US Indices : Getting @ Interesting Points

Almost all US Indices are Getting @ Interesting Points.

So the key Q:

Is today the day of hitting a short term bottom.. and thus a point from were a decent bounce could start ? OR
Is today the day of breach of long term support trends, and so a start of another major down side movement all across ?
A friend mentions: i think there is still too much money with folks (even though with lesser purchasing power), and I see all sectors getting sold off today .. so where is it going ? I think it has to come back into the market, but I really doubt as a long term investment. So maybe we will see short rallies
which is what we have seen in this year.

Despite being hopeful of bounce or not.

Nevertheless, Interesting times to come, ahead.  Hold your breath for the Joyride and enjoy the game.

Gold … Ongoing Correction and Beyond

As I mentioned, that Gold would correct to 840~860 range.. and it exactly did during recent months.

Now that the correction is under-way.. what seems next when we look at Gold’s (Weekly and Daily) Chart and it’s trend lines. I think the correction price point has been touched, but the sentiment indicators still indicate further weakness. And with the de-leveraging that’s being expected and seems to be happening in most commodities (Oil, Gold, Basic commodities, etc.), Gold could touch 80~820 region.

But I don’t expect sharp correction in Gold under 850 mark. Gold, as in the past, should form some base in this region till long term moving averages base out and new support gets formed, before gradually moving up.

Now some may bring in elements of rising USD and reversal in Euro strenghtneing from here on. I beleive at somepoint USD will stop correcting further and strengthen on. But considering the current state of US economy that seems far from remote, to start anytime now. Euro (due to rishing govt. debt on various weak and some strong economies) should unwind to $ parity over next few years. But USD is not yet ready to start the reverse strengthening move. So I expect USD Index to correct to ~60 from current ~73 region. And during such time ot turbulence in currencies, no matter which one’s become strong and which one’s become weak, Gold is very likely to stay a safe currency and inflation hedge, globally.

Here, I must state that:

Gold, unlike Oil and other daily use commodities, doesn’t serve any other useful purpose, so it’s ‘useful demand’ stays limited to jewellery. By-and-large, it’s an anti-currency and anti-inflation bet.. So as long as these forces stay alive, gold should do well. Once global stabilization of stronger currency framework happens, all speculative demand from Gold should move out. Luckilu, all speculative price action (futures and speculative based) for precious metals, moved away into Oil and some other commodities.. And this bubble rotation from gold into Oil, etc. caused Gold correction and Oil speculation. Good for Gold in long run.

In nut-shell, Advise stays un-changed, i.e. :

“Those considering buying gold, might want to wait for such corrections to 860 region, and then start to “gradually” accumulate. Those who have better clarity and right patience, may want to look for clear technical signals of bottoming signs and buy gradually towards next uptick.”

Enjoy the Game.

PS:

Some very useful links to read:

http://www.frontlinethoughts.com/article.asp?id=mwo052308
http://www.gloomboomdoom.com/subscribers/download/080601.pdf
http://www.frontlinethoughts.com/article.asp?id=mwo053008

Gold .. what next

Looking at Gold (Weekly and Daily) Chart. It’s trend lines.
It’s EMA (50-day, 200 and 350 day), Long term Stoch and RSI patterns.
It recent breaking down off short term support lines and long term support lines and EMA support levels.

I think there is a decent chance that over next 2~3 months gold should touch 830~860 mark, form base in that region, new support before climbing up again by this yearend, to reach new peaks.

So those considering buying gold, might want to wait for such corrections to 870 region, and start to gradually accumulate. Those who have better clarity and right patience, may want to look for clear signals of bottoming signs and buy gradually towards next uptick.

Enjoy the Game.

US Markets : Critical Juncture

US Markets : Critical Juncture

I am looking at the charts of US markets (NASDAQ, SP500, DJIA, etc.), their technical indicators and volatility indices (VIX, VXN). It looks like that the US markets (after recent up-side bounce) are reaching an interesting point of resistance lines, from where is they are more likely to move down, to either test last lows or make new lows.

So, If this week’s action starts down, for those considering buying short positions (through ultra-short vehicles like QID, SDS, DXD,… or other vehicles) might want to consider coming days, as the right time to do so.

