All posts in "Stocks"

Tuesday: Personal Income and Outlays, Case-Shiller House Prices

{pixabay|100|campaign}Tuesday: Personal Income and Outlays, Case-Shiller House Prices

by Bill McBride on 5/29/2017 08:05:00 PM

Weekend:
Schedule for Week of May 28, 2017

May 2017: Unofficial Problem Bank list declines to 140 Institutions

Tuesday:
• At 8:30 AM ET, Personal Income and Outlays for April. The consensus is for a 0.4% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to be up 0.1%.

• At 9:00 AM, S&P/Case-Shiller House Price Index for March. Although this is the February report, it is really a 3 month average of January, February and March prices. The consensus is for a 5.8% year-over-year increase in the Comp 20 index for March.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for May.   This is the last of the regional Fed surveys for May.

From CNBC: Pre-Market Data and Bloomberg futures: S&P and DOW futures are up slightly (fair value).

Oil prices were down over the last week with WTI futures at $49.94 per barrel and Brent at $52.29 per barrel.  A year ago, WTI was at $49, and Brent was at $49 – so oil prices are up slightly year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.37 per gallon – a year ago prices were at $2.33 per gallon – so gasoline prices are up slightly year-over-year.

(Why?)

Published at Tue, 30 May 2017 00:05:00 +0000

Continue reading >
0 Shares

Pot Stock Winners of the Week

Photo

Pot Stock Winners of the Week

Partner Content By Daily Marijuana Observer | May 27, 2017 — 1:09 PM EDT

Looking across the 200+ cannabis-related publicly listed companies, there were a few clear pot stock winners this week. A handful of cannabis-related companies ended the week up more than 5%, and a few have market capitalizations greater than $50 million USD. The broader marijuana sector, as tracked by the Solactive North American Medical Marijuana Index, finished this week up roughly 1.5%.

(MORE: What Stocks are on the Marijuana Index)

This week’s pot stock winners are:

Insys Therapeutics Inc. (NASDAQ:INSY)

On the winners list for the second week in a row, Insys Therapeutics Inc. gained over 11% this week. On Wednesday, Insys announced that the U.S. Food and Drug Administration has approved the final product label for Syndros™, the company’s dronabinol (synthetic THC) oral solution for the treatment of chemotherapy-induced nausea and vomiting and AIDS related anorexia. This approval marks the final regulatory step necessary before the product can be launched commercially.

Marapharm Ventures Inc. (CSE:MDM)(OTC:MRPHF)

Shares of Marapharm Ventures Inc. gained over 40% this week. On Tuesday, May 23rd, Marapharm announced that the company will be applying for recreational marijuana licenses in the state of Nevada. Just a day later, Marapharm announced that the building permits for two modular buildings placed to meet the requirements of licensing have been approved. The news at Marapharm didn’t end here. On Thursday, Marapharm announced that one of their Nevada licenses has received final approval from the state to grow and sell cannabis.

MMJ Phytotech Ltd. (ASX:MMJ)

Shares of MMJ Phytotech Ltd. were up more than 5% this week, closing Friday’s trading at $0.365 AUD per share. This week’s bullish action came without any news from MMJ Phytotech. Australia is currently building out their medical marijuana program after it became legal nationally in November of 2016 and there are quite a few marijuana companies listed on the ASX.

MORE: Top 4 Marijuana Stocks to Watch for May

Tetra Bio-Pharma Inc. (CSE:TBP)(OTC:TBPMF)

Shares of Tetra Bio-Pharma gained more than 20% this week. On Wednesday, Tetra Bio-Pharma signed an agreement with Panag Pharma to develop and commercialize two cannabinoid based formulations for the treatment of pain and inflammation.

Zynerba Pharmaceuticals Inc. (NASDAQ:ZYNE)

Insys Therapeutics Inc. wasn’t the only winner in the cannabinoid biotech space this week, Zynerba Pharmaceuticals Inc. also posted notable gains in this week’s trading. Shares of Zynerba Pharmaceuticals Inc. finished this week up roughly 5%. This week’s bullish action came without any news from Zynerba.
Published at Sat, 27 May 2017 17:09:00 +0000

Continue reading >
0 Shares

BlackBerry Turnaround Catching Fire

by Meditations from Pixabay

BlackBerry Turnaround Catching Fire

By Alan Farley | May 24, 2017 — 12:19 PM EDT

BlackBerry Ltd. (formerly known as Research in Motion Ltd.) (BBRY) is trading at a 2-year high this week, after lifting into double digits for the first time since May 2015. A refocus on software, and licensing fees has underpinned the long overdue turnaround, following a brutal downtrend triggered by market share destruction in the wake of iPhone and Android. While revenues are unlikely to reach lofty levels posted during its smartphone reign, the newer smaller operation could pay dividends for patient shareholders.

The company beat fiscal fourth-quarter profit and revenue estimates in its March release while surprising Wall Street analysts with guidance that expects profitability and positive cash flow into 2018. Enterprise mobility management and security software divisions comprised nearly 84% of total revenues, with those units expected to drive growth in coming quarters.

BBRY Monthly Chart (1999-2017)

BBRY

The Canadian technology company listed on the U.S. exchanges in February 1999, at the height of the Dot.com bubble. It opened at $3.69 and fell sharply, dropping to an all-time low at $1.14 just one month later. A bounce into midyear caught fire, lifting the stock in a vertical rally that topped out at $29.29 in March 2000. It fell more than 80% in the next three months, victimized by the collapse in tech stocks, and bounced back into the lower teens in October.

The wild two-sided action continued into the second half of 2001 when a more persistent downtrend took control. The decline broke yearlong support near $2.59 in May 2002 and entered a climactic phase that ended 25-cents above the 1999 low in October. The subsequent bounce continued the pattern of broad price swings, returning to the 2000 high in 2004 and breaking out in 2006, setting off a final buying spree that posted an all-time high at $148.13 in June 2008.

A bear market decline into the mid-30s generated horizontal support within a multi-year double top that broke to the downside in 2011. The stock plunged into the second half of 2012, finding support near $6.20 in 2012 but selling pressure didn’t end until it posted a deeper low at $5.44 more than one year later. Price action since that time has carved a shallow basing pattern that’s triggered an aggressive reversal each time it’s lifted into double digits.

As a result, the current rally wave has now entered a critical testing phase, highlighted by a series of 2014 and 2015 highs between $11.50 and $12.50. That price zone hides a massive June 2013 gap between $14.48 and $10.98 that remains partially unfilled nearly 4-years later. Also, the 50-month EMA has dropped into that resistance level, setting up a major battle because the stock hasn’t traded above that line-in-the-sand since 2011.

BBRY Weekly Chart (2012–2017)

BBRY

A Fibonacci grid stretched over the 2013 decline brings order to the chaotic basing pattern, with the 2014 into 2015 recovery wave stalling at the 50% retracement level. The stock is now headed into that zone after lifting above the 200-week EMA for the first time since 2011. This combination suggests the upside will flame out in coming weeks, giving way to a bullish consolidation pattern or a major reversal back into single digits.

