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Remembering the worst day in Wall Street history

Remembering the worst day in Wall Street history

It was a day so terrible, it will forever be known as Black Monday.

On October 19, 1987, the stock market collapsed. The Dow plunged an astonishing 22.6%, the biggest one-day percentage loss in history. Even bigger than the 1929 stock market crash, just before the Great Depression.

Nothing since Black Monday has come close. Not the selloff after the September 11 terror attacks or the 2008 financial crisis, which almost wiped out the economy.

On that day in 1987, as the cameras rolled on the frenzied floor of the New York Stock Exchange, prices on the ticker tumbled, the panic spread, and the crash worsened. By the closing bell, the Dow stood at 1,738.74, down 508 points.

A crash like that today would equal more than 5,000 points on the Dow.

black monday anniversary front page
The Philadelphia Inquirer after Black Monday in 1987.

What was to blame? Heightened hostilities in the Persian Gulf, fear of higher interest rates, a five-year bull market without a significant correction, and computerized trading that accelerated the selling and fed the frenzy among the human traders.

It was panic, and that’s what separates a crash from just a really bad day on Wall Street. When emotion takes over and trading is no longer calm or orderly, that’s when Black Mondays are born.

Could it happen again? A panic is always theoretically possible. But a 22% Dow drop? Less likely. At least not in one day.

After the Black Monday free fall, the New York Stock Exchange installed what are known as circuit breakers, designed to stop trading when stocks dive too far too fast. It’s a forced timeout to give investors a chance to calm down and interrupt a panic.

Today, if stocks dived even 7%, trading would be suspended for 15 minutes. A decline of 20% would shut down trading for the rest of the day.

After the 1987 crash, the selling ricocheted around the world. But out of the ashes of Black Monday came the green shoots of what would be the longest and strongest bull market in American history.

Now, 30 years later, the Dow is charging through milestones at a blistering pace. Just this year, the Dow has cracked 20,000, 21,000, 22,000 and 23,000, and the rally since 2009 is the second longest and strongest on record.


Published at Thu, 19 Oct 2017 14:52:04 +0000

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World stocks stumble after all-time high, kiwi takes a dive

Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, July 3, 2017. REUTERS/Staff/Remote


World stocks stumble after all-time high, kiwi takes a dive

LONDON (Reuters) – World stocks set a fresh record high before stalling in Europe on Thursday, as the longest winning streak for Japanese stocks since 1998 and the first close above 23,000 for Wall Street’s Dow index helped to offset nerves in Spain.

Traders were marking 30 years to the day since the 1987 Black Monday stock market crash but there couldn’t have been a greater contrast as equity markets have continued to clock up milestone after milestone.

The Nikkei enjoyed its 13th straight daily rise, helping the MSCI index of global stock markets .MIWD00000PUS – now up 17.6 percent for the year – add to its long list of record highs.

It wasn’t all one-way traffic, though.

European shares took their biggest tumble in almost two months after a new batch of third-quarter results brought some disappointments, notably from Anglo-Dutch consumer goods titan Unilever, French advertising group Publicis and Germany’s Kion.

They then took another lurch lower as signals emerged from Spain that Madrid was gearing up to invoke a never-before-used clause to re-impose central rule over the restive region of Catalonia.

The euro EUR=EBS trimmed gains that had taken it to a three-day high against the dollar, while Spanish bond ES10YT=TWEB markets gave up their early morning gains.

“Everyone is watching this with great interest but it just looks like a standoff,” said Saxo Bank FX strategist John Hardy, saying the situation was something of a ‘catch-22’ for Catalonia.

A declaration of independence would see it lose its prized autonomy ,while calling a regional election could mobilize Catalan voters who would prefer to stay part of Spain.

“But the market is not expressing any real fear over this and I think that is justified,” Hardy added.

The other big currency market move came from the New Zealand dollar. It was sent skidding to its lowest since May after the left-leaning Labour Party won the support of the minor nationalist New Zealand First party to form a ruling coalition.

It ended weeks of political guessing games but fanned concerns that the Labour Party’s hardline policies on immigrants and foreign ownership could hurt investor sentiment.

The New Zealand dollar NZD=D4 slid as much as 1.4 percent to $0.7047, which as well as the 4-1/2 month low was also the biggest percentage decline since November 2016.


Among the other headlines, China’s economic growth cooled slightly to 6.8 percent in the third quarter from a year earlier, from the second quarter’s 6.9 percent.

A modest loss of momentum had been expected as the government reins in the heated property market and cracks down on riskier lending.

Other data showed that China’s industrial output rose a stronger-than-expected 6.6 percent in September, while retail sales also outperformed. Property sales fell though for the first time in over two years.

The Chinese yuan and stocks eased, with Shanghai .SSEC falling 0.4 percent.

“The GDP reading could weigh negatively on both mainland stocks and currency markets as traders may position for further weakness into year-end, suspecting financial curbs will continue to have a negative impact on growth in China,” said Stephen Innes, head of Asia-Pacific trading at OANDA in Singapore.

The dollar index against a basket of six major currencies was broadly steady at 93.340 .DXY.

The index ended a four-session winning run overnight on lacklustre U.S. data but briefly resumed its climb after the 10-year Treasury yield US10YT=RR spiked 4 basis points with safe-haven bond prices falling on better investor risk appetite.

The dollar was little changed at 112.940 yen JPY= after climbing 0.6 percent overnight. The euro nudged up 0.15 percent to $1.1802 EUR=.

The term of current Fed Chair Janet Yellen’s expires in February and investors are keen to see whom U.S. President Donald Trump will pick as her replacement. The White House said Trump would announce his decision in the “coming days”.

In commodities, Brent crude oil futures LCOc1 dropped 1.2 percent to $57.43 a barrel and U.S. WTI CLc1 dropped 1.5 percent.

Brent had risen to a three-week high of $58.54 a barrel on Wednesday on worries about tensions in Iraq and Iran, but lost steam after a surprising drop in U.S. refining rates and an unexpected build in fuel stocks signaled slower demand in the world’s top oil consumer.

Reporting by Marc Jones; Editing by Gareth Jones


Published at Thu, 19 Oct 2017 09:01:43 +0000

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Mnuchin to Congress: Cut taxes or market will dive

“There’s no question in my mind if we don’t get it done you’re going to see a reversal of a significant amount of these gains,” Mnuchin told Politico on Wednesday.

Mnuchin’s warning — a highly unusual one for a sitting treasury secretary — suggests he fears a drop of at least thousands of Dow points. The average has spiked almost 5,000 points since last fall’s election, a rally that President Trump often celebrates as evidence of his success.

Trump’s treasury secretary told Politico that the stock market has “baked into it reasonably high expectations of us getting tax cuts and tax reform done.” He predicted the market will go “up higher” if Congress succeeds on taxes.

It’s true that Trump’s economic agenda, including promises for “massive” tax cuts and deep deregulation, sent the stock market soaring in the weeks and months after the election.

But the market’s entire post-election rally is not based solelyon the anticipation of tax cuts or tax reform. Stocks have been supported by strong corporate profits, improved economic growth and extremely low interest rates.

If all markets cared about were tax cuts, then stocks should have plunged this spring and summer when Trump’s political stumbles threatened his agenda. Instead, investors dialed back their bets on tax cuts by selling “high tax” stocks that should benefit from tax reform. And the broader market kept going higher.

Lately, hopes of tax reform have returned, lifting potential tax cut winners like high-tax payers and small-cap stocks.

dow trump election stocks 1017

Sam Stovall, chief investment strategist at CFRA Research, said tax cut hopes have “boosted investor confidence,” but they didn’t alter the fundamentals that markets trade on: earnings estimates. Those projections haven’t budged because details on the tax deal aren’t available yet, Stovall said.

Only 32% of investors polled by E*Trade believe “President Trump and the current administration” is a leading factor behind the extended bull market in stocks. The survey respondents said that the top three drivers for stocks are: improving U.S. economy (61%), strong earnings (45%) and strong performance in certain sectors (40%).

Those positives are why Stovall isn’t worried about Congress setting off a market crash.

“Should tax cuts not materialize, a pullback or mild correction may ensue, but I don’t think it would trigger a new bear,” Stovall said.

Mnuchin’s comments raised eyebrows because normally the U.S. treasury secretary is counted on to instill financial and economic confidence, not sow doubt.

