Golden trade

Gold...Is It a Dead Trade?

The last weeks we have seen spot Gold in US dollar terms tumble from 1750 to 1670 despite global central banks coming out with more aggressive monetary policy and looking dovish.



In theory, much has not changed with regards to the fundamental reasons to own gold as an investment. You still want gold to "protect" you from currency devaluing by the central banks in efforts to strengthen their individual economies (As central banks increase their asset purchases/ balance sheet, we expect more money in the system thereby fueling inflation and devaluing the currencies, this in turn makes domestic products cheaper to foreign companies and boosts an economy's exports). However, Something has clearly changed in the last few weeks for the price of precious metals to basically shrug off an increase in asset purchases by the US Central bank, an increasingly dovish Japanese government that threatens to debase their currency and continued reassurance of cheap money around the world... or has it?

Equity markets don't seem to think so, the Dow and other indices have rallied on the news and activities from central banks. Although other news seems to prop these indices up, I suspect that increasing the amount of liquidity in the global economy is the chief driver.



As it stands, it would seem that increased liquidity has caused a "risk on" mentality to run rampant in the markets. Whereas in the past, increased easing caused investors to be cautious of inflation, they have simply disregarded this notion today because they have seen no impact of inflation due to central banks easing. On one hand, it seems Ben Bernanke is achieving at least part of his goal when it comes to his monetary policy.

Bernanke has time and time again insisted that his aggressive monetary policy will achieve many things in order to strengthen the economy, one of them being the wealth effect (people feeling wealthier when their investments are doing well and in turn spending more money). As we have seen since the beginning of his policies, the stock markets have rallied by double digits and consumer confidence has increased, some would speculate about the causal relationship between the two, but regardless of ones stance on the matter it is impossible to deny that both have happened. So much so that the chatter now that of a consumer led recovery in the U.S. All this is good stuff, but what about the price of gold and why its taking it on the chin you ask?

Well there are a few possible explanations
1. The market is completely discounting the idea of inflation and therefore taking a risk on position in equities rather than a protecting their wealth with gold.
2. Glimmer of presumed brilliance with regards to solving the Euro Zone fiscal woes is causing investors to be more optimistic about the future, therefore increasing their risk appetite.
3. (And ill expand on this) The actual effects of the Fed's increased asset purchases are not being felt yet in the market until these purchases kick in in 2013.

Julia La Roche brilliantly notes that "The FED has committed to purchase $40Bn per month in MBS + $45Bn per month in Treasuries (QE). That’s a total of $1020Bn in QE next year, over $1 Trillion in balance sheet expansion. See right axis of chart below….That takes FEDs total assets from roughly $2.9 Trillion to over $3.9Trillion."

To illustrate the correlation between the price of Gold and the size of the Fed's balance sheet



leaning on her analysis we note that this price correction in gold and precious will be short lived until we begin to see an expansion in the Fed's balance sheet.

Otherwise, the common theme in my analysis is that investors have an optimistic forecast for the future and expect to see a global resurgence in 2013.
Ultimately, it pays off to be well hedged; and having some exposure to precious metals is an excellent way to do so.

Gold is financial antimatter; it is the fear factor which is opposite to the confidence factor.

The fact that it has pulled back doesn’t indicate all fear has vanished, but its saying that the "risk on" trade is popular, and we all know how quickly that can go south

Till later Trade well

Simple Technical Reason the S&P Looks Bad

The up trend failed its support trend line on the 22nd of October, This broke the long term uptrend that begun in June, we have been in a correction for two weeks. Today we broke a significant support at 1396, Traders be cautious this market could get ugly and fast!

This time is different, again? The US five years after the onset of subprime | vox

Brilliantly put!!

This time is different, again? The US five years after the onset of subprime | vox

Economic Outlook (Investment ideas)

Economic Outlook
The global economy had barely recovered from the recession that begun in 2008 before the recent round of economic turmoil began. As a result many countries in the world are facing a double dip recession due to overwhelming economic uncertainty, political polarization and simultaneous de-levering. These factors are posing a serious risk to businesses and consumers and as a result they lack the confidence needed to revive the global economy. Investors are entering a new era of volatile markets and seeking yield. They must invest in a world with low growth, very low interest rates, and a de-levering economy. As a result it is of prime importance to position portfolios based on macroeconomic events that will serve to produce yield while investors wait for economic issues to be resolved and normal growth to be restored. Understanding current economic conditions and making bets on probable direction of various economies will be vital to protecting investors’ capital and getting reasonable returns.

