Seeking Alpha

danielosborne's  Instablog

danielosborne
Send Message
I am an investment professional currently working for the amazing Wall Street Bad Boys.
My company:
NextCandle.com
My blog:
Nextcandle.com
  • Commodity Review: Trading The China Syndrome

    As China goes, so goes commodities according to commodity market watchers and stock predictions. After all and as the workshop of the world, China uses more copper and energy than any other country. However, the data coming out of China is not looking so rosy for the commodity markets and for global economy in general.

    To quickly recap last week's commodity action: Commodity markets took a hit early in the week when China downgraded growth but investor and trader sentiment later recovered on news of the Greek debt swap deal plus positive US employment data.

    Since then, the yuan has weakened after reports that Chinese exports have grown at a slower pace than forecasted. Specifically, exports from China rose 18.4% last month from a year earlier and imports were up 39.6% while analysts had forecasted a 31.1% rise in exports and a 31.8% increase in imports. There are also concerns about China's factory output and consumer retail activity while China's GDP growth target for 2012 has officially been set at a "mere" 7.5% verses analyst forecast calling for 8.5% for both 2012 and 2013.

    So what does all of this negative China economic data mean for commodity investors and investors in general? To begin with, a slowdown in China or the commodity markets could impact commodity rich countries like Indonesia, Brazil and Chile. Hence, investors might want to keep an eye on our stock predictions for and then possibly consider shorting country closed end funds or ETFs such as the Aberdeen Indonesia Fund (NYSEMKT:IF), the iShares MSCI Brazil Index ETF (NYSEARCA:EWZ) or the Aberdeen Chile Fund (NYSEMKT:CH).

    Likewise, any long term slowdown in China will likely impact major copper mining stocks like Freeport-McMoRan Copper (NYSE:FCX), which is already down more than 1.5% in today's trading, and Southern Copper Corporation (NYSE:SCCO), a major integrated copper producer that also produces molybdenum, zinc and silver in Chile, Mexico and Peru.

    Other commodity and mining stocks investors might want to check Next Candle stock predictions for and selectively consider shorting would be:

    • Alcoa (NYSE:AA), a major producer of aluminum that has just been removed from the S&P 100 Index (OEX).
    • BHP Billiton (NYSE:BHP), an Australian mining giant and Rio Tinto (NYSE:RIO), a London based natural resources behemoth. These two stocks have exposure to most hard commodities (e.g. anything mined or extracted from the earth).
    • Glencore International (GLEN), a Switzerland based mining and commodities trading giant that is also the world's biggest commodities trading firm.
    • Vale (NYSE:VALE), a major Brazilian producer of iron ore, basic metals and non-ferrous minerals and fertilizers which has also been hit with an ongoing tax dispute and tax bill of $5.6 billion by the Brazilian tax authorities.

    However and if you are considering shorting these commodity stocks, beware of the tendency for stocks to become oversold on any bad or negative news - especially concerning China. After all, China may be slowing in part due to the stalling European economy BUT the Chinese economy is also far from crashing while the US economy appears to be perking up (or at least its already hit bottom some time ago).

    Hence, keep an eye on commodity stocks by adding them to your Next Candle "my portfolio" list and periodically check your Next Candle stock prediction as well as keep an eye out for any news about China and China's economy.

    NOTE: THIS PIECE WAS JUST POSTED ON OUR BLOG AT http://www.nextcandle.com/blog/2012/03/commodity-review-trading-china-syndrome
    Mar 13 2:34 AM | Link | Comment!
  • A Review Of Next Candle’s Top Stock Forecasts

    Electric cars and clean tech might be the wave of the future but over the past week, these industries appeared to be stalling on our Next Candle stock forecasts. To begin with, Next Candle correctly predicted that General Motors (NYSE:GM) would hit a lower low during the trading day on Tuesday after a spat of negative news, including news that it would halt production of its plug-in hybrid electric vehicle, the Chevrolet Volt, for five weeks because of high inventories.

    Naturally, this news in particular from General Motors (GM) had an impact on other electric vehicle and clean tech stocks with a few of them making regular appearances on our highest probability lists (>80% probability of a movement in the predicted direction). In fact, a quick review of this week's highest probability revealed the following stock forecasts:

    • Quantum Fuel Systems Technologies (NASDAQ:QTWW) will produce a lower low on Friday.
    • Ocean Power Technologies (NASDAQ:OPTT) will produce a lower low on Friday.
    • A123 Systems (AONE) will produce a lower low on Wednesday and Thursday.

