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After Hours Summary: WM down 9.0% (to raise $2.5 bln in additional capital, reduce dividend, resize home loans business and cut expenses to fortify capital base); TXN up 4.7% (narrows Q4 guidance to the upper end of previous range, in-line with consensus)
Companies moving in after hours trading in reaction to earnings: Trading Up: SAI +4.8%; DMND +1.6%... Trading Down: NCS -14.0%; IDT -1.0%... Companies moving in after hours trading in reaction to news: Trading Up: NFI +10.1% (notes in an 8-K that the co has entered into a Master Repurchase Agreements Waiver); WCG +4.8% (received an executed amendment number 2 to the current Medical Services Agreement; co also notes that Fairholme Capital reports a 16.1% stake in a SC 13G); TXN +4.7% (narrows Q4 guidance to the upper end of previous range, in-line with consensus); TLCV +4.2% (Highland Capital discloses 18.67% stake in SC 13D/A, up from 14.6% previously); LSCC +3.2% (Soros Fund Mgmt discloses 5.19% stake in SC 13G); PRGO +2.8% (announces final FDA approval of Dexcel's OTC Omeprazole; Raises full year earnings guidance); AEM +2.4% (increases annual cash dividend by 50% and provides updates in reserves and production); TRMS +2.3% (announces 2008 strategic plan; designed to maximize cash flows from FUZEON, while also advancing TRI-1144 to a value-creating milestone); WEN +1.2% (notes in an 8-K that the co sees FY07 EPS in-line with consensus)... Trading Down: MEDX -18.7% (Bristol-Myers and Medarex announces top-line data available from three ipilimumab pivotal trials in patients with advanced metastatic melanoma; the results did not meet the primary endpoint); WM -9.0% (to raise $2.5 bln in additional capital, reduce dividend, resize home loans business and cut expenses to fortify capital base); PLL -6.3% (files to delay in NT 10-Q; reports prelim Q1 revs above consensus); TMA -1.2% files Form S-3 announcing the offer and sale of 34,778,077 authorized but unissued shares of common stock).
SCLD SteelCloud announces $1 mln IT consulting services contract with one of the country's largest transit authorities (1.05 )
Co announces that it received a $1 mln IT consulting services contract from one of the country's largest transit authorities to accelerate compliance with the Payment Card Industry's Data Security Standard.
Mid-day Summary
The mkt is sharply higher today, trading near its best levels at mid-day, on a number of better than expected economic reports, strength in the heavily-weighted technology sector (AAPL, GOOG, QCOM, RIMM) and continued expectations for a FOMC rate cut next Tuesday (12/11). The economic data began very early this morning (7:00ET) with a 22.5% increase in mortgage applications for the week ended Nov 30, but futures really took off following the ADP est for Nov payrolls. It showed a very strong 189K increase in private payrolls. With average growth in govt payrolls, that suggests about a 225K increase in Nov Nonfarm Payrolls (out this Friday, 8:30ET; current consensus: 70K). This estimate (225K from the ADP) is often well off the mark, but as a general indicator it has been fairly good. A strong number Friday should help ease recession fears and could impact the FOMC's decision. Currently, CBOT futures price a 100% chance of a 25 basis point rate cut and a 68% chance of a 50 basis point cut. Other economic data: Q3 Productivity was revised upward to 6.3% (consensus 5.9%) from a previously reported 4.9%; Nov Factory Orders, which comprises the already released durables orders (with a revision) and nondurable orders, was up 0.5% (consensus 0.0%); The Nov ISM non-manufacturing index dipped to 54.1 (consensus 55.0) from 55.8 in Oct. A reading above 50 is intended to reflect growth, so this isn't a significant variance from expectations... Following the mkt's higher open, the major averages consolidated over the first hour of trade before extending the advance. The mkt has climbed consistently since then, but is pulling back modestly at mid-day. Note the SPX is trading just below the key overhead resistance level between 1490 & 1500. Dow is currently +195 to ~13444; Nasdaq is currently +50.5 to ~2670.5; S&P is currently +22.5 to ~1485. Today's strongest sectors include REITs, Semis, Energy, Brokers, Steel, Coal, Tech, Banks and Rails. There are no sectors showing significant moves to the downside... The Bond mkt was hit early following the better than expected economic data and is getting no help from the equity mkts as stocks rally. The 10-yr is currently -13/32 to 3.941%... In Commodities, Jan crude oil ($88.84 -0.52) spiked overnight, hitting its morning high of $90.39, after OPEC decided to keep its output unchanged due to uncertainty about the economic outlook. Note the cartel did agree to meet again in Jan. Crude, however, consolidated modestly lower following the decision and ahead of this morning's weekly inventory stats from the Dept. of Energy. At 10:30ET, with crude trading ~$89.50, the E.I.A. announced that crude inventories showed a massive draw of 7913K barrels against expectations for a much smaller draw of 1250K. Crude immediately spiked back up near its highs, but has since pulled back to slight gains at mid-day. Note both distillate and gasoline inventories showed larger than expected builds, and the key oil hub of Cushing, Oklahoma also showed a build... In Europe, mkts rallied as banks and commodity stocks rose and a series of U.S. data releases soothed some concern over the outlook for economic growth. FTSE closed +2.8%; DAX closed +1.7%; CAC closed +2.0%. Note in Asia, the Nikkei closed +0.8%, the Hang Seng closed +1.6% and the Shanghai Composite closed +2.6%... On the Earnings calendar: CWST, CASY, CMTL, DDMX and GEF are confirmed to report today after the close. Tomorrow before the open, 11 cos are confirmed to report including TOL... On the Economic calendar, nothing remains on the schedule for today. Tomorrow before the open, weekly Initial Claims will be released at 8:30ET.
MOVE Move signed a new exclusive three-year content distribution agreement with online leader MSN (2.34]
Market View: Stock indices slip back slightly off highs/resistance in midday trade -Update- -Technical-
Financials (XLF) provided leadership in opening action and again after the first hour gap pullback with the stock indices running to/pausing near resistance highlighted earlier at 1484 S&P 500 (200 day sma) and 2668/2673 Nasdaq Comp (congest/50 day ema). The Dow has paused shy of resistance at 13461/13466 (50% retrace of Oct-Nov decline, last Friday's recovery high
Pre-market Summary
Following yesterday's modest declines, and despite Fannie Mae (FNM) cutting its dividend and OPEC deciding not to raise its production, futures indicate a sharply higher open for the mkt on a combination of strong economic data and a prevailing view that the Fed will be cutting interest rates again at its Dec 11 meeting. The Nov ADP employment report showed nonfarm private employment grew at 189K on a seasonally adjusted basis compared to the consensus est that called for a reading of 50K. There has been plenty of debate regarding the validity of this number and its ability to forecast the Nonfarm Payroll number in the subsequent Employment Report (out this Friday, Dec 7th). At the very least, expect the results to cause some analysts to adjust their Nonfarm Payroll ests for Friday. A strong number should help ease recession fears and could impact the FOMC's decision on interest rates, with investors currently hoping for a 50 basis point cut. This morning's other economic data was also better than expected. The final reading on Q3 Productivity showed a reading of 6.3% (consensus 5.9%), revised up from 4.9%, while Q3 Unit Labor Costs fell 2.0% (consensus -1.2%), revised down from -0.2%. With respect to Fannie, it is aiming to shore up its capital position in a manner reminiscent of Freddie Mac (FRE). Fannie is cutting its quarterly dividend to $0.35 from $0.50 and plans to issue $7 bln of non-convertible preferred stock in one or more offerings in Dec. OPEC, for its part, decided to keep output unchanged due to its uncertainty about the economic outlook, but also agreed to meet again in Jan. Crude oil is up +1.45 to $89.77 following the announcement, but are off morning highs. On a related note, the Dept. of Energy will release its weekly inventory statistics this morning at 10:30ET. Dow futures are currently +138; Nasdaq futures are currently +26.3; S&P futures are currently +16.4. For technical levels of interest, click here... The Bond mkt slid in early trade as this morning's economic data all came in better than expected (including weekly MBA Mortgage Applications, which increased 22.5%). The 10-yr is currently -09/32 to 3.926%. Note Treasury Secretary Paulson speaks today at 11:45ET on U.S.-China economic relations... In Europe, mkts were higher by mid-day as banks bounced and commodities rose on continued consolidation talk and rising oil prices. FTSE is currently +1.7%; DAX is currently +1.3%; CAC is currently +1.6%. In Asia, mkts ended higher on speculation the U.S. and U.K. will step up measures to contain subprime loan losses and support economic growth. Nikkei closed +0.8%; Hang Seng closed +1.6%; Shanghai Composite closed +2.6%... Notable pre-market Calls include Upgrades: TTWO at Kaufman; Downgrades: FNM and FRE at Credit Suisse, FNM also at Piper Jaffray, SKM at Bear Stearns, XMSR at Stifel Nicolaus, CMCSA and ERTS at Kaufman... On the Earnings calendar: CWST, CASY, CMTL, DDMX, GEF and NOVL are confirmed to report today after the close... On the Economic calendar, Oct Factory Orders (consensus 0.0%) and Oct ISM non-manufacturing (consensus 55.0) will both be released at 10:00ET.
