Thursday, April 29, 2010

Alert HQ signals for Thursday, April 29, 2010 - surprising resurgence in stocks. Can this be real?

This post is announcing that Thursday's Swing Signals, Trend Leaders, Trend Busters and Gap Signals are now available at Alert HQ. All are based on daily data.

Today we have the following:
  • 54 Swing Signals -- 46 BUY signals and 7 SELL Signals and one Strong BUY.
  • 351 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 107 stocks that are new additions to the list and 130 that fell off the previous list.
  • 10 Trend Busters of which 6 are BUY signals and 4 are SELL signals.
  • 188 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 80 are bearish gaps and 108 are bullish gaps.
The view from Alert HQ --

On Tuesday it looked like stocks were heading for a downturn. Subsequent news related to sovereign debt in Europe seemed to confirm the bearish stance. Mr. Market, however, had other things in mind.

Here we are two days later and the market is undergoing a resurgence. Most of Tuesday's losses have been regained. Our Swing Trading Signals have swung decidedly bullish and even served up a Strong BUY today (what do you think of Finisar?) Out Trend Leaders list is mired at a pretty mediocre number of stocks but the number falling off the list has decreased significantly since Tuesday, indicating a real slowdown in bearish momentum. We also have a majority of bullish upside gaps showing on our Gap Analysis list. The oddball today is the Trend Busters list which is surprisingly small but still leaning bullish.

Before we jump to any conclusions, we should do a little chart review. Here is our Vanguard Total Market VIPERs ETF (VTI).


The gap upward is positive as is the surge back above the 20-day moving average. It is interesting to see Williams %R reversing course and moving upward again. On the other hand, we have both MACD and Slow Stochastics still in a bearish mode.

The bottom line, then, is that things are still a bit shaky. Caution may be the best strategy right now. Those who have dry powder, however, should be looking for places to put it, either now or in the near future. Alert HQ, as usual, has plenty of good stocks and ETFs for your consideration.

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 or Gap Signals may provide some good trading ideas.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Tuesday, April 27, 2010

Alert HQ signals for Tuesday, April 27, 2010 -- another tipping point?

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

Today we have the following:
  • 30 Swing Signals -- 9 BUY signals and 21 SELL signals.
  • 374 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 62 stocks that are new additions to the list and 272 that fell off the previous list.
  • 23 Trend Busters of which 6 are BUY signals and 17 are SELL signals.
  • 175 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 83 are bearish gaps and 92 are bullish gaps.
The view from Alert HQ --

You know the market has taken a hit when 8 out of 9 Swing Signal BUY signals are inverse ETFs. The bearish tone is reinforced by our Trend Busters list where SELL signals are in the majority. The number of stocks on the Trend Leaders list has decreased significantly. Only the Gap Analysis list shows some small signs of bullishness.

Since the Alert HQ signals are derived from a sweep of 7000 stocks, a close approximation would the Vanguard Total Market Vipers ETF (VTI). The chart follows:


A number of technical indicators suggest we are starting a short-term pullback. VTI has fallen below its 20-day moving average, MACD is looking bearish, slow stochastics have fallen below 80 and Williams %R has fallen from above -20 all the way down to -72. These are all classic technical analysis signals suggesting short-term bearishness. It looks like stocks are at a tipping point. I wouldn't be surprised to see VTI at least test its 50-day moving average before we're done.

If you agree that we're in for a pullback you still need to consider whether you wish to indulge in a short-term trade or whether you are willing to take the long view. If you're looking for the short-term trade, inverse leveraged ETFs such as we have on the Swing Signals list are good choices. If you are looking longer term, this is when you need to pull out your list of buy candidates. If you're like me and you are confident the long term trend is clearly up, these pullbacks present buying opportunities. As always, browse Alert HQ for a good selection of both BUY and SELL signals that could help you no matter which persuasion you happen to be.

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 or Gap Signals may provide some good trading ideas.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Saturday, April 24, 2010

Weekend Winners and Losers - Alert HQ BUY and SELL signals for April 23, 2010

Winners and LosersThis is our usual quick post announcing that the weekend's free stock signals are now available at Alert HQ.

