JPMorgan Chase (NYSE: JPM) Chairman and CEO Jamie Dimon made news last week when it was announced he was personally buying $26 million worth of company stock as prices were hitting two-year lows. As The Wall Street Journal put it, his purchase was intended to “boost confidence in [the] banking industry” and “stem the tide of negative sentiment overwhelming bank stocks this year.” #-ad_banner-#​JPM jumped in after-hours trading on Feb. 11 following the news and hasn’t looked back, gaining more than 10% in the past three trading days. The question is whether Dimon’s bold move was enough to turn the… Read More

JPMorgan Chase (NYSE: JPM) Chairman and CEO Jamie Dimon made news last week when it was announced he was personally buying $26 million worth of company stock as prices were hitting two-year lows. As The Wall Street Journal put it, his purchase was intended to “boost confidence in [the] banking industry” and “stem the tide of negative sentiment overwhelming bank stocks this year.” #-ad_banner-#​JPM jumped in after-hours trading on Feb. 11 following the news and hasn’t looked back, gaining more than 10% in the past three trading days. The question is whether Dimon’s bold move was enough to turn the tide in the sector or even just in JPM.  The short answer is no. As we can see on the chart, it’s been all downhill for JPMorgan this year, starting with a breakaway gap to the downside on the first trading day of the year. This is a powerful event that signals a stock rapidly changing its condition from uncertain to undeniably bearish.  JPM then fell as much as 18% through last week’s low, and even after the three-day rally, it remains solidly below its major moving averages.  Had this rally not occurred, there would be no doubt… Read More

There are countless investing rules, mantras and cliches out there ranging from extremely useful to downright dangerous.  #-ad_banner-#One of the most widely accepted and potentially detrimental to your portfolio is, “Buy low, sell high.” When taken literally, of course, to make a profit you must sell a stock for more than you paid for it. But the essence of buy low, sell high has become one of the costliest myths on Wall Street. Investors have been trained to think that “undervalued” stocks have the most upside potential. The problem is that this approach often causes investors to overlook… Read More

There are countless investing rules, mantras and cliches out there ranging from extremely useful to downright dangerous.  #-ad_banner-#One of the most widely accepted and potentially detrimental to your portfolio is, “Buy low, sell high.” When taken literally, of course, to make a profit you must sell a stock for more than you paid for it. But the essence of buy low, sell high has become one of the costliest myths on Wall Street. Investors have been trained to think that “undervalued” stocks have the most upside potential. The problem is that this approach often causes investors to overlook the market’s best-performing stocks in favor of the ones doing the worst. Since underperforming investments usually sport lower valuations, investors tend to think these stocks are the more attractive buys. And nothing could be further from the truth. I’ll get into this in more detail in a moment, because today I want to share my three golden rules of investing.  I’ve honed  them over my two-decade-plus career in the markets. They are the foundation of investment success. They are non-negotiable. And while they may seem simple, many investors fail to abide by them, which all but guarantees failure. Golden Rule… Read More

Most investors are aware that the tech-heavy Nasdaq has a tendency to lead the market both up and down, and the current sell-off is no exception. The Nasdaq Composite is off more than 15% from its late-December highs, while the broader market is down just 10%. Tech stocks often take the brunt of the selling because they tend to carry higher valuations and are thus considered more risky.  #-ad_banner-#Since there doesn’t seem to be an end yet in sight to the current market correction, shorting overvalued tech stocks is a sound strategy to profit from this downtrend. And Universal Display… Read More

Most investors are aware that the tech-heavy Nasdaq has a tendency to lead the market both up and down, and the current sell-off is no exception. The Nasdaq Composite is off more than 15% from its late-December highs, while the broader market is down just 10%. Tech stocks often take the brunt of the selling because they tend to carry higher valuations and are thus considered more risky.  #-ad_banner-#Since there doesn’t seem to be an end yet in sight to the current market correction, shorting overvalued tech stocks is a sound strategy to profit from this downtrend. And Universal Display (Nasdaq: OLED) is a perfect candidate. Started in 1994, Universal is a leader in organic light emitting diode (OLED) technology, which contains organic films that emit light when struck by electric current. Universal own nearly 3,600 patents in the OLED space and also works with major universities on research. OLED technology is used for full-color displays in products such as smartphones, tablets and TVs. It’s both lightweight and power-efficient, while also offering superior color to many competing technologies. For instance, in the television market, its picture quality has helped it seize market share from its main rival, liquid crystal display… Read More

While a strong stock can rise on its own merits, it is easier when it is part of a rising sector. Conversely, when an entire sector is falling, even stocks that are not quite so weak can be taken down with it. #-ad_banner-# The latter is the case for the computer services sector and VeriSign (Nasdaq: VRSN) in particular. This domain name registry and Internet security stock has already fallen more than 20% from its December high, but given weakness in the sector, there is likely more pain ahead. Selling a stock that has already dipped… Read More

