Thursday, July 30, 2015

Twitter - Is It Really A Business?

Today Twitter published its 2Q 2015 results. Below I put three charts showing the basic measures.

Firstly, a chart showing revenue and operating losses incurred by the company.

Note: operating loss for 2015 is calculated as: 2014 operating loss - 1H 2014 operating loss + 1H 2015 operating loss.

As the chart shows, although revenue generated by the company had been in a rapid increase since 2011, Twitter has not been able to make any profit on its core business.

Another chart - this time it shows revenue and cash flow from core business operations (excluding working capital issues):

Well, this time it looks much better. It seems that the Twitter's core business brings some cash to the company.

Unfortunately, since 2011 Twitter has been reporting a negative free cash flow. Please, look at the chart below:

Free cash flow is calculated using the following formula:

Free Cash Flow = Cash Flow From Operations (including working capital issues) - Investment Expenditures

Investment expenditures contain purchases of property and equipment plus spending on business combinations.

Free cash flow is one of the most important financial measures - if a company is not able to report free cash flow in the long term it's future does not look bright (at least).


Sunday, July 26, 2015

Managed Money - Negative Sentiment At Highest Level In History; Gold, Silver and Copper Ahead Of A Furious Rebound

When pessimism prevails there is practically no chance the market will go down. These days Managed Money (mostly big hedge funds) holds the highest short positions in gold, silver and copper  ever.
To make the picture clear, instead of presenting three charts, I have added and adjusted short positions held by Managed Money in these commodities. Please, look at the chart below:

Well, every time the Managed Money was totally pessimistic about any market, no new down leg started. Quite contrary - if such was a case, we saw the market bouncing up. Looking at the highest short position in three popular commodities, I think the rebound will be really surprising.

Friday, July 24, 2015

Japanese Equities Are Still In Fashion

The scale of capital flows is one of the best indicators identifying whether a specific market is bringing the investors' interest.

In the case of the Japanese equities, below I am presenting two flow indicators showing that these shares are still been acquired by foreigners and the Japanese investors.

Please, look at the charts below:

As the charts show, foreigners have been buying the Japanese equities since the beginning of 2013. From that same time the Japanese investors have been selling foreign shares - therefore they have been probably using the funds acquired from these sales to buy the Japanese equities.

Both trends magnify themselves so we see the ongoing bull market in Japan (weak Yen is another factor standing behind it).

Well, for the time being there are no signs that the current bull market is going to end.

Wednesday, July 22, 2015

My Fortune-Telling On Gold

Financial markets go in cycles. After a strong appreciation in prices there is time for correction. While I am not a believer in the Fibonacci wave theory, sometimes it is interesting to look at the so-called Fibonacci retreat levels. This time I am trying to use this theory to look at the entire bull market in gold.

Since its beginning in 2001, gold had gone up from $250 per ounce to $1,920 per ounce (in 2011). According to the Fibonacci theory, a corrections of 33%, 50% and 66% are the most probable ones. These days, gold is standing close to $1,083 per ounce, which is a point of 50% correction of the current big bull market. So the bottom could be in.

If not, another important level is $888, which means a 66% correction.

Monday, July 20, 2015

US Equities - Be Very Careful This Time

Today Nasdaq 100 hit another all-time high. Another index, S&P 500, is jut 2 points below its all-time high. It looks fine for the bulls.

But the market internals deteriorated once again. This time this deterioration is especially impressive.
Well, it is nothing strange that less and less companies hit their 52-week highs (I had written about it many, many times). What is strange is that today, while Nasdaq 100 was very busy with making its record, actually more stocks hit their new 52-week lows than highs. It is not a common thing when index makes new high. I would say - it is very uncommon.

Please look at the table below:

Friday, July 17, 2015

At The End Of Day Gold Bulls Are Defeated And Nasdaq 100 Prints Another Record At The Awful Market Internals

Gold bulls are in despair - both gold and silver made new lows today:

Nasdaq 100 made another record but it was printed at less new highs and more new lows. It is totally strange situation....

Precious Metals Sector - Hard Times For Gold Bulls To Be Continued?

Today we have another bad day for the gold bulls. Bears, who have been controlling the PM (precious metals) market since 2011,  are trying to break the gold support once again.

Looking at the relative strength of gold against world equities, one could easily spot that on this front the gold bulls are loosing once again:

But I have a chart, which could make the gold bulls a little happier. Please, look at it:

The chart shows the relative strength of silver (SLV) against gold (GLD). The chart line is going down, which is a sign of a bear market in the precious metals sector (silver going down faster than gold). The chart confirms that since 2013 silver has been much weaker than gold.

For example, every time the 50-day simple moving average (50 SMA) had been closing to the 200-day simple moving average, it was not able to break above its 200-day sister (200 SMA). These days we have the similar situation once again. It seems that 50 SMA is going to bounce down once again.

But if it fails to do that - and it could make the gold bulls happier - a new up leg in PM sector could start shortly after that.