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A Unique Way of Tracking Market Strength and Weakness

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Above we see a cumulative running total of the number of NYSE stocks closing above their upper Bollinger Bands minus the number closing below their lower bands.  (Data from the Stock Charts site).  This is an interesting measure, because it tells us how many issues are distinctively strong versus weak.  The slope of the cumulative line is as important as the direction, as it gives us a sense for the breadth of market strength or weakness.  Note the anemic bounce in the cumulative line since the election lows.  This reflects the very mixed breadth of the market rise–some sectors quite strong, others distinctively weak.  Still, the line has been consistently rising, reflecting relatively little weakness among stocks.  For example, the past two days we’ve seen 95 and 103 stocks close above their respective bands, but only 5 and 9 stocks close below their lower bands.  In general, to get a sustained market decline, we need to see not just a reduction in market strength, but an expansion of weakness.  

The absence of weakness very often is a useful predictor of future market strength.  For example, when the number of stocks below their Bollinger Bands has been in its lowest quartile since 2004 (little weakness), the next 20 days in SPY average a gain of +.95%.  When the number of stocks below their bands has been in their highest quartile (great weakness), the next 20 days have averaged a gain of +.70%.  All other occasions have averaged a 20-day gain of only +.21%.  It’s a nice example of how so much in the way of market returns comes from the relative extremes of momentum and value.

Further Reading:  Momentum, Value, and Short-Term Market Movement

My Trading Journal: 30 Day Trading Journal

Published at Wed, 07 Dec 2016 11:01:00 +0000

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Banks, telecoms lead Wall Street up; another Dow record

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 5, 2016.REUTERS/Brendan McDermid

Banks, telecoms lead Wall Street up; another Dow record

By Lewis Krauskopf

Wall Street climbed on Tuesday as telecom stalwarts AT&T and Verizon gained and bank shares added to their torrid post-election rally, helping the Dow set another record closing high.

The S&P financial sector .SPSY rose nearly 1 percent, lifted by a 2.2 percent gain for Wells Fargo (WFC.N). The bank’s chief executive told an investor conference it will see a near-term profit hit because of the sharp rise in interest rates, but will benefit in the longer term from rising rates.

Bank of America (BAC.N), Citigroup (C.N) and Goldman Sachs (GS.N) also ended higher.

Financials have climbed more than 15 percent since the Nov. 8 election and are seen as one of the sectors particularly benefiting as President-elect Donald Trump seeks to pass economic stimulus and reduce corporate taxes and regulations.

Meanwhile, the Federal Reserve is widely expected to raise interest rates next week, in another boost for banks.

Financials in general are “benefiting from the feeling that interest rates are done going down and we are going to see a much more favorable interest rate and spread environment for financials,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

The Dow Jones industrial average .DJI rose 35.54 points, or 0.18 percent, to 19,251.78, the S&P 500 .SPX gained 7.52 points, or 0.34 percent, to 2,212.23 and the Nasdaq Composite .IXIC added 24.11 points, or 0.45 percent, to 5,333.00.

Equities are also gaining support from recent positive economic data and corporate results from S&P 500 companies, which in the third quarter were poised to snap a streak of quarterly profit declines, said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

“It looks like we are leaving the earnings recession and we have entered a period of earnings growth that I think can support the higher prices that we’re seeing,” Carlson said.

AT&T (T.N) shares rose 1.9 percent. The company said its new streaming television service DirectTV Now has so far exceeded expectations.

Verizon shares climbed 1.2 percent. The No. 1 U.S. wireless carrier is selling 29 data centers to Equinix (EQIX.O) for $3.6 billion.

Verizon also helped boost the Dow, which has outperformed other major indexes and notched a series of fresh record highs since the election as investors pile into financials and industrial stocks.

Trump’s market influence was seen on Tuesday as Boeing (BA.N) shares fell after he tweeted that the government should cancel an order with the plane maker to develop a revamped Air Force One. Boeing shares recovered initial losses and ended marginally positive.

Trump’s announcement that Japanese telecoms and internet firm SoftBank (9984.T) agreed to invest $50 billion in the United States also rippled through markets, with Sprint shares (S.N) rising 1.5 percent and T-Mobile (TMUS.O) gaining 1.8 percent.

In other corporate news, Nike (NKE.N) fell 2.5 percent after Cowen & Co downgraded the shoe and apparel maker’s shares to “market perform.”

About 7.1 billion shares changed hands in U.S. exchanges, below the 7.9 billion daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 2.45-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored advancers.

The S&P 500 posted 41 new 52-week highs and four new lows; the Nasdaq Composite recorded 294 new highs and 21 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Dan Grebler and James Dalgleish)

My Trading Journal: 30 Day Trading Journal

Published at Tue, 06 Dec 2016 22:56:10 +0000

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Sears Loses 2 Top Executives; Is the End Near?

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by graec from Pixabay

Sears Loses 2 Top Executives; Is the End Near?

Sears Holdings (NASDAQ: SHLD) has been on a sad, protracted slide.

The company, which once dominated the American retail landscape, has become a flailing shell of its former self. It has been closing stores from both its eponymous chain and its Kmart subsidiary with little hope that those cuts will do anything more than postpone the inevitable.

Sears entered the 2016 holiday season with questions as to whether it would survive. There were numerous reports of vendors cutting shipments to the chain over fears they would not get paid in the event of a bankruptcy. And now, in the middle of the holiday season, a key executive has quietly exited the company.

What happened at Sears?

The company reported in a SEC document that Executive Vice President Jeffrey Balagna left the company on Nov. 30, “in order to focus on his other business interests and pursue other career opportunities.” That move follows the departure of Sears President and Chief Member Officer Joelle Maher, who also left in late November.

