Based on Friday's close Dow has gone back to Oct 2006 level........
That IS a pullback of 17 months...........
Similar pullback has occurred on Nasdaq & S&P 500......
So....what COULD be the logical conclusion about the direction of this market ????
When markets technical break like this.......
It takes time to "repair the damage or build technical strength"
Have we seen the low or are on the verge of a new low????
Market have been testing & RETESTING the low/support since January breakdown.....
Is 6 week of test & retest enough for this market to form a solid bottom???
I personally believe that we are very close to finishing this "bottoming process"
If my thesis IS right...then what could be the road map for markets........
With every retest of bottom.....if the market do NOT go to previous LOW...then we have finished the support building base......
Let us THINK that this Monday ...we will finish the retest phase...hopefully
Then we will "slowly work towards an ascending pattern"
Ascending pattern means that we will work towards higher lows on any pullback & higher highs on any rally gradually.......
Why do I believe that Monday could be the final signal of a "directional CHANGE"......
Because finally we have evidence that economy IS in "negative growth" based on Jobs report....
Market wants to make a believer of "negative growth of every skeptic".......
With Friday's jobs report of negative 63,000 for Feb & Jan negative of 20,000.......we are in a full blown negative environment........
So...not only markets predicted this negative scenario in the last 17 months but actually delivered IT......
Once we have negative picture confirmed...then markets job IS to WORK on the future.....
So what IS market going to predict for the next 17 months......hopefully "growth in Job from here"
In order to survive & grow in investing/trading...you NEED to look AHEAD...NOT in rear view ...
Who saw this 17 month decline in markets .......?????
I CAN assure you ...NOBODY did......
Now the question IS ????
Who IS going to predict a recovery in market........
I CAN safely GUESS ......that next 17 months the direction of the market will be UP from these levels.......Monday could be the last day of downtrend or Friday was already done & over with.....
So...If we are going to be "higher in 17 months"......the question IS.......CAN we relax little bit & not be paranoid about "what IS going on in the markets"
My answer is ...absolutely yes......
So what IS going to recover in this "improving 17 months scenario"????
I see PE of all growth oriented techs to expand gradually......
What has worked in the last 12 months IS going to take a back seat & will be flat to down.....
So what did work in the last 3 months of market carnage......
Gold,Oil,Shorting US$,Mining,Metals,Euro.......
It IS safe to THINK...that those will start their downtrend for the next 17 months.....
I am now long US$ & short Canadian $ in my account.......
Let us discuss the carnage in solar sector also......my favourite area.....which surprised me by losing 70% from high ?????
So...what happened to solar????
@ $105 oil.....you would think that solar will be shining and will be @ new all-time high like Oil,Gold?????
Solar was beaten down..NOT because of fundamentals ...but was taken down along with the market as lot of "fast & furious money was made"...think FSLR,SPWR...gone through the roof with low earnings and sky high multiples.....
So what we get in this market...other good solar companies like LDK with growing sales @ 100% and profit @ minimum 60% was taken to cleaners?????
LDK is trading @ 12 time PE....CSIQ trading @ 12 time PE also for this year earning.....
I expect PE of LDK & CSIQ to expand to 17 times as we see a CHANGE in market sentiments..
This will mean that LDK & CSIQ has a chance of going UP 41% from current level......
If it sounds too good to be true.......then ensure your OWN due diligence & find your own comfort level.......
I expect Ag to continue its growth.......and increase their PE also !!!!
So... for a Sunday morning......
Some good thought for investing/trading soul !!!!!
BLOG does NOT give buy or sell.
Saleem
24 comments:
Great stuff.... lot of people are waiting for the downtrend to get over ...
lets hope for the best...!!
