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Schedule for Week of Aug 13, 2017

 

Schedule for Week of Aug 13, 2017

by Bill McBride on 8/12/2017 08:11:00 AM

The key economic reports this week are July retail sales and Housing Starts.

For manufacturing, July industrial production, and the August New York and Philly Fed manufacturing surveys, will be released this week.

—– Monday, Aug 14th —–

No major economic releases scheduled.
—– Tuesday, Aug 15th —–

Retail Sales 8:30 AM ET: Retail sales for July will be released.  The consensus is for a 0.3% increase in retail sales.This graph shows retail sales since 1992 through June 2017.

8:30 AM: The New York Fed Empire State manufacturing survey for August. The consensus is for a reading of 10.0, up from 9.8.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for June.  The consensus is for a 0.4% increase in inventories.

10:00 AM: The August NAHB homebuilder survey. The consensus is for a reading of 65, up from 64 in July. Any number above 50 indicates that more builders view sales conditions as good than poor.

—– Wednesday, Aug 16th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.Total Housing Starts and Single Family Housing Starts8:30 AM: Housing Starts for July. The consensus is for 1.225 million SAAR, up from the June rate of 1.215 million.

This graph shows total and single unit starts since 1968.

The graph shows the huge collapse following the housing bubble, and then – after moving sideways for a couple of years – housing is now recovering.

2:00 PM: FOMC Minutes for the Meeting of 25 – 26, 2017

—– Thursday, Aug 17th —–

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 241 thousand initial claims, down from 244 thousand the previous week.8:30 AM: the Philly Fed manufacturing survey for August. The consensus is for a reading of 17.0, down from 19.5.

Industrial Production9:15 AM: The Fed will release Industrial Production and Capacity Utilization for July.

This graph shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 76.7%.

—– Friday, Aug 18th —–

10:00 AM: University of Michigan’s Consumer sentiment index (preliminary for August). The consensus is for a reading of 93.9, up from 93.4 in July.10:00 AM: Regional and State Employment and Unemployment (Monthly) for July 2017

 

Published at Sat, 12 Aug 2017 12:11:00 +0000

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Gold Could Break Out From Reaction Highs Amid Volatility

by griepsma from Pixabay

Gold Could Break Out From Reaction Highs Amid Volatility

https://pixabay.com/en/users/griepsma-495223/

Gold prices have soared nearly 7% over the past 30 days thanks to a 2.59% decrease in the U.S. dollar index and a 27.2% increase in the CBOE Volatility Index over the same time frame. The North Korean crisis and other political risks have led to a spike in volatility, which has increased demand for gold as a safe-havenasset class. Meanwhile, the declining U.S. dollar has helped boost gold prices, as the precious metal is priced in dollars.

From a supply and demand standpoint, demand for physical gold rose to 1,895 tons during the first half of the year, which represents a 17% increase over the prior year. The increase in demand was offset by a 138-ton surplus during the first six months, despite supplies shrinking 5% to 2,160 tons. Chinese demand fell about 7%, but Indian demand nearly doubled ahead of a 3% tax implemented on July 1, 2017. (See also: What Drives the Price of Gold?)

The SPDR Gold Shares ETF (GLD) is one of the largest gold funds with about $30 billion in assets under management.

Technical chart showing the performance of the SPDR Gold Shares ETF (GLD)

From a technical standpoint, GLD rebounded from the 50-day moving average at $119.11 toward R1 resistance at $122.80 and upper trendline resistance. The relative strength index (RSI) has reached overbought levels at 69.40, while the moving average convergence divergence (MACD) remains in a bullish uptrend. Traders should maintain a bullish bias on the gold fund over the near term given the strong momentum.

Traders should watch for a breakout from upper resistance levels to $124.86 or a move to prior highs at $130.00. A failure to break out from these levels could lead to a move back down to trendline support at around $115.00. Traders should keep an eye on ongoing global political risks as a catalyst for GLD to break out from its year-to-date price channel. (For more, see: Will Gold and Gold Miners Break Out?)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

Published at Fri, 11 Aug 2017 12:44:00 +0000

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How do I know what to invest in?

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Money guide for Millennials
Money guide for Millennials

 How do I know what to invest in?

  @CNNMoney

You’re not the only one feeling overwhelmed by the tens of thousands of stocks, bonds, mutual funds and exchange-traded funds out there.

A lot of young people who are new to the investing game feel so intimidated by all the choices, that they shy away from investing altogether. But avoiding your 401(k), or keeping all your money in a savings account can cost you in the long run.

Just by following a few simple steps, you’ll be earning returns like the pros (or better).

Step 1. Start with retirement accounts

Your company 401(k) plan is a good entry point. Financial planners advise you stash away at least 10% of every paycheck for retirement.

It may not sound like a lot, but the magic of compounding will surprise you.

“If a young professional, say she is 25, earns $50,000 per year, saves $5,000 each year, and places this money into her company’s 401(k) balanced mutual fund or even an ETF, which earns 8% annually on average; she could end up with $1.3 million in retirement assets,” said John Barnes, a certified financial planner with Barnes Financial.

That number assumes no company matches, additional contributions or salary increases.

But in reality, you’ll probably earn more money over the course of your life.

A better strategy is to slowly increase your contributions over time as you get raises, until you reach the legal maximum — currently $18,000 a year.

After that, you can invest any additional money in an IRA or a taxable mutual fund account.

Step 2. Figure out how comfortable you are with risk

Generally speaking, the younger you are, the more risk you can afford to take on.

The stock market can be volatile, but young people have a unique opportunity to take on risk because they have plenty of time to recover from market setbacks before retirement.So it’s pretty common for people under age 30 to have 90% or even 100% of their savings in the stock market, said Pearce Landry-Wegener, a wealth management advisor at the Summit Place Financial Advisors.

But asset allocation — or how you divide up your money between stocks, bonds, cash or other investments — is a completely personal choice.

If you’re not all that comfortable with risk or need money in the next few years, invest a larger chunk of your money in safer assets like bonds.

Step 3. Diversify, but keep it simple

So you know you want, say, 90% stocks and 10% bonds. Now what?

You can offset some of the stock market’s risk by spreading your money around in a variety of different investments.

For newbies with a limited amount of money, investing in mutual funds or exchange-traded funds (ETFs) is the way to go. ETFs and mutual funds are securities that track a basket of stocks, bonds, commodities and indexes — like the S&P 500 index, for instance. With just one fund, you’re investing in a variety of different underlying investments.

And you don’t need many funds to be diversified.

Mychal Eagleson, president of An Exceptional Life Financial, recommends a portfolio with just three funds: a total U.S. stock fund, and total international stock fund, and a total bond market fund.

In some cases, just one fund is enough.

For instance, some retirement accounts offer target-date mutual funds. Rather than selecting different funds to create the right mix of stocks and bonds yourself, a target-date fund will do it for you.

Pick one target-date fund around the time you plan to retire. The investment mix will change over time, transitioning into more conservative assets as you get closer to retirement.

“Set it and forget it! And don’t try to get sexy with your money,” said Randy Bruns, a certified financial planner with HighPoint Planning Partners. “Time in the market, not timing the market, is how you’ll become a multi-millionaire.”

Step 4. Keep fees as low as possible

When choosing what to invest in, don’t forget to look at the fees each fund charges.

It’s important to select funds with low fees to get the biggest bang for your buck, because the charges can eat away at your returns over the years.

Look for funds that are cheaper than average. The average ETF expense ratio (aka fee) is 0.24%, and the average for target-date funds is 0.71%, according to Morningstar.

“You can’t control what the market as a whole does,” Landry-Wedener said. “What you can control is how muchof your return is taken away in fees.”

Published at Thu, 10 Aug 2017 16:17:33 +0000

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Investors pull more cash from U.S. domestic stock funds: ICI

Investors pull more cash from U.S. domestic stock funds: ICI

NEW YORK (Reuters) – Momentum for domestic U.S. stock funds waned during the latest week, with investors pulling cash from those products for a sixth week out of the last seven, Investment Company Institute (ICI) data showed on Wednesday.

The funds posted $3.9 billion in withdrawals during the week ended Aug. 2, the trade group said, even as U.S. stocks steamed higher. The S&P 500 is on pace to deliver double-digit percent returns for seventh year in the last decade.

Investors say that rise has left U.S. stocks richly valued and that they have been moving to taxable bonds and international stocks. Each of those categories had a 35th straight week of inflows, according to ICI.

Taxable bonds added $6.1 billion, while world stock funds attracted $4.2 billion.

Bond funds sold $203 billion in shares during the first half of 2017, compared to $136 billion in stocks. Of that, domestic equities took in just $4.3 billion, ICI data showed.

Phil Bak, chief executive at ACSI Funds, said the growth in index funds that own big stakes in technology companies like Facebook Inc and Apple Inc has exacerbated fears of a top-heavy market.

