Spread trading with IT pair.

There is one of the best examples for spread trading (or pair trading). It comes from IT stocks, Intel (INTC) and AMD. Basically this kind of trading is convenient if market is unpredictable. Stocks can go up, down or sideways. You are going long with your favourite one and going short with worse company. The whole idea is that your laggard will always drop more than your favourite and in the same meaning for bullish trend.

If you would apply this trading system for mentioned stocks (long with INTC, short with AMD) you would have profit 70% for last year. At the chart, you can see that even recent sell off you would survive with as AMD drop was more significant than INTC.

Stocks hedging with long position in Yen.

Broad market indices are very volatile nowadays. Mostly dragging down by negative news in credit market. There are many ways how to hedge your portfolio. Either investment in bonds or commodities or just going short with shares.
Except of those there is also currency hedging. Japanese Yen has really strong correlation to broad market indices. With major US benchmarks it is about -0,95. Meaning if Nasdaq drops 1% Japanese Yen strengthens 1% against USD. On the picture you can see exactly this correlation with Nasdaq index for last 6 months. Yen had strengthened during August's sell off and also reached one year high during November.
In addition to futures you can use currency ETF iShares Yen trust (FXY) for investment to Yen. For leverage, options are available for FXY and also for Yen FX index (YUK).

Traders are blogging about stocks.

Two of my most respectable bloggers are having different view on current situation. Stock markets are after or maybe still in sell off. We are asking now is it right time to buy cheap stocks or exit long position as bear market is coming.
Well, Optionpundit is mentioning on his blog about crossing bellow technical support for major US indices. Russell 2000 crossed below, Dow Jones Industrial Average only slightly bellow 12800 points. Optionpundit announced beginning of bear market last week.
On the other side Denarii posted today quite bullish forecast. He is predicting multi week bounce.
Me personally, I still believe in bull market. But watching closely support like 12800 points for DJIA. Deeper crossing could trigger psychological selling.

You can find links for Denarii and Optionpundit blogs in my blogroll section.

First technology IPO in Prague.

Software company ICZ is considered as a potential IPO at Prague Stock Exchange. It would be first IT company issuing shares.Company is doing business in system integration, information system for logistics, finance, public sector, telecommunications and others. Year to year revenue increase is 127%. 35% of share is owned by Raiffeisen Private Equity Management.

Business Week. Home sales.

Monday
Economic: NA
Earnings: Citi Trends (CTRN), Donaldson (DCI)

Tuesday
Economic: Consumer Confidence (91.5)
Earnings: Aecom Tech (ACM), American Eagle (AEO), Staples (SPLS), Analog Devices (ADI), Dress Barn (DBRN), Marvell (MRVL), Pep Boys (PBY), Shanda (SNDA), Verigy (VRGY)

Wednesday
Economic: Durable Orders (0.0%), Existing Home Sales (5.00M), Weekly Crude, Fed’s Beige Book
Earnings: Aeropostale (ARO), Beacon (BECN), CBRL (CBRL), Atwood (ATW), Coldwater (CWTR), Men’s Wearhouse (MW), TiVo (TIVO)

Thursday
Economic: GDP Prelim (4.8%), Chain Deflator (.8%), Weekly Claims (330K), New Home Sales (750K)
Earnings: Beazer (BZH), Del Monte (DLM), Lululemon (LULU), Sears (SHLD), Tiffany (TIF), Vimpel (VIP), Brocade (BRCD), Dell (DELL), J. Crew (JCG), OmniVision (OVTI), Zumiez (ZUMZ)

Friday
Economic: Inc & Spend (.4%, .3%), Core PCE (.2%), Chicago PMI (50.5), Construction (-.2%)
Earnings: Big Lots (BIG), Knightsbridge Tankers (VLCCF)

Falling banks and developers.

Trading at Czech Stock Exchange goes in similar direction like in other stock markets. Mainly banks and developers are dropping. Look at Erste bank which lost 35% in last month. Company's fundamentals are healthy with P/E ratio 11 and P/BV 1,7. Contrary is Komercni banka (Société Générale) which is traded close to all time high.
Developers Orco, ECM lost on average 10% in last week. On the other side commodities price rise is helping others. Energy giant CEZ and petrochemical and oil company Unipetrol are gaining even during sell off.