Europe

• Because of political gridlock, and polarized differences in cultures in Europe, politicians will fail to come to a speedy conclusion that tackles the issues of fiscal integration. Until they manage to resolve this issue which will take over a year in my opinion, I expect the ECB to step in with monetary policy to provide stability to a quickly dwindling economy.
• An exit for some of the more troubled states in the Eurozone such as Greece, Portugal, Finland and a probable fracture of the Euro area to North and South Euro within a year will draw them closer to creating a fiscal union.
• This will cause the Stronger Euro for the stronger economies such as Germany and to an extent France (North Euro).
• There will be inflationary pressures in the weaker parts of Europe (South Euro) as devaluing currencies will allow the countries to pay their debt and restructure their trade balance.

Continued uncertainty regarding the future of the Eurozone and the ability for the remaining countries to agree to a fiscal accord that will create a United States of Europe is going to continue producing volatility in markets. These uncertainties will affect consumer and business spending thus, affecting emerging economies that depend on the eurozone such as China

China

• As long as the Eurozone remains a problem China is likely to continue to experience slower growth than investors are accustomed to.
• The Chinese economy is heavily dependent on foreign investment from Europe and the United States; as a result, until they successfully transition to a consumer economy, their growth will heavily depend on the economic conditions in Europe and North America.
• In efforts to combat a slowing economy in china, I expect the PBOC to partake in a simultaneous injection of monetary policy with the rest of the G20 nations. I expect some form of monetary stimulus to assist unemployment and various industries that have been suffering due to uncertainty.

US
The United States of America also faces major hurdles to overcome in the next year or so. First and foremost is the “fiscal cliff” which threatens to slow the American economy by up to 4.5%; thereby, throwing the economy back into a recession. It is evident that policy makers are at a standstill on the matters until after the elections on November 4th to decide on the next president of the United States and the members of the senate. This risk causes businesses to be uncertain of the future of the economy and reduce spending thereby causing more tightening in the economy. Over the next year I expect to see measures to combat this issue in the United States

• To begin with the Federal reserve bank of the USA will enact monetary stimulus to reduce unemployment and avoid a complete economic catastrophic event if the US went over the “fiscal cliff”
• Printing and distributing more money will devalue the US dollar relative to competitors which will drive US exports
• The US will continue to keep interest rates unusually low until the economy begins to recover.

The three major markets in the global economy will drive many investment decisions moving forward, and should be taken into account when constructing a portfolio. However, other markets may present investment opportunities.

Investors need to be aware of other emerging countries that are growing based on domestic activity and have been through a de-levering process thus have low debt; countries in South East Asia such as Indonesia and the Philippines fit this description.

Countries such as Australia and Canada are viewed as safe havens from economic uncertainty in the global economy. Investors will look favorably at the economies in these nations and be attracted to their assets. Canadian bonds produce a comparable yield to the US and Strong European Countries such as Germany.

Portfolio Construction
Balance Mandate

• 40% Fixed income
• 40% Equities
• 20% Precious Metals and Hard Assets

Technology (Equity) / Natural Gas (companies)
I will look to add dividend paying strong technology stocks to my clients’ portfolio. I believe this is an area which will be beneficial to a portfolio because the one of the two primary ways to grow an economy is by increasing efficiencies by developing technology. Companies that are positioned to increase efficiencies and have good management and are trading at a value to investors will benefit a portfolio

Dividend yield
REITS (Equity)
It is important to find yield in an environment with slow growth. Rental real estate in the United States provides such opportunity. Companies operating in Non-judicial states that seek to purchase homes and rent them out while waiting on the value of the houses to appreciate will add value to portfolios. In addition, home building and real estate add value to the economy and the politicians may see this as a place to begin when seeking to improve the economy.

Housing (Equity)
Builders/ Steel manufacturers. Companies in these sections with attractive yields and good price valuations.

Gold/ Precious metals (PM/FA)
With the co-ordinated efforts by central banks to print money and devalue currencies, investors will look for a flight to safety. Investors will flock into gold as they perceive the dollars and euros devalue. This is because Gold and silver have always acted as inflation hedges and as a back-up currency.

Real Return Bonds (Fixed Income)
Real Return bonds will serve as a low risk opportunity to protect investors from inflation and currency devaluation.

MBS (Fixed Income)
These are a low risk way to invest in one of the tools to creating job growth in America; in addition, speculation shows that further monetary easing by the Federal Reserve may be in purchases of Mortgage backed securities.

Emerging Market ETF’s (Equity)
Emerging markets will have higher yields than domestic markets, I would seek low risk emerging market situations such as those in South East Asia where there is a young large growing population, growth based on domestic consumption and low debt structure.

