Bought NIKE (NKE)

• Nike said Q4 2009 earnings dropped -30% due to $195 million in restructuring charges, as revenue and margins slid and future orders dropped across all regions.
• Sportswear market has begun to soften in the middle of larger declines in the retail sector.
• Nike has responded to the global downturn by slashing expenses, compensating for dwindling sales. It is cutting back on marketing, terminating orders from factories in Asia, and laying off 5 percent of global staff.
• Latest results included the previously disclosed restructuring charges, while the prior-year quarter’s results included a $32 million in gain from Nike’s sale of Bauer Hockey.
• Revenue decreased –7.4% to $4.71 billion. Excluding changes in currency rates, revenue would have been flat from a year ago.
• Recent decrease in the value of the US dollar is expected to help Nike’s result in the following quarter, although its hedging strategy minimizes to effects of currency fluctuations.
• Analyst were expecting a per share earnings of 0.96c per share.
• Sales of Nike’s subsidiaries including converse, Cole Haan & Hurley dropped –5% to $702.3 million.
• Asia-Pacific sales was flat. But fell –3% in the Americas and –19% in Europe, the middle east and Africa.  US revenue fell 2% to $1.6 billion. As athletic footwear sales increase +2% buy apparel sales decline –15%
• Nike brand President Charlie Denson said the company had not resorted to heavy discounting. Executives defended its strategy of selling products at various price points and venues, from small boutiques to large lower-cost chains.

Based on the company’s cost cutting measures, SG&A should be coming down and add that to the recent decline in the dollar Nike should have a better footing going forward.  Fundamentals of this company are still solid and Nike is only trying to become even more leaner going forward.

Technicals

Nike’s shares dropped considerably hard ever since that dismal earnings release causing it to break its major trendline.  Support is currently at the $49.21 level but based on to day’s price actions it appears to be holding up fairly well above the 100DMA at $50.00.  Will drill my way into this stock adding more if it falls closer to $49.21.  But overall, I believe all the modest guidance going forward has been factored in at these levels considering the 16% drop from its highs.  orders placed at $50.98 with a stop loss at the $49 level.  But a close above that in the next few days will lead me to add more.  Strong resistance at $52.00.  But short to medium term target price placed at $55.00

Source: WSJ & Barron's

Consumer sentiment rises 2.6% in May

• Consumer sentiment in the month of June has improved by more than previously estimated.
• Report showed that the consumer sentiment index was revised up to 70.8 in June compared to 69.0 in May. Consensus was for a 69.7.
• Expectations grew that the worst of the economic recession is ending.

"Such a sizable gain has usually indicated that an end to the economic downturn is on the horizon, as consumers begin to increase their spending on houses, vehicles, and large household durables" – Reuters Michigan Survey

• Economist were looking for a final June result of 69.  Index hit a 28-year low of 55.3 in November, and has averaged 88.2 over the last 10 years.
• Recent readings show that the weak labor market continues to dampen consumer sentiment.
• In the survey, consumers stressed their intent to rebuild savings and reduce debts.  And while their view on current conditions rose, most consumers expect the economy to be “hindered in in unfavorable financial conditions” for at least the year ahead.

Source: RTT News, CNBC, MarketWatch & Forex FXDD

May 2009 Personal income & outlays data

• Personal income increase much for than expected, but a large part was due to the increase in government social benefit payments of $250 payments to social security beneficiaries. 
• Report showed that personal income jumped +1.4% in May following an upwardly revised +0.7% increase in April.
• Economists had expected income to rise +0.3%
• A reduction in taxes and increased government benefit payments associated with the economic stimulus package contributed to the bigger than expected increase in personal income.

“That’s the whole point — put money back in the pockets of consumers and households and they’ve accomplished that. The good news is, it’s working. The question is, how much of this is a blip?” – Nariman Behravesh (Chief economist, IHS Global Insight)

• Disposable income though on the other hand increase by a much more modest +0.2% in May.
• With personal income increasing much more than spending, savings as as percentage of disposable income was +6.9% in May compared with +5.6% in April.
• Economist say the recent spike in personal savings was likely to fall slightly as the effects of government stimulus fade, but they have said that Americans are becoming more thriftier and are not likely to return to the spendthrift patterns that field much of the growth in the last 9 years.

