NOK Earnings Today (7/19)

“As we look ahead, we expect the launch of Windows 8 for PCs and tablets plus the launch of Windows Phone 8 to be a catalyst for Lumia,” Nokia CEO Stephen Elop.


Talk about all your eggs in one hopeful basket. There was no sign that they intended to develop an Android product in addition to Windows (maybe they are secretly just in case.) Anyway, it's just a wait and see game now with NOK. If they continue to disappoint over the quarters, their stock will sink and sink until it is trading at a safe discount. If anything, it's probably fairly valued at the present time. 

More on Nokia and the Smartphone market

I am tracking Nokia because 1) I find this space interesting and 2) if it drops low enough it prices ($1-$1.25 my current thoughts), I believe it will be a solid buying opportunity.

Nokia's CEO, Stephen Elop, has been on board for less than two years. He worked formerly at Microsoft and is the one who made Nokia change its phone platform to one that supports Windows' mobile Operating System (OS). Fine, but why not create Android powered phones (51% US market share) as well? I don't know.

They believe Windows 8 will be a catalyst for their phone. If that catalysts disappoints, and sales and market share continue to evaporate, perhaps Mr. Elop will be booted, or Nokia will at least consider adopting Android in addition to Windows. 

Here's the real problem: at different times, I have heard various people say,

"I love Amazon." The forthcoming competitor, rumored to use Android as well. If they don't, I think they can be successful anyway; or perhaps start with Android and then switch to their own later. 
"I love Google." (Android is Google's OS.)
"I love Apple."

I have never heard anyone say, "I love Microsoft." That sentence sounds almost absurd. Moreover, I've often encountered Microsoft/Windows bashing, "Every time you use Internet Explorer [by Microsoft], God kills a kitten!" For younger generations, which phone they carry, more than anything else today, is the strongest, most external statement of one's identity-- superficial as it may be. Since it's about identity, the issue of brand, "I love Amazon/Google/Apple" reigns supreme. Religion and politics are fine, but the firmaments forbid you bring up iPhone versus Android at a dinner conversation. Android users are relatively agnostic towards device makers, Samsung, HTC, Motorola-- it's all about the OS. As such, I don't think there'd be any resistance in wedging Nokia into that list.

Given those deliberations, I don't think it would be wise for Nokia to switch to Android. Until they do, the stock price may continue to drop as a result of the repercussions of that sin of omission. As such, I am waiting patiently for an approach of my tentative price target range.

Added: At the end of the day, I'm looking to buy NOK-- I think it has much greater prospects than RIMM-- I just think more bad news can come its way, and depress its stock price, to make it a worthwhile risk/reward buy.

Called it! AMZN to create a smart phone

Here is an article about Amazon's plans to release a smartphone. I have been saying that for months and am happy to have been lucky enough to post it a couple weeks ago on this blog. Some articles have surfaced suggesting AMZN buy NOK (trading at 1.86 now) for its patent portfolio of 30,000 patents, from which NOK gets $600MM in royalties per year.

I was worried about what the news of an Amazon smartphone would do to NOK--which may likely be the cause of NOK's 10% drop in price over the last couple of days. Fortunately, that random variable with unclear timing is now out of the way.

More on this later-- I believe NOK can trade much lower than it currently is. Based on 2011's numbers, the company's "free cash flow" was $700MM, compared with $5.5B in 2010. Free cash flow is one measure of the company's true earnings, which can be used here as an alternative to earnings, since theirs are negative. Let's say the company can surely be around for 4-5 more years, that values it approx at $2.8-4.5B. The current market value of the company is $7.13B, so it would not be unreasonable for the stock to drop to about $1 per share.

Nokia also pays a hefty dividend of about $2B per year, which it has not altered. A slash to this would be another news item that can bring the stock down to attractive levels.

Cancelled my buy order on NOK

more on this later...

Nokia (NOK)

Currently trading at 2.12, I first looked at the stock with interest when it was at around 3.30.

The technical picture. 

There are two charts below. One is a weekly chart for perspective. The second is a daily chart with Darvas boxes; they are equal in percentage changes, not absolute values, because the chart is on a log scale. In each subsequent box, the stock price lost about 35% of it's value. Based on such a box and some rough approximations, the next low is between 1.87-1.97. I currently have a limit buy at 1.91, with a sum that I would be OK losing 100% if the stock goes to zero. The stock behaves well technically, often responding to horizontal support and resistance levels.

The fundamental picture.

