The major U.S. stock indices finished last week fractionally lower despite very strong housing data, as anxiety over a potential debt default in Greece this week undoubtedly triggered some defensive liquidation heading into the weekend. Despite the day-to-day volatility that has kept investors on edge for months, the S&P 500 is only up 2.1% for the year. #-ad_banner-# The week’s strongest and weakest sectors were both influenced by the recent rise in long-term U.S. interest rates. Financials put in the best showing, as increasing rates and a widening yield curve both make banks more profitable. Moreover, Asbury Research’s own ETF-based… Read More

The major U.S. stock indices finished last week fractionally lower despite very strong housing data, as anxiety over a potential debt default in Greece this week undoubtedly triggered some defensive liquidation heading into the weekend. Despite the day-to-day volatility that has kept investors on edge for months, the S&P 500 is only up 2.1% for the year. #-ad_banner-# The week’s strongest and weakest sectors were both influenced by the recent rise in long-term U.S. interest rates. Financials put in the best showing, as increasing rates and a widening yield curve both make banks more profitable. Moreover, Asbury Research’s own ETF-based metric shows that, on a percentage basis, the biggest inflow of sector bet-related investor assets over the past one-month and three-month periods again went into financials. This trend has fueled the sector’s outperformance. Utilities were the weakest sector, as rising yields in risk-free Treasuries continued to lure yield-seeking investor assets away from utility stocks. Stocks’ Pinball Game Poised To Continue This Week  In the June 15 Market Outlook, I pointed out that the bellwether S&P 500 was testing minor support at 2,072 amid near-term oversold conditions. I said this level should become the springboard for… Read More

One of my favorite types of stocks is those that have recently hit new all-time highs. That’s because with no overhead resistance in their path there is nothing to stop them from moving even higher from a technical perspective. And when that stock has an upbeat fundamental outlook to support the strong technical picture, I know I have likely found a winner. That’s why I’m enthusiastic about Dollar General (NYSE: DG), the largest U.S. discount retailer by store count. The stock is in a powerful uptrend, making new high after new high this year. A quick note before we get… Read More

One of my favorite types of stocks is those that have recently hit new all-time highs. That’s because with no overhead resistance in their path there is nothing to stop them from moving even higher from a technical perspective. And when that stock has an upbeat fundamental outlook to support the strong technical picture, I know I have likely found a winner. That’s why I’m enthusiastic about Dollar General (NYSE: DG), the largest U.S. discount retailer by store count. The stock is in a powerful uptrend, making new high after new high this year. A quick note before we get to the trade: Many investors are reluctant to buy stocks near 52-week highs, regardless of any positive news or information about the company. This is due to “buy low, sell high” conditioning. Yet, there is proven reason why this is a huge mistake. If you’re serious about momentum investing, there is a presentation I think you should see. #-ad_banner-# Dollar General — which sells everything from A to Z (apparel to Ziplock bags) — has over 12,000… Read More

European stock markets have come under heavy pressure over the slow-motion train wreck of Greece’s potential default. All of the major European indices have dropped below their 50-day moving averages. The markets in France, Spain, Austria and Germany became so weak that they touched long-term support of their 200-day moving averages. This pressure from across the pond weighed on U.S. markets with the S&P 500 briefly slipping below its 50-day moving average twice in the past two weeks. Yet while things here at home looked wobbly, they didn’t break down. On Thursday, the S&P 500 saw a bullish… Read More

European stock markets have come under heavy pressure over the slow-motion train wreck of Greece’s potential default. All of the major European indices have dropped below their 50-day moving averages. The markets in France, Spain, Austria and Germany became so weak that they touched long-term support of their 200-day moving averages. This pressure from across the pond weighed on U.S. markets with the S&P 500 briefly slipping below its 50-day moving average twice in the past two weeks. Yet while things here at home looked wobbly, they didn’t break down. On Thursday, the S&P 500 saw a bullish break above a resistance line on heavy volume. On the chart I’ve also marked an important support level going back to April that has stopped four declines. On the same day, the Nasdaq followed suit with an even sharper rally to a new high on heavy volume in what is known as a “follow-through day.” Coined by William O’Neill of Investor’s Business Daily, it is a sign of a new intermediate-term uptrend.  #-ad_banner-# While not every follow-though day has led to a sustained rally — no indicator is perfect — no rally of significance has… Read More

