The Red Roadmaster’s US Market Re-cap + Stock Talk ™
21 January 2010
Date Line: Hong Kong (SAR) China
You can now follow us on Twitter please go to http://twitter.com/EbelingHefferna and join in.
Red’s Bull Alert: On Tuesday, the DJIA and the S&P 500 ended on 15 month highs on bets the The S&P 500 is up 68.2% since March 9, 2009
Re-cap of the US Stock Market Action for the week ending 20 January 2010 Wall Street drops on IBM profit taking, but eBay runs North into the close The DJIA closed lower Wednesday as US on China, and Tech worries. Yesterday It was reported in the US media that Chinese authorities have ordered some major banks to curb their lending over the rest of this month after an early burst of credit. Some believe that this action signals that China, the world's 3rd largest economy, may slow its economic expansion. Perhaps but in my opinion not likely, this has been in the International news for a week or so now. The DJIA shed 122.28 points, or 1.14%, to end at 10,603.15, S&P 500 lost 12.19 pts, or 1.06%, to close at 1,138.04, and the NAS tallied up a minus 29.15 pts, or 1.26%, to end the session at 2,291.25. The latest earnings season picked up pace after the Bell, when e-commerce company eBay Inc and coffee chain Starbucks Corp posted stronger-than-expected Q-4 earnings (covered in Stock Talk below) Advancing Sectors: (None) Declining Sectors: Energy (-1.7%), Materials (-1.5%), Tech (-1.5%), Telecom (-1.4%), Industrials (-1.3%), Consumer Discretionary (-1.2%), Utilities (-1.1%), Consumer Staples (-1.0%), Health Care (-0.5%), Financials (0.1%) Volume and Breadth: Volume once again on the NYSE, about 1.05B/shrs changed hands, below last year's estimated daily average of 2.18b/shrs, and on the NAS, about 2.39b/shrs traded, above last year's daily average of 1.63B/shrs. Decliners outnumbered advancers on both the NYSE and Nasdaq by about 3 to 1.
Stocks to Watch Today
Brocade Communications Systems, Inc. (BRCD), eBay (EBAY), Starbucks Corp. (SBUX), and US Bancorp (USB). 1
Brocade Communications Systems, Inc. (BRCD) Up-date 3 Last Look: June 25, 2009 January 21, 2010 Paul A. Ebeling, Jnr. Analyst Today let’s look at Brocade Communications Systems, Inc. (BRCD), the maker of fiber channel switches, from a Technical POV. The overall indications, after Wednesday’s (January 20, 2010) market action, are Bearish: in the near term Neutral, mid-term Bearish, and long term Very Bearish. The recent Candle Stick analysis is: Neutral
**Chart by: http://www.stockta.com
Latest News and Opinion: Brocade Announces Closing of $600 Million Senior Secured Notes Offering
Wednesdayâ€™s Market Action Close 7.73
- .15 Volume 11,906,800/shrs
There a Bearish DOJI Star and one Gap open down on November 12, 2009 at 9.06/8.31 the near term resistance is 7.77, support at 7.25, and the 50 day (EMA) exponential moving average is 7.84. This is Brocade Communications Systems, Inc. (BRCD) The Company makes Fibre Channel switches and related software for connecting corporate storage systems and servers. Its products are used in storage area networks (SANs), which pool storage resources across enterprises for easier management and more efficient utilization of assets. The company's SilkWorm switches automatically reroute data upon path failure and reconfigure the SAN when new devices are added. Brocade sells its products primarily through equipment manufacturers, including EMC, Hewlett-Packard, and IBM, which together generate about 65% of revenues.
The Competitive Landscape The USAâ€™s economy heavily influences business spending for software products. The success of programming companies depends heavily on strong technical expertise. The success of packagedsoftware companies depends on technical expertise and good marketing. Small software companies compete mainly by developing packaged products in small niches or producing custom products for individuals. Many small companies form alliances with larger ones to market their products.
