All posts in "Stocks"

Stocks Move Lower Amid Growing Risks to the Rally

Stocks Move Lower Amid Growing Risks to the Rally

By Justin Kuepper | September 8, 2017 — 6:18 PM EDT

The major U.S. indexes moved lower over the shortened trading week. On Sunday, North Korea conducted a nuclear test with an explosion estimated to be greater than 140 kilotons – or 10 times stronger than anything it has tested before. By Friday, investors had shifted their attention to a massive cyberattack exposing the personal information of 143 million people, as well as Hurricane Irma, which appears on track to hit Florida’s south coast as a Category 4 storm.

International markets were mixed over the past week. Japan’s Nikkei 225 fell 2.12%; Germany’s DAX 30 rose 1.33%; and Britain’s FTSE 100 fell 0.81%. In Europe, the European Central Bank (ECB) indicated that it is considering how to wind down its easy money policies, with details set to emerge in October’s meeting. In Asia, Chinese exports continue to experience a slowdown, but its domestic economy has been resilient. (See also: China Is Slowing: Here Are the Investing Implications.)

The SPDR S&P 500 ETF (ARCA: SPY) fell 0.51% during the shortened trading week, making it the best performing major index. After dragging along lower trendlineresistance in August, the index rebounded past its pivot point at $246.58 in recent sessions. Traders should watch for an ongoing move higher to R1 resistance at $250.32 or a move lower to retest trendline support at around $244.00. Looking at technical indicators, the relative strength index (RSI) moved back to neutral levels of 53.96, while the moving average convergence divergence (MACD) continues to trend higher. (For more, see: The S&P 500 Is 300 Days Above Its 200-Day Moving Average.)

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

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) fell 0.76% over the shortened trading week. After briefly rallying to the middle of its price channel, the index fell back to trendline support at around $218.00 this week. Traders should watch for a rebound to R1 resistance at $221.96 or a breakdown from trendline support to S2 support at $213.39. Looking at technical indicators, the RSI appears neutral at 51.33, and the MACD remains in a bearish downtrend.

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

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 0.93% over the shortened trading week. After breaking out toward upper trendline resistance late last month, the index moved lower to pivot point support levels at $144.21. Traders should watch for a rebound to upper trendline and R1 resistance at $148.21 or a breakdown to the 50-day moving average at $142.51 or lower trendline support just below that level. Looking at technical indicators, the RSI appears neutral at 52.79, while the MACD remains in a tenuous uptrend. (See also: 3 Reasons Apple Will Keep Beating the Market: Bernstein.)

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

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 1.23% over the shortened trading week, making it the worst performing major index. After briefly breaking out from the 50-day moving average earlier this month, the index fell to the pivot point at $138.68. Traders should watch for a breakout toward R1 resistance at $143.25 or a breakdown to the 200-day moving average at $137.02. Looking at technical indicators, the RSI appears neutral at 53.36, while the MACD remains in a bullish uptrend after hitting lows in late August.

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

The Bottom Line

The major indexes moved lower over the past week, which helped bring RSI readings back to neutral levels. Next week, traders will be closely watching several economic indicators, including jobless claims and consumer price index data on Sept. 14 as well as retail sales and consumer sentiment data on Sept. 15. Traders will also be keeping a close eye on the impact of Hurricane Irma and any new developments in North Korea. (For additional reading, check out: 9 Stocks to Own for a U.S. Recession.)

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

 

Published at Fri, 08 Sep 2017 22:18:00 +0000

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3 Ways to Trade Strong Performance in Healthcare

by DarkoStojanovic from Pixabay

 

3 Ways to Trade Strong Performance in Healthcare

Over the past month, healthcare has been one of the top performing sectors. Healthcare is a big sector, and most of the industries within it can be traded via exchange-traded fund (ETF). With the strong recent performance, let’s look at potential buy locations in one well-known ETF and two that are not as well known.

The SPDR S&P Biotech ETF (XBI) is a popular healthcare ETF, with average volume of more than 4 million shares per day. In June, the price broke above an ascending channel, and it then came back to test that channel in August. After a major breakout, when the price comes back to test the prior pattern, it can often be a good entry point. That occurred near $76, and with the Sept. 6 close at $84.22, that buying opportunity has long passed.

However, another opportunity to buy on a pullback may not be far off. Going back to early 2016, rallies for XBI have typically advanced 14% to 24% before seeing a pullback. This rally off the August low is now within that range, meaning that the price could move a bit higher, but then a pullback of 6% to 10% is likely. The potential buy area on the pullback aligns with the trendline​ in play since the start of the year. If this trade setup develops, traders could place a target 5% above the most recent high (which is subject to change). (See also: Why the Biotech Rally Has More Room to Run.)

Technical chart showing the SPDR S&P Biotech ETF (XBI) in an uptrend but likely to pull back

The iShares U.S. Healthcare Providers ETF (IHF) is a less well-known ETF, trading only about 25,000 shares per day. It reached a new high in late July. The advance since late 2016 is composed of extended runs to the upside, interspersed with minor pullbacks. One of those minor pullbacks occurred in late July through mid-August, with the price dropping a bit more than 5% off the $150.75 high. The ETF consolidated through the end of August and then broke to the upside.

Near the breakout point of the consolidation – $145.50 to $146 – could be a good buy point. A stop-loss can be placed below $142 (or below $140 to give the trade a bit more room in case of a deeper pullback), with a target up near $162. The risk here is a deeper pullback of between 12% and 15%, like the one that occurred in late 2016. If that occurs, the above trade would be stopped out, but another buying opportunity would potentially occur between $132 and $128. (For more, see: The Vanguard Effect: Lower Prices, Higher Returns.)

Daily technical chart for the iShares U.S. Healthcare Providers ETF (IHF) in an uptrend

The iShares U.S. Medical Devices ETF (IHI) trades more than 130,000 shares per day and is in a long-term uptrend. After hitting a high of $169.80 in July, the price pulled back a touch more than 5%. While that is a relatively small pullback, it is the largest of 2017.

With the strength of the trend, trying to enter between $165 and $164 is warranted, as the price could run to $172 or $173 in the short term. That said, a pullback of 10% or more, like the one that occurred in late 2016, is inevitable at some point. Waiting for the deeper pullback could mean missing out on another run to the upside (in the short term), but entering here could mean being out of the money if the price does correct further. Those that prefer to wait could look to buy 10% to 12% off the high, which could align with the rising trendline extending back to 2016. (See also: Why This Healthcare ETF Is Surging.)

