Saturday, May 8, 2010

How bad was it? Ugly!

Time to quit reading all the doom and gloom and quantify just how bad it really was. We will use our 3 standard yard sticks from Barchart to see where we really stand and try to come up with a strategy for next week.

Value Line Index -- Contains 1700 stocks so it is much broader than the S&P 500 or very narrow Dow 30 -- We haven't been this far down in a long time
  • The Index was down 8.12% for the week
  • The Index closed Friday below it's 20, 50 and 100 day moving averages
  • Barchart's technical indicators have 9 out of 13 sell signals for an over all rating of 48% sell

Barchart Market Momentum -- Contains approximately 6000 stocks -- Percentage of stocks trading above their daily moving averages for various time frames -- Above 50% is good but we were no where near that this week

  • 20 DMA -- 9.99% this week, 48.92% last week, 71.47% last month
  • 50 DMA -- 23.74% this week, 72.02% last week, 84.85% last month
  • 100 DMA -- 43.79% this week, 80.10% last week, 83.92% last month

Ratio of new highs to new lows for various time frames -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- We are bearish for all 3 time frames

  • 1 month ratio of new high/new lows = 141/1788 = .08
  • 3 month ratio of new highs/new lows = 103/632 = .16
  • 6 month ratio of new highs/new lows = 71/362 = .20

Investment strategy for the coming week -- The Conference Board last week reported its best news in several years. First time all 3 economic indicators were positive: leading, coincident and lagging. The economy is the US has turned but there seems to be a possibility that the world wide economy is being dragged down by Greece, Portugal and Spain. I will trim my worst stocks and not reinvest until I see some support in the market. When the market comes back it will snap back like its being pulled by a rubber band. Each day have a buy list so you will be prepared to jump back in and not be left behind. Remember that the stocks that do well during this market pullback may not be the ones that benefit in the next rally so make a new buy list every day. If you are a cautious investor only buy back into the market one position at a time.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Friday, May 7, 2010

Profit in credit card processing

As the economy recovers people will begin spending money and most will do that on a credit or debit card. Fidelity National Information Services ( FIS) Inc. provides credit, debit and merchant card processing, e-banking, check risk management and check cashing services to financial institutions and merchants worldwide.

They have a customer list of over 14,000 financial institutions including 40 of the top 50 global banks. The best part of their customer list is that no single institution accounts for more than 5% of their revenue. In this fickled economy the loss of a major institution would not be a revenue buster.

The stock hit 15 new highs in the last 20 trading sessions and had an 18.17% price appreciation in the last 30 days. Barchart's technical indicators still have 13 of 13 buy signals for a 100% technical buy rating. The stock trades around 28.51 with a 50 day moving average of 24.47.

Investor sentiment on Motley Fool is positive with a 93 to 14 vote that the stock will beat the market. All Star investors agree with a vote of 27 to 2. Fool reports that the last 8 articles about the company have been positive.

Wall Street likes the stock and gives 13 buy and 7 hold recommendations with no negative releases. Sales are expected to increase 37.20% this year and 4.70% next year. Double digit increase in EPS are expected with estimates of increases of 20.20% this year , 13.30% next year and 11.76 annually for the next 5 years.

If you think the economy is improving and consumer spending will increase this stock has a few things going for it:
  • Recent price appreciation with a 100% technical buy signal from Barchart
  • Buy recommendations from Wall Street plus estimates of increases in sales and earnings
  • Positive investor sentiment

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: No position in FIS at the time of publication

Wednesday, May 5, 2010

Hewlett Packard -- HPQ -- Customer Support F-

Here is a company I really have mixed feelings about. I read a posting on Marketocracy just after I had a bad customer support experience with my HP computers and printers. I read this posting: "What's behind this dinosaur? Not much!.....To me HPQ looks like a great short opportunity. Opinions?"

