Monday, June 23, 2008

Another win for the analysts - not

Having morning coffee and flipping through the cable business shows this caught my ear - Piper Jaffray downgraded the shares of Motorola to a sell. Let's check this out for a moment.

This stock was trading in the mid-20s for much of 2006 and started to crated in mid-2007. Where is it now? Last price as of this writing was 7.57. Where was Piper when the stock was in the 20s? Now they downgrade it? Thanks for looking out for my best interests.

I read a report that someone did a study buying stocks when they collect analyst sell recommendations. Motorola still looks like it is a dying stock but I certainly will start watching it now with the idea that it has a dead cat bounce, if not more, coming up soon.

Just for kicks, here are the last few analyst changes as recorded by

3/26/08 Amer. Technology Research........ Neutral from Sell
9/24/07 RBC Capital Markets..................... Outperform from Sector Perform
9/20/07 Cowen & Co. .................................. Outperform from Neutral
7/30/07 JMP Securities ............................... Market Perform from Market Underperform

Each one of these is an upgrade!!!

Now check out the chart:

Do you think this might have helped here? Uh, yeah. You can see some support breaks. Not shown is a rather big trendline breakdown in Jan 2007.

Is it any wonder I don't look at balance sheets and income statements? The market tells me what I need to know and it said quite clearly several times last year that this stock should not be owned.


Anonymous said...

I suppose for readers of your column/blog this is "preaching to the choir" to say that technical analysis is superior to fundamental analysis, and articles on the poor quality of analysts recommendations are easily found. But funny you should mention MarketWatch. There is a technician writing there that by my analysis is always slow to see the down side and rarely recommends short positions. I have often wondered if you would comment on a competitor's analysis.

Michael Kahn said...

Not a chance. :-(

Nobody is perfect in this business, everybody gets hot and cold streaks and I will leave it up to the marketplace to decide if there is value in my work or the work of anyone else.

Anonymous said...

What's going on with the VIX? I believe the Dow set an new intraday low today, but the VIX is still hovering around 23. I thought I read something about big accounts buying options OTC which don't show up in the VIX --true? Is there an intentional effort to make the VIX misleading?

Michael Kahn said...

You cannot always get a good read from the VIX since there are so many ways to lay off risk these days. What I see is some fear but nothing that would end the decline we've seen in the stock market.

As for the OTC stuff, yeah, it would not show up in the VIX since it is the CBOE index, not an all encompassing index of everything that trades.

Our indicators are good but they need tweaking to stay current.

Anonymous said...

But it is good enough!
VIX staying low is by far best expression of complacency of traders.
The mass senses downside probability exists, yet for various reasons, are not ready to act on it. Thus divergence manifests.
This type of uncertainty & complacency cocktail often ends with everyone rushing to the door at once=panic sell=climactic sell, of which and without, bottom cannot form.
A lot of traders must be assuming double bottom here, yet the chart seems to be telling another story...
Show me the VOLUME!