While a strong stock can rise on its own merits, it is easier when it is part of a rising sector. Conversely, when an entire sector is falling, even stocks that are not quite so weak can be taken down with it. #-ad_banner-# The latter is the case for the computer services sector and VeriSign (Nasdaq: VRSN) in particular. This domain name registry and Internet security stock has already fallen more than 20% from its December high, but given weakness in the sector, there is likely more pain ahead. Selling a stock that has already dipped into official bear market territory may seem risky. However, in addition to its falling sector, VeriSign’s chart offers ample evidence for another double-digit drop. It does not hurt that the broader market is struggling either. Let’s start with the big picture. Amazingly, we can draw a trendline on a log-scaled monthly chart that connects the start of the bull markets in 2002 and 2009 with major lows in 2011, 2012 and 2014. That line is currently in the $64 area, roughly 10 points below recent trading.  On its own, that would be an enticing downside target. But let’s… Read More

As the old Wall Street saw goes, “There’s always a bull market somewhere.”  These days, with the stock market faltering, you might think that can only mean inverse ETFs. But even in bearish times, there are still stocks that can and do move higher. After all, even during the Crash of 1987, several dozen stocks on the New York Stock Exchange gained ground. #-ad_banner-# That’s why it always pays to keep an eye out for stocks with healthy charts, even in a sick market. One that I like right now is for-profit hospital operator HCA Holdings (NYSE: HCA). Read More

As the old Wall Street saw goes, “There’s always a bull market somewhere.”  These days, with the stock market faltering, you might think that can only mean inverse ETFs. But even in bearish times, there are still stocks that can and do move higher. After all, even during the Crash of 1987, several dozen stocks on the New York Stock Exchange gained ground. #-ad_banner-# That’s why it always pays to keep an eye out for stocks with healthy charts, even in a sick market. One that I like right now is for-profit hospital operator HCA Holdings (NYSE: HCA).    It was a rough first few weeks of the year for the broader market until, on Jan. 20, it suddenly reversed to the upside. The Dow Jones Industrial Average was down as much as 565 points intraday, but closed just 249 points lower. The media reported the net loss but the charts told a different story — one of an oversold market with extreme fear staging an intraday comeback. HCA’s price action that day was not quite as dramatic, but it still ended with a nice intraday turnaround. It also formed a weekly reversal pattern right at a nice… Read More

Last week, blue-chip Caterpillar (NYSE: CAT) reported dismal fourth-quarter and full-year results. 2015 was a tough year for the construction and industrial equipment giant, and the stock reflected this, falling 25%.  Following the earnings announcement, the company’s CEO warned that 2016 would be another “rough” year. #-ad_banner-#But the Q4 results were not as bad as many feared, and shares shot up nearly 5% after their release. Short covering was likely a factor, though, and the rally creates an excellent entry point for new short positions.  We think CAT is vulnerable to more selling. Here are four big reasons… Read More

Last week, blue-chip Caterpillar (NYSE: CAT) reported dismal fourth-quarter and full-year results. 2015 was a tough year for the construction and industrial equipment giant, and the stock reflected this, falling 25%.  Following the earnings announcement, the company’s CEO warned that 2016 would be another “rough” year. #-ad_banner-#But the Q4 results were not as bad as many feared, and shares shot up nearly 5% after their release. Short covering was likely a factor, though, and the rally creates an excellent entry point for new short positions.  We think CAT is vulnerable to more selling. Here are four big reasons why: 1. Falling Revenues  The company’s sales have been declining since 2012, when they peaked at $65.9 billion. For 2015, Caterpillar reported revenue of $47 billion, which was down 14.8% from 2015. The severe slump in oil and gas prices, plus lower prices of mined commodities such as iron ore and copper for which the company makes equipment, have taken a big toll.  For example, in the most recent quarter, revenue from the machinery, equipment and transportation segment fell 24%, and a $921 million operating profit in the comparable quarter of 2014 turned into a $227 million loss. The resource… Read More

With the gaming industry so dependent on China for a chunk of its fortunes, it seems odd that Las Vegas Sands (NYSE: LVS) is poised to rally over the next few months. The Chinese stock market fell to a 13-month low this week, reflecting weakness in the country’s economy. But positive traffic data in Macau gave casino stocks a boost, and it seems some analysts are starting to see improvements stateside as well.  But as a chartist, I’m more excited about the improved technical conditions and still excessively bearish sentiment, which could make for the beginnings of a… Read More

