A POINTER FOR INTERNATIONAL SUBSCRIBERS REGARDING GOLD AND SILVER
February 3, 2012
We often trade gold ETF GLD and silver ETF SLV. These ETFs are not available in some international markets. However, different gold and silver ETFs are available in most markets. Please consider ETFs that trade in your market with the following two characteristics: the highest volume ETF and the smallest spread between bid and ask.
Full size futures contracts are suitable only for large accounts. The reason behind this is our methodology to scale in and scale out.
Some markets, including the United States have mini or micro futures contracts available. Usually these contracts exhibit wide bid ask spreads. However if you can find a small futures contract in your market with tight bid ask spread it should work well with our methodology.
Those who are able to buy and sell in the spot market with very little spread can also use our methodology.
The foregoing applies only to short term trades.
For long term investors, almost any instrument can be used. Please be aware that the long term signals are given in the ZYX Global Multi Asset Allocation Alert.
TAKE PROFITS ON MRO
February 3, 2012
MRO has been a long term position. Our reason for buying was that considerable value could be unlocked if MRO went to spin off its refining operations. Well, it worked out just the way we predicted. MRO spun off its refining operations. The new refiner has been trading under the symbol MPC. We received shares of MPC in the spin off. We have already taken profits on MPC.
We are still holding 45% of the full core position size of MRO.
This has turned out to be a very profitable long term position. Now there are better opportunities elsewhere. It is time to take profits and exit this position. We will not be following this position any more.
This is an example of a trade that long term investors have profited handsomely simply by subscribing to our FREE service. In the ZYX Buy Change Alert, you can find dozens more similar opportunities. In addition, paying subscribers to the ZYX Buy Change Alert, receive updates in real time when ever there is a significant development. Paying subscribers also receive guidance on stop zones and taking partial profits when applicable. Here is the link to take a FREE NO RISK 30 DAY TRIAL. http://thearorareport.com/sub
Tags: MRO
GREAT NEWS A FEW MINUTES AGO AND GOLD SPIKES UP
February 3, 2012
The U.S. Department of Labor just reported employment numbers for January. This number is known as ‘Mother of all numbers’. January non-farm private payrolls increased by 257k vs 168k consensus. There are several components to this number, but our models focus on non-farm private payrolls. The number was a blow out on the positive side. This means U.S. economy is improving strongly. This number makes it highly unlikely for QE3 to occur in February.
By any rational school of thought and analysis this is a negative development for gold and silver.
What do gold and silver do? They jump up. Please see our post from yesterday:
FLAT EARTH MOMO CROWD RUNNING UP GOLD AND SILVER
This is a very positive development for the stock market and negative development for the bond market.
Gold futures are at $1761, silver futures are at $34.20, and oil futures are $97.30.
S&P 500 resistance levels are 1338, 1352, and 1368; support levels are 1324, 1312, and 1300.
DJIA futures are up 96 points.
This is the morning capsule from today. Paying subscribers to ZYX Buy Change Alert and ZYX Short Sell Change receive a similar capsule most mornings before the market open. The morning capsule is a great way for investors to get a good handle on the market every day before the market opens in a couple of minutes. FREE NO RISK 30 DAY TRIALS are available. Please click on this link now. http://thearorareport.com/sub
Tags: MARKETS
ADDING ANOTHER TRANCHE TO GOLD (GLD)
February 3, 2012
Adding a 5% tranche to GLD right here at $170.98.
Tags: GLD
NEW IDEA ON GAP STORES (GPS)
February 2, 2012
Gap Stores (GPS) has long been an under performing retail stock. Finally, there is hard data that GPS may be turning around.
GPS has just announced that it sees Q4 EPS of $0.41 -$0.42 vs consensus of $0.25. In 2012, GPS faces easy revenue and margin comparisons. merchandise in the store is improving.
Please do not chase the stock as it is likely to gap up. It is best to wait for a pull back into the buy zone. Buy zone is $18.26 to $19.83. Stop zone is $16.26 to $17.73. Target zone is $25 to $26.
Tags: GPS
Steve Jobs’ Ex-Lieutenant Adds $1.5 Billion To JCP In Two Days
January 30, 2012
J.C. Penney (JCP), the fourth largest US department store chain, is undergoing a transformation and brought in Ron Johnson, the ex-chief of stores at Apple (AAPL), to revive its business.
J.C. Penney scheduled an analysts’ day on Jan. 26, 2012. The stock had been levitating for a couple of months in anticipation of Johnson making a great presentation. By almost any measure at $33, J.C. Penney was one of the most expensive major retail stocks.
On Jan. 25, Johnson made the rounds and leaked his plan ahead of the big event on Jan. 26. J.C. Penney will in the future be known as jcpenney. There is a new logo to evoke the image of the American flag. The stores will have a number of small boutiques as opposed to rows of racks. Most importantly, J.C. Penney will introduce a simplified promotion and pricing structure.