Technical chart showing the iShares U.S. Medical Devices ETF (IHI) in an uptrend with a trade opoortunity

The Bottom Line

These healthcare ETFs have been in strong uptrends, but that does not necessarily mean right now is the time to buy. Traders should consider where the ETF is trading within its trends and how much upside or downside there is based on tendencies.

The future won’t always align with historical tendencies, but those tendencies do provide a good context for the risk/reward of a trade. Traders should utilize stop-losses to help control risk in the event that the price keeps dropping after entry and risk only a small portion of account capital on any single trade. (For additional reading, check out: Why Healthcare Has Some of the Best Sector ETFs.)

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

 

Published at Thu, 07 Sep 2017 17:00:00 +0000

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Twitter Stock Breaks Out Toward Resistance Levels

A screen displays the stock price of Twitter above the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., January 31, 2017. REUTERS/Lucas Jackson

Twitter Stock Breaks Out Toward Resistance Levels

By Justin Kuepper | September 7, 2017 — 1:33 PM EDT

Twitter, Inc. (TWTR​) shares have moved sharply higher over the past few sessions amid buyout rumors that sparked interest in out-of-the-moneycall options. At the same time, the stock broke out from near-term trendline resistance and could make a move to break out from its next major resistance levels this week. Traders have been keeping an eye on the stock due to the opportunity to capitalize on both fronts.

Twitter beat analyst expectations last quarter with revenue that fell 4.6% to $574 million and earnings per share that hit eight cents. However, many analysts remain skeptical of Twitter’s ability to grow. Aegis Capital believes that the market is in the early stages of an ad recession, which could be bad news for companies like Snap Inc. (SNAP) and Twitter, while Jefferies downgraded Twitter stock in favor of other social players such as Facebook, Inc. (FB) and Alphabet Inc. (GOOG) subsidiary Google. (See also: Twitter Has Lost Out to Facebook: Jefferies.)

Technical chart showing the performance of Twitter, Inc. (TWTR) stock

From a technical standpoint, the stock broke out from short-term trendline resistance at around $17.00 and made progress toward its next major resistance levels at the 50-day moving average, R1 resistance and trendline resistance at around $17.46. The relative strength index (RSI) remains neutral at 55.82, but the moving average convergence divergence (MACD) continues to improve from its lows made in mid-August.

Traders should watch for a breakout from the 50-day moving average, R1 resistance and trendline resistance at around $17.46 to R2 resistance at $17.99. A prolonged breakout could lead the stock to close the gap made in late July and move up to around $20.00, but traders should keep an eye on RSI levels moving into overbought conditions. The long-term trend also remains uncertain, with the stock trading mostly sideways. (For more, see: Twitter Would Lose $2B if Trump Stopped Tweeting: Analyst.)

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

 

Published at Thu, 07 Sep 2017 17:33:00 +0000

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Weekly Initial Unemployment Claims increase to 298,000

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By nattanan23 from PixabayWeekly Initial Unemployment Claims increase to 298,000

by Bill McBride on 9/07/2017 08:34:00 AM

The DOL reported:

In the week ending September 2, the advance figure for seasonally adjusted initial claims was 298,000, an increase of 62,000 from the previous week’s unrevised level of 236,000. This is the highest level for initial claims since April 18, 2015 when it was 298,000. The 4-week moving average was 250,250, an increase of 13,500 from the previous week’s unrevised average of 236,750.

Hurricane Harvey impacted this week’s initial claims.
emphasis added

The previous week was unrevised.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 250,250.

This was above the consensus forecast, but an increase was expected due to Hurricane Harvey.

Note: Claims will probably increase further over the next few weeks due to Hurricane Harvey and possibly due to Hurricane Irma.

Published at Thu, 07 Sep 2017 12:34:00 +0000

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Investors, Grab The Huge Opportunity in Smart Home Stocks: Barclays

Investors, Grab The Huge Opportunity in Smart Home Stocks: Barclays

By Shoshanna Delventhal | September 6, 2017 — 5:02 PM EDT

A team of analysts at Barclays suggests that the booming connected home market represents “one of the most significant investment opportunities over the next several years.” The Wall Street bank indicates that as consumers become increasingly attracted by voice controls and appreciate the savings generated from smart gadgets, the connected home industry could be worth several hundred billion dollars by 2020. (See also: Amazon’s Alexa Will Approach 71% of Smart Speaker Market: eMarketer.)

Barclays analyst Manav Patnaik highlights Alphabet Inc.’s Google (GOOG), Amazon.com Inc. (AMZN), Apple Inc. (AAPL) and Microsoft Corp. (MSFT) as major players in the space attempting to build their own ecosystem of smart house products. Other companies that sell gadgets used across the different platforms developed by the major tech giants are also set to gain from rapid adoption of smart home tech.

Home Automation Everywhere

While smart homes were once limited to wealthier consumers, new products such as the Apple HomeKit have eliminated the need for expensive, highly specialized systems that are required to be installed in homes. Consumers now only need an affordable hub and smartphone to add voice controls to gadgets such as light bulbs, vacuums and garage door openers.

“We estimate that the full opportunity of converting to a smart home with a fully electric vehicle replacing a conventional vehicle would save consumers 46.6% on their annual energy bills while also increasing overall household usage by 14% in our base case,” wrote the Barclays analyst, also suggesting that voice control will be the driving force behind growth in the smart home space.

Barclays foresees the hardware segment of the market contributing $130 billion by 2020, while software and advertising are expected to reach $170 billion over the same period. (See also: Tech Stocks Set for Boom From Smart Speakers.)

 

Published at Wed, 06 Sep 2017 21:02:00 +0000

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3 Reasons Apple Will Keep Beating the Market: Bernstein

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3 Reasons Apple Will Keep Beating the Market: Bernstein

By Shoshanna Delventhal | September 6, 2017 — 6:06 PM EDT

As shares of tech behemoth Apple Inc. (AAPL) surge nearly 40% in 2017 versus the S&P 500’s 10% gain over the same period, one team of analysts foresees further upside in shares ahead of the tech giant’s anticipated new product releases slated for mid-September.

“We continue to believe that Apple offers attractive risk reward,” wrote Bernstein’s Toni Sacconaghi in a research note this week. The analyst, reiterating an outperform rating on AAPL, notes that the stock multiple is still less than it was at the time of the iPhone 6 unveiling in 2015. Bernstein foresees a $999 priced iPhone 8 adding $0.70 to his fiscal 2018 earnings per share (EPS) estimate, now at $11.05. (See also: Apple iPhone 8: Leak ‘Confirms’ a Price of $999.)

What About Samsung?