Financial condition: Last year, it lost about 700MM in cash. It has enough cash reserves for a few more years, but that's meaningless if business doesn't pick up, or the stock is bought out. The company's debt is rated junk. It's a weakening financial condition, but not so much so that bankruptcy is inevitable.

Valuation is really low. Yahoo Finance statistics for it are down for the moment, so I cannot reproduce.

The story.

Nokia has lost a ton of market share to Apple and Android (an OS by Google) phones. It's phone OS is Windows, which has less than a 2% market share. The stock has been hit with a lot of bad news.

I believe Microsoft will support Nokia, as Microsoft wants to be a stronger player in the mobile space.  NOK does not have an exclusive partnership with MSFT, but I have come to consider that a good thing because the problem with Windows phones is a lack of awareness. If a huge player like Samsung began to more heavily promote its phones with Windows OS, it would create a lot more awareness of the product, and lead people to look at NOK's for comparison. The latter's phone has received positive reviews-- it just hasn't been marketed effectively.


I also believe that ever since Google launched Google Play-- it's online, cloud-based store for books, movies, and music-- Amazon needs to have its own phone to be competitive. Amazon already has the second most successful tablet on the market, the Kindle Fire. If it releases its own characteristically low-margin phone product, it may be a very strong competitor against Apple and Android, making it even tougher for Windows based phones. But who knows-- maybe AMZN will buy out NOK. 

The stock is dirt cheap and patents and intellectual property for phone related stuff are valued right now. As I said, I started eyeing it at $3.30, and have very patiently been waiting for it to drop. It's now pretty close to my target and entry point of $1.91.

Disclosure: I am not a profitable trader, nor have I never bought a stock before (ETFs only).

Blog Update

My schedule has become too demanding to post the intraday bias. I will still post the occasional market updates if I see anything interesting. You can subscribe to this blog via email to get the updates, instead of checking at random to see if I happened to post anything.

bias 6/19

10:27 overbought since open; not certain what suggested action is

bias 6/18

10:15 am, negative, suggesting sell the rallies

update 12:31, the bias has strengthened to neutral

Market Wisdom for the Weekend

"I skate to where the puck is going, not where it has been" ~Wayne Gretzky

bias 6/15

10:48 am, no clear signal

bias 6/14

10:19 am, no clear signal.

update 3pm: strong negative signal

bias 6/13

10:13 am, negative, suggesting sell rallies

bias 6/12

10:20am, Neutral to positive, but generally unclear signal

bias 6/11

10:01, negative, suggesting consolidation*


*i mean tot say, "negative, suggesting sell the rallies." The "consolidation" was a typo.

bias 6/8

11:05, no clear signal

bias 6/7

10:33, neutral, suggesting consolidation

bias 6/6 - and market stuff

10:53, no clear signal. the following parallel trendlines suggests that the correction that began at 1420 is over. However, the correction was in 5 distinct waves, with waves 1 and 5 being about equal length. according to elliot wave, corrections must be in three waves, which suggests that after a counter trend rally--which can retrace as much as 100%, so elliott is no great guide here) another 5 wave drop will presume.

I had made note of this same trendline earlier when I suggested on this blog that the correction would continue:

bias 6/5

9:56 am, positive, suggesting buy dips intraday

will not post bias on 6/4/12

Trade

On December 6th, I entered a short position when SPX was around 1245-55 (don't recall.) I just got out today when SPX was around 1284. Although I didn't post it, I added to this position at 1330, when it first got there.

I've learned that on a scale of 1-10, my sell discipline is a 1. Instead of getting out with gains (which I had decent ones at two points), I held this position all the way to 1420 on SPX. I was lucky prices came down this much. Net, I had a 6% loss, exacerbated by the ETF leverage decay. Not my biggest loss, but definitely my worse trade ever.

In the past, when I was net profiting trading, it was because I was doing it full time and my buying discipline was good enough to compensate for the poor selling, which has gotten worse with lack of practice.

bias 6/1

Bias opened at oversold. At 10:57, no clear signal.

Will not post today

bias 5/30

at 10:20 am, no clear signal

update 12:00 pm, positive, suggesting buy the dips

bias 5/29

10:30 am, overbought, suggesting sell into strength

update 1:17 pm, overbought condition relieved. hold.

inverse h&s on the vix

a chart of the vix with daily bars reveals an inverse head and shoulders. target is around 28. i wouldn't give this too much credence, but it's one data point.

bias 5/25

10:23 am, negative, sell the rallies

Check Out My Review of Carl Futia's Trading Seminar

Here is a link to a review I wrote of Carl Futia's Real Time Trading Seminar.