A trading range between $10 and $13 will set the stage for a secondary assault that could eventually reach the 2013 high above $18. Progress above that level will be difficult due to the massive double top breakdown and intense selling pressure in 2011. Even so, the majority of shareholders impacted by that catastrophic price action have now departed, allowing a new crowd of speculators to take advantage of the turnaround.

The Bottom Line

BlackBerry has rallied to a 2-year high in double digits and is expecting profitable results in the coming year. This positive price action should mark a long-term reversal that generates the first sustained uptrend in many years for the former smartphone giant.
Published at Wed, 24 May 2017 16:19:00 +0000

Continue reading >
0 Shares

Top 5 Alternative Energy ETFs for 2017

Photo

Top 5 Alternative Energy ETFs for 2017

By Ruth Konigsberg | Updated May 23, 2017 — 6:00 AM EDT

The alternative energy space has not been as lucrative as environmentally-conscious investors would like. However, those interested in gaining some exposure to this potentially profitable market can diversify across several companies by buying alternative energy exchange-traded funds. (See also: Alternative Energy ETFs Drop to Key Support.)

The potential for this sector is very large due to growing awareness about global warming and the depletion of oil reserves over time. In addition, with oil prices on the rise again, alternative energy is becoming more attractive to many consumers. This can boost the bottom lines of alternative energy companies.

We selected five alternative energy ETFs based on dividend yield. Investors can expect to earn some income, although the total returns on all of these ETFs are negative. All performance figures are current as of May 18, 2017.

Guggenheim Solar ETF (TAN)

TAN tracks the Mac Global Solar Energy Index. The fund keeps 90% of its investments in securities from the index. This ETF is volatile, and the dividend yield is offset by the negative return. However, TAN would be considered a long-term play for investors who want to be in the alternative energy sector when it finally becomes mainstream.

  • Avg. Volume: 168,942
  • Net Assets: $204.87 million
  • Yield: 4.76%
  • YTD Return: 5.61%
  • Expense Ratio (net): 0.71%

First Trust Nasdaq Clean Edge Green Energy ETF (QCLN)

QCLN is for investors who want to focus on green energy. This ETF tracks the Nasdaq Clean Edge Green Energy Index. In addition to investing 90% of its assets in stocks from the index, QCLN weights its investments so that larger companies have a larger weighting. This is known as market-cap weighting. Despite this effort, the money managers place limits on how much money be put into any given stock to avoid over-exposure to large stocks in the index.

  • Avg. Volume: 11,688
  • Net Assets: $56.32 million
  • Yield: 1.01%
  • YTD Return: 9.18%
  • Expense Ratio (net): 0.60%

VanEck Vectors Solar Energy ETF (KWT)

KWT duplicates the performance of the MVISa Global Solar Energy Index. This index is comprised of companies that have a minimum of 50% of their assets in solar-power enterprises or that receive 50% of their revenues from solar power. This may include companies that provide equipment to solar power enterprises.

  • Avg. Volume: 526
  • Net Assets: $10.98 million
  • Yield: 3.89%
  • YTD Return: 7.91%
  • Expense Ratio (net): 0.65%

VanEck Vectors Global Alternative Energy ETF (GEX)

This ETF tracks the Ardour Global Index. The focus here is companies in any area that is considered alternative energy. The definition of “alternative energy” for this ETF is any company that provides power through environmentally-conscious means. There are small- and mid-cap companies in the portfolio, as well as foreign companies.

  • Avg. Volume: 4,190
  • Net Assets: $73.12 million
  • Yield: 1.88%
  • YTD Return: 13.46%
  • Expense Ratio (net): 0.62%

iShares Global Clean Energy Index Fund (ICLN)

The S&P Global Clean Energy Index is the benchmark for this ETF, which maintains a 90% concentration of assets in securities from the index. Up to 10% of assets may be in futures, options and swap contracts.

ICLN also invests in companies that are not part of the underlying index. There is also a focus on liquidity. The fund seeks clean energy companies that trade at volumes that are high enough to make them easier to trade than some smaller alternative energy stocks.

  • Avg. Volume: 57,001
  • Net Assets: $80.56 million
  • Yield: 3.61%
  • YTD Return: 7.61%
  • Expense Ratio (net): 0.47%

Bottom Line

Alternative energy has yet to produce a highly profitable company, but for investors who are willing to be patient and wait for increased consumer acceptance and government endorsement, alternative energy ETFs can be an attractive way to get into the sector. (See also: Going Green With Exchange Traded Funds.)
Published at Tue, 23 May 2017 10:00:00 +0000

Continue reading >
0 Shares

3 Under-the-radar Momentum Plays

3 Under-the-radar Momentum Plays

By Alan Farley | May 22, 2017 — 10:45 AM EDT

A broad selection of blue-chip and other widely held names have rallied to bull market and all-time highs in recent months, fueled by optimism for a business-pleasing tax cut. Small caps have struggled during this period, but a handful of these under-the-radar stocks are also engaged in fast-moving rallies that can reward well-timed positions. Let’s look at three of the hottest plays, focusing on levels that may offer substantial upside.

Of course, there’s a dark side to playing the momentum game because it’s often necessary to enter positions well above obvious support levels in hopes of selling even higher. This stairstep mechanism exposes less disciplined players to sudden and sizable losses, especially when a large public crowd has discovered the trade, making them vulnerable to stop running by predatory algorithms that feed on human mistakes and skill inadequacies.

AAOI

Applied Optoelectronics, Inc. (AAOI) just crossed the one billion dollar line in market capitalization, underpinned by a powerful rally that’s tripled the stock’s price so far in 2017. It joined the Nasdaq exchange in September 2013 at 10 and posted a new high at $28.01 in March 2014. The subsequent decline found support in single digits in the first quarter of 2015, ahead of a proportional bounce followed by a May 2016 test of the low.

Buyers emerged at that level, generating a double bottom and uptrend that set off a powerful momentum rally in January 2017. The uptick ran into a buzzsaw of selling pressure in March, giving way to a pullback that reached support at the 50-day EMA in April, ahead of an early May bounce that reached a new high about two weeks ago. The stock is now building a base in the lower-60s, with a rally above the red line having the potential to reach the 80s in a vertical buying wave.

CALA

Calithera Biosciences, Inc. (CALA) creates compounds that fight tumor growth. It has risen nearly 500% since that start of 2017, grinding higher in a momentum rally that could eventually reach the 2014 peak in the mid-30s. It posted that all-time high just three months after coming public at $9.40 and turned sharply lower through 2015, with sellers maintaining full control into the October 2016 all-time low at $2.20.

