Major U.S. indices were essentially unchanged in a week that featured a lot of day-to-day volatility but not much directional movement. When markets move in a sideways range, as the U.S. stock market has been doing since February, it indicates temporary investor indecision.  #-ad_banner-#These periods of indecision almost always lead to the next meaningful directional move, which is precisely where the market finds itself heading into this week. The big question is: “Which way from here?” That is the focus of this week’s report. At the sector level, financials and consumer staples were last week’s best performers. The recent strength… Read More

Major U.S. indices were essentially unchanged in a week that featured a lot of day-to-day volatility but not much directional movement. When markets move in a sideways range, as the U.S. stock market has been doing since February, it indicates temporary investor indecision.  #-ad_banner-#These periods of indecision almost always lead to the next meaningful directional move, which is precisely where the market finds itself heading into this week. The big question is: “Which way from here?” That is the focus of this week’s report. At the sector level, financials and consumer staples were last week’s best performers. The recent strength in financials, which are up 1.9% in the past month, has been driven by the spike in long-term U.S. interest rates amid a steepening yield curve. Both of these factors will help make banks more profitable.   The weakest sector last week was energy, which lost 0.9% and is down 4.5% over the past month. This has been driven by a strong outflow of investor assets, according to Asbury Research’s own metric, as shown in the table below. The biggest inflow of investor assets over the past one-week and one-month periods went into the financial sector. Stocks Need… Read More

It’s not often that a stock suffers technical destruction and repairs itself in just a few weeks. But that is what seems to be happening to professional social media site LinkedIn (NASDAQ: LNKD). And the way it has performed recently suggests it has plenty of gas in the tank. On April 30, the company issued a warning that Q2 revenue and earnings would fall short of expectations. The next day the stock cratered 19% to smash through its one-year trendline and 200-day moving average on huge volume, which is often the case when a stock purges. The question… Read More

It’s not often that a stock suffers technical destruction and repairs itself in just a few weeks. But that is what seems to be happening to professional social media site LinkedIn (NASDAQ: LNKD). And the way it has performed recently suggests it has plenty of gas in the tank. On April 30, the company issued a warning that Q2 revenue and earnings would fall short of expectations. The next day the stock cratered 19% to smash through its one-year trendline and 200-day moving average on huge volume, which is often the case when a stock purges. The question on many investors’ minds is, “Is LNKD now on sale?” In my experience, a stock that makes such a huge break is damaged goods and not a bargain. It can take weeks, months and in some cases years for the market to forgive the company’s transgressions. And that manifests in the charts as a long trading range with little action and low turnover. #-ad_banner-# Basically, the trading range allows both bulls and bears to rethink their strategies. Many traders move on to other stocks because there is nothing happening in the fallen. But when interest is low… Read More

Investment bankers are having a field day. They’ve been helping their clients pursue a stunning amount of deals, pushing the phrase “Merger Mondays” back on to the front page. What kind of volume are we talking about? More than $1 trillion worth of deals have been announced thus far in 2015, according to Dealogic. That puts us on pace for the second-busiest year of M&A activity ever (though still trailing the pace seen in 2007, a record-setting year). The tech sector can always be counted on for a vigorous pace of deals, and this year is no exception. And the… Read More

Investment bankers are having a field day. They’ve been helping their clients pursue a stunning amount of deals, pushing the phrase “Merger Mondays” back on to the front page. What kind of volume are we talking about? More than $1 trillion worth of deals have been announced thus far in 2015, according to Dealogic. That puts us on pace for the second-busiest year of M&A activity ever (though still trailing the pace seen in 2007, a record-setting year). The tech sector can always be counted on for a vigorous pace of deals, and this year is no exception. And the hottest industries within technology — adtech and datacenters — are leading the way. That makes this a fine time to focus on the companies that might soon catch a bid. Digital Marketing From 2008 through 2012, major tech firms such as Facebook, Inc. (Nasdaq: FB), Google, Inc. (Nasdaq: GOOG) and Yahoo, Inc. (Nasdaq: YHOO) spent a combined $6 billion in cash and stock to acquire small, privately-held advertising technology firms. Fast forward to 2014 and that level of adtech deals took place in just one year. And the industry M&A has already surpassed $5 billion thus far in 2015,… Read More

