Thursday, July 31, 2014

Stock trader who called three crashes sees 20% collapse

Mark Cook, a veteran investor included in Jack Schwager’s best-selling book, “Stock Market Wizards,” and the winner of the 1992 U.S. Investing Championship with a 563% return, believes the U.S. market is in trouble.

The primary indicator that Cook uses is the “Cook Cumulative Tick,” a proprietary measure he created in 1986 that uses the NYSE Tick in conjunction with stock prices. His indicator alerted him to the 1987, 2000, and 2007 crashes. The indicator also helped to identify the beginning of a bull market in the first quarter of April 2009, when the CCT unexpectedly went up, turning Cook into a bull. 

What does Cook see now? (more)

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Macy’s, Inc. (NYSE: M)

Macy’s, Inc. operates stores and Internet Websites in the United States. Its stores and Websites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The company also operates Bloomingdale’s Outlet stores that offer a range of apparel and accessories, including women’s ready-to-wear, fashion accessories, jewelry, handbags, and intimate apparel, as well as men’s, children’s, and women’s shoes. As of February 25, 2014, it operated approximately 840 stores under the Macy’s and Bloomingdale’s names in 45 states of the United States, the District of Columbia, Guam, and Puerto Rico, as well as the and Websites; and 13 Bloomingdale’s Outlet stores.
Take a look at the 1-year chart of Macy’s (NYSE: M) with my added notations:
1-year chart of Macy's (NYSE: M)
With the exception of a brief break in April, and another in May, M has been range bound since March. Over that period of time the stock has formed a clear resistance at $60 (red). In addition, the stock has also created a common level of support at $56 (blue), which had also been resistance prior. At some point the stock will have to break one of the two levels that the consolidation has created.

The Tale of the Tape: M has clear levels of support ($56) and resistance ($60). The possible long positions on the stock would be either on a pullback to $56, or on a breakout above $60. The ideal short opportunity would be on a break below $56.
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Breakout in US Steel: X

Is it possible that US Steel (X) is finally catching a bid from a breakout (and reversal pattern) from a long-term resistance level?
Could this be the start of a new long-term uptrend in price?
Let’s take a look at the Weekly and Monthly Chart to give us some clues for a longer-term play.

First, let’s start with the long-term “Rounded Reversal” or Saucer Reversal pattern that has developed since mid-2011 to present (mid-2014).  (more)
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BRIC-Heavy ETFs At PE Ratios Below 9

With the SPDR S&P 500 ETF (SPY) and the Vanguard Total Stock Market ETF (VTI) currently trading at forward price earning multiples near 17, investors are regaining their appetite for emerging markets. A year after the taper tantrum smacked emerging markets, flows into the developing countries are picking up, lured in large part by the relative value proposition (and signs of easing in China). In a recent investment note that recommended emerging market stocks, BlackRock’s (BLK) chief global investment strategist cited improving liquidity -- six weeks of positive flows -- as a signal that sentiment is in shift mode.

The two largest emerging market ETFs, the $48 billion Vanguard Emerging Markets Stock Index ETF (VWO) and the $41 billion iShares MSCI Emerging Markets ETF (EEM) both trade at forward multiples below 12. That’s even after a strong rebound during the past six months following the global micro-swoon that started the year:(more)

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Homebuilder Stocks Continue To Tank

Despite the “robustly” rigged GDP number, padded by a dubiously large attribution to construction and home improvement spending, the homebuilder stocks continue their huge sell-off, which started last week. I say that the GDP attribution for construction and home improvement spending is “dubious” because the numbers compiled, massaged and reported by the Government do not correlate with the reports being released by construction industry companies and industry associations or with home improvement/furnishings retailers.
Here’s a daily graph of the Dow Jones Home Construction Index:
The homebuilders currently represent what I believe to be on the of the lowest risk/return short-sell plays in the market right now. Every single one I look at is borrowing $100′s of millions to build up what has become “bulging” home and land inventories.
Most of them will not make it through the next downleg of the housing bear market.
I have written my first research report on a homebuilder short-sell idea .  I believe this stock has an easy 60% return from where it trades now. You can access this report here:   My Research Reports.
Because of the large sudden drop in the homebuilder stocks over the last week, I would suggest reading my report and waiting for an oversold bounce before entering the short. However, you can also short near money calls that expire 3 or 4 months out to start a position now. The reason to do this is you get to hold the premium from shorting the call. If the stock keeps dropping, you can cover the call for a profit or hold it to expiration and keep the entire premium. If the stock moves above the call price by expiration, you let the call exercise and establish a short at an average price of the strike price PLUS the premium you collected from shorting the call.
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Wednesday, July 30, 2014

U.S. Home Price Gains Slow … or Reverse

Standard & Poor’s reported(.pdf) that U.S. home price gains have slowed dramatically in recent months and, on a seasonally adjusted basis, home prices have now declined for the first time in two-and-a-half years as shown below.
As the the non-seasonally adjusted data and the year-over-year data in this report traditionally receive more attention than the adjusted data, few news headlines are indicating (gasp!) U.S. home price declines, but that may soon change.
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Louise Yamada: Market Still Climbing a Wall of Worry – Backed by the Fed’s Continued Easing

Also, Ryan Puplava, Erik Townsend and Rob Bernard

Jim welcomes back Louise Yamada CMT, Managing Director of Louise Yamada Technical Research Advisors. Louise notes that the market has continued to shrug off bad news, which is a characteristic of structural bull markets. She also notes that the market will likely continue to climb its wall of worry as…
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Will Crashing Commodities Crash The Stock Market?