The stock turned higher after the election and lifted into resistance at the 200-day EMA at year’s end. A January breakout built a 3-week basing pattern on top of new support, giving way to a vertical advance that topped out at $14.90 in March. A 2-month rounded correction at the 50-day EMA has now reached the first-quarter high, with a breakout opening the momentum door to a fast rally into the lower-20s.

WTW

Weight Watchers International, Inc. (WTW) rose sharply after Oprah Winfrey announced a large stake in October 2015 and slumped through most of 2016 due to mediocre earnings results. Recent metrics have shown surprising growth, triggering a momentum rally that’s testing the post-Oprah high in the upper-20s. While this level marks resistance that could trigger a sizable reversal, the pullback could offer a low-risk entry ahead of even greater upside.

The stock topped out in the 80s in 2012 and sold off to a 2015 low at $3.67 just ahead of the news. The current rally is testing resistance from that downtrend, with a breakout into the 30s relieving overhead supply while favoring a strong advance into the mid-50s. Market timers wanting to establish pullback positions should keep a close watch on the green 200-day EMA at 20, with a basing pattern at or above that support level setting the stage for quick upside.

The Bottom Line

A selection of small stocks have erupted in 2017 momentum rallies, signaling strong buying interest due to a bullish story, improving metrics or a positive feedback loop, in which one set of shareholders gets rewarded, inducing the next group to come off the sidelines and take exposure, so they don’t miss out on the move.
Published at Mon, 22 May 2017 14:45:00 +0000

Continue reading >
0 Shares

Philly Fed: “Regional manufacturing activity continued to expand” in May

Philly Fed: “Regional manufacturing activity continued to expand” in May

by Bill McBride on 5/18/2017 09:11:00 AM

From the Philly Fed: Current Indicators Reflect Continued Growth

Results from the May Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand this month. The diffusion indexes for general activity and shipments improved notably from their April readings. The indexes for new orders and employment, however, fell modestly from last month but remained at high readings. Although most of the survey’s future indicators fell this month, the readings suggest that most firms still expect growth to continue over the next six months.

The index for current manufacturing activity in the region increased from a reading of 22.0 in April to 38.8 this month. The index has been positive for 10 consecutive months. This month, the index recovered some of the declines of the previous two months, but it still remains slightly below its high reading of 43.3 in February …

Firms reported an increase in manufacturing employment this month, but the current employment index fell 3 points. The index has remained positive for six consecutive months. The percentage of firms reporting an increase in employment was 23 percent, lower than the 27 percent that reported increases in April. Firms also reported an increase in work hours this month: The average workweek index remained positive for the seventh consecutive month and increased 3 points.
emphasis added

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMIClick on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through May), and five Fed surveys are averaged (blue, through April) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through April (right axis).

This suggests the ISM manufacturing index will show solid expansion in May.

Published at Thu, 18 May 2017 13:11:00 +0000

Continue reading >
0 Shares

Baidu Looks to Break Out to New Highs

Baidu Looks to Break Out to New Highs

By Justin Kuepper | May 12, 2017 — 2:57 PM EDT

Baidu Inc. (BIDU) recently announced first quarter financial results that delivered some mixed signals. While revenue was in-line with a 6.5% increase to $2.45 billion, earnings per share increased to $1.00 per share – beating consensus estimates by 13 cents. Shares initially moved lower as investors questioned the company’s new focus on artificial intelligence as it moves to shed its non-search related businesses to narrow its scope.

That said, the company continues to post faster growth rates than comparable U.S. companies like Alphabet Inc. (GOOGL) at a modestly lower revenue multiple. The Chinese market may also have more growth opportunities than the U.S. market in terms of an addressable market for many online services that Baidu has targeted.

From a technical perspective, the stock is making a renewed run towards its reaction highs at around $188.00. A breakout from these levels could lead to a run-up to its September highs of around $198.00 – a 6.1% gain from its current levels.

However, the relative strength index (RSI) is pointing to overbought conditions at 65.55 while the moving average convergence-divergence (MACD) doesn’t show a definitive trend higher quite yet. A clean breakout on above-average volume could help provide the push needed, but traders may want to wait for some additional consolidation below trend line resistance before such a move occurs.

Charts courtesy of StockCharts.com. Author holds no position in stock(s) mentioned except through passively-managed index funds.
Published at Fri, 12 May 2017 18:57:00 +0000

Continue reading >
0 Shares

Snap! $5 Billion in Value Disappears

Snap! $5 Billion in Value Disappears

By Justin Kuepper | May 12, 2017 — 2:59 PM EDT

Snap Inc. (SNAP) shares fell more than 20% after posting its first quarter earnings report, which shaved more than $5 billion off its market capitalization.

The company reported revenue that increased 285.8% to $149.65 million – missing consensus estimates by $8.33 million – and a net loss of $2.31 per share. While the app reached 166 million daily active users (DAUs), the modest addition was insufficient to reach analyst estimates calling for 168 million DAUs. Average revenue per user (ARPU) and hosting costs per DAU were also unfavorable versus the prior quarter – although up year-over-year.

From a technical standpoint, the stock broke down below its S2 support at $18.56 to fresh all-time lows. Thursday’s candlestick suggests a lot of indecision in the market with long shadows and a small real body, which means that the market is unsure about how to value the stock following the earnings announcement. This indecision means that traders could see a period of sideways price movements before a definitive new trend in either direction.

Technical indicators suggest that the stock may be approaching oversold levels with a relative strength index (RSI) of 34.94, although the stock has only been trading since early February, which means the indicator may have limited reliability. The moving average convergence-divergence, on the other hand, points to a renewed bearish downtrend as the stock resumes its downward trend following its initial public offering earlier this year.

Charts courtesy of StockCharts.com. Author holds no position in the stock(s) mentioned except through passively-managed index funds.
Published at Fri, 12 May 2017 18:59:00 +0000

Continue reading >
0 Shares

These stocks are getting left out of the Trump rally

Photo

The Trump rally, 100 days in
The Trump rally, 100 days in

The stock market pulled back a bit Thursday, but the Dow, S&P 500 and Nasdaq are still not far from their all-time highs.

It seems safe to say that the Trump trade is still on. Wall Street remains hopeful about the potential for tax reform, deregulation and economic stimulus from President Trump — even if the timing for all of this could get pushed to later this year, or early 2018.

But many stocks have been left out of the Trump rally. As of the closing bell on Thursday, there were 168 companies in the S&P 500 whose stock prices have declined since the inauguration on January 20.

And many of these companies are in sectors that were expected to be big beneficiaries of Trump policies, particularly oil and finance.

Energy companies Transocean(RIG), Range Resources(RRC), Anadarko Petroleum(APC) and Helmerich & Payne(HP) have all plunged more than 25% after Trump took office. That makes them among the worst 10 performers in the S&P 500 since late January.

Noble Energy(NBL), Halliburton(HAL), Devon Energy(DVN), Schlumberger(SLB) and Marathon Oil(MRO) have all dropped by more than 15% too.

