Page 1

Red Roadmaster

STOCK TALK


Red Roadmaster


25th June, 2009

Contact Paul A. Ebeling, Jr. redroadmaster@aol.com

Paul A. Ebeling, Jr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highlyregarded financial market letter, read by opinion makers, business leaders and organizations around the world. Ebeling has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/ Support Levels.


The Red Roadmaster’s US Market Recap + Stock Talk

June 25, 2009 Alert: The Red Roadmaster looks at American Greetings Corp. (AM) and Orckit Communications (ORCT) the Biggest Percentage Price Gainers on the NYSE and NAS on Wednesday + Dollar Thrifty Automotive Group Inc. (DTG), for the 1st time.

The Recap of Wednesday’s US Stock Market Action As widely expected the US Fed left the benchmark fed funds rate at almost Zero US Stocks ended Wednesday's session mixed but mostly higher after the US Fed said the economy was on the mend, but bond prices fell after the US Fed said it would not step up its spending to purchase US Treasuries and other debt to pry interest rates lower The US Fed's report on the economic outlook was mixed, the central bank said the economy was likely to remain weak in here, but the contraction's pace was slowing. The DJIA closed off 23.05 pts (0.28%) at 8,299.86, the S&P 500 was up 5.84 pts (0.65%) to close at 900.94, the leading NAS tallied a + 27.42 pts (1.55%) to close at 1,792.34, and the Russell 2000 index rose 5.18 pts (1.1%), to end the session at 494.95. .Volume and Breadth: Trading volume was below average on the NYSE with only about 1.10B/shrs changing hands, under last year's estimated daily average of 1.49B/shrs, and on the NAS, about 2.16B/shr traded, below last year's daily average of 2.28B/shrs. Advancers outnumbered decliners on the NYSE by a ratio of nearly 3 to 1, and on the NAS three stocks rose for every two that sank. Crude Oil fell 57c to settle at US$68.67 bbl on the New York Mercantile Exchange, the US$ was mixed against other major currencies, and Gold prices rose. Overseas stock prices advanced. Japan's Nikkei stock average rose 0.4%. In Europe, Britain's FTSE 100 rose 1.2%, Germany's DAX index rose 2.7%, and France's CAC-40 rose 2.2%. Stock to Watch Today American Greetings Corp. (AM), Brocade Communications Systems, Inc. (BRCD, Dell Inc. (DELL), Dollar Thrifty Automotive Group Inc. (DTG), Google Inc. (GOOG), MGM Mirage (MGM), Orckit Communications (ORCT), and Wells Fargo Company (WFC)


American Greetings Corp. (AM) June 25, 2009 Paul A. Ebeling, Jr. Analyst Today, let’s look at American Greetings Corp. (AM), #2 US maker of greeting cards (behind Hallmark), from a Technical POV. The overall indications, after Wednesday’s (June 24, 2009) market action, are Bullish: in the near term Bullish, mid-term Bullish, and long term Neutral.

**Chart by: http://www.stockta.com

Latest News: Lower costs help American Greetings' results, shrs soar http://www.reuters.com/article/marketsNews/idINBNG54688320090624?rpc=44 Wednesday’s Market Action Close 9.62 + +3.26

Volume 4,257,300/shrs


There is a Bearish Engulfing Candle on June 19, and two Gaps open up between Mar 10 and June 24, 2009 at 3.74/7.31, the near term resistance is NIL, support at 8.54, and the 50 day (EMA) exponential moving average is 7.05. This is American Greetings Corp. (AM): The #2 US maker of greeting cards (behind Hallmark), the company makes American Greetings, Carlton Cards, and Gibson Greetings brand missives. While greeting cards make up more than 60% of sales, the company also produces DesignWare party goods, Plus Mark gift wrap, and DateWorks calendars. The company's AG Interactive subsidiary distributes online greeting cards and other interactive media. American Greetings' products are sold through card and stationary stores, mass merchants, and other retail outlets worldwide. The family of chairman Morry Weiss controls more than 45% of the company. Industries Where American Greetings Competes Media Publishing Greeting Cards (primary) Internet Content Providers Consumer Products Manufacturers Housewares American Greetings Corp. (HQ) Zev Weiss, Chief Exec. Officer and Director One American Road Cleveland, OH 44144-2398 United States Phone: 216-252-7300 Fax: 216-252-6778 http://www.americangreetings.com