Today we have the following stock picks and signals:

  • Based on daily data, we have 9 Alert HQ BUY signals and 20 SELL signals
  • Based on weekly data, we have 5 Alert HQ BUY signal and 5 SELL signals
  • We have 214 Bollinger Band Breakouts based on daily data and 585 Breakouts based on weekly data.
  • We have 593 Cash Flow Kings
  • 25 Swing Signals -- 22 BUY signals and 3 SELL Signals
  • 584 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 142 stocks that are new additions to the list and 47 that fell off the previous list.
  • 23 Trend Busters based on daily data of which 19 are BUY signals. We also have 38 Trend Busters based on weekly data.
  • 146 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We see 60 downside gaps and 86 upside gaps based on daily data. We also have 43 Gap Signals based on weekly data.
The view from Alert HQ --

Stocks keep struggling higher and thus we remain bullish at Alert HQ. We again have more BUY signals than SELL signals on the Swing Trading Signals, Trend Busters and Gap Analysis lists. The Trend Leaders list is staying at a fairly strong level and more stocks were added to this list than fell off.

Some of our signals, however, suggest caution. The Alert HQ reversal signals (the first two entries in the list above) don't tell such a bullish story.

On the whole, as earnings season tells a decent story about the recovery in U.S. economy, some amount of bullishness is warranted. Be sure to browse through Alert HQ for some good investment candidates

Using our signals --

Visit Alert HQ to view or 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.

If you're a momentum trader, the Trend Leaders 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 practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas. See them all at Alert HQ.

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

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Thursday, April 22, 2010

First earnings scorecard for Q1 - tech is off to rip roaring start

Earnings season for the first quarter of 2010 is now well under way. As I have been doing for the last few quarters, I'll try to get a sense of how tech stocks are doing and how they compare to the rest of the market.

This first chart shows the stats for all the stocks that have reported thus far.

Total counts for all stocks reporting 
Categories Total Count
Earnings Beats 335
Y-o-Y Earnings Increases 321
Y-o-Y Revenue Increases 322
Upside Guidance 54
Total Providing Guidance 195
Total Number of Stocks Reporting 480

Let's start with some percentages. First of all, looking at the whole population, we are getting a pretty high percentage of earnings beats, roughly 70%. Earnings and Revenue increases on a year-over-year basis are just under that 70% level. When it comes to providing forward guidance, the percentage is not as strong. Less that 28% of those companies that have offered guidance have provided upside guidance.

Now that we've set the baseline by looking at the total stock market we can focus on tech stocks in particular.

Tech Stocks Only
Categories Total Count
Tech Stock Earnings Beats 63
Tech Stock Y-o-Y Earnings Increases 68
Tech Stock Y-o-Y Revenue Increases 71
Upside Guidance 19
Total Providing Guidance 47
Total Number of Tech Stocks Reporting 76

Walk through these percentages and it's hard to think tech isn't doing well. Beats are over 82%, almost 90% of tech stocks have registered earnings increases year-over-year. Revenue increases come to 93%. This implies that improvements in results are not the result of cost cutting but actual top-line growth. Over 40% of tech stocks are providing upside guidance.

Now we can contrast tech stocks with non-tech stocks as shown in the following table.

Total counts, Non-Tech
Categories Total Count
Earnings Beats 272
Y-o-Y Earnings Increases 253
Y-o-Y Revenue Increases 251
Upside Guidance 35
Total Providing Guidance 148
Total Number of Stocks Reporting 404

Eliminating tech stocks, the market statistics don't look quite as good. Roughly 67% of stocks have beat earnings expectations, roughly 63% of stocks have registered earnings increases or revenue increases on a year-over-year basis. Less that 24% of non-tech stocks that have offered guidance have provided positive outlooks.

Conclusion --

As earnings have been released some tech stocks have soared and some have plunged. Those that have fallen have often been the victims of analyst expectations or "whisper numbers". The fact is, the tech sector is showing true improvement. Compared to the rest of the stock market, tech stocks are looking pretty strong.

Given how most of the tech sector is doing well, this is one area where the ETF approach still works. Some bloggers and analysts contend we are entering a phase where stock picking skills will be paramount. These earnings season results suggest that the sector approach still works in tech.

For an excellent selection of tech ETFs, this link at Stock-Encyclopedia.com has plenty to choose from: List of tech ETFs. Wait for the mid-earnings season pull-back and load up on a few of these ETFs. You'll be glad you did.



Tuesday, April 20, 2010

Arris Group advances but value proposition is still solid

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 20
  • PEG between 0 and 1.3
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
As 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 five stocks:

AIPC American Italian Pasta Company
ARRS Arris Group Inc
LB LABARGE, INC.
LH LABORATORY CORP. OF AMER.
CLW CLEARWATER PAPER CORPORATION

Since I like to highlight tech stocks when I can, today I'll take a closer look at Arris Group.

Starting with the chart, you can see why Arris is a Trend Leader:

Chart for ARRS

Wilder's DMI and Aroon are clearly bullish and MACD looks like it's moving in a bullish direction again. Te 50-day moving average headed upward and is close to a bullish crossover above the 200-day moving average.

