Celgene Reports 1st Quarter Results

Corporate earning releases are past history, and at times will have little effect fundamentally moving forward.Celgene's latest earnings release fits into this category well.  This report can be viewed at Seeking Alpha here, Celgene Reports 1st Quarter Results, as we are not allowed to reproduce the report on another website including our own. 

Month of March Recap

The markets returned +3.21% during the month of March.  A 3.21% return annualized is approximately +36% for the year, which is four times the average stock market return.  So it was a strong month for stocks.  Below is a chart of the S&P 500.  Notice the upward trend line support.

Celgene (CELG) is a major holding of ours and we began buying the stock in the low 60's.  The company has several near term catalysts approaching in the 2nd quarter and beyond.  I do not believe the street has given this stock the respect it is due.  Below is a chart of CELG.

Bottom Line:  The overall market is performing well and looks like the move higher will continue into April.  Celgene is a key stock of ours, and we await several near term catalyst to push the shares higher.  The company continues to buy back stock in the open market, and should continue the buyback until the stock hits $100.00 a share, which I believe can happen sometime in 2012.  Thank you for stopping by.

Weekly Recap 3-23-2012

Just a quick look at markets around the world.  Japan and emerging markets have outperformed this 2012 year to date.  The US stock market representative of the S&P 500 index (SPY) has trailed other parts of the world to date, but has still put in a healthy gain so far.  Below is a chart of select stock markets around the world and their year to date results.

As shown above, world markets are putting in healthy returns so far in 2012, with the Nikkei Index in Japan leading the way, higher at + 19.77%. 

Bottom Line:  The returns of these markets around the world have exceeded expectations during the first quarter of 2012.  For now, markets look healthy and are trending higher, but I am expecting a correction sometime during the next few months prior to the 2012 political elections.  Thank you for visiting. 

Celgene Chart Update

Celgene, (CELG) one of our larger holdings has made a multi-year high and is approaching the all time high set in 2008.  Today the stock moved on the rumor that Novartis (NVS) may be interested in purchasing the company for a huge premium at 115.00 per share price.  Though I do not give much credence to rumors, this one seems to make sense on several fronts.  The combined companies would become a Hematology leader worldwide. Below is a chart of CELG.  

The all time high for the stock is around 77.50, or just a 1.50 away from challenging that price.  Below is a monthly chart of CELG.

Bottom Line:  The overall market is moving nicely to the upside and CELG has just broke out to a new multi-year high is can now challenge the all time high of around 77.50.  Today's buyout rumor does make some sense, as the two companies CELG and NVS would have a nice Hematology worldwide product line.  Thank you for stopping by.  

Weekly Recap

The market looks a bit tired right now.  I would expect some sideways action or possibly a 4-6% pullback from the current area to relieve overbought readings.  Then a break higher above resistance to have a sustainable intermediate term market rally. Below is the support area I would expect the S&P 500 to pull back to.

CEN.TO Toronto, or (CENJF) US symbol, is a current holding of ours.  They are an oil exploration company with resources off the coast of Thailand.  This is one of the fastest growing companies that I have seen in the past 20 years. We originally bought in the 16.00 area and repurchased again around the 20.00 area.  Seventy percent of the stock is held by four insiders, making the float available to the public at about 35 million shares.  I believe the company will be purchased within the next 12 months at a premium to today's prices. Below is a weekly chart of CEN.TO.

Bottom Line:  The markets need some side ways to a small pullback, then a move above resistance to have a better chance of an intermediate market rally.  CEN has come a long way, but is still a cheap stock comparing its production and future resources, they should be an attractive acquisition for a larger company. Thank you for stopping by.

Disclosure:  Long CEN.TO 

Charts of Interest

Here's some charts of interest heading into a new and shortened week.  First the S&P 500 exchange traded fund  (SPY).  The S&P 500 has broken out of resistance and has achieved multi-year new highs.  The chart is oversold on a shorter term basis but there is still no reason to be shorting this market based on an intermediate term basis from the chart below.

The next chart of interest is the Euro.  The Euro has had a positive correlation to the US stock market.  In other words, when the Euro is appreciating against the dollar US stocks in general tend to outperform.  The chart really has not made up its mind which direction it will proceed, but it is well of the lows. Below is a chart of the Euro exchange traded fund FXE.

