It has been a long time since banks were among the market’s leading groups. And while the broad market is trading near all-time highs, the SPDR S&P Bank ETF (NYSE: KBE), which tracks regional banks, has barely recovered half of what it lost during the financial crisis. It is truly a forsaken group. Or at least it was.  For the first time in a year, the relative performance of banks versus the S&P 500 has turned positive. And on an absolute basis, KBE is on the verge of a major upside breakout from a sideways pattern that has… Read More

It has been a long time since banks were among the market’s leading groups. And while the broad market is trading near all-time highs, the SPDR S&P Bank ETF (NYSE: KBE), which tracks regional banks, has barely recovered half of what it lost during the financial crisis. It is truly a forsaken group. Or at least it was.  For the first time in a year, the relative performance of banks versus the S&P 500 has turned positive. And on an absolute basis, KBE is on the verge of a major upside breakout from a sideways pattern that has trapped it since late 2013. Breakouts in both relative and absolute terms signify a positive shift for any sector and tell us that the group is now one of the strongest in a rising market. Most investment pros would tell us that finding the strongest sectors is the best starting point for selecting the best stocks to buy.  To be sure, the market as a whole is still working out some issues and has yet to make a clean break to the next level. But the bias in the overall market is still to the upside, and so is the… Read More

The roaring 1990s brought a new phrase to the investing lexicon: “market melt-up.” It is described by some as a “buy first, ask questions later” mentality, as legions of investors piggyback on a winning trade. Yet such melt-ups invariably end badly. Once some investors start to book profits, a cascade effect takes place, where selling begets further selling. We surely saw that in evidence at the start of the past decade. From peak to trough, the Nasdaq composite index fell a stunning 78.4% from 2000 to 2002. #-ad_banner-#U.S. investors were so badly burned by that event that there is still… Read More

The roaring 1990s brought a new phrase to the investing lexicon: “market melt-up.” It is described by some as a “buy first, ask questions later” mentality, as legions of investors piggyback on a winning trade. Yet such melt-ups invariably end badly. Once some investors start to book profits, a cascade effect takes place, where selling begets further selling. We surely saw that in evidence at the start of the past decade. From peak to trough, the Nasdaq composite index fell a stunning 78.4% from 2000 to 2002. #-ad_banner-#U.S. investors were so badly burned by that event that there is still a lingering distrust of stocks. And that’s a good thing. Such caution likely means we’ll stop ourselves before collectively creating another market melt-up. Unfortunately, investors in China can’t draw from past experience and are setting themselves up for the same bit of misery. Chinese stocks rose at a measured pace in 2014, but have been absolutely on fire in the past few months. These investors have been buying shares with abandon, even in the face of an increasingly apparent economic slowdown. They aren’t conducting rigorous investment analysis, but are instead simply chasing success. The economic backdrop in China… Read More

Four times a year, companies report their financial results and investors score their performance in real time with real money. Those that impress can see shares soar, while those that disappoint may suffer losses and even gap down through investors’ protective sell stops. Bottom line: Earnings season is the most volatile scheduled time of the year for stocks — and traders’ portfolios. As the chief investment strategist for Profitable Trading’s Alpha Trader, it’s my job to steer the ship for my subscribers. Today, I’m going to discuss my objectives for earnings… Read More

Four times a year, companies report their financial results and investors score their performance in real time with real money. Those that impress can see shares soar, while those that disappoint may suffer losses and even gap down through investors’ protective sell stops. Bottom line: Earnings season is the most volatile scheduled time of the year for stocks — and traders’ portfolios. As the chief investment strategist for Profitable Trading’s Alpha Trader, it’s my job to steer the ship for my subscribers. Today, I’m going to discuss my objectives for earnings season and how I manage entry risk for my readers, because many of these are ideas you can apply to your personal portfolio as well. #-ad_banner-# My primary objective is to conservatively manage the downside volatility or risk of new entries during earnings season. Paul Tudor Jones, one of the greatest hedge fund managers of all time, once said, “Risk control is the most important thing in trading.” He has also said, “Don’t focus on making money, focus on… Read More

Normally this kind of information is kept secret. But due to regulatory requirements for its initial public offering (IPO), this company was forced to reveal the shocking wall street biggest scam. From 2009 to 2013, a secretive high-frequency trading firm named Virtu managed to only have one losing day. In 2014 it notched a perfect record. On its worst day, the firm was making between $800,000 and $1 million a day. It may sound too good to be true. But there it is, laid out in Virtu Financial’s… Read More