“That is fundamentally irresponsible. He has no understanding of the role of treasury secretary,” said Robert Shapiro, who served as a Commerce Department economic official under President Clinton and later advised Hillary Clinton.

“Part of the job of the treasury secretary is to maintain the stability of U.S. markets. Every other treasury secretary has recognized this. Apparently, it’s eluded Mr. Mnuchin,” said Shapiro, who is a senior fellow at Georgetown’s McDonough School of Business.

One parallel in recent history of a treasury secretary linking the health of the market to a single piece of legislation is Hank Paulson’s support for the TARP bailout in 2008. The former treasury secretary famously begged Speaker of the House Nancy Pelosi not to blow up the Wall Street rescue. The Dow plunged 777 points after the House of Representatives initially rejected the bailout.

Of course, that was a totally different time as the U.S. was grappling with the scariest financial crisis since the Great Depression. Now, big banks are healthy, unemployment is very low and markets are on the upswing — raising the question of how much the economy really needs tax cuts right now.

Besides, just because the notoriously-fickle market expects something, doesn’t mean it’s the best policy for the moment.

“To pinpoint or lever policy initiatives to the direction the stock market will take seems a little short-term oriented,” said Mark Luchini, chief market strategist at Janney Capital.

Ironically, Luchini said it’s possible the economic expansion is extended if there is no tax deal because it would keep the Federal Reserve from fearing the economy is overheating.


Published at Wed, 18 Oct 2017 16:03:42 +0000

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Johnson & Johnson Stock Extends Breakout After Solid Q3

Johnson & Johnson Stock Extends Breakout After Solid Q3

By Justin Kuepper | October 18, 2017 — 10:25 AM EDT

Johnson & Johnson (JNJ​) shares jumped nearly 3.5% on Tuesday after the company posted better-than-expected third quarter financial results. Revenue rose 10.3% to $19.65 billion – beating consensus estimates by $370 million – while earnings per share of $1.90 beat consensus estimates by 10 cents per share. Management also increased revenue guidance for the full year to $76.1 billion to $76.5 billion, calling for earnings per share of $7.25 to $7.30.

RBC analysts raised their price target on Johnson & Johnson shares to $147.00 from $144.00, saying that the third quarter results show a stable recovery in the company’s pharmaceutical business. That said, the company’s 23x price-to-earnings ratio (TTM) is high by historical standards and could cap upside potential. On a macro level, the stock is trading up more than 22% this year, which is in line with the Health Care Select Sector SPDR ETF’s (XLV) roughly 21% gains. (See also: Why Johnson & Johnson’s Stock Could Rise 10%.)

Technical chart showing the performance of Johnson & Johnson (JNJ) stock

From a technical standpoint, the stock broke out from trendline resistance at $136.00 earlier this month, quickly retested those levels early this week and then broke out sharply higher on Tuesday following the company’s third quarter financial results. The relative strength index (RSI) soared to overbought levels of 76.39, but the moving average convergence divergence (MACD) remains in a strong bullish uptrend that supports a bullish bias.

Traders should watch for some consolidation above R2 resistance at $138.36 following Tuesday’s significant move higher and an overbought RSI reading. A breakdown from these support levels could lead to a retest of trendline support at $136.00, but a more likely scenario is a short period of consolidation before an ongoing move higher. Traders should maintain a medium-term bullish bias following the favorable financial results. (For more, see: Buy J&J on Q3 ‘Turning Point’: Wells Fargo.)

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


Published at Wed, 18 Oct 2017 14:25:00 +0000

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Bulls Take Aim at Financials

The Wall Street bull is seen in the financial district in New York, U.S., March 7, 2017. REUTERS/Brendan McDermid

Bulls Take Aim at Financials

By Casey Murphy | October 17, 2017 — 9:55 AM EDT

The earnings out of the financial sector so far this season have been predominantly positive. Strong uptrends across most of the charts suggest that this is a sector that most bulls will continue to watch. In this article, we take a closer look at the charts and try to determine which companies could be best poised for a move higher over the weeks and months ahead. (For further reading, check out: Top 4 Financial Stocks for 2017.)

Financial Select Sector SPDR Fund (XLF)

One of the most common exchange-traded products (ETPs) used by retail traders for gaining exposure to the financial sector is the Financial Select Sector SPDR Fund. In case you aren’t familiar, XLF comprises 67 holdings from segments such as financial services, insurance, banks, capital markets, mortgage and real estate investment trusts, and consumer finance. With a gross expense ratio of 0.14% and total net assets of $28 billion, it is one of the most heavily traded assets in the public markets.

Taking a look at the chart, you can see that the price recently surpassed the key resistance shown by the horizontal trendline​. The breakout is a technical buy sign and suggests that traders will maintain a bullish outlook until the price closes below the trendline, the 50-day or the 200-day moving averages, depending on risk tolerance. (For more on this topic, check out: What Are the Most Common ETFs That Track the Banking Sector?)

Technical chart showing the performance of the Financial Select Sector SPDR Fund (XLF)

Berkshire Hathaway Inc. (BRK.B)

With a weighting of 11.31%, Berkshire Hathaway Class B is the largest holding of XLF. While the company is a favorite among long-term value investors, it is also becoming more popular among the active trading community due to its strong uptrend and well defined breakout points.

More specifically, taking a look at the chart below, you can see that the company’s stock has been trading along a well defined trendline over the past 12 months, and the recent uptake in momentum (combined with the subsequent close above the horizontal trendline) is a clear technical buy signal. Long-term traders will likely maintain a bullish outlook on the shares until the price closes below the 200-day moving average, which is currently trading at $171.02. (For more, check out: How Warren Buffett Made Berkshire Hathaway.)

Technical chart showing the performance of Berkshire Hathaway Inc. (BRK.B) stock

JPMorgan Chase & Co. (JPM)

When it comes to investing in financials, one of the strongest performers and the most well known is JPMorgan Chase. Taking a look at the chart below, you can see that the company’s stock is trading within an extremely strong uptrend, and the price closing above the dotted resistance suggests that the bulls are readying to push the price even higher. Most traders will likely keep a bullish outlook on the stock until the price closes below either the 50-day or 200-day moving averages, depending on risk tolerance. (For more, check out: J.P. Morgan: Famous or Infamous.)

Technical chart showing the performance of JPMorgan Chase & Co. (JPM) stock

The Bottom Line

Strong uptrends across the financial sector suggest that this is one of the best areas to allocate capital over the next couple of months and possibly into 2018. Recent closes above major resistance levels are creating well defined trading opportunities, and most traders will likely look to protect their positions by placing stops below nearby moving averages. (For more, see: This ETF Suggests Now Is the Time to Buy Financials.)

Charts courtesy of At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.


Published at Tue, 17 Oct 2017 13:55:00 +0000

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Facebook Stock Could Hit $200 After Earnings


Facebook Stock Could Hit $200 After Earnings

By Alan Farley | October 16, 2017 — 4:19 PM EDT

Political crosswinds have buffeted Facebook, Inc. (FB) in recent months, with fake Russian accounts, hate speech and unruly algorithms decaying trust in the social media Goliath while drawing D.C.’s unwelcome attention. COO Sheryl Sandberg just wrapped up a quick visit to the capital, meeting with dozens of lawmakers to exercise damage control while Congressional committees are set to review 3,000 Russia-linked advertisements.

Market players have largely ignored the whirlwind since a late September swoon dropped Facebook stock nearly 7% in three sessions. The bounce into October has now recouped those losses, lifting back to the July high, which also marks the all-time high. Strong October volume confirms committed buying interest, setting the stage for a healthy trend advance toward $200 following the company’s Nov. 1 earnings release. (See also: Facebook Breaks Out, Could Rise 16% to $200.)

FB Weekly Chart (2012 – 2017)

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Facebook shares dropped like a rock after peaking at $45 during a heavily subscribed May 2012 initial public offering, closing the inaugural session at $38. Selling pressure picked up while sentiment soured into late summer, finally ending in August at an all-time low in the upper teens, ahead of a two-step recovery wave that mounted the IPO opening print in the low $40s one year later.

The stock broke out in the fourth quarter of 2013, lifting into a powerful uptrend that eased into a rising channel in March 2014. Channel support narrowly aligned at the 200-day exponential moving average (EMA), with that level generating multiple tests into an August 2015 breakdown. The stock bounced strongly in the second half of that session, leaving behind a fat finger reversal that has carved a long-term trading floor in the upper $70s. (For more, see: Facebook Is All Grown Up.)

