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Thursday, September 26, 2013

Believe It or Not, the Bulls Still Have Plenty of Muscle

An einem Sonntag im August...
(Photo credit: Concentrated Passion)
Russell, NYSE Composite still pushing upward

Chart Key
The Russell 2000 made a new all-time high yesterday with its intraday high of 1,082. The Russell 2000 — like its cousin, the Nasdaq (see Wednesday’s chart and comment) — is trading within a bull channel, but unlike the Nasdaq, it has no resistance above it to hamper further new highs. MACD is slightly overbought but could become more overbought as the index continues its dogged advance.
The NYSE Composite is a broad-based index containing all stocks traded on the Big Board. Its chart pattern is much like that of the S&P 500 (see Monday’s chart), which recently made a new all-time high. But the NYSE’s new high at 9,906 — made last Wednesday — was unlike the S&P 500 in that it has not seen a new high since May, and its all-time high at 10,387 was made in October 2007.
Conclusion: Despite yet another down day, the short-, intermediate- and long-term trends still are bullish. The continuing power of the bull market is supported by both the broad-based indices as well as the small- and midcap stocks. The ability to keep trudging along despite the overwhelming negativity coming from Washington is a powerful argument in favor of the bulls. Bearish momentum is absent.
The strongest sectors continue to be industrials, tech & biotech, consumer discretionary, biotech, pharma, housing, materials and financials. Bonds and bond substitutes have been the weakest.
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Dollar and Treasuries likely to lift Gold

English: A sample of crude oil from Haenigsen,...
English: A sample of crude oil from Haenigsen, Germany. Deutsch: Flasche mit Erdöl (Photo credit: Wikipedia)
By Colin Twiggs

Sydney, Sept.26, stock watch .- Spot gold continues to test support at $1300/ounce. Failure of support would visit the primary level at $1200/ounce, while respect would test $1440. Breach of the downward trend channel indicates the primary trend is slowing, but recovery above $1440, and a primary up-trend, seem some way off — as does recovery of 13-week Twiggs Momentum above zero.

Spot Gold
The two-hourly chart shows breakout above resistance at $1330. Retracement that respects the new support level would signal a rally to test $1375, improving the chances of a bottom.
Spot Gold

Dollar Index

The Dollar Index broke primary support at 80.50, warning of a primary down-trend. Follow-through below 80 would confirm. A 13-week Twiggs Momentum peak at zero also suggests a down-trend. A falling dollar would boost gold prices. Recovery above 81 is unlikely, but would warn of a bear trap.
Dollar Index
The yield on ten-year Treasury Notes broke support at 2.70 percent, warning of another test of 2.40 percent. Penetration of the rising trendline would strengthen the signal. Falling treasury yields are also likely to lift precious metal prices (because of the lower opportunity cost).
10-Year Treasury Yields

Crude Oil

Nymex light crude broke support at $103/barrel and its rising trendline, warning that the up-trend is slowing. A test of medium-term support at $98/barrel is now likely. The wider spread with Brent Crude is an indication of tensions over Syria which threaten supply.
Brent Crude and Nymex Crude


Commodity prices continue to fall, with the Dow Jones-UBS Commodity Index headed for another test of 124 despite a resilient Shanghai Composite Index. Recovery above 130 is unlikely, but would confirm the earlier double-bottom reversal and a primary up-trend.
Dow Jones UBS Commodities Index
* Target calculation: 130 + ( 130 - 125 ) = 135 ...
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Top 10 Stocks For 2014

EI-EPD (Photo credit: markyharky)
By StreetAuthority

Chicago, Sept.26, stock trade .- It's one of our most popular pieces of annual research. Literally hundreds of thousands of investors have read -- and profited -- from this advice.

And since we first started publishing our annual Top 10 Stocks list, we've beaten the market seven out of 10 years. For comparison, shares of Warren Buffett's Berkshire Hathaway (NYSE: BRK-B) have only beaten the market five out of the past 10 years.

