Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
AMD broke H&S pattern, IMO next support around 5,03...4,46 and Oct 02 low 3,10.
I would like opinions because I will start to buy AMD under
5,03
Regards
GFS
Analysis - Friday, January 17, 2003 8 p.m.
At the lows today the Dow was down another 138 points, reaching a
print low of 8559.11. The Dow closed down 111.13, with the Nasdaq closing
down 47.55.
Our Gann 3-Day Chart turned down yesterday, and it is still
pointing down as of this update. The 3-Day Chart could not turn back up now
before Thursday of next week at the earliest.
Our Gann Weekly Chart on the Dow turned down today, and it is even
stronger than the Gann 3-Day Chart. At this point only a rise above 8870 on
a print basis and 8897 intraday in the Dow could turn the Gann Weekly Chart
back upward, and signal that even higher prices are coming in this time
frame. The Gann Weekly Chart on the Nasdaq also turned down today. At this
point only a rise above 1468 in the Nasdaq from here could turn the Gann
Weekly Chart back upward, and signal that even higher prices are coming in
this time frame.
If the Dow continues to sell off even more strongly next week,
there should be support near the bottom of the Dow's 21 Day 3 1/2%
Exponential Trading Band. The bottom of that band on Tuesday should be in
the area of 8325 or so, depending on where we close on Tuesday.
The 5-Day RSI on the Dow today closed at 33.98. The 5-Day RSI on
the Dow does not truly reach oversold territory, suggesting you are near at
least a short-term low, until it falls below 30. So there is room for even
lower prices over the next few days.
For now, we see no reason to alter our current positions. Our next
update will be released on Tuesday evening.
IPDH didn't broke bearish pattern for a short trade. A lot of charts this week gave false signal.
Always Wait for Breakout or buy a little position first.
Regards
GFS
S&P 879 support !!
If the S&P 500 closes above 879.82 on January 31, the January Barometer will give
a bullish signal for the year 2003. If the S&P 500 closes below 879.82 on January 31, a
bearish signal will be given.
-------
Look that +/- 979 is a important support number
since Oct 02 .
Analysis - Tuesday, January 14, 2003 8 p.m.
For the last seven days the Dow has for the most part just been trading sideways, failing to make any real progress in either direction. On January 6 the Dow closed at 8773. Today the Dow closed at 8842.62, within just 69 points of the January 6 closing high.
Not one of our Gann Charts have given any sort of sell signal just yet, not even the very short-term hourly charts. The Cycles still suggest we should be near a short-term high right in this time frame, but so far there has been no confirmation that that short-term high has been seen yet.
The market's refusal to "give up the ghost" to this point suggests to us that we may well see a still stronger rise this week before we turn back down. If so, we would expect that rally to once again carry the Dow up near or just above the top of our 21-Day 3 1/2% Exponential Trading Band. The top of that band tomorrow should be in the 8950 or so area in the Dow, depending on where we close.
The Dow is within one day of giving a potentially higher upside projection. Depending on where the Dow closes tomorrow, that projection could be somewhere in the area of 9040, plus or minus 83 points intraday. A rise up into that area this week would not at all surprise us.
For tomorrow the initial support levels will be 8746 on a print basis and 8717 intraday in the Dow, and 1442 in the Nasdaq. If those support levels are broken our Gann Daily Trendline will turn down, which should signal that a short-term high has likely been seen, and that a still stronger correction is coming, at least over the very short term.
At this point, given how the market has managed to hold up so far this week, and the possibility of a new upside projection tomorrow, we must still allow for some further rise this week. As long as the Dow holds above 8580 on a print basis, and the Nasdaq holds above 1390, we believe the odds will favor some further rally short term.
For now, we will continue holding current positions.
Source: Jerry Favors
THE JANUARY BAROMETER
Over the last two weeks we discussed three specific market barometers on our
subscriber hotline which always come up during this time of the year. On January 2, 2003
we stated the following: "We have heard much talk in the press about the failure of the so
called 'Santa Claus rally' in this time frame. In fact, the rules for the Santa Claus rally,
according to one of the astute market analysts we have ever known, Mr. Yale Hirsch
(www.stocktradersalmanac.com), are as follows: "Santa Claus used to come to Wall
Street nearly every year, bringing a short, sweet, respectable rally within the last five
trading days of the year, and the first two in January." (So we are still within the time
limits for the Santa Claus rally.) The other Santa Claus rule is as follows: "If Santa Claus
should fail to call, the Bears may come to Broad and Wall."
Another rule of importance in this time frame is the January early warning system. If
the Dow and the S&P 500 close up in the first five days of January a bullish signal be
will be given. If we close down in the first five days of January, a bearish signal for the
year will be given by this system."
Perhaps the most widely followed of these types of indicators is the January
Barometer. According to Mr. Hirsch: "Since 1950, January has predicted the annual
course of the stock market with amazing precision, registering only four major errors for
a 92.3% accuracy ratio." The January Barometer, devised by Yale Hirsch in 1972, is
based on whether the S&P 500 is up or down in January. Most years, stocks continue the
course set in January. Mr. Hirsch states: "Of the four major errors, two (1966 and 1968)
were affected by Vietnam, one (1982) by the start of the powerful bull market that began
in August 1982, and in 2001 the Fed's two January rate cuts unnaturally buoyed the
market higher. The 9/11 attacks, despite the subsequent rally, still likely held the market
down in 2001. However, there was only one error in odd years (2001) when a new
congress convened."
Mr. Hirsch goes on to state: "Every down January since 1950, without exception,
preceded a new or extended bear market, or a flat market."