Brocade Communications Systems, Inc. (BRCD) Up-date 1 June 25, 2009 Paul A. Ebeling, Jr. Analyst Today, let’s look at Brocade Communications Systems, Inc. (BRCD, the maker of fiber channel switches, from a Technical POV. The overall indicators, after Wednesday’s (June 24, 2009) market action is Bullish: in the near term Neutral, mid-term Very Bullish, and long term Very Bullish.

**Chart by: http://www.stockta.com

Latest News: Brocade: Bullish Notes From Think Equity, Pacific Crest http://blogs.barrons.com/techtraderdaily/2009/06/23/brocade-bullish-notes-from-think-equity-pacificcrest/#mod=yahoobarrons Today’s Market Action Close 7.80

+ .40

Volume 30,095,100/shrs


There is a Bearish Harami on June 18 and one Gap open up on Apr 22, 2009 at 4.63/4.82 the near term resistance is 7.80, support at 7.32, and the 50 day (EMA) exponential moving average is 6.43. 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 USA’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 http://www.brocade.com

Brocade Communications Subsidiaries Foundry Networks, Inc.


Dell Inc. (DELL) Up-date 6 June 25, 2009 Paul A. Ebeling, Jr. Analyst Today let’s look at Dell Inc. (DELL), one of the world's top suppliers of personal computers, from a Technical POV. The overall indicators, after Wednesday’s (June 24, 2009) market action, are Bullish: in the near term Neutral, mid-term Very Bullish, and long term Bullish.

**Chart by: http://www.stockta.com

Latest News: US Trade Officials Urge China to Revoke PC Rule http://online.wsj.com/article/SB124584251393346953.html?ru=yahoo#mod=yahoo_hs Wednesday’s Market Action Close 13.28 + .30

Volume 24,048,800/shrs


There is DOJI on June 23 and a Gap open up on Mar 11, 2009 at 8.76/8.77, the near term resistance is 13.42, and support at 13.01 and the 50 day (EMA) exponential moving average is 11.80. This is Dell Inc. (DELL): The Company engages in the design, development, manufacture, marketing, sale, and support of computer systems and services worldwide. It offers desktop PCs and workstations; notebook computers; servers and networking products; and storage solutions, including storage area networks, network-attached storage, direct-attached storage, disk and tape backup systems, and removable disk backup. The company also offers third party software products, which comprise operating systems, business and office applications, anti-virus and related security software, and entertainment software; peripheral products, including software titles, printers, televisions, notebook accessories, networking and wireless products, digital cameras, power adapters, scanners, and other products; and displays, including flat panel monitors and projectors. In addition, it provides infrastructure consulting services, deployment services, asset recovery and recycling services, training services, support services, and managed services. Further, the company provides a range of financial services, including originating, collecting, and servicing customer receivables related to the purchase of Dell products; and financing alternatives, asset management services, and other customer financial services for business and consumer customers. Its customers comprise large corporate, government, healthcare, and education accounts, as well as small and medium businesses, and individual consumers. The company sells its products and services directly to customers through sales representatives, telephone-based sales, and online at www.dell.com, as well as through various indirect sales channels

Competitive Landscape Demand is tied to consumer and business income. The profitability of individual computer companies depends on purchasing and production efficiencies, and on technological expertise. Large companies have economies of scale in purchasing and production. Small companies can compete successfully by specializing in certain products or by developing superior technology. The industry is capital-intensive and highly automated: annual revenue per employee is about US$500,000. Computer Manufacture Industry Forecast The output of US computer manufacturing is forecast to grow at an annual compounded rate of 4% between 2008 and 2013. Data Sourced: December 2008. Dell Inc. (HQ) Michael S. Dell Founder, Chairman and Chief Exec. Officer One Dell Way Round Rock, TX 78682 United States Phone: 512-338-4400 Fax: 512-728-3653 http://www.dell.com

Dell Subsidiaries Alienware Corporation ASAP Software, Inc. Dell Canada Inc.


