Friday, July 31, 2009

ProShares ETF links - the big list for July 31, 2009

The level of noise around leveraged ETFs has been rising lately. What's going on?

Lately, there has been a lot of discussion related to leveraged ETFs and how some brokerages are no longer allowing clients to trade them. And, of course, there are a number of posts pointing out why these vehicles should be avoided (be sure to read the comments as there are plenty of investors who are not opposed to these ETFs at all). In the interest of being even-handed, we have also included a few posts that suggest why investors might want to use these ETFs.

It has been nearly five months since the last time we presented a links post focused on ProShares ETFs but today we have an interesting and well-edited selection of articles. I highly recommend the post at TheStreet.com for a well-reasoned warning and a different take on the leveraged ETF dilemma. ETFGuide.com does a good job taking the other side of the argument.

So check out the following link list and don't hesitate to click through to the sites of some of these authors whose posts are presented at Seeking Alpha.

Fri Jul 31DIGOil PriceVolatility Driving Valuation of Wide Range of Equity Prices: 5 Star AnalystCharts Future Investing Patterns -- at Wall Street Transcript
UCO
Fri Jul 31FXPOberg: Short ETFs 'Pick Off the Dumb Guy' -- at TheStreet.com
SH
SKF
Fri Jul 31REWIs the Backlash against Leveraged ETFs Warranted? -- at ETFguide.com
ROM
RXD
RXL
SKF
UYG
Fri Jul 31SDSProShares:An All Out Defense of Leveraged ETFs -- at Seeking Alpha
SSO
Fri Jul 31DDGExxon'sProfits Slide: Energy ETFs in Focus -- at Seeking Alpha
Fri Jul 31TBTTheLong and Short of U.S. Treasury Auctions -- at Seeking Alpha
Fri Jul 31TBTSeven Drivers Behind the Recent Boom in Bank Profits -- at Seeking Alpha
Fri Jul 31TBTWhat Did New York Fed Chief William Dudley Actually Say About Monetary Policy? -- at Seeking Alpha
Thu Jul 30SKFDead Banks Walking -- at Seeking Alpha
Tue, Jul28FXPThe China 'Bubble': Buy, Sell, or Hold? -- at Seeking Alpha
PSQ
Sun, Jul26EZJJapan: June Exports Sustain Upward Momentum But Surplus Employment Rockets -- at SeekingAlpha
Wed,Jul 22BZQEdward Jones Discontinues Sale of Leveraged ETFs -- at Seeking Alpha
EET
EFO
EPV
EZJ
JPX

I am also providing this link to the Google "Search Blogs" feature that will return any blog post that includes the symbol for one of the ProShares ETFs that was written in the last month. Bookmark this post and come back to use this link at any time. There may be some overlap with the content presented above.

If you haven't tried it yet, I would also like to recommend the TradeRadar Stop Calculator for leveraged ETFs. It pulls up latest prices and keys off the underlying indexes that leveraged ETFs are intended to track.



Thursday, July 30, 2009

Up and down Thursday - Swing Signals, Trend Busters and Trend Leaders for July 30, 2009

The NASDAQ gapped up today but couldn't hold its intra-day highs. No gap on the S&P 500 but otherwise a similar performance. Stocks ran up early, gave ground late in the day but still finished with decent gains. This seemed about right as the morning rally seemed to me to be a bit overdone. Catalysts today included a Goldman Sachs upgrade for GE, a beat by Motorola and a decrease in the unemployment rate. Weekly initial claims climbed for the second week in a row but still managed to stay below 600,000. Decent news but not worth a 2% rally as we saw in the morning. Stocks still managed to finish up around 1% which is nothing to complain about.

The view from Alert HQ --

Our list of Trend Leaders has finally gotten above 1000. This is a good indication of the bullish sentiment that is prevelent but it gets us closer to the kind of extreme levels that presage a pullback.

As we saw on Tuesday, we have more SELL signals than BUY signals on our list of Swing Trading Signals. This kind of action has been seen before a pullback.

Our Trend Busters list is shrinking but, in contrast to our Swing Signals, shows more BUY signals than SELL signals

For the most part, our signals reflect a high level of bullishness. The weakness in our Swing Signals is no surprise as, prior to today, stocks had stopped their mad rush to new highs. So I'm pretty happy to see the bullish tone but I'm worried about how some of these signals are getting that look - the kind of look that suggests new highs will be harder to come by and stocks could be ready to turn down again.

Friday we get the advance look at GDP for for the second quarter. That could be a big market mover if it blows away expectations on the upside or disappoints big on the downside. Anything in between is liable to be a let down and we could see stocks give up today's gains.

Thursday's Signals --

Today we have the following:

  • 27 Swing Signals -- consisting of 10 BUY signals and 17 SELL Signals.
  • 1018 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. There are 242 new stocks that made today's list and 221 that fell off Tuesday's list.
  • 14 Trend Busters of which 12 are BUY signals and 2 are SELL signals
Using the signals --

As a humble practitioner of technical analysis, I admit that every signal can't be correct. Alert HQ can, however, provide a filtered selection of likely candidates from which investors can choose. Remember, if you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Wednesday, July 29, 2009

Durable Goods Report - is the tech sector slipping?

The Durable Goods report for June was released today. What did it say about the tech sector?

The last couple of months have shown that the decline in tech was moderating and indeed some improvement was in evidence. Did that trend continue?

Shipments --

Many analysts say that new orders are great but shipments are what really count. The following chart shows shipments for the tech sector in general as represented by the Computers and electronic products category.


The results here are alarming. Shipments have reached a three year low. The recent upswing has been undone.

The next chart shows shipments in the semiconductor sector. There was a big surge in April and now two consecutive months when shipments have decreased. The only consolation is that at least we didn't hit a new low.


At last, some good news. Here in the Computers and related products category, shipments actually increased last month. The chart below shows what looks like a serious bottom being made and we are grateful for that.


New Orders --

The following chart shows new orders for the tech sector in general. After hitting a multi-year low, new orders have increased and though we are not at a new low it now seems like the downward trend is resuming.


The next chart shows new orders for the Computers category. Here we had a decrease last month but the situation doesn't really look too bad at all. The decrease was very small and new orders remain around the highest level we have seen in seven months.


Conclusion --

First, the bad news: for the tech sector as a whole, long term trends are still looking weak.

Now the good news: there are green shoots in the Computers category. This is the only area in the charts above where improvement seems to be ongoing.