“As Apple’s stock sits at all-time highs and as the highly anticipated iPhone 8 launch approaches, many investors have asked how to play AAPL from here,” wrote the analyst, highlighting three main reasons the stock could surge higher.

First, Sacconaghi suggests that the consensus’ view on average selling prices (ASPs) and units of the iPhone 8 “may still be too conservative,” while Apple’s stock has “continued to outperform in iPhone cycles that have exceeded investor expectations.” The analyst also noted that AAPL is trading “comfortably below its peak relative multiple during its last iPhone super-cycle,” in which it would trade at $186 versus $161.91 at Wednesday close. Further, Bernstein suggests that, “the potential contribution from currency and other products (HomePod, LTE Watch) may be material.”

In response to fears that consumers will shy away from the iPhone 8 in turn for cheaper options, Sacconaghi notes, “such pricing is not entirely outlandish, given Samsung’s recent launch of the Galaxy Note 8 pricing that has a starting price tag of $960.” (See also: Apple iPhone 8 Won’t Stop Market Share Loss: IDC.)

 

Published at Wed, 06 Sep 2017 22:06:00 +0000

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Why the Bull Market May Last Until 2018

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Why the Bull Market May Last Until 2018

By Mark Kolakowski | September 5, 2017 — 2:15 PM EDT

The bull market in stocks is still alive and kicking and is likely to extend into 2018. But the bull’s final charge won’t be pretty, according to Doug Ramsey, chief investment officer at Minneapolis-based Leuthold Group, as reported by Barron’s. Stocks are likely to face huge volatility as they stage one last rally before year-end and then stumble badly, falling at least 25% in 2018, he predicts. Investors should expect a correction in the next few months, a market drop of up to 10 percent, before the bull’s last-gasp rally and final plunge.

Leuthold publishes widely-read studies on the markets.

One Final Bull Run

“If a number of different valuation metrics were to return to their 60-year median, since the S&Ps inception in 1957, that would imply a drop in the S&P 500 to 1750, or about 25%,” Ramsey told Barron’s. A market technician, he notes that years ending in “7” tend to have a “strong downward bias” in the August to November period. He believes that a pullback of 6% to 8% in the S&P 500 Index (SPX) is already underway, and that the Russell 2000 Index could drop by 13% to 14%. After rebounding to new highs later in the fall, he expects the S&P 500 to close 2017 in the range of 2550 to 2600.

Betting on Technology

In recent weeks, Leuthold has reduced its maximum net equity exposure to 57%, Ramsey says in Barron’s August 26 story. His company, he indicates, has its biggest bets in technology, particularly semiconductor equipment, data processors, IT consulting, and electronic manufacturing services. However, his firm does not own the FANG stocks, which are Facebook Inc. (FB), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX), and Google parent Alphabet Inc. (GOOGL). They do not believe that tech sector valuations are out of hand, even including the FANGs, and see a positive in the fact that the price to cash flow ratio for the S&P tech sector has been virtually unchanged over the past four years, at a value of about 15.

Bull Market Top in 2018

The great bull market will end sometime in 2018, Ramsey predicts, but he won’t speculate on when the top will be reached. Current negative indicators that he cites include a slowdown in the auto market, a cyclical peak that’s approaching in single-family housing, and a slowdown in annual nonfarm payroll employment growth, which normally precedes the onset of a recession within 12 months.

After experiencing negative real, inflation-adjusted, interest rates for eight of the last nine years, he expects that “the level at which rates begin to bite might be lower than commonly believed.” Thus, if yields on the 10-Year Treasury note rise to 3% or 3.5%, he believes that income-oriented investors might begin selling high-yielding stocks, whereas bond yields of 5.5% to 6% would have been necessary in the past to prompt a similar exit from equities.

Inescapable Investment Math

Based on market history going all the way back to 1880, a theoretic balanced portfolio that has been 60% in S&P 500 stocks and 40% in 10-Year U.S. Treasury Notes has produced an average annualized return of 8%, Ramsey says, noting that this is a common target for pension funds. In turn, that 8% breaks down into 4.1% from dividend and interest income, and 3.9% from capital appreciation, he adds. Today, however, “a record combined overvaluation” of both stocks and bonds mean that a 60/40 equity/debt portfolio is yielding only about 2.1% today. “That is inescapable investment math that challenges the bulls,” he asserts, forecasting that investors will struggle to generate an average annual return of 3% to 4% over the next ten years for such a balanced portfolio.

Meanwhile, billionaire investor Warren Buffett remains positive on the equity markets. He believes that stock valuations, though high by historical standards, are far more reasonable than those on bonds right now. (For more, see also: Buffett Says Aging Bull Market Best Place to Be.)

 

Published at Tue, 05 Sep 2017 18:15:00 +0000

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Stocks Edge Higher Despite Rising Risks

 

Stocks Edge Higher Despite Rising Risks

By Justin Kuepper | September 1, 2017 — 6:28 PM EDT

The major U.S. indexes moved higher over the past week, despite weak nonfarm payroll data on Friday morning. The Bureau of Labor Statistics reported 156,000 jobs added in August, which was lower than the 180,000 consensus forecast. While these figures were lower than expected, Wednesday’s favorable second quarter GDP revision was enough of a positive to offset any negativity, with a better-than-expected 3% annualized rate.

International markets saw mixed results over the past week. Japan’s Nikkei 225 rose 1.22%; Germany’s DAX 30 fell 0.21%; and Britain’s FTSE 100 rose 0.5%. In Europe, the market will be keeping a close eye on the European Central Bank’s upcoming monetary policy meeting, where measures to reduce stimulus could be announced. In Asia, investors will be keeping an eye on North Korean aggression, particularly with its recent missile launch over Japan. (See also: The 3 Biggest Risks Faced by International Investors.)

The SPDR S&P 500 ETF (ARCA: SPY) rose 1.34% over the past week. After breaking out from the 50-day moving average at $245.05, the index reached prior highs and trendlineresistance at around $247.50. Traders should watch for a breakout to R1 resistance at $250.32 or R2 resistance at $253.16 on the upside or a move lower to retest the 50-day moving average. Looking at technical indicators, the relative strength index (RSI) moved higher to 60.9, while the moving average convergence divergence (MACD) experienced a bullish crossover that could signal upside ahead.

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

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) rose 0.86% over the past week, making it the worst performing major index. After rebounding from the 50-day moving average at $216.54, the index moved toward the middle of its price channel. Traders should watch for a breakout to R1 resistance at $221.86 or R2 and upper trendline resistance at $224.21 or a move lower to the pivot point at $218.80. Looking at technical indicators, the RSI rose to 61.98, but the MACD could see a near-term bullish crossover. (For more, see: Top 3 ETFs That Track the Dow.)

