Economic focus this week in the US is on the FOMC meeting results to be released on Wednesday. Earnings and sales by S&P 500 companies during the next two quarters remain a concern. Intermediate and technical indicators for most equity markets and sectors remain overbought and trending down. Short-term technical indicators (mainly momentum indicators) for most equity markets and sectors are trending up.
Category Archives: Technology
Morning Market Commentary
As we predicted since our 2014 Global Investment Strategy, the $SSEC has been the star performer in 2014 and 2015 y-t-d, hitting our very aggressive 2015 price target of 4,900 last Friday, outperforming the S&P 500 Index by around 40%.
Morning Market Commentary – Buy Chinese Equities $SSEC bottoming, Euro equity benchmarks continuing to gather momentum vs SPX
Global manufacturing data remains strong and it cannot be ruled out that the data out of China is distorted as a result of the upcoming Chinese New Year. Manufacturing activity in China typically declines into the Chinese holiday, which this year is on January 31. Despite the unexpected data point from China, manufacturing numbers continue to show signs of improvement, both in the US and Europe. Overshadowed by China’s disappointing manufacturing PMI report, January Flash Manufacturing PMI in the Euro-Zone was reported at the highest level since June 2011 at 53.9, firmly in expansion territory.
Although gold is not presently within its period of seasonal strength, which runs from July through to September, the metal typically does benefit from strength in metal prices at this time of year due to improving manufacturing demand.
Morning Market Commentary – Buy into mini global equities’ correction
Short and intermediate technical indicators for most equity markets and sectors are overbought and showing signs of peaking. Midterm US Presidential Cycle years show that US equity markets show an average correction by the S&P 500 Index of 1.7% in the month of January followed by strength into mid-April. History appears to be repeating itself. Look for renewed seasonal buying opportunities in economic sensitive sectors following a brief period of weakness into January.
Our preferred equity markets like Germany, France, Spain, and Japan continue to outperform US benchmarks. We advise clients to add towards those countries’ equities and towards our favorite sectors, which continue to show seasonal strength, such as: …. Continue reading
Morning Market Commentary & Weekly Stocks – Global Stocks enter positive seasonal period, German Stocks to outperform
German Equities are at an all-time high. The DAX 30 Index is +20% ytd, after +29% in 2012. Our CGI Global 50 includes 12 German stocks, of which all are in positive territory for 2013.
We think so, particularly when looking at the anemic bond yields that European, US and Japanese government and corporate bonds are offering. We are seeing but one way for German investors, namely to increase equities investments, albeit late, however not too late to the plate, and invest now in their own equity market. Continue reading
AAPL Apple Sell Recommendation
Apple (AAPL), the biggest company still by market capitalization in the US, didn’t have the sort of effect it was hoping for with the launch of two new smart phones: its share price fell sharply as analysts expressed their disappointment with the latest gadgets: the iPhone 5S and iPhone 5C.
Apple, once the technological and applications leader has become an innovation follower, and it proves our point more and more, as the company management is struggling with its corporate vision and business plan and original strategy. Recent product announcements, like the iWatch, and “cheaper” iPhones are confirming our 2012 concerns, which we published in our leading “Sell/short” AAPL report on October 3rd 2012 (AAPL US$ 685). Apple’s business model has run out of momentum, growth is declining, and AAPL is forced by market and consumer trend dynamics to test smaller, cheaper, and lower value added gimmicks, which are going to be having a negative affect on AAPL’s margins, which we identified as unsustainable, in our last years original report.
Morning Market Commentary Sell in May, AAPL reiterating sell/short; Gold & Silver to go higher
The period for seasonal strength in equity markets concludes on May 5th, after which a trendless market is the average. Economic events over the next few days, including central bank announcements and employment report releases, are likely to set the tone for the month ahead. The technical backdrop of equity markets has shown deterioration over recent months, particularly pertaining to momentum, and the likelihood is increasing that a market correction is near based on recent warning signals that have become prominent in April. Stocks have been up 6 months in a row. And April finished at a historic high of 1597.57.
Each May is different. And there have been some very profitable summers in years past. So it’s never wise to just take this saying at face value and truly walk away from the markets. The resilience of stocks to be pressing all-time highs after 3 straight weeks of soft economic reports (including a scary showing for Chicago PMI in contraction territory) is making it hard to say what exactly would make stocks go lower at this stage. Meaning that investors seem quite comfortable with the ebb and flow of muddle through economic growth. And as long as the Fed is on the side of investors, with all that QE, then there is no reason to walk away?