Commodity investing.

Two new investment certificates for wheat have been launched at Prague Stock Exchange. One for long and short trading. Both are knock out (turbo) certificates. Those are first soft commodities products. On Czech stock market it is already possible to trade with gold and crude oil.

Technical support for Google (GOOG) and Ebay (EBAY).

At previous post I set technical support for GOOG at $625. Google share prices rebounded this week to $660. Also the highest target price upgrade ($900) done by Credit Suisse helped shares to lift.

Another big tech name in my long term portfolio Ebay is setting up for rebound. From last Q3 release shares went all the way down from $42 to $31 today. Significant 25% drop in only 35 days. The results were better than expected but one time Skype write down triggered all this bad. I am looking at MACD bullish crossover. But before I'd do enter position I am watching closely at broad market indices trading close to support levels.

Bull vs. Bear.

We started today trading session well up ahead FED meeting. Nevertheless NASDAQ Composite lost all gains (+1,5%) and in fact reverse its performance to -1,5%. But it is not the end of our volatile session as index is unchanged now.

There are no hopes for lowering interest rates as record crude oil prices are pushing inflation.

Market behaviour is highly dependent on DOW support at 12800 which was April's high plus August's low. I believe many traders are opening long position with protective stop losses. Also NASDAQ composite is touching support level (200 moving average).

New Issues - Developer Group IPO VGP.

Today we've received official announcement about new developer group VGP going IPO sometimes around 7th December this year. It is dual listing at Czech Stock Exchange and Brussels Stock Exchange (Euronext Brussels). VGP would like to gain 50 millions EUR. Company business is similar to already listed developer groups ORCO and ECM. But VGP is doing business mainly in industrial properties.

Well, is it right time to go IPO? ORCO and ECM lost a lot during this year mainly because of negative worldwide sentiment. Also last issue of securities (used car seller AAA) is consider as a unsuccessful.

We, in Prague Stock Exchange, are still far away from stock exchange in Poland in terms of IPOs. But this year is quite active. Till the end of year we can see 2 more IPO. Coal mining company OKD, and first listed software company ICZ.

Business Week. Hewlett Packard.

Monday
Economic: NA
Earnings: Campbell’s (CPB), Lowe’s (LOW), Valspar (VAL), Focus Media (FMCN), Hewlett Packard (HPQ), KongZhong (KONG), Medtronic (MDT), Nordstrom (JWN)

Tuesday
Economic: Housing Starts / Bldg P’s (1.16M, 1.19M), FOMC Minutes
Earnings: Barnes & Noble (BKS), BJ’s (BJ), Blue Coat (BCSI), Freddie Mac (FNM), Gamestop (GME), Target (TGT), Aruba (ARUN), China Finance (JRJC), China Med (CMED), Limited (LTD), Whole Foods (WFMI)

Wednesday
Economic: Weekly Claims, Leading Indicators (-.4%), Michigan (75), Weekly Crude
Earnings: Abercrombie (ANF), Deere (DE), Patterson (PDCO), Trina Solar (TSL), Gap (GPS)

Thursday: (Market Closed)
Economic: NA
Earnings: Genesco (GCO), J. Crew (JCG), Leap Wireless (LEAP), Foot Locker (FL)

Friday:
Economic: NA
Earnings: Office Depot (ODP)

Bullish technical pattern for Google (GOOG).

In the beginning of November Google (GOOG) reached $750 but after shares dropped to $630.

It seems there is a support on $625 (at 50 days moving average). Last trading day Google crossed over but return back before closing bell. Candlestick has created technical pattern "hammer".

I open long position with protective stop loss slightly below $625.

Are we going for rebound next week?

Last two posts I've been mentioning investment specialty like inverse ETF and mutual funds. But it doesn't mean that I am turning to short investing. I am still bullish and recent sell-off have seen as a buying opportunity.

First don't fight the FED. Technically speaking we have oversold RSI 14. Bollinger Put Volume Indicator eclipses August highs with 1.78 reading. Historically speaking, strong second half on November. And also end year rally ahead with January effect.

Short market with Inverse ETF.