“A lot of people feel that trade will start to unwind,” said Bak, whose firm is based in Ann Arbor, Michigan.

But stocks are not trading in tandem, meaning there are relative winners and losers and in the market. A CBOE S&P 500 Implied Correlation Index that uses options to measure how much markets expect stock prices to move together is trading at 31.4, compared to 57.7 on the day of the U.S. election in November, a turning point for markets.

S&P 500 earnings for the second quarter rose an estimated 12 percent, according to Thomson Reuters I/B/E/S. But in recent days some large companies turned in disappointing results, including airlines, and the U.S. Food and Drug Administration announced it wants to reduce nicotine levels in cigarettes, hitting Altria Group’s shares.

Bak said a lack of correlations between stocks creates a good environment for investors who pick equities beyond those held in the highest proportion by indexes such as the S&P 500.

“We think it’s a pretty good environment to be in stocks,” he said.

Reporting by Trevor Hunnicutt; Editing by Meredith Mazzilli

Published at Wed, 09 Aug 2017 17:00:03 +0000

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Eerie quiet on Wall Street is finally broken

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Haley: Sanctions are a gut punch to N. Korea
Haley: Sanctions are a gut punch to N. Korea

Eerie quiet on Wall Street is finally broken

  @mattmegan5

Markets have been quiet for far too long. That finally changed a bit on Wednesday.

President Trump’s vow of “fire and fury” in response to North Korea, and its threat to strike the U.S. territory of Guam, was a reminder of how unprepared Wall Street is for a shock.

Stocks have been coasting to new highs day after day. The Dow was on track for a 10th straight record close before Trump’s “fire and fury” comments late Tuesday caused stocks to retreat.

Investors aren’t freaking out about North Korea, but there was a noticeable shift in sentiment nonetheless.

“I’m concerned. I can’t predict a shooting war before it happens, but escalating rhetoric of this type is dangerous,” David Kotok, chief investment officer at Cumberland Advisors, told CNNMoney.

The Dow fell as many as 88 points on Wednesday, before ending down just 37 points. The S&P 500 suffered its worst open since mid-June, but closed almost flat.

Of course, North Korea wasn’t the only catalyst for the caution on Wall Street. Disney(DIS) shares slumped after it announced plans to pull its movies from Netflix. That news also sent Netflix(NFLX, Tech30) stock lower. There were also disappointing earnings reports from Fossil(FOSL) and Priceline(PCLN, Tech30).

But that corporate news doesn’t account for the two-month high in the price of gold, which serves as a safe haven during times of worry. The closely-watched VIX volatility gauge remains low, but it’s popped 21% since Monday’s close. CNNMoney’s Fear & Greed index of market sentiment flipped to “neutral” after previously sitting comfortably in “greed” mode.

“The world is getting more dangerous. You don’t wait for the tornado. Seeing the cloud is enough to start moving,” Kotok said.

Kotok said he’s “glad” his asset management firm has been building cash reserves. He’s also been buying shares of the VanEck Vectors Gold Miners ETF(GDX) as well as shares of defense contractors — both of which rallied on Wednesday.

This summer’s rally on Wall Street has left the market almost priced for perfection. The Dow is up nearly 12% this year, while the Nasdaq has soared 18%.

chart trump dow stock markets

The relentless rise has been marked by unusual calm. Consider that the S&P 500 hasn’t suffered a downturn of 5% or more in 408 days, the longest streak since May 1996. Two weeks ago, the VIX(VIX) touched an all-time intraday low.

North Korea worries sent Asian markets sinking overnight. Japan’s Nikkei slumped 1.3%, while South Korea’s KOSPI closed down 1.1%. The iShares MSCI South Korea Capped ETF(EWY) fell 2%. European markets also dipped modestly.

Investors are worried that the war of wordscould turn into a miscalculation that spirals out of control.

“The concern is about how this could devolve into a fairly messy state of affairs that would cause markets to sell first and ask questions later,” said March Luschini, chief market strategist at Janney Capital Markets.

Kotok said Trump’s aggressive threats are a stark departure from Teddy Roosevelt’s famous approach of “walk softly and carry a big stick.”

“Now we have ‘yell loudly and we don’t know about the stick.’ It’s something that just adds to the uncertainty,” said Kotok.

But Luschini warned investors not to overreact to the rising tensions with North Korea.

It’s “premature to de-risk your portfolio” by dumping stocks, Luschini said, because this threat could fade away.

If there’s ultimately no impact on the global economy and corporate profits, it shouldn’t disrupt the stock market either.

Indeed, this is hardly the first time that North Korea has threatened stability in the region. And previous incidents had just a fleeting impact on global markets.

For decades, investors who were brave enough to “buy on the dips” caused by North Korea concerns ended up making money, according to Erin Browne, head of asset allocation at UBS Asset Management.

But the flipside to that, Browne said, is that a “general sense of complacency” has crept into global markets about the North Korea risk.

Published at Wed, 09 Aug 2017 20:31:01 +0000

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3 S&P 500 Laggards Flashing Short Sale Signals

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3 S&P 500 Laggards Flashing Short Sale Signals

By Alan Farley | August 9, 2017 — 10:55 AM EDT

The S&P 500 hit another bull market and all-time high this week, but not all index components rose in tandem. An expanding group of laggards is heading the other way, grinding out downtrends that are now setting off preliminary short sale signals. These plays could generate opportune profits in coming weeks, especially if the broader market turns tail and enters a late-summer correction.

Many traders try to pick tops in strong uptrends when choosing short sale candidates, but those buying impulses feed on this weak-handed mentality, taking each batch of short sellers and squeezing them into oblivion. In turn, those upticks draw the next wave of momentum buyers off the sidelines, generating a positive feedback loop that can lift stocks well above logical price targets. (To learn more, check out: Rules and Strategies for Profitable Short Selling.)

A more reliable approach sells breakdowns in the weakest stocks or waits for pullbacks following big declines. In both cases, short sellers access steady tailwinds of deteriorating sentiment, poor technical positioning and nervous shareholders looking to exit positions at any cost. It also allows those positioned on the short side to sleep at night, confident that the next session won’t start with an unexpected catastrophe.

O’Reilly Automotive, Inc. (ORLY) stock posted an all-time high at $293 in July 2016 and turned lower, carving the next stage of a topping pattern that broke to the downside in May 2017 when it sold off through support at $250. The decline eased into a descending channel, losing ground at a modest pace into July 5, when it plunged in a vertical decline that relinquished more than 41 points in a single session. (See also: O’Reilly Beats on Q2 Earnings Estimates, Cuts Outlook.)

The stock bottomed out at $169 three sessions later, giving way to a recovery wave that has drawn the outline of a bear flag pattern. The bounce turned south at the 50-day exponential moving average (EMA) last week after reaching within 10 points of filling the gap, generating a preliminary short sale signal that predicts a decline to the downtrend low. However, a final buying impulse to $220 is possible, with that level offering a more favorable risk/reward ratio.

Shares of The Mosaic Company (MOS) returned to the 2008 bear market low near $22 in the first quarter of 2016 and bounced in a recovery wave that stalled in the low $30s about two months later. A 10-month consolidation pattern tested the deep low in October, ahead of a January 2017 breakout that attracted aggressive selling pressure and a reversal that has now reached long-term support for the third time. (For more, see: Mosaic Shares Tumble on Disappointing Fertilizer Guidance.)

An old market expression insists that there’s no such thing as a triple bottom because three tests at support are more likely to trigger a breakdown than a new uptrend. In addition, on-balance volume (OBV) entered an aggressive distribution wave in February 2017 and is now testing the 18-month low, signaling that bottom fishers are abandoning losing positions. This loss of sponsorship could presage a breakdown that drops the stock toward deep support at $12.50.

The Kroger Co. (KR) stock topped out at $42.75 in December 2015 and ticked lower through most of 2016, building the next stage in a head and shoulders topping pattern that broke to the downside when the stock violated the neckline in June 2017. A perfect storm of bad news triggered the decline, with the company lowering guidance just one day before Amazon.com, Inc. (AMZN​) upended the supermarket world when it announced the acquisition of Whole Foods Market, Inc. (WFM). (See also: Kroger CEO Not Fazed by Amazon-Whole Foods Tie Up, Shares Pop.)

The stock bottomed out on June 16 and eased into a bear flag that is now testing the underside of the 50-day EMA at $25. It filled the lower of two gaps last week and is unlikely to trade higher than $27 before aggressive sellers return in force. A solid entry plan will be to watch the weekly stochastics oscillator, waiting for a crossover at the overbought level to enter or add to existing short sales.

