Date: April 23, 2011
Introduction
Companies and Indexes for this week: AAPL, BAC, CSCO, GE, BA, XOM, $GOLD, $SILVER, $WTIC, $USD.
In my effort to introduce my life’s work / Analytics to serious investors, who may be looking for or perhaps would consider, ( as an alternative to mutual funds and / or stock brokers ) a 50+ year profitable - professional financial analyst / asset manager - I am providing:
* This weekly flow of information and data - - with warnings and alerts.
* A flow to you of my private Emails of on going identification of – Inflection Points and specific Securities Recommendations.
Please let me know – if you are interested - by sending me an Email with just a bit of information about yourself and your investment objectives. This offer is definitely / exclusively being made available - for a limited time - to Serious Investors. There is no obligation and it is totally free – however, it is important to me that you understand my requirement for followers, and prospective clients is that: you “communicate” with me, one on one via Email!
As you likely already know I am slowing down my flow of SeekingAlpha articles with a focus on company fundamental valuations. I have written over 50 articles covering many companies – so far – but it requires too much time (as well as several other reasons) to do a proper job. You may want to review some of these efforts in my archive?
The information and data within these (getting old) articles and this weekly missive are backed by my “Three Pillars” of Investing Wisely. They are: My Rotation Model, My SHB Cycle and My Inflection methodology. In my analytics, I also use a highly disciplined / weighted fundamental (40%), technical (35%) and consensus (25%) analysis. (please see below for URLs that will help explain this “stuff”)
In addition I am providing SafeHaven.com a weekly Course of Study focused on the Dow Jones 30 Industrials. It is quite similar to this missive. To view my most recent Course, an Investment Basics Course and my bi-monthly Commentary / Update - - please click on the below URL – and view my Archives:
http://www.safehaven.com/article/20724/investing-wisely-dow-30-industrials-week-7
In the below tables there is an update of this week’s grouping of 5 ‘valuated’ eg. - Dow 30 Industrial companies plus Apple, Inc. with brief Comments and Current Recommendations. You will also have my technical perspective on: Gold, Silver, Crude Oil and the U. S. Dollar.
General Market – Current Perspective
The general market is currently over-valued, over-bought and is showing serious signs of deterioration, especially in the area of breadth. Interest rates are on the rise, and inflation is becoming and will be a serious problem.
This means, with regard to your portfolio - you might consider moving to and holding Cash or perhaps if you are a more proactive investor, begin taking (highly selective) bearish positions. I would not recommend taking short positions in these five securities - there are much better (bearish) candidates to consider with equally low or even lower risk.
In time frames like we are currently experiencing, the risk / reward ratio of owning common stock or mutual funds is not what I consider “Investing Wisely.” If you disagree with this and are not willing to share with me your opinions, I strongly suggest that you do not follow my work / analytics. For me, holding Cash until the risk / reward ratio is totally in my / your favor - is a basic philosophy for investors and (of course) unthinkable for traders.
My analytics is on a crescendo towards a “Breadth” General Market Bearish Inflection Point. That could well happen next week. This coming few days will either confirm or reject a Bearish turn in the marketplace.
Note: The above paragraphs and words do not change very much - week by week, but when they do I recommend you remain alert! Changes are in italics and bold.
Want to visit my personal / private Blog? It is updated on Sunday and typically on Wednesday’s. I do file special alerts as they occur. You may particularly be interested in my forecast of Sectors and Commodities in a special Table in my Wednesday – Personal / Private Blog .http://twitter.com/#!/InvestRotation/
If you will share a bit about yourself and your investment objectives, I will add you to my Mail / Alert List. Just send me an Email – remember I am totally focused on “Serious Investors.”
My Email Address: senorstevedrmx@yahoo.com
Companies – Current Perspective
Apple, Inc: for those of you who follow my work/analytics closely – you know that I focus much of my effort on Comparative Analytics. AAPL has served that purpose very well over many years, bull and bear – it is my - Numero Uno!