If the S&P 500 closes above 879.82 on January 31, the January Barometer will give
a bullish signal for the year 2003. If the S&P 500 closes below 879.82 on January 31, a
bearish signal will be given.
source: Jerry 's January Newsletter
Report From Iraq
1/14/03 08:17 AM ET
From a report on BBC News' Web site: "Weapons experts in Iraq have found large quantities of illegally smuggled materials, chief inspector Hans Blix has said. But they have not yet determined if they are related to weapons of mass destruction such as nuclear bombs or chemical warfare, Mr. Blix said in a BBC interview."
News about the Iraq inspections has the capacity to move this market quickly. Clearly the U.S. is building up to take action there, and it's a mistake not to keep that in mind when looking at longer-term positions.
www.thestreet.com
http://www.thestreet.com/p/dps/td/tradingdiary1.html
possible short? I prefer IDPH instead of OPWV, Wait for Breakout
Regards
GFS
Analysis - Monday, January 13, 2002 8 p.m.
At the highs today the Dow was up another 84 points, reaching a
print high of 8869.29. We closed up 1.09. Once again the Dow ran into
resistance up near the 8900 area today. The top of our 21-Day 3 1/2%
Exponential Trading band today was 8910. The Dow's intraday high today was
8896.09.
We know the Cycles call for the next short-term high in this time
frame, January 13, plus or minus 1 day. For Tuesday, any decline below 8746
on a print basis and 8710 intraday in the Dow will suggest that short-term
Cycle high has likely been seen. A decline below 1436 in the Nasdaq
tomorrow should signal that a short-term Cycle high has been seen there. If
the above levels are broken it will then be important for the Dow to hold
above 8580 on a print basis and 8540 intraday, and for the Nasdaq to hold
above 1390. If those lower levels are broken this week our Gann weekly
Chart will turn down. A downturn in that Gann Weekly Chart is normally a
signal that an even stronger decline is coming, at least short term.
So far at least, neither the Dow or the Nasdaq have really done
anything wrong in this time frame. Not even a short-term sell signal has
been given in the Dow or the Nasdaq to this point.
We cannot rule out another test of the resistance up near or just
above 8900 tomorrow, but at this point we doubt the Dow will be able to
significantly close above that resistance. For now, we will continue
holding current positions.
source:Jerry Favors
Analysis - Friday, January 10, 2002 8 p.m.
For the most part today was mostly a sideways day, with the Dow making little real progress in either direction. The Dow did manage to close up 8.77 with the Nasdaq up 9.29.
Perhaps the best thing we could say about today's action is that so far, the market has done nothing really wrong.
The Gann 3-Day Chart had a chance of turning down today, but it did not. The 3-Day Chart could not turn down from here before January 15 at the earliest. The Gann Weekly Chart is also still pointing up at this time. Any decline below 8580 on a print basis and 8540 intraday in the Dow next week will turn the Gann Weekly Chart downward. That would signal that a still stronger decline is coming next week which could test the very important support at 8214 intraday and 8242 on a print basis in the Dow. If those support levels are broken at any time next week, it will signal that an even stronger decline is coming, at least short term. In terms of the Nasdaq, any decline below 1390 next week will turn the Gann Weekly Chart down there, and signal a test of the important support now at 1327. A decline below 1327 in the Nasdaq any day next week will signal that an even stronger decline is coming there next week.
The Cycles still call for a short-term high near January 13, plus or minus 1 day.
For now we would continue to look for fairly strong resistance to any further rally attempt up near or just above the top of the Dow's 21-Day 3 1/2% Exponential Trading Band. The top of that band on Monday should be in the 8920 area or so, depending on where we close on Monday.
At this point we will continue holding current positions.
Jerry Favors
LG i hope that you solve this problem and come back as soon is possible IMO these gays are already monitored.
Regards
GFS
Bulls Stay Home
1/08/03 04:19 PM ET
The bulls failed to make even a brief appearance today and we sold off slowly and steadily on volume that was quite a bit lighter than yesterday. The light volume is an indication that investors are more confused and uncertain rather than scared and anxious to sell.
The bears are pointing at the makings of a head-and-shoulders top in the indices. You can see this most clearly in the DJIA with the shoulders in the 8750 area and the head the spike up on Dec. 2 through the 9000 area. A lot of folks make the mistake of proclaiming that a head-and-shoulders pattern exists before it is fully formed. The pattern is not complete until it pierces the neckline, which is around the 8250 area on the DJIA.
We have some economic data tomorrow, but more importantly, December same store sales numbers should be out for many retailers. Retail was one of the strong groups today, probably on hopes that some after-Christmas buying may have given the sales numbers a little last minute boost. That group will be the primary focus tomorrow.
Next week we have a flood of earnings reports on the agenda and anticipation of that may be sufficient to put some bids under this market in the next day or two. I see no reason to make any big bets long or short at the moment.
From The Street.com diary
Analysis - Wednesday, January 8, 2003 8 p.m.
We looked for the Dow to reach a short-term high near January 7,
plus or minus 1 day. We then looked for a fairly brief decline which should
bottom near January 9, plus or minus 1 day. The Dow in fact reached a print
high of 8802 exactly on January 7, right in line with the Cycles
forecast. The Dow has since fallen 222 points to a print low today
of 8580.10.
