Bill Cara’s Blog for Jul 18, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning.
Fed chairman Bernanke’s testimony to the Senate Banking Committee yesterday was summarized by Econoday as follows:
At 10:00am ET today, Bernanke will address the House Financial Services Committee, and Econoday will later summarize it here:
Confirmed release date for Lessons from the Trader Wizard (2012) is Friday July 27! Announcements to follow.
Have a good day.
Good morning, Geoff here.
We are looking for a catalyst to kick gold and silver out of their trading ranges.
Public opinion on gold has been very negative as many bulls have thrown in the towel.
Public opinion on silver is as negative as it has been in 5 years.
The Hulbert Newsletter Sentiment Index – you would have to go back to 1991 to find a more negative 4 month average reading of Gold newsletter writers.
Clearly, opinion on gold couldn’t get much worse.
However, the latest COT data shows an extremely low Net Long Position as a % of Open Interest in both futures and options for commercial traders. This is a bullish reading for the metals.
The Simpleton trader says that when the little guys are bearish and the big guys are bullish prices will rise.
The price of gold is down as I write this. Apparently, lack of QE mention has some traders exiting positions today. I guess the move will occur when the big guys are all fully positioned for it and that could happen following one last flush or gold could simply move up out of its triangle – we shall see.
Here are some basic charts showing how prices have been coiling. The longer this action goes on, the larger the move out of the triangle usually is.
I have been a gold bull for a decade due to fundamentals. Those fundamentals have slowly showed themselves to the public but not all. Look at the Libor Manipulation scandal. Central Bankers knew of this issue but stayed quiet for years and it is only coming to the attention of the public now. This is just a fraction of what we will learn in the next few years and gold will rise because of fiat scams.
The price of gold will end in a parabolic price pattern much higher than here. When bank assets are priced as marked to market securities, gold will be at a top but we are no where near that point.
The big boys are getting positioned, are you?
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||8.66 (0.44%)||Components, Chart, More|
||18.40 (0.83%)||Components, Chart, More|
||19.54 (0.62%)||Components, Chart, More|
||13.31 (0.20%)||Components, Chart, More|
||1.04 (0.33%)||Components, Chart, More|
|^OSEAX||OSE All Share||470.78
||1.40 (0.30%)||Components, Chart, More|
||1.78 (0.56%)||Components, Chart, More|
||21.30 (0.34%)||Components, Chart, More|
||5.85 (0.10%)||Components, Chart, More|
||8.50 (0.94%)||Chart, More|
||3.70 (0.26%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||623.07
||10.69 (1.75%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara 100 Company research notes from brokers
July 18, 2012
Credit Suisse report:
Intel Corp. (INTC) OUTPERFORM J. Pitzer
CP: US$ 25.38 TP: US$ 35 CAP: US$ 126.5b
Macro Chips Fall Where They May But INTC Continues to Execute; Lowering 2012 Estimates
Bottom Line: INTC’s C2Q report/C3Q guide was better than/in-line with investor expectations. While macro headwinds persist and are forcing INTC to lower 2012 rev guidance from +7-9% y/y to +3-5%, management continues to demonstrate significant flexibility around the operating model – lowering 2012 opex by $100m, maintaining full year GM of 64%, controlling capex/depreciation in-line/below the low end of the range – resulting in 2012 EPS declining by only 3 cents to $2.45. Macro risks still persist, but no more so for INTC than the rest of Semis/the stock market. Sub-seasonal guide for C3Q, only seasonal for C4Q – despite lean inventory and Win8 – might actually mean INTC stock is less exposed, especially relative to continued negative investor sentiment. We disagree with but at least understand the structural bear call on INTC. The tactical call of disappointing revenue coupled with uncontrollable spending driving major EPS revisions is losing steam. Our view: Tactically a levered play on reaccelerating Emerging Market GDP, structurally one-of-one chip companies able to continue to leverage Moore’s Law with tangible economic benefit. While we acknowledge NT volatility, we maintain our LT OP rating and PT of $35.
