#$armh

[vkatsenelson]

SoftBank’s Bet on Exponential Growth

I am about to go out on very thin ice. I am a value investor, but I’ll probably get banned from the value community for what I am about to say: Current valuations don’t mean much for companies in industries that are entering an exponential growth phase. As I type this, I catch myself thinking that it sounds so “dot-commish,” but bear with me as I try to bring my statement into a more familiar value framework.

Wall Street hates SoftBank’s recent decision to purchase ARM Holdings for £24.3 billion ($32 billion) — at a whopping 48 times earnings! SoftBank is paying a 43 percent premium for an already richly priced stock, and it doesn’t have any synergies with the U.K.-based supplier of semiconductor intellectual property — there are no costs to cut or additional revenue to capture by adding ARM to its existing businesses. Masayoshi Son, SoftBank’s founder and CEO and the reason my firm owns SoftBank stock, is not liked today as a result of the deal. I heard this (understandable) reaction from a friend about Son and the ARM purchase: “a bored rich man who needs to spend because he has too much.”

To understand this acquisition, we need to come to terms with Son’s investment strategy and his mental models that have made him the richest person in Japan. Son is a master of exponential (nonlinear) thinking. Examine his past investments and you’ll find that he identifies industries about to go from high but linear growth into the exponential phase — where the rate of growth is accelerating.

Son has done this over and over again during the past 40 years. It started with PCs in the ’70s, when he built a software distribution business in Japan to capitalize on PC growth entering the accelerating phase. He saw the inflection point of Internet growth in the ’90s, bet on Yahoo and created Yahoo Japan (a joint venture with Yahoo).

In the early 2000s he saw e-commerce and the Internet taking off in China and purchased a stake in Alibaba, turning his $20 million investment into $60 billion today.

Son had the insight that the wireless market, which was already growing nicely, was about to explode due to the popularity of smartphones. True story: He went to Steve Jobs with a drawing of an iPod with a superimposed dialing pad and asked him to make a smartphone. This was before Apple even announced plans for the iPhone.

More important, to capitalize on this realization he bought the worst-run wireless mobile carrier in Japan (a very unpopular move at the time) and transformed it into the best one — a huge source of SoftBank’s cash flow today.

Continue reading ... 

[dragonflycap]

5 Trade Ideas for Monday: Aflac, ARM Holdings, Cadence Design, Chevron and Eli Lilly

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers

Aflac, Ticker: $AFL

Aflac, $AFL, started a pullback in December that made a low in January. It rounded out of that to move back near the December high and has now been consolidating. As it consolidates the Bollinger Bands® are squeezing, often a precursor to a move. The RSI is in the bullish zone and the MACD is level after a minor pullback. Look for a break over consolidation to participate to the upside.....

ARM Holdings, Ticker: $ARMH

ARM Holdings, $ARMH, fell back from a high in July to a low with the market in August. It bounced back from there, recovering 80% of the drop before falling back to a new lower low in February. Since then it has started higher again and is now finding some resistance. The RSI is on the edge of the bullish zone while the MACD is flat but positive. Look for a break of resistance to participate to the upside.....

Cadence Design Systems, Ticker: $CDNS

Cadence Design Systems, $CDNS, has had a long run higher off of a bottom in January. The last week has seen a pullback to the 20 day SMA, a spot where it has bounced all along this uptick. Will it bounce again or fall through? The RSI is bullish and may be turning back higher while the MACD heads down. Let price tell you which way its going and then follow.....

Chevron, Ticker: $CVX

Chevron, $CVX, made a low with the market in August and then bounced. It stopped shy of $100 and then reversed again lower at the start of the year. Finding support at a higher low it has been rising and is now consolidating near that November high. The RSI is in the bullish zone and the MACD is leveling after having rest lower. Look for a break of the resistance to participate in the move higher.....

Eli Lilly, Ticker: $LLY

Eli Lilly, $LLY, rose quickly from May to mid June and then bounced around for 7 months before falling back to the May low. With bottoming action again since that drop the price ended last week back at resistance. As it does the RSI is rising and near a move into the bullish zone while the MACD rises. Look for a break over resistance to participate to the upside.....

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into April Options Expiration week sees the equity markets have stalled in some respects and may be starting to turn back lower.