CELG is a large holding in the portfolios.  The stock is closing in on an all time high price of around 77.50.  Once it breaks that level, it will be trading in new high territory.  Below is a monthly chart of CELG.

Bottom Line:  The stock market has been resilient shrugging off average economic data and European debt issues.  The trend is heading higher as the market has broken out of several year resistance points.  There is absolutely no reason to be shorting this market based on the charts above, and I expect higher prices in the future.

Disclosure:  Long CELG

 

Chart Update

I still like the uptrend of the overall market here.  The S&P 500 is close to a breakout higher (above the resistance zone) that I believe will take it to the 140 level in the coming weeks. As long as the overall market is trending higher we can still hold onto stocks for the near to intermediate term time frame.  Below is a chart of the S&P 500 fund (SPY).

Bottom Line:  There is still the issue of a Greece default down the road that may have an effect on Portugal and other countries within the EU.  But for now, markets are willing to put those worries aside and focus on corporate earnings and a potential economic recovery in the US.  We remain about 90% invested.  Thank you for stopping by.

 

Market Recap - Tuesday December 10th

Three breakout charts below.  First the S&P 500 index ETF (SPY) breaking out above prior resistance.  Please click chart to view.

Although the S&P 500 has not been trading at very high volume, the volume today was 15% higher than yesterday, which counts for something.  Below is a confirmation chart of the transportation index, also breaking out higher.  

Lastly a holding of ours, CELG, has broken out higher on above average volume.  The breakout is a multi-year new high.

Bottom Line:  From a technical basis we have both the S&P 500 and the transportation index on breakouts above previous resistance levels.  On a shorter term basis the market is getting a bit overbought so I would expect some consolidation prior to extending the gains.  CELG a holding of ours has made a clean break higher on above average volume.  I am looking for more upside from them also.  Thank you for stopping by. 

US Dollar and Stocks

I have written about the non correlation between the US Dollar Index and stocks several times including most recently here US Dollar and Stocks. Another words when the dollar index was appreciating higher in value, stocks were falling at the same time.  This non correlation was extremely strong up to around September of 2011.  Let's have a look at a 4 month chart of the US Dollar Index and the S&P 500 with performance since this time.

Notice that both the S&P 500 is higher by 9.62% and at the same time the US Dollar Index is higher by 8.27%.  So the question becomes, has the non correlation been broken?  For the time being yes.  Part of this reason could be due to economic releases that have been better than expected over this past month, or that investment dollars are finding their way out of Europe and into US stocks while the dollar gains strength against the Euro currency. Thank you for stopping by.

 

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.

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.

Sector Comparison

Here's a comparison of two sectors that have high and low ticket items. Below is a chart of Ford, GM and a major auto supplier Lear.  Ford and GM are both down approximately - 40% and Lear is down around -18% this year alone. These are companies that sell high priced items to the consumer, or provide items to the auto industry as Lear does.

Copper a leading economical indicator is down - 27.63%, as shown by the the copper ETF (JJC). Copper is used in just about any large scale building including auto and homes.

Not to show just bearish looking charts, below is a nice looking chart of stocks that cater to people looking for low cost items and food.  McDonald's, Dollar General, Dollar Stores, and Walmart all fit this category and are all higher for the year with Dollar General up 28%.

So what we have is a tale of two industries.  Car manufacturers and anything heavy duty including copper has been sold off hard which is expected in a struggling economy. McDonald's, where you can feed a family of four for around $20.00 and the $1 dollar stores have seen their stocks appreciate this year.  

Bottom Line:  Monitoring charts like these can be helpful in determining the mindset of the consumer.  Is the consumer still pulling back and staying away from high priced ticket items and continuing their cost conscious ways by visiting the economical low cost stores, or have they opened up their wallets to higher ticket items that have a longer term obligation to pay off.  For now, the consumer is extremely risk averse with their purchasing habits.  I would expect those charts to reverse when the economy starts a recovery.  A potentially good trade would be to go long the autos manufacturers and sell short the low cost providers when the economy does rebound.