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What's a Better Buy: Facebook or LinkedIn 12.4.12

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 Fundamentals: Facebook has over a billion users compared to Linkedin’s 100 million users, but Linkedin is a site used by professionals so they have far different user experience expectations.  

Facebook takes in most of its revenue from advertising specifically using the sidebar like its advertising competitor google. More recently they have expanded to put some ads in the newsfeed but the problem they occur is if they put too many ads in the news feed their customer base becomes unhappy with the experience and less people are likely to click.

Linkedin does do some sidebar advertising but has expanded its revenue stream by selling premium memberships to customers and charging companies to recruit future employees on their site.

Because Facebook does not charge users a dime for using the site that does open the door for all sorts of potential.  Even finding a way to get $5-10 per user would do a lot to facebook’s top and bottom lines. Linkedin’s growth might be capped at becoming the premier site for job hiring.

 

Now lets take a quick look at valuations:

With this is mind one would have to say FB is the better buy because you are getting a much PE ratio for a sales growth percentage that is still very respectable.

Technicals: Both Facebook and Linkedin are coming up in overbought territory on the RSI indicator.  FB has show buyers will come in heavy in the $18.50-$20 range.  It should encounter some resistance in the $29 range.  However you are about to get the 50 day SMA crossing above the 100 day positively which could be viewed as a buy signal to some. In my opinion I feel that FB could be bought on dips after the RSI gets worked off into neutral territory.

Linkedin has recently crossed back above the the 200 day moving average and is consolidating here as it is overbought on most indicators.  This is a great sign if you bought the stock on that cross over because you get the feeling it is just waiting to take off back above both the 50 and 100 day moving averages.  LNKD could be bought on a breakout of above average volume of that 50 day with an upside target of first $112 and then then $122-124 range.

 



Conclusion: Since technically they both could be seen as buys in the the short to intermediate term, I will use the fundamental story of FB to break the tie and be a buyer of the dips in Facebook.

 

Disclaimer: Currently I am not long FB or LNKD

 

Bio: Zachary Teller has a degree in Finance from the University of Connecticut. Zachary has 8 years of equity trading experience.  His trading approach is largely technical but refers to fundamentals regularly to get a gauge on the markets as a whole. Feedback is always appreciated.

 

Email: zachary.teller1@gmail.com

Twitter: @zachteller16

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Quiet Gold ATR = Buy? (GLD, SLV, USD) 12.4.2012

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ATR is simply the average range of a product over a specified period. We chose 21 periods, or trading days, for 21 is a decently long period that smoothes out random volatility, but still captures trends, and is a Fibonacci number. Bottom line however, the ATR denominator is discretionary.

The data below buys gold futures when the ATR closes below $20 for a few consecutive periods and closes the trade when it crosses $20 to the upside. Of the observations outlined below, the average return was 10.6% trading this indicator. When gold is not experiencing volatility, either way, the story fades into the media darkness. This is because not that many people are trading it or watching it, thus lower ratings if media outlets run a story about it…for who wants to ear about a financial product that is not moving in today’s fast action, short term, and hot money trading financial world…nobody. More range indicates more participants and therefore more opinions of fair value…hence the increase in average true range.

 

01

 

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“Buying gold is just buying a put against the idiocy of the political cycle. It’s that simple!” – Kyle Bass

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to…

Author

mark@keeneonthemarket.com

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Could Deckers be setting up for a breakout? 12.4.2012

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Let me point out the OUTRAGEUOS divergence on the top, and potential bottom.

1

I have marked the negative divergence with the red lines and the positive divergence with the green lines. As you can clearly see, Deckers kept on making higher highs with the price action, as the MACD made lower lows for 11 months! This is ‘textbook’ divergence. As for the positive divergence, it is really starting to look nice down at these levels. To see if this is a possible break out, let’s check out what the waves are telling us…

2

What I am seeing right now as my most probable scenario, is that we are working on our (4th) of 5 wave. This move off the top at 119.06, looks like a clear 3 waves down so far. What makes me believe that this is just a bounce is the behavior that 4th waves usually show. They are always the most difficult, and almost always seems like ‘news’ or ‘chatter’ for the stock starts to heat up right before it takes its last dive, or thrust up. What this does, is throw off all those traders that jumped on one step to early, and forces them to take their small loss before things get worse. And right before they know it, the stock begins to breakout in an impulsive manner. Shakes out the shorts or longs…

The level that you should be watching is $55-$61. If it takes a hard turn down from there you know that the most likely scenario is a 5th leg down. There is also some resistance at the $50 area, so this will act as a strong fence for the bears.

If, and only if it passes up through the $65 region would I think that the low as been seen. I would not be chasing this right now…. wait for confirmation.

 

Author: Peter Nitso

Contact: pnitso@yahoo.com

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Autozone (AZO) Earnings 12.3.12

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This leads to Autozone reporting a gain in gross profits that began in May at 1.089million to 1.432 million in August. Along with bullish profits, Autozone opened today at $384.00, only $15 off of the 52-week high of$399.10, and has consistently increased in price from September 14th at $351.99 to $383.77 as of November 30th.  Again, look for the bullish trend in Autozone to continue tomorrow, however looks to place a stop at $370, as that was the previous low, before the November highs. 

 

Historical vol: 30day=12.8%  60day=17.4%  120day=18.3%

Current ATM IV[30d]: 25.2% +1.4 pts (+5.7%)

 

Date      PreEarn PostEarn     Change

09/19/12  $357.84  $369.84  $+12.00 (3.4%)

05/22/12  $368.55  $361.14  $-7.41 (-2.0%)

02/28/12  $366.09  $376.41  $+10.32 (2.8%)

12/06/11  $338.97  $337.81  $-1.16 (-0.3%)

Average Magnitude of Post Earnings Return 2.1%

 

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SBUX Analyst Day 12.3.2012

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SBUX is working to gain consumer confidence in Asia in an effort to stimulate growth.  SBUX has announced that it has plans to open an additional 1500 stores in China by 2015. SBUX intends to develop a program called Starbucks China University.  This program is aimed to enhance the overall performance of the SBUX employees that will be working in China. The Chinese coffee market is estimated to become the second largest in the world within the next two years.

The company’s problem with sales in Europe may also be part of the discussion at the analyst meeting on Wednesday.  SBUX has closed several stores in Europe, which has had a negative impact on SBUXs share value.  SBUX opened on Monday December 3, 2012, at $52.14.

Investors can anticipate these three topics to be addressed at the analyst meeting on Wednesday.

 

Author: Tyler Sciortino

Current Student at Roosevelt University, Majoring in Finance.

Contact for questions or inquiries at tsciortino@mail.roosevelt.edu 

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Toll Brothers Earnings Preview 12.3.2012

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Earnings are expected to come in at 23 cents per shares, up from 9 cents a year ago. Revenue is projected to be $566.5 million for the quarter, 32.4% above the year-earlier total of $427.8 million. Revenue grew in the last two quarters. In the most recent quarter, revenue rose 40.6% year-over-year to $554.3 million. The quarter before that, it rose 16.9%.  

=The underlying theme for all companies this quarter has been beats on the bottom line but misses on revenue as companies show they are cost cutting due to the uncertainty with the fiscal cliff. When this happens traders have been very unforgiving hitting equities hard.

2012 has treated Toll Brothers and its other housing counterparts very nicely with the stock up about 56% for the year. Although it has recently been in somewhat of a downtrend, it has shown support at its 200 day simple moving average.

The options market has indicated that TOL should move anywhere from $2-$2.50 after the announcement.