May 31, 2012
As Sam Sees It: Why June Could Be Pivotal for Investors
 As the month of May comes to a close, the S&P 500 managed to avoid what could have been one of the worst performing months in its history, but instead may have found potential near-term support after briefly breaking below 1300 on the index. With June on the horizon, could investors expect another swoon in the market? Or will major develops both in the U.S. and overseas develop into catalysts for major swings one way or the other? In this week’s interview with Sam Stovall, Chief Equity Strategist for S&P Capital IQ, we discussed major events to watch for next month, as well as how the strengthening dollar may affect the equities market. EQ: Since hitting the low on May 18 of 1295 on the S&P 500, stocks have recovered nearly 3 percent based on yesterday’s close. Is this an (more)…
Global Glut Going Nowhere
 The drop in gas prices over the last month has been a relief to us all. The economic sanctions placed by the European Union, Canada and the U.S. on Iran has simply shifted the flow of Iranian oil from west to east. The net result has been more oil on the global market with China, India and Russia picking up cheaper oil from Iran due to the lack of competition from western buyers. One would think that cheaper oil to the BRIC countries would be just the catalyst needed to help them develop their own internal demand for goods and services through the creation and evolution of their own middle class. Unfortunately, we are in an economic phase of global deleveraging and even the stimulus of low fuel prices will not keep their engines turning fast enough to save us (more)…
Call of the Week: When Packaging is Everything
 This week’s top idea at Singular Research is UFP Technologies, Inc. (UFPT), a producer of innovative custom-engineered components, products, and specialty packaging. Singular currently has a 12-month price target of $23.00 per share on the company, representing upward potential of about 40 percent based on its current trading price of about $16. We have a buy rating on UFP. Investment highlights include: Q1 revenues rose to $32.0 million from $31.5 million in Q1:11. However, excluding $1.8 million in door panel sales from Q1:11 results, we estimate revenues were up about 7.6%. We had forecast revenues of $31.4 million. UFPT saw strength in all end-use markets with the exception of automotive, with particular strength in medical (+$0.5 million) and molded fiber packaging (+$1.0 million). Gross margin rose 90 bps to 28.8% from 27.9% and was nicely above our 27.7% estimate with (more)…
MLPs Still Trying to Hold Ground
 On Tuesday, we saw one of those post three-day weekend rallies, which seemed to have come to a halt as of yesterday, as Euro woes continue to dominate. I’m staring at the screen seeing a 1.69 percent yield on the 10-year and the MLP yield spread in excess of 400 basis points, wondering whether this is a good tradeable entry point for MLPs. The technicals on the chart are certainly telling us that we are somewhat oversold here and due for some sort of bounce, but its not oversold to the point where MLPs have been literally thrown out the window. Also note that the moving averages have crossed and turned lower, which is not a positive. So far the 360-365 level is holding and that’s good. We could rally back to 380-385 here without much difficulty. However given the (more)…
Economic Numbers Soft – Facebook to Acquire Zynga?