IDCC Interdigital Comm: Major overhang removed with win of Samsung case - Broadpoint (17.00 )
Broadpoint notes that late yesterday, the U.S. District Judge in New York issued his final ruling in the pending 2G/2.5G case between Samsung and IDCC. The Judge confirmed the second arbitration panel's award of $134 mlnfor 2G/2.5G units sold from 2002 to 2005, and confirmed that IDCC is entitled to receive royalty payments for 2G/2.5G handsets sold by Samsung in 2006 based on the rates set by the arbitration panel, plus annual interest of 5% on the amount due. All in, firm calculates the final amount at $185-$190 mln. Firm says with three legal losses, Samsung is running out of options and will have to pay; and firm does not rule out the possibility of Samsung entering into a comprehensive 2G/3G deal with IDCC before the I.T.C. hearings begin in April 2008.
TTWO Take-Two upgraded to Buy at Kaufman- tgt $21 (16.68 )
Kaufman upgrades TTWO to Buy from Hold and raises their tgt to $21 from $17 saying they believe the Activision (ATVI)-Blizzard deal makes Take-Two more interesting as an investment vehicle because 1) its relatively small size and high transparency make it easier to evaluate relative performance, 2) it's a recovery story that trades at a discount to its peers and future estimates, and 3) it increasingly looks like a potential acquisition target. Moreover, they think there is a long-play into the launch of G.T.A early next year.
Piper Jaffray downgrades Famous Dave's (DAVE 13.63) to Neutral from Buy.
JSDA Jones Soda Chairman and Chief Executive Peter Van Stolk to step down at year-end (5.94 )
Co announces that Peter van Stolk will step down from his position as chairman of the board of directors and as chief executive officer at the end of the year. He will remain on as a member of the board of directors. Board members Scott Bedbury and Steve Jones will take on the interim positions of chairman and CEO, respectively
Tomorrow im off will be updating all day.Enjoy.
Staying in TBUS for now.
I got caught looking after the quarterly about a week ago and now im down about .50....with TBUS however this is not a major problem...i think this stock still has the potential to bust $5.00 in 2008 or sooner with the right news.
Will continue to accumilate my position in this and also updated some real scary stocks for decemeber in the header...yikes.
DAVE could and should see some more downward pressure tomorrow....and beyond. Its no good when you throw out the founder of the company.
DAVE Famous Dave's David Goronkin resigns as Director, President and Chief Executive Officer (13.63 0.00)
Co announces that David Goronkin, President and CEO, will step down from his position effective December 13, 2007 to pursue other interests. The Co announced that F. Lane Cardwell, Jr., a member of DAVE's Board of Directors, has been appointed to serve as acting CEO in accordance with the co's previously adopted corporate succession plan. Mr. Cardwell is expected to serve on a short-term basis while the co undertakes a search for Mr. Goronkin's permanent replacement.
After Hours Summary: GES up 5.8% on earnings/guidance; FNM down 2.2% (confirms dividend cut and $7 bln preferred stock issuance) -Update-
Companies moving in after hours trading in reaction to earnings: Trading Up: VSNT +16.0%; GES +5.8%... Trading Down: PLAB -12.6%; CHS -9.6%; WIND -1.9%... Companies moving in after hours trading in reaction to news: Trading Up: CPST +15.7% (New York City Mayor Bloomberg announces new rule for microturbine deployment); PSS +14.3% (Stride Rite Children's Group and Camuto Group announce licensing deal); SOHU +3.7% (raises Q4 revs guidance above consensus; raises Q4 EPS guidance); KSU +1.9% (will be added to the S&P MidCap 400); IGTE +1.8% (offshore subsidiary signs a strategic IT partnership agreement with the Union Bank of California); AFCE +1.6% (announces increase in share repurchase program by an additional $50 mln); EDS +1.3% (elected EDS Chairman of the Board); RUTH +1.2% (announces CFO Thomas Pennison Jr will leave the co once suitable replacement is found); AFAM +0.9% (announces expansion of revolving credit facility); VECO +1.0% (DMetrix hires Chief Operating Officer); FCX +0.7% (announces plans to restart climax molybdenum mine)... Trading Down: FNM -2.2% (confirms dividend cut and $7 bln preferred stock issuance); MRTN -2.1% (announces one million share repurchase program for common stock); BECN -1.4% (President bought 56K shares at $8.75-9.20 on 11/30-12/04); MDT -1.3% (Medtronic in it's 10-Q discloses it has received a letter from US Attorney's office in Pennsylvania).
Candlestick Reversal Patterns
11/21/07 03:01:34 PM PST
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by John Devcic
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Candlestick patterns can be invaluable in identifying a possible tren reversal.
Identifying candlestick reversal patterns is not easy. But with patience and persistence it can be done. Chart reading is an art form and an important part of a chart reader's arsenal. In this article I will focus on a couple of very important patterns that can help spot a reversal of a current trend. As with all candlestick patterns, these patterns will also take time and patience to learn, but once mastered they will be an invaluable resource.
REVERSAL PATTERNS
When it comes to investing or trading, identifying reversal patterns can be very helpful. That doesn't mean you should only pick tops and bottoms. It is nearly impossible to pick a top or bottom in a current trend. What reversal patterns can do is help you identify a significant change in the current market direction. For example, we saw the US dollar slide lower and lower. When will we see a reversal in this trend?
A reversal pattern could signal a possible end of the current trend or it could signal a continuation of the trend. There are two types of reversal patterns, bullish and bearish. A bullish reversal pattern will appear at the end of a downtrend and a bearish reversal pattern will appear at the end of an uptrend. A reversal of the current trend signifies that the selling or buying pressure subsided for that trading day. There are different ways to spot reversals. I prefer to use candlestick charts since, in my opinion, they reveal a very detailed representation of that trading day. From a visual standpoint, candlesticks are a great tool to help you spot one of these reversals once you learn to spot the formations.
THE COMMON REVERSAL PATTERNS
I will discuss some of the more common candlestick reversal patterns.