Investors hate this industry. Pension funds do, too. In fact, the industry is so hated that some funds aren’t allowed to own the companies involved. But for the last 115 years, these companies have been the best performing stocks in the United States — despite stiff competition from sectors like healthcare, technology and energy. And today, while most investors shun these stocks, you could use them to earn more than 20% annualized. And here’s the best part… you won’t even have to buy shares. Let me explain. Investment bank Credit Suisse recently conducted a study on the best-performing industries in… Read More

Investors hate this industry. Pension funds do, too. In fact, the industry is so hated that some funds aren’t allowed to own the companies involved. But for the last 115 years, these companies have been the best performing stocks in the United States — despite stiff competition from sectors like healthcare, technology and energy. And today, while most investors shun these stocks, you could use them to earn more than 20% annualized. And here’s the best part… you won’t even have to buy shares. Let me explain. Investment bank Credit Suisse recently conducted a study on the best-performing industries in the United States since 1900. Here’s what they found: One dollar invested in the U.S. stock market in 1900 would have been worth $35,255 at the end of 2014. That comes out to an average annual return of 9.6%. Not bad. However, one dollar invested in the tobacco industry in 1900 would have ballooned to $6.28 million by the end of 2014. That’s an average annual return of 14.6%. No other industry has come even close to delivering that kind of return. The second-best performing group was electrical equipment, but tobacco outperformed these stocks by a factor of 10. It… Read More

Higher interest rates are setting up to be one of the major market themes of 2015. Global rates are surging, and despite the fact that the International Monetary Fund (IMF) urged the Federal Reserve to hold off on increasing the fed funds rates, investors remain on edge. This is wreaking havoc on the bond market, sending prices plummeting as investors sell bonds with lower fixed rates. The iShares 20+ Year Treasury Bond ETF (NYSE: TLT) has lost more than 10% over the past two months. #-ad_banner-# Stocks in the S&P 500 are not doing that much better,… Read More

Higher interest rates are setting up to be one of the major market themes of 2015. Global rates are surging, and despite the fact that the International Monetary Fund (IMF) urged the Federal Reserve to hold off on increasing the fed funds rates, investors remain on edge. This is wreaking havoc on the bond market, sending prices plummeting as investors sell bonds with lower fixed rates. The iShares 20+ Year Treasury Bond ETF (NYSE: TLT) has lost more than 10% over the past two months. #-ad_banner-# Stocks in the S&P 500 are not doing that much better, down 2% from their May high, and investors are scrambling to cover their portfolios in the event of higher rates. But one sector stands to benefit from the increase in yields. It booked the second highest earnings growth in the first quarter and could jump when second-quarter results come out. Risks remain but options traders can take advantage of a powerful strategy to minimize losses while amplifying potential returns into 50%-plus profits by the end of summer. Interest rates can be a mixed bag for companies in the financial sector. While low rates drive down borrowing costs, they also limit… Read More

There’s a little-known indicator that’s making a small group of investors a lot of money. I call this indicator the “Alpha Score,” because it consistently beats the market and often with less risk than buy-and-hold investing. It can flag exactly which stocks are about to jump double and triple digits in the coming days… weeks… and months. I’ll tell you more about the Alpha Score in a second, but just know that the indicator can range from 0 to 200. The higher the number, the more potential the stock has. For… Read More

There’s a little-known indicator that’s making a small group of investors a lot of money. I call this indicator the “Alpha Score,” because it consistently beats the market and often with less risk than buy-and-hold investing. It can flag exactly which stocks are about to jump double and triple digits in the coming days… weeks… and months. I’ll tell you more about the Alpha Score in a second, but just know that the indicator can range from 0 to 200. The higher the number, the more potential the stock has. For example, you’ve probably never heard of Westmoreland Coal (Nasdaq: WLB). It operates six surface coal mines and two power generating units in the western United States. The company looked promising when we recommended it on Dec. 18, 2013. Westmoreland had sold 95% of its future production under long-term contracts, and the market for coal looked stable. But that’s not what attracted us to the stock. What most investors didn’t know about WLB is that it had an Alpha Score of 158. Less than 1% of stocks have a score that high at any given time. … Read More

“Sell in May and go away” is one of those trite pieces of investment advice that traders would be wise to not follow blindly. This year, the Dow and S&P 500 finished up 1% in May, and the Nasdaq rose nearly 3%. That being said, I did warn my Profit Amplifier readers of one thing they definitely should sell in May. It wasn’t a stock, but a country that is struggling to sustain economic growth — and I saw a chance to make big profits. #-ad_banner-# Weak Economic Foundation Makes This Market Susceptible GDP… Read More