Elsewhere look for Gold to continue its reversal higher as Crude Oil rises. The US Dollar Index looks weak and headed lower while US Treasuries are strong and rising. The Shanghai Composite looks to continue its drift higher as Emerging Markets are starting to turn lower. 

Volatility looks to remain subdued keeping the bias higher for the equity index ETF's SPY, IWM and QQQ. Their charts show some weakness, especially in the SPY, with the IWM and QQQ a bit strong and consolidating, but no longer rising short term. Use this information as you prepare for the coming week and trad'em well.

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[dragonflycap]

5 Trade ideas for Monday: Abbott Labs, Capital One, FedEX, ARM Holdings and Nuance

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers

Abbott Laboratories $ABT

Abbott Laboratories, $ABT, was in a long uptrend until it started lower in August with the market.  It took a second leg lower when all healthcare stock were hit again in September, making a bottom at the end of the month.  Since then it has rebounded and is now back at the top of the gap down area from August and consolidating.  The RSI is bullish and rising along with the MACD, both supporting more upside.  

ARM Holdings, Ticker: $ARMH

ARM Holdings, $ARMH, fell out of consolidation in June, making an eventual bottom with the market in August.  It has crept higher since making higher lows and higher highs.  Now it is consolidating at the resistance from July.  The RSI is in the bullish zone and rising and the MACD is flat, while the Bollinger Bands® point higher.  

Capital One Financial, Ticker: $COF

Capital One Financial, $COF, gapped lower on earnings in July and then continued lower. With a double bottom to start October it now is consolidating back near resistance of the August bounce and just below the gap just above.  The RSI is trending higher and in the bullish zone with the MACD rising.  Friday saw a test probe over resistance, and if it holds could be a trigger for more upside.

FedEx, Ticker: $FDX

FedEx, $FDX, started lower in June and then accelerated through support in late August.  After a short consolidation it made a lower low in September and then started higher.  Now it is back at resistance and over the 100 day SMA for the first time since June.  The RSI is bullish and rising and the MACD is rising too.  The strong Marubozu candle Friday bodes for more upside, and could give the trigger over resistance.

Nuance Communications, Ticker: $NUAN

Nuance Communications, $NUAN, pulled back from 18.50 in August and found support over the 200 day SMA.  it has built a consolidation zone since with a series of higher lows.  Heading into the week the Bollinger Bands® are opening higher and it has support for more upside from a rising RSI and MACD.  Look for a move over resistance to participate to the upside.  

If you like what you see sign up here for how to trade these, more ideas and deeper analysis with better more detailed charts.

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Contact me at [email protected] use the code GO CAVS in the message to get either an annual subscription for $556 (an additional 10% off the already 40% discounted rate compared to the monthly) or an annual subscription plus my book signed for $600.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into next week the equity indexes look strong and ready to challenge the all-time highs.

Elsewhere look for Gold to continue lower while Crude Oil moves lower in its consolidation. The US Dollar Index is breaking to the upside while US Treasuries continue lower. The Shanghai Composite also looks to continue higher while Emerging Markets consolidate under resistance.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF's SPY, IWM and QQQ. Their individual charts show some consolidation in the SPY and QQQ short term as the IWM takes the lead, but all look strong on the weekly timeframe. Use this information as you prepare for the coming week and trad'em well.

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[dragonflycap]

5 Trade Ideas for Monday: Constellation Brands, Marathon Oil, ARM Holdings, American Electric Power & Commerce Bancshares

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers

American Electric Power, Ticker: $AEP

American Electric Power, $AEP, has moved in a sideways range for most of 2015 until breaking it to the upside in late August as the broad market fell. It pulled back as the market settled and found support at the prior low. Now it is rising again and at resistance with the Bollinger Bands® opening to the upside. It also has support for more upside from the rising and bullish RSI and MACD.

ARM Holdings, Ticker: $ARMH

ARM Holdings, $ARMH, reached a top in March and built a flat consolidation there until the end of June. It then fell back, eventually finding support at the same price level that began the move higher in October 2014, when the market sank. Now bouncing off of a double bottom it is pushing up to resistance with support for more upside from the rising RSI. The MACD is also avoiding a cross down and turning higher.

Commerce Bancshares, Ticker: $CBSH

Commerce Bancshares, $CBSH, fell back from a high base with the market in August. Since then it has started higher with a series of fast moves up and down making higher highs and higher lows. Now it is at prior support, now resistance, and pushing up. The RSI is pushing through the mid line and the MACD is rising in support of a break higher.