Buy a house (Hard assets)
For investors looking to purchase houses out right, there are pockets in the US that have shown signs of improvements and look poised to produce good returns through rental income or increased house prices.

CNN lists 10 cheapest and best cities to buy rental properties:

• Las Vegas has a Median price of $122,000 after prices reduced 65% from its peak in 2007, there is projected annual rent of $12,898 in the region by 2015.
• Detroit has a median price of $78,000 down 50% from its highs in 2004 and a projected rental income of $9,016.
• Daytona Beach has a median price of $114,000; Orlando Florida’s median price is $115,000.

Investors will want to stay away from states where foreclosure rates are increasing and there stands to be an increase in “shadow inventory”. The problems are most severe states such as Arkansas, Hawaii, Washington, Oklahoma, New Mexico, Mississippi, and almost all states in the Northeast.

This is my trading book!1

Where have we been?

I realize that it has been over two months since my last post, since then there's been a lot of events transpiring in the world that could have been capitalized on in an investment/trading sense. I'll briefly go over the events I believe hold the key to unravelling a solution to other problems in this interconnected global economy.

To begin with, Europe is not in the same position they were two months ago, it is really up to you to decide if they have progressed towards a solution to their lasting issues or if they went even further away from a solution, I'd argue the former. Closer to home, The United States is drawing ever closer to their day of reckoning, they will have to deal with political issues as well as economic ones both surrounding ways to foster growth and maintain the budget in their country while remaining a dominant economic power in the global community. I believe these two economic power houses hold the key to a stabilized economy in which business people will be able to thrive, and nations can achieve growth.

I was speaking to my friend this morning as I watched Federal Reserve Chairman Ben Bernanke speak about the status of economic growth in the US. I will go on record and say that I believe that the work Bernanke has been doing is the best anyone could do given the situation he inherited from his predecessors. I would also like to add that the minds governing the great nation of US should act smarter than they are. At the very least they should be more open to ideas, or better versed in history and the consequences of their action (or lack thereof). Anyway, during Bernankes address to congress this morning, (17/07/2012) I discussed with my friend how incompetent and irresponsible they were being. Without a doubt those people elected are intellectual economic minds, but they seem to be completely unaware of the consequences of their political games, they even openly say that they're confident that they wont do anything concerning the current fiscal concerns brought forth by the Fed chair man till November, and the onus on protecting the economy of the free world from turning upside down is completely on Bernanke and his monetary capabilities..

Let me back track for a bit... At the end of 2012, the United States of America faces what Fed Chairman Ben Bernanke describes as a "fiscal cliff" that is the simultaneous onset of tax increases and government spending cuts that will be triggered on Jan. 1 unless Congress acts. Combined, the policies would take $7 trillion out of the economy over 10 years -- about $500 billion of which would occur in 2013 which accounts of roughly 4.5% of the nations GDP. Now this problem is dynamic in nature in that, if the nation is allowed to go over this "fiscal cliff", economic growth in the US will slow down severely and the nation as well as others dependent on US (Virtually everyone else in the world) WILL enter another recession(on the heels of the recovery from the credit crisis in 2007-2009.) Now, there's also the perceived problem of United States' budget deficit; if you remember in August of 2011 the US faced a credit rating downgrade that sent capital markets tumbling thanks in part to a debt ceiling increase, or lack of a definitive move from congress in regards to that(there is a clear pattern here). There is no question that US debt must be taken care of, it is not wise to run a country on such high debt as we see in parts of Europe, but would that justify sending nations into another recession in as little as five years? is it reminiscent of the great depression of the 1930's??

Who really knows the solution? I am by no means an economic genius so I cannot render a solution that is unique, nor guaranteed to work. But listening to congress question our friend Ben this morning showed me one thing... That even though they all agree that there's a problem, and it needs to be fixed and they're all saying more or less the same thing, with exceptions to some **** Interesting characters****, They have no plan to come together to remedy an issue that could spiral the world into a situation reminiscent of the 1930's. A congressman brought up a great point today, in which I think the solution lies. He said that President Obama proposed a bill that would serve as fiscal stimulus in the short run to ensure that the economy survives and continues to grow, but in the long run enacts strict austerity** (for lack of a better word) in order to reduce the mountain of debt in the US. Bernanke alluded to something similar in his address to congress. This bill was not passed nor agreed upon simply because this is an election year and the Liberals do not have a clear majority in the congress, Republicans cannot afford President Obama to be right and win votes on his ability to solve the United States biggest economic problem because their candidate will be at a disadvantage (My view on politics: they're the same any way, regardless of who wins they'll find a way to screw over the people who put them in for 4-5 years... but I'm just a political pessimist... thanks a lot Jamie). Instead they continue to bicker and argue over whether or not Ben Bernanke should add more monetary stimulus to the economy, the effectiveness and effects of which is topic for another 3 posts.

