Last week, the major U.S. stock indices posted their fourth consecutive weekly gain. The rally was led by the tech-heavy Nasdaq 100, which advanced 1.7%, lifting this market-leading index further into positive territory for the year. From a sector standpoint, the rally was led by technology (1.8%) and utilities (1.5%), while energy (-1.3%) was the week’s big loser. #-ad_banner-# In last week’s report, I warned investors of a potential pullback in stocks in late July due to extremes in investor complacency that were apparent in both the Volatility S&P 500… Read More

Last week, the major U.S. stock indices posted their fourth consecutive weekly gain. The rally was led by the tech-heavy Nasdaq 100, which advanced 1.7%, lifting this market-leading index further into positive territory for the year. From a sector standpoint, the rally was led by technology (1.8%) and utilities (1.5%), while energy (-1.3%) was the week’s big loser. #-ad_banner-# In last week’s report, I warned investors of a potential pullback in stocks in late July due to extremes in investor complacency that were apparent in both the Volatility S&P 500 (VIX) and the CBOE Put/Call Ratio. These extremes indicated historically low market volatility and extremely low put volume relative to call volume. Both of these conditions remain heading into this week, so caution is still warranted. Watch Semis For Signs Of A Pullback Now that we know the market is vulnerable to a pullback, the next logical question is: Where is the pullback likely to start? This week’s first chart shows the PHLX Semiconductor (SOX) index closing in on a test of formidable overhead resistance at its 751 benchmark high from June 2015. That line is only 1.2% above Friday’s close. Read More

Emerging markets have had a tough few years. Slowing growth in China after the global financial crisis has meant reduced commodity demand and weaker investor sentiment for the group. Then the plunge in crude prices led to lower income for oil-producing nations, along with weakening currencies and falling foreign direct investment.  But 2016 looked to be the year the group could turn a corner. The price of oil and of some metals has rebounded, and dollar strength has plateaued. The iShares MSCI Emerging Markets (NYSE: EEM) was up 26% in mid-July from its January low.  #-ad_banner-#One particular emerging market looked… Read More

Emerging markets have had a tough few years. Slowing growth in China after the global financial crisis has meant reduced commodity demand and weaker investor sentiment for the group. Then the plunge in crude prices led to lower income for oil-producing nations, along with weakening currencies and falling foreign direct investment.  But 2016 looked to be the year the group could turn a corner. The price of oil and of some metals has rebounded, and dollar strength has plateaued. The iShares MSCI Emerging Markets (NYSE: EEM) was up 26% in mid-July from its January low.  #-ad_banner-#One particular emerging market looked to be a standout among the group, with shares of its country fund up 37% from the January low just to the end of April. The country’s current account deficit, the difference between exports and imports, shrank to a five-year low in 2015 and foreign investors were pouring money into the economy. That is, until political uncertainty started gripping the country in late April and erupted in a failed coup this month.  Shares of the country fund are now down 22% from their 52-week high and may be the best buy in emerging markets this year. Historical evidence shows that… Read More

As a market analyst, my job is to make sense of the markets and to uncover the real reason stocks rise and fall — and then use that information to help others profit. My methods go far beyond just buying a good quality stock or shorting a pricey one, though.  Countless hours of research go into finding what I call “disconnects” between where a stock is trading and where it should be trading based on past precedents, peer values and earnings growth potential.  #-ad_banner-#An example of a disconnect is a weak stock or index that’s moving higher, or possibly even… Read More

As a market analyst, my job is to make sense of the markets and to uncover the real reason stocks rise and fall — and then use that information to help others profit. My methods go far beyond just buying a good quality stock or shorting a pricey one, though.  Countless hours of research go into finding what I call “disconnects” between where a stock is trading and where it should be trading based on past precedents, peer values and earnings growth potential.  #-ad_banner-#An example of a disconnect is a weak stock or index that’s moving higher, or possibly even moving lower, but hasn’t fallen fast enough given the data.  And what I’m seeing today is one of the biggest disconnects I’ve seen. It makes absolutely no sense!  The S&P 500 is relentlessly climbing to new highs despite the fact that we are deep into an earnings recession.  “S&P 500 companies have posted negative growth for six straight quarters, a stretch that’s been exceeded only once since 1936. That was the seven-quarter slump of the 2007-2009 recession.” — Bloomberg The chart below will help you visualize just how insane the market’s behavior… Read More

When discussing consumerism from a socio-economic standpoint, the term “upward mobility” is always used. When consumers move up in economic class, money moves with them. I’ve discussed the rise of the emerging market middle class in previous articles. One product/service that had trouble gaining traction among the new middle class is consumer banking. Financial institutions like Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM) have established large institutional footprints in emerging markets in corporate banking, as well wealth management services for the emerging market rich. #-ad_banner-#However, unlike in the United States where there is a brick and mortar bank… Read More