There are some analysts out there who maintain that the precipitous decline in commodity prices this year bodes ill for the stock market. Witness for example the dramatic drop in the price of corn. Above is a chart of the Teucrium Corn Fund (CORN), a proxy for corn futures. As you can see, corn prices are at multi-year lows right now. This is ironic given that the mainstream media assured us earlier this year that higher ag commodity prices were on the way.
[...] The price of wheat on the Chicago Board of Trade (CBOT) doesn’t present a rosy picture, either. Here you can see an equally conspicuous plunge in the wheat price to multi-year lows.
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Quanta Services Inc (NYSE: PWR)

Quanta Services, Inc. provides specialty contracting services to the electric power, and oil and gas industries in North America and internationally. The company’s Electric Power Infrastructure Services segment provides network solutions comprising design, installation, upgrade, repair, and maintenance of electric power transmission and distribution infrastructure, and substation facilities. The company’s Oil and Gas Infrastructure Services segment provides network solutions to customers involved in the development and transportation of natural gas, oil, and other pipeline products. The company’s Fiber Optic Licensing and Other segment designs, procures, constructs, maintains, and owns fiber optic telecommunications infrastructure, as well as licenses the right to use these point-to-point fiber optic telecommunications facilities to its customers.
Take a look at the 1-year chart of Quanta (NYSE: PWR) with the added notations:
1-year chart of Quanta (NYSE: PWR)
Over the last year PWR has consistently moved higher. Since October the stock has formed a trendline of support (blue) that it has been bouncing on top of. Always remember that any (2) points can start a trendline, but it’s the 3rd test and beyond that confirm its importance. PWR’s trendline seems to be very important now that it has been tested multiple times.

The Tale of the Tape: PWR has created a trendline of support over the last year. A long position could be entered on a pullback to that trend line, which is currently sitting right around $34-35, with a stop placed below that level. A short position could be entered if PWR were to break the trend line support.
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How To Profit From The Coming Propane Crisis

You may not realize this, but propane is about a lot more than just firing up the family grill.
In a very real sense, it’s the lifeblood of the entire rural lifestyle.
In the countryside, propane heats more than six million homes, fuels equipment and vehicle fleets, and is instrumental on farms for drying grain for storage and keeping livestock-filled barns warm in the winter.
But like any fuel, it’s susceptible to shortages that cause unwanted strain on entire rural communities, and decisively raises prices in supermarkets across the country. (more)

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Tuesday, July 29, 2014

NYSE Margin Debt Storms Back To All Time Highs

A month ago we explained why ordinary margin debt (such as that tracked by the NYSE) is largely irrelevant as it completely ignores the leverage of the largest investor class (aside from the Primary Dealers who use Fed reserves as collateral against which to purchase equity index futures), namely hedge funds and whose leverage blows out ordinary retail investors out of the water. Nonetheless, NYSE margin debt is still useful as an indicator of prevailing retail and less than sophisticated investor leverage, and thus euphoria, in the market.
It is from this perspective that we observe how after dropping modestly from all time highs hit in February, NYSE margin debt has recouped virtually all its losses and is now essentially back to all time highs. And as a parallel to that, investor net worth, defined as total Free Credit Cash and Credit Balances in Margin accounts less Margin Debt, has once again dropped to all time lows.

And while it may represent a mere subset of overall market leverage, it is perhaps worth rereading Deutsche Bank's warning on the topic from a year ago, in which the German bank, embroiled in the latest financial reporting credibility scandal, hopes that "not all margin calls come at one in case of a sell-off."
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Andrew Maguire: Hundreds Of Tons Of Gold Bought By East In 14 Days

from King World News

London metals trader Andrew Maguire told King World news that hundreds of tons of physical gold was bought by Eastern nations in just the last 14 days. Below is what London metals trader Andrew Maguire had to say in Part II of a series of interviews that has now been released on KWN.
Eric King: “Andrew, I know there were large sovereign bidders in this market near the $1,300 level. By taking gold through that level, how much gold was lost to the cartel (of Western central banks)?”
Maguire: “When you look at the billions of dollars of instantaneous sales, you see a $2.5 billion sale, you see a billion dollar sale. You are talking hundreds of tons of paper gold being sold….
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This Week in Money with Guests: Martin Armstrong, Ross Clark – July 26, 2014

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5 Beaten-Down Bargain Stocks: KGC, DNN, DML, K, NG

Are you worried about today’s lofty equity valuations? You should try combing through the market’s discount bin.
Stocks trading under $5 per share can be a great source of investment ideas. Just like your department store bargain rack, many securities are only put here because they’re out of season.
For those of us who don’t mind being out of step with Bay Street’s latest fashion, these stocks are sometimes outright steals. After combing through the discount bin myself, here are five companies that have been unfairly marked down.

1. Spartan Energy
Spartan Energy (TSX: SPE) is the fastest-growing junior in the Canadian oil patch. Since the company is only spending 80% of cash flow, management still has plenty of room to accelerate that expansion further through acquisitions. Although investors are starting to discover this company, it’s still a relatively unknown name on Bay Street. I don’t expect that situation to last for long.

2. Denison Mines
Denison Mines (TSX: DML)(NYSEMKT: DML) has been completely abandoned by the investment community due to low uranium prices. However, the industry is beginning to consolidate and a small player like Denison would make an attractive acquisition target. Even if no buyout occurs, the company still has a great asset portfolio and huge exploration potential.

3. Kinross Gold
Kinross Gold (TSX: K)(NYSE: KGC) has been hammered by falling metal prices and reckless spending like the rest of the gold mining industry. However, there are some signs of a turnaround at the struggling company. Its new CEO has suspended the company’s dividend, halted unprofitable mines, and slashed spending. With operating costs coming down, Kinross Gold’s shares could start to rally even without higher gold prices.

4. Novagold Resources
Novagold Resources (TSX: NG)(NYSEMKT: NG) has also struggled thanks to soft metal prices and higher costs. However, most the the company’s largest asset writedowns are behind it and tough cost-cutting measures are returning it back to profitability. In recent months a number of notable hedge fund managers have built large positions in this stock, including John Paulson, David Iben, and Seth Klarman. The smart money clearly sees lots of upside potential.