To that point, given the events that have happened, and the likeliness of no fiscal policy being put in until after November (presidential elections) , if any thing is going to prevent the US from shedding 4.5% of GDP, Bernanke has little choice but to implement more monetary stimulus, he must weigh the pro of circulating more money in the system and possible creating the wealth effect to increase consumption, lending, employment and spending versus the con of increasing the money in the system and causing inflationary pressure and devaluing their precious US dollar. How much monetary policy will affect the economy can be questioned, but anyone who studied macroeconomics will tell you that maximum effect on the economy only happens when fiscal and monetary policy work hand in hand as we will see again when I discuss European issues.

I caught my self rambling so I'll end it here. My next post will discuss the European point brought up earlier in the post, I also want to discuss where I'll be putting my money and why I think it will work for you. If you have an opinion about this I'd love to hear it. Till then....

This is my trading book !

My Three Year Investment Idea

My Investment Idea
Precious Metals
Precious metals such as Gold and Silver are at a critical point in our history. They have never been valued so high, nor have they been so accessible to the ordinary investor. Precious metals currently provide a great investment opportunity in my opinion. The value in precious metals such as gold and silver is in its ability to be a preserver of wealth and as a currency value. Historically the wealth of a country was always determined by the amount of Gold the country had in its reserves. Precious metals presents a real measure of wealth because they are not subject to inflation or manipulation. After the second world war, countries decided to value their currency relative to a US Dollar rather than the gold standard, this left their currencies subject to monetary policy done in the United States. Now gold is no longer pegged to any national currency, rather it is more commonly used as an investment or a symbol of wealth.

Today an interesting opportunity presents itself in valuing precious metals such as gold. Since gold is not subject to inflation and the value is relatively reliable, it stands to reason that investors who are unsure about the future value of their home currency will seek a stable alternative to protect their wealth. To be more specific, in the United States, monetary policy in the form of Quantitative easing and low interest rates is causing the value of One US dollar today to be a lot less than it was four or five years ago. With the probability of even more monetary policy in the form of Quantitative easing three (QE3), it seems that the US dollar will lose even more value in the future. For investors that recognize this as a threat to their wealth they will seek out ways to preserve their wealth. The two most common and reliable options are to either invest in companies in the form of stocks or purchase a preserver of wealth or another currency.

Stocks would be a good idea, however the risk inherent in owning stocks are increasing. A company fares as well as the economy does, this would be a worse alternative to preserve investors wealth as the outlook for the economy seems to be “grey” at best. The recent credit crisis has led to a nationwide deleveraging of balance sheets, this means that companies and people are no longer borrowing money to support an expanding economy. This will invariably lead to a slowdown in economic growth which does not bode well for the future outlook for stocks. This leaves the second alternative which is to find another form of wealth preservation in precious metals or other currencies. Many countries in the world are facing the same sort of crisis in deleveraging of balance sheets, therefore buying foreign currency would only serve to shift the issue to a different country. The solution to the issue of wealth preservation in this case would have to be precious metals. Gold and other precious metals will always have value either as an aesthetic or as currency, in addition to that, gold and other precious metals are not subject to manipulation by over production, rather the laws of supply and demand are the two main factors governing the price of precious metals. As demand increases and the supply stays relatively the same, the value of gold and silver should appreciate for investors everywhere. Precious metals are the ultimate inflation hedge and safe haven in times of uncertainty which is what we are experiencing now in North America and Europe.

Investment Vehicle

Precious metals ETF (GLD, SLV, CGL) these are exchange traded funds that track the price of owning the underlying commodity with a 99.91% accuracy

Commodity future – This is a risky option but provides an opportunity to own precious metal with leverage

Physical form (Bullions, bars, E.T.C) – Buying the physical precious metal could prove even more expensive, as the owner would have to be concerned about security and storage.

Mining company stocks- Although the value of a stock has other variables besides the value of the underlying precious metals, buying stock in a company that is exposed to the precious metal of one’s choice is another way to be exposed to the effects of change in the price of the commodity.

Come into my trading book: Sydney Foresythe - Research Report

Come into my trading book: Sydney Foresythe - Research Report: I've finally figured out how to share the report with you guys. As my last post indicated, I have been working diligently on getting my very...