An extended test at channel support in the fourth quarter of 2016 found equal buying interest, yielding a strong bounce that reached channel resistance in March 2017. The stock pressed against that level for three months and broke out, signaling impressive relative strength that has generated new support near $160. As a result, that level should offer a low-risk buying opportunity the next time that aggressive sellers take control.

FB Daily Chart (2016 – 2017)

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Price action since November 2016 has carved a triple bottom, followed by a powerful uptick that has generated two impulsive buying waves and two reactive trading ranges. This price structure suggests that the stock is now engaged in the fourth wave of an Elliott five-wave rally pattern that will yield a climactic advance, ending the uptrend. The third wave carved a 31-point rally, while the first wave added 42 points, predicting a shorter-than-usual fifth wave advance, suggesting that round number resistance at $200 will act as a formidable barrier. (See also: 4 Reasons These Giant Tech Stocks May Be Unstoppable.)

The stock posted a series of lower lows off July’s all-time high while carving horizontal resistance near $175. In turn, this raises the odds for a final downturn prior to a breakout, filling in the bullish pattern with a higher low. August price action suggests that the sell-off will find support in the mid-$160s, because a bounce would then draw the right shoulder of an inverse head and shoulders breakout pattern.

On-balance volume (OBV) confirms many years of institutional sponsorship, in line with the stock’s elite status as a member of the FANG quartet. The buying trajectory eased in the fourth quarter of 2015, while the subsequently shallow slope has continued to gain ground. The indicator hit a new high at the end of July and again last week, generating a bullish divergence that predicts price will follow with an intermediate breakout. (For more, see: FAANG Stocks May Lead Market in Last Quarter.)

The Bottom Line

Facebook buyers have ignored recent headlines and lifted the stock back to range resistance in the mid-$170s. Volume measurements have matched bullish price action, raising the odds for a breakout that reaches $200. However, current price structure looks inadequate to support a trend advance at this time, suggesting a final decline that posts a higher low in the $160s. (For additional reading, check out: Facebook: 7 Secrets You Don’t Know.)


Published at Mon, 16 Oct 2017 20:19:00 +0000

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Top 3 Healthcare Penny Stocks for 2017


Top 3 Healthcare Penny Stocks for 2017

By Kevin Johnston | Updated October 13, 2017 — 7:05 PM EDT

The healthcare industry can be precarious for stocks of large companies, much less penny stocks. Nevertheless, smaller companies that capture a niche can grow much faster than large caps. That higher reward potential comes with higher risk. Of course, small-cap healthcare companies can be nudged out of the market by big competitors, and they can simply become unable to service debt when products and services don’t sell quickly enough. All of this makes the small-cap healthcare stalwarts on this list more attractive.

None of these are new companies – they have developed products and found the marketing outlets that are needed to sustain them. Because of the higher risk, investors should continuously perform due diligence. It is important to watch for product failures, closing markets or excessive competition moving in. To learn more about trading penny stocks, Investopedia Academy has a day trading course online.

Let’s look at how our top three picks break down. All figures are current as of Oct. 13, 2017. (For a quick primer on healthcare stocks, check out: Investing in the Healthcare Sector.)

Curis, Inc. (CRIS)

Curis (CRIS) is engaged in biotechnology with a focus on developing drugs that treat cancers. It does significant amounts of research and collaborates with other drug makers in testing and developing drugs. Therefore, it must put drugs through trials and obtain approvals, which means that the stock can fluctuate depending on the outcome for any given drug. Profits have been less than robust while the company focuses on research. However, management says it is now ready to bring many drugs to market that will produce profits going forward.

Volatility for this stock is high, but that can be a good thing for investors who want to build a position by buying at support levels. The 50-day moving average is below the 200-day moving average, so cautious investors may want to wait until the 50-day line is back on top before buying into this stock. The company has been paring its income losses, according to the earnings report for the period ended June 30, 2017. Curis has been increasing its research and development expenditures, which has negatively affected the bottom line. Investing in this stock must be based on whether investors see promise in the company’s drug pipeline. (See also: Invest in Cancer Research With These 3 Stocks.)

China Pharma Holdings, Inc. (CPHI)

China Pharma Holdings develops and markets a broad range of products in China, targeting hospitals and retailers. The drugs are focused on cardiovascular applications, brain diseases and infectious diseases. When the Chinese company reports results, it tends to have the majority of its assets as receivables, and investors should keep in mind that many companies do not collect all of their receivables.

The stock dropped dramatically in May 2017, rebounded, then pulled back again. It is in a sideways pattern now, perhaps forming a new base. Investors should note that the 50-day moving average has crossed below the 200-day moving average, which suggests that the stock could have more downside. However, these moving averages are trailing indicators. (See also: Pharma Majors to Benefit From China Drug Inclusion.)

For the period ended March 31, 2017, the company reported that it had reduced its losses. Operating income was negative but had rebounded dramatically from the previous quarter. Yearly revenues decreased by 23.5%. Revenues and income were also down in the period ended June 30, 2017. Investors who buy this stock are hoping for the release of effective and popular drugs. As with all penny drug stocks, buyers of China Pharma Holdings shares must be willing to wait out long periods of volatility while hoping for profitability to return.

It is important to remember that China monitors and controls companies closely, so any investor in this stock is also obtaining exposure to the geopolitical influences that could affect the stock. (For more, see: China on a Record High International Healthcare Acquisition Spree.)

  • Average Volume: 141,112
  • Market Cap: $6.973 million
  • P/E Ratio (TTM): -0.83
  • EPS (TTM): -$0.19

Repligen Corporation (RGEN)

Antibodies dominate the product line for Repligen. The company sells worldwide and has been in business since 1981. Quarterly revenues have been rising, and operating income is slightly up for the past four quarters.

The stock price broke through resistance at around $34 per share in April 2017 and then climbed steadily, but it saw a decline at the end of September, plummeting over 14% in one session on Sept. 26. However, Repligen’s revenues have been rising for the past four quarters, and the company’s longevity offers stability. It would be very unlikely that this company would disappear given its strong product line and marketing effectiveness. (See also: How to Pick Winning Penny Stocks.)

  • Average Volume: 346,663
  • Market Cap: $1.66 billion
  • P/E Ratio (TTM): 75.34
  • EPS (TTM): $0.51

The Bottom Line

Penny healthcare stocks are high risk. Trials of drugs can produce negative results, and the market may not readily accept a new drug. On the other hand, a successful drug can cause a penny stock to soar and give investors profits they would not expect from more expensive stocks. It is wise to limit the percentage of your portfolio that you keep in penny healthcare stocks – these are speculative plays. (See also: Understanding Penny Stocks’ Risks and Rewards.)


Published at Fri, 13 Oct 2017 23:05:00 +0000

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Top 5 Copper Stocks for 2017


Top 5 Copper Stocks for 2017

By Kevin Johnston | Updated October 13, 2017 — 8:55 PM EDT

Copper prices have been rising, and this bodes well for copper stocks. In fact, copper has risen to over $3 per pound. This means that there is incentive for copper companies to increase production to take advantage of the better prices.

Copper stocks have been beaten down for a long time, but 2017 has given them some relief. That is no reason to pick just any copper stock – it is a reason to perform due diligence and make some choices that will have the most reasonable prospects for success. (For a primer on investing in this metal, check out: Commodities: Copper.)

We have chosen five copper stocks that should do well for the remainder of 2017 based on their resilience through the down times. All figures are current as of Oct. 13, 2017. Here is how the five stocks break down.

Southern Copper Corporation (SCCO​)

The stock of Southern Copper broke sharply higher in November 2016 and formed a new base to consolidate its gains. It broke out of that base in August 2017 and is moving upward. Its 1.34% dividend could grow if the company continues to prosper from rising copper prices. Furthermore, Southern Copper’s quarterly income and total revenues have been climbing. (See also: Copper Enters First Bull Market in 4 Years.)

Freeport-McMoRan Inc. (FCX)

As the world’s largest copper miner, Freeport-McMoRan suffered greatly during the copper price decline, but it stands to prosper as copper rises. The company is simply in the best position worldwide to increase production and take advantage of profitable copper prices. Freeport-McMoRan could move into a position where it can resume its dividend. The stock has been moving sideways in 2017 and has formed a cup and handle pattern. (For more, see: Freeport to Divest Majority Stake in Indonesia Unit.)