J.C. Penney also plans to cut a large number of jobs and save $900 million over the next two years.
‘Buy the rumor, sell the news’ is a dictum often followed on Wall Street. When the stock did not go up after Johnson made the rounds, short sellers aggressively sold the stock short on Jan. 25. Nine out of 10 times this technique is profitable.
On Jan. 26, every time the stock would fall as it should have, one or more buyers would aggressively buy it and run up the stock. This is a common technique used to cause a short squeeze. Watching this buying, short sellers started buying to cover generating upward pressure on the stock. The higher the stock went, the more short sellers had to cover — the classic short squeeze..Read more at Forbes
Back Up The Truck And Buy Facebook
January 30, 2012
In response to my recent article, “Facebook IPO Is Nigh, Should You Buy,” I have received a large number of emails asking about supply and demand in.
We will not know the numbers until the filing is made public, but here are my qualitative estimates. Facebook may sell 250 million shares at $35-40 apiece.
It is too early to know the demand for the shares precisely, but it’s not too difficult to make a reasonable estimate.
At The Arora Report, our estimate is that 3-6 million individuals will be clamoring to buy these shares. If 5 million individual investors want only 100 shares each, this amounts to a demand of 500 million shares.
Institutional investors will be more price sensitive than individual investors. The demand from institutional investors will be in the range of 500 million to one billion shares depending on the price.
The point is that a qualitative estimate of the demand is around one billion shares compared to the supply of about 250 million shares.
A lot will depend on how Facebook handles the road show. In a road show, the management travels around the country giving presentations to analysts and investors.
In any case, the demand is likely to be 400% times the supply.
As I have previously written, it’s a no brainer to back up the truck and buy as many shares of Facebook as you can get in the IPO. For the long-term, growth rates, price earnings ratios and other fundamental metrics will matter, but in the short-term, it is all about supply and demand….Read more at Forbes
Facebook IPO Is Nigh, Should You Buy?
January 29, 2012
A number of media sources are reporting that Facebook will file for an initial public offering next week.
Apparently,Morgan Stanley is to be the lead underwriter. Goldman Sachs is also expected to play a major role.
Facebook, with its 800 million members, has become the new standard platform for communication between people.
The IPO is expected to raise about $10 billion with a valuation of at least$75 billion. By comparison, Google (GOOG) raised $1.9 billion in an IPO with a valuation of $23 billion back in 2004.
Previously the largest technology IPO was done by Infineon (IFX), a former semiconductor subsidiary of Siemens (SI).
The big question for investors is should they buy Facebook stock.
In the coming days, there will be much analysis of revenues, profits, gross margins, cash flow, growth rates and the like. Certainly, such analysis will be of interest to talking heads, newsletter writers, and academics. Media will love the story as it will generate more page views, sell more magazines or put more eyeballs on the TV screen at CNBC, Bloomberg and Fox.
From a practical point of view for an investor, doing the foregoing analysis is an unnecessary torture of brain cells. None of the traditional fundamental analysis is going to matter.
The reality is that underwriters will price the IPO based on demand under the ruse of comparisons with recent internet IPOs such as Zynga (ZNGA), LinkedIn (LNKD), Pandora (P), and Groupon (GRPN)…Read More at Forbes.
New Siri Patent Paves Way For Apple Stock To Run To $1,000
January 27, 2012
On October 12, 2011, I started a series on Forbes titled “Future of Apple.” The first article in the series was ‘Tim Cook’s Leadership Determines Whether Apple Hits $100 or $1,000 Next’.
Now I have come across Apple’s plan to become a $1,000 stock. Obviously, the plan is secret and Apple did not give me access to it. I was able to connect the dots from the gobbledygook contained in an Apple document. The document is United States Patent Application 20120016678. The document is purported to be a simple patent application for Siri. On the surface the document is benign as shown by the abstract reproduced below:
An intelligent automated assistant system engages with the user in an integrated, conversational manner using natural language dialog, and invokes external services when appropriate to obtain information or perform various actions. The system can be implemented using any of a number of different platforms, such as the web, email, smartphone, and the like, or any combination thereof. In one embodiment, the system is based on sets of interrelated domains and tasks, and employs additional functionally powered by external services with which the system can interact.
Before I get into putting the dots together, some background is necessary. Here is how Apple describes the landscape:
Today’s electronic devices are able to access a large, growing, and diverse quantity of functions, services, and information, both via the Internet and from other sources. Functionality for such devices is increasing rapidly, as many consumer devices, smartphones, tablet computers, and the like, are able to run software applications to perform various tasks…Read more at Forbes
Be Prepared To Sell Your Soul If You Use Google
January 27, 2012
Yes, I admit I use Google (GOOG) products. Much has recently been written about the new privacy policy from Google. The discussion in media did not bother me as I thought I would easily deal with privacy issues. Then I, too, received my Dear Google User email.
