I am a huge proponent of following Peter Lynch’s mantra of buying what you know in the stock market. Mr. Lynch intended for this saying to be the impetus that launched further research into the company, rather than as the only reason to make a buy or sell decision in the stock market. When used correctly, it can be a powerful way to create investment ideas to explore for your portfolio.   #-ad_banner-#Taking this saying to heart, I am always looking for the next big thing when it comes to food. As a foodie who loves the American classics such… Read More

I am a huge proponent of following Peter Lynch’s mantra of buying what you know in the stock market. Mr. Lynch intended for this saying to be the impetus that launched further research into the company, rather than as the only reason to make a buy or sell decision in the stock market. When used correctly, it can be a powerful way to create investment ideas to explore for your portfolio.   #-ad_banner-#Taking this saying to heart, I am always looking for the next big thing when it comes to food. As a foodie who loves the American classics such as hamburgers, I keep a close eye on the fast and gourmet burger joints that seem to be popping up everywhere. I was thrilled to see the success of Shake Shack (NYSE: SHAK). Starting out as a humble hot dog cart in Manhattan, the company launched its IPO in January 2015. Given the simple start, the IPO alone was a testament to American capital markets and our never-ending love of fast-food hamburgers. However, Shake Shack continued to surprise and confound critics, with shares more than doubling on their first day of trading. Even more, the stock continued to rocket higher… Read More

If there’s one lesson that stands out among all those I’ve learned in my 20 years of trading, it’s that even the best research, resources and skills can’t guarantee success. When I was coming up as a pit trader, I was fortunate enough to work alongside and learn from some of the best traders that have every played the market. Many generously revealed their favorite metrics and secret tips to finding market trends and picking the best stocks.  #-ad_banner-#But the thing we never talked about was how often or how badly they lost on trades. Unbeknownst to me, this was… Read More

If there’s one lesson that stands out among all those I’ve learned in my 20 years of trading, it’s that even the best research, resources and skills can’t guarantee success. When I was coming up as a pit trader, I was fortunate enough to work alongside and learn from some of the best traders that have every played the market. Many generously revealed their favorite metrics and secret tips to finding market trends and picking the best stocks.  #-ad_banner-#But the thing we never talked about was how often or how badly they lost on trades. Unbeknownst to me, this was a critical part of the equation, and one that most market gurus never address. I remember feeling inadequate because, as hard as I tried, I still couldn’t pick winners 100% of the time. It wasn’t until I became an options market maker that I learned how to add real odds to my trading. As a market marker, I was required to trade hundreds of contracts on a daily basis. For every trade I took, I was trying desperately to time the market so I could gain a sliver of an advantage. One of my competitors, a trader named Brett, noticed… Read More

Headline risks can strike at any time and can hit even the best investments. Most companies have felt the pain of a news story that sent shares plunging, and when the issue results in little more than a humiliation for management, it can turn out to be an opportunity for investors. #-ad_banner-#That’s the case with my favorite bank stock, Wells Fargo (NYSE: WFC), which is the largest bank in the country by deposits and underwrites more than a third of the nation’s home loans. The bank’s focus on lending rather than asset management has helped it outperform other large banks… Read More

Headline risks can strike at any time and can hit even the best investments. Most companies have felt the pain of a news story that sent shares plunging, and when the issue results in little more than a humiliation for management, it can turn out to be an opportunity for investors. #-ad_banner-#That’s the case with my favorite bank stock, Wells Fargo (NYSE: WFC), which is the largest bank in the country by deposits and underwrites more than a third of the nation’s home loans. The bank’s focus on lending rather than asset management has helped it outperform other large banks with nearly 60% of its $1.7 trillion in balance sheet assets in consumer and business loans. News broke in early September that more than 2.1 million fake deposit and credit card accounts had been opened by employees of the bank. This was done primarily as a way to meet high quotas for cross-selling products, and only about 5% of the fake accounts generated any fee income, which totaled $2.4 million. Aggressive cross-selling of products is nothing new in banking. The problem is that Wells didn’t have the oversight structures in place to catch employees committing the fraud.  — Recommended Link… Read More

When a company delivers a positive earnings report and increases its outlook for the full year, it’s usually a good bet that its stock will garner some buyers. But when a stock initially rallies on the news only to spend the rest of the day falling on heavy volume, we can surmise that something is not right.  That’s exactly what happened to Darden Restaurants (NYSE: DRI) on Tuesday. #-ad_banner-# The restaurant operator announced better-than-expected earnings before the bell, increased its outlook and announced a new $500 million buyback plan. The stock instantly jumped more than 4% from Monday’s close. But… Read More