FIGURE 1: Here's the hammer, a bullish reversal pattern that forms after a decline.
Hammer — This is a bullish reversal pattern that forms after a decline (Figure 1). Hammers usually help you locate a bottom or possible level of support. A hammer has a long range but with a small body formed at the top. The long line represents sellers driving the price down but they could not continue to drive the price lower and eventually the stock finishes higher.
But spotting the hammer pattern is not enough. You need some other confirmations in addition to this pattern to indicate a change in the current downtrend. After the hammer pattern is formed, you want to see a continuation of buying with strong volume to really signal a change. The long thin line on the hammer is what is most important because it tells you that the sellers are still there. Seeing the hammer formation cannot be used as a signal by itself.
What you need to look for:
A steady decline
The formation of the hammer candlestick
Strong volume and the following trading day to be higher as well.
FIGURE 2: Here's the hanging man, a bearish reversal pattern that may signal the end of the current uptrend.
Hanging man — This is a bearish reversal pattern that may signal the end of the current uptrend. The hanging man looks similar to the hammer except that it shows there are sellers able to drive the stock down (Figure 2). That long narrow line represents sellers coming in and driving the stock down. In most cases, the stock will even finish lower for the day. The bulls were able to drive the stock up at some point but were unable to have it close higher. As with the hammer, seeing the hanging man pattern alone will not be enough to act on. You need to look for confirmation of the trend change. This confirmation comes in the form of lower closes following the formation of the hanging man.
What you need to look for:
A steady uptrend
The formation of the hanging man pattern
Lower closes following the formation of the pattern
FIGURE 3: And the spinning tops pattern shows indecision between the bulls and bears.
Spinning tops — This pattern really highlights indecision on that specific trading day. Neither the bulls nor bears were able to gain enough momentum that day, which is why this pattern was formed (Figure 3). The interesting thing about this pattern is its complexity. You have a small body that is either hollow or filled in. What is more important is that you have a long shadow. This long shadow indicates that there was a lot of movement both higher and lower that day.
Oftentimes, this pattern forms after a current long trend. This signifies that there could be a reversal in that trend. For example, after a long advance or a series of strong candlesticks, seeing a spinning top tells you that selling pressure is starting to gain momentum and may lead to a reversal of the strong buying. On the other hand, after a long decline or filled in candlestick (usually black) a spinning top can indicate that the selling pressure is subsiding and this could potentially signal a trend reversal.
A spinning top alone is not a signal of a reversal. You need to get confirmation before you can make a trading decision based on spotting a spinning top. However, the spinning top is a good indicator that the current trend is starting to lose momentum and a possible reversal could occur.
WHEN TO PLACE THAT TRADE
None of these candlestick patterns mentioned here will guarantee a reversal of a current trend. They become invaluable in identifying a possible trend reversal, however. There can be external forces that may again continue the preexisting trend regardless of either the hammer or hanging man pattern being formed. The hammer and hanging man are the same pattern, except they appear at different times.
Once you learn to identify one you will be able to identify the other easily. It is important to keep in mind that identifying the pattern is only the first step. The next depends on you as an investor and your investing philosophy. That means you will have to decide when to pull the trigger on the trade based upon these patterns. Learning to find formations using candlestick patterns can give you the edge when trading.
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John Devcic
John Devcic is a market historian and freelance writer. He may be reached at glatko@aol.com.
E-mail address: glatko@aol.com
Trading The 10-Bagger
12/04/07 02:28:53 PM PST
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by Thomas Maskell
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In this, the latest installment of the 10-bagger series, we look at the phenomenon from the viewpoint of the trader.
In my previous installment of the 10-bagger series, we discovered that fundamental analysis was not a good predictor of 10-bag performance. However, as one reader pointed out, there were significant fundamental separations between 10-baggers and the overall stock market. Yet, from an investor's point of view, those separations did not predict 10-bag status. For instance, the observation that 75% of 10-baggers are losing money prior to their launch is hardly a reason to buy a stock. Fundamentalists are not in the habit of buying losing companies. So today, we are going to explore 10-baggers from a different perspective — the trader's viewpoint.
KEEP IT SIMPLE
In the interest of full disclosure, I am not a fan of technical analysis. To me, it makes no sense. There is no cause and effect. Stock prices don't increase because they increased, and they don't fall because they fell. The cause of their movement is beyond the chart.
Of course, most technical analysts readily admit this. After all, they are not concerned with why a stock does what it does; they are only concerned with what it is doing. Since the prediction of 10-baggers is based on "the why" and not "the what," we might be tempted to discard technical analysis as an analytical tool. But we won't. There are two reasons why.
First, while the causal foundations of trading may be suspect, the fact is that 90% of stock market profits come from trading stocks. Thus, trading cannot be ignored. Second, trading provides an immediacy of observation. As I have observed in earlier articles, 10-baggers often move six to 12 months prior to a change in company performance. As investors, we are conditioned to wait for the change. As traders, we are conditioned to react to the move. When it comes to 10-baggers, time is money, and immediacy has its rewards. So we will not ignore trading, but we will also not elevate it beyond its worth.
In that regard, we will keep it simple. There will be no use of moving average convergence/divergence (MACD) or on-balance volume (OBV) or relative strength index (RSI). These are all just manipulations of the basic inputs of price and volume. They may clarify, but they do not enlighten. We will skip the manipulations and focus on the basic inputs — price and volume. I'll leave the technical analysis to the mathematically adept and the true believers.
We'll start our analysis by dividing the chart into four sections: the launch (or breakout), the path (or trend), the potholes (or corrections), and the destination (or reversal). These are all illustrated in Figure 1. The objective is to determine how the 10-baggers differ from the overall market with respect to price and volume. Unlike our fundamental comparison, we are not looking for cause and effect; we are looking for degrees of separation that identify that a 10-bagger has been set in motion as it is occurring.
FIGURE 1: FOUR SECTIONS OF A CHART. Here you see the launch (breakout), path (trend), potholes (corrections), and destination (reversal).
THE LAUNCH (BREAKOUT)
The launch has been defined as the point at which the price of a stock rises above its six-month moving average (MA). However, many 10-baggers will exhibit false starts. These false starts occur when the stock rises above its six-month MA but then falls back. They can stay in this fallback position for months, even years. This results in a losing trade or if you hang on to the stock, lost time and money. And worse, a false breakout may mean that the stock in question isn't a 10-bagger; it may simply be some pump-and-dump scheme that you have bought on the dump side.
How can we distinguish between a real launch and a false start? There are several clues (but no guarantees).
The first clue is the sheer size of the price move. As illustrated in Figure 2, the median monthly price move for the overall market is 0.00%. The median launch price increase for a 10-bagger is 34.43%; thus, 10-baggers are in the top 3% of the overall market. Viewed another way, if a stock's price increases 34% or more in a month, there is a one in 10 chance that you are looking at a 10-bagger.
Another clue is volume. The median volume increase for 10-baggers at launch is 114%, which is in the top 4.5% of the overall market. Figure 3 shows the volume profile of a 10-bagger, and the increase stated is calculated by dividing the volume before the move into the volume at the move (5.77 / 2.69). When we combine both the price and the volume increases, we discover that only 1% of the overall market exhibits that level of positive activity. Your odds have just improved from one in 10 to one in three that a price move on volume is a 10-bagger.
The final clue comes after the launch. It is more of a confirmation than an immediate indicator. It is the 13-week price movement that occurs after the launch, which is illustrated in Figure 4. The median 13-week price increase of a 10-bagger is 39.06%, compared to the market increase of just 0.92%. It is clear four months into the move that these stocks are establishing a new price trend. If you couple this price observation with the observation that the volume of shares traded is maintaining the launch level (Figure 3, 5.77 at launch and 5.31 after launch), there is a strong sense that a 10-bagger may be in the making.