Background --

Arris is a global communications technology company specializing in the design, engineering and supply of broadband services for residential and business customers around the world. The company supplies broadband operators with the tools and platforms they need to deliver reliable telephony, demand driven video, next-generation advertising and high-speed data services. ARRIS products expand and help grow network capacity with access and outside plant construction equipment, reliably deliver voice, video and data services and assure optimal service delivery for end customers.

To get into the detail of the stock's value proposition, here are the numbers:

Trailing P/E (ttm):18.28
Forward P/E (fye 31-Dec-11):11.68
PEG Ratio (5 yr expected):0.90
Price/Sales (ttm):1.45
Price/Book (mrq):1.62
Enterprise Value/EBITDA (ttm):5.668

All of these measures show Arris to be well within value territory. But this is a tech stock; can they show growth?

The following chart shows the financials over the last five quarters.


Explore more ARRS Data at Wikinvest

Q4 of 2009 showed a nice sequential increase in both revenue and net income. That performance was driven by the move to high speed cable modems. Time Warner Cable and Comcast (CMCSA) increased their business offerings through Arris which is a major provider of the latest DOCSIS 3.0 technology which supports higher broadband speeds up to 100 Mbps. Cable operators like Comcast and Time Warner Cable (TWC) are now offering these higher broadband speeds through Arris modems. I suspect this trend to higher speeds has legs.

Arris is about to release results for the first quarter of 2010. Seeing how the stock is advancing, it appears that many investors are expecting good things from them. On the other hand, there have been some mixed analyst opinions. In March, Needham and Company upgraded Arris while Zacks downgraded Arris based on management's indication that sales towards its biggest customer, Comcast Corp., will decline in 2010 compared to the previous year. Zacks is not convinced sales to Time Warner Cable will more than make up for the decline at Comcast. Needham thinks the Comcast issue is overblown and that Arris will find success with a new product roadmap in the area of IP set-top boxes (Moxi) and SMB access equipment as new engines of growth.

On April 27 we will see Arris Group's earnings report for the first quarter of 2010. Even at current levels, the stock still shows value so I would think that, short of a really disappointing earnings announcement, the risk is minimal while the potential for growth is solid. This could be a good stock to keep on your watch list.


Disclosure: no positions



Monday, April 19, 2010

Take my wafers, please...

Semiconductor stocks have been flying lately, apparently reinforced by Intel's excellent earnings report.

Reading the Intel conference call transcript, however, there were some notes of caution sounded by CEO Paul Otellini. He was positive on the remainder of the year but he was careful not to get carried away in his enthusiasm.

Now comes another sign that maybe investors should ratchet up that sense of caution. Reading the Digitimes.com web site, there was a small article that raises the hair on the back of my neck. Here's what they said:
Taiwan Semiconductor Manufacturing Company (TSMC), alarmed by its rising inventory level, has demanded IC design houses take delivery of their ordered wafer starts before placing new orders, according to industry sources.
The company is seemingly worried by the possibility that their clients might have been overbooking. The article went on to say that TSMC's inventory of analog ICs is currently 50% higher than its safe level, while inventories of both network- and consumer-related IC segments have also exceeded their safe levels by about 20%, which has sent TSMC undertaking inventory control measures.

So the question I have is whether this is a company-specific situation or whether it will turn out to be the beginning of an industry-wide slowdown. If inventory is building up at the source of the semiconductor supply chain, it doesn't bode well for the the chip companies that are further up the ladder. Are they seeing demand dry up? Is this just a temporary speed bump due to modest overbooking? Or is the tech rally running out of gas?

If this situation persists or spreads to other chip manufacturers, it might be time to start looking at the ProShares Ultra Short Semiconductor ETF (SSG).



Sunday, April 18, 2010

Weekend Winners and Losers for April 16, 2010

Winners and LosersTake a few days off and something weird always happens. Goldman is accused of fraud (I'm shocked, shocked...) and the market tanks. In any case, I've been out of pocket since Thursday but I've had some help getting the Alert HQ signals out. What follows is a combination of our Weekly Review and the Weekend Winners and Losers where we announce the weekend's free stock signals available at Alert HQ.

