As we kicked off the fourth-quarter earnings season this week, one sector got rocked on disappointing results.  #-ad_banner-#The market knew that earnings would be weak for banks, but it looks like investors were underestimating just how bad they’d be.  Citigroup (NYSE: C) reported an unbelievable 86% drop in profits to $0.06 per share, missing analyst estimates by 40% and sending the stock tumbling for a 12% loss for the year.  Citigroup isn’t alone. JP Morgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) both reported results that sent their shares lower. The Financial Select Sector SPDR ETF… Read More

As we kicked off the fourth-quarter earnings season this week, one sector got rocked on disappointing results.  #-ad_banner-#The market knew that earnings would be weak for banks, but it looks like investors were underestimating just how bad they’d be.  Citigroup (NYSE: C) reported an unbelievable 86% drop in profits to $0.06 per share, missing analyst estimates by 40% and sending the stock tumbling for a 12% loss for the year.  Citigroup isn’t alone. JP Morgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) both reported results that sent their shares lower. The Financial Select Sector SPDR ETF (NYSE: XLF) fell as much as 4% this week, partly in anticipation of what the market knew would be a tough month. But is there a silver lining to weak earnings? And are there other catalysts that may send bank shares higher from here?   Betting on the Forest Despite the Trees Lower profits from trading activities were a major culprit for the earnings disappointments. Implementation of the Volker Rule meant that banks could no longer bet their own money in proprietary trading, a lucrative business in previous years. Further, high volatility in December kept many investors from… Read More

An old trader once told me, “Trading is the hardest easy money you’ll ever make.”  #-ad_banner-#In theory, trading is easy enough — all you have to do is buy low and sell high, right? After all, there are thousands of books claiming to tell us everything we need to know.  In practice, however, trading is among the most difficult activities in the financial world. Despite the availability of a wealth of information, few do it well. To understand why it is so easy for investors to fail, I always remember the advice of another old trader who told me: “To… Read More

An old trader once told me, “Trading is the hardest easy money you’ll ever make.”  #-ad_banner-#In theory, trading is easy enough — all you have to do is buy low and sell high, right? After all, there are thousands of books claiming to tell us everything we need to know.  In practice, however, trading is among the most difficult activities in the financial world. Despite the availability of a wealth of information, few do it well. To understand why it is so easy for investors to fail, I always remember the advice of another old trader who told me: “To know what everyone knows is to know nothing.” In other words, investors who are using the tools everyone knows about shouldn’t expect to be successful.   Think about that for a moment.  If you could really win in the markets by simply buying stocks with low price-to-earnings (P/E) ratios, then we would all be successful. The secret to beating the market — and your fellow investors — is to use little-known indicators. Personally, I’ve been successful using tools you likely have not heard of, like the Income Trader Volatility (ITV) indicator.  ITV is similar to the Volatility S&P… Read More

Commodities have been stumbling badly.   To get a sense of how badly, take a look at the Greenhaven Continuous Commodity ETF (NYSE: GCC), a diversified exchange-traded fund that uses futures contracts to provide exposure to 17 commodities like wheat, gold, oil and others. Since peaking at the end of April, GCC has fallen about 20%. That’s bear territory, and it might be cause for concern. Sharply falling commodities suggest demand for raw materials is weakening and the global economy is headed for a recession, possibly dragging down the U.S. economy along with it. Read More

Commodities have been stumbling badly.   To get a sense of how badly, take a look at the Greenhaven Continuous Commodity ETF (NYSE: GCC), a diversified exchange-traded fund that uses futures contracts to provide exposure to 17 commodities like wheat, gold, oil and others. Since peaking at the end of April, GCC has fallen about 20%. That’s bear territory, and it might be cause for concern. Sharply falling commodities suggest demand for raw materials is weakening and the global economy is headed for a recession, possibly dragging down the U.S. economy along with it.   #-ad_banner-#Plunging oil prices in particular have typically been one of the more reliable signs of a looming recession, but maybe not anymore. Normally, the nearly 60% price drop we’ve seen in the past six months would be a major red flag. But because the U.S. fracking boom has vastly increased global oil supplies in a relatively short time, it’s tough to say how much of the decline is demand-related.   So to get a better idea of the state of the economy, investors might want to look instead to copper.   Copper is tremendously versatile, with applications in many… Read More

Without a doubt, our annual list of Top 10 Stocks is one of our most popular pieces of research to date. #-ad_banner-#This list has helped investors beat the overall market eight times since 2003. For comparison, shares of Warren Buffett’s holding company Berkshire Hathaway, Inc. (NYSE: BRK-B), beat the market only five times during the same period. As history has shown, our system works. And in today’s article, I’ll tell you why it works and give you all the details on one of my favorite “Top 10 Stocks For 2015.” Before… Read More