5. Sherritt International
Sherritt International (TSX: S) has struggled in recent quarters due to problems at its Cuban and Indonesian operations. This has left the stock trading at a fraction of book value. Given that most of these problems have already been priced in, any good news could send shares sharply higher.
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Two Buy Signals in Crude Oil

To help us analyze this chart of light, sweet crude oil, let’s use two momentum indicators:

  • The MACD (Moving Average Convergence Divergence) indicator

  • The RSI (Relative Strength Index – not to be confused with “relative strength”).
The main portion of the chart shows the price action of light, sweet crude oil.
Just below the price action portion of the chart is the MACD indicator.
In this chart, the “MACD line” is green and the “signal line” is red. The signal line is the moving average of the MACD line, which is why it’s a bit slower to move.
There are two main requirements for a true MACD “Buy” signal. First, the MACD line must cross from below to above the signal line. Second, this must happen below the zero line (which is the midpoint of the indicator). “Buy” signals given when a price chart is in a downtrend are unreliable.
I pointed out some MACD “Buy” signals with the blue lines in the chart. The MACD just gave us a “Buy” signal on Wednesday.
At the bottom we have the RSI. When the RSI crosses above the 30 line, it’s a “Buy” signal. I drew green arrows from every legitimate RSI “Buy” signal to show where the price of light, sweet crude oil was at the time.
Notice I said “legitimate” RSI “Buy” signal. In relation to the MACD “Buy” signals, RSI “Buy” signals that are given when a price chart is in a downtrend are unreliable entry points for bullish positions. They become legitimate when the RSI makes a higher low that matches the lower lows in the price chart (a “positive divergence”). An example of this is the RSI “Buy” signal seen in November 2013.
Notice how the RSI gave us a “Buy” signal just over a week ago.
No indicator has a perfect track record. But these two momentum indicators are telling us light, sweet crude could be making a profitable move.
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Monday, July 28, 2014

Textron Inc. (NYSE: TXT)

Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. It operates through five segments: Cessna, Bell, Textron Systems, Industrial, and Finance. The Cessna segment manufactures business jets, single-engine utility turboprops, and single-engine piston aircraft, as well as parts, maintenance, inspection, and repair services. The Bell segment manufactures and supplies military and commercial helicopters, tiltrotor aircraft, and related spare parts and services. The Textron Systems segment produces unmanned aircraft systems; armored vehicles, turrets and related subsystems, and marine craft and smart weapons. The Industrial segment offers blow-molded plastic fuel systems, windshield and headlamp washer systems, engine camshafts, catalytic reduction systems, and other parts. The Finance segment provides commercial loans and leases for aircraft and helicopters.
Take a look at the 1-year chart of Textron (NYSE: TXT) with my added notations:
1-year chart of Textron (NYSE: TXT)
Like yesterday’s LINTA, TXT has also been trading mostly sideways for the last 5 months. Over that period of time TXT has formed a resistance level at $41 (red). In addition, the stock has also created a level of support at $37 (blue). At some point the stock will have to break one of the two levels that the sideways consolidation has created.

The Tale of the Tape: TXT has clear levels of support ($37) and resistance ($41). The possible long positions on the stock would be either on a pullback to $37, or on a breakout above $41. The ideal short opportunity would be on a break below $37.
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Maguire – “Criminal” CME Colluded To Save Banks Short Gold

from King World News
Today London metals trader Andrew Maguire accused the CME of being a “criminal” organization and for working in collusion with the bullion banks, who were dangerously offside recently on their massive short bets in gold, to facilitate the downside move in the gold market. Below is what London metals trader Andrew Maguire had to say in Part I of a series of interviews that will be released today on KWN.
Maguire: “These bearish bullion banks have bet billions of dollars on gold and silver closing below $1,300 gold and $20 silver. And with the CME assisting them in rigging the casino, these bets are almost always going to pay off….
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Jim Puplava’s Big Picture: U.S. Real Estate – The Good, Not So Good, and The Bad

Also, “What the LEI’s Tell Us About the Rest of the Year” and “Respecting the Message of the Markets”

BIG PICTURE07/26/2014
Jim’s first Big Picture topic covers the state of the U.S. real estate market. He finds that real estate reports have been mixed, and as usual it boils down to location, location, location. Jim also notes that the real estate market is interest rate driven, and it cooled off considerably as mortgage rates rose in the second half of 2013.
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How Bad Can The Junk-Bond Sell-Off Get? So Bad It’ll Take Down Stocks / by  • 
Late Friday, when the strategy folks at Goldman Sachs downgraded global stocks to “neutral” for the next three months, they gave a reason that would have been peculiar in normal times: “a sell-off in bonds could lead to a temporary sell-off in equities.”
OK, let’s forgive Goldman for flip-flopping. At the peak of the bubble, trigger fingers are nervous, and flip-flopping is the norm. Last week, another Goldman strategist, in a very bullish mood at the time, had raised his year-end target for the S&P 500 to 2,050. But that’s like so last week.

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Liberty Interactive Corp (NASDAQ: LINTA)

Liberty Interactive Corporation, through its subsidiaries, is engaged in the video and on-line commerce industries in North America, Europe, and Asia. The company markets and sells various consumer products primarily through live televised shopping programs, and Websites and other interactive media, including It also operates Websites offering sports gear and clothing for outdoor and active individuals in various categories; sports nutrition, body building, and fitness products; costumes, accessories, d├ęcor, party supplies, and invitations; and perishable goods, including flowers, fruits, and desserts, as well as personalized gifts. In addition, Liberty Interactive Corporation provides online travel services under the TripAdvisor and brands.
Take a look at the 1-year chart of Liberty (Nasdaq: LINTA) with my added notations:
1-year chart of Liberty (Nasdaq: LINTA)
LINTA has been trading mostly sideways for the last 5 months. Over that period of time the stock has formed a clear resistance level at $30 (red). In addition, the stock has also created a strong level of support at $28 (blue). At some point the stock will have to break one of the two levels that the sideways consolidation has created.