Interestingly, we have now seen a surge in Semiconductors followed by strength in Computers. So semiconductors did prove to be a leading indicator in this case. With Semiconductor shipments now weakening, let's hope that the seasonal upturn suggested by Intel does actually play out. Otherwise, this is not a good sign at all.

Given that this data is from last month, it is worth referencing the current earnings season. We have seen plenty of tech companies beat expectations; some have even provided positive guidance. Unfortunately, the charts above clearly indicate that the entire tech sector is not completely healthy yet. There are certainly pockets of strength but overall, tech is not yet out of the woods. On the other hand, are there any sectors that are doing appreciably better?



Tuesday, July 28, 2009

Muddle through Tuesday - Swing Signals, Trend Busters and Trend Leaders for July 28, 2009

This is a quick post to announce that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 26 Swing Signals -- 11 BUY signals and 15 SELL Signals.
  • 997 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 286 stocks that are new additions to the list and 165 that fell off the previous list.
  • 22 Trend Busters of which 16 are BUY signals and 6 are SELL signals.
Stocks muddle through and end the day mixed --

The wild advance in the stocks market has finally slowed down. The last few trading days have been noncommittal. Today was more of the same as stocks sank, attempted to rally in the last couple of hours and ended mixed. Only the NASDAQ managed to end up in the green. It is clear investors are pausing to digest the recent gains.

The results are clear to see at Alert HQ. The number of stocks on our list of Trend Leaders has expanded to nearly 1000 but the increase in this number has slowed down noticeably. Larger numbers of stocks are falling off the list and many more stocks coming onto the list - a sign of rotation as more stocks become exhausted and fail to meet the criteria for being a Trend Leader.

Our Trend Busters list continues to reflect bullishness as breakouts to the upside continue to outnumber the breakouts to the downside.

We are seeing a divergence, however, with our Swing Signals. Here, the BUY signals are now outnumbered by the SELL signals. This is the first time we've seen that happen in weeks.

We are seeing a combination of bullishness and hesitation in our signals. As of today, it looks like stocks are taking a rest, not that they are getting ready for a major decline. That would imply being a buyer on the dips. What do you think? Are we a coiled spring ready for another run up? Or are we on the verge of another meltdown?

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Saturday, July 25, 2009

Break out or break down? Stocks approach extreme levels

Running late tonight. I'm all covered in polyurethane and joint compound from the multiple projects I'm working on around the house. Painful as it may be, progress is being made.

And so it was in the markets this week, also. Progress was made again despite a disappointment or two from a few tech stocks. Major averages were able to add another 4% or so to the previous week's 7% gains. Stocks now appear to be well overbought and ripe for a pullback. I've read recently, however, that there is still quite a bit of skepticism out there. A contrarian might think that suggests this rally might have a bit of gas left in the tank. And earnings season may still have a few positive surprises waiting for us.

So where are the markets today and where might they be going? We look for clues in some of the charts that follow.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:


The above chart, illustrating our moving average analysis, is leaning quite bullish. You can see a sharp downturn followed by an equally sharp upturn. Note that the number of stocks above their 50-day MA is extending its lead over the number of stocks whose 20-DMA is over their 50-DMA. We are closing in on roughly 80% of all stocks being above their 50-day moving average. We're not there yet, but we are certainly getting to kind of extreme levels that precede a pullback.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.


Here again, the chart is quite bullish. It shows that more than half of all stocks are now in up-trends and a dwindling number of stocks are in down-trends. This chart is also approaching extreme levels.

Conclusion --

Sentiment is positive, earnings are decent considering the recessionary backdrop and economic reports have been reasonably benign. Why shouldn't stocks go up?

Technicians are pleased at the moves that have been made (some are even predicting another leg up) while those who rely on fundamentals are more skeptical (with some justification).

With the charts showing the market out of danger for the time being (though closing in on extreme levels), investors will need to see some follow through from earnings and economic reports.

Whereas last week was very light in terms of economic news, this week the pace picks up. We will see new home sales, consumer confidence, the S&P/Case-Shiller Home Price Index, durable goods, the Fed Beige Book, initial jobless claims, advance GDP, core PCE and the Chicago PMI.

We have a slew of earnings reports coming up, as well. So far, there has been a good percentage of companies beating lowered expectations. Will investors get impatient with that scam? Or will they continue to look on the bright side?



Weekend Winners and Losers - Alert HQ BUY and SELL signals for July 24, 2009

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
The view from Alert HQ --

After a 7% gain in the previous week, markets, rather than take a rest, pushed on and racked up another 4% gain with small caps doing even better. There were barely any economic reports but the ones that were released helped stocks rally, especially the existing home sales report that handily beat expectations. Jobless claims were up but still below expectations. Then there were the earnings reports. There were still a good percentage of beats but there were a few that didn't measure up to investor expectations and that put a damper on tech stocks toward the end of the week.

As a result, though our signals still show a strong tendency towards bullishness, we are seeing a moderation in momentum. The Trend Leaders list seems to have hit a plateau at under 900. In our Swing Signals and Bollinger Band Breakouts lists the BUY signals overwhelmingly outnumbered the SELL signals but the absolute number of signals has not increased. Our Trend Busters list grown somewhat and they are showing a similar tilt toward bullishness.

After two weeks of earnings season, investor sentiment is still pretty positive; however, stock price gains are bringing out the bears who say the rally is exhausted, that expectations were so low it is no surprise companies are beating estimates and that earnings improvement has been due to cost cutting, not increasing revenue. Sounds like a wall of worry. Can we keep climbing it?

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 12 Alert HQ BUY signals and 4 SELL signals
  • Based on weekly data, we have 5 Alert HQ BUY signals and 4 SELL signals
  • Based on daily data, we have 876 Trend Leaders. 193 new stocks joined the list since Thursday and 36 fell off the list since Thursday.
  • Based on daily data, we have 228 Bollinger Band Breakouts but we also have 276 Breakouts based on weekly data.
  • We have 805 Cash Flow Kings
  • Based on daily data we have 17 Swing Signals of which 12 are BUY signals and 5 are SELL signals. No Strong BUY signals or Strong SELL signals today
  • Finally, we have Trend Busters with 28 signals based on daily data (only 4 are SELL signals) and 23 based on weekly data (17 BUY signals and 6 SELL signals).
Using our signals --

Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.



Friday, July 24, 2009

Microsoft earnings report - bad for tech or bad for Microsoft?

