Apple earnings disappointment no surprise:

At the close April 26, 2016 the shares of Apple Inc. closed at about $104 and after the close the business media lead with, “Apple's revenue falls for first time in 13 years” To the technical analyst who looks at very long term charts – today was no surprise so let us re-visit a post of last June 2015 - with the original chart, and I quote.

“I see Apple Inc as built a triple top on a point & figure chart. I love P&F charts because most of the squiggly line guys never use them.

Apple Inc was added to the DJII March 2015 suggesting that Apple is in transition from a growth stock to a value stock. In other words – the great 2001 – 2015 growth period may be over. Some past DJII growth to value stocks - Cisco Systems added in June 2009. Bank of America and Chevron added in February 2008, Intel and Microsoft were added in November 1999

Honeywell was dropped from the Dow in February 2008 and has doubled in price – now a true growth winner – Alcoa also doubled in price after being dropped in September 2013

Our chart – monthly of Apple Inc displays the progressively shorter growth periods – this may cause some momentum loss in the broader technology sector

Street consensus and Buy. Hold and Sell:

Torstar (TS.B) seems to be a value trap at the moment. They are sitting on a lot of cash – companies sitting on cash are usually bad investments. They are tying to go digital, the publisher is leaving, the shares are trading at multi-year lows and out of the 5 analysts that cover the company – all 5 have a “Hold” rating on the stock.  Again - we all know that a “hold” rating means they just don’t know.

One BNN contributor recently said – “Torstar is stupid cheap,”

So there are a lot of negatives – we have a shrinking business with no analyst support and a fundament guy thinks the stock is “cheap”. Cheap to me means cheap because nobody wants to own the shares. I bought some Torstar stock last week because of all the fundamental negatives – and the one technical positive – a bounce of the recent lows on a big (for Torstsr) volume increase. Thanks to Stockcharts.com for the CandleGlance plot of Torstar.

More on the value of street consensus:

According to The Wall Street Journal – April 21, 2016 the Analyst Ratings on the TSX listed Alimentation Couche-Tard Inc (ATD.A) was currently 11 buys, 2 holds and no sells. Three months ago it was 12 buys, 2 holds and no sells. We all know that a “hold” means they just don’t know.

A few posts ago I observed that on BNN’s popular Market Call shows there was a growing tendency for the callers to ask the host for the “street consensus” in addition to the guest opinion on a particular company. The problem is the street consensus is usually a “buy”, a “hold” and rarely a “sell”.

One Market Call guest correctly described Couche-Tard to be “One of the darlings of the TSX via growth by acquisition.”

The fundamentals I see are based on common sense – first the stock was over loved and over-owned and secondly when you grow by acquisition – each one has to be bigger in order to propel the growth story..(sort of like the Valeant story)

Technically the “B” shares are trading below both the 50 and 200 day simple moving averages, the stock is underperforming the TSX Comp and the S&P500 and the point & figure has peaked and the down O’s sit on key support at $55

Our weekly bar chart of Couche-Tard spanning about 100 weeks displays the relative perform vs. the TSX Comp and Couche-Tard’s 40-week moving average. Clearly the street consensus and the technical picture do not agree.

More on phoney Share Buy-Backs:

Today a quote from Aaron Tilley, Forbes Staff - on the Intel workforce cut:

“Reeling from a four-year decline in the PC market, Intel said Tuesday that it would cut 11% of its workforce — or about 12,000 employees. The news came as Intel reported financial results for the first quarter that were roughly in line with Wall Street estimates, but the company forecast weaker-than-expected sales for the current quarter. The cuts will save Intel, the world’s largest chipmaker, an estimated $1.4 billion annually once the are completed and allow the Santa Clara, Calif.-based company to refocus its resources on new areas of growth. The company will also take $1.2 billion restructuring charge.”

A few months ago on a post I was negative on share buybacks stating - the move makes the company's profit per share look better, and many think buybacks have played a key role pushing stocks higher in the seven-year bull market. - but buybacks can also sap companies of cash that they could be using to grow for the future, no matter if the price of those shares rises or falls.