First let me tell you about my bad experience. I decided to upgrade my computer so I went to Best Buy and purchased a new HP Pavilion Entertainment PC. When I got home I tried to connect it to my old and trusty HP LaserJet III but there was no place to plug in the printer's 25 pin cable so back to Best Buy to get a converter cable to connect to the USB port. I log on and try to print but nothing happens. I call HP customer support to get assistance connecting my HP computer to my HP printer. To me that sounds like a logical step but boy was I wrong.

I don't know how many of you have ever had a problem with your computer -- do you believe that statement? I bet you all have had the same experience as I've had. The hardware people say the hardware is fine it's a software problem. The software people usually say the software is working properly it's a network problem. The network people say its not a network problem it must be a problem with connectivity to the peripheral devices. They send you round and round with no one taking responsibility and everyone passing the buck to a different department or vendor. I think this is a trick they all learn the first week of their IT training school.

This time though I think I've got them. This is an HP computer connected to an HP printer so HP customer support should be able to help. Right? Wrong! When I call the 800 number no one knows what to do. After several transfers and an hour and fifteen minutes later I'm transferred to a guy who claims to be the senior printer customer support person at the support center. He informs me that although there are millions of these Laserjet III printers still in use HP no longer provides customer support for that product. He asks me what software I have. Why Windows 7 of course. His reply is that the software does not provide a driver to connect to such an old printer. He says I should either load an old software version or better yet buy a new HP printer.

I decide to get a second and third opinion so I call again several times to see what other customer support reps will tell me and that all say that HP no longer supports that printer and my only option is to buy a new HP printer and then they will help me.

I decide to call the Geek Squad and get an appointment. There is no way that Mister Softy would design a software program that leaves out one of the most popular laser printers ever sold. They quote $129 for a diagnostic visit but don't promise they can fix it.

Now I'm really frustrated. I log onto the Microsoft website after a few clicks find a list of supplemental printer drivers and download the one for the HP Laserjet III. It asks what communication port I want it to connect to I click "USB" and out of my printer pops a test page.

How is this possible? I am a total computer illiterate but I can go to the on-line software site, spend less than 5 minutes, click a few tabs and correct a problem that is beyond the expertise of the best and most experienced customer support people at HP? Either they are total idiots or they have been told to lie and get you to buy new HP equipment. Either way I'm not pleased with HP customer support and because HP has made a decision to not properly support their products I'll never buy another HP product.

But what about the posted question? Should we be shorting HPQ at this time? Well the stock is trading down 5.88% for the month and has hit 7 new lows in the last 20 trading sessions. Barchart has technical sell signals on 9 of its 13 technical indicators of an overall 48% sell signal.

The Wall Street analysts have 28 buy and 5 hold reports published with no negative recommendations released. They think sales will increase 7.60% this year and 5.30% next year. EPS growth estimates are great with an increase of 15.60% for this year and 10.30% next year. They even think the 5 year compounded EPS growth rate will be 12.60%.

Investor sentiment is high on Motley Fool with CAPS members voting that the stock will beat the market by a vote of 2761 to 228 and the All Stars agree with a vote of 704 to 41. That is a very high and positive investor sentiment. The columnists Fool tracks have had favorable articles 33 to 1.

My opinion -- At this time I'm not going to sort HPQ no matter how bad their customer support is. Although there has been a negative price trend recently there are just too many brokerage firms recommending the stock so how can it continue to go down with such strong investor sentiment?

If you short at this point you'd better be prepared to cover at a moments notice.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: No positions in HPQ at the time of publication.

Wabco Holdings --- WBC

Today I'm doing some ting I seldom do, I'm going to double up on a stock because I just think it's the right thing to do. WABCO Holdings ( WBC ) is one of the world's leading providers of electronic braking, stability, suspension and transmission control systems for heavy duty commercial vehicles. WABCO products are also increasingly used in luxury cars and sport utility vehicles.

The stock continues to hit new highs and hit 9 new ones in the last 20 trading sessions but more importantly 4 of the recent 5 in a weak market. 30 day price appreciation has been 17.38% and the stock is still hitting 13 of 13 Barchart technical buy signals. The stock trades around 31.30 with a 50 day moving average of 29.67.