“I clearly see signs of households altering their behavior in the face of large capital losses in investment and real estate portfolios, an abysmal labor market and tight credit.” – Joshua Shapiro (Economist of MFR)

RTT News, MarketWatch, Barron's & Forex FXDD

Warren Buffet’s thoughts about the economy & other stuff

• Progress in economic war pretty flat. 
• No bounce in true economy in everything he has seen so far.
• Takes a while for the economy to come back.
• See’s no green shoots at all. It hasn’t happened yet.
• Unemployment will lag the actual turn of the economy for sure.
• Bernanke did a fabulous job saving the economy.
• Ben Bernanke should continue 2nd term, sees no one that could do better… Bernanke is very much the key.
• We all got overleveraged in the American arena and need some regulating to make sure something like this doesn’t happen again.
• Its in human nature to go in excess so its kind of natural to see something like this possibly happening again.
• “Inflation is a very big worry. We have done things that will lead to high rates of inflation in the longer term not near term”
• Earnings power of Wells Fargo is strong with or without the TARP money.
• Rest of it is about Apple’s Steve Jobs and stuff.. Not much of a concern for me..

Source: CNBC

US Q1 GDP revised down to –5.5% decline

• Economic activity in the Q1 2009 contracted by less than previously expected. GDP fell –5.5% in Q1 vs. a –5.7% expected decline
• None the less, this was a large improvement compared to the Q4 2008 GDP of –6.3%

“slightly less bad first quarter sets the stage for an even smaller drop in the second quarter and a trough in the third quarter.” – Nariman behravesh (Chief economist at IGH global insight)

• Behravesh expected economic activity to contract by –2.5% to –3.0% in Q2 followed by a more less flat performance in Q3 and around a +1% growth in Q4 2009
• This smaller downward revision reflected an upward revision to inventory investment and a downward revision to imports.
• Report also showed a downward revision to the pace of consumer spending growth, which was revised to show an increase of 1.4% compared to the previously reported 1.5% increase.
• Positive contributions were partly offset by larger decreases in private inventory investment and in spending on non-residential structures.
• Fed also said conditions in financial markets have generally improved and housing spending has shown further signs of stability.
• EOCD predicted this week the US downturn will bottom out this year and be followed by a soft recovery in 2010.
• Weak job markets and falling home prices as mentioned above are expected to dampen consumer spending for some time.
• Exports dropped –30.6% in Q1 instead of –28.7% a months ago.
• Imports dropped at 36.4%, the steepest since 1947.
• Drop in exports cut 4.16% points from GDP.
• Corporate porfits grew at a +1.4% rate during Q1 slightly better than the expected 1.1% estimated a month ago after falling 10.7% in the final 3 months of last year.

RTT News, Reuters & Barron's

New Home sales Slightly worst than expected

• New home sales dropped in the South more offsetting notable increases in sales in the Northeast and Midwest.
• Report showed that new home sales dropped –0.6% on an annual rate to 342,000 from a revised 355,000 in April.
• Economist had expected a 2.3% jump to 365,000.
• The decrease was contributed by the 8.5% decrease in new home sales in the South.
• Sales in the region fell to 184,000 YoY in May  from 201,000 in April.
• By region:
• Northeast +28.6% or 27,000 YoY
• Midwest +18.6% or 51,000 YoY
• West +1.3% or or 80,000 YoY
• South –8.5% or 184,000 YoY
• Median sales price of new houses sold in May was $221,600 up 4.2% from the previous month but down 3.4% compared to the same month last year.
• New home inventories fell 2.3% to 292,000 from 299,000 in April.
• Representing a 10.2 months supply at the current sales rate, down from 10.4 month supply in the previous month. 

"New homes make up a small part of the market where existing homes with foreclosures are making up a bigger and bigger portion, but the drop in months supply and rise in prices are the focus of homebuilder investors.” - Peter Boockvar (Equity Strategist Miller Tabak)

Source: RTT News

FOMC Minutes transcript June 24, 2009

Release Date: June 24, 2009

For immediate release

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

 

Source: Federal Reserve

Durable Good orders MUCH! better than expected..

• New order for Durable goods rose much much better than expected at 1.8% change in May vs. –0.6% in May.
• New orders excluding transportation rose 1.1% in May compared with a forecast for a –0.4% decline.
• Orders excluding defense were 1.4% higher, vs. a -0.4% expected drop.
• Non-defense capital goods, excluding aircraft, jumped 4.8% in May, the largest gain since Sept 2004, when they were up 8.2% in May.
• Orders from Motor Vehicles and parts dropped -8.1% in May.
• Shipment of durable goods fell –2.1% in May, after falling –0.5% the month before.

Source: CNN Money & Barron's

Long Mosaic as well today (MOS)

Long Monsanto as well today at $43.94 as the sell off I believe is already overdone.  Stochastic and MACD are also confirming oversold levels.  Stop loss placed at $42.15 with a short term garget price at $47.00 & medium target price at $53.00.