I've shared one of these stocks with you already. Last week, I told you about Philip Morris International (NYSE: PM). This tobacco company, while hated by most people, has raised its dividend nearly 85% since spinning off from its parent company in 2008.

And in today's article I'll tell you about another one of my "Top 10 Stocks for 2014."

But before I continue, I want to make something clear. I can't provide you with all 10 of my "Top 10 Stocks for 2014" here. I've reserved the report exclusively for my Top 10 Stocks advisory subscribers. It wouldn't be fair to them to give this list away to everyone.

But I can give you something even more valuable than just a couple of stock picks...

You see, I want to show you why these stocks made my list for 2014... and how you can find similar stocks on your own.

I think my 2014 ideas may end up being the most profitable in our history. As you can see in my chart, this group of 10 stocks has already beaten the S&P during each of the past five years -- that includes the sharp bear market we saw in 2008 and the powerful bull market we enjoyed in 2009 and 2010.

In fact, if you had invested $10,000 into this group of stocks just five years ago, your investment would be worth $22,950 as of the end of September -- a 129.5% total return. The same investment in the S&P would be worth just $14,590 -- a 45.9% return.

So what's the secret behind this performance?

Well, after years of research, I've found that companies with a few basic characteristics are the ones that consistently beat the S&P...

-- Companies that enjoy huge (and lasting) advantages over the competition.

-- Companies that are buying back massive amounts of their own stock.

-- Companies that pay investors each and every year by dishing out growing dividends.

I've found that more often than not, companies that match these three simple criteria are the ones that make you the most money long term.

It makes sense -- strong companies that take care of their shareholders tend to do better over the long run. These are the stocks that consistently create value for their investors year after year, delivering some of the market's biggest returns.

Take Enterprise Products Partners (NYSE: EPD), for example. EPD made my "Top 10 Stocks for 2014" list precisely because it meets two out of the three characteristics listed above.

Does EPD enjoy huge advantages over its competition? Absolutely.

The company is one of the largest pipeline companies in the U.S., with 50,000 miles of onshore and offshore pipelines.

Does it pay a steadily growing dividend? You bet.

Since 1998 EPD has raised its dividend 202%... from $0.225 per share every quarter to $0.68.

It doesn't take a Ph.D. to understand that this is the sort of stock that should continue to make money for its investors year after year.

And in recent years, EPD has done just that. Since 2008, shares have returned roughly 170%. That includes a nearly 20% gain since the start of the year.

Performance like this proves investing doesn't have to be complicated. There's nothing complex about investing in simple businesses that dominate their industries and return billions of dollars to their investors through dividends and buybacks. Yet it works.

Keep this in mind. It might be the most profitable investing lesson you'll ever learn.

Note: For more information about the rest of my Top 10 Stocks For 2014 --including several names and ticker symbols -- you can follow this link.

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Wednesday, September 25, 2013

If You Have a Burning Desire to Buy, Here's Where to Look

This is the Dow Jones Industrial Average over ...
This is the Dow Jones Industrial Average over the last 40 years. (Photo credit: The_Smiths)
Momentum is strongest in small-cap and mid-cap tech stocks, while some blue chips offer bargains

Chart Key
The Dow industrials have turned away from the high of 15,710 made only four sessions ago, and have penetrated into the broad support zone of 14,760 to 15,400. Within that zone is its next meaningful support, the 50-day moving average at 15,310.
The blue chips held for most of the day, but in roughly the final hour and a half of trading, the Dow plunged over 100 points, led by the financials. The bias is against the blue chips and in favor of small-cap and mid-cap stocks.
The Nasdaq’s bull channel is much like the Russell 2000′s channel illustrated on Monday. Trading is clustered close to the top of its range, and so, with MACD overbought, the Nasdaq could pull back to its 50-day moving average at 3,657.
Conclusion: If you must own stocks or are a trader, grabbing the small-cap and mid-cap technology stocks appears to be the best near-term strategy since that is where the buying is concentrated and momentum is strongest.
Even the broad-based S&P 500 closed below 1,705, a near-term inflection point. Its next support is its 50-day moving average at 1,679. But volume was high on last week’s advance and has declined on the blue chips’ pullback. The bright side of the blue chips’ near-term weakness is that some big, profitable names can be bought at reasonable prices like my Top 6 Stocks to Buy for October
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Tuesday, September 24, 2013