Wall Street has 6 buy recommendations with no holds or negative reports. Sales are expected to increase 21.70% this year and 17.90% next year. I'm having a hard time with EPS growth estimates of 230.00% this year, 75.00% next year and a 5 year compounded annual EPS growth of 15.00% a year. I can only hope.

Investor sentiment is very high with a vote of 184 to 7 that the stock will beat the market. Experienced investors agree with a solid vote of 90 to 1.

I hardly ever double up on a bet but here the numbers just keep getting better and better:
  • 100% Barchart technical buy
  • Analysts giving great sales and earnings growth estimates
  • Investor sentiment getting even higher.

Monday, May 3, 2010

Intuit Inc -- INTU -- has the right products

Intuit Inc. ( INTU ) is trying to show you how easy it is to do all your finances including tax filings on-line. The products are marketed to the public and many of the products can be purchased and downloaded directly on-line. Demographics are in their favor because the youthful markets are used to doing things on line and the boomers are finding that doing tax filings using on-line software isn't really that hard. They enjoy not only the privacy ( they like to play their finances close to the vest ) but also like the math and fact check features that are built into the software.

Price momentum in this stock has been very good lately with a 7.48% increase this past month. The stock hit 12 new highs in the last 20 trading sessions and on Barchart all 13 technical indicators signal a buy for a 100% buy rating.

Wall Street analysts are looking for increased earnings of 5.80% this year and 8.20% next year. Their projections of earnings per share increases get my attention. They estimate an EPS increase of 11.00% this year, 11.40% next year and a 5 year annual compounded EPS increase of 13.83%. I like this for a long term pick.

Over on Motley Fool the CAPS members think the stock will beat the market by a vote of 441 to 30 and if that's not a good enough investor sentiment indicator for you the All Stars vote 156 to 9 to beat the market.

I'm adding this stock to my Wall Street Survivor portfolio because:

  • I like the current price momentum and the 100% Barchart technical buy call

  • The product line is one that the public likes and should continue to buy year after year

  • Wall Street has 10 buy and 9 hold reports published so at least I know their firms are still pumping up interest

  • Investor sentiment is very high so new purchases of share are likely

Disclosure: I own no shares at the time of publication

Jim Van Meerten is an investor who writes on financial matters her and on Financial Tides. Please leave a comment below or email

Sunday, May 2, 2010

Weekly Market report W/E 4/30

Time for Financial Tides weekly stock market wrap-up. April was a good month but the past week wasn't a good week. Too much news about Greece, Goldman Sachs and the Gulf oil spills. Bummer! Let's use our 3 standard yard sticks from Barchart to quantify the damage and then move on.

Value Line Index - Contains 1700 stocks so it's much broader than the S&P 500 or even narrower Dow 30 -- down for the week but up for the month
  • Index down 3.16% for the week but still up 4.94% for the month
  • The Index closed Friday below its 20 day moving average but above its 50 & 100 DMA
  • Barchart technical signals have a 40% short term sell but an 8% overall buy signal
  • Index was positive 3 months in a row

Barchart Market Momentum -- The percentage of stocks closing above their daily moving averages for various time periods -- above 50% means a rising tide floats all boats -- slight weakness this week

  • 20 DMA -- only 48.96% closed above -- 77.93% last week -- 64.63% last month
  • 50 DMA -- 72.10% closed above -- 85.00% last week -- 82.15% last month
  • 100 DMA -- 80.05% closed above -- 86.23% last week -- 81.31% last month

Ratio of stocks hitting new highs to stocks hitting new lows -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- still a bullish sign for this week

  • 20 day ratio of new highs/new lows -- 1297/790 = 1.61
  • 65 day ratio of new highs/new lows -- 978/177 = 5.52
  • 100 day ratio of new highs/new lows -- 837/391 = 2.14

Investment Strategy -- Although the market ended weak for the week we are still above the 50 day moving averages. Don't be afraid to trim weak stocks ( those trading below their 50 day moving average ) but cautious investors might want to wait till later in the week to see how long the effects of bad news might linger. Long term investors might see this slight dip as an opportunity to pick up a few bargains.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email