Sydney Foresythe - Research Report

I've finally figured out how to share the report with you guys. As my last post indicated, I have been working diligently on getting my very first equity research report to those interested. The journey to creating this report was long but very rewarding. I have learnt so many things that I had no idea of before, and have grown as a professional in the field of finance. The most impact-full lesson I learnt was how to think critically about anything.

The world is full of information, a lot of it is redundant, some aren't even true, other pieces of information are critical to your goal. What every piece of information has in common as it regards to you is that on its own, the information is just words on a page, or numbers on a board.. (or what ever it is you're searching for.) What set a person armed with knowledge apart from someone with internet access is their ability to critically analyze the information provided, and come to an educated conclusion based on a bunch of incoherent data and information. That is essentially what this research report is. I (not to "toot my own horn") have gathered and analyzed information pertinent to Cisco, and presented it in a coherent, concise manner for your enjoyment and criticism.

While anything regarding returns on investment is a forecast and thus is subjective to the authors interpretation of the information provided, hard facts and proven forecasting methods have been employed to reach the conclusions presented in this report. Careful consideration has been given to all sides relevant to the underlying security in order to present a non bias conclusion.

For those considering a career in finance or wealth management, I would advise that you undertake an independent project pertinent to your desired professional field. It is one of the most rewarding things you can accomplish as an undergrad student. It extends learning and knowledge beyond classrooms and enables you to tackle unforeseen and untaught of issues.

Before you have access to my report in the link below I have to disclaim a few things for legal purposes.
1. I have not been compensated to create this research report.
2. I do not currently hold any positions in the underlying security, however, I may at sometime in the future see it fit to purchase shares in the company.
3. The report contains forward looking information that has neither been confirmed nor denied by the parties involved as being an accurate perspective of the company's future.
4. Please do not invest solely on my or any one else's information, always conduct your own due diligence and talk to your professional investment advisor before making an investment decision.

View File: Cisco Equity Research Report

Chinese Growth, But at what cost!

Chinese growth, but at what cost?

China is the world’s largest manufacturer as well as a major consumer of most of the world's natural resources, as a result, the well being of major economies are contingent on how successful the country is as a whole. Their perceived growth and consumption is critical to the world’s economic health. As it stands, China also produces the lion’s share of consumer goods such as TVs, electronics, clothing and other staple goods. They have existed as a cheap and reliable supplier to the west in most recent history. The Chinese economy is facing increased costs especially in manufacturing China; Land prices, regulation, taxes and labour are all recently inflated costs that may affect the price we pay for consumer goods from China.

Constantly increasing manufacturing costs seems to be as a result of Inflation in an effort to strengthen the Chinese economy and see GDP growth in the nation. This comes at the cost of American firms who have seen labour costs surge by 20% a year for the past 4 year. As a result, this creates a complicated situation whereby companies in the US do not want to see continued inflation in China due to rising costs, yet the world needs to see continued inflation in China as a sign of strengthening economy and increasing consumption. The Chinese worker now demands better wages and more benefits. The end of rising costs is nowhere in sight according to Joerg Wuttke, he believes that we may see up to 200% increase in the cost of manufacturing in china by 2020.

As manufacturing costs increase we can expect companies to take their business elsewhere, and a mild slowing down of china’s economic growth. However, China will sustain itself if this is the case thanks to its booming domestic market. So while large companies will likely avoid increasing costs by moving production elsewhere, the Chinese economy will not be doomed to fail due to much of its inland revenue.

For other articles of the sort please visit the GTF Market Watch

Working - Coming soon : Research Report.

Over the next few days/ weeks I will be working on my first research report that i will make publicly available. Please check back every now and then for the opportunity to download my very first research report.
Meanwhile....
In the short term I've been taking a look at Research in Motion for a swing trade opportunity. After applying some Technical analysis to RIM, I find some potential for small gains with the Canadian Tech company.

Here's a Look at the potential I see for a short term swing.

What I look for is areas of support and resistance, coupled with technical catalysts such as oversold regions or candle stick patterns. There is no guaranteed tell tale sign that a stock will rally to the extent which an investor or trader wants it to. One important thing missing from RIM is volume. It is important for trends or trend reversals to be confirmed by volume. Look for higher than normal volume at the tail end of a rally or price decline to confirm that a reversal is imminent.

It is also important to note that technical analysis is simply the study of investors sentiments regarding the supply and demand of an underlying security, while sometimes signs point to an imminent rally, the underlying security does not necessarily react like they "should". To quote Dr. Alexander Elder (Paraphrase)... Technical analysis is always correct unless it isn't.