Brocade Communications Systems, Inc. (HQ) Chairman David L. (Dave) House 1745 Technology Dr. San Jose, CA 95110 United States Phone: 408-333-8000 Fax: 408-333-8101
Brocade Communications Subsidiaries Foundry Networks, Inc.
eBay, Inc. (EBAY) Up-date 6
Last Look: December 1, 2009
January 21, 2010 Paul A. Ebeling, Jnr. Analyst Today let’s look at eBay (EBAY), the premier online (AKA World’s Biggest) marketer/seller, from a technical POV. The overall indications, after Wednesday’s (January 20, 2010) market action, are Neutral: in the near term Neutral, mid-term Neutral, and long term Neutral. The recent Candle Stick Analysis is: Very Bullish
**Chart by: http://www.stockta.com
Latest News and Opinion: EBay’s Profit Rises Sharply, Aided by Sale of Skype
Wednesday’s Market Action Close 22.23
There a Bullish Engulfing Candle on January 19, and one Gap open down on October 22, 2009 at 24.92/24.22; the near term resistance is at 22.40, support at 22.06, and the 50 day exponential moving average is 23.25. This is eBay, Inc. (EBAY): In the lexicon of the modern consuming idiom the term “I got it on eBay" has become fully establish and is making eBay online auctioneer the world leader. eBay is a cyber-forum for selling more than 50,000 categories of merchandise, from junk to fine antiques, and hosting about 500,000 online stores worldwide. eBay, which generates revenue through listing/ selling fees and advertising, has more than 27%MM registered users. In 2007, eBay acquired one of the fastest growing online ticket sellers, StubHub, for US$307MM. eBay, Inc. ranks #326 in FORTUNE 500 and #213 in FT Global 500. The Competitive Landscape. eBay competitors are primarily in the Auctions industry. eBay also competes in the Messaging, Conferencing & Communications Software, Transaction, Credit & Collections, and Fixed-line Voice Services Providers sectors eBay’s competition includes Amazon.com Google Yahoo!
eBay, Inc. (HQ)
Chairman Pierre M. Omidyar SVP & CFO Robert H. (Bob) Swan 2145 Hamilton Ave. San Jose, CA 95125 United States Phone: 408-376-7400 Fax: 408-376-7401
Starbucks Corp. (SBUX) Up-date 2
Last Look: July 21, 2009 5
January 21, 2010 Paul A. Ebeling, Jnr. Analyst Today let’s look at Starbucks Corp. (SBUX), the World's #1 specialty coffee retailer, from a Technical POV. The overall indications, after Monday’s (July 20, 2009) market action, are Bullish: in the near term Neutral, in the mid-term Bullish, and long term Bullish. The recent Candle Stick Analysis is: Very Bearish.
**Chart by: http://www.stockta.com
Latest News and Opinion: Starbucks Corporation to Make First Entry Into The Ready-To-Drink Coffee Category in Europe with Arla Foods
Wednesdayâ€™s Market Action
Close 23.29 -.29
There is a Bearish Engulfing Candle on January 20, and one Gap open up on November 6, 2009 at 19.89/20.26, the near term resistance is 23.84, support at 23.24, and the 50 day (EMA) exponential moving average is 22.44. This is Starbucks Corp. (SBUX): The Company is the world's #1 specialty coffee retailer, Starbucks has more than 16,000 coffee shops in more than 35 countries. The outlets offer coffee drinks and food items, as well as roasted beans, coffee accessories, and teas. Starbucks owns more than 9,000 of its shops, which are located in about 10 countries (mostly in the US), while licensees and franchisees operate more than 7,400 units worldwide (primarily in shopping centers and airports). The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products.
