The Case for a Stock Market Correction and a Pick for Egypt

Richard Suttmeier submits:

Unrest in Egypt could turn out to be the catalyst for triggering a long overdue global stock market correction. I saw some negative factors beginning over the past couple of weeks, most notably the ValuEngine Valuation Warning and the negative divergences away from the Dow Industrial Average, as all major averages are still overbought on their weekly charts.

In discussing the US Capital Markets, we know that the yield on the US Treasury 10-Year note is still in the trading range set in December between 3.568 and 3.247 with Friday’s close at 3.329 closer to the low end, as Egypt could be the catalyst for a flight to quality that will compete with the Federal Reserve’s continued QE2 purchases. A weekly close richer than 3.247 signals a US bond rally.

Comex gold traded as low as $1307.7 versus my semiannual value level at $1300.6, then rallied Friday to close at $1335.0 on a flight to safety in reaction to the unrest in Egypt. Gold is now positioned between my quarterly pivot at $1331.3 and my annual pivot at $1356.5. A weekly close above $1356.5 targets the range of my quarterly and semiannual risky levels at $1441.72 and $1452.6.

Nymex crude oil rebounded from $85.11 to $89.38 at Friday’s close, as my semiannual pivot proved to be a strong magnet. If oil stops being shipped through the Suez Canal, the price of oil could spike towards my annual risky levels at $99.91 and $101.92, particularly if the unrest spreads to other

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15 percent of Galaxy Tabs are returned

If investment firm ITG is to be believed, 15 percent of all Samsung Galaxy Tab tablets are returned after purchase, a huge figure when compared to market leader Apple's 2 percent return rate for the iPad.

Says the firm: "Consumers just aren't in love with the device."

Samsung announced yesterday that global sales for the Tab had reached 2 million, just two months after launch.

The analysts believe the main problem with the Tab is its use of Android 2.2 Froyo, which was designed for smartphones, and is not ideal for large screens.

Upcoming Android tablets, like the Motorola Xoom and LG G-Slate will run on Android 3.0 Honeycomb, which is optimized for tablets.

Research firm iSuppli says the Tab is not alone in its issues, however: "There are a lot of issues with Android tablets, not just Samsung. A lot of those products have difficulties with high return rates or with not moving off the shelf."

Samsung's tablet runs on Android 2.2, has a 1GHz processor, a 7-inch multi-touch screen and dual cameras.

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PS3 Save Games Headed to the Cloud

Sony will soon introduce a new feature to the PlayStation 3 that will allow users to keep their save games stored in the cloud. That is to say, save games will be stored on Sony servers as opposed to your local hard drive. Kotaku reports that developers were recently informed of the impending introduction of the new functionality.

This is beneficial because it protects you against losing your save games in the case of having your hard drive break or PS3 stolen. It also potentially opens the door for you to be able to access your save games from any Internet-connected PS3.

The feature will not, however, be available to all users -- to take advantage of it, you'll need to be a PlayStation Plus member. Plus is Sony's premium PlayStation Network service that entitles subscribers to exclusive deals on PSN content, priority invitations to betas and demos, automatic downloads, and other perks.

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Monday ETF Roundup: XLE Surges on ExxonMobil Q4 Report, XHB Tumbles

ETF Database submits:

Despite ongoing worries across much of the Middle East and a surging price for crude oil, U.S. equity markets trended higher in Monday trading. The broad S&P 500 led the way on the upside, posting gains of 0.8% compared to a 0.6% jump in the Dow and a 0.5% rise in the tech-heavy Nasdaq. Oil markets were the main focus as traders bid up the price of the important commodity in light of ongoing tensions in Egypt, pushing the price of oil up close to $3/bbl or roughly 3.1% in the trading session. A variety of other commodities also surged on the day as the U.S. dollar slumped, pushing everything from livestock to grains higher for the session.

