WEEKLY MARKET DIGEST: PHILLY FED INDEX CAUSES MASSIVE SHORT SQUEEZE IN GOLD AND SILVER
May 18, 2012
(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
PHILLY FED INDEX CAUSES MASSIVE SHORT SQUEEZE IN GOLD AND SILVER
May 18, 2012
The Philly Fed Index is a monthly survey by the Federal Reserve Bank of Philadelphia of manufacturing firms in the Philadelphia region. The index, which was released yesterday came a -5.8 vs consensus of +10. Some market participants believe that such an extremely negative reading may prompt the Federal Reserve to do more monetary easing. This started short squeeze in gold and silver which built on itself and continues this morning.
Here is our take. We previously wrote that gold and silver were very oversold and a bounce was likely. Philly Fed was simply an excuse to ignite the short squeeze. America is a big country, manufacturing firms in Philadelphia form a tiny part of the American economy. The Fed is not likely to move unless similar data is also seen from other regions.
When the stock market was at the recent top, we started telling you that there was 65% probability of correction. Now the stock market is in the zone we had been predicting. The next move in the stock market will be determined by the news from Europe and economic data. Please note that two other strong support levels are nearby.
Smart Money is beginning to step in gingerly at these levels to buy stocks and sell bonds.
No significant Smart Money actions were seen yesterday and this morning in gold and silver.
Gold futures are at $1588, silver futures are at $28.28, and oil futures are $92.41.
S&P 500 resistance levels are 1300, 1290, and 1285; support levels are 1312, 1324, and 1330.
DJIA futures are up 38 points.
ECB STOPS LENDING TO GREEK BANKS
May 17, 2012
ECB has stopped lending to certain Greek banks. The reason appears to be the reports of a run on Greek banks. There are big jitters in the markets.
Wal-Mart is a bell weather and it reported blowout earnings. This may help the U.S. stock market stage a bounce. As a full disclosure, ZYX Buy Change Alert is long on WMT.
Gold, silver and oil are staging an oversold bounce. In the end the trading in various markets will be determined by how euro holds up against the U.S. dollar.
Gold futures are at $1554, silver futures are at $27.60, and oil futures are $93.55.
S&P 500 resistance levels are 1312, 1300, and 1290; support levels are 1324, 1330, and 1339.
DJIA futures are up 11 points.
RADICAL LEFTIST SYRIZA LEAD IS NOT A GOOD NEWS
May 16, 2012
The radical leftist anti-bailout Syriza party is beginning to widen its lead in Greek opinion polls. Syriza may become the biggest party in parliament after next elections now scheduled for June 17th.
The rise of Syriza is likely to deepen European debt crisis. Such a development portents further downside in stock and commodities markets around the world.
In the very, very short-term, stocks, gold, silver, oil, and copper are oversold; U.S. Treasury bonds and German bunds. We may see a small trend reversal to relieve overbought and oversold conditions.
Gold futures are at $1541, silver futures are at $27.46, and oil futures are $92.95.
S&P 500 resistance levels are 1339, 1348, and 1352; support levels are 1330, 1324, and 1312.
DJIA futures are up 52 points.
GERMANY SAVES THE DAY
May 15, 2012
In the middle of a constant stream of depressing news, there is good news from Germany. GDP in Germany expanded 0.5%, a much stronger growth than the consensus. In contrast, France reported zero growth and Italy reported 0.8% fall.
Spanish and Italian bond yields remain near recent highs.
In the United States May Empire Manufacturing Index was encouraging as it came at 17.1 vs consensus of 8.4; April Retail Sales x-auto 0.1% vs 0.2% consensus; and April Core CPI 0.2% vs 0.2% consensus.
Gold futures are at $1560, silver futures are at $28.28, and oil futures are $95.22.
S&P 500 resistance levels are 1348, 1352, and 1358; support levels are 1339, 1330, and 1324.
DJIA futures are up 58 points.
SYRIZA TURNS MARKETS SOUR
May 14, 2012
It was not long ago that most investors had not heard of Syriza. Syriza is the largest anti-bailout party in Greece. Over the weekend, Syriza rejected appeals for it to join a unity government. Now Greece faces new elections. Markets are contemplating exit of Greece from the eurozone.