LDK holders check this out, finally an analyst that is positive
09:02 LDK LDK Solar: Needham sees LDK as attractive, undervalued at 6x 09 EPS est (24.27 )
Needham believes LDK is attractive for the following reasons: 1) they est that revs will grow at a 80%-plus CAGR in 2007- 2010; 2) favorably positioned in the PV food chain at the higher end of margins with potential for increases by 2009 with its backward integration to manufacture raw polysilicon; 3) solid supply agreements for raw polysilicon and ingot growing equipment covers 80% of their 2008 rev ests, respectively; 4) an impressive customer base that is growing and becoming less concentrated and more diverse geographically with total output for 2008 100% sold out due to very strong demand. LDK has 10GW booked so far equivalent to an impressive $22 bln.
Hi Troy,
Thanks for posting Needham's take on LDK......
Needham is extremely bullish on LDK with the highest price target of $90.....
GS, PJ & Lazard are shorting ..which will start covering their short soon.....
LDK is facing market sentiment with a major shrinkage in PE.....
All game playing comes to an end on wall street sooner or later !!!
Saleem
Is JASO a buy before the earnings? Anyone following, it looks extremely good at the current price...
Hi Troy,
JASO is trading @ 21 times PE...
Playing the earning roulette on JASO MAY backfire.....
If I were you ..I will add more to LDK or buy CSIQ instead....not because I own it...but due to low PE.....
My 2 cents !!!
Saleem
Hi Saleem. In my stocks, you need to remember I have 1/2 (or, it was 1/2 before this correction) in a diversified long-term foreign etf, energy, natural resources and ag basket. So, I am feeling the pain that everyone here is. The foreign basket has been hit harder than the U.S., except brazil.
Saleem, thanks for the suggestions, i think it is time to average down more in LDK and there is not much it can go down from here... but what do we know, we are not as smart as those anal-ysts...!!
Hi Minaccess,
We are all in the same boat.
Hopefully very soon..we all can start recovering from this "meltdown"...
I have been monitoring ETF daily for some exposure....but they all are behaving like LDK....
We should see another "coupling on the UPSIDE worldwide"
Saleem
Saleem,
Looking at the LDK chart suggests massive hedge fund manipulation and final capitulation of longs. Anyone know the short position in LDK? CMED is about 1.3M last I know of. Hedgies are running out of room on the down side. So they will move on to other targets to attack. I'm not expecting any sort of fast move up. Hedgies have sold down any rally attempt. IMHO I believe the hedgies greed has not come to an end just yet. I so hope I'm wrong on this one.
Hi Standards,
Hedgies are smart people.....they know that LDK has been trashed...and all weak hands have sold......
Now they want to lock their profit and attack other sectors...
Solar has been trashed....
LDK naked short position is horrendous..like over 30 million naked short.......FTD....
Interesting times ahead for LDK UP move ..imho
Saleem
Saleem!
30 Million short positions in LDK????
Unbelievable!
How many honest hard working people have they crushed?
That's why I left the business.
I encountered amoral people who care little of who or what they destroy. No compassion, no remorse, just greed.
Standards,
Jim Cramer has a video presentation which he has narrated many times...how hedge funds use CNBC to create panic selling in any stock.....
Has he been charged for a confession video by SEC....NO !!!
Ethics,Morals,Integrity does NOT exist on wall street.....thanks to SEC...with NO TEETH !!!
LDK 30 million is NAKED short...which means they never borrowed a single share to short...It is known as Failure To Deliver(FTD) 30 million shares...& SEC knows about it.....on a daily basis....
FTD has been outstanding since October on LDK.....
Saleem
Saleem
LDK Solar: A Bargain Too Good to Ignore?
By David White (at Seeking Alpha)
As of Friday, LDK Solar (LDK) was still going down. But is it very close to the bottom? Certainly some solar stocks, such as First Solar (FSLR), are still trading at very high multiples. These are still down trending with the down trending market. LDK is following them. They likely have further to go, but does LDK?
