Tuesday, August 20, 2013

This Could Kill the Stock Market: The 10 Year Treasury

A couple of years ago, I wrote that the S&P 500 would surpass the 1500 mark. This was during a time when investors were worried, the market appeared to be headed lower, and volume was non-existent.

Many doom and gloom experts called me a sucker. Some said I was crazy for thinking the market had the gusto to even move through 1400. They told me the fundamentals simply weren’t there.
And they were right.

The fundamentals for growth weren’t there – and they still aren’t.

Corporate earnings continue to beat analyst estimates but have seen so many downward revisions that beating market expectations doesn’t exactly mean there’s growth. (more)

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Gold Mining ETF Investing 101: GDX, GDXJ, GLDX, GGGG, NUGT, DUST, RING, PSAU

Gold miners have been pretty terrible investments for much of 2013. These miners often trade as leveraged plays on their underlying metals, and with gold floundering for much of the year, losses began to pile up for the space.

In fact, during the first seven months of the year, most gold miners lost more than 40%, further underscoring the extreme bear market conditions in the space. However, recent trading in the segment has been decidedly more bullish, leading many to believe that the worst might be over for the segment.

Gold miners have actually risen more than 15% on average in the past 10 day time frame, with a few rising more than 20% in the period. This suggests to many that gold miners—thanks to some firm trading in gold and bottom fishing—may finally be back on track and some intrepid investors may want to consider taking a closer look at the gold mining ETF space for diversified exposure.

There are a lot of options in the segment though, so some investors might be wondering which is the best choice for them. Below, we have highlighted some of the key differences between the many funds in this space for those looking to play the recent surge in gold miners in ETF form: (more)

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Zero Isn’t Forever

It wasn’t so long ago that the challenge of making money with interest rates stuck around zero was investors’ top concern. Those days are gone. Today, they’re worried about the opposite: the threat that now-rising rates pose for fixed income investments. That, and the downturn in emerging markets that many only recently embraced in the hunt for yield caused by those near-zero rates.

It’s easy to identify the date that things changed: May 22, the day that the Federal Reserve first alerted markets that it might soon start “tapering” the $85 billion in monthly asset purchases it has been making since December to juice the economy. And soon looks to be getting even sooner. A steady improvement in U.S. employment figures—unemployment fell from 7.6 percent in June to 7.4 percent in July—has brought into focus the 6.5 percent unemployment target the Fed set as a prerequisite for raising short-term interest rates. On Thursday, the U.S. Bureau of Labor Statistics released yet another piece of good news on the employment front: New applications for unemployment benefits sank to their lowest levels in six years in July.  (more)

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The Best Correction Indicator

What if you had just one technical signal to warn you before the market tops? Watch the video as Kevin Cook goes over what he believes to be the best correction indicator.
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HomeAway, Inc. (NASDAQ: AWAY)

HomeAway, Inc., together with its subsidiaries, operates an online marketplace for the vacation rental industry worldwide. Its vacation rental properties include homes, condominiums, villas, and cabins to the public on a nightly, weekly, or monthly basis. The company's online vacation rental property marketplace enables property owners and managers to market properties available for rental to vacation travelers who rely on its Websites to search for and find available properties. It publishes detailed property listings, including photographs, descriptions, location, pricing, availability, and contact information. HomeAway also sells complementary products, such as travel guarantees and property management software and services. The company's portfolio of Websites comprise HomeAway.com, VRBO.com, and VacationRentals.com in the United States; HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in Germany; Abritel.fr and Homelidays.com in France; HomeAway.es and Toprural.com in Spain; AlugueTemporada.com.br in Brazil; and HomeAway.com.au in Australia. In addition, it operates BedandBreakfast.com, for finding bed and breakfast properties, providing travelers with lodging alternatives to hotels.
To review HomeAway's stock, please take a look at the 1-year chart of AWAY (HomeAway, Inc) below with my added notations:
1-year chart of AWAY (HomeAway, Inc) Since March AWAY has essentially been trading sideways while forming a common pattern known as a rectangle. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. AWAY's rectangle pattern has formed a $34 resistance (red) and a $28 support (blue), which was also resistance back in October. A break above $34 would also be a new 52-week high.
The Tale of the Tape: AWAY is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $28, or on a breakout above $34. The ideal short opportunity would be on a break below $28.
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Kinder Morgan Energy Partners, L.P. (NYSE: KMP): My Favorite MLP – With a 6.45% Yield

Classifying MLPs as “income” stocks is a big mistake. It’s a costly one too… especially if it’s growth you’re after.

Yes, the partnerships toss off tons of cash. The high-net worth folks I work with can achieve, for example, $350,000 in cash payouts from investing $5 million in an MLP yielding 7%.

But they’re more like growth stocks in disguise…

Remember, the high income is merely a function of the MLP structure. They’re set up in a “pass-through” structure.  (more)

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Value Investors: Buy Housing Now: RYL, MTH, MDC

Housing stocks were the darling of 2012 and started off 2013 on a hot streak. But in May, the stocks peaked and it's been downhill ever since even though many of the homebuilders have reported better than expected earnings and the year over year earnings growth is expected to be phenomenal.
What gives?
The homebuilders are a classic case of what was once hot is now not.
But the sell off has created an opportunity for the savvy value investor.
In May, many were concerned about excessive valuations of the homebuilders as they hit new highs, but that's not the case now that the stocks have plunged. Far from it.
There's plenty of value to be found in many of the homebuilders. Not only that, you can get double digit earnings growth and an attractive Zacks Rank.
If you loved the homebuilder stocks as they were going up just a few months ago, now's your chance to get them while they're cheap.
Homebuilders are Confident
If anything, the fundamentals in the sector have actually improved since the stocks peaked in the spring.
On Aug 15, the Homebuilders Confidence Index hit an 8-year high as it rose to 59 from 56 in July. The homebuilders haven't been this confident since the housing boom and bubble years. (more)
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