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David White is a software/firmware/marketing professional and a long time investor. He has worked in the networking field, the semiconductor equipment field, the mainframe computer field, and the pharmaceutical/scientific instrumentation field. He has bachelor's degrees in bioresource sciences... More
  • Why the GDP Number Thursday May Be a Lose – Lose Situtation
    The US reports its Q3 GDP number Thursday. The current estimate is for 3.2% growth. This is almost 4% above the Q2 result of -.7% growth. This should be great news! Even a slight disappointment should be great news. How would it not be?
     
    First the US equities markets are toppy at the moment. They are really looking for an excuse to retrace. They are up about 60% from the March 2009 lows. Commodities have risen dramatically lately too. Oil is over $80. If it goes much higher, it will seriously impact any chances of a worldwide economic recovery. Gold has gone up dramatically too, but there are no big signs of huge inflation yet. In fact the signs of deflation abound. The housing market is still troubled. The commercial real estate market is apparently in bigger trouble. There is no reason to believe a dramatic increase in prices is imminent. Gold’s intrinsic value is only about $700/oz. The rest of the current price is speculation on inflation. It is toppy without further strong signs of inflation.
    More »
    Tags: SPY, UUP
    Oct 26 10:35 am | Link | Comment!
  • UK Economy Contracts for Sixth Straight Quarter --> Markets Should Go Down Friday
    The UK economy contracted by -.4% in Q3 vs. an expectation of +.2% growth. This is bad news for the world economy. By itself it should mean a bad day for US markets. This news signals that the recession still has teeth. US markets will have a hard time being positive when they open later today. Other world markets that are well into their days may be less effected Friday. 

    More than just the negative sentiment, the UK's recessionary GDP reading means that the UK Pound will likely fall against other world currencies on Friday (and probably for several days afterwards). The UK pound is already down -1.12% vs the USD. With the USD also rebounding these days from a bottom against the Yen, this virtually ensures that the USD Index will gain ground Friday. A higher USD Index will put pressure on already topping commodities, which have run up strongly recently. Those commodities, especially oil, are likely to fall on this news. That means commodity related stocks will fall too. This may well turn into a rout today -- Friday. It will almost assuredly mean that the day will be a down day, even with AMZN's great result yesterday. MSFT and the Existing Home Sales data will play into the mix too, but they are not likely to outweigh the UK recession news for Friday.
    Tags: SPY, QQQQ, DIA
    Oct 23 05:40 am | Link | Comment!
  • HOG Misses Again. After “Dip Buyers” Run Up, Opportunity Exists to the Downside.
    HOG missed earnings estimates earlier this week. It reported EPS of $.11 vs. an estimate of $.21. Thus far on Yahoo Finance, the analysts' estimates for Q4 2009 have been lowered to -$.26 from -$.16. This means HOG now stands to earn $.43 in FY2009. This translates into a FY2009 PE of 65 based on Friday's closing price of $27.86. This PE is far too high for a company whose earnings and revenues seem to be going in reverse instead of growing. Earnings were down more than 80% and sales were down 21% year over year (i.e. revenues are down).

    HOG announced it was discontinuing two product lines -- Buell and MV Agusta -- in order to focus more strongly on the Harley-Davidson brand. We'll have to see how good a strategy this turns out to be. Many people have expressed doubts that the Harley-Davidson brand will continue to have the same appeal as the baby boomer generation ages out of the motorcycle buying demographic. Those same people have suggested that both Buell and MV Agusta had more appeal to younger generations.

    HOG has announced some improvements to its HDFS unit. It has made loan qualifications more stringent. It has started to ask for bigger down payments. However, this does nothing to help most of the $5.18B in loans held for investment at the end of Q3. It also likely will prevent some customers from buying Harley’s. Further the $5.18B in loans still represents a huge threat to HOG/HDFS as unemployment continues to rise. Moody's is predicting that the credit card charge off rate will peak in about mid 2010. That will likely be the peak of HDFS' problems too. HDFS lost $31.5M in Q3. That was $67M worse than a year ago. It is likely to do much worse before things perhaps begin to improve in the credit business after the middle of 2010.
    In the last 90 days the predictions for 2009 EPS have come down from $.88 to $.46 (or $.43) for FY 2009. The predictions for 2010 have not moved down nearly as much. However, as 2010 nears that eventuality seems only a matter of time. I would not be surprised to see HOG lose money in 2010. I would not be surprised to see HOG enter bankruptcy. HOG had a very hard time finding money for HDFS for the 2009 fiscal year (about $1B). HOG will perhaps have a harder time in 2010.  HOG seems expensive with a PEG value of 2.8566, above the Recreational Products industry median PEG of 1.22. Considering the FY2009 PE of 65, the PEG doesn’t give one much hope.

