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Showing posts from January, 2009

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 30, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…

December Durable Goods - no tech recovery in sight

The advanced numbers for December 2008 Durable Goods were released today and they were considerably worse than expected. The headline numbers were as follows:
New orders for manufactured durable goods in December decreased $4.7 billion or 2.6 percent to $176.8 billion.Shipments of manufactured durable goods in December, down five consecutive months, decreased $1.4 billion or 0.7 percent to $191.3 billion.Unfilled orders for manufactured durable goods in December, down three consecutive months, decreased $10.3 billion or 1.3 percent to $803.2 billion.Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $1.3 billion or 0.4 percent to $343.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992.As we always do, we will focus on the tech sector, looking at the summary category of Computers and Electronic Products and updating our charts with the December data.

The following chart shows how Ship…

Google AdSense revenue flat - what does it mean?

Google just released earnings. As usual, search advertising showed strong growth year-over-year as well as sequentially. Things were not nearly so good for AdSense.

From the earnings release, Google had this to say:
Google’s partner sites generated revenues, through AdSense programs, of $1.69 billion, or 30% of total revenues, in the fourth quarter of 2008. This represents a 4% increase over fourth quarter 2007 network revenues of $1.64 billion and a 1% increase over third quarter 2008 network revenues of $1.68 billion.
Only 1% over the previous quarter? That seems pretty light for Google. But look at the chart below (courtesy of HowToNotMakeMoneyOnline.com). AdSense revenue has not been growing significantly since the end of 2007. Yet it is also clear that AdSense makes up a big chunk of Google revenue: 30% as of the most recent quarter.


So what has caused AdSense revenue to stagnate?

Certainly there is no lack of opportunity. With the continued proliferation of blogs and web sites that a…

UltraShort ETFs - they work if you follow the rules

Bashing the ProShares UltraShort ETFs seems to be a favorite blog topic these days but it has also incited a few defenders of these ETFs to respond.

To review, those who dislike these ETFs have pointed to the fact that they do not seem to have come anywhere near delivering the expected result of double the inverse of the underlying index. Indeed, they might not have shown any gain at all even if the underlying index lost significant value.

Evaluating the arguments --

Let's take a look at the following scenario: buy an UltraShort ETF when the corresponding long index ETF falls below its 200-day simple moving average.

We looked at four pairs of ETFs as described in the following tables. The Start Date corresponds to when the index ETF fell below its 200-day MA. Standard Deviation is included as a measure of volatility.

This first table shows the results using ETFs that correspond to two major market averages.


QQQQQIDSPYSDSStart Date1/9/08
1/7/08
End Date1/16/09
1/16/09
Initial Price47.7537.01…

Two custom screens yield picks from the oil patch

This post looks at the results of combining several of the stock screens that we ran this weekend at TradeRadar.

We executed the usual weekend Alert HQ process (read about this weeks results) and generated several lists of stocks based on our special screens including: Bollinger Band Breakouts, Trend Leaders and Cash Flow Kings (you can download these lists at the Trend Leaders page).

Trend Leaders represents a collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. To obtain the list of Cash Flow Kings we calculate the free cash flow yield of all the stocks we scan and pick the ones whose yield is 50% or greater.

The "Leadership Screen"

All these screens generate big lists since we run them against essentially the entire stock market. Combining the Trend Leaders and the Cash Flow Kings results in what I think of as the "Leadership Screen" as i…

Weekly Review - technicals dicey, will earnings save us or bury us?

Well, there was no Obama rally last week despite all the hooplah over the inauguration. On the contrary, markets dived several more percent.

Interestingly, the U.S. market was somewhat spooked by international happenings this week. The situation with banks and their need for bail-outs in the U.K. sent chills down the backs of U.S. investors. Nationalization became a hot blog topic and U.S. financial stocks went into a tailspin. The fact that most U.S. banks reporting earnings this week revealed still more writedowns and ever higher loan loss reserves certainly didn't help sentiment in the financial sector which dropped another 7%. Other international developments included major declines in GDP in both the U.K. and China. South Korea saying maybe U.S. treasuries were no longer a buy helped put pressure on our bond market.

News was mixed in the tech sector though it tilted mostly negative. Apple beat, Google did well but investors focused on Microsoft who missed expectations, withdrew…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 23, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their uppe…

Tech Bellwether Earnings Scorecard

To get a measure of this earnings season, I've been keeping track of some of the tech bellwethers. There have been a few winners but, for the most part, the results aren't encouraging.

The following table is our tech scorecard for the week ending Jan 23, 2009. Three out of fourteen companies on our list of bellwethers have beat earnings expectations thus far in this earnings season.