LDK is now trading at 6 times 2009 earnings. Friday’s PEG listed on Yahoo is 0.12 for LDK. LDK's PEG may be even better with Friday’s stock price drop. The FPE for 2009 is based on an earnings estimate of $3.80 for LDK. The high estimate is actually $7.15. It appears the $3.80 figure can be reached almost solely by the manufacturing capacity doubling that LDK is planning for each of 2008 and 2009. LDK has already shown that it can accomplish this without any problems. LDK has long term contracts. LDK has already sold all of its 2008 production and most of its 2009 production at fixed prices. LDK cannot be easily hurt by a recession in the next 2 years. The only real variable is the price of polysilicone. LDK has contracted for most of the polysilicone it will use in 2008. The earnings figures for 2008 are almost guaranteed at this point. The only real question is LDK’s polysilicone costs for 2009.
LDK is currently building a polysilicone manufacturing plant. Fluor is the contractor, so there is no question of it being substandard. LDK has hired top level people from such companies as MEMC Electronic Materials (WFR) to oversee all of this and to hire and train the people necessary to run the plant. In short, LDK has acquired good experts. It seems likely these people will eventually produce a great polysilicone manufacturing facility for LDK. The only question then becomes when. LDK currently says by the end of this year. Jesse Pichel says not until the end of 2009. Who is correct? It is really hard to say.
Mr. Pichel has made some good points. However, he has underestimated Mr. Peng’s will power and drive. He has written off Mr. Peng as a young upstart who is full of air. Thus far Mr. Peng has proven to be anything but full of air. Further after all the negative news of the fall, you would think LDK would be conservative in estimates that so clearly will effect near term future earnings. Yet LDK is still predicting completion of the polysilicone plant by the end of 2008.
LDK handily beat Q4 earnings and revenue estimates. LDK beat analysts’ estimates for gross margin also. LDK raised Q1 2008 guidance. However, LDK did not raise full year 2008 guidance. Since LDK has already sold all of their 2008 production, one might think LDK is a little worried about how much the polysilicone needed for 2008 production, but not yet contracted for, will cost them. LDK is sensibly restraining itself from making any predictions it is not sure it can back up. Why would anyone think that LDK would act differently with regard to the polysilicone plant completion predictions? The answer is that LDK probably would not.
This may mean that LDK will meet or come close to meeting its schedule for the polysilicone plant. If LDK does this, the earnings for 2009 will likely be close to the high estimate of $7.15. That would mean that LDK is trading closer to 3-4 times 2009 earnings today; and it is a 100% grower. LDK would be able to show gross margins of 40-50% with a functioning polysilicone plant in 2009. This margin figure would be competitive with FSLR’s, which is currently trading at approximately 39 times 2009 earnings. Would you rather buy a company showing the same gross margins (40-50%) which costs 6 to 13 times less based on 2009 earnings results? Or would you rather pay for a brand name. Some people would rather pay for the brand name.
However, I tend to think value stocks will perform better in a recessionary market. This could be the best buying opportunity for LDK that we will see. It is hard to believe it will go much lower. Even Mr. Pichel thinks the polysilicone plant will be done by the end of 2009. LDK’s long term picture looks extremely rosy.
Still, there is the negative press LDK keeps getting. Let’s examine that. First there is the allegation that LDK is cooking its books, especially with regard to inventory. LDK was cleared of this allegation in the fall, by a top 4 U.S. accounting firm that was commissioned for the primary purpose of establishing LDK’s guilt or innocence of this particular charge. It is virtually impossible to believe that the accounting firm did not fully investigate this allegation. LDK may still be skirting the bounds of legal accounting, but apparently it is acceptable GAAP accounting. Second, there is the innuendo that LDK must be cooking their books to achieve as high a margin as they did using the same equipment as YGE. Soon after this allegation, we saw Trina Solar (TSL) improve their margins year over year by about 10% supposedly through greater efficiencies. This also put TSL in the same gross margin ballpark as LDK (27% to 30% respectively). Why could LDK not be more efficient than Yingli Green Energy (YGE)? Perhaps YGE was just more of an analysts’ darling, and the analysts needed to save face. Certainly YGE has no polysilicone plant planned, so it cannot make use of some of its bad scrap polysilicone. It must buy better scrap, which is more costly. It must throw away any it deems too bad to use. LDK can just keep all of this to be used as raw material for its polysilicone plant. In this way LDK will save the raw material costs; and LDK is able to buy lower cost and mixed quality scrap. LDK knows it does not have to throw scrap away.