Dollar Thrifty Automotive Group Inc. (DTG) June 25, 2009 Paul A. Ebeling, Jr. Analyst Today, let’s look at Dollar Thrifty Automotive Group Inc. (DTG), Drivers hoping to save a buck look to Dollar Thrifty to rent their cars, from a Technical POV. The overall indications, after Wednesday’s (June 24, 2009) market action, are Very Bullish: in the near term Bullish:, mid-term Very Bullish:, and long term Very Bullish.

**Chart by: http://www.stockta.com

Latest News: Rental Companies Looking Unscathed by Automaker Bankruptcies http://finance.yahoo.com/news/Rental-Companies-Looking-indie-15502311.html?x=1&.v=1 Tuesday’s Market Action Close 10.96

+ 1.40

Volume 850,800/shrs


There is a Bullish Engulfing Candle on June 23, and two Gaps open up between Apr 2 and June 24, 2009 at 1.29/9.64 the near term resistance is 11.71, support at 10.6, and the 50 day (EMA) exponential moving average is 6.92. This is Dollar Thrifty Automotive Group Inc. (DTG): Dollar and Thrifty rent cars from about 740 (down from 830) locations in the US and Canada, more than half of which are company-owned locations. Both brands target the airport rental market; Thrifty also maintains off-airport locations. The combined DTG fleet of some 140,000 vehicles is made up mainly of Chrysler models. Although the brands retain distinct identities, key operations and administrative functions have been consolidated under the DTG umbrella. Competitive Landscape The industry depends highly on the general state of the US economy because most customers are business or vacation/leisure travelers, whose numbers can rapidly fall during an economic slowdown. Automobile Rental and Leasing Industry Forecast The output of US automotive equipment rental and leasing services is forecast to grow at an annual compounded rate of 2% between 2008 and 2013. Data Sourced: December 2008 Dollar Thrifty Automotive Group Inc. (HQ) Scott L. Thompson Chief Exec. Officer, President 5330 East 31st Street PO Box 35985 Tulsa, OK 74135-0985 United States Phone: 918-660-7700 Fax: 918-669-3912 http://www.dtag.com


Google Inc. (GOOG) Up-date 9 June 25, 2009 Paul A. Ebeling, Jr. Analyst Today, let’s look at Google Inc. (GOOG), the Internet Search Engine leader, from a Technical POV. The overall analysis after Wednesday’s (June 24, 2009) market action is Neutral: in the near term Neutral, mid-term Neutral, and long term Very Bullish.

**Chart by: http://www.stockta.com Latest News: Google Android Gets Help In Fight Against Apple iPhone http://finance.yahoo.com/news/Google-Android-Gets-Help-In-siliconalley-2455140631.html?x=0&.v=2 Wednesday’s Market Action Close 409.29 + 3.61

Volume 2,455,700/shrs


There is a DOJI on June 24 and are two Gaps open up between Mar 23 and Apr 2, 2009 at 332.99/360.32, the near term resistance is 417.13, support at 392.09, and the 50 day (EMA) exponential moving average is 402.80. This is Google Inc. (GOOG): Google operates the leading Internet search engine, offering targeted search results from billions of Web pages. Results are based on a proprietary algorithm -Google's technology for ranking Web pages is called PageRank. The company generates nearly all of its revenue through ad sales. Advertisers can deliver relevant ads targeted to search queries or Web content. Google also operates the Google Network, a network of third party customers that use Google's advertising programs to deliver relevant ads to their own Web sites. Founders Sergey Brin and Larry Page each have nearly 30% voting control of the company. The Competitive Landscape Demand comes largely from corporations that sell consumer products, and telecommunications, entertainment, and financial services. The profitability of individual companies depends on creative skills and good marketing. Large companies are advantaged in being able to serve the varied needs of large customers, but small companies can be competitive through special talent or lower pricing or through special services. The industry is labor intensive, but the high value of the product produces annual revenue per employee of about US$150,000. Advertising and Marketing Industry Forecast The output of US advertising services is forecast to grow at an annual compounded rate of 5.5 % between 2008 and 2013. Google Inc. (HQ) Chairman & Chief Exec. Officer Eric E. Schmidt Ph.D. 1600 Amphitheatre Parkway Mountain View, CA 94043 United States Phone: 650-253-0000 Fax: 650-253-0001 http://www.google.com


MGM Mirage (MGM) Up-date 6 June 25, 2009 Paul A. Ebeling, Jr. Analyst Today let’s look at MGM Mirage (MGM), one of the World's largest gaming firms, from a Technical POV. The overall indications, after Wednesday’s (June 24, 2009) market action, are Neutral: in the near term Neutral, mid-term Neutral, and long term Bearish.

