In “That’s one long gold bubble,” Tim Ianaco created an illustrative animated graphic from Google news archives comparing the news coverage of “housing bubble,” “credit bubble,” and “gold bubble.” He rightfully observes the following:

…my understanding of how bubbles work is that they materialize rather quickly, fueled by media coverage toward the end and then they burst spectacularly – like the stock market bubble, the housing bubble, and the credit bubble.

Thursday night, Research In Motion (RIMM) released an earnings report that exceeded analyst expectations, produced strong guidance, and was well-received by the market. I took particular interest in RIMM’s share repurchase activity.

RIMM used $775M to purchase 12.3M shares at an average price of $63 per share (full details noted in Seeking Alpha’s transcripts of the earnings conference call). This amount is almost 2/3 the entire $1.2B RIMM’s board authorized for the repurchase program. By going “all in” with the majority of its authorization, RIMM management has followed through with its statement about its confidence in the business.

LDK Solar (LDK) dropped 15% Thursday as the company announced it will issue 18.9 American Depository Receipts as part of a larger bid to remain a going concern. LDK filed a 6K with the SEC summarizing its problems with cash flow, and its plan to arrest its descent into bankruptcy. The introduction states:

We are operating with a significant working capital deficit and incurred a net loss of $209.9 million for the nine months ended September 30, 2009; if we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern.

“Tricks are for kids he plays much gigs
He’s a big bad wolf and you’re the three pigs
He’s a big bad wolf in your neighborhood
Not bad meaning bad but bad meaning good“

Good (or not as bad as expected) economic news has typically garnered selling in the U.S. dollar and buying in the stock market. On Friday, the good news that November’s monthly change in U.S. non-farm payrolls came in essentially flat sent the S&P 500 soaring as high as 1.7%.

However, the dollar index also soared, ending the day with a 1.5% gain. It took 30 minutes, but the market did respond to the stronger dollar by selling off for the rest of the day. The S&P 500 faded and ended the day with a much smaller 0.6% gain. The intra-day action suggests that a stronger dollar still means a weaker stock market. The daily action suggests the inverse correlation may have finally broken.

For Toll Brothers (TOL), history has a nasty habit of repeating itself. Over the last two quarters, TOL released preliminary earnings reports that propelled the stock to one-day double-digit gains on record trading volumes. For the second time in a row, the actual earnings report generated the exact opposite response. After the last earnings report, TOL slid 27% over two months before bottoming in late October. Thursday, TOL dropped almost 8% in one day and is now down 16% from the close after November’s preliminary report.

TOL disappoints and closes previous gap

The weakness in the shares of Research In Motion (RIMM) persists despite the company’s apparent initiation of its share buyback program on November 9, 2009. Two weeks ago, I used intra-day trading action to suggest that RIMM launched its share buyback program. Overall daily volume surged for three days along with price. The stock then stopped cold directly under the 200-day moving average (DMA) and volume snapped back to “normal” levels.

Within six trading days, all the buyback-related gains were erased. Friday’s close completed the roundtrip with a close under under Nov 9’s low. In my earlier post, I also claimed that RIMM’s buyback pattern from 2005 suggested that the dollar volume from the three days of buying indicated RIMM had finished its buyback activity for the fiscal quarter. So far, this roundtrip action seems to confirm that assessment. The fiscal quarter ends November 30th.

The Bank of England (BoE) released its “Inflation Report” on November 11, 2009. This was my first time ever reviewing the report and watching BoE Governor Mervyn King in action as he coolly parried with reporters during the press conference covering the report.

The latest Inflation Report frequently references the benefits of the depreciation of sterling (I refer to the currency as the British pound):

Erika Miller, correspondent at Nightly Business Report, expressed surprise that the CPI showed prices declined year-over-year by 0.2%:

It came as a total surprise to me that grocery prices have fallen nearly 3 percent in the past year, one of the biggest category declines. I would have guessed prices at the supermarket were up.

If inflation expectations remain “contained” why is a record amount of money pouring into commodities this year? Indeed, there is nothing like a rapidly increasing global supply of paper currency to drive interest in hard assets and push prices upward.

