THE DO NOT DISTURB SIGN IS IN EFFECT
I haven't taken a weekend off the market, let alone a business day, for more than a year now. Now that the market has gone into Dark Lord of Boring mode, I have come to the conclusion that if I am to take off now, I will not suffer from the paranoia of missing out on my next 100% gainer for lack of attention. I'll be back on Monday with a look at the weekly and monthly charts to see where we stand from a very long-term point of view. Enjoy what is left of...
THE SOX NEEDS TIME THEREFORE THE ENTIRE MARKET NEEDS TIME
The study of price action for me is an evolving art form. My abilities are continuously evolving as a result of consistent practice. I can't compare the price analyst I am now to what I was 5, 10 or 15 years ago. Every period is worlds apart in terms of ability and aptitude. With time comes certain discoveries. One of my more recent findings is the ability for certain averages to take on more importance for the market at different times of a bull or bear cycle. For a period of weeks it could be the Russell that takes on the primary leadership role. For another period of weeks it can then become the duty of financials. The next few weeks it will be the SOX. The most important part of this cyclicality within the leadership of the market is the fact that, more often than not, these periods of cyclical leadership are dictated by proximity to important trajectory points. This is something I am just beginning to grasp. The day will come when I have a firm understanding of it. For the time being, it is more abstract in nature than anything else. Here is an example of it in action. The SOX is the current leader of the entire market based on the launch from the important trajectory that marked the bottom in July. The recent response to resistance tells me that the market, as a whole, requires more time before taking on the significant resistance ahead: click chart to...
THE LATEST PROOF THAT SMALL-CAP STOCKS ARE A BARREN WASTELAND OF UNDISCOVERED PROFITS
The appeal of investing in small-cap stocks in the current market environment has more to do with the fact that they have been forgotten by a majority of professional and retail investors than anything else. They are in that middle, attic area that investors don't care much about and rarely dare to stick to their heads in to see what is going on. Institutional investors are too big to invest a $3 stock that trades 40,000 shares per day. Individual investors come by every so often to take a peek but don't really know what it is they are looking for. This repulsion from both sides leads to the occasional no-brainer type of investment that AUTH turned out to be. It took AAPL to come along and remind investors that this was a much more valuable company than the market was giving it credit for given the current technology landscape. I still think they sold cheap. I made my 100%+ return, I can't complain. This repulsion from both sides leads to companies like SYNC stagnating after their IPO, despite an improving earnings landscape due to being in the sweet spot of technology. Another 100% gainer if you read the price correctly. There were a few other 20% plus gainers this year, as well. Software and telecom names that have taken steps to improve their business and don't receive the proper attention. SPNS is the latest name that is a reminder of how much of an ill-forgotten wasteland the small-cap space can be given the current lack of imagination on Wall Street. Tell me another place you are going to find a conservative CEO that has openly stated a $200 million goal for revenues one year from now? That's double where we are now. Stock does nothing. Tell me another place you are going to find a company that has successfully integrated key acquisitions into their business model, allowing the company to experience greater than 70% gains in top and bottom line numbers year over year? Stock does nothing. Tell me another place you are going to find a company that is in the sweet spot of a niche upgrade cycle within an industry that has no other choice but to spend? Stock does nothing. Tell me another place you are going to find a company whose parent company is buying up shares in the open market because they know the market is undervaluing the asset? Stock does nothing. Here are some highlights from the earnings report released Monday: - Revenue increased 91% to $27.2 million, compared to revenue of $14.3 million in the second quarter of 2011 - Non-GAAP...
4 CHARTS THAT POINT TO A MARKET WITH DANGEROUSLY BULLISH INTENTIONS
click chart to enlarge
AMAZINGLY ENOUGH, IT IS JANUARY ALL OVER AGAIN
It is my duty to bring you, my dear patrons, the freshest and most reliable information with respect to the markets available. That is why I am persistent in my chase to dig deep into areas that few others bother to look. I am not simply going to sit here and show you a head and shoulders pattern, followed by a couple moving averages, giving you a elementary summary of what it is the markets are slated to do. The kiddie pool is over there. This is an arena for dignified adults seeking stimulation of the mental variety that reverberates into exquisite displays of prosperity if executed properly. With that said, I bring you my most recent postulation. The following study is the cousin of a study I posted on January 31st, 2012 titled, "A Fascintating Interpretation Of The VIX & Put/Call Ratios: Volume 2." The basic premise was that during bull markets put/call ratios and the VIX are no longer contrary indicators but rather serve little purpose other than to create conversation among pseudo-market intellectuals of which there are many in financial social media circles. In this study we look at both the Dow and short-term moving averages of the put/call ratio to gauge sentiment. There are some striking similarities to January of this year when another rally was just on the verge of getting underway. click chart to...
