2 18 2014
The markets shrugged off emerging market fears and rallied Friday. The DOW was up over 125 points, or .79%, leading all of the major indices higher. The DOW was helped by mega-cap Exxon (XOM), which is the 2nd largest company by market cap and 3rd by revenue in the world, up almost 3%. The NASDAQ and Russell Small Cap 2000 were the laggards with very modest gains.
Total volume was light and it was a relatively quiet day. Up Volume was 70% on the NYSE with advancing issues 66%. The internals confirmed the NASDAQ’s weakness with Up Volume 59% and advancing issues 52%.
Now we had a lot of economic news over the long weekend. Japan’s annualized GPD came in at 1%, far less than the 2.8% consensus. This is just ahead of the implementation of their new sales tax which will slow the economy even more.
China is having difficulties and is injecting liquidity (printing) into their banking system. So Asia is definitely slowing.
And the EU “recovery” is now showing signs of doubt. Many of the EU countries are slowing back into recession. Now the major concern is deflation. The European Central Bank (ECB) is considering more stimulus and trying to figure out a system for “future” bank bailouts. Deposits from account holders are at risk. This is known as “bail-ins,” Google it.
Along similar lines, Italy announced over the weekend they would withhold 20% from ANY incoming bank transfers for individuals assuming it is income. It is then up to the individual to prove whether the transfer is, in fact, taxable as income or just a transfer from a family member or some other innocent movement of money. This is Capital Controls. It won’t work, and capital will flee from Italy.
The emerging markets are in an even worse predicament. The ‘hotmoney’ that was flowing into the emerging markets the past few years is now working in reverse, like a vacuum.
Their currencies are coming under pressure. From Russia, to Turkey, South Africa, Chile, and the worst, Argentina, currencies are losing value. If it doesn’t stabilize soon, it will accelerate downward.
You also have the countries Syria, Ukraine, and Venezuela who are either in civil war, or on the verge of a civil war. Of all the global markets, many emerging markets and Japan have fared far worse than other countries.
This is also why precious metals have been so strong lately. Gold is a better fear indicator than it is an inflation indicator. With many emerging market currencies losing value, people in those countries are looking for a safe haven for the money.
But what does this mean for the US investor. It means, that while you may make some money overseas, especially in the short term, the risk is high, and in my opinion, doesn’t warrant the reward. This is why I have been saying for months, stay away from overseas markets at this time.
Now in the short run, the global markets have firmed up last week after the recent selloff. You can make some money abroad, but it should be considered a short term trade, not an investment.
More stimulus by global Central Banks will be bullish short term, but end badly in the long term. The FED, however, may counteract the other Central Banks if it continues to taper. This is because the dollar will continue to strengthen.
The strengthening dollar is what caused the reversal of ‘hotmoney’ in the first place. Former FED Chairman Ben Bernanke believed that he could exit all of this stimulus, or quantitative without consequences. QE couldn’t go on forever and was unsustainable, but reversing it also has extreme consequences. Current Chairwomen Janet Yellen will have pressure from other Central Banks and the IMF not to taper.
For now, the place to be in is stocks, especially US stocks. I also personally believe every investor should have some amount of precious metals to offset the currency devaluation.
If the emerging markets contagion does take hold though, it will effect, or should I say infect, all of the global markets, especially the equity markets.
The problem with diversification is that when markets go down, the benefits of diversification disappear. All of the markets will become correlated and move downward together, just like they did in 2008.
I am not saying it will be to that extreme, but it certainly is a possibility. You need to have a plan in place if/when global selling takes place.
We have 5 economic reports today including Empire Manufacturing and the NAHB Housing Index. We have 12 companies reporting on the S&P 500, 1 or which, Coca-Cola (KO) , is also included in the DOW.
