Last month, the world mourned terrorist attacks in Paris that left 130 dead. In the wake of the attacks, the State Department issued a global travel alert for U.S. citizens — an action that was both warranted and fear-mongering. Travel-related stocks, for instance, were punished following both events.  The travel alert is in place through Feb. 24, but we expect strong travel stocks to begin recovering before then, making now a good time to pick up shares on sale. With an aggressively expanding portfolio of companies, strong fundamentals and a bullish chart, our favorite stock in the $1.3… Read More

Last month, the world mourned terrorist attacks in Paris that left 130 dead. In the wake of the attacks, the State Department issued a global travel alert for U.S. citizens — an action that was both warranted and fear-mongering. Travel-related stocks, for instance, were punished following both events.  The travel alert is in place through Feb. 24, but we expect strong travel stocks to begin recovering before then, making now a good time to pick up shares on sale. With an aggressively expanding portfolio of companies, strong fundamentals and a bullish chart, our favorite stock in the $1.3 trillion global travel market is Expedia (Nasdaq: EXPE). Expedia established itself as the largest online travel company by bookings after acquiring discount travel site Orbitz in September. Earlier in 2015, it also acquired online travel agency Travelocity. #-ad_banner-# As a way of gaining competitive advantage over its chief rival, Priceline (Nasdaq: PCLN), Expedia plans to further expand its online presence by acquiring other players. To that end, the company just announced plans to dole out $3.9 billion to acquire do-it-yourself home rental agency HomeAway (Nasdaq: AWAY).  This strategic move will give Expedia further access to the… Read More

No matter where you look in the financial press, you see predictions about what the Federal Open Market Committee (FOMC) will do with interest rates after its next meeting.  This is nothing new, of course. It’s been happening every few months for years. And it has certainly picked up steam with many inside the Federal Reserve openly discussing the likelihood of a hike.  But journalists aren’t allowed to attend FOMC meetings, and can only report the results when the committee issues a press release.  So whenever an event like this comes up investment “journalists” and speculators are forced to create… Read More

No matter where you look in the financial press, you see predictions about what the Federal Open Market Committee (FOMC) will do with interest rates after its next meeting.  This is nothing new, of course. It’s been happening every few months for years. And it has certainly picked up steam with many inside the Federal Reserve openly discussing the likelihood of a hike.  But journalists aren’t allowed to attend FOMC meetings, and can only report the results when the committee issues a press release.  So whenever an event like this comes up investment “journalists” and speculators are forced to create the story themselves.  The New York Times — amongst many other widely-read outlets — has now made the claim that Friday’s jobs report “all but guarantee[s] that policy makers at the Federal Reserve will raise interest rates” this month. But why is that? What is a jobs report, exactly?  Can One Report Change Everything? Also known as the Employment Situation Report, the jobs report is released monthly by the Bureau of Labor Statistics  that shows how many jobs (non-farm payrolls) have been added in the United States during the previous month. It also gives information about the current unemployment… Read More

With several weeks of rally under the market’s belt, it was susceptible to the disappointment doled out this week by central banks.  To take advantage of the decline, I’m looking for sectors that lagged on the way up, as they tend to lead on the way down as well. While the S&P 500 rallied from its September lows nearly all the way back up to its 52-week highs, the chemicals group only recovered about two-thirds of its summertime losses. And it now looks ready to roll over. Within that group, PPG Industries (NYSE: PPG), a maker of protective… Read More

With several weeks of rally under the market’s belt, it was susceptible to the disappointment doled out this week by central banks.  To take advantage of the decline, I’m looking for sectors that lagged on the way up, as they tend to lead on the way down as well. While the S&P 500 rallied from its September lows nearly all the way back up to its 52-week highs, the chemicals group only recovered about two-thirds of its summertime losses. And it now looks ready to roll over. Within that group, PPG Industries (NYSE: PPG), a maker of protective and decorative coatings and glass products, sports a rather clear chart with all the hallmarks of a stock ready to break down.  First, there was declining volume and, therefore, declining investor interest on the price rally.  Second, the chart shows a bearish divergence in the Relative Strength Index (RSI). Even though price made a higher high in November versus October, this momentum indicator made a lower high. This suggests waning momentum, and such divergences are usually resolved in the direction of the indicator — down in this case.  But there is more. Cumulative or on-balance volume also… Read More

