May 17, 2012
Equities Sector Coverage: Stocks Break Lower on Increased Fear and Disappointment
Initial Jobless Claims came in at 370,000 still above the 350,000 recessionary threshold. The Philly Fed Index came in well below estimates at -5.8 in May when a +7.0 reading was expected. Leading Indicators came in at -0.1 in April, below estimates and the first decline in seven months. Freddie Mac reported that their 30-Year fixed rate mortgage is now at a record low of 3.79%. The Dow Jones Industrial Average rebounded to 12,611.42 then declined to 12,462.62 going into the final half hour of trading. The NASDAQ traded between up to 2879.22 then down to 2821.02 going into the final half hour of trading. Asian stocks were lower on Thursday. The Nikkei 225 ended their session at 8,877 – up 0.86% on the day. The Hang Seng ended their session at 19,201 – down 0.31% on the day. European (more)…
As Sam Sees It: Market’s Slow Decline Could Provide Some Reassurance for Investors
 Each week, we tap the insight of Sam Stovall, Chief Equity Strategist for S&P Capital IQ, for his perspective on the current market. EQ: The S&P 500 has been moving lower since the start of April, and crossed 5 percent pullback threshold earlier this week. However, the rate of the decline has been slower than the historic average of other pullbacks. What does that tell us? Stovall: In some ways, it tells us that maybe investors are not all that worried, and that they believe the nervousness associated with Europe, Asia and the U.S. might not be as severe as the general public might believe. While I don’t have the “bat phone” to Greece’s parliament–or to any other parliament around the world–what I do is try to ascertain investor opinions on these issues by looking at market action. What the (more)…
MLPs Hitting the ATM: Equity Trends Part I
 For the next two weeks of columns, I want to tackle two major trends in MLP equity issuance: at-the-market (ATM) equity offerings and variable distribution MLP IPOs. This week, I’ll cover ATM deals, then next week, I’ll review the large increase in the number of MLPs going public with a variable distribution structure (with no incentive distribution rights, no subordinated units) rather than the more common minimum quarterly distribution structure (with IDRs, and subordinated units). History Lesson: MLP PIPEs MLPs need massive amounts of equity each year to fund growth, because they pay out most of their cash flow. The traditional method of raising equity is a marketed follow on equity offering, which involves a 2 or 3 day marketing period (or book build). During that 2 or 3 day period, however, the MLP’s price tends to fall quite a (more)…
Two-Legged Decline Likely Before Stability
 Investor’s first read – Brooksie’s edge before the open Thursday, May 17, 2012 9:15 a.m. ET DJIA: 12,598.55 S&P 500: 1324.80 Nasdaq Comp.: 2874.04 Russell 2000: 772.11 CONCLUSION: The persistent weakness in stock prices suggests a two-legged decline before the market stabilizes. Assuming no change in news, a possible scenario would be that the first leg down would find support at DJIA 12, 275 (S&P 500: 1292). A bounce back to 12,610 (S&P 500: 1333) could then happen depending on the news at the time followed by another leg down with a final bottom around DJIA 11,915 (S&P 500: 1255). So much depends on the flow of news out of Europe. The market is trying to find a comfort level for what is known now and the possibility Greece will exit the euro. Presently, I give this scenario a good (more)…
May 16, 2012
Equities Sector Coverage: Wall Street Continues to Slump
 Housing starts for April rose by 2.6% to an annual rate of 717,000, which topped estimates for a 680,000-unit rate. Permits to build new homes fell 7% to a 715,000-unit rate, which was short of the 730,000-unit rate expected. Industrial Production rose a stronger than expected 1.1% in April with Capacity Utilization at 79.2. The Dow Jones Industrial Average rebounded to 12,722.63 on Wednesday morning then declined to a low of 12,611.42 into the final half hour of trading. The NASDAQ traded between 2896.82 and 2913.90 in morning trading then dipped to 2873.28 going into the final half hour of trading. Asian stocks were lower on Wednesday. The Nikkei 225 ended their session at 8,801 – down 1.12% on the day. The Hang Seng ended their session at 19,260 – down 3.19% on the day. European exchanges opened lower on (more)…