The Bottom Line

The weakest S&P 500 components could offer the strongest short sales in coming weeks and months, especially if the broad market enters a correction or downtrend. (For additional reading, check out: Stocks Face Miserable August as Correction Looms.)

(Disclosure: The author held no positions in the aforementioned securities at the time of publication.)

 

Published at Wed, 09 Aug 2017 14:55:00 +0000

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Kohl’s and Dillard’s Shares Could Add to Recent Gains

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Kohl’s and Dillard’s Shares Could Add to Recent Gains

By Alan Farley | August 9, 2017 — 11:59 AM EDT

This week’s department store earnings reports could yield buy-the-news reactions that add to gains posted since the group bottomed out in May following months of selling pressure. Tighter fiscal controls, fewer defections to online sales and speculation about the 2017 holiday season could underpin these issues, shaking out high short interest levels while working off long-term oversold technical readings.

Kohl’s Corporation (KSS) and Dillard’s, Inc. (DDS) release quarterly results prior to the Aug. 10 opening bell. They companies been evenly matched in recent years, facing identical headwinds at opposite ends of the shopping mall. Both are trading above their 200-day exponential moving average (EMA) for the first time since 2016, attracting significant bottom fishing interest, but neither has reached the hallowed technical ground needed to declare an uptrend or set off a long-term buying signal. (See also: 2017: The Year of Retail Bankruptcies.)

KSS Weekly Chart (2008 – 2017)

Kohl’s shares topped out at $78.83 in 2002 following a multi-year uptrend and fell into a narrow trading range that broke to the downside during the 2008 economic crisis. The stock found support at a 10-year low in March 2009, bounced back above broken range support in the $40s and eased into a narrow sideways pattern at the start of the decade. It held within those boundaries into a 2015 breakout that reversed just two months later at the 2002 high. (For more, see: Can Kohl’s Sales Boosting Initiatives Aid Q2 Earnings?)

Aggressive sellers took control through 2015 and into 2016, generating a steep downtrend that hit a seven-year low at $33.87 in June. Kohl’s stock bounced strongly off that level into the end of the year and resumed selling pressure after the company reported weak 2016 holiday sales. That downdraft settled just above the 2016 low, while a bounce into August has increased bullish calls for a double bottom reversal that signals a new uptrend.

On-balance volume (OBV) hit a multi-year high during the 2016 bounce and has held in the upper half of the long-term range into the second half of 2017. This resilience signals extensive bottom fishing, consistent with an improving technical outlook. Even so, the recovery faces a major challenge headed into earnings because it still has not penetrated the huge January 2017 gap between $44 and $49. The most bullish scenario in this complex price structure would unfold through a post-earnings rally gap that leaves behind a bullish island reversal. (To learn more, check out: Uncover Market Sentiment With On-Balance Volume.)

DDS Weekly Chart (2009 – 2017)

Dillard’s stock returned to the 1993 high at $52.75 in 2011 following a multi-year V-shaped pattern carved in the aftermath of the 2008 economic collapse. It paused at that level for more than six months and broke out, posting a series of new highs into the April 2015 all-time high at $144. The subsequent decline continued into the May 2017 five-year low, right in the middle of the 2011 into 2012 consolidation pattern, and took off in a bounce that confirmed long-term support in the $40s. (See also: 5 Retail Stocks With High Earnings Beat Predictability.)

The bounce off that low stalled at the 200-week EMA in the mid-$70s at the end of July, with price action easing into a sideways consolidation ahead of this week’s confessional. Dillard’s stock finally ended the string of lower highs off the 2015 peak in July, when it rallied above the 2016 swing highs in the mid-$70s, signaling the next stage in a bottoming pattern that could eventually support a new uptrend.

A buy-the-news reaction after earnings would run into steep resistance at the March 2016 high in the upper $80s, offering plenty of short-term upside, while a sell-the-news reaction could reach support at the top of the 18-month falling wedge breakout (blue lines) above $60. Volatile price action into that level could yield a higher low, but the tape may be too chaotic to profit from carefully placed pullback trades. (For more, see: Top Strategies for Mastering Pullback Trading.)

The Bottom Line

Bulls hold the advantage heading into this week’s department stores earnings flood, with the group working off long-term oversold technical readings that have lifted these struggling issues back above key support levels. (For additional reading, check out: Ailing Department Stores Grasp for Solutions.)

 

Published at Wed, 09 Aug 2017 15:59:00 +0000

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S&P closes barely lower despite North Korea tensions

S&P closes barely lower despite North Korea tensions

NEW YORK (Reuters) – U.S. stocks clawed back losses late on Wednesday as investors appeared to brush off geopolitical concerns after falling in the wake of U.S. President Donald Trump’s “fire and fury” warning to North Korea.

Bargain-seeking investors instead turned their focus to strength in the global economy and earnings toward the end of an active trading day.

“It’s amazing when you consider the headlines just how calm the equity markets are, how they’ve taken things in their stride,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

“There was some skittishness earlier but then some buyers stepped in,” he said.

Investors had rushed to safe-haven assets after strongly worded exchanges between Washington and nuclear-armed North Korea late on Tuesday. U.S. Secretary of State Rex Tillerson said he did not believe there was an imminent threat.

“You’d need to see something more tangible than just rhetoric for a broader pullback,” said Richard Steinberg, managing director at HSW Advisors, a finance team within HighTower Advisors, in New York.

After a dip of as much as 0.52 percent earlier in the day, Wall Street’s three major indexes bounced off intraday lows.

The Dow Jones Industrial Average .DJI fell 36.64 points, or 0.17 percent, to end at 22,048.7, the S&P 500 .SPX lost 0.9 point, or 0.04 percent, to 2,474.02 and the Nasdaq Composite .IXIC dropped 18.13 points, or 0.28 percent, to 6,352.33.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 19, 2017.Brendan McDermid

While gold XAU=, a safe-haven favorite, pared some gains, it was last up 1.2 percent, at around its highest since mid-June. The Swiss franc CHF= and the Japanese yen JPY= also rose.

Politics lifted U.S. defense stocks. Lockheed Martin (LMT.N), Raytheon (RTN.N), General Dynamics (GD.N) and Northrop Grumman (NOC.N) all rose and the Dow Jones U.S. defense index .DJUSDN was up 1.6 percent after hitting a record high.

The CBOE Volatility Index .VIX, the most widely followed barometer of expected near-term stock market volatility, ended at a session low of 11.11 after rising as high as 12.63.

Six of the S&P 500 sectors ended higher. The consumer discretionary index .SPLRCD was one of its biggest losers with a 0.47 percent drop. Its biggest drags were Priceline (PCLN.O) and Walt Disney (DIS.N).

Disney shares closed down 3.9 percent as investors were skeptical of its plan to launch streaming services rather than rely on Netflix (NFLX.O).

Travel website operator Priceline Group Inc (PCLN.O) fell 6.9 percent after a disappointing financial forecast.

After the bell, Twenty-First Century Fox (FOXA.O) shares were up 0.7 percent following the release of its results.

Declining issues outnumbered advancing ones on the NYSE by a 2.29-to-1 ratio; on Nasdaq, a 2.47-to-1 ratio favored decliners.

About 6.48 billion shares changed hands on U.S. exchanges on Wednesday compared with the 6.16 billion average for the last 20 sessions.

Additional reporting by Sinead Carew, Tanya Agrawal and Sruthi Shanker; Editing by Nick Zieminski and James Dalgleish

Published at Wed, 09 Aug 2017 21:39:10 +0000

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Solar Stocks Are Heating Up

Solar Stocks Are Heating Up

By Cory Mitchell | August 9, 2017 — 1:00 PM EDT

Solar stocks are recovering from major sell-offs over the past few years, recently completing major bottoming patterns and signaling that a longer-term uptrend could be under way. While some of these stocks remain in basing patterns, others have already surged higher. Therefore, each stock will require a slightly different game plan for traders who wish to get involved.

SunPower Corporation (SPWR) stock is in a long-term downtrend going back to the 2014 high of $42.07. That long-term downtrend should be kept in mind, but the price could still make significant upside progress, especially considering the basing pattern that is playing out right now. Over the past year, SunPower stock has been forming a rounded bottom, and since April, it has started making consecutive higher swing lows and higher swing highs. (See also: SunPower Q2 Losses Narrower Than Expected, Sales Fall.)

While the price did fall sharply on Aug. 2, and there may be more short-term downside, the overall trajectory is up. Possible buying locations include the rising trendline, which intersects near $8.50. Based on the short-term downward momentum, reaching that $8.50 to $8.00 area is probable, yet in light of the broader strength, it could be a good entry point. If the price continues to drop below $7.50, that is a warning sign that the broader move to the upside is in trouble and does not have enough buying interest behind it. However, if the price continues its uptrend, the next targets are $13 and $14.50. Traders could exit a portion of their position at each level, implement a trailing stop-loss at the first, or pick one level or the other as an exit point.