One of the biggest ETF gainers on the day was the Energy Select Sector SPDR (XLE) which rose by 2.8% during Monday trading. Energy firms were boosted by a robust report from ExxonMobil (XOM) in which the oil giant said that its earnings rose 53% in the fourth quarter. The company posted a profit of $9.25 billion on revenues of $105.19 billion, beating estimates which called for roughly $99.11 billion in revenues. The report boosted shares of XOM by $1.70 on the day, pushing it up past the $80 mark and into 52-week high territory. The news also pushed up a variety of other firms in the sector which are reporting later in the week as traders looked to get in ahead of these likely to be optimistic reports. As a result,

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HDGE: The First Actively-Managed Short Selling ETF

Ron Rowland submits:

Retail investors seeking an actively-managed short selling solution have traditionally had very few choices. The menu expanded last Thursday (1/27/11) with the introduction of AdvisorShares Active Bear ETF (HDGE), the first actively-managed short selling fund in an ETF format.

HDGE seeks capital appreciation through short sales of domestically traded equity securities. The fund typically consists of 20-50 short positions, with each receiving a 2%-7% allocation.

AdvisorShares is the advisor of record, but the ETF will actually be managed by subadvisor Ranger Alternative Management, LP. Portfolio managers John Del Vecchio and Brad H. Lamensdorf bring extensive short selling experience to the table. They employ a bottom-up, fundamental, research driven security selection process.

HDGE holds securities the managers believe have low earnings quality or aggressive accounting that could mask operational deterioration and bolster earnings per share. Additionally, the managers try to identify catalysts that may lead to the price decline of a security.

Portfolio construction consists of 6-8 “core” fundamental positions that the manager’s forensic accounting process has thoroughly vetted. Additional “tactical” trading positions are used to help manage volatility and enhance returns. HDGE Investment Philosophy & Portfolio Construction Process (pdf) provides further information about the methodology.

The 10 largest positions currently are Herbalife Ltd (HLF) -6.1%, Juniper Networks Inc (JNPR) -5.1%, Avon Products Inc (AVP) -4.9%, Bank Of America Corp (BAC) -4.0%, Kohls Corporation (KSS) -3.9%, Citrix Systems Inc (CTXS) -3.5%, Netapp Inc (NTAP) -3.4%, Visa Inc (V) -3.4%, Hasbro Inc (HAS) -3.4%, and Paccar Inc (PCAR) -3.4%.

Sector exposure presently

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Sega Rally Online Arcade confirmed for PSN, XBLA

Sega Rally Online Arcade has made the trip from ratings board to release calendar in record time -- it's coming to Xbox Live Arcade and PlayStation Network in 2011. According to the official announcement, Sega Rally Online Arcade is a new game "inspired" by Sega Rally Revo (2007) and the arcade-only Sega Rally 3, both of which were developed by Sega Racing Studio.

As the title subtly implies, online rally racing is a given. Other features, which couldn't be incorporated into the logo with any elegance whatsoever, include the 13 rally cars, Championship Battle and Time Attack modes, leaderboards and "a brand new achievement system."

While you hurriedly type "Game Over YEAAAAAH" into the comments section, we'll keep an eye out for a more specific launch window.

Gallery: Sega Rally Online Arcade

Sega Rally Online Arcade confirmed for PSN, XBLA originally appeared on Joystiq on Mon, 31 Jan 2011 15:00:00 EST. Please see our terms for use of feeds.

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Why is Al Jazeera Blacked Out in US ?

WTF? Huff Po: Canadian television viewers looking for the most thorough and in-depth coverage of the uprising in Egypt have the option of tuning into Al Jazeera English, whose on-the-ground coverage of the turmoil is unmatched by any other outlet. American viewers, meanwhile, have little choice but to wait until one of the U.S. cable-company-approved [...]

