#-ad_banner-#As the long-running bull market shows signs of tiring, investors are searching for pockets of safety. But even seemingly safe stocks may not always provide a refuge. A clear example: StoneMor Partners LP (NYSE: STON), the nation’s second-largest owner and operator cemeteries and funeral homes, has announced modest dividend increases every year for a decade. But that impressive run may soon end. At first glance, this master limited partnership holds solid appeal. Partnership units currently yield an attention-grabbing 8.2%, and yields have ranged from about 7% to nearly 18% since 2005. However, StoneMor’s operational results tell a different story. The… Read More

#-ad_banner-#As the long-running bull market shows signs of tiring, investors are searching for pockets of safety. But even seemingly safe stocks may not always provide a refuge. A clear example: StoneMor Partners LP (NYSE: STON), the nation’s second-largest owner and operator cemeteries and funeral homes, has announced modest dividend increases every year for a decade. But that impressive run may soon end. At first glance, this master limited partnership holds solid appeal. Partnership units currently yield an attention-grabbing 8.2%, and yields have ranged from about 7% to nearly 18% since 2005. However, StoneMor’s operational results tell a different story. The firm has been unprofitable for nearly seven years, posting per-share losses ranging from $0.09-to-$0.89. And it’s unlikely to get back into the black anytime soon for several reasons. Overpriced Acquisitions Cemeteries and funeral homes are dependable, but stagnant businesses. As a result, StoneMor has only been able to grow through acquisitions. From 2010 through 2014, the firm obtained nearly 90 properties, about half of which were cemeteries. The strategy successfully increased the top line, which has risen 46% in the past five years, to $288 million. However, StoneMor spent $153 million to acquire that additional… Read More

The title of last week’s Market Outlook posed the question: “Could Complacency Reverse Last Week’s Gains?” The answer was a resounding, “Yes.” One week after aggressively rebounding from the major support levels I identified earlier in July, all major U.S. stock indices collapsed. The S&P 500 fell 2.2%, the Dow lost 2.9%, the Nasdaq 100 declined 2.3% and the Russell 2000 dropped 3.2%. #-ad_banner-# All sectors of the S&P 500 closed down for the week, led lower by economically sensitive materials, energy and industrials, which warns of a global slowdown that could put even more downside pressure on… Read More

The title of last week’s Market Outlook posed the question: “Could Complacency Reverse Last Week’s Gains?” The answer was a resounding, “Yes.” One week after aggressively rebounding from the major support levels I identified earlier in July, all major U.S. stock indices collapsed. The S&P 500 fell 2.2%, the Dow lost 2.9%, the Nasdaq 100 declined 2.3% and the Russell 2000 dropped 3.2%. #-ad_banner-# All sectors of the S&P 500 closed down for the week, led lower by economically sensitive materials, energy and industrials, which warns of a global slowdown that could put even more downside pressure on world stock markets in the weeks ahead. Nasdaq Fails at Tech Bubble Highs In last week’s Market Outlook, I pointed out that my 4,600 upside target in the tech-heavy Nasdaq 100 (NDX) was met on July 17. I also warned that corrective declines often begin once initial price targets have been met as investors take profits.  The big question, I said, was how much upside was left. I noted that one key to answering that question was whether the Nasdaq Composite, the Nasdaq 100’s broader cousin, could remain above secular overhead resistance at 5,133, which was the tech bubble high… Read More

Last week, I suggested trading against the trend in an oversold stock. For this week’s trade, though, the trend has returned to being my friend — and for Johnson Controls (NYSE: JCI), that trend is to the downside. This maker of automobile interior systems and building heating, cooling and management systems broke down last month through its intermediate-term trendline, as seen in the chart below. That came on the heels of the June 10 breakout failure, also seen below, sparked by news the company was considering spinning off its automotive businesses. Initially the market viewed… Read More

Last week, I suggested trading against the trend in an oversold stock. For this week’s trade, though, the trend has returned to being my friend — and for Johnson Controls (NYSE: JCI), that trend is to the downside. This maker of automobile interior systems and building heating, cooling and management systems broke down last month through its intermediate-term trendline, as seen in the chart below. That came on the heels of the June 10 breakout failure, also seen below, sparked by news the company was considering spinning off its automotive businesses. Initially the market viewed the spin-off as a positive for the company, but it was a one-day wonder rally. The next day, the stock started to fall, and it has not looked back since. In the face of a series of lower highs and lower lows, the downside trend break and a drop back below the 200-day moving average, we can safely assume the bears are in charge here.  That suggests there is more downside ahead. For some additional background, Johnson Controls is in the consumer discretionary sector and its representative exchange-traded fund, the Consumer Discretionary Select SPDR (NYSE: XLY), appears to… Read More

