal is still a SELL. The financials are still vulnerable to the mortgage situation, problems with the carry trade and the feeling that interest rates won't be coming down anytime soon.
TradeRadar Stock PicksWith the NASDAQ 100 recovering a bit this week, the ProShares Ultra Short QQQ (QID)fell back a bit. At $55.45, we are now showing a gain of 5.3% since our recommendation went out.
We continue to hold Generex (GNBT) even though it is going nowhere. It lost a penny this week to close at $1.71. We are showing a slight gain.
This week an adjustment of the TradeRadar filter settings led us to sell PacificNet (PACT) at $4.95 for a loss of 5.4%. The weak TradeRadar SELL signal first flashed on 2/12/2007 should have been heeded. With the stock at $6.42, we could have captured a 22% gain. Ah well...
Finally giving in to the negative tone in the market and the concerns over sub-prime mortgages, Tarragon (TARR) gave up its recent gains and then some. TARR finished the week at $11.17, off 14.4% from last Friday's closing price, handing us a loss of 3.9% and flashing a weak TradeRadar SELL signal.
Tuesday, March 6, 2007
The bad news is that the damage over the last week or so has been so great that today's rally didn't even move the needle in terms of the charts. Indeed, the TradeRadar signals are still firmly bearish on the indexes and sectors that I track here.
As we all know, markets don't go straight up and they don't go straight down. Expect more volatility for the near term and don't be surprised if we see another low later this week. After all, today's economic news was anything but supportive. Q4 productivity was lowered to 1.6%, below the consensus of 1.7%, from a previous read of 3.0%. Unit labor costs were more than double economists' forecasts with a rise of 6.6%. With productivity improving an anemic 1.6%, margin pressure is beginning to develop. This is not the foundation for a rising market.
Sunday, March 4, 2007
Weekly Market CallThis week the markets gave up all of their year-to-date gains and then some. The search for a culprit was all over the place. Greenspan was blamed for having said a recession "was possible" later in the year. The Chinese stock market was blamed because they led off the slide this week by dropping 8.8% in one day. January durable goods dropped 7.8% from the previous month. Fourth quarter GDP was, as expected, revised downward to 2.2%. January new home sales dropped 16.6%.
The mood in the market now appears to be much more pessimistic that it was just last week. All this market and economic news would have been taken in stride last week as investors looked past it to a soft landing. This week it appears to have driven the sell-off.
Interestingly, nearly all the market commentators and fund managers made a point of saying the economy is in pretty decent shape and this abrupt drop was probably not the start of a major correction, let alone a bear market. Stocks continued to show lower lows for the remainder of the week, however, and trendlines in many sectors have been broken. With little near-term support in many of the charts, there could be more declines to come.
ETF CommentsIndexes - a horrible week. All three ETFs that I track have flashed the TradeRadar SELL signal. DIA and SPY have joined QQQQ in looking weak. This is a complete turnaround from last week when QQQQ joined the others in an uptrend. All this back and forth with the BUY/SELL signals in QQQQ seems to have been a predictor of what we see today.
Commodities - Oil was up this week but XLE, the energy ETF, was pulled lower in the downdraft of general selling that took place. Basic Materials (XLB) was also pulled down but managed to recover somewhat and at least close above its 65-day moving average. It is just shy of flashing the TradeRadar SELL signal.
Technology - XLK is now flashing a sloppy SELL signal.
Housing - The US Real Estate ETF (IYR) is now flashing a SELL signal though it is sitting at a support level. If it drops any further, it could be a long way down. As for the home builders (XHB), we have a weak SELL signal based on the start of its mild recovery from the lows on last July.
Biotech - I had start following XBI because it looked like a reversal from the Jaunary 2007 low was taking place. That reversal has been completely negated as XBI has fallen back almost to the same level it was back in January.
Financials - another sector flashing a clear SELL signal. The financials, as represented by XLF, look really terrible at this point and negative news seems to be accumulating.
As can be seen, all the sector funds took a hit this week. ProShares, however, just rolled out a set of inverse sector ETFs. I just wrote about these funds this week. (Read it here).
I have discussed in a previous post the ProShares UltraShort ETFs that track the major indexes. As can be expected, they all had a stellar week. Here is an abbreviated list of their symbols and the index they track: QID - NASDAQ 100, SDS - S&P 500, DXD - Dow Industrials, MZZ - MidCap 400.