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

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 2.83% over the past week, making it the best performing major index. After breaking out from the 50-day moving average at $142.12, the index moved toward its upper trendline resistance. Traders should watch for a breakout from R1 resistance at $148.21 to R2 resistance at $150.23 or a move lower to retest the pivot point at $144.20. Looking at technical indicators, the RSI moved higher to 62.98, but the MACD experienced a bullish crossover that could signal upside ahead.

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

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 2.66% over the past week. After breaking out from the pivot point at $138.68, the index moved beyond the 50-day moving average to the middle of its price channel. Traders should watch for a breakout to R1 resistance at $143.25 or upper trendline resistance at $145.50. A failure to break out could lead to a retest of the pivot point at $138.68. Looking at technical indicators, the RSI moved higher to 60.64, but the MACD experienced a bullish crossover that could signal upside ahead. (See also: IWM: iShares Russell 2000 Index ETF.)

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

The Bottom Line

The major indexes moved higher over the past week, and technical indicators predict more upside potential ahead. Next week, traders will be keeping an eye on several upcoming economic indicators, including factory orders on Sept. 5 as well as international trade data and jobless claims on Sept. 6. The market will also be monitoring developments involving North Korea and the U.S. debt ceiling debate. (For additional reading, check out: Trade Data Hints at a Shift in the Structure of the U.S. Economy.)

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

 

Published at Fri, 01 Sep 2017 22:28:00 +0000

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U.S. stock ETFs attract most cash since June: Lipper

 

U.S. stock ETFs attract most cash since June: Lipper

NEW YORK (Reuters) – U.S. fund investors regained their risk appetite during the latest week, draining money market funds and pouring their cash into stocks after six straight weeks of withdrawals.

Stock exchange-traded funds in the United States attracted $9.2 billion during the week ended Aug. 30, the most since June, according to Lipper data on Thursday.

That more than offset the $3.1 billion that bled from equity mutual funds in the same period, the research service said. Mutual funds are heavily favored by retail investors, while ETFs draw a diverse set of clients, including fast-trading hedge funds.

Tom Roseen, head of research services for Thomson Reuters’ Lipper unit, said there is plenty to worry about with ongoing conflict between North Korea and the United States as well as “lofty” U.S. stock prices. Yet the global economy looks good.

“People were a little bit more aggressive,” Roseen said of ETF investors. “They were just focused on the good news.”

Funds focused on domestic shares pulled in $3.9 billion, the most since June. Internationally focused equity funds pulled in $2.2 billion, the most since July, Lipper said.

Money market funds, which have pulled in tens of billions this summer as calm markets turned turbulent, posted $19.9 billion in withdrawals during the latest week, the data showed.

But Roseen said uncertainty is keeping demand up for some safe-haven investments. Gold is trading at $1,321 an ounce, up nearly 9 percent from early July.

Precious metals commodities funds, which invest directly in gold and other similar assets, pulled in $766 million in their largest week of inflows since June. The VanEck Vectors Gold Miners ETF pulled in $213 million, the most since March. That fund buys shares in companies that produce bullion.

Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Andrew Hay

Our Standards:The Thomson Reuters Trust Principles.

 

Published at Thu, 31 Aug 2017 23:40:18 +0000

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New ETF plans to ‘make America great again’

 

New ETF plans to ‘make America great again’

NEW YORK (Reuters) – A planned index fund is hoping to “make America great again” by investing in companies that support the Republican Party.

The Point Bridge GOP Stock Tracker exchange-traded fund will list under the ticker “MAGA,” according to a filing with U.S. securities regulators this week, an apparent reference to the slogan repeatedly used by U.S. President Donald Trump.

A call to the fund’s sponsor, Point Bridge Capital LLC in Fort Worth, Texas, was not immediately returned. The company is planning a set of what it calls Politically Responsible Investing products.

Wall Street is building a growing number of products that cater to people hoping to express their social or political views when they invest. Current offerings include ETFs that reward companies with high gender diversity, strong environmental practices or those that meet certain religious standards.

The “MAGA” fund will invest in a group of S&P 500 .SPX companies with employees or political action committees that donate significant money to back Republican candidates for office. The data is based on public filings with the Federal Election Commission, according to the fund’s filings.

Annual expenses for the fund are at $72 a year for every $10,000 under management and it is expected to list on CBOE Holdings Inc’s (CBOE.O) Bats exchange.

A rival group, Active Weighting Advisors LLC in Cape Girardeau, Missouri, plans a Republican Policies Fund and a Democratic Policies Fund listed under the tickers GOP and DEMS.

Those funds are designed to perform better when the U.S. government is helped by each of the parties’ policies, according to filings. A spokesman for that company declined to comment.

The Republican Party, founded in 1854, is sometimes referred to as the Grand Old Party or GOP.

Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Matthew Lewis

Our Standards:The Thomson Reuters Trust Principles.

 

Published at Thu, 31 Aug 2017 22:06:33 +0000

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Gilead Rally Isn’t Fully Warranted: Morgan Stanley

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Gilead Rally Isn’t Fully Warranted: Morgan Stanley

By Shoshanna Delventhal | August 31, 2017 — 4:34 PM EDT

As shares of biopharmaceutical company Gilead Sciences Inc. (GILD) continue to soar on news regarding the approval of a CAR-T treatment from Novartis AG (NVS) on Tuesday and Gilead’s acquisition of Kite Pharma Inc. (KITE) on Monday, one team of analysts finds the mixed reaction in pharma stocks rather puzzling.

Morgan Stanley’s Matthew Harrison and team indicate that while a bump in Foster City, Calif.-based Gilead’s shares following its $12 billion acquisition of Kite Pharma was expected due to investor speculation regarding increased strategic interest in the CAR-T space, the mixed reaction in stocks following Novartis’ approval may be unwarranted.

Shares Up on CAR-T Approval

Investors sent Juno Therapeutics Inc. (JUNO) falling on Tuesday, recovering 4.8% as of Thursday afternoon at $42.22 per share and reflecting a 37.3% rally this week. Gilead continues to surge after facing no pullback on Tuesday, up 2.3% on Thursday at $83.07 per share and reflecting a 12.5% jump this week. Biotechnology company Bluebird Bio Inc. (BLUE) has rallied more than 26% this week, up 10% on Thursday at $123.70 per share. (See also: Juno Stock Continues Breakout After Gilead Buys Kite.)