  • Average Volume: 19,117,049
  • Market Cap: $21.35 billion
  • P/E Ratio (TTM): 20.80
  • EPS (TTM): $0.71
  • Dividend and Yield: 0.00 (0.00%)

BHP Billiton Limited (BHP)

BHP Billiton has a widely diversified mining operation, but it makes the list of copper stocks to watch because it owns BH Copper. The stock climbed steadily starting in mid-June 2017, although it gave back some of those gains in September. The 4.16% dividend is attractive. (See also: Beyond Gold: Top Picks in Industrial Metals.)

  • Average Volume: 2,394,72
  • Market Cap: $114.47 billion
  • P/E Ratio (TTM): 19.11
  • EPS (TTM): $2.21
  • Dividend and Yield: $1.72 (4.16%)

Anglo American plc (AAUKF/AAL.L)

This company mines for a variety of metals, including copper. The chart on Anglo American shows a steady and orderly rise throughout most of 2016, but the stock was in a base through the first part of 2017. It broke out of that base in June and has been climbing, despite a slight downturn in September. The company has been in business since 1917, so this is a reliable pick for those who want exposure to miners in general and copper in particular. (For more, see: Billionaire’s Anglo American Bet Excites Investors.)

  • Average Volume (AAL.L): 6,119,063
  • Market Cap: GBp 1.879 trillion
  • P/E Ratio (TTM): 5.01
  • EPS (TTM): GBp 293.3
  • Dividend and Yield: GBp 0.48 (2.59%)

Rio Tinto plc (RIO)

Rio Tinto pays a 4.56% dividend. Production levels have been rising, and the stock has been in an uptrend for more than a year. The company mines other metals besides copper, which helps stabilize the stock price because Rio Tinto is not dependent on the price of any single metal for profitability. (See also: Is Rio Tinto a Great Stock for Value Investors?)

  • Average Volume: 2,988,561
  • Market Cap: $85.36 billion
  • P/E Ratio (TTM): 14.58
  • EPS (TTM): $3.43
  • Dividend and Yield: $2.20 (4.56%)

The Bottom Line

It should be noted that Codelco, a very large Chilean copper miner, did not make this list because it is state owned and therefore is subject to non-market influences that could affect its value. The five copper stocks on our list are all miners, so they are likely to directly profit from rising copper prices and do not depend on secondary income sources such as futures contracts. All five are large enough that they have assets they could sell should a sudden downturn in copper hit.

All five also have extensive copper reserves in place that they can put on the market any time they choose. This will help them take advantage of any sudden spikes in the price of copper. The reserves can also be sold if any of the companies want to raise cash for a new opportunity. Investors in copper must watch two indicators at once: 1) the financial health of the company; and 2) the trend in copper prices worldwide. Going long on any of these stocks will require a regular reading of reports on supply and demand for copper. (See also: What Factors Affect the Price of Copper?)


Published at Sat, 14 Oct 2017 00:55:00 +0000

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Asia shares at 10-year high ahead of U.S. data, China Congress


Asia shares at 10-year high ahead of U.S. data, China Congress

TOKYO (Reuters) – Asian stocks edged to a 10-year high on Friday thanks to expectations of brisk global growth, although investors held off chasing shares higher ahead of U.S. economic data and next week’s Chinese Communist Party Congress.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.15 percent, having gained 3.6 percent so far this month. Japan’s Nikkei edged up 0.2 percent to another 21-year high.

Wall Street shares dipped slightly on Thursday, pulled down by a fall in AT&T after the telecoms company reported subscriber losses in its cable TV business.

But MSCI’s broadest gauge of the world stock exchanges covering 47 markets also stood at record levels, extending its gains so far this year to 17 percent.

China’s trade data showed both growth in exports and imports accelerated in September, with imports beating expectations, adding to the evidence of recent resilience in China’s economy.

“It is hard to think the current ‘goldilocks economy’ will suddenly change,” said Nobuyuki Kashihara, head of research group at Asset Management One, referring to an economy that is neither too hot, or too cold, but just right.

“Stock prices will continue to rise in line with growth in corporate earnings globally.”

On top of a broad consensus that the global economy is in its best shape in recent years, expectations that U.S. President Donald Trump would push through a tax cut also encouraged investors.

“While we don’t know the details of the tax reforms, the announcement of a plan to make the biggest tax overhaul in three decades triggered a fresh wave of reflation trade,” said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

In currencies, the dollar lost some steam in recent days as U.S. bond yields appeared to have peaked for now, with minutes from the last U.S. Federal Reserve meeting showing policymakers remained divided on U.S. inflation prospects.

The next big test for the dollar is U.S. consumer inflation figures due later in the day.

“The data will likely be disrupted by the hurricanes. But if inflation is picking up, that is still positive for the dollar,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

On top of the near-term inflation readings, investors are also looking to who Trump will nominate as successor to Fed Chair Janet Yellen, whose term expires next February.

White House Chief of Staff John Kelly said on Thursday that Trump was “some time away” from making a decision, while another official said Trump had met with Stanford University economist John Taylor to discuss the job.

Another main focus is China’s 19th Communist Party Congress that begins on Oct 18, where President Xi Jinping is expected to lay out new policy initiatives and consolidate his power for a second five-year term.

”Specific economic policies won’t be laid out at this

meeting, but official statements and who ascends to

power will set the tone for the third Plenary Session … in March 2018, which will give more specifics about China’s economic agenda for the next five years,” said analysts at RBC Capital Markets.

The euro traded at $1.1849, slipping from Thursday’s high of $1.1880 but has kept weekly gain of almost 1 percent, though the currency remains dogged by the crisis around the Catalonian independence movement’s campaign to split from Spain.

The yen was little moved at 112.10 yen per dollar, though at that level, it is on course for a slight gain on the week, which would be its first in five weeks.

Bitcoin soared more than 4 percent after Thursday’s 13 percent gain to hit a record high of $5,846, a gain of 450 percent on the year.

The Chief Financial Officer of JPMorgan Chase & Co said the firm is open minded on the potential use cases in future for digital currencies, appearing to dial back comments last month from his boss, Chief Executive Officer Jamie Dimon, that bitcoin was a “fraud”.

Copper prices held firm after hitting a one-month high on Thursday as optimism over the demand outlook from major consumer China fueled buying.

London copper futures were at $6,862 a tonne early on Friday.

Oil prices edged up on Friday as both U.S. crude production and inventories declined. U.S. crude ticked up 0.5 percent to $50.87 a barrel. Brent crude rose 0.4 percent to $56.49 per barrel.

Reporting by Hideyuki Sano; Editing by Simon Cameron-Moore


Published at Fri, 13 Oct 2017 03:42:47 +0000

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Top 4 Alternative Energy Stocks as of October 2017


Top 4 Alternative Energy Stocks as of October 2017

By Kevin Johnston | Updated October 12, 2017 — 6:45 PM EDT

With concerns about climate change and the state of the environment continuing to draw headlines, there is no doubt that the markets are also paying attention to clean and renewable energy resources. As oil prices rise from their recent lows, traditional energy companies will no doubt dominate the energy sector, but alternative energy is here to stay. The alternative energy companies on this list have the potential to make investors some money in 2017.

The stock charts on each of these companies show positive developments that could create upward momentum for the remainder of the year. All figures are current as of Oct. 12, 2017. (See also: Why You Should Invest in Green Energy Right Now.)

NRG Yield, Inc. (NYLD)

NRG Yield is not a pure alternative energy play, but it does own and operate renewable energy assets. The company was founded in 2012. This stock has been forming an upward price channel since February 2017. The shares are up over 20% year to date, and the company has consistently beat earnings estimates in recent quarters. Based in Princeton, New Jersey, NRG Yield is a subsidiary of NRG Energy, Inc. (NRG).

Pattern Energy Group Inc. (PEGI)

This San Francisco-based company owns wind energy projects. It makes its living selling energy to local utility companies. Projects are in the United States, Canada and Chile. The stock was rising throughout most of 2017, but it saw declines in August and again in late September. At current levels, the stock offers an attractive dividend yield of 6.82%. (For more, see: Clean or Green Technology Investing.)