FIGURE 2: REAL LAUNCH OR FALSE START? If a stock's price increases 34% or more in a month, there is a 1 in 10 chance that you are looking at a 10-bagger.
THE PATH (TREND)
A 10-bagger is launched when it crosses its six-month moving average price line. After it launches, it typically remains above that average until it hits its peak price and reverses or, more accurately, falls back and settles at a new price level significantly higher than the launch price. With the exception of a few corrections (discussed in the next section), the price approximately doubles in the first year, doubles again in the second year, and doubles once more at its peak in the third year (Figure 1).
While this price rise is occurring, the volume of shares traded also increases. The volume increase is even more dramatic than the price increase. In some cases, 100% of the shares outstanding are traded in one month. The implications are intriguing, but that will have to be addressed for another time. What is clear from the chart (and illustrated in Figure 3) is that the percentage of the shares outstanding that are traded grows to far exceed the normal volume traded in the overall market. At its destination, the median level for the number of shares traded, as a percentage of the shares outstanding, is 29.45% compared to just 7.02% for the overall market. There is plenty of price and volume confirmation along the path of a 10-bagger chart.
FIGURE 3: VOLUME PROFILE OF A 10-BAGGER. The median volume increase for 10-baggers at launch is 114%, which is in the top 4.5% of the overall market.
THE POTHOLES (CORRECTIONS)
Very few price charts are perfectly linear. Dips and spurts can be found in even the strongest charts, and 10-baggers are no exception. The 30 studied here demonstrated a total of 193 corrections. (A correction is defined as a price decline of one or more months.) Of those 193 corrections, 74 dipped below the six-month MA, with seven of the 30 10-baggers having no corrections that dipped below the six-month MA.
For the trader, the goal is to distinguish between a correction and a reversal. In that regard, the six-month MA is of little value since 76.7% of the 10-baggers would trigger multiple sell signals prior to the stock's peak price. Unfortunately, adding the size of the price correction and the volume of the shares traded during the correction did not aid in the distinction. However (and here I am about to break my promise to keep it simple), the MACD did offer some insights. Only five of the 193 corrections (2.6%) triggered an MACD sell signal (monthly MACD). Thus, you have a 97% confidence level that a price decline that does not trigger the MACD is a correction rather than a reversal. This is a significant improvement over the 71.2% confidence level offered by a simple decline below the six-month MA.
FIGURE 4: THE CONFIRMATION. The median 13-week price increase of a 10-bagger is 39.06% compared to the market increase of just 0.92%.
THE DESTINATION (REVERSAL)
The time to sell a 10-bagger is when the run is over and it has peaked. Of course, we don't know that it has peaked until it reverses. And we don't know that it has reversed until we realize that the price decline is not a correction. And since corrections vary in size, volume, and duration, there is no simple distinction between a correction and a reversal. Thus, we turn to the MACD.
All reversals trigger a MACD sell signal, but not all MACD sells signs indicate a reversal. Previously, we have identified five MACD sell signs that were later determined to be simple corrections. So there is a risk that if we sell on the MACD, we will sell too early. What is that risk? It is 14.3%. This means you are more than 85% confident that you are making a correct sell decision. This is considerably higher than the reported success rate of top business executives. Their success rate is just 70%. Thus, when it comes to 10-baggers, selling on the monthly MACD appears to be good business.
FIGURE 5: HOW EFFICIENT IS THE 10-BAGGER? Trading a 10-bagger is not very efficient, but it is still very profitable. When the 23.6% efficiency number is applied to a typical 10-bagger, the annual rate of return on a 30-month trade is more than 50%.
CONCLUSION
Let's conclude by looking at the efficiency of a 10-bag trading strategy. We will buy after the 13-week confirmation and sell on the monthly MACD sell signal. Backtesting this strategy with our 30 10-baggers reveals the observations presented in Figure 5.
It is clear from Figure 5 that trading a 10-bagger is not efficient, but it is still very profitable. When the 23.6% efficiency number is applied to a typical 10-bagger, the annual rate of return on a 30-month trade is more than 50%. In other words, a $5,000 play will grow to $329,159 in 10 years. Compared to the average stock market return over the same period of just $14,197, trading 10-baggers is a lucrative business.
Yet, 23.6% leaves a lot of room for improvement. Could we do better? My trading experience indicates that any attempt to speed up the process to increase efficiency tends to have a negative impact on effectiveness. In essence, when we are right, we make more (efficiency), but we are right less often (effectiveness). A series of ineffective trades will ultimately reduce the overall efficiency of the strategy.
So where is the answer? Our analysis of the fundamentals demonstrated that the answer isn't there. They would be even slower to buy and slower to sell, which would reduce the efficiency further. And there is no evidence that they would be any more effective. That leaves us with just one player to turn to — the speculator. They may have the answer, but they will have to wait until the next installment.
SUGGESTED READING
Maskell, Thomas [2006]. "The Search For The 10-Bagger Begins," Working-Money.com, March 23.
_____ [2006]. "The Anatomy Of The 10-Bagger," Working-Money.com, September 5.
_____ [2007]. "Search For The 10-Bagger Fundamentals," Working-Money.com, July 3.
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Thomas Maskell
Thomas Maskell is currently working on a book about investing that is due out in January 2008. If you would like to comment, suggest, or chide him about this article, he can be reached at Brdgames33@aol.com. He is a notorious email deleter. So be sure to include "10-bag" in the subject line if you want him to actually read your email.
E-mail address: Brdgames33@aol.com
Term of the Day - December 4th, 2007
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Term Of The Day: Consumables
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Goods used by individuals and businesses that must be replaced
regularly because they wear out or are used up. Consumables
can also be defined as the components of an end product that
are used up or permanently altered in the process of
manufacturing, such as semiconductor wafers and basic chemicals.
Investopedia Says:
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Stocks of companies that make consumables are considered to
be relative safe harbors for equity investors when the economy
shows signs of weakness. The reasoning is simple: people will
always need to purchase groceries, clothes and gas no matter
what is going on in the broad economy.
Many of the items measured in the basket of goods used to
calculate the Consumer Price Index (CPI) are consumables;
inflation in these items is closely watched because it can
lower the discretionary income people have to spend on items
such as cars, vacations and entertainment.
Related Links:
------------------------------------------------------------
Article: The Disposable Society: An Expensive Place To Live
http://www.investopedia.com/articles/pf/07/disposablesociety.asp
Article: Cyclical Versus Non-Cyclical Stocks
http://www.investopedia.com/articles/00/082800.asp
Article: Using Consumer Spending As A Market Indicator
http://www.investopedia.com/articles/07/retailsalesdata.asp
Related Terms:
------------------------------------------------------------
Basket Of Goods
http://www.investopedia.com/terms/b/basket_of_goods.asp
Consumer Cyclicals
http://www.investopedia.com/terms/c/consumer_cyclicals.asp
Consumer Price Index - CPI
http://www.investopedia.com/terms/c/consumerpriceindex.asp
Consumer Staples
http://www.investopedia.com/terms/c/consumerstaples.asp
Discretionary Income
http://www.investopedia.com/terms/d/discretionaryincome.asp
Inflation
http://www.investopedia.com/terms/i/inflation.asp
Have a Great Day!