These are major executives leaving during a critical time of the year. It’s fair to say that a bad performance this holiday season could be enough to push the company into bankruptcy. Losing two top members of its management team will certainly do little to give confidence to the company’s lenders and vendors.

What’s next?

While the sales picture is bleak and Sears could run out of cash, the company still has moves to make. It has been shopping its popular house brands: Craftsman, Kenmore, and Diehard. Those are assets which could bring a sizable return that could keep the company afloat for a while longer.

The problem, and it’s a significant one, is that while cash would give the company time, nothing CEO Edward Lampert has done suggests that a turnaround is coming. This is not a healthy company that just needs money to complete its transformation. It’s a dying retailer that has not shown it has a plan to move forward in a way that will reverse its fortunes.

The departures of Maher and Balagna may one day turn out to have been minor hiccups on the way to a triumphant return for Sears. So far, however, there’s no reason to believe that. This seems more a case of two people getting out while they still could.

10 stocks we like better than Sears Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Sears Holdings wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

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*Stock Advisor returns as of Nov. 7, 2016

Daniel Kline has no position in any stocks mentioned.

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Tue, 06 Dec 2016 18:31:03 +0000

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Viacom CEO: We’re Not Interested In Owning Vice

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by geralt from Pixabay

Viacom CEO: We’re Not Interested In Owning Vice

Viacom (NASDAQ: VIA) (NASDAQ: VIAB) has been involved in some fairly heavy drama for the last few months.

The company saw the departure of longtime CEO Philippe Dauman after a protracted battle with the Redstone family, which owns 80% of the company’s stock through its privately held National Amusements theater chain. Viacom was also rocked by the rapid departure of Dauman’s replacement, Thomas Dooley, a well-liked figure within the company.

Now, the company has a new CEO in Bob Bakish, who is operating the media giant while speculation runs wild that it will merge with CBS (NYSE: CBS). That’s what the Redstone family wants, and given that they own about 80% of CBS’s voting stock, too, that’s what’s likely to happen.

It’s a situation which has led to instability, rumors, and a clear lack of direction. Bakish got the job partly to quell those problems, and one of his first actions has been to quash a rumor about a potential acquisition.

What is Viacom not doing?

During a speech at the annual UBS Global Media conference earlier this week, the freshly minted CEO stated very clearly that his company had no interest in buying digital media company Vice, Broadcasting & Cable reported. A growing operation, Vice has been the subject of acquisition rumors linked to a number of companies. In theory, a Viacom deal would make sense because its MTV network is in some ways Vice’s spiritual predecessor, and paved the way for the risk-taking company.

What is next for Viacom?

Bakish wants to stabilize Viacom while preparing for the possibility that the CBS merger happens, but also for a future in which it does not. It’s a difficult position to be in, but the executive has been resolute in his internal and external messaging.

“My own view is, whether or not it happens, we need to insure that Viacom is as strong as it can be and that’s what I’m focused on,” he said.”…Whether or not it happens, we need to ensure that Viacom is as strong as it can be, and that’s what I’m focused on.”

That’s a smart, no-more-drama approach, and it’s exactly what Viacom needs right now. The company must focus on improving its own operations, because it does not control what will happen regarding any possible CBS merger — that’s largely in the hands of the Redstones.

10 stocks we like better than Viacom
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Viacom wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of Nov. 7, 2016

Daniel Kline has no position in any stocks mentioned.

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Tue, 06 Dec 2016 18:04:02 +0000

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Oil retreats on doubts OPEC cuts can ease glut

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Rigging equipment is pictured in a field outside of Sweetwater, Texas June 4, 2015.REUTERS/Cooper Neill

Oil retreats on doubts OPEC cuts can ease glut

By Jessica Resnick-Ault | NEW YORK

U.S. crude futures strengthened Monday before retreating in post-settlement trade as the market lost confidence OPEC cuts would be sufficient to reduce oversupply given increased U.S. drilling.

U.S. West Texas Intermediate crude rose early in the day and began to pare gains in the late afternoon, settling at $51.79 a barrel, up 11 cents or 0.21 percent, before retreating to as low as $51.11 a barrel.

Brent crude settled at $54.94 a barrel, up 48 cents – or 0.88 percent – before retreating to $54.22 a barrel.

Monday’s retreat indicated a potential halt to the rally that drove the market up as much as 19 percent since the Organization of the Petroleum Exporting Countries’ agreement was struck on Wednesday. Last week’s 12.2 percent increase was the largest one-week rise since February 2011.

The market fell as investors shifted their focus to rising drilling, said Tariq Zahir, managing member of Tyche Capital Advisors in New York.

“The Brent-WTI spread has blown out, and a lot of that has to do not only with shale but with the idea that there would be more drilling,” he said. U.S. drilling rigs increased on Friday, increasing sentiment that shale drilling would offset potential cuts from other producers.

After OPEC agreed to curb production by 1.2 million barrels per day (bpd) from January, eyes have now turned to a meeting this weekend between OPEC and non-OPEC producers to expand the deal.

The market remained leary that cuts by non-OPEC members, in tandem with the OPEC cuts, would be sufficient.

Saudi Arabia said Monday afternoon that it would cut its official selling prices to Asia, indicating that it would continue to strive to maintain market share.

Weekly data from the InterContinental Exchange on Monday showed investors had raised net long positions on Brent to the highest level in four weeks. [O/ICE]

Non-OPEC producers are expected to agree to add an output cut of 600,000 bpd in Vienna on Dec. 10.