Long Apple (AAPL)

Long Apple at $134 after the nice pullback from the Year’s high at $145.  I believe the Steve Jobs news is overdone, treatment or no treatment it is almost time for Steve Jobs to retire and so I still have plenty of confidence in Apple going forward especially with Tim Cook potentially taking over the realm.  Steve Jobs will be coming back by the end of this month and there have been reports that Steve Jobs was seen at the Apple campus yesterday.  I think there’s plenty of time for Steve Jobs to train his successor which I believe he is trying to do now. 

Stop loss will be placed at $132 with a short term target price of $145. 

Back in Blackberry again (RIMM)

Back in RIMM again at $69.11 after getting out on Friday of last week around the $73 level.  Stop loss now will be placed at $67.50.  Short term target price will be placed at $77.50. 

US Manufacturing survey: Grim for 2009 but optimistic for 2010

• Report based on survey of small – to mid-sized US manufacturers have found that 44% of companies plan to begin hiring workers again as soon as next year if the economy rebounds as expected.
• RSM McGladrey reported that manufacturing sector has lost 1.6 million jobs since recession began.
• Based on 923 manufacturers:
• 40% said businesses were still declining, 19 months after the current recession began, up from 12% last year.
• 9% characterized their current business as "'thriving & growing” down from 38% last year and 50% from 2007.
• 62% said they were preparing or sales declines domestically.
• Thus, 52% said they planned to cut jobs in 2009, up from 26% last year.
• 44% expect the economy to rebound next year

"Not all of manufacturing is in terrible shape," said Tom Murphy, the lead author of the RSM McGladrey report. "There are segments that are doing well." – Tom Murphy (McGladrey Report)

• Executives though at companies that make medical devices and food and beverages were far more upbeat than those in the transportation equipment, building materials and metal fabrication sectors.
• Companies with international footprints and sales are doing better, on average, than those confined to the domestic market.

Source: CNBC

My thoughts on the S&P 500 on June 21, 2009

Since the beginning of of June, the bulls and the bears are still in a very tough fight with close to a draw.  As highlighted by the purple box above, we had been in a range for almost 2 weeks until June 16, 2009 when we pierced through the 930 support after a slew of ill-favored economic data such as the housing market index, empire state manufacturing index and the gloomy comments made by the FED-EX CEO, Frederick Smith,  noting that there wasn’t much sign of business improvements for the near term. 

From there, we started crashing down breaking that key 930 technical support which sparked a fairly huge sell off beyond normal trading activity with roughly about a -2.4% on the S&P.  But what amazed me most about the trading activity since June 15, 2009, was that the 200DMA, the red line, really acted as a very strong support ever since it was broken on June 1, 2009. 

MACD & Stochastic is telling me that it might be ready for another run on the upside.  But I will be watching out for the 930 level to see if it is capable of breaking it again. 

Alot of people say that this market is tired and is surely due for a pullback and I wouldn’t disagree myself.  But I am going to let the market tell me where to go and not those people on TV.  Thus as of now, my position is not really biased to the bullish side or the bearish side.  I still kept many of my longs with a hedge against those through the purchase of SDS (an inverse S&P 500 ETF). 

With Q2 earnings season coming around the corner, the market has really raised its expectations this time compared to Q1 where anything slightly better than bad is good.  This time, the market is looking for signs of recovery in alot of these companies’ earnings and what will matter most is their thoughts about their future earnings for the remainder of the second half of 2009 as many economist are predicting this recession to end by the end of this year. 

VERY EXCITING INDEED!!!!!

Closed off my RIMM position

Closed off my RIMM position for a loss @ $72.90 after seeing the stock failing to close above the 50DMA.  Next key technical support will be @ $70.00 level and might consider reentering from there.  

As mentioned on my twitter yesterday, the smart thing to do was to get out as the technicals were screaming at me to get out.  But I was comfortable enough to take the risk and accept the potential losses if they failed to impress the market on which they did. 

So I broke one of the key rules of trading on this one but it was for the fun of it which is:

“Trade what you see, not what you feel (I think its ok to think)”

Bought Visa (V) today in the afterhours

Bought Visa today in the after hours after it drew near a double key technical line around the $60.52 level at $61.14.  Will be expecting a bounce tomorrow as MACD and stochastic is also confirming that its ready to turn. 

Fundamentally this stock is solid and have been wanting to enter this stock but could not get the right timing until my friend called me and asked what was going on with Visa.  Then after checking out the charts I got SOLD!! 

This stock has been dragged down with the rest of the broader market and put that on top of the bad retail sales numbers from the US and the UK it is pretty much understandable that the market panicked and sold off.  Exit strategy will be placed below the $60.40 level and will be watching the $64.04 level to reassess my position.  

View of the near term economy from the four big players..