“Sell in May and go away” is one of those trite pieces of investment advice that traders would be wise to not follow blindly. This year, the Dow and S&P 500 finished up 1% in May, and the Nasdaq rose nearly 3%. That being said, I did warn my Profit Amplifier readers of one thing they definitely should sell in May. It wasn’t a stock, but a country that is struggling to sustain economic growth — and I saw a chance to make big profits. #-ad_banner-# Weak Economic Foundation Makes This Market Susceptible GDP growth in China and Hong Kong has been steadily declining since December 2011. Hong Kong’s growth dropped from 8% in the first quarter of 2012 to 2.1% in the first quarter of 2015. As a quick note, the city of Hong Kong is part of the country of China, reverting to Chinese rule from British rule in 1997. Hong Kong and China’s legal and governmental relationship is complex but they are economically intertwined, with Hong Kong and Shanghai being the financial hubs of the country. The chart below shows the trajectories of year-over-year GDP growth for China, Hong Kong and… Read More

Most major indices finished lower for the second consecutive week. Only the small-cap Russell 2000 managed to eke out a 1.2% gain.  The U.S. markets were pressured by a number of factors. These included sharply rising long-term U.S. interest rates and worries of a debt default in Greece. Generally favorable U.S. economic data had investors concerned the Federal Reserve will begin raising short-term interest rates sooner rather than later. Another negative factor last week was generally declining global equity prices, which I’ll discuss in more detail later in the report.  At the sector level, only financials, consumer discretionary and industrials… Read More

Most major indices finished lower for the second consecutive week. Only the small-cap Russell 2000 managed to eke out a 1.2% gain.  The U.S. markets were pressured by a number of factors. These included sharply rising long-term U.S. interest rates and worries of a debt default in Greece. Generally favorable U.S. economic data had investors concerned the Federal Reserve will begin raising short-term interest rates sooner rather than later. Another negative factor last week was generally declining global equity prices, which I’ll discuss in more detail later in the report.  At the sector level, only financials, consumer discretionary and industrials finished in positive territory last week. Financials were driven by rising interest rates and a steepening yield curve that will help banks become more profitable. The weakest sector last week was utilities as rising interest rates lured yield-seeking investors out of this sector and into safer U.S. Treasuries.  Keep a Close Eye on Technology This Week  In last week’s Market Outlook, I discussed the importance of the 5,133 March 2000 tech bubble high in the Nasdaq Composite. I said, “Historic benchmark highs like this one are seldom appreciably and sustainably broken without at least a multiweek decline first.”  What I… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just another amateur grasping for success. The truth is, today’s “game” requires an increased arsenal of tactics and methods to prosper. And for the average investor, a powerful options strategy is one tool that should be used. #-ad_banner-# Options can be as simple or as complicated as you want to make them. Just know that when you purchase options as a means to speculate on future stock price movements, you are limiting your downside risk, yet your profit potential can be unlimited. Aside from speculation, investors use options for hedging purposes. It is a way to… Read More

I want to share a little-known but powerful indicator with you today. To paraphrase hockey legend Wayne Gretzky, this indicator helps us skate to where the puck is going to be, not where it has been. In other words, we can use it to identify and anticipate strength and weakness in markets and specific sectors. This indicator is a graphical illustration of relative strength (RS). Regular readers know RS is a quantitative measure of trend strength and one of the most powerful tools available to traders. Study after study shows that outperforming stocks tend to continue to outperform, and we… Read More

I want to share a little-known but powerful indicator with you today. To paraphrase hockey legend Wayne Gretzky, this indicator helps us skate to where the puck is going to be, not where it has been. In other words, we can use it to identify and anticipate strength and weakness in markets and specific sectors. This indicator is a graphical illustration of relative strength (RS). Regular readers know RS is a quantitative measure of trend strength and one of the most powerful tools available to traders. Study after study shows that outperforming stocks tend to continue to outperform, and we have used high RS to find stocks that returned up to 242% in a year. Typically, most people compare performance between financial instruments by measuring percentage changes. The following graph shows the performance of a few of the major U.S. equity indices over the past 10 weeks: Here you can see the tech-heavy Nasdaq is leading the fray with the broad-market NYSE Composite a close second. The natural resource-heavy AMEX is in third, and the blue-chip Dow industrials and small-cap Russell 2000 are bringing up the rear. That’s all the information you can really… Read More