The holiday season can bring cheer to retailers that count on it to deliver a large portion of yearly sales. It’s been a good year for the sector so far, with the SPDR S&P Retail ETF (NYSE: XRT) outperforming the broader market with a 40%-plus year-to-date gain. But not all retailers have shared in the prosperity. Abercrombie & Fitch (NYSE: ANF), which was once a leader in the fickle world of fashion, is off 28% in the past 52 weeks. Even more striking is its underperformance in the past five years, which can be seen in the chart below. Read More

The holiday season can bring cheer to retailers that count on it to deliver a large portion of yearly sales. It’s been a good year for the sector so far, with the SPDR S&P Retail ETF (NYSE: XRT) outperforming the broader market with a 40%-plus year-to-date gain. But not all retailers have shared in the prosperity. Abercrombie & Fitch (NYSE: ANF), which was once a leader in the fickle world of fashion, is off 28% in the past 52 weeks. Even more striking is its underperformance in the past five years, which can be seen in the chart below. ANF has largely traded in a range between $54 and $34 with solid support just below at $30. Bullish divergence, i.e., new lows in price without new highs in volatility, may be a sign that a bottom is forming. The first recovery objective is the $44 midpoint of the two-year trading range. A break above $54 projects a $20 move and a secondary target of $74. #-ad_banner-#The $44 target is about 32% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could see a 146% return on a move to that level. One… Read More

The stock market rarely gives you a chance to prove your investment thesis in real-time. Expectations for share price moves usually take many quarters to play out, if not longer. Yet a recent set of events has opened a window to provide a simple test for a recent suggested trading strategy. Nearly two months ago, I noted that the early snowpack in Siberia was an accurate predictor of colder-than-usual weather in the United States. And that would have a profound effect on natural gas prices as consumption increased. That part of the thesis played out like a charm. It’s been… Read More

The stock market rarely gives you a chance to prove your investment thesis in real-time. Expectations for share price moves usually take many quarters to play out, if not longer. Yet a recent set of events has opened a window to provide a simple test for a recent suggested trading strategy. Nearly two months ago, I noted that the early snowpack in Siberia was an accurate predictor of colder-than-usual weather in the United States. And that would have a profound effect on natural gas prices as consumption increased. That part of the thesis played out like a charm. It’s been quite cold in much of the eastern United States, which led to a faster-than-expected drawdown in gas storage. And that has led natural gas prices to quickly spike. In that column, I recommended three companies that had an inordinately high exposure to gas, relative to most oil and gas producers. How have those stocks fared? Decently, but not nearly as fast as the underlying commodity price itself. #-ad_banner-#Considering gas prices have surged roughly 30% in that time, these moves might be seen as a disappointment, disproving the thesis that these… Read More

ETFs are designed to decrease risks by offering investors access to a group of stocks. However, the use of highly specialized indexes by ETFs can increase exposure to the riskiest sectors and lead to large losses when trends reverse. To find the right balance, we look for ETFs that have diversified holdings and can benefit from several investment trends.#-ad_banner-# Heading into 2014, we see several important economic themes developing that should have a large impact on stocks. In the U.S., robust retail spending in November and an upward revision to October’s data has led to hopes that consumer spending will… Read More

ETFs are designed to decrease risks by offering investors access to a group of stocks. However, the use of highly specialized indexes by ETFs can increase exposure to the riskiest sectors and lead to large losses when trends reverse. To find the right balance, we look for ETFs that have diversified holdings and can benefit from several investment trends.#-ad_banner-# Heading into 2014, we see several important economic themes developing that should have a large impact on stocks. In the U.S., robust retail spending in November and an upward revision to October’s data has led to hopes that consumer spending will pick up in 2014. Since consumer spending accounts for about two-thirds of GDP, it is unlikely we’ll experience a recession if this trend continues. Recent data also indicates that Europe will finally be joining the U.S. economy in an expansion. And with Asian economies expected to expand too, this could be the first synchronized global expansion since at least 2008, when the credit market crisis sparked deep economic declines around the world. Automakers could be among the biggest winners from a strong global economy. In the U.S., some analysts expect car sales to reach 16.4 million in 2014, the highest… Read More

Short sellers are wrapping up another tough year, as a liquidity-fueled rally has helped to levitate even the most dubious business models.#-ad_banner-#​ Some short sellers have even thrown in the towel, noting that John Maynard Keynes’ maxim that “the market can stay irrational longer than you can stay solvent.” But signs are emerging that this losing approach to the market may finally be gaining traction. In recent weeks, a range of heavily-shorted stocks have indeed begun to move lower, which may be a sign that short selling will again be a useful component… Read More