Feedback appreciated!!

bias 5/24

10:29, negative, suggesting sell rallies intraday

bias 5/23

10:21 am, positive, buy dips intraday

update 12:03  pm, the bias has weakened to neutral.

bias 5/22

10:56 am, overbought, suggesting sell strength intraday

update 2:23 pm: overbought condition relieved. hold.

bias 5/21

11:04 am. With the market up over 1%, stating that the bias is positive doesn't really add value, but that is the case anyhow.

Update: 1:15. The bias is very near overbought. Hold.

my two cents

Facebook, although it has plenty of growth left, is a relatively mature company. Current revenues are $4.25B. Will its revenues eventually hit $20-$25B, closer to justifying its IPO valuation, not sure, but I doubt that market will continue to expect that in the intermediate term future. Similar to what happened to linkedin, which has fewer competitors, I am whimsically predicting that the share prices will drop by 50% of its opening trading day high.

Facebook has been "priced to perfection". There are much greater chances for it to disappoint than meet expectations.

bias 5/18

10:17 am, no clear signal

bias 5/17

10:35 am, the bias is extended beyond oversold, suggesting no reversion to the mean. to be safe, hold

bias 5/16

11:14 am,  no clear signal

Update 12:12 pm: negative, sell the rallies intraday

bias 5/15

at 10:06 am, the bias is negative, suggesting sell rallies

bias 5/14

won't be able to post until afternoon

at 11:45 am, the bias is oversold, suggesting buy weakness.

Serious Resistance

bias 5/11

10:51, positive, buy the dips intraday

bias 5/10

At 10:52, negative, suggesting sell rallies intraday.

bias 5/9

At 10:57, neutral, suggesting consolidation.

Update 11:25, positive, buy dips intraday.

bias 5/8

At 10:26, beyond normal oversold, suggesting no reversion to the mean. (Usually oversold means buy weakness.) To be safe, hold.

bias 5/7

Technical difficulties this morning.

At 12:11, negative, suggesting sell the rallies intraday.

bias 5/4

At 10:21, no clear signal; Two of the there indicators comprising the bias opened at oversold, but are extended beyond suggesting a "reversion to the mean", and the third, strongest weighted one, is neutral.

bias 5/3

At 10:21, negative; sell the rallies intraday.

The S&P and Dow have doubled topped, and several indexes have lagged, including the Nasdaq 100, which most benefits from AAPL. With negative divergences, and an abundant belief that a new leg up is stretching out, I think the odds are in the favor of a continued market correction. New highs on the indexes would prove me wrong.

bias 5/2

At 11:13 AM, no clear signal intraday, but starting to encounter resistance on the daily scale.


Update, 12:56; the bias is now positive, buy the dips intraday.

bias 5/1

10:31 am: positive but approaching overbought, suggesting cautiously buy the dips intraday.

bias 4/30

10:42 am: neutral, suggesting comsolidation

bias 4/27

10:25 am: neutral, suggesting comsolidation

S&P 500 Intraday Bias, 4/26/12

At 10:48 AM, the bias is positive, suggesting buy the dips intraday.

S&P 500 Intraday Bias, 4/25/12

At 10:45 AM, no clear signal.

S&P 500 Intraday Bias, 4/24/12

At 11:09 AM, the bias is positive, suggesting buy the dips intraday.

Updated, 1:51 PM, the bias has weakened to negative.

bias 4/23

oversold; buy weakness

update, 12:14 pm; oversold condition relieved. hold.

S&P 500 Intraday Bias, 4/20/12

At 10:21 AM, the bias is neutral, suggesting consolidation.

S&P 500 Intraday Bias, 4/18/12

At 10:19 AM, there is no clear signal.

S&P 500 Intraday Bias, 4/17/12

At 10:49 AM, the bias is neutral, suggesting consolidation.

S&P 500 Intraday Bias, 4/16/12

At 10:23 AM, the bias is oversold, suggesting buy weakness.

S&P 500 Intraday Bias, 4/13/12

At 10:51 AM, the bias is negative, suggesting sell the rallies intraday.

Update, 1:43 PM, the bias has strengthened to neutral.

Traveling

Will not be available to post on april 11th and 12th

S&P 500 Intraday Bias 4/10/12

At 10:11 AM, no clear signal: of the three components comprising the bias, one is oversold and two are neutral. One interpretation of this circumstance, is a day trader who is short could cover. Otherwise, not activity suggested.