When a company delivers a positive earnings report and increases its outlook for the full year, it’s usually a good bet that its stock will garner some buyers. But when a stock initially rallies on the news only to spend the rest of the day falling on heavy volume, we can surmise that something is not right.  That’s exactly what happened to Darden Restaurants (NYSE: DRI) on Tuesday. #-ad_banner-# The restaurant operator announced better-than-expected earnings before the bell, increased its outlook and announced a new $500 million buyback plan. The stock instantly jumped more than 4% from Monday’s close. But it was all downhill from there. By Tuesday’s close, shares had given up nearly all of those gains, closing up just 0.6%. While the media will report it as a gain on positive earnings news, the charts say otherwise. Bad action on good news is bearish. DRI, as well as a good deal of the restaurant sector, has been in a decline since the summertime. Darden peaked in June and fell through mid-July before settling into a sideways range. But within that range there were clues to suggest there was more pain ahead. First, the… Read More

A couple of months ago, I introduced you to our newest expert analyst Genia Turanova. We brought Genia in to take the helm of two of our most important and successful premium newsletters (The Daily Paycheck and Game-Changing Stocks). And she hasn’t disappointed. In fact, one of her most recent picks for Game-Changing Stocks is up 20% in a matter of 10 trading days — and she believes there could be even more upside ahead. Before I tell you about that pick, I should also mention that another one of our strategists, options expert Jared Levy, has been following the… Read More

A couple of months ago, I introduced you to our newest expert analyst Genia Turanova. We brought Genia in to take the helm of two of our most important and successful premium newsletters (The Daily Paycheck and Game-Changing Stocks). And she hasn’t disappointed. In fact, one of her most recent picks for Game-Changing Stocks is up 20% in a matter of 10 trading days — and she believes there could be even more upside ahead. Before I tell you about that pick, I should also mention that another one of our strategists, options expert Jared Levy, has been following the very same stock for some time as well. And he’s recommending a safe way to play the upside the stock still has while also protecting against the downside.  —Sponsored Link— AGHI: First 243% Profits. Then 390%. Are 1,775% Gains Next?​ AGHI keeps making investors unbelievable gains. In less than a year, this stock has returned triple-digit gains… twice. Every time they get a little attention — share prices just don’t stop climbing. And this time 1,775% profits could be yours. Click here to learn more.  That stock in question is social… Read More

The banking sector enjoyed a nice run higher as investors saw the reality of rising interest rates getting closer. Banks make money by borrowing it at lower short-term interest rates and lending it at longer-term interest rates. So, the yield curve — the difference between short- and long-term rates — is critical. #-ad_banner-# If the Federal Reserve raises short-term rates, with all else being equal, the yield curve will flatten, making it harder for banks to make money. All things are never equal, though, and the chain of events in the… Read More

The banking sector enjoyed a nice run higher as investors saw the reality of rising interest rates getting closer. Banks make money by borrowing it at lower short-term interest rates and lending it at longer-term interest rates. So, the yield curve — the difference between short- and long-term rates — is critical. #-ad_banner-# If the Federal Reserve raises short-term rates, with all else being equal, the yield curve will flatten, making it harder for banks to make money. All things are never equal, though, and the chain of events in the capital markets is thought to push long-term rates higher, as well. Pundits think long-term rates will rise more than short rates, and that will make the yield curve steeper. However, that does not seem to be happening now. The yield curve remains as flat as it has been since early July, which represented a nine-year low and a level last seen as the financial crisis was still unfolding. While the yield curve spent the first half of September steepening and broke a one-year trendline to the upside, something happened mid-month to abruptly change that. Out of the blue, markets got… Read More

It’s no secret that I don’t think much of the housing and real estate sectors in terms of stock market investments right now. Last week, I panned homebuilder Lennar (NYE: LEN), calling it one of the first stocks you should sell in a market correction. My recommendation to short LEN turned out to be a decent plan. Before the market opened on Tuesday, the company delivered an earnings beat… that was quickly shrugged off as shares closed 3.5% lower on the day. #-ad_banner-# The weakness was blamed on slowing orders for the homebuilder, as well as a report showing lower-than-expected… Read More