Marathon Oil, Ticker: $MRO

Marathon Oil, $MRO, fell out of an ascending triangle in July and overshot the target move to 17. Since mid August it has been consolidating in a symmetrical triangle and has moved into the apex. The RSI is trying to push higher, but still in the bearish zone, while the MACD is rising. Watch for a break of the triangle to follow along.

Constellation Brands, Ticker: $STZ

Constellation Brands, $STZ, rose the first half of 2015 and then consolidated in a tight range for 5 months. It moved higher in August only to be pulled back down and retest that base when the market sank. Now it is consolidating again at a higher base. Friday saw the price push higher and open the Bollinger Bands®. The RSI is holding over the mid line and turned up while the MACD is still falling. Watch for a push to new highs.

If you like what you see sign up here for how to trade these, more ideas and deeper analysis with better more detailed charts.

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Contact me at [email protected] and use the code TRIBETOWN in the message to get either an annual subscription for $556 (10% off) or an annual subscription plus my book signed for $600.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, as the market closes out the quarter and move into October sees the Equity markets still looking weak.

Elsewhere look for Gold to continue in its short term uptrend while Crude Oil consolidates. The US Dollar Index also looks to continue broad consolidation while US Treasuries are biased lower in consolidation. The Shanghai Composite looks to continue its consolidation in the downtrend while Emerging Markets are biased to the downside. Volatility looks to remain elevated keeping the bias lower for the equity index ETF's SPY, IWM and QQQ.

Their charts suggest there may be more pain with the SPY looking the worst on the short term basis and the IWM and QQQ possibly catching a break and just consolidating. The longer term all look a bit stronger but nothing to have a party about with more downside risk as well. Use this information as you prepare for the coming week and trad'em well.

[dragonflycap]

5 Trade Ideas for Monday: ARM Holdings, Atmel, E*Trade, Honeywell & Plum Creek

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers.

ARM Holdings, Ticker: $ARMH

ARM Holdings, $ARMH, has had a strong trend higher off of a bottom in October. It pulled back near the 20 day SMA after a peak to start March, and is now moving back to that peak. As it rises the RSI is in the bullish zone and the MACD is kinking up. There has been strong Call buying in the name recently as well.

Atmel, Ticker: $ATML

​Atmel, $ATML, is back testing a resistance zone its third touch there. The last two have come after some consolidation following a move higher off of a low in October. As it probes resistance the RSI is bullish and rising and the MACD is crossing up. 

E*Trade Financial, Ticker: $ETFC

E*Trade Financial, $ETFC, has been moving higher out of some consolidation to end 2014 and start 2015. The 20 day SMA has been a guide higher and last week saw another pullback to that level before a move up Friday. The RSI is bullish and the MACD is already starting to level after a pullback.

Honeywell, Ticker: $HON

Honeywell, $HON, has been trending higher in a channel since April 2014. It touched the top of the channel Friday before pulling back, on very strong volume. The RSI remains bullish and is rising while the MACD is crossing up. Perhaps this is the time it pushes through the channel.

Plum Creek Lumber, Ticker: $PCL

Plum Creek Lumber, $PCL, rose off of a low in October as well. This stock then made a top in February before pulling back to the 100 day SMA 2 weeks ago. Now rising again, it is testing short term resistance. The RSI is rising and on the verge of a move in to the bullish zone while the MACD has crossed up, both supporting more upside. And the Bollinger Bands® are opening higher as well.

If you like what you see sign up here for how to trade these, more ideas and deeper analysis.

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, Heading into spring, College Basketball's March Madness, the April options cycle and the last full week of March, sees the equity markets are looking strong.

Elsewhere look for Gold to bounce higher in its downtrend while Crude Oil consolidates in its downtrend. The US Dollar Index is consolidating the move up and US Treasuries are looking strong. The Shanghai Composite is also strong and looks to move higher while Emerging Markets are biased to the upside in the short run but not looking really strong.

Volatility looks to remain subdued and drifting lower keeping the bias higher for the equity index ETF's SPY, IWM and QQQ. Their charts also look good for more upside with the IWM the strongest even at all-time highs, and the SPY and QQQ showing signs of a possible short term pause before another move up. Use this information as you prepare for the coming week and trad'em well.

More at Dragonfly Capital