Technical chart showing SunPower Corporation (SPWR) stock forming a basing pattern and rallying to the upside

Canadian Solar Inc. (CSIQ) has also been forming a bottom after a long-term decline. A volatile rounded bottom has been forming for more than a year, with the price making higher swing highs and lows since April. In July, the price hit a 52-week high of $18.12, and as of Aug. 8, the price is slightly below that. The past year has been marked by strong moves up and down, so buying near a high may not be the most prudent play based on the stock’s tendency. (For more, see: Rounded Bottom Could Mean a Rally for These Stocks.)

Since Canadian Solar stock tends to see sharp corrections after a rally, getting a lower entry point is quite possible. The rising trendline that intersects near $13.50 is one spot to look for an entry. An entry signal could include the price falling to near (it could be slightly above or below) the trendline and then consolidating for several sessions. If the price then breaks out of the consolidation to the upside, that is a buy signal. If the price falls below $12, the uptrend is in trouble, and the technical premise for the trade is no longer valid. If the uptrend can regain its legs (after a pullback), upside price targets include $21 and $23.

Technical chart showing Canadian Solar Inc. (CSIQ) stock forming a basing pattern after a long-term decline

JinkoSolar Holding Co., Ltd. (JKS) has been one of the strongest solar stocks year to date, up 87%. Jinko stock is pushing into price levels not seen since 2015. This stock exhibited the same pattern that is playing out in Canadian Solar and SunPower, but in the case of Jinko, the higher lows and highs started forming a couple of months earlier. (See also: JinkoSolar to Supply Solar Modules for Fuji Electric Project.)

With the price having already rocketed up and earnings just around the corner (Aug. 23), this is a tough time to justify buying. The stock has already hit its profit targets based on the rounded bottom and is approaching some strong resistance from 2015. If the price declines back below $25.50, traders should be careful. With the stock near resistance, a move below $25.50 could mark the start of a steep decline.

Technical chart showing JinkoSolar Holding Co., Ltd. (JKS) stock spiking after completing a bottoming pattern

The Bottom Line

Right now, these solar stocks are looking good. Even with the recent weakness in SunPower, the broader uptrend remains in play. However, an uptrending stock still requires buying at a price that is acceptable given the risk and profit potential. Since any trend can turn, it is important to cap risk and exit a trade if the original premise for the trade is no longer valid. The risk, or the difference between the entry and stop loss, helps determine if the trade is worth taking from a risk/reward perspective. No matter how good a trade looks on paper, traders should risk only a small portion of account capital on any single trade. (For related reading, check out: A Surprisingly Sunny Run for the Solar ETF.)

Charts courtesy of StockCharts.com. Disclosure: The author does not have positions in the stocks mentioned.

 

Published at Wed, 09 Aug 2017 17:00:00 +0000

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Is Inflation an issue or did the Fed Mess Up?

by stevepb from Pixabay

 

Is Inflation an issue or did the Fed Mess Up?

By: Sol Palha | Tue, Aug 8, 2017


“Bankers know that history is inflationary and that money is the last thing a wise man will hoard.”

-William J. Durant

The Fed has been trying to create the illusion that inflation is an issue. The guys from the hard money camp also maintain that inflation is an issue and to a point they are right. Their definition of inflation is an increase in the money supply.  The Fed, on the other hand, defines inflation as an increase in prices.  The real definition of inflation is an increase in the money supply; rising prices are just the symptom of the disease.  This article from mises.org summarises this concept quite succulently

Inflation, therefore, means an increase in the amount of receipts for gold on account of receipts that are not backed by gold yet masquerade as the true representatives of money proper, gold.

The holder of un-backed receipts can now engage in an exchange of nothing for something. As a result of the increase in the amount of receipts (inflation of receipts) we now also have a general increase in prices.

We are not going to spend time dwelling on this point as the crowd has bought the line the Fed has sold them and so the above point is moot. This article will focus on the price factor and not money Supply factor.

In numerous articles published over the last twenty months, we stated that Fed would be playing with fire if they raised interest rates as this economic recovery is based on “hot money”. We went on to state that if they raised rates, it would be a temporary ploy to buy them more wiggle room. Yellen recently confirmed that the Fed’s Hawkish bias might be coming to an end. She acknowledged that Inflation was below the Central bank’s target of 2%

Yellen, as she has in other statements recently, told lawmakers that she expects low inflation to be transitory. “Temporary factors appear to be at work. It’s premature to reach the judgment that we’re not on the path to 2% inflation over the next couple of years,” Yellen said. “As we indicate in our statement, it’s something we’re watching very closely, considering risks around the inflation outlook.”Full Story

Based on the factors we are going to list below, Yellen, might have to wait a very long time before inflation hits the Fed’s target rate of 2%. All we need to do is look at Japan; they have been trying to generate inflationary forces for decades without any success. They continue to inject billions into the economy hoping for change, but inflation remains stubbornly low.  Our economic recovery is not real; remove the easy supply of money, and the economy will collapse.

Former Bond King Bill Gross seems to concur:

Gross said most destructive leverage occurs at the short end of the yield curve as the cost of monthly interest payments increase significantly to debt holders. “While governments and the U.S. Treasury can afford the additional expense, levered corporations and individuals in many cases cannot,” he said.

Since the Great Recession, more highly levered corporations, and in many cases, indebted individuals with floating-rate student loans now exceeding $1 trillion, cannot cover the increased expense, resulting in reduced investment, consumption and ultimate default, Gross said. “Commonsensically, a more highly levered economy is more growth sensitive to using short-term interest rates and a flat yield curve, which historically has coincided with the onset of a recession,” he said.  Yahoo

In inflation was an issue, central bankers worldwide would be raising rates; instead, we find that many of them are lowering rates.

BOJ stated that they had no intention of raising rates in the near future

The Bank of Japan’s policy meeting ended Thursday with no change to its injections of trillions of yen (hundreds of billions of dollars) into the economy each year through government bond purchases. The BOJ said in a statement that it forecasts inflation at 1.1 percent in 2017, below its 2 percent target and also its earlier outlook for a 1.4 percent rise in the consumer price index. But while central banks in Europe and the U.S. begin winding back stimulus measures taken to counter the fallout from the global financial crisis, Kuroda has said the BOJ will persist until it can achieve its inflation target — now not expected until 2019. Full story

 

South Africa’s Central banker’s surprise markets with a Rate cut

The South African Reserve Bank surprised markets with an interest rate cut on Thursday. While most economists have been expecting the bank to move towards a cut‚ it was not expected to come quite so soon. The Bank cut the repo rate to 6.75% from 7%. Full story

Inflation appears to be decreasing on worldwide basis

Even though Canada raised rates, the data indicated that a rate increase was not warranted. The July rate increase might be a short lived stint. They might mimic the Fed’s footsteps and then back away.

May saw an increase in CPI when unadjusted, but it was well below the Bank of Canada (BoC) target. CPI rose 1.3% year-over-year in May, slipping even further than last month’s 1.6%. Statistics Canada claimed the decline was mostly due to a drop in food and energy costs. The BoC targets a rate of 2% for a well-balanced money supply. Full Story

According to FT, Inflation in Germany (Europe’s largest economy) fell to 1.4%; a low for 2017

A surprising tumble in Germany’s closely-watched inflation rate. Annual consumer price growth in the eurozone’s largest economy has fallen to 1.4 per cent from 2 per cent in May – the lowest level of the year.

Brazil’s inflation falls to a decade low

Consumer prices in June decreased 0.23% over the previous month, which contrasted May’s 0.31% increase. The drop came on the back of falls in a number of categories across the index, including lower prices for housing, transport, and food and beverages. Inflation continued to drop in June, falling to an over decade low of 3.0% (May: 3.6%). The result was below the Central Bank’s target range of 4.5% plus/minus 2.0 percentage points and is good news for the battered economy. The sharp fall will give the Central Bank space to continue with its easing cycle to support a recovery and should help support household spending.Full Story

Credit Suisse goes on to state that Global inflation risks remain low in the following article

Global inflation trends remain quite benign. In most of the major advanced economies, headline inflation peaked in the first quarter once the positive base effects from energy price developments had faded. In the major emerging markets, inflation is also mostly in decline, with the recovery of their currencies combined with still weak domestic demand the most important drivers in countries such as Russia and Brazil. Looking ahead, we see good reason for this benign global environment of relatively low inflation to last for longer

Why are these central bankers not running out and raising rates? These countries cannot play with fire; their currency is not the World’s reserve currency, so they have limited room to manoeuvre. They are not going to risk a recession when they are fully aware this economic recovery is an illusion. Remove the cash infusions, and the economies of the world will collapse.