Microsoft (MSFT) reported a decline in revenue in the most recent quarter. Is that a bad omen for the whole tech sector?

First, a quick look at the numbers. For the fourth quarter, Microsoft reported net income of $3.05 billion, or 34 cents a share, on revenue of $13.10 billion, down 17 percent from a year ago. Expectations were for earnings of 36 cents a share on revenue of $14.37 billion.

Here are a few quick thoughts on three of Microsoft's business segments.

Microsoft Office software product line --

As good as Microsoft's suite of Office productivity software is, there is no compelling reason for current users to upgrade if they haven't done so already. The next iteration is not due until next year.

Given the cost of Office and the fact that even old versions are packed with plenty of features that most people never even use, it is no surprise to see sales stagnating.

There are also much less expensive alternatives to the pricey Microsoft products. Both Google and Zoho offer quite decent alternatives for costs that range from free to reasonably cheap. These two have not yet claimed any kind of huge market share yet but their mere existence might be enough to cause current Microsoft customers to hold off upgrading and potential new customers to try the products from these two competitors first.

Operating Systems for PCs --

Second verse, same as the first.

The Windows operating system for PCs also suffers from the situation where there is no compelling reason to perform an upgrade, especially to the much-maligned Vista.

Microsoft, like Dell, was also hit by declining PC sales due to the economic downturn.

Extending the theme described above, there are more alternatives to Windows than ever before. With the surge in sales of netbooks, we see that Windows isn't always the first choice for installation. There are various versions of the open-source Linux operating system that are often chosen both for being cheaper and more light-weight than Windows.

Another alternative that is slowly gaining popularity is cloud computing. With everything hosted in a browser, there is no need for an operating system as powerful and resource-hungry as Windows.

Again, the alternatives to Windows still have very modest market share but it shows that competitors can successfully chip away at Microsoft's dominance of the desktop.

Server software --

This category consists of the heavy duty Windows operating system software used on servers and associated products like SQL Server, Microsoft's database software that competes with Oracle, MySQL and others.

For the most part, this segment held it's own with income nearly flat year-over-year. This is despite the fact that Linux is considered a credible competitor to Windows and MySQL is considered a credible competitor to SQL Server.

Online division --

This is where Microsoft lost the most money. Losses actually exceeded revenues.

Again, Microsoft is trying to battle tough competitors and users have plenty of choice. Need to do a search? Google and Yahoo can do the job as well as Bing if not better. Need to check on the stock market? Google and Yahoo can just as easily provide the information. Checking on the day's news? A plethora of alternative web sites exist.

You get the picture. Microsoft is doing what so many others are also doing. No wonder they are having a tough time making money.

Conclusion --

Where Microsoft really provides value is in the server software segment. Here it has a product line that is robust and reasonably cost effective. And we can see the market has rewarded the company accordingly.

In its Office and Windows PC segments, the company has often been charged with offering bloated, overly complicated products that are too expensive. There is some truth to that accusation. So when purse strings are tightened in economic bad times like we see today, these kinds of products become nice to have rather than necessities.

Microsoft's results do not so much provide a bad omen for the tech sector in general as they provide a bad omen for Microsoft itself. The theme that has repeated itself in the paragraphs above is that there are increasingly compelling alternatives to Microsoft's products and web sites.

To me, that bodes well for the tech sector and for customers. Competition and new products are what makes the tech sector exciting. Seeing Microsoft begin to loose their dominance is not a sign of decline but, under these circumstances, a sign that the tech sector remains healthy.


Disclosure: no positions



Thursday, July 23, 2009

ProShares ETF survey - which ones have the strongest technicals?

With the stock market seemingly melting up, I wanted to know which ProShares ETFs were generating the best technical signals.

The list below shows those ProShares ETFs that are exhibiting strong upward trends according to DMI and Aroon analysis and also have their 20-day moving average above their 50-day moving average.

SymbolNameCategory
DDMUltra Dow30Ultra Market Cap
QLDUltra QQQUltra Market Cap
ROMUltra TechnologyUltra Sector
UGEUltra Consumer GoodsUltra Sector
ULEUltra EuroUltra Currency
UPWUltra UtilitiesUltra Sector
USDUltra SemiconductorsUltra Sector

All of these are Ultra ETFs. In other words, they deliver 200% of the performance of their underlying index on a daily basis.

For those of you who are looking for a little extra juice in your portfolio, these 2X ETFs are a good source. Unfortunately, after the big run-ups they have seen in the last two weeks, it is hard to recommend them as a BUY today. On the other hand, these ETFs represent sectors or styles on which investors have particularly positive outlooks. On a pullback, these ETFs could be the ones to buy.

Disclosure: positions in ROM and USD



Thursday makes it twelve - Swing Signals, Trend Busters and Trend Leaders for July 23, 2009

A twelve day winning streak? This is no baseball team, this is the NASDAQ I'm talking about. Stocks looked like they might finally take a rest when it was reported that existing home sales came in better than expected. With that news, major averages took off and closed with gains of roughly 2.5%.

The view from Alert HQ --

Our list of Trend Leaders has dwindled a bit since Tuesday but on the whole we still have a good number of stocks and ETFs on the list. And why not, with stocks spiking as they have been for the last two weeks? This list still maintains a bullish tone.

The number of Swing Trading Signals today has increased and we continue to see that the majority are BUY signals. In a good indication of the breadth of this rally, today's BUY signals are widely dispersed across many different industry sectors.

After two weeks of rapidly rising prices, it is a little surprising to see an increase in the Trend Busters list. By now I would have thought that every stock that was going to reverse to the up-side already had. Apparently, there are still some left and they're turning up as BUY signals on our Trend Busters list.

All in all, our signals show a market flexing its muscles. We know nothing goes straight up forever but for now Alert HQ shows that stocks are still on a roll with no real signs of weakness yet.

Thursday's Signals --

Today we have the following:

  • 33 Swing Signals -- consisting of 27 BUY signals, a just 6 SELL Signals.
  • 719 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. There are 339 new stocks that made today's list and only 34 that fell off Tuesday's list.
  • 48 Trend Busters of which 46 are BUY signals and 2 are SELL signals
Using the signals --

As a humble practitioner of technical analysis, I admit that every signal can't be correct. Alert HQ can, however, provide a filtered selection of likely candidates from which investors can choose. Remember, if you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Wednesday, July 22, 2009

How to analyze tech stocks - 7 factors that must be considered

There are a number of measures that are especially pertinent to tech stocks. Do you know what they are and how to interpret them?