Today we have the following stock picks and signals:

  • Based on daily data, we have 3 Alert HQ BUY signals and 39 SELL signals
  • Based on weekly data, we have 4 Alert HQ BUY signal and 5 SELL signals
  • We have 67 Bollinger Band Breakouts based on daily data and 341 Breakouts based on weekly data.
  • We have 625 Cash Flow Kings
  • 33 Swing Signals -- 13 BUY signals and 20 SELL Signals
  • 573 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 48 stocks that are new additions to the list and 166 that fell off the previous list.
  • 12 Trend Busters based on daily data of which 5 are BUY signals. We also have 38 Trend Busters based on weekly data.
  • 128 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We see 33 downside gaps and 95 upside gaps based on daily data. We also have 46 Gap Signals based on weekly data.
The view from Alert HQ --

We actually had a pretty decent week and Friday was the only significantly down day. Nevertheless, the Friday downdraft seemed to be enough to lend a noticeably bearish tone to this weekend's signals, especially in the ones based on daily data. We see SELL signals outnumbering BUY signals in most cases and, though the Trend Leaders list remains in good shape, there are more stocks falling off the list than gaining membership in the list. This is not a good sign. I also notice some of the double inverse ETFs generating BUY signals. This development is a warning sign that bears watching.

With all that said, let's take a look at some of the numbers we track at Alert HQ.

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 7000 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (SPY).


Now we begin to see an element of confusion. I just discussed the bearish tone of Alert HQ's signals. Now, looking at the chart above, there seems to be very little wrong with this market. All the measures of moving average analysis that we track actually moved up this week.

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, too, things are looking good despite the weakness on Friday. This chart suggests the week was strong enough for most stocks to register gains and see a larger percentage of stocks exhibit up-trends.

The previous two charts contrast statistics for the whole market with the S&P 500. So it's worthwhile to take a more detailed look at a chart of the whole market. We'll use the Vanguard Total Market VIPERS ETF and look at some technical measures.


In this chart of VTI, it is easier to see the conflicting signals we discussed above. Williams %R is signaling SELL. On the other hand, MACD and Slow Stochastics are heading in a bearish direction but have not yet crossed the bearish threshold.

Conclusion --

With the technicals on the fence but leaning bearish and the market sinking with Goldman's reputation, earnings are probably the only thing that can save this market. On the positive side, Intel blew away earnings estimates as did JP Morgan Chase and both stocks found favor from investors. A worrisome sign, however, is that several bellwethers including GE, Google and UPS beat expectations and their stocks fell anyway.

The economic calendar this week is light but there is one thing that worries me. Durable Goods orders will be released on Friday. After the disappointing results for March manufacturing released this past week, another poor report on the manufacturing sector could weigh on the market. Manufacturing has been a bright spot in the recovery so far. A perception that the sector is faltering will certainly be a problem for stocks.

So with things looking pretty shaky at the moment, it seems like a good time to make sure your stops are updated and in order.



Thursday, April 15, 2010

Bless you, Intel...

On Tuesday Intel (INTC) reported strong earnings for the first quarter of fiscal 2010, with the company calling it the "best first quarter ever." As I suggested in yesterday's post, tech stocks and semiconductor stocks in particular should see a nice bump. The ProShares Ultra Semiconductor ETF (USD), which we own as part of our speculative portfolio, saw an increase of 7.73%. Not bad for one day. I can only say: bless you, Intel, for pushing stocks to new highs.

Notes from the conference call --

Looking at net income, Intel recorded a sweet $2.4 billion for the first quarter, an increase of 288% compared to the first quarter a year ago. The net income beat estimates of $2.13 billion from analysts polled by Thomson Reuters. Diluted earnings per share were $0.43, beating analyst estimates of $0.38. This 13% beat is certainly meaningful.
.
The company recorded revenue of $10.3 billion for the first quarter, an increase of 44% compared to last year's first quarter. The numbers also beat analyst estimates of $9.8 billion by 5%

Netbooks are leveling off at about 20% of all consumer laptop purchases, CEO Paul Otellini said. As the economy improves, this will probably be a common theme, with consumers able to spend a little more for more powerful PCs. This is a good thing for Intel as the margins are typically better at the high end.

Another favorable trend as discussed by CFO Stacy Smith was in the mobile computing segment which saw strong customer demand for new products leading to an increase in mobile microprocessor average selling prices and record mobile microprocessor revenue. It would be nice if this was a larger proportion of Intel's overall sales but all trends have to start somewhere.

Gross margins were higher than expected in the quarter, reflecting both better execution and improvement in sales of higher end products. The company has seen corporate PC purchases pick up in the first quarter. CEO Otellini noted that corporate laptop populations are roughly 4 years old and desktop populations are about 5 years old. The expectation is that, as the economy improves, there will be a movement to replace these aging machines.

For owners of the stock, it is nice to see that management regards increasing the dividend a priority.

Warnings --

The company is expecting 64% gross margin, close to a record. There are many analysts who consider margins in this range to be a sell signal. The saying is: sell when margins are in the mid-sixties and buy when margins are at or below sixty.