Banks have also been left out of the big market rally. Shares of Capital One(COF), Discover Financial Services(DFS), Fifth Third(FITB), MetLife(MET) and scandal-plagued Wells Fargo(WFC) have all fallen.

So have shares of Goldman Sachs(GS), the alma mater of several key members on Trump’s financial team — most notably Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn.

Other companies that have surprisingly lagged? Real estate firms. Trump, after all, made his name (and his wealth) from being a landlord.

But having one of their own in the Oval Office has done little good for real estate investment trusts. There are 14 REITs in the S&P 500 whose stock prices have fallen since January 20.

Several mining companies have fallen too, even though many on Wall Street predicted that Trump’s inflationary policies — and unpredictability — could be good for gold.

Trump also hasn’t done any wonders for retailers, despite a surge in consumer confidence since his election.

Bed Bath & Beyond(BBBY), Kohl’s(KSS), Victoria’s Secret owner L Brands(LB), Macy’s(M) and Target(TGT) have all fallen in the past few months. But a lot of that has to do with the shifting landscape in retail and the dominance of Amazon(AMZN, Tech30) and Walmart(WMT).

Media companies aren’t benefiting either, even though the Trump’s ability to constantly generate headlines has been great for clicks and ratings.

Shares of CBS(CBS), Comedy Central owner Viacom(VIAB) and Trump’s favorite media company Fox(FOXF) have all fallen since he took office.

For now, the broader market is still holding up well — thanks in large part to strong results from tech leaders like Apple(AAPL, Tech30), Google parent company Alphabet(GOOGL, Tech30), Amazon(AMZN, Tech30) and Microsoft(MSFT, Tech30).

The S&P 500 has gained more than 5% since Trump moved into the White House.

But Craig Sterling, head of US equity research for Pioneer Investments, said that investors need to keep in mind that other parts of the market could pull back too if Trump is unable to push any of his economic proposals through Congress.

And the longer that the James Comey firing and other circus-like aspects of the White House dominate the news cycle, the tougher it will be for Trump to actually get anything meaningful accomplished.

“The Trump trade was ahead of itself,” Sterling said. “The market priced in a near certainty of lower taxes, less regulation and higher economic growth.”

But Wall Street is quickly learning, like the rest of America, that nothing is certain in Washington.

Published at Fri, 12 May 2017 06:03:54 +0000

Continue reading >
0 Shares

Why Are Symantec Shares Sinking?

Photo

Why Are Symantec Shares Sinking?

By Shoshanna Delventhal | May 11, 2017 — 10:44 PM EDT

Cybersecurity industry pioneer Symantec Corp. (SYMC) saw its shares dip after posting its most recent quarterly earnings report and current-quarter guidance. Symantec stock recovered slightly before closing down about 5.1% at a price of $31.46 per share on Thursday.

While the tech giant posted fiscal fourth-quarter earnings and revenues in line with expectations, investors were disappointed with Q1 forecasts below the Street’s estimates.

Fiscal Q4 In Line with Expectations

The Mountain View, Calif.-based software security vendor reported a fiscal Q4 adjusted loss of $0.28 per share on revenues of $1.14 billion. In the full year, the company posted a loss of $0.17 per share, with sales coming in at $4.02 billion. Moving forward into the firm’s first quarter, ending July, Symantec foresees earnings per share (EPS) of $0.30 on revenue of $1.2 billion at the midpoint. The Street had forecast earnings of $0.38 per share on $1.27 billion in sales.

Chief Executive Officer (CEO) Greg Clark says investors should not to worry about lower-than-expected forecasts in the current quarter. Clark indicates that a rise in cloud computing software sales will lead to a large amount deferred revenue streams in the future, while only depressing revenue in the near term.

CEO: Better Quarters Ahead

“We are seeing the same levels of business,” said Clark, “but revenue in a period is less and goes into our deferred revenues, which makes future quarters better.”

The tech giant’s CEO also told Barron’s in an interview that the firm is “meeting expectations in the middle of a pretty big integration of Blue Coat and LifeLock assets.” Amidst a disrupted industry, Symantec spent $6.5 billion to buy up its two smaller rivals in efforts to boost its cloud-based enterprise and consumer security offerings. (See also: Behind Symantec’s Recent Buyout Spree.)

Other tech giants have gone the same route in trying to carve out a piece of the growing cybersecurity market. Legacy enterprise IT leader Cisco Systems Inc. (CSCO) has gobbled up a number of security businesses in the recent period. Shares of Symantec have lifted 90.8% over the 12-month period and 31.7% year-to-date (YTD).
Published at Fri, 12 May 2017 02:44:00 +0000

Continue reading >
0 Shares

Yikes! Yelp’s 2017 Guidance Raises Questions

by 3844328 from Pixabay

 

Yikes! Yelp’s 2017 Guidance Raises Questions

By Justin Kuepper | May 10, 2017 — 2:58 PM EDT

Yelp Inc. (YELP) shares fell nearly 20% on Wednesday after reporting first quarter financial results that missed estimates and cutting its outlook.

Yelp reported revenue that increased 24.4% to $197.32 million missing consensus estimates by $1.28 million and earnings of $0.19 per share beating consensus estimates by $0.03. Despite the relatively solid performance, the company’s second quarter guidance of $202 million to $206 million in revenue fell well-short of consensus estimates of $215.3 million while EBITDA of $32 million to $35 million missed expectations of $36.9 million.

CFO Lanny Baker believes that the company remains strong despite the lower guidance for the second quarter, saying, “Sales productivity has rebounded, transactions revenue has accelerated, and we’ve seen promising results from our newly expanded retention efforts, giving us confidence in our ability to grow and scale in 2017 and beyond.”

From a technical standpoint, the stock broke down from its long-term trend line support at around $32.00 and S2 support at $29.84. The stock reached a low of $25.00 before rebounding to near its opening price of $27.91 on extremely heavy volume. Technical indicators suggest that the stock may be oversold with a relative strength index (RSI) reading of 25.31, although the moving average convergence-divergence (MACD) moved into bearish territory.

Traders should watch for some consolidation at these new levels before re-testing S2 resistance at $29.84 on the upside. If the stock moves lower, traders can look for trend line support at around $23.00. The knee-jerk reaction to the earnings announcement, however, could lead to a period of consolidation before a move higher or lower as the market sorts out the long-term meaning of the bearish second quarter and full year guidance.

Charts courtesy of StockCharts.com. Author holds no positions in the stock(s) mentioned except in passively-managed index funds.
Published at Wed, 10 May 2017 18:58:00 +0000

Continue reading >
0 Shares

Cisco Downgraded by BMO Capital

Photo

Cisco Downgraded by BMO Capital

By Shoshanna Delventhal | May 9, 2017 — 6:09 PM EDT

Enterprise IT leader Cisco Systems Inc. (CSCO) saw its shares close down about 1.1% on Tuesday after a bearish note from analysts at investment bank BMO Capital. On Monday, shares reached a new 52-week high by a slim margin before cooling off later in the day. (See also: Credit Suisse Upgrades Cisco on Trump Tax Plan.)