“Novartis outcomes-based pricing is a slight negative to the group, esp. for indications where responses are low (like DLBCL [diffuse large B-cell lymphoma]). Thus, it makes sense that JUNO saw some pressure in light of the sig. move higher this week and BLUE closed the gap with JUNO as BCMA response rates high,” wrote Harrison, speaking to B-cell maturation antigen response rates.

The analysts reiterated their perspective that initial DLBCL sales in 2018 will likely drive street sentiment for Gilead, Novartis and its peers. “We expect near-term volatility to continue as sentiment swings, but do not see greater clarity until 2018,” wrote the Morgan Stanley analysts. (See also: Why Gilead’s Acquisition of Kite Is Not Enough.)

 

Published at Thu, 31 Aug 2017 20:34:00 +0000

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Why Utility Stocks Are Looking So Attractive

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Why Utility Stocks Are Looking So Attractive

Max Ganik August 30, 2017

Published at Wed, 30 Aug 2017 14:48:00 +0000

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Watch for Triangle Breakouts in These Stocks

 

Watch for Triangle Breakouts in These Stocks

By Cory Mitchell | August 30, 2017 — 1:00 PM EDT

The triangle is a useful chart pattern, especially when it occurs in the context of a trend. A triangle is formed when the price makes converging highs and/or lows. It shows that movement in the stock is becoming smaller and provides some areas to watch for a breakout. If the price moves outside the triangle, it is an indication that the price could keep moving in that breakout direction. A breakout that occurs in the same direction as the overall trend is especially noteworthy if looking to initiate a new position. A breakout in either direction is noteworthy if already in a position, as it provides context for whether to keep holding the position or to consider exiting it.

IHS Markit Ltd. (INFO) stock has had a great year, up 31% in 2017. After peaking in June at $47.92, the stock has been moving in a triangle pattern. The rising trendline (bottom of the triangle) intersects near $46 – therefore, a drop below that level, especially a closing price, would signal a downside breakout. A rally above the upper trendline at $47 would imply an upside breakout. The height of the triangle at its widest point is $4.58 (it then narrows). This can be added or subtracted to the breakout point to provide an approximate target point. If a downside breakout occurs, the target is $41.42, while an upside breakout would target $51.58. (See also: Corporate Inversions: IHS and Markit Merge.)

Technical chart showing a triangle pattern in IHS Markit Ltd. (INFO) stock

Dr Pepper Snapple Group, Inc. (DPS) stock has been forming a triangle since mid-June. The triangle occurs well off the April high of $99.47, following an abrupt fall on April 26. A daily close below $90 would break the triangle to the downside and provide a target of $82. On the other hand, closes above $92, and especially above $93, would signal an upside breakout and a retest of the $99 to $100 area. That $100 area warrants caution, as it has been probed twice in the past 14 months and has been rejected both times. Similarly, the $82 downside target saw the price bounce aggressively off of it in late 2016. The triangle is right in between strong support and resistance areas. (For more, see: Dr Pepper Snapple Q2 Earnings Lag, Sales Top Estimates.)

Technical chart showing a triangle pattern in Dr Pepper Snapple Group, Inc. (DPS) stock

The triangle on the chart of Restaurant Brands International Inc. (QSR) stock started in June. In that month, the stock reached a low of $56.15 and a high of $62.94. Those set the extremes for the triangle, and the price action has been narrowing since. Traders should watch for a downside breakout below $59. Based on the size of the triangle, the downside target is $52.21. With multiple swing highs just below $63, traders should also watch for a breakout above that level. If a breakout above $63 occurs, the target is $69.79. (See also: Restaurant Brands Q2 Earnings Beat, Revenues Miss.)

Technical chart showing a triangle pattern in Restaurant Brands International Inc. (QSR) stock

The Bottom Line

The triangle is a useful pattern. It can be traded, but it can also be used for analytical insight. If already in a position, a breakout in the opposite direction is not ideal and signals that the price could move against the position for some time. Alternatively, a breakout in the trade direction signals that the trade should be kept on.

Triangles also provide a way to control risk. Traditionally, a stop-loss order is placed outside the triangle on the opposite side from the breakout. For example, with an upside breakout, the stop-loss is placed just below the lower trendline at the time of the breakout. Alternatively, the stop-loss can be placed below a recent swing low (if going long) or above a recent swing high (if going short). Because the target is based on the thickest part of the triangle and the risk is based on the narrowest part of the pattern, triangles can offer very favorable risk/reward trades. (To learn more, check out: Analyzing Chart Patterns: Triangles.)

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

 

Published at Wed, 30 Aug 2017 17:00:00 +0000

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Apple Suppliers Catch Bid After Analog Devices Results

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Apple Suppliers Catch Bid After Analog Devices Results

By Alan Farley | August 30, 2017 — 11:52 AM EDT

Shares of Apple Inc. (AAPL) supplier Analog Devices, Inc. (ADI) gained more than 5% in the first hour of Wednesday’s session after the company beat fiscal third quarter profit and revenue estimates while raising fourth quarter guidance. The bullish results should generate a steady tailwind for the broad swath of companies that make iPhone components, especially with the iPhone 8 set for release in September or October.

These symbiotic issues have underperformed their benefactor throughout 2017, with the biggest names trading well below their 2017 highs while Apple stock grinds out a series of all-time highs. This laggard behavior suggests that product lines outside the iPhone universe have weighed on results, which makes sense given the highly commoditized nature of the semiconductor business. (For a refresher, see: The Industry Handbook: The Semiconductor Industry.)

Analog Devices stock topped out at $103 in 2000 and entered a multi-year downtrend that finally bottomed out in the mid-teens in 2008. The stock returned to resistance at the 2004 swing high just above $50 in 2013 and broke out one year later, making steady progress into the May 2017 high at $90.49. It then reversed on heavy volume and sold off in a rounded correction that tested 200-day support for nearly three months.

The post-news reaction has broken the trendline of lower highs in place since June 2017 and reached the 50% sell-off retracement level above $83. The rally wave is likely to stall between that level and the .618 retracement at $85, giving way to a broader basing pattern before it tackles the multi-year high in the low $90s. Meanwhile, pullbacks to new trendline support in the $80 to $81 price zone should now offer low-risk buying opportunities. (See also: Analog Devices Beat Earnings and Revenues in Q3.)

Cirrus Logic, Inc. (CRUS) shares posted an all-time high at $61.13 in 1995 and entered a persistent decline that ground out lower lows into the October 2002 all-time low at $1.47. The stock lagged badly during the mid-decade bull market, struggling in the lower third of its multi-year trading range, and posted a higher low during the 2008 economic collapse. The stock finally completed a 100% round trip into the prior century’s high in January 2017.