• Abey Cohen (Goldman Sachs) – Economic data is looking somewhat better, industry wise very mixed lot, recession to end in 2009, results will be widely varied amongst industries & Q4 2009 profits will be set to surge…
• Jack Bogle (Vanguard) –Agree road to recovery but not as quickly as Abey’s views, don’t see a strong recovery at all, tremendous amount of deleveraging amongst consumers and long period of slow growth with 2% real GDP growth.
• Paul McCulley (PIMCO) – Right now not worried with the budget deficit.
• Bob Doll (BLackrock) – Agree with all, emphasize policy lags and more stimulus to be seen.  Very uneven. Economies in the east doing a lot better already.

Source: CNBC

My reasoning for buying GENZ

The stock has gone down huge since the announcement that two of their top selling drugs were halted due to contamination.  They said that the cells that make the protein for the medicines Cerezyme and Fabrazyme were contaminated by a virus that came from a nutrient used in the manufacturing process.  But still, even though they are contaminated, there are no alternative treatments available in the US. 

The production interruption is only temporary, and the company expects the plant to be fully operational again in about a month. 

Technically, the stock has fallen very close near support yesterday and even though yesterday's candle stick is green, it’s supposed to be red signaling a drop of 4% yesterday at a close of $52.75. I bought this stock at $52.80 and so far I am content.  Stock gained 5% so far this morning and is looking good with a full bar, hope it continues and closes with it. 

Source: Bloomberg

Housing Market Index falling again, with a little dash of optimism..

 

• Confidence fell in June among US home builders, left uneasy by a rise in mortgage rates.
• NAHB’s housing market index dropped to 15 from 16 in May after two months of increase that had nurtured hopes of a bottom to the housing crisis. 
• Mortgage rates have climbed in the recent weeks, pushing by rising government bond yields.
• Investors are concerned about inflation because of increased spending in Washington which is meant to pull the economy of the recession.
• Freddie Mac data showed 30-year mortgage was 5.59% average last week.  0.73% higher than the previous 4.86% in the average four weeks.

"The housing market continues to bump along trying to find a bottom," – David Crowe (NAHB chief economist)

• New home sales have gone up 2x in the latest 3 months period.
• Affordability has gone up with the long, deep slide in prices, there was a 15% drop, YoY.
• Foreclosures though are still competing with the new-home market.
• Layoffs and tight credit have also slowed new-home sales.
• Inventories of unsold homes are high, ratio of homes for sale to houses sold in April exceeded 10 months.
• Home construction fell 13% in April compared to March.
• Index gauging prospective buyers though also stayed flat at 13. 
• Index estimating traffic of prospective buyers also stayed flat at 13. 
• Index gauging sales expectation slipped to 26 from 27.

"Builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes." – David Crowe

Source: WSJ

Empire State Manufacturing Survey, a lot worst than expected

• Empire State Manufacturing index indicated that businesses conditions are still deteriorating in June, signaling an increase in the pace of decline in the manufacturing sector.
• Silver lining in this report is the fourth consecutive month of improvement for the forward-looking measures of business conditions six months from now, which jumped 47.8.

 

Source: Barron's & Wachovia Securities

Bought SDS for protection

Bought myself some protection from a potential downside of the S&P by buying SDS at $52.82 or S&P at 945.  It is an inverse leveraged ETF of the S&P 500.  So if the S&P goes down, SDS goes up. 

Consumer confidence 69.0 (9 Months High)

• Consumer sentiment index rose to 69.0, a nine-month high, from May’s final reading at 68.7. 
• One year inflation expectations rose to 3.1% in June from May’s 2.8%

“Jobs and income uncertainty remain high and constitute a significant barrier for completing planned purchases.” – Survey Reports

• 5 year inflation outlook rose to 3.1% in June from May’s 2.9%

Source: Barron's, Reuters & CNBC

US: Auto & gasoline sales lift consumer spending

 

Source: Danske Research

China: Domestic Demand Roaring Ahead

 

Source: Danke Research

Oh my gosh Kroger (KR) better not break the 50DMA or I will butcher it!

So far it has been holding fairly well since the break out on April 22 when it pierced through the 50DMA.  Since then the 10DMA & 20DMA has finally crossed and hopefully now it will not break the 50DMA & 100DMA which is around the $21.70 level. 

If it does, next support from there will be $21.00.  I think by then I would already pull out and not look at this stock again…  Disappointed me already when it broke my trendline and the $22.17 support.

June 10th, Still stuck in a range!!

Between 930 & 945.74 on the S&P 500 since June 1st 2009 and now its June 10th, 2009. 

ZZZZZZzzzZZZzzzzz…….

