All posts by Tate Dwinnell

A Close Look @ The S&P500

It’s on.. Let the bull and bear tug ‘o war begin! After the bears had the run of the place over the past couple weeks the bulls have begun to step up and defend their ground a bit, but today they looked tired and counting the days to the 3 day weekend.  It seemed nearly everyone expected this morning’s bounce to be the beginning of a little buying spree from bargain hunters and short covers, but that will have to wait.  While the bleeding has stopped, it’s clear sellers still have the upper hand for now.

Today I take a close look at the S&P, starting with a long term weekly chart and ending with a one month daily chart to get an idea of what kind of shape we’re in.  In the 2 year weekly  chart you can see the long term trend line and what I would call the last line of defense for sustaining the bull market.  This support area appears to be in the 1235 – 1240 range.

On the 1 year daily chart of the S&P you can see that the area between about 1240 and 1255 is a major area of support convergence with the 200 day moving average (~1258), channel support (~1250) and the long term trend line (discussed above ~1240) all coming to a head.  I’d like to see some sort of massive capitulation (high volume selloff in the morning followed by massive volume to close out the day) with the lows at some point in this range.  That kind of action usually signals a bottom.

The one month chart provides a nice close up look of recent action.  You see the high volume distribution days and the bouncing around at support of the 200 day moving average.  On the 18th of May, the instensity of the selling subsided with a lower volume decline.  Following that, was a nice higher volume reversal day off support which can indicate that the bulk of the selling is done (much of that move was probably short covering though).  You can see there are some positive signs but we’re not out of the woods, especially considering todays big reversal off the highs to finish at the low of the day.  There is work left to do and I wouldn’t not be an aggressive buyer here (nor would I be aggressively pursuing shorts at this level).  I personally have begun nibbling on some liquid, larger caps names such as Google and Apple, but that’s about it.  I’ve been sitting on mostly cash for some time and will remain there at least through next week.

Here’s a longer term weekly chart of the Nasdaq which allows you to better see volume levels over a longer time horizon.  Notice the violation of the one year trend line.  Next stop: the "not quite" 2 year trend line around 2140.

Last but not least, the daily chart of the Dow.  Notice the violation of the trend line off the October 2005 lows which sets up the probability of a move to test the next level of support: Dow 11,000 in the coming days.

Support Looms in Nasdaq – Rotation Where?

Howdy all, good to be back and attempting to get my arms around the market.  After spending a week in Sayulita Mexico (wow, what a place) it’s been more difficult than imagined to get back into a market mindset and try and get my arms around whats going on.  I’m getting there slowly but surely :).  While I was away, the markets continued to push higher, albeit on meager volume.  With each uninspired up day came the greater likelihood of a significant fall to retest key support levels.  It’s where we stand currently.  The Nasdaq has been hit the hardest, but the good news is that strong support is on the horizon.  Look for some sort of capitulation around this area for a signal that a bottom has been put in place.  Before that happens, I imagine we’ll get some sort of weak oversold bounce.  This may provide an opportunity to exit weak long positions and/or initiate a short trade or two.

Below is a longer term, weekly chart of the Nasdaq.  You see the long term uptrend remains intact with key support in the 2200 range.  I’ll be looking for some kind of high volume reversal in this area as a signal that a bottom may be in place.  Until then, I remain largely in cash with the possibility of a short position or two.

Rotation in Medical/Health?

With sizable corrections often come rotations from sector to sector.  With money flowing out of commodities, it’s important to get a feel for where that money is being put to work.  It may be a bit premature to say that health and medical related issues will lead in a new market upturn, but over the past several days, these industries have been leading the way and moving up despite heavy losses in just about every other nook and cranny of the market.

For example, here are the top 15 performing industries over the past 5 trading days.  9 of the 15 are medical/health related.  Look for the trend to continue.

