The market seemingly had to digest the news with a hefty hiccup. Seen from a longer perspective Netflix made a fine restart today:

The long-term chart shows a more slowly but steadily growing company with a relatively high valuation:

The best part of the news today was probably that Apple had not chosen one of Netflix’s direct competitors. But there is more strong competition in the video and TV market ranging from traditional broadcasters to the more Internet-centric giants like Google and Amazon. Perhaps even Microsoft wakes up at the end of this or the next year and tries to play its Johnny-comes-late-game.

TV and video streaming over the Internet is a hot topic right now and Netflix has a good starting position. Nonetheless, the slightest shift of favor towards a service from the competition may darken the outlook for its subscriber growth, which will inevitably make the stock look expensive.

Isilon offers easily scalable cluster storage technology to enterprise customers. Their stock is still under water for early investors that bought directly at or after the IPO. Part of Isilon’s problems were accounting issues that terminated no less than 11 manager careers in that company including the CEO and CFO.

However, the company seems to be on a path to growth and is currently in their first year of profitability. For comparison here is the chart of PAR with its impressive jump of almost factor 3:

The blue revenues curve does not really seem to grow, which raises the question why did Dell and Hewlett Packard bid for PAR and not for ISLN. The answer could be simply that 3Par was cheaper than Isilon with regard to their price/sales ratios. Another answer could be hidden in the technology of their products.

Sure, McAfee covers more areas of expertise than antivirus scanners, all centered around security and there might be a few things that could be indeed crystallized into the chip, but it is still hard to believe that Intel paid such a steep price for such a small synergy. The market reacted accordingly.

McAfee bought lately some mobile security providers. Intel tries desperately to catch up and get its x86 processor line into mobile devices and smaller gadgets. Especially the iPad and its forthcoming clones will nibble into the netbook and even the PC market.

Does Intel see a chance somehow to defend its crumbling monopoly with the patent portfolio that comes with the acquisition? Do they hope that McAfee will enable them to force security standards built into the chip favoring their own processors? Are they planning to replace part of what belongs reasonably to the operating system with their chips and create another superfluous dependency on their products? Hard to say, but Intel’s move looks nothing but desperate to me.

For decades Intel cheated consumers, making them believe that they need an absolutely excessive processor, which is at least by a factor of 10 with regard to cost, number of transistors, and power consumption exaggerated.

You don’t believe that? Just bring up the task manager and identify the process that used by far most of your PC’s processor time – it is called the “idle” process. And that is only the main unit, other more specialized ones like the floating point unit are idling even more around. Intel has managed to add a huge bag of underused transistor graves around an already inefficient core.

The global waste of resources that this x86 juggernaut causes happened for the sake of market dominance – only Intel could produce these monster chips using the latest technology with a sustainable yield.

Finally the time of its competitor, ARM Holdings (ARMH), a designer of low power CPUs, has come. Intel has a lower power CPU – the Atom – but it still isn’t even close to what the ARM offers. For the foreseeable future phones and tablet computers will be non-Intel-Inside, which is, by the way, one reason why Windows 7 on a pad computer will be a flop.

Even the netbook market is at risk to be overtaken by really energy-saving processors like the ones from ARM. Perhaps the end of the Wintel monopoly will come faster than expected.

The long term chart of ARMH does not disclose much, because it is an ADR and there are no revenues and earnings lines in my database. Other than a trend walking up by a factor of 4 within 18 month there is not much to discover. The company had $492 million revenues in 2009 and was not really growing over the last years.

Perhaps ARM Holdings is too old and well known and its stock price has already more than anticipated all the hoopla about the iPad and other handheld devices. So, get off INTC but don’t bet on ARMH.

What to say about fundamentals? This company produces alcohol as an ingredient for a beverage apparently called “baijiu”. Given the current price of $9.40, expected earnings for 2010 would result in a P/E ratio in the single digit range. Revenues rose in 2009 about 75%. The company is said to have an edge over the competition with its special production process, the stock seems to be cheap and the current trend is impressive.

The quotrader.net site is about stock picks that could become trading signals. A post about a stock generally means that this is a trading candidate. There are exceptions, like comparisons of similar stocks or earnings reports, but it should not be too difficult to interpret which stocks I find interesting right now and which not.

