If you’ve read my premium advisory Top 10 Stocks for any length of time, then you know I like to focus on companies that dominate their markets, that provide a product or service essential to daily life, and that return the bulk of their cash to shareholders in the form of dividends and share buybacks. As I’ve mentioned countless times, these core attributes are what form the basis of what I call “Forever” stocks. These are the types of companies that you can buy today and hold for the rest of your life. Put simply, “Forever” stocks are some of… Read More

If you’ve read my premium advisory Top 10 Stocks for any length of time, then you know I like to focus on companies that dominate their markets, that provide a product or service essential to daily life, and that return the bulk of their cash to shareholders in the form of dividends and share buybacks. As I’ve mentioned countless times, these core attributes are what form the basis of what I call “Forever” stocks. These are the types of companies that you can buy today and hold for the rest of your life. Put simply, “Forever” stocks are some of the world’s greatest businesses. And once you know what to look for, it’s easy to spot these sorts of companies (and to quickly see which businesses don’t fit the mold). Want some insights into what I look for in a stock? Here are 12 important things I look for when searching for the world’s greatest businesses. I urge you to print out this list. Put it next to your computer and refer to it before you buy any stock. There’s little doubt it will make you a better investor. 1.) The world’s greatest businesses sell their products at premium prices. Read More

All major U.S. indices except the small-cap Russell 2000 closed higher last week, logging the third straight week of gains. However, the market still has some work to do if it’s going to pull this year out of the fire. With the exception of the tech-heavy Nasdaq, all major indices are still in negative territory for 2015. All sectors of the S&P 500 finished in positive territory last week except for industrials and materials. Two of the strongest sectors were defensive ones, utilities and health care, which is not the ideal springboard for a sustainable market rally. Read More

All major U.S. indices except the small-cap Russell 2000 closed higher last week, logging the third straight week of gains. However, the market still has some work to do if it’s going to pull this year out of the fire. With the exception of the tech-heavy Nasdaq, all major indices are still in negative territory for 2015. All sectors of the S&P 500 finished in positive territory last week except for industrials and materials. Two of the strongest sectors were defensive ones, utilities and health care, which is not the ideal springboard for a sustainable market rally. Moreover, Asbury Research’s own metric — which typically leads sector performance — shows the biggest inflow of investor assets over the past one-month and three-month periods was into utilities. Additionally, over the past one-week and three-month periods, the biggest outflow came from financials. I view this as a subtle warning not to be overly optimistic about a fourth-quarter market recovery just yet. Continued outperformance by utilities and underperformance by financials would be characteristic of declining long-term U.S. interest rates amid a flattening yield curve, would indicate an apprehensive bond market. #-ad_banner-#As I stated in last… Read More

The surging dollar has been one of the most pervasive themes in quarterly earnings reports for a year now. Companies have taken a hit in each quarter when translating their foreign sales from weakening currencies into dollars.  It doesn’t look like that trend is going to be broken in the third quarter. Of the 24 companies in the S&P 500 that had reported earnings by October 9, 18 of them cited the stronger dollar as a negative impact on earnings or sales. This was more than all the other reasons for negative earnings impacts combined according to FactSet Research.  As… Read More

The surging dollar has been one of the most pervasive themes in quarterly earnings reports for a year now. Companies have taken a hit in each quarter when translating their foreign sales from weakening currencies into dollars.  It doesn’t look like that trend is going to be broken in the third quarter. Of the 24 companies in the S&P 500 that had reported earnings by October 9, 18 of them cited the stronger dollar as a negative impact on earnings or sales. This was more than all the other reasons for negative earnings impacts combined according to FactSet Research.  As bad as the negative impact has been on U.S. companies with overseas business, the positive impact from a surprise weakening of the dollar may be all the market needs to make new highs.  We may not have to wait long for that surprise turnaround in the dollar — and I’ve found two companies that will benefit more than most. Why The Dollar Isn’t As Strong As You Think After an historic surge from July of last year through March, the dollar has remained relatively flat against a basket of currencies for most of this year. David Bloom, Chief Currency Strategist… Read More

In the wake of reports pointing toward a slowing economy, this past week brought troubling signs that the United States may be facing a period of slight deflation — that is, on average, prices of goods and services are declining rather than rising. While deflation is far from a sure thing, it’s important to understand the impact it would have on our economy, and how it could affect your investments. First, let’s look at the indicators. On Wednesday, the Labor Department said the Producer Price Index (PPI) fell 0.5% in September, a bigger drop than the expected 0.2% decline. The… Read More