Adding to the credibility of a high near January 7 was the fact
that the Dow this week rose right up into the top of our 21-Day 3 1/2 %
Exponential Trading Band, which normally suggests that some form of at
least short-term high is likely. The top of that band on January 7 was
8846. The Dow reached an intraday high on January 7 of 8843.
At this point we have seen nothing to alter our basic position for
this time frame. The market has sold off in this time frame, as we
expected, but so far we have seen nothing to cause us to conclude that any
important top has been reached just yet.
From here a rise above 8804 on a print basis in the Dow and 8844
intraday is necessary to prove the market is going higher. For the Nasdaq
to prove it is going higher, it must rise above 1443. The probability of a
rise above those resistance levels during the rest of this week is not
high. Still, to this point the market not done anything really wrong.
We allow for still lower prices tomorrow, but we will continue
holding current positions.
source: Jerry Favors
Lets wait until neckline break to confirm H&S top pattern
Augieboo, I'm betting on the Inverse H&S bottom
Shoulder 1 .... August
Shoulder 2 .... October
Head ...... December
Against the one that may be is forming its right shoulder now.
Everything IMO depend how Iraq war will play
.....
All I can say is that people have been pointing out possible inverse head and shoulders formations to me for at least a year now
One Year? Which H&S are you talking about?
Regards
GFS
John if I'm not wrong Zeev finish 68% cash because he will not be online tomorrow morning.
But with Jerry Favors calling a possible high on Jan 7, Zeev could buy on Jan 8 or 9 at discount prices
regards
GFS
ADTC made a Inverse Head and Shoulder pattern and broke it last friday Jan 3 . I bought @ 2,45 and place today a stop loss around 2,60
ADCT made 2 Inverse H&S botton.
The bigger was build between Jully and Dec 2002
and a small one now between and Dec
Target 3,20
Look that ADCT already break MA 200. I think Dow Jones will follow the same way.
Another stock that I trade and I'm still holding is AMTD after break Ascending Triangle on Dec, 31. Big Volume!!!
Regards
GFS
If this Inverse H&S botton pattern works like 1998 we are at least 5 months from the next top around 11000. After that top we trade
again around 8000...7000.
Look that in 1998 when Dow Jones broke the Inverse Neckline
we trade sideline during Jan and Feb before explode until May
Regards
GFS
Dow Jones is building a inverse head and shoulder botton like 1998 botton. If we can close above 9000 we will break the neckline and trade above MA 200 . Neckline projection is around 11000 . (Looking at weekly chart you will see Inverse H&S pattern better)
The same pattern is found at SnP500
Some charts look great with real breakout with volume but
I'm trading with stop loss. If we hold above MA 200 I will turn more bullish.
Regards
GFS
Analysis - Monday, January 6, 2003 8 p.m.
At the highs today the Dow was up over 197 points, and the Nasdaq was up 41. The Dow closed up 171.88 and the Nasdaq closed up 34.21.
We stated last week that the Gann Weekly Chart on the Dow had turned up, but that same chart had not turned up on the Nasdaq last week. The Gann Weekly Chart on the Nasdaq did turn up today. This makes the December lows of 8214 intraday in the Dow and 1327 in the Nasdaq important. A decline below those levels from here on would generate at least a short-term sell signal, and possibly an intermediate-term sell signal.
During the decline from the 12/02/02 high of 9076 to the December 30 intraday low we stated that we expected the Dow to find support near the bottom of its 21-Day 3 1/2% Exponential Trading Band. The bottom of that band on December 30 was 8253. The Dow reached an intraday low on December 30 of 8214, fairly close to the bottom of the band. We have since risen 612 points to an intraday high today of 8826.71. We also normally expect the market to be near some sort of at least short-term high when the Dow rises up near or just above the top of its 21-Day 3 1/2% Exponential Trading Band. The top of that band today was 8826. Today's intraday high was 8826. The top of this band tomorrow should be in the area of 8850 or so, depending on where we close tomorrow.
Another thing that bothers us somewhat on a short-term basis is that the 5-Day RSI on the Dow today closed at 79.78. Over the last 12 months the market has had a habit of reaching short-term highs when the 5-Day RSI reaches up near or just above 80.
Now we should tell you that if the Dow reached a truly important bottom in October, then few of the normal areas of resistance will be able to hold the market back for long. As we see it, that is the real question we have to answer in this time frame, and right now we are frankly not sure.
The Cycles still call for a short-term high near January 7th, plus or minus 1 day, and a short-term low near January 9, plus or minus 1 day. A short-term high is due near January 13, plus or minus 1 day.
The Gann Daily Trendline is still pointing upward. A decline below 8578 intraday and 8602 on a print basis in the Dow tomorrow would turn the Daily Trendline down. That would suggest that a still stronger decline is coming short term, and that the Cycle high due near January 7, plus or minus 1 day has been seen.
We will hold current positions for now.
source:www.jerryfavors.com
James Cramer view about this rally........
Many times, we follow this progression: We have a huge up day on Day One of a move, huge. The next day, we consolidate after a little decline, causing short-sellers to freak out and come in and buy on Day Three, which is also a big up day. (By my reckoning, we're on Day Three right now.) By Day Four (which will be Tuesday), we have analysts believing in the rally and upgrading a bunch of stocks, causing the stocks to go up even though they've already moved a great deal.
Day Five (Wednesday) sees a consolidation to a slight decline, featuring more hedge fund panic and talk that "It won't come in."
Day Six (Thursday), we get some bad news and start seeing rollover. By Day Seven, it's obvious that everyone overstayed their welcome and we get our heads slammed. The move ends.
We often get confused during these moves because we keep calling them "one-day wonders." In reality, the moves start with a one-day wonder and then don't roll over as they should because of shorts pressing their bets and hedge funds being underinvested, because that was correct going into the one-day wonder.