The Investopedia Staff
http://www.investopedia.com
Pre-market Summary
The mkt ended yesterday on a weaker note, and futures indicate that is how today's session is expected to begin. Guidance from bellwether Nokia (NOK) and a number of negative headlines from the financial sector have served as restraint for buyers. While Nokia upped its operating margin target to 16-17% from 15% within the next one to two years, its prediction for declining average selling prices in the industry has contributed to demand concerns. The stock is indicated nearly 3% lower pre-mkt. Among financials, Punk Ziegel downgraded Goldman Sachs (GS), Bear Stearns (BSC) and Lehman (LEH) to Sell from Mkt Perform. Separately, Merrill Lynch (MER) and Morgan Stanley (MS), along with GS and LEH, had their earnings ests trimmed by J.P Morgan on concern that write-downs, along with falling M&A, will hurt earnings. The downgrades/est cuts are feeding concern that the recent rebound effort in the financial sector may have run its course. However, some positive news just hit the wires as Dell's (DELL) Board of Directors authorized a $10 bln common stock repurchase. Also just released, the Bank of Canada unexpectedly lowered its interest rate 25 basis points to 4.25%. Note today's trading session will lack catalysts with no economic data or Fed speakers on the agenda. Investors will also continue to look ahead to a number of central bank meetings in Europe and Asia later this week (and next Tuesday's FOMC meeting), tomorrow' OPEC meeting and Friday's November Nonfarm Payrolls number. Dow futures are currently -49; Nasdaq futures are currently -15.5; S&P futures are currently -6.9. For technical levels of interest, click here... The Bond mkt is slightly lower in early trade following yesterday's advance as investors have little to grab onto today with an empty calendar. The 10-yr is currently -05/32 to 3.864%... In Commodities, Jan crude oil ($89.14 -0.17) is showing little direction early as investors look forward to tomorrow's OPEC meeting in Abu Dhabi... In Europe, mkts were lower by mid-day as ongoing concern about banks' profitability weighed on the financial sector, while tech stocks were hurt by a cool investor reception to a trading update from Nokia. FTSE is currently -1.2%; DAX is currently -0.3%; CAC is currently -1.3%. In Asia, mkts ended mixed, though concern that economic growth is slowing in the U.S. continued. Nikkei closed -1.0%; Hang Seng closed +0.8%; Shanghai Composite closed +1.0%... Notable pre-market Calls include Downgrades: GS, BSC and LEH at Punk Ziegel, ETFC at GARP Research, ORCL at JMP Securities, PAY at Credit Suisse... On the Earnings calendar: AVAV, CHS, PSS, CPRT, GES, PLAB, NX and WIND are confirmed to report today after the close... Today's Economic calendar is empty.
Market View: Market bias still mixed but working off morning lows -Update- -Technical-
The stock market opened on a mixed/weaker note following pre-market Fed comments on below potential growth and saw some morning downticks following an in line with consensus ISM report for Nov. Have seen the indices work slowly higher off the morning lows but the they continue to cling to a mixed bias (S&P 500 slightly weaker amid minor weakness in Finance XLF -0.5%). Technically the market action thus far today appears to be merely a continuation of the minor correction that began after the Friday's gap higher start. Short term resistance is at 2672/2675 Nasdaq Comp, 13420 and 13460 Dow with levels for the lagging S&P 500 at 1482 and 1485.
Market Internals
THe Dow is up 0.07% to 13381, the Nasdaq is up 0.03% to 2662, and the S&P is down 0.30% to 1477. Leading sectors include: Footwear +2.3%, Tires & Rubber +2.0%, IT Consulting & Services +2.0%, Department Stores +1.7%, and Gas Utilities +1.6%. Lagging sectors include: Broadcasting & Cable TV -12.2%, Human Resources & Employment Services -3.7%, Health Care Facilities -3.3%, Thrifts & Mortgages -2.8%, and Personal Products -2.7%. The morning action has come on below average volume (NYSE 450 mln, vs midday avg at 586 mln; NASDAQ 772 mln, vs 873 mln avg), decliners outpacing advancers (NYSE 1402/1753, NASDAQ 1250/1613), and with new lows outpacing new highs (NYSE 33/39, Nasdaq 23/45).
Pre-market Summary
Following last week's rally, futures indicate a flat start for the mkt in the month of Dec. M&A activity is leading the headlines. Vivendi has signed a definitive agreement to merge its Vivendi Games business with Activision (ATVI). Through a series of transactions, Vivendi will end up owning 52% of the new co that will be called Activision Blizzard. Activision shareholders will receive $27.50 per share, which is a 24% premium to Friday's closing price. In other developments, News Corp (NWS.A) is said to be interested in buying e-mail service LinkedIn for more than $1.0 bln, while Lennar (LEN) is forming a strategic land investment venture with Morgan Stanley Real Estate and will sell 11K home sites to the venture for $525 mln. In financial news, Reuters is reporting that Berkshire Hathaway (BRK.A) bought $2.1 bln worth of TXU junk bonds. While some might view this as a bottoming signal for the junk bond mkt, a CNBC report was quick to note that Warren Buffett cautioned investors against thinking that way since Berkshire's junk bond interest right now is only in these TXU bonds. Separately, Bloomberg reported Moody's Investors Service may lower ratings on $105 bln of debt sold by structured investment vehicles after the net asset values of 20 SIVs sponsored by cos including Citigroup (C) declined to 55% from 71% a month ago. Dow futures are currently -8; Nasdaq futures are currently -2.5; S&P futures are currently +0.8. For technical levels of interest, click here... The Bond mkt rallied slightly at its open as Moody's announcement that it has put about $105 bln of SIVs on watch to the negative side is providing support. Note traders this week will be looking ahead to Friday's Nonfarm Payroll number. The 10-yr is currently +06/32 to 3.915%. On today's Fed calendar, Boston President Rosengren has already spoken this morning (8:15ET), but Treasury Secretary Paulson speaks at a housing conference at 10:30ET and San Francisco President Yellen speaks on U.S. outlook and monetary policy at 13:30ET. Note Rosengren said he sees growth "well below potential" for the next 2 quarters, but it will gradually improve next year... In Commodities, Jan crude oil ($88.55 -0.16) fell back below $88 this morning, though it has rebounded back near break-even. There is intl election news that could be playing a part. Venezuelan President Hugo Chavez suffered his first electoral loss in nine years as voters turned down his plan to revamp the constitution and cement his power. Also, Vladimir Putin's party swept a parliamentary election, giving the president the mandate he sought to keep guiding Russia after he leaves office next year... In Europe, mkts fluctuated either side of unchanged by mid-day as a 3-day rally paused ahead of key rate decisions later in the week. Miners tracked metals lower, while media stocks rose. FTSE is currently -0.5%; DAX is currently -0.1%; CAC is currently -0.3%. In Asia, mkts overall rose modestly on continued speculation the Federal Reserve will cut U.S. interest rates to bolster growth in the world's largest economy. Nikkei closed -0.3%; Hang Seng closed +0.1%; Shanghai Composite closed -0.1%... Notable pre-market Calls include Upgrades: AMD at Caris, ATVI at BMP Capital; Downgrades: ETFC at BofA, RIMM at Morgan Keegan, PNK at Lehman... On the Earnings calendar: CPWM, ISLE and PVH are confirmed to report today after the close... On the Economic calendar, the ISM Manufacturing Index (consensus 50.5) will be released at 10:00ET