The chart for the stock and for most semiconductor ETFs now show a big gap up after today's trading. An optimist would say that this is a sign of strength but others might say gaps are meant to be closed. Given that the coming quarter typically shows seasonal weakness, the odds of that gap closing are good.

Conclusion --

All in all, Intel turned in a great quarter, in effect making it two in a row. Favorable trends identified included a continued strength in consumer sales, above average growth in mobile segments and good potential for corporate demand to begin ramping up. The introduction of new multi-processing systems bodes well for server sales as enterprises, large and small, look to upgrade to more powerful servers, enabling companies to do more with less hardware. And the slow but steady adoption of cloud computing is also positive for servers.

Good results from Intel often presage improved results from other chip companies as OEMs purchase all kinds of other semiconductors to build gadgets and equipment around Intel's processors. This is a positive for the whole chip sector.

As I recall, though, when Intel reported good results in the previous quarter, the market eventually sold off. Today, the market registered robust gains, especially in the tech sector (which I am particularly happy to see). Let's hope other companies can keep the ball rolling as earnings season unfolds.



Tuesday, April 13, 2010

Alert HQ signals for Tuesday, April 13, 2010

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

Today we have the following:
  • 28 Swing Signals -- 17 BUY signals and 11 SELL signals.
  • 529 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 155 stocks that are new additions to the list and 80 that fell off the previous list.
  • 26 Trend Busters of which 7 are BUY signals and 19 are SELL signals.
  • 125 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 26 are bearish gaps and 99 are bullish gaps.
The view from Alert HQ --

Stocks continued their winning ways today. The Dow stayed above 11,000 as major indexes again fought their way from a morning deficit and closed with modest gains. Here are some numbers to put things in perspective: looking at the Vanguard Total Market Vipers (VTI), the ETF is up almost 15% from the low set on February 5 but up only 5% from the previous high established January 19. So it's not out of the question that stocks could tack on another couple of percent.

At Alert HQ, today's signals suggest the possibility of further bullishness. BUY signals outnumber SELL signals on the Swing Signals list and the Gap Analysis list. The Trend Leaders list has increased in size though I am sorry to see Anaren (ANEN), a stock we recently profiled, fall off the list. Throwing cold water on the bullish attitude is the Trend Busters list which is dominated by SELL signals.

For those who follow Dow Theory, we have the Dow Jones Industrials making new highs this week and, confirming the bullish move, we see IYT, the iShares Dow Jones Transportation Average Index ETF, being added to the Trend Leaders list today.

With earnings season unfolding, we'll see if values are stretched or whether stocks will be able to push major averages to new highs. In the meantime, look for semiconductors to jump with a nice beat being reported by Intel today. Note that USD, the ProShares Ultra Semiconductor ETF was a new addition to the Trend Leaders list tonight, too. So keep an eye on Alert HQ; we've got lots of good stuff showing up on our lists these days.

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 or Gap Signals may provide some good trading ideas.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Monday, April 12, 2010

Signs of a top? -- reverse split for 9 ProShares ETFs

ProShares announced that it will execute reverse share splits on nine ProShares ETFs. Here are the details:

Ticker Fund Split Ratio Price
DUG UltraShort Oil & Gas 1:5 $11.22
EEV UltraShort MCSI Emerging Markets 1:5 $9.37
FXP UltraShort FTSE/Xinhua China 25 1:5 $7.15
GLL UltraShort Gold 1:5 $9.02
SMN UltraShort Basic Materials 1:5 $6.56
SRS UltraShort Real Estate 1:5 $5.62
URE Ultra Real Estate 1:5 $8.66
UYG Ultra Financials 1:10 $7.36
ZSL UltraShort Silver 1:10 $3.77

The splits take effect after the close on April 14. Here's the reason for doing the reverse splits according to ProShares: For funds with lower nominal prices, bid-ask spreads represent a higher percentage of the transaction price than for higher-priced funds, increasing both costs and volatility — even when the spread is tight. ProShares believes the reverse splits will adjust the share prices to a more cost-efficient level for the Funds' shareholders and that commissions charged by brokers who assess their clients on a per-share basis may be smaller, as investors will need to buy or sell fewer shares.

For those who followed ProShares through the depths of the stock market downturn, there are some surprises on this list. Take SRS, for example. Just look at this chart:


It's just incredible that this ultra short real estate ETF has gone from a peak over $200 to less than $10. During the worst of the market crash, this was one of the go-to ETFs as real estate cratered and dragged the entire market down.

Now, investors seem positively enamored with real estate despite the constant stream of analysis suggesting losses in commercial real estate continue to increase. Though the index upon which SRS is based consists mostly of REITs, it doesn't help that the residential real estate market is still struggling.