Yesterday I've published post about inverse mutual funds. Today let me present you where you find inverse ETF. Major issuers are Rydex and ProShares. Rydex offers 3 reverse exchange traded funds which are also 2x leveraged. And underlaying S&P500 (RSW), S&P MidCap 400 (RMS) and Russell 2000 (RRZ).

ProShares's offer is much bigger. First short and ultrashort group of ETF is covering all US indexes. Second group is so called Ultrashort sector with downside exposure from financials, oil & gas, consumer goods, utilities and others. And last one is focused on markets outside US like Japan, emerging markets, EAFE and China. Especially Chinese Ultrashort FTSE/Xinhua China 25 (FXP) is very interesting tool.

Inverse funds - Go bearish.

There are couple of funds issued by ProFunds with reverse direction. If you are bearish with US indices you can have a look to them. Except US funds you can short as well as Nikkei 225, MSCI EAFE and emerging markets.

ProFund - Index - Daily Objective
Bear - S&P 500 - Inverse
Short Small Cap - Russell 2000® - Inverse
Short OTC - Nasdaq 100® - Inverse
UltraBear - S&P 500 - Double Inverse
UltraShort Latin America - Bank of New York Latin America 35 ADR Index - Double Inverse
UltraShort Mid Cap - S&P MidCap 400 - Double Inverse
UltraShort Small Cap - Russell 2000® - Double Inverse
UltraShort Dow 30 - Dow 30 - Double Inverse
UltraShort OTC - Nasdaq 100® - Double Inverse
UltraShort Japan - Nikkei 225 Stock Average - Double Inverse
UltraShort International - MSCI EAFE - Double Inverse
UltraShort Emerging Markets - BONY Emerging Markets 50 ADR - Double Inverse

The most performing US sectors.

Here you have the most performing US sectors for last 3 months.

DJ US Coal Index 35,55%
DJ US Mining Index 33,06%
DJ US Gold Mining Index 29,74%
DJ US Internet Index 27,07%
DJ US Nonferrous Metals Index 23,08%
DJ US Heavy Construction Index 22,78%
DJ US Specialty Chemicals Index 22,00%

US markets boost. Who is leading gains?

Markets are boosting mainly supported by Goldman Sachs announcement. Company doesn't expect big losses due to subprime. Also good earnings came on the street. Which industries are leading gains and which are laggards? Surprisingly financials are not on top.

Leaders in Price Performance (Intraday)
Recreational Goods, Other +12.56%
Surety & Title Insurance +9.37%
Nonmetallic Mineral Mining +9.08%
Personal Computers +8.33%
Technical & System Software +7.58%
Internet Service Providers +7.09%
Major Airlines +6.64%
Jewelry Stores +6.38%
Long Distance Carriers +6.07%
Foreign Regional Banks +6.02%

Laggards in Price Performance (Intraday)
Building Materials Wholesale -2.39%
Long-Term Care Facilities -1.13%
Restaurants -0.45%
Home Health Care -0.29%
Medical Equipment Wholesale -0.25%
Drugs - Generic -0.23%
Diversified Utilities -0.21%
Research Services -0.09%
Oil & Gas Pipelines +0.01%
Biotechnology +0.03%

New Europe fund.

Jupiter Asset Management launched third fund investing in emerging European stock markets. Fund is called Jupiter New Europe Fund. Recently you could see that Russian and Eastern European stock markets (Bulgaria, Romania) were quite resistant to credit market turmoil in August and as well as in last days in November. Russian stock market (RTS) is traded at P/E ratio 10 which 60% discounted compared to overheated China. Also Russian companies are having 18% debt to equity ration (US companies 51%) and are twice as profitable as US companies. Steel companies reported 50% earnings increase and telecommunications 70% for first half of year.

New investment certificate for index PX50.

Today was first trading day with new investment certificate "PX index certificate". Issuer is Volksbank AG. Product is first standard index certificate under laying Czech stock market index PX50. There are already some but traded at Stuttgart (EUWAX) and denominated in EUR.

I really welcome this product as this one is the first with reasonable spread up to 9 CZK (about 0,5%).

Expensive Big Mac in Czech Republic.

Based on Big Mac index McDonald's product is more expensive in Czech Republic than in USA. It happens first time in history. Major affect has weakening US$ and as well as strengthening Czech Koruna (CZK). Czech currency is gaining also against strong EURO. Against two major world currency we can see all time high.
Nevertheless Czech salaries are far behind USA. McDonald's worker is getting 3 times more than Czech one.