BE BearingPoint names Edwin Harbach as CEO (3.65 )
Co announces that its Board of Directors has named Ed Harbach president and chief executive officer and a member of the Board of Directors. Harry You is leaving the company to pursue other opportunities and will be succeeded by Harbach
Citigroup: At bank, a favorite emerges for the top job - NY Times (33.30 )
NY Times reports the financial giant is closing in on a CEO and the board appears to be leaning toward an insider, according to people briefed on the situation. The inside candidate, Vikram S. Pandit, is a former Morgan Stanley investment banker who joined Citigroup seven months ago, these people said. But they cautioned that no final decision had been made and that the four-member search committee, led by Richard D. Parsons, was reviewing other candidates. The board is hoping that a chief executive can be named within the next week, a person briefed on the situation said. The search has been difficult and no clear choice has emerged, the person said, adding that support on the search committee seemed to be building for Mr. Pandit
Alpha Trends End of day Summary 11/30/07
Weekly Retailer Summary:
Retailers had another busy week as more quarterly results came out. The majority of retailers in our universe finished on the upside, but there were some notable decliners. This week saw earnings from AEO, CMRG, TB, DBRN, BWS, CBRL, ARO, CWTR, JAS, MW, BONT, FRED, SMRT, WTSLA, ZUMZ, TIF, KIRK, and BIG... Notable gainers: PLCE +17.9%, FRED +11.2%, DDS +10.8%, JCP +9.8%, and CHS +9.5%. Notable losers: CTR -24.5%, BONT -13%, SMRT -9.3%, WTSLA -9.2%, and WAG 6.9%... Notable News: On Monday, THI was profiled in the New America section of IBD, reporting it as the largest quick-service chain operating in Canada... DRJ entered into an agreement with TGT in which they will provide fully licensed, limited edition framed NASCAR memorabilia... On Tuesday, AEO reported Q3 earnings of $0.45 per share, in-line with the First Call consensus of $0.45; revenues rose 6.9% year/year to $744.4 mln in-line with the co's preannouncement. Co also issued in-line guidance for Q4, seeing EPS of $0.67-0.70... BONT announced real estate initiatives regarding its Elder-Beerman stores located in Muskegon, Michigan and Morgantown, West Virginia... BONT announced James Zamberlan, Executive Vice President, Stores, announced plans to retire while Barbara Schrantz, Senior Vice President, appointed successor... GPS announced a quarterly dividend of $0.08 per share payable on January 30, 2008 to shareholders of record at the close of business on January 9, 2008... On Wednesday BKE announced new stock repurchase authorization of up to 500,000 shares of common stock... JWN filed a debt security shelf offering... On Thursday PSUN announced the appointment of Michael Henry as interim CFO... Quarterly Results (note this is not a complete list of retailers that reported): AEO reported EPS of $0.45 vs. $0.45 consensus; revs were $744.4 mln vs. $750.1 mln consensus... CMRG reported EPS of ($0.05) vs. ($0.01) consensus; revs were $106.6 mln vs. $110 mln consensus... TLB reported EPS of ($0.18) vs. ($0.23) consensus; revs were $556 mln vs. $550 mln consensus... DBRN reported EPS of $0.30 vs. $0.32 consensus; revs were $363.7 mln vs. $370.3 mln consensus... BWS reported EPS of $0.67 vs. $0.64 consensus; revs were $645.5 mln vs. $674.95 mln consensus... CBRL reported EPS of $0.57 vs. $0.65 consensus; revs were $581 mln vs. $585.81 mln consensus... ZUMZ reported EPS of $0.28 vs. $0.28 consensus; revs were $104 mln vs. $103.8 mln consensus... KIRK reported EPS of ($0.24) vs. ($0.27) consensus; revs were $88.7 mln vs. $88.8 mln consensus.
Weekly/Monthly Sector Performance -Update- -Technical-
Although we have seen the indices edge back after the gap higher start to resistance, the overall performance this week has been strong. The Weekly sector chart, with roughly another half hour to go, shows that Energy XLE is the only major segment of the market that is negative with Finance XLF, Materials XLB, Consumer Discretionary XLY and Healthcare XLV out performing the S&P 500. Despite this week's surge the only sectors that are positive on the monthly chart , however, are more defensive (Consumer Staples XLP, Healthcare XLV and Utility XLU).
Weekly Percentage Losers:
Stocks posting the largest percentage loss over the last five sessions include: NG -52%, BIDZ -42%,KF -31%, PBY -25%, CTR -24%, FBTX -24.1%, SLP -23.7%, IIG -23.5%, ADVNA -22.8%, MDVN -22.7%, AMWD -21.5%, SIG -21.2%, FNLY -21.1%, CMRG -21.0%, CIA -20.5%
Weekly Percentage Gainers
Stocks posting the largest percentage gain over the last five sessions include: SPAB 950%, FCMC 202.6%, FFHL 76.4%, DEIX 66.1%, NFI 65.3%, EEEI 59.1%, GLYT 50.7%, SCA 50.4%, SOLF 48.3%, ABH 47.9%, PEIX 44.1%, JADE 42.9%, BMD 40%, JRCC 39.9%, LTON 39.7%, THC 39.36%, ONCW 39%, SNUS 38.1%, TBSI 37.6%, RVEP 37.6%, NTEC 37.1%, UBET 36.1%, EXM 36.1%, DWCH 35.5%, EXM 35.8%, AMC 35.5%.
Friday Market Internals End of Day
The Dow was up 0.45% to close at 13371, the Nasdaq was down 0.27% to close at 2660, and the S&P was up 0.78% to close at 1481. Leading sectors included: Thrifts & Mortgages +14.3%, Homebuilding +9.8%, Healthcare Facilities +8.3%, Airlines +5.2%, Diversified Banks +2.7%. Lagging sectors included: Gold -3.3%, Healthcare Tech -2.9%, Computer Hardware -2.5%, Photo Products -1.9%, Semiconductors -1.4%. Today's movement came from above average volume (NYSE 1923 vs. 1494 avg, Nasdaq 2562 vs. 2192 avg), with advancers outpacing decliners (NYSE 2335/961, Nasdaq 1660/1355) with new lows outpacing new highs (NYSE 121/82, Nasdaq 118/89)
That's awesome spencer, I had no idea where the terminology "cookie" came from and since I love Chinese food your post caught my attention !
You can be sure I'll be forwarding that interesting trivia !
