Q1 SPX update and Review on calls - April 14, 2015

Two weeks in Q2


Lets review from previous post on performance:

Feb 4th 2015 Post

Jan 23 2015 Post


Formalized from jan 23rd expecting big correction, qualified in feb 10% correciton in US equities needed.

Thesis still in play:

• Resistance in play
• Short term strong closes below 50 SMA
• Big test to see price stabilize below 200 SMA
• Series of Higher Lows
• Sentiment in line with interest rates and FED speak

Fundamentally weak support going into corporate earnings. Whats to drive prices higher in short to medium term? 

• Theoretically weak consumer. 
• Energy sector weak
• Financials so so
• Utilities? 2014 trend positive
• Healthcare?
• Tech?

Not enough positives to push higher. 

Is contigon from Europe a possibility? Psychologically and technically yes only imho. I see 10% drop only as a price correction in the larger bullish equity trend. We will need to see macro correlations consistently disappoint to see a sustained down trend to end of year. 

Get the feeling we see correction and year ends flat. 

*Side note: Greece needs to blow up and leave the eurozone. Too much at stake for whole system to tank. Cut the cancer and move on. Short term will be bloody and messy but we need this shock to the system to correct fundamentally. Will be interesting to see how Iceland moves forward as well given different trajectory and path post blow out. 

Clarity Conclusion:

• Still expect greater than 10% correction in 2nd quarter
• Once it occurs need to assess fundamentals and sentiment closer

Long long term is up, short term and medium bearish (long long = year to years out and short and medium equals one month to 6 months)

Need to see broader picture too relative to other financial markets and other global markets to gain more context.

Above is more or less a pure technical play with some brief fundamental/sentiment considerations based on headline skimming

Found in notebook written back in 2011:

Prices follow fundamentals. Yes, true. But prices will often lag significantly since information is not efficient. Perception is never 100% correct. ideas of dynamic mean reversion. Fundamentals are not some static variable that once analyzed stays (as is).

Policy or ones philosophy must incorporate this dynamic fact.

Inefficiency allows and gives rise to multiple solutions to similar problems

trends, value, "edge" are all ephemeral because of this.

Right and wrong do not exist; what is, exists

Feb 4, 2015

month one of 2015 passes correct formation still in play

Thesis still stands, pyramid gains here. 

Stop - to resistance or slightly above.

Fews ideas here to possibly confirm.

1. Oil led via fundamentals in its own market

2. Divergence means the prices will revert back to its mean? correlation or whatever? Think pairs trading.

3. volume supports correction, markets behind this. 

4. lots of short covering in WTI spot, however no major fundamental changes here

5. 10% correctin in stocks can mean prices still very soft in crude

6. USD follow correlation beautifully. conveniently timed to euro problems. Markets are linked?

Overall trend set still in play, hold to guns. Main play is stock correction which is lagging. 

Fundamentally don't "feel" real material fundamental strength here need see people take risk off for anything to continue.

Possible swans? Will think about that more later.

Repost from elsewhere - Jan 23, 2015 - lets get back into it

• uncharted territories
• no value in these earnings
• correction to real leg up needed to get full extension on trend (think waves)
• Still relatively cheap given highs and history
• Smart buys at 1400-1500

hedge on inverses

look for the values on drop

Short term trend looks very weak. First two quarters retrace? Buy in? How to play first and second quarter in terms of portfolio allocation?

The year 2014 is just the extension of the raging bull form 2013, but is there any valitity here? NO fundamentals going into the trend. Need to confirm with volume analysis and sentiment indicators. 

Gut feeling says BS on the year leg up. Smart money exiting waiting for crash given last quarter performance 2014. Lots of nice long covering from Oct 2014. 

Trend actually extends from 2012 bull market. Post sovereign debt = us economy driven sentiment. Pent up unused capital became less risk averse with no where to go. US seems good? ok why not... lots of werid stuff going on in currencies. Lots of mixed indicators dollar strength and commos makes sense but equities not following... slow convergence. 

Will like to see this baby crash be full fully going in.

Maybe good plays to start getting back in the game is to short the dollar. Will look into how to get this exposure later if thesis makes sense. 

BBRY - Update 2013

http://analyzecapital.blogspot.com/2013/09/bbry-sept-21-2013.html

Called it


blackberry-reportedly-in-talks-with-google-samsung-and-others-about-buyout

 

• Price rapidly approaching buy zone. Another 1.50+ off  and I think its fair game to buy
• Unlikely deals will sour unless management is that bad... given company performance perhaps it wouldn't' be surprising if they did
• I think other exits are unlikely and they will be forced to sell cheap
• Negative scrutiny from MSFT NOK deal
• Lots of short term pressures to see price go further down = better value in buy once deal goes through

GIS - OCT 1 2013

Old chart from last week - 3 year weekly chart

 

Lets look at the long term chart and top down fundamentals:

• Strong strong trend past 3 years
• Long term chart says correction needed
• Likely correction longer term out
• 60% of top line from US --> how is consumption in staples?
• How are commodities prices? Is there pressure? If pressure what spill over can we expect?
• Inflation indicates probably no price pressure, Fed confirms with policy (however there are divergences from individual commos markets to equities, must look more carefully)
• How is growth expansion abroad? Can GIS diversify revenue further?

