Filed under: Forecasts, Bad news, Economic data, Oil

It has been a long time coming. After a big move in 2007, the markets hoped that oil would stay put in the $90 range. OPEC has been pumping at the same rate for most of the year; so have Mexico, Venezuela and most big African producers.

The theory was that demand would drop off in big consuming nations like China and the U.S. because the economy’s growth has been slowing. But there are no figures to show that this has happened.

Oil moved above $100 for the first time today. As Joe Lazzaro had already posted, political trouble in Nigeria and Pakistan were partly to blame. Concerns about U.S. supply during a cold winter contributed.

According to MarketWatch, “US crude inventories have likely fallen by 1.8 million barrels in the week ending Dec. 28, according to a Dow Jones Newswires survey of analysts.”

Those are the easy answers, though. The harder facts are that oil-producing nations are keeping more of their crude to build their own infrastructures and support growing numbers of cars and trucks within their own borders. Crude is getting harder to find and it is more expensive to drill, especially in deep water. The appetite for oil in the U.S. is not going away. In China, the government underwrites that cost of gas and diesel to keep the economy moving, so cheap supply is provided by the national treasury.

It is not the short-term price of oil that should trouble the market. It is what is likely to happen over the next ten years.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Major movement, International markets, Forecasts, Consumer experience, Commodities, Oil

For the first time ever oil prices have busted through the psychological $100 mark.

As Joseph Lazzaro mentioned earlier this morning, concerns over unrest in Nigeria, along with expectations of a bullish inventory report from the Energy Department had been the forces pushing prices higher, and now prices have finally been able to hit the $100 mark.

This week’s inventory report, which is typically released on Wednesdays, will be coming out a day late due to the fact that the market was closed yesterday for New Years. We will see if prices are able to hold onto the century mark once we get tomorrow’s data.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer

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Filed under: Forecasts, Bad news, Economic data, Oil

It has been a long time coming. After a big move in 2007, the markets hoped that oil would stay put in the $90 range. OPEC has been pumping at the same rate for most of the year; so have Mexico, Venezuela and most big African producers.

The theory was that demand would drop off in big consuming nations like China and the U.S. because the economy’s growth has been slowing. But there are no figures to show that this has happened.

Oil moved above $100 for the first time today. As Joe Lazzaro had already posted, political trouble in Nigeria and Pakistan were partly to blame. Concerns about U.S. supply during a cold winter contributed.

According to MarketWatch, “US crude inventories have likely fallen by 1.8 million barrels in the week ending Dec. 28, according to a Dow Jones Newswires survey of analysts.”

Those are the easy answers, though. The harder facts are that oil-producing nations are keeping more of their crude to build their own infrastructures and support growing numbers of cars and trucks within their own borders. Crude is getting harder to find and it is more expensive to drill, especially in deep water. The appetite for oil in the U.S. is not going away. In China, the government underwrites that cost of gas and diesel to keep the economy moving, so cheap supply is provided by the national treasury.

It is not the short-term price of oil that should trouble the market. It is what is likely to happen over the next ten years.

Douglas A. McIntyre is an editor at 247wallst.com.

Read | Permalink | Email this | Comments

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Filed under: Major movement, International markets, Forecasts, Consumer experience, Commodities, Oil

For the first time ever oil prices have busted through the psychological $100 mark.

As Joseph Lazzaro mentioned earlier this morning, concerns over unrest in Nigeria, along with expectations of a bullish inventory report from the Energy Department had been the forces pushing prices higher, and now prices have finally been able to hit the $100 mark.

This week’s inventory report, which is typically released on Wednesdays, will be coming out a day late due to the fact that the market was closed yesterday for New Years. We will see if prices are able to hold onto the century mark once we get tomorrow’s data.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer

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Filed under: Bad news, QUALCOMM Inc (QCOM), Broadcom Corp’A’ (BRCM), Options, Technical Analysis

QUALCOMM Inc. (NASDAQ: QCOM) stock opened lower this morning after a federal judge in California ruled on Monday that the company must immediately halt selling third-generation (3G) WCDMA cellular chips, as they seem to infringe on patents held by rival Broadcom (NASDAQ: BRCM). According to analysts, QCOM may eventually have to pay royalties to BRCM due to the ruling, which would negatively affect its guidance, though the ruling allows QCOM time to implement a workaround solutions before any royalties can be imposed. Shortly after the open, QCOM announced the launch of new chips it says will comply with the ruling. If you think this stock won’t be rising too far in the coming months, then now could be a good time to look at a bearish hedged play on QCOM, since options prices could be high at this time.

After hitting a one-year high of $47.72 in May, the stock hit a one-year low of $35.23 in August. This morning, QCOM opened at $38.23. So far today the stock has hit a low of $38.12 and a high of $39.80. As of 11:15, QCOM is trading at $38.92, down $0.42 (-1.1%). The chart for QCOM looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Continue reading Qualcomm (QCOM) unfazed by court ruling

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Filed under: Bad news, Economic data, Federal Reserve

The nation’s factory sector contacted in December 2007 to its weakest level since April 2003, the Institute of Supply Management announced Wednesday. The ISM index fell to 47.8% in December 2007 from 50.8% in November 2007. Readings below 50% indicate a contracting industrial sector. Analysts had expected a December 2007 ISM reading of 50.9%.