With the 2x leverage calculated on a daily basis, SRS has crumpled as its counterpart, the  iShares Dow Jones U.S. Real Estate Index ETF (IYR) has surged.

With all the ultra short ETFs in the table above showing prices so low as to need reverse stock splits, it has the flavor of a market top. Underlying indexes have rebounded not only strongly but steadily. That steady advance has been very destructive to these ultra short ETFs, with their tracking of underling indexes on a daily basis serving to drive prices ever lower.

I can't help but worry that this is a sign that the sectors represented by these ultra short ETFs have come a little too far too fast. As earning season begins to unfold, bringing with it the usual volatility, we may look back at this announcement and say that it marked a temporary top. Bullish ETF investors in these sectors might want to take some profits now.



Thursday, April 8, 2010

Alert HQ signals for Thursday, April 8, 2010

This post is announcing that Thursday's Swing Signals, Trend Leaders, Trend Busters and Gap Signals are now available at Alert HQ. All are based on daily data.

Today we have the following:
  • 17 Swing Signals -- 13 BUY signals and 4 SELL Signals.
  • 397 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 123 stocks that are new additions to the list and 216 that fell off the previous list.
  • 24 Trend Busters of which 13 are BUY signals and 11 are SELL signals.
  • 152 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 54 are bearish gaps and 98 are bullish gaps.
The view from Alert HQ --

Stocks keep scratching out modest gains. Today was more of the same but our Alert HQ signals, while still reasonably bullish, started showing a bit of weakness today.

Jobs data was less than thrilling today while retail sales were better than expected. The push and pull had stocks starting in the red and ending in the green. That was enough to ensure that Alert HQ had more BUY signals than SELL signals. And I'm a little surprised to see upside gaps outnumbering downside gaps 2 to 1.

So even if stocks over-extended we see the up-trend continuing. We'll have to see how long it lasts.

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 or Gap Signals may provide some good trading ideas.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Wednesday, April 7, 2010

Commodity markets not crazy enough for you? Just wait...

Equity markets have felt the impact of the quants and their algorithms for some years now. Commodity markets, on the other hand, have been a bit more old fashioned. Investors should be aware, however, that situation is changing.

Automated trading strategies are expanding into commodities as firms look to apply these techniques to other asset classes. And it's happening at a rapid pace. It is thought that as much as 35 to 50% of volume in the most active front-end oil contracts is generated by algorithmic trading.

There are differences in automated commodities trading when compared with the way it's done in equity markets. Here are the three strategies most commonly in use in commodities markets.

The first is called ETRM which stands for electronic trading and risk management. In this scenario, which comprises the majority of automated trading in commodities, there is actually a lot of human input driving the trading with assistance from fairly standard electronic trading systems configured with risk management add-ins.

Going further along the automation curve, the next level is referred to as PTRM. Here, algorithms implement a programmatic trading approach that supports the trading decision and the risk management is more tightly integrated into the whole process. This methodology is the next step for traders that wish to more fully embrace automation.

The fully automated approach as practiced by the most advanced quants in the equity markets has not quite arrived in the commodity markets but many bits and pieces are in place already at some firms. Trend following and fundamental-driven strategies are being implemented  in software to provide long, short or flat (cash) exposure as well as functionality that will look familiar to stock traders like trailing stops.

The commodities markets offer a rich environment for quants. There is a variety of trading strategies that can yield to automation: calendar spread trades involving contracts for different months, inter-commodity trades (crude oil versus refined products,  for example), seasonal trading, exploitation of price differences between exchanges, various kinds of pairs trades and more.

So put the computers into the hands of commodity speculators, stir in a little leverage and see how the big trading desks pile into similar trades faster and with bigger positions. With commodities representing finite resources and big money chasing after profits on the way up (with long strategies) and on the way down (with short strategies), moves can be expected to be quick and extreme with prices overshooting on the way and on the way down.

Hat tip to "Wall Street & Technology" magazine for providing source material for this post



Tuesday, April 6, 2010

Alert HQ signals for Tuesday, April 6, 2010

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

Today we have the following:
  • 17 Swing Signals -- 16 BUY signals and one Strong BUY. Wow, not one SELL signal!
  • 490 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 253 stocks that are new additions to the list and 67 that fell off the previous list.
  • 29 Trend Busters of which 18 are BUY signals and 11 are SELL signals.
  • 159 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 61 are bearish gaps and 98 are bullish gaps.
The view from Alert HQ --

Reviewing our signals, things are looking pretty bullish today. For the first time ever, we have a Swing Signals list with no SELL signals at all. The Trend Leaders list has expanded from having 300+ stocks and ETFs on it to 490 today. The Trend Busters list has more BUY signals than SELL signals and there are more upside gaps on the Gap Analysis list than downside gaps. Bullishness across the board.