Cirrus Logic stock broke out in April, hitting an all-time high at $71.97 in June before turning sharply lower, dropping into new support in the low $60s. An early August plunge completed a failed breakout that reached a five-month low last week, while this week’s news has completed a three-week basing pattern. This reversal should support a relief rally into new resistance, which is likely to deny bulls into the fourth quarter. iPhone hype at that time could then yield an even stronger recovery wave. (For more, see: 2 Suppliers Dependent on Apple for a Majority of Revenue.)

Skyworks Solutions, Inc. (SWKS) shares stalled at $78.25 in 2000 following a multi-year uptrend and sold off to $2.89 in 2002. The stock underperformed throughout the mid-decade bull market and tested the multi-year low in 2009, grinding out a long-term double bottom reversal. The subsequent uptick reached the prior decade’s high in February 2015, giving way to a second quarter breakout to an all-time high at $112.88, followed by a rounded correction that found support in the upper $50s in 2016.

Sellers took control after a steady recovery wave reached 2015 resistance in June 2017, dumping the stock to a three-month low, ahead of consolidative price action between June’s high and low. The stock struggled at the 50-day exponential moving average (EMA) into this week’s news and has turned higher but not broken key resistance now centered at $103.50. As a result, interested market players should keep their powder dry, focusing on today’s other entries or stalking this chart until price action sets off buying signals with a breakout toward $105. (See also: Chip Stocks Not Finished Yet, More Room to Run.)

The Bottom Line

Apple suppliers are gaining ground this week after Analog Devices reported surprisingly strong quarterly results while raising forward guidance. This bullish price action could mark the start of a long-term rally for the group, with many components set to hit new highs in the triple digits. (For additional reading, check out: Top 5 Semiconductor ETFs.)

 

Published at Wed, 30 Aug 2017 15:52:00 +0000

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Xerox Stock Tests Resistance Amid 2-Month Rally

 

Xerox Stock Tests Resistance Amid 2-Month Rally

By Justin Kuepper | August 27, 2017 — 6:08 PM EDT

Xerox Corporation (XRX) shares rose over half of a percent on Friday in a move that will test key trendlineresistance levels this week. A breakout from trendline resistance could send shares to fresh 52-week highs following their rally over the past two months. While the company has been struggling in terms of its fundamental performance, investors are hoping that Xerox’s plans to shed non-core assets and modernize its existing businesses will pay off in the long term.

Last quarter, the company reported revenue that fell nearly 8% to $2.57 billion – missing consensus estimates by $40 million – while earnings per share of 87 cents beat consensus estimates by seven cents per share. Equipment sales fell by 16% to $546 million, while post-sale revenue slipped 5.7% to $2.02 billion. On the positive side, adjusted gross margins improved 50 basis points to 40.7% thanks to reduced expenses. (See also: Xerox Beats on Q2 Earnings but Misses on Revenue.)

Technical chart showing the performance of Xerox Corporation (XRX) stock

From a technical standpoint, Xerox stock broke through R1 resistance at $31.87 to upper trendline resistance at around $32.30. The relative strength index (RSI) is approaching overbought levels at 61.21, while the moving average convergence divergence (MACD) remains in a bearish downtrend since mid-August. Traders should maintain a bullish bias on the stock given its significant run-up of approximately 15% over the past three months.

Traders should watch for a breakout from upper trendline resistance to R2 resistance at $33.07, which could lead to a breakout to new 52-week highs. If the stock fails to break out, prices could move down to R1 support at $31.87. A further breakdown from these levels could lead the stock to retest lower trendline support at $31.00. Traders should maintain a bullish bias on the stock while watching RSI levels for overbought conditions. (For more, see: Xerox Strengthens Foothold in Multi-Brand Retail Space.)

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

 

Published at Sun, 27 Aug 2017 22:08:00 +0000

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Cash is king for U.S. fund investors wary of stocks

Cash is king for U.S. fund investors wary of stocks

NEW YORK (Reuters) – Investors socked savings away and opted against loading up on U.S. stocks during the latest week, Lipper data for U.S.-based funds showed on Thursday.

Money market funds, designed to hold their cash value even when markets falter, attracted $24.6 billion during the week ended Aug 23. The products are on pace for their largest monthly inflows since December 2012, having drawn $69 billion already during August, Lipper said.

Stock mutual fund and exchange-traded fund withdrawals were $3.4 billion, according to the weekly data.

Investors’ risk-averse shift came as the S&P 500 was hit by a 1.5 percent selloff last Thursday, the kind of setback that has grown increasingly rare as U.S. stocks prepare to claim a ninth straight year of positive total returns.

Investors are wary of whether tax reform and other promised U.S. government policies will come to fruition and lift markets further, said Pat Keon, senior research analyst for Thomson Reuters’ Lipper unit. A late-September deadline also loomed for U.S. officials to raise the amount of money the government can borrow, or risk default.

“People are taking money out of play,” said Keon, “waiting to see what happens before they invest.”

Meanwhile, once-popular bets on rising rates and inflation are fading as monetary policymakers convene for a summit in Wyoming.

Central bankers have kept developed economies’ interest rates near historic lows to stoke growth, and inflation has fallen short of levels that would push them to make a drastic change. Rising inflation and rates hurt a bond’s value.

Yet funds invested in certain types of bonds that gird against rising prices posted $300 million in outflows during the week, the most withdrawn since June 2016.

Loan participation funds, invested in debt that actually yields more when rates rise, recorded $377 million in weekly outflows, also their largest withdrawals in about 14 months.

Fund flows show more confidence in high-rated bonds and international stocks than in domestic stocks.

Non-domestic equity funds, which attracted $996 million in the latest week, have recorded outflows just four weeks this year, according to Lipper. Investment-grade debt funds have not seen a single week of outflows in 2017, pulling in $3.3 billion during the latest seven-day period.

By contrast, domestic stock funds posted $4.4 billion in weekly withdrawals. Technology sector funds posted $427 million in outflows, their first withdrawals in seven weeks. High-yield bond funds recorded $1 billion in outflows, Lipper said.

Reporting by Trevor Hunnicutt; Additional reporting by Kimberly Chin; Editing by James Dalgleish and Andrew Ha

 

Published at Fri, 25 Aug 2017 01:06:15 +0000

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Jeweler Stocks in Rally Mode After Strong Quarters

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Jeweler Stocks in Rally Mode After Strong Quarters

By Alan Farley | August 24, 2017 — 10:02 AM EDT

Tiffany & Co. (TIF) and Signet Jewelers Limited (SIG) reported solid second quarter results on Thursday morning, lifting off summer lows in recovery waves that could pick up steam in coming weeks. Signet’s results look stronger than those of its rival at first glance, beating quarterly estimates while raising fiscal year 2018 guidance. Tiffany also beat quarterly expectations, but revenue contracted year over year, and the company failed to raise annual projections.

