It is always interesting to see the changes in short interest, particularly when you are right in the middle of earnings season. It seems the short sellers have gotten a little less confident on the "digital four" of the NASDAQ. In fact, the only one of the four that saw an increase was only a tiny increase.
As you will see below, the major components of the NASDAQ top digital companies saw real short covering ahead of earnings. Keeping conviction against stocks is frequent, but the lessons of eternal pessimism have historically shown to not be a winning strategy.
Microsoft Corp. (NASDAQ: MSFT) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 109,056,265 (7.88%) 48,450,376 2.25 03/31/2008 118,383,897 (3.82%) 57,762,166 2.05
Google Inc. (NASDAQ: GOOG) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 4,905,775 (5.84%) 5,368,787 1.00 03/31/2008 5,210,156 7.07% 6,382,427 1.00
Yahoo! Inc. (NASDAQ: YHOO) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 36,104,797 (12.54%) 22,789,737 1.58 03/31/2008 41,280,401 (17.13%) 25,874,919 1.60
Oracle Corp. (NASDAQ: ORCL) Short Interest Change Avg, Day Vol. Days to Cover 04/15/2008 42,655,256 2.94% 34,868,017 1.22 03/31/2008 41,436,043 6.57% 51,966,613 1.00
As Oracle's earnings are still a ways out, the need for traders to cover there probably wasn't as critical as it was otherwise.
Jon Ogg is an editor and producer of the "10 Stocks Under $10" weekly newsletter for 247WallSt.com.
"A once in a lifetime super bull market in commodities is underway," note resource experts Mary Anne and Pamela Aden. Here, the advisors look at some favorite commodity stocks in their The Aden Forecast.
"Commodities are in a mega super rise is because of the dramatic changes in the global economy. The rise that started in commodities in 2001 has continued to expand over the years and we believe the upmove is just warming up and it has years to run.
"There are several reasons for this. The weakening dollar and low interest rates have certainly helped push up the whole sector while investment demand grew as an inflation hedge. But the key reason why the commodities are in a mega super rise is because of the dramatic changes in the global economy.
Back on March 24, I made some very rudimentary predictions on BloggingStocks based on the chart patterns of some popular technology names. Let's see how I fared:
Apple (NASDAQ: AAPL) performed just as its chart implied it would -- a clear path from $140 to $160, but no more. Score one for technical analysis!
I noted that while Research in Motion Ltd (NASDAQ: RIMM) had a solid base, a ton of overhead resistance would prevent a big breakout-bingo, another perfect call -- no matter that it wasn't actionable -- the stock's barely higher now, just like the Nasdaq market as a whole.
The very day my original article came out, Priceline.com Inc (NASDAQ: PCLN) did indeed breakout to a new high, but ever since it's done exactly squat. Hmm, was this a self-fulfilling prophecy -- somehow I can't quite claim victory here, although its definitely not a defeat.
I'm glad all these "blue chip stocks" are blowing up. No, I don't enjoy seeing investors suffer, but as I've written about here, here and here, investors need to learn not trust any company or anybody in this business. Investors don't even have to remain invested all the time! Contrary to the advice of fee-earnings-professionals, the majority of whom continually fail to match the S&P 500's returns, you don't have to manage your money like a $500 million mutual fund. Diversification is for widows and orphans!
While it'll probably take me a few years to truly get through to all of you, if you've been invested for any length of time in any company listed below-considering what you've been through-you're probably more likely to believe me:
The New York Times reports that General Electric Co. (NYSE: GE) sponsored a webcast yesterday with its CEO, Jeff Immelt, to answer questions submitted by the general public. Immelt denied that its NBC Universal unit was for sale while answering questions from Carl Quintanilla and a co-host of the Squawk Box program on CNBC, and Chrystia Freedland, the United States managing editor of The Financial Times.
A few disclosures are in order: GE invited me to participate in this webcast but I had a prior commitment. I met last July with GE's CFO -- where he said that NBC Universal was worth between $40 billion and $45 billion. I've appeared on CNBC with Quintanilla, most recently as guest host of Squawk Box. And I own GE stock and am not a happy camper since it's trading 13% below where it was on September 10, 2001 when Immelt took over. The S&P 500 has risen 21% since then.
Is Immelt right that GE is undervalued? I took a look at that question and concluded that it was slightly overvalued on February 27th. Specifically, I calculated a range of breakup values for GE which were between 11.1% and 1.5% less below GE's current market capitalization. I could be wrong about that analysis since I was compounding assumptions on assumptions and had no guidance on the analysis from GE.
Each quarter brings a new batch of earnings plays, so which ones should you trade?
I've had my fair share of successful calls, but I've also been burned badly before. One time, I put in a solid week's worth of research (pdf) to pick Vasco Data Systems (NASDAQ: VDSI) right before earnings, and what happened, they totally blew it. A 30% drop. It still stings. This is just the latest reminder that you can't trust companies, analysts or really anyone on Wall Street.