A closer look into China’s latest CPI numbers

 

 

Source: Danske Research 

China CPI –1.4% in May

• Consumer price index in China were down –1.4% on year in may, falling for the 4th straight month.
• Data was roughly inline with analyst expectations for a 1.3% decline after the –1.5% decline in April.
• Food priced down –0.6% YoY
• Non-food prices fell –1.7% YoY
• Excluding food and energy inflation was down –1.3%
• Among individual components
• Grain +5.0%
• Meat and poultry –15.5%
• Eggs +3.4%
• Vegetables +22.2%
• Fruit +13.6%
• Tobacco & alcohol +1.4%
• Transportation equipment –2.2%
• Vehicle fuel and component –6.7%
• Telecommunications equipment –18.8%
• Residential water, electricity, fuel –3.6%
• MoM inflation eased –0.3% compared to April.

Based on these specific spending patterns it does seem like the trend is still in necessities which is why alot of consumer staple items are showing signs of inflation while alot of the utilities and compliments to utilities are still on a decline. 

Source: RTT News

Bullish on Apple, and I agree with this guy.

Source: CNBC

Bought Kroger today

Its time to get a little defensive and decrease my cash position a little more to protect myself from the declining dollar and one way to this is by investing in a fundamentally solid company such as Kroger owner of QFC, Fred Meyer and Kroger stores in the mid to eastern regions of the United States.  Shares have been butchered considering that this company’s fundamentals are actually improving such as their improvement in profit margins which is up to 2.0% in Q4 2009 (1/2009) compared to 1.3% in Q3 2008 (10/2008) and 1.5% in Q2 2008 (07/2008).  One factor that has helped improved their margins is in their cost of sales which has gone down by about 1.2% to 75.8% compared to Q3, Q2 & Q1 2008 which has roughly averaged above 77%.  One contributing factor is also in their SG&A which has improved to 75.86% compared to the average 78.33% in the past 3 quarters. 

Plus they have also maintained a nice positive cash flow even though they increased their capital expenditures by 33% from Q3 to Q4 2009 as they did it without any additional financing, rather through their own net income stream and it also looks like they are also trying to trim down their debt and stocks outstanding. 

On the technical side, Kroger has been traveling on an uptrend channel since April 13, 2009 and today it touched the bottom of the channel giving me the buy signal at $22.38.  MACD turned slightly negative today to –0.03 but I'm giving it the benefit of the doubt by giving it 2% room below the 20DMA which is around $21.89.  Support is around the $22.17 level.

Source: Google Finance

A possible bright spot in the jobs market

• About 25% of manufacturing companies and 40% of service-sector employers plan to hire workers in June.
• The highest total in 6 months, according to a survey by the Society for Human Resources Management.
• Conference board also reported that online job ads rose by 250,000 in May to 3.37 million, the first increase since October and the largest jump since October 2006.
• None the less, economist still warns that jobs overall will remain scare as most employers are likely to wait until the economy grows at a healthy pace before they feel confident enough to add workers.  Which will not happen well until 2010.
• The current unemployment rate now stands 9.4% and the Federal Reserve expects unemployment to remain elevated until 2010.
• Labor department today showed that total job openings fell in April to 2.5 million, from 2.6 million in May.

With 13.7 million people unemployed it means that there are 1 job for every 5 people in America.

• Manpower Inc said quarterly employment outlook survey found only 15% of respondents planned to increase hiring in the Q3 2009.  13% plan to cut more staffing and 67% plan no changes.
• Labor department also showed some pockets of growth though in specific areas such as layers, accountants and other professional business services which rose from 428,000 to 458,000.
• Restaurants and hotels also advertised about 55,000 more openings in April than in March.
• Restaurant operators added nearly 9,000 jobs in May.  (First time in 10 months).  This is particularly true among fast-food and other low-cost restaurants.

Employment growth in low-cost and fast-food restaurants reflect greater frugality by consumers.

• Hiring has also ramped up among banks and other lenders.  In part, because low rates have led to a surge in mortgage refinancing.
• Indeed.com have also reported that mortgage-related jobs has risen 50% since last summer.  Job listings related to foreclosures and bankruptcy are also up.
• Simply hired CEO reported that total job postings are declining at a much slower pace.  Online want ads fell 3.7% in May compared with 5.9% in April and 13.7% in February.
• Job ads for accounting, government and truck-driver positions registered the largest increase in April.

“There are indications of greater optimism and greater demand” – Gautam Godhwani (CEO Simply Hired)

Source: Seattle Times

Consumer credit dropped $15 billion MoM

• Consumer credit decreased at an annual rate of 7.5% in April 2009. 
• Revolving Credit decreased –11% YoY.
• Non-revolving credit decreased at an annual rate of -5.25%. 

Consumercreditapril09

Pulled out of my Apple (AAPL)

Pulled out of my Apple trade today at $145.67 as I feel that the its due for a pull back to the lower support level around the $139.10 level.  Will look for reentry once that pullback occurs. 

