November 2, 2010 | In: Opinion

Volatile Day Ahead

The market will open in a 15 minutes (or less), and most of the stocks I’m watching are up in the pre-market, let’s see if the levels we’re seeing ahead of the trading are sustainable throughout the day. I personally feel that today will be very volatile (because of the elections), where most stocks will have a rollercoaster, including, but not limited to, BAC, BP, and C.

I think today will be a perfect opportunity for swing traders, provided they time their tradings correctly.

Here are some of the pre-market prices of some of the stocks I’m watching:

BAC: $1.58, up 8 cents.
BP: $41.23, up 46 cents.
C: $4.18, up 3 cents.
MFC: $12.64, up 8 cents.
RIG: $63.27, up 37 cents (I have the feeling though that the stock will go down from this level, and will probably close lower than yesterday. RIG is bearish for the last week or so).
SIRI: $1.58, up 4 cents (or 3%).

Oil is also up, but for some feeling I feel that it will trade lower by the end of the day. There is no need for oil to be up $1 in a day.

November 2, 2010 | In: Opinion

Elections and the Stock Market

Ever since I began trading, I started paying attention to everything, even the current senate election, that should happen tomorrow. The reason why is that a few people believe that these elections can positively affect the performance of the stock market, in case the republicans win the upper hand in the senate.

The stock market was nearly flat by the end of the day, anticipating, BAC dropped considerably (to the 30s) before closing 5 cents higher, BP closed 3 cents lower, and C closed 2 cents lower (also after dropping considerably during the day). The day was extremely volatile, with FAZ moving up to $12.90, before closing at $12.59, which is miraculously the same price of yesterday.

I expect tomorrow to be highly volatile well during the day, and I expect all the stocks to close at nearly their opening level, nobody wants to take a risk before the elections.

I hope it’ll be a fun trading day.

I bought an Android phone, the Sony Ericsson Xperia X10 mini pro (could they make the name even longer), although the phone has a few minor glitches, I like it, but the problem is that it doesn’t have the one feature that Blackberry is, which is the Blackberry email. Everyone mistakenly believe that the Blackberry is the milking cow for RIM, this is inaccurate, the real milking cow is the Blackberry email, this is what clients want, not the poorly designed, ugly, and clumsy Blackberry phones.

Now imagine, just imagine, in a remote place and in a distant time, that Google decided to mimic this service, how hard would that be? Any technical person understands that the service that Blackberry supplies is stupid (it’s just another form of Internet), and any company is able to replicated it. Now Google is an excellent potential with similar interests. Not to mention is the owner of the Android brand and technology.

Let me ask the following questions, in order to see if Google is able to do this:

- Will creating such a service provide Google with a decent ROI?
- Does Google have the resources to create this service?
- Does Google have the worldwide connections to facilitate the logistics for creating this service?
- Does Google have enough money to establish this service?
- Would mobile producers (especially those creating Android phones, such as HTC, Motorola, Samsung, Sony Ericsson, etc…) support Google’s new endeavor?
- Is Google a trusted brand that people would love to use?
- Can Google provide the service at a competitive price that can force RIM to drive down its prices?
- Can Google force mobile carriers to adopt the above mentioned pricing?

I think, with confidence, that the answer is yes to all the above. So why is Google not doing it? Maybe, just maybe, they’re thinking of a sort of partnership with RIM (or maybe they just want to buy it?), instead of doing all the work to create a similar service.

I think RIM’s short term potential is rosy, but that’s because nobody has mimicked the server yet. Long term the story is different, RIM has to understand that if does not collaborate with other companies (especially Google) it may be reduced to another Palm. Here’s what RIM should do in order to survive in the future:

- Drop (or drastically reduce) the hardware arm of the company and focus on the services.
- Open up the service to other phones, including Android phones and iPhones.
- Drop the arrogance.

Opening up the service to other phones will probably make RIM one of the richest companies in the world, most people (who would want to use the service) don’t own blackberries, but own other types of phones, Androids, iPhones, etc…, so if RIM opens up the service to every single mobile phone on the planet, then imagine what could happen.

RIM should not delay in executing the above in order to control the worldwide market with this service, and become, when it comes to the phone, what is Google like on the Internet.

You see, Apple and its iPhones are not a threat to RIM. The two are completely separate, and they can live in harmony without stealing from each other’s share, especially if RIM drops the focus on the hardware part.

SIRI is up almost 10 cents since I wrote about it a week ago, does that mean that people have started to recognize that this stock is way undervalued?

The stock has a very good momentum currently (although it is still suffering from this stupid 1 penny up 1 penny down dilemma). I personally think that the stock will definitely go up from a technical perspective. Take a look a the JAN11 2 C, there are some people who think that the stock will reach $2 by January of 2011.

Again, I think SIRI is undervalued and it is worth looking into it, especially if you have some money that you are not investing properly (e.g. in a bank, accumulating a heft 0.5% interest over the year).

October 28, 2010 | In: Energy

HAL, BP, RIG and the Blame Game

Of course we all know about the blame circus that happened after the rig explosion in the Gulf of Mexico. The government blamed BP, BP blamed Transocean (and everyone else), and, of course, Transocean blamed BP. BP and RIG fell to a low of $26.75 and $41.88, respectively. Now that we all thought that the story is over, another scapegoat comes into play, Halliburton.

An investigation concluded that Halliburton was aware that the cement it recommended for BP’s well in the Gulf of Mexico was unstable. What does this mean?

This means that Halliburton is (at least) partly responsible of what happened in the Macondo well, and of course, an immediate reduction of about 8% in market capitalization (HAL is now trading at $31.59 in the after hours).

