Friday, December 6, 2013

Stocks Tank 5 Days-In-A-Row As 52-Week Lows Reach 3-Month High

“Good news” once again proved the undoing of the equity market (which some bright spark on TV said “has priced in the taper”) and bonds and bullion also fell. Despite the ubiquitous late-day ramp to VWAP (thanks to to JPY selling and VIX stomping), equities closed red for the 5th day in a row for the first time since mid-September. Perhaps most notably, new 52-week lows reached its highest in almost 4 months. Volume was above average yet again as Treasuries saw yields hammered higher with the belly underperforming +4.5bps as 7Y broke above 2.20% to near-3-month highs. The USD sold off – driven more by EUR strength as Draghi disappointed in his jawboning – which proved to stumble all the carry trades as USDJPY moved back below 102. Gold and Silver were volatile but ended the day lowerVIX closed back over 15% for the first time in over 2 months and its reaching extreme inverted levels for 2013 into tomorrow’s all-important NFP print.
52-Week Lows are rising rapidly…
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Sapient Corporation (NASDAQ: SAPE)

Sapient Corporation provides various services that enable clients to leverage marketing and technology to transform their businesses in the United States and internationally. It operates in three segments: SapientNitro, Sapient Global Markets, and Sapient Government Services. The SapientNitro segment offers Web and interactive development, traditional advertising, media planning and buying, strategic planning and marketing analytics, and multi-channel commerce strategy and solutions. The Sapient Global Markets segment offers services in the areas of buy-side investment process; commodities trading and risk management; derivatives platforms; clearing and collateral; data management; Java and operations services to capital and commodity markets. The Sapient Government Services segment offers digital marketing strategy and execution, program management, solution delivery, strategy, and communications and outreach services, as well as provides consulting, technology, and marketing services.
To review Sapient's stock, please take a look at the 1-year chart of SAPE (Sapient Corporation) below with my added notations:
1-year chart of SAPE (Sapient Corporation) Sapient's stock has been trading sideways for the last 4 months. Over that period of time, SAPE has formed a clear resistance level at $16 (red). In addition, the stock has also created a strong level of support at $15 (blue) that has actually held since mid-August. This rectangle formation on SAPE is very helpful in trading it because at some point the stock will have to break one of the two levels the pattern has created. Although the stock isn't a huge 'mover', a break out of the rectangle should send the stock on a more significant run.

The Tale of the Tape: SAPE has clear levels of support at $15 and resistance at $16. The possible long positions on the stock would be either on a pullback to $15, or on a breakout above $16. The ideal short opportunity would be on a break below $15.
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Trouble For Treasurys, The Technicals Tell

Treasuries are resuming their bear trend, with 10yr yields pushing above 2.839%, the Nov-21 high and BofAML’s MacNeil Curry warns “Treasuries are in trouble.” They continue to target a break of 3.00% in the sessions ahead. This is the September/3m range highs. However, they are most focused on 5yr yields and TYH4 (10Y March futures). Remember, Curry cautions, with the MOVE Index turning higherTreasuries are moving into a more volatile environment. Price action in the next week or so could be explosive. Of course, while the trend (and consensus) is your friend in this view, given the Fed’s dominant position, there is always the chance of a short squeeze.
Via BofAML,
US 5yr yields are completing a 2m Head and Shoulders Base on the push above 1.449%/1.473%. A daily close above 1.449%, ideally 1.473% confirms this formation, targeting 1.670%/1.659% and potentially beyond.
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Melco Crown: Gamble on a Breakout

Melco Crown Entertainment Ltd. (MPEL), based in Hong Kong, operates gaming casinos and resort facilities in the Far East, including the Macau Studio City Project. Annual revenues are $4.8 billion.

The stock came public in late 2006 around $21, and fell to a low of $2.31 in 2008. However, since then, the stock has been on a roll. It made a recent new all-time high at $37. A breakout to another new high could draw more buying from the new-high crowd.

This year, analysts are forecasting a 57% surge in profits to $1.21 a share from 77 cents a year ago. The stock sells with a price-earnings ratio of 29, which we see as reasonable.

For the upcoming fourth quarter, analysts are forecasting an 80% surge in profits to 36 cents a share from 20 cents a year ago. The highest estimate on the Street is at 42 cents a share.

We see chances for an upside earnings surprise. The past three quarters, MPEL topped the consensus estimate by two cents a share, eight cents, and one cent.

The stock came public in late 2006 around $21, and fell to a low of $2.31 in 2008. However, since then, the stock has been on a roll. It made a recent new all-time high at $37. A breakout to another new high could draw more buying from the new-high crowd.

With strong profits coming, we see MPEL in a good spot to be accumulated in anticipation of a breakout.

For now, we suggest a partial stake in MPEL with further buying to be done on a breakout over $37.20. We are then targeting MPEL for a move to $46. A protective stop can be placed near $34.
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Two Fantastic Charts Show Gold May Quickly Surge $200

On the heels of continued downside pressure in the gold and silver markets, today top Citi analyst Tom Fitzpatrick spoke with King World News about what may cause a quick $200 surge higher in the price of gold. Fitzpatrick also sent King World News two fantastic charts. Below is what Fitzpatrick had to say both of his key charts.

Eric King: “Tom, can you talk about what your bullish view on oil will mean for gold?”
Fitzpatrick: “When you look at oil, Eric, as you well know it’s something that is the main part of the commodity complex. So if we do see a push higher developing in oil, which we suspect there will be, and we’re particularly looking at WTI (West Texas Intermediate) which is outperforming Brent at the moment, then there is going to be a feedback loop in terms of seeing that filter into other commodities….
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ShoreTel, Inc. (NASDAQ: SHOR)

ShoreTel, Inc., together with its subsidiaries, provides Internet protocol (IP) unified communications (UC) systems for enterprises in the United States and internationally. The company's systems are based on its distributed software architecture and switch-based hardware platform that enable multi-site enterprises to be served by a single telecommunications system. Its solutions include ShoreTel IP Phones; ShoreTel Voice Switches; ShoreTel Service Appliances; ShoreTel Director, which enables IT administrators to view and manage the entire system of the enterprise from any location using a single application; and Small Business Edition for smaller businesses. The company also offers ShoreTel Dock, a docking station for the mobile generation that turns smart phones and tablets into desk phones; unified messaging solutions; and Automated Attendant software, which enables the enterprises to direct callers to appropriate individuals, groups, or messages.
To review Shore's stock, please take a look at the 1-year chart of SHOR (ShoreTel, Inc.) below with my added notations:
1-year chart of SHOR (ShoreTel, Inc.) SHOR has worked its way higher from its $3.25 bottom in April up to its sideways move in November. During that sideways trading range, the stock formed an obvious support level (green) and an $8 resistance (blue), which was also a 52-week high resistance. Finally, last week SHOR broke through that $8 resistance.

The Tale of the Tape: SHOR broke out to a new 52-week high and has now pulled back. A long trade could be made at $8 with a stop placed below that level. A break below $8 would negate the forecast for a continued move higher.
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