“We remain skeptical that non-OPEC producers will line up to pledge their own reductions when OPEC’s announcement last week already largely took responsibility for rebalancing the market,” said Tim Evans, energy futures specialist with Citigroup in New York. “In our view, the rally in prices represents an economic call for more production, not more cuts.”

Transneft, Russia’s pipeline monopoly, suggested on Monday a cut to oil output could begin in March.

Iran, which was granted an output rise as part of the OPEC deal as it recovers production curbed by sanctions, will also attend the meeting, SHANA news agency said.

Mexico said it would attend the meeting, even as it auctioned off leases in the deepwater Gulf of Mexico, which will pave the way for future production increases.

(Additional reporting by Karolin Schaps in London, Henning Gloystein in Singapore; Editing by Marguerita Choy, David Evans and Andrew Hay)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Mon, 05 Dec 2016 22:20:17 +0000

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Adidas CEO Has “Words” for Nike’s HyperAdapt 1.0 (NKE, ADDYY)

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Adidas CEO Has “Words” for Nike’s HyperAdapt 1.0 (NKE, ADDYY)

By Dan Moskowitz | December 5, 2016 — 9:02 PM EST

If you have ever run in a race, caught ground on the person leading that race, and then fell back into the pack again, then you know how frustrating this experience can be. No matter what you do, no matter how hard you try, catching that superior competitor is just not possible. Based on what Adidas AG (ADDYY) Chief Executive Officer Kasper Rorsted recently told The Wall Street Journal, this is how he must feel. Referring to NIKE, Inc.’s (NKE) new HyperAdapt 1.0, Rorsted stated, “I don’t know if that’s a save-the-world product.”

Prior to the $720 self-lacing HyperAdapt 1.0, Adidas had stolen Nike’s thunder thanks to its classic Stan Smith shoes becoming popular again. Consumers are currently finding style in simplicity. These same consumers aren’t likely to go out and buy the $720 HyperAdapt 1.0, which are obviously expensive as well as difficult to purchase. Rorsted’s comment didn’t indicate fear about the current version of the HyperAdapt, but the future versions of that shoe, which are highly likely to be more affordable in order to target the masses. Since Nike has been working on the technology for more than a decade, it would be nearly impossible for Adidas to catch up if self-lacing sneakers became a trend. (See also, Adidas Takes on Nike & Under Armour in U.S.)

Rorsted is also likely frustrated because Adidas is focused on sustainability. According to Business Insider, Adidas is making sneakers from ocean plastic and biodegradable silk. Sustainability will play a role in future consumer decisions, but it unfortunately will not be as impactful as a new technology like self-lacing shoes. Once a few young consumers sport the cheaper version of these shoes in the future, everyone else is going to want them. That’s not going to happen with shoes that are made from ocean plastic. If self-lacing shoes resonate with consumers over the next several years, then Nike will once again run far ahead of the competition.

NKE has depreciated 23.31% over the past 12 months and currently offers a dividend yield of 1.43%.

ADDYY has appreciated 46.98% over the past 12 months and currently offers a dividend yield of 1.23%.

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Tue, 06 Dec 2016 02:02:00 +0000

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WRAP UP 1-Trump should not spend like economy in crisis -Fed officials

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St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015.REUTERS/Lucas Jackson/File Photo – RTX2TY27

WRAP UP 1-Trump should not spend like economy in crisis -Fed officials

By Howard Schneider | PHOENIX

Federal Reserve officials cautioned on Monday that the incoming Trump administration’s economic plans should not be cast as if the economy is in crisis, but instead be designed to help the economy’s long-run prospects.

The comments reflected a developing debate within the Fed over the impact of president-elect Donald Trump’s leadership of a Republican-controlled government.

Fed officials worry there is risk that overly aggressive fiscal, tax and other changes could become inflationary given the economy’s current strength.

That could force the Fed into more rapid interest rate increases and possibly raise the risk of recession. Yet there is also potential, officials feel, for well-designed tax, regulatory and infrastructure spending to boost the country’s lagging productivity.

Properly designed and executed policies to boost infrastructure, modify regulations for some industries and overhaul the tax code “may have some impact … if they are directed towards improving medium-term U.S. productivity growth,” St. Louis Fed President James Bullard said in remarks in Phoenix at a luncheon sponsored by Arizona State University.

But “these policies should not be viewed as countercyclical measures,” Bullard said. “The economy is not in recession today.”

“An infrastructure plan would be terrific, that would be good,” Chicago Federal Reserve bank president Charles Evans said in Chicago. “I think corporate tax rationalization would be a huge improvement.”

Yet he agreed: “you don’t need explicit stimulus” with the jobless rate already so low.

FISCAL OUT OF SYNC

Fed officials are typically reluctant to give specific advice to the elected officials who set government spending and debt levels, in part to preserve their own political independence.

But in recent months they have become more voluble on the subject. They feel fiscal policy in the critical early years after the 2007-09 financial crisis was out of sync with what the country required, set too tight at a time when the country needed, and the Fed was pushing to achieve, higher growth.

Trump’s victory, coupled with the election of a Republican-controlled House and Senate, has turned that debate on its head: elected officials may be pushing to stimulate the economy at a time when the Fed is beginning to raise interest rates and sees the economy approaching full employment.

The dilemma would be resolved, Fed officials suggested, if the new administration’s policies focus on efforts that revive productivity growth, and do not amount to spending for spending’s sake.

“If you put the right public capital in place it could improve productivity and you would have a higher trend growth rate,” Bullard said in comments that have been echoed across the Fed.

In remarks in New York, Fed vice chair and New York Fed President William Dudley recommended Congress and the administration set rules that could help in the next crisis with programs that automatically boost spending in a downturn.