1. Long Distance Carriers
2. Long Term Care Facilities (SUNH,  GHCI)
3. Drug Delivery
4. Health Care Plans
5. Medical Laboratories and Research
6. Music & Video Stores
7. Entertainment Diversified
8. Catv Systems
9. Drugs Wholesale
10. Drug Manufacturers
11. Medical Equipment Wholesale
12. Specialized Health Services
13. Hospitals
14. Personal Products
15. Beverages – Soft Drinks
24. Biotechnology

Today’s Notable Earnings Movers: VCA Antech (WOOF); Tollgrade Communications (TLGD)

Here are today’s notable earnings movers…

Note: fundamental rank in brackets does not include latest results

UP

  • VCA Antech (WOOF) Specialty Health Services, fundamental rank [25/30] up 10%, carving out right side of sloppy base
  • Amdocs (DOX) Business Software & Services, fundamental rank [25/30] up 7%, nice bounce and breakout off the 50MA today
  • Witness Systems (WITS) Application Software, fundamental rank [24/30] up 6%, carving out right side of base
  • Psychiatric Solutions (PSYS) Specialized Health Services, fundamental rank [24/30] up 5%, carving out right side of base
  • Aspreva Pharmaceuticals (ASPV) Biotech, fundamental rank [26/30] up 4%, adding to gains following a breakout a few days ago

DOWN

  • Tollgrade Communications (TLGD) Communication Equip, [21/30], down 20%, next stop: 200DMA
  • Navteq Corp (NVT) Business Software & Services, [27/30], down 18%, slicing through major support levels of 50MA and 200MA; support at 40
  • Aetna (AET) Health Care Plans, [24/30], down 17%, may be one of Aetna’s largest single day drops in its history
  • Intralase (ILSE) Medical Appliances & Equip, [25/30], down 11%, sharp reversal after yesterday’s breakout but still has support of 50MA
  • Arris Group (ARRS) Communication Equip, [25/30], down 10%, continuing to carve out a base
  • Kendle International (KNDL) Drug Manufacturers, [25/30], down 10%, returning to pivot point
  • Dynamic Materials (BOOM) Industrial Metals & Minerals, [26/30], down 10%, bouncing off the lows this morning; currently right around pivot
  • Harman International (HAR) Electronic Equipment, [24/30], down 7%, stick a fork in this one
  • Allegheny Technologies (ATI) Industrial Metals & Minerals, [24/30], down 7%, not surprisingly giving up some tremendous gains over the last 6 months
  • Smith Micro Software (SMSI) Application Software, [25/30], down 7%, still looks very strong despite today’s selling
  • FormFactor (FORM) Semiconductor – Broadline, [24/30], down 6%, giving up gains after recent breakout but still has support and looks OK
  • Modis Professional Services (MPS) Staffing & Outsourcing Services, [22/30], down 6%, todays selling doesn’t change a thing – still looks very good technically
  • First Horizon Pharmaceuticals (FHRX) Drugs Wholesale, [26/30], down 6%, getting a bounce off the 50MA today
  • Granite Construction (GVA) Heavy Construction, [23/30], down 4%, slicing through the 50MA

Today’s Earnings Movers: Under Armour (UARM), Sirf Technologies (SIRF)