Interesting right now? Yes, these stock picks are no buy recommendations or entry signals, but they could be. It is up to the reader to trade them and this can be done with different systems.

This site offers its own trading system, the quoTrader system, which focuses on stocks that could rise substantially, on stocks that are in the middle or better the beginning of a steep growth phase, on stocks that are in the best phase of their life.

These stocks are clearly the best investment choices, but they are also advantageous vehicles for traders. For swing traders this is true anyway, but even for day traders stocks in a sharp long-term trend offer the better liquidity and intraday coherency on average.

Many people either tend to be traders or investors, by which I mean they neglect one aspect. “Real” investors buy into falling prices, which is sort of antitrading, and traders often cling too long to the same selection of stocks that they monitor. Investors like to fall in love with a specific stock, no matter how daunting or dull its chart looks, and traders often do not even consider to hold a stock longer than what they are used to.

With this blog I try to present stock ideas, roughly at “the right time” and then my readers should feel free to use the quoTrader system or enter the position using their own trading style. While posts about stocks could be interpreted as buy signals, at least in principal, there will be no follow-ups for sell signals.

Why? Many times a trader gets in just to be shaken out a short time later. This is the very nature of the market. In other words, your trading system has to work with tight stops! The quoTrader system works only this way and yours should by no means deviate from this practice!

High flying growth stocks can change their flight direction like the wind, no matter what you think you know about the underlying company and its prospects. These stocks often have a high expectation built into their price and so a high-flyer can quickly become a deep-diver. This is the flip side of a momentum stock that could have easily doubled or tripled.

So, please remember, stocks mentioned on this site are only tradable with a system that incorporates the stop-loss component. Moreover, there will be generally no sell recommendation. Instead you will see many of my well-meant trading ideas languishing around or even falling severely, shortly after they got discussed here. Don’t be astonished! This is also the very nature of the market, and I don’t pretend to be a prophet. Trading is a game of probabilities.

If you are on the hunt for an infallible trading system that consists only of some simple parts, is easy to understand and executable without the slightest effort, I also have to disappoint you. Such a magic trading automat doesn’t exist.

Instead this blog offers at times reflections about interesting methods, tricks and systems for trading, highlighting their good and bad sides, or comparing them to my own system.

The quoTrader adventure is about currently interesting stocks and a trading system to ride or trade their “once in a lifetime run”. It is for both trading investors and short-term traders who understand that success in trading is nonetheless difficult.

On the other hand, combining fast moving stocks with more potential and the right trading system can produce exceptional results. For my own trading and for others I try with quotrader.net to find new trading ideas early and offer opinions about the currently admired growth stocks that are on the move. You won’t find here anything about stock picks that are falling back or don’t move at all.

Of course, eventually a stock has to be sold, and if you are curious, which you should be in this very second, the trading system I use has its very own method for finding the exit. This special exiting behavior is the second reason why we have here no sell signals.

For me there were two interesting pieces of news for Google today. Eric Schmidt said that there are now 200,000 Android smart phones sold per day. The market share of the mobile operating system Android is growing fast and that at the expense of all others, but foremost Microsoft seems to be the victim.

The other news read like this: The L.A. city council voted unanimously to go ahead with their move to Google Apps, the office suite in the cloud. In a few month 30.000 employees will be migrated.

Has the market reacted to the latter news and is this the beginning of hard times for Microsoft’s cornerstone of success, it’s office software?

One thing is for sure, this is a threshold phenomenon. For now Microsoft Office gets chosen, because everyone else is using it. You can’t make a mistake by imitating others, but if you try something new, it’s you who is to blame if something goes wrong.

But at some point, when early adopters have tested the uncharted terrain, when the “critical mass” has been reached for most of us looking for somebody to follow, people will give up their hesitation and use alternatives.

Once this process of changing perceptions has started, other products, or more generally ideas, are also profiting, even if they had not ignited the movement originally.

For example, free software like OpenOffice and Linux will eventually be carried along by successful products like Apple’s iPad and iPhone or Android smart phones, pads and netbooks.

These radio-enabled devices are all sending a subliminal message, which is getting continually louder: It has not necessarily to be “Wintel inside”. Perhaps in a few years we will all know that there is a live after Microsoft.

