New URL for this Blog

Sailing Markets has moved to the Trading Effect blog with all the previous posts and valuable comments.

PFE: update

Price/(book value): 2.08

Annual EPS growth (last 3 years): 7 % / DEC/2009 (quarter) vs June/2009 (quarter): -13%

Revenue growth Dec/2009 vs Sep/2009: -51%

Dividend yield: 4.2%

GE - General Electric

It has one of the lowest Price/book value of the DOW's companies. 

The annual rate of growth in the EPS in the last 3 years is negative, -18%. (and it has decreased 53% from dec/2007 to dec/2009).

Total Debt to equity: 4.35. One of the highest of the DOW JONES.

Annual revenue growth (dec/2008 vs dec/2009): -14%. But from March/2009 to Dec/2009, revenue increased 8%.

Dividend yield: 2.5%.

Weekly chart:

Daily charts:

GOLD

This is one of the elliot wave counts and patterns that I am following in Gold. May be this is a good risk-reward opportunity to go long on gold, considering that the US Dollar is at very high levels and (in my humble opinion) finishing the last impulse (wave 5).

Weekly chart:

Daily Chart:

C: Target reached

Today C reached the objective of 4.34 (EMA 200). I have this tentative elliot structure in the intraday chart...

In the daily chart, this is the structure. Notice the divergences in the RSI. This divergence  at least tell us that we should not go long here... but the EMA's tell that we should not go short too. The 200 daily EMA is the next resistance (4.34) . In addition huge volume today.

3 days frequency chart: notice the resistance in the 23.6 % fibonacci retracement (4.40)

Euro-Usd

Yes, the signal it is not clear enough, but may be the next coming days we will understand. This could be more fuel to the market rally, (if it breaks the channel).

EURO-USD weekly chart - Fibo's: 

EURO-USD daily chart - Fibo's: 

Let's see what's happening in the FXE:

PFE: watch-list

IWM: Bull

Notice how the Russell 2000 broke the key resistance.... but we can expect a pullback this week. The target is 74.55. Amazing the rally of this index.

XOM: Update

We had a buy signal some days ago. Look the interesting pattern that is developing. I am not sure but looking at the volume decreasing during the formation of the triangle and the break with relative high volume (a little high), I would guess that we have a change in the trend, at least in the short term. The target could be 71.5, where it is the  61.8% fibonacci retracement and where it fills the gap.
In addition I suggest to look in the previous post about XOM where there is a long term perspective for the stock.

Critical levels

To continue with the  previous post in which we measure the SPX in euro, we notice the critical resistance reached.

In the previous post on the S & P 500, we highlighted a down trend-line that was acting as a resistance. But this red down trend-line have been broken. Then, I think 1222 in S & P are possible, but respecting the trend-line from 1962 (green dotted line). The green trend line cross 1222 in October 2010.

Quarterly chart S & P 500:

DOW JONES: Fundamental Analysis

During February and March, we have received the last balance sheets of the DOW JONES components. Using the statistics of Yahoo Finance and the information available in my broker, I made some relationships and comparisons between them. In addition, I compare the situation now and some periods ago. 

First, lets take a look to the Current Price / Book value relationship.  I am wondering why BA is so high, and the implications. AA, BAC, CVX, GE, DIS, JPM, KFT, T and TRV have good ratios.

Now, here we compare the beta of each stock. Notice that sectors like energy (XOM & CVX), consumer goods (KO, KFT, PG), Services (MCD & WMT), telecomunications (VZ & T) and drugs manufactures (PFE, MRK & JNJ) have the lowest. This are the "defensives" companies. 

Now that we have some idea about how this companies could react to the crisis, let's take a look on how they reacted until now. 

First, the revenues and the E.P.S.: MRK, T, PFE, MCD, PG, T, VZ and WMT were little affected. 

The E.P.S. growth vs. dividend growth (annual rate, from January 2007 to December 2009). It is interesting to notice the growth in the EPS of MRK, but this growth is not in relationship with the growth in dividend. Then, I would consider that an increase of dividends in MRK is something possible. MCD, PG, PFE and KFT are some companies in the same situation as MRK.

Revenue year over year (2009 vs 2008) and quarter over quarter (DEC/2009 vs SEP/2009). Notice that revenues from BA, HPQ, JNJ,, MCD, MRK, TRV, PFE, T and VZ were not affected.