Take a look at the US retail sector; the entire sector is imploding due to players like Amazon that continue to push prices lower and lower. Bloomberg estimates that 8640 stores are set to close by year end. We think this estimate might be conservative and that the final tally could be north of 9,000.

Extrapolating out to the full year, there could be 8,640 store closings in 2017, Buss said. That would be higher than the 2008 peak of about 6,200.Retail defaults are contributing to the trend. Payless is closing 400 stores as part of a bankruptcy plan announced on Tuesday. The mammoth chain had roughly 4,000 locations and 22,000 employees — more than it needs to handle sluggish demand.

With Amazon’s purchase of Whole Foods and Lidel’s entry into the US market, a massive grocery war is underway; this price war will trigger another set of deflationary forces.  Lidl has stated that they would price groceries up to 50% below US rivals.

“This is the right time for us to enter the United States,” Brendan Proctor, chief executive officer for Lidl U.S., told Reuters at a media event in New York late on Tuesday. “We are confident in our model. We adapt quickly, so it’s not about whether a market works for us but really about what we will do to make it work.”

Aldi the other German company that has been here for some time already offers prices that are below Wal-Mart’s prices; the upside here is that the consumer gets good priced lower than those at Wal-Mart, but the quality is far superior. Analysts estimate that by 2020 Lidl will have over 300 stores in the US. Aldi already has 1600 stores in over 35 states plans to open another 900 stores within the next five years.  Aldi and Lidl are a formidable duo; they have already sent shockwaves through Britain’s Grocery Retail Market, hurting old timers such as Tesco Plc and the ASDA Supermarket chain.

Artificial Intelligence (AI) and Technological breakthroughs will continue to drive prices lower.  Look at how much pricing power the consumer has today compared to a decade ago; this trend will continue to gain traction.

There is another factor “ the velocity of M2 money stock” it indicates that inflation is not an issue.  The velocity of M2 money stock in the US has been plunging for years and shows no signs of letting up; if inflation were an issue the velocity of M2 would be trending upwards and not downwards. We will examine this in more detail in a follow-up article.

The Bond market does not buy the inflation argument

Bonds should have continued to plunge, but notice that bonds bottomed in April and have started to trend higher. After the July rate hike, bonds should have taken out their April lows, but they did not.  Instead, they went on to put in a series of higher lows; higher lows are usually indicative of higher prices. Furthermore, the stock market hardly reacted to the last rate hike; after a very mild reaction, it has continued to trend higher.

We tend to focus more on the technical and psychological outlook, and both are indicating that inflation is still not an issue.    The Gold market is also indicating that inflation is not an issue. Last July Gold traded past $1400; at that time rates were lower and the US dollar was trading at higher levels.  But today rates are higher today, and the dollar is trading lower than it was in 2016, but Gold instead trading at or above $1400 can’t even trade above $1300 for sustained period.

Conclusion

The psychological factor does not support higher prices; the economy is not doing well as the consumer is not spending wildly. Consumer confidence is increasing, but consumer spending is not marching in tandem with consumer confidence.  Income growth is weak; the rise in incomes and net worth has primarily benefited high income and high net worth households. These are the same individuals that have the most money invested in the stock market which has tripled since its March 2009 lows.

We have listed a plethora of factors that illustrate that inflation is not an issue; at least not yet.

Even James Bullard, president of the Federal Reserve of St Louis went seems to be in agreement

“Low inflation has been the major surprise of the era,”

He also went on to state that he was still waiting for inflation to return to the 2% ranges and would not support any increases in the Fed’s benchmark rate until 2018 to allow inflationary forces to recover. He might have to wait a lot longer than that. AI and technology, in general, are going to continue to fuel lower prices. The retail sector is in freefall; the remaining players battle it out, and price wars will continue for the foreseeable future. Food prices are going to plunge due to the price war that new entrants like Lidl and Amazon have triggered.

The bond market is not supporting the higher inflationary outlook, in fact by all measures the bond market appears to be building momentum to trend higher.

Government is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink. Ludwig Von Mises

By Sol Palha


Sol Palha

Sol Palha
TacticalInvestor.com

Sol Palha is a market analyst and educator who uses
Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the
right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

The information contained herein is deemed reliable but
no guarantee is made about its completeness or accuracy. The reader accepts
this information on the condition that errors or omissions shall not be made
the basis for any claim, demand or cause for action. Any statements non-factual
in nature constitute only current opinions, which are subject to change. The
author/publisher may or may not have a position in the securities and/or options
relating thereto, & may make purchases and/or sales of these securities relating
thereto from time to time in the open market or otherwise. Neither the information,
nor opinions expressed, shall be construed as a solicitation to buy or sell
any stock, futures or options contract mentioned herein. The author/publisher
of this letter is not a qualified financial advisor & is not acting as such
in this publication. Investors are urged to obtain the advice of a qualified
financial & investment advisor before entering any financial transaction.

Copyright © 2004-2017 Sol Palha, All rights reserved.

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Published at Tue, 08 Aug 2017 07:34:10 +0000

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What I’ve Learned From My Trading Setbacks

{pixabay|100|campaign}What I’ve Learned From My Trading Setbacks

What I’ve Learned From My Trading Setbacks

During the summer months, I have made a concerted effort to work on my trading.  My year to date results had been well below my average returns and indeed had turned negative for the first time in recent memory.  I took that as a worthy challenge and engaged in a detailed review of what was working and what wasn’t working in my trading.  I’m pleased to say that the results of this work have been quite positive, not only turning the P/L around but also instilling both a consistency of process and a consistency of results.  Below I share a few of the things I have learned in my trading that might be of help to other traders who are adapting to challenging, low volatility markets:

1)  Think in Cycles – This has been one of the two greatest changes I’ve made in my trading.  I stopped thinking about trends and ranges entirely, I don’t focus on chart patterns, and I don’t pretend to know what the “big players” are doing apart from noting volume patterns.  Instead, I am identifying dominant cycles in the market at short, medium, and longer time frame and focusing on how those cycles interact with one another.  I am focusing on cycles of volatility in the market, as well as cyclical price action.  This has been a much more effective way to participate in directional market behavior, especially when implemented in event time. The cycle framework has naturally made me more flexible as a trader:  at certain junctures in a cycle, I am a “trend” trader, following the momentum that occurs when cycles line up.  At other cycle junctures, I am a “mean reversion” trader, adjusting to the “choppiness” that occurs when cycles are not aligned.  Most of all, I’ve become better at focusing on dominant cycles and the ways in which volatility regimes shift the cycles that dominate.

2)  Focus on Execution – A side benefit of the cycle framework is that it allows for simultaneous tracking of short term and longer term cycles.  The short term cycles become extremely useful in entry and exit execution, allowing the trader to extract more from each trade.  I find that the difference between good entries and exits and poor ones in low volatility markets is an important component of making and losing money.  I might be trading a longer term cycle, but I will use a short term cycle to get in near a trough and exit near a peak.  This is a bit counterintuitive, as you’re buying when things look worst and selling when they’ve been recently strong.  By giving execution a short volatility bias, it’s helped me participate in directional moves that do occur.

3)  Focus on Trading Spirituality, Not Just Trading Psychology – This is subtle and is a topic not everyone is comfortable with.  Trading just doesn’t work when it is *me* focused.  Me making money, me losing, me becoming successful, me working on my state of mind, etc.  Once the ego is the focus, we lose flexibility and perspective.  I of all people should know that: as a psychologist, if therapy ever becomes about me, I lose my effectiveness.  The skill of a therapist is in listening, understanding, and responding to another person.  If I’m concerned about my income, my reputation, or my feelings about the other person, I lose my focus and my impact.  In the past months, I’ve regrounded myself in my religion and made spiritual readings a daily part of my morning routine. The change in perspective has been dramatic. A turning point occurred when my research yielded a very good trade opportunity.  I didn’t feel excitement, conviction, greed, or any of those things.  I felt grateful.  It’s a big change.

I’ll be doing a free online workshop this week and will be happy to amplify these ideas.  Setbacks occur for a reason; they point the way to new directions we need to take.  I hope you always have setbacks in your trading and I hope they always make you a better trader–and a better person.

Published at Mon, 07 Aug 2017 13:20:00 +0000

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Twilio Stock Breaks Out to Test Key Resistance

Twilio Stock Breaks Out to Test Key Resistance

By Justin Kuepper | August 8, 2017 — 6:29 PM EDT

Twilio Inc. (TWLO​) shares soared nearly 10% on Tuesday after the company reported better-than-expected second quarter financial results. While Twilio has struggled with its reliance on large customer accounts, management projected third quarter revenue of $91 million to $93 million – above consensus estimates of $89.69 million – while full-year revenue guidance of $371 million to $375 million exceeds consensus estimates calling for $359.79 million.