S&P 500 Intraday Bias 4/9/12

At 10:57 AM, no clear signal.

S&P 500 Intraday Bias, 4/5/12

At 10:50 AM, after a strong open, the bias has quickly reached overbought; I am hesitant to say sell into strength, but that is the signal.


Update 1:45 PM, the overbought condition has been relieved. No clear signal now.

S&P 500 Intraday Bias, 4/4/12

At 10:01 AM, the bias is neutral, suggesting consolidation.

S&P 500 Intraday Bias, 4/3/12

At 10:23 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias 4/2/12

At 10:12 AM, there is no clear signal.


Update, 1:10 PM, still no clear signal.

S&P 500 Intraday Bias, 3/30/12

At 10:45 AM, there is no clear signal.

S&P 500 Intraday Bias, 3/29/12

At 10:21 AM, the bias is oversold, suggesting buy weakness intraday.

Jammed!

Unexpectedly jammed this morning, and will not be around for the remainder of the day. See you tomorrow.

S&P 500 Intraday Bias, 3/27/12

At 10:04 AM, there is no clear signal.

Update, 11:24 AM, the bias is now negative, suggesting sell the rallies. 

For several days the bias has given negative signals and the market has trudged upward.

Unbelievable

S&P 500 Intraday Bias, 3/26/12

At 10:09 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 3/23/12

At 10:28  AM, the bias is negative, suggesting sell the rallies intraday.


Update, 11:35 AM, the bias has strengthened to neutral. 

S&P 500 Intraday Bias 3/22/2

At 10:17 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias 3/21/12

At 10:04 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias 3/20/12

The bias opened towards oversold. At 10:23 AM, it remains negative and oversold, suggesting buy into weakness.

S&P 500 Intraday Bias 3/19/12

At 10:25 AM, the bias is negative, suggesting sell the rallies intraday.

Not around 3/15 or 3/16

Enjoy the weekend!

S&P 500 Intraday Bias 3/14/12

At 10:13 AM, the bias remains overbought, suggesting sell into strength.

S&P 500 Intraday Bias 3/13/12

At 10:18 AM, no clear signal.


Update, 12:40 PM, the bias jetted up to overbought, suggesting sell into strength.

S&P 500 Intraday Bias 3/12/12

At 11:53 AM, the bias is Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias 3/9/12

At 10:04 AM, there is no clear signa.

Update, 10:40 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias 3/8/12

At 10:03 AM, the bias is negative, suggesting sell the rallies intraday.

not around 3/7/12

S&P 500 Intraday Bias 3/6/12

At 10:10 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday bias 3/5/12

At 10:07, AM, there is no clear signal.

S&P 500 Intraday Bias 3/2/12

At 10:06 AM, the bias is neutral, suggesting consolidation.


Update 12:58 PM, the bias is positive, suggesting buy the dips intraday.

S&P 500 Intraday Bias 3/1/12

At 9:48 AM, the bias is positive, suggesting buy the dips intraday.

Update, 11:13 AM, the bias has weakened to neutral.

S&P Intraday Bias 2/29/12

At 10:00 AM, the bias is overbought, suggesting sell on strength.

Update, 12:35 PM, (after selling off from overbought) the bias is now negative, suggesting sell the rallies intraday.

i will not be around to post on 2/28/12

S&P Intraday Bias 2/27/12

At 10:10 AM, the bias is positive, suggesting buy the dips intraday.

Update, 12:02 PM, the bias has weakened to neutral. Hold.

S&P Intraday Bias 2/24/12

At 10:14 AM, the bias is positive, suggesting buy the dips intraday.


Update, 12:27 PM, the bias has weakened to neutral.

S&P Intraday Bias 2/23/12

At 9:55 AM, the bias is negative/oversold, suggesting buy on weakness.

Update, 10:53 AM, the oversold condition has been relieved. Hold.

S&P Intraday Bias 2/22/12

At 10:00 AM, the bias is neutral, suggesting consolidation.

Update, 1:21 PM, the bias is now negative, suggesting sell the rallies intraday.

SP 500 intraday bias 2/21/12

At 10:00 AM the bias is negative, suggesting sell the rallies intraday.

will not be around to post 2/17

Significant Top in Apple, Inc. (AAPL)

Above is a daily bar char of Apple's stock, AAPL. The price action is a text book example of a trend reversal formation. I am sure many others have pointed this out. Most notably, a parabolic rise ended with a bearish-engulfing candlestick pattern. Notice that the volume on the most recent red candle is far greater than any preceding day in the chart. This evidence suggests that AAPL is going to correct significantly. However, often in these patterns, the previous high is visited before a larger drop; so, prices may return to the $530 area first. 