**Chart by: http://www.stockta.com Latest News: MGM Shares Rise as Company Removes 'Going Concern' Doubt http://online.wsj.com/article/SB124586864689148981.html?ru=yahoo#mod=yahoo_hs Wednesday’s Market Action Close

6.69

+ .85

Volume 47,971,500/shrs


There are three Gaps open up between Apr 2 and June 24, 2009 at 2.63/6.30, the near term resistance is 6.82, support at 4.68, and the 50 day (EMA) exponential moving average is 7.10. This is MGM MIRAGE (MGM): MGM Mirage through its subsidiaries owns and operates casino resorts in the United States. The company’s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2008, the company’s properties consisted of 17 wholly-owned casino resorts and 50% investments in 4 other casino resorts. It has a strategic alliance with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort under the MGM Grand brand name in Ledyard, Connecticut. The company, formerly known as MGM Grand, Inc., was founded in 1986 and is based in Las Vegas, Nevada. MGM MIRAGE is a subsidiary of Tracinda Corporation. Competitive Landscape Growth in consumer income and state spending has driven expansion of the US gambling industry. The profitability of individual companies depends on efficient operations and effective marketing. Large operators have the financial resources to make large investments in facilities and efficient computer operations, and have cross-marketing opportunities. Small gambling facilities can thrive by catering to a local clientèle. The industry is fairly labor-intensive: annual revenue per employee is US$90,000. Gambling Operations Industry Forecast US personal consumption expenditures for participant amusements and pari-mutuel net receipts, which include gambling operations, are forecast to grow at an annual compounded rate of 4% between 2008 and 2013. Data Sourced: December 2008 MGM Mirage (HQ) James J. Murren: Chairman, Chief Exec. Officer and President 3600 Las Vegas Boulevard South Las Vegas, NV 89109 United States Phone: 702-693-7120 Fax: 702-693-8626 http://www.mgm-mirage.com


Orckit Communications (ORCT) June 25, 2009 Paul A. Ebeling, Jr. Analyst Today, let’s look at Orckit Communications (ORCT), the manufacturer of telecommunications networking equipment, from a Technical POV. The overall indications, after Wednesday’s (June 24, 2009) market action, are Bullish: in the near term Very Bullish, mid-term Bullish, and long term Neutral.

**Chart by: http://www.stockta.com

Latest News: Good News from Japan for Orckit http://seekingalpha.com/article/142271-good-news-from-japan-for-alvarion-orckit?source=yahoo Wednesday’s Market Action Close 3.65

+.73

Volume 153,600/shrs


There is a Grave Stone DOJI on June 23, and three Gaps open up between Apr 7 and June 24, 2009 at 2.18/3.38, the near term resistance is 3.70, support at 3.53, and the 50 day (EMA) exponential moving average is 3.06. This is Orckit Communications (ORCT): The Company manufactures telecommunications networking equipment. Through its Corrigent subsidiary, the company provides optical transport system used by telecom service providers to manage data, video, and voice traffic over metropolitan-area networks. Its devices are specifically designed to handle high bandwidth services such as HDTV and IP-based television, but they also support traditional circuit-based data and voice transmissions. Sales to Japanese telecom service provider KDDI accounted for almost all of Orckit's revenues in 2005, 2006, and 2007. Competitive Landscape The industry depends on purchases from businesses, telephone companies, cable companies, data communications providers, and TV and radio broadcasters. Profitability for individual companies is linked to technical innovation and the ability to secure high-volume contracts from large customers. Small companies can be successful if they make highly specialized products. There are large economies of scale in manufacturing standard products, but many products are specialized and produced in small manufacturing plants. Annual revenue per employee in a large plant varies from US$500,000 to US$1MM. Telecommunications Equipment Manufacturers Industry Forecast The output of US communication equipment manufacturing is forecast to grow at an annual compounded rate of 2% between 2008 and 2013. Data Sourced: December 2008 Orckit Communications Ltd. (HQ) Izhak Tamir Chairman & President 126 Yigal Allon Street Tel Aviv, 67443 Israel Phone: 972 3 696 2121 Fax: 972 3 696 5678 http://www.orckit.com