Without a doubt, our annual list of Top 10 Stocks is one of our most popular pieces of research to date. #-ad_banner-#This list has helped investors beat the overall market eight times since 2003. For comparison, shares of Warren Buffett’s holding company Berkshire Hathaway, Inc. (NYSE: BRK-B), beat the market only five times during the same period. As history has shown, our system works. And in today’s article, I’ll tell you why it works and give you all the details on one of my favorite “Top 10 Stocks For 2015.” Before I continue, I need to be upfront about something. I can’t provide you the entire list of Top 10 Stocks For 2015 here. I’ve reserved the report exclusively for my Top 10 Stocks advisory members, and it wouldn’t be fair to give the full list away to everyone. But what I can give you is something far more valuable than just a couple of stock picks. I will show you why these stocks made my list for 2015. That way you can find similar stocks on your own. Read More

The current low interest rate environment is driving investors to seek income in the stock market and possibly take unnecessary risks. But there are pockets of conservative dividend payers still trading at attractive levels with potential for capital gains for many months to come.  #-ad_banner-#It is no secret that utility stocks are in that group. While they are no longer the “widow-and-orphan” stocks they were a few decades ago, many still pay generous dividends. And many have diversified their businesses to offer the growth potential a simple electric utility cannot.   Otter Tail (NASDAQ: OTTR) is a Minnesota-based electric utility,… Read More

The current low interest rate environment is driving investors to seek income in the stock market and possibly take unnecessary risks. But there are pockets of conservative dividend payers still trading at attractive levels with potential for capital gains for many months to come.  #-ad_banner-#It is no secret that utility stocks are in that group. While they are no longer the “widow-and-orphan” stocks they were a few decades ago, many still pay generous dividends. And many have diversified their businesses to offer the growth potential a simple electric utility cannot.   Otter Tail (NASDAQ: OTTR) is a Minnesota-based electric utility, named for the Otter Tail River from which it generated its first kilowatt, that has diversified into manufacturing, plastics and construction.  The stock has a modest trailing price/earnings (P/E) ratio of 19, which is below the average P/E for the Dow Jones Utility Average of 24. And the company pays a generous quarterly dividend of $0.3025 for a current yield of 3.9%.  Over the past few months, OTTR has traded in a similar fashion as its more traditional utility peers, but when we look at the big picture we see a stock itching to break out to the upside, if… Read More

  You would think that cuts in defense spending would lead to lean times for defense stocks. And you would be wrong.   The PowerShares Aerospace & Defense ETF (NYSE: PPA) has risen 65% over the past two years, even as the defense budget is set to fall by 20% in fiscal (October) 2016, compared to 2014 levels.   The core defense budget is expected to be $534 billion, while supplemental war-related spending would tack on another $51 billion. That would be the lowest level since 2001.     Talk of spending cuts in Washington is nothing new. Read More

  You would think that cuts in defense spending would lead to lean times for defense stocks. And you would be wrong.   The PowerShares Aerospace & Defense ETF (NYSE: PPA) has risen 65% over the past two years, even as the defense budget is set to fall by 20% in fiscal (October) 2016, compared to 2014 levels.   The core defense budget is expected to be $534 billion, while supplemental war-related spending would tack on another $51 billion. That would be the lowest level since 2001.     Talk of spending cuts in Washington is nothing new. Wall Street analysts have been anticipating them for several years. Yet, the factors that have allowed defense stocks to rally in the face of cutbacks are likely to remain in place.   #-ad_banner-#The reasoning behind the rally lies in Congressional control: Republicans take over leadership in the Senate’s 13 committees and Veterans’ Affairs this year. While the Obama administration will still be able to guide policy through the respective departments and cabinet heads, the GOP has already targeted many cutbacks for a fight.   There is a precedent for the turnover and its affect on stocks of defense contractors. Both… Read More

Market action over the past week has been volatile, and at times, downright scary. With the major indices threatening short-term breakdowns, I like to look for stocks that have yet to make a downside move but sport chart patterns that show they’re on the edge.  I also like to stick to slower-moving, large-cap stocks that offer a bit more predictability, albeit with smaller profit potential. I’ll take that trade-off in a risky market. Consumer products giant Procter & Gamble (NYSE: PG) is one such stock.  On this blue chip’s chart we see a variation of a head-and-shoulders top. Read More

Market action over the past week has been volatile, and at times, downright scary. With the major indices threatening short-term breakdowns, I like to look for stocks that have yet to make a downside move but sport chart patterns that show they’re on the edge.  I also like to stick to slower-moving, large-cap stocks that offer a bit more predictability, albeit with smaller profit potential. I’ll take that trade-off in a risky market. Consumer products giant Procter & Gamble (NYSE: PG) is one such stock.  On this blue chip’s chart we see a variation of a head-and-shoulders top. This pattern is marked by a central peak flanked by two smaller peaks, and the lows between the peaks are roughly equal.  This tells us the stock pulled back harder the last time than it did the time before, and then the ensuing rally failed to set a higher high to drive home the point that the trend was in danger. #-ad_banner-# The sell signal happens when the support line connecting the lows, called the neckline, is broken to the downside.  PG is… Read More