CompanyEarnings ResultsCommentsIBMbeat by $0.25good guidanceApple (AAPL)beats by $0.32
conservative guidance (as usual)
Intel (INTC)
miss (rev -23%)conservative guidanceeBayprofits down 31%
weak guidance
Nokia (NOK)
miss by $0.02weak guidanceSony (SNE)
miss, first annual loss in 14 yearsguidance revised downward
Microsoft (MSFT)missed by $0.02announced layoffs, not providing guidanceGoogle (GOOG)beats by $0.15AdSense (30% of revenue) flat, $1B charge to write down AOL and Clearwire. Search ads, aggregate clicks doing well. Somewhat conservative guidance offered.
MEMC (WFR)earnings down almost 80% from prior y…

State Street props up stable value funds - another crack in the foundation?

There is good news and bad news. The good news is that State Street (STT) decided to provide support to their stable value funds in the face of potential losses. The bad news is that they had to.

Here is what they said in their 8-K and referred to in their recent conference call:
"In some very limited circumstances, and consistent with applicable regulatory requirements, we may compensate investment pools for all or a portion of the pool’s losses even though we are not statutorily or contractually obligated to do so. For example, during the fourth quarter of 2008, we elected to provide support to stable value accounts managed by SSgA."
They go on to provide a little detail:
"...we elected to purchase approximately $2.5 billion of securities from these accounts that had been identified as presenting increased risk in the current market environment and to contribute an aggregate of $450 million to the accounts to improve the ratio of the market value of the accounts’ portfoli…

What is the ratio of inventories to sales telling us?

If you weren't sure how bad sales in the U.S. have been lately, take a look at the chart below.

Last week the Census Bureau released the Manufacturing and Trade Inventories and Sales report for November 2008. At this point, November seems like ancient history but the chart seemed dramatic enough to me that I wanted to share it with readers.


This chart tracks the ratio of inventories to sales. What we are seeing is the effect of sales falling at a much faster rate than inventories. Here are the underlying numbers:
Sales were down 5.1% from October to November while inventories were down 0.7%. These are the adjusted numbers. The unadjusted numbers were much worse: sales down 12.5% with inventories down only 0.5%.Year-over-year, adjusted sales were down 8.9% while inventories were up 3.3%. Unadjusted sales were down 12.2% and inventories up 3.1%.Note that we are just about at the worst level realized during the recession following the bursting of the dot-com bubble. In the years since, …

TradeRadar SuperList - the best of our weekly picks for Jan 16, 2009

This post looks at the results of combining two stock screens that we ran this weekend at TradeRadar.

We executed the usual weekend Alert HQ process (read about this weeks results) and generated several lists of stocks based on our special screens including: Bollinger Band Breakouts, Trend Leaders and Cash Flow Kings (you can download these lists at the Trend Leaders page).

Trend Leaders represents a collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. To obtain the list of Cash Flow Kings we calculate the free cash flow yield of all the stocks we scan and pick the ones whose yield is 50% or greater.

All these screens generate big lists since we run them against essentially the entire stock market. It occurred to me that combining the Trend Leaders and the Cash Flow Kings might provide an interesting outcome.

So what did we get when we combined these two scans?…

Weekly Review - financials take down the market, again

It was all about the financials again this week.

Citigroup reported over $8 billion in losses for the most recent quarter and announced it was splitting up into two entities: one to concentrate on core investment and banking activities, credit cards and high net worth individuals and another to hold all "non-core" businesses like real estate lending, private branded credit cards, various kinds of consumer lending (CitiFinancial, Primerica, student loan and auto lending) and most of the toxic waste currently dragging down the balance sheet. In addition, Citi did a deal to sell majority interest in its brokerage unit Smith Barney to Morgan Stanley. There was a whiff of desperation there as Smith Barney was actually one of Citi's profitable businesses.

As if that wasn't exciting enough, we had Bank of America receiving another 11th hour bailout from the Treasury. BofA claimed that without it they wouldn't be able to complete the acquisition of Merrill Lynch. BofA then…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…

Charts are a mess - using cash flow yield to find strong stocks

Cash Flow Yield - the higher the number, the more cash per share is being generated by the business that is available to shareholders.

That's the definition of the Cash Flow Yield indicator calculated by the Alert HQ software and the TradeRadar software. The indicator is based on a Free Cash Flow determination that starts with Cash Flow from Operations and then subtracts any Capital Expenses. The intention is identify how much cash the company is generating over and above what it takes to pay the bills of the ongoing operations as well to pay for the cap ex investments intended to grow the company in the future. Data from the most recent quarter is used and then annualized so as not to penalize companies that are recovering from bad quarters in the past.

This overall Free Cash Flow number is then divided by the Market Capitalization to generate a percentage which actually equates to cash flow per share divided by the share price.

This is a favored indicator used by many managers (Bru…

The big "if"

Last week markets received some pretty ugly news related to employment, or the lack thereof. ADP came out with their estimate of nearly 700,000 jobs lost in December. The Bureaus of Labor Statistics released their non-farm payrolls report which included job losses of 524,000 and an unemployment rate hitting 7.2%.

