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.