Wednesday, May 9, 2012

First Solar (FSLR) and Green Mountain (GMCR) – Blood in the street

Markets continued selling-off today in the wake of anti-austerity election results from the weekend in the Eurozone core (France) and periphery (Greece). In today’s trade (May 8, 2012), the S&P 500 ended down 0.43%, the Nasdaq slipped 0.39%, and the DJIA underperformed with a decline of 0.59%.

In yesterday’s trade, the principal indices recorded results ranging from unchanged to down a quarter percent.

Particularly interesting action is happening among certain day-trader favourites, most notably First Solar Inc (FSLR) and Green Mountain Coffee Roasters Inc (GMCR).

FSLR, 5 y 1d
GMCR, 4 y 1d
The long-term view of these securities, as is depicted in the charts above, is decidedly ugly. Both stocks are down over 75 percent since September 2011. The difference between GMCR and its 200-day simple moving average (negative $41.6) is considerably greater in absolute value terms than the GMCR share price ($26.4).

Price channels offer a fair amount of explanatory power from the perspective of daily candles, particularly so for GMCR. In the case of the coffee roaster, an 8-month channel nicely captured the support area around $24 of this week’s colossal fifty-percent rout.

FSLR, 180 d 1h
On the hourly candles chart, First Solar’s price extremes are cleanly encapsulated by price channels. That said, these channels (depicted just above) are not robustly defined and should be treated with caution; the red, 8-month channel is defined by the bare minimum of 3 points, and the yellow, 4-month sibling is marked by only 4 points.

In their defense, the slopes of the lines that mark these channels are significant in other, not-drawn spots. In other words, additional lines of the same slope as the channels could be drawn, and these additional lines would identify areas of support or resistance.

The fact that such a “significant slope” exists lends weight to the value of a price channel of that slope.  

GMCR, 180 d 1h
The hourly candles chart of GMCR is similarly enticing to the price channel devotee. Most notably, as mentioned above, the red, 8-month channel perfectly catches this week’s free-fall collapse in price. Other channels are also evident and, moreover, the security exhibits a tendency to react to horizontal support and resistance.

Tuesday, May 8, 2012

Exciting wind shear -induced go-around at LAS

Travels today delivered an exciting occurrence: a go-around while on final approach to Las Vegas McCarran on account of wind shear. Here's a snapshot of the flight:

Flight details from
Zoomed-in flight path near LAS

The radar data superimposed by FlightAware does not do justice to the weather conditions we encountered; indeed, the weather time-stamp is about 20 minutes prior to UA 963's transit of it.

While on the 270-degree right-hand turn to establish ourselves on the 1L approach, we were really rocking and rolling. From my vantage point on the right, relentless beads of rain were assaulting the wing and engine (which were dramatically illuminated by the leading-edge lighting), intermittent lightning was illuminating the crevices of the barren hills below, almost as vividly as if the sun were momentarily above, our pilot-not-flying was making a report to ATC that our B757 was encountering light-to-moderate chop. (And thank goodness that this flight crew had sufficient love of aviation to enable Channel 9, the live ATC communications audio channel on United!)

Once established on the visual to 1L, our enterprising flight deck crew radioed a request to side-step to a visual 1R approach, so as to reduce our ground taxi time. This was immediately granted, and we proceeded further in. Our gear went down, the aircraft was noticeably decelerating further, but then a pronounced increase in bumpiness occurred, perhaps akin to light chop but slightly more disconcerting because of the proximity of the ground. And suddenly, full, exhilarating power as though we were expeditiously launching down the diminutive runway of Washington's Reagan airport or the fabled Orange County field!

Yes, the go-around was exciting to be sure: a combination of the raw power of an aircraft, the poise of flying professionals executing non-standard maneuvers, the adrenaline flowing from the non-zero chance of further hazards ahead.

At this point, UA 963 communicated a request to remain at 5000 feet while establishing itself on the downwind leg, presumably to keep away from more hostile air above. Yet the ATC response was a curt and non-apologetic negative: UA nine six three, climb and maintain 7000. Around this time, our pilot-not-flying also reported (to ATC, not to the cabin) that the reason for our missed approach was the hazard of wind shear along our descent path.

Soon enough, our ride was over; we touched down very gingerly on 1L. And then we had that long taxi around the airfield after all.

Friday, May 4, 2012

Markets tank on poor employment statistics

Equity markets reacted negatively to weak non-farm payrolls and closed at session lows. At the closing bell today (May 4, 2012), the S&P 500 ended down 1.6%, the NASDAQ gave up 2.3%, and the DJIA retreated 1.3 percent.

/ES, 180 d 1h
The hourly bars chart of the E-mini S&P 500 Index Futures (/ES) is among the charts of market indices with interesting price action with respect to price channels. Depicted above, the chart shows that today’s selling pressure brought the contract into the support of a well-defined, 3-month price channel.

And while a break of the channel support line would be bearish, just below rests horizontal support of 1352.5 (the low of April 10) and 1354 (the low of April 23).

/NQ, 180 d 1h
Interesting technicals are also evident on the hourly bars chart of the E-mini NASDAQ 100 Index Futures (/NQ). Today’s low of 2625.25 came within a point of horizontal support from intra-day lows on April 23 and April 24. Price is also at an extreme level of divergence from the 200-period simple moving average since Feb 6th (which is as far back as the above chart depicts); the current difference between price and the SMA is -80 points.

Thursday, May 3, 2012

Intel Corp (INTC) reacts from resistance of a 2-year price channel

Markets settled the day in bearish territory: the S&P500 slid 0.8%, the NASDAQ surrendered 1.2%, and the relatively defensive DJIA outperformed with a decline of only 0.5%.

Intel Corp (INTC) shares merit a closer look.

INTC, 4 y 1d
Intel declined today from a conspicuously overbought point, namely a touch yesterday of two-year price channel resistance on the daily bars chart. Moreover, yesterday’s price action, at which INTC incidentally set an 8-year high, brought the security to over $4.50 above its 200-day moving average. Such an occurrence over the past four years has always marked an unsustainable level of bullish sentiment (at least over the short term; see the oscillator on the lower portion of the above chart). 

INTC, 180 d 1h
The hourly bars chart likewise shows Intel shares at price channel resistance, although the lower line of the channel is admittedly poorly defined. It might be more apt to describe INTC as being at trendline resistance. The price-versus-SMA oscillator does not show the security as being particularly overbought.

In sum, a short position initiated yesterday above $29.25 would have been prescient and, in light of the above evidence, relatively high-probability. But the profitability of holding such a position beyond today’s knee-jerk reaction lower appears less certain.