understanding the psychology of behavior

WoldWater and Solar Tech is a very interesting company with some interesting prospects. What sums up the company the best is when the CEO Quentin T. Kelly provided a testimony… to the House of Rep. Committee on Small Business.

Testimony

The last page really digs into the potential of the company, but I recommend reading the whole thing as it is not too long.

“Emcore’s cell concentrated by Entech’s optical lenses and translated from energy into working power by WorldWater’s electronic control devices. That is what I meant when I said I could see the future of power. This three legged stool of technology, for example, will be able to supply full power for
cities of 10 to 20 thousand—from sunshine alone.”

The company is currently very dependant on PPA (tax credits) to grow, as is every other solar company. Valuation is high, no question, but that is why this is a speculative play. On the other hand, if growth pans out with the promise of the technology, WWAT will be one of those “why didn’t I play at least some shares” type of stocks.

I was waiting for the Entech’s LOI to be signed before making a fundamental case for the stock. Apparently so were others. The stock shot up on the deal.

On the chart front, the stock is overbought, and about to hit some resistance. But the dynamic of the stock and company has changed due to the acquisition, and the conditions for it.

The chart is bullish, and a case can be made to make an initial entry, as I have done. Also , a case can be made to wait for a potential pull back to around 1.80 to 2 or so. The initial entry I made I plan on holding for the long-term, but will wait for a pull back and trade that position.

You Johnny-Come-Lately… Should have known he would push MA now.  Momentum players got their claws on it now. Will mostlikely see further upside from that.

Take most of the profits… don’t be greedy, and wait for the next opportunity. 

Isn’t it nice to get in before the late comers try to squeeze out extra gains from the momentum boys?

Congrats to whoever took the trade.

Sweet. They did 1.80 in EPS (minus the 0.51 investment benefit), crushing the est. of 1.42 by 36cents!

One word sums it up… nice.

I will unload the options today, to fully capture the call premium from the volatility of the day, but what a great core holding MA would be.

Update: It is nice to see a company actually increase its asset value via investment when it conducts a ‘mark-to-market’ on that investment. Nice change of pace.

FaceBook… WTF?!? Apparently Facebook will be tracking its users info via cookies to create an assumed better ad network. (A field that is already crowded, and dominated by Google.)

Facebook will not be the first to use cookies, other do, but it will be the first to utilize the social networks user generated profile to facilitate its targeting.  Let me rephrase that… Facebook will use you to profit.  A bit invasive, no? How do their users feel about this?

All these cookies going onto your computer by various internet companies that want to know everything about you. Now FaceBook is about to utilize the very information its users input to gain a somewhat competative advantage over other network ad platforms.  What if somewhere in that fine print of their ‘User Agreement’ it states they will license your info to third parties? Will there be controls onto these third parties as to how to utilize that info?  Will your pictures be expose to big bad corporate america? 

Oh the privacey concerns.  Ultimately I wonder how college students, which are wannabe hippies or at least in their hippy stage of life, will feel having Corporate America know everything about them; and profiting from them.

Not cool facebook… not cool.  If their users are smart enough to understand what will happen, they will not be happy.

Now I know why everytime I go use my computer I delete all my cookies.  That little voice in my head that tells me someone is watching is absolutely correct.

Will MSFT benefit from this… on Nov 6th we will find out.

The move upward was too good to pass up. Will wait for a pull back, and definately re-enter. Waiting for 88-89 (or the 10SMA) for the initial re-entry.

I like today’s BID announcement. One of my grips with Management was their lack of partnering with the Banks, but that was squashed today.

The move on my part was purely technical. (Still think estimates are far too low, but most of that should be realized soon, or the next q as the new pricing and BIDs take effect.) Will look to start playing the March 08 90 Calls. (If the move happens before Nov 2nd, I will still enter so I am keeping NYX up on my portfolio.)

So I am sitting here thinking about whether or not to sit through MA’s earnings. (I re-entered MA via 160 Nov Calls today) The chart still looks bullish, and a natural move to the upper resistance should occur, but fundamental events (like earnings) always de-rail the natural desire of a stock’s psychological behavior.

Digging through last quarters results, I came across some interesting stuff. First off, my article stating that a PEG of 1.59 is pretty pricey. Well, coincidently as it may sound, with a 5yr est. growth rate of 20%, MA is still at about a PEG of 1.59. But this go around, I do not consider it pricey. Here is why…

1. Analysts have raised their estimates since the last quarter, but I do not think high enough.

2. The company beat last time by about 8% on the strength of strong international growth.

3. During the last Q, the company stated “Two percent of Mastercard’s quarterly revenue growth was due to the weakening dollar”. (This is key, especially from July to October)

From end of June to the end of Sept the dollar saw a massive decline, thanks to the Fed cuts. If the previous quarter’s decline caused MA to see 2% rev growth, than this quarter should have a bigger effect.

Other companies with strong international exposure saw nice stock appreciation, MA should be no different (unless a negative fundamental shift occurred in the macro conditions of their biz model).

Taking into account the weakening dollar, growth from abroad, and the growing use of plastic verse cash I think a 5yr growth rate of over 20% is merited. As such, the stock can potentially test new highs, if my thesis holds.

With the dollar downward spiral, there are a few companies that benefit the most, and based on their current strength, they should continue to do great with further deterioration from the dollar decline. (Oh, and their stocks are really good too )

FXE: Just looks so bullish, despite the previous leg up. The Fed may not cut as much as the markets think, so the dollar may show some strength toward the end of next week.

GOOG: Look at the SMA support for an entry.

NYX: Look at the 10/20 SMA for an entry.

GS: I would have liked to see it touch 210 before an entry, but with its strength (despite index weakness) I do not know if that is going to happen.

KO: The company is doing things right, and greatly benefits from a week dollar to Euro. The chart has been so solid, I do not know if a worthy pullback will be seen.

MCD: My least favorite only because it is pretty pricey, but if growth is there, obviously it will not be considered pricey here.

As stated above, I do not think the Fed will cut as much as the markets think, assuming they cut at all. If the markets are disappointed, the buying opportunity will be toward the end of the week.

MA: Broke out from the potential resistance. Looks like a move to 162 is in the works.

WFR: Broke from its channel thanks to a great q.

My limit order was executed. Took the profit. 

It is still oversold. Could go to mid 152 (28 SMA) before some resistance.  Ultimately it could see 162. I will look to play it again, on a down day.

I took some profits on my NYX position. Will buy back on a pull back. My decision was purely technical, as NYX is currently too overbought.

I will buy back on a pullback or a consolidation via the chart. I am still a big fan of the fundamentals here.

(I kepted the protective put position. I found it weird that the stock was up at the open, yet the Nov 85 Puts were up too. That observation contributed in me taking profits.)