Such automatic stabilizers “would kick in to support incomes,” Dudley said, which “should lead workers to be less fearful about losing their jobs, and businesses to be less concerned that demand for their products might fall precipitously.”

(Additional reporting by Ann Saphir in Chicago and Jon Spicer in New York; Editing by David Chance, Paul Simao and Meredith Mazzilli)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Mon, 05 Dec 2016 20:44:49 +0000

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Fitbit Is Still the King of Wearables

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by skeeze from Pixabay

 

Fitbit Is Still the King of Wearables

New data from IDC proves Fitbit (NYSE: FIT) is still the king of wearables. In a press release issued earlier today, the market research firm reported Fitbit was not only the third-quarter market leader in wearables shipments, but also one of the fastest growers.

“Despite recent negativity surrounding the company’s long-term strategy and stock price, IDC expects Fitbit to continue leading the pack in the near term,” the researcher commented. “The acquisition of Coin and the potential to expand into the smartwatch category present an opportunity for the company to be more than just a fitness brand.”

Overall, Fitbit shipped 5.3 million units in Q3, a 11% year-over-year increase, and good enough to account for 23% of the worldwide wearables market, IDC says. Fitbit accounted for 21.4% of the market last year at this time. Only Samsung, Garmin (NASDAQ: GRMN), and the “Others” category grew faster — up 89.9%, 12.2%, and 26.1%, respectively. Apple took the biggest hit, suffering a 71% drop in unit shipments on slowing sales of the Apple Watch.

Why should investors care? As a stock, Fitbit has taken a beating and is now down more than 72% year to date. IDC’s data suggests that may have been too big a haircut. So does the company’s earnings multiple. According to S&P Global Market Intelligence, Fitbit trades for less than 20 times earnings, a low never before seen in the short history of the stock trading on public markets.

Some may find it interesting that Garmin was in this same position at one point, as well, and has since stabilized its business enough to push the stock up over 40% year-to-date. Either IDC has it wrong and Fitbit is about to be decimated by rivals, or bearish investors who’ve shorted an estimated 25% of the company’s shares outstanding are due for a costly backlash. Either way, it’s an interesting time to be tracking Fitbit.

Tim Beyers owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Fitbit. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Mon, 05 Dec 2016 20:25:03 +0000

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The Path of Persistence

 

The Path of Persistence

Here’s a great exercise:

Review your trading journal and/or your written goals and plans over the past several months.

How many items appear repeatedly, over many days per week and over many weeks?

Change is rarely instantaneous.  Enduring change requires repetition.  Repetition requires persistence.  

If your notes and journal entries don’t have items you work on repeatedly, over time, then you’re simply logging one good intention after another.  The path of least persistence rarely is the path to success.

And if you’re not persisting in keeping a journal, setting goals and plans, and chronicling your progress and learning?

We don’t win by persisting at trading.

We win by persisting at working on our trading.



Further Reading:  How Ordinary Traders Become Extraordinary

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Mon, 05 Dec 2016 11:09:00 +0000

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CNN’s Plans for Video-Sharing Startup Beme (TWX, DIS)

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CNN’s Plans for Video-Sharing Startup Beme (TWX, DIS)

By Richard Saintvilus | December 5, 2016 — 5:10 AM EST

In an effort of lure in the millennial audience and perhaps stunt the cord-cutting phenomenon, Time Warner Inc.’s (TWX) cable news network CNN has acquired video-sharing startup Beme, founded by popular YouTube personality Casey Neistat, which boasts six million subscribers.

As part of the deal, the terms of which were not publicly disclosed, Beme’s 12 employees will join CNN. With millions of people regularly tuning in to Neistat’s YouTube video blogs each morning, this move by CNN could pay off, given that Neistat’s youthful audience and millennial fan base are coveted by marketers and media companies. It’s possible that CNN, and essentially Time Warner, wanted Beme before a rival like The Walt Disney Company (DIS) or CBS Corporation (CBS) stepped in. (See also: Disney Exploring 24-Hour Digital News Channel.)

In an internal memo to employees, General Manager of CNN Digital Worldwide Andrew Morse said, “Together we are launching a new media company dedicated to timely and topical video content powered by bleeding edge mobile technology.”

Morse is one of several CNN managers who will serve as an executive officer for a new entity that will be formed within CNN with Beme employees. As the new company forms, expected to launch by the summer of 2017, CNN will invest plenty of resources, including hiring dozens of producers, builders, developers, designers and content creators of every mold, CNN told TheStreet.

Described as a “more authentic” way of putting video out into the social sphere, Beme is a social sharing application that distributes four-second bursts of video clips without giving users the ability to edit or tweak the content. The company was founded on the premise that the camera was an extension of a person’s chest. CNN seems to appreciate that idea and believes the authenticity will enhance its news and media environment. More importantly, CNN sees an untapped millennial audience for its cable news network.

The deal for Beme, which comes as Time Warner is being acquired by AT&T, Inc. (T) for $85.4 billion, continues the trend of traditional TV cable news networks looking for new ways to draw in younger audiences. While it’s early, it seems that Time Warner and CNN have found a winner. (See also: AT&T Execs Expect Trump OK of TWX Deal.)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Mon, 05 Dec 2016 10:10:00 +0000

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This Stock Market is a Market of Stocks

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By Olichel from Pixabay

This Stock Market is a Market of Stocks

The above chart of sector performance over the past three months from FinViz really is quite remarkable.  There have been big moves during this recent period, but the moves have been very different across the sectors.  If you have been long industrial conglomerates and commodity-related shares, you’ve likely done well.  If you have been long consumer staples shares, healthcare issues, or utilities, your returns have been significantly negative.

