Monday, November 26, 2012

The Golden Nugget That Makes Traders Wealthy Trading AAPL, RIMM And Gold Stocks

I know most Apple enthusiasts will be rolling their eyes with my analysis and that's fine because the rest of us need people to buy our shares as we unload long positions or sell Apple short .

All joking aside, the charts below clearly show some very interesting information you cannot afford to overlook. At minimum, take a quick glance at the charts which tell the full story on their own.

The Four Stages of Stocks
Markets are cyclical in nature. There is a constant process of expansion and contraction, rally and
decline that continues as the market determines the theoretical fair value of a security. The sum
of these moves forms an unquestionable cyclical pattern consistent within all time frames. 

During a cycle a stock enters different phases of support, from irrational exuberance typically
found before its peak, to periods of widespread discontent where its price is continually
punished. However there are never distinctly good or bad stocks. 

Every "good" stock will eventually become a bad one and vice versa. There are however good
trades; trades that reward an investor who has correctly anticipated a move and positioned
himself accordingly. 

It is important to note that this works with commodities like gold and silver which are trading at
a VERY interesting point in their life cycle. Looking at various time frames in GLD and SLV
you can see this.  (more)

Rosen – This Move In Gold & Silver Is Going To Shock People

from King World News
KWN has received tremendous interest in 54-year market veteran and analyst Ron Rosen’s charts and comments which were published exclusively on King World News. We followed up with Rosen to get his take on where gold and silver are headed longer-term, and Rosen did not disappoint. He gave an absolutely extraordinary interview.
Below is a chart and comments from 54-year market veteran and analyst Ron Rosen:
Continue Reading at…

Comcast Corporation (NASDAQ: CMCSK)

Comcast Corporation provides entertainment, information, and communications products and services in the United States and internationally. The company’s Cable Communications segment offers video, high-speed Internet, and voice services to residential and business customers. Its Cable Networks segment consists of national cable entertainment, national cable news and information, national cable sports, regional sports and news, and international cable networks. Its Filmed Entertainment segment consists of the operations of Universal Pictures, including Focus Features, which produces, acquires, markets, and distributes filmed entertainment worldwide in various media formats for theatrical, home entertainment, television, and other distribution platforms. This segment also develops, produces, and licenses stage plays. The company’s Theme Parks segment comprises theme parks; studios; and a dining, retail, and entertainment complex. The company offers its services directly to residential and business customers through call centers; door-to-door selling; direct mail, television, Internet, and local media advertising; and telemarketing and retail outlets.

Comcast’s stock is potentially forming a Head and Shoulders pattern. Please take a look at the 1-year chart of CMCSK (Comcast Corporation) below with my added notations:
1-year chart of CMCSK (Comcast Corporation)
CMCSK has been on a nonstop rally since last year. Over the last (3) months though, the stock has created a very important level at $34 (navy), which would also be the “neckline” support for CMCSK’s possible H&S pattern. Above the neckline you will notice the H&S pattern itself (red). Confirmation of the H&S would occur if the stock broke below its $34 support. If CMCSK breaks that level, the stock should move lower from there. A move above the $36 area would probably negate the potential H&S pattern.

Keep in mind that simple is usually better. Had I never pointed out this H&S pattern, one would still think this stock is moving lower simply if it broke below the $34 support level. In short, whether you noticed the pattern or not, the trade would still be the same: On the break below the key $34 level.

Juniors to hit a Fiscal… Wall?? Brent Cook

Garbage Piles Up in Spain as Unpaid Municipal Bills Mount; Green Shoot of the Day: Cement Consumption Falls 34%

by Mike Shedlock
MISH’S Global Economic Trend Analysis

As Spain attempts austerity by cutting back payments to regions, those regions run out of funds to pay bills.
For an interesting case-in-point, please consider (via Google translate from El Economista) Municipalities Owed €2,000 Million, Companies Refuse Collection and Cleaning
Defaults on local councils put back on the ropes to urban sanitation companies. No respite worth. If the final plan provider payment partially interrupted the problem, the situation again becomes serious. “Since the beginning of the year delinquencies has skyrocketed. In just eight months to August, the accumulated debt of the sessions with cleaning companies was around 1,680 million.
Continue Reading at…

Traders Who Heed Chart's Warning Could Score 100% Profits : HSNI

Investors often think of stocks in terms of growth and value. Growth stocks tend to enjoy rapid growth in earnings and trade at high price-to-earnings (P/E) ratios. Value stocks usually have lower P/E ratios but offer investors relatively stable earnings growth and often pay a small dividend. Many companies begin trading as growth stocks and then become value stocks when earnings slow. One sign that this transition is under way could be the initiation of dividend payments.

