Archive for Auto

Uptrend and Downtrend Trade Setups (ERIC, KIM, XYL)

Here are current trade setups for buying or selling, and a couple stocks that could see a big move either way.

Since the middle of February, the S&P 500 has rallied, from 1810.01 (on February 11) to 1986.45 on March 2. While short-term momentum is up, there are major resistance levels overhead—primarily starting at 2060, but selling could kick in before then. In this sort of environment big moves in either direction are likely (as opposed to a strong trending market where the big moves favor one direction), so plan some trades for both the long and short side. Here are four stocks with recent trade setups, one favoring a long trade, one favoring a short trade, and two others which could make a move in either direction.

Kimco Realty Corp. (KIM) is trending higher since September when it bottomed at $22.07. The recent February 3 move higher, to $28.08 confirms the uptrend is still intact. Through November and December, the stock moved sideways, breaking above $27 resistance in late January. Mid-February saw the price pullback to this former resistance area, as the price hovered between $27 and $26 for a couple of weeks. With the stock closing at $27.50 on March 2, the next rally may already be starting. Buy orders can still be placed between $27 and $26.60, and may be filled on an intraday fluctuation. A stop loss goes below $26, and the upside target is $29. That target is just above the 2015 high of $28.54. By getting in near $27 the reward:risk on the trade is 2:1; getting in at a higher price reduced the reward:risk, making the trade less attractive.

Ericsson (ERIC) is in a declining trend channel going back to mid-2015. Right now the stock is at the top of that trend channel, where it has a tendency to decline from. Between February 25 and March 2, a consolidation has formed between $9.38 and $9.14. If the price declines below $9.14, that signals the price may start dropping again. If the price continues to rise before dropping below $9.14, the short trade is avoided. If the trade triggers, place a stop loss at $9.45 or above. The target is $8.40, just below the February 9 low of $8.43 and near the bottom of the channel. This trade also provides a roughly 2:1 reward to risk ratio.…read more

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Category: ERIC, KIM, XYL

Can Netflix Get Back on Track? (NFLX)

By Alan Farley

Netflix has entered a topping pattern after posting an all-time high while institutions continue to dump positions.

Netflix Inc. (NFLX) ripped higher in the fourth quarter of 2015, posting an all-time high at 133.27 in December. The superior performance solidified its membership in the FANG quartet, joining Facebook Inc. (FB), Amazon Inc. (AMZN) and Alphabet Inc. (GOOGL) formerly known as Google. Netflix’s stock has fallen on hard times in 2016, losing its leadership role in a steep decline that’s trapped overeager shareholders.

The stock has bounced in recent weeks, but is still trading well below last year’s lofty levels. Will this recovery effort finally end the downtrend and attract the sidelined capital needed to build a new uptrend? Or is this uptick represent a short selling opportunity, ahead of a much steeper slide that takes out first quarter lows and sends this iconic tech company into a multi-year bear market?

The stock rallied above the 2004 high at 5.68 (post spilt) in 2009, entering a strong uptrend that topped out in the lower 40s in 2011. The subsequent decline gave up the majority of the two-year uptrend, coming to rest in 2012 just a few points above the 2009 breakout. This fierce downtrend obliterated the stock’s loyal shareholder base at the same time that broad benchmarks were hitting multiyear highs.

A strong recovery set into motion in the fourth quarter of 2012, lifting the price back to the prior rally high about one year later. It broke out at the end of 2013, joining other tech stocks in the strong bull market but the rally stalled quickly, yielding a rectangular consolidation pattern, with support at the breakout level and resistance in the upper 60s. The stock finally cleared range resistance in April 2015 and entered a rapid advance into the December rally peak.

The 2011 into 2013 downtrend tells us the stock can go its own way regardless of broad market direction. This is a two-edged sword because it raises the possibility of another brutal decline in coming years. However, the stair step rally in the last three years has built a number of platforms that should provide strong support if lower levels get tested. The strongest of these levels lies at the top of the 2014 rectangle.…read more

Read more here: Can Netflix Get Back on Track? (NFLX)

Category: NFLX

A gambler on shale

By The Economist online
“To hell with OPEC”

IT WAS a tragic end to a life that epitomised the winner-takes-all spirit of American capitalism. On March 2nd, the day after he was indicted by a federal grand jury on charges of rigging bids for oil-drilling rights, Aubrey McClendon, a founder of Chesapeake Energy and one of the pioneers of America’s natural-gas revolution, died after driving his car at high speed into a wall.