TradeRadar Stock Picks
The one bright spot in my portfolio this week was the ProShares Ultra Short QQQ (QID). It was up over 13% this week. We are now showing a gain of over 8% since our recommendation went out.
As for the others, the news was not so bright. At $1.72, our gains on Generex (GNBT) were reduced to 1.2%. Tarragon (TARR) managed to hold most of its recent gains and by finishing the week up slightly at $12.84 delivers a gain of 10.5% since we recommended it.
We have now dropped into negative territory with PacificNet (PACT) which, at $5.09, leaves us with a 2.7% loss. The TradeRadar signal is flashing a weak SELL on PACT and with the focus on the drop in Chinese stocks this past week, it is no surprise to see the stock pressured.
Saturday, March 3, 2007
ProShares has a slate of ultra ETFs that tracks eleven Dow Jones US indexes: Basic Materials, Consumer Goods, Consumer Services, Financials, Health Care, Real Estate, Industrials, Semiconductors, Oil & Gas, Technologies and Utilities. The ultra ETFs are meant to deliver 200% of the performance of the underlying index.
These ETFs come in two flavors: long and short (the short funds are often referred to as inverse). The short ETFs go up when the underlying index goes down. The long funds go up in concert with the underlying index.
If you are in the bear camp and believe we have further to go on the down side, this could be a good time to identify those sectors that are expected to be most under pressure in the coming weeks or months. In reviewing the charts this week, there was a pretty consistent pattern: big drops starting Tuesday, moving averages violated, etc. Those that looked most interesting to me include Financials, Industrials, Basic Materials and Technology. A good candidate out of this sub-group might be Financials. With the turmoil in the mortgage lending industry, especially in the sub-prime market, and the unwinding of the Japanese yen carry trade there are some negative factors setting up that could keep the Financials from bouncing back. In addition, if the current downturn becomes more extended it could reduce investment banking and brokerage revenues which have been strong lately. The following chart shows the Select Sector: Financial SPDR ETF (XLF) compared to its 65-day moving average and to the ProShares UltraShort Financials ETF (SKF).
The situations that have developed with the Select Sector: Technology SPDR (XLK) and the ProShares UltraShort Technology ETF (REW) and the Select Sector: Industrials SPDR (XLI) and the UltraShort Industrials (SIJ) look very, very similar to that of XLF and SKF.
The Select Sector: Basic Materials SPDR (XLB), however, has not broken down as badly as those mentoned above. Nevertheless, a bear could point to a number of troubling signs. Manufacturing in the U.S. has been struggling over the last few months and, as with technology companies, earnings forecasts are less than stellar. This would tend to impact Basic Materials as their customer base is saying they are not expecting business to be robust. In the case of Basic Materials, the chart is not so extreme as the one shown above for XLF. The 65-day MA has not yet been crossed but if it is, there would be time to catch the move early and potentially rack up a quick double-digit gain. Now might be the time to pay close attention to the ProShares UltraShort Basic Materials ETF (SMN).
If the Basic Materials trade looks good to you, you should also check out the situation developing with the iShares Dow Jones US Real Estate ETF (IYR) and the ProShares UltraShort Real Estate ETF (SRS). IYR had been trending strongly upward for several years until early in February when it finally began to weaken. This week's market drop just pushed it below its 65-day moving average and, with investors beginning to believe that real estate may not yet have seen the bottom, IYR could have further to go on the downside. As the following chart shows, this could be a good time to buy SRS.
For more information on the ProShares Funds click on the following links:
UltraShort Sector Funds and Ultra Sector Funds. These ETFs have only been available for about a month but they seem to have arrived just in time.
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- TradeRadarWeb - Updates
- Weekly Market Update - the Fed triggers a rally
- Web-based version of TradeRadar now available!
- Is SanDisk (SNDK) Recovering?
- Weekly Market Update - No progress
- Pick 'o the Month - a two'fer
- Down Day Again
- QID as a contrary indicator?
- Tips for TradeRadar Users - Filter Settings
- Weekly Market Update - bears take a breather
- Tuesday Rebound - is it for real?
- Weekly Market Update - The mood changes
- Time for Inverse Sector ETFs?
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