Mid-Session Market Comment 02-28-2014

Major market indexes  opened flat this morning and has been rising steadily since, and they are having moderate gains now.  GDP is slightly lower than expected but both the Chicago purchasing managers index and the consumer confidence index are better than expected. No big surprise of these data vs expectations serve to boaster the stock market today. Technically, S & P 500 broke to new record high today and attracted buying in the market. But there are concerns for the market. Gains of S & P 500 and the Dow are almost twice as much as those in the NASDAQ and Russell 2000 and their moves don't seem to be in steps. In addition there is no influential sector leading the market up. Regardless,  S & P 500 breaking  to new highs will likely take the Dow  up to challenge its new high at 16588. Cautiously optimistic is what I can use to describe the present market situation. 

Closing Market Comment 02-27-2014

Major indexes opened slightly lower this morning, traded within a narrow range intraday and closed with small gains. In this morning's congressional hearing ,Fed President Janet Yellen said that harsh winter weather may have a negative impact on recent economic data, and reiterated that easy monetary policy stance to continue for some period of time. This provide positive tone to today's  stock market. Technically, the S & P 500 today regained above the 1851 level and made a new historical closing high. Stock market is looking good. If investors are satisfy with tomorrow's GDP and Chicago PMI data , the stock market will likely start a new leg up . S & P 500 support is 1819 and resistance is 1859.

 

How TSLA Should Be Played

Tesla Motor (TSLA 251.46) gapped above 230 after JP Morgan analyst upped its stock price target to 320 the day before yesterday. It followed through with this strength and was up again yesterday. The stock was up earlier today and is coming back down on  the news that it plans to build a battery "gigafactory" which can build batteries for 500,000 cars. This news is bullish for TSLA long term but some profit taking is reasonable as company warns that the upcoming conversion of convertible notes may negatively impact the stock. Going forward, let's look at why TSLA is still very attractive.

TSLA has a reputation for its big price movement and consistently making new high prices.  And by now its name is very well known. One fact is, investors are addicted to buy famous names. This has been proven true to such well known stocks as Google (GOOG), Priceline (PCLN), Face Book (FB), Netflix (NFLX) , Pandora (P) etc. These stocks continue to make new highs even though more than a few voices  have been saying they are way overvalued. Being a name brand is good for a stock, TSLA will be the same.

Is TSLA really over value as many have said? It is not by the measure of PE/G ratio. That is the ratio between its forward PE and its forward 1 year earning growth. A stock is fairly valued when PE/G equals 1. Over value if higher than 1 and under value if under 1. The degree of the overvaluation and undervaluation depends on how big and small the ratio is . For TSLA the PE/G is (253/3.8)/100x(3.8 - 1.87)/1.87=66.58/103=0.64. A 0.64 PE/G means in order for PE to catch up with G to become fairly priced, TSLA need to be at 395 by next year. That is if the consensus earning estimates are correct. Although the analysts are not always right.

TSLA is also known as a momentum stock. That is, it is a stock investors like to pile on to buying when there is a little bit of good news or when the general market goes up. Its heavy short interest of 37% float also helps it to go up quickly as shorted shares are bought back. It is considered bullish for a stock if short interest is larger than 20% of its float.

Investors.com has a great service called stock check up. I ran the check up on TSLA and its composite rating is a strong 97 out of a possible 99. What I pay most attention to is the accumulation/distribution rating and it is A for TSLA. This means there has been a lot of underline buying on this stock. Investors.com also indicates that there have been 8 quarters of increasing institution ownership. This means institutions have been looking at TSLA and find it attractive.

Checking on institution ownership as a percentage of float for strong stocks I mentioned above, they are as follows: P 101% (I can not explain how this is possible), PCLN 98.2%, NFLX 88.2%, GOOG 86.7%, FB 46.7%. Now look at TSLA, it is at 68.3%. So in order to catch up with the leaders, more institutions still need to pile in and this is bullish.

Finally it's the chart. Price chart is important because it allow us to see how investors are actually placing their bet after they digested all factors related to the company. TSLA has been moving up since last December, and has been trading above its 50, 100 and 200 day moving averages. All trends are up. Stock may consolidate between 228 and 265 near term. The two buy points are when it trade near 228 and when it broke above 265 with initial target 300.

Disclaimer: The above write up represents the opinion of the author only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own position in the mentioned stocks.

 

 

Closing Market Comment 02-26-2014

Major indexes opened slightly lower ，trading narrowly the whole day and closed modestly up.  Strength in retail and home construction sectors provide support to today's market. Technically, the S&P 500 is still digesting the huge recent gains by trading a narrow range around the 1851 resistance level. Breaking through 1851 level and stay is very important near term. Profit-taking will ensue if it doesn't . Friday's GDP and Chicago PMI released may be able resolve the dull consolidation one way or the other.  Even though S &P 500 is still below 1851, today's action still favors a break out unless Friday's economic reports are weak.  S & P 500 support is 1818 and resistance is 1859.

