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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Notes: Autos & Semis Keep On Truckin' -- April 1

    The S&P 500 and the market leading Dow Transport Index (DTX) were both finally able to break out of a month long consolidation range to hit new all-time highs. The Dow Industrial Index (DJIA) is retesting its all-time high put in a couple of months ago while the tech heavy Nasdaq and small-cap driven Russell 2000 (RUT) both sharply rebounded from a recent sell-off. The question now is how much steam do the bulls have to propel the move higher?

    Looking at the VIX may provide us with a clue. The volatility index, a measure of fear and uncertainty, dropped nearly 6% today showing that investors are becoming more confident. Although the VIX closed just above 13--a very low value by historical measures--it still has a ways to go before contrarians become concerned. In the past year or so, the VIX has shown that it can stay at very low levels (in the 12-14 range) for a month or so before rebounding. If history is planning on repeating itself, we may not see the market sell off for at least another month, just in time for the "Sell in May and go away" scenario to kick in. Let's keep our fingers crossed that today's pop wasn't just an April Fool's joke by the bears wearing bull horns.

    Today's hot stocks: Autos & semis deliver the goods
    Two industry groups in particular were on fire today--the auto makers and auto part makers and the semiconductors. One would think that with GM's CEO Mary Barra getting grilled by Congress today would cause the auto stocks to crash and burn (like some GM cars), but it seemed to have the opposite effect. In fact many motored to new highs: Tower (TOWR, $29), Autoliv (ALV, $102), Delphi (DLPH, $70), Lear (LEA, $87), Superior (SUP, $21), Magna (MGA, $99), Thor (THO, $64), Tata Motors (TTM, $36), Fiat (FIATY, $12). Most of these have P/Es in the 15 - 25 range with Fiat and Tata being the lowest (11 & 14 respectively), and most pay a dividend with Superior and Autoliv having the highest yields at 3.5% and 2.1%. Technically, all of the above charts are compelling but I especially like Fiat's as it today pistoned out of a three year base--a very bullish indication.

    The semiconductor etfs, SOXX and SMH, have been rallying juggernauts and today they both broke out of recent consolidation to hit new highs, gaining roughly 1.5% on the day. Helping these etfs along were some individual names, each popping at least 3% to new highs themselves: Tower Semi (TSEM, $10), Rambus (RMBS, $11), Lattice Semi (LSCC, $8), Micrel (MCRL, $12), Spansion (CODE, $18), Amkor (AMKR, $7), NXP Semi (NXPI, $61), Linear Tech (LLTC, $50), Freescale Semi (FSL, $25). Many of these names have been moving up for a while and still don't show signs of slowing down. Note that the rally in the semis helped the Tech etf (XLK) move past current resistance to yet another new high--just the fuel the market needs to continue moving up.

    Apr 01 6:16 PM | Link | Comment!
  • Market Notes: Old Is The New New -- March 31

    The bulls charged back today amid a lot of end-of-quarter rotation and portfolio window dressing. Possibly fearing that a market correction is in the offing, fund managers have been aggressively dumping current hi-fliers concentrated mostly in the "new" tech and the biotech areas. High P/E names such as Netflix (NFLX, P/E = 180), Linkedin (LNKD, P/E = 770),and Amazon (AMZN, P/E = 560) have suffered massive outflows in favor of "boring" industry groups such as food producers, transportation, "old" media (hey, the New York Times (NYT) broke out to a new high today!), "old" tech (we'll get to those in a moment), and utilities.

    Speaking of utes, the Utilities etf (XLU) popped to a new high today hitting a level not seen since before the 2008 recession. And why not? With reasonable P/Es and decent dividends, they won't face much competition as sources for reliable income until bond rates go up. And from what Janet Yellen said today, she's not anticipating on hiking rates soon. Here's a list of utes hitting new highs today in order of decreasing dividend yield (%): AVA ($30.65, 4%), PEG ($38.14, 3.9%), VVC ($39.39, 3.7%), LNT ($56.81, 3.6%), DTE ($74.29, 3.5%), NWE ($47.43, 3.4%), WEC ($46.55, 3.4%), EIX ($56.61, 2.5%), ITC ($37.35, 1.5%). Technically, Wisconsin Electric (WEC) sports the most compelling chart, but because I'm a Cheesehead I may be a slightly biased in my opinion. The XLU is also a good choice and pays a nice dividend, too (3.6%).

    Food and beverage producers also had a good day. Breaking out new highs recently: Diamond Foods (DMND, $34.93), Constellation Brands (STZ, $84.97), Pilgrim's Pride (PPC, $20.92), Tyson Foods (TSN, $44.01), Hormel (HRL, $49.27), Cal-Maine Foods (CALM, $62.78), Pinnacle Foods (PF, $29.86). Of these, Constellation (STZ) is my choice--it sports the best chart and has a reasonable P/E of 8.5 (but it does not pay a dividend as some of the others do).

    Old-guard tech names such as Microsoft (MSFT) and Oracle (ORCL) have been on the come-back trail in recent months. Today, Mr. Softee broke out of a fourteen year base on slightly heavier than normal volume. Apparently, investors as well as Wall Street analysts are liking the changing of the guard in senior management along with a refocusing of company efforts on cloud computing and mobile strategies. Oracle, too, blew through recent resistance on 3x volume to hit a level also not seen since 2000. Compared with the tech stocks mentioned above, the P/E's of these two stocks are more down-to-earth--15 for MSFT and 17 for ORCL. I rate both of these stocks as Buys and if I had to pick just one, it would be Microsoft for its more bullish chart and for its higher paying dividend--2.7% compared with 1.2% for Oracle. And if a market correction is in the cards, both of these stocks should be able to weather it well.

    Mar 31 7:17 PM | Link | 1 Comment
  • Market Notes: The Big Yawn -- March 25

    The major averages have been range-bound since the beginning of the month. The 60 minute chart of the S&P 500 above exemplifies this action. While this lack of market action may be putting some to sleep, it doesn't mean that nothing isn't happening. Market internals are showing a rotation out of the recent high flying groups (think biotech and "hot" stocks such as Tesla that have enjoyed a massive run-up) and into those that have been beaten down. Emerging markets such as the BRICs (which have been in the toilet) are seeing some inflows and appear to be turning around. The real point of this sideways market action will be when the major averages finally break out of it. Whichever way they finally decide to move--be it up or down--a continuation in that direction is indicated. Here are the key support and resistance levels to be aware of for some of the major averages:

    Dow Transports (DTX): 745/762
    S&P 500 (SPX): 1840/1880
    Dow Industrials (DJIA): 16050/16500
    Russell 2000 (RUT): 1170/1210

    The only major average that has not been trading sideways is the tech-heavy Nasdaq. Instead, this index has been trending down, likely for the reason given above.

    Mar 25 5:12 PM | Link | Comment!
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  • Utes suit investors: Utes comprising 20% of today's New High list (16/73). 3-4% average yields. The Wichita Linemen have been busy lately!
    about 3 hours ago
  • Gushing: Oil/gas explorer etfs $XOP & IEO popping to new highs today. Sure looks like they're determined to motor higher.
    about 3 hours ago
  • Intraday support/resistance: $SPX 1846/1860, $DTX 746.5/759, $DJIA 16265/16445, Nasdaq 4030/4080, $RUT 1121/1131; $VIX 14.1/15.3
    about 4 hours ago
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