The major U.S. stock indices aggressively rebounded last week from the underlying support levels I pointed out in the July 6 and July 13 issues of Market Outlook. The rally was led by the tech-heavy Nasdaq 100, which gained 5.5% and is now up 10% for the year, and was fueled by news that China appears to have averted its major stock market crash while the eurozone is on its way to kicking the Greek default “can” further down the road. #-ad_banner-# Last week’s rally was led by the technology and financials sectors, which gained 4.8% and 3%, respectively. In… Read More

The major U.S. stock indices aggressively rebounded last week from the underlying support levels I pointed out in the July 6 and July 13 issues of Market Outlook. The rally was led by the tech-heavy Nasdaq 100, which gained 5.5% and is now up 10% for the year, and was fueled by news that China appears to have averted its major stock market crash while the eurozone is on its way to kicking the Greek default “can” further down the road. #-ad_banner-# Last week’s rally was led by the technology and financials sectors, which gained 4.8% and 3%, respectively. In fact, all sectors of the S&P 500 posted gains except for energy and materials, which both remain under pressure within a sluggish global economy. The big question this week, and the focus of today’s Market Outlook, is whether last week’s rally is sustainable.  Nasdaq 100 Meets Our Upside Target  Two weeks ago, in the July 6 Market Outlook, I pointed out that the bellwether S&P 500 was testing major underlying support at its 200-day moving average, a widely watched major trend proxy, and said this was where its larger bullish trend should resume if still… Read More

#-ad_banner-#The two titans of retail squared off last week in a discount smack down. The battle should have major  consequences for each other and the broader industry. Amazon.com, Inc. (Nasdaq: AMZN) has amassed a $100 billion revenue base through a combination of solid execution and well-timed promotions. For example, its Amazon Prime service has created a strong base of loyal and sticky customers. Celebrating its 20th anniversary of that service, the company held a special “Prime Day” on July 15, with a range of discounts. The move came as retail Wal-Mart Stores, Inc. (NYSE: WMT) is making its own… Read More

#-ad_banner-#The two titans of retail squared off last week in a discount smack down. The battle should have major  consequences for each other and the broader industry. Amazon.com, Inc. (Nasdaq: AMZN) has amassed a $100 billion revenue base through a combination of solid execution and well-timed promotions. For example, its Amazon Prime service has created a strong base of loyal and sticky customers. Celebrating its 20th anniversary of that service, the company held a special “Prime Day” on July 15, with a range of discounts. The move came as retail Wal-Mart Stores, Inc. (NYSE: WMT) is making its own massive online push. While Amazon was touting its sales event, Wal-Mart cut prices on thousands of products last week and is developing its own loyalty program, which will cost $50 a year. Walmart also lowered its minimum purchase for free shipping to $30 from $50 for the week’s promotions. Wal-Mart’s CEO even took subtle digs at Amazon and its pricey $99 per year membership fee. These two warriors are officially in battle. Tale Of The Retail Tape In tandem with a steady consumer migration toward e-commerce, Amazon’s growth rate has vastly outpaced Wal-Mart’s… Read More

If you fancy yourself a momentum investor, you’re likely intimately familiar with the concept of relative strength (RS) — arguably one of the most important technical investing tools and one that has withstood the test of time.  At its core, relative strength investing involves buying the best-performing stocks relative to the market and holding them until their momentum changes course. In 1967, Robert Levy published the first scholarly paper on the subject, which was called “Relative Strength as a Criterion for Investment Selection.” The groundbreaking work showed stocks that had outperformed over the past six months… Read More

If you fancy yourself a momentum investor, you’re likely intimately familiar with the concept of relative strength (RS) — arguably one of the most important technical investing tools and one that has withstood the test of time.  At its core, relative strength investing involves buying the best-performing stocks relative to the market and holding them until their momentum changes course. In 1967, Robert Levy published the first scholarly paper on the subject, which was called “Relative Strength as a Criterion for Investment Selection.” The groundbreaking work showed stocks that had outperformed over the past six months tended to do well in the following six months, while stocks that underperformed also tended to continue to do so. Put another way, he showed that strong price trends tend to persist. #-ad_banner-# Even before that, though, the legendary Jesse Livermore — one of the world’s greatest traders from the early 20th century — was following the same concept to make money. According to the classic investment book “Reminiscences of a Stock Operator,” which is based on his life, Livermore believed, “Prices are never too high to begin buying or too low to begin selling.” My own trading system, the… Read More

I have to admit it: McDonald’s (NYSE: MCD) is not one of my favorite fast-food restaurants. As I age, I am increasingly concerned about the effect diet has my health, so I try to eat lots of fruits and vegetables and avoid foods high in salt and fat. True, you can find some relatively healthy options at McDonalds if you choose wisely. However, if you indulge regularly in high-fat, sodium-rich hamburgers and fries, it can lead to an increased risk for Type 2 diabetes and heart disease, among other things.  My beef with the chain goes beyond its food, though. Read More