Mr McClendon, 56, was one of the high-rollers of the shale boom—and of its bust. He turned a $50,000 investment in 1989 in Chesapeake, based in Oklahoma City, into what became one of the two biggest natural-gas producers in the United States, with an acreage of leaseholds almost the size of West Virginia. He was also one of the champions of natural gas as a relatively clean fuel compared with coal, and an advocate for freeing America from dependence on Middle Eastern oil. “To hell with OPEC”, he was fond of saying.

 

Yet his ride was a white-knuckled one even by the standards of America’s oil industry. He quickly seized on the potential of two emerging technologies, horizontal drilling and hydraulic fracturing…

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Category: Business and finance, Approved, Business, Business

Three Stocks with Buying Opportunities (GCI, MT, SXL)

By Cory Mitchell Three buying opportunities based on an uptrend and pullback, or severely depressed prices offering long-term upside potential.

The saying “buy low, sell high” has different meanings to different traders. To some, it means buying when the price is trending higher, but only after a pullback. To others, it means buying after a big decline starts to show evidence an uptrend may be beginning, and to others it means buying at a high price, with the expectation that the price will go even higher. All these strategies can work, at times. With the S&P 500 well below its May 2015, 2134.72 high, current buying opportunities favor the first two strategies—buying uptrending stocks during pullbacks or buying stocks at very depressed prices. Here are three such opportunities.

Gannett Co., Inc. (GCI) trended higher from the July 2015 low of $10.75, to a high of $17.91 in December 2015. In 2016 the price has fallen, finding support above $13.27 since late January. The pullback presents an opportunity to enter a long trade between $15 and $14, with a stop loss below $13.25. The target for the potential advance is $18 to $19. Buyers will also appreciate the $0.16 quarterly dividend, which equates to a 4.27%yield if purchasing at $15.

ArcelorMittal (MT) is an example of a price depressed stock, with the possibility of a turnaround. On March 1 the stock gapped up 8.95% to $4.14, hitting an intraday high of $4.19. The prior swing high was on February 4 at $4.16. Between the former high and the March 1 rally the stock hit a low of $2.93. The movement between $4.19 and $2.93 is an inverse head and shoulders pattern—a bottoming formation if the price can break and close above resistance in the $4.16 region. The height of pattern ($1.23) provides an initial upside target of $5.39, but considering this stock hovered around $10 for the first half of 2015, longer-term investors are expecting moves back up into the $9 region (or higher).

 

 

 

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Read more here: Three Stocks with Buying Opportunities (GCI, MT, SXL)

Category: GCI, MT, SXL

The new mediocre

By The Economist online
THE launch, a year ago, of the European Central Bank’s programme of quantitative easing (QE—creating money to buy bonds) sparked elation. Growth was picking up, consumers had a spring in their step and stockmarkets were jubilant. A year later spirits are sombre as the recovery flags, stockmarkets languish and deflation returns. After prescribing more medicine in December, the ECB is expected to increase the dose again on March 10th. But there are increasing doubts about its effects.

Consumer prices fell by 0.2% in the year to February (see chart), reinforcing the case for greater stimulus. Though this fall was driven by a renewed collapse in oil prices, the core inflation index, which excludes volatile items such as energy, is also looking wan. Prices rose by just 0.7% in the year to February, among the lowest readings since the euro was born 17 years ago. Despite a year of QE, during which the ECB has bought €60 billion ($65 billion) of bonds a month, it appears to be no closer to its goal of inflation of nearly 2% than when it started.

 

Unemployment has at least carried on falling, to 10.3% in January, reflecting the…

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Category: Business and finance, Approved, Finance and economics, FINANCE

Capital in fetters

By The Economist online..

THE chairman of Barclays, a big British bank, was asked in a conference call last year whether the firm might draw back its investment in its listed African subsidiary. Actually, he replied, “we would probably be biased to own more than less.” Yet on March 1st Jes Staley, Barclays’ CEO since December, announced that it hopes to reduce its 62% stake in Barclays Africa over the next two or three years, to focus on its main business in Britain and America.

On the face of things, the reversal is surprising. Barclays has been in Africa for over a century. Its blue eagle logo can be found in shopping centres from Nairobi to Lagos. Moreover, Barclays Africa made a healthy return on equity of 17% last year. It has grown quickly in recent years and plans to keep doing so. Over the past year it has acquired licences of various sorts in Ghana and Nigeria and part of an insurance business in Kenya. This will continue despite the sale of Barclays’ stake, Maria Ramos, Barclays Africa’s CEO, insisted this week.