Trade the right way, Pigs get slaughtered

Company coverage

An analyst typically chooses a sector in industry and covers stocks within that sector. If you know me personally you would understand my fascination with tech gizmos and consumer goods. You can actually go into my room and see a ridiculous amount of gadgets that I cannot possibly use at once. My sister makes fun of me for that but it's a fascination I just can't overcome. Lucky for me I know the root cause.... Father (this piece of knowledge will save me at least 4 hours in therapy). The point I'm trying to make here is that as an analyst my fascination will play into the kind of stocks I cover. That fascination tends to be a competitive advantage, it helps me to notice subtle changes that have ripple effects on the company and the stock price as a whole.

In this post I will give outlooks and my personal opinions on 3 tech stocks which I follow closely and one consumer good (Also have a fascination for watches) Fossil.

The First and obvious tech choice Apple
I am very bullish on this Tech Giant. After being one of the only companies to withstand the barrage of bad news from Europe on Friday; one must assume that investors truly believe in the growth story at Apple. They continue to maintain a large amount of Cash in hand totalling $98 billion dollars, which may be the only ruffle in their sheets. Investors will soon begin to demand value for that large cash balance. It will be interesting to see what AAPL is able to do with such buying power and future potential. I will continue to hold a position in this company, and add unto my position on pull backs and hedge for downside protection with in-the-money puts.

Second and perhaps just as obvious as the first: Google
Google continues to recover after dropping due to earnings release that missed projections. The sentiments in Google stock are that they are still a strong growing company with the ability to branch out into more technological ventures; their acquisition of Motorola speaks to such prospects. It is very possible and likely to see Google reach the highs created prior to earnings release. I continue to remain bullish on this stock going into next week and further out until they fail to break the resistance created by their all time highs at $640.

Our Canadian love child RIM
RIM took a major hit in its stock prices over the previous week. What was supposed to be a correction in price was amplified by major bad news regarding a loss of a huge part of their market share which is the U.S department of justice (A loss to the Apple iPhone). Seeking a position at this time would be like trying to catch a falling knife. It is tough to see where the Canadian Tech company might bottom out, I will continue to stay away from RIM but seek an entry position $13.00 shows much value and promise.

Finally my consumer good/ Additional stock Fossil
On Wednesday a very bearish signal developed in this stock, a candlestick with a long upper wick signalled that Prices increased to a point where investors saw no value in the stock then retreated to close the day much lower. This forms an immediate resistance point and an opportunity for a short in the market, at least temporarily. I took this as a signal and entered a short position on the stock. I’m bearish in the short run, but will seek to hedge my position going into earnings.

Weekly Recap - NASDAQ and APPLE

Today Ill recap what happened in the NASDAQ As well as my outlook for AAPL after it officially became the world's largest company surpassing Exxon.

NASDAQ composite opened bullish on Monday Jan 23rd based on optimistic views about a Greek debt meeting as well as positive earnings outlook, however, early gains were erased as earnings came in less than expected and uncertainty about Greek debt resurfaced. The day ended relatively flat from opening.

On Tuesday the NASDAQ outperformed other indices, the tech index showed more resilience than the market withstanding the stall in Greek debt talks in Europe. The rally was supported by positive investor sentiment regarding tech stocks in the United States, and perhaps on the heels of expected tech giant’s earnings report.

On Tuesday night Apple Inc. released Q4 earnings report that were better than analyst expected, this led the stock 8.5% up and it carried the index along with it. On Wednesday NASDAQ composite index opened positive. The announcement by the Federal Reserve to keep interest rates low till 2014 also helped tech stocks and ensured that the NASDAQ composite index remained up on the day.

On Thursday, the NASDAQ opened up along with the market. Investors were still bullish after the statement from the Federal Reserve to keep interest rates low, as well as the possibility of more monetary stimulus also known as “Quantitative Easing (QE 3)”. Strong earnings reports from some tech companies were enough to propel the Index to further gains. By midday, the index began to inch down as investors began taking profits from the tech and financial sectors. The index closed down on the day due to profit taking and weak housing economic data.
The US released less than expected GDP growth data on Friday, this caused the NASDAQ composite Index to open lower on Friday. However, technology stocks rallied in the afternoon as investors bought back into the sector on pull backs. This caused a market wide rally and the NASDAQ finished positive for the week.

Outlook on NASDAQ
I believe NASDAQ will continue to be the index that is most resilient to macroeconomic data coming from Europe. However, it has seen an unusual bullish rally in January and is due for a pull back this week before continuing its rally.

