Archive for the ‘technical analysis’ Category
The other evening on “60 Minutes,” Steve Croft hosted a fascinating report on General Motors, highlighting the company’s current struggles and its task ahead to return to greatness.
There’s been a lot of bad news about GM so far this year and it finally occurred to me that what GM is doing is purposefully making 2006 its official transition year. Put all the bad stuff into one fiscal year, then even a modest improvement in fiscal 2007 will look like a real accomplishment.
So far in 2006, GM has announced a number of plant closings, layoffs of both workers and management, and the majority sale of its highly profitable finance arm along with other non-core operations. The company is ending its corporate alliances with other automobile manufacturers and is going back to the drawing board to create new automobile designs.
In the “60 Minutes” story, Bob Lutz himself (GM’s Vice- Chairman) said that automobile companies usually design their best products when they are in crisis. I hope GM comes out with some great new vehicles and I hope they do it fast. Even if you don’t like the Chrysler 300 or Dodge Magnum, you have to give Chrysler credit for producing bold designs.
That’s it! Bold design. GM needs it so it can generate some excitement in its vehicles again.
My mechanic (at a private garage) doesn’t recommend any American cars to his customers because he says they just aren’t screwed together as well as foreign manufacturers. He used to like German cars, but now puts them down because of their poor reliability over the last few years, particularly in … Read More
Where’s the beef? You might remember that great advertising slogan for Wendy’s. The same question can be applied to the stock market today. Just where is the leadership in this market?
The broad market indices are up around 5-year highs, but I’m worried about a few benchmark stocks. Don’t get me wrong, I still think the overall trend for stocks is positive, but I’m not super bullish because some great companies aren’t participating in this market.
General Electric; otherwise known as one of the economy’s benchmark companies isn’t doing great on the stock market. The Dow Jones Industrial Average is going up, but it is doing so without GE’s help. The stock hasn’t done anything for the last two years and has been trending lower since June of 2005.
IBM also isn’t participating in the renewed enthusiasm for technology stocks. Big blue’s been trending lower since early 2004 and the company continues to layoff staff.
Even good old Johnson & Johnson, the benchmark pharmaceutical, healthcare, consumer products company is having a tough time in this market. The stock has been going down significantly since May of 2005.
It isn’t a big deal, but the performance of these stocks bothers me because they are benchmark companies. Fortunately, the Dow Jones index hasn’t required their help.
I think the stock market performance of these three companies raises a red flag for stock market speculators. There are lots of good opportunities in the stock market right now, but I think a little caution is appropriate. Perhaps these well managed large-cap companies are telling us something that the market doesn’t want to hear. Is … Read More
The news is out on the U.S. auto industry and there should be no surprise, especially if you have followed my columns. In March, it was reported that the two top U.S. automakers, General Motors Corp. (NYSE/GM) and Ford Motor Co. (NYSE/F) both saw its monthly sales fall.
GM saw its March sales plummet 14.6% year-over-year, its largest decline since October 2005. Ford reported a 4.5% year-over-year decline, which was disappointing given that Ford offered the most consumer rebates in March according to Edmunds.com, an industry tracking firm. The lone bright U.S. automaker was DaimlerChrysler AG (NYSE/DCX), which reported a 2% year- over-year increase in March sales.
As has been the case in the recent months, U.S. automakers are losing sales to Japanese automakers. Toyota Motor Corp. reported a monthly record for U.S. sales, seeing a 7% year-over-year jump in March sales.
The reality is the U.S. auto sector is in a shift. Domestic automakers must correct this or the negative trend will continue going forward and could further devastate the U.S. automakers.
As far as market share, GM is still holding to the top spot, but saw its U.S. market share decline to 22.8% from 26.9% a year ago. Likewise, Ford saw its share fall to 18.4% from 19.4%. Concurrently, Toyota held on to the third spot at 13.8%, just ahead of the 13.7% belonging to Chrysler.
The use of incentive programs by U.S. automakers, while it helps, does not really address the root of the problem. Once incentive programs are finished, consumers may go back to buying foreign autos. The reality is incentive programs make the consumer wait … Read More
Computer-chip maker Transmeta Corp. (NASDAQ/TMTA) is a stock that I have been following for some time. I remember all the hype back in November, 2000 when Transmeta launched its highly anticipated Initial Public Offering. At that time, there was a trend developing towards smaller computers, laptops, and PDAs. While the main computer-chip makers, Intel Corp. (NASDA/INTC) and Advanced Micro Devices, Inc. (NYSE/AMD), focused on the desktop PC segment, Transmeta was gaining some followers by focusing on developing chips that used lower energy consumption–ideal for the smaller computer market.
Some market watchers even went as far as saying Transmeta would be a force to be reckoned with in their niche. But, since trading at $45 in November, 2000, the stock has steadily seen its value erode in the market to the tune of 96.86%. From a market cap of $8.24 billion, Transmeta is currently trading at a market cap of $270 million.
Here is the problem. Transmeta was correct in predicting the trend for portable devices and laptops would rise, but the problem was Intel and AMD also figured this out. Once this happened, there was very little hope that Transmeta could fend off the industry giants. The only hope was a takeover of Transmeta, but it failed to materialize as the major computer-chip makers with their huge resources and technology expertise developed competing low power chips with more features.