Looking at the charts of the major averages, one question arises: is this a bullish blowout to be followed by a pullback or are we on the verge of new highs. Well, the trend is up and economic news has been positive. Let's assume this rally continues - be sure to look to Alert HQ for some ways to play it.

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 or Gap Signals may provide some good trading ideas.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Monday, April 5, 2010

Anaren - nice upside reversal proves slow and steady wins the race

It's not often that we see a tech stock showing up in one of our reasonable value screens. But here's one for you: Anaren, Inc. (ANEN)

The reasonable value screen looks for the following:
  • PE between 0 and 20
  • PEG between 0 and 1.3
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
Anaren fits the bill in all these criteria plus it has an Enterprise Value/EBITDA ratio that is less than 7, further confirming the company's status as a reasonable value stock. Indeed, the PEG is less than 1 and Price-to-Sales is only 1.26.

So with the company's value characteristics established, we can look at the technical analysis situation. The chart below is a screen shot from the Trade-Radar software.

ANEN stock chart, 04-05-2010


The top chart shows the stock breaking out above its downward sloping trendline. It also shows the how the stock has turned up based on regression analysis and has moved up sufficiently to to register a Signal Strength of of 98%. Furthermore, we see the stock above its 20-DMA and its 50-DMA and a bullish crossover of the 20-DMA over the 50-DMA. The bottom chart show a well-defined BUY signal that kicked in earlier in March.

Background --

Anaren is in the business of developing microwave and RF assemblies and components used in radar and wireless communications systems. Products include surface mount components, ferrite isolators, couplers, splitters and combiners, attenuators, RF backplane and hybrid assemblies. In addition, Anaren designs and manufactures advanced microwave-based hardware for use in radar systems, jamming systems, smart munitions, electronic surveillance systems, and satellite and ground based communication systems.

The following chart from Google shows the financials over the last five quarters:


You can see revenue beginning to recover on a sequential basis. Earnings, however, are up 59% year-over-year.

The Outlook --

Here is what management had to say when releasing earnings results back in January:
For the third quarter of fiscal 2010, we anticipate an increase in sales for both the Wireless Group and the Space & Defense Group from our just completed second quarter. As a result, we expect net sales to be in the range of $41 to $45 million. We expect GAAP net earnings per diluted share to be in the range of $0.18 - $0.22, using an anticipated tax rate of approximately 32.0% and inclusive of approximately $0.05 - $0.06 per share related to expected equity based compensation expense and acquisition related amortization of acquired intangibles. Non-GAAP net earnings per diluted share are expected to be in the range of $0.23 - $0.27 for the third quarter.
In other words, the low end of expected results will be about even with the most recent quarter and the high end of expected results will reflect a decent improvement.

The company has shown strong growth in consumer wireless applications (56% sales increase in the most recent quarter) which demonstrates that they are not tied only to military or wireless infrastructure customers.

Conclusion --

What is unusual is that this company is on the Trend Leaders list, it passes the reasonable value screen and it is a tech stock.We don't usually see all three of these combined in one stock.

So take a closer look at Anaren. They may not be involved in creating cutting edge semiconductors but they provide the bread and butter components that are important to manufacturing complete RF and microwave devices including cell phones, cellular base stations, radars, Bluetooth devices and wireless routers. Sometimes slow and steady wins the race.



Sunday, April 4, 2010

Weekend Winners and Losers for April 1, 2010

What follows is a combination of our Weekly Review and the Weekend Winners and Losers where we announce the weekend's free stock signals available at Alert HQ.

Today we have the following stock picks and signals:

  • Based on daily data, we have 5 Alert HQ BUY signals and 45 SELL signals
  • Based on weekly data, we have 5 Alert HQ BUY signal and 6 SELL signals
  • We have 96 Bollinger Band Breakouts based on daily data and 214 Breakouts based on weekly data.
  • We have 694 Cash Flow Kings
  • 36 Swing Signals -- 30 BUY signals and 6 SELL Signals
  • 304 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 93 stocks that are new additions to the list and 179 that fell off the previous list.
  • 22 Trend Busters based on daily data of which 14 are BUY signals. We also have 32 Trend Busters based on weekly data.
  • 146 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We see 63 downside gaps and 83 upside gaps based on daily data. We also have 42 Gap Signals based on weekly data.
The view from Alert HQ --

The big news of the week was employment. Wednesday's ADP report showed an unexpected drop in jobs while Thursday's initial claims were in line and still showing hefty numbers of people joining the ranks of the unemployed. On Friday, it was announced that nonfarm payrolls increased by 162,000 in March. Though below consensus expectations of 184,000 this was the first increase in jobs many months and the highest rate in three years. Unfortunately, the stock market was closed Friday so today's Alert HQ results don't reflect investor opinions on whether to focus on the good news of the increase in jobs or the bad news of the miss in expectations. Note that treasury bond yields did increase in response.