  • Average Volume: 670,260
  • Market Cap: $2.15 billion
  • P/E Ratio (TTM): 71.22
  • EPS (TTM): $0.34
  • Dividend and Yield: $1.68 (6.82%)

Atlantica Yield PLC (ABY)

Atlantica owns renewable energy generation assets. It generates power through solar and wind technology. Revenues have shown solid gains for four straight years, and operating income has grown dramatically during that period. Buyers stepped in during early 2017 and bought shares, giving the stock a high-volume breakout. At the same time, the 50-day moving average crossed above the 200-day moving average. This is called a “golden cross” and is considered bullish by investors. While the price action has been volatile throughout the year, the stock has consistently found support at around $19, and its dividend yield of over 5% could be appealing to income investors. (See also: Atlantica Yield Posts Narrower-than-Expected Q1 Loss.)

  • Average Volume: 461,716
  • Market Cap: $2.08 billion
  • P/E Ratio (TTM): 67.10
  • EPS (TTM): $0.31
  • Dividend and Yield: $1.04 (5.05%)

Covanta Holding Corporation (CVA)

Covanta Holding provides waste services to cities in the United States and Canada. The company has developed assets that convert waste to energy. CVA owns 45 plants that are involved in converting waste, and the company sells metal that is a byproduct of the waste-conversion process. Daily volatility for this stock can be high, so this is one to buy only for those who are willing to ride out some dramatic moves in the stock price. Similar to several other stocks on this list, Covanta may be enticing to those investors seeking dividend yield.

  • Average Volume: 1,115,878
  • Market Cap: $2.01 billion
  • P/E Ratio (TTM): -73.33
  • EPS (TTM): -$0.21
  • Dividend and Yield: $1.00 (6.60%)

The Bottom Line

Alternative energy is mainstream enough now that investors can find companies that are extremely viable. Our list has one penny stock, but all the companies have a track record of securing contracts for their products and services. Nevertheless, the companies are relatively small compared with the giants of the energy sector, so they are subject to being nudged out of the competition. Owning alternative energy stocks means staying abreast of news in the field. (For more on alternative energy, check out: Top 5 Alternative Energy ETFs.)


Published at Thu, 12 Oct 2017 22:45:00 +0000

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Bull market is 103 months old. Trump owns 11 of them


Is it too late to buy stocks?
Is it too late to buy stocks?

President Trump’s victory last November set off a massive party on Wall Street that is still going strong today.

The Dow has spiked an incredible 4,500 points since the election. As CNNMoney has reported frequently, that 25% surge is based in part on Trump’s promises to slash taxes and regulation.

Trump, who warned of a “big, fat, ugly bubble” before he took office, brags about the red-hot market now that he’s in charge. He did it again on Wednesday, cheering the “virtually unprecedented Stock Market growth since the election.”

The market’s cheerleader-in-chief never mentions that he inherited a bull market — one that began long before “Make America Great Again” hats started showing up on the campaign trail.

The bull market in stocks started in March 2009, near the end of the Great Recession. This market upswing is now 103 months old, making it the second-longest on record.

Trump can claim credit for 11 months at most, if you start counting after the election. The other 92 months of upward trajectory took place under President Obama.

bull market sp 500 1011

Taken as a whole, the Obama-Trump bull market is historic as well. The S&P 500 has soared 277% since bottoming in March 2009 thanks to the improving economy andextremely-low interest rates. That’s good for No. 2 among all bull markets, according to Bespoke Investment Group.

Of course, the vast majority of those gains occurred under Obama. The stock market more than tripled during Obama’s eight years in office as the U.S. economy recovered from the recession.

Nonetheless, Trump often points to record highs on Wall Street as a barometer of his success. “Stock Market hit an ALL-TIME high!” Trump tweeted on October 5.

He’s right that the Dow has never been higher. In fact, the Dow has notched 65 records since Trump’s election. The S&P 500 isn’t far behind with 52 records. Both have benefited from Trump’s promises of tax cuts as well as strength in corporate profits and the domestic and global economies.

dow trump election stocks 1011

No matter the cause, record highs were a regular occurrence during Obama’s second term — even as Trump was bashing the economic track record of the 44th U.S. president. In fact, the S&P 500 hit 127 all-time highs under Obama, according to Ryan Detrick of LPL Financial.

All-time highs were even more frequent during the economic booms of the 1980s and 1990s. The S&P 500 hit record highs 268 times under President Clinton and 154 times under President Reagan, according to LPL. (Trump has easily surpassed the nine S&P 500 records under President George W. Bush.)

None of those presidents talked up the day-to-day movements of the stock market like Trump has. That’s not just because Twitter didn’t exist during most of those presidencies.

The risk is that taking too much credit for the notoriously-fickle stock market will make it more difficult to avoid criticism when stocks eventually retreat.


Published at Wed, 11 Oct 2017 20:20:46 +0000

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Chase Stock Could Hit Triple Digits After Earnings


Chase Stock Could Hit Triple Digits After Earnings

By Alan Farley | October 11, 2017 — 11:37 AM EDT

JPMorgan Chase & Co. (JPM) fires the opening shot of third quarter earnings season on Thursday morning, with the commercial banking giant expected to report earnings per share of $1.66 on revenue of $24.9 billion. CEO Jamie Dimon is likely to offer an optimistic fiscal year outlook, driven by expectations for corporate taxcuts and a December interest rate hike that would increase sector profitability.

Commercial banks are attracting steady interest following a September slide that shook out many 2016 breakout buyers. Trading at an all-time high and just a few points below the psychological $100 level, JPMorgan Chase now shares its long-term leadership role with a newly resurgent Citigroup Inc. (Citigroup Inc). A solid quarterly report could lift JPMorgan Chase stock above that magic $100 number, setting off a long-term test that might not end until 2018. (For a refresher, check out: The Industry Handbook: The Banking Industry.)

JPM Long-Term Chart (1991 – 2017)

 Full Screen  Make It Live

The stock hit an all-time low at $3.21 in 1990 and turned higher in an uptrend that stalled in the mid-teens in 1993. It cleared that resistance level two years later and took off in a powerful trend advance that topped out at $67.20 at the height of the internet bubble in the first quarter of 2000. The subsequent decline generated severe technical damage, knocking the price down to mid-1990s support in the teens.

A bounce into the $40s stalled in 2004, generating a broad sideways pattern ahead of a 2006 breakout that lifted the stock within 14 points of the 2000 high in July 2007. That marked the bull market top, ahead of a historic plunge that ended at a 13-year low in March 2009. Even so, the company fared better than its banking rivals, maintaining a strong balance sheet that underpinned a recovery into the upper $40s in the fourth quarter of 2009. (See also: JPMorgan Chase & Co.: The Big Bank.)

That resistance level stalled progress for the next three years, giving way to a 2013 breakout that reached the 2000 high in 2015. The stock then sold off, entering an intermediate correction that completed the last leg of a multi-decade breakout pattern that was set into motion after the November 2016 election. The stock has rallied nearly 30 points since that time and could add substantially to gains in the coming years.

JPM Short-Term Chart (2015 – 2017)

 Full Screen  Make It Live

The 2015 correction carved the outline of an ascending triangle, while the late 2016 breakout stalled at $94 on March 1, 2017, easing into a cup and handle pattern that broke to the upside on Oct. 2. The stock is now trading just two points above new support, exposing a failed breakout if traders sell Thursday’s news. However, it is more likely that sidelined players jump on board after the release because corporate tax cuts could super-charge an already strong U.S. economy. (For more, see: Trump Tax Plan ‘As Good as It Gets’ for US Banks.)

The bullish tone will remain intact as long as a decline holds the trendline​ of rising lows since June. That support is now situated near $90, in between the 50- and 200-day exponential moving averages(EMAs). The June and September pullbacks ended between those moving averages, generating fractal behavior that could come into play once again. That decline may also offer a low-risk buying opportunity.

On-balance volume (OBV) posted three rally peaks in two years and entered a 2015 distribution wave that ended in the second quarter of 2016. The indicator surged to a six-year high in March 2017 and turned lower, while the most recent uptick has failed to reach the prior high, generating a notable bearish divergence that signals inadequate institutional sponsorship. This deficit may need a correction before it can be worked out of the system. (To learn more, see: Uncover Market Sentiment With On-Balance Volume .)

The Bottom Line

JPMorgan Chase shares could hit the triple digits after a strong earnings report this week, but immediate upside appears limited because that level often generates months of sideway action. Meanwhile, a bearish reaction could test recent gains, with the stock needing to hold the $90 level to avoid a deeper slide into late 2016 breakout support. (For additional reading, check out: Why BofA May Outperform JPMorgan, Citigroup.)