It would be nice to see longer historical price trends. No thoughts no calls, no HW done.

Rambling Thoughts

I love the divergence of equities and commodities seen from 2012 and 2013. Break from historical correlation leaves rooms for many ways to make more money and a more interesting dynamic to look at. Time to start looking back at fx and commos again.

PCLN - Sept 21 2013 - 3 Year Weekly Chart

• Look at this awesome trend
• We are looking for a 10 - 15% correction at these levels
• Buy on big correction --> very possible can get a strong second leg of dumb money going up after correction

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• Risk to thesis - interesting volume action August 2012
• Lack of strong volume confirmation on last leg
• Above risk probably indicative of correction as mentioned above

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• Look to fundamentals to confirm despite irrational exuberance

AMZN Update - Sept 21 2013

• Close above break in resistance = confirmation of healthy trend
• Conservative look for a few days closes around 320+

BBRY - Sept 21 2013

• Looking very good for buyout candidate
• Easy to get on cheap valuations
• Definitely entries at or below historical support from 1 year go (sept 2012)
• Company needs to be revamped
• New strategy sounds desperate and little add value and even if it works it has limited upside to profits unless they cut beyond current plans...

SYMC update 9/10/2013

• I remember from back in 2006 that SYMC responds well to technicals
• Overall SYMC is a shit stock from what I understood
• However, despite any bad fundamentals strong technicals could prevail in the short term
• Gaps like this usually don't lie and is in tact with overall recent uptrend ( see below)
• Break in resistance, profit covering --> back to support
• We looking at green buy zone

Nice, trend dude:

• Given the nature of the STRONG trend from June last year... its possible the above scenario would need to be a short term buy. Enough to get you over 27 for sure. 
• If you believe in Waves, this trend looks like its going to collapse

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Summary

• Short term buy
• Watch closely to catch the first leg of shorts

MSFT update SEP 6 2013

Shallow thoughts:

• Smart money is gone now which begs...
• Is Ballmer leaving really a fundamentally good thing for the company?
• If yes, buy at support or below support because its value realized over a longer period?

Look to longer picture for technical buys...

Very interesting gaps. Strong volume gap down, strong volume gap up however couldn't breach resistance. Again, look for longer term plays here. Looks like of sideways roller-coastering from here in the short to medium term. 

5 Month Laters AMZN - AUG 23 2013

BOOM

My only and best call for 2013.

See quote from Post: "AMZN Update April 2nd 2013 Update"

"If support can hold up trend still in tact = Buy in 240-250's range. Depending on how strong conviction is or trading style (waiting for confirmation on up swing, pre-emp buy in before move, scale in slowly pyramid up on confirmation). "


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Buy in at 240 - 250 was the correct zone to buy in. The trend materialized one month later in May for the buy zone and unfolded through MAY --> JUNE --> JULY. Finally, the short term trend peaked out in the 310 range making about a 20 - 30% gain on price from buy in zone to peak.

Hell, the trend still looks healthy to me. However, we are exploring uncharted areas in the 300+ range. Fundamentally is AMZN sound? I dunno, but management still remains strong and if the core values are still there we should continue to see continued long term uptrend.

No comments on current correction in play. Possible pyramiding area if you buy into the continued up trend in the short term... hell look at the S&P500 this past year. Crazy stuff. (remind me to not say this is a call... NO BACK TRADING... more of light observations)

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Longer long term view... hmmm, get that gut feeling that internet is going to be another bubble either that theres just too much possible collapsable focus in the space despite there seemingly being more grounded reasons to be in internet vs. circa 99 - 00's ...

AMZN - April 10, 2013

CAN 267 HOLD???

Good Read

http://www.vanityfair.com/business/2013/04/bill-ackman-dan-loeb-herbalife

Interesting read highlighting fundamentals investment mindsets vs not so explicit trading mindsets.  Knowing a truth doesn't mean a trade materialize in that truthful direction. No one sees markets in 20/20 vision.

The whole MLM aspect too was interesting in that such a strong fundamental view coming from Ackman failed to capture the many different types of people involved in the Herbalife business. His viewpoint comes from a very high level one track mindset.

I've been to a few Amway meetings, and they try to recruit like cults. The average person involved in distribution for an MLM most probability won't know or care what some Fat Cat Hedgie guy thinks or says. MLM's run on a faith type system and highlight the 1% Ackman highlights as successful, as a norm or something to aspire too. Reinforcement, and self-fulfilling yumminess.

Hope and faith are a powerful thing. Powerful enough to trump any short plays. The only question is how long can Ackman's billions last until the margin calls ring in...

Who knows, maybe he will get lucky like that time Robertson sat on a metals position for more than 5 years to claim he was "right" on the trade after it moved in the desired direction...

When you are well funded, its easier to sit on tougher positions.