Analysts downgraded shares of the San Jose, Calif.-based networking hardware vendor from outperform to market perform ahead of Cisco’s first-quarter earnings slated for May 17.

The investment firm also cut its price target on Cisco stock to $35 from $37, indicating an approximate 3.2% upside from its current valuation. Analysts’ one-year target estimate remains at $35.86. BMO Capital’s Tim Long warns investors that the legacy tech firm faces significant “share losses in switching and a struggling router market,” along with a “contracting” data center business.

Analysts Highlight Declining Core Business

While Cisco is hedging against declines in its core networking hardware businesses by doubling down on an acquisition spree and investing in high-growth segments such as cybersecurity​ and the Internet of Things (IoT), routing and switching still comprise a majority of revenues. Cisco bears point to difficultly with Cisco’s core businesses as a drag on future growth as the firm loses out to newer cloud-based networking competitors such as Arista Networks Inc. (ANET) and Juniper Networks Inc. (JNPR).

Last week, analysts at Credit Suisse issued a double upgrade on shares of Cisco, suggesting a new Trump tax plan could boost the firms M&A activity and drive long-term EPS growth.

Trading at a price of $33.90 per share, CSCO reflects an approximate 32.4% gain over the 12-month period and a 12.2% gain year-to-date (YTD). (See also: Cisco Rivals Post Q1 Earnings.)
Published at Tue, 09 May 2017 22:09:00 +0000

Continue reading >
0 Shares

Nvidia Revenue Will Be Boosted By Nintendo Switch Success

Photo

Nvidia Revenue Will Be Boosted By Nintendo Switch Success

By Donna Fuscaldo | May 9, 2017 — 8:40 AM EDT

It’s not only Nintendo (NTDOY) that is making money off of its new game console. Graphics chip maker is as well Nvidia Corp. (NVDA).

That’s according to RBC Capital Markets analyst Mitch Steves who said this week Nvidia could make $300 million to $400 million in its fiscal year 2018 all because of the Switch game console. In a research note to clients covered by Yahoo Finance, the analyst said Nintendo will double production of the Switch console to 16 million units from 8 million units, creating a situation when Nvidia earns even more off of the game console.

“We think the incremental 6-8M units could add $300-400M to the top line (3-4% growth to annual revenue on a $50 ASP),” wrote RBC Capital Markets analyst Mitch Steves according to Yahoo Finance. “This is a notable metric given that the Wii U sold ~13.5M units since its release in 2012 and 10M+ in the first 12 months are unlikely reflected in current estimates.” Nvidia makes a customized Tegra X1 chip for the Switch device. (See more: Nintendo Sold Close to a Million Switch Systems in March)

Ever since Nintendo rolled out the much anticipated Switch game console, which is a portable gaming system and home console rolled into one, it has been selling out all over the globe. Nintendo Switch uses a dock when it functions as a console. It switches to portable mode when lifted out of the dock. The strong response to the device has prompted Nintendo to increase the number of units produced with the Wall Street Journal reporting in March that companies that assemble the Nintendo Switch plan to manufacture 16 million more units. Originally, the plan was to assemble 8 million units.

In March alone, Nintendo said it sold close to 1 million Switch units in the U.S. The Japanese game maker said the Switch has sold faster at its launch than any other video game system in the company’s history, which bodes well for Nvidia and other component suppliers.

While Nvidia has long been one of the leading graphic chip makers, concerns about saturation in its core market have been cropping up. (See more: Is the Nvidia Growth Story Over?)

In an effort to move beyond the PC and gaming markets, Nvidia has been branching into new areas the past couple of years such as providing chips for the automotive market, data centers and for artificial intelligence. AI may be a big growth opportunity for Nvidia as the burgeoning technology starts to get adopted more by the masses.
Published at Tue, 09 May 2017 12:40:00 +0000

Continue reading >
0 Shares

Stocks End Mixed Despite Positive Employment Report

Photo

Stocks End Mixed Despite Positive Employment Report

By Justin Kuepper | May 5, 2017 — 5:15 PM EDT

The major U.S. indexes were mixed over the past week after large employment gains. According to the Bureau of Labor Statistics, U.S. job growth rebounded sharply in April with 211,000 jobs added following a measly 79,000 gain in March. The headline unemployment rate fell to a 1-year low of 4.4% with substantial gains in leisure and hospitality, healthcare, and social assistance, as well as business and professional services payrolls. The gains support the notion that the 0.7% first quarter GDP growth was merely a transitory issue.

International markets were mixed over the past week. Japan’s Nikkei 225 rose 4.43%; Germany’s DAX 30 rose 5.55%; and, Britain’s FTSE 100 rose 2.47%. In Europe, equity indexes moved largely higher as France wraps up its presidential election this weekend with the centrist Emmanuel Macron leading the polls. In Asia, the risk of conflict in North Korea appears to have decreased, and Japanese equities recovered a lot of lost ground, although some risk remains and investors remain cautious in the region.

The S&P 500 SPDR (ARCA: SPY) rose 0.68% over the past week. After trending below last month’s R1 resistance levels, the index moved marginally higher toward its new R1 resistance level at $240.90. Traders should watch for a breakout from these levels toward R2 resistance at $243.73 or a move lower to its pivot point at $236.71. Looking at technical indicators, the RSI is getting lofty at 65.70, while the MACD remains in a bullish uptrend.

The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 0.33% over the past week. After breaking out from its descending triangle chart pattern, the stock has trended sideways over the past couple of weeks. Traders should watch for a breakout to re-test its prior highs near R1 resistance at $211.85 or a move lower to its pivot point and 50-day moving average near $207.39. Looking at technical indicators, the RSI appears lofty at 63.68, but the MACD remains in a bullish uptrend dating back to late-April.

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 1.13% over the past week, making it the best performing major index. After breaking out from its price channel, the index continued to make gains toward R1 resistance at $138.09. Traders should watch for a breakout from these levels toward R2 resistance at $140.20 or a move lower to its trend line support at around $135.75. Looking at technical indicators, the RSI appears massively overbought at 77.31, but the MACD shows a continuation in the bullish reversal dating back to late-April.

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 0.05% over the past week making it the worst performing major index. After briefly hitting R1 resistance at $142.70, the index moved lower to the middle of its price channel and the pivot point at $138.18. Traders should watch for a move higher to re-test R1 resistance or a move lower to the lower trend line and S1 support at around $134.54. Looking at technical indicators, the RSI appears neutral at 55.36, but the MACD could see a near-term bearish crossover.