It is the days that follow the one-day wonder that are so painful to the bears, days like today, on which, frankly, the bears are saying to themselves "Hold it, people have been talking endlessly about the dividend thing and now, after all that talk, it matters? Give me a break!" These days cause intense pain. They get the hedge funds thinking, "Another day of this and I am going to capitulate."
Then they get that other day of this (Day Four, Thursday) and they capitulate.
And the move ends.
The Surprises of the New Year - The Surprises of 2003
Morgan Stanley
1. The United States equity market defies the return to-the-mean, modest-return pundits and surges more than 25% during the
first half of the year. A Teflon-like dollar draws support from stronger-than-expected earnings growth and a recognition of
America’s economic, political, and military strength. Foreign capital inflows surge and individual investors start to buy
again.
2. The United States economy confounds double-dip and deflation worry-warts and shows 4% real growth in 2003.
Consumers hold their own and capital spending rebounds. Inflation moves higher and the Federal Reserve increases short-term
rates 100 basis points in the second half. Yields on 10-year Treasuries move toward 5.5% as the balance-of-payments
deficit approaches $600 billion and the federal deficit threatens to reach $200 billion. The US stock market comes under
some valuation pressure in the second half, but still closes strongly positive for the year.
3. Japan finally seems serious about implementing financial reforms. Government support helps the banks there face up to
non-performing loans, import barriers are lifted, profits begin to recover, and the Nikkei 225 climbs to 11,000. Japanese
Prime Minister Koizumi proposes an historic free-trade agreement with the new Chinese leadership. Asia becomes the
new engine of global growth, pushing the US into second place.
4. Starting with France, several member countries lose confidence in the European Monetary Union and threaten to pull out.
They believe Germany, once the economic envy of everyone on the Continent, is dragging the system down. Sensing a
lack of confidence, German Chancellor Gerhard Schroeder resigns. European equity markets badly lag the US and Japan.
5. Government legislative relief on the double taxation of dividends encourages some technology companies to start making
quarterly payouts to shareholders from their huge cash hoards. Cisco, Dell, Oracle, and Microsoft lead the way.
6. The housing bubble doesn’t burst; it grows larger. Home prices rise in the Rust Belt while remaining elevated on the two
coasts. Alan Greenspan resigns as Federal Reserve Chairman, saying he isn’t up to handling yet another bubble. Lennar
and Centex are strong performers.
7. With a massive US military force at his borders and United Nations inspectors increasing the pressure, Saddam Hussein
decides to step down and seek asylum in Libya rather than watch the slaughter of thousands of his people. North Korea’s
Kim Jong Il negotiates with US and United Nations representatives and agrees to stop converting spent uranium fuel rods
into weapons-grade plutonium. We get through the year without a major military battle in the Middle East or Asia,
increasing investor confidence and reducing the risk premium for equities. Oil remains in tight supply, however, and
hovers at $30 a barrel. Oil service stocks Schlumberger, Halliburton, and BJ Services break out and deliver strong
performance.
8. After a difficult period, a number of significant biotechnology products receive Food and Drug Administration approval.
This group, which had weak performance in 2002, comes alive. Amgen and Gilead perform especially well.
9. Just as Pakistan with all of its terrorist problems was the most rewarding emerging market of 2002, Brazil leads Latin
America, the almost-forgotten continent, to a stock market recovery. Tighter fiscal control, higher agricultural commodity
prices, and the US recovery fuel the turnaround.
10. Expressing her concern about the lack of vitality, spirit, and programmatic vision in the Democratic Party, Hillary Clinton
announces she will run for president in 2004, at least four years ahead of schedule. George W. Bush is said to be looking
forward to the campaign so that a Bush can finally have a victory over a Clinton.
U.S. Investment Strategy – January 6, 2003
Byron.Wien@morganstanley.com
Byron R. Wien
January 2003
January 3, 2003 closing prices for stocks mentioned: Cisco (CSCO $14), Dell (DELL $28), Oracle (ORCL $12), Microsoft (MSFT $54), Lennar (LEN $53),
Centex (CTX $51), Schlumberger (SLB $43), Halliburton (HAL $19), BJ Services (BJS $33), Amgen (AMGN $49), Gilead (GILD $36).
Analysis - Friday, January 3, 2002 8 p.m.
The Dow and the Nasdaq did a good job today of holding onto yesterday's gains. The Dow closed down just 5.83 points, with the Nasdaq closing up 2.17.
The Gann 3-Day Chart on the Dow turned up today, so we now have both the Gann Weekly Chart and the Gann 3-Day Chart pointing upward.
Last evening we discussed the Santa Claus rally and the significance of the first five trading days of January as an "early warning" system. The above systems are important as they are relevant to one of the most widely followed indicators of this type, the January Barometer. We know of no one who has done more research in this area than Yale Hirsch.
The basic tenet of the January Barometer is that if the market closes up for the month of January, it is bullish for stock prices for the year. If the month of January closes down, it is bearish for stock prices that year. In the 2000 issue of the Stock Traders Almanac Mr. Hirsch stated: "Since 1950 the January Barometer has predicted the annual course for stock traders with amazing accuracy. Based on whether the Standard & Poors index is up or down in January, most years have followed suit - 44 out of 49 times - for a 90% batting Average."
The action of the first five days of January is often an early warning signal of whether the market will be up or down for the month of January. For the January Barometer to give a bullish signal this year, the S&P 500 must close above 879.82 and the Dow above 8342 on January 31.