Symbol |
Category |
Fundamental (weighting 40%) |
Technical (weighting 35%) |
Consensus (weighting 25%) |
| ||||
| (AAPL) | Bellwether |
Excellent |
Very Good to Excellent - - (deteriorating) |
Excellent |
|
Comments: Apple remains in a strongly ascending trend and has both momentum and relative strength working for it. I do believe it is now in a topping formation. This a very critical time frame for making investment decisions – including Apple, Inc. The question is for AAPL and for most all securities is: Hold through a pullback or sell and perhaps re-buy? The probabilities are very high that a General Market / Apple bearish inflection point will occur very soon and I believe you should be preparing to make this decision.
I believe this coming week could very well tell the story about both Apple, Inc and the General Market. Apple does NOT look all that positive after posting its earnings on Wednesday.
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Special Note for those of you who have been or are “attack soldiers” and feel an obligation to criticize my very successful methodology of Investing Wisely:
Please understand that the purpose of including AAPL each week is to remind you that it is a fantastic “Bellwether” and more important it is a model company. So, comparing Apple to these Dow 30 Industrial companies (for some of you) is like comparing apples and lead sinkers or worse. Keep in mind that many companies are in the process of rotating into a comparable level to Apple and that when they do, they are like Apple, worth owning during bullish time frames. Few companies do match up with AAPL - but when they do, (or come close) believe me, they are ‘worth owning.’
I suggest you remember that from time to time Apple turns unfavorable (look at a long- term chart) and when that happens, I believe, it is best to sell and re-buy. At this “re-buy” time the ‘other’ companies that I mention above that have ‘rotated’ into favor along with Apple should be the ‘other’ companies you also buy.
Thanks for reading this special note – I am totally pissed at the general readership / self appointed critics of SeekingAlpha.com and it is the same for most every other financial blog.
- - -
Understand that as the General Market / Sectors / Industry Groups “Rotate” in and out of favor – Bullish to Bearish and then back again to Bullish – I believe there are time frames that it is best to hold Cash. This is one of those time frames. However, for more proactive investors you should have or begin to take bearish positions in highly selective securities.
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Grouping One: (see below for a list of the six groupings of five - Dow 30 Industrial Companies.)
Symbol and Current Numeric Ranking within the Dow 30 Industrials |
Category |
Fundamental |
Technical |
Consensus |
| ||||
(BAC) Ranked: # 29 |
Bellwether |
Very Poor |
Good |
Poor |
Comments: Currently, at $12.3 the company does not look healthy and is carrying a very low Ranking against its Dow peers. Numeric Ranking is very important and yet Investors do not acknowledge that it is essential to being profitable in the stock market. BAC is down in price over 10% and it’s ranking has dropped from 26th to 29th. If you are not keeping records of this kind of stuff and want to be an A or B student, I suggest you begin and begin NOW! Otherwise I suggest you DROP the Course. Over the coming couple of years the earnings' growth pops up very nicely and then falls back to zero! ( No Change from 6 weeks ago) Fundamentally, BAC is a mess of a company, and I am quite bearish. It is definitely not even a hold. Technically, it looks like it is topping and a bearish inflection point has been completed. I believe the stock is coming much lower before it can begin a new up-trend. Consensus wise, in plain English - the "Street" does not like BAC. | ||||
| ||||
(CSCO) Ranked: # 30 |
Bellwether |
Poor |
Very Poor |
Poor |
Comments: Currently, at $16.9 the company in trouble and carrying the lowest Ranking against its Dow peers. During all this upward market momentum CSCO has also dropped in price! This year earning' turned negative. However, it appears that next year as well as the following year projected earnings' will have recovered back to or above normal. (What is Normat?) (No change from 6 weeks ago) Fundamentally, CSCO is meanwhile in trouble, and we must now wait for a recovery. Technically, never hold a stock that takes a beating like Cisco Systems did in November. And to confirm this point - February was another follow-on - there may well be another before a bottom is reached. Holding is and likely will definitely be costly. Those who insist on being Buy and Hold investors have taken it on the chin for over a decade and in this "unforgiving" marketplace this has become an expensive methodology to follow. Mutual funds still have not learned this lesson, and "you" are paying for it! Consensus wise it is negative. | ||||
| ||||
(GE) Ranked: # 14 |
Bellwether |
Very Good |
Very Good |
Good |
Comments: Currently, at $20 the company has come a long way on the upside over the past four months and HAS carried a top Ranking against its Dow peers. In just 6 weeks it has dropped in Ranking from 7th to 14th. The good news is that the price has not moved even with good, recent earnings. It is a SELL and I will see you in 6 weeks again on this company. (You should track this company and my line of reasoning as a homework assignment) (No change from 6 weeks ago) Fundamentally, GE is making a positive move that could be sustained. Technically, on a more near-term basis it is looking tired at the current top. Is there more life in it for the near term? My work says yes, but my conservative asset management says - wait for a pullback it may be coming lower. Consensus wise it is definitely not one of the strongest. | ||||