Closing Market Comment 02-25-2014

Major market index opened slightly lower this morning, they then rose to positive but closed at small losses. Lower consumer confidence and weak Richmond Fed manufacturing index have negative impact on today's stock market. Technically, the S & P 500 yesterday broke through 1851 and made intra-day new high but failed to hold. The market did not succeed in breaking to new high.  Near term, S & P 500 will likely consolidate around 1851 while waiting for good news to try breaking out again. Market is still in an up trend but S&P 500 breaking above1851 level near term is very important. It may formed Triple Top and may fall again if it doesn't. S & P 500 support is 1816 and resistance is 1859.

Two Bearish Charts --- AAPL, TWTR

As the general stock market is rallying towards new highs, price trend of both Apple (AAPL) and Twitter (TWTR) are looking very bearish.

Apple ( AAPL 524.93)

AAPL failed to stay above 50 day moving average at 537 after a strong rebound first half of February. It has now formed a bearish 4 month Head and Shoulder Top. It may come down to test its 200 day moving average at around 487. Latest analyst actions are: Barclay downgrade from Overweight to Equal Weight on 2/20 while Standpoint Research downgrade from Hold to Sell on 1/6.

Twitter (TWTR 54.97)

TWTR has been trending down since last December from around 75. It rebounded toward 50 day moving average but failed to break through. Down trend has reasserted. Near term down side target is 50. Latest analyst actions are: UBS downgraded from Neutral to Sell while Stifel downgraded from Buy to Hold, both actions were done on 2/6.

Disclaimer: The above write up is for your information only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own position in the mentioned stocks.

Mid-Session Market Update 02-24-14

Stock market opened up and has been trending up. S&P 500 broke above its old all time high level 1851 and is now trading around 1856. There is no influential economic news to drive the market. However, merger news of RF Micro Device (RFMD) merging with Triquint System (TQNT) and Man's Warehouse (MW) raising takeout price for Jos. A. Bank (JOSB) are having positive impact to the market. It is crucial for the S&P 500 to hold above 1851 at the close. If it does, more near term upside for the market is likely and the Dow will quickly run up to its all time high. The Dow is about 300 points away from its all time high of 16588. However if S&P 500 comes back below 1851, there's the danger of a top in market.Today is an crucial day for the market.

Gold is up 14.10 at 1337.90. Crude oil is up 0.86 to 103.06. 10 year treasury yield rises to 2.752% while  US dollar index (UUP)  is down to 21.50.

Applying Elliot Wave on 100 Year Of Dow Jones Industrial Average

The following is a chart of 100 year Dow Jones Industrial Average with Elliot Wave applied. Thanks to the sharing by Boyplunger99 in StockTwits.

Mid-Session Market comment 02-21-2014

Major indices opened lower this morning, then reversed back up. Currently, major indices are posting small gains. Technically, the S & P 500 is only 7 points from its 1851  new high level . It is no doubt that S & P 500 will challenge the new high, but the market needs good news to break the strong resistance. It has been multiple  times in the last two months that the S&P 500 new high was challenged but failed.  S & P 500 resistance is 1851 and support is its 50-day moving average at 1814. Today is the last trading day for February stock options, stock will be subject to price manipulation by options players and the market tends to be less volatile. Any break out to new high may need to wait until next week.

 Dow is at 16166.28 +33.05, Nasdaq is at 4281.13 +13.58, S&P 500 is at 1844.23+4.45.

Yield for 10 year Treasury is down 0.04% to 2.750%. Gold is up $4.8 to $1321.80 per ounce. Crude oil is down $0.98 to $101.77 per barrel.

Twitter (TWTR) IS A Short

Twitter (TWTR 55.68)

This popular social media stock rose rapidly to all time high of  $74.74 in December after gone public at $26 in November last year. Ever since then it has been trending down. On February 6, TWTR dropped 24% to $50 on more than 3 times average volume after earning report. This caused extreme technical damage to the stock. Since then, short cover, bargain hunting has pushed stock back up to $60. However, it happens that $60 is where the 50 day moving average lies and is where its upward movement stopped. It turned sharply down yesterday and a technical sell signal issued. Stock is up slightly today due to buy action in sympathy to Facebook's high price taking over of Whatsapp. But it is only up 18 cents today and price action is weak in the face of a 109 point up move in the Dow Jone Industrial Average.