We have over stocks reporting in the broader markets. Some of the more notable companies are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
Empire Manufacturing
Revisions of Consumer Price Index
US Foreign Net Transactions
Treasury International Capital Net Inflows
NAHB Housing Market Index
Some Notable Earnings Reports Today:
Coca-Cola (KO)
Genuine Parts (GPC – before market)
Duke Energy (DUK)
DENTSPLY International (XRAY)
Medtronic (MDT)
Flowserve (FLS – after market)
Nabors Industries (NBR – after market)
Fluor (FLR – after market)
Analog Devices (ADI – after market)
CF Industries (CF – after market)
Oceaneering International (OII)
Panera Bread (PNRA – after market)
Herbalife (HLF – after market)
Potbelly (PBPB – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 14 2014
Retail Sales and Initial Jobless Claims both came in weaker than expected dampening the mood before the open yesterday. The futures were all firmly in the red just before the open.
But the markets displayed their strength on a strong reversal. The markets gapped down at the open decidedly in the red, only to quickly reverse with all the major indices finishing in the green at their highs of the day (see S&P 500 1 Day Graph).
Total volume was healthy. Up Volume and advancing issues were 73% on the NYSE. The internals on the NASDAQ were a little weaker with Up Volume 64% and advancing issues 71%.
The small and mid indices handily outperformed their larger piers. This is always a good sign as it means investors are willing to take risk.
In earlier newsletters a few weeks ago, I noted that the advance/decline lines, number of advancing issues relative to declining issues, were weakening, and a pullback was likely. It even got scary if you were fully invested as selling was beginning to accelerate.
However, with this rally the advance/decline lines have firmed up and are around new highs again. This is as it should be when the market are rallying. If there is a divergence, meaning the advance/decline line is declining while stocks are climbing higher, this can be a signal of a market top.
Now the advance/decline lines are “flattening out,” which either signals loss of momentum or simply a breather before moving higher (see S&P 500 w Advance/Decline 1 Yr Graph). The advance decline line is a widely followed and should be in your toolkit as one indicator.
After this move, most of the oscillating technical indicators are now registering overbought. So could we get a brief pause, sure. But buying has reemerged in the dominant position. Again, this is why I used the idle cash and increased my exposure using 2 ETFs for quick, broad exposure.
That said, I will treat every significant acceleration in selling as the big one. Volatility is already higher this year and will likely continue throughout the year. For now, stocks and precious metals are the place to be.
On a side note, precious metals continue their breakout (see previous newsletters for an explanation). For a few client who have the right level of options, I did a weekly bull put credit spread and purchased a call on silver. Thus far, it is working out quite well.
We have 6 economic reports today including the Import Price Index and Industrial Production.
We have companies reporting on the S&P 500, 1 or which, , is also included on the DOW. These include
We have over stocks reporting in the broader markets. Some of the more notable companies are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
We will have Jonathan Chatfield CFA®, who is the Chief Portfolio Manager for the Probabilities Fund discussing seasonality and trends. We will also have Mark Eicker, Managing Partner of Sterling Global Strategies to discuss sector rotation.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
Revisions of Producer Price Index
Import Price Index
Industrial Production
Capacity Utilization
Manufacturing Production
University of Michigan Consumer Confidence
Some Notable Earnings Reports Today:
Campbell Soup (CPB – before market)
DTE Energy (DTE – before market)
Ventas (VTR – before market)
Interpublic Group (IPG – before market)
Scripps Networks (SNI)
JM Smucker (SJM)
VF Corp (VF)
Lifepoint Hospitals (LPNT – before market)
William Lyon Homes (WLH – before market)
ITT Corp (ITT)
TRW Automotive (TRW)
Hyatt Hotels (H)
Alkermes (ALKS)
Ambac Financial (AMBC)
Red Robin Gourmet Burgers (RRGB)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 13 2014
The markets had mixed results yesterday. The NASDAQ was consistently higher throughout the day with the exception of a brief moment late morning where it touched breakeven. The S&P 500 and DOW, however, had trouble finding a discernible direction.
The S&P 500 went between red & green throughout the day only to finish flat. The DOW moved higher in early trading but then went into the red for the remainder of the day.
Between all of the indices, the range was fairly narrow. Total volume was mediocre. The Up Volume was 48% on the NYSE but 61% on the NASDAQ. Advancing issues were 52%, and 53% respectively.
The good news is that small and midcaps outperformed their larger brethren with smalls up .3% and mids up .5%. The strongest sectors were technology and industrials.
