It appears that the Fed-induced rally is ending this morning after strong gains last week. Asia was able to hold onto some of their gains, however Europe is all red but marginally so at that. We would hope that we can consolidate these gains here and set the table for another move higher later this year. That would be healthy for the market and allow bears to place their bets. which could add further fuel to this fire. Technology has lagged behind commodities, but through the end of the year we would expect to see it make up some of this lost ground with new products released going into the holiday season.
We have economic news out today, and it is as follows (data set - consensus):
- Empire Manufacturing - -3.0
Looking at Asian markets we see markets are mixed:
- All Ordinaries - up 0.26%
- Shanghai Composite - down 2.14%
- Nikkei 225 - CLOSED
- NZSE 50 - up 0.66%
- Seoul Composite - DOWN 0.26%
In Europe markets are lower:
- CAC 40 - down 0.58%
- DAX - down 0.17%
- FTSE 100 - down 0.21%
- OSE - down 0.20%
Social media stocks have been rising as of late as the risk-on trade has found its way back into the market and as investors have begun to take these entities serious again. Groupon (GRPN) rose $0.51 (10.71%) on volume of 20 million shares to close at $5.27/share. The company still trades at a steep discount from its highs, but in good news for investors the stock was up four out of the last five days and four straight days last week. This is not one of the best social media plays out there, but it looks like many may be rotating back in to social media stocks and allocating a healthy portion to Groupon.
Obviously the leader in this rally, and the spark, is Facebook (FB) which has rekindled investors' interest after falling to new 52-week lows recently. It appears that the company is now breaking the code to mobile ads on their site and some big advertisers are already reporting solid returns on their advertising campaigns. Shares finished at $22.00/share on Friday after having risen $1.29 (6.23%) on volume of 72.8 million shares. If we had to choose a winner within the industry (of public companies) it would most certainly be those resembling Facebook more so than those mirroring Groupon.
We want to revisit one of our recent successes in Sirius XM (SIRI). Readers may remember for a few months we were on the right side of this trade both up and then down and then up again. We did miss the last $0.25-0.30/share, but we were moved that capital has more than made up for that difference. We now see the shares setting up for volatility, and if we cannot get back above the $2.50/share level we may be in for some downward pressure towards the $2.40/share level. If shares cannot hold the $2.40/share level, then there is a good distance to fall before the next support level is found. We are not bearish on the shares at this point, we just recognize that we are once again at a point where the bears and bulls will have another battle.
Sirius may have problems from Apple (AAPL), but Cirrus Logic (CRUS) appears to once again be blessed by Apple's success. The company has made a name for itself by developing the semiconductors which make the iPhones and iPads work. With the new iPhone due out and a rumored iPad before Christmas, we suspect that shares will be in an uptrend through the end of the year and possibly through the end of the first quarter. Shares almost hit a new 52-week high on Friday, and although it came up just short we feel that there will be many new highs hit over the next few months. With that said, this is definitely an area where investors need to look for gains in technology, and we would be bullish all things Apple at this time.
We referenced our ongoing bearish feelings towards the solar industry Friday and First Solar (FSLR) saw its shares rise $2.01 (8.89%) to close at $24.61/share. Obviously that price movement had nothing to do with that quick reference, but we caution investors moving capital into this area. Even if one makes the argument that they are buying the best managed company with the best business model and technology - essentially nothing wrong with said company - in a floundering industry, we still would point out that it is a horrible industry and probably not worth the trouble. Investing in something so heavily dependent upon government subsidies is never a good idea, and due to these above reasons is why we constantly caution investors on the perils of investing in solar stocks.