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Three ETFs to Watch This Week: VDE, PPH and FXE

Michael Johnston submits:

By Stoyan Bojinov

Most markets inched higher last week, but hit a bit of road bump on Friday after investors digested news of declining consumer sentiment for January and a worse-than-expected GDP report. Gold and oil both traded lower during the week, but both commodities were able to stage small rallies on Friday amidst all the uncertainty that weighted down equities. International markets didn’t fare too well last week either, with civil unrest continuing to develop in Egypt, Standard and Poor’s downgrading Japan , and a suicide bomber attack in Moscow’s Domodedovo airport, which killed at least 35 people and injured more than 100.

This week is stacked with earnings reports from major industry leaders as well a handful of economic reports including the ISM Manufacturing Index, personal income, and construction spending. Below we profile three ETFs that will be in for an active week:

Vanguard Energy ETF (VDE)

Why VDE Will Be In Focus: This fund has Exxon Mobil Corporation (XOM) as its top individual holding at just over 20% allocation, and the industry heavyweight is scheduled to report earnings results on Monday before the opening bell. VDE tracks the MSCI US Investable Market Energy 25/50 Index, which consists of large, medium, and small U.S. companies in the energy sector. Analysts are expecting the oil giant to deliver earnings per share somewhere in the range of $1.36 to $1.72. Likewise, revenues are expected to come in at around $97 billion compared with last year's results of $89 billion. As

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Week in gaming: graphic adventures, new Sony portable, Dead Space 2

This week our number one story was a look back at the world of graphical adventures, but the most buzz belonged to Sony's new handheld. Codenamed "NGP," it's filled with every bit of technology you can imagine. Although Sony didn't mention a price, we're going to bet it will be more expensive than Nintendo's $250 3DS.

We also discussed Magicka's disappointing launch, reviewed the wonderfully scary Dead Space 2, and followed Sony's legal woes and victories with the PlayStation 3. These are the stories that had people talking this week, so dig in!

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Android 3.0 ported to Nook Color with graphics acceleration

Developer/hacker "@deeper-blue" has posted a quick video this weekend of how he ported the new tablet-optimized OS Android 3.0 to run on the Nook Color.

Deeper-Blue is able to boot the OS, and control the device, but functionality is still somewhat limited.

The hacker is now working on completing graphics acceleration, which should speed up the interface, which currently runs slowly.

Says the hacker (via XDA):

Graphics acceleration more or less working. The SGX driver seems too old for some buffer request of android 3.0, so right now the statusbar is invisible but still functional. Not sure if I can fix that or have to wait for the AOSP release.

What is not working... pretty much everything else, no accelerometer, no wlan, no sound. Haven't started working on those things yet.

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Lead Inventor On One Of The Patents Paul Allen Is Suing Over Worries About Litigation Over Innovation

We've been covering Paul Allen's move into patent trolling in which he's suing Google, Apple, AOL, eBay, Facebook, Netflix, Yahoo and others over a set of incredibly broad patents, covering things like "recommendations," "alerts" and popping up information in the corner of your screen. The EFF points out that Michael Naimark, the lead inventor on one of the patents, 6,757,682, on "alerting users to items of current interest," has put out a statement about the lawsuit.

He does note that he is contractually obligated to "defend intellectual property to which [he] contributed and to respect confidentiality," and he intends to live up to those obligations. However, he did not sign any kind of "no-speak" or "non-disparagement" agreement, and thus he's comfortable making a general statement expressing concern about how much money is focused on litigation instead of innovation these days:

I am also committed to fostering a vibrant creative culture. Long-term labs like Interval Research don't come along often, and I'm grateful for Paul Allen's support. But the stage is now set for enormous resources, from all sides, to support litigation over innovation. The creative community needs all the support it can muster, and it's a perplexing thought that the money at risk in this lawsuit will likely exceed the annual budget of the National Endowment for the Arts, possibly several times over. It could be hugely significant if all parties commit to something good for the creative community as an outcome.

While the statement is carefully worded and balanced, it's good to see him at least suggest there's a serious problem in how much litigation has taken over for actual innovation.