The email starts out by claiming it is about privacy. The email itself is benign, however buried in the links is a bomb. Now Google has made it mandatory for you to sell your soul to Google if you want to use its products.
I am not referring to soul in the religious sense but subscribing to the contemporary definition popular in the scientific community. Wikipedia sums it up well, ‘Soul can function as a synonym for spirit, mind or self; scientific works, in particular often consider soul as a synonym for mind.’
Since you are reading this article, it is no secret that I write. My work garners over a million page views a month. When asked about the reason behind popularity of my work, my response is that I write from my soul.
Now if I use Google Docs to compose, Google+ to communicate with my fact checker and Gmail to communicate with my editor, will I grant Google unlimited license to publish, modify, create derivative works and do everything under the sun as it arbitrarily pleases?
The answer should be a clear totally unambiguous‘NO’. Dream on, when you use Google…Read more at Forbes
ADDING TO GOLD (GLD)
January 27, 2012
Adding a 5% tranche to gold (GLD) right here at $169.
Tags: GLD
ADDED TO GOLD (GLD)
January 27, 2012
Added a 5% tranche to gold (GLD) right here at $167.48.
Tags: GLD
NEW TRADE ON GOLD (GLD)
January 26, 2012
A new 5% tranche short on GLD right here at $167.82.
The plan is to build a new short position in GLD starting with the last entry. The plan is to build the position slowly if gold continues to go up all the way to $1825.
Our stop zone will be $1826 to $1865. This is a medium term trade and the risk of loss is high.
Those holding an existing short position in GLD or gold futures may want to adjust their position based on the principles taught in Bullet Proof Your Portfolio seminar or in the alternate, by properly using ZYX Change Method Trade Management Guidelines.
We will be closely following this trade on the ZYX Short Sell Change Alert.
Tags: GLD
The Federal Reserve on Gold and Silver
January 26, 2012
The Federal Reserve on Gold and Silver
The Federal Reserve does not directly comment on gold and silver. For the first time in the living memory, the Fed sent a clear signal to sell gold and silver.
The market participants did not listen and ran both gold and silver up. After the 12:30 pm EST announcement from the Fed, gold ETF [s:GLD] and silver ETF [s:SLV], gold miner ETF [s:GDX] and popular miner stocks such as Newmont [s:NEM], Barrick [s:ABX] and Silver Wheaton [s:SLW] saw explosive buying.
Famed investor Benjamin Graham, said that in the short term the market is a voting machine, but in the long term it is a weighing machine. In other words, in the short run gold and silver moved based on the prevailing consensus opinion, but in the long run the true value of gold and silver will be reflected in their prices.
After the 12:30 pm Fed announcement, gurus were out in full force recommending aggressively buying gold and silver.
“Fed Promises Exceptionally High Inflation For Three More Years,” shouted the headline from a well circulated newsletter.
Previously, the Fed statement promised exceptionally low interest rates until mid-2013. In the 12:30 pm statement, the Fed said that it expects exceptionally low interest rates until late 2014.
The Fed action amounts to QE2.5 (Quantitative Easing).
The foregoing Fed move was interpreted as inflationary and it made sense for gold and silver to spike.
In other words, the Treasury’s printing presses will run harder and longer. Up to this point, gurus and investors were right in running gold and silver up…Read more at MarketWatch
OUT OF GOLD
January 26, 2012
This is the post on ZYX Short Sell Change Alert yesterday at 12:28:
’FED EASES, GOOD FOR GOLD AND SILVER’
The language behind Fed’s statement amounts to QE2.5. This is positive for gold and silver.
Out of the gold ETF (GLD) trade at $161.
Tags: GLD
‘Don’t Be Evil’ Gives Google Possible Antitrust Cover
January 24, 2012
In my article, “Google’s Brilliant New Weapon To Fight Facebook,” I described Google’s new weapon “Search plus Your World”.
Search plus Your World changed Google’s ranking in its search results. Google started emphasizing results from Google+ social network at the expense of Facebook and Twitter.
Now a few engineers from Facebook led by Blake Ross, Facebook’s product director and co-founder of Firefox, along with engineers from Twitter and MySpace, are responding with a new tool called ‘Don’t Be Evil.’ The name Don’t Be Evil is a fairly deliberate dig at Google’s tag line.
The engineers asked how much better social search would be if Google surfaced results from all across the Web. They created a tool that uses Google’s own relevance measure—the ranking of their organic search results—to determine what social content should appear in the areas where Google+ results are currently hardcoded.
