Friday, October 17, 2014

Position Your Portfolio for a Global Ebola Outbreak

Ebola is making the news and could become a factor in global financial markets. Individual stocks and ETFs could offer opportunity should this deadly disease continue to spread.
You have been reading about the frenzy which media attention has brought to the companies involved in the battle against Ebola. The wall-to-wall coverage has driven the prices for these stocks sky-high. In the midst of the media hysteria, it is important for investors to proceed with due diligence before investing in any of these stocks. The market has been playing a game of “musical chairs” among the various biotech companies that show promise for addressing some aspect of the epidemic. One day’s “hot stock” is in the next day’s trash heap.
LAKEMany investors following the Ebola crisis have been focusing on hazardous materials (HazMat) suits, which are in ever-increasing demand for the workers who are responsible for cleaning potentially contaminated areas. The most popular stock in this area has been Lakeland Industries (LAKE), which has seen its share price skyrocket from $6.25 on September 10 to $17.72 on October 9. Skeptical commentators have focused on the stock’s unimpressive track record. Nevertheless, in the current environment, the past is completely irrelevant. The really important question concerns whether Lakeland’s suits will find demand from the front lines in the Ebola battle, as opposed to demand from would-be shareholders. (more)
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Art Cashin: 50-Year Veteran Predicted Stock Plunge Last Week: What Now?

from King World News
Today a 50-year market veteran, who last Thursday astonishingly predicted that a “cascade” of panic selling would engulf the stock market, warned King World News that this is still an extremely “nervous market.” He also gave the exact level that will trigger the next “cascade” of panic selling to the downside and discussed the historic action in the bond and gold markets. Below is what Cashin, who is Director of Floor Operations at UBS ($650 billion under management), had to say in this timely and powerful interview.
Eric King: “Art,when I asked you last Thursday if the early signs of selling could develop into some more serious you issued what turned out to be an astonishingly accurate warning:
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John Kaiser’s Tips for Escaping the Resource Sector Swamp Alive

by JT Long
The Gold Report

What if the goldbugs are wrong and fiat currency isn’t going to throw the world into hyperinflation? What if, instead, a steadily growing economy and a new awareness of the importance of having security of supply for critical metals, along with a big exciting discovery that heats up the resource sector, are what pull sinking gold and silver prices and their related mining companies out of the muck? If so, John Kaiser tells The Mining Report that he has set his sights on the dozen companies that would star in this horror-turned-romantic epic adventure.
The Mining Report: At the Cambridge House Canadian Investment Conference in Toronto, you talked about escaping the resource sector swamp. Why do you call the current market a swamp?
John Kaiser: There are four key narratives that dominate the resource sector, in particular the junior resource sector. One is the supercycle narrative where a growing global economy catches the mining industry off guard with the result that higher-than-expected demand results in higher real metal prices.
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Agios Pharmaceuticals Inc (NASDAQ: AGIO)

Agios Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapeutics in the field of cancer metabolism and inborn errors of metabolism (IEMs) in the United States. Its product candidates include AG-221, an oral inhibitor of the mutated isocitrate dehydrogenase (IDH) 2 protein for the treatment of patients with cancers that harbor IDH2 mutations, as well as for the Type II D-2 hydroxyglutaric aciduria treatment; and AG-120, an oral inhibitor of the mutated IDH1 protein for the treatment of patients with cancers that harbor IDH1 mutations. The company is also developing AG-348, an oral small molecule activator of PKR enzyme for the treatment of patients with pyruvate kinase deficiency.
Take a look at the 1-year chart of Agios (Nasdaq: AGIO) with the added notations:
1-year chart of Agios (Nasdaq: AGIO)
From March thru mid-September AGIO repeatedly stalled at $50 (blue). Finally, the stock broke through that $50 on a massive increase in volume. After hitting resistance at $70 the stock has fallen into what is known as a flag pattern. The pattern gets its name from the appearance of a “flagpole” on the breakout, and a small pennant formation after. This type of price action usually implies a break higher, but is certainly not a guarantee.

The Tale of the Tape: AGIO is consolidating within a flag pattern. A break above $65 should lead to higher prices, thus a long trade could be made, and a break below $60 should lead to lower prices and a short opportunity.
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Is An Oil Rally Just Around the Corner?

Oil has suffered an epic decline.
Since peaking above $107 per barrel at the end of June, the price of West Texas Intermediate (WTI) crude oil recently collapsed to less than $82. That's a 23% decline in less than three months. Oil is now trading at its lowest price in two years. And a lot of folks think it's going to fall even further.
I disagree. It's likely the bottom is almost in for oil prices. And the sector looks like it's setting up for a short-term rally.
Let me explain...
As regular Growth Stock Wire readers know, assets like oil typically trade opposite of the U.S. dollar. So oil rallies when the dollar falls... And oil falls when the dollar rallies. (more)

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The Purgative Of $80 Oil: Junk Bond Mullets Are Getting Fracked

It’s now called a “collapse”: The US benchmark light sweet crude plunged 4.6% to settle at $81.84 a barrel on Tuesday, the lowest since June 2012. In London, Brent made a similar journey to $85.04, its lowest level since November 2010. Explanations abound why this is suddenly happening, after years of deceptive calm.
Is it some harebrained plot to punish Russia by destroying its economy? Signs of success are everywhere. The ruble is in free fall despite the central bank’s efforts to prop it up. Yield on Russia’s 10-year note is nearly 10%. The government’s budget, heavily dependent on oil revenues, is in trouble. And every unit of foreign currency that isn’t nailed down is fleeing the country. (more)

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