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Showing posts from May, 2008

Markets rebound - is the danger of new lows over?

Markets made solid gains this week though in most cases the gains were not enough to reverse the previous week's losses.

Investors cheered the moderating in oil prices mild though it may have been and market sentiment took a turn for the better. We had another week of economic reports that were at least not horrible. As such, bulls could point to the fact the reports did not paint a picture of an economy in a tailspin. On the other hand, the bears could easily say that the reports did not send an "all clear" signal either. Sentiment this week, then, seemed to be slightly in favor of the bulls.

Some examples: consumer spending in April was flat in real terms. While this does not imply a consumer-led rebound in the economy it also doesn't imply an economy plunging into recession. Durable goods orders surprised investors with a 2.5% gain ex-transportation, implying that the manufacturing sector is still standing despite the woes in the auto and airline industries. First q…

Alert HQ for the week ending May 30, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. This week's results are now available.

Markets gained this past week though only the NASDAQ managed to gain as much as it lost in the previous week. Nevertheless, investors should be happy to see the slide in stocks prices slow and the gains in oil moderate. Economic news wasn't bad considering the situation the U.S. economy is in currently. All in all, it was a reasonably quiet week of modest gains.

Last week markets were down significantly and it was tough to find stocks that were generating BUY signals. With some strength returning this week, Alert HQ was able to identify a very interesting mix of stock alerts. As a result, this week we have a good list of 15 BUY signals and only 5 SELL signals available at Alert HQ.

Looking back --

Here are a couple of examples of BUY signals from last week's Trad…

Using the new TradeRadar software - a more complete strategy

With the latest release of the TradeRadar software (we're up to version 3.0.1 now), I thought I should provide a description of the trading system the software supports.

History --

The earlier releases of the software focused on technical analysis of closing price data.

We started out with the basic BUY/SELL signal logic including measures of how strong the signal is, how well-shaped the signal is, etc.

The next version added trend lines whose angles were measured and used to determine whether the signal was strong enough.

With these indicators, we added what look like colored LEDs on the Dashboard screen of the software where the detail of the indicator computations is presented. The LEDs would be set to Red/Yellow/Green based on whether the individual indicator was strong enough to support the BUY or SELL signal. For example, if you are looking for a BUY signal and the LED is Red, then the indicator is saying that a BUY signal is not confirmed. If all or most of the LEDs are Green, t…

Stocks drop - are we in a trading range or in free fall?

Many analysts and investors have been saying that the market is ready to take a breather. This week it took a really deep breath...

We have seen over the last couple of months that all news, good or bad, was mostly taken in stride. This week, it was a different story.

Things this past week didn't seem any worse than they had been in previous weeks. Economic reports were not particularly bad though the PPI report heightened concern that inflation is creeping though the supply chain. There was a drop in existing home sales, but then we already knew that housing was in trouble. Financials are still in trouble as evidenced by problems reported at Moody's, UBS and AIG but that shouldn't be a surprise either. Airlines and auto makers also contributed to the negative tone but why that was a new factor I don't know.

What really stopped the market in its tracks was the combination of oil and the Fed. Oil turned in another strong performance this week, closing over $131 per barrel.…

TradeRadar software - Online version discontinued

I have discontinued supporting the online, browser-based version of the TradeRadar software.

There have many new improvements to the desktop version of the software that I would like to add to the online version. Unfortunately, the install process is getting too complicated with multiple sets of components that need to be loaded to a user's PC.

It would be best if all online users would convert to the desktop version which, in addition to all the new indicators, also provides portfolio tracking tools.

I apologize for any inconvenience this may cause. Please try the new version 3.0 of the desktop TradeRadar software. It is definitely the best version yet!

Alert HQ for the week ending May 23, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. This week's results are now available.

Oil prices hit new highs this week but this time major stock averages tumbled. Sentiment turned negative as inflation became a concern and Fed minutes showed little sign of further rate cuts. As a result, this week we have only 5 BUY signals and 10 SELL signals.

Looking back --

Here are a couple of examples of BUY signals from last week's TradeRadar Alert List and the gains they generated in just five days:
A digital identity assurance company gained 7%A pharmaceutical company gained 3%These BUY signals were on the TradeRadar Alert List one month ago. Here are the gains they generated in just four weeks:
A real estate investment trust is now up 25% A regional bank that is up 11% A U.S. telecom company that has gained 10%Looking ahead --

As usual, later this weeken…

TradeRadar software version 3.0 - Bug Report

This past weekend, without much fanfare, I rolled out the latest version of the TradeRadar software, version 3.0.

The software now retrieves some fundamental data from Yahoo Finance to help in making your trading decisions. Yesterday, Yahoo changed something in the URL for financial data retrieval and it no longer works as it used to. This broke my various web widgets as well as TradeRadar and I have been scrambling to roll out fixes.

This post is to announce that the fix for TradeRadar version 3.0 has been deployed to the Trade Radar web site and is available for download.