PORTFOLIO UPDATE
During the trading day, I tweeted the following: SPRT has become my go to stock when I am looking for exposure. And why not? It has been very good to me this year. I've traded it a couple times, both instances for double digit percentage gains. The current portfolio now consists of PXLW, WMIH, SPNS, ATNY and SPRT. I'm at 85% invested, with a 15% cash position that I would like to put to work over the next week or two. My trend indicators are all 100% in bull mode now, indicating that cash is a...
STALLING…AT BEST
Today was a tell. The market twitched, scratched its ear and shifted its feet in a manner that allowed the astute observer to tell that it wasn't holding as strong a hand as suspected. Cards are now face up. Two factors today tipped me off to the fact that we are in for a sideways market at best over the next several days and down at worst: 1. The Dow has now had two days in a row of weakness in the final hour. This is occuring as we come up on an enormously consequential generational trajectory (see chart below). We need a burst or acceleration to take place in order to get over this major hurdle. The last hour weakness is a sign that the institutional buying support just isn't there...yet. 2. The SOX bounced right off the trajectory point I mentioned as its initial target on July 29th. I mentioned an initial target of 405 for the SOX. Today's high was 403 and change before weakness took hold to knock it down to 400 on the close. The SOX should start consolidating from this point, which takes out a key driver of this recent rally in the near term. Here are the charts of both the Dow and the SOX: click chart to...
RESEARCH REPORT-PXLW: OVERLOOKED, UNDER-APPRECIATED AND PERFECTLY POSITIONED FOR TECHNOLOGY SPENDING GOING FORWARD
Note: Insiders have been purchasing additional shares of PXLW as I have been writing this report. The insider buys are listed here http://finance.yahoo.com/q/it?s=pxlw Pixelworks is a Silicon Valley based manufacturer of video and pixel processing semiconductors and software. As we all have found out over the past few years, video is increasingly becoming the killer application over the internet. Video demand is fueling a movement towards increasing quality of the images we view. Take for example the IPad Retina Display that delivers an extremely high quality image, increasing the viewing experience for the consumer. This type of increasing attention to portable video quality is just beginning to grab the attention of hardware manufacturers. PXLW is positioned perfectly to take advantage of this movement. The company has been around since 1997 and once upon a time traded as high as $100 per share during the glory days of technology in the early part of 2000. Here is the official explanation of what PXLW does: Pixelworks, Inc designs and develops system-on-a-chip semiconductors and software for broadband communications. It is a semiconductor company that designs, develops and markets innovative video and pixel processing chips and software for high-end display applications, including digital projection, large screen LCD flat panels and digital signage. Their solutions leverage proprietary core technologies that enable digital display and projection device manufacturers to differentiate their products with a consistently high level of video quality, regardless of the content's source or format. Pixelworks was founded in 1997 by Allen H. Alley and is headquartered in San Jose, CA. Notes from their recent earnings report seem to confirm the fact that they are perfectly positioned going forward and present a compelling valuation proposition. The most exciting tidbit was the following: Also in Q2, we achieved another key milestone as we won a significant co-development project with a major customer to develop a highly integrated next generation chip that will result in significant revenue impact in 2014 and beyond. This engagement is a significant positive for Pixelworks and reinforces Pixelworks’ market leadership position in video. In both of these engagements, Pixelworks was selected because of our industry leading display technology, recognized leadership in video quality, and world class execution capability. "Significant revenue impact in 2014 and beyond." This in a company that is already trading at a heavy discount to present sales, let alone the discount that increased future sales provides. More positive tidbits from the conference call: Overall TV/Panel products came in at 28% of revenues and were up 166% year over year and 6% sequentially, driven by volume production of our PA Series products, and by the recognition of the...