    And the results:

    • Quantum Fuel Systems Technologies (QTWW) fell 3.88% or $0.04 to $0.99 and had a daily trading range of $0.98 to $1.08. Quantum Fuel Systems Technologies (QTWW), which develops and produces hybrid propulsion and natural gas vehicle systems plus other alternative energy technologies, had reported earnings on Thursday morning for the past eight months as the company is changing its fiscal year end from April 30 to December 31.
    • Ocean Power Technologies (OPTT) fell 5.77% or $0.18 to $2.94 and had a daily trading range of $2.91 to $3.36. In fact, our Next Candle stock forecast about Ocean Power Technologies (OPTT) appeared to be way off as the stock surged in morning trading but around 11:50 am, it produced the lower low that we had predicted and it kept heading lower for the rest of the trading day. Its worth noting that Ocean Power Technologies (OPTT) is not an electric car related stock as it is instead developing and commercializing systems that will generate renewable energy from ocean waves.
    • A123 Systems (AONE) closed lower on both Wednesday and Thursday - just as Next Candle had predicted. On Thursday before the market opened, A123 Systems (AONE), which designs, develops, manufactures and sells rechargeable lithium-ion batteries and battery systems for electric vehicles and other uses, reported a wider than expected loss thanks in part to troubles at Fisker Karma - which represents a big chunk of the company's revenue. Specifically, Fisker Karma has suspended work at US plant as it tries to renegotiate a $529 million loan from the Department of Energy.

    Of course, how much money you would have made from a good stock forecast about General Motors (GM) along with electric vehicle and clean tech stocks Quantum Fuel Systems Technologies (QTWW), Ocean Power Technologies (OPTT) and A123 Systems (AONE) would have depended upon your trading strategy plus how well you were able to execute it. Nevertheless, you would have had a better chance of coming out ahead with a Next Candle stock forecast.

    NOTE: THIS PIECE WAS JUST POSTED ON OUR BLOG AT http://www.nextcandle.com/blog/2012/03/review-next-candle%E2%80%99s-top-stock-forecasts-0

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Mar 11 7:00 AM | Link | Comment!
  • Stock Of The Week: Starbucks (SBUX) Grounds Up Green Mountain Coffee Roasters (GMCR)
    Late on Thursday, Starbucks (NASDAQ:SBUX) announced the Verismo, a single-serving coffee maker for the home - sending shares of Green Mountain Coffee Roasters (NASDAQ:GMCR), the makers of the Keurig machines (which are also the number 1 single-cup brewers in the US), plunging 15.72% to $52.59 on Friday. Starbucks (SBUX) would end the up around 6.43% while Green Mountain Coffee Roasters (GMCR) ended down 21.75% and below a key technical support level at $53.

    Interestingly enough, Reuters is reporting that there was a heavy burst of bearish options trading action in Green Mountain Coffee Roasters (GMCR) in the hours before Starbucks (SBUX) announced its plans - raising a number of eyebrows in the options market and no doubt with regulators at the SEC. Likewise, some traders have also been quoted as saying that they noticed strong call buying in Starbucks (SBUX) around the same time.

    Nevertheless, both Starbucks (SBUX) and Green Mountain Coffee Roasters (GMCR) were quick to issue statements clarifying their future relationship with the former saying on a conference call that it would still continue to supply the later with it's Starbucks-branded, single-serve coffee pods known as K-cups. Starbucks (SBUX) has also emphasized that Verismo will be focused on espresso and specialty drinks rather than coffee.

    However, it's pretty obvious that it won't be a big leap in the future for Starbucks (SBUX) to muscle in and take over the single cup of coffee market that Green Mountain Coffee Roasters (GMCR) is focused on one its Verismo has enough market share.

    Hence and in the short-term, expect analysts to first start revising their financial models and stock price targets for Green Mountain Coffee Roasters (GMCR). There may also be some downgrades when the dust settles but probably nothing immediate.

    So how should investors and traders react? A quick look at the chart of Green Mountain Coffee Roasters (GMCR) shows considerable support at the $45 level. So it probably makes no sense to continue shorting GMCR right now. On the other hand, most analysts and market participants will probably have a wait-and-see attitude about both the stock and Starbuck's Verismo. In other words, don't expect Green Mountain Coffee Roasters (GMCR) to suddenly rally when the market opens on Monday but it might begin to show some signs of a recovery.

    Therefore and if you think you can make a profit on Green Mountain Coffee Roasters (GMCR) either but buying shares or trading options on it, you might want to add it to your Next Candle My Portfolio list first in order to keep an eye on directional changes and probabilities before committing to a trading strategy.

    NOTE: THIS PIECE WAS JUST POSTED ON OUR BLOG AT http://www.nextcandle.com/blog/2012/03/stock-week-starbucks-sbux-grounds-green-mountain-coffee-roasters-gmcr

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Mar 10 3:03 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.