WaveStrength Market Trends for November 06, 2006
Print shakes Internet's hand
Market Trends
Print shakes Internet’s hand
By Ann Sosnowski
There’s interesting news coming out today involving Google Inc. (GOOG:NASDAQ) and major print newspapers.
GOOG has now announced a plan to offer advertising space offline for the top 50 American newspapers. Companies advertising online via Google now have the option to also advertise in print, a stride that will hopefully pick up the failing newspaper industry.
During the three-month test period starting this week, newspapers owned by The New York Times Company (NYT:NYSE), Gannett Co. Inc. (GCI:NYSE), Tribune Company (TRB:NYSE), and the Washington Post Company (WPO:NYSE) will have their ad space bid on by more than 100 Google advertisers.
Although Google won’t make any money during this test period, it will when the official ad program launches. Not only does this help Google continue as the top seller of online ad space, but it also exposes print newspapers to new ad revenue from smaller businesses.
This could very much be a two-sided coin that profits both parties involved.
After reporting a drop of 2.8% in weekly circulation on the top 770 national newspapers last week, it was obvious to all investors that these news giants are now being crushed by the weight of the Internet, and need to move into a new era of disseminating information.
Not only is Google lending a hand, but the newspapers are helping themselves: Gannett, Tribune and McClatchy invested an additional $15 million to Topix.net, collects online news content and separates it into categories. Gannett and Tribune already own 33.7% individually of Topix.net and McClatchy owns 11.9%.
This investment is a self-sufficing move and will hopefully bring their newspapers’ stories to the top of search engine lists and in turn increase traffic to their own online Web sites.
Before looking at the charts, which are only based on the news involving the print paper industry, one would think that there are no investment opportunities to be found. Au contraire: Most have been beat down so badly, have found bottom, and are now in rising formations that I term “trend busters.”
Based on the amount of effort that the print news industry is making following poor results for the six months ending in September (albeit a little too late) there may be a great buying opportunity going into early 2007.
WaveStrength Traders: Bryan and I will be out with a play tomorrow morning based specifically on this subject.
Regarding the Dow Jones Industrial Average, it sure was a good day. The Dow rose nearly 100 points to the 10-day Moving Average for a support retest, but has not gone much higher.
If you go back on the daily chart to the most recent correction in May 2006, 10-day retests on drastically falling Relative Strength are customary. Price should not go any further.
As for WaveStrength Traders’ calls, they’re still in ok shape. Price can return back to our entry in the snap of a finger.
Our telecom play is doing well on the day.
And finally, a free stock update on a play I recommended in June 2006.
Advanta Corp. (ADVNA:NASDAQ), our play on the credit card industry, is fairing very well. We originally bought the stock at $32.83 per share. Today, it’s trading as high as $36.56, a gain of 11.4%.
The company’s earnings rose for the third quarter as reported on October 31, stating new customer growth, low credit losses and high net income of 73 cents per share. Advanta’s business credit cards earned a net income of $20.7 million.
ADVNA has low Money Flow that’s starting to rise, and rising RSI.
If you’re still holding ADVNA from June, keep holding!