Mid-day Summary
The mkt opened higher this morning following Fed Chairman Bernanke's comments last night that seem to have validated investors' belief that the FOMC is likely to cut interest rates at its Dec 11 meeting, and after the Wall Street Journal reported the Treasury Department and financial institutions are working on a plan to freeze rates on certain subprime loans. But the opening prints were also the highs of the day as the major averages have slowly slid lower since. Note the S&P opened just below a major resistance level between 1490 and 1500. Dow is currently +62 to ~13374; Nasdaq is currently -1.5 to ~2666.5; S&P is currently +10 to ~1480. Today's strongest sectors include Homebuilders, Banks, Airlines, Brokers, Steel and Retail. Today's weakest sectors include Coal, Energy and Gold/Silver... The reports of a White House-led plan to curtail foreclosures is giving the financial and homebuilding sectors a huge boost. Presumably, if the plan gets finalized, banks won't get hit as hard due to a decrease in foreclosure costs, and homebuilders will face less pressure as less foreclosures mean there will be less inventory of existing homes for sale. Since the open, Bloomberg.com reported that a Treasury spokeswoman would not discuss specifics of the plan, but said "we are encouraged progress is being made"... The Nasdaq is underperforming due to weakness in the technology sector. Dell (DELL) is trading lower by 14% after the computer maker's Q3 earnings didn't live up to the mkt's expectations. Gross margins declined, and the co said its near-term results could be negatively impacted by a slower decline in component costs. Research In Motion (RIMM) is also a drag on the sector after Piper Jaffray reduced its FY08 earnings ests on the stock this morning (though there is a positive article in Gizmodo on the co's upcoming Blackberry 9000)... The Bond mkt saw a modest decline overnight, but the bottom fell out as the treasury pits opened for trade at 8:20ET with information leaking on a govt bail-out of the mortgage industry, despite the idea that the FOMC will certainly cut rates on Dec 11. However, bonds have managed to rebound off their lows by mid-session. The 10-yr is currently -14/32 to 3.985%. Note there are still some Fed speakers on today's agenda, with Governor Kroszner speaking at 13:40ET on the financial markets and St. Louis President Poole talking at 16:00ET... In Commodities, Jan crude oil ($89.50 -1.51) continues to see major profit-taking as it hit a low of $88.52 early this morning and has range-traded near its low through the morning. Note crude has support at $87.46. Dec copper ($3.1515 +0.0880) continued its 2-day rally overnight following the comments from Fed Chairman Bernanke, and has held the majority of its gains into mid-day. Dec gold ($782.50 -12.80) and Dec silver ($14.020 -0.217) declined this morning following a rally in the dollar against the other major currencies... In Europe, mkts rallied as banks took pole position on rising prospects for cuts in U.S. interest rates. FTSE closed +1.3%; DAX closed +1.4%; CAC closed +1.3%. Note in Asia, the Nikkei closed +1.1%, the Hang Seng closed +0.6% and the Shanghai Composite closed -2.6%... On the Earnings calendar, no cos are confirmed to report today after the close. Monday before the open: CPWM, ISLE and PVH are the only cos confirmed to report... On the Economic calendar, nothing remains on the schedule for today, nor is anything scheduled for Monday before the open.
How the Cookie Got Its Name
Updated: 20-Nov-07 14:45 ET
Analyst: Robert V. Green
[BRIEFING.COM - Robert V. Green] Nearly everyone comfortable with the Internet is familiar with the term "cookie." But, did you ever wonder why the file on your computer used by Web servers is called a "cookie?" Here is the explanation.
The Heritage Of Digital Equipment Corporation
Almost everything present today on the Internet was first deployed conceptually on the Digital Equipment Corporation's global network. In fact, the global DEC network can rightly be seen as the technical and functional precursor of the Internet. The proprietary and closed nature of Digital's own corporate network made awareness of it limited to Digital employees, the company's development partners and resellers, and Digital customers.
Nearly every "core" feature of the Internet today: e-mail, instant messaging, hypertext browsing, message boards, and live chat rooms, was present on the Digital network in the mid-1980s.
In fact, the modern day browser, first commercialized by Netscape, derived all of its conceptual features from Mosaic, a publicly available browser, which owed its existence to Digital's Bookreader (but that is another story).
The personal computer revolution of the 1990s quickly eroded the dominance of the minicomputer, led by Digital.
However, many of the architects of the emerging Internet era either worked for Digital Equipment or in the Digital Equipment environment in the early part of their careers.
It is this heritage that led to the development of the "cookie."
Programmers Love Chinese Food
It may be a stereotype, but it is also true that many computer programmers love Chinese food. The modern day "cookie" owes its existence to this fact.
An unknown programmer, or programmers, wrote a program at Digital for internal use by employees. The program, called Fortune Cookie, was distributed internally on the network and could be installed by any employee.
The program automatically displayed a random fortune from a fortune cookie whenever the user logged into the VMS operating system. The sole purpose was entertainment. It was never a commercial product.
Anyone could add a new fortune to the database of fortune cookie quotes. Many people returned from a fine lunch of Chinese food and added the latest humorous quote. To ensure that users would always see a new fortune from the database of cookie quotes, each fortune had a unique number.
When a randomly selected fortune was displayed, that unique number was written into a text file in the user's local disk space. Before displaying a fortune from the database, the program scanned the text file to ensure that the user had not seen the particular fortune cookie before.
The name of this text file was "cookie.txt."
The Vestigial Heritage Of Cookie.txt
Today, the purpose of cookies is to track and record information about a user's habits on a particular site or sites on the Internet. Much of the future business potential of the Internet is based upon behavior tracking, which interprets the information stored in cookie files to create targeted advertising.
Without cookie files, none of this potential would be possible.
The Internet Cookie Files
Somewhere in the lost history of the evolution of the Internet, a programmer decided to add tracking functionality to a browser. That programmer, or programmers, likely spent some time working at Digital, prior to their work on browser tracking.
After all, the programmer decided to call the tracking file "cookie.txt." Subsequent programmers simply followed the convention, although there is no requirement to do so.
Today, most files called cookies are not named "cookie.txt." The most common convention is to name the file "username@website.txt"
But all cookie files are stored in a Windows directory called "Cookies."
The Lost Inventors
The names of the programmers who originally created the fortune cookie program at Digital have been lost. Likewise, the names of the programmers who decided to use the same type of functionality for tracking website interactions have also been lost.
The legacy of these programmers, however, has become a core aspect of the Internet.
Who could have known that Chinese food lunches would have such a lasting impact on today's world?
Comments may be e-mailed to the author, Robert V. Green, at
Thanks spencer for your analysis contributions here.
Alpha Trends end of day summary 11/29/2007
Market Internals
The Nasdaq is up 0.29% to 2671, the Dow is up 0.27% to 13326, and the S&P is up 018% to 1472. Leading sectors include: Diversified Metals & Mining +3.3%, Steel +2.8%, Health Care Facilities +2.7%, Oil & Gas Equipment +2.6%, and Tobacco +2.3%. Lagging sectors include: Real Estate Management & Development -4.3%, Motorcycle Manufacturing -2.8%, Drug Retail -2.5%, Airlines -2.5%, and Department Stores -2.1%. The morning action has come on mixed volume (NYSE 461 mln, vs midday avg at 586 mln; NASDAQ 893 mln, vs 873 mln avg), NYSE decliners outpacing advancers and NASDAQ advancers outpacing decliners (NYSE 1510/1596, NASDAQ 1400/1395), and with new lows outpacing new highs (NYSE 28/45, Nasdaq 27/36).
LOL, I have been reading some :)
Good day board have been busy for the last two days and havent had time to devote to the update of the board...tomorrow i will be right back in with updates and news.
Not that anyone is actually reading it anyways but i figured what the hell.
After Hours Summary: MRVL down 10% on earnings/guidance; BIDZ down 22.2% (responds to Citron on call - no comment on the criminal background of Saied Aframian)
Companies moving in after hours trading in reaction to earnings: Trading Up: VRGY +17.8%; TLVT +3.5; ADI +2.5%; INWK +1.7%... Trading Down: SNIC -13.7%; CENT -11.4%; UTI -10.1%; MRVL -10.0%; SMTC -5.8%; DBRN -5.1%; LNUX -3.2%; CEDC -1.3%; ROH -1.2%... Companies trading in after hours on news: Trading Up: NAVR +3.9% (names Brian Burke Chief Operating Officer); LOV +2.7% (announces appointment of new CFO); PVTB 2.6% (GTCR announces $100 mln investment in co); ARE 2.2% (to replace SQA in the S&P MidCap 400); AN +1.3% (Eddie Lampert amends 13D, discloses 30% stake); FLOW 1.2% (receives multi-million dollar aerospace contract)... Trading Down: BIDZ -22.2% (conference call; responds to Citron (StockLemon) - no comment on the criminal background of Saied Aframian); ILE -12.7% (modifies ongoing clinical program for acne scars); WFC -4.4% (in 8-k discloses special Q4 2007 provision of $1.4 bln); JRCC -2.3% (to sell 4.5 mln shares of common stock); ABCB -1.7% (announces share repurchase program for up to 1 mln shares); CSH -1.4% (Chief Executive Officer adopts 10b5-1 plan); PFG -1.2% (announces authorization of share repurchase program); AMFI -1.1% (names Judith Carre Sutfin new Chief Financial Officer); GOLD -1.1% (announces global offer of 6 mln new shares)
no doubt. read their SEC filings man. great company IMO.