Here are today’s notable earnings movers…

Note: fundamental rank in brackets does not include latest results

UP

  • Under Armour (UARM) Apparel Clothing, fundamental rank [24/30] up 17%, building right side of base
  • LifeCell (LIFC) Biotech, fundamental rank [26/30] up 13%, breaking out to new all time high from long, somewhat sloppy base
  • Manitowoc (MTW) Farm & Construction Machinery, fundamental rank [24/30] up 11%, despite doubling in price in just 5 months, still no signs of slowing down
  • Jones Lang Lasalle (JLL) Property Management/Dev, fundamental rank [23/30] up 11%, also adding to big gains since January
  • Monster Worldwide (MNST) Advertising Agencies, fundamental rank [26/30] up 9%, with the job market on fire, MNST is reaping the benefits in a big way
  • Interactive Intelligence (ININ) Business Software & Services, fundamental rank [23/30] up 7%, continuing yesterdays bounce off the 50DMA
  • Baker Hughes (BHI) Oil Gas Equip & Services, fundamental rank [25/30] up 6%, breaking out of base with no handle this morning
  • Itron (ITRI) Scientific & Technical Instruments, fundamental rank [22/30] up 6%, adding to gains after breaking out in February
  • Portfolio Recovery Associates (PRAA) Business Software & Services, fundamental rank [28/30] up 6%, forming right side of base
  • National Oilwell Varco (NOV) Oil & Gas Drilling & Exploration, [23/30], up 5%, carving out right side of base

DOWN

  • Sirf Tech Holdings (SIRF) Scientific & Technical Instruments, [26/30], down 12%, failed base, taking out support of 50MA with very heavy volume
  • Moody’s  (MCO) Business/Management Services, [27/30], down 11%, the impressive one year run along the 50MA has ended with a bang
  • Lone Star Technologies (LSS) Oil & Gas Equip & Services, [25/30], down 8%, dropped well below the pivot but still has support of 50MA
  • Chemed (CHE) Consumer Services, [23/30], down 8%, taking out support of 50MA
  • Simpson Manufacturing (SSD) Small Tools & Accessories, [26/30], down 7%, testing support of 50DMA and has returned to the pivot

Today’s Earnings Movers: Nutrisystem (NTRI), Stamps.com (STMP)

Here are today’s notable earnings movers…

Note: fundamental rank in brackets does not include latest results

UP

  • NurtiSystem (NTRI) Personal Products, fundamental rank [28/30] up 32%, adding to gains in a big way following the breakout a few days ago
  • TheStreet.com (TSCM) Internet Info Providers, fundamental rank [22/30] up 11%, breaking out from base today to new multi yeaer high
  • Radyne Comstream (RADN) Communication Equip, fundamental rank [24/30] up 6%, breaking out from sloppy base this morning
  • Buffalo Wild Wings (BWLD) Restaurants, fundamental rank [24/30] up 5%, breaking out from long base
  • Atheros Communications (ATHR) Semiconductor- Integrated Circuit, fundamental rank [24/30] up 4%, bouncing off the 50 day moving average
  • Applied Industrial Tech (AIT) Industrial Equip & Components, fundamental rank [23/30] up 4%, continues to look very strong following breakout back in January

DOWN

  • Stamps.com (STMP) Internet Software & Services, [27/30], down 15%, slicing through the 50DMA
  • WR Berkley (BER) Insurance – Property & Casualty, [24/30], down 10%, failed base, taking out support of 50MA with very heavy volume
  • Ezcorp (EZPW) Specialty Retail, [25/30], down 10%, looks like it wants to fill the gap
  • HYDL (HYDL) Oil & Gas Equip & Services, [25/30], down 8%, breaking below the pivot, but still has support of 50MA
  • Coach (COH) Apparel Stores, [28/30], down 7%, taking out support of 200DMA; its going to be a long time before this former leader makes anyone any money
  • Jacobs Engineering (JEC) Heavy Construction, [23/30], down 7%, testing support of 50DMA
  • Brown & Brown (BRO) Insurance Brokers, [27/30], down 6%, returning to support around pivot and 50MA
  • Burlington Northern (BNI) Railroads, [24/30], down 5%, testing support of 50DMA

Focus Media (FMCN) Update

Wanted to give an update of Focus Media (FMCN), a stock I currently have has the highest rated stock in my database (see more here for your own access) and a stock I purchased on April 6th.  You can see the first entry regarding FMCN here.  The stock still looks good technically but has been meandering a bit.  I’m waiting for the big confirmation move up with a spike in price and volume. 