Note from the Publisher: As a valued StreetAuthority reader, I’d like to cordially invite you to a special event.Two of StreetAuthority’s leading analysts sat down for a one-on-one interview about three epic market trends Wall Street is completely missing. This free 30-minute online conference will touch on 1) why inside information points to an epic commodities rebound, 2) what China is hiding from U.S. investors and 3) the next big tech revolution that will rival smartphones… as well as which stocks have the potential to soar from these events. Registration spots are going quickly for our June 23 broadcast. To… Read More

Note from the Publisher: As a valued StreetAuthority reader, I’d like to cordially invite you to a special event.Two of StreetAuthority’s leading analysts sat down for a one-on-one interview about three epic market trends Wall Street is completely missing. This free 30-minute online conference will touch on 1) why inside information points to an epic commodities rebound, 2) what China is hiding from U.S. investors and 3) the next big tech revolution that will rival smartphones… as well as which stocks have the potential to soar from these events. Registration spots are going quickly for our June 23 broadcast. To sign up, click here right now. ____________________________________ The U.S. stock market finished modestly higher last week as the tech-heavy Nasdaq Composite and small-cap Russell 2000 set new all-time highs. The bellwether S&P 500 and Dow Jones Industrial Average moved back to the upper end of their recent ranges.   #-ad_banner-# Although last week’s new highs by market-leading technology and small-cap stocks are certainly encouraging, almost halfway through 2015 the broad market S&P 500 is only up 2.5%. Critical resistance just above the market and underlying support just below it continue to get closer and closer… Read More

“You can’t time the market.” It’s one of the most often-repeated investment phrases. And it’s wrong. History has shown that a simple ratio delivers impressive market gains. In fact, it appears when most investors have little desire to buy stocks. Let me explain. Every week, the American Association of Individual Investors (AAII) asks its members to answer one simple question in an online survey: Regarding the future direction of the stock market, are you bullish, bearish or neutral? Over the long haul, investors feel bullish about 39% of the time, and at times of maximum optimism, more than… Read More

“You can’t time the market.” It’s one of the most often-repeated investment phrases. And it’s wrong. History has shown that a simple ratio delivers impressive market gains. In fact, it appears when most investors have little desire to buy stocks. Let me explain. Every week, the American Association of Individual Investors (AAII) asks its members to answer one simple question in an online survey: Regarding the future direction of the stock market, are you bullish, bearish or neutral? Over the long haul, investors feel bullish about 39% of the time, and at times of maximum optimism, more than half of respondents will answer with a bullish response.  #-ad_banner-#Yet at rare pressure points in the market, what Sir John Templeton once cited as “the point of maximum pessimism,” the entire crowd can turn bearish. Indeed at various points over the past three decades, the vast majority of respondents in the AAII survey express extreme bearishness. Presumably, such investors are selling stocks at these times and moving to cash.  And that has proven to be a big mistake. I’ve tallied the market performance whenever the crowd turns bearish, and on almost every occasion the market has gone on to post… Read More

When it comes to stock markets, China’s sure marches to the beat of its own drum.  The Shanghai Composite gained 145% in the past year, compared to about 7% for the S&P 500. Now, though, things may be unraveling in China — and given what happened there just a few years ago, it is not likely to be pretty. In the chart below, we can see the recent nearly vertical rise in the Chinese market after a slow, multiyear drift lower.  The same thing happened at the start of this century. It was as if sellers… Read More

When it comes to stock markets, China’s sure marches to the beat of its own drum.  The Shanghai Composite gained 145% in the past year, compared to about 7% for the S&P 500. Now, though, things may be unraveling in China — and given what happened there just a few years ago, it is not likely to be pretty. In the chart below, we can see the recent nearly vertical rise in the Chinese market after a slow, multiyear drift lower.  The same thing happened at the start of this century. It was as if sellers just gave up and buyers pushed valuations to impossible levels. Chinese stocks peaked in 2007 and then fell off a cliff when the magic of the Chinese economy faded, taking commodity markets down with them.  Experience shows that when a market trend continually accelerates, affectionately called “going parabolic,” the gain is often mirrored by the decline on the other side. Most of the time, the accelerated rally is erased completely.  If that happens again now, the resulting decline could be on the order of 55% to 60% from current levels — devastating by any definition.  Domestic investors cannot easily short… Read More

