Category: Stocks

The stock of the week is Apple Inc. with a pretty interesting price pattern. After the 15% drop started at the beginning of June the stock managed to gain back 61.8.

Chart: AAPL, H1

On the way up the price started drawing a Rising Wedge, which topped at 430.50$ per share. The price pattern was formed during the last 3 weeks. In all this time it can be observed that the volume started to drop. Next to this signals we can also add the 14 periods RSI which has made a negative divergence and it dropped under its trend line.

Now the price got very close to the apex of the pattern. The width of the Wedge is 21.50 dollars. If the pattern will be confirmed by a close, on a one hour chart, under the lower line, we can expect for the stock to lose at least 5%. Why at least? Because if we look at the trend, it is descending, so a new drop might become another impulse for the current main trend.

Even though our favorite scenario is on the down side, we have a backup. If the price will break and close above 431$ per share we will revise our analysis.

 

In almost 4 years eBay Inc. gained about 480%, rallying from 10$ per share all the way to 58 dollars per share, having an all-time high around 59 bucks. From the first day of 2013 the price started to consolidate itself in a rectangle.

This price pattern was drawn right above the rejection line of an ascending channel. Until now the buyers did not have enough force to drive the price through the key resistance and now it will be even harder. The company announced a profit of 0.63$ per share, missing the estimates of 0.64$ per share. The price dropped suddenly 4 dollars from 57.50 to 53.50.

Taking into consideration the factors mentioned earlier and combining them with a negative divergence on the 14 weeks RSI we can say that we have some good signals of shorting. The confirmation would come with a close under 50$ per share, sending the price back into the channel. The support it is found next to the trend line at about 45$ per share. From the current level to the support it is about a 15% drop.

Keeping in mind that until the end of 2012 bulls were pretty strong, we should keep an eye over the resistance. A break and close above 59 – 60$ per share could trigger another rally targeting 65 and 70.00 levels.

 

Starting with April this year the QQE program (quantitative and qualitative monetary easing) has been launched. Through this program, the Government is increasing annually the monetary basis by 60-70 trillion yen. The quantitative aspect is determined by the great amount of JGBs bought monthly while the qualitative aspect is represented by increasing average remaining maturity of the Bank’s JGB purchases to about 7 years. Positive effects have been observed in terms of stocks (whose prices rose), a flat long-term interest rates, a more favorable consumer’s sentiment and increased expectations for inflation.

The pace of growth is expected to evolve as: 2.8% for fiscal 2013, 1.3% for fiscal 2014, and 1.5% for fiscal 2015. The only disturbing factors are the two scheduled consumption tax hikes (this scenario is valid if the global economic situation remains stable otherwise, the strongest obstacle remains the anxious global economic evolution). An increase in the sales tax in considered to be mandatory in order to sustain the “repair” rhythm of the country’s finances.

In the meantime, Japanese officials are visiting China on the 29th and 30th of July in an attempt to build a mutually beneficial relationship and to solve the territorial disputes.

Yahoo, representing the internet information providers’ industry, was founded in 1994 by Stanford Ph.D. students David Filo and Jerry Yang. Since then it has evolved in an American multinational internet corporation headquartered in California. Yahoo is known for its web portal, search engine Yahoo! Search and other many related services.

Yahoo’s market capitalization is $28.51 billion with 11.700 employees. Its main competitors are AOL with a market capitalization of $2.80 billion and Google with $289.74 billion in market capitalization. What have been interesting about this company are its latest and frequent acquisitions. Starting with May 2012, we may observe 11 acquisitions made. Almost the same pace of purchasing start-ups with huge potential is found at Amazon and Google with 7 acquisitions each in the last year, and Facebook with 9 purchases for the same period of time.