With that said, let's take a look at some of the numbers we track at Alert HQ.

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 7000 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (SPY).

SPY versus the market, Moving Average Analysis for 04-01-2010

The chart shows some slowing in upward momentum. Interestingly, we are at the same levels from which we dropped into a correction in January and February. This time, though, the economic backdrop is more clearly showing recovery on the way. It will be worth watching to see if we can move up through this level where more than 5000 stocks are above their 50-day moving average. We are clearly in over-bought territory but then that is what rallies look like.

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 market, Trend Analysis for 04-01-2010

This chart shows that the S&P 500 has continued to grind out gains while the broader market is losing some up-trend momentum. In other words, the two charts are consistent though this chart suggests we are not so over-bought.

The outlook --

Investors will have had a long weekend in which to mull over Friday's Non Farm Payroll report. I'm thinking this is a pretty good report: not so good as to suggest the Fed will need to tighten rates right away but good enough to confirm that the economy and the jobs picture are on the mend. As such, there will not be a big move in stocks either direction.

Some folks have pointed to MACD beginning to suggest that stocks, in particular the S&P 500, are beginning to break down. Indeed, you can see that on the chart of SPY below:


On the other hand, Williams %R and Slow Stochastics show the market to be in good shape and probably ready to extend the current rally to new highs.

The coming week will bring only a few economic reports: the ISM Services Index, pending home sales, minutes from the last FOMC meeting, crude oil inventories and the usual weekly initial jobless claims and continuing claims.

Well, the first quarter is now in the books. Before you know it, we will be in the middle of another earnings season. For now, expect stocks to continue the up-trend. Some pretty high expectations are built into prices so it will be interesting to see if earnings reports deliver. We shouldn't have long to wait before volatility returns to this market. And volatility means good action in our Swing Signals and Trend Busters.



Friday, April 2, 2010

More jobs for the U.S. - mirror image of outsourcing proposed

Today jobs were front and center in the news with the Non Farm Payroll report showing jobs being added for the first time in many, many months. Commentary was generally positive but everyone took the opportunity to point out that still more job growth is needed.

I just came across an interesting article on the Tech News World website. It describes what seems to be more or less the "mirror image" of outsourcing.

The "Startup Visa" --

Here's what is being proposed:
"The idea is to issue a work visa to foreign entrepreneurs who start a company in the U.S., provided that they raise at least US$250,000 from qualified U.S. investors. Then, within two years, the startup must create five new jobs, raise at least $1 million, or generate at least $1 million in revenue. If one of those goals is achieved, the founder gets a green card. If not, the entrepreneur must leave the country."
The idea is credited to Paul Graham who runs the venture firm Y Combinator.It has been picked up numerous other venture investors. It is actually gaining ground in Washington now. In February, Senators John Kerry, D-Mass., and Dick Lugar, R-Ind., introduced the StartUp Visa (NYSE: V) Act. In a joint statement, the senators said the following: "We both believe that America remains the best country in the world to do business and we want to continue attracting immigrant entrepreneurs to help drive innovation and job creation here at home."

Hot button topic --

Given the high unemployment rate, discussing foreign workers and immigration has a tendency to get feelings inflamed. In the case of startup visas, however, instead of "stealing jobs" from Americans, the visas would require the creation of new jobs that stimulate the economy. With the requirement to be successful or leave, the incentive for these foreign entrepreneurs to work extremely hard and really build a business is strong. Benefits are not only jobs for U.S. citizens but potential creation of new industries or markets, the ability of these companies to become taxpayers as they exit the startup phase and, of course, there are all the typical related economic benefits that accrue to suppliers, office landlords, etc.

Conclusion --

I have to agree with proponents - the startup visa is a good idea. The U.S. has always prided itself on being friendly to entrepreneurs and the startup visa extends this concept to folks who, if successful, contribute to our economic competitiveness, create jobs and deliver financial benefits to local economies.

Instead of outsourcing jobs, we would be "in-sourcing" companies. And the jobs would be right here. What's wrong with that?

Hat tip to Tech News World: Silicon Valley's Innovative Approach to Creating American Jobs



Alert HQ and MarketClub - an excellent fit

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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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