Wednesday, July 21, 2010
A double bottom typically resembles a "W" and forms after a downtrend. Typically, a low is formed and then the stock bounces higher before coming back to retest the first low. The important point to remember is that a double bottom is not valid until the price closes above the center peak of the "W", also known as the neckline. (For related reading, see Analyzing Chart Patterns: Double Top And Double Bottom.)
Oracle (Nasdaq:ORCL) is a good example of a stock that recently cleared the neckline of a small double bottom. While the left side of the base was a little choppy, the overall price action follows the pattern in principle. After a decline, ORCL attempted to rally reaching just over $23.50. It pulled back from this level and retested its prior lows near $21.50. It then rallied sharply to clear its June high and the neckline from the pattern. ORCL is now in the process of testing the neckline as support. If it can hold here, especially in the light of a negative IBM (NYSE:IBM) earnings report, it could rally to its projected target near $25.50. (more)
Amazon.com: Janney Montgomery Scott equity analyst Shawn Milne maintained a buy rating and $175 fair value estimate on shares of Amazon.com (AMZN) on July 20.
On July 19, Amazon.com, the largest Internet retailer, said growth in sales of its Kindle digital reader accelerated every month in the second quarter and that it is selling more electronic books than hardcover versions.
The rate of Kindle sales also has tripled since the company cut the device's price to $189, from $259, Amazon.com Chief Executive Officer Jeff Bezos said in a statement.
"We've reached a tipping point with the new price of Kindle," Bezos said. "Amazon.com customers now purchase more Kindle books than hardcover books—astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months." (more)
click here for audio
Dogs are conditioned to perform tricks in order to receive a treat. Horses are conditioned to trot or gallop at command. Humans are conditioned to deny the existence of a bear market.
Conditioning is defined as a process of behavior modification by which a subject comes to associate a desired behavior with a previously unrelated stimulus. It's ironic that Webster's uses the term stimulus' to define conditioning, because that's the same term the government has used.
In fact, the government's and stock market's actions have conditioned investors to believe that the worst is behind them. Anytime we are presented with data that points towards a recession or depression, the general consent is: 'This time is different!'
Unemployment is up, housing is down but stocks are up, so things must be different. That's at least the logical conclusion on Wall Street.
This Time is Different (more)
When the price of cars or sweaters or iPods declines, it's a break for consumers and a welcome sign that economic productivity is improving. That helps drive up living standards. But when the price of everything drops, it's an alarming development that portends stagnation.
The consumer price index, which measures inflation, declines every now and then, usually when there's a big drop in the price of volatile goods like energy or food. But there hasn't been sustained deflation in America since the early 1930s. Now, we may be on the verge of yet another unnerving economic adventure. Inflation over the last 12 months has been a scant 1.1 percent, which is below the level most economists deem optimal. And so far this year, inflation on a monthly basis has been negative as often as it's been positive. The odds are growing that low inflation could become deflation—with some economists worried that it has already started to happen. (more)
Teck Resources Ltd., Canada’s biggest base-metals and coal producer, gained 3.7 percent as copper rallied on prospects of Chinese demand. Suncor Energy Inc., the country’s largest oil and gas producer, increased 1.8 percent as oil reached a three- week high. Air Canada, the country’s largest airline, surged 13 percent after saying second-quarter profit increased.
The Standard & Poor’s/TSX Composite Index increased 86.41 points, or 0.8 percent, to 11,629.88. Most of the gain occurred late in the trading day on speculation that Fed Chairman Ben S. Bernanke will announce a lowering of the interest rate the central bank pays on banks’ excess reserves to stimulate economic growth. (more)
However, this is exactly what the "smart money" does -- they look for stocks with good, liquid balance sheets, high short interest (fuel for a rally) and a reason to move higher (a catalyst).
So today Benzinga went on the lookout for names with short interest greater than 9.5%, high liquidity metrics, positive institutional flow over the previous quarter, and earnings dates on the horizon (during August). Here are some names to consider adding to your trading portfolio.
“The economy is not robust,” Faber told Bloomberg. “We have mixed signals, but in general, the economy is still weak.”
And despite the euro’s recovery to $1.30, Faber also says he thinks Europe is stuck in a sideways economy for years, as austerity cuts and bailouts weigh on growth.
“I am not a great believer in this austerity that they are proclaiming,” Faber said in an interview with Daily Motion.
“I think the fiscal deficit will actually stay very high or even increase," he said. "And I think that if they decrease the fiscal deficit then it will be offset by very expansionary monetary policy, in other words monetization, so the whole burden to support the economy will fall on monetary policies, then they’ll print money like crazy,” he said. (more)