This time of year, market prognosticators, financial journalists and traders look back on what was hot and what was not in 2014. More importantly, all of us are trying to figure out what’s likely to work in 2015. #-ad_banner-#Now, there are two schools of thought. One is to sort through the most beaten-down sectors of the year (the most obvious being the bludgeoned energy sector) and try to find the hidden gems that have been unfairly caught up in the sell-off. The other school of thought is to look at sectors that outperformed the rest of the market. … Read More

This time of year, market prognosticators, financial journalists and traders look back on what was hot and what was not in 2014. More importantly, all of us are trying to figure out what’s likely to work in 2015. #-ad_banner-#Now, there are two schools of thought. One is to sort through the most beaten-down sectors of the year (the most obvious being the bludgeoned energy sector) and try to find the hidden gems that have been unfairly caught up in the sell-off. The other school of thought is to look at sectors that outperformed the rest of the market.  I prefer the latter tactic. Most investors are conditioned with a “buy low, sell high” mentality that can actually hurt their performance. Research has shown assets that are outperforming the market tend to continue outperforming. A screen of the major market sectors showed outstanding relative price performance year to date in two sectors that I suspect have the juice to continue delivering into 2015: biotech and tech.   For most of the year, stocks in the health care space have been on fire. Large-cap stocks in the iShares DJ US Healthcare ETF (NYSE: IYH)… Read More

Ask six market analysts what they think about Chinese stocks and you’re liable to get a dozen answers. Those opinions will range from frighteningly bearish to unabashedly bullish. On the bull side is China’s still enviable economic growth, which should be about 7% in 2015. The bulls say that’s not bad, but it’s a huge slowdown, as well as a far cry from the double-digit percentage growth of years past. Well, you know what they say about opinions — everybody has one, or in the case of China, everyone has at least one.  So, rather than rely on… Read More

Ask six market analysts what they think about Chinese stocks and you’re liable to get a dozen answers. Those opinions will range from frighteningly bearish to unabashedly bullish. On the bull side is China’s still enviable economic growth, which should be about 7% in 2015. The bulls say that’s not bad, but it’s a huge slowdown, as well as a far cry from the double-digit percentage growth of years past. Well, you know what they say about opinions — everybody has one, or in the case of China, everyone has at least one.  So, rather than rely on opinions to guide my trading, I prefer to rely on hard data — and there’s no harder data out there than share price performance. One of my favorite Chinese stocks, and my favorite international pick for 2015, is Baidu (NASDAQ: BIDU). #-ad_banner-#The company dominates China’s Internet search market with an 82% market share by revenue, according to data from iResearch. Ironically, Baidu can be considered “China’s Google.” I say ironically, because Google (NASDAQ: GOOG) actually is a distant second in the Chinese search market.  Over the past six months, the stock is up an impressive 34%. That performance… Read More

Despite the incredible, often life-saving benefits of medical devices such as pacemakers, stents, catheters, implants, etc., the companies who manufacture them have a big tax bull’s-eye on their backs courtesy of Obamacare. The Affordable Care Act (ACA) has a provision in it called the medical device tax, which is a 2.3% excise tax on a wide variety of medical devices, including most of the products sold by one of the biggest, and in my view, best, companies in the space: Medtronic (NYSE: MDT). Fortunately for Medtronic, and partially because of the industry’s aggressive lobbying, the medical device tax… Read More

Despite the incredible, often life-saving benefits of medical devices such as pacemakers, stents, catheters, implants, etc., the companies who manufacture them have a big tax bull’s-eye on their backs courtesy of Obamacare. The Affordable Care Act (ACA) has a provision in it called the medical device tax, which is a 2.3% excise tax on a wide variety of medical devices, including most of the products sold by one of the biggest, and in my view, best, companies in the space: Medtronic (NYSE: MDT). Fortunately for Medtronic, and partially because of the industry’s aggressive lobbying, the medical device tax could soon be erased from Obamacare. That’s because, in a rare display of bipartisanship in Congress, lawmakers from both sides of the political aisle want to repeal the tax. #-ad_banner-# In fact, a recent Washington Post article called the repeal “one of Washington’s top priorities” and actually mentioned Medtronic by name, as the Minnesota-based company has its two Democrat senators, Al Franken and Amy Klobuchar, on record supporting it. The repeal is almost certainly going to become an even… Read More

The Affordable Care Act, also known as Obamacare, has been in the news a lot lately thanks to the insulting utterances of its “architect,” MIT economist Jonathan Gruber.  Yet the controversy over Gruber’s comments surrounding the “stupidity of the American voter” aside, the fact is that just about everybody needs health care and health care insurance, in one form or another. It’s this understanding that has likely led investors to buy into this defensive sector.  This year, health care has been one of the market’s best-performing sectors, up nearly 25% in 2014, compared with 12% for the S&P 500. And… Read More