Now this is assuming, that the recent bounce is over. BUT it’s also possible that markets budge this resistance point and continue to move up. So if markets bounce big from here (i.e. crossing the resistance lines on upside on a good volume), then it’s better hold on to your plans to initiate short positions. And wait untill another buying saturation becomes visible on the US indices charts. We will keep a watch and update you all.

For now, play this with confirmation of upside/downside volume, as direction becomes clear.

Enjoy the game.

US Markets Down, Precious Metals Sector bottoming out..

Friends,

Some recent thoughts.

General US Market Indices

So we’re seeing exactly what I had been writing since early Jan..
that US markets were fairly overbought and 10~15% corrections is needed to find more value.

In investing (and trading)
‘Right amount of Patience’ is a virtue and ‘ignoring value and sentiment saturation’ turns out to be a sin.

And following them pays off well while risk is reduced.

So now that markets are under correction, in some small healthy pullbacks in between.. we continue to wait till

NASDAQ reaches 2150~2175 levels, DJIA to 11600 levels, and S&P500 to 1300 levels.

We continue to watch for saturation and oversold conditions before making our new buying moves. However, we see that some stocks are already close to their expected technical bottom, while others continue to gradually deflate back to sentimentally healthy levels. And so we continue to make trades in between to earn some change, while waiting for any large buying decisions, till markets correct fully.

 Precious Metals Sector

In the meantime, I am starting to see that the Precious Metals and Gold sector is close to reaching its sentimental bottom. Here are some charts that kind of give me that feeling. The probability of Gold, prec metals, related tickers to bounce of these support lines are high. So we are keeping a watch and plan to add to our position.

Chart of HUI (Philadelphia Gold Miners Index), should correct to 300 range before healthy upside can be expected.

Chart of XAU (Basket of Unhedged Gold Miners), should correct to 128 range before healthy upside action becomes low-risk.

Chart of GDX : The famous ‘Gold Miners Index ETF’, should correct to 36+ range before major upside action.

This left over correction in miner,s is expected to coincide with the general market correction, so the last legs of US indices could deflate the miners some more.

And finally let’s loook at what the base metal Gold itself looks like.

Here is what ‘EndOfDay GOLD futures’ ($GOLD) indicates on long term support line basis.

Looks like, that Gold could/should correct to touch 620~625/ounce range before all upside movement becomes low risk.

I continue to keep a watch, for any premature upside action, fullness of correction.. And we will add to our positions accordingly.

Enjoy the Game.

AHM (American Home Mortgage) : A crazy stock pick

Stock Pick: AHM: 12+% dividend, Low PE, Major Insider Buying at 28+

Home Mortgage REIT, It’s dreaded sector but this stock seems like a value play. Look at profille statistics and major insider buying over last few months.

http://finance.yahoo.com/q/it?s=AHM
http://finance.yahoo.com/q/ks?s=AHM

I bought at 31.5 and some more @ 31.1 a few days ago.
This might hit ~30 on the support side.. anytime in coming weeks.
I will hold it as LongTerm dividend value play, unless it goes under 29.

I am in here for dividend and potential higher return than downside risk on this.

Some of you, you might want to consider this. esp. with stop order at 28.97. The rest might want to kill me for suggesting something in Homereality/Mortgage sector.. Let me know what you think.

Just thought of sharing.

CSCO : Overbought

So far, it was a good ride on CSCO chart for last 2 weeks.. And CSCO stock was moving up taking care of all upside resistances around 19, 20. Now, 21 has become a tough one.. and still is.. Stock is finding tough to stay above 21, for suffecient time.
At this point, despite all this upside momentum seen over last few days, the upside movement is getting tired. Profit taking and overbought situations are making it tough for it to cross 21.45 level. which was another “key” resistance point, as I posted in my last post.. So I expect CSCO to correct to 19.x levels, before it can hit 21.5+ levels (if it ever does0)..

So it may be time to take some part of your profits off the table and live in piece.. This is what I am planning to do.. if I get another opportunity to sell some part of my position @ 21.4x TODAY, I would gladly do so.. I am not very hopeful of more upside action (without downward movement) in coming few days.
Enjoy the game…

Neeraj.