Only Part of This Market Appears to Be Out of Gas

Image representing Apple as depicted in CrunchBase
Image via CrunchBase
Small-cap and mid-cap stocks are leading the market, while the large-cap indices sag

Apple (AAPL) rose 5% following news of demand for its latest products, and BlackBerry (BBRY) rose more than 1% after a tentative agreement to be bought out by Toronto-based Fairfax Financial at $9 a share.
At Monday’s close, the Dow Jones Industrial Average fell 50 points to 15,401, the S&P 500 was down 8 points at 1,702, and the Nasdaq lost 9 points at 3,765. The NYSE traded 690 million shares and the Nasdaq crossed 427 million. Decliners beat out advancers on both major exchanges by about 1.3-to-1.
Chart Key
After blasting to a new high on Wednesday, the Dow industrials have sagged and closed Monday almost on the first line of support, the upper band of a wide range from 14,785 to 15,400. Within the band is the important 50-day moving average at 15,304. MACD is turning down, as is momentum and RSI (not shown).
But while the Dow looks tired and due for a rest, the Nasdaq has barely felt the pressure of the profit-taking that has hit the Dow. The Nasdaq closed Monday just below its bullish resistance line at around 3,800, and is nicely above its bullish support line and 50-day moving average at 3,653. MACD is bullish.
Conclusion: Again, the small-cap and mid-cap stocks are leading the market. But the indices that traditionally ignite markets to major bullish explosions, the S&P 500 and Dow, have low momentum readings, even appearing to be “out of gas” (see Monday’s chart of the S&P 500). And a close below the S&P 500′s 1,680 to 1,690 zone would be a negative jolt for the entire stock market.
But the Nasdaq and Russell 2000 are technically sound, and so the broad market will probably continue in the upper ranges of the support zones of each of these indices until late in October. A traditional Halloween treat may be the event that leads to another leg up.
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Tuesday, September 3, 2013