In the wake of reports pointing toward a slowing economy, this past week brought troubling signs that the United States may be facing a period of slight deflation — that is, on average, prices of goods and services are declining rather than rising. While deflation is far from a sure thing, it’s important to understand the impact it would have on our economy, and how it could affect your investments. First, let’s look at the indicators. On Wednesday, the Labor Department said the Producer Price Index (PPI) fell 0.5% in September, a bigger drop than the expected 0.2% decline. The PPI measures wholesale prices that are part of businesses’ supply chains and have an indirect impact on consumer prices. Much of the reason for the PPI decline was energy prices. We’ve seen a continuation of the bear market in oil and natural gas — leading gasoline prices to their lowest levels in nine years. Retail prices show signs of falling, too. As part of its disappointing sales and earnings guidance on Wednesday, Wal-Mart (NYSE: WMT) suggested it would cut prices during the holiday season to attract shoppers. Irish-based Primark, known for rock-bottom prices on apparel, has entered the U.S. market… Read More

The “King of Beers,” AB InBev (NYSE: BUD) has had some problems of late. To solve them, the $178 billion maker of Budweiser and Corona is doing what any large company does in that situation. It’s trying to buy a better company and steal their growth. #-ad_banner-#You may recall the enormous $52 billion merger between Anheuser-Busch and InBev back in 2008. Some investors — and beer drinkers — never truly forgave the maker of Bud for relocating overseas. Yet, I don’t think that’s what’s causing the company’s operating mess today. AB InBev suffers from the simple problem of too few… Read More

The “King of Beers,” AB InBev (NYSE: BUD) has had some problems of late. To solve them, the $178 billion maker of Budweiser and Corona is doing what any large company does in that situation. It’s trying to buy a better company and steal their growth. #-ad_banner-#You may recall the enormous $52 billion merger between Anheuser-Busch and InBev back in 2008. Some investors — and beer drinkers — never truly forgave the maker of Bud for relocating overseas. Yet, I don’t think that’s what’s causing the company’s operating mess today. AB InBev suffers from the simple problem of too few drinkers. For the first time in 30 years, beer volume is set to decrease globally this year.  To make matters worse, the major beer makers like InBev have been forced to compete with an explosion of craft beer and smaller breweries like Dogfish Head and New Belgium.  The volume of craft beer sold in the United States has more than tripled over the last decade: Meanwhile, brands like Bud, Miller and Coors have been weak. Volume for these brands are falling at about 1.7% annually.      Still, the real problem for InBev and its ilk… Read More

Emotion is the bane of traders. It causes us to act rashly instead of rationally, and typically at times when it’s most costly.  It has been shown that investors are most bullish at or near tops and most bearish at or near capitulation bottoms. Just look at the mania right before the dot-com bubble burst or the despair during early 2009 following the credit crisis meltdown. In both instances, the trend was turning as emotions peaked. There’s only one way I know of to remove emotions from investing: following a rules-based system built on a measurable, repeatable process.  And the… Read More

Emotion is the bane of traders. It causes us to act rashly instead of rationally, and typically at times when it’s most costly.  It has been shown that investors are most bullish at or near tops and most bearish at or near capitulation bottoms. Just look at the mania right before the dot-com bubble burst or the despair during early 2009 following the credit crisis meltdown. In both instances, the trend was turning as emotions peaked. There’s only one way I know of to remove emotions from investing: following a rules-based system built on a measurable, repeatable process.  And the system I follow in my premium newsletter, Alpha Trader, has worked very well for me and my readers.  We’ve detailed numerous times how our proprietary indicator, the Alpha Score, goes about selecting stocks poised to make huge runs based on a relative strength (RS) score above 70 and a fundamental trigger. (For more on how the Alpha Score works, you can read this article.)  But today, I want to talk about how our rules-based system helps ensure success once we are in a position. At that point, there are two critical components: … Read More

All major U.S. indices closed higher last week, logging the second week of strength following choppy trading since late August.  Last week’s rally was led by the small-cap Russell 2000, which is another positive sign. The index gained 4.6% through Friday’s close but is still down 3.3% for the year and lagging the other major averages. Broad market advances are typically led by the Russell 2000 and tech-heavy Nasdaq 100, the latter of which is the only major index still in positive territory for 2015. Recent strength in the energy sector is more good news, as it suggests a pickup… Read More