It’s no secret that I don’t think much of the housing and real estate sectors in terms of stock market investments right now. Last week, I panned homebuilder Lennar (NYE: LEN), calling it one of the first stocks you should sell in a market correction. My recommendation to short LEN turned out to be a decent plan. Before the market opened on Tuesday, the company delivered an earnings beat… that was quickly shrugged off as shares closed 3.5% lower on the day. #-ad_banner-# The weakness was blamed on slowing orders for the homebuilder, as well as a report showing lower-than-expected August housing starts that was also released on Tuesday. Related sectors such as home furnishings look rather weak, too, with the Dow Jones U.S. Home Furnishings index breaking down below support and its 50-day moving average.  The break was led by office furnishings stocks, but right on their heels is La-Z-Boy (NYSE: LZB), maker of the iconic reclining chair of the same name. This stock is one bad day away from a fresh breakdown of its own. La-Z-Boy had a very strong run from February to August, culminating in a breakout of a short-term range on Aug. 23, with shares… Read More

Last week’s hawkish chatter from the Federal Reserve put the kibosh on the market’s advance. And although more soothing rhetoric doled out Monday sparked a rebound, the market could not sustain it, and stocks fell on Tuesday. What was once a calm, serene market has turned stormy, and one of the hardest hit sectors, at least from a technical perspective, is the homebuilders. #-ad_banner-# It’s easy for bears to look at the year’s biggest winners and think that’s where the easy money is in a market correction. However,… Read More

Last week’s hawkish chatter from the Federal Reserve put the kibosh on the market’s advance. And although more soothing rhetoric doled out Monday sparked a rebound, the market could not sustain it, and stocks fell on Tuesday. What was once a calm, serene market has turned stormy, and one of the hardest hit sectors, at least from a technical perspective, is the homebuilders. #-ad_banner-# It’s easy for bears to look at the year’s biggest winners and think that’s where the easy money is in a market correction. However, it’s rarely a good idea to bet against winning stocks such as Facebook (NASDAQ: FB), as they tend to remain in strong rising trends. It’s far better to look for sectors and individual stocks that have not fared as well. Within the homebuilding group, I like Lennar (NYSE: LEN) for a bearish play, as the charts show the stock is poised for a double-digit drop. Lennar has been floundering since March, and unlike the broader market S&P 500, it never eclipsed its 2015 highs. As you can see in the chart below, the trading range formed over the past few… Read More

With the Federal Reserve seemingly conflicted about when to raise short-term interest rates, it is no wonder the market has been chopping sideways for weeks, unsure of which direction to break out. Some interest-rate sensitive sectors have fared worse, but this now sets up a buying opportunity.  Looking at the Treasury bond market, long-term interest rates have not budged since July. Currently, the benchmark 10-year rate appears ready to break down, which will send note and bond prices higher, as well as boost prices of interest-rate sensitive stocks. Read More

With the Federal Reserve seemingly conflicted about when to raise short-term interest rates, it is no wonder the market has been chopping sideways for weeks, unsure of which direction to break out. Some interest-rate sensitive sectors have fared worse, but this now sets up a buying opportunity.  Looking at the Treasury bond market, long-term interest rates have not budged since July. Currently, the benchmark 10-year rate appears ready to break down, which will send note and bond prices higher, as well as boost prices of interest-rate sensitive stocks. #-ad_banner-# Aside from all these intermarket machinations, the chart of the Dow Jones Utility Average looks ready to break out to the upside.  Traders can buy a utilities ETF to participate in the potential upside, but digging a little deeper into component stocks reveals some even better bets. Top on my list is Southern Company (NYSE: SO), which operates power-generating and transmission facilities throughout the southeastern states. The stock offers a 4.2% dividend yield and a bullish setup on the charts. SO fell from its 52-week high of $54.64, made on July 22, to an intraday low of $50 on… Read More

You don’t need me to tell you that there are two parts to any trade. First, for long trades, we have to buy something. Then, to actually turn paper profits into real money, we have to sell it.  To me, biotech giant Amgen (Nasdaq: AMGN) is at that latter point. After a nearly 20% run since its late-June lows, it looks like it’s time to cash in or flip it around to an outright short. #-ad_banner-# Some may argue that the fundamentals still look decent and that AMGN is trading… Read More

You don’t need me to tell you that there are two parts to any trade. First, for long trades, we have to buy something. Then, to actually turn paper profits into real money, we have to sell it.  To me, biotech giant Amgen (Nasdaq: AMGN) is at that latter point. After a nearly 20% run since its late-June lows, it looks like it’s time to cash in or flip it around to an outright short. #-ad_banner-# Some may argue that the fundamentals still look decent and that AMGN is trading near its all-time high. However, the entire health care sector is in a precarious situation with drug and service providers at the greatest risk as politicians take a stand against their high prices. These groups are underperforming the market and some already display technical breakdowns on the charts.  The first item to take note of on Amgen’s chart is a small double-top formed by the July and August highs. Some may say that the pattern is not valid due to the fact that, after an initial breakdown, the stock moved back above the pattern’s lower border. But I say the… Read More