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David White
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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
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  • Technical trade Point (R3) Reached on the SPY for Monday. A Reversal Is Likely

    The pending US homes sales index for March was +3.2%. This was +1.1% from a year ago. The Construction Spending was +.3% versus an expected -1.3%. This was very good news for the markets. However, the markets quickly reached a technical trading point (R3 = $89.70 on the SPY). While there is no absolute in trading, only very infrequently will an index move beyond its R3 on any given day. For this reason alone, the direction of the market for the rest of the day may be flat to down. If you are enthused about today's news, you may wish to wait to buy in. Technically this may not be a good point to do so. You could get in just in time for the slide. Adding to my the technical reversal probablity is the fact that the 10-minute chart RSI for SPY is at 87 (highly overbought). The fast stochastic is at 94 (overbought). The volume spiked on the news, but is now considerably lower. All of these indicators would tend to indicate that the market is more likely to reverse than to go higher from hereon today. I note this is only meant to be a prediction for today. It is only a probability, not a certainty.

    Tags: SPY
    May 04 10:14 AM | Link | 2 Comments
  • Don't Be Too Distracted by the Glitzy Stress Tests. Pay Attention to the Nuts and Bolts

    A lot is being made of the stress test results that are coming out later this week. They are important; but so is some data that has drawn little attention of late, the unemployment rate number. Unemployment is supposed to rise to the 8.9%-9.0% level. Why is this so significant for banks? The charge off rates on credit card debt generally follow the unemployment rate. If the unemployment rate reported later this week is in the 9% area, the charge off rate will likley be in the 9% area. Remember COF reported an 8.4% charge off rate for Q1, but it reported a 9.3% charge off rate for March 2009. Given this I expect COF's charge off rate to be 9% or above for April. Other banks in this industry are likley in the same boat. Plus MA reported a 10% decline in total US dollar value charged in its latest quarterly results. These two factors should be a double whammy. They should ensure that the credit card businesses of the banks involved will all be losing money for this quarter (and likely many to come). Don't forget that BAC CEO, Ken Lewis, warned recently that the credit card business is souring rapidly. When everyone gets over looking at the media darling stress test results, they may start to pay attention to the nuts and bolts of this industry like the credit card business. Those are looking increasingly ill. Add to this the fact that the rising unemployment rate also means there will be more NPL's in the near future. Then the banking picture starts to look very gloomy indeed. Keep in mind that the stress tests are likely a gimmick to make the banks seem more solid than they really are. Even the lawmakers have already said that the stress tests are too close to our current conditions to provide much reassurance about banks' stability. Looks at those nuts and bolts this week. Eventually the markets will be paying attention to them also. Banks like COF, C, and BAC should be particularly hard hit by the unemployment numb...

    May 04 9:43 AM | Link | 1 Comment
  • It might be time to short Toyata Motors (TM)

    The automakers reported April sales numbers today. They all showed year over year losses. However,Ford and Honda seemed to stand out as the better performers. They showed the least decreases in their sales numbers (-31.5% and -25.3% respectively). TM on the other hand had relatively dismal results (-41.9%). This was even significantly worse than GM (-33.2%). This clearly puts TM on my short list. It has a very high stock price. It has a reasonable TTM PE of 18.78 (Yahoo Finance). However, it has no FPE (i.e. it is expected to lose money in the future). These latest numbers likely mean that ti will lose even more money than many people had expected. I have written a previous article on TM if you want more information. Today's numbers could be the trigger for a big down movement in TM stock. This will still likely be dependent on overall market action. However, with this result the likelihood of such a move has increased dramatically.

    Tags: TM, F, GM, HMC
    May 01 3:47 PM | Link | Comment!
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