Here’s another interesting perspective, courtesy of the excellent Index Indicators site.  As of Friday’s close, we had 48% of SPX stocks trading above their three-day moving averages; 43% above their five- and ten-day averages; 58% above their 20-day averages; 60% above their 50-day averages; 54% above their 100-day averages; and 61% above their 200-day averages.  In other words, at every time frame, there have been a large proportion of stocks you could identify as weak or strong purely on a moving average basis.

In short, we’ve had less of a true stock market than a market of stocks.  

From a cycle perspective this is important, because the bull and bear phases of cycles are characterized by trend and momentum.  When we are in a true bull or bear market move, the tide tends to lift or lower all boats.  When markets spend significant time topping or bottoming, we see a meaningful degree of rotation, with the stronger and weaker sectors diverging in performance.  

It is not clear to me that the moves off the election evening lows represent a fresh bull market in stocks.  Yes, we did see significant share creation in the SPY ETF after the election; this has leveled off and even dipped a bit since mid-November.  And, yes, we did see an expansion of the number of stocks making fresh 52-week highs following the election.  That has leveled off in the past week, but interestingly 100-day new highs minus lows among the SPX stocks only hit 94 at their recent peak, below levels seen off the late June bottom.  Much of the breadth strength in the aggregate market numbers are a reflection of relative strength among small caps and mid caps.

As long as that aggregate breadth stays positive, with few shares actually registering fresh new lows, I don’t expect any major near-term corrections or transition to bear market conditions.  When I see all ships not rising, however, I question the tide.  End of year performance dynamics for fast money participants have led markets to price in a significant degree of expectation for the new Presidential administration.  I am watching breadth statistics carefully to handicap the odds of continuation versus consolidation, and I’m carefully tracking the relative performance of the strongest and weakest sectors to determine the staying power of the post-election themes.

Further Reading:  The Momentum Curve

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Sun, 04 Dec 2016 12:02:00 +0000

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Fed official stands by Wall Street reforms, says must complete work

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New York Fed President William Dudley takes part in a panel convened to speak about the health of the U.S. economy in New York, U.S. on November 18, 2015.REUTERS/Lucas Jackson/File Photo

Fed official stands by Wall Street reforms, says must complete work

The United States “absolutely must” complete unfinished work ending the too-big-to-fail bank problem that helped plunge the global economy into recession eight years ago, an influential Federal Reserve policymaker said on Saturday.

In remarks that appeared to pre-empt President-elect Donald Trump, who has promised to roll back Wall Street regulations, New York Fed President William Dudley said much progress has been made making the financial system “less prone to panics.”

“Still,” he said in prepared remarks, “there is more to do before we can say that we have ended ‘too big to fail.’ This is work that we absolutely must complete.”

Dudley’s comments, to a Group of 30 meeting of top world regulators, came a day after another powerful regulator at the U.S. central bank, Daniel Tarullo, also warned against “backsliding” after years of implementing the landmark 2010 Dodd-Frank financial-reform law.

Challenges especially remain in regulators safely and smoothly handling the hypothetical failure of a massive bank with operations in multiple jurisdictions, Dudley said.

Addressing other areas of the financial landscape, Dudley, whose institution acts as the Fed’s eyes and ears on Wall Street, drew a line around these areas he said provided important structure changes: reforms in tri-party reverse repurchase market; in over-the-counter derivatives and the central clearinghouses that handle that activity; and in money market mutual funds.

Trump, a Republican whose victory last month shocked pollsters, has said his administration will grow the economy in part by rolling back elements of the Dodd-Frank Wall Street reform law.

(Reporting by Jonathan Spicer; Editing by Alistair Bell)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Sat, 03 Dec 2016 14:35:16 +0000

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Three Powerful Measures of Character

 

Three Powerful Measures of Character

Character is more than personality.  Character reflects our deepest values and priorities and our most fundamental commitments.  When someone has a good personality, we might like that person.  When someone has a good character, we’re likely to admire that person.

Here are three simple but powerful measures of character:

1)  How does the person spend his or her free time?  Per Ayn Rand’s observation above, what does he or she do for enjoyment?  

2)  How does the person respond to your successes?  Many people are willing to commiserate with you when you’re down and elevate themselves in the process.  A person of genuine goodwill celebrates your successes and is happy for your happiness.

3)  What strong beliefs does the person voice and live through their actions?  Character means standing for what you believe in and living your beliefs.  Go along and get along might be comfortable, but commitment is what powers effective action in the world.

Now apply the three criteria of character to yourself.  What do you do for enjoyment?  How do you respond to the successes of family members and colleagues?  If someone were to read your writings, hear your speech, and observe your actions, what would they conclude about your beliefs, values, and commitments?

Character is a magnet:  who we are determines who is drawn to us.

Further Reading:  Personality and Character in Trading

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Sat, 03 Dec 2016 14:11:00 +0000

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A Unique Measure of Stock Market Cycles

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By stevepb from Pixabay

A Unique Measure of Stock Market Cycles

A rule that has held up well is that successful traders tend to look at unique data and look at common data in unique ways.  It’s pretty difficult to distinguish ourselves from the herd if we’re part of what the herd is looking at and listening to each day.  Some of the best traders I know view unique data uniquely.  That means they’re looking at things others aren’t.

Above we see an indicator created by tracking every stock listed on the NYSE and whether it is giving a buy signal, no signal, or a sell signal on the Parabolic SAR system created by Wilder.  The indicator, in red above, simply cumulates the buy signals minus the sell signals and keeps them as a running total, like an advance-decline line.  I scrape the raw data from the excellent Stock Charts site daily.   