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Interesting Week Indeed

Trader Mark submits:

The market has been on a seemingly autopilot path for months on end; aside from a hiccup due to sovereign debt issues in Ireland, there has been no respite for bears since late August when Bernanke added "pushing asset prices up" as the third mandate of the Federal Reserve. Almost no economic news has mattered since investors believe the Bernanke Put is in play and whatever the data, the Fed stands behind the market.

Indeed, aside from 8 sessions in November, we've seen extraordinary strength with the S&P 500 closing above the 13-day moving average throughout the rally. Even Friday's weaker than expected GDP and some disappointing earning reports by bellweather companies (following Thursday's spike in weekly unemployment claims) were completely ignored as the market started the day in the green.

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Is Gold's Golden Era Over?

David Hunkar submits:

Gold prices surged 1.8% to close at $1,340.70 an ounce Friday as investors sought the safety of the yellow metal. Despite the slight fall in gold prices so far this year, gold has had an incredible run in recent years.

An article in The Wall Street Journal takes a bearish view on gold suggesting that gold’s golden era may be over.

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Blog Post: Microsoft Research Released Windows Phone 7 + Cloud Services SDK (Codename - Project Hawaii)

Microsoft Research Team just released a new SDK name “Windows Phone 7 + Cloud Services SDK” to combine the Windows Phone 7 development along with Windows Azure. The SDK released under the code name Project Hawaii and a little summary is as below:

Project Hawaii involves building web applications and services, as well as mobile applications. While there are many platforms available, we have currently chosen to use Windows Phone 7 as the mobile platform and either Windows Azure or Internet Information Services (IIS) as the web-application server. In January 27, 2011 release the SDK has the following two parts:

Relay Service

Most mobile service providers do not provide mobile phones with consistent public IP addresses that would allow for them to be reachable from other devices. This makes it difficult to write applications where mobile phones communicate with each other directly.

The Hawaii Relay Service provides a relay point in the cloud that mobile applications can use to communicate. It provides an endpoint naming scheme and buffering for messages sent between endpoints. It also allows for messages to be multicast to multiple endpoints.

Rendezvous Service

The Hawaii Rendezvous Service is a mapping service from well-known human-readable names to endpoints in the Hawaii Relay Service. These well-known human-readable names may be used as stable rendezvous points that can be compiled into applications.

 

The SDK also has a February 2011 release scheduled which will include the following two more components:

OCR in the Cloud

The Hawaii OCR in the Cloud service takes a photographic image that contains some text and returns the text. For example, given a JPEG image of a road sign, the service would return the text of the sign as a Unicode string.

Speech to Text

The Hawaii Speech to Text service takes takes a spoken phrase and returns text (right now in English).

 

Project Hawaii Web Page:

http://research.microsoft.com/en-us/um/redmond/projects/hawaii/

 

The SDK is immediately available for download at the link below:

http://research.microsoft.com/en-us/downloads/0c54f42c-84b1-4ad5-a1b3-37008f3b6bff/default.aspx

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15 percent of Galaxy Tabs are returned

If investment firm ITG is to be believed, 15 percent of all Samsung Galaxy Tab tablets are returned after purchase, a huge figure when compared to market leader Apple's 2 percent return rate for the iPad.

Says the firm: "Consumers just aren't in love with the device."

Samsung announced yesterday that global sales for the Tab had reached 2 million, just two months after launch.

The analysts believe the main problem with the Tab is its use of Android 2.2 Froyo, which was designed for smartphones, and is not ideal for large screens.

Upcoming Android tablets, like the Motorola Xoom and LG G-Slate will run on Android 3.0 Honeycomb, which is optimized for tablets.

Research firm iSuppli says the Tab is not alone in its issues, however: "There are a lot of issues with Android tablets, not just Samsung. A lot of those products have difficulties with high return rates or with not moving off the shelf."

Samsung's tablet runs on Android 2.2, has a 1GHz processor, a 7-inch multi-touch screen and dual cameras.

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