On April 18th, I added additional shares to my originial position (about 30% of the originial) on anticipation of a big confirmation move.  It didn’t quite turn out the way I had hoped as the stock never added to those gains, but i’m still confident that move will occur.  If not, I’m still in position to get out with a small gain or loss.  Lots of reward potential vs. very little risk.  Here’s the intraday chart from April 18th, which shows my entry point as the stock took out the intraday high with good volume.

One news story of note in the past couple of days is word that a competitor is suing the company for 1.7 million for unfair competition.  Link to news story.

Today’s Earnings Movers: Google (GOOG), F5 Networks (FFIV)

Here are today’s notable earnings movers – there are several highly rated companies moving on earnings today

Note: fundamental rank in brackets does not include latest results

UP

  • Google (GOOG) Internet Info Providers, fundamental rank [28/30] up 8%, strong breakout from fairly steep, somewhat sloppy base; I just can’t bring myself to get in here..if it fills today’s gap I’m jumping in with both feet
  • BTU International (BTUI) Semiconductor Equip & Materials, fundamental rank [25/30] up 7%, extending gains following the breakout on April 12th
  • Robert Half International (RHI) Staffing & Outsourcing Services, fundamental rank [25/30] up 4%, also extending gains following a recent breakout

DOWN

  • F5 Networks (FFIV) Internet Software & Services, [27/30], down 12%, headed right for the 200 DMA at around 54
  • Computer Programs & Systems (CPSI) Business Software & Services, [25/30], down 10%, crashed through the 50DMA but has made up more than half of this mornings losses already
  • Satyam (SAY) Information Technology Services, [28/30], down 10%, also heading straight for the 200 DMA around 34-35
  • Sandisk (SNDK) Semiconductor – Memory Chips, [24/30], down 8%, carving out a handle formation of a nice looking base
  • Intersil Holding (ISIL) Medical Appliances & Equip, [25/30], down 5%, carving out the right side of a base and is getting support at the 50DMA today
  • Broadcom (BRCM) Semiconductor – Integrated Circuit, [23/30], down 4%, also carving out the right side of a base.. looks like it will need to spend at least a few more weeks basing

The World’s Best Real Estate Value

The following essay was written by Steve Sjuggerud of DailyWealth.com which I received from DailyWealth.com the morning after I wrote about CRESY (bottom of post).  I found it to be an interesting read and a nice supplement to my comments on the company.  Note that the stock moved over 20% following the release of this email.  Not sure what the circulation is of Dr. Sjuggerud newsletter (I’m guessing in the 10’s of thousands), but certainly the positive comments had some affect on the stock.  At this point I’d look for it to come in a bit and touch down to 16 before heading higher.  I do not own shares of CRESY but am considering a position.

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These shares are comically cheap…

If you had a billion dollars, you couldn’t put together a better real estate portfolio than Cresud’s… and yet the market value of Cresud’s stock is less than $250 million.

To me, Cresud is the world’s best value in real estate. The nice part is, Cresud trades on the Nasdaq, so you can buy and sell this fantastic real estate portfolio whenever you want.

I first told my True Wealth readers about Cresud in November of 2003. I came up with a “rough value” of the assets back then of about $800 million. I told my readers that Cresud was worth $30 a share, and that we’d take our profits at $25. So far, the stock has only risen from $11 to $14.

Yet the value of their real estate has soared.

Remember… I thought Cresud was worth $30 a share back in 2003. Since the value of real estate has soared since then, Cresud has to be worth over a billion dollars today. Yet the market value is less than $250 million. Why is it so cheap? How has everybody missed this one?

The reason everybody has missed Cresud – even though it trades on the U.S. stock market – is the company is based in Argentina.