AMZN Update April 2nd 2013 Update

Jan 24 my last comments on AMZN --> HERE

Jan 24:

• High - 276.65
• Low - 269.37
• CLOSE -273.62

Technical perspective very interesting. Jan 24 candle indicative of failing bullish momentum, confirmed with next day failed gap above previous high with lack of volume confirmation (20/20 hindsight)

Followed by lovely volume confirmation of next few days correction. 

March 21 Close - 253.39

From Jan 24th Close to March 21st close = 7.4% correction from last call Jan 24th

10% correction from the close of 24th would = 246.25

15% correction from the close of 24th would = 232.57

If my analysis from the 24th is correct we will see 200day SMA support with price noise piercing below 200SMA changes. True support should hold with close above 200 SMA. 

If support can hold up trend still in tact = Buy in 240-250's range. Depending on how strong conviction is or trading style (waiting for confirmation on up swing, pre-emp buy in before move, scale in slowly pyramid up on confirmation). 

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LONG WINDED NOTES

Above very linear analysis pure chart no comparison. 

Some interesting notes look at various time frames of AMZN vs $COMP and $SPX stockcharts.com. 

VOLUME

Volume on Jan 29th not so different from high volume seen in 2012 during other major corrections (mid sep - mid nov 2012). 

If volume from 24th is consistent with last years trend, bullish picture still very much in tact. However, watch short term price movements and support carefully to see if volume kills bullish scenario with much lower than expected price moves.

PRICE

Looking at short term picture. Amazon significantly out performed SPX and COMP for the first two months. By the end of the third month prices converged already (would have made for interesting pairs trade scenario if one was aware). 

In terms of index performance, the first month COMP outperformed SPX slightly. By the end of the second month SPX caught up, and starting from the third month SPX started to greatly outperform COMP. 

The question is how indicative is the 30 day price performance for the short term going forward?

IF as I suspect long term trend is up, price convergence should be bullish. Prices should correct further to stated above and we can expect higher highs. Given the recent performance of SPX, COMP and AMZN would have to play catch up, and SPX lag a little. Perhaps there can be some fundamental evidence found for this? 

However, if longer term picture is more relevant, AMZN/COMP need to correct significantly relative to SPX performance from 2009.

From 2009:

• AMZN prices are 300%+ higher
• COMP prices are 40%+ higher
• SPX prices are 20% higher

This being said though, more than often or not, human perception of technicals in such a long time frame to interpret something relevant is difficult as fundamentals become more important in such time frames. 

Though as perhaps is still true, post 2008 crisis, macro environment can trump fundamentals easily...

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Another interesting signal may be all this M&A spike and big move in equities past year... Bubblicious or indicative? Perhaps for another post.

AMZN Jan 24, 2013

Beginning to believe a 10-15% correction needed for a good healthy correction for AMZN to end positive this year. Trend and momentum still favor up.

Anything beyond 15%+ changes trend changer.

Will dig in the financials to see whats in store for the year.

AMZN - JAN 2013

I was looking at AMZN back in NOV/DEC 2012. I'm not really a stock guy but looking purely on technicals here. Though in general after some venture building experience stocks do suddenly make more sense after all. Its something I could probably understand with time. Some of those fundamentals that were drilled into me back in 2006 make more sense.

All in all though with current scale, don't think its still the game for me unless I played some futures, but then again never the same liquidity I'd be looking that I could get in currencies or commodities at better leverage.

Over this year I'll re examine the basic and see if I can make any interesting plays, may be play some long term investment oriented ideas over trades and vice versa.

In general, after having a WHOLE blank year I think it would be good to clean the slate and reformulate strategy. Study some history and see if I can make a better product this year...

Off the tangent...

AMZN looks amazing on the chart long term, 5 year and Max. 5 Year steady trend. If I learned anything its really hard playing the long term trends as the path to up is very confusing and tricky from 5 - 10% volatility jumps. Sometimes those fundamentals will really kill you when information was never clear and present as well... 180 degrees thesis killer.

I would make this call as of January based of basic eye balling...

buy into the dip within the first quarter. Trend should still be strong through out 2013. The stock has amazingly outperformed the market in the past 5 years and I would expect it to continue to do so.

I think from here it would be good to look at putting the fundamental picture together here to fillin the holes and gaps to see if this makes sense as a good long term play.

Previously I was interested in shorting if there were solid closes on the daily below 220 but that never happend with strong SMA support.

In general break up top confirms strong upward momentum with strong gap up in price... the only real bad thing is the lack of volume confirmation.

Again a correction maybe due and hopefully strong fundamental catalyst can kick in to get this trend really going.

Hurricane Sandy

Today, would be a Great day, or at the very least day to trade energy products. VERY few commos trading. No equities, and most futures not trading. We can be seeing lots of pure price action of energy moves. Worth looking into.

Time to start revising old historical correlations. Will post back later if I get my correlation tool running again. Need to find a good place to pull decent historical data.

Stay safe if you are on the east coast, and hope everyone is prepared.

-Analyze Capital LLC

Open Books

After a year I open the books again. Feel free to browse during operations of 2011 since we no longer solicit investments.