    On a technical basis HOG is currently above its upper Bollinger Band. It is very likely to come down from there. It is about $4 above its 50-day sma. It should very easily return to there, especially if the market retraces. If the market goes sideways, HOG should still fall. If the market continues upward with strong Q3 earnings, then it might be best to get out quickly. This should be a good short. Any positives in EPS have come from cost cutting and added efficiencies. This cannot go on forever. HOG needs to produce revenue growth. There is no sign of that yet. Rather HOG is likely going to be severely challenged in 2010 as the credit charge off rates skyrocket. Does a stock, which is at risk of losing money in 2010 (or at best growing very little in 2010), deserve to be trading at 65 times 2009 earnings. I think not. The dividend is no reason to keep this stock. It pays a paltry 1.45%, which is considerably below the 2.38% average currently paid by the S&P500. The Williams %R and the RSI both indicate that HOG is over bought. The SPY is looking like it may retrace soon.  Nothing is one hundred percent certain in the stock market, but betting HOG to go down seems like a good percentage bet at this time. Still it might pay to keep a tight upper stop as the overall direction of the market is uncertain; and HOG has a Beta of 2.3. The recent rapid rise seems likely to reverse itself given the negative earnings news. I think the initial negative reaction to the earnings news was the correct one. The “dip buyers” have since pushed the stock price up by about $4. It seems likely that the fundamentals will soon override the unreasonable optimism of the “dip buyers”. This should allow for a very nice profit for those who short. Perhaps GS was a big “dip buyer”? Perhaps GS is now planning to make good money to the downside?
    Below if the 3-month chart of HOG:
    More »
    Tags: HOG, SPY
    Oct 18 04:43 pm | Link | Comment!
  • VIX and SPY Signal Possible Reversal
    The VIX has a strong support base at about 23 on its daily chart. It is there now. If history is any indication, it may rise again from there. This would likely mean the stock markets would go down. See chart below:



    The SPY has strong overhead resistance at about $108.10 on its daily chart. The market went up to $108.13 in the pre-market. It seemed to bounce of this resistance. It is heading back up toward it now. If it bounces off the resistance again, it may signal a new near term down trend. See chart below:



    The combination of the overhead resistance on the SPY daily chart and the support from underneath on the VIX daily chart is a strong technical indicator that the SPY may be headed downward in the near term. It is only an indicator, but it is good to be aware of strong technical indicators.

    If the SPY does bounce downward, it will have formed a triple top on its daily chart. This will be a strong technical signal that the SPY will be heading significantly lower.

    I apologize for the lack of charts, but the denial of service attack on seekingalpha has prevented me from loading them.

    I have no positions in SPY or VIX
    Tags: SPY, VIX
    Oct 12 09:44 am | Link | Comment!
  • VIX and SPY Signal Possible Reversal
    The VIX has a strong support base at about 23 on its daily chart. It is there now. If history is any indication, it may rise again from there. This would likely mean the stock markets would go down. See chart below:



    The SPY has strong overhead resistance at about $108.10 on its daily chart. The market went up to $108.13 in the pre-market. It seemed to bounce of this resistance. It is heading back up toward it now. If it bounces off the resistance again, it may signal a new near term down trend. See chart below:



    The combination of the overhead resistance on the SPY daily chart and the support from underneath on the VIX daily chart is a strong technical indicator that the SPY may be headed downward in the near term. It is only an indicator, but it is good to be aware of strong technical indicators.

    If the SPY does bounce downward, it will have formed a triple top on its daily chart. This will be a strong technical signal that the SPY will be heading significantly lower.

    I apologize for the lack of charts, but the denial of service attack on seekingalpha has prevented me from loading them.

    I have no positions in SPY or VIX
    Tags: SPY, VIX
    Oct 12 09:43 am | Link | Comment!
  • Gold Is Breaking Out. AUY Is Loving It
    Days don't get any better for a stock than today has been so far for AUY (Thursday 10-8-09). AUY received 6 target upgrades and 4 ratings upgrades already today, and the day is still young.

    Target Upgrades:
    Raised to $13.50 from $13 by R. James
    Raised to $14 from $11.50 by TD
    Raised to $13 from $12 by RBC
    Raised to $12.50 from $11 by Natl Bk
    Raised to $14.50 from $11.50 by BMO
    Raised to $13 from $11 by UBS

    Ratings Upgrades:
    Raised to Buy from Hold by TD
    Raised to Outperform from Sector Perform by Scotia
    Raised to Outperform from Mkt Perform by BMO
    Raised to Buy from Hold by Paradigm

    The bottom would have to fall out of the market today for this stock not to move up on this news. Gold is already up $10+ today to $1055. This should help AUY move up also.
    Tags: AUY
    Oct 08 08:06 am | Link | Comment!
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