If it doesn’t then I will enter back in once it breaks the resistance around the $147.09 level. 

I believe all the news is pretty much out and based on the past patterns with AAPL it has almost always been buy the rumor and sell the news.  Sure, Steve Jobs is back and in better shape again to run the company and that is good news.  Plus I’ve also been getting mixed rumors about whether Apple will release any new products on the developers conference.  If they don’t, it will be a huge disappointment for the markets especially when the Palm Pre is coming out around the same time. 

I am still bullish on this stock but I just want to take profits in the near term and will wait for reentry around the 139.10 level or above the $147.09 level.

Dollar crisis Looming – Don’t short the market – Jim Rogers

Will be away from my blog

Will be away from my blog for abit as I have a lot of assignments I have to take care of before the end of the quarter.

Will update more on the weekend.

Bought GLD and SLV today

Bought GLD at $94.64 and SLV at $15.03 after a nice pullback seen on the whole inflation trade including a gain in the USD, drop in GLD and SLV as well as many other commodities, including energy, metals, soft goods etc.  Basically everything dropped today as the USD gain. 

GLD

GLD today closed right on the support line that has previously been broken around the $94.34 area on May 29th, 2009.  Today is a nice confirmation of that support line being a key technical level.  Will look for consolidation still in the next few days and keeping a close eye if there’s any significant drop in GLD especially below $94.34. 

SLV

In terms of SLV after a nice break out the other day on the key $14.91 technical downtrend and resistance, SLV has been confirmed to form a new bull run.  Today’s close above the support line around the $14.91 is also confirming the strength of the support line.  Will look for consolidation too for the next few days, but not falling anywhere below the $14.91.  

Short Summary of FED Chairman Bernanke’s testimonial

• Data suggest economic contraction may be slowing, but the economy is hardly out of the woods. 

"A number of factors are likely to continue to weigh on consumer spending, among them the weak labor market, the declines in equity and housing wealth that households have experienced over the past two years, and still-tight credit conditions," Bernanke said.

• Bernanke still anticipates the economy to recover by the end of this year or around Q3.

"recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring and the unemployment rate is likely to rise for a time, even after economic growth resumes.” – Cautions Bernanke.

• On the issue of tarp, the FED is planning to release a list of banks in good shape and able to repay TARP.
• On inflation, Bernanke does not see any upside risk in the near term.  He does not see wage pressures currently.
• On unwinding quantitative easing, the chief stated that he believes the Fed will not have difficulty cutting back on balance sheet expansion. 
• He sees the FED’s new ability to pay interest rate on reserves as a key tool when unwinding and also simply closing the new lending programs when appropriate. 

Source: CNN Money & Barron's

ISM manufacturing slightly lower can consensus at 44

• Business worsened in May in the non-manufacturing sector of the US economy after data showed that ISM numbers were worse than expected at 44 in May, from 43.7 in April vs. 45 consensus.
• Overall, factor orders rose 0.7% in April after a revised 1.9% drop in March. 

"It kind of fits with all the other news we're getting. Things are less bad but they're not yet growing. It's encouraging to see this stabilization process start to take hold, but at the same time the weakness does persist," - Jonathan Basile (economist at Credit Suisse in New York.)

• Excluding transportation items, factory orders inched up 0.1% in April from March’s 2.1% decline.
• Orders for big ticket durable goods such as cars and refrigerators were slightly revised downwards to show an increase of +1.7% in April instead of the 1.9% rise previously reported. That followed a –2.2% decline in March.
• Orders for non-defense goods excluding aircraft, fell –2.4% in April.
• Inventories at April fell –1.0% after slipping –1.2% in March.

Source: CNN Money & Barron's

Mortgage Application Drops

• Seasonally adjusted purchase index saw a nice 4.3% increase to 267.7 from 256.6 last week. 
• Mortgage applications today showed volume dropped over 16%, including an adjustment for the Memorial Day holiday.
• Decline came as refinancing activity plunged over 24% from the previous week, adding to its 18.9% decline from the previous week.
• Refinance share of mortgage activity fell significantly, down to 62.4% from 69.3% of total applications in the previous week.
• Mortgage Bankers Association (MBA) reveled that its market index
• ARM mortgage share activity increased +3.0% from the previous week, when it made up 2.6% of total applications.
• Interest rates increased across the board, with 30-year fixed rate mortgages jumped to 5.25% from 4.81% last week.
• The rates for 15-year fixed rate increased to 4.8% from 4.44%.
• 1 year ARM also rose to 6.61% from 6.55% in the previous week.
• Key element to remember as to why mortgage rates are at historical low rates is the Federal Reserve’s “quantitative easing” measures which have clearly pushed mortgage rates down spurring incased re-finance activity.  But the rate reduction have yet to impact purchase activity. 