So does this look like investors rushing for the exits? A flight to quality? No, this is simply a consolidation day after a nice run. We had the “January pullback” which actually extended into early February.
Today the futures are lower as Retail Sales came in weaker than expected. We also had weak earnings from Cisco (CSCO). The S&P 500 has retaken its 50 day moving average (50DMA) and all of the major indices are testing resistance. How the markets respond after the weaker open will be important.
Now I am not a homer or a sellside guy who is a perma bull, and if you follow my newsletter, you know that. Right now the probabilities favor a move higher over the next few weeks. But in the 2nd quarter, if not sooner, we will run into some headwinds if history is any indication. We have had 5 days of gains, so the market is most likely simply taking a breather.
That is why I took 2 positions yesterday, both ETFs for quick, broad exposure and easy entry and exit. This is a “tactical” allocation where I do not suspect I will hold for a long period of time. When I take a longer position, it is usually an individual stock/equity with solid fundamentals and/or cash flow.
Contrary to what you may have heard, ETFs (and before their invention mutual funds) actually can make great tactical tools whereas your longer term investments should be individual securities so you don’t have the ongoing carrying costs.
We have a few economic reports today including Retail Sales. We have 17 companies reporting on the S&P. One company I will be watching closely is EQT Corp (EQT).
We have over 100 stocks reporting in the broader markets. Some of the more notable companies are listed below.
One of my favorite stores, not necessarily stock, Cabela’s (CAB) reports before the bell. Every time I go in there, the place is packed, so even though some retailers have been struggling, I suspect CAB will do just fine.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
Retail Sales
Initial Jobless Claims
Business Inventories
Some Notable Earnings Reports Today:
Avon (AVP – before market)
Neilsen (NLSN – before market)
Goodyear (GT – before market)
Molson Coors (TAP – before market)
PepsiCo (PEP – before market)
EQT Corp (EQT)
Apache (APA)
Kraft (KRFT)
American International Group (AIG)
Cliffs Natural Resources (CLF – after market)
Cabela’s (CAB – before market)
Calpine (CPN – before market)
Generac Holdings (GNRC – before market)
Weingarten Realty Investors (WRI)
Orbitz Worldwide (OWW)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 12 2013
Stocks and precious metals both had a strong showing yesterday on strong total volume. It seems FED Chairwomen Janet Yellen’s ‘Fedspeak’ was not too hot, and not too cold. It was just right, soothing the markets.
First she complimented former Chairman Ben Bernanke for his service and said she agreed with the FED’s current course. In fact, she sounded just like Ben Bernanke. And if the economy and growth continued as expected, the decision of a gradual taper would continue.
But she went on to say “that said, purchases are NOT on a preset course.” She further implied the FED could reverse course if necessary. So the ‘Bernanke Put’ is now the ‘Yellen Put’, and is firmly in place. But you don’t have to take my word for it, I have attached her actual speech directly from the FED’s own website as the first article in the Trending Section on this newsletter so you can judge for yourself.
Nevertheless, the markets were already trading ahead of Yellen’s remarks, but after she gave her testimony, they climbed higher closing near the highs of the day. Up Volume on the NYSE was 82%, thus qualifying for an 80% upside day. The NASDAQ was weaker with Up Volume 71%. Advancing issues were 77% and 70% respectively.
Precious metals also had a solid day, and the miners were the best performing sector. The Market Vectors Gold Miners ETF (GDX) had broken through its 50 day moving average (50DMA) mid January. Now in the last few days it has broken above its 200DMA and has gapped up both of the last 2 days.
A gap up is defined at opening and remaining above the previous days entire trading range. So opening and remaining above any price during the previous day. This means GDX has been showing strong momentum to the upside. In fact, the miners, especially the junior miners, are one of the best performing sectors this year.
You are likely seeing momentum traders following the value investors. GDX has formed a Cup & Handle formation and is quickly breaking out of the right side of the handle (see GDX 6 Mo Graph).
For now, the least path of resistance seems to be higher. Investor’s Business Daily (IBD) has just switched from ‘Market Under Pressure’ to ‘Market in Confirmed Uptrend.’ According to IBD’s methodology, which is quite solid and backed by research, this means that 3 out of 4 stocks will move higher during an Uptrend.