According to the developers, this is how the tool works:
If Google decides that it’s relevant to surface Google+ page as a result in any of the areas where Google+ content is hardcoded, the tool searches Google for the name of the Google+ page. Then, the tool identifies the social profiles within the first ten pages of Google results (top 100 results). The ones Google ranks highest — whether they are from Flickr, Twitter, Facebook, LinkedIn, MySpace, Quora, Tumblr, Foursquare, Crunchbase, FriendFeed, Stack Overflow, Github or Google+ — replace the previous results that could only be from Google+.
This tool is offered as a bookmarklet, which is a small bit of code that run…Read more at Forbes.
3 Real Reasons for Google Stock Drop
January 23, 2012
Shares of Google GOOG +0.01% lost about 8% after the Internet giant missed earnings. Google is a cheap stock; the big drop cannot be justified by missing earnings alone.
The three real reasons behind the big drop in Google’s stock price are Amazon AMZN -0.04% , Apple l AAPL +0.06% , and Facebook.
On Nov 3, 2011, I wrote on MarketWatch that “holders of Google stock are well advised to lighten up on bounces…”
I did not have a crystal ball to predict a decline in Google’s stock price; it is simply that the attack on Google’s basic business model was so easy to see.
Ecosystems built by Amazon, Apple, and Facebook are the reasons behind the big decline in cost-per-click (CPC) data. The average cost paid by advertisers per click to Google was expected by analysts to increase 3.2%. It turns out the CPC decreased by 8% both from the previous year’s fourth quarter and from the previous quarter.
The problem facing Google is that its bread and butter is still a basic search.
Amazon has developed its own ecosystem complete with information from its competitors. It used to be that most consumers would start their search for online purchases at Google. Now since consumers know that they can see information from Amazon’s competition on Amazon, the research at The Arora Report shows that consumers are increasingly bypassing Google and going directly to Amazon.
Facebook has been working hard to keep consumers within its own ecosystem. Our research shows that an increasing number of Facebook users are making less use of Google…Read more on MarketWatch
Iranian Buying Unlikely Culprit For Uranium Stock Rise
January 23, 2012
Is Iran buying large quantities of uranium ore or yellowcake?
It is true that Iran has an extensive uranium enrichment program. It is true that Iran is making progress in its nuclear program. It is also true that Iran in the past has claimed that it was forced to resort to secrecy after U.S. pressure resulted in several of its nuclear contracts with foreign governments being terminated.
Yellowcake is a form of uranium concentrate obtained from leach solutions as an intermediate step in the processing of uranium ore. Sources indicate that aggressive buying in uranium stocks is occurring in North America on speculation that Iran is buying uranium. Look at shares of Canada’s Cameco (CCJ), up 30% year-to-date. Similarly aggressive speculation does not seem to be happening on overseas stock exchanges.
In the 1970s, South Africa sold 600 tons of yellowcake to Iran. At that time, with U.S. support, the Shah of Iran had embarked on building as many as twenty atomic power reactors in Iran and signed a contract with Kraftwerk Union (now Siemens) to build a power reactor at Bushehr.
It would appear that the purchase from long ago is the source of some of Iran’s uranium. Iran also has its own uranium mines. One mine is in southern Iran near the Persian Gulf at Gchine. The second mine is in central Iran at Saghand. There have been reports the Saghand mine contains a low-grade ore body of about 553 parts per million uranium…Read more at Forbes
Battle Planning For Apple’s Earnings Report
January 23, 2012
Apple reports earnings on Tuesday, January 24, after the close of trading. The consensus estimate is for $9.97 in earnings and $ 38.73 per share for revenues.
Of course, as usual, breakdown of numbers by product category will drive the price of Apple stock.
Over last three years, I have watched in amazement as analysts dismiss Apple’s projections. The legions of analysts have concluded that Apple has perfected the art of guiding conservatively so that it can beat the projections.
I follow several sets of rigorous principles and rules in my investing and here are a few I focus on prior to the earnings release of every stock in the Arora Report portfolio:
1. Nobody knows with certainty what is going to happen next. Analysts can be diligent and knowledgeable, but in the end it is a guess. A prime example is the recent earnings release by Google(GOOG). Analysts were uniformly bullish, but actual earnings turned out to be significantly under the consensus, and Google stock promptly fell about 8%. A similar situation happened with Amazon (AMZN) in the last quarter.
2. Pay attention to whisper numbers. Traditionally, whisper numbers have been a gimmick by Wall Street to curry favor with clients who pay large commissions. Whisper numbers are unofficial and unpublished numbers. Over the last three years, whisper numbers have been consistently different from the published numbers. What can you do if you do not pay large commissions? There are several services providing whisper numbers. In my experience, none of these services help investors make money…Read more at Forbes