Some observations

Cisco (CSCO): My call on CSCO reaped very good gains.. I sold half of my accumulation @ 19.7 and 19.9, and holding the rest for 21~22 range resistance. I expect some more resistance at 21.5 and then at 22, and then around 24.. So I plan to gradually liquidate my holdings along the way.

Alcatel (ALA): ALA chart kind of shows early signs of stock bouncing from a long down slide. Fundamentally, the Co. has downside risk of merging LU into it’s operations with a cost run rate of 1+ Billion every year, which can bring down earnings every year. But on upside, it’s making good headways into verious service provider, High Speed Data and video access markets. This might be playing in favor of it’s possible upside movement, so I plan to buy some on pull back into ~11 region. Will stop limit at <10. and shall add more if it moves higher on higher volume.

Gold: Gold is under short term correction.. and has support at 620, then @ 605 and then in 590 region.. which should offer a very good LT support point. if it falls under 600, I would recommend those accumulating gold over time, should consider buying some more coins.. as it might rally big time from these correction points.

Other stocks on my short list for keep a watch on..

EPIX, CHKP, NEM, TRE, OIH, AHM, …. <some more>

Let’s see how these offer good entry points..
Till then enjoying the game.

Portfolio Thoughts

1. Warren Buffet in one of his musings mentioned:

Macro-economonic conditions do not apply when you are looking into Individual Cos. for Long Term holding. You simply look at the Cos. earnings and profits potential, its growth potential and the managements ability to run the bussiness operations effeciently, and and then take a stake.
Economic and Market conditions can help you to get a better price, but that shouldn’t change your decision on whether to buy a stake in a certain Business or not.

So even if you’re expecting a down side on market and economy, carefully picking value stocks during such times, for long term holding and cost-averagin g purposes, is a farily sane strategy.

2. Speculating into any thing without any intellectual basis, mostly yields into major losses.
- From the book “The Millionare Next Door”

Enjoy,

neeraj

Dividend + Value Stocks

Here’s a list of some Dividend + Value Stocks I found last weekend, using the following criteria:

• P/E Ratio: Current <= 15 Price/Cash Flow Ratio <= 15
  
• EPS Growth Qtr vs Qtr >= 20 EPS Growth Year vs Year >= 20
  
• Institutional Ownership Increased Since <In The Last Year> % Institutional Ownership >= 50
  
• Return on Equity >= 12 Net Profit Margin >= 12
  
• Current Dividend Yield >= 3
  
• S&P Index Membership

This criteria gave a big list, which I trimmed down based on Chart Tech analysis, where I think to buy on Long Term Support Line, is a good low risk high reward entry point..
1. NDE
Very good Value short list.. Perfect chart.. Needs to correct to ~42 range before it can be bought for low risk entry point.
My Plan: Buy 25 @ 42 and Buy 25 later @ 38~40 range if it corrects

2. ZNT
Very good value short-list. Sitting on long term weekly+daily chart support line. Good low risk entry point. ZNT is a buy now esp. if it breaks out of it’s resistance line above 40.
My Plan: Buy 100 shares long term @ ~40

3. LRY
REIT: Self-administered and self-managed real estate investment trust that has an ownership interest in and operates 426 industrial and 292 office properties located primarily in the Mid-Atlantic, Southeastern and Midwestern United States. Offers wonderful value anmd dividend.. A good buy in 42~45 range for long term holding.
My Plan: Buy 100 shares in 42~43 range, for long term holding.

4. TKC

Good Fundamentals, and Technicals. A good buy (entry point) with 4.6% div. and Large Cap value play.
My Plan: Buy 200 shares on short term pullback to 10

5. AHR
Tech Analysis: What a beautiful cyclic stock. Has moved between ~10 and ~13 in last 5 years. Sitting around top resistance line at this time. A wonderful short candidate at 12.5+. OR a wonderful buy at ~10 with 9.6% dividend yield. Wonderful short candidate in 12.5~13 range.
My Plan: Great Long term Buy at ~10. Short 200 @ 12.5~13 AND/OR Buy at ~10+ later

You might want to consider them for your Low Risk, Value Stock, Dividend Portfolio.

This very filter, criteria gave me my earlier hold-and-wait winners: AHM (@ $27), SLG (@ $70), OXY (@ $80).
So thought of sharing.
Neeraj.