FusionIQ: May 2012

Thursday, May 31, 2012

The Good Old Days

$200 oil was supposed to ruin everything, remember?

http://www.financialsense.com/contributors/jeff-rubin/whatever-happened-to-two-hundred-oil

Wednesday, May 30, 2012

Animal House

College degrees no longer guarantee success. Graduates essentially have a mortgage, with no house.

http://www.wealthwire.com/news/economy/3265?r=1

Battery Not Included

Volt production halted after fraudulent sales figures exposed, taxpayer dollars well spent.

http://blog.alexanderhiggins.com/2012/03/03/gm-halts-chevy-volt-production-zerohedge-exposes-accounting-fraud-90102/

Tuesday, May 29, 2012

The Danger of Seduction Investing ...

As I wrote the recent story on U.S. Airways (LCC), I couldn't help but think of how good the story sounded, particulalry as a supporting thesis to the improving technical picture. Aggressively falling feul prices not yet factored into earnings, demand for seats still remains strong, and from a sentiment perspective the airlines are extremely underloved. It all sounds so plausible, so logical, seemingly without flaw, and that my freinds is the seduction of the stock story ! Seduction can make us blind, particulary to risk, because the power of the seduction (ie. the stock story) is so strong. It reminds me of 1997 movie the Devil's Advocate starring Keanu Reeves, Al Pacino and Charlize Theron. In the movie Reeves stars as a defense attorney in Gainseville, Florida who has never lost a case. He defends a school teacher, Mr. Gettys, against a charge of child molestation. During the trial, Reeve's character realizes that his client is guilty, and a reporter tells him that a guilty verdict is all but inevitable. However, through a harsh cross examination Reeves destroys the credibility of the victim and secures another yet another not guilty verdict. As he celebrates, Reeves is approached by a representative of the New York Law firm Milton, Chadwick & Waters, who offers him a large sum of money to help the firm with a jury selection. After Reeve's jury delivers a not guilty verdict, John Milton, played by Al Pacino, offers Reeve's character a large salary, and a swanky New York apartment overlooking Central Park, if he joins the firm. Despite warnings from his Evangelical Chistian mother, Alice, about the sinful and seductive big city life, he accepts the job and moves to New York City with his wife Mary Ann, played by Charlize Theron. Once in New York the seduction continues as Pacino's character wines and dines Reeves, tempts him with money and easy woman, to the point where Reeve's loses himself in the seduction. In the process he loses his moral compass and ability to be objective. We draw this analogy as the same thing happens everyday in the world of investing. A story sounds wonderful, an investor pours money into it, and when the stock goes south, the seduction of the story keeps the investor from being able to make a logical decision. While it is good to be as informed as we can about what we invest in, again, there is a very fine line between knowing the story, yet not letting the story blind you should the stock not trade as the story suggests, hence the power of the seduction. This is why we love the quantitative methodolgy and looking at unbiased data, as it allows us to balance the story's potential with the reality of how the underlying stock is trading. We have seen too many great story stocks drop 40 or 50% in our day, while the underlying and seductive story seemingly never changed. So while the potential for U.S. Airways is there and the supportive story sounds good, we always know a story is only as good as the way the stock trades. Hence, why its' a good idea to always have an exit strategy in place before entering a position, for not only the upside, but also for the downside, before the love affair begins ! IQ's unbiased numerical ranks and BUY and SELL signals certainly aide this process.

Friday, May 25, 2012

Guilt By Association

No winners in the Facebook IPO, but a billion people are still looking at it today.

http://blogs.reuters.com/felix-salmon/2012/05/23/facebook-the-list-of-incompetents/

Thursday, May 24, 2012

IQ Market Direction Poll

Going Rogue

Mark Cuban comments on Facebook, Silicon Valley now officially on notice.

http://www.businessinsider.com/facebook-ipo-post-mortem--killer--but-not-for-the-reasons-you-think--2012-5

Police State

Lawyers going into hyper drive over the Facebook IPO debacle, this won’t end well for anybody.

http://www.latimes.com/business/la-fi-facebook-beseiged-20120524,0,1622347.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fbusiness+%28L.A.+Times+-+Business%29&utm_content=Google+Reader

Wednesday, May 23, 2012

Self Service

CNBC is annoyed with declining ratings, don’t blame Andrew Ross Sorkin.

http://www.marketwatch.com/story/does-andrew-ross-sorkin-annoy-you-too-2012-05-09

Fight Club

Investors now suing Facebook for not disclosing risks? Please don’t throw me in that briar patch.

http://www.reuters.com/article/2012/05/23/us-facebook-lawsuit-idUSBRE84M0RK20120523

Inside Straight

The financial services industry continues to struggle with transparency, here’s a primer.

http://www.forbes.com/sites/brightscope/2012/05/22/its-time-for-a-universal-performance-standard-for-financial-advisors/

Tuesday, May 22, 2012

Troll Patrol

Is Congress is getting dumber? Is that a trick question?

http://sunlightfoundation.com/blog/2012/05/21/grade-level-congress/

House Of Cards

The botched Facebook IPO finger pointing starts with Morgan Stanley.

http://www.bloomberg.com/news/2012-05-22/facebook-11-drop-means-morgan-stanley-gets-blame-for-flop-tech.html

Monday, May 21, 2012

Badge Of Honor

Jim Cramer, financial troll, hates the Facebook IPO. Sounds like a raging buy signal.

http://nymag.com/news/features/32382/

Thursday, May 17, 2012

Wisdom Of Fools

Buy and hold strategies and 60/40 portfolio allocations not working anymore? You don’t say.

http://www.investmentnews.com/article/20120516/FREE/120519945

Wednesday, May 16, 2012

GLU Mobile (GLUU) - possible short squeeze

GLUU shares are consolidating nicely and yesterday they moved up on big volume. With almost 20.00 % of its float short and the company presenting at some brokerage conferences in the next few days shares may be ripe for a short squeeze. Minor resistance lies near $ 5.20, however nothing significant until the 2011 peak near $ 6.00.

Mystery Machine

You’re worth $4.84 a year to Facebook, in case you were wondering.

http://www.cnn.com/2012/05/16/tech/social-media/facebook-users-ads/index.html?hpt=hp_c1

Tuesday, May 15, 2012

FusionIQ Russell 2000 Outlook

The Russell 2000 has been capped by resistance since 2007 (red lines and arrows) near 850. So at this juncture in order to really embrace small cap, the market needs to show it can rip through this level, since so far it has failed to since 2007 ! The R2000 is now nearing a support zone (green lines) near 775 - 750. If that is violated the weakness continues. At this point you're in a range between support and resistance and it can go either way, thus it makes no sense to take a big swing either way. It boils down to risk tolerance (do you buy here with tight stops and blow out on a breach of support ? or Do you wait and pay up on a confirmed break out above resistance to make sure a durable move is under way ? - for me I am vote for the latter.)

Everyone is saying stimulus is good for equities and equity values should rise, yet they are struggling here. Most likely recent activity is correcting the excesses, and the usual summer weakness, however at this point it makes sense to observe, more than participate, until the odds line up better for a better pitch to swing at.