With the gaming industry so dependent on China for a chunk of its fortunes, it seems odd that Las Vegas Sands (NYSE: LVS) is poised to rally over the next few months. The Chinese stock market fell to a 13-month low this week, reflecting weakness in the country’s economy. But positive traffic data in Macau gave casino stocks a boost, and it seems some analysts are starting to see improvements stateside as well.  But as a chartist, I’m more excited about the improved technical conditions and still excessively bearish sentiment, which could make for the beginnings of a bullish case for LVS. We’ll start with the bigger picture. The weekly chart shows a steep drop during the 2008 financial crisis, followed by a steady recovery through early 2014.  A set of Fibonacci retracement lines applied to the bull run helped define support for the 2014-2015 pullback. And now the stock has once again dropped to the key 61.8% retracement level of the rally. On their own, Fibonacci support and resistance levels are often questionable. However, the current retracement coincides with traditional chart support at a series of lows in 2010 through 2012. That makes the $34.50… Read More

Twitter (NYSE: TWTR) is ubiquitous in the online lives of millions, yet its stock has been the bane of many a portfolio.  After a strong performance following its initial public offering in 2013, it’s been a tough slog. The stock fell from a peak near $75 to an all-time low of $15.48 on Thursday.  While there have been false reversals along the way, this week’s reversal seems like it just might have a chance of making traders quick double-digit profits. The latest leg lower, which began in October, started to accelerate in the new year along with the… Read More

Twitter (NYSE: TWTR) is ubiquitous in the online lives of millions, yet its stock has been the bane of many a portfolio.  After a strong performance following its initial public offering in 2013, it’s been a tough slog. The stock fell from a peak near $75 to an all-time low of $15.48 on Thursday.  While there have been false reversals along the way, this week’s reversal seems like it just might have a chance of making traders quick double-digit profits. The latest leg lower, which began in October, started to accelerate in the new year along with the broader market’s sell-off. But on Jan. 20, Twitter scored a rather substantial, albeit imperfect, reversal to the upside. I say “imperfect” because the stock closed in the middle of the day’s range. Still, it set a lower low and closed with a net gain on the day with big volume. So we have to respect the sudden bullish change of heart. The broader market also staged an intraday reversal that day, although it closed with a significant loss.  Rumors that News Corporation (NYSE: NWS) was taking a stake in the company can take some of the credit for… Read More

Tech stocks often lead the market down, and the current decline is no exception. Just two weeks into the new year, the S&P 500 is down 8%, which is substantial, but not as big as the tech-heavy Nasdaq Composite’s 10%-plus drop.   While tech weakness is widespread, one of the most vulnerable stocks is extreme action camera company GoPro (Nasdaq: GPRO). [Note: The weakness in tech has put solid companies on sale, including two major firms that made our list of the Top 10 Trades for 2016. You have until 11:59 p.m. on Thursday,… Read More

Tech stocks often lead the market down, and the current decline is no exception. Just two weeks into the new year, the S&P 500 is down 8%, which is substantial, but not as big as the tech-heavy Nasdaq Composite’s 10%-plus drop.   While tech weakness is widespread, one of the most vulnerable stocks is extreme action camera company GoPro (Nasdaq: GPRO). [Note: The weakness in tech has put solid companies on sale, including two major firms that made our list of the Top 10 Trades for 2016. You have until 11:59 p.m. on Thursday, Jan. 21 to access the report. Click here.] Shares of GoPro are down 36% in 2016 and now trade for less than half their $24 IPO price. The latest blow to the stock came when the company announced ugly preliminary results for the fourth quarter last week. #-ad_banner-# Management said they expect revenue to be just $435 million. That would represent a 31% year-over-year decline and is significantly below the $521 million expected by analysts and the $500 million to $550 million GoPro had itself projected.  In response, the company laid off 7% of… Read More

It can be difficult to wrap our heads around the reasons why a diverse market index is bullish or bearish. Often times, the index is nothing more than a mathematical derivation from a disparate set of inputs. Think about an industry group such as “specialty retail,” for example. It is more of a bin for the unclassifiable than anything else. That is the feeling I get in the real estate investment trust (REIT) sector. After all, there is not much similarity among hospitals, storage facilities and apartment buildings beyond the common denominator that real estate is… Read More

It can be difficult to wrap our heads around the reasons why a diverse market index is bullish or bearish. Often times, the index is nothing more than a mathematical derivation from a disparate set of inputs. Think about an industry group such as “specialty retail,” for example. It is more of a bin for the unclassifiable than anything else. That is the feeling I get in the real estate investment trust (REIT) sector. After all, there is not much similarity among hospitals, storage facilities and apartment buildings beyond the common denominator that real estate is involved. From a technical point of view, however, a bottom-up analysis suggests the sector as a whole is in trouble. Basically, if enough component REIT stocks look ready to fall then the index must follow suit. At first glance, the iShares US Real Estate (NYSE: IYR) looks as if it is clinging to a short-term trendline breakout. The problem is that no matter how the chart is presented, the long-term picture shows a trendline breakdown. It does not make a difference beyond nuance if we use a linearly or logarithmically… Read More