The companies purchased by Yahoo are the following: OntheAIR, Snip.it, alike, Jybe, Summly, Astrid, GoPollGo, MileWise, Loki Studios, Tumblr and PlayerScale. What all these services have in common? They are trying to provide the best communication channels, innovative ways to ease human’s activities, new ways to organize our days and interesting sources of entertainment. Moreover, 10 of these acquisitions have in common Marissa Mayer as CEO and have been bought since the beginning of 2013. If we look at Google, former workplace of Marissa Mayer, it owns assets like Gmail and YouTube which are enormously valuable speaking about traffic generated and online ads sold. One of the latest acquisition of Yahoo is Tumnblr, which is a powerful tool with 55 million bloggers and 300 million visitors per month, possibly stealing users from Google and Facebook. There are voices saying that Yahoo is prepared for even bigger acquisitions as Hulu, Zynga and Daily Motion. It looks like Marissa Mayer is ready to go further with these acquisitions. All these actions are part of the plan that is intended to make Yahoo a leader in the internet information providers’ industry.

Furthermore, what is the meaning of buying a startup? May this action eventually lead to an extraordinary investment idea? Some more of you may say yes, as I tend to answer this question. Because startups are small companies designed to grow fast, they are characterized by fully dedicated people with innovative ideas that can lead to the creation of remarkable products and services. Big companies have recently added on their investment portfolio the buying of startups, as the examples cited above. Also, outstanding examples of startups are Skype (initially acquired by eBay for $2.5 billion, 65 % of Skype being bought for $1.9 billion in 2009 and in 2011 Microsoft acquired Skype Communications for $8.5 billion) and PayPal (acquired by eBay for $1.5 billion 2002).

If you are really thinking about investing in Yahoo, then you need to know that it is part of 10 indices and is traded on the NASDAQ stock market.

The Vodafone Group decided to sell its 45% stake in Verizon Wireless for $130 billion according to the last press releases related to the negotiations. Sources are saying that Vodafone will get $58.9 billion in cash, $60.2 billion in Verizon stock and additional $11 billion in the beginning of the next year. For the following period, Vodafone is planning to extend on the European market which is its main target. In this respect, the company is about to make serious investments in countries like Spain, Italy, Germany and Portugal. Another area that is in question is Africa which is considered a market with full of potential. This transaction would also help Verizon Communication develop on the U.S. market and beat its competitors, boosting its profits. Because of a clause introduced in 2002 in the Britain capital gains legislation, allowing companies to return cash from large disposals to the U.K. without paying taxes, chances are that the great deal of money resulting form this transaction will go to the U.K..

As the deal is nearing completion, Vodafone’s stocks are getting to highs that haven’t been reached in a decade. Holders of the Vodafone’s shares are expecting as well a better payout resulting from their investments, situation that could radically change on the long term. The second largest transaction in history is expected to improve the image and profits of both the companies involved.

 

The answer for this question is in my opinion, yes!

Hewlett Packard (HPQ) has reported earnings above expectations of 0.87$ per share but the price continued to rise at a moderate pace. Starting with the April low the shares gained over 45%, rising almost 9 bucks.

Chart: HPQ, Daily

The power of the bulls dropped with each higher high. And this can be seen in the chart, because it has drawn a Rising Wedge. The pattern was accompanied by a fall in the trading volume which also shows that investors are less interested in this stock. With some effort the price managed to retreat 38.2(26.50$), Fibonacci retrace, from the main down trend started at 51$ per share in April 2010.

Adding the fact that on the 14 days RSI we can see not only a negative divergence created, but also a symmetrical triangle I would say that we just need a price action confirmation before a 20% drop back to 21$ per share. If on a daily time frame there will be a close under the lower line of the pattern the fall could be imminent.

All the facts are indicating a drop, but do not rush in taking a decision right now. Wait for a breakout and a close under the lower line and you can act. Short selling the stock could be a choice, but if you prefer you could use options to limit your risk in case of a false breakout.

Tesla is the company that shined lately by its impressive results. Not only that its sales increased more than expected, but also the profit on shares beat expectations by far. On 15th of July Tesla was included in the Nasdaq 100, index that tracks the largest companies on the exchange. The place was freed by Oracle which moved to the New York Stock Exchange.

Thursday, August 08 2013, the Nasdaq 100 Index rose, driven by gains in the technology sector. In this respect, Tesla Motors Inc brought its substantial contribution as it jumped 14.2% to $153.46 a day.