| ||||
(BA) Ranked: # 19 |
Bellwether |
Poor |
Good |
Poor |
Comments: Currently, at $75.4 ( I said 6 weeks ago) there is little to complain about, at least for the now. The Aerospace Industry Group is still doing well but many component companies have already been hit hard. Remember, these are "Bellwether" companies that are not supposed to be volatile. When doing my analytics and a company Ranks near the bottom of my list, I usually spend very little time looking deeper? Like CSCO, this year earning' turned negative, but it appears that next year and the following year, earnings' will have recovered to the point of you wanting to watch it carefully. Ranking wise it improved! Fundamentally, currently BA is just another component of the Dow 30. However, look out and be watchful, things could turn positive in the coming months. Technically, it looks tired and is likely in for a pullback. But of the time being it is a hold. Consensus wise it is not doing well. | ||||
| ||||
(XOM) Ranked: # 4 |
Bellwether |
Good |
Very Good |
Very Good |
Comments: Currently, at $864 the company looks healthy but is one of my least favorites for future price appreciation. At this time, it is Ranked very high however, I am not at all positive about the coming months years, please note the following numbers. Earnings Grow appears to be declining steadily for the next few years. Current 2011: 36%; 2012: 6%; 2013: 0% and 2014: 2%. You should understand that there are almost always better energy companies than XOM to own and many also pay a dividend. The Energy Sector is and has been a very compelling story but is often subject to high volatility. Exxon Mobil is not historically a great mover, but 20% plus price appreciation since December is (or has been) a nice gift. Remember, "they" give-ith and "they" take-ith and away. Don't be greedy. (No change from 6 weeks ago) Fundamentally, the near-term looks quite positive, however, the above numbers signal you do not want to remain too optimistic about the coming years. Technically, this is an excellent example of a chart picture that can turn negative without much notice. This current mini-pullback is eating up profits rather quickly. There is very positive Consensus picture. Your job is to remember is it currently rather strong. |
Commodities - Current Perspective
Four Commodities for Focus: These four commodities are offered in order to compare their on going analytics with that of the Dow 30 Industrials.
This presentation each week will be a simple update of the Technical picture. Fundamental and Consensus Analysis is much too complex to present in this format. However, understant in order to invest wisely in an appropriate ETF or Company the work / analytics is much the same as for any common stock.
Symbol and Name |
Category |
Fundamental |
Technical |
Consensus |
| ||||
Gold ($GOLD) |
Bellwether |
Very Good |
Excellent |
Very Good |
Comments: Currently, at $1,505., up again for the week. Gold is and has moved up strongly and has been a leader since late 2008 – that’s a long time. Current Technicals: It looks like it is topping but may just keep doing its thing for awhile longer. If you were worried during the January 2011 pullback you can expect yet another pullback, and quite likely - more severe! Until Gold experiences a meaningful pullback, and then clearly fails to successfully test the previous highs, it is likely a hold. However, looking at the near-term and not wanting to “experience a meaningful pullback” – I suggest that prudence says that if Gold starts looking like it did in November and December that it could become a strong sell. Students and investors alike should develop an exit strategy. Few investors ever even consider this (an exit strategy) as part of their investment philosophy! | ||||
| ||||
Silver ($Silver) |
Bellwether |
Very Good |
Excellent |
Very Good |
Comments: Currently, at $46.6., Silver is ‘ranked’ WAY out in front of Gold, but what goes up fast comes down even faster. That will happen but not likely in the near-term. ( Gold & Silver track each other very well historically) Silver is and has moved up strongly and has also been a leader since late 2008. Current Technicals: I suggest you re-read the above Comments on Gold. | ||||
| ||||
Crude Oil ($WTIC) |
Bellwether |
Very Good |
Very Good |
Very Good |
Comments: Currently, at $112.3., Crude Oil has been tracking Gold/Silver and the above is also applicable to this commodity. However, it could be starting to look like the topping action of December / January. I said it could and that simple means caution. Energy in general is not holding up nearly as well as Gold / Silver. That should be a warning of some sort? | ||||
| ||||
U. S. Dollar ($USD) |
Bellwether |
Very Good |
Very Good |
Good |
|
Comments: Currently, at $74.0., at this time there is nothing to lead one to believe that the Dollar will be turning up – however!. Current Technicals: I now believe that any turn-up could well be coincident with a turn-down in the General Market. In other words - a possible rally in the U. S. Dollar and a pullback in the General Stock Market?