For the short term, any decline below 8552 on a print basis and 8503 intraday on Monday would turn our Daily Trendline down. The Daily Trendline in the Nasdaq on Monday would turn down on any decline below 1374.61. If the above levels are broken, it will signal that an even stronger decline is coming at some point Monday. If this occurs any subsequent rise back above the print high for this month should signal that an even stronger rally is coming, at least short term. So far the print high for the month in the Dow has been 8635.49.
The Cycles still call for a short-term high near January 7, plus or minus 1 day. The pullback from there, at least according to the Cycles, should be brief, that is no more than a few days.
The most important point to be stressed here is that we consider the December lows of 8252 on a print basis and 8214 intraday in the Dow, along with 1329 in the Nasdaq, to be vitally important to the short-to-intermediate term picture. As long as we hold above those levels this month, we would be bullish. However, if those levels are broken from here, we believe a very significant decline in stock prices will follow.
We will decide over the weekend if we will raise our long position, and give our conclusion on Monday.
Source: Jerry Favors
- Bernie Schaeffer 2003 to be another bear market year.
I do not rule out an extension of the rally that began on the first trading day of the year through the end of January. If this rally occurs, it is likely to be a major fake-out that will result in an avalanche of money flowing into equities at just the wrong time.
I expect the bulk of the damage to have occurred by mid-year or shortly thereafter, with a potential Dow low in the 5800-6000 area.
I look for a rally beginning in the second half of the year that could take the Dow back above 8000, but only if the Dow first takes out the October 2002 lows and trades down to at least 6500.
I see Nasdaq and the techs as being the least vulnerable to a first-half slide and the Nasdaq potentially posting a gain of up to 50 percent for 2003. I am most bullish on the small- and mid-cap techs – the "single-digit midgets."
I see the biggest cap names in the Dow and the S&P as being most vulnerable to major declines. Many of these stocks have attracted "safe haven" money due to their large capitalizations and liquidity and the illusion of safety. But I see these names as being "first out" of institutional portfolios on the next market leg down. These include Pfizer (PFE), 3M (MMM), Procter & Gamble (PG), Citigroup (C) and General Electric (GE).
Overall, 2003 is likely to be a very tough year for heretofore "safe" or "quality" assets – mega-cap stocks, the dollar, and bonds. I suggest "thinking speculatively" – not with all your capital but with a portion of your funds – by investing in low-priced tech stocks and gold stocks (see below).
I continue to believe that all investors should have at least 10 percent of their portfolios in precious metals stocks. Gold has broken out to the upside technically and will be the beneficiary of the Fed's "reflation" push and potential dollar weakness. And investor enthusiasm on gold remains muted, with gold funds accounting for a smaller than average percentage of sector fund assets.
- Bernie Schaefferhttp://www.schaeffersresearch.com/schaeffer/bernie_observations.asp?ID=6851
Is Yahoo breaking 2 years semi log downtrend????
Gaping Holes in the SOX Recovery Story Part 3
"Here is a blurb last week from Jon Joseph, the semiconductor analyst at Salomon Smith Barney:
"'We believe most companies will guide Q1 revenues 'flat to down 5%' in coming weeks, though 'lack of visibility' and a weak December could make for a cautious tone on the calls.' "
So much for that. Keep in mind too that Kurlak's original call from Oct. 31 had a time horizon of three to five years to make "three to five times" your money. Contrary to the tone of his latest column, that analysis didn't appear to be geared for a quick trade. Good thing, too, because his top picks from that column -- Nokia, Applied Materials (AMAT:Nasdaq - news - commentary - research - analysis) and Intel -- were down an average of 11% from the day of his call through year-end.
Even with Kurlak's five-year outlook, there is no rule that says chip demand won't simply muddle along in fits and starts for that long -- or even longer. After all, last time I looked, there wasn't any new Internet-like boom waiting to drive demand to old levels. Which brings us to my source's targets for Kurlak's favorites:
Applied Materials: $5. "It should trade at a price/earnings multiple in line with other little-growth cyclicals like paper and chemicals," the chip source says. "Applied will not grow in this cycle."
Nokia: $10. Contrary to what the numbers show, "They are losing market share to Chinese and other low-cost manufacturers. Their margin structure is also unsustainable."
Intel: $10. "No growth in PCs. There's no demand for more processing power. My PC runs Microsoft Word just fine with a 3-year-old Pentium, thank you very much."
So does mine!
Gaping Holes in the SOX Recovery Story Part 2
Kurlak: "The Semiconductor Industry Association has now reported three straight months of 20% year-over-year sales growth without any help yet from chip pricing."
Chip source: "These statistics were viewed by most analysts as universally disappointing. This was a distinct slowdown from previous months' growth rates, and marked a top in the current cycle. The only reason it was up 20% year over year was because of easy compares against last year's disastrous inventory bubble. Sequentially, the industry is showing no growth in what should have been a seasonally strong period."
Kurlak: "Wall Street received some confirmation of better demand when, in early December, several leading semiconductor companies, including Intel (INTC:Nasdaq - news - commentary - research - analysis), Texas Instruments (TXN:NYSE - news - commentary - research - analysis) and Xilinx (XLNX:Nasdaq - news - commentary - research - analysis), raised their forecasts for December-quarter sales -- the first such upward revisions in more than a year. National Semiconductor (NSM:NYSE - news - commentary - research - analysis) also reported stronger-than-expected fiscal second-quarter sales. In addition, gross margins are starting to improve (a good leading indicator), which also reflects pricing stabilization as well as cost reductions."