If you have already downloaded the full version, you will only need to download the upgrade. Here is a link that will take you directly to the upgrade page:

Download Version 3.0 Upgrade
As an added bonus, I have added a new feature to the Dashboard screen: Cash Flow Yield. This indicator is computed by taking the most recent quarter's free cash flow (operating cash flow minus capital investments) and dividing by the…

Chip makers and semi equipment manufacturers on divergent paths

I have come out bearish on the semiconductor equipment industry before and the latest numbers from SEMI do nothing to change my attitude.

The chart below shows the dismal trend. Bookings are about 8% less in April than in March. More ominously, the April 2008 number is 32% lower than April 2007. Associated with this, the book to bill ratio has now dropped to 0.81, indicating orders are coming in at a slower rate than shipments are going out. In general, growth in the industry can be considered to be flat to down.


We have in the past pointed out that over-capacity in the memory industry is keeping a lid on semiconductor equipment sales growth. On the flip side, red-hot growth in the solar industry is providing some support to those semiconductor equipment manufacturers that offer a product in this segment. Applied Materials (AMAT) comes to mind. Without the solar mini-boom I suspect this chart would look even worse.

In contrast to the equipment makers, we have the semiconductor manufactur…

Can AOL stop dragging Time Warner down?

AOL and parent Time Warner (TWX) have been in the news quite a bit lately. Time Warner today reported it is spinning off its cable unit and will receive a $9.25B dividend in return.

So the ongoing transformation of the company continues.

With the ebb and flow of Microsoft/Yahoo! deal rumors Time Warner's AOL unit has occasionally popped up as a potential player. With AOL, their transformation has been a public and often-criticized drama that seems to go on without end.

This might be a good time to see what progress AOL has made.

AOL is pursuing a three-pronged strategy. They are working to extend and capitalize on their most popular products, properties and features. They are looking to profit from the long tail. They are committed to creating a formidable ad network. Let's look at each in turn.

Product extension --

AOL has recently closed the purchase of Bebo, the British social network. Bebo has more than 40 million members worldwide. In the United States, however, it ranks a dist…

Stocks show broad strength - is a breakout in store?

In last week's post we saw stocks were weakening but we said "don't throw in the towel yet". This week we reaped the rewards of holding steady.

An overview of the short-term technical picture is presented in the following chart of market statistics collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:


As can be seen, we plot six different indicators. After this past week's market action we now have all of them moving in a direction that indicates continued strength in the market.

Moving average analysis --

Markets did well this past week and it is clearly reflected in the moving averages. The number of stocks trading above their 20-day moving average rose sharply, increasing by almost 800. Similarly, the number of stocks trading above their 50-day moving average also rose, increasing by almost 600.

We see a contin…

Alert HQ for the week ending May 16, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. This week's results are now available.

Oil prices hit new highs this week but major stock averages managed to gain anyway. Sentiment continued to improve as retail sales turned out to be decent, housing starts surprised to the upside and weak manufacturing surveys were shrugged off. As a result, this week we have 16 BUY signals and only 2 SELL signals.

Looking back --

Here are a couple of examples of BUY signals from last week's TradeRadar Alert List and the gains they generated in just five days:
An oil and natural gas company gained 17%A company engaged in the purchasing and managing of charged-off consumer receivable portfolios gained 6%These BUY signals were on the TradeRadar Alert List one month ago. Here are the gains they generated in just four weeks:
An insurance company received a buyout offer and…

TradeRadar Version 3.0 - Advanced Release Available

As a courtesy to those who use the TradeRadar software and read this blog or subscribe to the RSS feed, I wanted to provide advance notice that the version 3.0 upgrade package is available at the following link:

Download Version 3.0 Upgrade
This download page is not yet public and can only be accessed from this blog post.

Note that this assumes you have installed one of the previous versions of TradeRadar. This upgrade download package includes new or updated components; it is not the full install.

What's new in this version --

The software adds a number of new indicators. Rather than making users become experts on numerous kinds of technical and fundamental analysis, we have extended the simple color-coded system we introduced in previous versions to cover the new indicators. As always, Green is good, Red is bad and Yellow implies caution.

There are several bug fixes and improvements in the trend line angle analysis. You can read the details in the TradeRadar help file that is included…

Finally a bottom in NAND pricing?

I have written before about SanDisk (SNDK) and have owned the stock several times over the years. Recently, the stock seems to have bottomed at about $20 and has now rebounded to over $30.

Today's strong move up was due to a bullish opinion on the company from Citigroup's Craig Ellis. He sees the stock hitting $35 based on tier-1 OEM customers poised to provide large orders, more products designing in ever greater quantities of flash (solid-state disk drives, for example) and a supply environment more conducive to firming prices.

Ellis could be right in his call. SanDisk reported earnings in mid-April that were less than expected but revenues that beat expections. Management pointed to tough pricing that kept margins under pressure.

So has NAND pricing finally hit bottom? Let's hope so. To show how serious the pricing pressure has been, the unit price of the benchmark 8Gb NAND flash chips for high-end handheld devices declined to $2.7 from $8 last September. Here is a quick s…

Rally tires, but don't throw in the towel yet

In last week's post we determined the rally was moderating. This week we got confirmation that this is true.