Now if it seems somewhat manic behavior going from negative to positive so soon, this is how the markets are actually responding this year. Volatility is rising and it is very unlikely we will have a smooth year like last year, which was by any metric, an outlier (highly unusual). This also means you will have to be more nimble and pick your battles more carefully this year.
We have 2 economic reports today including MBA Mortgage Applications. We have 14 companies reporting on the S&P 500, 1 or which, Cisco (CSCO), is also included on the DOW.
We have over 90 stocks reporting in the broader markets. Some of the more notable companies are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
MBA Mortgage Applications
Monthly Budget Statement
Some Notable Earnings Reports Today:
Cisco (CSCO)
Lorillard (LO – before market)
Deere & Co (DE – before market)
Dr Pepper Snapple (DPS – before market)
NVIDIA (NVDA)
Mondelez (MDLZ)
Applied Material (AMAT – after market)
CenturyLink (CTL – after market)
Equifax (EFX – after market)
Whole Foods (WFM – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 11 2014
The markets took a breather yesterday ahead of new FED Chairwoman Janet Yellen’s Congressional testimony to the House Financial Services Committee today. When will the FED raise interest rates? Is she worried about the economy? Is the stock market in a bubble?
These are likely questions she will get after she gives the ‘Fedspeak’ speech discussing monetary policy. And investors were on hold not wanting to be surprised.
For this reason the equity markets were relatively quiet. Both the DOW and S&P 500 were up marginally while the NASDAQ bucked the trend and finished up just over 1/2% with the biotech sector helping to lift the index.
Total volume was light on both major exchanges. The internals were mildly mixed on the NYSE with Up Volume 48% and advancing issues were 51%. The NASDAQ had a stronger showing confirming the percentage gains with Up Volume 70% and advancing issues 57%.
So you really can’t read too much into yesterday’s numbers. The one thing that is positive was Thursday and Friday’s dual gap ups reversing the downtrend. Demand has now expanded and supply has shrunk.
The markets now need to decide which way it intends to go. At this point though, the probabilities and path of least resistance is higher. This assumes though, that Janet Yellen doesn’t make a gaff and spook the markets.
But earnings have shifted slightly more positive. Of the 348 companies out of the ‘499’ reporting on the S&P 500, 1% in aggregate have surprised to the upside in sales and 5% surprised to the upside in earnings (see Earnings Analysis Graph Breakdown).
The negative sectors to be concerned about are Consumer Staples and Consumer Discretionary. This implies the consumer may be coming under pressure going forward.
The strongest sectors are Health Care which includes biotech and Industrials. Again, I don’t count the Financials/Banks as I don’t trust their balance sheets.
We have 11 companies reporting on the S&P 500 to help drive the markets higher. Regeneron (REGN), a stock I have been watching and have a Bull Put Credit Spread on, reports before the open.
We have over 75 stocks reporting in the broader markets. Some of the more notable companies are listed below.
We have 4 economic reports today including Small Business Optimism. All the economic reports today are listed below, but again the economic focus will be on Yellen’s testimony.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
NFIB Small Business Optimism
JOLTs Job Openings
Wholesale Inventories
Wholesale Trade Sales
Some Notable Earnings Reports Today:
Regeneron (REGN – before market)
Entergy (ETR – before market)
IntercontinentalExchange (ICE – before market)
Reynolds American (RAI – before market)
CVS Caremark (CVS – before market)
Mosaic (MOS)
Western Union (WU)
TripAdvisor (TRIP – after market)
Fossil (FOSL – after market)
Sprint (S)
Trimble Navigation (TRMB – after market)
FireEye (FEYE – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 10 2014
Thursday Nonfarm Productivity came in much stronger than expected at the expense of Unit Labor Cost, meaning employee wages. Bad for the economy but good for Wall Street. Then Friday, the Nonfarm Payrolls came in much weaker than expected creating only 113k on new jobs. Expectations were for 180k.
The markets were able to shrugged off the news and rallied both days. In fact, Friday when the news of weak payrolls were announced before the market open on Friday, the equity futures gapped down well into the red. But they quickly reversed with the markets opening in the green and never looking back.