Big numbers but what do they mean? And how do they compare to unemployment in previous downturns? I'd like to share with readers the following two charts from Citi's "Comments on Credit" that provide some interesting comparisons.

Citi has looked at job losses over time starting at the cyclical peak of the stock market prior to each recession. They have plotted this data for the current recession and compared it to the same data for several earlier recessions. The have further differentiated between "mild" recessions and "deep" recessions.

Job losses --

This first chart shows job losses. Our current recession is the blue line. Note that it is …

Stable value funds - the controversy continues

As markets began to tumble early last year I wrote a couple of posts advocating that workers put a sizable percentage of 401k investments into stable value funds.

This generated some debate as stable value funds are somewhat murky investments. It is difficult to find out exactly what investments are held within the funds and there was some fear regarding the fact that it had been common for these funds to hold Fannie Mae and Freddie Mac bonds, for example. Adding to the apprehension, AIG was one of the companies that was well known for providing insurance (known as a "wrap") for these funds in the event they are not able to generate promised returns and needed to make up the difference. Most investors remember when these companies were in the spotlight and eventually required government bailouts.

Despite all the worry, stable value funds have been quite stable during all the market turmoil of the last year or so. Except for one.

The Wall Street Journal recently wrote about an I…

Weekly Review - stocks follow sentiment down

Markets declined this week on bad jobs numbers, bad retail numbers, bad auto sales numbers and downbeat announcements from bellwethers Intel and Wal-Mart.

To add some detail, On Wednesday ADP released their December job loss results calculated according to their new methodology and the numbers were way worse than anyone expected, coming in at 693,000. The market fell hard that day and left investors prepared for the worst with respect to the BLS non-farm payrolls report which hit on Friday. In this case, December layoffs were in line at 524,000 while the unemployment hit 7.2%, somewhat above expectations. Markets spent Friday in the red and finished the last hour of the week falling further.

As for company announcements, Alcoa announced major layoffs and a suspension of capital investments, Intel surprised with the second projection of falling revenue within three months and even Wal-Mart reported unexpected weakness in same-store-sales.

Wal-Mart was not alone, as a substantial number of…

Free stock alerts, Trend Leaders and Bollinger Band Breakouts for Jan 9, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

And there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper …

Goldman slaps software stocks

Lately I have parsing the Durable Goods reports (read latest post) to more precisely identify what is going on with technology hardware manufacturing.

Today Goldman Sachs released a report that focuses on the other big part of the hi-tech picture: software. Suffice to say, it wasn't pretty.

Here is a quote from the report:
"The worst of the IT-spending slowdown likely remains in front of us, as we start the clock on slashed 2009 budgets. We forecast 0 percent revenue growth for our group, below consensus at 5 percent, and 1 percent earnings growth, below Street at 2 percent."Goldman presents a recommended list of big-name IT software stocks that they consider to be "safe" choices in the current environment. Microsoft (MSFT) and Oracle (ORCL) are on the list, as well as companies that suggest "strong cost-cutting discipline and mission-critical product sets" like BMC (BMC), CA (CA), and Symantec (SYMC). BMC and CA are big in system management and support …

PC business down the tubes

Yesterday I wrote that investors should not be fooled by the increase in New Orders for Computers & Electronic Products in the most recent manufacturing report (read that post).

Prompt confirmation was provided today:
Lenovo surprised by indicating they are now expecting a quarterly loss. They further indicated that they will be cutting 2500 employees or 11% of the workforce. The company pointed to lower demand in the commercial sector and slowing sales in China, one of its main markets.
Intel revealed that Q4 revenue will now be below expectations: down 20% from the last quarter and down 23% year-over-year. This is lower than its previous guidance which was provided only on November 12. The company said it was impacted by slowing demand from end users and a build-up of inventory in the supply chain.
This goes to show that the PC industry is caving in. Intel was surprised by a drop in revenue over the course of less than two months. Intel is usually pretty good at predicting its quart…

Manufacturing report - is tech finally looking up?

The preliminary numbers for November 2008 manufacturing were released today. Headline numbers on factory orders were terrible - twice as bad expected: down four consecutive quarters and falling by 4.6% month-over-month.

Focus on tech --

We previously wrote on the advance number for November and focused on the tech sector (to read it, click this link to that post).

As our proxy for tech, we'll again look specifically at the Computers and Electronic Products category. This segment includes computers and related products, communications equipment and semiconductors.

In today's release there were some small downward revisions for Shipments but some small upward revisions for New Orders.

The following chart shows the situation with Shipments:


At a summary level, Shipments were down 4.5% month-over-month from October to November but down only 1% year-over-year.

Some of the most hard-hit sub-categories were as follows:
Computers: down 12.4% month-over-month and down 11.1% year-over-yearAudio…