Obviously, this is good news for BP, whose stock jumped 80 cents as soon as the news broke. I think BP is now a solid stock, and is now majorly corrected by what happened in the gulf. The stock’s fair price when crude is around $80 is around $44, and in case it was deemed that Halliburton has to pay for this (which is very unlikely), the stock may edge higher.

It is important to mention that this whole Halliburton implication in the matter might be strictly political, after all, there are elections coming next month, and it is clear where Halliburton stands. I don’t think BP would even want Halliburton to assume responsibility, for many (mainly political, stemming from the close relationship) reasons.

HAL is attractive at the current price, but I think there is a better entry point (possible below the $30), and I’d wait until the stock regains its momentum.

October 25, 2010 | In: Financial

Citigroup Is Set to Jump Today

C closed Friday at $4.11, it is currently trading at $4.24 in the pre-market, up 3%. Why is that? Apparently investors are sensing that the Citigroup is one of the very few financial institutions that is shielded by the treasury, for reasons that may only be known to God. Citigroup is an extremely undervalued stock, and I believe it will be trading at 3 times the current amount by the end of next year. Many prominent investors have a lot of money at stake in this institution, and it is currently the 3rd largest bank in the US, with just over $2 trillion in consolidated assets.

C is one of the very few stocks that I feel I must always have, and if I sell it, I tend to buy it again in a day or two at a lower price (sometimes the same day), because I always have the feeling that this stock will always go up in the long term. Citi was resilient when all bank stocks, especially BAC, were down. If you have some money that you want to invest, stockpiling C is not a bad idea at all…

Let’s see what will be the value of the stock by the end of the day today. I hope it closes above the $4.30 resistance, and it holds for the week. This would be very bullish.

October 22, 2010 | In: Services

Is SIRI Undervalued?

I had a chat with a friend yesterday, and he was telling me that almost every new (half-decent) car now comes with a Sirius satellite radio and a free year, that most people renew. I was thinking, probably this company is losing money at the moment, but it has a huge potential, providing its technology does not become obsolete with time, and no real competitors jump in the satellite radio bandwagon.

At the current price of $1.31, there is a possibility that this stock is largely undervalued in the medium run, but let’s wait and see. I personally think that Sirius need to change a substantial part of their vision, enter global markets with a firm feet, and not just restrict themselves to the fluctuating and the currently weak US market, also provide stations in local languages.

To be honest, even though people like this service, I don’t see the point or the advantage of having a satellite radio, but then again, I’m not a die hard Howard Sterns’ fan, and I’m sure I will never be…

October 22, 2010 | In: Financial

AIB, the Next AIG?

I keep watching AIB‘s stock every day, I don’t know why this stock in particular interests me. I have warned against buying it a couple of times, and it dropped almost 50% since the previous warning. Now at the current pricing of $1.13, a drop of 1 cent is a drop of about 1%, this is ridiculous, but not as funny as SIRI.

But now I keep wondering, what if AIB is the next AIG, clearly the Irish government doesn’t want this bank to fail, they keep on supporting it, and now the Irish government is virtually running it. What would be their interest if the bank is bound to collapse? None, of course.

I read somewhere today that the current book price (after all this mess) of AIB is around 41 EuroCents, which translates into 57 cents (USD), at the current exchange rate, so probably that’s the absolute bottom, and if ever reaches 60 cents, I will buy 2000 shares, just for fun and out of speculation (well not really, I’m sure the Irish government will not let this bank to fail). Of course, the official book price is $13.66 (the stock is trading at less than 10% that amount).

I can’t but feel a huge resemblance between AIG and AIB (with the exception that the former collapses from over a $1000 to less than $1 in less than a year, while AIB was more graceful in its downfall). AIG is now trading at $41.81, could AIB rebound in a few months?

Only time will tell, and only the very bold investor would buy AIB right now.

October 20, 2010 | In: Financial

BAC: Is There an End in Sight?

Every time I buy BAC I regret it later on, even though I vowed many times not to buy this stock, I still buy it thinking that it’s undervalued, and I still believe that it’s undervalued, but obviously the market doesn’t. BAC is now trading at $11.59 in the pre-market, there’s a huge difference between BAC and Citi, a resilient stock.

BAC is having a constant stream of bad news at the moment, the latest is this thing by the government to ensure that BAC swallows bad mortgages.

Nobody knows the bottom of BAC, some say that the stock will be halved by the end of the year (reaching around $7 to $8). I personally believe that it will end the year at the $18 level. The problem right now that I have a lot of money invested in BAC and it’s blocking me from investing the money somewhere else (I know I should have bought DAL yesterday).

I have to make around 10 trades till the end of the month to make sure that I maintain my active traders status.

Yesterday, Apple reported a 70% surge in their profit, yet they failed to meet the analysts’ estimates, AAPL shares, of course, fell 5.2% in pre-market trading, yet it seems now that the stock is now going up (the loss is narrowed at the moment to 2.73%, and the stock is trading at around $309).

In short, Apple posted a profit of $4.80/share, vs. analysts’ estimates of $5.03/share. I’ve always thought that the expectations are too high from Apple. Apple, like Netflix, is becoming a very scary company from an investor’s perspective:

- It depends on one person (Steve Jobs, who will bring the company down if he dies).
- It has production problems, and producing expensive and hyped gadgets that are not selling as many as investors think (or wish) they are. I have warned against the ipads, and I’m sure that the next quarter will be harsher on this expensive and (so far) useless gadget.
- It is ignoring the competitors. This is a very serious problem, while Apple is struggling to produce iphones to meet demands, competitors are working very hard to make better products. These competitors include RIM (Research In Motion), Motorola, and of course, Sony Ericsson.

AAPL will probably continue to move up, but the fall will be a very dirty one, even with the slightest (God forbids) health problem that Steve Jobs might encounter. A company that depends on one person (especially a company of that size) is not a company.