Geez give me one stock with a 250000 share position at the bottom of that chart...whoooweee that would be sweet.
I have to agree!!!!! SEE HERE AGAIN:
RMDX is the sexiest rise I've seen.
BLUE HORSE SHOE LOVES HOKU!!!!!!!!!!!!!!
Looks like the Blue Man is still knocking them out of the park!!!
Congrads on your picks...I still got some BLTA-and ARTG.
I went to your board on my lunch today and checked out all the news on ONMC...i hope that one works out for you and the boys.
Sorry i havent been around like i promised...i have been trying to build this board up and Ihub Matt agreed to let me fix the WTCT board so i have been doing that one too.
Hope you bought some HOKU when it went under $6.00 this last week....nice move on that one.
I havent meant to spam your board either with my questions to Lemmy. He has me on ignore and honestly i have no clue why? I wasnt mean to him or anything...i am real confused cause he has me blocked...anyways....love ya bro hope you have a green day tomorrow.
Spenc
Spencer!!! HOW R U BUD>>>??? Check out these here:
ONMC (.031)
NTEC (1.16)
BXC (3.67)
DLIA (3.14)
BLTA (.10)
SPAR (10.50)
PRXM (.83)
ARTG (4.11)
RMDX (4.01)
BLUE (.60)
UTVG (3.24)
FINL (3.17)
NFI (1.17)
Briefing.Com AEO spotlight:
Bargain Hunting About this page | Print version
Profile of stocks with a value/contrarian orientation.
Updated weekly. Archive
Updated: 27-Nov-07 14:27 ET
American Eagle Outfitters (AEOS 21.05) - Update
Few things are as frustrating for an investor than to see their stock fail to participate in a broad market rally. This disparate condition has befallen American Eagle Outfitters (AEO 21.05, -0.32), which is losing ground today while the S&P 500 is up better than 1.0%.
The disappointing performance follows the retailer's third quarter earnings report, which was released before the start of trading.
For the 13-week period ended Nov. 3, American Eagle reported a 2.0% decline in net earnings to $99.4 million. Share buyback activity moved the dial, however, so that earnings per share actually rose 2.0% to $0.45. The latter was in-line with the consensus estimate. Total sales increased 7.0% to $744.4 million. That was below the company's original plan and the consensus number of $752.5 million.
The top line disappointment and gross margin contraction (to 47.4% from 49.5%) were negative focal points, as was the company's fourth quarter earnings guidance of $0.67 to $0.70 per share. The fourth quarter outlook matches the market's expectation at the high end, but clearly, there is more room for a negative surprise in the forecast range.
In expected fashion, the market is dwelling on the near-term outlook which is admittedly lackluster. The guidance range translates to growth of just 2.0% to 6.0% versus the same period a year ago.
American Eagle, though, is in better shape than you might think judging by the market's reaction. Inventory, excluding its direct business, is down 3.0% on a per square foot basis while clearance inventory is a lower percentage of total inventory than last year. This is a positive condition that should help mitigate margin pressures during what is expected to be a promotional holiday period.
Looking to 2008, American Eagle is poised to announce some new growth initiatives that include expanding in the global marketplace and unveiling its new Concept 4 business. Additionally, it plans to ramp up its successful aerie segment. There will be 39 aerie stores at the end of 2007, but more than 70 aerie store openings are planned for 2008.
Overall, American Eagle expects its square footage to grow 10% in 2008. The company also plans to install new point-of-sale terminals in at least half its chain by the end of 2008, and said it has 20.1 million shares, or nearly 10% of diluted shares outstanding, authorized for repurchase.
The company didn't provide any specific earnings guidance for 2008, other than to say that the loss from its MARTIN + OSA concept will be less than the $0.15 to $0.17 per share loss in 2007 and that the company will maintain a critical focus on expense and inventory management.
The FY08 consensus estimate is pegged at $2.14, which represents growth of 14% if American Eagle is able to hit the 2007 mark of $1.87.
There is clearly a lot of negativity right now surrounding the retail sector as the market frets about a slowdown in consumer spending. That much is clear in recognizing that AEO is down 17% since we highlighted it on the Bargain Hunting page in September.
We would hasten to remind readers that insiders were buying the stock in the $24.00 area, with Chairman Jay Schottenstein leading the way with a purchase of roughly 850,000 shares.
That insider buying combined with American Eagle's strong financial position, leading brand, and attractive valuation continues to underscore our bullish view of the stock, which is trading at a 20% discount to its projected long-term earnings growth rate.
--Patrick J. O'Hare, Briefing.com
AEO post on Yahoo: GOOD JOB!!!
Some Thoughts About The Call (2 Ratings) 27-Nov-07 12:45 pm Allow me to describe what I heard on the conference call. I’m sure you heard the same words and reached the same conclusions, but confirmation can be healthy. For those who see things differently, it may be helpful to know what the other guy is thinking.
What have you done for me today is the mantra of traders and too many investors. Management, however, can not control day to day price movements, much less week to week or month to month. Need proof? Compare the stock price movement of AEO to the aggressive buyback of shares.
No, management can only seek to manage competently and withstand the unavoidable second guessing investors hurl at them each day. If the buyback fails to have an immediate impact on share prices, that is great. Why? Significant share repurchases produce an average 17 percent improvement in the stock price over the following year. The effect is delayed, and the short-term trader and speculator earns the rewards appropriate to a short-sighted perspective.
So, lets look at whether management is performing competently, rather than at the daily share-price changes.
First, the expansion into women's undergarments and the targeting of 27-to-40 year old customers strikes some as a diversion. Peter Lynch famously warned against DeWorsification. DeWorsification, however, happens when a firm seeks diversification by heading into products and markets that are completely unrelated to the company’s core competencies and proven customers. If Burger King were to start building theme parks or urgent care centers, that would be DeWorsification. Teen undies and accessories is nothing more than increasing sales density per store -- becoming a fuller-service provider to the same customer. M&O seeks to retain the known customer as he ages -- expanding the period of brand loyalty. Of the two moves (undies and M&O), M&O may be closer to DeWorsification, but it is too soon to make that call, with fewer than 50 stores and, as management indicated, the true look and feel for the M&O brand not appearing until spring / summer of next year. Focusing on this criticism misses a more important element of competent management from the call.
With both line extension initiatives, management seeks to grow existing operations before undertaking alternative efforts that pose a greater threat to accumulated shareholder wealth. This is an incremental expansion strategy and it is a sign of competent management. Keep in mind that management is allowed to make mistakes and exercise independent judgment, but they are not allowed (by this investor, at least), to risk it all on a single throw of the dice.
The next thing I look for is the management of costs, a point that Buffett has hammer on repeatedly. All across SG&A, expenses were, either, down or flat, despite growing market share by 14 percent to 18 percent, depending on the line. They spent just an added 2 percent in SG&A costs to gain a 7 percent increase in revenues. For me this is a sign of competent management, because, at this point in a company's life (and at this level of profitability), management often becomes lax when it comes to expenses
In 6 months to a year folks will look back and tell each other..."I bought Citiback below $30.00" and you will see them drop their jaws in disbelief.
Thanks spencer, very informative. Abu Dhabi appears to have saved the day.
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