Amazon.com (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) and Broadcom (NASDAQ: BRCM) all had very solid quarters, but where did it get investors? Nowhere -- all three stocks are flat since then.
Every investor I know is hurting. Doesn't matter how great they were in years past. They're all stunned at the hammering in their portfolios. The smart ones are doing two things now: they're moaning, along with the rest of us, and they're doing research to find bargains they haven't seen in decades.
We all know about stock bargains: they look great when you buy them. Some of them do well and bounce back. Others get to be even better bargains, then hit the clearance bin before they become totally worthless. The bargains I'm suggesting here are the ones that have the best chance of bouncing back. How can you tell?
After nailing the top in Apple (NASDAQ: AAPL) and warning investors this would be a painful year, I've been getting hundreds of emails from people asking me what to do next? As if suddenly after two correct predictions, I'm Nostradamus or David Blaine!
Make no mistake, I'm neither a forecaster nor a magician, I'm just a trader who bases his decisions around these key elements: a distrust of everyone and every company on Wall Street (made easier by the likes of MBIA (NYSE: MBI), E*Trade (NASDAQ: ETFC) and Countrywide Financial (NYSE: CFC); a respect, bordering on religion, for charts and a quick trigger finger if the charts turn against me. I know people want longer term predictions, but I believe those to be 100% guessing games and potentially hazard to your investment health. Pregnant women should avoid them at all costs. Just kidding, it's fine for some people, but I like to make my predictions and cash out, so I can enjoy stress-free weekends if you catch my drift.
So, here's what I see right now: two weeks in and we're already halfway to my 10%-down market prediction, and Apple is down 15% (take that you stereotypical cheerleaders, go date some football players)! The markets are definitely rolling over, and while it's usually a long, drawn-out process, the charts seem to have little concern for what's normal as all the major indices have formed perfect head-and-shoulders patterns (a very bearish sign) and investors are rightfully freaking out.
With stocks beaten up, those courageous investors looking for cheap stocks should take a look at Dow Chemical (NYSE: DOW). With the recent announcement of its 50/50 joint venture with Kuwait's Petrochemical Industries Company (PIC), to form a market-leading, global petrochemicals company, Dow stands to become the world's leading petrochemical company. Look for growth in China to help propel earnings over the next decade.
"We're creating a petrochemicals company that will be a global leader from its first day of operation, an $11 billion company that is well positioned to grow profitably across the industry cycle," said Andrew N. Liveris, Dow chairman and CEO. "For Dow, this marks an important milestone in our transformational strategy: growing our Basics businesses through joint ventures; reducing our capital intensity; and, freeing up cash to invest in our portfolio of Performance and Market Facing businesses."
The stock is off 20% from its high, and it's now sporting a juicy yield of 4.5%. That's not all; the stock has a P/E of about 10.60 and more importantly, a PEG of just 0.86. So what you have is a company with nice growth, paying a handsome dividend, that has gotten pounded down. Dow Chemical looks like a winner for investors over the next few years.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position long or short in any stock mentioned as of 1/8/08.
The short interest in Sirius (NASDAQ: SIRI) spiked up between November 15 and November 30 by 14.4 million to 113.4 million.
Sirius shares have been down over the last few days, and perhaps the market thinks they will go lower.
Many analysts expected that the Sirius merger with XM Satellite Radio (NASDAQ: XMSR) would be approved by now. No such luck. The longer the approval drags on, the better the chance that it will get derailed by ranting congressmen of the Justice Department.
Then, there is the issue of the Sirius balance sheet. The company has long-term debt of about $1.3 billion and no way to repay it. With bad credit markets, it may not even be able to be refinanced. The company had an operating loss of $106 million last quarter on $242 million in revenue. And subscriber counts are not doubling year-over-year like they used to.
Sirius is in trouble. The market knows it. And it needs that merger and the savings it should bring to stay afloat.
Douglas A. McIntyre is an editor at 247wallst.com.
Technology stock expert Mark Mowrey finds the server virtualization market of recent IPO VMware (NASDAQ: VMW) attractive, but as a strict value and growth manager he is not interested in the highly-valued shares.
"So how about a company that sells VMware's software?" he asks in his industry-leading The Prudent Speculator TechValue Report. Here, he looks at Wayside Technology (NASDAQ: WSTG), which does meet his value criteria and is poised to benefit from VMware's growth.
The advisor recalls, "As we watched shares in VMware soar after they made their IPO, we wondered how we might take advantage of the tremendous growth in server virtualization solutions." He explains, "These servers allow tech managers to more efficiently use the massive computing power of modern servers by running multiple virtual computers on one system, potentially reducing overall hardware needs."