The results confirm healthy consumer buying interest in the luxury segment, with folks at the top end of the financial spectrum spending freely. It matches broad optimism about tax cuts under the Trump administration, despite the lack of progress on the president’s economic agenda since he took office in January. Even so, both stocks will need weeks or months of higher prices to break long-term resistance levels and reach new highs. (For more, see: Jewelers Gaining Ground in Tough Retail Tape.)

Tiffany stock topped out at $57.34 in October 2007 following a multi-year uptrend and plunged into the mid-teens during the 2008 economic collapse. The subsequent bounce completed a round trip into the prior high in the fourth quarter of 2010 and broke out six months later, but momentum buying interest failed to develop. Choppy sideways action then took control, persisting into 2013, when the stock took off in a healthy advance that posted a series of new highs. (See also: Tiffany Stock Shines on Q2 Earnings Beat, View Intact.)

The uptrend hit an all-time high at $110.60 in December 2014, giving way to a correction that ended at a three-year low at $56.99 in June 2016. It completed a double bottom reversal five months later, breaking out in a recovery wave that stalled within two points of the .786 Fibonacci sell-off retracement level in April 2017. A July test at that harmonic barrier triggered a reversal and sell-off that found support at the 200-day exponential moving average (EMA) just ahead of this week’s bullish report.

Short-term traders looking for technical guidance should focus their attention on retracement levels generated by the four-week sell-off. This analysis highlights resistance just above $90, where the .386 retracement and broken range support have narrowly aligned. The stock is trading near $91 in the pre-market, suggesting a bullish platform for continued upside into $93, but price action during the regular session could alter that view. (For more, see: Goldman Sachs: Tiffany & Co. Is a Solid Gold Bet.)

Signet Jewelers shares topped out the low $50s in 2007 and were hurt badly during the bear market, and the company was forced to issue a one-for-two reverse split to maintain liquidity. The stock bottomed out at $5.91 in the first quarter of 2009 and entered a recovery wave that completed a round trip into the prior high in 2011. A narrow consolidation at that level yielded a healthy 2012 breakout and trend advance, lifting the stock into the October 2015 all-time high at $152.27.

The stock sold off into 2016, building a descending channel that has controlled price action into the third quarter of 2017. Selling pressure eased at a four-year low in the mid-$40s in June 2017, giving way to a bounce that failed at the 50-day EMA in the lower $60s in early August. The stock fell more than 10 points into this week’s confessional but has recouped that loss, trading as high at $62 in the pre-market. (See also: Signet’s Q2 Earnings and Sales Top the Zack’s Consensus.)

The buy-the-news reaction has remounted a small-scale head and shoulders pattern with a neckline at $55, generating new support at that level. However, it has also stalled under a trendline​ going back to February 2017, predicting additional testing at the 50-day EMA, which the stock has failed to hold for longer than a few weeks since 2015. Once mounted, bulls will face an even challenge at channel resistance near $70, with that level tightly aligned with the 200-day EMA.

The Bottom Line

Tiffany and Signet Jewelers surprised retail bears with bullish second quarter results on Thursday morning, lifting the beaten-down brick and mortar group. Both stocks have already reached short-term resistance levels following post-news rallies but could add to gains in coming weeks. Conversely, neither stock is trading close to the price levels needed to sustain new uptrends. (For additional reading, check out: Jewelers Vulnerable to Brick and Mortar Exodus.)

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

 

Published at Thu, 24 Aug 2017 14:02:00 +0000

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Best Buy Stock Probing All-Time Highs

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Best Buy Stock Probing All-Time Highs

By Alan Farley | August 24, 2017 — 11:30 AM EDT

Best Buy Co., Inc. (BBY) defied retail sector bears on Thursday morning, rallying to an all-time high following a three-month test at 11-year resistance near $60. The stock has outperformed its brick-and-mortar peers for many months, cutting costs in a brutally adverse sales environment while enhancing its online portal to compete more effectively with Amazon.com, Inc. (AMZN) and privately held Newegg.

However, there is little rush for market players to take new exposure because breakouts all across the market universe have developed little buying interest in recent months, often reversing into new downtrends. This conflicted behavior suggests that the stock will enter a longer testing period, with success measured by modest gains until this confused mid-year tape attracts greater public participation. (See also: Best Buy Stock Poised to Break Out Ahead of Earnings.)

BBY Long-Term Chart (1990 – 2017)

A long downtrend ended at a split-adjusted 17 cents in 1990, giving way to a healthy uptrend that topped out at $5.03 in 1995. The stock lost ground for the next two years, bottoming out at 88 cents, ahead of a powerful buying impulse that continued into the April 2000 high at $39.50. It broke a double top pattern in October and fell into the single digits two months later.

That decline posted the lowest low in the past 16 years ahead of range-bound action that persisted into a 2005 breakout. Momentum buying pressure failed to develop, yielding a secondary trading range with resistance centered at $59.50. That level is important to keep in mind because it is back in play in the second half of 2017. The range finally collapsed in September 2008, generating a vertical decline that dropped the stock nearly 70% in just two months. (For more, see: Why Is Best Buy Stock So Volatile?)

A bounce into 2010 fell short, stalling at the .618 Fibonacci retracement level, ahead of a steep decline that posted a 12-year low at $11.20 in December 2012. It completed a round trip back to the 2010 high in 2013, with that level generating intense resistance until an April 2017 breakout reached the 2006 high. It spent three months carving a small-scale cup and handle pattern at that level, ahead of this morning’s breakout attempt.

BBY Short-Term Chart (2015 – 2017)

The stock entered a broad symmetrical triangle after the February 2014 low at $22.30, posting lower highs and higher lows into August 2016, when it broke out on heavy volume. It took another three months to mount the top of the triangle in the mid-$40s and seven more months to clear that level. This stair-step price action has continued into the second half of 2017, with two more sets of higher highs up to 11-year resistance. (See also: Best Buy Stock Tanks on Amazon Service Team Report.)

The three-month cup and handle built a solid platform ahead of this morning’s breakout attempt, which has been met with aggressive selling pressure. However, bulls should eventually prevail given the well-established uptrend and solid technical characteristics. Even so, a breakdown through the mid-August low at $58.93 would undermine the bullish outlook, perhaps triggering a decline into long-term support at the 200-day exponential moving average (EMA).

