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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.

 

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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.

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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…

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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.

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Corporate America's Dividend Parade Off the Cliff! (COST, LVS, HCA, SPY) 12.3.2012

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According to  many sources, there were over $100 billion dollars worth of bonds snapped up in November. Companies are trying to front run the dividend tax increase. Issuing one-time dividends now will allow shareholders to pay 15% in tax, as opposed to the near 40% after the cliff.  Some of the firms jumping on this trend include LVS (announced a $2.75/share or about 6% dividend), DDS (announced a $5/share or about 5.6% dividend), WLK (announced a $3.75/share or about 6% dividend), COST (announced a $7/share or about 6.7% dividend) and ABT announced that they will issue cash as opposed to fractional shares…a form of a special dividend for shareholders on record as of Dec 12th 2012.

What can be implied from this action? Regardless of political opinion, it is clear that corporate America has their shareholder interests in mind. Pushing through these dividends will keep cash in the hands of consumers as opposed to inefficient government.

Perhaps it will be prudent to keep an eye on cash rich companies to maybe front run these announcements. There is also the REIT trade to keep an eye on…AGNC and NLY, for these stocks may have valuation changes when taxes change. These stocks yield 15.8% and 14% annually respectively.

Political positions are dynamic, and considering the ‘closed door’ negotiations that go on, one should stay skeptical and nimble in the market.  The market’s ATR (average true range) is up 60% from September 2012…from $1 in the SPY to nearly $1.6 now, over a 14-day period. The market is perpetually trying to find its true value and this increase in range indicates that the market is swinging more due to events that are constantly changing valuations.

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

Author

mark@keeneonthemarket.com