Earnings season is in full swing. This post will attempt to provide a few guidelines for drawing your own conclusions when reading tech stock results. This is not to say that standard measures of revenue and income are not important; they are. The point of this post is that there are areas to examine that will allow you obtain a deeper understanding of a tech company's results. And hopefully, will allow you to do a better job trading tech stocks.

The seven factors to consider --

  • Year-over-year comparisons versus sequential quarterly results: It is important to always examine y-o-y revenue and earnings. It may not be obvious that tech sales have a seasonal component but they do. Enterprise software companies, for example, are affected by the budgeting cycles of large corporations which are generally on an annual calendar-based cycle with projects often ramping up as the new year begins and budgets are defined. Hardware component companies that are players in consumer electronics often have bigger sales in the summer and fall as they supply parts to the companies that are focused on building products for the holiday selling season. This is why we have recently heard some of the semiconductor companies like Intel (INTC) and SanDisk (SNDK) talking about a "return to seasonal trends".
  • Gross Margin: theoretically, this term is not really specific to tech companies as any company can be evaluated on this metric. Simply put, Gross profit margin = (Revenue - Cost of Goods Sold) divided by Revenue. Investors track this carefully for tech stocks because it provides a quick way of identifying if costs are under control. There are two more factors that play into this analysis: scale and factory or fab utilization. Usually, when production systems are more fully utilized, cost per unit is reduced which helps to reduce the overall cost of goods sold (COGS). Similarly, efficiencies of scale will tend to drive down unit costs. When you are looking at hardware companies that are cranking out electronic components, unit costs can be a huge driver for overall profitability. Declining margins, therefore, are often a sign prompting investors to stay away from a stock, a situation we saw in the recent earnings report from AMD.
  • Average Selling Price (ASP): this term is most often used with respect to semiconductor companies. It can be used to describe a specific product line of chips or it can be a consolidated number for several different product lines. Declining ASPs are often a red flag for tech investors. On the other hand, there may be a "sweet spot" where a product is cheap enough to gain wide acceptance but expensive enough to provide good profit to the manufacturer. It is important to know where in that lifecycle a company's flagship products are. Where ASPs are high and the products tend to be cutting edge, like the microprocessors sold by Intel (INTC), ASPs are highly scrutinized and commented upon. We saw this when Intel began reporting higher shipments of their lower cost Atom chips for netbooks.
  • New license revenue: For software companies, comparing new license revenue versus maintenance revenue is a critical evaluation. In tough times, these companies are supported by maintenance revenue but if you are looking for growth, it is important to see new licenses being sold in order to increase the user base. This is always a major topic when Oracle (ORCL) or SAP, for example, report earnings.
  • Debt: most tech companies have modest amounts of debt and strong balance sheets. This is one reason they have gained in popularity during this recession. Beware tech companies with loads of debt. Be sure cash flow covers debt payments. Use a ratio like debt-to-equity to evaluate the debt load. A large company like Cisco Systems (CSCO) can accommodate a lot more debt than a small company like Skyworks (SWKS). Ratios help you make an apples-to-apples comparison across companies.
  • R&D: beware tech companies with R&D expenses that are falling significantly on a sequential basis. This could be a sign that they are milking current product lines while ignoring the future. It is true that during an economic downturn like we have today, companies will tend to reduce R&D somewhat but an investor needs to assured that the company is continuing to invest in its future.
  • Customer base: It is not uncommon for small-cap tech companies to have just a few large customers. This is especially true of companies like Big Band Networks (BBND) that sell into the telecom sector. This sector tends to be dominated by a few huge service providers in each country, thus limiting the potential customer base that is available. Over time, however, the customer base should expand as the company develops more products or extends its international footprint. Beware the companies where this hasn't occurred or where a large customer is suddenly lost.
Try using these seven factors to evaluate the next tech stock you are interested in and see if they don't provide a much clearer picture of the company's true worth.

If there are factors you use that I have not listed here, please leave a comment!



Tuesday, July 21, 2009

Come from behind Tuesday - Swing Signals, Trend Busters and Trend Leaders for July 21, 2009

This is a quick post to announce that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 21 Swing Signals -- 18 BUY signals and 3 SELL Signals.
  • 414 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 215 stocks that are new additions to the list and 35 that fell off the previous list.
  • 35 Trend Busters of which 29 are BUY signals and 6 are SELL signals.
Stocks continue their winning streak, barely --

Markets have been on a tear for over a week now. In a change of pace, stocks spent most of the today underwater and then began a slow rise. By the close, stocks had come from behind and finished with minor gains. The S&P 500 has now risen six out of the last seven days. The NASDAQ has finished with gains for ten days straight.

The results are clear to see at Alert HQ. The number of stocks on our list of Trend Leaders has surged to over 400. Again, we are seeing fewer stocks falling off the list and many more stocks coming onto the list - a sign of continued improvement in market breadth.

Our Trend Busters list also continues to reflect bullishness as breakouts to the upside continue to greatly outnumber the breakouts to the downside. Similarly, the BUY signals are in the majority on our list of Swing Signals, also.

At some point stocks will need to take a breather. After another good earnings report from Apple (AAPL) announced after the close today, perhaps markets will decide to sell the news on Wednesday. Be that as it may, I am still thinking there are further gains in store over then next week or two. Certainly, things continue to look pretty bullish here at Alert HQ.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Sunday, July 19, 2009

Weekly Review - the Meredith and Intel rally

The stock market sure rallied last week. Can it continue at this pace?

Monday belonged to the financials. Analyst Meredith Whitney actually came out with a Buy rating. It was on Goldman Sachs (GS) and, delivering on heightened expectations, Goldman came through with a killer earnings report.

Wednesday was all about tech. As reported Tuesday evening, Intel not only beat on earnings but they also delivered a forecast that fired up the market. Their CEO's comments on expectations of a firmer second half and the appearance that customers seem to be restocking inventories at a higher than anticipated rate were exactly the kind of positive words investors were looking for. As the week progressed, Google (GOOG) beat but saw their shares droop and IBM beat and saw their shares jump. For the most part then, tech was on a roll and the entire market went along for the ride.

Economic reports kept pushing the "less bad" theme with NY Empire State Index, the Industrial Production and Retail Sales reports showing the economy still weak but getting better. More significantly, weekly jobless claims were less than 600K for the second week in a row.

So where are the markets today and where might they be going? We look for clues in some of the charts that follow.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:

SPY versus the stock market - Moving Average Analysis, 07-17-2009
Major averages gained roughly 7% last week and erased the losses experienced over the last four weeks. You can see how the number of stocks over their 50-day moving average jumped by more than we've seen since we began tracking these statistics and also jumped above the line that shows the number of stocks whose 20-day MA is above their 50-day MA. This is typically a bullish signal and implies there is more room to rally.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

SPY versus the stock market - Trend Analysis, 07-17-2009
Two weeks ago, the number of stocks in strong up-trends hit a three month low and I was wondering if we were due for a bounce. Last week we definitely got the bounce and our trend statistics switched directions: a falling line showing fewer stocks in down-trends and a rising line showing lots more in up-trends. Neither are at extreme levels yet so this indicator also implies the rally has room to run.

Conclusion --

The fears of a head-and-shoulders have passed. Market sentiment is reasonably positive. Even the financials are back in favor despite the troubles at CIT. And an unlikely source of strength last week was the fact that housing starts and building permits came in much better than expected. All in all, investors had good reason to be happy.

With few economic reports on tap this week, earnings will be the main focus. With earnings expectations still fairly low, it's likely that a good percentage of companies will beat. That will undoubtedly serve to further prop up this market. Our statistics, as outlined above, show that the market is not yet overvalued and could add to its gains. After such a strong surge, though, it would be no surprise to see stocks slow down for a bit. It might just be the pause that refreshes, however, before reaching new highs.



Saturday, July 18, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for July 17, 2009

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
The view from Alert HQ --

You really can't complain about this week in the stock market. With positive comments from Meridith Whitney, great earnings from Goldman Sachs, JP Morgan Chase, Intel and IBM and jobless claims down below 600K a second week in a row, there were good reasons for stocks to rally. The surprise is that this weeks gains completely undid the prior four week's losses.

As a result, our signals showed a strong tendency towards bullishness. The Trend Leaders list increased steadily all week long. In our Swing Signals and Bollinger Band Breakouts lists the BUY signals overwhelmingly outnumbered the SELL signals. Our Trend Busters are somewhat muted but they are showing a tilt toward bullishness as well.

Having gotten off to a good start, we'll see if this earnings season can keep up the pace of good news and keep stock market sentiment positive. In the meantime, if you were a buyer earlier in the week, we don't see any reasons why you shouldn't continue to hold on.

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 22 Alert HQ BUY signals and 10 SELL signals
  • Based on weekly data, we have 6 Alert HQ BUY signals and 11 SELL signals
  • Based on daily data, we have 234 Trend Leaders. 59 new stocks joined the list since Thursday and 9 fell off the list since Thursday.
  • Based on daily data, we have 116 Bollinger Band Breakouts but we also have 114 Breakouts based on weekly data.
  • We have 818 Cash Flow Kings
  • Based on daily data we have 28 Swing Signals of which 23 are BUY signals and 5 are SELL signals. No Strong BUY signals or Strong SELL signals today
  • Finally, we have Trend Busters with 27 signals based on daily data (only 4 are SELL signals) and 20 based on weekly data (11 BUY signals and 9 SELL signals).
Using our signals --

Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.



Thursday, July 16, 2009

The return of commodities?

What's going on with commodities?

We just released Thursday's Swing Trading Signals and I was struck by how many commodity ETFs are generating BUY signals. Most are energy related ETFs but there is a sprinkling of other types, as well.

Here is a preview of the list:

Symbol Name
DBCPOWERSHARES DB COMMODITY INDEX TRACKING FUND
DBE POWERSHARES DB ENERGY FUND
GSG ISHARES S&P GSCI COMMODITY-INDEXED TRUST
JJE IPATH DOW JONES-UBS ENERGY SUBINDEX TOTAL RETURN ETN DUE OCTOBER 22, 2037
JJT IPATH DOW JONES-UBS TIN SUBINDEX TOTAL RETURN ETN DUE JUNE 24, 2038
OIL BARCLAYS BANK PLC IPATH EXCHANGE TRADED NOTES LINKED TO GOLDMAN SACHS CRUDE OIL TOTAL RETURN INDEX
OLO POWERSHARES DB CRUDE OIL SHORT EXCHANGE TRADED NOTES DUE 6/1/2038
UHN UNITED STATES HEATING OIL FUND, LP
USL UNITED STATES 12 MONTH OIL FUND, LP

Some of these ETFs are quite well known and some are rather obscure. Nevertheless, this is a signal that a resurgence in commodities is under way.

If you are a trader, you might want to look into a few of these. It sure looks like this sector is poised for a rally.

Disclosure: no positions



Follow-through Thursday: Trend Busters, Swing Signals and Trend Leaders for July 16, 2009

It looked like today might result in profit taking but instead we got a fine follow through on the previous days' rally. With jobless claims under 600K for the second week in a row, continuing claims finally showing a decrease and JP Morgan Chase reporting excellent earnings, the bulls wouldn't be denied today.

The view from Alert HQ --

The buildup in BUY signals on our Swing Signals list gave us a suspicion that a rally was on the way. Sure enough, that's what we've had this week. The number of Swing Trading Signals today has receded but the majority are BUY signals. If they are truly a leading indicator, the outlook now should be that the rally is slowing down.

On the other hand, our list of Trend Leaders continues to bulk up. It has been steadily growing and reflecting the return of bullishness to the market as more and more stocks and ETFs begin to display strong uptrends.

A further confirmation of the positive tone is found in our Trend Busters list where BUY signals dominate SELL signals three-to-one.

Thursday's Signals --

Today we have the following:

  • 46 Swing Signals -- consisting of 43 BUY signals, a mere 3 SELL Signals.
  • 184 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. There are 107 new stocks that made today's list and only 21 that fell off Tuesday's list.
  • 45 Trend Busters of which 35 are BUY signals and 10 are SELL signals
Using the signals --

As a humble practitioner of technical analysis, I admit that every signal can't be correct. Alert HQ can, however, provide a filtered selection of likely candidates from which investors can choose. Remember, if you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Wednesday, July 15, 2009

If Intel does well, these stocks should, too

Intel's good earnings report and positive forecast for the second half of the year lit a fire under many tech stocks today.

It's a not a stretch to conclude that, if Intel is doing well, so will other companies in the semiconductor sector. But the benefits aren't limited to the semiconductor sector. There is another sector that might not immediately come to mind that I think will also see improved results.

Contract electronics manufacturing --

Intel has said that one reason their expectations for the rest of the year are looking better is that there seems to be solid demand from the consumer, especially in emerging markets and China. If Intel is selling more microprocessors, someone must be using them in finished goods, especially consumer electronics products. These days, much of the assembly of electronic products is outsourced. It would seem that those companies in the contract electronics manufacturing sector will see more business coming their way.

There are a number of companies in this sector but two of the biggest names are Flextronics (FLEX) and Jabil Circuit (JBL). We'll take a quick look at both.

Flextronics --

The company has factories on four continents and is all over the map with regard to services offered and customers served. According to Hoover's, Flextronics provides manufacturing services to the world's leading electronics companies, including Cisco Systems, Eastman Kodak, Ericsson, Hewlett-Packard, Microsoft, Research In Motion, and Sony-Ericsson. The company's services range from design engineering, through manufacturing and assembly, to distribution and warehousing. It manufactures and assembles printed circuit boards, electromechanical components, subsystems, and complete systems for a wide range of makers of networking and telecommunications equipment, computers, consumer electronics, and medical instrumentation.

The company had $30B in annual revenue but still managed to turn in a loss during this recession. The most recent quarter, however, Flextronics got a lot closer to profitability. It seems that expectations among investors are improving, as the chart below shows.

Flextronics stock chart
Jabil Circuit --

Again according to Hoover's, Jabil is one of the leading providers of electronics manufacturing services (EMS) in the world. Parts made by Jabil on a contract basis are used in communications products, computers and computer peripherals, and automobiles. Services range from product design and component procurement to order fulfillment and supply chain management. The company is rapidly expanding into Asian and Eastern European markets, through acquisitions and new plants. Top customers include Cisco Systems (16% of sales), Hewlett-Packard (11%), Nokia, and Philips.

Jabil is smaller than Flextronics but still rolled up over $12B in annual revenue. Like Flextronics, Jabil has also shown a loss over the last year but significant improvement in the most recent quarter.

Jabil Circuit stock chart
Conclusion --

Looking at these charts, it appears that some investors are already placing their bets on these two companies. If you accept that Intel's strength is a leading indicator for a large swath of tech companies, it is reasonable to assume that the strength in component makers will trickle down to those companies that put all the components together. That puts Flextronics and Jabil Circuit squarely in line to benefit from the nascent recovery in the tech sector.

Disclosure: no positions



Tuesday, July 14, 2009

Hang tough Tuesday - Swing Signals, Trend Busters and Trend Leaders for July 14, 2009

This is a quick post to announce that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 160 Swing Signals -- 151 BUY signals and 6 SELL Signals plus 3 Strong BUYs.
  • 98 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 59 stocks that are new additions to the list and 13 that fell off the previous list.
  • 18 Trend Busters of which 12 are BUY signals and 6 are SELL signals.
After Monday's big rally, stocks hang tough on Tuesday --

Stocks had a big day on Monday. The S&P 500, for example, rebounded from a sagging support level and avoided dropping through the neckline of the dreaded head-and-shoulders chart pattern that so many market participants were watching. With a couple of so-so economics reports that came out today, stocks had to fight to keep Monday's gains. In the end, stocks managed to hang tough and finish Tuesday with further gains.

After four weeks of declining stock prices, this week's upsurge is generating major turn-arounds in our daily data. Our Swing Signals have sky-rocketed and the vast number are BUY signals.

The number of stocks on our list of Trend Leaders nearly doubled. Rather than a rotation, we are seeing only few stocks falling off the list and a bunch more stocks coming onto the list - a sign of improvement in market breadth.

Similarly, our Trend Busters list suggests the beginning of a resurgence in the market as the breakouts to the upside now outnumber the breakouts to the downside.

With bellwether Intel coming through with a good earnings report after the close today, I am hopeful that we will see a further advance in the major stock averages. The promising chart action of the last two days provides more ammunition for the bulls. Now if the S&P 500 can just get back up above its 50-day moving average...

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Monday, July 13, 2009

Did investors throw the baby out with the bathwater?

When the market rallied from the March lows, there were a lot of bears who said that it was a "junk rally". They pointed out, rightly, that everything was going up, good stocks and bad stocks, companies with decent earnings prospects and companies without a prayer.

Since stocks peaked a month ago, markets have been falling steadily. Now we have the flip side of the coin: good companies are seeing their stock prices fall right along with weak companies.

Just to show how exaggerated the situation has become, I ran one of our custom screens. This one identifies those stocks that have shown both year-over-year and sequential gains in both revenues and EPS. This screen yields 193 stocks. The screen further checks to see if the stock is currently on our Trend Leader list which identifies those stocks that are showing strong up-trends according to Aroon, DMI and MACD analysis. This weekend the combined screen yielded only two little know stocks:

  • EMERGENCY MEDICAL SERVICES CORPORATION (EMS)
  • ENDURANCE SPECIALTY HOLDINGS LTD. (ENH)
I'm not saying there's anything wrong with these two companies. What I am pointing out is that investors have thrown the baby out with the bathwater. Whereas a month ago we would routinely see over a thousand stocks on the Trend Leaders list; the most recent list from this weekend has only 52.

It is not unusual for this kind of exaggerated action to be the precursor of a reversal. Sure enough, as Monday's trading played out, stocks ended up putting in a strong rally. As I write this, stocks are rallying in Japan. As long as earnings season doesn't disappoint, we could easily see stocks resume their upward trajectory.

PS: the two stocks mentioned above really are pretty decent with respect to fundamentals. Solidly profitable, P/Es not excessive, little debt, good cash flow. ENH has a 3.3% dividend and a PEG ratio of only 0.48. It almost looks like a value stock but with a rip-roaring chart. Both of these stocks are worth a look.

Disclosure: no positions



Sunday, July 12, 2009

Weekly Review - damage is done, time for a turnaround?

Well, I'm swamped with another renovation project in my 100-year old house. This time I have a deadline as the wife has arranged to host a 60th anniversary party for her parents. So if you've noticed that the posting here has been a bit anemic lately, it's because I've too busy with the hammer and nails.

Today I demolished a ceiling. I pulled down a bunch of mismatched acoustical tiles and discovered that the original plaster was cracked and falling off the lathe. As I took the ceiling down piece by piece, I started thinking about how the market has been cracking and how, over the last four weeks, piece by piece the different sectors have have been succumbing to this correction, failing to make new highs and falling through initial support levels.