The Affordable Care Act, also known as Obamacare, has been in the news a lot lately thanks to the insulting utterances of its “architect,” MIT economist Jonathan Gruber.  Yet the controversy over Gruber’s comments surrounding the “stupidity of the American voter” aside, the fact is that just about everybody needs health care and health care insurance, in one form or another. It’s this understanding that has likely led investors to buy into this defensive sector.  This year, health care has been one of the market’s best-performing sectors, up nearly 25% in 2014, compared with 12% for the S&P 500. And one of the best-performing stocks in the health care sector is health insurance provider Centene Corp. (NYSE: CNC). #-ad_banner-#Centene provides programs and services related to the so-called “underinsured” via Medicaid and Medicaid-related health coverage. Government subsidies associated with the Affordable Care Act have helped this segment of CNC’s business blossom.  In late October, Centene reported better-than-expected Q3 revenue and profit that was primarily fueled by growth in Medicaid members. The company said its total membership count rose 42% year over year in the quarter to 3.7 million as of Sept. 30. Nearly 70% of that was Medicaid members. Read More

Newton’s First Law of Motion states, “An object at rest stays at rest, and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.” This, of course, applies to physical objects, but there is a similar principle in the markets known as relative strength. Relative strength, or RS, is a way to rank a stock’s performance relative to all other stocks in the market. Specifically, it assigns a numerical score from 0 to 100 to a stock based on its performance over a certain period of time,… Read More

Newton’s First Law of Motion states, “An object at rest stays at rest, and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.” This, of course, applies to physical objects, but there is a similar principle in the markets known as relative strength. Relative strength, or RS, is a way to rank a stock’s performance relative to all other stocks in the market. Specifically, it assigns a numerical score from 0 to 100 to a stock based on its performance over a certain period of time, typically six months. RS is one of the few indicators that have been proven to predict the future direction of a stock’s price. Research uncovered that stocks that are outperforming — thereby commanding a high RS rank — are more likely to continue outperforming than those that are underperforming. #-ad_banner-#In other words, a stock in upward motion is likely to stay in upward motion. It’s a simple concept — and a profitable one. One stock sporting a high RS rank that caught my eye is computer network services firm Level 3 Communications (NASDAQ: LVLT).  In August,… Read More

After a big sell-off in early October, stocks are back with a vengeance. The uncertainty about the Fed and the end of quantitative easing is off the table, as is the uncertainty over the midterm elections.  Not surprisingly, traders now are turning to more substantive, company-specific metrics to identify winning stocks. One trader friend of mine told me yesterday that he can now “get back to doing what I do best.” And by that he meant finding high-quality momentum stocks “that are just killing it” and riding their coattails to big gains. Sounds good, but in the vast universe of… Read More

After a big sell-off in early October, stocks are back with a vengeance. The uncertainty about the Fed and the end of quantitative easing is off the table, as is the uncertainty over the midterm elections.  Not surprisingly, traders now are turning to more substantive, company-specific metrics to identify winning stocks. One trader friend of mine told me yesterday that he can now “get back to doing what I do best.” And by that he meant finding high-quality momentum stocks “that are just killing it” and riding their coattails to big gains. Sounds good, but in the vast universe of tradable equities, how do you consistently identify the winners? #-ad_banner-# The key indicator I use is relative strength (RS).  I suspect you are aware of the concept of relative strength, as it’s by no means a new tool in traders’ kits. In fact, relative strength is something I first used back in the mid-1990s to identify those stocks most likely to move higher. In case you aren’t familiar with the indicator, relative strength compares a stock’s performance against the performance of… Read More

Analog and mixed-signal semiconductor device maker Skyworks Solutions (NASDAQ: SWKS) has enjoyed a huge run over the past 52 weeks, up more than 130% and trading at levels not seen in over a decade. The company makes high-tech microchips used in mobile devices, wireless networks and the automotive market. Its mixed-signal devices convert and boost radio frequency signals in smartphones, making the user experience much more powerful. Given the huge growth in the mobile device and networking space over the past several years, there’s been heavy demand for Skyworks Solutions’ radio frequency microchips. This demand has analysts projecting double-digit sales… Read More

Analog and mixed-signal semiconductor device maker Skyworks Solutions (NASDAQ: SWKS) has enjoyed a huge run over the past 52 weeks, up more than 130% and trading at levels not seen in over a decade. The company makes high-tech microchips used in mobile devices, wireless networks and the automotive market. Its mixed-signal devices convert and boost radio frequency signals in smartphones, making the user experience much more powerful. Given the huge growth in the mobile device and networking space over the past several years, there’s been heavy demand for Skyworks Solutions’ radio frequency microchips. This demand has analysts projecting double-digit sales and EPS growth for the foreseeable future. #-ad_banner-#On average, analysts expect the company to grow earnings about 20% a year for the next five years. Skyworks Solutions is set to report fiscal fourth-quarter earnings after the closing bell on Thursday, Nov. 6. Expectations are high due in large part to an upwardly revised guidance the company offered Wall Street in mid-October.  Management boosted its Q4 revenue outlook to $718 million, which represents a 51% year-over-year increase. It also lifted its earnings-per-share projections to $1.08, which translates to a 69% increase from the year-ago quarter. This was up from previous guidance… Read More

