D&D Note (5-22-2012)
Today started with a nice rally on housing data – until the final 30 minutes of trading when one headline on Greece possibly beginning an exit strategy from the Euro dragged all the indexes down erasing todays gains. New reports have that Greece might only have 2 days to determine its future.
Existing home sales surged 3.4% in April an annual rate of 4.62 million which is a gain of 10% year-over-year (from the National Association of Realtors report). While this isn’t anything to really cheer about, it might mean that perhaps the warm winter wasn’t the only thing adding to housing, and perhaps the US housing market has finally bottomed. Or perhaps this is simply clearing out of excess “shadow” inventory which includes foreclosed homes.
US stocks tried to continued the global rally today but gave them back on the Greece news. DOW (INDU) ended lower .01% , S&P 500 (SPX) gained of .05%, Nasdaq (COMP) ended lower .29% with Facebook (FB) being a big drag.
Wynn Macau (WYNMF) the Chinese Casino located in Macau (which is a special territory like Hong Kong) has been under pressure lately due to, of all things, a labor shortage in Macau (lots of specialized elements causing this including rules on hiring a certain percentage of local residents). Interestingly the company is rumored to be requesting a $1 billion loan. That big of a loan seems to be for more than just the second casino, and perhaps could be for an entire residential/ commercial development (coupled with government help) along with a casino which would essentially create more space in the city to add to the only 500,000 population, thus eliminating the labor shortage. Just speculation.
Currently the stock is trading at its lowest level since January 16th and has long term support around the current price of $2.37. The stock just broke it’s downward channel and could be on the verge of a breakout.
WYNMF represents one of D&D’s speculation holdings and is a long term investment. The holding will stay at 2.5% of total D&D Holdings (which is a decent allocation for one speculative position) until the there is more certainty in the financing and building plans of the company. Imagine investing in Las Vegas when Frank Sinatra was getting his start there.
Facebook (FB) is getting a rude welcome by the markets. The valuation of the company was simply too high. The underwriters should have capped the IPO price at the original top of $34 if not at the the $31 bottom level. Until Facebook can crack into the mobile market, there is no justification for the initial valuation. FB shares fell again today down 8.90% to close at $31.00.
If… when… Facebook falls under $30 and can find some support, then you can start thinking about starting a small position. Don’t forget shorting of the stock begins tomorrow, how far it gets cut the next few days will tell how the market really prices the company. D&D will be on the sidelines for awhile on this equity until the technical chart analysis can develop, i.e. where is the floor.
Apple (AAPL) might be poised to break resistance around $575 – $580 if it can then the stock could be poised to take out all time highs. All though as with everything trading in the markets today it all depends on Europe. High correlation.
Oil fell $1.38 to close at $91.48 a barrel – remember watch $90 for resistance.
Gold fell $22.10 to close at $1,566.60 an ounce. Until the printing presses kick back on Gold will be under pressure.
Next global easing movement could be a coordinated swap easing by central banks.
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