The Tale of the Tape: LINTA has clear levels of support ($28) and resistance ($30). The possible long positions on the stock would be either on a pullback to $28, or on a breakout above $30. The ideal short opportunity would be on a break below $28.
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US Weeky Economic Calendar

time (et) report period Actual CONSENSUS
10 am Pending home sales June -- 6.1%
9 am Case-Shiller home price index May -- 10.8% yoy
10 am Consumer confidence index July 85.0 85.2
10 am Vacancy rate 2Q -- 8.3%
8:15 am ADP employment July -- 281,000
8:30 am GDP 2Q 3.2% -2.9%
2 pm FOMC statement
8:30 am Weekly jobless claims July 26
308,000 284,000
8:30 am Employment cost index 2Q 0.5% 0.3%
9:45 am Chicago PMI July
63.5 62.6
8:30 am Nonfarm payrolls July 230,000 288,000
8:30 am Unemployment rate July 6.0% 6.1%
8;30 am Personal income June 0.4% 0.4%
8:30 am Consumer spending June 0.5% 0.2%
9:45 am Markit PMI July -- 56.3
9:55 am Consumer sentiment July 81.7 81.3
10 am ISM July 56.3% 55.3%
10 am Construction spending June 0.4% 0.1%
TBA Motor vehicle sales July 16.7 mln 16.9 mln
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Saturday, July 26, 2014

Martin Armstrong – Hang In Or Hang Up

from Financial Survival Network
We caught up with Martin Armstrong today. We wanted to know if he was sticking by his call for Dow 32,000 and for the Dollar to remain the reserve currency. He stands by his them and cites further proof that the wealthy are sending their funds to the US. Wealthy Europeans, Canadians and Chinese are buying up properties in the US. As far as the stock market, there’s no other place to put large quantities of money. No one trusts the banks or sovereign bonds, so the market can only continue going up.
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I have been saying for a while now thatworldwide economic collapse is soon to come to a country near you, a state near you, a city near you, and right up to your doorstep.
In all the financial world, no other than one Martin Armstrong gets it right.  The same Armstrong who analyses all data everywhere, all sectors, all history, throws it all into a computer data model and out pops the date/timeframe of 2015.75 – end of the 3rd Quarter, 2015.
This is a planned crash, folks.  Not a mere accident waiting to happen but a planned crash.  It will be done to subjugate the entire world into one economic system with full power given out by a dictator who knows best how to rule (in his eyes) the people and make slaves the whole world over…
I highly recommend the liquidation of all paper investments and that includes stocks, mutual funds, all retirement vehicles, etc and hold your dry powder for when silver dips below $19 again this Fall/Winter.
It is going to happen and when it goes below $19 I say buy, buy, buy physical and hold it.
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T. Boone Pickens: Live From Dallas

T. Boone Pickens, founder and chairman of BP Capital Management, joins Stansberry Radio.
Porter is on vacation this week so we thought we'd sneak in an exclusive interview that he did with T. Boone Pickens at the Dallas Society Conference.
As some of you might already know, T. Boone Pickens is the founder and chairman of BP Capital Management, as well as an oil expert and founder of The Pickens Plan.
Every time he joins Stansberry Radio, our listeners get priceless knowledge from one of the most legendary oil icons that have ever lived. (more)
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V: The Guerrilla Economist / End of Empire America

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South Africa, Australia top stock markets in the world for over a century

Americans take pride in what’s called American exceptionalism. They were the first country to practice democracy in modern times. They were the first with no monarchy or aristocracy. America was the first country to free itself from European control. It admitted new territories, not as colonies, but as equal states. Americans let capitalism flourish, among many other achievements.
So it’s no wonder that some investors think that American stocks have done exceptionally well too. After all, what started out as 13 British colonies along the Atlantic coast has become by far the world’s largest economy. But, while American stocks have done better than most, they are not exceptional.
Australian and South African stocks won
History shows that American stocks have performed well over time. From 1900 through 2012, they provided average real (removing the impact of inflation) compound returns of 6.2 per cent.
Three British economists—Elroy Dimson, Paul Marsh and Mike Staunton—examined the historical returns of stocks and bonds in 19 countries from 1900 through 2012. A portfolio that invested a dollar in all 19 countries in 1900 would have generated an average yearly real compound return of 5.4 per cent. This is relatively close to the real compound return of American stocks.
Both Australian and South African stocks beat American stocks. Their average yearly real compound returns from 1900 through 2012 were above seven per cent.
Canadian stocks were in sixth place
Canadian stocks were in sixth place—after South Africa, Australia, the United States, Sweden and New Zealand. From 1900 through 2012, Canadian stocks outpaced the stocks of the United Kingdom, Finland, Denmark, the Netherlands, Switzerland, Norway, Ireland, Japan, Spain, Germany, France, Belgium and Italy.
Many of these countries suffered from economic disasters such as hyperinflation, depressions and wars. Even so, the stocks of all 19 of them experienced positive compound real returns from 1900 through 2012.
We have often noted that American stocks outpaced American government bonds and Treasury Bills. The longer the time period examined, the greater the outperformance of stocks.
This was also true of all 19 countries examined by Dimson, Marsh and Staunton. On average, stocks returned 3.7 per cent more than government bonds and 4.5 per cent more than T-Bills each year.
What’s more, both government bonds and bills produced losses (negative returns) in Italy, Belgium, France, Germany and Japan. From 1900 through 2012, for instance, Italian Treasury Bills lost value at an average compound yearly rate of close to four per cent. This was mostly due to inflation.
Meanwhile, Italian stocks provided real returns of 1.7 per cent. True, this was the lowest return of the 19 countries. But it was still far better than the losses on Italian Treasury Bills and government bonds.
Companies can raise prices, bonds can’t
One thing to keep in mind is that most companies can raise their prices during inflationary times. This can shield these companies and their shareholders from the worst effects of inflation. Ordinary bonds, by contrast, offer investors no protection against inflation. They’ll never pay more than they promised.
In short, it’s worth buying American stocks to diversify your portfolio--particularly when it comes to manufacturers and consumer products and services companies. But since American stocks are not exceptional, it’s worth buying stocks in other advanced countries as well.
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What About that Bullish Corn Market??

