Friday, February 26, 2010
Drifting
It was another very slow down of trading, but we had a positive tone, and the bears were unable to dig their claws in, even though we had a fair amount of bad news this week. Weekly unemployment claims, consumer confidence and sentiment, as well as housing numbers all came in below expectations, but the buyers were willing to shrug it off. While the action was generally positive, it lacked zest. There just isn't a lot of strong momentum. We'll had some impressive action in retailers, and the big-cap technology names finally delivered some upside today, but we didn't have this extremely aggressive dip buying like we saw so often last year. Underperforming market players were constantly trying to catch up with the market last year, but that has not been an issue this year. We have some very clear technical overhead in the S&P500 at the 50-day moving average and the recent highs around 1108-1110. It wouldn't surprise me to see a break above that level, triggering buy stops and then a reversal, but we'll worry about that next week. For now, we are in this drifty, low-volume environment and waiting for a clearer trend to develop. I can imagine both bullish and bearish scenarios going forward, but my style is to react as things develop rather than to anticipate (usually).
AAPL Going On A Run? Plus Some Other Techs...
The research from Morgan Stanley was good - "Apple Product Catalysts Ahead; Reiterate Overweight - Morgan Stanley" - and I must say I think Apple is setting up for a run as alluded to recently. As I've stated previously, the iPhone is a platform and the "iNetbookkiller" product may be as big (or bigger) as the first in the line -- the 2.5G iPhone.
The more I think about this product the more I think this will spur a huge infusion of Apple Computing share into the enterprise, which would be the next holy grail for Apple share price over time.
Much like CSCO, the value of Apple's hardware has to do with the underlying software. Once you get hooked on the functionality you stick with the next generation of hardware advancements.
RMBS has increased its share buyback. I don't really like share buybacks, never have in fact. But others do and Rambus will be selling much higher in due time. It is below its settlement spike and that settlement was watershed for it.
What's this I hear about Cisco and some new tech? Wonder if it will coincide with some real government stimulus for the group in March........BRCD's a buy at $5 and a sell in the high 7s....I think VRGY's report was better than the stock has acted.....
long AAPL
The more I think about this product the more I think this will spur a huge infusion of Apple Computing share into the enterprise, which would be the next holy grail for Apple share price over time.
Much like CSCO, the value of Apple's hardware has to do with the underlying software. Once you get hooked on the functionality you stick with the next generation of hardware advancements.
RMBS has increased its share buyback. I don't really like share buybacks, never have in fact. But others do and Rambus will be selling much higher in due time. It is below its settlement spike and that settlement was watershed for it.
What's this I hear about Cisco and some new tech? Wonder if it will coincide with some real government stimulus for the group in March........BRCD's a buy at $5 and a sell in the high 7s....I think VRGY's report was better than the stock has acted.....
long AAPL
Thursday, February 25, 2010
CDS; The Market, Etc.
Calling Susan Powter: Someone must stop this CDS insanity! If I was Greece (or any of the PIIG countries for that matter) I would simply declare all CDS contracts that do not have a notional underlying interest (in other words, insurable interest) in Greek debt to be unlawful and therefore nullified.
Again, someone has to try and put a stop to the CDS insanity. Why not Greece and/or some other country? While this would not be the end of the story, the legal structure of the CDS would at least be examined and I think the powers that be would realize the importance of insurable interest in the CDS market, just as with the life insurance market......
As far as the market, once again I think market rules (which are a real nagative), political head winds and fears of PIIGS are being magnified beyond any semi-rational measure. Moreover; the absolute futures driven nature of this move feels too contrived of late as we sell off on these one off numbers that are well within normal volatility for the given data points.
I think it's very clear we will be adding meaningful jobs quite soon. In an improving labor market, jobless claims rise initially while new jobs are added. I continue to see endless sources stating with fervent vigor that we are still in recession, or depression or we will double dip.
The more I look the more I'm reminded of 1997 and 1991 and the perceived tumult surrounding those periods.
Lastly, there has been a surge in talk about the death of buy and hold. Something I have never been a big fan of. But like I do with most other things investing related, I lean to the variant view. So the more I hear about the death of buy and hold the more likely I'll be to start embracing that as part of my strategy......
Again, someone has to try and put a stop to the CDS insanity. Why not Greece and/or some other country? While this would not be the end of the story, the legal structure of the CDS would at least be examined and I think the powers that be would realize the importance of insurable interest in the CDS market, just as with the life insurance market......
