Thursday, February 13, 2014

Bear Stock Market Possible This Year: Ned Davis Research

Ned Davis Research says a bear stock market, generally defined as a decline of at least 20 percent, isn't out of the question for this year.

In a report issued Friday, the firm, which has been bullish on stocks for most of the rally since March 2009, says it expects continued gains for now, The Wall Street Journal reports.

But the firm warns that if investors grow overly enthusiastic during the next several weeks, sending prices too high, the market could tumble later in the year, the paper says.

Ned Davis Research looks at various indicators to determine whether a bear market is coming. These include ones measuring whether stocks are ascending broadly through many industry sectors and countries, or whether a shrinking cadre of large, expensive issues are leading the market higher.

The second situation has pointed to bear markets in the past. But while the indicators have dipped a little recently, they don't point to a bear market yet. So Ned Davis isn't steering clients clear of stocks yet, The Journal reports.

One expert who believes a big drop is definitely in store for the market is Marc Faber, publisher of the Gloom, Boom & Doom Report. He thinks Federal Reserve easing has artificially inflated stocks.

"I think the market is way overdue for a 20 to 30 percent correction," Faber tells CNBC.
"In fact, I'm hoping for the market to drop 40 percent so stocks will again become — from a value point of view — attractive."
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Petrobras (PBR) How to Make a Fortune on Forgotten Oil

You’re probably familiar with Warren Buffett’s famous line about buying when the market is fearful and selling when investors become greedy.
Well, given the recent performance of Brazilian energy giant, Petrobras (PBR), investors are pretty fearful!
Shares have dropped to their lowest level in a decade, and are now trading at a whopping 40% discount to the company’s book value. Suffice it to say, that makes it one of the cheapest stocks on the planet.
With a markdown like that, you’d think most investors would be all over it faster than a Black Friday sale.  (more)

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Parker Drilling Company (NYSE: PKD)

Parker Drilling Company, together with its subsidiaries, provides contract drilling and drilling-related services in the United States, Latin America, Africa, the Middle East, the Asia Pacific, and Commonwealth of Independent States. It operates in six segments: Rental Tools, U.S. Barge Drilling, U.S. Drilling, International Drilling, Technical Services, and Construction Contract. The company operates barge rigs for drilling natural gas, oil, and a combination of oil and natural gas in the shallow waters in and along the inland waterways, as well as drills geologically difficult wells and manages the logistical and technological challenges of operating in remote, harsh, and ecologically sensitive areas. As of February 28, 2013, its rig fleet included 23 land rigs and 2 offshore barge rigs in international locations; 12 barge rigs in the U.S. Gulf of Mexico; and 2 land rigs in the U.S. The company also provides rental tools for land and offshore oil and natural gas drilling and offers equipment used for drilling, workover, and production applications, such as drill pipes, heavy-weight drill pipes, tubing, high-torque connections, blow-out preventers, drill collars, and others. In addition, the company also provides technical services.
To review Parker’s stock, please take a look at the 1-year chart of PKD (Parker Drilling Company) below with my added notations:
1-year chart of PKD (Parker Drilling Company)
PKD had been trading sideways for the last 3 months. Over that period of time, the stock had formed a clear resistance level at $8.50 (red). In addition, the stock also created a strong level of support at $7.50 (blue). The rectangle formation on PKD is very helpful in trading it because at some point the stock would have to break one of the two levels that the pattern had created. As you can see, earlier this week the stock finally broke the $7.50 support and has already started moving lower.

The Tale of the Tape: PKD recently broke down out of its rectangle pattern. A rally up to $7.50 would provide an opportunity to get short on the stock. However, a break back above $7.50 would negate the forecast for a move lower.
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Chart of the Day - Sunoco Logistics Partners LP (SXL)

The Chart of the Day is Sunoco Logistics Partners LP (SXL). I found the stock by sorting today's New High List for frequency in the last month, skipped the stocks that did not have positive gains for the last week and month then used the Flipchart feature to review the charts. Since the Trend Spotter signaled a buy on 12/19 the stock gained 13.87%.

Sunoco Logistics Partners L.P. is a limited partnership recently formed by Sunoco, Inc. to acquire, own, and operate a geographically diverse and complementary group of refined product and crude oil pipelines and terminal facilities.

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Top 10 Penny Stocks of 2014

Penny stock investing is attractive to those looking for huge gains in a short period of time, and these top penny stocks from January prove just that.
Each stock posted a gain of at least 97% in January alone — one gained an incredible 858%.
Investing in penny stocks can have its drawbacks and can be risky. But those investors who are prepared for the risks and jump on the right penny stock can double their money in days.
Just look at these top penny stocks from last month…(more)

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Genuine Parts Company (GPC)

Imagine being in the market to buy a used car.
You scan the car dealership lot and there are two choices that catch your eye…
One is a sleek coupe with fancy rims and a loud exhaust. It looks and sounds fast.
The other is an unassuming sedan. It has conservative trim and an engine that squeals.
The salesman looks on in amazement as you tell him that you’d like to purchase the plain four-door.  (more)

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