The indicator provides a useful sense of overbought and oversold.  More to the point, when values have been in their strongest quartile since 2014, the next 20 days’ return has been superior.  That’s a momentum effect.  When the values have been in their weakest quartile, we’ve also seen a superior average return over a 20-day period.  That’s a value effect.  The trajectory of the cumulative measure acts reflects the cyclical nature of market movement, with returns shifting between value and momentum at various phases of market cycles.

Note that we’ve shifted downward from a peak in the measure recently and have been heading lower, though are not yet near oversold territory.

Thinking of market movement in cycles has helped me frame when I expect prices to trend and when I expect mean reversion.  Tracking cyclical behavior over time has been useful in identifying longer-term market strength and weakness.  Perhaps most of all, having a cycle framework means understanding that no market move will last forever.  “This, too, shall pass” helps place many things in a useful life perspective.

Further Reading:  Volatility and the Dynamics of Market Cycles

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Fri, 02 Dec 2016 12:17:00 +0000

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Trump’s win gives some hedge funds big boost: investors

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William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York May 4, 2015.REUTERS/Brendan McDermid

Trump’s win gives some hedge funds big boost: investors

By Svea Herbst-Bayliss | BOSTON

Donald Trump’s U.S. presidential election win gave a huge boost to some prominent hedge fund portfolios, helping them post double-digit gains in November, several investors said.

William Ackman’s Pershing Square Capital Management posted gains of roughly 10 percent in two portfolios while Mick McGuire’s Marcato Capital Management’s flagship fund surged 12 percent, investors in the funds said. Both firms are known as activist investors that often try to shake up management.

Pershing Square’s gains were largely fueled by gains at mortgage finance companies Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK) as investors bet that Trump’s administration would end the government control that began with the 2008-09 financial crisis. It helped cut Ackman’s losses for the year to roughly 10 percent.

Whitney Tilson’s Kase Capital jumped 7.5 percent last month, he said in an email as the government-backed mortgage firms jumped 172 percent since the Nov. 8 election.

At Marcato, the gains were underpinned by crane maker Terex (TEX.N), a relatively new position in the portfolio, as investors expected the Trump administration to focus on infrastructure projects. Marcato’s main fund is up 10.7 percent for the year while its smaller Encore fund is up 13.7 percent for the year.

Barry Rosenstein and David Einhorn, both closely watched for their investment ideas, told clients they made money in November, but not as much as the Standard & Poor’s 500 stock index, which gained 3.6 percent.

Rosenstein’s Jana Partners fund climbed 2.2 percent in November, and is up 1.4 percent for the year. Einhorn’s Greenlight Capital rose 1.9 percent in November and is up 7.7 percent for the year, investors said.

Almost immediately after the election, investors bet on a business-friendly president helping financial and healthcare stocks perform even better than the broader index. Hopes for lighter regulation, corporate tax cuts, fiscal stimulus and higher interest rates boosted these stocks.

Most hedge funds are still compiling monthly numbers which are generally not made public.

The Standard & Poor’s 500 has gained 7.2 percent since Jan. 1.

Renaissance Technologies LLC’s Renaissance Institutional Equities Fund, one of two portfolios available to outsiders, has gained 14.8 percent this year, but fell 1.7 percent in November, an investor said.

(Reporting by Svea Herbst-Bayliss; editing by Grant McCool)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Sat, 03 Dec 2016 01:04:14 +0000

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La-Z-Boy Lifts Its Dividend 10% Higher

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by Pexels from Pixabay

La-Z-Boy Lifts Its Dividend 10% Higher

On the back of a quarter that beat analysts’ expectations for profitability, La-Z-Boy (NYSE: LZB) is increasing its quarterly shareholder payout by 10%. The company has declared a dividend of $0.11 per share, $0.01 higher than its predecessor.

Since re-initiating its payout at the rate of $0.04 per share in late 2012, after a suspension that began amid last decade’s financial crisis, La-Z-Boy has been a reliable dividend payer. It has handed out a distribution in each quarter since then, and raised it once a year.

The latest dividend declaration was made concurrently with the release of the company’s fiscal second-quarter 2017 results. For the period, total sales slid by 2% on a year-over-year basis to $376.6 million. Attributable net income fell by 3% to just under $21 million, or $0.42 per share. In spite of the declines, the latter figure beat analysts’ average expectation of $0.38.

The company said that although its customers have been making larger purchases, total sales are down due to softer demand. That particularly affected sales of upholstered furniture, which provides the bulk of La-Z-Boy’s revenue. During the quarter, the take from these products fell by more than 3% compared to the same period last year, landing at almost $296 million.

The company sounded a hopeful note in its earnings release. Said CEO Kurt Darrow: “While the consumer environment for the past six months has been somewhat choppy, our team is well versed in adapting our marketing plans and merchandising strategies to ensure we resonate with the consumer, and I have every confidence we will navigate our way through this period.”

La-Z-Boy’s new dividend is to be paid on Dec. 15 to stockholders of record as of Dec. 9. At the current share price, this would yield 1.6%, which is shy of the current 2.1% average of dividend-paying stocks on the S&P 500.

10 stocks we like better than La-Z-Boy
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Eric Volkman has no position in any stocks mentioned.

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 01 Dec 2016 22:10:03 +0000

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UPDATE -Starbucks CEO steps down to focus on high-end coffee, shares fall

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A man walks out of a Starbucks coffee shop in Seoul, South Korea, March 7, 2016.  REUTERS/Kim Hong-Ji

A man walks out of a Starbucks coffee shop in Seoul, South Korea, March 7, 2016. REUTERS/Kim Hong-Ji

UPDATE -Starbucks CEO steps down to focus on high-end coffee, shares fall

By Lisa Baertlein and Gayathree Ganesan

Starbucks Corp (SBUX.O) co-founder Howard Schultz will step down as chief executive to focus on new high-end coffee shops, handing the top job to Chief Operating Officer Kevin Johnson, a long-time technology executive.

