The bellwether S&P 500 traded completely inside of last Monday’s trading range from Tuesday through Thursday of last week, indicating near-term investor indecision, before staging a tentative move to new all-time highs on Friday. Friday’s move to new highs, despite a sharp downward revision in Q4 2014 GDP and amid worries about Russian intervention in Ukraine, was an impressive show of bullish investor conviction and is characteristic of a market that wants to go higher. #-ad_banner-#Last week’s new 2014 high in the small-cap Russell 2000 index, matching those in the S&P 500 and in the tech-laden Nasdaq indexes, was another… Read More

The bellwether S&P 500 traded completely inside of last Monday’s trading range from Tuesday through Thursday of last week, indicating near-term investor indecision, before staging a tentative move to new all-time highs on Friday. Friday’s move to new highs, despite a sharp downward revision in Q4 2014 GDP and amid worries about Russian intervention in Ukraine, was an impressive show of bullish investor conviction and is characteristic of a market that wants to go higher. #-ad_banner-#Last week’s new 2014 high in the small-cap Russell 2000 index, matching those in the S&P 500 and in the tech-laden Nasdaq indexes, was another positive sign. However, as discussed here last week, both the Dow Jones Industrial Average and Transportation Index continue to lag and must also establish new 2014 highs to confirm and corroborate the recent strength seen in the rest of the market. Improving Market Breadth = More Horsepower for the Trend Despite the lagging Dow Jones indexes, there are also a lot of good things happening under the hood of this market — particularly on a near term basis. One of these is the positive shift in market momentum as indicated by the rising Moving Average… Read More

One of the big advantages here at StreetAuthority is that we have access to each other’s brains. That collective brain consists of a whole slate of investing minds across the StreetAuthority universe — experts who are constantly pulling together critical insights from all over the investing world. It was a recent dispatch from one of our top analysts that jogged my memory on a lesser-known way to invest in the consumer sector — one that I believe has considerable upside, but with much less risk of loss than your average consumer stock if the economy does happen to zig when… Read More

One of the big advantages here at StreetAuthority is that we have access to each other’s brains. That collective brain consists of a whole slate of investing minds across the StreetAuthority universe — experts who are constantly pulling together critical insights from all over the investing world. It was a recent dispatch from one of our top analysts that jogged my memory on a lesser-known way to invest in the consumer sector — one that I believe has considerable upside, but with much less risk of loss than your average consumer stock if the economy does happen to zig when we think it should zag. That dispatch came in the latest edition of Amy Calistri’s The Daily Paycheck. While looking for sectors with big dividend yields — but also below-average risk profiles suitable for income investors — Amy pointed out a very interesting chart, one I haven’t seen any other analysts talking about yet. #-ad_banner-#Her chart shows how there’s a boom underway in a place you might not expect: shipping. As the chart below shows, shipping rates — as measured by the Baltic Capesize Index — were on a tear in the second half in 2013. Amy points… Read More

The defense industry may now seem like an area best avoided by investors, what with the sequester eroding the U.S. defense budget and imposing total projected defense cuts of about $1 trillion over a 10-year span. #-ad_banner-#I wouldn’t categorically dismiss defense stocks, though. You could end up missing opportunities for some very nice investment returns. There’s one defense firm in particular that has held up quite well so far in spite of the sequester, with earnings per share (EPS) growing by 50% in the past 12 months. During that time, the company’s stock has more than doubled, compared with a… Read More

The defense industry may now seem like an area best avoided by investors, what with the sequester eroding the U.S. defense budget and imposing total projected defense cuts of about $1 trillion over a 10-year span. #-ad_banner-#I wouldn’t categorically dismiss defense stocks, though. You could end up missing opportunities for some very nice investment returns. There’s one defense firm in particular that has held up quite well so far in spite of the sequester, with earnings per share (EPS) growing by 50% in the past 12 months. During that time, the company’s stock has more than doubled, compared with a 23% return for the S&P 500. The firm has remained strong in large part because it’s so crucial to national defense, providing the bulk of the equipment and services necessary to keep the U.S. Navy operational. I wouldn’t be surprised if most investors were unfamiliar with the company because it certainly isn’t among the first names that typically come to mind when you think of firms involved in defense like Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA) and General Dynamics (NYSE: GD). However, the company was spun off a few years ago from another well-known defense firm, Northrop Grumman (NYSE:… Read More

My great-grandfather owned a small department store in the Pacific Northwest. With the help of my great -grandmother (who, I am told, watched the cash register like a hawk), they built a successful business — which they sold before the onset of the Great Depression. #-ad_banner-#From what I can piece together, my great-grandfather was a shrewd merchant — but I’m thankful the family got out of the department store business back then. Today, I don’t think we’d be as lucky. Two years ago, I gave the bear case for J.C. Penney (NYSE: JCP). (Last week, my colleague David Sterman gave… Read More