"Prices will continue falling because of foreclosures. Without policy, conditions would be even worse.  Mortgage rates are rising again, but the Fed's intention is to keep them low, so it will likely take steps to do so," – Cecilia Chen (Senior Director of housing economics at Moody’s)

 

Source: RTT News, Barron's & CNN Money

ADP Estimated private payrolls fell 532,000 in May.

• Unemployment rate rose in all the nation’s largest metropolitan areas in April, compared with figures from a year earlier.
• Labor department says all 372 metropolitan areas saw their jobless rates increase last week.
• April’s ADP figures were revised to show more job cuts than previously estimated, meaning May’s job losses were smaller, but highlighting ongoing deterioration in an economy that may have difficulty living up to expectations that it will resume economic growth in the 2nd half of the year.
• Highlights of key cities: 
• Seattle-Tacoma-Bellevue area saw its jobless rate drop from 8.7% in March to 8.0% in April.
• Elkhart-Goshen rate jumped to 17.8% from 12.7% YoY in April.  But down from 18.9% in March.
• Bend, Oregon rose to 15.6% up from 9% YoY
• North Carolina Hickory-Lenoir-Morganton saw unemployment rate rise to 14.9% from 8.8% last year.
• Yuma, Arizona saw a jobless rate of 20.3%. 
• Merced, CA 18.3%
• Yuba City, CA 18.2%

"The level of initial jobless claims of about 625,000 that we've seen does fit with this level of job losses, which has stabilized, albeit at still very weak levels.  While we've no doubt seen stabilization in the level of firings at still weak levels, hiring still remains sluggish, and until the economy starts generating 125,000-plus jobs monthly, the unemployment rate will continue higher." – Peter Boockvar (Equity strategist at Miller Tabak)

• While the service providing sector lost 265,000 jobs, the good-producing sector lost 267,000 jobs.
• Within the goods producing sector, employment in the manufacturing sector fell by 149,000 jobs.
• Job losses were led by medium and small-size businesses, which lost 223,000 jobs and 209,000 jobs.
• Large businesses jaw employment decline by 100,000 jobs.
• Small-size businesses have shed 2.125 million jobs since reaching peak employment in January 2008.

"Despite some recent indications that economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least several more months, although perhaps not as rapidly as during the last six months." – ADP

Source: Barron's, Seattle Times, Reuters & RTT News

Indonesia’s Fiscal Stimulus Taking Effect

Source: CNBC

Took the remaining 1/2 of my Nvidia long (NVDA)

Took the remaining of my Nvidia long at $10.88 to wait out for another pull back again.  This stock has moved too quickly and am now looking for a pull back into the lower channel again before initiating new positions. Stochastic & MACD also are confirming the share is starting to become overbought.

Motor Vehicle Sales

• Sales of domestic-made motor vehicle were pretty much unchanged in April, at a 6.9 million unit adjust annual sales rate. 
• However, imports slipped back to a 2.5 million pace, sizably down from 2.9 million in march.

YoY Brand breakdown for May:

• Ford –24.2%
• Daimler –33.4%
• GM –29%
• Toyota –40.7%
• Nissan –33.1%
• Volkswagen –12.4%
• Chrysler –47%
• Kia –16.1%
• Hyundai -20.4%

Source: Barron's & MarketWatch

Rank of cigarette consumers by nations

• Greece has the highest smoking rate in the world, with each person smoking over 8 cigarettes a day.
• Of the 123 countries, 17 European countries are in the top 20.
• Smoking rates tend to decline when countries get wealthier thanks to higher taxes, bans and health education.
• Spain, Japan and South Korea remain strongly addicted.
• 20% of cigarettes in France are sold illegally to avoid heft tobacco duty, and so are not included in the figures.
• Tiny consumption of Indians compared with the Chinese might in part be explained by Indian fondness for chewing tobacco.

Source: Economist

Pending home sales +6.7%

• Pending sales of previously owned home shot up by 6.7% in April.
• The biggest monthly gain in 7.5 years, according to a report on Tuesday that reinforced the views that the US recession is easing.
• Economist had expected the report to show pending home sales just rise 0.5%
• National association of realtors said Pending home sales index, rose to 90.3 in April from 84.6 in March.
• This is now the 3rd largest straight monthly increase and the largest jump since October 2001.  The monthly gain took the index 3.2% above its year-ago level in the latest sign the battered US housing sector was stabilizing.

"It's a very positive and encouraging number. It plays into the 'green shoots,' economy stabilization story," - William Hornbarger (senior fixed income strategist at Wachovia Securities in St. Louis.)