Schultz, who will become executive chairman in April 2017, said he would focus on building ultra-premium Reserve stores and showcase Roastery and Tasting Rooms around the world as well as setting the brand’s “social impact agenda” that includes sending employees to college and recruiting veterans.

Starbucks had signaled the change in July, but its shares fell 3.6 percent to $56.41 in extended trading on Thursday, as investors recalled the company’s decline after Schultz handed over the reins in 2000. He returned in 2008.

“Having him step down as CEO raised the anxiety level,” said Stephens analyst Will Slabaugh, who said that Schultz is the heart and soul of the brand, its entrepreneurial leader and its savior.

“We’re in a much better position on every level,” said Schultz, who returned for his second stint as CEO in the depths of the “Great Recession,” when Starbucks’ stock was trading below $10. Late last year, it hit an all-time high above $60. Schultz has put Starbucks in the national spotlight, asking customers not to bring guns into stores and urging conversations on race relations.

Many of the campaigns have generated controversy, but analysts have not seen a hit to financial results and the efforts have raised the profile of the coffee company and cemented Schultz’s status as a national figure.

“The idea that he’s replaceable, I think that’s erroneous,” said Bill Smead, CEO of Smead Capital Management in Seattle, which owns Starbucks shares. He compared the change to the retirement of long-time McDonald’s Corp (MCD.N) CEO Ray Kroc, who turned a handful of hamburger stands into the world’s biggest restaurant company.

The announcement on Thursday also came as investors worry about the restaurant industry’s stubborn traffic declines. Starbucks has held up better than most, but it has not been immune.

Johnson is a former technology executive who became president and chief operating officer at Starbucks in March 2015.

Johnson has been on the Starbucks board since 2009 but most of his career was in the technology industry. He was the chief executive of Juniper Networks Inc (JNPR.N) from September 2008 to January 2014 and prior to that held several senior positions at Microsoft Corp (MSFT.O).

On a conference call after the announcement, analysts pressed the company on timing and whether, with Schultz stepping aside, senior management still had the “merchant gene.”

“Not having retail experience could be a problem over time,” said Howard Penney, an analyst at Hedgeye Risk Management.

“I’m not leaving the company and I’m here every day,” said Schultz, whose office is connected to Johnson’s.

Traffic at established Starbucks cafes fell in the last quarter, which Johnson has attributed to a change in the company’s loyalty program, and Starbucks forecast a mid-single-digit rise in 2017 same-store sales.

The company dismissed speculation that Schultz could be preparing for a new career in politics.

“He has no plans to run for political office, as he has said many times, and will remain with the company as Starbucks executive chairman, focusing on premium coffee,” a spokeswoman said.

(Reporting by Gayathree Ganesan and Siddharth Cavale in Bengaluru; additional writing by Peter Henderson; Editing by Bill Rigby and Jonathan Oatis)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 01 Dec 2016 23:49:21 +0000

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Hedge fund returns mixed for November after market rally

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U.S. President-Elect Donald Trump speaks at event at Carrier HVAC plant in Indianapolis, Indiana, U.S., December 1, 2016.REUTERS/Chris Bergin

Some big hedge funds got a bump in November after Donald Trump’s surprise U.S. presidential election victory sent stocks higher, but lagged behind the broader market’s gains, according to some early returns.

Barry Rosenstein and David Einhorn, both closely watched for their investment ideas, told clients they made money in November, but not as much as the Standard & Poor’s 500 stock index, which gained 3.6 percent.

Investors bet on a business-friendly president after Trump’s victory in the Nov. 8 election. Some sectors, including financial and healthcare stocks, performed even better than the broader index, fueled by hopes for lighter regulation, corporate tax cuts, fiscal stimulus and higher interest rates.

Most hedge funds are still compiling their monthly numbers which are generally not made public.

Rosenstein’s Jana Partners Fund gained 2.2 percent in November, marking one of its strongest monthly gains this year after starting 2016 with losses. November’s gains helped put the fund back into the black with a year-to-date gain of 1.4 percent, an investor summary seen by Reuters showed.

Einhorn’s Greenlight Capital climbed 1.9 percent in November, leaving the fund up 7.7 percent for the year, an investor said.

The Standard & Poor’s 500 has gained 7.2 percent since Jan. 1.

To be sure, there are funds outpacing the stock market’s year-to-date gains both on a monthly and yearly basis.

Whitney Tilson’s Kase Capital jumped 7.5 percent last month, he said in an email, largely because of a gain in government-backed mortgage giant Federal National Mortgage Association (Fannie Mae), which has jumped 172 percent since the election. Trump’s Treasury secretary pick, Steven Mnuchin, said Fannie Mae and Freddie Mac should be privatized.

Renaissance Technologies LLC’s Renaissance Institutional Equities Fund, one of two portfolios available to outsiders, has gained 14.8 percent this year, an investor said. It stumbled in November with a 1.7 percent loss.

(Reporting by Svea Herbst-Bayliss; Editing by Bill Rigby)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 01 Dec 2016 21:48:04 +0000

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Why Dollar General’s Comp Sales Dropped in Q3

dollar-941246_1280

by TBIT from pixabay

Why Dollar General’s Comp Sales Dropped in Q3

Cuts to the federal Supplemental Nutrition Assistance Program (SNAP) — what used to be called “food stamps” — contributed to a slight drop in same-store sales for Dollar General (NYSE: DG) in the third quarter, the discount retailer said in its earnings release Thursday.