As far as the market, once again I think market rules (which are a real nagative), political head winds and fears of PIIGS are being magnified beyond any semi-rational measure. Moreover; the absolute futures driven nature of this move feels too contrived of late as we sell off on these one off numbers that are well within normal volatility for the given data points.
I think it's very clear we will be adding meaningful jobs quite soon. In an improving labor market, jobless claims rise initially while new jobs are added. I continue to see endless sources stating with fervent vigor that we are still in recession, or depression or we will double dip.
The more I look the more I'm reminded of 1997 and 1991 and the perceived tumult surrounding those periods.
Lastly, there has been a surge in talk about the death of buy and hold. Something I have never been a big fan of. But like I do with most other things investing related, I lean to the variant view. So the more I hear about the death of buy and hold the more likely I'll be to start embracing that as part of my strategy......
Nice Turnaround Today...
We started the day with an ugly gap down as higher-than-expected weekly unemployment claims, more problems in Greece and a stronger dollar spooked the market. For four hours after the opening, we drifted around as the dip-buyers showed little interest and the bears failed to press their advantage. Finally, at around 1:30 p.m. EST, the machines went to work, and we had a quick pop. We drifted again for another hour but then popped again and ended up closing near the highs of the day. Weakness in the dollar helped the cause, and of course the day before the last day of the month is always prime time for some end-of-the-month markups.
Under the surface, it was an odd mix of action. Gold and retail led, while regional banks, oil and biotech lagged. We started off the day with very poor breadth, but it improved nicely and was only around 2,400 gainers to 3,200 decliners by the close. We certainly came back very nicely after the poor action this morning, but I'm not at all convinced that further upside will come easily. We still have some substantial overhead resistance, little leadership and a lack of energy. We did have higher volume today, but the major indices were still in the red at the end of the day, so it is technically a "distribution day." It is a muddled picture, although the late-day recovery is definitely bullish. Stay nimble while we wait for a clearer trend to develop.....
Under the surface, it was an odd mix of action. Gold and retail led, while regional banks, oil and biotech lagged. We started off the day with very poor breadth, but it improved nicely and was only around 2,400 gainers to 3,200 decliners by the close. We certainly came back very nicely after the poor action this morning, but I'm not at all convinced that further upside will come easily. We still have some substantial overhead resistance, little leadership and a lack of energy. We did have higher volume today, but the major indices were still in the red at the end of the day, so it is technically a "distribution day." It is a muddled picture, although the late-day recovery is definitely bullish. Stay nimble while we wait for a clearer trend to develop.....
Wednesday, February 24, 2010
AAPL Research Note
Bernstein Research analyst Toni Sacconaghi this morning lifted his EPS forecasts for AAPL for the September 2010 fiscal year - and for FY 2011 - to reflect “upward pressure” on gross margins from a mix shift to the iPhone.For FY 2010, he goes to $11.99 from $11.67; for FY 2011, he now sees $13.73, up from $12.72.
Sacconaghi thinks that iPhone revenues will grow from about 30% of Apple revs in FY 2009 to 45%-50% in FY 2011. He estimates that iPhone gross margins were 58% in ‘09, well above the company average of 40.9%. If you assume flat iPhone gross margins and ASPs, corporate gross margins would lift by 400-500 basis points, he notes.The Street consensus, he says, is for gross margins to be down about 10 basis points over the next two years. For that to be accurate, he says, would require a $100-plus drop in average iPhone prices over the next two years, and a 700-plus basis points drop in iPhone gross margins. He thinks that is not realistic.
Sacconaghi is also now calculating the iPad into his forecasts: he sees sales of 2.2 million units in FY 2010, and 6.8 million in FY 2011.The analyst expects iPhone sales to hit 45-50 million units in FY 2011, up from 20.7 million in FY 2009, and 8.7 million in FY Q1 2010.
long AAPL
Sacconaghi thinks that iPhone revenues will grow from about 30% of Apple revs in FY 2009 to 45%-50% in FY 2011. He estimates that iPhone gross margins were 58% in ‘09, well above the company average of 40.9%. If you assume flat iPhone gross margins and ASPs, corporate gross margins would lift by 400-500 basis points, he notes.The Street consensus, he says, is for gross margins to be down about 10 basis points over the next two years. For that to be accurate, he says, would require a $100-plus drop in average iPhone prices over the next two years, and a 700-plus basis points drop in iPhone gross margins. He thinks that is not realistic.
