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Coca Cola Reaches New 52 Week High

by srpatterson on Wednesday, November 25, 2009 12:27 PM

Coca Cola Reaches New 52 Week High

The Coca Cola Company (KO) fell slightly on Wednesday after reaching a new 52 Week High the past two trading sessions. On Monday a report came out from the Financial Times that the company plans to double it’s bottling capacity in China and triple it’s sales within the country over the next 10 years.

Call Options Volume

Options Volume for KO Shares rose nearly 2000% on Wednesday (According to Options Dragon) with over 350,000 contracts changing hands. December Calls for 52.50 and 55.00 were strong. Along with January Calls from a strike price of 40 up to a strike price of 52.50.


Earnings estimates for the fourth quarter of 2009 don’t look to be improving much over time but first quarter 2010 and the full yearly earnings for 2010 have seen some expectation growth. Next quarter earnings are expected to be 15% better than a year ago while 2010 is expected to be 11% more profitable than 2009. Revenue is expected to grow at 1% this quarter and 8.7% next quarter.

KO Trade

The Forward Price to Earnings ratio (P/E) for Coca Cola (KO) is currently at 16.99, a little rich for the expected growth of the company next quarter. The stock has rallied 28% over the past 52 weeks and is due for a pull back from it’s high. I would wait for a correction of 5% before building a position.

Dell Falls on Poor Earnings

by srpatterson on Friday, November 20, 2009 1:28 PM

Dell Falls on Poor Earnings

Dell Inc (DELL) reported today a 54% decline in income for it’s most recent quarter along with a 15% reduction in revenue. The company missed estimates on both fronts and the stock was battered 10% lower on Friday. The bad report has made some investors question the technology leadership and the overall market rally.

Opposite of Other Tech Giants

These earnings are in contrasts to a number of other technology companies that have beaten estimates and performed well during the 3rd quarter. HP, Intel, and IBM have all done well with HP and Intel both operating in the consumer PC space. Michael Dell stated during the announcement that the company has seen consumer strength in the last 30-60 days. This would correspond with the beginning of holiday shopping in the US.

Consumer Buying

Dell has not suffered because of the consumer in the last quarter but because of it’s reliance on business spending and government contracts. Both business and government revenue declined for Dell. Laptops and Netbooks have become hot items this year and Dell is missing some of this trend. At the same time Dell is moving into the services market with its recent acquisition of Perot Systems.

© 2009

Gold: Don’t Fight the Trend

by srpatterson on Wednesday, November 11, 2009 12:03 PM

Gold: Don’t Fight the Trend

An old saying in trading technical charts is ‘don’t fight the trend’. And this has been the case with Gold over the past year, every pause in the rally of the price of gold has been a good opportunity to buy. Of course this could reverse if the US dollar was to gain support with a monetary change by the Federal Reserve. But that doesn’t not appear to be on the minds of the Federal Reserve.

Gold rallied to a new high today as Federal Reserve officials spoke about keeping the current historic low interest rates in place until there is a more forceful economic recovery in America. Gold is moving in the reverse direction as the US Dollar which has fallen over the past 15 months and looks to continue falling until their is a policy change.

Inflation is also a concern for traders who are predicting a rise in consumer costs as the dollar continues to fall. Gold is then used as a hedge against the inflation and the fall in the dollar. Gold reached a new high of $1119.10 an ounce this morning on the NYME and closed slightly lower by mid-afternoon. Investors can play the price of gold rather conservatively by buying the Exchange Traded Fund, Spiders Gold Shares (GLD), and following practical trading guidelines.

Federal Reserve Holds Rates as Expected

by srpatterson on Wednesday, November 4, 2009 1:14 PM

Federal Reserve Holds Rates as Expected

The Federal Reserve continue to hold the Fed Funds Rate at 0.25 %, historically low rates. The news created a mid-day rally in the stock market that faded into the close. The Fed believes economic activity has improved but is fearful about new job losses in the US and the possibility of tightening credit for consumers. There is no plan to increase the rate in the near term.

Service Industry

The Service Industry also added support early in the day with a decent report. The ISM reported service industry growth for the 2nd quarter in a row last month. The reading came in at 50.6 compared to a reading of 50.9 in September. Both readings signal growth. The Market was expecting 51.5 but rallied on the report non-the-less.

Economic Calendar

The remainder of the week remains busy with Initial Claims and Continuing Claims being released on Thursday. While Friday is a very active reporting day with Nonfarm Payrolls at 8:30 am, the Unemployment Rate at 8:30 am, and Wholesale Inventories at 10 am in addition to many other government economic reports.

The late sell-off in the markets would likely be related to the unemployment numbers coming later this week. Initial Claims is expected to come in lower than the last report at 522,000. Non-Farm Payrolls will also improve if in-line with estimates of –175,000. But the Unemployment Rate will still climb to a troubling rate of 10%. The markets will struggle to find buyers until all the reports are out this week.

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