See below Big Mac prices in different countries (in US$).


USA 3,41
China 1,48
Thailand 1,96
Russia 2,12
Japan 2,52
Argentina 2,61
Mexico 2,67
Poland 2,78
Australia 3,15
South Korea 3,20
Slovakia 3,25
Czech Rep 3,45
Hungary 3,47
New Zealand 3,53
Turkey 3,96
Canada 4,13
Great Britain 4,16
Eurozone 4,49
Sweden 5,22
Denmark 5,46
Switzerland 5,61
Norway 7,52
Island 7,81

Weekly outlook. 12.11.

Monday
Economic: NA
Earnings: Blackstone (BX), EchoStar (DISH), Tyson (TSN), Orbitz (OWW), Esco Tech (ESE)

Tuesday
Economic: Pending Home Sales (-2.0%), Treasury B (-$53.0B)
Earnings: Fortress (FIG), Fossil (FOSL), Home Depot (HD), Wal-Mart (WMT), Excel Maritime (EXM) Xinhau Finance (XFML)

Wednesday
Economic: Retail Sales / ex Auto (.2%, .3%), PPI & Core (.2%, .2%), Biz Inv (.3%), Weekly Crude
Earnings: Canadian Solar (CSIQ), Daktronics (DAKT), Diana (DSX), GigaMedia (GIGM), Applied Matls (AMAT), Network Apps (NTAP), PETsMART (PETM)

Thursday
Economic: CPI & Core (.3%, .2%), Weekly Claims (320K), Empire (21.0), Philly Fed (6.0)
Earnings: Dicks (DKS), FCStone (FCSX), JC Penney (JCP), Sears (SHLD), Suntech (STP), Tyco (TYC), Verasun (VSE), Agilent (A), China Digi (STV), Autodesk (ADSK), Home Inns (HMIN), Intuit (INTU), Kohl’s (KSS), Salesforce (CRM), Sina (SINA)

Friday
Economic: Ind Prod & Cap Util (.1%, 82.1%)
Earnings: Ann Taylor (ANN), Qiao Xing Mobile (QXM)

Short ETF for emerging markets.

Emerging markets are over performing major US indices. Some of us can be more bearish now with emerging stocks.There is a new way how to short (or ultra short) emerging stock market indices. Last week ProShares has introduced reverse ETF, Short MSCI Emerging Markets (EUM) and UltraShort MSCI Emerging Markets (EEV). Except those two they listed on AMEX as well two short ETF for benchmark MSCI EAFE index (EFZ, EFU). And in the pipeline there are ultra short ETF for MSCI Japan index and FTSE/Xinhua China 25 index.

Financials again are taking losses.

Major world indices are again in red for today not only due to subprime worries. Another factors in play are crude oil reaching $100 for barrel plus disappointing corporate results. But mostly financial are in deep red.

Mortgage Investment -7.44%
Savings & Loans -6.16%
Credit Services -5.55%
Surety & Title Insurance -5.13%
Toy & Hobby Stores -4.36%
Rental & Leasing Services -4.34%
Investment Brokerage - National -4.25%

High flying Divx after earnings.

Divx posted better than expected results. Earnings per share (17 cents per share) beat analyst estimates (12 cents per share) almost by 50%. In yesterday after close session shares went up by 10%. Today it is 30% daily change!!!

Do you hate or love Google?

Today I was reading several blogs. And basically I'd divide blog sphere into trader's blog and blogs about "How to make money blogging". Money makers blogs are usually blaming Google for recent Google PageRank (PR) assignment. Based on using text ads links many bloggers were punished with lowering Google PR.
On the other side if you are reading trader's blogs majority of them are celebrating successful trading with Google shares (GOOG). I found posts mentioning record earnings with Google options and similar stories like this. Also I still do have long position in Google shares which is one of the best performing for 2007. Today Google introduced mobile phone intention. This company is entering new segment of business. Once I saw Jim Cramer's Mad Money saying about Google: "Don't trust analyst or portfolio manager who is short with Google".

Volatility continues - Dow Jones 150p up.