Competitive Landscape Consumer taste and population growth drive demand in the consumer sector, while economic growth of businesses, like restaurants and hotels, drives demand in the commercial sector. The profitability of individual companies depends on effectively managing raw ingredient costs, efficient operations, and effective marketing. Large companies have scale advantages in purchasing, distribution, manufacturing, and marketing. Small companies can compete effectively by offering specialized products or serving a local market. The industry is capital-intensive: average annual revenue per worker is about US$500,000.
Coffee and Tea Manufacture Industry Forecast The output of US coffee and tea manufacturing is forecast to grow at an annual compounded rate of 2 % between 2008 and 2013. Data Sourced: December 2009 Starbucks Corp. (HQ) Howard D. Schultz Founder, Chairman, Chief Exec. Officer and Pres 2401 Utah Avenue South Seattle, WA 98134 United States Phone: 206-447-1575 Fax: 206-682-7570
US Bancorp (USB) Up-date 1
Last Look: April 22, 2009 7
January 21, 2010 Paul A. Ebeling, Jnr. Analyst Today let’s look at US Bancorp (USB), the large regional US bank, from a Technical POV. The overall indications, after Wednesday’s (January 20, 2010) market action, are Neutral: in the near term Neutral. mid-term Bullish. , and long term Neutral. The recent Candle Stick analysis is: Very Bearish
**Chart by: http://www.stockta.com Latest News and Opinion: Mortgage pain persists for BofA, Wells, U.S. Bancorp http://finance.yahoo.com/news/Mortgage-pain-persists-for-rb-2263007423.html?x=0&.v=5 Wednesday’s Market Action Close 25.01
There is a DOJI on January 19, and there are no Gaps open up or down on the Chart, the near term resistance is 25.39, support at 24.63 , and the 50 day (EMA) exponential moving average is 23.50. This is US Bancorp (USB): This US bank has approximately 2,800 locations and 5,000 branded ATMs in two dozen mid-western and western states. The bank holding company, one of the 10 largest in the country, owns U.S. Bank and other subsidiaries that provide consumer and commercial banking, as well as credit card and ATM processing, mutual funds, mortgage banking, brokerage, wealth management, equipment leasing, trust services, corporate payments, and insurance. In late 2008 U.S. Bancorp acquired the banking operations of the failed California-based banks Downey Savings & Loan and PFF Bank & Trust in an FDIC-assisted transaction. Competitive Landscape Demand for banking services is closely tied to economic activity and the level of interest rates. The profitability of individual banks depends on marketing skills, efficient operations, and good risk management. Large economies of scale exist in some segments of the industry, which has encouraged industry consolidation. Smaller banks can compete successfully in segments where customer service or knowledge of the local market is more important. The industry is capital-intensive and highly automated: annual revenue per employee is close to US$300,000. Banks and Credit Unions Industry Forecast The output of US banks and credit unions is forecast to grow at an annual compounded rate of 1 % between 2008 and 2013. Data Sourced: December 2009
US Bancorp (HQ) Richard K. Davis, Chairman, President and CEO 800 Nicollet Mall Minneapolis, MN 55402 United States Phone: 651-466-3000 http://www.usbank.com
Disclaimer DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS WEBSITE OR IN OUR NEWSLETTERS. Red Roadmaster is not registered as a securities broker-dealer or an investment advisor either within the US Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. The information contained on our website or in any of our newsletters should be viewed as commercial advertisement and is not intended to be investment advice. Any information found on our website, or in any of our newsletters is not provided to any particular individual with a view toward their individual circumstances. The information contained on our website, and in any newsletter we distribute, is not an offer to buy or sell securities. We distribute opinions, comments, and information free of charge exclusively to individuals who wish to receive them.
Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies’ profiled based solely on information contained in our report. Individuals should assume that all information contained on our website or in one of our newsletters about profiled companies is not trustworthy unless
verified by their own independent research.
Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment adviser or licensed stock broker before investing.
Information contained in the Redroadmaster Stock Talk report will contain “forward looking statements” as defined under section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.
Red Roadmaster is committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable. To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in this report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information). We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org