Published at Wed, 11 Oct 2017 15:37:00 +0000

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Asian shares hit decade highs, Catalan fears ease


Asian shares hit decade highs, Catalan fears ease

SYDNEY (Reuters) – Asian shares jumped to the highest in a decade on Wednesday as Wall Street scaled all-time highs, while the dollar loitered around two-week lows on worries President Donald Trump’s tax plan could stall.

The euro traded around a 10-day peak after Catalonia’s leader suspended plans to leave Spain, easing near-term concerns about euro zone stability.

The MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.5 percent to 546.38, a level not seen since December 2007.

Australian stocks jumped to 1-1/2 month highs while South Korea’s KOSPI added 0.6 percent to within a whisker of record peaks.

Japan’s Nikkei edged closer to a 21-month top, even as scandal-hit Kobe Steel extended losses.

Sentiment was boosted after the International Monetary Fund upgraded its global economic growth forecast for 2017 and 2018, driven by a pickup in trade, investment, and consumer confidence.

“A risk-on mood has set in and money is flowing out of bond funds into equities funds,” said Hugh Dive, chief investment officer at Atlas Funds Management.

“One of the biggest drivers of global equities is the United States and some of the macro data coming out from there has been quite positive. There is also this view that China is traveling much better than many people had expected.”

The three major Wall Street indices set record highs again, with Dow up 0.3 percent, the S&P 500 adding 0.2 percent and the Nasdaq inching 0.1 percent higher.

In currency markets, the dollar held around a two-week trough as U.S. President Donald Trump’s escalating war of words with Senator Bob Corker raised concerns about the administration’s ability to pass promised reforms.

The dollar index steadied at 93.314 against a basket of currencies, around the lowest level since Sept.29.


The greenback was also under pressure amid ongoing uncertainty over the next Federal Reserve Chairman, with the predictions market site, PredictIt, favoring Fed governor Jerome Powell as the most likely candidate.

While Powell is regarded as more hawkish than incumbent Janet Yellen, whose term expires in February, analysts say he might be less aggressive in winding back stimulus than Kevin Warsh, another possible candidate for the role.

Investors will keep an eye on the minutes of the Fed’s September meeting due later in the day, which might help bolster views of a December rate hike.

The euro held around $1.1803, not far from Tuesday’s high of $1.1825, after Catalonian President Carles Puigdemont called for talks with Madrid to discuss the region’s future.

The gesture tempered fears of immediate unrest in a major euro zone economy and cheered investors. Madrid’s IBEX 35 Index futures added 1.1 percent, after the cash IBEX stock index closed down 0.9 percent on Tuesday.

“Markets were on edge, and no doubt so was he,” said David Plank, head of Australian economics at ANZ Banking Group, referring to Puigdemont’s address at Catalonia’s parliament.

“But the declaration for independence did not come, at least not explicitly,” Plank said. “This issue remains extremely fluid. But one thing is clear – this is not going to go away quickly or quietly.”

In commodities, U.S. crude rose 12 cents to $51.04 per barrel and Brent added 7 cents to $56.68 on signs of tighter near-term supply.

Gold prices came off their highest in two weeks, with spot gold at $1,287.61 an ounce.

Reporting by Swati Pandey; Editing by Sam Holmes


Published at Wed, 11 Oct 2017 03:58:55 +0000

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S&P 500 breaks record run on jobs data, drug chain drop


S&P 500 breaks record run on jobs data, drug chain drop

NEW YORK (Reuters) – The S&P 500 eased on Friday, ending a six-day run of record highs as the first monthly decline in U.S. nonfarm jobs in seven years dampened sentiment and pharmacy shares fell on Amazon competition fears.

The Nasdaq ended up for a ninth straight day, however, and set its sixth straight record high close, its longest such streak since seven records in February.

Walgreens Boots Alliance (WBA.O) and CVS Health (CVS.N) fell and were among the biggest drags on the S&P 500 after a CNBC report that Amazon (AMZN.O) was close to a decision on selling prescription drugs. Walgreens shares dropped 4.9 percent and CVS was down 4.9 percent, while Amazon shares rose 0.9 percent.

The Labor Department’s closely watched jobs report showed nonfarm payrolls fell by 33,000 in September as hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring. A bright spot was a better-than-expected rise in average wages.

“It’s been amazing how resilient our U.S. stock market has been, going up on no news or bad news, so there’s no surprise on a day where most people feel it was a mixed jobs report at best that the market actually is reacting in a way that makes sense,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

“It’s a logical move for this illogical stock market.”

The Dow Jones Industrial Average .DJI fell 1.72 points, or 0.01 percent, to end at 22,773.67, the S&P 500 .SPX lost 2.74 points, or 0.11 percent, to 2,549.33 and the Nasdaq Composite .IXIC added 4.82 points, or 0.07 percent, to 6,590.18.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 3, 2017. REUTERS/Brendan McDermid

The benchmark’s slight decline follow a six-day run of record closing highs, its longest since 1997.

The CBOE Volatility index .VIX, Wall Street’s fear gauge, bounced sharply after setting a record low close in the previous session.

For the week, the S&P 500 rose 1.2 percent, the Dow added 1.6 percent and the Nasdaq gained 1.5 percent.

Adding to the day’s worries was a report that North Korea is preparing to test a long-range missile.

S&P energy index .SPNY declined 0.8 percent as oil prices CLc1 LCOc1 fell amid a bout of profit taking and the return of oversupply worries.

Shares of Costco (COST.O) dropped 6 percent after the warehouse club retailer reported a fall in gross margins. The stock was the biggest drag on the S&P 500 and the Nasdaq.

Declining issues outnumbered advancing ones on the NYSE by a 1.74-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored decliners.

About 5.7 billion shares changed hands on U.S. exchanges. That compares with the 6.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Additional reporting by Yashaswini Swamynathan and Gayathree Ganesan in Bengaluru; Editing by Nick Zieminski and James Dalgleish


Published at Fri, 06 Oct 2017 21:25:57 +0000

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How to Trade Emerging Markets After This ETF Set a Multiyear High


How to Trade Emerging Markets After This ETF Set a Multiyear High

By Richard Suttmeier | October 6, 2017 — 3:47 PM EDT

The iShares MSCI Emerging Market ETF (EEM) represents 850 overseas investments heavily-weighted to China, South Korea and Taiwan. The exchange-traded fund includes popular ADRs for Chinese companies Alibaba and Baidu.

The ETF is recovering from two major bear markets. The ETF declined 40% from a high of $45.85 set during the week of Sept. 5, 2014 and a low of $27.61 set during the week of Jan. 22, 2016. This decline has been fully recovered with the ETF setting a slightly higher high of $45.98 on Oct. 5.

Investors need to be aware that this decline and recovery is within a larger bear market decline of 67% from its all-time intraday high of $55.82 set during the week of Nov. 2, 2007 to its multiyear intraday low of $18.22 set during the week of Nov. 21, 2008.

Let’s put this into prospective. The emerging markets ETF will have to rally 22% from Thursday’s close of $45.85 to the 2007 high.

Compare this to the S&P 500, which set its all-time intraday high of 2,552.51 on Thursday and is 62% above its Oct. 2007 high of 1,576.

The Weekly Chart for EEM

Courtesy of MetaStock Xenith

The weekly chart for the emerging markets ETF is positive but overbought with the ETF above its five-week modified moving average (in red) at $44.81. The stock is well above its 200-week simple moving average (in green) at $38.58.

The horizontal lines are two sets of Fibonacci retracement levels. Those at the right of the chart represent the inner decline from the Sept. 2014 high to the Jan. 2016 low. The 61.8% retracement at $38.88 lines up with the 2-week SMA.

The horizontal lines across the entire chart are the Fibonacci retracement levels of the decline from the Nov. 2007 high to the Nov. 2008 low. The 61.8% retracement of this decline is $41.46. This level has been a magnet since the week of Sept. 18, 2009.

The 12x3x3 weekly slow stochastic reading is projected to end the week at 89.17 well above the overbought threshold of 80.00.

Given this chart, my trading Strategy is to buy weakness to my quarterly and semiannual value levels of $43.59 and $38.40, respectively, and reduce holdings on strength to my monthly and annual risky levels of $46.72 and $53.86, respectively.