New economic data from China was very weak. The government responded by lowering bank reserve requirements. Bulls expected this move to ignite a big rally. However, the trading action shows how wrong bulls on China are. As a full disclosure, ZYX Emerging Markets ETF Alert is short on China.
Another day, more bad news and gold plunges. As a full disclosure, ZYX Short Sell Change Alert is short on gold.
The time to buy gold and silver will be when trading is no longer controlled by the momo crowd.
Gold futures are at $1560, silver futures are at $, and oil futures are $94.15.
S&P 500 resistance levels are 1339, 1330, and 1324; support levels are 1348, 1352, and 1358.
DJIA futures are down 100 points.
WHY I BECAME A BIG FACEBOOK BEAR AFTER LIMP IPO
May 18, 2012
Facebook (FB) started trading today with much anticipation. Unfortunately the common place advice doomed the IPO.
The IPO was priced at $38. One of the first opening indications was $45 on 18 million shares. The stock was set to open at 11:00 am ET. The opening was repeatedly delayed and opening price indication kept on falling.
The common advice was to put in for 50,000 shares if an investor wanted 2,000 shares. Investors who heeded such advice got more shares than they wanted. As the opening indication was lower than bulls expected, investors simply wanted to flip. Buy orders were not there to match sell orders.
Even before the open of Facebook IPO, aggressive selling was seen in Facebook sympathy plays, notably in GSVC and SVVC, two funds that own Facebook shares. There was selling pressure in other Facebook sympathy plays such as ZNGA, GRPN, RENN, LNKD, and YOKU.
After Facebook stock opened and started falling, aggressive selling was seen in the above named sympathy plays.
Facebook stock touched its IPO price of $38. As is customary, underwriters appeared to have stepped in at $38 and as of this writing the syndicate bid has held.
As the situation unfolded, long before the Facebook opening this morning, I recommended to my subscribers to cancel orders to buy Facebook in the open market. I have recommended to those who received Facebook in the IPO to put tight stop loss orders right below the…Read more at Forbes
SELL FACEBOOK (FB)
May 18, 2012
This post was just published on ZYX Buy Change Alert
Consider selling FB right here at $38.08 and exiting the trade.
Tags: FB
PLEASE ENSURE STOPS IN PLACE ON FB
May 18, 2012
This post was just published on ZYX Buy Change Alert
FB has now plunged to $38. Please ensure that stops previously mentioned are in place.
Tags: FB
FB OPENS AND FALLS
May 18, 2012
This post was just published on ZYX Buy Change Alert
FB opens at $43 and is now falling to $42.37 as of this writing.
Tags: FB
LARGE CANCELLATIONS ON FB
May 18, 2012
This post was just published on ZYX Buy Change Alert
Apparently large number of orders on FB are being cancelled. Markets are fickle but for the time being it appears that our calls to cancel FB open orders was spot on.
Tags: FB
NASDAQ FAILS TO OPEN FB ON TIME
May 18, 2012
This post was just published on ZYX Buy Change Alert
NASDAQ NDAQ has failed to open FB on time. Apparently demand is less than expected.
NEW FB INDICATION IS LOWER
May 18, 2012
This post was just published on ZYX Buy Change Alert
New FB indication is $42 on 55 million shares. This is a lot lower than bulls had expected. If it opens at $42 and does not move up from here it can pull the entire market, especially stocks like ZNGA, GRPN, GSVC, RENN, QPSA, AOL, SINA, ANGI, NTES, DMD, YOKU, YNDX, YELP, and P down.
FB PRICE INDICATION
May 18, 2012
This post was just published on ZYX Buy Change Alert
At this time the price indication for FB opening is $45 on 18 million shares. FB will start trading at 11:00 am ET.
FB BUY IN THE OPEN MARKET IS CANCELLED
May 18, 2012
This post was just published on ZYX Buy Change Alert
It appears that some institutional investors received larger allocations of FB shares than they were expecting. Such investors may flip at the open or in the coming days.
For the above reason the recommendation to buy FB shares in the open market is being cancelled.
Those who received FB shares in the IPO at $38 may stay alert to a signal on the Real Time Feed. Such investors may also consider setting the following stops: $37.83 on half the position, and $37.48 on the other half.