Short sellers are wrapping up another tough year, as a liquidity-fueled rally has helped to levitate even the most dubious business models.#-ad_banner-#​ Some short sellers have even thrown in the towel, noting that John Maynard Keynes’ maxim that “the market can stay irrational longer than you can stay solvent.” But signs are emerging that this losing approach to the market may finally be gaining traction. In recent weeks, a range of heavily-shorted stocks have indeed begun to move lower, which may be a sign that short selling will again be a useful component of your broader portfolio strategy in 2014. If you are looking at potential short sale candidates, here are four that are in the targets of short sellers right now. 1. Bank of America (NYSE: BAC )​ Shares of this banking giant have rebounded more than 200% over the past two years. Joining its major banking peers, Bank of America finally trades back up above book value, taking away one of the lone pillars of value. That argues for muted upside in the year ahead. Yet it’s the downside risk that is coming into focus as well. In… Read More

Income investors have two equally important objectives when it comes to investing — obtaining high amounts of income and limiting risk. Many survivors of the 2008 bear market learned this the hard way. They found out that they must either balance the two, or face heavy losses. Case in point: Many investors jumped at abnormally high yields in financial stocks like Citigroup (NYSE: C) when its yield jumped above 10% shortly before the company eliminated its dividend. And investors looking for a bargain in General Electric (NYSE: GE) endured a dividend cut of almost 70%. #-ad_banner-#Remember, these are companies that… Read More

Income investors have two equally important objectives when it comes to investing — obtaining high amounts of income and limiting risk. Many survivors of the 2008 bear market learned this the hard way. They found out that they must either balance the two, or face heavy losses. Case in point: Many investors jumped at abnormally high yields in financial stocks like Citigroup (NYSE: C) when its yield jumped above 10% shortly before the company eliminated its dividend. And investors looking for a bargain in General Electric (NYSE: GE) endured a dividend cut of almost 70%. #-ad_banner-#Remember, these are companies that were once widely assumed to be among the safest in the world, yet they eliminated their dividend practically overnight.  To be fair, these were also extraordinary circumstances that happened during a financial crisis. But long-time income investors still follow a general rule of thumb — “The higher the yield, the riskier the stock.” Today, I’m making an exception to this rule. As I mentioned to you last week, there is a way to invest in stocks with great yields, but without all the added risk that comes from dividend cuts. Let me explain. As you’ve probably heard in the past,… Read More

The Federal Reserve is trapped and bluffing.#-ad_banner-# While the market worries about the Fed reducing the size of its monthly bond purchases, I predict the exact opposite will continue to happen for at least through next December after the midterm elections. The most powerful central bank in the world will actually increase spending. And because of that, two companies in one forgotten sector could see triple-digit gains in coming months, and they’re already sporting rare yields as high as 7.1%. I’ll share specific details on these investments in a moment. First, here’s why I think the Fed is… Read More

The Federal Reserve is trapped and bluffing.#-ad_banner-# While the market worries about the Fed reducing the size of its monthly bond purchases, I predict the exact opposite will continue to happen for at least through next December after the midterm elections. The most powerful central bank in the world will actually increase spending. And because of that, two companies in one forgotten sector could see triple-digit gains in coming months, and they’re already sporting rare yields as high as 7.1%. I’ll share specific details on these investments in a moment. First, here’s why I think the Fed is trapped and bluffing: As the Fed continues to threaten the market with its stated desire to taper, global economic growth projections continue to decline. Just last week, the Organization for Economic Cooperation and Development (OECD) downgraded its global growth projection for 2014 from 3.1% to 2.7%. It raises the question: If the Fed was unable to pull the trigger on a taper when the global economy was projected to grow 3.1%, how is it going to taper now that the global economy is showing signs of weakness? The answer is, it can’t. The Fed has to keep the money spigot… Read More

The major oil companies (also known as Supermajors) have long been known for their steady growth and cash flow generating capabilities. This has translated into share buybacks and rock solid dividends for investors.#-ad_banner-# But what happens when the United States threatens to become energy independent? Well, that would seem to be great news for the major oil companies that have exposure to the fast growing oil and gas shale plays scattered across the United States. The International Energy Agency (IEA) believes the United States can become the world’s top oil producer by 2015, with complete self-sufficiency being achieved in less… Read More

The major oil companies (also known as Supermajors) have long been known for their steady growth and cash flow generating capabilities. This has translated into share buybacks and rock solid dividends for investors.#-ad_banner-# But what happens when the United States threatens to become energy independent? Well, that would seem to be great news for the major oil companies that have exposure to the fast growing oil and gas shale plays scattered across the United States. The International Energy Agency (IEA) believes the United States can become the world’s top oil producer by 2015, with complete self-sufficiency being achieved in less than two decades. The Supermajors that are leveraged to oil production will be the biggest benefactors. There’s one major U.S. oil and gas company that is heavily levered to liquids, as opposed to lower margin natural gas. This same company has also transformed itself into the largest U.S. exploration and production company, having divested its lower growth downstream operations. This Supermajor looks to be one of the markets best investments for 2014, while also paying the highest dividend in the exploration and production (E&P) space. With a 4% dividend yield, ConocoPhillips (NYSE: COP) is that company. However, it’s not just… Read More

