Tuesday, August 5, 2014

Chris Vermeulen – Stock Market Correction Underway?

from Financial Survival Network
Chris Vermeulen of TheGoldandOldGuy.com is an expert at detecting market short and medium term trends. He believes that all signs are pointing to an intermediate stock market correction and he thinks it’s an excellent time to make money. But you’ve got to be on the ball. Precious metals could be heading lower. Same with oil and commodities. But Chris is unconcerned. As long as the market is moving and he’s picked up on the trend, he’s happy.
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Baker Hughes (NYSE: BHI): No. 3 Oilfield Services Company is My No. 1 Pick for the Energy Boom

If you aren't familiar with the North American energy boom by now, then you've likely had your head stuck in shale rock for the past several years. 
New technologies such as hydraulic fracturing, or "fracking," for getting oil and natural gas out of the shale formations, as well as new high-tech techniques that have uncovered hitherto unknown oil and nat gas supplies, have created not just a boom in energy, but a virtual renaissance in North American energy production.
With many of the best companies in the oil and gas drilling and equipment segment drowning in revenue and profits, it's been a great time to be an energy investor.  (more)

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NTELOS Holdings Corp. (NASDAQ: NTLS)

NTELOS Holdings Corp. provides digital wireless communications services to consumers and businesses in Virginia and West Virginia, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio, and Kentucky. It primarily offers wireless voice and digital data personal communication products and services to retail and business customers under NTELOS Wireless and FRAWG Wireless brand names. The company provides network access, data services, feature services, and equipment services; and an interactive Web presence, which offers customers with access to their account, auto-pay billing service, and account monitoring services, such as overage text alerts and other customer care support. It serves consumer, small/medium enterprise, education, municipal, and medical markets through approximately 3 regional call centers, 61 company-operated direct retail locations, 384 indirect retail distribution locations, and 459 third-party payment centers.
Take a look at the 1-year chart of NTELOS (Nasdaq: NTLS) with the added notations:
1-year chart of NTELOS (Nasdaq: NTLS)
NTLS has held a very important level of support at $12 (green) for most of the last 5 months. No matter what the market has done since March, NTLS almost always found support at that level. Now, the stock is approaching $12 again and that might provide another bounce higher.

The Tale of the Tape: NTLS has a key level of support at $12. A trader could enter a long position at $12 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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IS Groupon GRPN Getting Ready for a Breakout Reversal?

Groupon shares (GRPN) may be setting up a potential breakout and bullish trend reversal trade.
Let’s start with the Daily Chart and plot future levels for this potential bullish reversal.

Keeping it simple, shares have the potential to break bullishly above the $7.00 price level toward the confluence of the falling 200 day SMA ($8.44) and price high from March 2014.
The breakout signal did not trigger today, and thus we’re only setting up a game-plan to plan potential trades.
Shares remain in the neutral/bullish zone between $6.50 and $7.00 and otherwise would trigger a bearish breakdown (downtrend continuity) reversal under $6.00.
Plan entry, management, and targets based on these levels.
We get a bit more perspective from the Weekly Chart:

I drew a short-term Fibonacci Retracement of the 2012 to 2013 rally and highlight price trading slightly under the 61.8% level near $6.50.
On this grid, Fibonacci levels include (roughly) $6.50, $7.70, and $8.90.
We again see a confluence with the $9.00 per share target mentioned above.
Again, should shares fall into the resistance cluster near $7.00 (falling 20 week EMA) then the downtrend would likely continue without a reversal signal.
Update your charts and trade-plans with these target reference level.
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China: One of the World's Cheapest Markets Is Soaring

No one's paying attention… But one of the world's cheapest stock markets has entered a stealth bull market…

Since bottoming in March, this market is up 23%. But no one is talking about it…

Better still, history shows that this could be just the start of a much larger move. Triple-digit gains are the norm from these levels.

Today's opportunity might not be in the most savory place to invest… But it's one you have to consider right now.

Our big opportunity is in China…

You see, Chinese stocks have been stuck in a bear market over the past few years. The iShares China Large-Cap Fund (FXI) remains 33% below its 2007 high. But over the last few months, Chinese stocks have rallied…

FXI is up 23% since March. And it's in the midst of breaking out of its multiyear downtrend. Take a look…

Longtime readers know we always like to wait on an uptrend before buying. Cheap stocks and stock markets can always get cheaper. So, buying after an uptrend begins dramatically lowers our risk.

This important thing is, even though Chinese stocks are up 23% in just a few months, we still have plenty of upside for one simple reason…

Chinese stocks remain one of the cheapest markets in the world.

The table below shows what I mean. It shows the Hang Seng China Enterprise Index (the "HSCEI") – an index that tracks large Chinese companies that trade in Hong Kong – versus a few of the world's major stock markets.

Any way you look at it, China's largest companies are dirt-cheap compared with the rest of the world…

Region Index P/E Ratio Price-to-book Dividend Yield
USA S&P 500 17.6 2.7 2.0%
Japan Nikkei 225 20.0 1.6 1.6%
Eurozone Euro Stoxx 50 22.3 1.5 3.7%
Hong Kong Hang Seng 10.8 1.4 3.7%
China Hang Seng China Enterprises 8.1 1.2 4.0%

China trades at a 50%-plus discount to the U.S., Europe, and Japan, based on earnings. It also pays a higher dividend, roughly 4% today. That's double what the U.S. market pays. But that's not the best part…

You see, China is also cheap compared with its own history. It's now cheaper than it was the last two times Chinese stocks soared…

Take June 2005, for instance. Back then, the Hang Seng China Enterprise Index traded for around 10 times earnings. That valuation extreme kicked off a multiyear bull market good for 333% gains.

Similarly, in October 2008, the index traded for around eight times earnings. Chinese stocks soared 132% over the next year.

Sure, shares of FXI are up 23% in just a few months. But from this level of cheapness, Chinese stocks could easily return triple digits from here. It has already happened twice in the last decade.

Of course, we can't know for sure if this is the start of the next bull market. But Chinese stocks are breaking out and they're dirt-cheap… compared with their own history and the rest of the world.

These two pieces make buying today considerably less risky. Chinese stocks – through the iShares China Large-Cap Fund – are worth considering right now.
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