Cresud is a massive land owner in Argentina. When I first wrote my story, I here’s how I valued Cresud:

$320 million in commercial property
$350 million in farmland (1.1 million acres)
$130 million in cows, crops, and cash
= $800 million

I know this business as well as anyone. I’ve traveled out to Cresud’s farms. I’ve stayed in their hotels (the Llao Llao in Patagonia is just incredible: www.llaollao.com). I’ve visited their shopping centers. I’ve stood on their land to be developed. I’ve been to their office buildings.

Getting to know this business so well has cost a lot of time and money It’s worth it though… I can confidently confirm this is a great business with a huge amount of valuable assets.

It’s not just Cresud’s land holdings I’ve become so familiar with. I’ve also gotten to know the guys who run the company.

I didn’t mean to, but with so many trips down here in the last three years, I’ve become friends with these guys. They’re exceptionally bright people who understand how the world works, and how to make money.

Over the last 15 years, these guys have put together a portfolio of Argentina’s very best properties. They managed to buy nearly all of them at fire sale prices too.

Right now, I’m in Argentina again, looking for investment opportunities. A few weeks ago, I started crunching some numbers looking for the cheapest stock markets in the world. Thailand and Argentina came out near the top of the list. So I headed back down here.

I love this place. Yesterday, while walking around the stunning Recoleta neighborhood in downtown Buenos Aires with Porter Stansberry and Doug Casey, Doug called Buenos Aires the “most European city in the world these days.”

I have to agree with him. We just arrived yesterday, and it was 75 degrees, with not a cloud in the sky. You couldn’t dream up a nicer day.

Argentine stocks and real estate are very cheap. We plan to fly around the country looking at real estate, and we’ll meet with some companies that look pretty interesting (but only trade on the stock exchange down here).

However, with shares of U.S. traded Cresud so cheap right now, you don’t have to look any farther to play this cheap market. By buying Cresud, you can buy Argentina’s “trophy” properties with excellent managers at fire sale prices. Right now, why do it any other way?

Cresud trades on the Nasdaq under the symbol CRESY. It’s web pages are www.cresud.com.ar and www.irsa.com.ar.

The shares are definitely worth checking out.

Good investing,

Steve

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While I don’t have time to read all of Steve’s newsletters, the one’s that I have had a chance to read I have been impressed with.  I receive no incentive for recommending this newsletter, just thought I’d pass along a good source of investing info : )

DailyWealth is a free e-letter focused on the world’s best contrarian investment opportunities.  To begin receiving a free subscription, click here.

Today’s Earnings Movers: Alliance Data (ADS), Texas Capital Bancshares (TCBI)

Another rousing rendition of "stocks moving on earnings" – here ya go:

Note: fundamental rank in brackets does not include latest results

UP

  • Alliance Data (ADC) Info & Delivery Services, fundamental rank [26/30] up 14%, adding to gains following the breakout on April 12th; new all time high today
  • Moneygram International (MGI) Business Software & Services, fundamental rank [24/30] up 12%, just continuing its rapid ascent
  • Trimble Navigation (TRMB) Scientific & Technical Instruments, fundamental rank [25/30] up 7%, breaking out from long base to new all time high
  • Apple Computer (AAPL) Personal Computers, fundamental rank [28/30] up 5%, continues to work on carving out the right side of a base
  • Informatica Corp (INFA) Business Software & Services, fundamental rank [22/30] up 4%, getting nice bounce off 50 day moving average

DOWN

  • Texas Capital Bancshares (TCBI) Banks – Southwest, [25/30], down 6%, reversing sharply following yesterday’s nice breakout; still has support of the 50DMA though
  • SunPower (SPWR) Scientific & Technical Instruments, [25/30], down 6%, giving up all of yesterday’s strong move above resistance of the 50 DMA, but holding at support there
  • CyberSource (CYBS) Business Software & Services, [28/30], down 5%, bounced quickly after the big gap down menu; bullish technical action remains intact
  • Labor Ready (LRW) Staffing & Outsourcing Services, [25/30], down 5%, giving up all of yesterday’s breakout move, but still looks OK technically (has support of 50DMA)