On the positive side, net sales increased 5% to $5.32 billion in Q3. Sames-store sales, however, dropped by 0.1%, which the company blamed on a decline in traffic that was partially offset by an increase in the chain’s average transaction value.

CEO Todd Vasos said in the earnings release that he expects the company to fix its same-store sales issue, but that the efforts it’s undertaking won’t have an immediate impact. And then, there’s the matter of the cuts to SNAP benefits.

“We saw an acceleration in headwinds from average unit retail price deflation and reductions in SNAP benefits in the 2016 third quarter as compared to the 2016 second quarter,” he said. We are focused on efforts to drive traffic in our stores and to control the factors we can control as we look to overcome the issues impacting our results, many of which we believe are macroeconomic and transitory in nature.”

The full year is still on track

Dollar General noted in the earnings release that it has not revised its full-year outlook. The company still expects earnings per share to come in at the low end of its forecast range of 10% to 15% growth.

So far, through three quarters of 2016, Dollar General has grown sales by 5.9% over the comparable 2015 period to $15.98 billion. And, despite the Q3 drop, same-store sales are up by 0.9% for that period, driven by an increase in average transaction amount.

What happens next for Dollar General?

Perhaps more than most retailers, the company’s future profits depend upon what kind of changes to entitlement programs for the poor come from the incoming Republican government in Washington, D.C. That’s a major unknown that makes any predictions much beyond Q4 far less reliable.

Still, despite these bumps in the road and future uncertainty, Dollar General remains committed to its long-term growth model. The company noted that it still expects to grow by 10% to 15% each year even if “in any given year, one or more key drivers of the model may be outside of the annual targets outlined” in the model.

10 stocks we like better than Dollar General
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David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Dollar General wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

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*Stock Advisor returns as of November 7, 2016

Daniel Kline has no position in any stocks mentioned.

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 01 Dec 2016 18:04:05 +0000

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Tech stocks weigh on S&P, Nasdaq

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2016.REUTERS/Brendan McDermid

Tech stocks weigh on S&P, Nasdaq

By Yashaswini Swamynathan

Losses in technology stocks dragged down the Nasdaq and the S&P 500 on Thursday, while gains in bank and energy shares propped up the Dow.

Declines in Facebook (FB.O), Microsoft (MSFT.O) and Apple (AAPL.O) pushed the Nasdaq near a two-week low, while setting the S&P 500 technology index .SPLRCT for its worst day since August.

While Wall Street has rallied since the November election on hopes that President-elect Donald Trump’s policies would be market friendly, technology stocks have barely budged, posting a mere 0.6 percent gain.

“I think what you are seeing is people moving out of names that have been winners in the past couple of years and from companies that have predictable growth such as Facebook, Alphabet and Apple,” said Michael Scanlon, managing director of Manulife Asset Management.

Facebook fell 3.2 percent to $114.73 after Canaccord Genuity cut its price target on the stock, while Microsoft (MSFT.O), Apple (AAPL.O) and Alphabet (GOOGL.O) fell between 1.5 percent and 2.2 percent.

However, the Dow moved higher, powered by a more than 5 percent rise in oil prices and gains in bank stocks.

Brent futures LCOc1 hit a six-week high of $53.98. The commodity rallied nearly 9 percent on Wednesday after major oil producers agreed to cut output and support prices – the first of such a move since 2008.

The S&P 500 energy index .SPNY rose 2 percent, with shares of Exxon (XOM.N) and Chevron (CVX.N) leading the pack.

Investors are now turning their attention to economic data to assess whether the Federal Reserve could raise interest rates at its meeting on Dec. 13-14.

The central bank has been preparing the markets for a rate increase amid improving economic conditions. Some Fed officials have said President-elect Donald Trump’s policies could boost inflation, pushing it closer to the central bank’s 2 percent target.

Financial index .SPSY rose 1.65 percent on Thursday. The sector has risen more than 12 percent since the November election on prospects of an interest rate hike this month and simpler bank regulations.

Traders have currently priced in a 91 percent chance of a rate increase in December, according to Thomson Reuters data.

At 12:19 p.m. ET the Dow Jones Industrial Average .DJI was up 73.73 points, or 0.39 percent, at 19,197.31.

The S&P 500 .SPX was down 2.52 points, or 0.11 percent, at 2,196.29 and the Nasdaq Composite .IXIC was down 54.84 points, or 1.03 percent, at 5,268.84. Six of the 11 major S&P sectors were trading lower, with bond proxies such as utilities .SPLRCU and real estate .SPLRCR among the big losers.

Shares of Dollar General (DG.N) was the biggest loser on the S&P, falling 6 percent after the discount retailer reported a surprise drop in quarterly comparable sales and tempered its full-year profit forecast.

Bluebird Bio (BLUE.O) soared 16 percent to $70.25 after the gene-therapy developer said patients undergoing its multiple myeloma treatment showed strong benefits. Shares of Celgene (CELG.O), which is developing the therapy with Bluebird, was up marginally.

Skechers (SKX.N) surged 13.7 percent after Buckingham Research upgraded the shoemaker’s stock to “buy” from “neutral”.

Declining issues outnumbered advancers on the NYSE by 1,627 to 1,305. On the Nasdaq, 1,516 issues fell and 1,205 advanced.

The S&P 500 index showed 78 new 52-week highs and six new lows, while the Nasdaq recorded 148 new highs and 41 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)

My Trading Journal: 30 Day Trading Journal

My Trading Journal: 30 Day Trading Journal

Published at Thu, 01 Dec 2016 18:02:31 +0000

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