Average annual  revenue, income and E.P.S. (2007 = 100%). I add up the revenue, income and E.P.S. of the 30 companies and divided by 30, to obtain an idea of this key numbers and their evolution during 2008 and 2009:

Average quarter revenue, income and E.P.S. (June 2009 = 100%):

DOW JONES: The bear case

This rising wedge is something that is worrying me. The 200 daily exponential moving average is the key support (resistance in May 2009) and is the key point in which I definitely will wear the bear suit. Meanwhile, a trading range between 10.600 and 9.840. In addition, the US dollar in an uptrend is something that give power to the bears.

S & P 500: 1222 possible?

This is one of the "road-maps" that I am following. It is possible?. Looking the previous posts, I think is something to be aware. I am not going short. The uptrend looks steady.


I think we can not go against the trend despite the apparent fallacy of the bull market.

I have been reading and listening a lot of reasons for the market to crash since Abril 2009. But the market does not listen to them. Then, I think them should listen to the market.

The fiscal tightening of China could be interpreted like something positive for the market, because it means that the economy is growing more than expected (!!!)

The systemic risk and the possibility of radical and political changes is something that were present in 2009 (and the market went UP UP UP).

Then, from the fundamentals, I think there is room for growth.

DAX in US Dollar

Notice the down trend-line (white line) and the candlestick pattern (short term reversal, yellow circle). In addition, the index is below its 21 EMA (white line) for the first time since March 2009. 

S & P 500 in euro: the soft bearish side

Some people ask me why to look the S & P in euro. I think looking S&P in euro you can eliminate the effect in the charts caused by the depreciation/appreciation of the currency. I am from Argentina, and when Argentina depreciated its currency (the 'peso") in 2002, the financial markets went up because of the depreciation effect. Then, in USA, the depreciation/appreciation of the US dollar is something that have a big impact in the SP500. Looking the SP500 in euro you change the US dollar fluctuation by the euro fluctuation, and then you have another valid and original view of the index. You can find for example which % of the ups and downs (or broken resistances / supports too) are caused by the currency fluctuation, additional targets, etc.

This chart does not looks bearish, but the target of the inverted head and shoulders have been reached.

Watchlist: Citigroup, Gold & XOM

These are some securities that I am following. The bull US dollar is something to worry (it is not good going against the US dollar now, buying stocks), but I think that the bull US dollar is a sign of weakness on the euro, rather than weakness in commodities and stocks.

Citigroup: wating for the breakup of the down trendline (with volume)


C daily:

GLD: a good buy could be 107 USD

$GOLD daily:

GLD hourly:

XOM: down trendline broken. Refer to older post in order to look up for other timeframes charts.


XOM hourly:

S & P 500 in US euros: bullish signs

Notice the bullish divergence in the slow stochastics. In addition, the EMA's are still pointing up and the trendline is intact. I am not bearish. 

XOM

It is difficult to imagine the market making new lows after this pattern in XOM.... but the trend is your friend. And mine.

S & P 500 in US dollars: supports and MA's

SLV: distribution with Head and shoulders?

Volume: As the Head and Shoulders pattern unfolds, volume plays an important role in confirmation. Volume can be measured as an indicator (OBV, Chaikin Money Flow) or simply by analyzing volume levels. Ideally, but not always, volume during the advance of the left shoulder should be higher than during the advance of the head. This decrease in volume and the new high of the head, together, serve as a warning sign. The next warning sign comes when volume increases on the decline from the peak of the head. Final confirmation comes when volume further increases during the decline of the right shoulder.

To learn more on this pattern, click here

GDP chart analysis

Let's take a look at the evolution of the GDP. In these charts we show the % change from preceding period in Real Gross Domestic Product, seasonally adjusted at annual rates. There are some interesting things to notice,like the "Services" component, in which the principal trend starts falling in the 2nd quarter of 2007 and then recovers in the 4th quarter of 2008 (coinciding with the market trend at that time)

GDP: Personal Consumption expenditures:

Gross private domestic investments:

Exports:

Imports:

Government expenditures:

For additional information: click here

This week Watchlist

The past week we saw a big down movement in the major world indexes. The Obama's proposal to reform the banks "to big to fail" and the announcement of China's government to put limits on the activities of the banks had been the "reasons" that the media use to justify these movements.

I am bearish in the SP500 (short term), so if I buy any of this stocks (not the UUP) I will use tighten stops loss.

For this week, I have these in my watchlist. Notice that I am using the 9, 22 and 35 EMA's to follow trend.

UUP: the EMA's had confirmed the uptrend. Now I am waiting for an entry point.

MCD:

AA:

GE:

PG: