ENER

ENER (Energy Conversion Devices) is a leading supplier of hybrid car batteries and player of alternative energy (e.g. solar). Yesterday (30 Aug), ENER break its 4-months downtrend by making a new higher high with a spike in volume.

The next target level ranges from $39.28 (38.2% Fibonacci level) to its 52-week high of $56.00. Stop-loss at $31.91. Currently, ENER is hovering at $35.51. This stock might be slow in movement. Have to be prepared to stay in the game for a few weeks.

- PersianCat04 (Millionaire-in-progress)

FOMC minutes (29 Aug 06)

Yesterday (29 Aug 06), the FOMC released its FOMC minutes. While analyst reports I read thought that the report is rather bearish, the market rally after the release of the report. Below is an extract of one such reports:

From Briefing.com The market took a surprisingly optimistic view of the August 8 FOMC minutes released yesterday. The minutes indicated that many members felt higher rates were needed. The minutes stated that it was a "close call" at that time not to raise rates, and that "additional firming may well be needed." The minutes also said that "All members agreed that the statement to be released after the meeting should convey that inflation risks remained dominant and that consequently keeping policy unchanged at this meeting did not necessarily mark the end of the tightening cycle." That's a fairly hawkish tone that conflicts with the financial market view that no more rate hikes are likely.

Nevertheless, traders poured over the minutes to find what could be considered bullish statements about economic and inflation trends. There was a clear effort to find the good news and ignore the bad. In our opinion, the minutes in themselves were clearly bearish for the stock market.

The fact that stocks went up after the release says more about the underlying tone than about what the minutes themselves revealed. We still believe the market is overly optimistic on the inflation and interest rate outlooks. There is a risk of disappointment on both. Nevertheless, the longer-term fundamentals remain good. -- Dick Green, Briefing.com.

I found Dick Green often give good analysis of the market. I tends to agree with him on this regard (FOMC minutes). I will treat any short term rally with care.

- PersianCat04 (Millionaire-in-progress)

DELL Earnings Play

Read in Briefing.com yesterday:

17-Aug-06 15:33 ET
In Play
Dell: earnings preview (22.62 -0.11) -Update : DELL is scheduled to report Q2 results today after the close, with analysts expecting EPS of $0.22 on revs of $14 bln. Note that on July 21, the co issued downside guidance, saying they see EPS of $0.21-0.23; sees revs of $14 bln. The co said these ests primarily reflect aggressive pricing in a slowing commercial market worldwide. AmTech does not anticipate much deviation from its pre-announced miss in late July. For the October qtr, they anticipate DELL to decline official guidance but express comfort with sequential growth. They are modeling $14.6 bln and $0.26 as they see a seasonal pick-up in the Americas offset by weaker seasonality in Europe and continued pricing pressure. With the stock trading at 16x depressed CY07 EPS, they see more upside than downside at these levels. A.G Edwards notes since Dell has already preannounced its July quarter, July sales and earnings are already known but P.C pricing details will be of interest. The firm says Dell's October quarter operating margin expectations will be important. They have assumed that Dell's operating margins will remain stuck in the 4-5% range for some quarters. The firm believes that Dell plans to regain some share in the consumer space, which is likely to result in ongoing margin pressure, though they think this is the right strategic move.

Since the July 21 downside guidance, DELL had gained significantly. As I do not expect any good news from DELL earnings, the only way for it to go is down. I played Bear Call Spread, selling Aug 22.5 Call and buying Aug 25 Call for $0.55. Also bought Sep 22.5 Put for $1.05 (almost at-the-money).

Today, DELL did opened much lower, dragging along the market somewhat. Closed my Sep 22.5 Put for $1.65 for a profit of 57% over one day. At the moment, I am leaving my Bear Call Spread intact. Hopefully, it expires worthless today.

- PersianCat04 (Millionaire-in-progress)

NVDA Earnings updates

NVDA did open lower the next day. However, it moved back upwards to fill the gap and gained much more the next day.

My mistake is not to lock-in my profit immediately in the current volatile market. In total, made a very small profit, helped by Bought leg of my Bear Call spread.

- PersianCat04 (Millionaire-in-progress)

NVDA Earnings Play

NVDA will report its earnings after the market close today. Read from Briefing.com regarding NVDA earnings preview.


14:59
NVDA NVIDIA: earnings preview (23.97 -0.36)
Today after the close NVDA is scheduled to report Q2 results, with analysts expecting EPS of $0.23 on revs of $677.08 mln. Caris says FQ2 results for NVDA should be roughly in-line with increased share in discrete notebook and incremental I.G.P sales. Despite the currently poor sentiment surrounding the PC space, the firm believes NVDA fiscal Q2 results were near expectations with low probability of an impending disaster. This would point to NVDA outperforming typical P.C seasonality with flattish revs QoQ as notebook and I.G.P strength offsets desktop related softness. The firm is expecting NVDA to report roughly $682 mln in sales, slightly above the street expectation. Given the increase in mix to G70 based components, the firm also looks for gross margin to be roughly flat at 42.5% despite the ramp of lower margin IGP business. The firm is slightly more optimistic than the street with a $0.28 EPS estimate for FQ2 as profitability remains relatively stable. Lastly, they believe the inventory situation will improve QoQ as NVDA burned additional G70 product and strictly management TSMC wafer-outs. The firm is looking for mid-single digit sales guidance as seasonal tailwinds commence... ThinkEquity believes Q2 results should be in-line and guidance for Q3 will be better than most are expecting. Most importantly, the firm believes DELL (DELL) will use NVDA's chipsets for its AMD PCs, driving revs up by $140 mln in CY07. Click here for techincal levels of interest.

The stock had a good steep run upwards since 18 July. In normal market, the market would punish stocks that had a good run upwards badly if the earnings outcome and guidance werejust in-line. As such, I expect the stock to correct downwards. (Anyway, Briefing.com earnings preview has served me extremely well before.)

Played a conservative Bear Call Spread (for $0.60) selling Aug 25 Call and buying Aug 27.5 Call. Also played a more agressive play buying Sep 23.75 Put (for $1.50).

After the close, Briefing.com reported:

16:21
NVDA NVIDIA announces voluntary review of the it's stock option practices (24.16 -0.17) -Update-
Co announces that the Audit Committee of the Board of Directors is conducting a voluntary review of the co's stock option practices covering the time from the co's initial public offering in 1999 through the current fiscal year. The Audit Committee is conducting this review with the assistance of outside legal counsel. The co has voluntarily contacted the SEC staff to inform them about the ongoing review.

This news is as good as reporting bad results. At the time of writing, NVDA price had dropped below $22.00. Hopefully, the price remains low when market opens tommorrow. Based on the charts, NVDA can drop further to $17.17 (my target).

- PersianCat04 (Millionaire-in-progress)

Market - Updates

As at yesterday, the indices (e.g. Dow, S&P 500, Russell 2000, Nasdaq 100, Housing) showed a confirmed short-term reversal to the downside. The first target should be the lowest point over the last 2 months. The immediate resistance (stop loss) would be the highest point over the last 2 months. I believe the market will try to break the support (where my target is) and go lower. Let see how it turn out.

There are many possible short plays. These include:

• AAPL - AAPL tends to close its gap whenever it has a huge gap up (last one in early July). Target $55.08 & %50.16
• Homebuilders & homelenders (DHI, TOL, KBH, BZH, RYL, LEN, LEND, etc)
• Index stocks (DIA, SPY, QQQQ)

I had already place my positions and am reaping the fruits of my labour so far. I will probably put more ahort positions soon.

- PersianCat04 (Millionaire-in-progress)