Morning Market Commentary – Currency impact on corporate earnings and equities pricing, AAPL Sell/Short reiteration
Just as an update on a major subject, which most sell side economists, strategists and analysts have grossly overlooked still so far yet, the impact of a temporary strengthening US$ against major currencies like the Yen, the Euro on US exports/imports, current account, and on corporate revenues and earnings. We had started to point to this significant subject in our Q 2 Global Strategy Outlook, and already do we see impacts of this highly overlooked and underestimated subject on earnings releases for major US companies, like Caterpillar, Coca Cola, AAPL, JBL, BA, to name just a few.
Morning Market Commentary – BDI, NDX, AAPL
When stocks began to peak from a substantial seasonal run that began in October of that year, the Baltic Dry index is rising as cyclicals, such as energy and materials, are weakening. The BDI provides an assessment of the price of moving the major raw materials by sea. The diverging activity of the price of shipping materials versus the price of companies valued based upon materials they produce is made without conclusion, other than the fact that underlying fundamental influences that typically drive these cyclical sectors higher at this time of year are still occurring. Manufacturing and industrial production typically increase into the Spring, driving the BDI higher as more goods are shipped, and customarily giving strength to Materials and Energy. However, the fading relative performance of these cyclical sectors suggests that investor demand to hold these stocks is clearly absent, despite the positive fundamental influences. Once again, warning signs are beginning to emerge. With AAPL still commanding a large percentage of the Nasdaq 100 , the short trade is in AAPL. Now after it completed it’s 10 % recovery from its lows of US$418, we are advising to short AAPL, with our next price target being US$ 380, then over the 9 – 12 months time period, we stick to our AAPL price target of US$ 320.
SES SA Update and “Buy” Reiteration “The sky is not the limit”
SES SA 2012 results were on top of expectations, and the management is guiding expectations higher for 2013, particularly, due to declining Capex and increasing free cash flow, and that not only for 2013, but also for 2014 and 2015. The proposed increased dividend comes in at EUR 0.97 (versus EUR 0.88 in 2011) and is as expected, and will offer investors a high yield of 4.2% annually. This high yielding stock, combined with solid top-line growth ad earnings growth, and a visibly declining capital expenditure program for the next three years, makes SES shares attractive for investors in our opinion.
SES SA, the growing global industry leader in the global satellite and communications market is in our opinion a good investment for global institutional investors, looking to achieve an above average total return with minimal investment risk, and with limited management execution risk. Our 12-month price target for SES SA shares is EUR 30.
Morning Market Commentary US$, US Market Charts, SSES, Italy, Greece
European Economic Outlook for 2013. Clearly, …………………………………………………more mixed macro news ahead.
We see technical evidence for the long-term bullish trend to remain intact until there are greater odds of a looming recession. Or until stocks become overvalued. Neither is a real concern right now. Not even with the government cost cuts from the sequester going through post March 1st.
So, we are recommending to add towards Asian, and European equities if, and when the correction increases in velocity.
Morning Market Commentary EUR/USE;US$/YESN;SSEC;AAPL
Apple stock continues to look for a lower price. The gap down from January is a major sign of more selling volume to possibly join the carnage in the once biggest stock in the world. Shares of Apple have not moved above its 50-day moving average since September of last year, precisely when the new iPhone and iPad were launched.
We maintain our “Sell/Short” recommendation on AAPL, with our 3 – 6 months price target of US$ 320.
Morning Market Commentary – No sell signals yet NDX;AAPL;Currency Musings;Global Automakers
We continue to see one good investment solution to the problem of global currency wars: Investors should continue to buy Gold.
We have been recommending for 3 years to “sell/short” the French OEM’s and also Fiat, in Italy, which in retrospect clearly was an alpha generating call for investors over the entire time period.
Given recent macro-dynamic changes, in monetary policies, impacting currency markets around the world, namely the Yen weakening substantially versus most currencies, particularly the US$, the EURO, but also mostly against the Korean Won, we have become bullish in September 2012 on Japanese stocks, calling for a major rise in the Nikkei, and implicitly seeing a bullish case in favor of Japanese car companies.
Morning Market Commentary & Weekly Charts – Russia’s “Nukes of Hazard”
Weekly Investment Conclusion:
Downside risk exceeds upside potential in equity markets during the next six weeks.The breakout by the S&P 500 Index last week implies that depth of the downside risk is less than previous. Selected seasonal trades continue on the upside (gold, energy, software) and downside (transportation). However, many of these seasonal trades reach the end of their period of seasonal strength this month. September is a month of transition.