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Gene Inger pioneered U.S. financial television and daily technical analysis. His broadcast stations later affiliated with FNN, merging into CNBC where he was an original Market Maven. His views have been quoted in Barron's, the Wall Street Journal, on CNN and now on his own ingerletter.com... More
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  • 'Siri': What's With Nuance?
    At CES in Las Vegas last month, I met with 'Siri', Ford Sync (and more) provider Nuance. I'm sharing views of their earnings miss. When I first wrote about Nuance we didn't buy it (ingerletter.com doesn't often pick stocks in this Index or ETF world; focusing mostly on E-mini S&P); suggesting it would miss on earnings.

    Why write about it at all? We select 'a' stock once yearly for 'survey' services; and this was the pick for later in 2013.

    We got the poor report, partially blaming 'usage rather than license revenues'; management's nervous mediocre guidance; partially due to soft Windows 8 PC markets; slow Dragon sales (due to low CapEx from businesses); and healthcare delays (new healthcare programs will ultimately require digital record-keeping).

    Price-wise I talked in our Daily Briefing (available at www.ingerletter.com) of ideally buying not at 24, ideally the mid-'teens; but under 20 in any event.

    We do not and never owned NUAN shares; do expect a few hedge funds to sell; look for downgrades to washout high-priced buyers on consumer product hype; and see all as reason for this hoped-for slide (from 52-week hi to low in a flash). A NUAN breaks 20 this morning has it moving to reestablish value.

    Looking for exhaustion as the year unfolds, we'll update this voice command, speech & control leader, as a 2014-2018 potential workout. Caveat: Google must not really threaten; due to hiring Ray Kurzweil or any breakthrough as may 'really' be behind Google Glass.

    Bottom-line: not surprised; projected disappointment since CES. With a looming overall market drop (caveat emptor), I'm optimistic NUAN will become attractive, to us for the first time, at some point later this year. It may be near the lowest price of the last year or more; and perhaps a low level for the rest of the decade.

    Stay tuned as we'll follow up on it.

    Gene Inger

    ingerletter.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: long-ideas
    Feb 08 2:23 PM | Link | Comment!
  • A Bull Trap Building?
    That’s the serious question a year after a bear trap was sprung, in-line with our call for the ‘fix to be in’ late in February 2009, looking for rebounds, as even occurred (rather strongly too) during the Great Depression of the 1930’s. (Refer to earlier 2007-2008 articles such as 'Is Bernanke our Napoleon' for foresight on this 'epic debacle', as we labeled it back in May of 2007.)

    In essence, armed with historical and hysterical knowledge, we had a Fed stepping on the gas as never before, on top of panic-driven stimulus. It should be noted that the Fed today is doing something quite different, which is why despite equity prices briefly projected to 'grind' higher two weeks ago, the Fed started ‘draining reserves’; a more significant consideration than remarks likely at the upcoming FOMC meeting.

    That the stock market ‘grinds’ to higher levels is not a surprise as we approach the Triple Witching Expiration. However we do not want to press upside expectations strenuously; for a couple reasons. One; everyone will be watching closely to see hints of a firmer monetary or 'exit' policy from the Fed, and I suspect they’ll get them.

    As to equities, which aren’t so cheap as the Street would have us believe based on ‘real earnings’, on the first drop down the cheerleaders will encourage public buying; noting the shallowness of dips that predated this scenario. That may initially work; but beware beyond. Recognize this market is increasingly due for corrective action; realize that it remains a seasonally strong time of year; while it seems reasonable to say, don’t insist that they play this out to the absolute max (April/May).

    Every day we’ve reiterated (on our website) that the S&P indeed WOULD surmount the 1150 area; then have two types of alternatives on a short-term basis. Clearly, due to institutional domination of this market, while it may not be a conspiracy or manipulation, it was able to ‘control’ patterns to ‘grind’ prices higher, in absence of ‘emotionally natured’ traders who aren’t so disciplined to play by ‘house rules’.

    Given that a real host of folks using common sense have discarded the buy-and-hold forever approach, due to their experience of being killed twice in the last decade (unless they listened to our warnings both in early 2000 and again forewarning an ‘epic debacle’ was coming starting in early-mid 2007), it made sense to have a market move higher without the public willing to come-in on the buy side. For sure in hindsight we wish we were more aggressive than just calling the high in 2007 and low just over a year ago. Logically this move is now over-owned and overextended.

    The number of offerings and deals is supposed to instill confidence. Actually concern is more of note; given details like unemployment worsening in 30 states; and as firms never raising money (KKR as an example) are in the process of doing so. Let’s see, who is smarter after such an advance; the buyers or the sellers?