Published at Fri, 06 Oct 2017 19:47:00 +0000

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Stocks Continue to Hit Highs Amid Positive Economic Data

Stocks Continue to Hit Highs Amid Positive Economic Data

By Justin Kuepper | October 6, 2017 — 5:59 PM EDT

The major U.S. indexes moved higher over the past week. While nonfarm payrolls unexpectedly fell by 33,000, which is presumably due to the hurricanes, the big surprise was a decline in the unemployment rate by two-tenths of a point and an increase in average hourly earnings by 0.5%. The news followed an unexpectedly bullish ISM Manufacturing Index reading of 60.8 and an equally impressive ISM Non-Manufacturing Index reading of 59.8.

International markets followed U.S. markets higher over the past week. Japan’s Nikkei 225 rose 1.69%; Germany’s DAX 30 rose 0.99%; and Britain’s FTSE 100 rose 2.03%. In Europe, the IHS Markit survey hit a four-month high in a sign that the Eurozone economy is picking up steam. In Asia, Japan’s economy is likely to match its second best stretch of uninterrupted growth since World War II, despite an ongoing lack of inflation. (See also: Why Is Deflation Bad for the Economy?)

The SPDR S&P 500 ETF (ARCA: SPY) rose 1.25% over the past week, making it the worst performing major index. Since the beginning of the month, the index has posted a string of gains that have led it past trendline​ and R1 resistance at $253.79. Traders should watch for an extended breakout to R2 resistance at $256.34, or if a false breakout occurs, a move back into its price channel below trendline support. Looking at technical indicators, the relative strength index (RSI) has reached significantly overbought levels at 77.61, but the moving average convergence divergence (MACD) remains in a bullish uptrend.

Technical chart showing the performance of the SPDR S&P 500 ETF (SPY)

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) rose 1.67% over the past week, making it the best performing major index. After breaking out from R1 resistance at $226.28, the index moved closer to R2 and trendline resistance at $228.74. Traders should watch for a breakout from these upper resistance levels or a move lower back into its price channel. Looking at technical indicators, the RSI appears very overbought at 80.45, but the MACD remains in a bullish uptrend following a near crossover in late September.

Technical chart showing the performance of the SPDR Dow Jones Industrial Average ETF (DIA)

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 1.52% over the past week. After forming an ascending triangle over the past few months, the index broke out to fresh highs just above R1 resistance at $147.18. Traders should watch for a breakout to R2 resistance at $148.91 or, if there’s a false breakout, a move back below trendline support. Looking at technical indicators, the RSI appears lofty at 65.97, but the MACD experienced a bullish crossover. (See also: 5 Big Tech Stocks’ Largest Threat May Be Uncle Sam.)

Technical chart showing the performance of the PowerShares QQQ Trust (QQQ)

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 1.26% over the past week. After breaking out from trendline resistance last month, the index moved close to R1 resistance at $151.66 before moving sideways. Traders should watch for a resumed move higher to R2 resistance at $155.14 or a move lower to trendline support at $147.00. Looking at technical indicators, the RSI appears very overbought at 81.18, but the MACD remains in a bullish uptrend. (For more, see: Could Small-Cap Rally Be Coming to a Close?)

Technical chart showing the performance of the iShares Russell 2000 Index ETF (IWM)

The Bottom Line

The major indexes moved higher over the past week, but many remain overbought from a technical standpoint. Next week, traders will be watching several key economic indicators, including the FOMC minutes on Oct. 11 and retail sales data on Oct. 13. (For additional reading, check out: How Rising Wages Will Fire Up U.S. Stocks.)

Note: Charts courtesy of As of the time of writing, the author had no holdings in the securities mentioned.


Published at Fri, 06 Oct 2017 21:59:00 +0000

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Costco Stock Gets Pummeled Despite Upbeat Quarter


Costco Stock Gets Pummeled Despite Upbeat Quarter

By Alan Farley | October 6, 2017 — 11:33 AM EDT

Costco Wholesale Corporation (COST) shares are getting pummeled in the aftermath of Thursday evening’s fiscal fourth quarter earnings report, dropping more than nine points to a four-week low despite beating EPS and revenue estimates. Weak gross margins have been cited for the decline, while fears of growing competition from, Inc.’s (AMZN) Whole Foods acquisition have also weighed on sentiment.

RBC, Stifel and Telsey analysts retained positive ratings after the news, insisting that investor fears are overblown and that the stock will prosper despite growing headwinds. Rapid e-commerce growth and solid traffic numbers have underpinned those optimistic outlooks, which may limit the downside in coming days. However, Morgan Stanley issued a downgrade ahead of the open, and others may follow, adding selling pressure that drops the price into critical support near $153. (See also: 7 Retail Stocks Hammered by Amazon May Be Good Buys.)

COST Long-Term Chart (1995 – 2017)

The stock tested the 1987 low near $5.50 at the end of 1994 and took off in a strong uptrend that cleared the top of a multi-year trading range near $15 in 1997. Rally momentum increased after the breakout, contributing to a powerful thrust that quadrupled the stock’s price into the 2000 high at $60.50. It plunged off that peak a few weeks later, dumping into the mid-$40s, with that price level holding support throughout the dotcom bear market.

Costco stock tested the bear market low in the first quarter of 2003 and turned higher, taking four years for the advancing price to reach the 2000 high. It broke out in the summer of 2007 and ticked higher into May 2008, when it topped out at $75.23, ahead of a steep decline during the economic collapse. That selling impulse settled at a four-year low at $38.17 in March 2009, giving way to a stair-step recovery that reached the prior high in the first quarter of 2011. (For more, see: Behind Costco’s 180% Rise in 10 Years.)

It broke out immediately, entering a powerful trend advance that posted the strongest gains so far this century. Buying pressure finally eased in February 2015 near $150, yielding a shallow rising channel that remains in force more than two years later. The relatively weak uptrend added more than 30 points into the May 2017 all-time high at $183.18, with price action since that time carving a triple top breakdown.

COST Short-Term Chart (2014 – 2017)

A base near $110 in the first half of 2014 gave way to strong rally into the February 2015 high at $156, printing the first peak in the rising channel. A decline into August undercut new support, leaving behind a candlestick shadow, ahead of less volatile price action that added three highs at resistance and two lows at support. The final high above $183 in May 2017 posted the middle peak of a triple top pattern that broke down in June when it undercut range support near $165. (See also: Costco’s Business Model Is Smarter Than You Think.)

Selling pressure ended in July at channel support near $150, generating a small-scale double bottom reversal, followed by a bounce into new resistance ahead of this week’s earnings report. The violently bearish reaction confirms the triple top breakdown, dropping the stock to $157 in the first hour of Friday’s session. In turn, this exposes a trip into channel support, which has now lifted to $153.

On-balance volume (OBV) topped out in March 2015 and entered an aggressive distribution wave that ended in August 2015, while an upturn into August 2016 fell short of the prior high. Bulls took control once again in the fourth quarter, lifting the indicator to an all-time high, while the June 2017 breakdown triggered violent downside that hit a three-year low. This bearish sequence raises the odds that the stock will eventually break support and enter a secular downtrend. (To learn more, see: Uncover Market Sentiment With On-Balance Volume.)

The Bottom Line

Costco stock fell nearly 10 points and 6% in the first hour of Friday’s session after a highly bearish reaction to fiscal fourth quarter earnings. Major technical damage in the second and third quarters could now generate a bearish feedback loop, breaking multi-year channel support and dropping the retailer’s shares into a bear market. (For additional reading, check out: Can Costco Recover From Amazon-Driven Decline?)


Published at Fri, 06 Oct 2017 15:33:00 +0000

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Top And Bottom Performing Stocks For Week #40

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Top And Bottom Performing Stocks For Week #40


It is Sunday afternoon and that means we get to review the performance of last week’s historical top and bottom stock symbols in the S&P 500. As you may recall these symbols are the result of parsing a database containing over 50 years worth of statistical performance data. The idea is to extract the prospective top ten winners and losers of the coming week purely based on historical statistics. The result is then sorted by liquidity and any symbol that is scheduled to report earnings or pass ex-dividend is being excluded.

How To Trade Along

Although being no guarantor of success, the long and short candidates posted here each week are intended to perform along their respective historical bias. One way of trading along would be to simply create a small one-week portfolio by buying the long candidates and selling the short candidates on Monday morning shortly after the open. There are no official stops or targets and all transactions are reversed Friday afternoon right before the bell.

