Friday, December 30, 2011

Chart of Interest

CELG, a major holding of ours, is on the verge of a multi-year high breakout. The previous price high was 68.25.  What I would typically like to see on a breakout is above average volume and closing near the high of the day. Below is a chart of CELG. Please click to view image.
Bottom Line:  A breakout of the 68.25 area with decent volume could clear the way for this stock to run into the mid 70's.  Technical aside, the company will be giving 2012 guidance on January 9th at the JPM healthcare conference. Thank you for reading.

Wednesday, December 7, 2011

Italian Bonds

Complacency is running extremely high as the EU countries start their two day meeting this week Thursday and Friday.  The meeting to discuss how to restore confidence in the European financial system.  Right now virtually nobody wants to loan money to financially troubled countries in the EU and nobody wants to lend money to major European banks. Europe was able to bail out Greece, Ireland and Portugal, but bailing out Italy is a whole different story.  All debt in Italy is 1.9 trillion euros or 120% of GDP.  Italy is indebted to France for 309 billion euros and Germany for 120 billion euros.  So its easy to see why France and Germany are in the public light when it comes to the EU debt crises, Italy owes a majority of its debt to those two countries.
The solution of countries needing  to cut back on spending during a time of high unemployment in the EU, will not make matters any better either.  Austerity measures in these countries becomes near impossible to do when they are in a recessionary environment. Below is a chart of Italy 10 year bond yields.  They reached a high of around 7% before just recently pulling back to under 6% yield, which is positive.  This move up in yields happened all during ECB bond intervention.  Another words the ECB has been buying Italy bonds in an attempt to keep yields from moving higher.
Bottom Line:  This two day summit in the EU Thursday and Friday may give us some clarity on how they intend to get out of this debt issue mess.  The end result for US stocks revolves the currencies ( Euro and USD ).  A default of Italy or a breakup of the European Union could send the US Dollar higher, which would have a negative effect on US stocks.  This, all outside of the possibility of a global recession occurring in 2012 all on its own.  Complacency is running high as stock markets rally higher in what many do not want to miss out on the Santa rally in December, or funds that find themselves under invested.  The fear of missing out on a market run is greater than the fear of losing investment capital at this time.  Thanks for reading.