Volatility (measured by VIX index) continues on US markets. Dow Jones industrial index rose 150 points during last hour. At day low I bought call warrant for German index DAX30 (DE000CB4YBV0). I am looking at tomorrow's positive opening at XETRA.

Divx posting earnings after market close.

What do you expect from Divx? Well, last two quarter results were disappointing. In Q3 company announced significant cooperation with Yahoo (YHOO) and Qualcomm (QCOM). Before both last disappointing quarters insiders were selling shares. Before this quarter Kevin Hell (company CEO) sold also shares for $13.5 - $13.79.

Is it right time to buy brokerages?

Today again negative subprime news are coming to market. Citigroup (C) predicted high losses due to credit market together with CEO resignation are dragging market to red. I'd like to focused on group of investment brokerages. This segment was hit heavily due to subprime lenders issues. Current P/E valuation of US brokerages is 9.5. Goldman Sachs (GS) has 9, Morgan Stanley (MS) 6.5, Merrill Lynch (MER) 12.3, Lehman Brothers (LEH) 7.8.
In my view Morgan Stanley stepped down the most from the record price and this company has still Q3 results announcement ahead. Of course P/E ratios don't tell us the shares are cheap now because all brokerages earnings are let's say disappointments and adjusting their P/E valuation. Do you think is it right time to buy brokerages? I still stay away and waiting..

Weekly outlook. 5.11.

Monday
Economic: ISM Services (54)
Earnings: Burger King (BKC), Cardinal (CAH), Marvel (MVL), Tsakos (TNP), Bristow (BRS), Dun & Bradstreet (DNB), Metabolix (MBLX), Sun Micro (JAVA).

Tuesday
Economic: NA
Earnings: Archer D (ADM), Cognizant (CTSH), Cooper Tire (CTB), Fuel-Tek (FTEK), Holly (HOC), Jacobs (JEC), Lear (LEA), Peabody (BTU), Valero (VLO), Blue Nile (NILE), Chesapeake (CHK), Herbalife (HLF), Ternium (TX)

Wednesday
Economic: Productivity (3.1%), Wholesale Invs (.1%), weekly crude, Bernankespeak
Earnings: Alcan (AL), DIRECTV (DTV), Expedia (EXPE), Fluor (FLR), GM (GM), Polo (RL), Sara Lee (SLE), Time Warner (TWX), Cisco (CSCO), Ctrip.com (CTRP), First Solar (FSLR), Netease (NTES), Tenaris (TS), WebMD (WBMD), American Intl (AIG)

Thursday
Economic: weekly claims (320K)
Earnings: Air Methods (AIRM), Biovail (BVF), Ford (F), Lamar (LAMR), Syneron (ELOS), Urban O’fits (URBN), Cephalon (CEPH), Comtech (COGO), GMarket (GMKT), NVIDIA (NVDA), Sotheby’s (BID), Disney (DIS)

Friday
Economic: Import / Export, Trade Balance (-$58.5B), Michigan (80)
Earnings: Clearwire (CLWR), Goldcorp (GG), JA Solar (JASO), FTD Group (FTD)

Moving from one tax paradise to another one.

On Wednesday I finished my 15 months stay in Athens. If you look at Greek taxation for capital gains it is not so bad. For sure better than taxes in Central European countries. Greek tax residents are paying 0% from capital gains achieved at Athens Stock Exchange and 20% from stock exchanges outside Greece. I like this fix rate compared to bloody progressive taxation in Central Europe (in Czech Republic up to 32%). And dividends are tax exempt for Greeks.

Well, I moved to Bulgaria for 11 months. And let me call this country tax paradise for traders. Because you have tax exempt capital gains from shares (I mean difference between sell buy prices). Dividend taxes are 7%.

Pick internationals with ADR screener.

I am giving you very interesting link which I've found. It is a website screening ADRs traded on US stock markets. International stocks are grouped per continent and also per country. Further you can compare performance of all ADRs based on BNY index (Bank of New York ADR index).
Link you can find as usual under left side bar section "Stock screener" called "ADR screener".

New IPO - Developer group VGP.

Everyday we are expecting official announcement about date when IPO (developer group VGP) will be listed at Prague Stock Exchange.Recent week brought new information about dual listing. Except PSE VGP will do issues of stocks at Euronext. Based on company announcement from 2009 dividend yield should be up to 5%.