Since the S&P 500’s all-time high of 2,093.55 on Dec. 29, the index is off 1.5% in just seven trading sessions. And that performance includes the bounce-back rally of Wednesday and Thursday. Based on this shaky start to the year, I want to play it safe by picking stable stocks with solid charts and strong revenue and earnings growth projections. #-ad_banner-#International aerospace parts designer and manufacturer, HEICO Corporation (NYSE: HEI) is just such a stock. The company provides aircraft replacement parts and specialty components to original equipment manufacturers and the U.S. military. Its parts are found on everything… Read More

Since the S&P 500’s all-time high of 2,093.55 on Dec. 29, the index is off 1.5% in just seven trading sessions. And that performance includes the bounce-back rally of Wednesday and Thursday. Based on this shaky start to the year, I want to play it safe by picking stable stocks with solid charts and strong revenue and earnings growth projections. #-ad_banner-#International aerospace parts designer and manufacturer, HEICO Corporation (NYSE: HEI) is just such a stock. The company provides aircraft replacement parts and specialty components to original equipment manufacturers and the U.S. military. Its parts are found on everything from commercial and military aircraft to industrial turbines and missiles.   HEICO has two main operating divisions. Its flight support group creates and distributes FAA-approved airliner parts such as hydraulic brakes and electromechanical engine components. The company’s electronic technologies segment is a world leader in designing, manufacturing, and selling electrical and electro-optical systems for the aerospace, defense and space industries.  The company reported record sales and profits in fiscal 2014 (ended in October). Revenue increased 12% to $1.1 billion while earnings rose 18% to $1.80 per share. The company pays a small but increasing dividend. Based on solid and growing… Read More

  What was the best performing sector of 2014 may not be so for much longer.   #-ad_banner-#Historically, this has been the go-to sector for yield-hungry investors. Add in the easy-money, low interest rate central bank policies being implemented across the globe and it’s no surprise that this sector has been doing so well.   In the late 1990s and early 2000s, income investors earned 5% on Certificates of Deposit (CDs) and consistent yields from the largest, most stable stocks in the Dow Jones Industrial Average (DJIA). Now, they must invest their money elsewhere to capture similar yields. Read More

  What was the best performing sector of 2014 may not be so for much longer.   #-ad_banner-#Historically, this has been the go-to sector for yield-hungry investors. Add in the easy-money, low interest rate central bank policies being implemented across the globe and it’s no surprise that this sector has been doing so well.   In the late 1990s and early 2000s, income investors earned 5% on Certificates of Deposit (CDs) and consistent yields from the largest, most stable stocks in the Dow Jones Industrial Average (DJIA). Now, they must invest their money elsewhere to capture similar yields.   Even 10-year government bonds were returning a solid 5-to-8% over the last couple decades.       Last year you would have earned a paltry 2.6% yield if you invested in a 10-year government bond, 1.8% if you invested in the DJIA and a measly 0.9% investing in a five-year CD.     However, income investors could have garnered an impressive 3.9% yield from 2014’s best-performing sector, utility stocks, had they bought shares of the Utilities Select Sector SPDR ETF (NYSE: XLU) in January 2014   So again, it’s understandable why the utility sector… Read More

With thousands of stocks to choose from, and just a few hundred of them garnering most of the attention, investors often overlook some diamonds in the rough. For instance, have you ever heard Steelcase, Inc. (NYSE: SCS)? Most have not, and that’s too bad because Steelcase has been crushing the market. Its 180% gain in the past five years almost makes the S&P 500’s 85% five-year return look meager.  Steelcase has generated market-beating returns by becoming the world’s largest provider of workplace furnishings and architectural elements. Annual sales top $3 billion. That’s well ahead… Read More

With thousands of stocks to choose from, and just a few hundred of them garnering most of the attention, investors often overlook some diamonds in the rough. For instance, have you ever heard Steelcase, Inc. (NYSE: SCS)? Most have not, and that’s too bad because Steelcase has been crushing the market. Its 180% gain in the past five years almost makes the S&P 500’s 85% five-year return look meager.  Steelcase has generated market-beating returns by becoming the world’s largest provider of workplace furnishings and architectural elements. Annual sales top $3 billion. That’s well ahead of main rivals like HNI Corp. (NYSE: HNI) and Herman Miller, Inc. (NASDAQ: MLHR), which currently have annual sales of around $2 billion.  #-ad_banner-#​Steelcase’s broad product portfolio includes state-of-the-art panel-based and freestanding furniture systems, walls, workstations, lighting, desks, storage and seating. Although the firm is best known for traditional office-space components, it also markets to customers in the health care, academic and hotel/hospitality sectors. What really sets it apart is a reputation for leading the most extensive shift in office space design to occur in several decades. Management realizes work environments have become much more technology-based, team-oriented and mobile, with… Read More