Stock Market Analysis – 04-15-2010
Tax day! With the booming market during 2009 (and the busted one in 2008) you most likely made more in 2009 on capital gains than 2008. In these situations, the key is to always make sure you withhold just over 100% of the down year’s taxes to get free margin on your $5k, $10k, $100k, etc. for the whole up year. The downside is that you end up paying the piper on tax day, even if it is penalty free, but at least you weren’t paying any juice to your broker for the leverage. Maybe some day my return can look like Obama’s though – a $5.5 million AGI would be nice.
Anyway, the market had some strong volume, but lacked movement. The telling thing is that GOOG announced some good earnings, but dropped almost 5% in the afterhours trading. Remember last year when everyone was announcing that they lost money, but they were losing less than the market expected so they were shooting up after the earnings calls? Well, now we’re doing the opposite, so that could mean this overbought market will finally start cooling off. Pay close attention to GOOG tomorrow to see if they carry this bearishness through the day. That could be an indicator of what’s to come over the next month or two.
Research in Motion (RIMM) – 09-25-2009
RIMM has been under attack from AAPL, GOOG, MSFT, and PALM in the smartphone market and it’s finally starting to show in their numbers. Their days of complete domination appear to be over, so now they need to come up with a way to keep their current user base or expand the market. Fortunately for them, the market is rapidly expanding, but they can’t afford to rest on their laurels or they’ll end up needing a huge comeback like AAPL in 2000 (completed successfully) or PALM right now (TBD).
The volume of the drop today outpaced the breakout that brought us here, so it will be interesting to see what happens. If the market follows through with its correction, RIMM may be a nice short play. If not, it should at least be interesting to day trade on some bounce back days. Either way, all of these stocks are interesting to watch if you like tech stuff for the long run too.
Palm Inc. (PALM) – 06-19-2009
The first stock screen beginning investors implicitly learn is to think about the products and services they really like in their lives and look up whether the companies are public. Palm happens to be one of those companies for me now after spending some time with a Palm Pre. If you want a phone that lets you play games and listen to music, the iPhone is probably the only thing you should be looking at. However, if you’re like me and you want something as a personal organizer, email, messaging, web browser, etc. device, I don’t see how you could live without the multitasking Palm Pre.
I know I’m abnormal, but I always have at least a few different web pages loading and a couple conversations going on at the same time, which the Pre allows me to do seamlessly. Surfing the internet on the iPhone feels like going back to pre tabbed browser days. Is the Pre going to take over the smartphone market? Probably not — at least not in the immediate future. As much as the AAPL fanboys will hate me making this comparison, the iPhone is essentially the Windows of cell phones, and the Pre is a little mix of Ubuntu and OS X. Each have their technical advantages and disadvantages, but if you aren’t leaps and bounds above the competition it’s tough getting people to switch, as Apple has found out in their PC war. Fortunately for Palm, the turn over on phones is a lot quicker than on computers.
If Apple decides to stay AT&T exclusive, look for this race to get a lot closer much quicker. Also, pay attention to GOOG’s big surge of Android phones coming later this year, MSFT’s WinMo 7, and RIMM who’s starting to become a bit of a dark horse after dominating the market for so long. Of these companies, as a trader I would selfishly prefer that PALM or RIMM win the war, since dominating the mobile phone market would make a much smaller impact percentagewise to the bottom lines of any of the other gorillas. Other companies that are interesting are ARM and Imagination Technologies, since they make the chips that all of the phones are using right now, so any expansion of the market would be good for them. However, they’re both on the London exchange (ARM has an ADR under ARMH though). Expect more posts on the subject in the future…
Stock Market Analysis – 10-16-2008
A late market rally sent the markets soaring. There was solid volume today, but the NYSE ended with slightly more down volume still (46% up vs 50% down). However, the Nasdaq was overwhelmingly up (87% up vs 13% down) as Ballmer sparked the YHOO merger rumors again, only to have MSFT issue an official statement that they have no interest in YHOO. After the market close GOOG also delivered an unexpectedly good earnings report that sent the stock up 10% after hours. I wouldn’t be surprised to see the bounce follow through tomorrow to close out the week, but once again, don’t expect it to last very long. Will it be enough to get another good short opportunity?
Google (GOOG) – 10-03-2008
Google continues their domination of the online search and targeted ad market, and it doesn’t seem like they’re going to get knocked off any time soon. With their recent forays into TV ads and mobile stuff amongst numerous other things, there’s still a lot of room for growth here. $500 has been a sticking point since 2006, probably largely due to the psychological resistance such a nice round number always produces.
There are two things you could watch for: a breakout over $500 as shown on the weekly chart or a break of the downward channel as shown on the daily chart. Currently that would mean breaking $460, but of course that will go down before the time to buy actually comes. Remember, patience is the key. Try to catch a falling knife and you’ll get hurt.
Stock Market Analysis – 09-10-2008
After a huge pullback yesterday, the market was mixed in forming a spinning top today. The most interesting thing that’s happened this week so far has been the explanation over the UAUA drop on Monday. For those that haven’t been following, UAUA dove from $12 to $3 on Monday after a rumor came out that they were going bankrupt. It turns out the rumor was traced back to Google’s news crawler finding an old article on a news site about the 2002 UAL bankruptcy filing, and it was supposedly unclear that the article was old so it was posted as current news. From there it got picked up by other news outlets and the stock was actually closed for trading temporarily after it ate it too much. Of course once people realized what happened, the stock bounced back most of the way, but it’s still interesting to see how fast the market reacts to news nowadays.
Some people are mad that automated news traders accentuated the drop (or quite possibly were the entire cause of it), but if you look at anyone that did automatically trade the news I think they learned their lesson. Let’s see, if you shorted it at $3 you would have had to cover at over $11 when the market opened back up. That means you lost over 250% in a little over an hour! Of course that’s from the bottom to the peak, but even half that is a devastating amount for an hours worth of trading. There are a lot of lessons to be learned from this, but the one I’m going with is: margin can be very painful, so size your positions accordingly.