by | November 26, 2013 · 2:17 pm

Consumer Spending

«There is only one side to the market.

Not the bull side or the bear side, but the RIGHT side».

Jesse Livermore

Another record high for the DOW yesterday, and Nasdaq topped 4,000 for the first time in 13 years.

Nasdaq closed at 3,994,573. Earlier it touched an intraday high at 4,007,093. The Dow ended at 16,072,54. S&P 500 dipped 2,28% and closed at 1,802,48.

It was not a good day for social media stocks yesterday. Twitter was down 4,7% and are now trading at $39,06. Facebook is down 3,1% and are breaking down from a technical support at $45,80. Facebook is now trading at $44,82. Yelp slid 6,7% and are now trading at $58,20.

Many investors are scared and expect a pullback, but the stock market can still go higher. The Dow has increased seven weeks in a row now, and S&P 500 is up 26,4% for the year. Investors continue to turn their back on gold and they expect the gold price to decline to $1,180 and that is its three year low.

Investors follow U.S data reports closely to gauge if they will strengthen or weaken the case for the Fed to start tapering in December. Gold prices are sliding down on concerns the Fed would start tapering its 85 billion a month asset-purchase program in December. So do the Silver prices, but Copper is up 1,33% on the week.

The precious metal turned bearish after the Fed`s minutes meeting. Fed said they will start tapering if the economy continues to improve as expected. Consumer confidence will be an important number to follow today. A level below 70 starts to be critical.

It is a shopping week now. Black Friday is the friday following Thanksgiving Day in the United States and this is usually the beginning of the Christmas shopping season. Shops opens earlier than scheduled, and this has been the busiest shopping day of the year since 2005.

Consumer confidence fell to 72,0 in November and that is its lowest since December 2011. The economists expected 74,5 this month so this was a surprise for them all. Forecast for the consumer confidence later today is 72,2 (previous 71,2). I will follow this later today (10.00am EST).

News today: Building permits and housing starts at 8.30am, CB Consumer confidence at 10.00am.

i_love_shopping

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 25, 2013 · 2:06 pm

Consumer Confidence is declining

It is thanksgiving week and this week is usually a low volume week. Traders are off enjoying the extended holiday, and if something moves, it will move monday and Tuesday. Since we are at the all time high, maybe some people are thinking profit taking?

Consumer confidence is declining. This gives us an idea about the consumer spending in the U.S economy. If people don`t feel great about their own economy, they will not spend so much money. It is just that simple.

I wrote about Apple and their new products and they really need to do it well in Q4. If people don`t have money to spend, they will not buy any Apple products like phones, tablets or other innovative products. They will rather keep what they have and cut back on their discretionary spending.

If people don`t spend money this holiday season, companies will not earn so much money and the stock prices will not go up. Nor the GDP (gross domestic product) will go up.

What really drives the U.S economy are suggesting there isn`t much light at the end of the tunnel. What about the so-called economic recovery we have seen since the financial crises? Does it work?

Gold is trading at $1231,50. Down -1,01%. As long as the inflation is low, the gold will continue to decline. People expect hyper inflation, but Janet Yellen are fighting against deflation. News today: Pending Home Sales at 10:00am.

 um-consumer-sentiment-through-november-2013

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 22, 2013 · 2:25 pm

Price to sales ratio (P/S)

When you evaluate companies, you have many tools to use. You can do the research by looking at the numbers in companies that have made money in the past. The tools I have been written about earlier is very useful.

But what if a company don`t have any earnings? Is it a bad investment? Not necessarily, but you should be very careful with companies with no income history.

The tech bubble is a good example. Many companies didn`t have earnings history and some of them didn`t have products either. That was the 90`s. Fortunately. However, sometimes you find a great company that is worthy of consideration. Therefore, you need to measure the young companies without the earnings.

You can calculate like this:

P/S = Market Cap / Revenues
or
P/S = Stock Price / Sales Price Per Share

Price to Sales (P/S) ratio is a tool you can use and the lower the P/S the better the investment is because you are paying less for each unit of sales. However, sales do not reflect the whole picture as the company may be unprofitabel with a low P/S ratio. This ratio is usually used only for unprofitable companies. That is because they don`t have a price-earnings ratio (P/E).