Only once a lifetime — twice, if you’re lucky — does an invention come along that truly changes the world. The wheel. The plow. The printing press. The combustion engine. The semiconductor. But with the benefits that come from mankind’s past and future achievements, there will always be exploitation. The wheel — and eventually the combustion engine — became (amongst other uses) weapons of war and oppression. The printing press can be used to spread propaganda, libel and plagiarism. Over-plowing depletes a soil’s nutrients and makes farmland infertile. Not only were these problems not solved overnight, but many of them… Read More

Only once a lifetime — twice, if you’re lucky — does an invention come along that truly changes the world. The wheel. The plow. The printing press. The combustion engine. The semiconductor. But with the benefits that come from mankind’s past and future achievements, there will always be exploitation. The wheel — and eventually the combustion engine — became (amongst other uses) weapons of war and oppression. The printing press can be used to spread propaganda, libel and plagiarism. Over-plowing depletes a soil’s nutrients and makes farmland infertile. Not only were these problems not solved overnight, but many of them are largely still present to this day… decades, even centuries, after the original tool was invented. Today, we are in the midst of a technological renaissance. The power of a semiconductor (the heart of most of today’s technological innovation) doubles every two years, according to the universally accepted Moore’s Law. Gadgets that nearly every American owns today are more powerful than the satellites launched into space decades ago. Nearly every aspect of life is now digitized: from family photos and funny videos to medical records and bank statements. And for the technologically savvy, all of that information is practically up… Read More

The U.S. stock market featured a lot of fireworks last week but very little in the way of directional movement. All major indices closed less than 1% higher, and the beleaguered small-cap Russell 2000 lost 1.6%.  #-ad_banner-#The good news is that all of this directionless volatility has potentially set the stage for a Santa Claus rally between now and year end. I’ll discuss this in more detail later in the report. Last week’s strongest sectors were technology, which gained 1.5%, and financial services, which rose 1%. Energy was by far the weakest sector, losing 4.5%, triggered by a… Read More

The U.S. stock market featured a lot of fireworks last week but very little in the way of directional movement. All major indices closed less than 1% higher, and the beleaguered small-cap Russell 2000 lost 1.6%.  #-ad_banner-#The good news is that all of this directionless volatility has potentially set the stage for a Santa Claus rally between now and year end. I’ll discuss this in more detail later in the report. Last week’s strongest sectors were technology, which gained 1.5%, and financial services, which rose 1%. Energy was by far the weakest sector, losing 4.5%, triggered by a drop in West Texas Intermediate (WTI) crude oil prices below $40 a barrel to their lowest level since late August.  Not surprisingly, Asbury Research’s metric shows the biggest inflows of sector bet-related assets over the past one-week and one-month periods went into financials, and the biggest outflows came from energy. S&P 500 Coiling For A Santa Claus Rally? The benchmark S&P 500 has traded in a choppy, sideways manner since early November, developing a triangle pattern that represents near-term investor indecision on the heels of the index’s strong rise from the late-September lows. A sustained rise above the upper… Read More

Since the 2008 collapse, sales of light vehicles have been the standout for the U.S. economy. Against a backdrop of sluggish growth in wages and retail, sales of autos and light trucks have surged to a 15-year record this year. However, not all auto-related stocks are created equal. And investors who aren’t selective may soon find themselves in the red.  That’s because there are two critical roadblocks approaching that could derail the industry’s terrific bull run. But despite the coming headwinds, there are two auto stocks that I like going into next year. Dual Roadblocks Coming For The Auto Industry… Read More

Since the 2008 collapse, sales of light vehicles have been the standout for the U.S. economy. Against a backdrop of sluggish growth in wages and retail, sales of autos and light trucks have surged to a 15-year record this year. However, not all auto-related stocks are created equal. And investors who aren’t selective may soon find themselves in the red.  That’s because there are two critical roadblocks approaching that could derail the industry’s terrific bull run. But despite the coming headwinds, there are two auto stocks that I like going into next year. Dual Roadblocks Coming For The Auto Industry Many believe that sales will continue to soar, pointing to the fact that the average vehicle on the road is 11.5 years old — a record. But what is not as frequently mentioned is that the average age is creeping higher largely as a result of vehicle quality. Cars are holding up better, and new car buyers are holding onto their vehicle for an average of 77.8 months before selling them, an increase of 26 months since 2006.  More than the age of cars on the road, much of the surge in demand for new cars can be attributed… Read More

