Schaeffer's Trading Floor Blog

Readers Respond - GM

by 6/14/2005 1:33 PM
Stocks quoted in this article:

Mike says - "Hi, Nick! Any chance we could get your thoughts on the GM chart? Bernie, as you know, was spot-on with his push of GM, in his columns, in the OPTION ADVISOR, and on NIGHTLY BUSINESS REPORT. His quote: "If you have an ounce of contrarian blood in you, buy GM stock." (Please thank him for me, btw). Today's push up looks like it's running into resistance at the 200 dma, but I'd like to see your take on the charts if possible. Thanks!"

My response - If you haven't seen Bernie's take on GM, a good summary can be found in his recent column - "Schaeffer's Media Outtakes: General Motors - A Contrarian's Dream".

As far as my take on the chart - I don't think it is particularly relevant. By that, I mean this is an example of a sentiment extreme. In most situations I discuss, I am looking for signs of either optimism or pessimism amid a trend. This case is different.

In sentiment extremes (which are somewhat rare) you have a level of sentiment that is so severe that is outweighs the other factors. I don't mean to imply that the shares will just move straight up (trading is rarely that easy) but that you want to give the shares a wide berth in terms of price action, magnitude and time to play out.


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Index Check

by 6/14/2005 1:00 PM
Stocks quoted in this article:

We slip...drift...slide...meander...pick your term...through the day with few groups gaining traction...or even moving...

After a strong couple of days gold stocks are pulling back, but that is the only group to tag the one percent line. Semis are also pulling back as the SMH still trades below resistance....

I was on the phone with a reporter from the Wall Street Journal yesterday and shared the same thoughts that I voiced here yesterday that perhaps traders were sitting on the sidelines ahead of this week's economic reports. We have retail sales and the PPI out of the way but still no action. Tomorrow we get the CPI and the Fed Beige Book so perhaps that is what it will take...


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Must Read

by 6/14/2005 12:42 PM
Stocks quoted in this article:

If you missed it yesterday, Bernie was on CNBC...He summarized his thoughts in a late-day column yesterday - The Perils of Technology...

If you haven't read this column, make sure you check it out for a great "big picture" view...

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Worth a Read

by 6/14/2005 12:04 PM
Stocks quoted in this article:

For some time I have keeping an eye on Goldman Sachs (GS)...Last month I revisited the chart as the shares were breaking support. A check of the current chart shows little has improved...


Created with SuperCharts by Omega Research

I wanted to note this for two reasons. First is because GS is scheduled to report earnings before the open on Thursday. Second, I just saw this article on BusinessWeek's site that gives an idea of what the Street is expecting.

It is also worth noting that, according to Zacks, 13 of the 19 analysts (68 percent) already rank Goldman with a "buy" rating...

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Stocks quoted in this article:

Daryl says - "Look at the AHC chart. Big breakout move underway."

My response - According to my records, I last looked at Amerada Hess (AHC), back in April and showed the long-term chart below...


Created with SuperCharts by Omega Research

AHC bounced off that long-term support zone and is now, as Daryl noted, trying to breakout. In my last check I noted that Wall Street wasn't a big fan of the stock and a check of the current sentiment shows that is still the case...

  • Percent of analysts tracked by Zacks who rate the stock with a "buy": 20%
  • Number of analysts tracked by Zacks: 15
  • Short interest as a percent of float: 6.9%
  • Short interest ratio: 3.82
  • Put/call ratio percent rank: 95.2%

Short interest isn't too terribly high but the put/call ratio confirms the Street's apathy. Overall I would still call this skewed toward the skeptical side...

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