January 24, 2012

Intraday support levels: DJIA-12680, S&P-1310, NASDAQ-2775.  Every time the weekly Tuesday triple digit turn around fails to materialize the markets experience some turbulence.  Possible downside short term target risk to 12520, 1285, and 2730.  That being said catalysts for market include the State of the Union, the Fed, Apple, and the miraculous, magical economic numbers.  If the usual rally ensues markets will make a run toward 13200, 1400, and 3000.  Note,one should not confuse the short term intraday, daily opportunities with the upside bias of the market.  Until that bias is broken the bear case is not completely on the table.  Once on the table however extreme caution is warranted.  A trader should always question one's trading bias and generate an opposing viewpoint to keep perspective.  Good luck and good trading.

The Good, the Bad and the Ugly: A look at IBM

There is no doubt IBM is the ultimate bellwether, the tried and true, the bluest of the blue chips. Quarter after quarter "Big Blue" hits the numbers, what is there not to like?  Even Warren Buffett has jumped on the bandwagon, scooping up north of $10 billion worth of stock.  According to Ryan Guina's article in US News dated Oct. 26, 2010, "Buffett and his partners famously sat out of the Dot-com Bubble in the late nineties because technology wasn't a field he was comfortable with.  While others speculated on technology start-ups, Buffett was scooping up value stocks which had fallen out of favor.  A few short years later the bubble crashed and investors went back to the value stocks Buffett had been buying all along.  Buffett not only avoided substantial losses, but he made money because he stayed true to investing in what he knows".  Does Warren know IBM?  Is he now comfortable with technology...or is he so enamored with IBM's financials that he has forgotten his own rule?  Profit margins of 15%, ROE in excess of 70%, and a P/E of 14, IBM does appear to have all the makings of a gorgeous technology play.  However, one should not make the mistake of attributing IBM's success with its own greatness as much as to HP's Neolithic incompetence.  Forecast cloudy.  IBM's new competition is coming from all fronts, including Apple and its Cloud centered devices.  There is little doubt given a long enough time horizon IBM will perform, but someone wanting to buy IBM today while it is trading at $190 with a paltry dividend of 1.5%?  I question the sanity.  IBM generated a weekly sell signal early in December.  A failure of IBM to break out above 195 will confirm the signal and could generate significant downside risk.  Near  term downside potential of 163 is possible, with an intermediate target of 132 should IBM's new CEO, Rometty, prove the Soothsayer of Omaha's crystal ball cracked. -To thine own self be true.

Markets- DJIA, S&P, NASDAQ

Markets are starting to look like they are in the nose bleed seats.  Short term sell signals will be generated for the DJIA, S&P, and NASDAQ at 12680, 1310, and 2775, respectively.  That being said, the weekly Tuesday triple digit trade setup is still in the cards.  For the bold -Potential  positional trading opportunities exist in TVIX, and TZA on a break down, or TNA, and RUSL on a breakout upside move.  RUSL has had considerable outside performance on market upside days. (Czar) Putin's coronation this March should continuously offer viable short term trading opportunities. Additional caution is warranted ahead of the Fed and GDP this week as complacency will quickly erode profits.  Next commentary later today will focus on IBM. -Weekly commentary will focus on directional trades for copper, coffee, and the Euro.   Good luck and good trading.

Progressing from surgery nicely.

Surgery on the leg went nicely, although unexpectedly, happening at a less than opportune time. (Have been waiting to hit the ground running for a while now, it should not be too much longer) Additionally, I was able to reschedule most of my courses this semester around market hours...which is a huge plus. In the eternal words of Mark Twain, "I never let my schooling interfere with my education."