Total volume was quite healthy and Up Volume was 82% on the NYSE and 85% on the NASDAQ. Advancing issues were 76% and 71% respectively.
Two 80% Up Volume days in a row is equivalent to a 90% Up Volume day. And both Thursday and Friday gapped up at the open and finished at their respective highs of the day.
Until Thursday it looked as though the markets were going to continue to fall. Now, however, the markets appear to be switching gears. Bad news seems to be good news again as investors feel this will provide ample excuse for the FED to slow the pace of tapering.
And in all fairness, last week’s earnings reports have come in stronger overall than previous weeks. Whatever the reason, over the past 2 trading days, Thursday and Friday, the markets have switched gears rapidly(see S&P 500 5 Day Graph) .
We have had 2 solid up days in a row with the DOW experiencing triple digit gains both days. We are not out of the wood yet and are still off our highs from Dec 31st and Jan 15th (see S&P 500 YTD Graph), but demand has strengthened considerably while supply has shrunk.
Many leading growth stocks have re-emerged as market leaders. So the probabilities are now for a resumption of the uptrend.
For this reason, I unwound my partial hedge on Friday. It has served its purpose reducing volatility in the portfolios. I didn’t experience the pain felt by many investors until Thursday.
I will, however, treat every pullback over 6% like it will turn into a double digit correction. This is because you don’t know which one actually will. The degree of hedge will depend upon the degree of selling volume.
For now though, we seem to be resuming the uptrend and this matches the historic seasonality of the markets. The 2nd quarter, especially the 2nd half of the quarter, will likely be a different story for the markets with seasonality switching gears again to a negative tilt.
On a side note, the Syrian conflict is heating up again. This should support the price of oil.
We have 2 economic reports today, Mortgage Delinquencies and MBA Mortgage Applications. We have 5 companies reporting on the S&P 500 including Lowes (L).
We have 40 stocks reporting in the broader markets. Some of the more notable companies are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
Mortgage Delinquencies
MBA Mortgage Applications
Some Notable Earnings Reports Today:
Hasbro (HAS – before market)
Loews (L – before market)
Pioneer Natural Resources (PXD – after market)
Masco (MAS – after market)
Insperity (NSP – before market)
Nuance Communications (NUAN)
Rackspace Hosting (RAX – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 7 2014
Economics provided a boost to our markets yesterday. Nonfarm productivity came in much stronger than expected and Unit Labor Cost was down more than double expectations. This came at the expense of wages and sometimes what’s good for Wall Street and stocks is not necessarily good for Main Street.
But it is what the markets needed to provide impetus for the markets to move higher. We finally got an expansion in demand coupled with a corresponding contraction in supply.
Wasn’t huge in magnitude or with the overall internals, but solid nevertheless. Total volume was fairly light. Up Volume was 79% on the NYSE and 76% on the NASDAQ. Advancing issues were 74% and 64% respectively.
So the jury is still out to whether this pullback has run its course, but yesterday’s action may provide enough confidence for investors so we get a much needed follow through day. The wildcard, of course, will be the plethora of employment data out today before the open (see below). Nonfarm Payrolls will be the ‘biggy’ and is released before the open.
Overall, earnings have also helped the past few days. There have been some notable misses though, most recently LinkedIn (LNKD) after the bell yesterday. LNKD was down -8.5% in after-hours trading.
After disappointing the day before, Twitter (TWTR) closed down -24%. On a positive note, Green Mountain Roasters (GMCR) finished the day up over 26%. So it still remains a mixed bag, and dependent upon the stocks you own.
The stock I recently purchased (see recent newsletters), EQT Corporation (EQT), managed to finish in the green after a rocky day. Many leading stocks failed to keep up with the broader indices.
So the light overall volume and the ‘leading stocks’ lagging isn’t exactly a positive. Most importantly, we have had trouble breaking through resistance at 1775. Yesterday we came just up to the resistance level and stopped there.
There has been a battle between the bulls and bears over the 1775 level, and thus far the bears have won. “Every move this week was a head fake” according to Tim Reazor of Investor’s Business Daily (IBD).