The window in which adverse weather can hurt the developing corn crop is closing rapidly. We're on tap to raise a huge, record large crop. Look for a substantial jump in the yield, likely moving well above trend-line. The grain numbers are changing rapidly with projected ending stocks for next year expected to swell toward, and eventually above 2.0 billion bushels. World ending stock projections are of a scary proportion. Lower corn prices can and should be expected into the fall harvest. Let's plow through some of the numbers. (more)

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Chart Says It's Time to Sell Johnson & Johnson (NYSE: JNJ)

It is no secret that big stocks have fared better recently compared with mid caps and small caps. What may not be immediately apparent is that consumer staples stocks of all sizes have been lagging. So have drug stocks. So when we find a stock straddling all three areas, we should take note.
Pharmaceutical and consumer products maker Johnson & Johnson (NYSE: JNJ) is one such stock, and unlike its large-capitalization peers, its chart is not healthy.
Last week, the stock moved below both its rising February trendline and 50-day moving average in what should be a serious warning for investors. Indeed, the pattern now developing is such that it is probably a good idea to sell it if not go outright short.
JNJ Stock Chart
Let's start with the big picture. Between July of last year and March of this one, JNJ traded in a rather wide range between $85.50 and $95.50, in round numbers. It exploded higher on March 21, on news of positive results with its schizophrenia treatment, for a technical breakout.

The rally progressed nicely until crossing the $105.50 level, where it stalled. Why $105.50? That was the measured objective for the trading range breakout. The 10-point height of the range projected up from the breakout level of $95.50 targeted $105.50.
Though prices edged slightly higher, the supporting technicals deteriorated. For example, cumulative volume started to fade in June, soon after the price target was reached.
As the stock fell, volume was much heavier than normal. And as JNJ rebounded over the past few days, volume contracted as it usually does during a countertrend move. In other words, volume is telling us that short sellers taking profits and not aggressive bulls pushed prices up this week.
The rising corrective bounce may not yet be over, but to me it looks to be a matter of time before the new falling trend reasserts itself. Support at the top of the old range near $95.50 seems to be the likely next downside target.
Recommended Trade Setup:
-- Sell JNJ short at the market price
-- Set stop-loss at $104.40
-- Set initial price target at $95.50 for a potential 7% gain in four weeks
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Friday, July 25, 2014

Arch Crawford – Stock Market Peak Approaching

from Financial Survival Network
Arch Crawford, an FSN regular, uses a combination of technical and astrological charts to track the markets and the economy.
He believes the stock market is very close to a peak. From there, it won’t be pretty. But it will be good for gold and silver, so get ready now.
There’s lots of factors involved in this forecast so listen closely.
Click Here to Listen to the Audio
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Teradata Corporation (NYSE: TDC)

Teradata Corporation provides analytic data platforms, marketing and analytic applications, and related consulting services in the United States and internationally. Its analytic data platforms comprise software, hardware, and related business consulting and support services for data warehousing, active intelligence, big data analytics, and data discovery. The company’s products comprise Teradata Analytic Database Software that delivers near real-time intelligence; Teradata Workload-Specific Platforms; Teradata Aster Discovery Platform, which is pre-configured with Teradata Aster Database; and Teradata Logical Data Models that are blueprints for designing an integrated data warehouse.
Review the 1-year chart of Teradata (NYSE: TDC) below with my added notations:
1-year chart of Teradata (NYSE: TDC)
TDC has formed a key level of support at $40.00 (blue) over the last 8 months. In addition, the stock has created a down trending resistance starting from the beginning of April (red). These two lines combined have TDC stuck trading within a common chart pattern known as a descending triangle, and at some point, the stock has to break support or break its string of lower highs.

The Tale of the Tape: TDC has formed a descending triangle pattern. A short trade could be made on a break of the $40.00 support level. A break through $43.00 would break the down trending resistance and would set up a potential long trade. A long trade could also be made on a pullback to $40.
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Warren Buffett's "Best Indicator" Is Flashing Bubble Red

While Bob Shiller's CAPE has been flashing red warnings for a while, String Advisors Stephen Jones warns it is flawed because corporate events can affect a specific company’s earnings and the broader profit outlook differently. However, Warren Buffett's "best single measure of where valuations stand," comparing the market value of US companies to the gross national product before inflation, is flashing near record bubble red... Still we are sure, you'll be able to exit before everyone else when this ends...

Source: Bloomberg
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Breakdown Predicts Double-Digit Drop in Harley-Davidson (NYSE: HOG)

Harley-Davidson (NYSE: HOG) suffered its biggest loss in two years on Tuesday, falling 5.4% following its second-quarter earnings report. While the iconic American company reported better-than-expected earnings, it lowered its forecast for new motorcycle shipments for the full year. The sharp sell-off broke through some significant support, and as a result, the charts now favor the downside in the multi-month time frame.