Trading With Daily Range Breakouts
 Looking for trading entries with the help of daily trading range patterns can help savvy traders spot volatile moves for potential trading opportunities. The concept of “Average True Ranges” (ATR) has always been popular, and the usage of daily trading ranges for fine tuning swing and intraday trading setups can assist traders in identifying chart patterns worth trading. Daily Trading Ranges: Wide versus Regular Range Patterns Using a fifteen-day, fifteen-minute candlestick chart for swing trading stocks can be valuable when traders know how to spot wide vs. regular-range breakout patterns. In Figure 1 [Netflix (NFLX)], it can be seen that the average daily trading range, as measured from the high to the low, is about four points on a regular trading day. What traders should look for, is volatility on high volume during days in which the trading range exceeds (more)…
Charts Look Bearish, But Shorting Here Could Be Risky
 Investor’s first read – Brooksie’s edge before the open Wednesday, May 16, 2012 9:15 a.m. ET DJIA: 12,632.00 S&P 500: 1330.66 Nasdaq Comp.: 2893.76 Russell 2000: 777.36 More “technical” damage was done yesterday, as two rally attempts during the day failed with a plunge at the close. It looks like the market is headed lower, what can stop it? For one, reading the next move in the market has never been that easy. Just about the time it looks like the market is absolutely, without a doubt, going to move in an obvious direction, it does the opposite. What I am saying is, don’t go short now, after a sharp rally, yes if justified then, but there are risks in shorting now – looks too easy. I can see a drop to DJIA 12,275 (S&P 500: 1292), even DJIA 12,075 (more)…
May 15, 2012
Is the Trend Changing for MLPs?
 Master Limited Partnerships have been a wonderful leading indicator for the past three years. Since its December 2008 low, the index has moved up from 145 to 410. But the index hit a wall back in January when it hit 410, and we have not been able to get back there since. After a first run down to 380, we saw the index make a run higher, only to be turned back at 400. Now we are back to 380 and went below it yesterday. This move down is coupled with a weaker market overall and European woes, which seem to be building up again to levels not seen since last summer. The index is telling us that this is, at the very least, a serious correction that is getting underway. The break below 380 to me says we will (more)…
Equities Sector Coverage: Stocks Continue to Break Lower
 CPI was flat in April, up 0.2% excluding food and energy. Retail Sales rose just 0.1% in April with and without autos. After a Dip in April, the NAHB Home Builder Index jumped 5 points to 29 in May. The Dow Jones Industrial Average traded down to 12,672.80 on Tuesday then up to 12,758.43 then plunged to 12,608.16 into the final half hour of trading. The NASDAQ traded down to 2902.30 Tuesday then up to 2930.68 then declined to 2889.39 into the final half hour of trading. Asian stocks were mixed on Tuesday. The Nikkei 225 ended their session at 8,900 – down 0.81% on the day. The Hang Seng ended their session at 19,894 – up 0.81% on the day. European exchanges opened higher on Tuesday but slipped into the red at the closes. The FTSE 100 ended their (more)…
To Trade or Not to Trade: Handling This Jittery Market
 It’s become pretty clear that the bears and bulls are once again engaged in a game of tug of war. While bulls are hoping that the recent pullback is nothing more than a moment of rest before the market resumes its run higher, bears are hoping that the hot streak stocks have enjoyed is finally cooling. While uncertainty in the market does create opportunities, sometimes the best idea is to stand clear and let the dust settle before choosing a side. We asked Toni Turner of TrendStar Trading Group how she plans to approach this volatile market, and which specific groups she’s keeping a close eye on. EQ: In our last interview, you discussed some key levels on the major indices that you were watching–mainly 13,000 and 12,845 on the Dow, and 1357 on the S&P 500. The two indices (more)…
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