Now Transmeta is struggling to stay afloat. Its chips, while used in some laptops, have yet to gain wide market acceptance. And, in business, this could be a killer.
On the operational front, there has been some encouraging news. Transmeta has … Read More
The world seems much more yellow now. Gold bugs are dancing on the streets as the cash price of gold on the COMEX broke above $500 an ounce on November 29 for the first time since late 1987. Gold subsequently touched $507 on December 2 and looks positive.
Since bottoming out at the $250 level in 2001, gold has been on a steady tear, as demonstrated by the positive upward sloping price trend. But now in somewhat unfamiliar territory, at least in recent memory, there are questions surfacing regarding whether the $500 resistance level represented a key technical point for gold. The fact is, when the level is broken twice in 18 years and, the last time, prices steadily fell thereafter, you have to wonder if the metal can hold. But the trend is bullish and suggests higher prices ahead.
The Relative Strength of gold is strong and points to higher prices ahead. But in the near term, given the buying, the gold market is technically overbought, so we could see some selling pressure at $500. A near-term retrenchment is normal and healthy in order for gold to move higher, but, in my view, the key will be the buying support. On the downside, a key support level is the 20-day and 50-day moving averages at $480.60 and $475.10, respectively. If gold can hold at these two moving averages, then we could see additional gains ahead in 2006. Yet a break below these moving averages could see a retrenchment towards the 100-day and 200- day moving averages at $459.20 and $449, respectively.
Should gold hold, we could see a move … Read More
The other night I watched a fascinating television show on PBS. The program was “NOVA,” which regularly deals with new developments across a broad range of scientific topics. In this particular show, the topic for discussion was fuel cells for automobiles.
The scientists pointed out that the current enthusiasm for fuel cells in automobiles is misguided. Their contention was that it will be decades before fuel cell vehicles will enter the mainstream economy and that we shouldn’t really use fuel cell cars at all.
The current problem for fuel cell technology is threefold: They can’t yet produce enough power in extreme heat or cold; hydrogen is very difficult to produce for consumption in automobiles; and hydrogen storage in automobiles is problematic at best.
The scientists pointed out that to develop a fuel cell economically, we would have to derive hydrogen from water. In order to do that, however, we’d have to use so much energy in extracting hydrogen from water molecules that the environmental gains from zero emission fuel cell cars would be offset by the energy production needed to produce the gas in the first place.
Also, because hydrogen is a gas, not to mention a quite volatile gas, it needs to be stored in well insulated tanks. So, it order to have enough hydrogen to power a vehicle for any reasonable distance, you’d need to have a really big tank in your trunk.
With current technology, the scientists contended that consumers just won’t go for hydrogen vehicles because they can’t do what current vehicles do.
Therefore, it seems reasonable to assume that gasoline/electric hybrids are going to be … Read More
The problem in this current market is that it’s way too edgy. One hint of any problem, whether minor or major, can often drive investors to the exits, selling the stock like a fire sale. Now, don’t get me wrong, sometimes stocks clearly deserve the wrath of investors, but many other times they do not.
An example of this, in my opinion, is ATI Technologies Inc. (NASDAQ/ATYT), which got whacked after warning investors in early June to expect lower sales in its third quarter.
This maker of advanced 3D graphics and digital media silicon solutions plummeted to a 52-week low of $11.20 on July 7, down 49% from its December 2004 high of $20.66.
The selloff appears to be overdone, driven by the extreme nervousness of investors. It doesn’t take much to rock a stock in this current investment climate. So, what do you do?
Given the price decline, now may be an opportune time to buy shares or trade this mid-cap and, in the process, hope for a rebound, as the stock is technically oversold. So far, it has played out this way, as shares of ATI have rebounded 19% since dropping to a low only a few days ago.
In this case, as in some others, ATI was sold off with little regard. In spite of the warning, ATI remains a dominant player in its area, in spite of its competition with NVIDIA Corp. (NASDAQ/NVDA).
In the third quarter, year-over-year revenue growth was a disappointing 8%, well below its forecast. Operating earnings came in a penny below estimates and well below the prior year’s profits.
Technically, ATI appears … Read More
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Last week, I celebrated a milestone birthday… I turned the big “Four O.” Some friends told me life starts at 40, while others, jokingly I hope, commented that the years move quicker after 40. Either way, I don’t feel any different today than I did when I was in my 30s.
I believe it was Joe Karbo who once said, “Use each minute before it disappears forever.” I live by this… and I embrace and enjoy every day that passes.
The question I’m asked most often is, “Michael, what would you credit as your most successful life and business building tool?” For me, my most successful tool has been the morning glory. Let me explain.
Since I was in my 20s, I have been an early riser. In fact, each year I put the alarm clock back a bit more. Right now I wake up each morning at 4:30AM… and I’m ready to work by 5:30AM. Our staff doesn’t get in until 8:30AM-and by then I have a full three hours on them. It’s three peaceful, reflective, and productive hours.
In a recent survey, when men over 65 were asked what they might do differently if they could relive their 40s, they said they would have: Taken more time to reflect (to see the big picture); taken more risks (by being bolder in their careers and investments); and defined their purpose (finding out what dent they were they making on the world).
Reflection is important. We all need uninterrupted time to think about work and family. In fact, it was Rockefeller who once said, “Do many of us who fail … Read More
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