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Showing posts from June, 2010

Not dead yet

I've been on the road this weekend, bringing my sons to visit their grand-dad and celebrate his 89th birthday. As a result, posting has been slim over the last few days but I wanted to provide these charts for your consideration as an alternative to the pervasive bearishness that has been out there lately

In the chart below we count the number of stocks above various moving averages and count the number of moving average crossovers, as well. We scan roughly 6400 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (SPY).


This chart shows that the market took a body blow last week but is still standing. Last week I wrote that the market was surely going to move up based on the pattern emerging on this chart where the yellow line (number of stocks above their 50-DMA) had moved decisively above the magenta line (number of stocks whose 20-DMA is above their 50-DMA). The yellow line has taken a step back but is still well above the magenta li…

May Durable Goods -- Tech wavers but the trend is still up

The Advanced Report on Durable Goods for May was released today and it didn't do much to keep the market from continuing its single-minded decline.

The headline number for May was not what investors were looking for (New Orders decreased 1.1%) but many analysts pointed out that ex-transportation, the overall number for new orders actually increased 0.9%.

As I always do, I will focus on the tech sector. The numbers were mixed but, with one exception, not bad at all.

Shipments --

Many analysts give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. In other words, ancient history. The following chart shows how May shipments look for the overall tech sector:


The chart shows a downturn in May but so far it just looks like a repetition of an ongoing pattern: big jump up followed by two months of small declines leading to a solid up-trend. So far, there is no reason to be alarmed. 

New Orders --

The …

Humana tops our "reasonable value" list with some deep, deep value characteristics

After running Tuesday's Alert HQ process I checked my "Reasonable Value" screen against the day's Trend Leaders. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen:
PE between 0 and 20PEG between 0 and 1.3Price-to-Sales less than 2Debt-to-Equity less than 1As Trend Leaders, each of these stocks is showing good up-trend performance according to MACD, Wilder's DMI and Aroon analysis. Today's list consists of the following four stocks:

SymbolNameLast PriceMarket CapPEPEGPrice-
To-
SalesPrice-
To-
BookDebt-
To-
EquityCash Flow YieldCash On HandEV
-to-
EBITDADINERewards Network, Inc.$14.11$124M181.071.571.4403.9%$14.5M6.7ENDPEndo Pharma-ceuticals Holdings Inc.$22.31$2.6B80.621.711.660.2116.5%$848M4.39SKXSkechers U.S.A., Inc.$41.35$1.9B19.0.831.262.4403.4%$325M10.42HUMHumana Inc.$48.41$8.2B70.960.271.380.2734%$8.5B0.82
I had trouble squeezing the table into this post because I've adde…

Weekly ProShares review -- bulls still at work but enthusiasm has waned

For the last couple of weeks I have been presenting a list of the ProShares ETFs that had exhibited the strongest performance over the course of the last week. I received a number of comments over at Seeking Alpha requesting that I do it again but I haven't had much reaction since then. If you find this useful please leave a comment and let me know!

A short recap on  leveraged ETFs and why I look at them --

The ProShares leveraged ETFs are primarily short-term trading vehicles and, as such, they can be viewed as indicators of short-term sentiment.

Since these ETFs come in so many styles and sectors, looking at the leaders among them can paint a picture of those areas of the market in which short-term investors are currently most interested.

The following table lists those members of the ProShares family that have turned in the best performance over the course of the last week (the period from last Tuesday through this Monday). The last two weeks the criteria included any ETF with d…

Say what you will about the fundamentals -- this market is going up

OK, I'm well aware of all the fundamental issues facing this market: stubborn unemployment, slowing leading indicators, shaky real estate, the European crisis, etc. Markets, however, have a way of doing what they wish regardless of what may or may not be logical.

This post looks at the market as it is, not as is should be, and I'm convinced stocks are going up. 

Our first piece of evidence is this list of all of this weekend's stock market BUY and SELL signals available at Alert HQ. Taken together, this is a picture of an improving market.

This weekend we have the following stock picks and signals:

Reversal Alerts based on daily data, we have 99 Alert HQ BUY signals and 3 SELL signals
Reversal Alerts based on weekly data, we have 3 Alert HQ BUY signal and 25 SELL signals
We have 64 Bollinger Band Breakouts based on daily data and 40 are bullish. We also have 108 Breakouts based on weekly data and 53 of them are bearish.We have 664 Cash Flow Kings10…

Value by Industry -- how do your favorite sectors stack up?

Today I ran a stock screen that looked at the ratio of "Enterprise Value" to "Earnings before Income Taxes, Depreciation and Amortization". This is known more simply as EV-to-EBITDA or the "enterprise multiple" and it is often used a measure of whether a stock is over-valued or not. The enterprise multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include. The lower the enterprise multiple, the greater the potential that the company is under-valued.

For this screen I took the average value of EV-to-EBITDA across each industry and created the following chart. Within the 10 standard sectors we have a total of 201 industries represented.

SectorIndustryAverage EV-to-EBITDACapital GoodsBuilding Materials107.5Capital GoodsBuilding Products95.7Capital GoodsHomebuilding46.6Consumer Non-DurablesFarming/Seeds/Milling39.9TechnologyComputer Communications Equipment37.7Tec…