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.
Showing posts with label Do jones analysis. Show all posts
Showing posts with label Do jones analysis. Show all posts
Sunday, 12 February 2012
Thursday, 13 October 2011
Dow Jones Analysis
This is the essence of this blog. More times than not i want to blog my analysis, sometimes it will be followed by my entry positions as well as my target price, stop price and risk profile. Other times it will be an analysis of the Dow Jones Industrial Average (DJI: DIA) because it is one of the best "market thermometers" if you will, or i will analyze Apple (AAPL), not only because it is one of the most promising pieces of equity out there, but also because i have to cover the stock for my investment club (Macglobal) <<--- Check it out !
DOW JONES
Now the Good Stuff
News and Non Technical Drivers
Today October 13, 2011 was a bearish day for the DJI; we saw a 40-point (.35%) decrease in trading price. The index traded below open all day, having an incredibly bearish open, then down trending intraday for a few hours till lunch before seeing a rally to close the below its open. Some major catalysts for the bearish day were: a less than stellar earnings report from JP Morgan Chase, as well as the wake of a possible investigation on the allegations that big banks violated antitrust laws before announcing monthly debit fees.Bank of America (BAC) and JP Morgan Chase lead the index decline with losses of 5.5% and 4.8% respectively
The mid-day rally was sparked on news that Slovakia voted to approve an expanded European Financial Stability Facility giving investors some solace in the troubles in Greece and the EU.
Technical Analysis
Photo from Barchart
We will use the ETF: DIA to analyze the Dow Jones industrial Average. DIA is an ETF that closely tracks and reflects the Dow Jones Industrial Average.
A three-month look at the daily chart of the DIA indicates that the ETF is trading in a range. Over the last 3 months prices have traded between $104 and $116, As of October 12 2011, prices hit the top of the range at approximately $116 as it traded above its 50,20 and 200 EMA.
When prices trade in ranges it is best to use oscillators and envelopes to indicate reversal points, if we are able to pinpoint a precise entry point at the bottom of the range we will expose ourselves to a possible gain of 11% in a short time period.
Bollinger bands indicates a reversal to the bearish side, prices hit the top of the Bollinger band on Oct 12 2011, prices that hit the band indicates a reversal, however, the end of a trend is typically accompanies with higher than average volume, this was not the case in this instance, therefore the reversal was not confirmed by volume.
A look at the stochastic oscillator shows the ETF trading in an overbought area; the %k stochastic line is at 91 and is indicating a bearish reversal. A bearish signal will be indicated when the %K line crosses below the %D line in the overbought region, this is a strong reversal signal.
Today a Doji was formed, indicating indecision in the market, a Doji followed by a bearish day is also a strong indicator of a reversal. Tomorrows trading may dictate weather or not the range continues or there is a break out to the bullish side.
Outlook for tomorrow
Technical signals indicate that tomorrow will be the beginning of a short-term bearish trend until we hit the bottom of the Bollinger band and we will see a reversal.
An anomaly may occur due to an impressive earnings report by Google released after hours today, the euphoria of market participants may drive prices up and bullish in the Dow.
Recommendation
We should sit out of the DIA or in the short term, if action must be taken right now we should short it or buy a contra Dow Jones ETF, The DOG is a stark contrast to the DIA, it is trading at the bottom of the Bollinger band and the stochastic oscillator indicates a bullish cross in the oversold area.
DOW JONES
Now the Good Stuff
News and Non Technical Drivers
Today October 13, 2011 was a bearish day for the DJI; we saw a 40-point (.35%) decrease in trading price. The index traded below open all day, having an incredibly bearish open, then down trending intraday for a few hours till lunch before seeing a rally to close the below its open. Some major catalysts for the bearish day were: a less than stellar earnings report from JP Morgan Chase, as well as the wake of a possible investigation on the allegations that big banks violated antitrust laws before announcing monthly debit fees.Bank of America (BAC) and JP Morgan Chase lead the index decline with losses of 5.5% and 4.8% respectively
The mid-day rally was sparked on news that Slovakia voted to approve an expanded European Financial Stability Facility giving investors some solace in the troubles in Greece and the EU.
Technical Analysis
Photo from Barchart
We will use the ETF: DIA to analyze the Dow Jones industrial Average. DIA is an ETF that closely tracks and reflects the Dow Jones Industrial Average.
A three-month look at the daily chart of the DIA indicates that the ETF is trading in a range. Over the last 3 months prices have traded between $104 and $116, As of October 12 2011, prices hit the top of the range at approximately $116 as it traded above its 50,20 and 200 EMA.
When prices trade in ranges it is best to use oscillators and envelopes to indicate reversal points, if we are able to pinpoint a precise entry point at the bottom of the range we will expose ourselves to a possible gain of 11% in a short time period.
Bollinger bands indicates a reversal to the bearish side, prices hit the top of the Bollinger band on Oct 12 2011, prices that hit the band indicates a reversal, however, the end of a trend is typically accompanies with higher than average volume, this was not the case in this instance, therefore the reversal was not confirmed by volume.
A look at the stochastic oscillator shows the ETF trading in an overbought area; the %k stochastic line is at 91 and is indicating a bearish reversal. A bearish signal will be indicated when the %K line crosses below the %D line in the overbought region, this is a strong reversal signal.
Today a Doji was formed, indicating indecision in the market, a Doji followed by a bearish day is also a strong indicator of a reversal. Tomorrows trading may dictate weather or not the range continues or there is a break out to the bullish side.
Outlook for tomorrow
Technical signals indicate that tomorrow will be the beginning of a short-term bearish trend until we hit the bottom of the Bollinger band and we will see a reversal.
An anomaly may occur due to an impressive earnings report by Google released after hours today, the euphoria of market participants may drive prices up and bullish in the Dow.
Recommendation
We should sit out of the DIA or in the short term, if action must be taken right now we should short it or buy a contra Dow Jones ETF, The DOG is a stark contrast to the DIA, it is trading at the bottom of the Bollinger band and the stochastic oscillator indicates a bullish cross in the oversold area.
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