APPLE
This week in Apple had quite an interesting story for the most part. On Monday analysts were preparing for Apple to release its Earnings report, most believed that they would produce positive reports from during the fourth quarter in 2011. Investors believed that they would beat estimates, these sentiments drove the stock price up and closed higher on the day. On Tuesday prices pulled back slightly as some investors exited their positions before earnings were to be released on Tuesday evening. Some negative news came out on Tuesday for AAPL; they lost a bid in Amsterdam for a ban on their competitor (Samsung Tablet). Regardless of the recent bad news analysis still advised investors to take position in apple going into their earnings report. I took a position in AAPL prior to a release of their earnings report because I believed that their iPhone 4s sales in the fourth quarter would be fantastic, thanks in large part to the gift giving season. On Tuesday evening AAPL released earnings that showed revenue of over US $46 Billion and $13.87/share which easily beat analysts’ estimates. This caused their share price to rise by 8% overnight. Seeing how I had a position in AAPL I decided to take profits at a high price and re-enter AAPL at a lower price. AAPL opened up 8.5% on Wednesday and traded down all day. On Thursday AAPL continued trading down as investors took profits. Most analysts have increased their price target on AAPL and remain Bullish.

Outlook for APPLE
I remain bullish on the tech giant, I believe in the fundamental strengths that this company has, as well as its incredible amount of cash on hand, totaling over US$98 Billion. I believe that investors will soon be done collecting profits caused by the huge gap up in price thanks to earnings. In the near future the price for AAPL will continue to increase and create new highs.


Till Later
Trade to Trade well
Pigs get Slaughtered!

Waiting to be bullish on RIM

I'll start out by saying that I've spent the last 24 hours playing with my new Blackberry 9900 bold, and I must say that although I've missed the Blackberry, since i parted ways with the phone nothing's changed significantly. I took a temporary leave from the world of Blackberry back in June of 2011 when Samsung released the new Sidekick 4g with the android platform, I have been a fan of the Sidekick and the android platform, so when they were put together all bets were off, the berry couldn't hold me any more, but that's neither here nor there. What I'm trying to say is that since I put down my blackberry (or what was affectionately known as "crack-berry") for its competitor the Android, The company has failed to make any tangible changes or innovations to their handsets. Nothing significant has happened with the company or the devices they offer. As far as I understand consumers(Tech Savy consumers that want more in a phone than BBM and SMS) consider the phone makers to be a stagnant company that lacked innovation and refused to evolve with the industry. As a result Blackberry's share holders suffered a dismal performance last year with a stock price drop of over 70%. What then happened on December 20th to spark such a bullish run in the price of the stock until two days ago?

On December 20th 2011 RIM traded at $12.45 which marked the lowest price the stock has ever traded at. At these prices the company's shares were clearly oversold and investors saw some value, enough in fact to cause a mild rally (price correction ), or so I thought. What was supposed to be a technical correction of the price reverting to its [steeply downward sloping]moving average, turned for the most part to be a trend reversal of sorts as RIM broke through resistance at $15.50 and continued it's rally up until two days ago.

Perhaps investors noticed that RIM is clearly under valued, trading at a PE of just below 4 while its competitors are well over 10 (AAPL~12 and GOOG~16). If that's the case I could be a bullish Investor in RIM, but I'm not quite buying it, RIM has had a relatively low PE ratio for most of the latter part of last year and it failed to see investors flooding in. For this to be a solid trend change there needs to be a reason to believe they will grow. The market price for rim is obviously undervalued but no one has any concrete reason to believe that the company will sustain growth and remain relevant in a highly competitive environment. This brings me to my next point.

Shareholders have begged RIM to change its leadership for months, That's the obvious move that could revitalize a dying franchise. In my opinion that would be a step in the right direction, but for RIM to be truly successful (And ill probably get killed for this) they need to divest from their handset creating business, it's obviously not their strong suit. They have yet to make a handset(Cellular device) with crucial features that the everyday cell phone user needs (Front facing Camera, WiFi hotspot capabilities, really they have just introduced one handset with touch capabilities that is worth mentioning (Okay maybe 2), the GPS on any one of their phones is absolutely dismal[I'm not even sure the Bold 9900 has one] ). RIM's competitive edge is in its enterprise security and information technology. I will say without a shadow of a doubt that rim has the most secure operating system, but their handsets just aren't competing with others out there.