As Chief Investment Strategist of Profitable Trading’s Alpha Trader service, I’ve noticed a clear trend emerging over the past few weeks. When I ran my algorithms to screen the market for our next big winners, two things leapt out at me — and both are bullish signs.  First, the number of stocks I’ve been recommending to subscribers is running at twice its “normal” rate.  #-ad_banner-# Second, which I’m going to discuss today, my watch list of potential future entries has exploded. In fact, this is the largest my list has been… Read More

As Chief Investment Strategist of Profitable Trading’s Alpha Trader service, I’ve noticed a clear trend emerging over the past few weeks. When I ran my algorithms to screen the market for our next big winners, two things leapt out at me — and both are bullish signs.  First, the number of stocks I’ve been recommending to subscribers is running at twice its “normal” rate.  #-ad_banner-# Second, which I’m going to discuss today, my watch list of potential future entries has exploded. In fact, this is the largest my list has been in the past six months. My watch list is a group of stocks that meet Alpha Trader‘s stringent initial qualifications and are nearing — but not quite at — a buy recommendation.  All stocks considered for Alpha Trader must have an Alpha Score of 140 or more out of a possible 200. You may have heard us discuss the Alpha Score before, which is based on two proven indicators — one technical and one fundamental.  Both of these critical factors have a plethora of studies supporting their success in helping select winning investments. The technical component… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went viral and brought millions of people to the Southwest site to look at tickets. Overwhelmed by traffic, the website crashed. It was not functioning properly for nearly a day and a half, leaving thousands unable to book travel online, and phone lines were busy as well. #-ad_banner-# Southwest extended the sale in the hopes of capturing additional business, but in the end this blunder was a huge positive catalyst that got shot down. More selling hit airlines when American Airlines (NASDAQ: AAL) lowered its second-quarter outlook this week. Meanwhile, Southwest CEO Gary Kelly… Read More

Major U.S. indices were essentially unchanged in a week that featured a lot of day-to-day volatility but not much directional movement. When markets move in a sideways range, as the U.S. stock market has been doing since February, it indicates temporary investor indecision.  #-ad_banner-#These periods of indecision almost always lead to the next meaningful directional move, which is precisely where the market finds itself heading into this week. The big question is: “Which way from here?” That is the focus of this week’s report. At the sector level, financials and consumer staples were last week’s best performers. The recent strength… Read More

Major U.S. indices were essentially unchanged in a week that featured a lot of day-to-day volatility but not much directional movement. When markets move in a sideways range, as the U.S. stock market has been doing since February, it indicates temporary investor indecision.  #-ad_banner-#These periods of indecision almost always lead to the next meaningful directional move, which is precisely where the market finds itself heading into this week. The big question is: “Which way from here?” That is the focus of this week’s report. At the sector level, financials and consumer staples were last week’s best performers. The recent strength in financials, which are up 1.9% in the past month, has been driven by the spike in long-term U.S. interest rates amid a steepening yield curve. Both of these factors will help make banks more profitable.   The weakest sector last week was energy, which lost 0.9% and is down 4.5% over the past month. This has been driven by a strong outflow of investor assets, according to Asbury Research’s own metric, as shown in the table below. The biggest inflow of investor assets over the past one-week and one-month periods went into the financial sector. Stocks Need… Read More

It’s not often that a stock suffers technical destruction and repairs itself in just a few weeks. But that is what seems to be happening to professional social media site LinkedIn (NASDAQ: LNKD). And the way it has performed recently suggests it has plenty of gas in the tank. On April 30, the company issued a warning that Q2 revenue and earnings would fall short of expectations. The next day the stock cratered 19% to smash through its one-year trendline and 200-day moving average on huge volume, which is often the case when a stock purges. The question… Read More

It’s not often that a stock suffers technical destruction and repairs itself in just a few weeks. But that is what seems to be happening to professional social media site LinkedIn (NASDAQ: LNKD). And the way it has performed recently suggests it has plenty of gas in the tank. On April 30, the company issued a warning that Q2 revenue and earnings would fall short of expectations. The next day the stock cratered 19% to smash through its one-year trendline and 200-day moving average on huge volume, which is often the case when a stock purges. The question on many investors’ minds is, “Is LNKD now on sale?” In my experience, a stock that makes such a huge break is damaged goods and not a bargain. It can take weeks, months and in some cases years for the market to forgive the company’s transgressions. And that manifests in the charts as a long trading range with little action and low turnover. #-ad_banner-# Basically, the trading range allows both bulls and bears to rethink their strategies. Many traders move on to other stocks because there is nothing happening in the fallen. But when interest is low… Read More