The total Chinese search market grew by 53.2% in the second quarter alone, which seems to attribute massively to the revenues jump of Baidu’s latest quarter. Only the second reason was the decreasing competition from Google.

During the last 6 month Google lost 5.5% market share of the Chinese search market down from 32.8% and Baidu gained 6% over the 64.8% it had at the end of 2009. Due to Google’s semi-exit in the Chinese search business, Baidu was able to abruptly reverse the longstanding trend of the years before, where Google ate slowly but steadily into Baidu’s market share. For comparison here is the long term chart of GOOG since its IPO.

Google seems to be already a mature company, while Baidu’s fundamentals are still shooting up. But after the hesitance BIDU showed today to reward investors for this phenomenal quarter with an exploding price, my conclusion is still the same: For Baidu it is probably better to wait for a breakout of the base in the long term trend and Google is the inferior investment compared to Baidu.

The Cupertino company is already the tech vision leader and will soon surpass Microsoft with regard to revenues. Especially astonishing was their revenues guide for the next quarter. Apple used to play it safe and predict only a modest outlook. This time they seem to expect sales far above analysts consensus.

Either they want to color the negative headlines of Antennagate more positively and convert them into free advertising. Or the iPad sales were constrained this quarter mainly by supply and not demand and they expect the situation to improve. If it is the latter, Cirrus Logic may even be the better investment or trading vehicle.

CRUS follows Apple’s stock more closely on an intraday basis than justified by fundamental data. In the longer run it shows relative strength compared to AAPL. The market seems to expect a bull run in “gadget chips” for the next years.

Cirrus Logic beat by a penny and guided revenues for the next quarter up. The weekly chart demonstrates that this company is on the move these days.

The pink earnings line shows something else, namely a relatively small PE ratio (15 for the latest quarterly results extrapolated to a full year). The market still fears the cyclical semiconductor nature of this stock and is not willing to let its price shoot up more. Should the smart phone and tablet computer craze continue and Cirrus be profiting from it, Mr. Market may finally change its stance on this.

The chart above of the last 9 years shows clearly that CRUS used to be a cyclical stock. However, the rise of the blue revenues line and the driving growth prospects behind it are encouraging. Eventually this is a semiconductor stock and it will regain its cyclical character, but there is potential for an intermediate growth ride.

People seem to understand very different things when it comes to trading systems. Some main interpretations go like this:

1. A formula or an algorithm that puts all trading decisions at its best completely into the hands of a computer, in order to build the most automated trading robot.
2. A simple but ingenious trading trick or piece of knowledge that gives its user an advantage, to which all trading behavior than could be adapted.
3. A complex description of how to become a better trader or investor.

The first route is the enticing one. Nothing more to be done and the money keeps on rolling in. It looks logical, because you just have to explore the universe of all possible trading methods, possibly again with the help of a computer, and then you have something all others don’t have. This secret is a relatively simple algorithm and as such it can be transformed easily into a program.

So far so good, there is just a little problem. If there is indeed a secret trading strategy, made up of a few parameters of a simple program, it will not remain very long secret. There are large trading houses, creative and hard working programmers, and similar wizards who search with tremendous effort the markets for such auto-traders. Very soon too many exploiters of this regularity will smooth it away. This approach is in my opinion more wishful thinking than anything else.

The second idea, looking for the trading trick, is not much better. It is merely a clone of its predecessor in this little abstract list of trading systems, just without the computerization aspect.

Naturally we arrive at item number three, the one that is not the magic bullet and that still sounds like much work and risk of failure. Right! Think about it, if you expected it to be easier, you will eventually find that a market consisting of many smart participants inherently means the opposite. Making money with trading and investing can’t be as easy as hoped by admirers of the first two magic money ways.

Consequently the quoTrader system is only a type 3 trading system. It tries to embrace some powerful trading patterns, but it concentrates on the individual trader who has to apply these in varying market situations, executing a trading strategy so that it actually works. So far I have not been able to create the magic bullet system consisting of a very few mechanical things.

In order to make it better understandable what is wrong with the first two approaches, I plan in the category ”System” to introduce various great traders, interesting trading systems and also pieces of them like type 2 trading methods and compare all these with the quoTrader system.