 

But Barclays is one of the most weakly capitalised big Western banks. As well as the sale of…

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Category: Business and finance, Approved, Finance and economics, FINANCE

Emission impossible

By The Economist online..
VOLKSWAGEN’S new boss, Matthias Müller, was no doubt hoping that his firm’s launches of new models at the Geneva motor show this week would help it move on from the scandal over its cheating in emissions tests. A British prankster had other ideas. As VW’s sales chief, Jürgen Stackmann, unveiled a new version of the Up city car, Simon Brodkin, a comic whose past targets include FIFA’s former boss, Sepp Blatter, gatecrashed the presentation in overalls, with a spanner and a “cheat box” which he tried to fit to the car (see picture), before being led off by security men.

Mr Müller can afford to see the funny side of the stunt: he owes his job to the scandal. He was brought in to replace Martin Winterkorn, who was forced out when it emerged last September that 11m of the company’s diesel cars had been fitted with software to cheat tests for nitrogen-oxide emissions. This week VW admitted that Mr Winterkorn had been sent a memo in May 2014 about irregularities in the cars’ emissions, but said he may not have read it. Speaking to The Economist in Geneva, Mr Müller promised “monumental change”. But whatever VW does…

…read more

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Category: Business and finance, Approved, Business, Business

Red ink rising

By The Economist online..
HOW worrying are China’s debts? They are certainly enormous. At the end of 2015 the country’s total debt reached about 240% of GDP. Private debt, at 200% of GDP, is only slightly lower than it was in Japan at the onset of its lost decades, in 1991, and well above the level in America on the eve of the financial crisis of 2007-08 (see chart). Sooner or later China will have to reduce this pile of debt. History suggests that the process of deleveraging will be painful, and not just for the Chinese.

Explosive growth in Chinese debt is a relatively recent phenomenon. Most of it has accumulated since 2008, when the government began pumping credit through the economy to keep it growing as the rest of the world slumped. Chinese companies are responsible for most of the borrowing. The biggest debtors are large state-owned enterprises (SOEs), which responded eagerly to the government’s nudge to spend.

 

State sponsors of error

The borrowing binge is still in full swing. In January banks extended $385 billion (3.5% of GDP) in new loans. On February 29th the People’s Bank of China spurred them on, reducing the…

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Category: Business and finance, Approved, Finance and economics, FINANCE

Living off the people

By The Economist online
FOR as long as there have been organised economies, people have been employed to look after the wealth of others. More than 4,000 years ago landowners in Akkad, an early Mesopotamian civilisation, hired local managers to look after their farms.

In their new book, “Investment: A History”, Norton Reamer and Jesse Downing explain how the industry has changed over time. Their fundamental idea is that investment has become “democratised”, available to a wider range of individuals.

Early investment was conducted on behalf of the wealthy, often by individuals with low status—current or former slaves in the Roman Republic, for example. In the Biblical parable of the talents, a master entrusts his wealth to a range of servants. Two of the servants doubled the master’s money but the third buried it in the ground, rather than “investing it with the bankers”. For this failure, the poor performer was “cast into the outer darkness” where “there will be weeping and gnashing of teeth”. Today’s clients might welcome the ability to add this penalty clause to their contracts.

Looking after the assets of the rich—or…

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Category: Business and finance, Approved, Finance and economics, FINANCE

Mortgage Rates Pushing Important Boundary

Mortgage rates continued farther into to the highest levels since early February today. The current territory is important in the bigger picture, as it has historically acted as a line in the sand between the lowest rate range and everything else. This refers to conventional 30yr fixed mortgage rates between 3.375% and 3.625%. The analogous 10yr Treasury yield would be 1.84% and below. With that in mind, 10yr Treasury yields ended the day at 1.84% and today’s most prevalent conventional 30yr fixed rate quote is right on the edge of a move back up to 3.75% after a stable run at 3.625%. The longer term rate considerations are coming to a head right as we approach the biggest events on this, the biggest week of the month. Friday’s jobs report is the most important event on the calendar, but markets …read more

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Category: currency, dollar, economy, federal reserve, gas prices, inflation, interest rates, janet yellen, job market, jobs, monetary policy, oil prices

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