HOG reported a 34% year-over-year hike in earnings per share to $1.62, which was better than the Street's estimates of $1.46. Revenue for the quarter increased 12% to $2 billion, also beating analysts' estimates for $1.84 billion. Motorcycles shipments in the quarter were up 9% from Q2 2013 to 92,217.  (more)

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King Dollar is 70! Is it now Out with the Old? McAlvany Weekly Commentary

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Thursday, July 24, 2014

Marin Katusa: Why Uranium Prices Will Go Much Higher

This week, resource expert and fund manager Marin Katusa joins S&A Investor Radio and explains why Russia holds the key to much higher uranium prices.
During the interview, he shares his two favorite uranium plays and talks about the upcoming PDAC Convention.
You'll hear him talk about several important rules he follows for buying any resource company. Plus he reveals several junior mining stocks that he is buying right now.
We're sure most listeners have never heard of these companies before. However, Marin says most resource investors will be talking about these names inside of 18 months.
If you want to be a successful spectator in the resource sector, then you won't want to miss what he has to say.
Something that Marin is really excited about is what he calls the "European Energy Renaissance"... and you can get all the details here.
This is your chance to get insight from one of the most connected experts in the mining industry.
Plus... Are you making a huge investing mistake?
Find out which select stocks Frank says you should NEVER ever short.
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CBS Outdoor America CBSO

I really meant to post this update over the weekend so obviously it’s not going to have the impact as this stock spiked over 4% today, but I think there’s more upside in this one to be had. Technically it has a very clear channel forming and it should have no problem getting back to the upper trendline. Low float of 22 million will surely add to the volatility but I think there’s a much better chance of this going over $37 then revisiting $32. The RSI has been behaving bullishly as it oscillates between 80-40.  20% of the float is short so as this moves higher many of those shorts could be forced to cover which again could add to the upside move. Keep your eye on this for follow through after today’s move as this thing could just be getting started.
Annual EPS (BNRI)
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The Cheapest Stocks in Europe to Invest In.

It's a tough time to be an investor in Europe…

Portugal's banking crisis is in full swing. And it's dragging European stocks down with it. Europe's blue-chip index – the Euro Stoxx 50 – is down 8% in the past month. Portugal's stock market fell 14% over the same period.

This fall has made already cheap European stocks even cheaper. But one country in particular stands out as the absolute best value. And while today is a scary time to buy, it could lead to big gains.

Let me explain…

 If you'd invested in European blue chips in early 2012, you'd be sitting on 53% gains… more than the return on U.S. stocks over the same period.

European blue chips are still a great deal today… 16% cheaper than the U.S., based on forward earnings. But we can get even better value by putting our money in one of Europe's cheapest markets… Italy.

The table below shows exactly what I'm talking about. It compares Italy's stock market with Europe's other major stock markets. Take a look…

Next Year's Estimates
Price to
Price to
Price to
Cash Flow
Euro Stoxx 50
FTSE 100
CAC 40

Italy's major market Index – the MIB – is cheaper than the rest of Europe, nearly across the board…

When you look at price-to-book value, Italy is 29% cheaper than Europe's blue-chip index. And it's more than 30% cheaper using price-to-cash flow.

Based on book value, Italian stocks would need to rise 40% just to reach the valuation of the Euro Stoxx 50. And remember, the Euro Stoxx 50 is much cheaper than the U.S.! So getting into Italy is buying the cheapest of the cheap…

Simply put, Italy is THE value investment of Europe's major stock markets. And our upside potential is huge.

The problem, of course, is that Italy's stock market is falling with the rest of Europe. As you can see in the chart below, the iShares MSCI Italy Fund (NYSE: EWI) has fallen 10% since early June.

It's never a good idea to try to "catch a falling knife." It's usually safer to wait for it to hit the ground and move higher. And even though Italy is an incredible value today, we need to be patient.

If you're interested in Europe's best value – Italy – wait for shares of EWI to move above $17.50. If that happens, it'll likely mean we're past the "danger zone" Europe is in today… and that Italy's multiyear bull market is back.

Investors in Italy should be in for big gains… Don't miss out.
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High-Yield Bonds “Extremely Overvalued” For Longest Period Ever / by Tyler Durden on 07/23/2014 15:23
The high-yield bond market has been “extremely overvalued” for a record nine consecutive months, according to Martin Fridson, a money manager at Lehmann, Livian, Fridson Advisors LLC. As Bloomberg Brief’s Matt Robinson notes, the streak breaks the previous record of eight months set in October 2006 to May 2007.
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Are Coal Stocks Ready for a Breakout? : KOL

Whenever I bring up coal stocks to my smart friends, they laugh at me and tell me to order another drink. I kid you not. I’m lucky that I live in New York City and get to hang out with some of the smartest minds in the business. I’ll never take that for granted. But anecdotally, it allows me to throw out feelers on some of my ideas and get feedback on what I’m thinking. It’s funny, no one I know agrees that coal stocks look interesting here.
So we can start there. It’s not data driven evidence of hatred, but through my experiences I can’t say it’s not a good starting point. The reason I’m bringing it up today is because of the incredibly tight consolidation taking place since March. Almost five months ago I put up a note suggesting it was time to own Coal stocks for a variety of reasons. Since then, the $KOL exchange traded fund is only up 2-3%, but it’s the consolidation that’s taken place since then that really gets me excited.
Look at this weekly chart of $KOL. It’s rare to find a tight range like this for such a prolonged period of time. We’re going on almost 4 months of this action:
7-23-14 kol
The best way to execute, in my opinion, is to wait for the breakout. Eventually, there will be a resolution. In my opinion it’s going to be to the upside, which could present a monster rally that would return 40-50% in a very short period of time. I would consider a confirmed breakout to be a weekly close above any of these others 19-19.15ish. It really all depends. I would love to see a gap higher out of this range. Some might call it a, “gap and go”. It’s hard to predict at this point. But this consolidation can’t be ignored. Epic moves have been born out of this type of pattern. So I’m waiting patiently.
I thought it would be prudent to bring up this recent development. It has nothing to do with who our president is or who he isn’t, it has nothing to do with alternative energies and even less to do with any geopolitical turmoil. This is strictly based on supply and demand dynamics. And looking at this chart, if demand can exceed supply just enough to break this out of it’s range, look out!
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Wednesday, July 23, 2014

Time to Profit From the Junk-Bond Market Insanity: HYG

The junk-bond market has broken down.

For the past year, junk bonds (corporate debt that is rated lower than investment grade) have been in rally mode. The iShares High Yield Corporate Bond Fund (HYG) was up 13% from its low last June to its high last month.