FB is not likely to break the syndicate bid, but stranger things have happened in the markets including extremely aggressive FB sympathy plays this morning. It is best to be prepared.
FACEBOOK PRICING
May 17, 2012
MEXICAN BRIBERY GAVE ME A CHANCE TO MAKE MONEY IN WAL-MART
May 17, 2012
This morning Wal-Mart (WMT) reported blowout earnings. As of this writing, Wal-Mart stock is up $3.20, or 5.4%, even though the overall market is down.
Here is why I recently bought Wal-Mart and recommended it as a buy to my subscribers on the news of bribery scandal in Mexico.
Investment Merits
I focus on making money by identifying change early. I had concluded that a change was happening at Wal-Mart but not fully recognized. However I could not pull the trigger to buy Wal-Mart because the price at which it was trading posed more risk than my system allowed.
The news of scandal, flood of downgrades by analysts, and overblown fears depressed the price and offered me an opportunity to buy the stock.
The biggest challenge to Wal-Mart’s growth in the United States has come from dollar stores such asDollar General (DG), Dollar Tree (DLTR), and Family Dollar (FDO). The merchandise in the dollar stores has improved and they are offering more food items. In my analysis, the adverse effect of dollar stores on Wal-Mart has peaked.
This morning Wal-Mart reported EPS of $1.09 vs. consensus of $1.04; reported revenues of $112.3 billion vs. consensus of $110.54 billion. Wal-Mart sees Q2 EPS $1.13 – $1.18 vs. consensus of $1.16. Commentary in the earnings release is positive.
My analysis about the impact of dollar stores on Wal-Mart has proven spot on. Interestingly, this morning’s earnings report from Dollar Tree is showing that cracks are developing in the torrid growth pattern. Dollar Tree sees Q2 EPS of $0.87 – $0.93 vs. consensus of $0.95.
As Wall Street recognizes that the dollar store phenomena….Read more at Forbes
CHANGE IN FACEBOOK AFTER MARKET BUY ZONE
May 17, 2012
This post was just published on ZYX Buy Change Alert
The after market buy zone for Facebook is being changed to $38 to $46. Please keep quantities no more than 20% of full core position size.
HOW THE MOMO CROWD HURT GOLD BUGS
May 17, 2012
The recent plunge in gold and silver has hurt gold bugs. The bugs have always contended that central banks and governments manipulate prices of gold and silver to support fiat currencies. It never occurred to most gold bugs that they would be hurt by the gold momo crowd.
I have to admit that my respect for gold bugs is relatively newly found. Like most people, I knew about gold bugs, but never had much interaction with them until a number of accurate calls on gold and silver started bringing a deluge of emails, mostly negative.
The hate mail started in earnest when I recommended selling all silver holdings as silver approached $50. I thought I had seen enough of it until I recommended selling half of the gold position at $1,904. At that time, the flood gates opened.
When I recommended selling the remaining half of the gold position at $1,757, for the first time, I started getting a large number of emails other than hate mail from intelligent gold bugs.
Subsequently, when I recommended short-selling gold, a totally unexpected event occurred. I started getting fan mail from gold and silver investors.
The foregoing background is important so that the readers of this article can put their arms around the point I am making.
Gold bugs and the gold momo crowd are often confused. The reality is the differences between the two groups as I have assessed from a large number of emails is stark.
Gold bugs tend to be intelligent and well-steeped in economics, especially monetary policy. They understand the arguments against gold and silver….Read more at MarketWatch
TAKE PARTIAL PROFITS ON WAL-MART (WMT)
May 17, 2012
This post was just published on ZYX Buy Change Alert
Consider taking profits on a 5% tranche on WMT right here at $62.10.
Tags: WMT
WAL-MART (WMT) REPORTS BLOWOUT EARNINGS
May 17, 2012
This post was just published on ZYX Buy Change Alert
Wal-Mart (WMT) reports $1.09 vs consensus of $1.04; reports revenues of $112.3 billion vs consensus of $110.54 billion. WMT sees Q2 EPS $1.13 – $1.18 vs consensus of $1.16. Commentary in the earnings release is positive. In the pre-market, the stock is trading up $2 to $61.19.
What To Do Now?
Those in the position may continue to hold.
Those not in the position may wait for a signal on the Real Time Feed to initiate a position.
