Tuesday, January 21, 2014

What Do "Insiders" Know That You Don't?

With your local friendly asset-gatherer constantly promoting the cheapness of stocks of the TINA (there is no alternative) to BTFATH, TV talking-heads jabbering over 'stock-pickers' markets (infuriating Cliff Asness), and CEOs trotted out day after day to espouse how bright the future looks (even if outlooks in the immediate future are down-down-down-graded); it is hardly surprising that sentiment among the sheeple is so extremely bullish. So, when we saw the chart below... we could only ask - what do the insiders know that the average-joe-investor doesn't?

Of course, we are sure someone will try and explain away this avalanche of insider-selling with "tax-related" factors or "taking-profits" but none of that negates the less-than-optimistic tone that it implies about what the short- or medium-term expectations are from management of the firms that comprise the US equity market...
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Favorite ETFs: First Trust US IPO (FPX), WisdomTree Japan Hedged Equity (DXJ)

First Trust US IPO (FPX) began trading in April 2006, and has a market value of over $300 million—it's a hidden gem that won't run the risk of selling at a premium or discount to its NAV.

The IPOX-100 US Index is made up of the 100 largest, best performing, most liquid US initial public offerings; measuring the IPO's performance during their first 1,000 trading days. (IPOs get placed into the index on their sixth trading day and remain in the index for 1000 days.)

The top three sectors are consumer discretionary (25.9%), information technology (19.3%), and health care (16.8%). The top ten holdings are Facebook, AbbVie, GM, Phillips 66, Kinder Morgan, Kraft Foods, Marathon Petroleum, HCA Holdings, Dollar General, and Delphi Automotive.

First Trust US IPO is US-centric and a great complement to my more speculative pick, WisdomTree Japan Hedged Equity (DXJ), which is made up of dividend paying Japanese companies and an inbuilt hedge against Yen movements versus our almighty US dollar.

If the yen weakens, this fund should get a bit more return boost, on top of its holdings' returns, compared to its un-hedged competitors…and vice versa. But in 2014, so long as tapering takes hold, and the prospect for faster US growth turns into the reality of it, the yen should weaken versus the dollar.

As for its holdings, with Abenomics working its stimulus mojo and the macro global view brightening, the names herein should fare well—and if clouds gather, they should be able to weather any storm well.

It began trading in June 2006 and has a market value of over $11.9 billion—you won't have to worry about liquidity. The top three sectors are industrials (25.5%), consumer discretionary (22.8%), and information technology (15.6%).

The top ten holdings are Mitsubishi UFJ Financial, Toyota Motor, Canon, Honda Motor, Takeda Pharmaceutical, Japan Tobacco, Nissan Motor, Mitsubishi, Mitsui & Co, and Astellas Pharma.

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The Silver Spike Is Going To Shock The World In 2014

kingworldnews.com / January 20, 2014
As markets continue to see some wild trading as we start 2014, today James Turk told King World News that a massive spike in the price of silver is going to shock the world in 2014.  Turk also warned about central planners’ desire to control humanity through banking and currencies, and also included a fantastic chart of silver.
Turk:  “The big question everyone should be asking here, Eric, is:  When are gold and silver going to break out from the huge base both precious metals have been forming since their low price was reached last June?….
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After the Collapse: Six Likely Events That Will Follow an Economic Crash

It’s not too difficult to understand that we are well on our way to a paradigm shift in America; in fact we’re in the midst of it right now. The writing is on the wall and can no longer be ignored.
The US government has run up trillions of dollars in debt, and given the recent debates over the country’s debt ceiling, we can rest assured that neither Congress or the President will act to curtail spending and balance the budget. We will continue adding trillions of dollars to the national debt clock until such time that our creditors no longer lend us money.
From the monetary side, the Federal Reserve’s response to this unprecedented crisis has been to simply “print” more money as is necessary. On top of the trillions in dollars already printed thus far, the Fed continues quantitative easing to the tune of about $80 billion per month. It’s the only arrow left in the Fed’s quiver, because failing to inject these billions into stock markets and banks will lead to an almost instant collapse of the U.S. financial system. Unfortunately, the current strategy is chock full of its own pitfalls, the least of which being the real possibility of a hyperinflationary environment developing over coming months and years.  (more)

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Shutterfly, Inc. (NASDAQ: SFLY)

Shutterfly, Inc. provides digital personalized photo products and services in the United States. It offers a range of personalized photo-based products and services for consumers to upload, edit, enhance, organize, find, share, create, print, and preserve their memories. The company also produces and sells photo books, greeting and stationery cards, personalized calendars, and other photo-based merchandise, including calendars, mugs, canvas prints, mouse pads, magnets, and puzzles; and photo prints of carious sizes. In addition, it provides Shutterfly iPhone Photo App, which combines storage, viewing, and photo gift creation. The company offers its products and services under the Shutterfly, Tiny Prints, Wedding Paper Divas, and Treat brand names.
To review Shutterfly’s stock, please take a look at the 1-year chart of SFLY (Shutterfly, Inc.) below with my added notations:
1-year chart of SFLY (Shutterfly, Inc.)
SFLY had been trading sideways for the last 2+ months. Over that period of time, the stock had formed a clear resistance level at $52 (red). In addition, the stock also created a strong level of support at $45 (green). The rectangle formation on SFLY is very helpful in trading it because at some point the stock would have to break one of the two levels the pattern had created. As you can see, yesterday the stock finally broke the $45 support and should be moving lower from here.

The Tale of the Tape: SFLY recently broke down out of its rectangle pattern. A rally up to $45 would provide an opportunity to get short on the stock. However, a break back above $45 would negate the forecast for a move lower.
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