The comment about wires, etc. in the polysilicone scrap was found disturbing by many. However, if this will end up being raw material for the polysilicone plant, does that really matter? Mineral raw materials rarely if ever are supplied completely pure. If the polysilicone was, there would be no need for the polysilicone plant. To me, this all looks like LDK has a good business plan; and LDK is executing it. The fact that YGE cannot do this is not a mark against LDK; it is a mark in LDK’s favor. Further LDK, like a successful U.S. company – WFR, has substantial long term contracts. It can easily weather a short term recession. Many other companies cannot say the same thing. Other companies may see their sales diminish noticeably during hard times. LDK will not see this. It will remain a top performer. It is a good stock pick for a recession. The market will recognize this eventually. The stock will then shoot up. It should be a good stock to own.
Hi Frogvest,
Thanks for posting the bullish write-up on LDK......
Saleem
Saleem,
I just received an email from Beatrice. She attached an article from the prudent bear that suggests we could end up seeing rate hikes rather than cuts in order to protect the collapse of the dollar. I am going to post it here so that you or anyone who cares to, could give their opinion on it, so that B can read. I am not able to give much of an opinion because of my limited understanding of Economics. Here is the article:
From www.prudentbear.com
I think this is the gist of it for me and why I'm heavily in cash
leaning to a bet on an interest rate rise:
Today, with Treasury yields having collapsed, Agency securities
having lost their luster, and even investment grade corporates
heavily tarnished, it is not at all clear as to which U.S.
financial assets today hold sufficient appeal to our foreign
Creditors. It is anything but obvious as to how we will now
sustain a smooth “recycling” of our massive Current Account
Deficits. And I certainly don’t believe it is any coincidence that
the recent alarming widening in agency debt and MBS risk premiums
has occurred concurrently with the acceleration in dollar
weakness.
I will continue to examine the stark contrasts between the current
Post-Bubble “reflation” attempt and those that preceded it. When
the seemingly irrepressible Bubble in Wall Street finance was
inflating, aggressive Federal Reserve rate cuts fed quickly into
speculative leveraging; heightened demand for securitizations;
aggressive lending in the asset markets; asset inflation; and the
inflation (of volume and prices) of myriad Credit instruments with
perceived limited liquidity and Credit risk (certainly including
ABS, MBS and agency debt, along with more sophisticated Wall
Street debt instruments and structures). The Fed didn’t really
need to concern itself with the dollar. Not only were foreign
financial institutions rushing in to play the boom in U.S.
“structured finance”, the U.S. Credit system was creating
perceived “money”-like securities that were the envy of the world.
As fast as our Trade Deficits and speculative outflows flooded the
world with dollar liquidity, this finance would return to find a
perceived “safe and secure” home through various Monetary
Processes right back into our asset-based securitization markets.
It was a Bubble of historic proportions and it’s all laid out on
the L.107 page in the Fed’s Z.1 report.
We haven’t heard much of the “Bretton Woods II” nonsense lately.
Somehow, everyone wanted to make believe that we would always
enjoy the luxury of trading endless new securities for imported
energy, commodities, capital equipment, cheap electronics, and all
the consumer goods we could ever dream of. The problem was that
our Credit system was issuing ever larger quantities of
increasingly suspect financial claims (well documented in the
Fed’s “Flow of Funds”). Well, the entire world has become aware
of our situation and will be less than keen to accumulate more of
our debt. The Fed’s willingness to cut rates so drastically in
the midst of faltering confidence and heightened inflationary
pressures is certainly exacerbating the very dangerous dislocation
that has erupted in the agency, MBS and investment-grade corporate
markets.