This week there was actually some decent economic news and the reaction from investors was a big "ho hum". Weekly jobless claims finally fell below 600,000 for the first time since January. The ISM index, though still less than 50, came in better than expected at 47. The trade numbers also surprised with the trade deficit decreasing and exports turning out much better than anticipated.

Nevertheless, stocks declined again this week. It's been a solid month now of declines. Major averages have fallen to serious support. If they fall further, it could be a long way down. Which way next? We look for clues in some of the charts that follow.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:


This chart illustrates the damage that has been done in the last month. The number of stocks above their 50-day moving average has dropped to levels last seen in late 2008 and early in 2009. It is surprising to me we haven't seem some kind of bounce by now. Last week I proposed that the correction needed another week to play out. This chart makes it look like we might still need a bit more time

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.


This week we can see that the number of stocks in up-trends is getting pretty close to a bottom. The number of stocks in down-trends, though, has not reached particularly high levels yet.

Conclusion --

Last week I provided a chart showing SPY, the S&P 500 SPDR ETF. I diagrammed a potential head and shoulders and a significant level of support in the area around $88. Sure enough, SPY has halted its decline in the vicinity of $88. That's a hopeful sign. Unfortunately, it is still threatening to fulfill the head and shoulders and is riding its downward trending 200-day MA. These are signs that we are certainly not out of the woods yet.

Our statistics show that we should be coming to the end of this correction fairly soon. With earnings season starting to ramp up, there will be plenty of opportunities for markets to react to the performance and forecasts of bellwether stocks. This coming week will see some major financial companies reporting as well important tech companies like Google, Intel and IBM.

There will be some significant economic reports this week, too. We will see PPI, Retail Sales, CPI, Industrial Production, initial jobless claims and Housing Starts, as well as the minutes from the June 24 FOMC meeting.

So with stocks teetering on the brink of another 10% decline, we will look for a week full of earnings and economic catalysts to potentially turn things around.



Saturday, July 11, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for July 10, 2009

The latest list of free stock alerts is up and available at Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
This week's results --

Another bad week in the markets: losses in the major averages ranged from 1.6% to over 3%. Economic reports were mixed but pretty much all the news was greeted with a negative reaction. Sentiment has shifted from "less bad" to "less good" despite weekly jobless claims coming in less than expected (finally under 600K) and exports growing more than expected (a positive for U.S. manufacturing). The negative tone is fully reflected in our Alert HQ signals. The Trend Leaders list continues to wilt, SELL signals greatly outnumber BUY signals and our Trend Busters are mostly breaking in a downward direction. Only our Swing Signals show any evidence of a bounce. Will they prevail?

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 1 Alert HQ BUY signal and 29 SELL signals
  • Based on weekly data, we have 3 Alert HQ BUY signals and 48 SELL signals
  • Based on daily data, we have 52 Trend Leaders. 12 new stocks joined the list since Thursday and 16 fell off the list since Thursday.
  • Based on daily data, we have 67 Bollinger Band Breakouts but we also have 76 Breakouts based on weekly data.
  • We have 859 Cash Flow Kings
  • Based on daily data we have 64 Swing Signals of which 55 are BUY signals and 7 are SELL signals. In addition, there is 2 Strong BUY signals today
  • Finally, we have Trend Busters with 40 signals based on daily data and 95 based on weekly data
Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.



Thursday, July 9, 2009

Thursday Bounce: Trend Busters, Swing Signals and Trend Leaders for July 9, 2009

This is a quick post to announce that we have published Thursday's Trend Leaders, Swing Signals and Trend Busters at Alert HQ. All are based on daily data.

Today we have the following:

  • 72 Swing Signals -- A couple of days ago we had 35 signals, today we have twice as many. Happily, we now have 65 BUY signals, a mere 4 SELL Signals plus 3 Strong BUYs. Whoo-hoo!
  • 56 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. There are 18 new stocks that made today's list and 60 that fell off Tuesday's list.
  • 48 Trend Busters of which 5 are BUY signals and 43 are SELL signals
The view from Alert HQ --

Talk about mixed signals.

If you look at our Swing Signals list you would think the market was in the middle of a big bounce. BUY signals are swamping the SELL signals and we even have a few Strong BUYs. Yes, there's a good sprinkling of tech stocks and tech ETFs but the distribution is pretty broad-based with a good number of different sectors represented, even a homebuilder!

To bring the level of enthusiasm down a bit, our list of Trend Leaders is looking rather anemic with only 56 stocks listed. Notable is the presence of a good number of inverse ETFs based on commodity and materials indexes. These guys are well represented today and show how hard these sectors have fallen.

Our Trend Busters seem to be caught between a rock and a hard place. We have enough upward trending data (in some cases, several months worth of bullish data) to generate SELL signals when the stocks reverse and begin to fall. On the other hand, most stocks have not been falling long enough to allow us to generate many BUY signals based on reversals from extended downtrends.

In conclusion, my optimistic outlook pushes me to look at the Swing Signals as a leading indicator and predict the market is about to see a bounce. Maybe it's just due to being oversold, but it looks like a bounce is starting nevertheless. Let's hope it's not just a dead cat bounce...

Using the signals --

As a humble practitioner of technical analysis, I admit that every signal can't be correct. Alert HQ can, however, provide a filtered selection of likely candidates from which investors can choose. Remember, if you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Tuesday, July 7, 2009

Terrible Tuesday - Swing Signals, Trend Busters and Trend Leaders for July 7, 2009

This is a quick post to announce that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 35 Swing Signals -- 17 BUY signals and 16 SELL Signals plus 2 Strong BUYs.
  • 98 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 22 stocks that are new additions to the list and 120 that fell off the previous list.
  • 40 Trend Busters of which only 9 are BUY signals and 31 are SELL signals.
After last week's sell-off, a terrible Tuesday leaves stocks broadly lower --

Well, today resulted in another shrunken list of Trend Leaders. On the weekend we had 157 stocks and ETFs on the list; after today we're down to 98. Whereas a few weeks ago there were around a thousand, lately we are bouncing around in the one to two hundred range.

Similarly, our Trend Busters list reflects similar weakness as the breakouts to the downside outnumber the breakouts to the upside by roughly three to one.

Our Swing Signals list is about evenly divided between BUY signals and SELL signals but the list is none too long. These last few days there has been no where to hide.

