July 31, 2011
Can You Handle the Risk?
 This past Friday, we put about 20% of our clients’ money to work in the market. We bought some broad market ETFs, some Asian stock and a little Japanese stock. But, 20% in the market and 80% in cash is about all the risk I want my clients to handle right now. You should seriously consider how much exposure you want in this market when looking at totally uncharted waters we are having to deal with right now in regard to the debt-ceiling, so-called crises. For my CycleProphet Trades subscribers, I plan to wait until we see what happens in Congress this week. Frankly, I happen to believe that the debt-ceiling should be raised.. but that is not the real issue… The REAL issue is something has to be done about our government’s runaway spending. Unfortunately, the only way the (more)…
July 29, 2011
Gold and Silver Outperform Mining Counterparts
 Tensions are high on Wall Street as the threat of a U.S. debt default continues to loom. Concern that the lack of resolution could result in a credit rating reduction from Moody’s and the S&P that would paralyze the market had led investors toward safe havens. Traditionally viewed as a stable place for investors to reside during weak economic periods, gold has been among the premier gainers amid the rising nerves and fast approaching deadlines. In the event of a potential default, investors seem as much concerned with protecting their assets as with generating returns. Perhaps this is the reason for the increasingly pronounced trend of heavy buying of gold, like in the SPDR Gold Shares (GLD) while mining shares remain more in line with the S&P. Currently the gold index is up only 3 percent while gold itself is (more)…
Equities Sector Coverage: Stocks Fall To End Rough Week
 Advanced Real GDP rose by a much less than expected 1.3% in the second quarter. Making matters worse is that First Quarter GDP was revised to 0.4% from 1.9%. The Chicago PMI came in at 58.0 in July, slightly below expectations. Michigan Consumer Sentiment fell to 63.7 in July. The Dow Jones Industrial Average opened lower and traded down to 12,083.45 before rebounding into the green at 12,243. The Dow drifted lower in afternoon trading to below 12,170 into the final half hour. The NASDAQ traded down to 2725 below its 50-day simple moving average at 2753 then rebounded back above the 50-day into the green with a morning high at 2780. The NASDAQ traded back and forth around the flat line in afternoon trading then slipped into the red below 2765 into the final half hour of trading. Asian (more)…
Equities Market Roundup: Debt Talks and GDP Growth Stall
 Congress made no progress yesterday on dealing with the nation’s debt ceiling and budget plan as House Speak John Boehner canceled voting for his bill because a lack of support from Republicans. The move caused more confusion in an already stressed market. Adding to the pressure was data released by the Commerce Department showing the economy had slowed considerably in the first half of 2011, and came very close to contracting in the first period. In the three months from January to March, the U.S. economy only grew 0.4 percent, with the second quarter picking up to 1.3 percent. Economists had originally thought GDP expanded 1.9 percent in the first quarter. The new report shows that the nation’s economy is much more fragile than originally thought and in danger of returning to a recession, especially if Congress fails to raise (more)…
3 Blue Chips to Play In Case of a Default
 With deficit discussions ending in explosive exits and gridlock, a U.S. debt default is becoming more of a threat. How then can an investor protect him or herself against the massive impact? One option is investing in blue chips. Many blue-chip companies will have a higher credit rating than the U.S. treasury in the event of a default making them appealing as a new safe haven. Furthermore the majority of these companies have strong sales not just in the U.S. but across the world; cushioning them from a major fall. A handful of listed blue chip companies that have exhibited strength even in the worst markets and are likely to do so again in the event of an economic relapse. Even in the event that the debt ceiling issue is solved, these companies are unlikely to slide like other traditional (more)…
Debt Ceiling Rally a Fake Out?
 Brooksie’s Daily Stock Market blog Friday, July 29, 2011 9:24 am EDT DJIA: 12,240 S&P 500: 1300.67 Tuesday I said, “Without news, odds favor a test of DJIA 12,000 (S&P 500: 1275) by Thursday.” We didn’t get there yesterday, but may today. We are going to get some kind of “deal” out of Washington in coming days concerning the debt ceiling and a deficit reduction plan, the latter probably will be handed over to a newly formed bipartisan ”Super Committee.” An announcement of a deal will probably come before the open on Monday or Tuesday resulting in a panicky “gap” open, up some 155 – 195 DJIA points in the first 30 minutes of trading, with some additional upside to follow. Based on what I see now in the economy and Congress, odds favor the “debt ceiling” rally will be a cruel (more)…
Next Week May Be Exciting for China Stocks
 Near-euphoria over expectations of bountiful corporate results clashed in the Hong Kong stock market this week with worry about a U.S. default, and the winner was — nobody. Next week could get exciting quick. The blue-chip Hang Seng Index ended the week virtually unchanged, sinking 5 points to 22,440. The index for Chinese companies fared a bit worse, dropping 1.8%, 225 points, to 12,374. One main reason for the decline is that investors think Chinese stocks won’t get as big a boost as local Hong Kong companies from rising corporate profits in coming weeks. Also, worry persists about Chinese inflation, falling growth and continuing economic tightening. Investors could get some direction on all three major factors early next week. Concerning corporate profits, market giant HSBC will announce results Monday (Sunday night in the U.S.). Haitong Securities expects HSBC to post (more)…
July 28, 2011
What is a Stock Market Bubble?
 A stock market bubble is part of the economic cycle during which securities and other assets trade at prices that are artificially high. When prices rise too much, forming a stock market bubble, a correction often occurs as the bubble pops, resulting in a stock market crash. When this happens, bullish investors suffer dramatic losses over a short period of time. This type of economic cycle is normal. The economic cycle from stock market bubble to bust consists of much opportunity and risk. Investors try to earn as much on their investments as possible during a stock market bubble, but must sell before a stock market crash erases the value of their assets. Because risk is increased when a sector of the market is overpriced, investors and analysts often try to identify bubbles and then predict how long they will last. (more)…
Vertex Led Higher by Hepatitis C Drug
 Biotech investors had no shortage of options to consider for making a play on a Hepatitis C drug this year. Four different pharmaceutical companies had treatments in the works prompting heated competition to complete them. Investors that chose Vertex Inc (VRTX) over the other possibilities are about to get their payoff. The company’s new hepatitis C drug, debuting only five short weeks ago saw sales approaching $75 million causing shares to rise around 4 percent. Sales of Incivek are expected to maintain strength as the drug established itself as the gold standard of Hepatitis C treatment. Some have shorted the stock, citing major quarterly losses or skepticism regarding the potential popularity of the drug. Given the track of Incivek, which Sanford Bernstein analyst, Geoffrey Porges predicts could reach $200 million in the third quarter, the decision to sell appears regrettable. (more)…
Equities Sector Coverage: Stocks Fall to Red in Final Hour of Trading
 Initial Jobless Claims fell to 398,000 below 400,000 for the first time since early April, but keep in mind that 350,000 is the recessionary threshold. The Dow Jones Industrial Average opened around the flat line then rebounded above its 50-day simple moving average at 12,331 to a morning high of 12,384.90. In afternoon trading the Dow dipped into the red just below 12,270 in the final half hour of trading. The NASDAQ stayed above its 50-day simple moving average at 2755 trading up to 2800, shy of its 21-day simple moving average at 2809. The afternoon low for the NASDAQ stayed in the green with a dip below 2775 in the final half hour of trading. Asian stocks were mixed on Thursday with the Nikkei 225 down 1.5% to 9,901. The Hang Seng gained a fractional 0.1% to 22,571. European (more)…
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