My great-grandfather owned a small department store in the Pacific Northwest. With the help of my great -grandmother (who, I am told, watched the cash register like a hawk), they built a successful business — which they sold before the onset of the Great Depression. #-ad_banner-#From what I can piece together, my great-grandfather was a shrewd merchant — but I’m thankful the family got out of the department store business back then. Today, I don’t think we’d be as lucky. Two years ago, I gave the bear case for J.C. Penney (NYSE: JCP). (Last week, my colleague David Sterman gave a bullish take.) Back then, JCP traded at around $27. Today, the stock is treading water just above $6. Granted, most of J.C. Penney’s wounds seemed mostly self- inflicted due to the hedge-fund-controlled board selecting a CEO with zero department store experience who tried to radically revamp the entire franchise and wound up alienating the store’s well-established core demographic. However, the company (and the department store sector as a whole) had been in critical condition prior to the stumble. Face it. Big department stores are a dying breed — and I’ve found the next casualty. Window Dressing My wife’s… Read More

One of the biggest success stories in the market over the past several years is the amazing performance of electric car pioneer Tesla Motors (Nasdaq: TSLA). That company’s shares have delivered a mighty 625%-plus gain over the past 12 months, and the stock has shown no real signs of slowing down. #-ad_banner-#Yet many traders and investors I know have already made big money in Tesla, and they’re now looking for peripheral electric car plays with the potential for Tesla-like returns. Enter Kandi Technologies (Nasdaq: KNDI). This China-based company is a maker of vehicles such as ATVs, motorcycles and other small… Read More

One of the biggest success stories in the market over the past several years is the amazing performance of electric car pioneer Tesla Motors (Nasdaq: TSLA). That company’s shares have delivered a mighty 625%-plus gain over the past 12 months, and the stock has shown no real signs of slowing down. #-ad_banner-#Yet many traders and investors I know have already made big money in Tesla, and they’re now looking for peripheral electric car plays with the potential for Tesla-like returns. Enter Kandi Technologies (Nasdaq: KNDI). This China-based company is a maker of vehicles such as ATVs, motorcycles and other small utility vehicles, including electric cars. And while its vehicles don’t approach the high-tech, luxury level of a Tesla Model S, they are in demand in China, and that demand is expected to continue in the years to come. According to a recent SEC filing, which was actually a Q-and-A session from the company’s December shareholder meeting, Kandi, which is a joint venture with China manufacturer Geely, said it expected to deliver some 2,800 electric vehicles in the fourth quarter of 2013. That’s huge when compared with the 3,915 vehicle deliveries the company had in all of 2012. Kandi CEO Hu… Read More

Buying in bulk remains a great value proposition for shoppers, but it can also be a great way to invest. #-ad_banner-#There’s only one pure play on the U.S. warehouse retail market. Even better, this stock is one of the best investments in retail thanks to its wide moat. Sadly, investors won’t get a discount for buying the stock in bulk — but they can still make money over the long term by buying the stock in bulk. Costco (Nasdaq: COST) remains the only pure play on the U.S. warehouse retail market. Its most formidable competitor, Sam’s Club, is owned by… Read More

Buying in bulk remains a great value proposition for shoppers, but it can also be a great way to invest. #-ad_banner-#There’s only one pure play on the U.S. warehouse retail market. Even better, this stock is one of the best investments in retail thanks to its wide moat. Sadly, investors won’t get a discount for buying the stock in bulk — but they can still make money over the long term by buying the stock in bulk. Costco (Nasdaq: COST) remains the only pure play on the U.S. warehouse retail market. Its most formidable competitor, Sam’s Club, is owned by Wal-Mart (NYSE: WMT), and another major peer, BJ’s Warehouse, was taken private in 2011. To shop at the major warehouse retailers, customers must buy a membership, which then allows them to save money by buying a wide variety of products in bulk. Costco uses its membership fees to offset the cost of the goods it sells, keeping its prices even lower for shoppers. Costco often gets unfairly grouped with many of the discount and variety retailers. These include the likes of Wal-Mart and Target (NYSE: TGT), as well as the various dollar stores. However, many of these other retailers lack… Read More

The financial sector was by far the biggest beneficiary of the trillion dollars injected into the economic system by the Federal Reserve. The traditional drivers of the sector, such as interest rates, took a back burner to the surge of capital. Acting like a shot of adrenalin, the money sent the sector’s biggest players soaring higher in 2013. One of the primary exchange-traded funds (ETFs) tracking the sector, iShares Dow Jones US Financial (NYSE: IYF), was up close to 30%, with many of its components posting similar massive increases. But all good things must come to an end. I think… Read More