With the trends in the major market averages pointing downward now, it's no surprise that our BUY signals are missing in action. As we approach significant support levels, another couple of bad days and investors might really start running for the exits. My recommendation is that you have your stops in place and maybe a couple of short plays in mind. This could be a time when some of our SELL signals will come in handy. We shall see...

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Monday, July 6, 2009

Making it easier to calcuate stops for leveraged ETFs

Markets are fluctuating and leveraged ETFs are gyrating. If you own any of these ETFs, have you examined your stop levels lately?

Back in April I introduced the TradeRadar stop calculator. It emphasized the fact that leveraged ETF performance is driven by the action in an underlying index. It was pretty basic in that it translated movement in the underlying index into changes in the leveraged ETF but it required the user to determine the appropriate underlying index or ETF and to enter most recent prices as well as target stop levels.

Major improvements --

I have now rectified some of the major weaknesses and made the calculator a lot easier to use. Here are some of the new features:

  • All the ETFs from ProShares and Direxion are now listed in a drop down. Pick a leveraged ETF and the calculator automatically identifies the appropriate underlying index or ETF that is based on that index.
  • The calculator retrieves the most recent prices for both the leveraged ETF and the underlying index or ETF and populates the form automatically.
  • The calculator automatically detects whether the leveraged ETF is 2x or 3x and whether it is a long or short ETF.
  • When trying to determine stops, it is very helpful to be able to see the chart of the leveraged ETF and the underlying index. The calculator automatically creates two links to the StockCharts.com site. In separate windows or tabs, a user can now display a chart of the underlying index/ETF as well as a chart of the leveraged ETF.
Ease of use --

Since I use the TradeRadar Stop Calculator myself, I think I've been able to identify some of the major shortcomings and, hopefully, address some of the major aspects of ease of use. Essentially, the calculator retrieves all the basic data needed to set up the calculation. It is up to you, however, to use the charts to determine an acceptable stop level on the underlying index. The TradeRadar calculator takes it from there.

If you haven't seen the TradeRadar Stop Calculator before, check it out. If you have used it before and found it lacking, I urge you to take a look at the new version.

As always, feedback and comments are welcome.



Saturday, July 4, 2009

Weekly Review - the correction picks up speed, how far will stocks fall?

This week a worse than expected non-farm payrolls report knocked the wind out of the sails of the stock market. The fact that the best performing index, the NASDAQ, fell 2.3% shows what a lousy week it was. Meanwhile, the unemployment rate, currently at 9.5%, continues its steady march toward double digits. Against this backdrop, it should not be surprising that consumer confidence, as well as the stock market, fell over the past month.

With the second quarter finishing up earlier this week it is understandable that some profits might be taken after stocks turned in strong performances. The S&P 500 gained 15% and the NASDAQ gained 20%. Ominously, oil gained 41%.

It is no doubt that stocks are now in a correction. The question is: how far will they fall? We look for clues in some of the charts that follow.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:


The chart above shows our analysis of the universe of stocks we evaluate, roughly 7200 of them. It's pretty clear that weakness has persisted over the last few weeks and performance was at its worst during this holiday shortened week. As lousy as this chart looks, there are still roughly 60% of stocks trading above their 50-day moving average. Not great but not bad. Unfortunately, there is no sign that the deterioration in stock prices is slowing down. Indeed, in order to complete this move, it looks as if the number of stocks whose 20-day MA is above their 50-day MA needs to move lower before we start to see some recovery.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

Here we see the number of stocks in down-trends increasing handily; the total currently stands at about 28%. With the cross-over displayed on this chart, we are now in the unfortunate situation where the number of stocks in down-trends outnumbers the number of stocks in up-trends. It is surprising, though, that the number of stocks in up-trends actually ticked up slightly this week.

The following chart show SPY, the S&P 500 SPDR ETF. I have drawn two green lines on the chart: the horizontal one is a support line and the descending line shows the down-trend that is being carved out. Put the two together and we begin see a triangle emerge. Falling below that support line would imply that we could see another 9% or 10% decline from that level.


Some bloggers are seeing a head and shoulders pattern developing on the S&P 500. I have circled the left shoulder, the head and what is starting to strongly resemble a right shoulder in light blue. The implication here is also for a 10% drop from the neckline which just happens to be the same horizontal green line forming the base of the triangle.

With respect to moving averages, SPY has dropped below its 50-DMA but is still above its 200-DMA. With the 200-DMA still clearly pointed downward, it's not hard to anticipate a continuing correction at this point

Conclusion --

Our charts show stocks caught in a reversal. The market hit a peak a month ago and has been steadily drooping since. Luckily the NASDAQ is looking much better than the S&P 500 so there is hope this correction will not be too deep.

Economic reports coming up this week are modest so it is unlikely they might light a fire under stocks. We will be seeing the ISM Services report, consumer credit, initial jobless claims, the trade balance and the University of Michigan consumer sentiment index. No big hitters like last week's non-farm payrolls report.

So we have had some unpleasant surprises in several economic reports while most others are slowing their deterioration or even starting to show some small amount of strength. In the meantime, stocks are in a down move that needs to play out before any recovery can begin.

I suspect there will be another week or so of weakness then we will need to throw ourselves on the mercy of earnings season. This week, earnings reports will be light but they will soon be ramping up as the second quarter earnings season kicks off in earnest. Until then, though, there isn't much to reassure bulls and the bears will most likely continue to brazenly roam the Street.



Weekend Winners and Losers - Alert HQ BUY and SELL signals for July 4, 2009

The latest list of free stock alerts is up and available at Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
This week's results --

The stock market ended the first week of the second half with a thud. Consumer confidence declined, construction spending disappointed and layoffs increased way more than expected. Improvements in factory orders couldn't nearly offset the strong negative impact of the jobs numbers. Major averages gave up 2% to 3% on the week.

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 5 Alert HQ BUY signals and 15 SELL signals
  • Based on weekly data, we have 7 Alert HQ BUY signals and 16 SELL signals
  • Based on daily data, we have 196 Trend Leaders. 69 new stocks joined the list since Tuesday and only 71 fell off the list since Tuesday.
  • Based on daily data, we have 75 Bollinger Band Breakouts but we also have 108 Breakouts based on weekly data.
  • We have 833 Cash Flow Kings
  • Based on daily data we have 28 Swing Signals of which 12 are BUY signals and 15 are SELL signals. In addition, there is 1 Strong BUY signal today
  • Finally, we have Trend Busters with 18 signals based on daily data and 36 based on weekly data
Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.




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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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