Tuesday Morning Chartology--9/3/13

The Morning Call

9/3/13

The Market

           

    Technical

     Tuesday Morning Chartology

            The S&P has confirmed the break below the lower boundary of its short term uptrend.  However, there has been little follow through which casts some doubt on the validity of this break.  On the other hand, it has clearly fallen below its 50 day moving average, suggesting additional downside.  If we get any further weakness, the S&P will re-set to a trading range. 

            GLD remains in a solid very short term uptrend, accelerating off its 50 day moving average.  However, it still mounts no challenge to its short and intermediate term downtrends.  At the moment, I am conflicted as to whether this is a buying opportunity or a trap.  Hence it is best to do nothing.

            The long bond has confirmed the upside break out of its short term downtrend but still faces resistance from its 50 day moving average (red line).

            There is not a lot of informational value in the VIX chart at the moment; if anything, it seems to have ceased declining---a very mild negative for stocks.

            Market regression to trend---a factor you need to consider (short):

            http://advisorperspectives.com/dshort/updates/Regression-to-Trend.php

    Fundamental

    

            More on valuation from Lance Roberts (medium):

            http://www.zerohedge.com/news/2013-09-02/guest-post-corporate-profits-what-jeremy-siegel-missing

            And Scott Gannis (medium):

            http://scottgrannis.blogspot.com/2013/08/corporate-profits-continue-strong.html

            Over night Chinese nonmanufacturing PMI and EU manufacturing PMI were both up.

            http://blog.yardeni.com/2013/09/chinas-economy-perking-up-excerpt.html

      News on Stocks in Our Portfolios

Microsoft buying Nokia's Devices & Services unit, licensing IP for $7.17B

·                                 Microsoft (MSFT) is paying €3.79B for Nokia's (NOK) Devices & Services ops, and €1.65B to obtain a 10-year non-exclusive license to Nokia's patents. The deal is expected to close in Q1 2014.

·                                 32K Nokia workers will be joining Microsoft. Stephen Elop and other senior Nokia execs (Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber) are expected to be among them. Elop has already been viewed by many as a top candidate to replace Steve Ballmer as Microsoft's CEO.

·                                 Elop is resigning as Nokia's CEO, and from the company's board, to avoid signs of conflicts of interest. He's now head of Devices & Services. Chairman Risto Siilasmaa has been named interim CEO.

·                                 Microsoft is also licensing Nokia's Here mapping platform, and providing Nokia with €1.5B in new financing. Nokia will now focus its efforts on NSN (telecom equipment), Here, and IP licensing; with no phones to obtain licenses for, Nokia now has more leverage in patent negotiations.

·                                 Nokia will "maintain and own" the Nokia brand. Microsoft has obtained a license to use the Nokia brand with Series 30 and Series 40 phones, but apparently not Lumia phones (which presumably will be Microsoft-branded). Nokia won't be able to use its brand "on Nokia's own mobile devices" until the end of 2015.

·                                 Nokia will hold a shareholder's meeting on Nov. 19 to vote on the sale. The company expects the deal to be "significantly accretive to earnings." The deal has a $750M termination fee.

Economics

   This Week’s Data

   Other

Unemployment in Europe (short):

            http://www.zerohedge.com/news/2013-09-02/mapping-europes-un-recovery

Politics

  Domestic

From Harvard research: guns don’t kill people, people kill people (medium):

http://www.zerohedge.com/news/2013-09-02/harvard-research-shows-guns-dont-kill-people-people-kill-people

  International

            Who wants Assad to go (medium):

            http://www.iwallerstein.com/syrian-impasse/

            The gas attacks---fact or fiction (medium/long but a must read):

            http://www.zerohedge.com/news/2013-09-02/fiction-fact-or-scandal-epic-proportions

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Investing For Survival is to help other investors build wealth and benefit from the investing lessons he learned the hard way.