Second quarter revenue increased 48.6% to $95.87 million – beating consensus estimates by $9.63 million – and net losses of five cents per beat consensus estimates by six cents per share. Base revenue – excluding large customer accounts without a year-long minimum contract – jumped 55% to $87.6 million, while total active customer accounts reached 43,431 compared with just about 31,000 during the same time last year. (See also: Twilio In-Line Q2 Loss, Solid View Mitigate Uber Woes.)

Technical chart showing the performance of Twilio Inc. (TWLO) stock

From a technical standpoint, the stock broke out from reaction highs made in mid-July to key resistance levels near $35.00. The relative strength index (RSI) reached overbought levels at $71.07, while the moving average convergence divergence (MACD) could see a bullish crossover. The stock has been building momentum since its sharp decline following first quarter earnings, when it issued guidance that was well below expectations.

Traders should watch for a breakout from these key resistance levels to new highs. Over the past 52 weeks, the $35.00 level has been tested three times without a breakout following the stock’s tremendous decline during the middle of last year. The next major resistance after a breakout would be at around $39.00 per share, although a failure to break out could send shares back down to retest support at around $32.50. (For more, see: The Top IPOs of 2016.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

Published at Tue, 08 Aug 2017 22:29:00 +0000

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Wall Street swings lower after Trump warns North Korea

by alessandrodandrea from Pixabay

 

Wall Street swings lower after Trump warns North Korea

(Reuters) – U.S. stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after U.S. President Donald Trump vowed to respond aggressively to any threats from North Korea.

After scaling back from record highs earlier in the session, Wall Street’s three major indexes dipped after Trump said North Korea “will be met with fire and fury” like the world has never seen if it threatens the United States.

“Trump’s response was aggressive and that’s why the market turned lower,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities.

Japan said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programs as Pyongyang’s continues missile and nuclear tests in defiance of U.N. sanctions.

Investors, who took the North Korea report from Japan in their stride earlier in the day, lost their appetite for risk after Trump’s comments to reporters during his vacation at his golf club in New Jersey.

The Dow Jones Industrial Average .DJI ended down 33.08 points, or 0.15 percent, at 22,085.34, snapping a 9-day streak of closing records.

The S&P 500 .SPX lost 5.99 points, or 0.24 percent, to close at 2,474.92 and the Nasdaq Composite .IXIC dropped 13.31 points, or 0.21 percent, to 6,370.46.

The CBOE Volatility Index .VIX, better known as the VIX and the most widely-followed barometer of expected near-term stock market volatility, closed at 10.96, its highest in about a month.

Ten out of the 11 major S&P 500 sectors ended lower after the comments with the only gains seen in the utilities sector .SPLRCU, which is seen as a bond proxy because of its slow but predictable growth and dividends.

Utilities closed up 0.3 percent while the materials sector .SPLRCM was the S&P’s biggest loser with a 0.9-percent drop.

Trading volume also picked up in the late afternoon of what had been a sleepy summer session while the U.S. Congress is expected to be in recess until Sept 5.

The S&P hasn’t moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year.

The financial sector index .SPSY gave back gains after news California insurance regulator will probe whether Wells Fargo & Co (WFC.N) and an insurance company harmed residents by selling insurance they did not need. Wells Fargo still ended up 0.3 percent at $52.71.

Shares of Michael Kors (KORS.N) ended up 21.5 percent, after the luxury goods maker raised its full-year revenue forecast.

NYSE declining issues outnumbered advancers 1.73-to-1; on Nasdaq, a 1.47-to-1 ratio favored decliners.

About 6.22 billion shares changed hands on U.S. stock exchanges, slightly above the 6.15 billion average for the last 20 sessions.

Additional reporting by Saqib Ahmed in New York and Tanya Agrawal in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski

Published at Tue, 08 Aug 2017 20:33:02 +0000

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Copper Enters First Bull Market in 4 Years

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Copper Enters First Bull Market in 4 Years

By Alan Farley | August 8, 2017 — 12:06 PM EDT

The copper futures contract has jumped to a two-year high in recent weeks, with the brown metal lifting above the 50-month exponential moving average (EMA) and entering its first bull market in more than four years. Improved China and emerging market growth has underpinned the long-overdue rally, along with continued speculation about U.S. infrastructure investment promised by the Trump administration.

The new uptrend should offer buying opportunities in copper-exposed equities, which have traded poorly in the first half of 2017. That shines a spotlight on the iPath Bloomberg Copper SubIndex Total Return ETN (JJC), the only pure copper fund play. Meanwhile, it is harder than it sounds to find traditional equity plays because most sector choices have diverse operations that include non-copper exposure. (See also: Commodities: Copper.)

The iPath Bloomberg Copper SubIndex Total Return ETN (JJC) holds $70.1 million in assets in 2.1 million outstanding shares that turn over just 74,000 shares per day. A relatively high expense ratio at 0.75% reflects the instrument’s unique positioning because it is the only fund with direct copper exposure. Fortunately, bid/ask spreads are relatively tight, rarely expanding beyond five to eight cents. (For more, see: Want to Invest in Copper? Read This First.)

The fund came public at $50.40 in 2007 and topped out at $58.40 in the first quarter of 2008. It plunged with world markets during the economic collapse, hitting an all-time low at $17.97 in December 2008. The subsequent recovery unfolded at the same trajectory as the decline, completing a V-shaped pattern that reversed less than three points above the 2008 high in 2011.

JJC posted a higher low in early 2016 after descending for nearly five years and built a narrow basing pattern, followed by a November breakout that mounted the 50-week EMA for the first time since 2013. Resistance at $31.50 stalled progress through the first half of 2017 before giving way to a July breakout that has set off a fresh round of buying signals. Price structure now suggests that pullbacks between $31 and $32 should offer low-risk buying opportunities. (See also: Nearby Support Suggests Now Is the Time to Buy Base Metals.)

Southern Copper Corporation (SCCO) also mines small amounts of molybdenum, zinc, silver, lead and gold. The stock broke out of a multi-year basing pattern in 2001 and entered a long-term uptrend that topped out at $47.75 in 2007. Southern Copper shares fell into the single digits in 2008 and bounced less than three points above the prior high in 2010, ahead of a decline that found support in the lower $20s in 2013.

Multiple tests at that level into the second half of 2016 yielded a breakout that stalled within 11 points of resistance in February 2017. A rounded consolidation since that time has attracted heavy buying interest that could support a third quarter breakout into the contested zone. Given its bullish positioning, this market leader could offer the most profitable play on the copper uptrend. (For more, see: Top 5 Copper Stocks for 2017.)

Freeport-McMoRan Inc. (FCX) holds the world’s top slot in copper production, but it is a watered down play due to the company’s broad diversification. In addition to precious metals exposure, Freeport spent $9 billion to enter the energy market at the perfectly wrong time in 2012, and the stock paid the price with a decline to a 15-year low in January 2016. According to 2015 data, 67% of revenues come from copper, 11% from petroleum products, 10% from gold and 5% from molybdenum.

The steep decline tested the 2000 low at $3.38, reversing just 14 cents above that level and entering a recovery wave that stalled at resistance generated by the 2015 breakdown through support at $16.50. A pullback through the second quarter of 2017 built a base at $11 ahead of a bounce that is now gathering momentum. It looks like this impulse will test the 2016 high at $17.06, with a breakout favoring additional upside that could reach steep resistance near $20. (See also: Freeport-McMoRan Stock Breaks Out as Copper Soars.)

The Bottom Line

Copper continues to strengthen and has now broken out to a two-year high, entering a bull market that should underpin related equities. Southern Copper and the copper sub-index fund look like better bets than Freeport in this scenario due to Freeport’s mixed metals and energy exposure. (For additional reading, check out: 3 Base Metal Charts to Watch.)

Published at Tue, 08 Aug 2017 16:06:00 +0000

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Online lenders upbeat about turnaround progress, but worries linger

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Online lenders upbeat about turnaround progress, but worries linger

NEW YORK (Reuters) – LendingClub Corp and OnDeck Capital Inc surprised investors on Monday with strong growth forecasts that sent the online lenders’ stocks soaring, but analysts said the sector’s health was still a concern.

Online lenders soared in popularity after the financial crisis when banks pulled back from traditional lending and borrowers sought other options. But rising delinquencies have made it harder to raise funds for fresh loans, prompting the sector to review its business model, which tends to attract borrowers with low credit quality.

LendingClub, which serves individuals, and OnDeck, which caters to small businesses, are cutting costs and trying to attract borrowers with better credit.

Executives of both companies were upbeat about the progress in their turnaround plans after they reported second-quarter results.

“It’s great to be back to growth,” LendingClub Chief Executive Scott Sanborn said in an interview. “We are excited about the momentum building in the business and the massive opportunity that lies ahead.”