Sacconaghi is also now calculating the iPad into his forecasts: he sees sales of 2.2 million units in FY 2010, and 6.8 million in FY 2011.The analyst expects iPhone sales to hit 45-50 million units in FY 2011, up from 20.7 million in FY 2009, and 8.7 million in FY Q1 2010.
long AAPL
Better Today
After the pullback Tuesday, we managed a decent bounce today. Breadth was good but the volume was weak. The dollar pulled back, which helped some of the commodity names, but the most impressive action was in regional banks and retails. Interestingly, cruise lines also did well today. Does today mark the resumption of the V-ish bounce, or was this just a brief reflexive rebound after yesterday's selloff? The S&P 500 wasn't able to regain the 50-day simple moving average, and I don't see the sort of frenzied dip-buying we enjoyed so often last year. Still, this market has been remarkably sticky to the upside for many months, so it is tough to have much faith in the bears.
I can understand why some folks think the market will continue to act just like it did last year, and continue to run up out of these poor technical patterns, but it isn't a bet I would make, based on the action I am seeing in individual stocks. What has troubled me most over the past couple weeks is the bulls' lack of energy, although we have had so many positive days. We don't have strong pockets of momentum or hot money chasing high-beta names. Even the big-cap technology names, such as GOOG, AMZN and AAPL have been struggling, though they did act somewhat better today.
long AAPL
I can understand why some folks think the market will continue to act just like it did last year, and continue to run up out of these poor technical patterns, but it isn't a bet I would make, based on the action I am seeing in individual stocks. What has troubled me most over the past couple weeks is the bulls' lack of energy, although we have had so many positive days. We don't have strong pockets of momentum or hot money chasing high-beta names. Even the big-cap technology names, such as GOOG, AMZN and AAPL have been struggling, though they did act somewhat better today.
long AAPL
Tuesday, February 23, 2010
Some Tech Stuff
Well, BRCD is getting crushed again for just producing a pretty good quarter. They guided a bit soft but so does everyone these days. I personally wouldn't make too much of the muted guide. They are in good subsectors and CSCO won't kill them. I really liked the FDRY deal when it was done by BRCD, which greatly improved BRCD's balance sheet. However, FDRY now makes up a good share of BRCD's total sales and FDRY is notoriously lumpy in delivering sales which was a reason the market never valued them richly. Let's just add BRCD to the list of Tech names that are growing in that 12-15% range with a PEG under 1. I would be more aggressive in the low $5's and a seller in the high $6's or low $7's.
How about a healthcare proposal? Let's get leadership from ACN, IBM, AAPL, CSCO, HON and MMM (essentially efficiency and innovation experts) all in a room for one day and let them figure out the first 5 things they would fix first in our our healthcare system. Then address these 5 things, let things play out for 18 months and then do it again and tackle the next 5 and so on.
Goldman's technology conference starts this week. Maybe that will shake things up a little bit as most of the key players are in attendence......GOOG will be talking to China shortly, about "should I stay or should I go now..."; I'm going to be watching BIDU closely.
As for some random thoughts on tech, there is no differentiation yet back in the market. This is negative. GS is up; that is a positive. Is it time to add GS, GOOG and AAPL again? Selling windows are closing; tech conferences are coming, including the aforementioned GS's. The technicals in the market (seem to be) lining up. So, to answer my own question, yes I think it's time!
The market is down this much on consumer confidence? Let's be real now; I think it's a futures-driven sell program into a thin market that will run its course in hours to days. If GOOG gets back to China (they never left of course), that could be a fulcrum event for the whole market. It may pay to be short BIDU by then.....
long AAPL
How about a healthcare proposal? Let's get leadership from ACN, IBM, AAPL, CSCO, HON and MMM (essentially efficiency and innovation experts) all in a room for one day and let them figure out the first 5 things they would fix first in our our healthcare system. Then address these 5 things, let things play out for 18 months and then do it again and tackle the next 5 and so on.
Goldman's technology conference starts this week. Maybe that will shake things up a little bit as most of the key players are in attendence......GOOG will be talking to China shortly, about "should I stay or should I go now..."; I'm going to be watching BIDU closely.
As for some random thoughts on tech, there is no differentiation yet back in the market. This is negative. GS is up; that is a positive. Is it time to add GS, GOOG and AAPL again? Selling windows are closing; tech conferences are coming, including the aforementioned GS's. The technicals in the market (seem to be) lining up. So, to answer my own question, yes I think it's time!
The market is down this much on consumer confidence? Let's be real now; I think it's a futures-driven sell program into a thin market that will run its course in hours to days. If GOOG gets back to China (they never left of course), that could be a fulcrum event for the whole market. It may pay to be short BIDU by then.....
long AAPL
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