Yet the spread between investment-grade bond yields and junk-bond yields is among the lowest in history. Investors aren't getting paid for taking on the extra risk of corporations having a difficult time making payments on their junk bonds when times are tough.

We said junk-bond investors were going to get hurt when reality finally set in and the junk-bond insanity ended. But it was still too early to bet on a decline in the market. Today, junk bonds are starting to break down. And it's time to set yourself up to profit…

Although we said buying junk bonds was a bad bet in May, we also said shorting junk bonds was a bad bet.

HYG had been in a bearish rising-wedge pattern for most of the past year. This pattern develops as a chart makes higher highs and higher lows, but the distance between the highs and lows shrinks. Most of the time, this pattern breaks to the downside. But HYG had just made a new all-time high. And there was still room for HYG to work even higher inside of the wedge.

You see, bouts of insanity can hang on a lot longer than most folks think is possible. So as tempting as it was to try to short junk bonds at their insane levels, the setup wasn't right. It was too early.

It's not too early anymore.

Take a look at this updated chart of HYG…

Please Enable Images to See this

HYG broke down from the rising-wedge pattern. It also broke below its 50-day moving average (DMA). Most technical analysts view the 50-DMA as the line in the sand separating intermediate-term uptrends from intermediate-term downtrends.

Junk bonds broke below the line last week. The intermediate-term trend is now bearish. And with junk bonds trading at historically high values, there's plenty of room to fall.

Traders should look to short the sector as HYG bounces toward its 50-DMA. Set a stop just above the 50-DMA in order to limit the risk of the trade. 

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FedEx Corporation (NYSE: FDX)

FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The company’s FedEx Express segment provides various shipping services for the delivery of packages and freight. Its FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services. The company’s FedEx Freight segment offers less-than-truckload freight services, as well as freight-shipping services. Its FedEx Services segment provides sales, marketing, information technology, communications, customer service, and other back-office support services.
To review FedEx’s stock, please take a look at the 1-year chart of (NYXE: FDX)
1-year chart of (NYXE: FDX)
FDX had been trending sideways from November until June. During that time, the stock had hit at 52-week high resistance at $145 twice (blue). Since breaking higher, FDX has hit support at $150 (green) and resistance at $155 (red). All combined, the stock’s reaction to the increments of $5 should provide traders with the most ideal entry points.

The Tale of the Tape: FDX broke through its 52-week high resistance level of $145 and is now trading between $150 and $155. A long trade could be made on a pullback down to the $150 level, or on a move above $155, with a stop placed below the level of entry.
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Euro Currency Breakdown

We have been watching the Euro closely here over the past few weeks and have noted that the 1.35 level has been a strong support zone on its price chart that has held the currency's downside for the last 8 months.

Today it broke through this strong level of support. As long as it held that zone, the range trade which had contained it was still intact. The top of the range was up between 1.39 - 1.40. The bottom was at or near 1.35.  (more)
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3 reasons silver isn’t the same as gold /
Many investors who remain cautious on gold wonder whether they should get their precious metal exposure through silver instead. In response, Russ explains why the two metals aren’t interchangeable.
In recent weeks, many investors reluctant to add to their gold positions are asking me if they would be better off getting their exposure to precious metals through silver instead.
While I don’t have strong views on the direction of silver prices, I think it’s important to distinguish between gold (IAU) and silver (SLV) rather than assume that the two metals are interchangeable.
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Petrobras (NYSE: PBR) Beaten-Down Oil Stock Poised for a Rebound

Brazilian integrated oil and gas company Petrobras (NYSE: PBR) rallied 6.6% on Friday in a technically significant move. The stock broke past near-term lateral resistance, as well as a series of long-, medium- and near-term diagonal resistance lines, and looks poised to rally further in coming weeks.
On Thursday, news broke that Petrobras is in talks with Brazilian electricity company Companhia Energ (NYSE: CIG) to sell it a 40% stake in natural gas distributor Gasmig worth $270 million.

Petrobras, whose share price has been on a near constant decline for years, is looking to shed non-core and low-yielding assets. The company has incurred billions in operational losses in recent years because Brazilian president Dilma Rousseff used it to subsidize fuel imports in order to hold down inflation. Rousseff's decreasing popularity among voters may also have contributed to last week's rally in PBR.  (more)

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Tuesday, July 22, 2014

Energy XXI (Bermuda) Limited (NASDAQ: EXXI)

Energy XXI (Bermuda) Limited is engaged in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and offshore in the Gulf of Mexico. As of May 15, 2014, the company had proved reserves of 179 MMBOE. It operated or had an interest in 463 gross producing wells on 272,262 net developed acres, including interests in 41 producing fields. Energy XXI (Bermuda) Limited was founded in 2005 and is based in Hamilton, Bermuda.
To review Energy’s stock, please take a look at the 1-year chart of EXXI (Energy XXI, Ltd.) below with my added notations:
1-year chart of EXXI (Energy XXI, Ltd.)
EXXI has been trading primarily sideways for the last 6 months. Over that period of time the stock has formed a very strong resistance area at $24 (red). In addition, the stock has also created a clear level of support at $20 (green). At some point the stock will have to break out of its current consolidation.