What’s the first rule of successful real estate investing? Of course, you just said to yourself, “location, location, location.” Well, when it comes successful equity trading, the first rule that should come to your mind is “price, price, price.” More specifically, it is the share price performance of a stock or ETF relative to other stocks and ETFs traded in the market that is the most important metric to put in your favor.  If a security you are looking to buy has a proven track record of outperforming others in the broad market, or within its specific industry group, then… Read More

What’s the first rule of successful real estate investing? Of course, you just said to yourself, “location, location, location.” Well, when it comes successful equity trading, the first rule that should come to your mind is “price, price, price.” More specifically, it is the share price performance of a stock or ETF relative to other stocks and ETFs traded in the market that is the most important metric to put in your favor.  If a security you are looking to buy has a proven track record of outperforming others in the broad market, or within its specific industry group, then that tells you others on Wall Street think there is something special about it that makes it worth buying. #-ad_banner-#This “something special” could be a variety of things, including a proven track record of strong revenue and earnings growth, e.g., Walt Disney (NYSE: DIS); a breakout product or game-changing service, e.g., Netflix (NASDAQ: NFLX); a high-demand personal technology product, e.g., Apple (NASDAQ: AAPL); or a brilliant CEO, e.g., Elon Musk of Tesla Motors (NASDAQ: TSLA).  Whatever the reason, or combination of reasons, the price performance relative to the… Read More

There’s a lot of angst in the market right now, and considering the Dow has spent the past 14 trading days making triple-digit intraday price swings, it’s no surprise that traders are nervous. #-ad_banner-#Since early September, there’s been a big correction in many formerly high-flying market leaders. Domestically, the small-cap segment of the market has come down sharply, with the Russell 2000 sinking 9%. In late September, I wrote about two inverse ETFs that can be used to take advantage of the breakdown in the small-cap segment. Today, I’m recommending you take a different tactic when… Read More

There’s a lot of angst in the market right now, and considering the Dow has spent the past 14 trading days making triple-digit intraday price swings, it’s no surprise that traders are nervous. #-ad_banner-#Since early September, there’s been a big correction in many formerly high-flying market leaders. Domestically, the small-cap segment of the market has come down sharply, with the Russell 2000 sinking 9%. In late September, I wrote about two inverse ETFs that can be used to take advantage of the breakdown in the small-cap segment. Today, I’m recommending you take a different tactic when it comes to profiting from another beaten-down sector. That sector is emerging markets, and buying the latest dip could net you 15% profits in the next few months. Like small caps, stocks pegged to the formerly high-flying emerging markets segment have come under heavy selling pressure since early September.  A look at the chart of the benchmark ETF in the space, the iShares MSCI Emerging Markets (NYSE: EEM), shows the huge run from the February low through the September high.  The seven-month surge of nearly 24% was shattered in September, as traders ran for the exits. That selling… Read More

When you’re the biggest maker of customer relationship management software on the planet, you have a whole lot of eyes watching your every move. Just ask San Francisco-based Salesforce.com (NYSE: CRM). The company has become a bellwether for the red-hot cloud computing space. Its prominence in the industry means that its shares are heavily traded and often volatile. The company seems to always be making headlines, and for a variety of reasons. First, its focus on bringing in revenue and reinvesting in its business — similar to the way Amazon.com (NASDAQ: AMZN) does things — has resulted in a lack… Read More

When you’re the biggest maker of customer relationship management software on the planet, you have a whole lot of eyes watching your every move. Just ask San Francisco-based Salesforce.com (NYSE: CRM). The company has become a bellwether for the red-hot cloud computing space. Its prominence in the industry means that its shares are heavily traded and often volatile. The company seems to always be making headlines, and for a variety of reasons. First, its focus on bringing in revenue and reinvesting in its business — similar to the way Amazon.com (NASDAQ: AMZN) does things — has resulted in a lack of actual profits. This has led to negative earnings surprises in each of the past four quarters. #-ad_banner-#More recently, the company suffered a malware attack aimed at stealing customer log in information. The malware, known as Dyre or Dyreza, was the same that was aimed at major financial institutions such as Bank of America (NYSE: BAC), Citibank (NYSE: C) and RBS (NYSE: RBS).  Then there was the September insider sale by the company’s CEO and Chairman Marc Benioff, who liquidated several million dollars’ worth of CRM shares. For CRM shareholders, the initiation of coverage by Robert Breza of Sterne, Agee… Read More