Chip source: "He fails to mention Silicon Storage (SSTI:Nasdaq - news - commentary - research - analysis), Integrated Device Technology (IDTI:Nasdaq - news - commentary - research - analysis), Cypress Semiconductor (CY:NYSE - news - commentary - research - analysis) and Cirrus (CRUS:Nasdaq - news - commentary - research - analysis) preannouncements of weaker-than-expected results.
"Xilinx raised guidance by a whopping 1%. National Semiconductor beat this quarter, but then gave weaker-than-expected guidance for the upcoming quarter and the stock sold off. Intel also sold off after their mid-Q update."
Kurlak: "It's looking increasingly likely that first-quarter sales will increase sequentially from the fourth quarter rather than decline slightly, as would be seasonally normal."
Chip source: "Giant contract manufacturers that produce everything electronic like Jabil (JBL:NYSE - news - commentary - research - analysis), Solectron (SLR:NYSE - news - commentary - research - analysis) and Flextronix (FLEX:Nasdaq - news - commentary - research - analysis) guiding Q1 down 5% to 10% on an organic basis? Where is this growth going to come from if end-markets are all down
Gaping Holes in the SOX Recovery Story Part 1
By Herb Greenberg
Senior Columnist
01/03/2003 10:06 AM EST
Click here for more stories by Herb Greenberg
Say this for Tom Kurlak: He's persistent.
Yesterday he posted another column on why chip stocks are undervalued. Though I don't know Kurlak, I respect him based on his reputation.
What I don't understand is his talk about stronger demand. In reality, information technology managers are talking about lower budgets this year -- not higher ones. And the economy certainly isn't showing any strong signs of improvement.
Let's take a look at some assertions Kurlak makes in Thursday's piece on RealMoney.com. Then we'll get a point-by-point reaction from my best chip source -- who I think is every bit as good as Kurlak in analyzing the industry and who is short as many chip stocks as Kurlak is long. The source, a hedge-fund manager who isn't allowed to speak on the record, presents an argument that makes the bullish case on this sector seem a lot less compelling.
Kurlak: "Evidence of improving industry sales is emerging, thanks to strengthening end demand, particularly in cell phones and personal computers, which together account for nearly half of total semiconductor consumption."
Chip source: "Cell phone and PC demand was by any account outright weak this holiday season. Every wireless service provider has disappointing net adds. People needed to give phones away to sell them. PC demand and retail demand overall stunk -- this was the worst Christmas in the last 10 years, period. Nokia's (NOK:NYSE - news - commentary - research - analysis) mid-Q update was a huge disappointment to people.
As Kurlak said, "cell phones and PCs account for 50% of semiconductor demand. Given demand there is actually so weak, we are in for more trouble."
Kurlak: "There's just no slack in the supply chain between factory and customer. One large chip distributor, Avnet (AVT:NYSE - news - commentary - research - analysis), reports having the lowest inventory-to-sales ratio in its history."
Chip source: "Inventory-to-sales level at Avnet is so low because they are having a liquidity crisis, because end demand is so weak they are trying to lower inventory to generate cash. Also, Avnet expects Q1 sales to be very weak and is lowering inventory so they have the proper amount on a forward basis. Less inventory for lower sales."
Tax Relief Expected To Be Part of Bush Stimulus Plan
Dow Jones, Thursday, January 02, 2003 at 19:11
Associated Press
WASHINGTON -- President Bush will unveil an economic-stimulus plan next week and two of the major elements are expected to be a reduction in taxes on stock dividends and an acceleration in the cuts in personal income tax rates included in the 2001 tax act.
These items would benefit higher income taxpayers the most but President Bush rejected criticism that his proposals would be weighted toward the well-to-do."Some would like to turn this into class warfare. That's not how I think,"he said.
The plan, which the president will unveil in a speech in Chicago on Tuesday, is certain to face renewed attacks from Democrats, who contend that President Bush's $1.35 trillion, 10-year tax cut was slanted to benefit the wealthy.
Republican officials, who spoke on condition of anonymity, said Thursday that there was still an intense debate inside the White House over details of the proposal, which is expected to offer about $300 billion in new economic stimulus measures over the next decade. One said the first year tax relief could amount to around $50 billion.
White House officials said the proposal was likely to include acceleration in the reductions in tax rates scheduled to take effect in 2004 and 2006.
However, these officials said the president was considering not including the very top tax rate, currently 38.6%, in this speed-up in an effort to deflect criticism.
Likewise, the reduction in taxes on corporate dividends, earned by Americans with enough money to invest in the stocks of companies paying dividends, isn't expected to cover a total exemption from taxes.
One possibility would be to exempt just the first $1,000 in dividend payments each year. That would make stocks more attractive to average investors but would do little to relieve the tax burden of the very wealthy, who receive much more in dividend payments each year.
President Bush, answering questions after giving reporters a tour of his Crawford, Texas, ranch, rejected complaints that his economic stimulus plan would be heavily skewed toward the wealthy."I'm concerned about all people,"President Bush said."I understand the politics of economic stimulus, that some would like to turn this into class warfare. That's not how I think. I think about the overall economy and how best to help those folks who are looking for work."On the other hand, conservatives are concerned that President Bush may be swayed too much by Democratic attacks and will end up presenting Congress with a watered-down stimulus proposal that won't provide enough in investment incentives for the wealthy and businesses to jump-start the weak economy.
Call for Speeding Up Cuts in All Tax Rates
Stephen Moore, president of the Club for Growth, said his group would be very disappointed if President Bush decides not to accelerate reductions in all tax rates, including the top rate paid by people earning on average more than $1 million."If Bush did put out a plan that surrendered to the class war critics, he would lose many in his conservative base,"Mr. Moore said.
