As a child, I wanted to be a weatherman. I knew more than any ten-year-old should about barometric pressure and relative humidity and spent countless hours in the winter staring at the radar praying for snow (understand, it’s a rarity in my home state of Louisiana).  Back then, one of our local network meteorologists never predicted any of the white stuff, even when his colleagues assured kids that several inches were coming and schools would be closed the next day. I hated that guy. But my ski gloves and sled never got much use — he was right 99% of… Read More

As a child, I wanted to be a weatherman. I knew more than any ten-year-old should about barometric pressure and relative humidity and spent countless hours in the winter staring at the radar praying for snow (understand, it’s a rarity in my home state of Louisiana).  Back then, one of our local network meteorologists never predicted any of the white stuff, even when his colleagues assured kids that several inches were coming and schools would be closed the next day. I hated that guy. But my ski gloves and sled never got much use — he was right 99% of the time.  Of course, you can’t really blame the weatherman for the forecast. They are simply the messengers. Please keep that in mind when I tell you the stock market forecast appears rather stormy right now.  I’d much prefer to say that conditions look lovely — but honestly, you might want to keep an umbrella handy the next few weeks.  Here’s what’s got me worried.  This chart shows the change in S&P first-quarter earnings estimates over the past 18 weeks. Back in September, analysts were anticipating a decent 6.7% increase. By December 31, that projection had been cut in half… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be any different?  —Recommended Link— 9 Game-Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now. ​To answer that question, we need to consider how the rally compares to the overall decline. The decline, which lasted 65 trading days, was sharp. The S&P 500 fell 20.2% from its intraday high on September 21 to its intraday low on the day after Christmas.  Through Friday, this most recent recovery has lasted 35 trading… Read More

Occasionally, I give Wall Street analysts a tough time. They tend to have a herd mentality, are myopically focused on the short-term, and are reluctant to downgrade stocks until trouble goes from bad to worse and the damage has already been done. That’s a bit like yanking a tiring pitcher after he’s surrendered a big home run. #-ad_banner-#But I never question the intelligence of these professionals, or their knowledge of the industries they cover. Spending all day, every day, analyzing one specific group (whether its airlines, utilities or biotechnology) affords a deep understanding of those businesses and their operating environments. Read More

Occasionally, I give Wall Street analysts a tough time. They tend to have a herd mentality, are myopically focused on the short-term, and are reluctant to downgrade stocks until trouble goes from bad to worse and the damage has already been done. That’s a bit like yanking a tiring pitcher after he’s surrendered a big home run. #-ad_banner-#But I never question the intelligence of these professionals, or their knowledge of the industries they cover. Spending all day, every day, analyzing one specific group (whether its airlines, utilities or biotechnology) affords a deep understanding of those businesses and their operating environments. I might not always agree with their conclusions, but if an analyst says a retailer’s debt maturities look problematic or a manufacturer might benefit from favorable foreign currency translation, I value their insight and opinion. They know who is gaining market share, where regulatory changes are headed and when disruptive new products will be released. They also know how stock prices behave. So, I find their target prices informative.  Take wireless tower owner Crown Castle (NYSE: CCI), a former holding in my premium newsletter, High-Yield Investing. In late December, with shares trading near the $100 mark, analysts had a consensus… Read More

After a dismal fourth quarter, disheartened investors needed a snap-back rally… and they got it in spades: The S&P 500 rallied 15% from the market’s lows on December 24 through the end of January.  That’s 15% in six weeks. I think it would be fair to say that this is a far better result that many investors had expected. While the rally still wasn’t enough to recover all of 2018’s losses — the S&P 500 now trades just about 2% above its levels of the start of 2018 — this is truly a great showing. January’s rally alone was one… Read More

After a dismal fourth quarter, disheartened investors needed a snap-back rally… and they got it in spades: The S&P 500 rallied 15% from the market’s lows on December 24 through the end of January.  That’s 15% in six weeks. I think it would be fair to say that this is a far better result that many investors had expected. While the rally still wasn’t enough to recover all of 2018’s losses — the S&P 500 now trades just about 2% above its levels of the start of 2018 — this is truly a great showing. January’s rally alone was one for the record books. It was the index’s best single-month performance since October 2015 and the best start of the year since January 1987. But was the snap-back enough to restore investors’ trust in the market? —Recommended Link— URGENT NEWS: Experts Warn Your Pension Is “A Disaster Waiting to Happen” Save your retirement from miserly interest rates and an overstretched stock market with our special “Executive Dividends” Program… Learn more inside.. It should be. In fact, a rational investor shouldn’t have lost faith in the market to begin with. Especially if he or she has a strong-enough plan (like… Read More

Not many asset classes finished 2018 on a high note. But the December pullback was particularly harsh for high-yield bonds. In fact, the group suffered its worst monthly performance in eight years.  Like most in this category, the SPDR High Yield Bond (NYSE: JNK) fund ended 2018 in negative territory with a loss of 3.3%. Despite being riskier than their investment-grade counterparts, annual declines are rare for high-yield bonds.  #-ad_banner-#In fact, it has only happened a handful of times over the past 20 years.  And they don’t stay down for long. According to State Street, high-yield bonds have rebounded 29%… Read More

Not many asset classes finished 2018 on a high note. But the December pullback was particularly harsh for high-yield bonds. In fact, the group suffered its worst monthly performance in eight years.  Like most in this category, the SPDR High Yield Bond (NYSE: JNK) fund ended 2018 in negative territory with a loss of 3.3%. Despite being riskier than their investment-grade counterparts, annual declines are rare for high-yield bonds.  #-ad_banner-#In fact, it has only happened a handful of times over the past 20 years.  And they don’t stay down for long. According to State Street, high-yield bonds have rebounded 29% on average in the calendar year following an annual decline. While I wouldn’t bank on that large of a gain, I do believe this same pattern will hold in 2019.  As you may know, this group isn’t particularly rate-sensitive. Like equities, it responds more to broad economic changes, which in turn influence the ability of corporate borrowers to repay their IOUs. Right now, most are meeting principal and interest payments in a timely manner.  According to Moody’s, default rates on speculative-grade U.S. debt are projected to fall from 3.0% currently (already well below historical norms) to just 2.0% by September. Read More