Like the other tools I have been writing about, you shouldn`t use only one of them to determine your investments. Especially, when you are dealing with young companies, you will have a lot of questions to answer and the P/S ratio is only one of them. Remember; Microsoft was without earnings at the beginning of their carreer.

shinybull_for_sitesite-7

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 21, 2013 · 2:08 pm

To taper or not to taper

The FED`s FOMC minutes, said yesterday that they could see the Fed tapering its $85 billion-a-month bond-buying program at one of the next few meetings the coming months. In addition, the committee members also saw the U.S. economy growing at a moderate pace.

This is not something new to us. They have earlier said that they want to see the unemployment rate below 6,5% and a better growth with a stabile inflation before they start to taper. Therefore, the U.S employment report in early December will be on traders and investors watch list now.

Once they came out with the news yesterday, the dollar index shot to its daily high, which is a bearish signal for the precious metals traders. Gold and silver prices dropped sharply. Where are the gold headed now?

From 1976 into the peak in 1980, gold rallied from $101,50 to $873 an ounce. A big bullish trend for the gold that time. Fear and greed are reflecting this chart, while people trade on emotions.

The gold indes peaked out and the market backed off and settled into a sideway trend from about 1982 to 1996. Then it started a sideways trend from around $281 to $514. A loooooong sideways trend for a loooong periode of time.

It went sideways in the 90`s and people considered the market to be «dead». But then the market changed in 2001 – 2002. It started a new trend that peaked out in September 2011, trading at $1900.

The chart is now very similar to the chart back in the early 80`s. If this is the future for gold, we are likely to see a sideways trend now.

But many people expect a big drop now because the market seems to be overbought. If that happend, we will se a change for the gold price. Probably a big jump. News today: PPI & Unemployment Claims at 8:30am, Philly Fed Manufacturing Index at 10:00am.

shinybull_for_sitesite-7

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 20, 2013 · 1:35 pm

Price-to-earnings growth (PEG)

PEG ratio is used to determine the value of the stock while you look at the company’s earnings growth. This gives you a better picture and overview than P/E ratio. Take a look at LinkedIn. Price-to-earnings is just below 1000 now.

A high P/E like that may look like a good buy, but factoring in the company`s growth rate to get the stock`s PEG may tell you another story. A company with a lower PEG ratio may be undervalued given its earnings performance.

The PEG ratio tells you whether the stock is over or underpriced and that varies by industry and what kind of business it is. The accuracy of the numbers in the PEG depends on all the inputs used. If you use historical growth rates, you may provide an inaccurate PEG ratio because the future growth can deviate from historical growth rates. Some use the terms “forward PEG” and some use the terms “trailing PEG” to distinguish between the calculation methods using future growth and historical growth.

The most popular way to compare two different stocks are to look at the P/E. You simply calculate it by taking the current price of the stock and divide it by the EPS. It tells you whether the stock is high or low relative to its earnings.

A stock with a high P/E is often considered as overpriced and that is probably right. It signals that the traders have pushed the stock price too high and above any reasonable near term growth that is probable.

However, a high P/E can also signal a strong vote of confidence that the company still has strong growth prospects in the future. This tells us that the stock price can go even higher.

Investors are usually more concerned about the future than the present. That`s why it is better to look at future earnings growth or the PEG ratio. You calculate the PEG by taking the P/E and dividing it by the projected growth in earnings.

PEG = P/E ratio / (projected growth in earnings)

For example:

P/E in Company A is 100, and projected earnings growth next year is 20%. PEG in this case is 5 (100 / 20 = 5). Like all other ratios, the number five in this case is just a number you can compare in relationship to others. The lower the number, the less you pay for each unit of future earnings growth. A company with a high P/E and a high projected earnings growth may be a good value.

A company that is not growing any more with a P/E of 10, and a low or no projected earnings growth, gives you a PEG like the P/E. This can tell you that the investment in here is very expensive.

Take a look at the chart below. I have compared Sony with Starbucks. People are not buying vinyl records or cd`s anymore. What do they buy? They simply buy coffee! Sony traded at $120 in year 2000, and now the stock is just below $20. By the way, do you know what company that is selling most cd`s in this world right now? Belive it or not; it is Starbucks!

SNE and SBUX

News today:

Core CPI & Retail Sales at 8:30am,

Existing Home Sales & Business Inventories at 10:00am,

Crude Oil Inventories at 10:30am,

Fed Meeting Minutes at 2:00pm.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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