I call this little-known strategy a “heist.” That’s because when you use it, you’re almost “stealing” from Wall Street’s profits. To understand what I mean, think about how a casino works. Every day, people come in through the doors seeking that one big payout. Sure, some people hit the jackpot once in a while. Most are lucky to simply break even or only lose a little bit, while others completely lose their shirt. Either way, the house always wins. That’s exactly how the derivatives market works on Wall Street. This market is like a financial gambling casino where risk-loving speculators… Read More

I call this little-known strategy a “heist.” That’s because when you use it, you’re almost “stealing” from Wall Street’s profits. To understand what I mean, think about how a casino works. Every day, people come in through the doors seeking that one big payout. Sure, some people hit the jackpot once in a while. Most are lucky to simply break even or only lose a little bit, while others completely lose their shirt. Either way, the house always wins. That’s exactly how the derivatives market works on Wall Street. This market is like a financial gambling casino where risk-loving speculators come to place bets. And it’s for this very reason that it’s one of Wall Street’s main sources of income. You see, Wall Street acts as the casino operator in the derivatives market, collecting the money being lost on these bets. But what most ordinary investors don’t realize is that in this market, there are strategies that let you take on the role of the casino owner. In other words, it allows you to collect the money being lost instead of Wall Street. This strategy is used by many private investors who’ve caught on to this secret. In fact, my… Read More

On Tuesday, I argued in this article that banks have officially lost it again.  They’re lending people money that they never expect will be able to pay them back… all for a few percentage points of short-term returns.  This chart wraps up this thesis perfectly: As you can see, there is a significant rise in the number of new auto loans for the groups with poor credit. “Near prime” (in yellow) are borrowers who have credit scores of less than 660. “Subprime” (in red) have scores below 600. Yet these two groups have received more new money to… Read More

On Tuesday, I argued in this article that banks have officially lost it again.  They’re lending people money that they never expect will be able to pay them back… all for a few percentage points of short-term returns.  This chart wraps up this thesis perfectly: As you can see, there is a significant rise in the number of new auto loans for the groups with poor credit. “Near prime” (in yellow) are borrowers who have credit scores of less than 660. “Subprime” (in red) have scores below 600. Yet these two groups have received more new money to buy cars than any other. Why would banks do this? Because these groups have to take whatever interest rates they can get. And banks are desperate.  Specifically, there are two lenders doing this more than anyone else. And if you know what’s good for you, you’ll steer clear of them. The first is probably not a huge surprise, if you think about it. Over the last decade, American carmakers have struggled. They have not been able to compete as well with the likes of Toyota and Honda. Resale values for cars made by General Motors, Ford and Chrysler have dramatically… Read More

As I wrote on Wednesday, the Paris climate change conference (COP21) is now in full swing. If it results in a binding global agreement to reduce greenhouse gas emissions, we’ll see winners and losers as governments around the world initiate or intensify policies to execute the plan. As an example of what might occur, take India, the world’s second-largest country by population and the seventh-largest economy. Prime Minister Narendra Modi has pledged to reduce emissions by 35% of 2005 levels and raise the percentage of its power generation that comes from non-fossil fuels to 40%. That will mean quadrupling its… Read More

As I wrote on Wednesday, the Paris climate change conference (COP21) is now in full swing. If it results in a binding global agreement to reduce greenhouse gas emissions, we’ll see winners and losers as governments around the world initiate or intensify policies to execute the plan. As an example of what might occur, take India, the world’s second-largest country by population and the seventh-largest economy. Prime Minister Narendra Modi has pledged to reduce emissions by 35% of 2005 levels and raise the percentage of its power generation that comes from non-fossil fuels to 40%. That will mean quadrupling its capacity of renewable energy generation by 2022, to 175 gigawatts. (By comparison, the United States’ current total renewable capacity was around 165 gigawatts in 2014.) #-ad_banner-#This is an ambitious goal, but experts say it’s achievable. Amazingly, 300 million people in India have no electricity today — so the nation needs to make enormous investments in energy infrastructure anyway. They’ll just do so with renewables — mainly solar and wind. India plans to add 100 gigawatts of solar capacity, 60 of wind, 10 of biomass and five of hydroelectric. And that’s just India. All of the major economies are making similar… Read More