We are nowhere near April 15th on the calendar. Still, for millions of taxpayers seeking to limit their liability this spring, the clock is ticking. The deadline to close out trades that went south to deduct capital losses is December 31.  Given the natural inclination of procrastinators to wait until the last minute, there is always a flurry of activity as millions of investors dump their losers in the final weeks of the year. Institutional mutual fund managers are also busy removing laggards and adding winners to window dress their portfolios.  #-ad_banner-#This doesn’t do much for performance — it is… Read More

We are nowhere near April 15th on the calendar. Still, for millions of taxpayers seeking to limit their liability this spring, the clock is ticking. The deadline to close out trades that went south to deduct capital losses is December 31.  Given the natural inclination of procrastinators to wait until the last minute, there is always a flurry of activity as millions of investors dump their losers in the final weeks of the year. Institutional mutual fund managers are also busy removing laggards and adding winners to window dress their portfolios.  #-ad_banner-#This doesn’t do much for performance — it is purely a cosmetic enhancement right before annual reports go out. So many stocks that struggle during the year are beaten down even further in December. Once the loss is harvested, the proceeds usually rotate back into the market shortly after, sometimes into the same stocks, as investors anticipate a rebound. Aside from tax harvesting in December and reinvesting in January, many workers also plow year-end bonuses into their accounts shortly after the New Year begins. All of this means that January is typically a good month for inflows into stocks and equity mutual funds. In fact, market observers as far… Read More

Think for a moment about a roulette wheel. A novice might note that there are two colors: red and black. This is similar to the binary outcome of a regular stock trade: you bet it will either go up or down. That’s it. But upon closer inspection, there are also a couple of green spots on the wheel. So if you make a bet that the wheel will land on black, you actually have less than a 50% chance of being right. The casino has improved its odds of winning to just over 50%, and is thus… Read More

Think for a moment about a roulette wheel. A novice might note that there are two colors: red and black. This is similar to the binary outcome of a regular stock trade: you bet it will either go up or down. That’s it. But upon closer inspection, there are also a couple of green spots on the wheel. So if you make a bet that the wheel will land on black, you actually have less than a 50% chance of being right. The casino has improved its odds of winning to just over 50%, and is thus guaranteed to win over the long haul. #-ad_banner-#Now imagine if you could play just like the house does… tilting the odds in your favor so that you are practically guaranteed to come out ahead in the long run. That’s exactly what our resident options guru Jared Levy does with his new project we’ve been telling you about for the past couple weeks. Because it has to do with options, many novice investors may think it’s too “risky” or “complicated.” But nothing could be further from… Read More

It’s been difficult to make a bad bet on the U.S. markets over the last six years. Historically low rates set off a run in asset prices that has topped averages for bull markets. While economic growth hasn’t surged higher than pre-financial crisis levels, it has rebounded relatively well compared to that of other countries.  But it’s beginning to look like the ride may be coming to an end. The first rate increase in nearly a decade could usher in an era of tighter monetary policy. While low energy prices could provide some upside on consumer spending, the energy sector… Read More

It’s been difficult to make a bad bet on the U.S. markets over the last six years. Historically low rates set off a run in asset prices that has topped averages for bull markets. While economic growth hasn’t surged higher than pre-financial crisis levels, it has rebounded relatively well compared to that of other countries.  But it’s beginning to look like the ride may be coming to an end. The first rate increase in nearly a decade could usher in an era of tighter monetary policy. While low energy prices could provide some upside on consumer spending, the energy sector has acted as a huge drag on corporate earnings where the group accounts for 6.6% of the S&P 500. #-ad_banner-#In fact, the S&P 500 has risen just 0.3% this year for its worst performance since 2011 and the third worst year of the last decade. Contrast this with another market that has lagged behind the S&P 500 in four of the last six years but faces significant tailwinds in 2016: Europe. While the United States was pumping hundreds of billions in fiscal and monetary stimulus into its own economy, this market was fighting fiscal tightening and slower monetary stimulus growth. … Read More

Directionless volatility in the U.S. stock market continued during the holiday-shortened trading week, as all major indices closed sharply higher on the heels of two straight weeks of losses.  Last week ‘s surge higher was led by the downtrodden energy and materials sectors — the two worst performers of 2015. A rebound in oil prices and industrial and precious metals apparently provided hope that some economically influential commodities may have at least temporarily found a bottom. #-ad_banner-# Bigger picture, however, 2015 has been a lackluster to disappointing year for most individual sectors of the S&P 500. And when all was… Read More