The Bottom Line

The major U.S. indexes were mixed over the past week with small-caps underperforming and technology stocks outperforming. Next week, traders will be watching several key economic indicators including jobless claims on May 11 and retail sales and consumer sentiment data on May 12. Investors will also be closely watching the French elections for any upset where the nationalist Marine Le Pen might secure a victory and potentially destabilize the euro area.

Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.
Published at Fri, 05 May 2017 21:15:00 +0000

Continue reading >
0 Shares

Yum Brands Headed for Breakout After Earnings

by Goodfreephotos from Pixabay

 

Yum Brands Headed for Breakout After Earnings

By Alan Farley | May 5, 2017 — 11:52 AM EDT

Restaurateur Yum Brands, Inc.’s (YUM) 2016 decision to spin off its Chinese operations into Yum China Holdings, Inc. (YUMC) is finally bearing fruit, with the parent company beating EPS and revenue estimates in Wednesday’s first quarter earnings report while reiterating lofty 2019 guidance of $3.75/share. The bullish metrics have triggered a strong advance that’s now testing two-year resistance in the upper-60s.

The spinoff is firing on all cylinders as well after breaking out above 5-month resistance at 30 in April and heading into a month-long string of new highs. Taken together, these worldwide purveyors of Taco Bell, KFC, and Pizza Hut are set to post outsized gains for the rest of 2017, despite a challenging restaurant environment that’s posted weak comparative sales in the last two years.

YUM Long-Term Chart (1997–2017)

YUM

The company came public in October 1997 at $5.59, after adjustment for three stock splits, and took off in a 1998 uptrend that reached $13.28 in April 1999. It then turned tail, losing points at an equally vigorous pace until posting an all-time low at $4.24 in August 2000. A bounce off that level stalled two points under the prior high in 2002, denying a breakout until the second half of 2004 when the stock took off in a major uptrend.

The rally peaked just above $29 in 2007, giving way to sideways action that broke to the downside during the 2008 economic collapse. Selling pressure settled at a 4-year low in November while a 2009 support test completed a double bottom reversal, ahead of a strong recovery wave that reached a new high in 2010. Good vibes intensified into 2015 when the stock finally topped out in the upper-60s and sold off in a major correction.

The decline found support in February 2016 at the 2013 low in the mid-40s and took off in a strong recovery wave that stalled in September just 3-points below 2-year resistance. The November 2 spinoff yielded a major low, ahead of a bounce that gained steam into February 2017 when the stock reached the 2015 high. Price action since that time has carved a rounded pullback that’s now completed a multi-year cup and handle breakout pattern.

YUM Short-Term Chart (2015–2017)

YUM

The 2015 decline unfolded through a series of volatile waves that trapped long and short-term traders on both sides of the aisle. High volatility continued into the first quarter of 2016, highlighting an intense conflict finally won by bulls in March when the stock exited the 5-month basing pattern into an uptrend that recaptured support at the 200-day EMA just a few sessions later.

The second half of 2016 proved tough for profit-building because the spinoff news triggered confusion and second-guessing, with Wall Street analysts worried the new company would undermine the parent’s performance. Institutions and the public set aside those fears after the November offering, generating a strong rally back to steep 2015 resistance in the upper-60s.

There’s still work to do because On Balance Volume (OBV) has failed to match price action, topping out in October 2016 and drifting lower into April 2017, even though the stock is now trading near a 2-year high. However, this volume-based indicator may be generating false readings due to the spinoff, which included a complicated split formula that may not reflect actual investor demand in the last six months.

The Bottom Line

Yum has charged back to resistance at the 2015 high after a strong first quarter earnings report, completing a cup and handle breakout pattern that supports a rally to $90 as a measured move target. Market timers may choose to ignore a bearish volume divergence due to complex accounting in the Yum China spinoff and jump in ahead of an expected breakout.
Published at Fri, 05 May 2017 15:52:00 +0000

Continue reading >
0 Shares

Securities And Exchange Commission – SEC

Securities And Exchange Commission – SEC

What is the ‘Securities And Exchange Commission – SEC’

The U.S. Securities and Exchange Commission (SEC) is an independent, federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets. The SEC promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.

Generally, issues of securities offered in interstate commerce, through the mail or on the Internet, must be registered with the SEC before they can be sold to investors. Financial services firms, such as broker-dealers, advisory firms and asset managers, as well as their professional representatives, must also register with the SEC to conduct business.

BREAKING DOWN ‘Securities And Exchange Commission – SEC’

The SEC’s primary function is to oversee organizations and individuals in the securities markets, including securities exchanges, brokerage firms, dealers, investment advisors and various investment funds. Through established securities rules and regulations, the SEC promotes disclosure and sharing of market-related information, fair dealing and protection against fraud. It provides investors with access to registration statements, periodic financial reports and other securities forms through its comprehensive electronic, data gathering, analysis and retrieval (EDGAR) database.

There are various laws that are at the SEC’s disposal for accomplishing its objectives. They are:

  • Securities Act of 1933
  • Securities Exchange Act of 1934
  • Trust Indenture Act of 1939
  • Investment Company Act of 1940
  • Investment Advisers Act of 1940
  • Sarbanes-Oxley Act of 2002
  • Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
  • Jumpstart Our Business Startups Act of 2012

Founding of the SEC

When the U.S. stock market crashed in 1929, securities issued by numerous companies became worthless as a result of previously stated false or misleading information. Public faith in securities markets plunged. To restore confidence, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934, which created the SEC. The SEC’s primary tasks were monitoring that companies made truthful statements about their businesses; and securities institutions, such as brokers, dealers and exchanges, treated investors in an honest and fair manner.

Organization of the SEC

The SEC is headed by five commissioners who are appointed by the president, one of which is designated as chairman of the SEC. Currently there are three vacancies on the Commission awaiting appointment by President Donald Trump. Each commissioner’s term lasts five years, but they may serve for an additional 18 months before a replacement is found. The law requires that no more than three of the five commissioners be from the same political party to promote nonpartisanship.

The SEC consists of five divisions and 23 offices. Their goals are to interpret and take enforcement actions on securities laws; issue new rules; provide oversight over securities institutions; and coordinate regulation among different levels of government. The five divisions are:

  • Division of Corporation Finance: Ensures investors are provided with material information in order to make informed investment decisions
  • Division of Enforcement: In charge of enforcing SEC regulations by investigating cases and prosecuting civil suits and administrative proceedings
  • Division of Investment Management: Regulates investment companies, variable insurance products and federally registered investment advisors
  • Division of Economic and Risk Analysis: Integrates financial economics and data analytics into the core mission of the SEC
  • Division of Trading and Markets: Establishes and maintains standards for fair, orderly and efficient markets

Authority of the SEC

The division of enforcement of the SEC is the primary department in charge of assisting the Commission with executing its law enforcement function. It does so by recommending the commencement of investigations of securities law violations and prosecuting such cases on behalf of the Commission. The SEC is only allowed to bring civil actions, both in federal court or before an administrative judge. Criminal cases are under the jurisdiction of law enforcement agencies within the Department of Justice; however, the SEC often works closely with such agencies to provide evidence and assist with court proceedings.