All major U.S. indices closed higher last week, logging the second week of strength following choppy trading since late August.  Last week’s rally was led by the small-cap Russell 2000, which is another positive sign. The index gained 4.6% through Friday’s close but is still down 3.3% for the year and lagging the other major averages. Broad market advances are typically led by the Russell 2000 and tech-heavy Nasdaq 100, the latter of which is the only major index still in positive territory for 2015. Recent strength in the energy sector is more good news, as it suggests a pickup in expectations for global economic growth. In last week’s Market Outlook, I pointed out that the biggest expansion in sector bet-related investor assets over the previous one-week and one-month periods was in energy, according to Asbury Research’s own ETF-based metric. These positive asset flows have already fueled an 8.4% rise in the energy sector in the past month, making it by far the strongest sector of the S&P 500. It has outperformed the broader market index by 4.7 percentage points during that time. As long as these positive asset flows continue, so should strength in energy-related stocks. Resilient European Market… Read More

Most major U.S. indices closed higher last week, reversing the previous week’s negative close as choppy price activity continues. However, the market is hardly out of the woods just yet. The market-leading Russell 2000 closed lower last week while most major indices are still negative for the year. Read More

All major U.S. indices finished in the red last week, led by the market-leading Nasdaq 100 and Russell 2000, which more than relinquished their modest gains of a week earlier. Last week’s decline resulted in all major indices falling back into negative territory for 2015. All sectors of the S&P 500 closed lower last week with the exception of financials, consumer staples and utilities. The latter two are defensive and thus expected to outperform during a down week. #-ad_banner-# Interestingly, Asbury Research’s asset flow-based metric showed the biggest outflow of sector bet-related assets during the past… Read More

All major U.S. indices finished in the red last week, led by the market-leading Nasdaq 100 and Russell 2000, which more than relinquished their modest gains of a week earlier. Last week’s decline resulted in all major indices falling back into negative territory for 2015. All sectors of the S&P 500 closed lower last week with the exception of financials, consumer staples and utilities. The latter two are defensive and thus expected to outperform during a down week. #-ad_banner-# Interestingly, Asbury Research’s asset flow-based metric showed the biggest outflow of sector bet-related assets during the past one-week and one-month periods came from former 2015 highflier health care. While it is still among the strongest sectors of the S&P 500 year to date, it now looks vulnerable to more weakness during the fourth quarter.  Market Must Break Resistance to Confirm a Bottom In last week’s Market Outlook, I pointed out an important overhead resistance level at 641 in the market-leading PHLX Semiconductor (SOX) index. I said a sustained rise above it would be necessary to help confirm a broader market bottom was in place. The SOX closed last week 7.5% below this level at 593.  The… Read More

The major U.S. indices finished last week mixed, but a closer look reveals some subtle positive signs. The two strongest were the small-cap Russell 2000, which gained 0.5%, and the tech-heavy Nasdaq 100, which was unchanged.   Since small-cap and technology indices typically lead the broader market higher and lower, last week’s performance could be the early stages of some upcoming market stability. This is especially true as we close in on October, a month that has historically led a strong seasonal rebound into year end. #-ad_banner-# From a sector standpoint, however, the market is not showing any… Read More

The major U.S. indices finished last week mixed, but a closer look reveals some subtle positive signs. The two strongest were the small-cap Russell 2000, which gained 0.5%, and the tech-heavy Nasdaq 100, which was unchanged.   Since small-cap and technology indices typically lead the broader market higher and lower, last week’s performance could be the early stages of some upcoming market stability. This is especially true as we close in on October, a month that has historically led a strong seasonal rebound into year end. #-ad_banner-# From a sector standpoint, however, the market is not showing any signs of life just yet. The only sectors to post gains last week were defensive: utilities, health care and consumer staples. If and when a market bottom emerges, it is likely to be fueled by strength in more offensive sectors like technology and consumer discretionary, perhaps with a little help from cyclical sectors like energy and materials.  Watch Semis For Clue To Near-Term Direction In previous Market Outlooks, I discussed signs of an emerging stock market bottom including a bearish extreme in investor sentiment and historically weak market breadth. But I also said that overhead resistance levels needed to be… Read More