However, if we break through the 1775 level on a strong rally with volume, it would be bullish and imply a resumption of the rally. I would then unwind my partial hedge. It has served its purpose during this very uncertain time.
No one knows which ‘pullback’ will accelerate into a full blown ‘correction.’ But at these valuation levels, I intend to err on the side of caution. The last time we saw these valuations levels were 1987, 1999, and 2008. You do remember what happened shortly after that?!
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
The other contributor to my newsletter today, Tim Melvin, who is a disciple of Benjamin Graham’s philosophy and a noted Value Investor will be on the show. He is also an expert in the banking sector specifically. We will discuss where to find value in this market, and then examine the banking sector.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
We have numerous economic reports today, virtually all regarding employment with the exception of Consumer Credit. Again, the big report will be Nonfarm Payrolls.
We have 5 companies reporting on the S&P 500. We have 40 stocks reporting in the broader markets. Some of the more notable companies are listed below.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
Change in Nonfarm Payrolls
Change in Private Payrolls
Change in Manufacturing Payrolls
Unemployment Rate
Underemployment Rate
Labor Force Participation Rate
Average Hourly Earnings
Average Weekly Hours
Change in Household Employment
Consumer Credit
Some Notable Earnings Reports Today:
Laboratory Corp of America (LH – before market)
Wyndam Worldwide (WYN)
Cigna (CI)
Moody’s (MCO)
FLIR Systems (FLIR)
CBOE Holdings (CBOE – before market)
Madison Square Gardens (MSG – before market)
Southern Copper (SCCO)
Pharmacyclics (PCYC)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 6 2013
In the morning the markets opened mildly in the red and headed lower just after the open. Then, the markets looked to be rebounding strong on increasing volume.
However, it was short lived and the markets rolled back over. The good news is that markets recovered off of their lows of the day to finish with moderate losses. The bad news is that small and mid caps had the worst performance, so investors were conservative.
Down Volume was 57% on the NYSE and 69% on the NASDAQ. Declining issues were 58% and 69% respectively. So selling wasn’t that intense.
But the markets failing to follow through on Tuesday’s advance is not a good sign. Especially when the markets don’t rebound during oversold conditions. That is not good and implies the markets are still weak and buyers aren’t willing to step in and buy the “dip.”
On a bright note, at Wednesday at 11:11 p.m. CT, the Asian markets are in the green and our US equity futures are moderately in the green. Hopefully they can hold overnight.
In yesterday’s newsletter, I mentioned that there were pockets of strength. One such stock on the verge of a breakout was EQT Corp (EQT). For a full description, see yesterday’s newsletter.
I said if the markets looked to be reversing along with EQT, I would likely take a position in EQT. Now just before 10 the markets did appear to be reversing very strong as was EQT (see 1 Day Graphs of S&P and EQT).
Therefore, I took a position in EQT using a limit order and purchased at $94.59. I proceeded to watched it rally, but then rollover. And like the markets, it came back towards the end of the day. It actually recovered nicely closing at $94.11.
In hindsight, I wish I would have waited, but hindsight is always 20-20. Now I need to monitor the trade over the next few days. I will also need to monitor the overall markets for continued weakness, but I am quite happy to be hedged.
I have been relatively unscathed during this pullback and am grateful for my short position. If the markets go lower by a few more percent, it will be officially a “correction” (10%).
Earnings have been coming in all over the place and we have many more today. After the bell yesterday, Twitter (TWTR) disappointed and was down over 17% in after-hours trading. I am also grateful I sold my TWTR for a decent gain a few weeks ago as it was acting too erratic (again see recent newsletters).
Conversely, Green Mountain Roasters (GMRC) had a strong showing and Coca-Cola (KO) announced it will purchase a 10% minority stake for a long term global partnership. GMCR was up over $35 or 43.6% in after-hours trading. Tim Reazor from IBD personally took 2 bullish positions, a Bull Put Credit Spread and Long Call on GMCR before the close yesterday. My hat is off to you Tim, nice move with controlled risk.
We have numerous companies reporting on the S&P 500, 26 to be exact. These include Philip Morris (PM), Cummins (CMI), General Motors (GM) to name a few.