An overview of the short-term technical picture is presented in the following chart of market statistics collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:

As can be seen, we plot six different indicators. After the past week's market action we now have three moving in a direction that indicates continued strength in the market. The other three are registering the opposite.

Moving average analysis --

This week we saw a clear decrease in the number of stocks trading above their 20-day and 50-day moving averages. This is a definite sign of weakness. Nevertheless, the total count of those stocks trading above these levels is still around 4000 and that is well over half of all stocks. So generally speaking, there is stil…

Moving averages and DMI for stocks in the S&P 500 - what can we learn?

Here are some interesting tables of data I just derived from running the Alert HQ process. We scan about 7200 stocks and ETFs each weekend looking at various technical analysis characteristics. The following tables show some numbers for the stocks in the S&P 500.

Moving Average Analysis --

Here we present the number of stocks in the index whose 20-day moving average is above their 50-day moving average. The data is presented by industry sector.

20-day MA above 50-day MAIndustry Sector55Consumer Discretionary25Consumer Staples33Energy57Financials25Health Care44Industrials49Information Technology17Materials6Telecommunications Services23Utilities
When the 20-day moving average of a stock is above its 50-day moving average, it is generally considered to be a bullish sign of strength in the chart.

From the table we see that after the recent down week in the markets there are still 334 stocks out of 500 with a 20-day MA above a 50-day MA. That is roughly equal to two thirds of the stocks in …

Alert HQ for the week ending May 9, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. This week's results are now available.

This week the major averages were down roughly 2%. Oil, AIG and the perennial party pooper Citigroup were the major drivers. As we wrote last week, the current rally was weakening and a potential new trading range might be developing. Against this backdrop it was hard to find too many stocks going up. As a result, our Alert HQ list of signals has shrunk this week to only 9 BUY signals. In addition, we have 4 SELL signals.

Looking back --

Here are a few examples of BUY signals from last week's TradeRadar Alert List and the gains they generated in just five days (and during a down market, too):
A company providing business process outsourcing to the financial industry gained 19%A semiconductor designer and intellectual property provider gained 8%A marketer of a range …

How vulnerable is the economy to individual industry sectors?

I recently wrote a post where I offered that the economy was seeing bear markets in certain specific industries. I mentioned the airline industry, homebuilding and financials and that it seemed that the other sectors of the economy were in OK shape.

In thinking about this I began to wonder how much impact the industries in bear markets would have on the economy as a whole. As a way to begin to gain some insight on this, I looked at the details of the government's Gross Domestic Product report. The GDP report provides a number of data tables that break down the headline number into various components.

Unfortunately, the numbers provided are not quite specific enough to zero in on airlines, for example or even financials. Still, it has been a useful exercise.

The approach I took was to look at two aspects of the issue. First, what percent of GDP a particular industry represented. Secondly, how had that percentage changed from a year ago.

In the first quarters of 2007 and 2008, we had th…

Nextel better off on its own?

Sprint Nextel (S) has been in the news quite a bit lately. First, there is news that Deutsche Telekom might make a bid for the company. Then we hear that Sprint may be seeking to spin off Nextel. The latest news is that the Sprint Clearwire (CLWR) WiMax combination is on again with backing from a number of big players.

In all the discussion, most writers take pains to point out what a disaster the original Sprint-Nextel merger has been. The finger is usually pointed at Nextel which has established a dismal trend of losing customers and is now embroiled with the FCC in a disagreement over how to handle network interference with radios used by police and firefighters.

Do Nextel's problems indicate something inherently wrong with the franchise or are these problems the result of the merger?

It may be instructive to look at how the Nextel brand is doing in a situation that doesn't include Sprint.

NII Holdings (NIHD) is a company I have written about before (read earlier post). The com…

Rally moderating - new trading range in store?

Now that the S&P 500 has broken above 1400, we will be looking to see if the index can hold its gains and build on them. Many technical analysts believe that piercing this level makes a significant move upward very likely.

There is a vocal camp that takes the opposite position. Based on the economic backdrop, this group thinks that we deserve to be deeper in bear market territory. Though the worst of the credit crunch may be behind us, these bears say that there is plenty more bad news out there waiting for investors.

It is a fact that whole industries are in bear markets of their own right now though the stock market and economy as a whole has managed to avoid that state. It is clear that financial companies, despite the rebound in their stock prices, are undergoing a severe contraction. Airlines are going bankrupt left and right. Homebuilders, though it looks like their stocks have bounced lately, are still caught in a situation where the demand for their product, new housing, is …

Alert HQ for the week ending May 2, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. This week's results are now available.

This week markets logged some solid gains on economic news that pleasantly surprised investors by not being as awful as expected. The Fed and earnings reports likewise failed to derail the major indexes. The S&P 500 even broke through a significant technical resistance level. Against this reasonably positive backdrop we see the strength noted in past posts continuing. As a result, this week's Alert list contains 36 BUY signals, an increase from 22 in the prior week, and only 7 SELL signals.

Looking back --

Here are a few examples of BUY signals from last week's TradeRadar Alert List and the gains they generated in just five days:
A real-estate investment trust that gained 18%A semiconductor equipment manufacturer that gained 7%A bank that gained 7%A food comp…