Daniel Mitchell, an economist at the conservative Heritage Foundation, said his group was also worried that the administration would trim back too much on tax incentives."There is no question that the left will try to drag out the pagan god of class warfare and say this is just a sop to the president's rich friends,"Mr. Mitchell said."The purpose of making these changes is to get more investment into the economy and create more jobs. That's what really matters."Sen. Max Baucus, the top Democrat on the Senate Finance Committee, last month put out his own stimulus proposal that was much more heavily weighted to increases in government spending. Sen. Baucus' $160 billion package included a one-time $300 tax cut for individuals and $75 billion in block grants to cash-strapped states.
Aides to Sen. Baucus, who provided key Democratic support in passing President Bush's original $1.35 trillion tax cut plan, said he was willing to look at the president's proposals and felt that any plan should serve as a starting point for negotiations.
President Bush may be forced to make compromises in order to get the 60 votes needed in the Senate to keep opponents from blocking passage of a bill that all agree will have to be passed quickly to ensure that the economy is growing at significantly higher rates by next year.
In addition to accelerating rate cuts and reducing taxes on corporate dividend payments, the president was also considering including an expanded tax break for businesses to encourage more capital investment. He also was considering accelerating tax relief in the 2001 act for child tax credits and helping to deal with the marriage penalty faced by two-earner couples.
President Bush said investors should take heart in the new year, given that the economy is still growing -- albeit slowly -- despite a recession, the terrorist attacks and the rash of corporate scandals."That's very positive,"he said."I recognize there are some uncertainties."(END) Dow Jones Newswires
Analysis - Thursday, January 2, 2003 8 p.m.
Last evening we stated: "Today was such a slow day, it was hardly
worth paying any attention to the market at all. In fact, the last few days
have been very slow. This is a common occurrence near this time of year.
However, we believe the market volatility will begin to increase for here
from the first trading day of January 2003 onward."
That was an apt forecast for today's action, as the Dow shot
upwards over 265 points at the highs today, and the Nasdaq was up over 49
points.
On December 30 we discussed the Trin-5 reading which was near
9.00. We stated that over the last year, readings of between 8.00 and 9.00
have normally occurred relatively close to at least a short-term low, if
not a very important intermediate-term low. If today's rally proves to be
the real thing, that reading of 8.87 occurred within two trading days of
the closing low.
We have heard much talk in the press about the failure of the so
called "Santa Claus rally" in this time frame. In fact, the rules for the
Santa Claus rally, according to Yale Hirsch, are as follows: "Santa Claus
used to come to Wall Street nearly ever year, bringing a short, sweet,
respectable rally within the last 5 trading days of the year, and the first
2 days in January." So we are still within the time units for the Santa
Claus rally. The other rule from the Santa Claus is as follows: "If Santa
Claus should fail to call, the Bears may come to Broad and Wall.
Another rule of importance in this time frame is the January early
warning system. If the Dow and the S&P 500 close up in the first 5 days of
January a bullish signal be will be given. If we close down in the first 5
days of January, a bearish signal for the year will be given by this system.
The Gann Weekly Chart on the Dow turned up today. That is normally
a signal that even higher prices are coming, at least over the short term,
and possibly even over the intermediate term. The 3-Day Chart will not only
turn up if the Dow holds above 8372 intraday, and also exceeds 8633.02
intraday, it also give an actual short-term buy signal.
The Weekly Chart on the Nasdaq will turn up tomorrow if the Nasdaq
exceeds 1393. That is normally a signal that higher prices are coming at
least short term.
For now, we must be at least short-term bullish, as long as the Dow
holds above 8242 on a print basis. A decline below 8242 on a print basis
would generate a new short-term bearish signal.
For now we will hold current positions.
Source: www.jerryfavors.com (hotline service)
Analysis - Tuesday, December 31, 2002 8 p.m.
Today was such a slow day, it was hardly worth paying any
attention to the market at all. In fact, the last few days have been very
slow. This is a common occurrence during this time of year. However, we
believe the market volatility will begin to increase for here from the
first trading day of January 2003 onward.
The Cycles suggest that a short-term high is due near January 7,
plus or minus 1 day. A short-term low is due near January 9, plus or
minus 1 day. A short-term high is due near
January 13, plus or minus 1 day. A short-term low is due near January 15,
plus or minus 1 day. A short-term high is due near January 23, plus or
minus 1 day.
If the market sells off from here there should still be support
near the bottom of the 21-Day 3 1/2% Exponential Trading Band. On Thursday
the bottom of that band for the Dow should be in the area of 8166 or so,
depending on where we close.
The first important support on Thursday will be 8242 on a print
basis in the Dow. A decline below that support on Thursday should signal
that an even stronger decline is coning at some point Thursday. That
decline could move down near, or just below the bottom of the 21-Day 3 1/2%
Exponential Trading Band, which we discussed earlier.
Analysis - Thursday, December 26, 2002 8 p.m.
At the highs today the Dow was up over 100 points. The market then began a fairly sharp pullback, and the Dow closed down 15 points, with the Nasdaq down 4.59.
The market has tried to rally this week, but so far the rally has not been especially successful. So far the Dow has failed to exceed the important resistance at 8639 on a print basis, and 8650 intraday. Even at the highs today the Dow reached a print high today of 8565.01, still well below the 8639 level we have discussed most of this week.