We also have over 125 companies reporting in the broader markets. Some of the more notable companies are listed below.
We have 5 economic reports today. Among them are Initial Jobless Claims, and all are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
Challenger Job Cuts
Trade Balance
Nonfarm Productivity
Unit Labor Cost
Initial Jobless Claims
Some Notable Earnings Reports Today:
Philip Morris (PM – before market)
Automatic Data Processing (ADS – before market)
Diamond Offshore (DO)
Cummins (CMI)
Sealed Air (SEE)
General Motors (GM)
Kellogg (K)
Expedia (EXPE)
News Corp (NWSA – after market)
Hercules Offshore (HERO – before market)
Dunkin Brands (DNKN – before market)
Noble Energy (NBL – after market)
Flower Foods (FLO – before market)
Monster Worldwide (MWW)
VeriSign (VRSN)
Nu Skin (NU)
Tempur Sealy (TPX – after market)
Haynes International (HAYN – after market)
LinkedIn (LNKD – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 5 2014
Although earnings got off to a sluggish start, we had a slew of earnings yesterday that helped pull the earnings above their long term average and mean estimates. This provided a much needed boost to the markets. Today we will have another round of earnings, many of them growth leaders over the past year (see below).
We are not out of the woods yet by any means and the bounce after a 90% Down Volume day wasn’t as robust as you would like to see. Specifically, total volume was light when compared to the selling days.
Up Volume was 72% on the NYSE and 69% on the NASDAQ. Advancing issues were 67% and 62% respectively. Not nearly the expansion in buyers and positive market breadth we need.
A follow through day on expanding volume will be important. We need to clear 1765 on the S&P 500 to confirm renewed strength. Otherwise, we likely have lower to go before strong buyers re-emerge.
There are bright spots in the markets. Facebook (FB) has a strong showing, up over 2% in trading. It has the highest revenue growth in the S&P 500 Information Technology sector (see FactSet article in Trending section) 2nd only to Micron Technology (MU).
he Information Technology and Social Media specifically is one of the fastest growing sectors. Now FB is extended and I wouldn’t chase it here, but look for a better entry point on a market pullback.
Another area to research is the Natural Gas sector. The price of natural gas has broken out but has been volatile lately. And we are nearing the end of its winter seasonality.
But an even better way to participate is natural gas companies. One such company poised to break out is EQT Corp (EQT).
Their EPS change over last quarter is just over 175% and their estimated EPS for this quarter is over 75%. Their sales have risen 39% since last quarter and their profit margin is over 20%. So their fundamentals are strong.
Technically, the stock appears to be breaking out with strong relative strength (RS). Yesterday is was up 3.8% on big volume. EQT has formed a multi-month Cup with Handle, with the right side of the handle breaking higher (see EQT 1 Yr Graph).
This is a momentum stock in a tough overall current market environment. If the market cooperates, this is a timely play but must be monitored closely, and they report earnings of the 13th.
We have 3 economic reports today including the ADP Employment Change. We have 26 companies reporting on the S&P 500, 2 or which, Merck (MRK) and Disney (DIS), are also included on the DOW.
We have over 100 stocks reporting in the broader markets. Some of the more notable companies are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
MBA Mortgage Applications
ADP Employment Change
ISM Non-Manufacturing Composite
Some Notable Earnings Reports Today:
Merck (MRK)
Disney (DIS)
Time Warner (TWX)
Humana (HUM)
NASDAQ OMX (NDAQ)
Automatic Data Processing (ADP)
Ralph Lauren (RL)
Fiserv (FISV)
O’Reilly Automotive (ORCY)
Tesoro (TSO – after market)
Stericycle (SRCL – after market)
Marathon Oil (MRO – after market)
Meritage Homes (MTH – before market)
Green Mountain Coffee (GMCR)
Solarwinds (SWI)
FleetCor Technologies (FLT – after market)
Twitter (TWTR – after market)
Yelp (YELP – after market)
Shutterfly (SFLY – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
2 4 2014
Stimulus Gone, Now What! Before QE in late 2008 there was virtually no correlation between the FED’s balance sheet and the stock market. But ever since the 1st QE, the correlation between the size of the FED’s balance sheet (asset purchases) and the stock market gains has been 94%, almost 1 to 1!
