Monday, January 27, 2014

Buy the Miners Not the Gold

After turning in its first losing year in 2013 in a long time, many have been wondering where gold’s bottom might be as MoneyShow’s Tom Aspray takes a technical look to determine whether or not now is a good time to buy.
The series of earning’s hits and misses has captured the focus of investors as has the continuing divergence between the Dow Industrials and the Nasdaq 100. The SPDR Dow Jones Industrials (DIA) is down 0.3%, so far this week, while the PowerShares QQQ Trust (QQQ) is up just over 1%.
These divergences are also evident in the market internals as while the NYSE Advance/Decline and Nasdaq Advance/Decline lines have made further new highs, the Dow A/D line has not. The volume analysis of the leading indices also looks strong and together they favor an eventual upside resolution of the trading ranges.
Following the miserable 2013 performance of gold and the gold miners, their recent gains have gotten a bit more attention, but most investors have been burnt by gold’s drop in the last quarter of 2013 as forecasted in early November’s Gold: Bull Trap Ready to Close as the volume analysis led prices lower.  (more)

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TDI Podcast: Larry Williams, Emerging Markets and Dolphin Fans (#348)

January 26, 2014 3:44 pm
Larry Williams is our guest in this episode and he is one great expert on the areas of markets. We talk about futures trading, commitment of traders reports and his outlook for the short- and long-term for markets.
We also dig into the situation in the emerging markets and the trouble it could have for global markets.
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Illinois Tool Works Inc. (NYSE: ITW)

Illinois Tool Works Inc. manufactures and sells a range of industrial products and equipment worldwide. Its Transportation segment offers plastic and metal components, fasteners, and assemblies; fluids and polymers; fillers and putties; polyester coatings, and patch and repair products; and truck remanufacturing, and related parts and services.
The company’s Power Systems & Electronics segment provides arc welding equipment; metal arc welding consumables and related accessories; metal solder materials; equipment and services for microelectronics assembly; electronic components and component packaging; static and contamination control equipment; airport ground support equipment; pressure sensitive adhesives and components; and metal jacketing and other insulation products.
Its Industrial Packaging segment offers steel and plastic strapping and related tools and equipment; plastic stretch film and related equipment; and paper and plastic products that protect goods in transit.
The company’s Food Equipment segment provides warewashing, cooking, refrigeration, and food processing equipment; and kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services.
Its Construction Products segment offers anchors, fasteners, and related tools; metal plate truss components, and related equipment and software; and packaged hardware and other products for retail. The company’s Polymers & Fluids segment provides adhesives; chemical fluids; epoxy and resin-based coating products; and hand wipes and cleaners.
Please take a look at the 1 yr. chart of ITW (Illinois Tool Works, Inc) that I have shown below with my added notations:
1 yr. chart of ITW (Illinois Tool Works, Inc)
ITW has formed a very nicely defined up-channel over the last (5) months. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to a channel any (3) points can start the channel, but it’s the 4th test and beyond that confirm it. You can see that ITW has multiple test points between the channel resistance (red) and the channel support (blue). Following the ITW channel can provide you with both long and short trading opportunities.

The Tale of the Tape: ITW has formed a common chart pattern known as a channel, in this case, an up-channel. A long opportunity could be entered on a pullback to the channel support, which is currently sitting near $81. Short trades could be entered at channel resistance OR if ITW were to break below the channel support.
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Dividend Power: Investing for Generations

With the Fed continuing to keep interest rates near zero, I think Wall Street's upward path will continue, at least, most of the way through 2014, forecasts Jim Powell, editor of Global Changes & Opportunities.

However, I think we will see more price swings than we did last year. Alas, the screaming bargains we enjoyed over the previous two years are largely gone. And a correction is also long overdue.

Fortunately, you don't need ultra-low prices to become a big winner with dividend stocks. Unlike the fixed interest rates paid on bonds, top companies usually increase their dividends from year to year.

As the payouts increase, so does the effective yield on the money that was invested. It's very sweet. Two examples show how rewarding dividend growth can be.

The current yields for Wal-Mart (WMT) and Target (TGT) are 2.30% and 2.70% respectively. Those returns are respectable, but are nothing to get excited about.

However, Wal-Mart's dividend per share has increased at a 16% annual rate since 2004.

Target's has increased 17.6%. After ten years at those rates, the effective yields on today's cost for the stocks (often called yield on cost) would be a very impressive 8.75% and 11.62% respectively.  (more)
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A "no-brainer" way to make 100%-plus on an unstoppable trend

After the recent 30%-plus fall in electronics retailer Best Buy, we wanted to make sure all Crux readers see this recent piece from our colleague, Frank Curzio. Read on for the details…

From Frank Curzio, editor, Small Stock Specialist:

[Two weeks ago], I attended one of the biggest events in the tech world – the Consumer Electronics Show (CES).

CES is one of the largest consumer-electronics and technology conferences on the planet. Over 155,000 people were expected to fill the more-than two-million-square-foot venue in Las Vegas this year to check out the latest innovations and gadgets from more than 3,000 exhibitors.

I saw headbands that measure brain activity... I saw a band playing live music from instruments made by 3D printing (the printing of solid objects like toys, tools, furniture, machine parts, and even guns)... And I saw a kitchen and living room where everything – appliances, sound systems, door locks, and lights – was controlled by a mobile phone.
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Weekly US Economic Calendar

time (et) report period Actual CONSENSUS
10 am New home sales Dec.   455,000 464,000
8:30 am Durable good orders Dec.   1.8% 3.4%
9 am Case-Shiller home prices Nov.   -- 13.6% y-o-y
10 am Consumer confidence index Jan.   77.6 78.1
2 pm FOMC statement     -$10 bln -$10 bln
8:30 am Weekly jobless claims 1/25
325,000 326,000
8:30 am GDP 4Q   3.3% 4.1%
10 am Pending home sales Dec.   -- 0.2%
8:30 am Employment cost index 1Q   0.4% 0.4%
8:30 am Personal income Dec.   0.2% 0.2%
8:30 am Consumer spending Dec.   0.2% 0.5%
9:45 am Chicago PMI Jan.   60.0 60.8
9:55 am UMich consumer sentiment index Jan.   81.0 80.4
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