Sanborn took on the CEO role last year after his predecessor, LendingClub founder Renaud Laplanche, was ousted in a scandal over disclosures and potential conflicts of interest.

In a post-earnings interview, OnDeck CEO Noah Breslow called it “a positive quarter.”

“We have done a lot of work to restructure the business,” he said.

OnDeck shares closed 18.5 percent higher at $5, and LendingClub ended up 4.8 percent $5.46. The stocks rose in after-hours trading but remain far below their initial public offering prices of $20 and $15, respectively.

On conference calls, analysts probed executives about their forecasts, questioning whether online lenders could deliver on promises for loan growth, credit quality and profitability.

While OnDeck’s initiatives were bearing fruit, the company remains a “‘show me’ story for investors,” BTIG analyst Mark Palmer wrote in a research note.

Prosper Marketplace Inc, another online lender, has been looking to raise a new round of funding in exchange for equity at a price that would slash its market value by more than 70 percent, people familiar with the matter told Reuters on Friday. The sources requested anonymity because they were not authorized to speak publicly about the matter.

The Information first reported last week on Prosper’s fundraising effort.

Earnest Corp is looking to sell itself for $200 million, Bloomberg News reported on Friday, far less than the $300 million it has raised from investors.

The sector has been expected to consolidate for several months, and mergers could be on the horizon, venture capitalists, investment bankers and analysts said in recent weeks. In theory, companies can improve profits by merging because they would need to spend less money on marketing and technology, and be able reach more customers.

“There have been too many princes wanting to be kings and they will not all be successful,” Ryan Gilbert, partner of financial technology venture capital firm Propel Venture Partners, said in an interview.

Reporting by Anna Irrera and David French; Writing by Lauren Tara LaCapra; Editing by Richard Chang

Published at Tue, 08 Aug 2017 00:04:39 +0000

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Funds target ‘unknown’ stocks as Wall Street cuts analyst jobs

Funds target ‘unknown’ stocks as Wall Street cuts analyst jobs

NEW YORK (Reuters) – With a nearly 30-percent gain in 2017, shares of industrial products maker Handy & Harman Ltd are outpacing hot stocks like Google-parent Alphabet Inc and Visa Inc. Yet few on Wall Street have ever heard of the $412-million market-cap company, in large part because no sell-side research analysts publish any estimates of its earnings.

That lack of information is a boon to Paul Sonkin, a portfolio manager at Gabelli Funds, whose firm owns shares of Handy & Harman. Sonkin estimates approximately 15 percent of the companies in his portfolio have no sell-side analyst coverage, leaving them more likely to be overlooked.

“What we’re looking for is some kind of edge, and if there are fewer analysts covering a stock there’s a greater chance that it will be mispriced,” he said.

Like Sonkin, other fund managers are increasingly turning to small-cap companies with no sell-side coverage, hoping an industry-wide pullback in analyst research will allow them to buy into more ‘unknown’ companies before they get on other investors’ radar.

Top-performing fund managers at Fidelity, Janus Henderson, Hodges Capital and Baron say that the decline in research coverage means that they are seeing more small-cap companies that are mispriced and potentially undervalued, giving firms that have the capacity to conduct their own research an advantage over the long term.

Overall, the number of companies in the small-cap benchmark Russell 2000 that receive no formal attention from Wall Street research firms has jumped 30 percent over the last 3 years, according to a Reuters analysis.

That cutback has left a broader number of small-cap companies – including household names Tootsie Roll Industries Inc, Revlon Inc, and Ruby Tuesday Inc – essentially a black box for investors without the time or resources to analyze a company. Investors in index funds that track the Russell 2000, meanwhile, are putting money into firms that few on Wall Street know anything about.

Numerous academic studies have shown that an analyst initiating coverage of a stock pushes share prices higher, in part by improving investor recognition of the company and increasing its liquidity. A study published in Financial Management in 2008 found that stocks that traded for at least one year without research coverage jumped by an average of 4.8 percent once an analyst began tracking the company.

Investors have little way of knowing in advance when a sell-side brokerage firm will initiate coverage of a company, however, adding the risk that it may be a long time before other portfolio managers recognize a company and boost its shares.

Side Effect of Index Investing Boom

In some ways, the focus on companies with no analyst coverage is an unintended consequence of the index investing boom. Approximately 42 percent of all assets in stock funds are now in passive funds that track indexes, up from 24 percent in 2010, according to the Investment Company Institute.

With fewer investors buying and selling individual stocks, brokerage firms have been forced to cut research staffs, which had long supplied information about small companies in hopes of generating trading commissions.

Over the last 12 months, brokers such as BB&T, Nomura, and Avondale have shut down whole research divisions, leaving a hole in information that is unlikely to be filled quickly. BCA Research, an independent Montreal-based firm, estimates the total number of analyst reports being produced will fall by at least 20 percent as investment banks reshape operations to adapt to the popularity of indexing.

“Portfolio managers are increasingly relying on algorithms to track any changes in a stock, not a human doing a report,” said Evan Pondel, president of Los Angeles-based investor relations firm PondelWilkinson Inc.

Overlooked Buys

Portfolio managers who conduct their own research into uncovered small-cap stocks say that it provides a greater justification for annual fees that are often far higher than passive funds.

Laird Bieger, a portfolio manager at New York-based Baron Funds, said he began meeting with executives at Impinj Inc, a maker of radio frequency identification devices with $1-billion market cap, when there were no sell-side analysts covering the firm. Five analysts now cover the company, whose shares are up nearly 40 percent year-to-date.

“This is something that is way below other people’s radars and at a point in their growth cycle when they are the most open to meeting with us,” he said. Once companies reach market values of $3 billion and above, they typically have much more formalized investor-relations teams that block access to executives.

Eric Marshall, a fund manager at Dallas-based Hodges Capital, said he is looking at uncovered companies in out-of-favor industries such as industrials and financials to find mispriced stocks. He owns shares of Hallmark Financial Services Inc, an insurance company with a market value of $203 million, in part because it is “virtually unheard of,” he said. Shares of the company are down 4.2 percent this year.

Graphic: here

Reporting by David Randall; Editing by Jennifer Ablan and Nick Zieminski

Published at Mon, 07 Aug 2017 18:46:19 +0000

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Market Update – 08/07/2017

Market Update – 08/07/2017


It’s Showtime!

The July 10, Market Update laid out our case for a tradable high in equities to commence sometime by August. We now have a host of reasons (laid out in this report) for thinking that high is now upon us. It’s Showtime!

As explained in the July 10 Market Update, a 15yr interval points to a tradable top (within the ongoing bull market) in the period September 2016 to August 2017 and we have come to the end of the forecast period.

A popular approach of Lindsay’s was his low-low-high interval. Lindsay showed that counting the number of trading days between two important lows often leads to a high the same number of days into the future. The distance between the lows on 2/11/16 and 11/4/16 was 186 days. Counting forward another 186 days targets a top near August 3, 2017.

Seasonally, a top in August makes total sense as August and September are the two weakest months of the year for equities.

The Decennial pattern warns of a nasty sell-off in equities during years ending in the number 7 (i.e. 2017).  Since 1907 each of these years (with the exception of 1947 which suffered a mere 6.2% drop) has seen a double-digit decline beginning somewhere between June and October.

By Ed Carlson


Ed Carlson

Ed Carlson
Seattle Technical Advisors.com

Ed Carlson

Ed Carlson, author of George Lindsay and the Art of Technical Analysis,
and his new book, George Lindsay’s An Aid to Timing is an independent
trader, consultant, and Chartered Market Technician (CMT) based in Seattle.
Carlson manages the website Seattle
Technical Advisors.com
, where he publishes daily and weekly commentary.
He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State
University.

Copyright © 2012-2017 Ed Carlson

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

Published at Mon, 07 Aug 2017 14:54:02 +0000

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All about earnings: Snap, Blue Apron, Disney and more

Photo

Wall Street gets its first taste of Blue Apron IPO
Wall Street gets its first taste of Blue Apron IPO

 All about earnings: Snap, Blue Apron, Disney and more

  @CNNMoney

1. Snap earnings: Snapchat parent company Snap(SNAP) will report its second-quarter finances on Thursday, but Wall Street isn’t holding its breath for anything positive.

The “camera company,” as Snap calls itself, wishes its bad news could just disappear. Shares soared following its highly anticipated March IPO, but Snap has lost much of its market value since then. Earlier this week, some insiders sold their shares after the expiration of the company’s “lockup” period, which bars employees and early investors from ditching their stock. If investors keep selling off shares, the company could be in trouble.

Those investors would have reason to move on. In May, Snap revealed a whopping $2.2 billion loss in the first quarter. It also announced that it had added just 8 million daily active users during that time, bringing its total to 166 million — a meager figure compared to Facebook’s average of 1.3 billion daily active users in June. Snap recently unveiled a slew of new features, but it may not be enough to keep users — and investors — on board.