 Investor’s First Read – Brooksie’s Edge Before the Open Thursday, May 31, 2012 9:15 a.m. ET DJIA: 12,419.81 S&P 500: 1313.32 Nasdaq Comp.: 2837.36 Russell 2000: 762.56 Again, it is necessary to emphasize that the vitality of economic recoveries depends on the severity of the recession that precedes it. I think the stock market’s huge rebound starting in early March got ahead of the economic recovery, which was labored, at best. We came within a whisker of a global meltdown in 2008, recovery takes time. That explains the economy’s flirting with a double-dip last year and maybe again even this year. Patience ! Yesterday’s post warned to “Beware of Calming Announcements” designed to minimize the crippling domino effect of Greece’s fiscal and economic tailspin and Spain’s efforts to avoid default. Reassuring announcements are intended to buy time and calm public (more)…
May 30, 2012
Equities Sector Coverage: Wall Street Tumbles Lower
 The National Association of Realtors reported that contracts for pending existing home sales fell 5.5% in April, missing estimates calling for a 0.1% increase. The Dow Jones Industrial Average traded down to 12,396.40 on Wednesday. The NASDAQ traded down to 2825.64 on Wednesday, but traded above 2840 in the final half hour of trading. Asian stocks were lower on Wednesday. The Nikkei 225 ended the day at 8,633 – down 0.28%. The Hang Seng ended the day at 18,690 – down 1.92%. European exchanges traded lower on Wednesday on Spain’s debt fears. The FTSE 100 ended the day at 5,297 – down 1.74%. The DAX ended the day at 6,281 – down 1.81%. The CAC 40 ended the day at 3,016 – down 2.24%. The yield on the 10-Year US Treasury traded down from 1.741 percent to 1.617, which is (more)…
Investors Get Defensive as Europe Remains in Driver’s Seat
 After enduring a major decline over the first few weeks of May, the market managed to hold up relatively well last week. Could this be the break that bulls have been waiting for? Or were the bears just taking a break before retaking control? In this week’s interview, Equities.com asked Toni Turner of TrendStar Trading Group for her thoughts on how the ongoing financial turmoil in Europe could be affecting traders and investors. EQ: Given that Europe has such an impact on the market right now, can you discuss the importance for equities traders to pay attention to the EUR/USD and CurrencyShares Euro Trust (FXE)? Turner: In my experience, there are times in the market, especially during times of exogenous shocks, such as the European sovereign debt crisis, when a single market component has the power to lead the market (more)…
Test of May’s Lows – Calming Announcements Imminent?
 Investor’s first read – Brooksie’s edge before the open Wednesday, May 30, 2012 9:15 a.m. ET DJIA: 12,580.69 S&P 500: 1332.42 Nasdaq Comp.: 2870.99 Russell 2000: 777.16 CONCLUSION: More misery…but expect announcements that measures are about to be implemented by European leaders to minimize the crippling domino effect of Greece’s fiscal and economic tailspin and Spain’s efforts to avoid default. Reassuring announcements are designed to buy time and calm a public panic. They also can create premature euphoria, which in this case stands to trigger a rally. Such a rally can suck investors in prior to another leg down in stock prices when it becomes obvious that solutions are not guaranteed or will take longer than expected to implement. It is possible, the market will simply plunge now to a level the Street feels discounts all possible adversities and we (more)…
May 29, 2012
What Are ETFs?
 An exchange-traded fund, or ETF, is a pooled investment vehicle that trades like a stock and is listed on an exchange. ETFs track assets or investment targets like a stock index, specific sectors, commodities or any number of strategies as well. While having some similar characteristics to mutual funds and index funds, an ETF has unique features and differences that investors need to understand before investing. When used appropriately, an ETF can be a very useful investment tool to add to any portfolio. Trading and Investing in ETFs Unlike an index fund, an ETF or exchange traded fund trades throughout the day like a regular stock. The purpose of the exchange traded fund is still to track the performance of some underlying index, but it allows individuals to trade the ETF throughout the day. ETFs also have lower operating expenses (more)…
Tradeoff: U.S. Economic Recovery vs European Contagion
 Investor’s first read – Brooksie’s edge before the open Tuesday, May 29, 2012 9:15 a.m. ET DJIA: 12,454.83 S&P 500: 1317.82 Nasdaq Comp.: 2837.53 Russell 2000: 766.41 Looks like investors’ are faced with a tradeoff between the prospects for a sustainable recovery in the U.S. economy and the potential for at least severe financial disruption in Europe if Greece abandons the euro. Tough call ! The resolution of both situations are big unknowns at present. Bulls are relying on a rebound in the U.S. housing situation, bears claiming a Greek departure from the euro would inflict collateral damage as Spain and Portugal would then enter an era of high risk where bailouts would be necessary or an exit from the euro likely. I have been expecting a two-legged decline from the May 1 peak in stock prices, or depending on (more)…
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