Wayside Technology, he notes, has grown in part because of VMware's top-line surge, and, he adds, should continue to do so as an important distributor of the latter's software. Indeed,the stock earns the advisors 'Cash is King' designation for its financial strength. He notes, "WSTG shares also sport an attractive dividend yield."
It reduced the largest component of a car's cost -- health care -- to something that is a lot more like what the other guys, its rivals, have.
To me this is crucial because right now, with the Fed cutting interest rates, you should have been buying these auto stocks. But the raw inputs -- namely, health care -- were too high.
No longer.
Currently the earnings per share estimates for GM for next year are in the $3s, some high $3 and some low $3.
You just got a huge boost to those numbers from the bottom-line side. I think the Fed's rate cuts are going to help the top line because the auto companies can then offer the cut-rate financing that brings people into the showroom.
I would buy this stock off this deal if the stock stays around current prices because the possibility of a 4 handle on the earnings makes it worth the taking.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.
George C. Lane developed the Stochastic Oscillator in the late 1950s, according to Stock Charts. You can view their page for the extensive, mathematical calculations behind the indicator because they can explain it much more simply than I can. However, here's the important thing: I've found that this indicator has predictive value in helping me spot overbought or oversold situations.
I never buy stocks simply because they are overbought -- the stock needs to be displaying the strength needed to stage a rebound or "bounce." For example, in the two situations I highlighted in a recent technically focused article, both of the stocks were oversold (one of them according to stochastics, the other from price action) and both were showing strength.
This is important because, in my experience, stocks can remain overbought or oversold for a very long time. While you might argue that, if this is the case, then why should someone even spend their time looking at the indicator? In my opinion, the same could be said about judging a stock's value -- a stock can remain over or undervalued for a long time before the true value is reached. That doesn't mean performing such measures is a waste of time.
As you can see from the chart, Stochastics certainly aren't a "holy grail" for market timing, if employed with the proper mindset, they do hold predictive value, in my opinion. While I'm sure efficient market theorists are going to attack me for that statement, I think the chart speaks for itself.
You can see that the first time the stock was "oversold" (bottom of oscillator), as soon as the stock began to rally, the rally continued for 10%+.
However, as you see, it is not flawless. For the stock's run from $23-$33, the indicator would have had you selling after just a small percentage of that move. But that's understandable in my opinion, because the market was playing catch-up in Microsoft as people realized that a low double digit earnings multiple was extraordinarily irrational for such an incredibly profitable company.
Through this post I've tried to explain how I use the Stochastic Oscillator so you can better understand what it means if you see it inside charts in my post. Feel free to comment with any questions!
General Electric Company's (NYSE: GE) Industrial segment is worth between $20.2 billion and $21.7 billion, according to my estimates.
GE Industrial, which constituted 20.5%, 22.1% and 22.9% of GE's revenues in 2006, 2005 and 2004, respectively produces and sells products including consumer appliances, industrial equipment and plastics, and related services. It also provides asset management services for the transportation industry.
GE Industrial strikes me as a hodgepodge of businesses that should either be fixed or sold. In the second quarter, this segment's revenues declined while its profits increased slightly. I was intrigued that Keith Sherin said that its appliances unit generated a return on total capital of 70%. On the other hand I wonder about how many of the other units within this segment earn such high returns.
Assuming that GE Industrial generates net income of $1.3 billion in 2007, here are the range of valuations based on the Price/Earnings ratios of the following peer companies:
General Electric Company's (NYSE: GE) Healthcare segment is worth between $24.1 billion and $59.1 billion, according to my calculations.
GE Healthcare, which constituted 10.1%, 10.2% and 10.0% of GE's consolidated revenues in 2006, 2005 and 2004, respectively, manufactures, sells and services medical equipment including equipment for magnetic resonance (MR), computed tomography (CT), positron emission tomography (PET) imaging, x-ray, patient monitoring, diagnostic cardiology, nuclear imaging, ultrasound, bone densitometry, anesthesiology and oxygen therapy, neonatal and critical care, and therapy.
I think GE Healthcare is a mixed bag for GE. Its technology is excellent and it has good relationships with those in the health care community. However, its revenues shrank because of regulatory problems -- the federal government cut reimbursements to nonhospital imaging centers, which bought less equipment from GE. I am wondering whether such regulatory challenges will impede GE Healthcare's growth in the future -- or whether new products can help revive the growth.
Assuming that GE Healthcare generates net income of $2.2 billion in 2007, here are the range of valuations based on the Price/Earnings ratios of the following peer companies:
I'm glad all these "blue chip stocks" are blowing up. No, I don't enjoy seeing investors suffer, but as I've written about 
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TheStreet.com's Jim Cramer sees good reason to own the automaker's stock now that a big raw cost has been reduced.
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