Early this year, Tesla started to glitter by proudly announcing the first quarter on profit in its ten years’ history. Immediately in May, its shares passed the 100$ threshold, now being established around the value of $150/share. Reporting the financial situation on 7th of August 2013, the second quarter was closed with $746 million in cash. The main sales market is the United States while is considerably expanding in Europe and Asia where it intends to open more service locations. China and Japan are expected to be major importers of these cars. After the steep increase registered so far, things are expected to calm down a little bit but by the end of each quarter of this year, profits are expected to be reported, sustaining the increasing trend that Tesla is following lately.

Chart: TSLA, Daily

Walt Disney Company

From October 2010 the price of Walt Disney Company shares started a bullish market. Ten months later, the price has gained 150% after reaching 67.70$ per share. From May 2013, when the price peaked, a triangle consolidation has started.

Chart: DIS, Daily

At this point the pressure seems to be o on the lower line of the triangle. A breakout and a daily close under this line could signal a 9.5% drop back to the trend line. Do not rule out the possibility of a false breakout on the lower line and a rally above the upper line and resistance. In any of the scenarios there is a good opportunity for taking some profits.

Coca-Cola Company

Chart: KO, Weekly

Let’s pass to our next company, Coca Cola. Another bearish market that lasted more than 4 years and the price of the shares rallied almost 150%.

At the current moment a corrective movement started that brought the price at the middle of the up channel. It has found a support at 39.60$, but it might move lower to test the trend’s line. The best opportunities for this stock would come with the breakout under the trend line, signaling this way the start of a possible bearish market, or a breakout above the 41.20$ resistance that could mean the continuation of the trend.

MasterCard Inc.

Chart: MA, Weekly

The last but not least is MasterCard Inc. This company’s share price rallied in less than 3 years almost 250%. It is an impressive market with no important corrections.

This trend might continue for the next three years, only that there are some bearish signals. The price has got close to 700$ per share, the 28 RSI entered an overbought area and the volume started to drop as the chart shows it. This signals are not enough to take action at this point, but a drop under the trend line (do not forget the chart is drawn on a logarithmic scale) or a candlestick formation could confirm our current signals.

If the signals will be confirmed, a fall back to 500$ per share would be imminent. In this case a shorting opportunity would appear.

If you are not fans for short selling you can always use options to trade this kind of patterns.

Remember our analysis 3 Stocks you Should keep an Eye on? Well, the price of Walt Disney shares have dropped from 68$. After a consolidation in a symmetrical triangle, the pressure started to turn on the down side. The lower line of the triangle couldn’t stop the fall of the price and now it is found at a key support, 61.69$.

Chart: DIS, Daily

The price pattern is looking now as a Double Top. A daily close under the base line of the pattern would confirm a breakout and might trigger a fall of almost 10 percent. The target of the price pattern is the projection of the height of the Double Bottom from the base line. The price target is 56.00$, but it could get even lower touching 53.38$ per share, which is an important support level, tested in September 2012 and February 2013.

This fall is also signaled by the big divergence drawn on the 28 days RSI, but it is dangerous to sell short the stocks right at this moment. Waiting for a close under 61.70 would be the smartest thing to do. Having the confirmation investors could sell short the stock with their broker, speculate on CFDs or even buy a put option with 3 months ahead strike price.

 

Good news started coming for Apple and better years are expected. The American multinational corporation is close to sign an important agreement with the biggest mobile carrier in the world, China Mobile. In order to have the full Asian market covered, Apple is considering a settlement to sell its mobile phones by Docomo, the Japan’s largest carrier. The deal with China has finally reached an agreement mainly because cheaper phones will be provided by Apple, the iPhone 5C which is considered to be affordable and in line with the expectations of the Asian consumers.

Next week Apple will launch its brand new iPhone 5S and the brand new and cheaper iPhone 5C which despite its low price, represents the product that is expected to boost sales. There are also rumors about the third iPhone, a larger one named iPhone 5L, which most probably will hit the market in the beginning of next year. The surprises list continues with the October launch of the new operating system named OS X Mavericks, expected to offer an improved battery performance, desktop versions of iMaps and iBooks and advanced multiple display support.

Therefore, Apple’s stocks will be the most tracked in the following period. The company may be on the right path, now that is offering a mix of high quality products that are affordable for a wider range of consumers. The variety of products, prices and the extended targeted area may the needed approach of this business, given the market and its main players.