Technical Outlook

A weblog about the markets, trading and technical analysis.

Saturday, June 21, 2003

NYTimes- Small Investors, Once Burned, Lead New Bull: "To some professional investors, the return of the individual to the stock market is a warning sign all its own. Traditional market lore states that individual investors are not shrewd enough to know when to buy and that when they swarm into stocks professional investors often sell. But amateurs are not the only ones who are bullish. The most recent Investors Intelligence survey shows that 60.2 percent of investment newsletter writers are bullish, while 16.1 percent are negative. That is the lowest bearish reading since before the crash of Oct. 19, 1987."

NYTimes- Halliburton's Rebuilding Efforts In Iraq: "The Army says KBR got the Iraqi oil-field contract without having to compete for it because, according to the Army's classified contingency plan for repairing Iraq's infrastructure, KBR was the only company with the skills, resources and security clearances to do the job on short notice. Who wrote the Army's contingency plan? KBR ... From 1997 to 2000, when Cheney was running Halliburton, two of its subsidiaries sold Saddam Hussein's government a total of $73 million in oil-field supplies. The deal didn't violate U.S. sanctions because the subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Company, were foreign. KBR/Halliburton, then, has rounded the bases when it comes to Iraq. It got rich doing business with Iraq, it got rich preparing to destroy Iraq and it's now getting rich rebuilding Iraq."

HAL announced on Friday that Q2 earnings would be below estimates. HAL gapped down in Friday trading and closed down 5.2% for the day.
BBCNews- Wi-fi will be 'next crash': "'What we're hearing right now are the promises of fame and fortune typical of an early deployment phase', says Keith Waryas, a wi-fi expert at IDC and warns that 'this market is still exceptionally young and rife with uncertainty.' ... George Bartley at Cordless predicts that in a wi-fi enabled UK just 15 to 20 places - like airports or train stations - will snap up 40% of all wi-fi revenue. Hotels for business travellers in about 1,500 locations will account for another 40% of revenue. About 17% of income will go to another 3,000 sites, while at the bottom end some 30,000 hotspot owners will fight for the remaining 3% of the wi-fi profit cake."

Wednesday, June 18, 2003

Play Money: "By the time the IRS comes calling next year, April 15, I will be able to report that selling UO [Ultima Online] goods is my primary source of income, and that I earn more from it, on a monthly basis, than I have ever earned as a professional writer."
NYTimes- Brain Experts Now Follow The Money: "Many neuroscientists are beginning to argue that it is time to create a new field of study, called neuroeconomics. These researchers are busy scanning the brains of people as they make economic decisions, barter, compete, cooperate, defect, punish, engage in auctions, gamble and calculate their next economic moves. Based on their understanding of how fluctuations in neurons and brain chemicals drive those behaviors, the neuroscientists are expressing their findings in differential equations and other mathematical language beloved by economists"

Interesting. Neuroeconomics, behavioral finance and technical analysis have different names but they all seem to be ways of getting behind the psychology of the markets.
AP- NASD Says Instant Messages Must Be Saved: "The National Association of Securities Dealers Wednesday told its member firms they must save instant messages for at least three years ... On Monday, the New York Stock Exchange officially told its 336 member firms that instant messages must be saved."
(via Boing Boing)

Sunday, June 15, 2003

Someone's been bidding up my Blogshares stock. The price went from $1.01 on Jun 14 to $192.55 today.
ESPN- CART may be privatized: "The For Sale sign is expected to be officially displayed by Championship Auto Racing Teams on Monday ... Since taking over CART's management before the 2002 season, CART CEO Chris Pook has maintained his goals were to take CART private and stabilize the company. 'All I can say is that there will be a press release issued in the near future,' Pook said on Sunday morning. 'Some of the naysayers may put a negative spin on it but it's the first step of what will be good news for this company.'"

CART (stock symbol MPH) has been on an constant downward trend since 1999, going from 30+ to Friday's close at 2.91.
WashPost- Wal-Mart Follows The Netflix Model: "[Netflix] has more than 1 million subscribers, offers 15,000 titles and ships from 20 distribution centers. Wal-Mart has released no subscriber tallies but is believed to have well under 50,000 ... It's worth noting that Wal-Mart, even with its vast network of stores, has rejected the in-store movie rental model being offered by Blockbuster."

In response perhaps to this news, NFLX dropped 12.4% on Friday to close at 19.20. NFLX had rocketed from 4.85 on Oct 10, '02 to a high of 26.35 on Jun 6, '03. The chart now shows a potential double-top pattern but was there any reason to exit the stock before Friday? Depending on how steeply we draw the uptrend line, it was broken either May 19, 03 or Jun 9, '03. In either case, breaking the trendline would have been a sign to sell. Doing so would have meant getting out around 23 or 22, preserving an extra 15-20%. Other than the trendline breaking, another bad sign was failing to hold the breakthrough of the 26 level on Jun 6. All these would be signs to exit before the massive drop on Friday.

Having said that, as noted in the WashPost article above, Netflix has over 1 million subscribers. It will conceivably still be a while before Wal-Mart is able to catch up to them. Also, one should consider the profiles of the customers who use Netflix vs Wal-Mart. My guess is Wal-Mart customers tend to be slightly lower income and less technologically inclined. These customers are probably less likely to own DVD players or access the internet on a regular basis. However, Wal-Mart could start a price war and thus attract customers that way and drive down Netflix's profits. Still, there remains no good news on the horizon for NFLX which could spur further upward price movement other than a minor correction of Friday's reaction.