I think this is a perfect time to short TWTR at this price level. Reasons are its chart looks very bearish, high forward PE of 266 and employee stock lock up period expired and may usher in fresh selling pressure. It will stay in a downtrend unless it recovers above $60. Down side price targets are $50 then $40.

Disclaimer: The above write up is for your information only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own position in the mentioned stocks.

LIOX A Strong Stock To Consider

Lionbridge Technologies Inc. (LIOX $7.24) 

Company provides language, development, and testing services.

Stock broke above $7 and price trend is up. Next resistances are $8.55 then $11.40. Support is $7.  Company experienced 3 consecutive quarters earning surprises of over 100% compared with consensus estimates. Its 2015 estimated PE/G is a very bullish 0.37. This means in order for its PE to catch up with G, its stock price will need to rise to $18.9. IBD Composite rating is a very strong 97.

Monthly chart of LIOX

Disclaimer: The above write up is for your information only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own shares in these stocks.

Stocks For Quick Profits

Followings are stocks look ready for quick pops:

Quick Logic (QUIK $5.29)
Broke above $5 and has room to run to $7. Support is $5. Short interest is 13.8%. Short ratio is 8.6 days. Only 48.88M shares float. IBD Accumulation/Distribution rating is A.

Moly Corp (MCP $5.56)
Triple Bottoms, up trending, next 2 targets $6 and $7. Support is $5.  Short cover will make it reach targets quickly. Short interest is 52.4%. Short ratio is 7.6 days. IBD Accumulation/Distribution is C+.

NQ Mobile Inc (NQ $18.48)
Consolidating up trend, may break out any time. Support is $17. Resistances are 20 then 25. 40% short interest and short ratio is 3 days . Only 29.5M share float. IBD Accumulation/Distribution rating is C+ while composite rating is 98.

Keryx Pharmaceuticals (KERX $15.60)
Consolidating up trend, breaking above $16.2 may mean a rally to challenge$20. Support is $15. Short interest is20.8% . Short ratio is 3.8 days. Float is 80.6M shares. IBD Accumulation/Distribution rating is B.

Disclaimer: The above write up is for your information only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own shares in these stocks.

MCP May Be Ripe To Rally

Molycorp, Inc. (MCP $5.49) may be ripe to rally

Technically, MCP triple bottomed at $4.55 since 11/2013. It is now above both its 50 and 100 day moving averages at 5.11 and 5.33 respectively. Next resistance is its 200 day moving average at around  $6 but its near term upside target may be to fill the gap to $7. The high short interest may cause the target to be realized quickly. Also helping is the rare earth ETF REMX ($36.26) has recently formed Double Bottom formation and may indicate positive expectation of rare earth sector.

Key bullish statistics:

Short interest: 52.4%

Short ratio: 7.6 days

Book Value: $6.8

Secondary stock offering at $5 half year ago

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disclaimer: The above write up is for your information only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own shares in these stocks.

 

Mid-morning market comment 02-18-2014

Pacific Time 8:45AM:

U.S. stocks opened lower this morning then bounced. Major indices have now turned positive. Bank of Japan announced additional easing efforts led to Nikkei's surge of more than 3% which provides positive help to the U.S. stock market . After the Dow corrected down about 7% from its high from early January to early February, a strong two-week rebound helped it recovered above its 50 days MA at 16100 level. Market correction  is completed, the chance of making  new high is good. Dow is  about 430 points from its high of 16,588 , the S & P 500 is only 9 points from its high of 1851 while the Nasdaq has already hit a new 13 1/2 year high . As for today, the market may consolidate within a narrow range.  The FOMC meeting minutes will be released tomorrow and that may be the trigger for the market to rise again.

Major Asian markets closed mixed, Shanghai -0.77%，Japan +3.13%， Hong Kong+0.23%.
Manor European markets closed mixed, Germany +0.13% , United Kingdom +0.99% , France -0.01%.

10 year Treasury yield fell to 2.718%. Gold rose $ 3.70 to $ 1,322.40 an ounce. Crude oil is up 1.58 to $101.87 per barrel.
 

Market Conditions 02-17-2014

Pacific Time 3:17PM

US stock market is closed for president's day today. Asian  markets are mostly up while European markets closed mixed. Crude oil is up $0.62 to $100.92 per barrel while gold is up $10.40 to $1329 per ounce. Early S&P 500 future is up 1point.

Technically, the Dow, Nasdaq and S&P 500 are all recovered above their 50 day moving averages and their trends are up. The S&P 500 is about 12points to 1850 all time high. The recent impressive rally is likely to continue and takes S&P 500 to new high.

Influential event will likely be Wednesday's FOMC meeting minutes.

Notable earnings this weeks are :Tuesday's KO and HLF, Wednesday's TSLA, Thursday's WMT, HPQ, PCLN and GRPN.