When discussing consumerism from a socio-economic standpoint, the term “upward mobility” is always used. When consumers move up in economic class, money moves with them. I’ve discussed the rise of the emerging market middle class in previous articles. One product/service that had trouble gaining traction among the new middle class is consumer banking. Financial institutions like Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM) have established large institutional footprints in emerging markets in corporate banking, as well wealth management services for the emerging market rich. #-ad_banner-#However, unlike in the United States where there is a brick and mortar bank on every single corner, brick and mortar banking has not grown in emerging markets. But money still needs to move and consumers will find other ways to do it besides a traditional bank. Enter Western Union (NYSE: WU). Spun off from First Data Corp (NYSE: FDC) in 2006, Western Union is recognized as one of the nation’s largest independent providers of consumer money transfer services. Nearly 80% of the company’s revenues come from consumer to consumer services such as its branded Western Union Money Gram product, pre-paid debit cards, and money orders. In the United States, these services are distributed… Read More

Johnson Controls, Inc. (NYSE: JCI) is headquartered in my backyard: Milwaukee, Wisconsin. #-ad_banner-#It’s a company focused heavily on efficiency, and it’s got its finger on the pulse of what the corporate world wants. And it turns out, the corporate world wants what JCI is selling. In its latest Energy Efficiency Indicator survey, JCI found that 72% of the 1,243 participants said their companies are anticipating increasing their investment in energy efficiency and renewable energy in the next twelve months. That’s a massive number, and it’s also a massive increase compared to just four years ago. In 2013, JCI’s Energy Efficiency… Read More

Johnson Controls, Inc. (NYSE: JCI) is headquartered in my backyard: Milwaukee, Wisconsin. #-ad_banner-#It’s a company focused heavily on efficiency, and it’s got its finger on the pulse of what the corporate world wants. And it turns out, the corporate world wants what JCI is selling. In its latest Energy Efficiency Indicator survey, JCI found that 72% of the 1,243 participants said their companies are anticipating increasing their investment in energy efficiency and renewable energy in the next twelve months. That’s a massive number, and it’s also a massive increase compared to just four years ago. In 2013, JCI’s Energy Efficiency Indicator survey found that only 42% of those surveyed had planned to increase investment. And take a look at this map: Emerging markets are going to be investing heavily in efficiency and renewable energy, but developed economies aren’t sitting on the sidelines, either. I think the efficiency sectors is going to be an interesting area over the next couple of years, and there are several different areas that could be of note to investors. According to the survey, heating, ventilation and air conditioning (HVAC) improvements were the most popular improvement over the past 12 months, followed by energy-focused… Read More

Chances are, you’ve read plenty of articles telling you how you should be investing this election season. Articles like: “Invest In These Companies If Clinton Is Elected” “How To Profit From A Trump Presidency” And more… But I have news for you. #-ad_banner-# It doesn’t matter who gets elected. Based on factual historical data, chances are good that the market is going to sink. In fact, I’m bracing for as much as a 30% economic plunge.  It’s hard to believe, but it’s true. History suggests that there’s a strong predictable pattern.  Every four years, the American people head to… Read More

Chances are, you’ve read plenty of articles telling you how you should be investing this election season. Articles like: “Invest In These Companies If Clinton Is Elected” “How To Profit From A Trump Presidency” And more… But I have news for you. #-ad_banner-# It doesn’t matter who gets elected. Based on factual historical data, chances are good that the market is going to sink. In fact, I’m bracing for as much as a 30% economic plunge.  It’s hard to believe, but it’s true. History suggests that there’s a strong predictable pattern.  Every four years, the American people head to the voting booth to elect the next U.S. president. The ripple effects from that vote can impact many financial markets… including the U.S. stock market.  And economic turmoil has immediately followed almost every new President once he’s taken office.  In 1937, Franklin D. Roosevelt’s first year, the market was down by 27.3%. Nixon watched the Dow Jones Industrial Average plunge 36%. In Reagan’s second year the unemployment rate hit 10.8% — the highest rate since the Great Depression. And according to CNN Money, in Obama’s second year, the market lost $2.8 trillion in value in only a few weeks… “some… Read More

U.S. stocks are near record highs. Many analysts would have downplayed the possibility of such a feat back in January, when fears of a sharp slowdown in demand from China and rising interest rates caused a mini-panic among some investors (and an opportunity for the rest of us). The impressive rebound after the selloff came in recognition of the relative strength of the U.S. economy versus much of the rest of the world. Employment continued to rise, wages finally started inching higher, the Fed kept its power dry and energy prices rallied, but not so much as to cause harm… Read More

U.S. stocks are near record highs. Many analysts would have downplayed the possibility of such a feat back in January, when fears of a sharp slowdown in demand from China and rising interest rates caused a mini-panic among some investors (and an opportunity for the rest of us). The impressive rebound after the selloff came in recognition of the relative strength of the U.S. economy versus much of the rest of the world. Employment continued to rise, wages finally started inching higher, the Fed kept its power dry and energy prices rallied, but not so much as to cause harm to pocketbooks or corporate earnings. Investors also couldn’t help but recognize the solid financial and competitive positions many large global companies have established since the financial crisis. #-ad_banner-#Investors have overlooked several worrisome signs: continued sluggishness in China, Europe, Brazil and Russia; an apparently stepped-up pace of terrorist attacks from ISIS; turmoil in the Middle East; Great Britain’s shocking vote to leave the European Union; an unpredictable, even bizarre, U.S. presidential race; and, most recently, a disturbing series of shootings in the United States that put the nation on edge. As the old expression goes, the market climbs a wall of… Read More