Spurned Techs Bouncing Back, Gold Glimmers: GOOG, NVDA, GLD, CROX, TLT

Market Recap
Since the beginning of September, investors and traders have returned to a bullish stance as recent economic data has indicated that the dreaded “double-dip” recession is likely off the table for now. Most notably, data from the sluggish labor market suggested that the situation is at least stabilizing, if not improving, for those looking to dip their toes back into the job pool. Specifically, on September 9 it was reported that weekly initial jobless claims were 451,000, better than the 470,000 expectation. Additionally, continuing claims maintained its downward track, dropping to 4.478 million from 4.48 million. This news comes on the heels of the non-farm payrolls report from September 3 which showed that the private sector added more jobs (+67K vs. +44K) than projected.
The positive news has been well received by the stock market, as the S&P 500 has extended higher by 7% since the end of August. In concert with the resurgence in stocks, the SPDR Gold Shares ETF (GLD) continues its recent surge, most likely due to the markets’ anticipation for increasing inflationary pressures (and a potential interest rate hike). On the flip side, the previously hot iShares Barclays 20+ Year Treasury Fund (TLT) has dropped sharply over this same period, down 5%, as investors take gains and become more comfortable allocating cash to the riskier equity markets. After sliding lower, shares of TLT are now trading at a support level around $102. Should stocks continue to outperform, however, TLT could violate that support area and drift lower. Subscribers to Stock Traders Daily have access to our detailed trading report on TLT which provides analysis on all the key support/resistance levels.
Google On The Mend
It has been a rough year for the world’s largest internet search company, with shares sinking lower by as much as 30% in 2010. One primary issue for Google (GOOG) has been a deceleration in top-line growth due to softening paid click and cost-per-click metrics. For instance, in 1Q10, GOOG’s revenue grew a paltry 2%. Back in late 2008 and early 2009, its revenue was growing at healthy double digit rates. Another shock came when GOOG missed Street expectations on the bottom line last quarter (July 15) as EPS came in at $6.45 versus the $6.52 estimate. That marked the first time in at least eight quarters that GOOG missed the mark on earnings. The earnings miss was a surprising disappointment, but it may have also been the low-point for GOOG. Since that earnings report, the stock is up 5% and may have further room to run given that its valuation is very reasonable with a 1-year forward P/E of 15.4x. It’s also worth noting that its balance sheet is exceptionally strong with $94.32/share in cash and no long term debt and has yet to make a major splash in the M&A market. For a complete technical analysis, all of our subscribers have access to our GOOG trading report which offers key entry and exit points. Of course, all of our reports provide risk control tools that allow our subscribers to minimize downside exposure while also taking full advantage of upswings.
NVIDIA Feeling Some Love
One stock that investors loved to hate this past spring and summer is graphic chip maker NVIDIA (NVDA). The stock price was cut in half, going from the $18 area in mid-April down to $9 by mid-August. The problem for NVDA is that it is a component of the previously ice-cold semiconductor space, and is more dependent on a strong consumer than most of its peers. This is because its graphic chips are generally top-of-the-line and more expensive than say, a highly-commoditized chip from Intel (INTC). They are used in the gaming world, as well as fields that use high quality imaging such as healthcare and auto manufacturers. With the economy showing some signs of life, this highly cyclical – and beaten down stock – has also lifted from the ashes. It pushed through its 50-day moving average in early September, which may also provide a spark as the move eliminated a key resistance level. After this 13% move, our subscribers can access our trading report on NVDA to see what the next resistance level will be.
What A Croc(X)
On the downside, shares of the casual footwear maker were hit hard on September 9 after research firm Susquehanna downgraded its peer, Skechers (SKX). A research firm also expressed concern that sporting goods stores have been cancelling orders of SKX’s shoes, which doesn’t bode well for CROX. However, CROX attempted to restore some confidence in its outlook by reaffirming its third quarter revenue and EPS guidance. Its future growth outlook looks promising too, as analysts see FY10 EPS improving to $0.68 from ($0.49) a year ago, on solid 18% sales growth. Following the 20% drop, the stock appears to be resting at support around $11. To see whether a long trading opportunity exists here, our subscribers can access the trading report for a full technical analysis.

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