Markets are waving a red flag

Technicals are getting weaker on US Markets. Fed, China whatever reasons but at a very inflated levels these technicals can mean a deeper correction.

Here's a chart for AAPL. Getting rejected at a key level of resistance. A bit of support at 160 zone but if that breaks we are looking at possible 140s to 130s.

Here's what SPY looks like.

Look how the Fib levels and support levels align. Look out below at targets close to 210s range as a first stop. ~25% down side. 

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AAPL is a buy

This is AAPL's net income. Crazy!!!

They are making more money than Microsoft, FB and Google combined or pretty close to it. How can you not love such a great cashflow machine?

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Where to best allocate investments - IRAs vs. Taxable account

IRAs are a great way to defer taxes (traditional) or eliminate taxes on capital gains (Roth). I have been researching what is the best place to allocate different investment options while I am building my portfolios and here's the net net.

What is best for IRA accounts:

• REITs - the REIT distributions are taxed at a higher tax rate as most REIT dividends are non qualified dividend so instead of paying 30+% in taxes - put them in IRA and enjoy higher than normal yields.
• BDCs - Same thing as REITs. These companies have above normal yields.
• GLD - I found out that gold is considered collectible and is taxed at a higher short term capital gains rate even if your capital gain is long term. So why not put in IRA.
• Your most conviction growth stories, cyclicals or stocks where you want to sell for quick gains.

What not to buy in IRAs:
MLPs. There is this issue around unrelated business taxable income UBTI which creates a mess in terms of tax filing. Just avoid that issue altogether by not holding MLPs in IRAs.

What to buy in taxable accounts:
Your core DGI holdings that you want to hold for long time. Again, the dividends are taxed at a lower rate and assuming you hold things for long time your cap gains if any will be taxed at a lower rate of long term cap gains rate.

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GIFI - Adding to watchlist

Good:

• Debt free company. 
• Variable cost structure allows them to trim cost with revenue.
• Way below book value.

Balance Sheet from 10-Q SEC filing for Mar 16 quarter:



Back of the napkin Liquidation Value calculated below:

  Current Assets: $118  MM
- Total Liabilities: $80.5 MM
-----------------------------------------
   Real Current Assets = $37.5 MM
+ Net property, plants, equipment etc. at 50% discount = $108.5 MM
----------------------------------------
Liquidation Value = $146 MM

Current Market cap @ 6.6 = $96 MM

Discount = 52%




Bad:

• Losing Money
• Cyclical
• Not a value creator. ROE, ROC and ROI are not great even in good times.
• It's a play to get the market to realize intrinsic value.

Technical:
 

Long term Support around $5.40-5.70 will make it a good entry point.

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Trade update– long Wal-Mart - WMT

WMT has been trending lower ever since the earning release without any meaningful pullback. I think it’s fairly oversold and extended on the downside. RSI is already oversold in both daily and hourly charts with weekly just about getting there. It’s also sitting right around the very long term support of around $72-72.50. It’s likely to bounce from here and provide a quick retracement opportunity.

The chart looks fairly ugly though, so I wouldn’t be surprised it it continues down without any consideration of the support – and there hasn’t been any evidence of buyers showing up yet so this is definitely trying to catch a falling knife with a very tight stop around 71.05.

Here’s a chart.

 

Let’s see how this one goes. The previous one didn’t workout so well but fortunately I didn’t take that trade.

Long 251 shares @$72.60.

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Intel - trade for the week 6/1

Intel is in a fairly tight upward trending channel. But running into some resistance at 34.50 which were long term highs from weekly timeframe. Good risk rewards here of 2.77. Stop loss is if you are clearly break the channel below.

(this is updated from Windows live Writer)

 

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Indian markets long term charts - Nifty

Needless to say I’m not too bullish on the Indian markets. After my earlier short ideas here’s a long term look at the nifty charts

[click on the chart to enlarge]

The weekly charts gave some interesting opportunities to trade. It made a textbook double top at around 6200-6300 levels which would have been an ideal opportunity to short. After that the prices have been slowly trending down with some up swings. The key levels to watch out for are 4600. That level has seen a lot of churn previously and has marked the turning point for multiple times.

Recent movement points to some weakness after testing the down trendline the prices have taken the turn and the RSI is also pointing downwards. Next week we have the RBI policy announcements which will decide the direction of the markets. Either ways – look for large moves. My bias is downwards but not that strong that I will go and short. So I’m on the sidelines but will short the market on signs of weakness. If weakness materialize, target is 4600 which will be a key key support. Good luck!

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India Stock trading idea : Short BHEL

I am finding some weak charts out there in the Indian markets. I posted about Tata Motors earlier and now its BHEL’s turn. Yearly chart below

[click the chart to expand]

BHEL tried to crawl it’s way back up to the stiff resistance at around 235-245 range but then got hammered back down.

The volume on the last two bars on the right is picking up and on a decent up market day BHEL gave up all its gain to close in red. There is a minor support coming in at around 200 which is the previous low but I don’t think its going to hold. The RSI is in oversold territory so you might get a minor bounce but that will be the opportunity to short. I would think the RSI will show a reading above 50 and that would be an ideal time to short. I wouldn’t wait till RSI is all the way in the overbought territory this time.

Stop loss at 251.

First target 200 which will break and then just wait for the slide and take profit on any signs of exhaustion.

Good luck!

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Trading tip for India–Short tata motors

 

Here’s the chart of tata motors.

Seems like the next support is coming in at around 190-200 levels. This stock will still give an opportunity to short if you have not already shorted it. keep an eye on it.

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$TTM showing weakness - TradingView

$TTM showing weakness - TradingView

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Well.. I guess it was not to be

In my last post, I said the India stock market is going to bump into a resistance and boy it just rocketed past it like there were no sellers in the market. Look at the chart below. Well, fortunately I kept waiting for signs of weakness which never came. So I am not short. Lets wait for the retest or at least some pullback before going in long. Its going up almost in the straight line up which is never sustainable..

Lets see how it goes.

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Indian Nifty bumping into the testing zone..

Have a look at the worst performing market amongst the developed and BRIC countries for 2011. The Indian Nifty. It has made a smart almost one way move up from the beginning of 2012 but it is almost running into a stiff resistance zone. Wait and watch how it does there before initiating any trades now. Most people believe that we have new lows to be made on this market, lets see if the market agrees. Jan 26th is the budget for India which a lot of people are watching with wide eyes. Any bad news will almost certainly mean we are heading south. Short if that happens. Don’t worry about long positions I think this puppy is not running away any time soon.. lots of resistance zones ahead. Support is way below at 4600 if we start losing steam. Watch for the short trade.

As always, lets see how it goes.

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Looking to buy WIT (Wipro Ltd.)

 

It’s been slim posting and stock picking as well. Been busy with work off late but was searching through some charts and thought this was an interesting play,

It broke out of the little congestion zone there after a fairly quick downwards move and is retesting the earlier resistance acting as support. The overall trend is still down so a fairly tight stop is needed. You could either put a stop-loss just below the 50 day MA or the red line marked in the chart. If the trade succeeds we should see it hit move towards the target zone of 12.50 soon.

Let’s see how it works out.

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