    We could delve into technicals like standard deviation bands converging, or similarities of RSI to what was seen at crucial points; plus others, but that’s not necessary. We could observe the VIX (volatility) as it drives to modern-era lows (often preparatory to reversal action), though here it is unlikely to be the classic pop-and-flop pattern because of the institutional ownership structural behavior.

    Generally the financial press is minimizing the stark realities of our time with a single exception, in that (we’ll give credit where due) CNBC finally recognized a developing ‘budgetary crisis’ in one of our major cities; Miami. We warned about Miami more than once in the last several weeks, and without prior knowledge of investigations by the SEC about corruption and mismanagement of municipal securities there (we’d also warned that certain risks were being built in the muni market, though calmed it a bit by noting how much money could be made by those who bought in Orange Co., California, after that debacle). To wit; we’d be careful (to be revisited in the future).

    Ironically; though we didn’t require the market to stop just on a dime at ‘double top city’, we will go back ‘on alert’ for a trading-based reversal. We have been suspicious for some time; but allowed for the rally to surmount the 1150 area, especially in the days before Triple Witching. Well, we got that. Now we’ll be more circumspect and commence looking for a complex broadening top of sorts.   

    There are sectors we have liked through this, and commodity-related and oil-related areas, as well as some techs, were at the forefront of that preference. From the start of the old move a year ago we liked even the financials and one auto (Ford); but not now. Meaning, holding some is not the same as entering the buy side into strength. I think this is mostly a waiting game and more of an intense battle set to expand.

    What has more closely occurred in the last decade or more, were political decisions of a type compelling companies to shift most of their operations overseas. I saw it as a degrading process that in the long-run would be Nationally destructive, as outlined since my consecutive speeches on this, to the American Footwear Assoc. in Boca & Palm Springs 25 years ago; most firms were patriots but had no choice just to stay in business in a Nation where Government was orchestrating destruction of their very survival if they tried to make it in the USA…all that was part of the ‘mutually assured economic destruction’ you never hear about, probably intended to prevent a new world war with unintended consequences that leveled the playing field alright; by decimating middle class America, which is what we warned of… and may require a generation or more to rebuild.

    Wealth and innovation build upon themselves; and it must be implemented by leaders we have now if we’re to see it by 2020-2030; the years in which we are preliminarily targeting a new prosperity for the United States as outlined here since 2007 (clearly at the time we forecast that three years ago, and five years ago for real estate, we’d made clear that our call for an ‘epic debacle’ would find an equity low much sooner). The ascension of a corporate or Federal culture over that of our great middle-class culture, is part of what’s wrong. It needs to be rethought. It is essential to regain social balance.  

    Domestically what is really dangerous is the oblique risk of another financial shock. In this case not necessarily a hyperinflation the gold bugs drone on about, but simply all the unresolved issues. Whether sovereign or state debt; whether commercial real estate; a double dip against odds proclaimed by those who are convinced we have a rousing recovery, which we don’t yet embrace; or something separate; increasingly overbought markets are pumped-up, not only by controlled rebounds, but by having used virtually all available or conceivable borrowing sources. 

    The idea of the U.S. almost being blackmailed by the sources that ‘bailed us out’, is not something to lightly dismiss. Now sure, the U.S. is in the catbird seat because we owe so much and our Dollar (for which we rightly called last years decline, base, and ensuing rally) is and will remain the ‘reserve currency’. Of course many blame us (without intelligent countering by our leaders), and not a serious word about industrial espionage. It is not that we aren’t impressed by what China has accomplished; but let’s get real here.

    I have called this a controlled Depression since forecasting the break to occur three years ago; particularly on the ‘never reported’ waivers that allowed commingling of fund transfers across ‘firewalls’ set-up at the major integrated banks. And I denoted it occurred because firms 'net capital' was tied-up in securitized derivatives without an AAA rating (this was readily visible in 2007). We said that after the break, the Fed and Treasury would facilitate systemic stabilization of banks, but not much more.

    So I regret to inform you that we were and continue correct. It dovetails in that businesses and even municipalities who concurred 'circled their wagons', harbored their cash, and properly rode-out the storm. But committing here is ludicrous.

    Conclusion: stabilization efforts notwithstanding; overall recession and deleveraging conditions will prevail through this year, and into next year as well. Intervening rallies in markets occur, but future ones will be of limited sustainability. If developments unfold that could truly change prospects; we’ll evaluate them over time.         

