Wednesday, July 9, 2014

Western Refining, Inc. (NYSE: WNR)

Western Refining, Inc. operates as an independent crude oil refiner and marketer of refined products. The company’s Refining segment owns and operates two refineries, and related refined product distribution terminals and asphalt terminals, as well as operates a crude oil gathering pipeline system. This segment offers crude oil and other feedstocks into refined products, such as gasoline, diesel fuel, jet fuel, and asphalt to the wholesale distributors and retail chains. Its Wholesale segment distributes gasoline, diesel fuel, and lubricant products. The company’s Retail segment operates retail stores that sell gasoline, diesel fuel, and convenience store merchandise. As of December 31, 2013, it operated 228 retail locations in Arizona, Colorado, New Mexico, and Texas; a fleet of crude oil and refined product truck transports; and a wholesale petroleum products distributor that operates in Arizona, California, Colorado, Nevada, New Mexico, Texas, Maryland, and Virginia.
To review Western’s stock, please take a look at the 1-year chart of WNR (Western Refining, Inc.) below with my added notations:
1-year chart of WNR (Western Refining, Inc.)
WNR has been trading sideways for the last 8 months. Over that period of time the stock has formed a common resistance area at $42 (blue). In addition, the stock has also created a clear level of support at $36 (green). At some point the stock will have to break out of its current consolidation.

The Tale of the Tape: WNR has levels of support at $36 and resistance at $42. The possible long positions on the stock would be either on a pullback to $36, or on a breakout above $42. The ideal short opportunity would be on a break below $36.
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The 2 Best Stocks To Profit From 'Housing Rebound 2.0'

The recovery in U.S. housing has been the pervasive theme since the financial collapse and has offered some of the best returns in the market. Extreme uncertainty over subprime loans and falling real estate prices drove homebuilders and building products to fire-sale prices by 2011.
Hindsight, curse that it is, has most of us looking back at the triple-digit gains in some housing-related companies over the two years to mid-2013 and wondering why we couldn't see the writing on the wall.
But you shouldn't beat yourself up too badly -- you just might get another chance.
The SPDR S&P Homebuilders Index Fund (NYSE: XHB) has underperformed the market with a gain of just 11% over the last year and a loss of 1% over the past six months. The weakness is in stark contrast to the 60% gain the index posted in the two years to mid-2013, along with triple-digit gains in shares of homebuilders like KB Homes (NYSE: KBH) and Hovanian Enterprises (NYSE: HOV).  (more)

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Why Bond Investors May Soon Head for the Exits

The spike in interest rates last week was just the beginning of a major rally.
Two weeks ago, we said interest rates were setting up for a surprise move. They had been falling all year. And most analysts were expecting rates to continue even lower, or at least remain at their depressed levels. But we said rates looked poised to rally. Last week, they started a new uptrend.
And that's bad news for bonds...
Take a look at this chart of the 30-year Treasury bond yield...
30-year treasury bond yield
As you can see, the 30-year Treasury yield broke above the blue down-trending resistance line in early June. It tested that line as support two weeks ago. Support held, and rates blasted higher last week.  (more)
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Three Incredibly Important Guest Commentaries / July 8, 2014
Today King World News is highlighting three incredibly important guest commentaries included in Art Cashin’s notes.  Below are the three fascinating guest commentaries that Art Cashin, who is Director of floor operations at UBS, chose to highlight.
By Art Cashin Director of Floor Operations at UBS 
July 8 (King World News) – “Earnings Season – Tonight, Alcoa reports, marking the “traditional” opening of “earnings season”.  Our pal, Peter Boockvar over at the Lindsey Group, sent out a note on that topic to clients.  Here’s a bit:
On to earnings. Current Bloomberg estimates has 3% y/o/y revenue growth and 5% earnings growth for the S&P 500. What will be key and sorry to repeat again but with profit margins at record highs, it is imperative that productivity growth starts to rise because the increase in hiring that we’re now seeing must be met with a gain in output per worker or else unit labor costs go higher and margins fall. Low labor costs have been a critical lift to corporate profits over the past few years in addition to historically low interest expenses. In 2013, wages and salaries combined with benefits (employer payments of medicare and social security contributions) totaled 52.7% of GDP, the lowest since 1948. Without stronger productivity as companies add to payrolls is called the 1970’s. For example, in 1977 monthly payrolls were 330k and improved to 355k in 1978. The average productivity growth over those 2 years was just 1.75% vs an average of over 2% in the two decades that followed. Inflation of course was the result and interest rates spiked. The S&P 500 fell 11.5% in 1977 and rose just 1.1% in 1978. The opposite, where productivity increased along with more money accruing to labor is called the 1980s/1990s and we know what happened then.
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