According to Intel, “As of April 2, 2016, $8.6 billion remained available for repurchase under the existing repurchase authorization limit and we have repurchased 4.8 billion shares at a cost of $106 billion since the program began in 1990.”.So far in Q1 this year (2016) Intel has shelled out 800 $million for share buybacks – while at the same time letting go bout 12,000 employees.

Clearly the interests of the employees and the shareholders are not aligned – the employees wish to have a long term job, and the shareholders only wish for the stock price to go up and the sooner the better. Also – when the share count shrinks – the company market cap gets smaller and companies do not shrink themselves to greatness.

The value of street consensus:

I notice that on BNN’s popular Market Call shows there is a growing tendency for the callers to ask the host for the “street consensus” in addition to the guest opinion on a particular company. The problem is the street consensus is usually a “buy”, a “hold” and rarely a “sell”.

In the new investing book - Market Masters (ECW Press, by Robin Speziale, I state on page 388 “the problem with fundamentals is that the fundamental analyst isn’t going to know anything about jewellery stores by going to the annual meeting. He needs to have actually worked in a jewellery store to understand the real story. Take a stock like Auto Canada, which everybody loved for a while. When I was in Ryerson, to pay my tuition I worked at a GM dealer selling cars. Also, I worked as an apprentice mechanic. So I

was at the back end of a dealer and at the front of it. I knew how complicated a dealership is: you’ve got new cars coming in, you’re dealing with trade-ins, you’re dealing with mechanics, you’re dealing with the union, you’re dealing with sales and marketing, you’re dealing with the workers’ compensation. You’ve got so much going on, so the only people who can run a dealership is the owner who is an entrepreneur.

And why would a dealership ever go up for sale? It’s because the owner can’t take it anymore and wants to get out. So he’s going to unload it to AutoCanada. Well, good luck with that..”

A recent tweet by BNN’s Frances Horodelski was refreshing – “In April 2014, 80% of the analysts that followed $BTU rated it a #Buy.  Today, company files for Chapter 11

$BTU refers to NYSE listed Peabody Energy (BTU) which is displayed in our weekly bar chart – spanning about three years. Note circled April 2014 period that Horodelski refers to at the $250 price level and the subsequent decline to the $2 level. I wonder how many analysts rated Valeant a “buy” or “hold” a year ago?

 

The new 52-week high / low rule:

In my last post – I observed that most of the technical analysts I know have their own style or skill sets they apply to the study of the capital markets. Technical analysis is an art form and differs from the fundamental analysis of profit and loss statements and balance sheets which is a mathematical study of past history      

The technical analyst will also scan the new 52-week high / low list because we know the 52-weekk high / low rule – the first new 52-week high will not be the last and, the first new 52-week low will be the last.

At the close on the TSX April 11, 2016 there were about 32 new 52-week highs (I ignore non common issuers) and of the total population 28 were commodity related. Names like Asanko Gold Inc, Yamana Gold Inc, Kinross Gold Corporation, Barrick Gold Corporation, First Majestic Silver Corp, NovaGold Resources Inc., Detour Gold Corporation and Agnico Eagle Mines Limited were listed.

Most of these names are components of the TSX listed iShares Materials ETF (XMA) and so to avoid stock picking why not just own the XMA?

Ignore the noise - listen to the market:

Most of the technical analysts I know have their own style or skill sets they apply to the study of the capital markets. Technical analysis is an art form and differs from the fundamental analysis of profit and loss statements and balance sheets which is a mathematical study of past history      

We technicians tend to tune out the opinions of the fundamental side and conversely listen to what the markets are telling us. Basically the technical analyst will follow the money – because the smart money will lead the lagging financial statements.

The new 52-week high list will often deliver a profound message – like if the bears are predicting doom and gloom, how come the SPDR Technology ETF (XLK) closed last Friday at a new 52-week and multi year high?