So it stands to reason that the FED pulling stimulus would also be highly correlated and stocks would decline with the reduction in QE. Especially if the economy isn’t expanding like the FED implied at their recent meeting.
As the cheap money is taken away and the Carrytrade is unwound by institutional investors, emerging markets will come under extreme pressure. Then this would be followed by the industrialized markets.
I have written extensively in recent newsletters that the FED tapering would likely have negative effects on our equity markets. That is coming true in spades.
Our markets took a beating yesterday over concerns of slowing growth both in the U.S. and China. The Institute of Supply (ISM) Manufacturing Index came in well below expectations. The number was 51.3 with estimates of 56, a major miss. 50 is considered an economic contraction versus expansion, but the reversal in trend is certainly alarming. And China announced a slowdown in their manufacturing activity just before going on their week long Lunar Holiday.
Match this with the FED’s tapering and weaker earnings, and you have a recipe for a market selloff. The DOW closed down -325 points, or 2%, and fell below its 200 day moving average (200DMA). This is an important level that longer term technicians pay attention too (see DOW 1 Yr Graph).
Both the S&P 500 and NASDAQ have broken through their 50DMAs but remain above their 200DMAs. They both have, however, broken their respective trendlines and support (see S&P 500 6 Mo Graph).
I have been saying for weeks that the markets were getting weaker in the short term. Yesterday’s market breadth was decidedly negative and selling was intense. Declining issues were 85% on the NYSE and 86% on the NASDAQ. Total volume was well above its 30DMA on both major exchanges.
We qualified for a 90% Down Volume day on the NYSE registering 93%. We narrowly missed a 90% Down Volume day on the NASDAQ with the number coming at 89%.
We have now had 2 90% Down Volume days on the NYSE within a week, and the question is whether this will be enough to rejuvenate demand. After yesterday, the DOW is now down 7.3% from its December 31st high. The S&P and NASDAQ are down 5.7% and 5.8% respectively.
Japan is faring even worse with its markets down over 10% while the emerging markets are getting eviscerated. For this reason I began playing defense over a week ago.
My first move was to sell my 2 most aggressive long ETFs, the ProShares Ultra 2x S&P 500 (SSO) and the Direxion Small Cap Bull 3x (TNA). I then sold my ProShares UltraShort Yen (YCS) as I believed the Yen would strengthen as institutional investors and hedge funds unwound their Carrytrade (see previous newsletters for an explanation and selling trades). I did this to protect profits and to raise cash.
About 5 days ago, I then purchased the ProShares UltraPro Short 3x S&P 500 (SPXU). I did this to hedge the stocks I still own. Sometimes, a good offense is a good defense.
We may actually get a bounce tomorrow, but make no mistake, our markets are weak. Our equity futures are up overnight in Asian trading (Monday 9:38 p.m. CT). The Japanese markets are down again over 3% overnight as are all of the other Asian markets that are open.
We have 3 economic reports today including ISM New York and Factory Orders. We have 25 companies reporting on the S&P 500 including Archer-Daniels-Midland (ADM), Michael Kors (KORS), and the CME Group (CME).
We also have over 80 stocks reporting in the broader markets. Some of the more notable companies are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a danny@thewallstreetshuffle.com and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at dstewart@old.noramassetmanagement.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
ISM New York Business Conditions
Factory Orders
IBD/TIPP Economic Optimism
Some Notable Earnings Reports Today:
Archer-Daniels-Midland (ADM – before market)
Boston Scientific (BSX – before market)
Spectra Energy (SE – before market)
International Paper (IP – before market)
Michael Kors (KORS)
CME Group (CME)
Delphi Automotive (DLPH)
Gilead Sciences (GILD)
Ameriprise Financial (AMP)
Alfac (AFL – after market)
Cerner (CERN – after market)
Dawson Geophysical (DWSN – before market)
TransDigm (TDG – before market)
Atmos Energy (ATO – after market)
Eagle Materials (EXP – after market)
Buffalo Wild Wings (BWLD – after market)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