2. Blue Apron earnings: Blue Apron(APRN) will also share its second quarter financial report on Thursday.

The company’s June IPO was supposed to whet Wall Street’s appetite for meal delivery services, but investors hardly took a bite. Its first day of trading was a bust.

It got worse. On Friday, Blue Apron’s stock dipped by more than 6% following news that it is shutting down its operation in Jersey City and will move more than 1,200 employees to a new plant. The company’s shares also fell earlier this month when it was reported that Amazon filed a trademark for its own meal-kit delivery service. Burgeoning competition from the likes of Hello Fresh, Plated, Purple Carrot, Sun Basket and other similar startups has always been a concern for Blue Apron. With Amazon(AMZN, Tech30) — and, once Amazon’s deal goes through, Whole Foods(WFM) — in the mix, the landscape will only get tougher for the company.

3. Retail earnings:Macy’s(M), Nordstrom(JWN) and Kohl’s(KSS) are all reporting second quarter earnings on Thursday. Both Macy’s and Kohl’s reported lousy earnings in the first quarter — yet another signal to investors that retailers are fighting for their lives.

Amazon and other online retailers like the Walmart(WMT)-owned Jet.com are posing the biggest threats to traditional brick and mortar stores, and Macy’s CEO Jeff Gennette said the company plans to “aggressively grow our digital and mobile business.”

But Kohl’s was a rare bright spot for retail in the first quarter. It beat Wall Street forecasts, and Kohl’s CEO Kevin Mansell said he was “encouraged by the significant improvement in sales and traffic.”

Target(TGT) recently raised its profit forecast and JCPenney(JCP) announced a plan to increase foot traffic by installing specialty toy shops in its stores, raising investors’ hopes for a less-disappointing quarter.

4. Disney earnings: The House of Mouse will report its second-quarter earnings on Tuesday, and Wall Street will be especially interested in ESPN. The struggling sports network has been dragging Disney down, despite the company’s many wins in the box office over the past few years.

In 2016, Disney(DIS) shares remained flat, thanks in large part to ESPN’s falling subscribers and lower ad revenue — all of which led to some high-profile layoffs. In 2017, its stock has continued to struggle.

5. Coming this week:

Monday — Marriott(MAR) earnings

Tuesday — Disney earnings; CVS(CVS) earnings

Wednesday — Mylan(MYL) earnings; 21st Century Fox (FOX)

Thursday — Snap, Blue Apron, Macy’s, Nordstrom and Kohl’s report earnings

 

Published at Sun, 06 Aug 2017 12:06:24 +0000

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Premarket: 7 things to know before the bell

 

Premarket: 7 things to know before the bell

  @ivanakottasova

premarket friday
Click chart for more in depth data.

1. U.S. jobs report: President Trump’s jobs tally could move beyond 1 million on Friday.

The Labor Department will give an update on how many jobs were created in July at 8:30 a.m. ET.

Economists surveyed by CNNMoney estimate that the U.S. added 183,000 jobs in July, down from 222,000 in June. So far, 863,000 jobs have been created during Trump’s presidency.

The unemployment rate is expected to dip to 4.3%.

2. Toyota and Mazda factory in the U.S.: Toyota(TM) and Mazda have announced plans to build a $1.6 billion manufacturing plant in the U.S. that will create as many as 4,000 jobs.

The Japanese automakers said in a statement that the new facility would be operational by 2021, but did not specify where it would be built.

Mazda plans to build new crossover vehicles for the U.S. market at the plant, while Toyota will produce its Corolla model there.

Shares in Mazda(MZDAF) gained 2.8% in Tokyo on Friday.

The move is likely to be seen as a win for President Trump, who had pressured Toyota and other automakers to build more cars in the U.S.

3. RBS picks Amsterdam: The Royal Bank of Scotland said Friday that it plans to use Amsterdam as a European base if Britain makes a clean break from the EU after Brexit.

Shares in the state-backed RBS (RBS)shot up as much as 4% after it announced it swung back into profit in the first half of the year.

4. Global market overview:U.S. stock futures were higher on Friday.

The Dow Jones industrial average closed flat on Thursday, while the S&P 500 was down 0.2% and the Nasdaq shed 0.4%.

European markets were mostly lower in early trading on Friday. Asian markets ended the trading session mixed.

Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

5. Stock market movers — Western Union, Viacom, Mazda, Fluor:Fluor Corp(FLR) shares plunged 10% after hours after the engineering company lowered its outlook for the year.

Viacom(VIAB) lost more than 8% in extended trading after it forecast lower ad revenues on Thursday.

Western Union(WU) gained 5% in extended trading after its earnings beat analyst expectations.

6. Earnings:AMC Entertainment(AMC), CIGNA(CI), Potbelly(PBPB), Trivago(TRVG) and US Cellular(USM) are set to release earnings before the open Friday.

Warren Buffett’s Berkshire Hathaway(BRKA) will follow after the close.

Download CNN MoneyStream for up-to-the-minute market data and news

7. Coming this week:

Friday — U.S. Bureau of Labor Statistics releases monthly jobs and unemployment report

Published at Fri, 04 Aug 2017 09:21:05 +0000

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Treading Cautiously

Finance Photo
tags
By Arulonline from Pixabay

Treading Cautiously

Something’s cooking and although I’m not sure what exactly is going on, my Spidey senses are tingling and that usually means that it’s best to tread cautiously and assume a wait and see position. It’s either that or someone spiked that mushroom soup I had last night, in which case I hope you’ll enjoy my very last post ever. Now all joking aside, my suspicion is that we may be approaching at a temporary bounce in the USD, which may just be the reason why several of my open campaigns are currently in the process of reversing. Let’s take a look:

2017-08-04_DX_Hades

The USD has now descended to a crucial inflection point I highlighted a few days ago. The weekly panel on the left shows you long term support produced by our lower 100-week BB plus two spike lows in the 92.1 vicinity. I hate to be a drama queen but if the Dollar continues straight lower from here then a whole boat load of stops will be triggered and we may just descend all the way into hades with no hope for a bounce until around 87.

By that point you’ll be using Dollar bills as toilet paper or wallpaper if your house is really small. By the way, why is it toilet paper but wallpaper (together)? English doesn’t make any sense and every Spaniard I ever met seems to agree. Anyway, I am somewhat exaggerating of course as the Dollar was just fine in the 80 range between 2011 to 2015 but those were different times and I have an inkling that Draghi and his ECB cohorts weren’t prepared for a 20% increase in the EUR/USD exchange rate when predicting sunny days ahead across the European Union.

Either way, if the Dollar drops this low I’ll be in a very very crappy mood, so you better hope it doesn’t happen. By the way, about the featured image: it is literally this hot here in Valencia right now, except that it’s also humid as hell. When turning on the cold water faucet late in the evening we need to watch out as to not burn our hands – no joke. And they always claim that building standards are so much better over in Europe. Bullpucky…

Campaign Updates

2017-08-04_ZB_update

Alright, let’s observe the damage. Bonds are probably going to be stopped out today as it’s nose diving and is now trading only a few ticks away from my trail. On the upside that would lock in about 2.2R and that’s ain’t bad. Alright, please stop reading now – the rest of the post is not very interesting… have a good weekend!

schneider_weisse

2017-08-04_gold_update

Damn it, you just couldn’t help yourself, could you? Well, gold just gave me a yikes and here I was thinking that the express elevator was waiting. Which apparently it was but it’s going the wrong way. Not stopped out yet but seeing futures drop like this across the board isn’t exactly promising.

2017-08-04_crude_update

Crude has been sickly since my entry and odds of survival are now pretty low. This definitely was worth a shot however as the general setup is extremely juicy until about 48 plus minus a few ticks. There’s a bunch of daily support accumulating there and although it may not help us with with this campaign it seems we at least may get a chance for revenge (yes, I’m joking – never trade your emotions – only trade technically sound setups).

2017-08-04_copper_watch

Now copper has me fascinated right now but clearly today isn’t the right moment to strike. What I would love to see here is a fast drop toward that upper 100-day BB which scares all the children and gives us adults a chance to buy in cheap. I know being long after such an advance may ‘feel’ risky but that’s just an illusion. Statistically trend break outs like these (see 100-week BB) have a good chance of continuation *after a retest and breach of the previous highs*. To be clear – the entry is a coin toss but once it breaches the previous highs the odds of success not only jump to 75% or higher but you often also see big trend moves. Which means that if you aren’t greedy a small position pays off handsomely. Hope that makes sense – if not please do not ask in the comment section  **

One entry however I cannot refuse today:

evil_separator

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

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** It’s already happening! The lower the Dollar drops the more abusive I get.

Published at Fri, 04 Aug 2017 13:21:20 +0000

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