On-balance volume (OBV) has carved a graceful accumulation pattern since 2014, with the long series of higher highs and higher lows into May 2017 signaling extensive institutional sponsorship that bodes well for higher prices. A minor deficit into August is not enough to signal a bearish divergence, because just one or two high-volume buying days would lift the indicator to another high. (For more, see: Sorry Amazon, Best Buy Is Still Alive and Kicking.)

The Bottom Line

Best Buy tagged an all-time high this morning before bears reversed the tape and dropped the stock back into the red. This mixed price action marks the opening shot of a breakout attempt that should eventually yield much higher prices. (For additional reading, check out: Top 3 Companies Owned by Best Buy.)

 

Published at Thu, 24 Aug 2017 15:30:00 +0000

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U.S. stock fund withdrawals largest of 2017: ICI

 

U.S. stock fund withdrawals largest of 2017: ICI

NEW YORK (Reuters) – Investors battered U.S.-based stock funds with the largest withdrawals this year as wild trading disrupted the market’s summertime calm, Investment Company Institute (ICI) data showed on Wednesday.

Nearly $9.2 billion flowed out of equity mutual funds and exchange-traded funds during the week through Aug. 16, with a 37th week of inflows for international shares only slightly offsetting $11.3 billion of withdrawals for domestic stocks, according to the trade group.

U.S. stocks remained on pace to deliver their ninth straight year of positive returns.

Yet two pullbacks of more than 1 percent in S&P 500 index .SPX this month jolted markets following geopolitical tensions between the United States and North Korea as well as questions surrounding U.S. President Donald Trump’s administration bringing its economic agenda to fruition.

Equity mutual fund outflows of $9.9 billion compared with $1.4 billion of stock ETF withdrawals, according to ICI.

“Investors have favored international equity and bond fund strategies as alternatives,” said Todd Rosenbluth, director of ETF and mutual fund research at CFRA.

Investors turned to perceived safe-haven funds, with taxable bond funds attracting $3.8 billion in their 37th straight week of inflows, ICI said. Funds that invest in commodities like gold pulled in $881 million, their best week since June.

Reporting by Trevor Hunnicutt; Editing by Meredith Mazzilli

 

Published at Wed, 23 Aug 2017 17:05:47 +0000

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Asia shares settle after rally, dollar squares losses on Trump comments

 

Asia shares settle after rally, dollar squares losses on Trump comments

TOKYO (Reuters) – Asian stocks steadied on Wednesday, taking a breather after the previous day’s surge, lacking the momentum to keep up with a global rally spurred by gains for tech shares on Wall Street and miners in Europe.

The dollar initially wobbled against the yen following campaign-rally threats by U.S. President Donald to force a government shutdown over funding a border wall, but it eventually squared the losses.

Spreadbetters expected a mixed start for European stocks, forecasting Britain’s FTSE .FTSE would open 0.15 percent lower, Germany’s DAX .GDAXI to start 0.05 percent higher and France’s CAC .FCHI to open unchanged.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS, which initially inched up to a two-week high, pulled back to stand little changed following a 0.7 percent rally on Tuesday.

Australian stocks were down 0.3 percent and South Korea’s KOSPI .KS11 gave back earlier modest gains to slip 0.1 percent.

Japan’s Nikkei .N225 bucked the trend and rose 0.3 percent, lifted as the dollar strengthened against the yen.

The Nikkei took its cues from Wall Street, which saw the Dow .DJI rise 0.9 percent, the S&P 500 .SPX climb 1 percent and the Nasdaq .IXIC gain 1.4 percent on Tuesday as technology shares rallied. [.N]

European stocks had also risen overnight, supported by upbeat results from miners and a weaker euro. [.EU]

Financial markets have been buffeted in recent weeks by heightened tensions on the Korean peninsula, turmoil in the White House, and growing doubts about Trump’s ability to fulfil his economic agenda.

Stocks, however, continue to attract buyers in an environment where bond yields remain relatively low and companies have largely notched up strong earnings.

“The return of bargain hunters after a shallow correction in U.S. markets again demonstrates that investors are reluctant to reduce exposure to equity markets given low bond yields, solid profit growth and a lower US$,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

“In a situation where earnings yields on stocks remain attractive in relation to bond yields, investors are reluctant to respond too negatively to ‘risk events’ unless they represent a clear and present short-term danger.”

The dollar was flat at 109.535 yen JPY=, coming off the day’s low of 109.370 plumbed after President Trump told supporters in Arizona “If we have to close down our government, we’re building that wall” in reference to his pledge to tighten immigration at the U.S.-Mexican border.

The greenback remained clear of a four-month low of 108.605 yen plumbed last week, when turmoil in the White House and geopolitical tensions took a toll on the currency.

“The dollar had been caught in a downtrend amid ebbing expectations towards U.S. inflation. It requires a surge in U.S. shares to break this pattern and that is what happened as Wall Street rallied,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

The dollar also drew support as U.S. Treasury yields rose and pulled away from two-month lows as some of the risk aversion that gripped the broader markets last week began to ebb.

The dollar index against a basket of six major currencies was little changed at 93.514 .DXY after rising 0.5 percent the previous day.

The euro was steady at $1.1759 EUR= after slipping about 0.5 percent overnight following weaker-than-expected German investor confidence.

A gathering of global central bankers on Friday in Jackson Hole, Wyoming, has also prompted investors to rebalance their currency positions ahead of the event, leading them to reduce some of their short dollar bets.

Speeches from Fed Chair Janet Yellen and European Central Bank President Mario Draghi will headline the event, although neither are expected to announce any significant policy.

In commodities, Brent crude LCOc1 slipped 0.35 percent to $51.69 a barrel after data from the American Petroleum Institute showed a crude stockpile decline largely in line with expectations and a surprise build in gasoline inventories.

Improving Libyan output also added to oversupply concerns in the crude oil market. [O/R]

Copper retreated from a three-year high, and other base metals also fell or trimmed gains, as speculators and funds locked in some profits after a steep rally. [MET/L]

Copper on the London Metal Exchange CMCU3 was down 0.3 percent at $6,562.50 per tonne after striking $6,649 on Tuesday, the highest since November 2014.

Spot gold XAU= was a shade higher at $1,285.50 an ounce, after losing 0.5 percent overnight as the precious metal felt the pressure from a stronger dollar. Spot gold had reached a nine-month high above $1,300.00 an ounce on Friday.

Reporting by Shinichi Saoshiro; Editing by Shri Navaratnam and Eric Meijer

 

Published at Wed, 23 Aug 2017 05:35:29 +0000

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