Tuesday, August 19, 2014

Nordstrom, Inc. (NYSE: JWN)

Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It operates in two segments, Retail and Credit. The Retail segment offers a selection of brand name and private label merchandise. This segment sells its products through various channels; online private sale subsidiary, HauteLook, Inc, as well as online store, Nordstrom.com; and catalog sale. As of July 30, 2014, this segment operated 271 stores, including 117 full-line stores, 151 Nordstrom Racks, 2 Jeffrey boutiques, and 1 clearance store in 36 states. The Credit segment operates Nordstrom fsb, a federal savings bank, which provides a private label credit card, two Nordstrom VISA credit cards, and a debit card. Its credit and debit cards feature a shopping-based loyalty program.
Take a look at the 1-year chart of Nordstrom (NYSE: JWN) with my added notations:
1-year chart of Nordstrom (NYSE: JWN)
JWN has been trading sideways for the last 3 months. Over that period of time the stock has formed a resistance level near $70 (red). In addition, JWN has also created a level of support at around $67 (green). At some point the stock will have to break one of the two levels that the sideways consolidation has created.

The Tale of the Tape: JWN has a support area near $67) and a resistance area around $70. The possible long positions on the stock would be either on a pullback to $67, or on a breakout above $70. The ideal short opportunity would be on a break below $67.
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Pinetree Capital (TSE: PNP, OTC: PNPFF) : Has Over 100% Upside

Let me tell you, if you are a contrarian investor and looking for a place to hunt for bargains, this is it.
Are you familiar with the S&P/TSX Venture Composite Index? Standard and Poors describes this index as "a broad market indicator of Canadian micro cap securities in Canada."
This index of stocks has been beaten down relentlessly.
Check out the performance for the index over its recent history. It is truly a chart that only a bargain hunter could love.

This entire index of stocks needs to increase by 250% just to get back to where it was in early 2011. The performance of this index has been so miserable that today a full five years after the global financial crisis stock prices are back near the lows seen in those dark days.  (more)
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Investing in Commercial Real Estate, REITs and How to Use Them

Following one of the most devastating shake-outs in real estate values in over 80 years since the Great Depression, real estate has rebounded into one of the hottest markets in which to invest.
Since the market bottomed in March of 2009, the Vanguard REIT ETF (NYSE: VNQ) holding an assortment of 138 residential, retail, office, storage and other REITs has soared an outstanding 275%, compared to the broader market S&P 500’s 224%.
In fact, compared to the nine sectors covered by the SPDR family of sector ETFs, VNQ has beaten eight. Over the five years since the economic recovery began, the only sector to beat the REIT sector has been consumer discretionary, as noted in the graph below comparing the VNQ (black) to SPDR’s sector funds since March 15, 2009. (We’ll talk about the red dot later.)
real estate investment trust funds
Source: BigCharts.com
To get an idea of whether REITs will continue to outperform other sectors in the future, we need to look at what specifically made them perform so well so far. If the winds blowing in REITs sails continue, they should remain great investments. (more)
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PacWest Bancorp (NASDAQ: PACW)

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services to individuals, professionals, and small to mid-sized businesses in the United States. It accepts demand, money market, and time deposits. The company’s real estate loans include construction loans, miniperm loans, and equity lines of credits; commercial loans comprise lines of credit and commercial term loans; SBA loans; and consumer loans, such as personal loans, auto loans, boat loans, home improvement loans, revolving lines of credit, and other loans. It also provides technology, manufacturing, software, transportation, and mining equipment leasing services; international banking, multi-state deposit, and investment services; telephone customer and online banking services; foreign exchange services; and remote deposit capture services, as well as issues ATM and debit cards.
Take a look at the 1-year chart of PacWest (Nasdaq: PACW) below with the added notations:
1-year chart of PacWest (Nasdaq: PACW)
There is a lot going on with the chart of PACW, so let’s start with the channel. The stock has formed a relatively clear down-channel pattern over the last 2 months. When it comes to channels, remember that any (3) points can start the channel, but a 4th point or more confirms it. You can see that PACW has several points of channel resistance and support (blue).
Next, PACW has held a very important level of support at around $38 (green) since November. The stock’s down-channel is forcing the stock back to $38 again, and that might provide another bounce higher. However, the stock’s formation of a head and shoulders (H&S) pattern (gray) could be setting the stock up for a breakdown.

The Tale of the Tape: PACW has a key level of support at $38. A trader could enter a long position at $38 with a stop placed under the level. A long trade could also be made if the stock breaks the channel resistance. However, if the stock were to break below the $38 support, which would confirm the H&S pattern, a short position would be recommended instead.
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A Trade in Treasury Bonds : TLT

Three months ago, I showed you one of the hardest trades to make in the market… It was a bullish bet on U.S. government bonds. And it did not go over well with readers (including J.D., who wrote the note above).

Even if you agreed with J.D. and skipped the trade, it's important to understand why it was so unpopular, why I recommended it anyway… and why I think it's working now.

There's a timeless lesson here. And you should remember it next time you recoil at a trading idea…

In May, I suggested Growth Stock Wire readers consider a trade on the iShares 20+ Year Treasury Bond Fund (TLT).

Treasurys are essentially loans to the U.S. government. Their prices rise and fall according to how eager folks are to lend their money to Uncle Sam. If folks are eager, they'll accept lower interest rates. Lower interest rates mean higher prices for Treasurys.

For every 1% increase in long-dated Treasury prices, TLT rises 1%.

So if you bought TLT, you were making a bet that folks would be willing to accept lower interest rates to lend money to the U.S. government for decades.

For most readers, that's a hard trade to make…

You've seen the proof that U.S. government finances are a mess. You've heard the arguments that we're undermining the dollar's unique status as the world's reserve currency with toxic amounts of debt. You know it's not going to end well.

But often, when everyone is convinced that something is going to happen, it's a good idea to bet on the opposite happening. It's a good idea to make the hard trade.

A "hard trade" is a trade that goes against your instincts. It goes against the consensus belief. It's a trade you don't want to tell your friends about because they'll tell you what a fool you are.

To the majority of people, a bullish bet on Treasurys was a preposterous idea. It was a deeply "anti-consensus" trade. But as currency analyst John Percival warned investors in his book The Way of the Dollar, "Never forget that the consensus usually includes you."

And our "anti-consensus" trade… our "hard trade"… has been the right trade…

As you can see in the chart below, TLT has built on the uptrend it began at the start of the year. It just broke out to a new 52-week high.

Please Enable Images to See this

Over the last three months, the yield on 30-year Treasurys is down from 3.49% to 3.20%. And TLT is up 7.2%, including interest. (My DailyWealth Trader readers are up 15.8% on this idea with UBT, a double-long Treasury fund.)

I don't expect this trend to continue forever. I expect the U.S. government's financial problems to come home to roost at some point. I expect long-term interest rates to rise and long-dated Treasury prices to fall. I expect that to be a painful transition for America.

But I have no idea when that's going to happen. And in the meantime, yields could continue to drop and TLT could continue to climb. In 2012, 30-year Treasury yields hit 2.46% – their lowest level in more than 50 years. At the time, TLT traded just over $132, about 12% higher than today's price.

If you made this trade, congratulations.

The crowd is still against you. The trend is still in your favor. And the hard trade is working.
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