Tags: WMT
THE BEST CHINA PLAY: APPLE, GOOGLE OR FACEBOOK?
May 16, 2012
It is not an exaggeration to say that all roads of growth lead to or through China. The obvious question for some of today’s most popular growth stocks is, “Out of Apple, Google, and Facebook, which company will do better in China?”
The Facebook (FB) IPO is upon us Friday, and the last Apple (AAPL) earnings conference call was remarkable in its description of astounding growth in China. Google (GOOG) is the main competitor of Apple in mobile operating systems, and commentary on valuation of Google vs. Facebook has become quite popular.
The biggest mistake I have seen gurus make in analyzing such a question is not fully comprehending that China is very different from America or Europe. Let us start out by developing a better understanding of China.
Communist Capitalists
In spite of all the progress China has made, the economy is still tightly controlled by an authoritarian communist regime. The first priority of the regime is its own survival. This is the paramount consideration any time China deals with a large enterprise such as Apple, Google, or Facebook.
The inherent nature of Google and Facebook is to empower the masses, which runs counter to the survival instincts of the regime. On the other hand, Apple does not threaten the regime.
On this count Apple wins.
Memory of Back Stabbing is Still Fresh
Google got an early foothold in China by agreeing to Chinese censorship of Google search results. Later on Google’s founders had second thoughts about Chinese censorship. Unnerved by Chinese hacking of Google’s computers, Google criticized Chinese censorship….Read more at Forbes
3 WAYS TO PLAY FACEBOOK
May 16, 2012
In my 30 years in the markets, Facebook FB is one of the most anticipated Initial Public Offerings (IPO) I have seen. The stock will start trading on Friday if it gets all approvals.
Here is a game plan investors may consider.
Back up the truck and buy in the IPO
For some time now I have been advocating that investors should back up the truck and buy all the shares they can get in the IPO. For those who are able to get shares in the IPO, buying Facebook with both hands is a no-brainer proposition. Demand is simply far higher than the supply. This is remarkable considering the size of the IPO. Facebook is likely to offer as many as 388 million shares. The price range is $28 to $35 and may be raised. At $35/share, the company will raise about $13 billion and will be valued at $100 billion. This will be the largest technology IPO in the United States. In history, only Visa V +1.38% and General Motors GM +3.97%have been larger IPOs.
Those who cannot get shares in the IPO
Many retail investors are likely to rush to buy shares in the open market. This is akin to gambling. The reason is that it is foolhardy to buy until a trading pattern is established.
Potential buyers should ask themselves a simple question to ascertain if they are investors or traders.
At this time there is no way to know where the stock will open. Those who consider themselves investors may consider buying, but only a very small quantity, if the stock opens below $55…Read more at MarketWatch
TAKE MORE PARTIAL PROFITS ON GOLD (GLD)
May 15, 2012
This post was just published on ZYX Short Sell Change Alert.
Consider taking partial profits on a 5% tranche on GLD right here in the after market at $149.75. The equivalent in gold futures is $1542.
SELL APPLE TO BUY FACEBOOK? SMART IDEA
May 14, 2012
The initial public offering of Facebook is one of the most eagerly awaited events that I have witnessed in my 30 years in the market. In the same 30-year period, I have seen very few companies accomplish what Apple has accomplished.
I’d say that the probability is very high that Facebook will beat Apple hands down where it counts–return on investment–and that Facebook stock purchased in the IPO may beat the return on Apple over the next four years.
Let’s compare the two
Recreation
Sometimes a unique set of events give birth to an enterprise in a manner that it cannot be recreated. Facebook is one of those enterprises. Given any amount of talent and money, Facebook cannot be recreated.
Google (GOOG) has proven the point with Google+. Google has the talent and the money. Google+ is very well done. In my analysis, the design of Google+ is better than that of Facebook in several respects.
Since Google is still the predominant search engine, there is a significant incentive for those who want to show up in Google searches to be an active member of Google+. Facebook simply cannot match this incentive. All of this has helped Google+ to attract about 125 million members in a very short period of time. Even with all of its advantages, Google+ is an online ghost town compared to Facebook.
Apple is unique in many ways but not in the aspect of recreation. Samsung is nipping on the heels of Apple. Several competitors are capable of making offerings on par…Read more at Forbes