C2Q In-Line to Better than Feared. INTC reported rev of $13.5bn (+4.6%), roughly in- line with Credit Suisse/Street ests $13.6bn (+5.4%)/$13.6bn (+5.1%) and EPS of $0.54 better than Credit Suisse/Street at $0.52. The modest revenue miss in C2Q was 100% related to NAND pricing; PCCG (+3% q/q) and DCG (+14%) and other IA (+3%) all performed as expected. PCCG units +3% q/q with ASPs -2% and DCG units +11% and ASPs +3% q/q. ASP declines in PCCG appear to be more mix related than like-for-like – despite the high level of Ivy Bridge (25% of mix) shipments in the quarter – inventory depletion/share gains at the low end drove ASPs lower. GM of 63.4% was better than our model of 62.0% helping to drive two cents of upside to EPS estimates. Inventory increased $415m q/q to 90 days but more than 100% of the inventory increase was Ivy Bridge related. Inventory dollars are expected to be flat q/q in C3Q with days down sequentially. CFO of $4.7bn was offset by $1.1bn in Dividends, $1.1bn in buybacks and $2.6bn in Capex.
Modestly Lower 2012 Estimates, Maintain PT. We lower our 2012 rev/EPS estimates of $56.9bn/$2.48 to $56.1bn/$2.45 on continued softness in the developed PC market and decelerating emerging market growth — Street is at $56.5bn/$2.43. For 2013, we lower our rev est. to $60.9bn from $61.5bn but maintain our EPS est. of $2.70 on tighter OpEx control. INTC trades at 9.4x CY13 EPS (8.9x ex-cash) vs. 5-year average of 12.9x (range is 8x-18x) and the SPX at 11.6x. FCF Yield (CY13) is 8.3% and Div Yield of 3.3%. Maintain our PT of $35 which represents 12.9x CY13 EPS (12.4x ex-Cash), in-line with the 5-year avg. multiple.
Data Deposition – Intel capex tracking to lower end, but within range
Summary: Capex tracking to lower end. Intel kicked off earnings season reporting C2Q12 (Jun) results after the close – company noted that its CY12 capex will likely track to the lower end of its range at $12.1-$12.9bb (up 12-19% y/y) by weaker macro, it will take some of its 32nm capacity offline and reuse this for leading edge such that total capex is likely to track to the lower end of the prior guidance range. Given weak macro and concerns on PCs, to us this change in capex appears better than feared. We continue to expect our 2012 WFE capex estimates will be lowered by ~5% (now at down 4% y/y, but expect to be closer to down 10% post earnings) as we will likely need to revise our NAND and Tier 2 foundry capex. Companies with high relative exposure to Intel’s capex are KLAC & ASML.
Revising estimates prior to earnings. We are also taking the opportunity to update our earnings models for AMAT, LRCX, KLAC ahead of earnings. We continue to maintain a positive relative view on KLAC given valuation and the inspection adoption theme.
Other details from Intel. (i) Weak macro, but not terrible – Intel noted generally weaker consumer in developed markets and slower growth in emerging markets; enterprise remains solid (15% yoy growth in data center); (ii) Intel remains optimistic on Win 8 and Ultrabooks with < $700 price points for Ultraboooks in 2H;(iii) NAND has been soft – company expects other companies to also be cautious on NAND – we had noted the dramatic decline in new orders for NAND at Tokyo Electron (Y2bb in June vs Y19bb in Mar – NAND has virtually stopped expanding for now – implying bit supply growth will decelerate sharply in 2013); (iv) An interesting tidbit of Intel’s pricing power was that Intel has seen its strongest quarter for distributor sales – not because of traditional desktop/whitebox/emerging market – but more because of enterprise server strength perhaps coming at the expense of some brand OEMs.
22nm ramp ahead of plan. Intel noted 22nm Ivy Bridge launch is tracking ahead of plan – with over 25% of PC now on Ivy Bridge – this should ice concerns on 22nm yield “issues” some investors have worried in the past for Intel. Also, Intel believes Ivy Bridge will be > 50% of PC mix by 3Q12.
Vad’s Catch of the Day
Kaimu’s Sound Money
Deron’s Daily ETF Analysis
On two occasions in the past three days, the Market Vectors Retail ETF (RTH) has tested and held support of its 20-day EMA. Yesterday, on an uptick in volume, RTH formed a bullish reversal candle, as it recovered from an undercut of its 20-day EMA. A volume assisted move above the three day high of $42.52 could provide a buy entry trigger for RTH.
The commentary above is an excerpt from The Wagner Daily newsletter, which we have been publishing since 2002. Subscribers to the full version receive our exact entry and exit prices for swing trades of the top ETF and stock picks, access to our market timing model, and more. To get started today, sign up for your 30-day risk-free trial to our Wagner Daily stock newsletter or visit our trading blog to learn more about our proven technical trading strategy.
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report