Directionless volatility in the U.S. stock market continued during the holiday-shortened trading week, as all major indices closed sharply higher on the heels of two straight weeks of losses.  Last week ‘s surge higher was led by the downtrodden energy and materials sectors — the two worst performers of 2015. A rebound in oil prices and industrial and precious metals apparently provided hope that some economically influential commodities may have at least temporarily found a bottom. #-ad_banner-# Bigger picture, however, 2015 has been a lackluster to disappointing year for most individual sectors of the S&P 500. And when all was said and done, the broader market index ended last week right where it began its most recent bout of sideways, choppy behavior in late October. This indicates temporary investor indecision, which typically becomes the springboard for the next directional move.  In this week’s report, I will cover three charts that should help us determine whether that move will be up or down. Investor Fear Remains Key In last week’s Market Outlook, I pointed out that the Volatility S&P 500 index — better known as the VIX or fear gauge — had been above its 50-day moving average since Dec 10. Read More

A few weeks ago, a man named Joe Campbell thought he had it made. He found a “sure thing” that would make him rich. His mark: A drug development company by the name of KaloBios Pharmaceuticals… a penny stock. The company recently announced it would wind down its operations and restructure in order to liquidate its assets. Because of this, shares were in a tailspin. At prices ranging between $1 and $2 a share, the company had a market value of just $5-to-$10 million. So Campbell did what… Read More

A few weeks ago, a man named Joe Campbell thought he had it made. He found a “sure thing” that would make him rich. His mark: A drug development company by the name of KaloBios Pharmaceuticals… a penny stock. The company recently announced it would wind down its operations and restructure in order to liquidate its assets. Because of this, shares were in a tailspin. At prices ranging between $1 and $2 a share, the company had a market value of just $5-to-$10 million. So Campbell did what any self-described “fairly new trader” might be tempted to do — he bet against the stock — shorting $18,000 worth of shares. What happened next? At the very last moment, when it seemed all but certain that the company would go belly-up and Campbell would make a fortune, everything changed. An investor group headed by Martin Shkreli swooped in and acquired 50% of outstanding shares and announced it was forming a plan that would allow the company to continue operations. (It should be noted that Shkreli made headlines… Read More

If you regularly follow the advice of StreetAuthority experts, you probably sold some winning investments in 2015. That’s great news — but of course, there’s a downside: the capital gains tax you’ll owe on those profits. So as we wind down to the final days of the year, it’s worth considering an investment maneuver that can lower those taxes, or even eliminate them. Smart investors use capital losses to offset gains in years when they’ve sold a lot of winners. By selling losing investments before December 31, you can lower your net gain and significantly reduce the tax bill you’ll… Read More

If you regularly follow the advice of StreetAuthority experts, you probably sold some winning investments in 2015. That’s great news — but of course, there’s a downside: the capital gains tax you’ll owe on those profits. So as we wind down to the final days of the year, it’s worth considering an investment maneuver that can lower those taxes, or even eliminate them. Smart investors use capital losses to offset gains in years when they’ve sold a lot of winners. By selling losing investments before December 31, you can lower your net gain and significantly reduce the tax bill you’ll pay for 2015. But as with anything involving the IRS, you’ll need to do it the right way: in this case, without running afoul of the “wash sale rule.” #-ad_banner-#The IRS wash sale rule prohibits investors from claiming a capital loss on a sale if they buy back the same security within 30 calendar days. The rule applies to all of your accounts as well as your spouse’s. Furthermore, you can’t buy a “substantially identical” security as a replacement — e.g., selling an S&P 500 index fund and buying another one. And don’t try to get clever with options, convertible… Read More

Stronger-than-expected earnings sent shares of Microsoft (Nasdaq: MSFT) soaring in October, scoring a very significant upside breakout on the charts. Since the August lows, when the market as a whole tumbled, this stock is up nearly 40%, putting it in an elite group of large caps that enjoyed big runs in 2015. Sentiment was rather hot, especially after the October jump, but the blue-chip stock has only added about 3 points to its total since then. Indeed, most of the big-cap leaders have not done much since that time. Most sectors are now in decline, leaving leaders without… Read More

Stronger-than-expected earnings sent shares of Microsoft (Nasdaq: MSFT) soaring in October, scoring a very significant upside breakout on the charts. Since the August lows, when the market as a whole tumbled, this stock is up nearly 40%, putting it in an elite group of large caps that enjoyed big runs in 2015. Sentiment was rather hot, especially after the October jump, but the blue-chip stock has only added about 3 points to its total since then. Indeed, most of the big-cap leaders have not done much since that time. Most sectors are now in decline, leaving leaders without any followers — a condition that cannot last forever. As a result, I am watching for signs that the leaders are starting to roll over — and I see those signs in Microsoft. #-ad_banner-# I will say this is quite a contrary point of view as sentiment is still positive, though not extremely so. Pundits are still calling Microsoft a good buy, and even trader consensus on social media is very much in its camp. To understand my bearish case, let’s start with the big picture. The weekly chart shows current levels are only about 8% away from… Read More