Stay alert, this could be a very interesting study / scenario for both students and investors. | ||||
You can also find all these Commodities and a number of other supporting Bellwether and High Profile charts amongst the 100 or so in:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID4095527
The Prof's Six Groupings of the Dow 30 Industrials
Grouping One: BAC, CSCO, GE, BA, XOM
Next Week: Grouping Two: HPQ, AXP, KFT, TRV, CVX
Grouping Three: CAT, HD, KO, DIS, DD
Grouping Four: T, IBM, JNJ, AA, JPM
Grouping Five: VZ, MRK, PG, MCD, MSFT
Grouping Six: PFE, , MMM, UTX, WMT, INTC
You can find my specific articles for these securities by going to search and my name in SeekingAlpha.com.
Source information and data:
Yahoo Finance
MSN Money
MorningStar
BarCharts
StockCharts
Nasdaq.com
Notes for the above Tables:
Note One: While I cover my Three Disciplines, Fundamental, Technical and Consensus analysis, my focus for these updates is primarily technical. It’s the WHEN that is so very critical in this market, and I have given you the WHAT in my SeekingAlpha.com articles and above. Selectivity is also an essential for investing wisely, but rather easy if you will use the “Three Pillars” of my Methodology. I continuously monitor the fundamentals and consensus status of these and many more companies, sectors and industry groups. As a mini example, please see my Public List in StockCharts of about 100 companies listed alphabetically by my two categories of securities - Bellwether and High Profile. Use this URL: Click here and scroll through them.
Note Two: When these three disciplines are Excellent to Very Good they become Candidates for Buying and when they are Poor to Very Poor they become Candidates for Short Sale. There is always rather large number of companies in both categories, but I wait for clear, bullish or bearish Inflection Points to be sure. You might want to think of these comments in terms of a slot machine. When my ‘Three Disciplines’ have 3 bars of Excellent / Very Good – it’s a bullish Jack Pot! Strangely enough to some investors, when I have 3 lemons of Poor to Very Poor – it’s a bearish Jack Pot!
Note Three: Within this missive I stop short of providing specific recommendations. If you are interested in a more specific dialog please let me know. Just so you know, I will work with you for a time if you currently are seeking or believe you may have in the future - interest in my professions asset management / consulting / mentoring services.
You can find my specific article for these securities by going to search and my name in SeekingAlpha.com.
There is more supporting information about my work / analytics in the following URLs:
My Personal / Private Blog -- Investing Wisely: (Introductory Information about my Investment Methodology)
http://twitter.com/InvestRotation
Three articles supporting my “Three Pillars” of my Investment Methodology that you may want to read: (the title for each is at the end of the below URLs)
https://seekingalpha.com/instablog/121308-steven-bauer/119898-my-rotation-model-a-short-explanation
https://seekingalpha.com/instablog/121308-steven-bauer/120955-my-shb-cycle-a-short-explanation
https://seekingalpha.com/instablog/121308-steven-bauer/104062-inflection-points-a-short-explanation
If you would like an opinion on securities in your portfolio and you are a serious investor, please feel free to Email me with your request. I would appreciate your first reading my Bio. in SeekingAlpha.com to be sure we are at least a little bit compatible. Use this URL for my Bio and other information:
https://seekingalpha.com/author/steven-bauer
Please understand that I do not read and definitely do not reply to anything coming to me from the SeekingAlpha.com – Message Board or Comments on my articles. I also will not read or respond to what I consider to be negative, brief or demanding language from any perspective or any source. Please consider using my Email Address to open a positive dialog on Investing Wisely.
Thanks for your interest in my work / analytics and perhaps you will consider my professional services.
Smile, have fun – Investing Wisely,
Steven Bauer, Ph.D.