In civil suits, the SEC seeks two main sanctions: 1) injunctions, which are orders that prohibit future violations; a person who ignores an injunction is subject to fines or imprisonment for contempt; and 2) civil money penalties and the disgorgement of illegal profits. In certain cases, the Commission may also seek a court order barring or suspending individuals from acting as corporate officers or directors. The SEC may also bring a variety of administrative proceedings, which are heard by internal officers and the Commission. Common proceedings include cease and desist orders, revoking or suspending registration, and imposing bars or suspensions of employment.

The SEC also serves as the first level of appeal for actions sought by self-regulatory organizations, such as FINRA or the New York Stock Exchange.

The SEC Office of the Whistleblower

Among all the SEC’s offices, the office of the whistleblower stands out as one of the most potent means of securities laws enforcement. Created as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC’s whistleblower program rewards eligible individuals for sharing original information that leads to successful law enforcement actions with monetary sanctions in excess of $1 million. Eligible individuals can receive 10 to 30% of the total sanctions’ proceeds.

Enforcement Record of the SEC

The SEC brings numerous civil enforcement actions against firms and individuals that violate securities laws every year. It is involved in every major case of financial misdemeanor, either directly or in aid of the Justice Department. Typical offenses prosecuted by the SEC include accounting fraud, dissemination of misleading or false information, and insider trading.

After the Great Recession of 2008, the SEC was instrumental in prosecuting the financial institutions that caused the crisis and returning billions of dollars to investors. In total, it charged 204 entities or individuals, and collected close to $4 billion in penalties, disgorgement and other monetary relief. Goldman Sachs for example paid up $550 million, the largest penalty for a Wall Street firm and the second largest in SEC history, second only to the $750 million paid by WorldCom. Still, many criticized the SEC for not doing enough to prosecute the brokers and senior managers who were involved, almost all of whom were never found guilty of significant wrongdoing. So far, only one individual is in jail for crime related to the crisis: Kareem Serageldin, a former investment banker at Credit Suisse. The rest either settled for a monetary penalty or accepted administrative punishments.
Published at Thu, 04 May 2017 21:25:00 +0000

Continue reading >
0 Shares

Super-rich private equity stars rue ‘lousy’ reputation, say they are misunderstood

by davechan from Pixabay

Super-rich private equity stars rue ‘lousy’ reputation, say they are misunderstood

By Lawrence Delevingne| BEVERLY HILLS, Calif.

Ultra-wealthy private equity managers lamented their reputation as ‘lousy’ corporate profiteers at a plush Beverly Hills hotel on Tuesday, arguing their value to society was greater than the public realized.

Stephen Schwarzman, chief executive and co-founder of the Blackstone Group, touted the fact that companies owned by his private equity business employed about 600,000 people and had grown 50 percent faster, on average, than the S&P 500 Index.

“The idea that you can do all that and have great success and be perceived at best in a marginal way in terms of contribution to society, you’ve got to really wonder who’s doing the PR,” Schwarzman said during a panel discussion at the Milken Institute Global Conference at the Beverly Hilton hotel.

“People mistake us for financial people. I don’t know exactly why,” said Schwarzman – worth some $12 billion, according to Forbes – drawing a distinction between private equity investors which own businesses and mere financiers. “If you had 600,000 employees, you might be a company. A responsible company. And that’s what we are.”

Private equity has been criticized by some for saddling companies with debt only to sell their assets, cut jobs and take out profits. Private equity executives are some of the wealthiest people on Wall Street, deriving most of their income from fees paid by their fund clients, including keeping a cut of investment gains when companies are sold or go public. The founders of most of the biggest firms are billionaires.

Jonathan Sokoloff, managing partner of private equity firm Leonard Green & Partners, chimed in with Schwarzman.

“We’ve been able to deliver returns for 30 years dramatically in excess of the stock market,” said Sokoloff on the same panel. “Notwithstanding that, our industry still has a lousy reputation, we are generally viewed negatively by most people who don’t understand us.”

Sokoloff said the private equity industry employs hundreds of thousands of people, has generally avoided scandal and performed well through the financial crisis of 2008.

“We need some better PR and some help in how we market ourselves,” Sokoloff said

Thomas Barrack, executive chairman of real estate and investment management firm Colony NorthStar Inc, did not miss the chance to commiserate during the same discussion.

“People go ‘Oh, you’re in PE, don’t you just go in and buy companies and cut costs and then pray them up and flip them?'” Barrack said. “I say ‘No, we’ve never done that. We don’t do that at all. We grow businesses. We create value.'”

 

(Reporting by Lawrence Delevingne; Editing by Carmel Crimmins and Bill Rigby)
Published at Tue, 02 May 2017 22:54:40 +0000

Continue reading >
0 Shares

Avoid These Tech Behemoths Despite Strong Earnings

 

Avoid These Tech Behemoths Despite Strong Earnings

By Alan Farley | April 28, 2017 — 12:12 PM EDT

Big tech behemoths and Nasdaq-100 components Alphabet, Inc. (GOOGL) and Amazon.com, Inc. (AMZN) blew away high expectations in their quarterly confessionals on Thursday evening, yielding sharply higher prices in Friday’s U.S. session. Their undisputed success highlights the Internet’s steady transformation from 1990s Wild West capitalism into 2010s corporate monopolies.

But neither stock is setting off buy signals after the news, despite posting bull market and all-time highs, because they’re technically overbought after long-term rallies that have carved few pullbacks. In turn, this price action raises odds for corrections that last a minimum of six to nine months while giving up at least 20% of current values. So, while it often makes sense to buy high in anticipation of selling higher, position risk in these market leaders has risen to unacceptable levels.

GOOGL Weekly Chart (2012–2017)

GOOGL

The stock returned to the 2007 high at $374 in the second-half of 2012 and broke out into 2013, entering a powerful trend advance that continued into the 2014 high above just $600. It then dropped into a shallow correction that tested support near $500 twice into a 2015 recovery wave and second half breakout. Price stair-stepped above $800 in early 2016 and spent the year pressing against resistance, ahead of a January 2017 buying spurt that’s now added more than 100-points.

Price action eased into a rising wedge at the end of 2015, with that pattern still in play nearly 18-months later. This signals a mixed blessing because upper and lower trendlines are now converging, pointing to a low volatility technical condition that’s unsustainable. In fact, many violent trend reversals occur when wedge support finally breaks because, while shareholders are getting paid, the relatively shallow price rate of change generates a good deal of anxiety and frustration.

Other technical measurements continue to support the powerful uptrend, with On Balance Volume (OBV) holding near an all-time high while the monthly and weekly Stochastics oscillators remain glued to overbought levels These readings are common in strong uptrends, but it will take little selling pressure at this point to trigger bearish crossovers, dumping the stock into a multi-month correction.

