Wednesday, November 13, 2013

Sector Pullback Makes Biotech a Buy: STML, RHHBY, BIIB, ALKS, INCY

Despite the fact that the biotech sector has faced some setbacks recently, Jay Silverman, editor of Medical Technology Stock Letter, is confident it's only the case of a normal correction.

Steve Halpern: We're here today with biotech sector expert, Jay Silverman, editor of the Medical Technology Stock Letter. How are you doing today, Jay?

Jay Silverman: Very well. Thank you, Steve.

Steve Halpern: After an exceptionally strong performance over the past year, the biotech sector's been noticeably weak in the past weeks or months. Some pundits have been suggesting that the biotech boom may be over, but you've taken a much more measured approach and have seen this weakness as a normal correction. First, you've looked at the technical factors. What do you see there?  (more)

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3 Retail Winners for This Holiday Season: BBY, FIVE, KR

3 Retail Winners for This Holiday Season

The final quarter is around the corner and retailers are pinning their hopes on the upcoming holiday season, which is generally a ‘Make or Break’ for retailers as it accounts for nearly 20 – 40% of the annual sales. So the question arises: Will this holiday season meet retailers’ expectations?

The predictions, however, do not seem overwhelming. The National Retail Federation – the largest retail trade association – anticipates November and December sales to grow 3.9% to nearly $602.1 billion, an improvement from the 3.5% rise in the comparable prior-year period. However, 2011 and 2010 recorded sales growth of over 5%.  (more)

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S&P 500, NYSE & Nikkei Attempting Multi-Decade Breakouts

The photo below caught my eye when one thinks of Courage and heading into uncharted waters. For sure the markets do not compare to the importance of battle and one's life!
The 3-pack below looks at long-term charts of the Dow, NYSE & Nikkei and how each of them are facing key lines in the sand, some dating back over 20-years.

A break above these lines would be a big positive for each of these indexes. Will investors have enough courage to continue buying these indexes and push them well beyond these important technical situations?

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There’s a Big Move Coming in Japan

One of the most fascinating markets of 2013 has been in Japanese stocks. There’s no doubt about it. Late last year we saw the potential for a pretty decent sized move in the Nikkei 225, but it obnoxiously exceeded all of our expectations. What we thought could be a 10-15% upside move last November turned out to be more like an 80% move over the next 6 months. What a monster that became.
The momentum chasers ripped this thing up above 16000 before the destruction eventually began. We saw a volatile 20% correction in just two short weeks – but that’s what happens after a big move like this. I would argue that the sell-off was both normal and well-deserved. During that correction in Japanese stocks, the Yen saw a monster rally. The negative correlation between Japanese Stocks and their currency has been off the charts over the last year. Apparently the central bank over there is like our Fed on steroids. But that’s not my expertise and I’ll leave that alone for now. Either way, the numbers don’t lie – the negative correlation between the two is nothing to ignore.
So here’s what’s happened since the monster rally and ensuing 20% correction: a whole lot of nothing. Less than nothing. Both the Nikkei 225 and the USD/JPY cross have been consolidating for over six months in a symmetrical triangle with well-defined converging trendlines. Here is what they look like (not a coincidence they’re mirror images):
11-11-13 nikkei11-11-13 usdjpyNow here’s the thing. When technicians look at these charts, we’re trained to presume that the consolidation will eventually breakout in the direction of the underlying trend, which in these two cases would be to the upside of course. But it’s not just us in the chart community, the fundamental guys are all over this one as well. In fact, I can’t find a single person that doesn’t think these two charts break out to the upside. It’s almost like blasphemy if I bring up even the possibility of a sell-off in Japanese Stocks or a rally in Yen.  (more)

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Homebuilders’ Cancellation Rate Surges To Highest Since December 2008

Despite ongoing optimism that the housing recovery can withstand fire, brimstone, rising rates, and collapsingconfidence (in spite of the fact that indications from most top-down data are to the contrary), investors in US homebuilders may need to adjust this morning. If DR Horton is any indication of a broad trend (and empirical comparisons with its peers show that it is) then the firm’s huge miss in its cancellation rate (31.0% vs an expectation of 25.5%) in Q3 should be food for thought. The surge in cancellation was the largest MoM since mid-2008 and jumped to its highest since December 2008.
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Supervalu, Inc., together with its subsidiaries, operates as a wholesale distributor to independent retail customers in the United States. It operates in three segments: Retail Food, Save-A-Lot, and Independent Business. The Retail Food segment operates retail stores that provide groceries and various additional products, including general merchandise, health and beauty care, and pharmacy under the Cub Foods, Farm Fresh, Hornbacher's, Shop n Save, and Shoppers Food & Pharmacy banners. The Save-A-Lot segment owns and operates 381 Save-A-Lot grocery stores and licenses an additional 950 stores to independent operators. The Independent Business segment provides wholesale distribution of products to independent retail customers comprising single and multiple grocery store independent operators, regional and national chains, mass merchants, and the military.
Please take a look at the 1-year chart of SVU (Supervalu, Inc.) below with my added notations:
1-year chart of SVU (Supervalu, Inc.) After double bottoming at $2.25 back in November and December, SVU has been on a fantastic run. However, over the last 4 months the stock has been trading in a sideways range. The key to this range is the level of $7 that has been support several times recently and was resistance prior to that. So, $7 is the line in the sand for SVU.

The Tale of the Tape: SVU is approaching $7 again. A long trade could be made at $7 with a stop placed below that level. A break of $7 would be an opportunity to short the stock and should mean a fall back down to at least $6.
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