    Three years ago I commenced projecting an 'accident waiting to happen'; affirmed historically after long-duration periods of free money (Gilded Age mentality). Now a market struggles with extended rebounds as this economy tries to restructure.

    Though enormous efforts have avoided systemic disaster on the banking front; there is no equivalent rescue of the overall economy besides perception; nor restoration of engines for sustainable growth. People are adjusting to lower expectations; which will never be a favored approach to American life. Actually I don’t see it permanently alternating the future; but we still have major adjustments to work-through. That’s the reason we warn about chasing rallies; not to mention ‘commercial’ adjustments as are ongoing. And as I’ve said; there are fairly visible new storm clouds gathering.

    Gene Inger,
    Publisher
    ingerletter.com  

    © 2010 E.E. Inger & Co., Inc. All rights reserved. Reproduction in any form without permission prohibited; brief excerpt quotations are allowed, providing full accreditation with web-link or reference to our website is concurrently included.

    Copyright© 2010 The Inger Letter- Daily Briefing™ & Gene Inger's MarketCast™. All rights reserved.




    Disclosure: no positions
    Mar 15 4:15 PM | Link | Comment!
  • Mature Market Uptrend becomes 'A Flight To Risk'

    A flight to ‘risk’ . . . rather than a flight to ‘safety’, is what happened on Wall Street Thursday. It was also a sort of ‘flagpole’ for the DJIA, while a bit of a ‘flagpole & pennant’ formation for the S&P 500. Too soon to rule this hearlding a clear ‘reversal’, but besides the best of presumably improved earnings largely behind, and a few misses which ought to restore a slight sensibility to all this; there more behind the scenes that reflects what is and isn’t worth embracing.

    First of all; the ‘risk’ trade aside short-covering, has essentially coming-out of Treasuries and into stocks. There’s an inherent danger in that; as rates end their consolidation and start advancing again. Then there is the Treasury Auction resumption next week, which  might tend to be a bit painful in this regard. Further, there is a mass migration (sheep-like) starting to be evident, which often is a sign of capitulation at the end of any swing run.

    If we’re right; you have an effort to compel acceptance of a 'done-deal' consensus view of stabilization and a recovery. Plus slightly improved housing statistics, that we view as suspect; though again you can’t replicate the downside we rightly forecast over these preceding two-plus years; nor did we or do we expect to. There are scenarios that could modulate just as Government wants; but there are alternate futures that could constrict economic activity, no matter expansionary monetary or other policies.

    I suspect a New York children's hospital director saying they were "preparing to have cots in the hallways" to handle this Fall’s possible pandemic overflow, is but an example. That doctor does not know if things will be that bad or not; and neither do we. What we know is that you have never had flu spreading in the middle of the Summer at the same time as the Southern Hemisphere (still unreported in the mainstream media by the way) struggles to find enough ventilators to keep their kids going until the virus subsides (that is the true and a sad pathology of what is going on). This is an indirect economic worry.

    With or without pandemic ramifications this economy has a struggle ahead of it. Absent engines of growth for job creation; that’s a fair observation. Government keeps talking about ‘consumers’ and spending; but they've avoided revising trade policy or endorsing sensible policies like Intel’s or that of General Electric, which have been to expand their U.S. manufacturing plans. Absent sensible trading policies, it’s difficult to see how this changes rapidly enough to justfiy a return to comparatively high equity valuations.

    Be careful as to stocks being upgraded. What can shine has. May again; but not at this point meaningfully, absent some sort of corrective price behavior. Back in late Feb. and early March, we were buyers; reversing our bearish stance calling for the year's best rally (albeit it extended a bit more than anticipated but right into our targeted risk timing).

    One buying on strength now is anticipating nothing (this is the reward for those who had agreed with us back in early March); hence the growing confidence should be growing concern, and we don’t just mean mistrust of Government; but relative to price modalities. I realize some indicators are not perfectly aligned for decline; but it wouldn’t be the first time markets celebrated what’s seen as an impregnable uptrend, only to fail almost without warning. Of course they'll come back to play another day; but that’s for another time; not now in our humble opinion. This market should stall right here; and whether or not the short-term bulls fight a bit more, the current move should seriously be on fumes. 

    Bottom-line: the next meaningful move (irrespective of hourly or daily trench-warfare) should be on the downside, not the upside. To wit: the longer this holds-up now; the more risky it is; not the more sanguine as so many newly complacent optimists suggest.

    gene inger

    ingerletter.com

    Jul 24 12:32 AM | Link | 2 Comments
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