Wells Fargo & Company (WFC) Up-date 24 June 25, 2009 Paul A. Ebeling, Jr. Analyst Today let’s look at Wells Fargo & Company (WFC), the Western USA banking Giant, from a Technical POV. The overall indicators, after Wednesday’s (June 24, 2009) market action, are Neutral: in the near term Neutral, mid-term Neutral, and long term Bullish.

**Chart by: http://www.stockta.com

Latest News: Wells Fargo's Steve Farish Recognized As Insurance Industry Employee Benefits "Power Broker" http://finance.yahoo.com/news/Wells-Fargos-Steve-Farish-bw-1535480680.html?x=0&.v=1


Wednesday’s Market Action Close 23.17

+. 26

Volume 69,034,300/shrs

There is a DOJI on June 24, and one Gap open up on Apr 9, 2009 at 15.17/17.42, the near term resistance is 24.27, support at 21.30, and the 50 day (EMA) exponential moving average is 22.99 This is Wells Fargo & Company (WFC): Wells Fargo & Company, through its subsidiaries, operates as a financial services company in the United States. It operates in three segments: Community Banking, Wholesale Banking, and Wells Fargo Financial. Community Banking segment offers deposit products, including checking accounts, savings deposits, market rate accounts, retirement accounts, time deposits, and debit cards; and loan products comprising lines of credit, equity lines and loans, equipment and transportation loans, education loans, residential mortgage loans, and credit cards. This segment also provides receivables and inventory financing, equipment leases, real estate financing, small business financing, venture capital financing, cash management, payroll services, retirement plans, health savings accounts, merchant payment processing, and securities brokerage. Wholesale Banking segment provides a range of commercial, corporate, and real estate banking products and services, including commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, mezzanine financing, high-yield debt, international trade facilities, foreign exchange services, treasury management, investment management, institutional fixed income sales, interest rate, commodity and equity risk management, online products, insurance, investment banking, and mortgage brokerage services. Wells Fargo Financial segment comprises consumer finance operations that make direct consumer and real estate loans to individuals and purchase sales finance contracts from retail merchants; and auto finance operations, which purchase sales finance contracts directly from auto dealers and make loans secured by autos. This segment also provides credit cards and lease, and other commercial financing services. As of December 31, 2007, the company operated 5,964 branches and 6,900 ATMs. Wells Fargo & Company was founded in 1852 and is headquartered in San Francisco, California. 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 5.1% between 2008 and 2013. Wells Fargo & Company (HQ) Chairman Richard M. Kovacevich 420 Montgomery Street San Francisco, CA 94104 United States Phone: 866-249-3302 Fax: 651-450-4033 http://www.wellsfargo.com

Wells Fargo Subsidiaries Wachovia Corporation


Disclaimer: The foregoing is commentary for informational purposes only. It is designed to help the reader learn the fine art of technical analysis. Links are provided to articles and stories referenced in this Report. Some statements and expressions are the points of view and/or opinions of Red Roadmaster™, aka Paul A. Ebeling, Jr. and the contributors. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. I am not licensed or registered in the securities industry. The information presented herein has been obtained from readily available sources believed to be reliable, but its accuracy is not guaranteed. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. I do not receive compensation in any manner from any of the companies that are discussed in this Report. Please feel free to print and/or send The Red Roadmaster’s Technical Report on the US Major Market Indices ™ to your friends and associates, no permission is necessary. ©2002/2009 Paul A. Ebeling, Jr.

Red Roadmaster Stock Talk 25th June, 2009  

Talk Stock with Red Roadmaster

Advertisement