Dividends are one of the ways that companies use the cash flow generated by their business.
Companies will also use cash flow to meet current operating expenses and to reinvest in the business so that they can generate more growth. As companies grow, they may find it challenging to find investment options that deliver the rate of return they like to see. When this happens, some companies initiate dividend payments and, in effect, signal shareholders that they cannot find a way to use all of their cash to maintain the previous growth rates in the current environment.

Last year, HSN Inc. (NASDAQ: HSNI) initiated a dividend. The company is a well-known retailer that was first known as Home Shopping Network. Home shopping channels are still an important part of the company's strategy, although catalogs, websites and retail outlets now supplement that strategy. In the past 12 months, the company has generated more than $3.3 billion in revenue from these diversified sales channels. Revenue growth is now in the low single digits and is expected to grow about 5% in the next year.

Earnings growth also seems to be slowing for the company. After averaging earnings per share (EPS) growth of more than 58% a year in the past five years, growth is expected to come in at 27% this year and 22% next year. Over the next five years, EPS growth is expected to average 16% a year, making the recent P/E ratio of nearly 19 look a little expensive. Traders often think that the P/E ratio should be equal to the EPS growth rate at fair value, and by this measure HSNI is overvalued.

The monthly chart also shows that HSNI could be due for a sell-off. The stock has been one of the biggest winners in the past four years, gaining more than 3,800%. The stock has now closed above its upper Bollinger Band four months in a row, indicating that it is overbought, and the stochastics indicator has just offered a sell signal.
HSN Chart
The weekly chart is similar, although the stochastics sell signal is clearer. A short-term price target of $47.08, the 20-week moving average, can be found with the weekly chart. Eventually, a move back to the lower Bollinger Band would be expected.
HSNI Chart
HSNI could be sold short to profit from the expected decline. The dividend has been paid at an annual rate of $0.50 and short sellers would be liable for quarterly dividend payments as long as they are short. This seems like a small price to pay given the potential downside in the stock.

Put options can also be used for those who are uncomfortable shorting stocks. March $50 put options are trading at about $2.33 and would be profitable if HSNI falls below $47.67.

The company is scheduled to report earnings in early February, and the March expiration date allows traders to benefit if HSNI drops on that report. At least one analyst did lower their estimate for this quarter in the past few weeks, although several others have raised estimates. Analysts have fairly diverse opinions about the stock and there is a 25% range between the lowest and highest EPS estimates. This variability seems to be consistent with the reality that the company is in a transition from fast growth to slow growth and analysts are uncertain how the company will manage the transition.

HSNI is a short trade for aggressive traders. There seems to be little upside potential in the stock and the current price leaves little room for operational errors. Retailers often stumble, and after four years of exceptional growth, HSNI could be due for a rough patch.

Recommended Trade Setups:
-- Short HSNI at the market price
-- Set stop-loss at $53.50.
-- Set initial price target at $47 for a potential 10% gain in three months; a longer-term target of $40 is reasonable for a potential 23% gain
-- Buy HSNI March 50 Puts at $3 or less
-- Set stop-loss at $1.
-- Set price target at $6 for a potential 100% gain in four months

Russell Napier’s “Most Important Chart In The World”

from Zero Hedge
Hopes for an early recovery in the global economy may be overoptimistic, according to CLSA’s Russel Napier, as he notes the expansion of China’s reserves, which has been an engine of global economic growth, is about to come to a shuddering halt. As eFinancial News notes, Chinese reserves have decelerated dramatically over the last five years and are now close to zero. Napier said of the graph: “It is the most important chart in the world. The growth in Chinese reserves has determined all the key developments in financial markets in the last two decades. It printed lots of currency and artificially depressed the US yield curve. It has been the cornerstone of global growth, and now it’s over.”
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US Weekly Economic Calendar

time (et) report period Actual forecast previous
8:30 am Chicago Fed national index Oct.   -- -0.37
8:30 am Durable goods orders Oct.   -0.5% 9.9%
9 am Case-Shiller home price index Sept.   -- 0.9% nsa
10 am Consumer confidence index Nov.
72.1 72.2
10 am FHFA home price index Sept.   -- 0.7%
10 am New home sales Oct.
385,000 389,000
2 pm Beige Book --   -- --
8:30 am Weekly jobless claims 11-24
393,000 410,000
8:30 am GDP 3Q   2.8% 2.0%
10 am Pending home sales Oct.   -- 0.3%
8:30 am Personal income Oct.
0.2% 0.4%
8:30 am Consumer spending Oct.   0.0% 0.8%
9:45 am Chicago PMI Nov.   -- 49.9