I have to admit it: McDonald’s (NYSE: MCD) is not one of my favorite fast-food restaurants. As I age, I am increasingly concerned about the effect diet has my health, so I try to eat lots of fruits and vegetables and avoid foods high in salt and fat. True, you can find some relatively healthy options at McDonalds if you choose wisely. However, if you indulge regularly in high-fat, sodium-rich hamburgers and fries, it can lead to an increased risk for Type 2 diabetes and heart disease, among other things.  My beef with the chain goes beyond its food, though. The company also uses way too much packaging from my point of view — a sin it shares with many of its fast-food brethren. For anyone with a sensitive environmental conscience, what gets dumped into the trash can at the end of a McDonald’s meal causes added distress. My complaint with McDonald’s stock goes beyond my dislike for the restaurant. With the broader market reeling from the effects of the Greek debt crisis and the massive sell-off in Chinese stocks, I believe McDonald’s may be on the brink of a major correction. As a result, it is setting itself up… Read More

The major U.S. stock indices finished last week essentially unchanged on the heels of two consecutive weeks of declines. My work suggests the stock market is within weeks of a significant bottom.  But the question is whether that bottom occurs now or if there is one more shoe to drop first. This week, that “shoe” is Greece and China, more specifically, whether a bailout deal for Greece can be finalized and whether the Chinese government can stem the tsunami in that country’s stock market, which saw the Shanghai Composite collapse by 35% over the past month. These issues… Read More

The major U.S. stock indices finished last week essentially unchanged on the heels of two consecutive weeks of declines. My work suggests the stock market is within weeks of a significant bottom.  But the question is whether that bottom occurs now or if there is one more shoe to drop first. This week, that “shoe” is Greece and China, more specifically, whether a bailout deal for Greece can be finalized and whether the Chinese government can stem the tsunami in that country’s stock market, which saw the Shanghai Composite collapse by 35% over the past month. These issues will have a big influence on whether the U.S. market begins its next leg higher now or later. [Editor’s note: On July 8, as Chinese stocks plummeted 5.9% and U.S. markets followed them down, one trader closed two positions for annualized returns of 1,205% and 2,111%. This same trader believes that was the day an event took place that could have a huge negative impact on your portfolio. He put together a special presentation to help you protect yourself. Access it for free here.] #-ad_banner-# The two strongest sectors of the S&P 500… Read More

Today could be critical to your financial future. The red flags I’m seeing right now are eerily similar to what I saw before several major corrections. #-ad_banner-#If my hypothesis holds true, then the next few days could mean the difference between earning outsized gains and losing 10%-to-30% in a matter of days. For example, on July 18, 2014, I warned that the Russian market was in trouble. Sanctions were starting to take hold, and its economy was cracking. I predicted we would… Read More

Today could be critical to your financial future. The red flags I’m seeing right now are eerily similar to what I saw before several major corrections. #-ad_banner-#If my hypothesis holds true, then the next few days could mean the difference between earning outsized gains and losing 10%-to-30% in a matter of days. For example, on July 18, 2014, I warned that the Russian market was in trouble. Sanctions were starting to take hold, and its economy was cracking. I predicted we would see “dramatic negative reversals in growth and earnings” of the top holdings in the Market Vectors Russia ETF (NYSE: RSX). This, I reasoned, would cause the fund to correct by at least 10% within three months. Well, over the next 20 days, RSX plunged 9%. Within three months, it was down 15%, and within five months, shares had been cut in half. More recently, on May 27, I warned that Chinese stocks were in a bubble. With a shaky fundamental foundation and ominous technical pattern, I targeted a… Read More

Health care is one investment theme that’s certainly in vogue right now. While traditionally considered a defensive sector, I’ve heard numerous pundits declare its classification has changed from defensive to growth.  I always find it interesting when people change their long-held assumptions about the market. Think about what happened when traders began to substitute “eyeballs” for “earnings” in the P/E ratio during the dot-com bubble, for example. Eventually, the market usually reminds them who’s boss.  Health care has been leading the market for many months, with the Health Care Select Sector SPDR ETF (NYSE: XLV) posting an 8% gain year… Read More

Health care is one investment theme that’s certainly in vogue right now. While traditionally considered a defensive sector, I’ve heard numerous pundits declare its classification has changed from defensive to growth.  I always find it interesting when people change their long-held assumptions about the market. Think about what happened when traders began to substitute “eyeballs” for “earnings” in the P/E ratio during the dot-com bubble, for example. Eventually, the market usually reminds them who’s boss.  Health care has been leading the market for many months, with the Health Care Select Sector SPDR ETF (NYSE: XLV) posting an 8% gain year to date as the broader market has moved sideways. Plus, the relative performance charts of most health care indexes versus the S&P 500 continue to point higher.  So, at first glance, it seems like there is not much to dislike. But the sector is overbought, and one event that can act as a double-edged sword in any sector is merger activity. #-ad_banner-# Mergers can boost share prices thanks to operating synergies between the companies involved. They can also signal that executives feel their stock is so valuable — perhaps overvalued — that they use it as a currency… Read More