The Tale of the Tape: EXXI has levels of support at $20 and resistance at $24. The possible long positions on the stock would be either on a pullback to $20, or on a breakout above $24. The ideal short opportunity would be on a break below $20.
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John Embry – This Is The Most Dangerous Period In 69 Years / July 21, 2014
Today a man who has been involved in the financial markets for 50 years warned this is the most dangerous period in 69 years.  Below is what John Embry, who is business partners with billionaire Eric Sprott, had to say in this fascinating interview.
Embry:  “I honestly believe this is the most dangerous period in my lifetime, particularly from a geopolitical perspective.  This is even more dangerous than the Cuban Missile Crisis.  I remember that crisis like it was yesterday….
Continue reading the John Embry interview below…
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Debunking Some Common Investment Myths

I’m going to need a shower after this week because I really whored myself out to the financial news media for the book.  I continued the media parade on Fox Business yesterday where I talked with David Asman and Liz Claman about some common investment myths.  These segments are always so short, but here are the key points I was trying to make:
  • Most of us don’t have to “beat the market” (the stock market) in the long-run.
  • In fact, most of us have financial goals that don’t require us to perform with the variance of the S&P 500.  Most of us are looking to beat inflation and do so without exposing us to huge amounts of permanent loss risk.  The S&P 500 doesn’t perfectly achieve those goals and so building a portfolio that’s entirely stocks could actually expose you to unforeseen risks and create unnecessary turbulence in your life.
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High Yield Closed-End Funds Trading at a Discount

Most investors have never heard of Central Securities Corp. (NYSE: CET). The investment firm was launched on Oct. 1, 1929, just weeks before an epic stock market crash -- but it survived that era and has made it intact for more than 80 years, albeit in a low-key fashion.

Rather than offer a range of mutual funds, CET offers just one closed-end fund. Yet it's the kind of fund that investors should always seek out: The stated value of its holdings is worth a lot more than the actual trading price.

Said another way, this closed-end fund owns $28.20 a share worth of assets, but trades for less than $24.

CET has a solid portfolio, holding companies such as Intel (Nasdaq: INTC), Citigroup (NYSE: C) and the Bank of New York Mellon (NYSE: BK). The management fee is 0.77%, which is tolerable when you consider the $4-a-share discount to net asset value (NAV).  (more)

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Advanced Energy Industries, Inc. (NASDAQ: AEIS)

Advanced Energy Industries, Inc., together with its subsidiaries, designs, manufactures, sells, and supports power conversion products that transform power into various usable forms. It offers thin-film deposition power conversion systems, including direct current (DC), pulsed DC mid frequency, and radio frequency (RF) power supplies, as well as matching networks, remote plasma sources for reactive gas applications, and RF instrumentation; and thermal instrumentation products that provide temperature measurement solutions for applications in which time-temperature cycles affect material properties, productivity, and yield. The company also provides solar power inverters, which provide a transformer-based or transformerless grid-tie photovoltaic (PV) solution to convert renewable solar power into electrical power, as well as integrated monitoring and performance measurement of PV installations.
To review Advanced Energy’s stock, please take a look at the 1-year chart of AEIS (Advanced Energy Industries, Inc.) below with my added notations:
1-year chart of AEIS (Advanced Energy Industries, Inc.)
During the last few months, AEIS has been consolidating after its severe drop-off. While consolidating, the stock has formed a clear resistance level at $20, and over the entire year the stock has created a $17, 52-week low support. For now, it appears that AEIS is on its way back down to $17.

The Tale of the Tape: AEIS seems to be on its way down to $17 after hitting $20 as resistance again. Long trades could be made at $17, or on a break above $20. Short trades could be entered on AEIS if the stock were to break below $17 or rally back up to $20.
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Monday, July 21, 2014

Weight Watchers International, Inc. (NYSE: WTW)

Weight Watchers International, Inc. provides weight management services in North America, the United Kingdom, Continental Europe, Australia, New Zealand, and internationally. The company operates through North America, United Kingdom, Continental Europe, and Rest of World. It offers a range of products and services comprising nutritional, exercise, and behavioral tools and approaches. The company also provides various products, including bars, snacks, cookbooks, food, and restaurant guides with PointsPlus values, Weight Watchers magazines, PointsPlus calculators, and fitness kits, as well as ActiveLink, an activity monitor and Web experience that tracks activity throughout the day.
Please take a look at the 1-year chart of WTW (Weight Watchers International) below with my added notations:
1-year chart of WTW (Weight Watchers International)
WTW has held a very important level of support at $19.50 (blue) since March. No matter what the market has done lately, WTW has not broken $19.50. Now the stock is approaching $19.50 again and that might provide another bounce higher. However, the stock’s insistent downtrend against a rising market implies an eventual breakdown.

The Tale of the Tape: WTW has a key level of support at $19.50. A trader could enter a long position at $19.50 with a stop placed under the level. If the stock were to break below the support, a short position would be recommended instead.
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Chart of the Day - Ford Motor Company (F)

The Chart of the Day belongs to Ford Motor Company (F). I found the stock by sorting the New High List for new highs frequency in the last month, then used the Flipchart feature to review the charts. Since the it signaled a buy on 5/27 the stock is up 9.78%.

Ford Motor Company (F) produces cars and trucks. The company and its subsidiaries also engage in other businesses, including manufacturing automotive components and systems and financing and renting vehicles and equipment. The company is divided up into the following four operating segments: Automotive, Visteon Automotive Systems, Ford Motor Credit Company, and The Hertz Corporation.

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Cash-In on the Long-Term Trend in Farmland

The idea we have for you today plays off one of our ongoing themes — “extraction.”
“We’ve got a real problem! This is a mathematical fact! Tens of trillions of dollars are being extracted from the United States of America,” ranted MSNBC pundit Dylan Ratigan in 2011. “An entire integrated system — financial system, trading system, taxing system — that was created by both parties over a period of two decades is at work on our entire country right now.”

Continue Reading at…
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Chart of the Day - Royal Bank of Canada (RY)

The Chart of the Day belongs to Royal Bank of Canada (RY).  I found the stock by sorting today's New High list for new high frequency in the last month.  Since the Trend Spotter signaled a buy on 4/29 the stock gained 11.69%.

 Royal Bank of  Canada (RY) operates under the master brand name of RBC. It is Canada's largest bank as measured by assets and market capitalization, and one of North America's leading diversified financial services companies. It provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services on a global basis. They have approximately Seventy Thousand full- and part-time employees who serve more than 15 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 36 other countries.
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