• While the volume of existing home sales has increased in recent months, nearly half involve properties have gone through foreclosure or which have been sold for a loss.
• Lawrence Yun, senior economist at the Realtor’s trade group, credited improved home affordability and a new government program that provides an $8,000 tax credit for first-time homebuyers for the surge in US buying activity.

YoY comparision across the region:

• Northeast Region +0.8%
• Midwest +11.1%
• South +3.5%
• West +2.9%

Source: Reuters, Barron's, RTT News & Paper Economy

China May PMI at 53.1

• China’s purchasing manager’s remain relatively unchanged compared to 53.5 in April.
• So far, the index has remained above 50 for the 3rd consecutive month following five straight months below that level.
• Export orders moved up to 50.1 in May from 49.1 in April.

Source: RTT News

Australian inventories –1.2% QoQ

• Inventories in Australia were down seasonally adjusted 1.2% in Q1 2009 compared to Q4 2008 standing at A$119.34 billion.
• Analyst expectations had forecasted a 1.4% quarterly decline following 1.9% fall in Q4 2008.
• Inventories were down 1.1%
• manufacturing sales were down 2.8% on quarter.
• Wholesale trade unchanged.
• Companies’ profits were down –7.2% defying forecasts for a 5% fall after the 6.5% decline in the previous 3 months.

Source: RTT News

Australian Retail Sales +0.3% in April

• Retail sales up 0.3% in April compared to the previous month coming in at $19.35 billion.
• This was slightly below expectations for a +0.5% monthly gain following an increase of +2.2% in March and a fall of 2.0% in February.
• Among the individual components
• Cloth and soft goods retailing +0.8%
• Household good retailing +3.9%
• Other retailing +0.1%
• Food retailing –0.2%
• Department stores –2.8%
• Cafe, restaurants & takeaway –0.5%
• Statewide:
• NSW +1.3%
• Queensland +0.8%
• Tasmania +0.5%
• ACT +0.9%
• Victoria 0.0%
• SA –0.1%
• WA –2.4%
• NT –4.6%

Source: RTT News

Indonesia’s inflation eases, exports drop

• Indonesia’s annual inflation eased to 6.04% MoM in May from 7.31% in April. Economist had expected a rate of 6.2%.
• MoM consumer prices were up 0.04% in May following a decrease of 0.31% in April.
• Exports dropped 22.55% YoY in April.
• MoM exports dropped 1.81% in March.
• Imports fell 2.58% in March MoM.
• Given the fall in inflation and exports, most economists predict Bank of Indonesia to cut its key rate by 25 basis points to 7% on Monetary policy announcements on Wednesday.

Source: RTT News

ISM manufacturing index rose to 42.8

• Pace of contraction in May slowed by more than economists were expecting in May.
• Report showed that the index activity in the manufacturing sector rose 42.8 MoM in May from 40.1 in April.  Slightly better than the 42 consensus.

"While employment and inventories continue to decline at a rapid rate and the sector continued to contract during the month, there are signs of improvement."  - Norbert J. Ore (chair of the ISM Manufacturing Business Survey Committee)

• A turnaround in new orders contributed to the improvement climbing 51.1 in May from 47.2 in April. This marked down the first time the index has been above 50 since November 2007.
• Report also showed a slow down in the pace of contraction in production, with the production index rising 46 in May from 40.4 in April.
• At the same time employment in the manufacturing sector continued to weaken as the employment index dropped to 34.3% in May from 34.4 in April.
• Prices still continued to decline, although at a much slower pace than the previous month.  Prices paid jumped to 34.5 in May from 32.0 in April.
• The fifth straight monthly rise in this measure of U.S. manufacturing followed encouraging signs from China and Europe that the world has moved past the worst the current downturn.

"It was better than expected, and I would put particular emphasis on the new orders component, which broke above 50. In my view, this is more evidence that we're getting closer to the end of the recession.” - Michael Darda (chief economist at MKM Partners LLC, Greenwich, Connecticut)

Source: RTT News, CNBC, Reuters & Barron's

Construction Spending +0.8%

• Construction spending rose +0.8% to an annual rate of $986.7 billion in April followed a 0.4% increase in March.
• YoY construction spending is still down –10.7% compared April 2008.
• Spending for Q1 2009 is down –11.4% compared to Q2 2008.
• A notable increase in spending on private construction spending contributed to the unexpected monthly increase in April, with spending on private construction rising +1.4% to an annual rate of $657.3 billion.
• Spending on residential construction increase by +0.7%,
• Spending on non-residential construction rose +1.8%
• Public construction fell 0.6% in April to an annual rate of $311.4 billion.
• Educational construction dropped by 0.6% in April.
• Highway construction rose +0.9%

Source: RTT News & Barron's