Brazilian stocks are the cheapest they’ve been in nearly 10 years. The last time they were this cheap, the Bovespa Stock Index (Brazil’s version of the S&P 500) soared over 100% in less than twelve months. Unfortunately, I bet many of you wouldn’t think twice about investing in a country like Brazil. Most people simply dismiss the fifth-largest nation in the world as just another “ultra-risky” growth play. #-ad_banner-#To those investors, all I have to say is you’re making a big mistake. Here’s why… Prior to the financial crisis, Brazil was the darling of Wall Street. Not only was the… Read More

Brazilian stocks are the cheapest they’ve been in nearly 10 years. The last time they were this cheap, the Bovespa Stock Index (Brazil’s version of the S&P 500) soared over 100% in less than twelve months. Unfortunately, I bet many of you wouldn’t think twice about investing in a country like Brazil. Most people simply dismiss the fifth-largest nation in the world as just another “ultra-risky” growth play. #-ad_banner-#To those investors, all I have to say is you’re making a big mistake. Here’s why… Prior to the financial crisis, Brazil was the darling of Wall Street. Not only was the country seeing rapid economic growth, but commodities — Brazil’s primary export — were also in high demand. Those tailwinds drove the Bovespa from less than 8,623 points in 2002 to 72,592 by 2008 — a 741% gain in just under six years. Flash-forward to today and Brazil couldn’t be more hated. While the S&P 500 is up nearly 25% since January, Brazilian stocks have fallen 20% — posting one of the worst performances among global stock markets year to date. Why are investors down on Brazil? For one, lately the country has been riddled… Read More

The average Internet user’s attention span is shorter than that of a goldfish.#-ad_banner-#​ It’s been estimated that Internet users have an attention span of eight seconds — one second less than a goldfish’s attention span. That makes speed in transmitting content across the Internet to desktops, tablets and smartphones more important than ever. That’s one of the biggest reasons researchers and scientists are racing toward the commercialization of a super-material with the ability to transmit data across the Internet 100 times faster than fiber optic cable. But that’s not its only extraordinary characteristic. This little-known substance is also… Read More

The average Internet user’s attention span is shorter than that of a goldfish.#-ad_banner-#​ It’s been estimated that Internet users have an attention span of eight seconds — one second less than a goldfish’s attention span. That makes speed in transmitting content across the Internet to desktops, tablets and smartphones more important than ever. That’s one of the biggest reasons researchers and scientists are racing toward the commercialization of a super-material with the ability to transmit data across the Internet 100 times faster than fiber optic cable. But that’s not its only extraordinary characteristic. This little-known substance is also 200 times stronger and six times lighter than steel, and close to being transparent. Those are just a few reasons why it is quickly gaining a reputation as a “miracle substance” with the potential to revolutionize multiple industries. I predict that within five years, this crystalline form of carbon — a one-atom-thick layer of graphite — will be on its way to being the vital building block in modern technology. And it could make early investors rich in the process. What exactly is this miracle substance? Graphene. And it’s not just the Internet it has the potential to revolutionize. Its… Read More

Trend following is a time-honored investing method.#-ad_banner-#​ Many investors erroneously believe trend following simply means following the price trend in a stock or commodity. Several books and many investment articles perpetuate the price-only myth, resulting in its widespread acceptance as truth.  But the savviest investors realize that although trend following may refer to following a price chart, to be effective, it needs a much deeper, all-encompassing investing method. I like to think of trend following from a top-down perspective.  Understanding the global or national economic climate by asking if we are in a bear or bull market is the… Read More

Trend following is a time-honored investing method.#-ad_banner-#​ Many investors erroneously believe trend following simply means following the price trend in a stock or commodity. Several books and many investment articles perpetuate the price-only myth, resulting in its widespread acceptance as truth.  But the savviest investors realize that although trend following may refer to following a price chart, to be effective, it needs a much deeper, all-encompassing investing method. I like to think of trend following from a top-down perspective.  Understanding the global or national economic climate by asking if we are in a bear or bull market is the first trend to follow. Next, societal trends need to be considered, such as what people are buying, what’s hot, what’s on the horizon, and what ideas and concepts are trending.  Finally, drilling down and discovering what industries and specific companies are poised to ride these trends makes far more sense than merely looking at a price chart that, by definition, only illustrates the past. Using this three-step, trend-following guide, I’ve discovered a company poised to ride an overwhelmingly powerful trend well into 2014. On Dec. 19, the Federal Reserve revealed that it will begin to taper its monthly $85 billion… Read More