Hi Doug & Beatrice,
In few days fed IS all set to cut interest rate...which will be aggressive like 50 basis or maybe even 75 basis CUT......
That will be the last time fed will cut.......
There will be a lag of several months...then the bias will tilt towards "tightening"
Why tightening.....because by aug we will see the confirmation that economy IS on the mend.....
So..in Sep... 25 basis point increase in fed funds rate.....
But...US$ will start to move UP in anticipation...that this is the last march 18 cut by fed......
So...from april US$ moves UP in anticipation.....
April Oil & Gold start their much desired fall......
So the story MAY GO !!!!
Saleem
Guys check this out, LDK investors of google and yahoo board memebers are requesting their brokerage houses to deliver physical certificates, this is a good idea... this is one of way stopping the naked shorting...
read this link for more info:
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_L/threadview?m=te&bn=51438&tid=198209&mid=198209&tof=3&frt=2#198209
ps. i am going to request it tomorrow....
Hi Saleem. At the open I sold PAAS at 39.15 for a few penny profit. Sold AUY at a few penny loss. I bought DXD at the open at 61.10. I will keep eye of this ultra-short of the dow. I am long term bullish, but bought dxd as a hedge foe my long term etf's.
Hi Minaccess,
Good moves.....
Todays close should be very interesting.
Saleem
Saleem,
What do you think about the "demanding LDK stock certificates" from our brokers in order to force them to aqcuire, to slow naked shorting? Do you think that this is a good idea? And if so, what are the potential risks for investors? I am thinking that if you own the certificates and received them through the mail, that you may not be able to sell them as easily but I dont really know what Im talking about. I just want to make sure that if I demand them through the mail, that I can still sell them on my on line account and that it would not add additional steps to sell, if you hold them. I hope that makes sense. Please give me your opinion on this. Thanks...
Hi Doug,
This IS what I think will happen.
Once you have the certificate..it means your brokerage has NO info about that.....
You paid cash & got the certificate...so it is NOT in your account.....
So..there is a delay of one week to get the certificates in mail....
And you have to physically take your share certificate back to brokerage to sell.
You CAN confirm all that from your brokerage CREDIT department..not from trading people.....
A better way IS to have a GTC order for say $40 for LDK for all shares you have.....that forces a recall by brokerage from short sellers.....so they have to cover....imho
Hope it helps !!!
Saleem
Thanks Saleem. That is what I will do. I just want to do whatever little part that I can to assist the efforts of stopping the bullying of LDK. I am going to put the GTC order in right now. I hope that collectively we can all contribute a little to at least make it more challenging for the shorts. On low volume day like today, even small amounts might make a small difference. I dont really know but its better than doing nothing IMO.
Saleem,
I wish that LDK would institute a buyback program of their shares at these discount prices to help investors with value protection as well as LDK as a company, if they in fact feel that the share price is low! Have there been other solar companies that have had buybacks or is it taboo in this sector? Im obviously reaching for straws because of the massive decrease in share price we are all experiencing. I also would like to complain to the SEC but Im not sure how. I went to their web site this morning and so far I haven't figured out how to file a complaint. Im not sure if that would just be a silly waste of time anyway.
Hi Doug,
Buyback by LDK is NOT a good idea..especially when they are plowing all the money back in the construction of 2 plants....
2009 LDK stock price will reflect all the potential.....in the meantime all the uncertainty about completion of factory is playing havoc with the stock.
LDK needs to do a convertible bond immediately to have all the money required for building a plant.
Second alternative will be to sell 10% of the company to Q-cell or some other company & get the required money......
SEC website should give you an email address for complaint..if not just google SEC complaint & see what come up.
Saleem
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