Results For Week # 39

The way we keep track is to record the respective relative performance of each week’s long and short portfolio in percentage points. So here are the results for week #39 ending 10/01/2017:

Long Profits: PAYX=0.35, WEC=-1.3

Long Profits Total: -0.95

Short Profits: AMD=4.14, AAPL=-1.47, INTC=-2.42, CSCO=-0.78, ARNC=5.07, JPM=-0.72, KO=1.06, AMAT=-9.04, BMY=-0.6, HAL=-4.02

Short Profits Total: -8.78

Combined Profits Total: -9.73

Clearly this was supposed to be a bearish week for stocks and it turned out to be everything but. So we’re logging a solid loss here, no if or buts.


Published at Sun, 01 Oct 2017 21:38:45 +0000

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The stocks set to win under Trump’s tax plan


Inside the GOP's tax blueprint
Inside the GOP’s tax blueprint

 The stocks set to win under Trump’s tax plan


Get ready for a party on Wall Street if President Trump and Congress successfully rewrite the corporate tax code.

Corporate America’s bottom line would grow dramatically under the proposed slashing of the corporate tax rate from 35% from 20%.

Many critical questions about the GOP’s tax framework remain unanswered — including how to pay for it without blowing up deficits and whether it’ll ever become a reality.

If it does, it’s clear that the tax overhaul would leave some corners of the stock market cheering louder than others. Here are some of the biggest potential winners under the GOP framework:

Tech titans sitting on tons of cash:

Wall Street is drooling over the part of the GOP plan that calls for repatriating cash that is being kept offshore.

American companies have hoarded about $1.3 trillion of cash overseas, where it’s not subject to U.S. taxes, according to Moody’s.

The top 5 U.S. cash hoarders — Apple(AAPL, Tech30), Microsoft(MSFT, Tech30), Alphabet(GOOGL, Tech30), Cisco and Oracle(ORCL, Tech30) — hold 88% of their money overseas. It’s not just Silicon Valley though. Other cash-rich companies include Johnson & Johnson(JNJ), Amgen, Gilead Sciences, Ford(F), Merck and Pfizer(PFE). Each of them were sitting on at least $25 billion in cash at the end of last year, according to Moody’s.

The tax plan seeks to encourage U.S. multinationals to bring those profits back to the U.S. by offering a one-time, low tax rate under “deemed” repatriation, meaning they have to pay the tax whether they bring the money back or not.

The goal is to get companies to deploy that cash to create jobs by building new factories and investing in the business. In reality, much of that money will likely go to investors in the form of dividends and share buybacks.


Banks have a higher tax burden, making them big winners if rates go lower. Financials account for 25% of the tax expenses of the broad S&P 1500, according to KBW Research.

JPMorgan Chase(JPM), Wells Fargo(WFC) and Bank of America(BAC) would all enjoy a 20% or more jump in profits if the corporate tax rate is lowered to 20%, KBW estimates.

Banks also stand to gain in other ways, too. The repatriation of hundreds of billions of dollars in cash could find a home in banks. All of that cash may lead to an uptick in M&A deals that Wall Street firms get paid to advise on. A faster economy, which is the goal of the tax plan, could boost demand for loans.

More good news for banks: Tax reform may cause interest rates to rise. Higher rates make it easier for banks to profit on the difference between what they charge borrowers and what they pay on interest.

“Banks touch all the bases,” said Art Hogan, chief market strategist at Wunderlich Securities.


Companies that tend to pay more to Uncle Sam each year will obviously benefit more than those who pay very little.

The sectors of the S&P 500 that paid the highest tax rates last year were telecom (33.4%), consumer staples (29.1%) and consumer discretionary (28.5%), according to Howard Silverblatt of S&P Dow Jones Indices.

Ninety-nine companies in the S&P 500 paid more than 35% in taxes last year, Silverblatt said. By contrast, he said that 115 companies paid less than 15%, including 42 that got money back.

Tiny stocks

Small-cap stocks are on fire right now thanks to all the Trump tax cut talk. The Russell 2000, home to mostly smaller and U.S.-based companies, has hit a record five days in a row. The index has almost quadrupled the September gains of the more international-focused S&P 500.

The reasoning is that smaller companies tend to pay more in taxes than their larger cousins, which tend to have more sophisticated tax strategies. Due to their size, even just subtle improvements to the cash flows of smaller companies can have a big impact.

Potential losers

Trump’s tax plan may also create some losers, depending on how the details on deductions shake out.

For instance, some fear the GOP’s plan to eliminate state and local tax deductions could hurt the real estate market in high-tax states like New Jersey and Illinois. That would be bad news for homebuilder stocks.

Private-equity firms could also end up losing. The framework did not call for eliminating the carried interest deduction that benefits private-equity firms and hedge funds. However, Gary Cohn, Trump’s top economic official, told CNBC that the president “remains committed” to ending this loophole.

Of course, more negotiations are needed on the tax plan. The deal may ultimately collapse in a cloud of Republican infighting, like the Obamacare repeal plan did.

But Hogan is betting it gets done, eventually.

“Tax reform seems a lot more possible than any other pillar of the administration’s platform. They desperately want a victory,” he said.

–CNNMoney’s Jeanne Sahadi contributed to this report.


Published at Fri, 29 Sep 2017 15:30:06 +0000

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Dow notches longest quarterly win streak in 20 years


Trump's shifting views on stock market highs
Trump’s shifting views on stock market highs

Dow notches longest quarterly win streak in 20 years


The stock market, undaunted by monster hurricanes, political tension and North Korea threats, keeps climbing to new heights.

The Dow soared another 5% during the third quarter, which ends for Wall Street on Friday.

The strong gains extend the Dow’s streak of winning quarters to eight. It’s the longest since an 11-quarter boom that ended in September 1997, according to FactSet stats. Back then, the U.S. economy was going gangbusters under President Bill Clinton at the start of the dotcom boom.

The current streak began during the final three months of 2015 and accelerated after last fall’s election. For those scoring at home, that’s five winning quarters on President Barack Obama’s watch and three under President Trump, who took office in January.

Trump, who claimed as a candidate that the market was in a “big, fat, ugly bubble,”brags about it now that he’s in charge. He did that again on Friday, cheering the “RECORD HIGH” for the S&P 500.

It’s true that the stock market soared after Trump’s victory. Wall Street cheered his promises to revamp the tax code, slash regulation and ramp up infrastructure spending. (The market largely ignored the administration’s less business-friendly trade and immigration policies.)

Stocks have continued climbing even though none of Trump’s economic policies have gotten through Congress. That’s because economic strength in the United States and overseas has kept corporate profits growing.

“The market is primarily up because earnings have been good. The tax reform proposal has been icing on the cake — but that’s not the ultimate reason,” said JJ Kinahan, chief market strategist at TD Ameritrade.

dow trump election stocks 4000

Wall Street has been largely unfazed by the turbulence of the past few weeks and months. The GOP’s repeated failure to repeal and replace Obamacare didn’t dent the market. Nor did the hurricanes that ravaged the Gulf Coast and Caribbean. And escalating tension between Trump and North Korean leader Kim Jong Un caused just fleeting concern among investors.

If anything, September was a bore for the stock market despite its history as a rocky month. The S&P 500 had its least volatile September going back at least to 1970, according to Ryan Detrick at LPL Financial. That’s based on how much the market moves from its high to its low each day.

The calendar ahead looks favorable for the stock market. Over the past 20 years, the Dow climbed 70% of the time during October, according to Bespoke Investment Group. The final three months of the year have historically been the best for the stock market.

That could change this year if Corporate America lets Wall Street down. Investors are hoping third-quarter results, set to begin streaming in later this month, will continue to show healthy profits.

Wall Street may also have to withstand bickering over the GOP’s plans to overhaul the tax system. Tax reform is complex, and many major questions remain unanswered.

“The bill’s announcement, and its eventual passing, are and will be bullish for stocks. But what comes in between is not bullish, and that starts right now,” Michael Block, chief market strategist at Rhino Trading Partners, wrote in a report.

Eventually, investors may grow impatient with Washington if it looks like the tax overhaul is being further delayed or watered down by politics.

“The markets are not going to ignore politics in 2018,” said TD Ameritrade’s Kinahan. “Washington has to get something done.”


Published at Fri, 29 Sep 2017 16:16:54 +0000

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