Remain Fully Invested Until This Happens

Dow Corning Chairman, President and CEO Stepha...
Dow Corning Chairman, President and CEO Stephanie A. Burns (Photo credit: Saginaw Future Inc.)
The long-term monthly chart of the S&P 500 confirms that a bull market is still in force
Geopolitical tensions popped oil prices to over $107 a barrel, raising the possibility of higher prices at the pump. The impact of higher gasoline prices sent the Dow Jones Transportation Average down 1.1%.
Second-quarter GDP growth was revised up to 2.5%, which is a positive. But slower homes sales, earnings misses in the retail sector, and the threat of the Fed cutting its purchase of bonds in September kept investors on the sidelines in anticipation of the long holiday weekend.
At Friday’s close, the Dow Jones Industrial Average was down 31 points to 14,810, the S&P 500 fell 5 points to 1,633, and the Nasdaq lost 30 points at 3,590. The NYSE traded 768 million shares and the Nasdaq crossed 383 million. Decliners led advancers by over 2-to-1 on the Big Board and by 3-to-1 on the Nasdaq.
For the week, the Dow was off 1.3%, the S&P 500 fell 1.8%, and the Nasdaq declined 1.9%.
The long-term monthly chart of the S&P 500 confirms that a bull market is still in force. And as long as the black monthly line fails to drop through the red moving average line, long-term investors should remain fully invested.
However, the S&P 500 is 11.5% above the 17-month moving average, and prior market tops were made at 8.1% in August 2000 and 8.4% in October 2007. Thus, a caution flag is flying for the near and intermediate trends. Currently, the near-term trend is down and the intermediate-term is in doubt.
Chart Key
The recent decline from the Aug. 2 high has resulted in a correction of over 4.5% in just a month. Now, with the market oversold, both MACD and our internal indicator, the Collins-Bollinger Reversal (CBR), predict a mild rally. Resistance to a near-term rally begins at the 50-day moving average at 1,660.
Unlike the S&P 500, the Russell 2000 has broken an important support line — the upper line of the support band at 980 to 1,013. It has plummeted over 5% from its high made on Aug. 5. It is much more volatile than the S&P 500, so it could rally through both its 50-day and 20-day moving averages up to the resistance line at 1,044.
The weekly chart of the Dow Jones Utility Average indicates that following a spike in late April, and a subsequent correction, this index is now in a buy zone. As long as the index is above its major weekly bull market trendline (red dotted line), but under its 200-day moving average (solid red line), utility stocks should be accumulated for yield and growth.
Note that it has often traded below its 200-day moving average, but just once in the last three years pierced the bull market trendline. But even on that occasion in 2011, the index quickly reversed, and within a short time resumed its upward move.
Conclusion: Technical analysis is based upon the principle that humans will, under similar circumstances, react to the buying and selling of stocks much as they did in the past. So technical analysis is the study of the market itself and the reactions of literally millions of people, charting in graph form the price changes, volume, etc., and then deducing probable future trends.
Thus, the input that forms the chart is all-inclusive. By that I mean that it includes the reaction of buyers and sellers to every conceivable factor that can have an impact on a stock or index. In the longer term (months and years), it has proven to be extremely accurate. But in the time frame of days and weeks, because of volatility, it becomes more difficult to make accurate predictions.
That, however, does not mean that technical analysis is of no use for short-term forecasting. Short-term trendlines, moving averages and volume indicators are invaluable to the trader. Unlike long-term patterns, short-term patterns change rapidly and can be used along with daily events to make quick, profitable trades as long as protective stop-loss strategies are implemented.
With this in mind, I expect the market to rally this week because it is oversold in almost every respect. This oversold condition, coupled with the probability that the political and international situation has suddenly become less intense due to the surprise delay of military action against Syria, lead me to believe that buyers will push prices at least to the resistance zones illustrated in this morning’s charts.
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Tuesday, August 27, 2013

Approach This Market With a Rifle, Not a Shotgun

English: source: my own photo.
English: source: my own photo. (Photo credit: Wikipedia)
In a highly charged, low-volume environment, it's better to take aim at specific stocks

Low volume contributed to the volatility, and the late selling was attributed to short sales and protective strategies in advance of the possibility of an even broader sell-off.
At Monday’s close, the Dow Jones Industrial Average was off 64 points to 14,946, the S&P 500 fell 7 points to 1,657, and the Nasdaq broke even at 3,658. The NYSE traded 546 million shares and the Nasdaq crossed just 336 million. Decliners led advancers on both exchanges by about 1.3-to-1.

Chart Key
The S&P 500 was holding its own, above its 50-day moving average, until the last hour when the sell-off hit almost all sectors. The selling also sent MACD slightly lower, cancelling the small upturn in its fast line noted last week.
The index now has clearly defined resistance lines that must be overcome if it is to move ahead in October. First, it must decisively overcome its 50-day moving average, now at 1,660, and then the resistance line at 1,676, which was its breakdown point on Aug. 15.
Small caps advanced slightly Monday but were victims of the volatility associated with the collision of low volume and negative headline news.
The current resistance for the Russell 2000 is at the confluence of its breakdown line and 20-day moving average at 1,042. Like the S&P 500, the Russell’s MACD has turned flat — not a bullish indication.
Conclusion: This week, the major indices may be just too difficult to trade since the low volume associated with the “dog days of summer” at the top of a major market advance can lead to extremely high volatility.
But that doesn’t mean that tradable opportunities don’t exist. Rather than swinging at the difficult-to-predict indices, it might be more profitable to concentrate on specific stocks like our Trade of the Day, 3D Systems (DDD), or Microsoft (MSFT). If you are bearish, short stocks in the homebuilding sector like Lennar (LEN).
Using a “rifle approach” to trading can be more profitable than the “shotgun approach” in a highly charged, low-volume environment.
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