S&P 500 Intraday Bias 2/16/12

At 10:07 AM, positive, suggesting buy the dips intraday.

Update, 2:32 PM, the bias has weakened to neutral.

S&P 500 Intraday Bias 2/15/12

At 10:37 AM, still no clear signal.

Update, 12:58 PM, reaffirming, no clear signal, but "negative" is starting to emerge.

S&P 500 Intraday Bias 2/14/12

At 10:07 AM, the bias is negative, suggesting sell the rallies intraday.

Update, 12:30 PM, the bias has strengthened to neutral.

S&P 500 Intraday Bias, 2/6/12

At 9:49 AM, the bias is negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 2/10/12

At 10:02 AM, the bias is negative, suggesting sell the rallies intraday.

Update, 11:11 AM, the bias has strengthened to neutral, limiting downside.

will not be around 2/9/12 either

not around today, 2/8/12

apologize for the late posting

S&P 500 Intraday Bias, 2/7/12

At 9:50 AM, the bias is Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 2/6/12

At 10:10 AM, there is no clear signal.

Update, 12:15 PM: the bias is now neutral, suggesting consolidation.

Update, 1:13 PM: (wacky day), the bias is now positive, suggesting buy the dips intraday.

S&P 500 Intraday Bias, 2/3/12

At 10:25 AM, the bias is positive, but I believe that signal is concurrent with the market strength, so I would hold.

S&P 500 Intraday Bias, 2/2/12

At 10:00 AM, no clear signal.

Update, 12:13 PM, the bias is now Negative, suggesting sell the rallies intraday.

Happy groundhog day!

S&P 500 Intraday Bias, 2/1/12

At 10:00 AM, the bias is Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 1/31/12

At 9:51 AM, the bias is Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 1/30/12

At 10:00 AM, Negative, suggesting sell the rallies intraday.

Should be able to post on a daily basis again.

S&P 500 Intraday Bias, 1/27/12

At 12:45 PM, the bias is Positive, suggesting buy the dips intraday.

Expecting Correction - In 1330 Target Zone

Several things are going on in the chart below that suggest a correction is imminent around current levels.

First is that RSI is at about 70. This is a usual overbought level after which a correction follows.

Second is that the 50 day moving average is near crossing the 200 day moving average. Although this is classically considered a bullish "golden cross," it can also be interpreted as a target area; consider the approaching of a golden cross as technical "news"-- sell the news. Earlier in the chart is a "death cross" which marked a bottom slightly earlier. A death cross also marked a price bottom in the Summer of 2010 correction.

The big blue boxes in the chart are approximate equal length, 62-65 points. I've circled in blue tops and bottoms which coincided with the box levels. Adding a box on top of the prior 1267 top yields a target of 1329-1332.

Adding all this evidence together makes for a bearish case, indicating a drop from current levels.

S&P 500 Intraday Bias, 1/24/12

At 10:00 AM, the bias is Neutral, suggesting consolidation.

update

Won't be back full time until next week. Hope to post again before then.

S&P 500 Intraday Bias, 1/17/12

At 9:55, Negative, suggesting sell the rallies intraday.

fyi

I will be traveling the next couple of weeks. I will try to post when I can, but I cannot predict it and it will be sporadic. Have fun!

S&P 500 Intraday Bias 1/12/12

Edit*: At 10:25 AM, Negative, suggesting sell the rallies intraday.

*I had written, "Negative, suggesting buy the dips intraday" originally. That was a mistake.

Update, 11:55 AM, the bias has strengthened to neutral.

wont be around on 1/11/12

S&P 500 Intraday Bias, 1/10/12

At 10:46 PM, Positive and overbought, hold.

S&P 500 Intraday Bias, 1/9/12

At 10:00 AM, Positive, suggesting buy the dips intraday.

S&P 500 Intraday Bias, 1/6/12

At 10:12, no clear signal.

S&P 500 Intraday Bias, 1/5/12

At 10:05 AM, Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 1/4/12

At 10:16 AM, Negative, suggesting sell the rallies intraday.

UPDATE, 12:00 PM, the bias has strengthened to Neutral.

S&P 500 Intraday Bias, 1/3/12

At 10:12 AM, Positive, suggesting buy the dips intraday.

Update 12:08 PM, the bias has weakened to Neutral.