MarketWatch technician raises ‘bullish flag’

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"The technical backdrop has taken a distinctly bullish turn," says Michael Ashbaugh in MarketWatch's The Technical Indicator. Here, he looks at the market averages and a trio of stock ideas.

"Perhaps most obviously, the S&P has staged a 10-to-1 rally, and a 28-to-1 spike, from its 200-day moving average. And by any measure, this raises a bullish technical flag.

"With a gravity-defying rally, the S&P extended its gains, clearing resistance at 930 last Thursday. From current levels, significant resistance holds at the 2009 closing high of 946 while initial support rests at 930.

"Meanwhile, the Dow's near-term view is similar. With this week's rally, it's staged a 'V'-shaped reversal, breaking to one-month highs. Looking ahead, significant resistance holds at 8,799 - matching the 2009 closing high - while support rests at 8,580, matching the breakout point.

Continue reading MarketWatch technician raises 'bullish flag'

MarketWatch technician raises 'bullish flag' originally appeared on BloggingStocks on Mon, 20 Jul 2009 11:00:00 EST. Please see our terms for use of feeds.

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Lex: Iceland’s rehabilitation

Iceland's plan to save its banks looks good on the surface, but there are at least three problems with it. First, the agreement to compensate British and Dutch retail savers the $5.5bn they deposited in internet bank Icesave requires parliament’s approval. That will be a contentious vote given the number of angry locals wearing “Iceslave” t-shirts....

GONE (FOR THE MOMENT) BUT NOT FORGOTTEN

The ascent in the yield on the 10-year Treasury Note during this past spring took a breather after rising to nearly 4.0% by mid-June. That prompted some to claim that the underlying source for the rise—worries about future inflation—were overbaked.

Perhaps, but we beg to differ, and have for some time. Even when the crisis of last fall was exploding with all its ignominious power, we were of a mind to expect a return of inflation at some point. The CPI report last week suggests that such expectations are still valid.

To be sure, the risk an imminent surge in inflation to lofty levels still looks low. Although deflationary forces are fading, the blowback from the financial crisis and the lingering effects of the current recession will reverberate for some time and so pricing pressures are still muted. Nonetheless, it's always been clear that the Federal Reserve's primary goal was to return the system to an inflationary bias. A mild one, if possible, but inflationary just the same. We never doubted the Fed's capacity for success on that front, and neither it seems does the bond market. The question is whether the central bank can let the genie out of the bottle just a little?

Caterpillar Surges; Peabody, Regions Plunge

Fed Chairman Bernanke in his prepared remarks for lawmakers indicated that unemployment will remain high till 2011 and slow economic recovery in 2010 will accelerate in 2011. Regions Financial plunged on wider than expected loss in the second quarter. Caterpillar surged on positive outlook.

Triple ETF Options Landscape

Since I find myself increasingly active in trading options in triple ETFs, I thought readers might find it interesting to see a graphic of some important options data on the triple ETFs currently in the market.

Utilizing data from iVolatility.com, the spreadsheet below captures the average options volume, open interest and current implied volatility for the 12 pairs of triple ETFs. I have separated the ETFs into four groups: broad index ETFs (market cap focus); sector ETFs; geography ETFs; and bond ETFs. I have also color coded the top five pairs in terms of liquidity in green, with two additional pairs highlighted in yellow that I believe are liquid enough to trade, though they do not yet have the following of the “big five.”

I will refrain from additional comments, other than to note that I believe a lot of additional information of interest can be gleaned from this relatively simple graphic.

For a related post, see: Using Options to Control Risk in Leveraged ETFs

[source: iVolatility]

Harmon Int’l Denies Buyout Offer

NEW YORK (Reuters) - Harman International Industries Inc (HAR.N), a maker of high-end audio equipment, said on Monday it had not received a buyout offer from a private investment group, denying reports that had sent its shares up 33 percent earlier on Monday.

Several media outlets on Sunday received a faxed statement that said a private investment firm called Arabian Peninsula Group planned to acquire Harman for $49.50 a share — double Harman’s Friday closing price of $25.18.

Some media reported it, adding fuel to trading activity before the bell. By mid-morning Monday, Harman shares had reversed course and were down 4 percent at $24.15 on the New York Stock Exchange.

When asked if it was the target of a hoax, Harman, which makes speakers for homes and cars under brands that include Harman Kardon, Infinity and JBL, said it had no idea who was the source of the supposed tender offer.

“The company has not received such communications and is not familiar with any parties claiming to make such a solicitation,” Harman said in a statement issued just before the start of trading on Monday.

A spokesman for Harman said, “I prefer not to speculate on any motive for these reports, other than to say we have no idea where they originated.”

The Sunday statement from “APG,” which quoted an executive named Donald Parker, and said to be head of Arabian’s Strategic Investments Unit, did not provide a contact for verification.

The U.S. Securities and Exchange Commission did not immediately respond to a request for a comment.

In 2007, Kohlberg Kravis Roberts & Co LP and Goldman Sachs Group Inc’s private equity arm backed out of their deal to buy Harman, under which stockholders would have received $120 per share.

(Reporting by Franklin Paul, editing by Gerald E. McCormick and Maureen Bavdek)

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Singapore Airlines loss ‘almost certain’

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Staff cuts are coming for Singapore Airlines (OTC: SINGF) with calendar Q2 "almost certain" to be a money-loser. This won't be a first for the carrier, but it's definitely rare. Since going public in 1985, SINGF has only had one quarterly loss until now. It took the SARS epidemic to put this company into the red for three months, back in 2003. According to four of the five analysts polled, there was little the company could do to avert the situation.

In a respectable move, the staff cuts are following that of the executive team, which has had 10% to 20% sliced from its salaries. An operating loss of $50 million or more for Q2 will cause staff paychecks to fall by at least 2.5%. SINGF is on the hook to cut 25% of the "monthly variable component" (MVC) that's included in staff salaries if the airline's loss pierces the $50 million threshold. MVC disappears in its entirety if the loss passes the $200 million mark. Currently, MVC accounts for only 10% of employees' total compensation.

Employees have already been chipping in to reduce the airline's costs. Pilots, for example, have sacrificed 65% of a day's pay every month, and employees in general are working shorter weeks.

But, this hasn't been enough.

Continue reading Singapore Airlines loss 'almost certain'

Singapore Airlines loss 'almost certain' originally appeared on BloggingStocks on Mon, 20 Jul 2009 10:40:00 EST. Please see our terms for use of feeds.

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