The financial sector was by far the biggest beneficiary of the trillion dollars injected into the economic system by the Federal Reserve. The traditional drivers of the sector, such as interest rates, took a back burner to the surge of capital. Acting like a shot of adrenalin, the money sent the sector’s biggest players soaring higher in 2013. One of the primary exchange-traded funds (ETFs) tracking the sector, iShares Dow Jones US Financial (NYSE: IYF), was up close to 30%, with many of its components posting similar massive increases. But all good things must come to an end. I think the party is over for this sector — at least for the rest of 2014. The sector sold off hard in January but has staged an impressive bounce back in February. Looking at the iShares financial ETF’s daily chart, you can clearly see the sharp selling in January and the bounce-back near the highs in February.   #-ad_banner-#As you know, I don’t place much credence in traditional technical analysis alone as a predictive tool in most cases. However, this pattern, combined with what is happening fundamentally, paints an ominous picture for the near-term future of the financial sector. … Read More

As I write this I’m sailing across the sky, 35,000 feet in the air in a Boeing (NYSE: BA) 777, heading home from a great vacation in Grand Cayman. It’s one of the most beautiful islands in the Caribbean. White sandy beaches and great snorkeling and diving. I also like vacationing in Grand Cayman because of its stable currency. The Cayman dollar is pegged to the U.S. dollar. That fixed-exchange rate shelters the Cayman dollar from unpredictable price swings that could negatively affect its economy. It also makes it easy for me to forecast my expenses for the week. But… Read More

As I write this I’m sailing across the sky, 35,000 feet in the air in a Boeing (NYSE: BA) 777, heading home from a great vacation in Grand Cayman. It’s one of the most beautiful islands in the Caribbean. White sandy beaches and great snorkeling and diving. I also like vacationing in Grand Cayman because of its stable currency. The Cayman dollar is pegged to the U.S. dollar. That fixed-exchange rate shelters the Cayman dollar from unpredictable price swings that could negatively affect its economy. It also makes it easy for me to forecast my expenses for the week. But that kind of currency stability is an anomaly in many emerging markets right now. For countries with floating rate currencies, inflation has been wreaking havoc. In India, onion prices recently jumped 300%. In Brazil, the CPI (consumer price index) topped the highest estimates in 2013. In Turkey, key lending rates were raised from 7.75% to 12% to defend the value of the lira. In Argentina, inflation recently spiked to 25%.  Naturally, investors want to know if these signals are transitory or the beginning of a larger issue. Opinions on the Street are mixed. Here’s what I think… In the short… Read More

After the market closed for trading on Wednesday, Feb. 26, short sellers quickly scanned the latest short interest data (which had just been released for the two weeks ended Feb. 15). These shorts know that if a company they are targeting is also being targeted by many others as well, they can get badly burned in a short squeeze ensues. #-ad_banner-#The fact that the short interest in struggling retailer J.C. Penney (NYSE: JCP) had just spiked another 10 million shares in just two weeks (to 128.5 million shares, representing 43% of the trading float) was a… Read More

After the market closed for trading on Wednesday, Feb. 26, short sellers quickly scanned the latest short interest data (which had just been released for the two weeks ended Feb. 15). These shorts know that if a company they are targeting is also being targeted by many others as well, they can get badly burned in a short squeeze ensues. #-ad_banner-#The fact that the short interest in struggling retailer J.C. Penney (NYSE: JCP) had just spiked another 10 million shares in just two weeks (to 128.5 million shares, representing 43% of the trading float) was a cause for concern. The morning after the fresh short interest data came out, shares were squeezed a stunning 25% higher. Management’s prediction that J.C. Penney would not run out of money any time soon was not wanted short sellers were hoping to hear. At this point, both the shorts — as well as the company’s bulls — are wondering: What’s next for this stock? Let’s take a closer look at each argument. Going Terminal? Short sellers love to target stocks that they believe will eventually fall to zero, known as a “terminal short.” And at first glance, J.C. Penney… Read More

A surging stock market has given the impression that the U.S. economy has made up for lost time over the past five years. But don’t confuse asset prices with economic activity. The vast majority of companies have sought to restrain spending, limiting capital expenditures in the face of a still-wobbly economy. #-ad_banner-#That flies in the face of historical patterns. In the past, as the economy exits recession, capital spending starts to rise, often hitting a peak in the next three to four years before the next inevitable pullback from the cyclical peak. This time around, the move toward a peak… Read More

A surging stock market has given the impression that the U.S. economy has made up for lost time over the past five years. But don’t confuse asset prices with economic activity. The vast majority of companies have sought to restrain spending, limiting capital expenditures in the face of a still-wobbly economy. #-ad_banner-#That flies in the face of historical patterns. In the past, as the economy exits recession, capital spending starts to rise, often hitting a peak in the next three to four years before the next inevitable pullback from the cyclical peak. This time around, the move toward a peak still lies in the future, perhaps into 2015 and 2016. And since we’re exiting a long phase of underinvestment in capital spending (what economists call “PP&E,” short for plants, property and equipment), companies will need to embark on an extended phase of higher capital spending, once the cycle kicks in. Instead of a cyclical peak lasting 18 to 24 months, as has been the case in the past, we may be looking at a peak that extends for three or four years. In that context, many industrial stocks are poised for better results in a year or two, and perhaps… Read More