In all, only seven of 18 industrial segments expanded. Moreover, economic activity in the manufacturing sector failed to grow in December 2007 after 10 consecutive months of expansion, while the overall economy grew for the 74th consecutive month, the ISM announced.

Disappointing statistic

Economist Steve Affinito told BloggingStocks Wednesday that the ISM statistic will place more pressure on the U.S. Federal Reserve to continue to cut short-term interest rates.

“It’s a disappointing statistic, no question. We were looking for something slightly north of [above] 50% and a reading below 50%, that has to concern the Fed. It’s just one month but it indicates that manufacturing is contracting, and at minimum is likely to grow to slowly,” Affinito said. “The Fed will have to cut interest rates at least two more times to help prevent an economic stall. The December ISM stat is not a number the Fed hawks can ignore.”

Continue reading Manufacturing contracts to weakest level since April 2003

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Filed under: Bad news, QUALCOMM Inc (QCOM), Broadcom Corp’A’ (BRCM), Options, Technical Analysis

QUALCOMM Inc. (NASDAQ: QCOM) stock opened lower this morning after a federal judge in California ruled on Monday that the company must immediately halt selling third-generation (3G) WCDMA cellular chips, as they seem to infringe on patents held by rival Broadcom (NASDAQ: BRCM). According to analysts, QCOM may eventually have to pay royalties to BRCM due to the ruling, which would negatively affect its guidance, though the ruling allows QCOM time to implement a workaround solutions before any royalties can be imposed. Shortly after the open, QCOM announced the launch of new chips it says will comply with the ruling. If you think this stock won’t be rising too far in the coming months, then now could be a good time to look at a bearish hedged play on QCOM, since options prices could be high at this time.

After hitting a one-year high of $47.72 in May, the stock hit a one-year low of $35.23 in August. This morning, QCOM opened at $38.23. So far today the stock has hit a low of $38.12 and a high of $39.80. As of 11:15, QCOM is trading at $38.92, down $0.42 (-1.1%). The chart for QCOM looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Continue reading Qualcomm (QCOM) unfazed by court ruling

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Filed under: Bad news, Economic data, Federal Reserve

The nation’s factory sector contacted in December 2007 to its weakest level since April 2003, the Institute of Supply Management announced Wednesday. The ISM index fell to 47.8% in December 2007 from 50.8% in November 2007. Readings below 50% indicate a contracting industrial sector. Analysts had expected a December 2007 ISM reading of 50.9%.

In all, only seven of 18 industrial segments expanded. Moreover, economic activity in the manufacturing sector failed to grow in December 2007 after 10 consecutive months of expansion, while the overall economy grew for the 74th consecutive month, the ISM announced.

Disappointing statistic

Economist Steve Affinito told BloggingStocks Wednesday that the ISM statistic will place more pressure on the U.S. Federal Reserve to continue to cut short-term interest rates.

“It’s a disappointing statistic, no question. We were looking for something slightly north of [above] 50% and a reading below 50%, that has to concern the Fed. It’s just one month but it indicates that manufacturing is contracting, and at minimum is likely to grow to slowly,” Affinito said. “The Fed will have to cut interest rates at least two more times to help prevent an economic stall. The December ISM stat is not a number the Fed hawks can ignore.”

Continue reading Manufacturing contracts to weakest level since April 2003

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Filed under: Major movement, Analyst upgrades and downgrades, Bad news, Industry, Intel (INTC), Options, Technical Analysis

Intel Corp. (NASDAQ: INTC) stock is trading lower this morning after an analyst at Banc of America Securities downgraded the stock to “Neutral” from “Buy,” pointing to weak seasonality in the first half of 2008. Banc of America downgraded seven other chipmakers, including Advanced Micro Devices (NYSE: AMD) and National Semiconductor Corp. (NYSE: NSM), taking a more cautious stance on the semiconductor industry due to slightly higher inventory levels, the likelihood of weak seasonality, and a potential macroeconomic slowdown. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on INTC.

After hitting a one-year low of $18.75 in March, the stock hit a one-year high of $27.99 in December. So far today the stock has hit a low of $25.38 and a high of $26.34. As of 11:05, INTC is trading at $25.47, down $1.19 (-4.4%). The chart for INTC looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 11.6% return in 4 months as long as INTC is below $30 at April expiration. Intel would have to rise by more than 21% before we would start to lose money.

Continue reading Intel (INTC) loses ground on industry-wide downgrades

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Filed under: Market matters, Personal finance, Politics, Housing

President Bush wants Congress to act fast on pending legislation that would give homeowners more options for refinancing their home loans. Economic adviser Ed Gillespie told reporters Bush wants Congress to act faster to “help make the market more stable.”

While some support this legislation, others think that those in trouble have made their own beds and now they must lie in them. Even so, many people who didn’t make any mistake and have fixed-rate loans are still feeling the pain as home prices continue to fall. Anything that can be done to help homeowners avoid foreclosure and stay in their homes will help everyone. Fewer homes will end up on the market at fire sale prices and the market will begin to stabilize.

What legislation does Bush want to pass? There are three key pieces:

• Make it easier for low-income homeowners to refinance adjustable-rate mortgages through the Federal Housing Administration. Of course, for this to work pre-payment penalties on those ARMs would have to be outlawed. Many of the ARMs set to jump 2% to 3% have prepayment penalties of $12,000 or more and home values lower than the mortgage amount due.

Continue reading Bush pushes bills to expand home refinancing options

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