AMZN Weekly Chart (2012–2017)

AMZN

Amazon topped out just above $100 at the turn of the millennium and fell into single digits during the Dot.com bear market. It returned to that resistance level in 2007 and built a 2-year handle into a 2010 cup and handle breakout that generated a strong uptrend. The stock posted higher highs into the start of 2014 and topped out at $400, ahead of a rounded correction that found support near $280.

It returned to resistance in April 2015 and broke out into mid-year, adding points at a rapid pace. A steep decline into 2016 found aggressive buying interest, triggering a V-shaped recovery wave that yielded a fresh breakout to new highs in the second half of the year. That bullish impulse has continued into April 2017, with this week’s earnings report lifting the e-commerce giant to an all-time high above $940.

Price action has also congested into a rising wedge pattern that denotes contracting volatility. Also, the rally has carved an Elliott 5-Wave pattern that’s reached within a few points of Fibonacci extension targets while approaching significant psychological resistance at $1000. Both technical factors raise odds for a correction that could drop the stock under $800 before the end of 2017.

The Bottom Line

Alphabet and Amazon hit home runs in the first quarter, handily beating analyst expectations, but overbought technical extremes, declining volatility, and completed price targets raise odds for pullbacks that could be measured in hundreds of points.
Published at Fri, 28 Apr 2017 16:12:00 +0000

Continue reading >
0 Shares

Wall Street gears up for busiest earnings week in years

Photo

 Wall Street gears up for busiest earnings week in years

By Caroline Valetkevitch| NEW YORK

Forget about French elections or the flagging Trump trade.

Corporate America is set to unleash its biggest profit-reporting fest in at least a decade next week, with more than 190 members of the S&P 500 index .SPX delivering quarterly scorecards, according to S&P Dow Jones Indices data.

The lineup accounts for around 40 percent of the benchmark index’s value, or more than $7.7 trillion, and includes big names like Google’s parent Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O), Microsoft Corp (MSFT.O) and Exxon Mobil Corp (XOM.N).

The onslaught could keep U.S. stock investors’ focus largely on earnings next week even as the world’s attention is likely to be drawn elsewhere.

“That would be our hope,” said Joe Zidle, portfolio strategist at Richard Bernstein Advisors in New York.

“A lot of people looked at this market and said it was the result of the Trump bump or the Hillary relief rally,” while earnings have been rebounding, he said. “The faster earnings growth is underappreciated by investors.”

Many strategists have attributed the 10 percent rally in the S&P 500 .INX since Donald Trump’s victory over Hillary Clinton in the Nov. 8 U.S. presidential election to optimism Trump would boost the domestic economy through tax cuts and an infrastructure spending binge.

The gains drove market valuations recently to their highest since 2004, even with little progress in Washington on the fiscal policy front. Meanwhile, other anxiety-provoking events have grabbed headlines, including unsettling relations with North Korea and this weekend’s election in France, which has a bearing on the country’s membership in the European Union and its currency, the euro.

Upbeat earnings from Morgan Stanley (MS.N) and other banks so far this reporting period cushioned those geopolitical worries, helping push the S&P 500 .SPX up 0.9 percent this week, its best such performance in two months. Shares of smaller companies did even better, with S&P’s benchmark indexes for small .SPCY and mid-cap .IDX stocks notching their best weeks of 2017, with gains of between 2 percent and 3 percent.

Expectations for the quarter’s profit growth have risen as well, and the first three months of the year now appear set to mark the strongest quarterly earnings growth in more than five years. In the last week alone, expected S&P 500 first-quarter earnings per share growth rose to 11.2 percent from 10.4 percent, a more than 7 percent jump, according to Thomson Reuters data.

“This week definitely has proven that the Street likes earnings – it’s controllable, it’s U.S.,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

The reason for the slew of reports next week is anyone’s guess, Silverblatt said, although recent holidays possibly played a role. Passover, Good Friday and Easter all fell in the previous weeks, which may have prompted some companies that typically report earlier to delay a week.

Just 76 companies reported this week compared with 134 in the comparable week a year ago, Silverblatt said.

Next week’s rush will represent a 15 percent increase from the 166 S&P constituents that reported in the comparable week last year.

Thursday will be the busiest day with nearly 70 reports due, including updates after the closing bell from Alphabet, Amazon, Intel Corp (INTC.O), Microsoft and Starbucks Corp (SBUX.O).

That could make for a bang in the market on Friday, Silverblatt said, which is also the final trading day of April.

(Reporting by Caroline Valetkevitch; Editing by Dan Burns and Meredith Mazzilli)
Published at Fri, 21 Apr 2017 20:55:16 +0000

Continue reading >
0 Shares

Decent Exposure

Decent Exposure

by THE MOLEAPRIL 19, 2017

I leave it up to you to decide whether its due to sheer luck or perhaps skill but we actually seem to be accumulating pretty decent exposure and there’s more waiting in the bullpen (see below). It has always been my opinion that the true skill of a trader reveals itself not by what he/she does during the easy times but by how he/she operates during those nerve wrecking periods when things tend to get messy. And to be clear – this doesn’t necessarily mean a necessity to take action or to attempt to ‘beat the market’ at its own game – which obviously none of us will ever be able to do.

2017-04-19_spoos_update

Yes equities are still meandering all over the place but the recent price action suggests that we did pick a pretty good spot for grabbing some long exposure. Now we are far from being out of the woods on this one but I do enjoy seeing a new spike low which formed overnight. I’m moving my stop at about 0.5R now as another drop toward our entry zone will most likely lead us much lower. This puppy has to get out of the gate now and that fast.

More Tape Reading

Someone asked me yesterday as to the exact definition of a spike low. Well in theory it’s a candle that is flanked by two candles with a higher low. A major SL of course is one that at the same time represents a recent price extreme – I personally use a 10 candle window to identify a major SL. Of course there is also always the advantage of additional context – for example a spike low breaching through a Net-Line Sell Level (and recovering). Or perhaps a SL dropping through terminating near a lower Bollinger you find valuable – you get the idea.

2017-04-19_silver_entry

So given that I think you will agree that the current major spike low on silver is a pretty damn good one. What has followed since then is the retest that I usually wait for. I wait for one more (non major) spike low and then enter with a stop below the major SL. And voilá – that’s my setup for silver.

2017-04-19_EURUSD_update

Good and bad news on the EUR front. The bad news is that my favorable exchange is being taken to the woodshed. The good news is that I (and hopefully you) was long since about 1.0625. I’m moving my trail at about -0.5R MFE now which may surprise you. Well, my reasoning is this – either the EUR keeps burning the shorts now or it will most likely correct back a bit deeper. If it does I can always find another entry. Oh by the way, did I mention I’ll have to raise the subscriber fees now?

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.

Published at Wed, 19 Apr 2017 12:03:27 +0000

Continue reading >
0 Shares
1 2 3 5
Page 1 of 5