Reuters summarizes a recent research report from Barclays on investment flows into commodities:

When I examined the trading patterns in Google’s (GOOG) stock between earnings reports, I found little consistency for forming a trading strategy. For October’s earnings cycle, I chose to play one of the few promising historical patterns: 67% of the times that GOOG opened up in response to earnings, the maximum close until the next earnings report was at least 10% above the post-earnings open. If history repeats itself, this means GOOG should hit at least $600 by mid-January.

On Wednesday, GOOG essentially hit my aggressive price target of $580 before November’s expiration of options. However, I locked in the profit on the corresponding call spread play. This week, I reloaded the GOOG post-earnings play by going long the January 600/610 call spread which is the spread I would have picked last month if using a less aggressive trade.

In early September, First Solar (FSLR) signed a deal with Ordos City, Inner Mongolia, China for a major solar farm project whose 4 phases will run until 2019. This week, FSLR and Ordos City signed a “Cooperation Framework Agreement” which…

…spells out additional project details and local support that advance the development of the 2 gigawatt (GW) solar power plant and confirm the June 1, 2010 expected construction start date for the 30 megawatt (MW) Phase 1. First Solar and Ordos also agreed to establish two committees to ensure the successful execution of the project and to develop a new energy industry in Ordos.

It has been a very long time since a stock blindsided me, but the sting is no less powerful.

Yesterday, SunPower (SPWRA) dropped the AA-bomb – audit and accounting, announcing that:

Probably one of the longest running jokes in the financial markets is the amount of time U.S. officials spend talking about their support for a strong dollar while taking no action to actually support a stronger currency.

On Monday, Federal Reserve Chairman Ben Bernanke made a rare contribution to the bluster by stating his own support for the dollar (note that it is fairly common for other central bankers to issue commentary on their respective currencies; for example, the Bank of England, the European Central Bank, the Reserve Bank of Australia, and the Bank of Canada):

The WSJ reports in “General Electric Pursues Pot of Government Stimulus Gold” that General Electric (GE) hopes to earn about $192B in sales from government-funded economic stimulus programs in the U.S. and foreign nations. The article goes on to describe GE’s various lobbying efforts, CEO Jeffrey Immelt’s ardent support for the U.S. stimulus bill (the American Recovery and Reinvestment Act), and initiatives to tap into U.S. government programs. Of course, it is no surprise that a major industrial company like GE has an on-going interest in snagging government contracts and projects. What caught my eye was the following quote from Immelt, apparently expressing just how enthusiastic he is about helping the government spend taxpayer money:

Chief Executive Jeffrey Immelt now has his eye on a huge new pool of potential revenue: Uncle Sam’s stimulus dollars. Mr. Immelt, a registered Republican, quips about the shift in thinking in the nation’s corner offices: ‘We’re all Democrats now.’

RIMM officially began its share repurchase period on Monday, November 9. Since then, the intra-day trading seems to provide evidence that RIMM (or some other large buyer) has gone to work purchasing shares.

The chart below shows a 10-day chart of RIMM with trading broken into 30-minute blocks. The first 30-minutes of trading on Monday, Tuesday, and Wednesday show an atypical spike in volume (see the three large green bars at the bottom at to the right of the chart). Each of those days, RIMM experienced significant increases in stock price. However, on Thursday, opening trading volume sank back to “normal,” and the day ended with a significant drop in price. (The large volume from last Tuesday, Nov 3 came on the heels of an analyst upgrade).

For the second straight quarter, Toll Brothers provided a preliminary quarterly report that ignited the stock as sales volumes once again surpassed expectations. Robert I. Toll, chairman and CEO, explains:

Our fourth-quarter unit deliveries exceeded the high end of our range of guidance due to the delivery of a higher percentage of our backlog, fewer cancellations, and the sale of quick delivery homes.

On a strong market day, RIMM opened up over 2% and, at the time of writing, is up over 4% on the day. RIMM’s share repurchase period begins today, and, so far, so good for propping up the stock.

Yesterday, I expressed my doubts that RIMM would spend the entire $1.2B that its board authorized, but I failed to provide some historical background. It turns out that the current share repurchase program is much larger in scale to a one-year repurchase program RIMM initiated in 2005.