The 3-Day Chart turned up last week, and is still pointing upward at this time. However, the 3-Day Chart will turn back down tomorrow if the Dow falls below 8392.25 intraday. Any decline below 8420 on a print basis tomorrow will suggest a probable decline below 8392.23 intraday, turning the Gann 3-Day Chart down. That would suggest that an even stronger correction is coming over the short term.
If the 3-Day Chart does turn down tomorrow, there is support to any decline in this time frame near 8200, plus or minus 20 points in the Dow. The market has for the most part been trading sideways for the last ten trading days. This pattern is typical during the month of December. We would not read too much into the market action from here until the last trading day of the year 2002. The real action, that is the important action, will begin during the first week of January.
MERRY CHRISTMAS and Happy NEW YEAR to all from your brazilian
friend !!!!
Intraday = low or high price during the day
Print = Close price
let me know if you understand it
regards
gfs
EK RIMM broke down pennant. May be a good short candidate.
Regards
GFS
Analysis - Friday, December 20, 2002 8 p.m.
At the highs today the Dow was up 149 points and the Nasdaq was up
16. The Dow closed up 147 points, and the Nasdaq closed up 9.59.
The Gann 3-Day Chart turned up today on the Dow, and we must
consider that as a short- term bullish signal. An even stronger signal will
be given if the Dow rises above 8649 intraday and 8638 on a print basis
any day next week. For the Nasdaq, an equivalent bullish signal would be a
rise above 1409. A rise above those levels next week should signal that an
even stronger rally is coming.
Any decline below 8367 on a print basis in the Dow and 1358 in the
Nasdaq on Monday should signal that an even stronger decline is coming at
some point Monday. A decline below 8464 on a print basis in the Dow on
Monday morning would suggest a further pullback is coming, at least over
the following 1 to 3 hours.
Most of our longer-term subscribers know that we rely heavily on
the work of the late George Lindsay. One of Lindsay's most important
indicators was a pattern called the 3-Peaks and Domed House. We have
discussed it many times in detail in our newsletter over the last ten years.
We received an interesting fax yesterday from one of the most
respected market analysts in this country, Yale Hirsch. Many times over the
last ten years we have used the 3-Peaks and Domed House pattern, which was
discovered by George Lindsay, to accurately forecast important market tops
and bottoms. Prior to Mr. Hirsch's fax yesterday, we had considered the
possibility that a 3 Peaks and Domed House pattern ended at the all-time
Bull market highs on 1/14/00, however there were certain anomalies in the
pattern which caused us to conclude that this pattern did not recur at the
January 2000 all-time highs. Mr. Hirsch's fax proposed a count for this
3-Peaks and Domed House pattern which we had not seriously considered,
because there was one significant anomaly in the count. However, after
reviewing Mr. Hirsch's count, we have to say that we believe Mr. Hirsch's
count for the 3-Peaks and Domed House pattern at the January 2000 Bull
Market highs could well prove correct. The importance of this count is that
it could signal that the October 10 lows in the market this year could well
prove to be more important than we originally believed. With Mr. Hirsch's
permission, we hope to reproduce this count and discuss it's implications
in detail in our January newsletter.
For now we will hold current positions and we will give a more
detailed update on Monday evening.
Source: www.jerryfavors.com
AU, if we repeat 2000, 2001 and 2002
Jan 10..15 top
Fev down (strong correction)
March up (Strong rally until April..May)
May be Iraq war will start between Jan and Feb
Regards
GFS
Analysis - Thursday, December 19, 2002 8 p.m.
At the lows today the Dow was down 120 points, and closed down 82 points. The Nasdaq at the lows was down 15.33 and closed down 7.28.
The Dow reached a print low today of 8327.78 and an intraday low of 8302.41 The downside projection we gave last evening called for a decline near 8262, plus or minus 82 points. That projection calls for a minimum decline to 8344 intraday. Today's intraday low was 8302.41, so the bare minimum of that projection has been satisfied. That downside projection allows for a maximum decline down to 8180 intraday in the Dow.
The 5-Day RSI on the Dow today closed at 30. The RSI reaches oversold territory when it falls below 30, and we not there quite yet. Keep in mind we do not believe it is mandatory for the 5-Day RSI to fall below 30 before any low in this time frame. However, at most important bottoms the 5-Day RSI does fall below 30, and sometimes, at important lows, it will fall below 20.
Both the Gann 3-Day Chart and the Gann Weekly Chart are still pointing downward. The 3-Day Chart could turn up tomorrow, if the Dow holds above 8302.41 intraday, and also rises above 8530.25 intraday by the close of trading. If that occurs, it would be the first signal that some sort of low was seen this week. Any decline below 8302.41 intraday in the Dow tomorrow will mean the 3-Day Chart could not turn up tomorrow no matter where the Dow closes. Any decline below 8322 on a print basis in the Dow tomorrow will signal a probable decline below 8302.41 intraday.
We could have gotten at least a short-term buy signal today, but the pattern the Dow and the Nasdaq traced out today failed to generate a new short-term buy signal. From here, a rise above 8507 on a print basis in the Dow should signal that a stronger rally is coming short term, but only if the Dow manages to hold above the prior print low for the week. So far the print low for the week has been 8327.48 in the Dow.
EK, imo too early to say this rally is over. Indexes didn't hold MA 50 (bearish). But I still think we can trade between
MA 50 and MA 200 until we turn down to may be test Oct low.
Right now we have Iraq war that could hold us to rally to MA 200 again. Now I'm just looking if we can close above MA 50.
Regards
GFS
All indexes at MA 50, a rally from here will be very bullish