To my surprise; yesterday, as I was picking up my new blackberry bold 9900 (for reasons too long for this blog) I got a text telling me to check the news, lo and behold, the thing that every Research In Motion investor wanted for RIM was coming true, the board had appointed Thorsten Heins as the new CEO of RIM. At first I was sad, mainly because I was looking forward to a pull back that began two days ago so that I could find an attractive entry price and trade up till its over bought again, but I believed that this was a piece of good news that would move markets further in a bullish direction.

I woke up this morning to hear pre market bullish sentiments about RIM as I suspected, but a drastic change occurred when the market opened and inched to the contrary. Apparently Thorsten Heins had effectively thrown me a bone and said that he plans to change nothing about current operations at RIM[no drastic changes necessary]. The markets quickly reacted to this unexpected news and the stock suffered for it, thereby furthering its correction/decent, and potentially presenting me with an attractive entry price.

while I believe that investors will see the value in this undervalued stock, I cant see it reversing in trend just yet, until some catalyst of "EPIC PROPORTION" comes by and attracts a flock of eager investors. For now I will wait for pull back and a technical signal for an oversold sign to find an attractive entry point.

I've done some technical analysis to illustrate my points and share my POV.
PS. Forgive the image size, I'm not a pro at coding HTML ... YET



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Last 3 months

I Apologize for the long absence, as a result i would like to recap the last three months in the S&P 500. I have also decided that this blog needs structure, I will post a weekly recap and outlook moving forward.


Recent Three Month History

October 2011 was a very bullish month for the Index. The index began the month at 1131.21 points and finished the month at 1253.30 points, with a high of 1292.66 and a low of 1074.77 for a month over month return of just over 10%. This marked the largest percentage gain on the index for the year 2011 after being at its yearly low (1074.77) at the start of the month. Part of the catalyst for the October rally was an agreement to boost the European region’s rescue fund to one trillion Euros. The rally was also partially spurred by an agreement to write down 50 percent on Greek debt. Finally, U.S economic indicators showed that the economy expanded in the third quarter at the fastest pace in a year, this eased concerns about a potential double dip recession, the growth trickled down into individual equities: as three-quarters of companies that reported third quarter results beat analyst estimates and on aggregate increased sales by 11 percent.

November 2011 was a month that began with some volatility; it was followed by a bearish decline in the index during the middle of the month. The index rebounded nicely into the end of November effectively recovering all the losses incurred in the month. In November 2011 the S&P 500 opened at 1251.00 and closed at 1246.96, with a high at 1277.55 and a low of 1158.66 for a month over month return of (-0.32%). To start off the month Investors were skeptical about Greeks ability to meet austerity measures necessary for a recovery, this skepticism was brought on by a call for a referendum on the debt crisis. The market rallied on positive economic data from the U.S soon after, but quickly pulled back due to more uncertainty in Greece. These uncertainties about Greece lead investors to fear about contagion in the European region, however, fears were mitigated by positive earnings reports as well as positive news from Greece and Italy; this fueled the volatility moving into the month of November. In the Middle of the month the fear of contagion resurfaced coupled with weaker readings on economic growth a bearish drop in the Index begun. On November 28th U.S retailers announces record breaking sales over the thanks giving weekend which sparked the rally going into the end of the month. Major central banks announced coordinated actions to provide liquidity to the global financial system, they also agreed to reduce interest rates for struggling European banks to put investors at ease.

December 2011 did not bring much change. The index started the month at 1246.91 and ended the month at 1257.60, the high was 1269.37 and a low of 1202.37. The last month of the year garnered a 0.85% return. In December Standard and Poor’s warned investors about an impending downgrade for the Euro-zone credit rating, this bad news was mitigated by news that the EU would discuss increasing the region’s debt rescue fund. Although the U.S Federal reserve assured Investors that the United States economy has been growing modestly, investors feared that there was no stimulus measures to offset a worsening European debt crisis. Signs of improving economic conditions in Germany and the United States in the form of increasing GDP and reducing jobless claims coupled with reducing yields on Spanish bonds sparked a late December rally. Investors felt optimistic about 2012 which caused a “Santa Claus” rally into the end of the year.

Thus far January has been a bullish month for the S&P 500. The index opened at 1258.86 and has rallied to 1315.38 for a 4% gain. Indicators point to a growing economy in the United States. This year there has been a reduced amount of jobless claims, which signifies an expanding economy. The rally was reinforced with positive news in Europe with regards to their bond auctions. January also marked the beginning of Q4 earning season. Other major events in the month include a downgrade of French credit rating, this downgrade instilled fear in investors as France is believed to be one of the strongest economies in the EU. The most recent news out of Europe has brought hope to investors; the IMF will raise additional funds to help combat Europe’s debt crisis. This bit of great news assisted a continued bullish rally in January.