Normally this kind of information is kept secret. But due to regulatory requirements for its initial public offering (IPO), this company was forced to reveal the shocking wall street biggest scam. From 2009 to 2013, a secretive high-frequency trading firm named Virtu managed to only have one losing day. In 2014 it notched a perfect record. On its worst day, the firm was making between $800,000 and $1 million a day. It may sound too good to be true. But there it is, laid out in Virtu Financial’s IPO prospectus for any and everyone to see. But Virtu isn’t alone. J.P. Morgan didn’t have a single losing day in 2013. Bank of America notched a perfect performance of its own in the first quarter of 2013. Clearly, Wall Street trades and invests its own money differently than the traditional buy-and-hold strategy its clients typically use. I’ll let you in on one of Wall Street’s best-kept secrets: selling put options. Does that sound scary? Intimidating? If it does, there’s a very good reason for… Read More

As the S&P 500 clings to its all-time high and investors wonder if its 21 times earnings multiple is a little pricey, one market makes it look like a bargain-basement deal. This stock market is trading for a staggering 44 times trailing earnings and has more than doubled in the past year. What’s even more perplexing is that stocks keep making fresh highs even as fundamentals continue to deteriorate. The government has taken notice though, and may soon remove the punch bowl from the party. It may not be long before a correction turns into a full-blown market… Read More

As the S&P 500 clings to its all-time high and investors wonder if its 21 times earnings multiple is a little pricey, one market makes it look like a bargain-basement deal. This stock market is trading for a staggering 44 times trailing earnings and has more than doubled in the past year. What’s even more perplexing is that stocks keep making fresh highs even as fundamentals continue to deteriorate. The government has taken notice though, and may soon remove the punch bowl from the party. It may not be long before a correction turns into a full-blown market crisis. How Quickly Sentiment Can Turn Anyone invested in the Chinese market over the past decade knows how important sentiment is to prices. After a meteoric rise and subsequent crash during the global financial crisis, things seemed to improve quickly as the Shanghai Composite recovered off its late 2008 lows.  Hopes that stock prices would surge again as the world’s second largest economy became a global powerhouse were dashed as the Shanghai Composite lost close to 40% in the five years following its 2009 high.  But then, as the government sought to cool overheating in the property market, investors found… Read More

All major U.S. indices closed in the red last week, continuing their recent pattern of see-sawing between positive and negative weekly closes. With the exception of the tech-heavy Nasdaq, they remain essentially unchanged for 2015.   It is noteworthy that the weakest of the major indices last week were the small-cap Russell 2000 and Nasdaq 100, which lost 3.1% and 1.3%, respectively. These two market leaders are the very indices that must remain strong to keep the broader market afloat this summer. If they don’t, it is likely that we will see our first real stock… Read More

All major U.S. indices closed in the red last week, continuing their recent pattern of see-sawing between positive and negative weekly closes. With the exception of the tech-heavy Nasdaq, they remain essentially unchanged for 2015.   It is noteworthy that the weakest of the major indices last week were the small-cap Russell 2000 and Nasdaq 100, which lost 3.1% and 1.3%, respectively. These two market leaders are the very indices that must remain strong to keep the broader market afloat this summer. If they don’t, it is likely that we will see our first real stock market correction since the quantitative easing era began years ago. Materials, up 2%, and energy, up 1.1%, were the strongest sectors last week. The two weakest sectors were health care, down 2.3%, and consumer discretionary, which lost 1.7%. #-ad_banner-# In the March 23 Market Outlook, I told readers it was time to protect profits on bullish positions in the consumer discretionary sector, as it had outperformed the S&P 500 by 6% since I identified it as an investment opportunity in… Read More

Landing a triple-digit winner is like hitting a hole-in-one. It doesn’t happen often, but it’s just as satisfying each time it happens. However, there’s an often overlooked subsection of the market that can lead to these types of gains — but you have to understand where to look, what to look for and the dangers involved. #-ad_banner-#When shares of data storage firm OCZ Technology Group, Inc. (Nasdaq: OCZ) slipped below $2 back in 2012, short sellers began to circle like sharks. The company was burning through cash at an unsustainable rate, and at the time, I noted that OCZ had… Read More

Landing a triple-digit winner is like hitting a hole-in-one. It doesn’t happen often, but it’s just as satisfying each time it happens. However, there’s an often overlooked subsection of the market that can lead to these types of gains — but you have to understand where to look, what to look for and the dangers involved. #-ad_banner-#When shares of data storage firm OCZ Technology Group, Inc. (Nasdaq: OCZ) slipped below $2 back in 2012, short sellers began to circle like sharks. The company was burning through cash at an unsustainable rate, and at the time, I noted that OCZ had “a very short window to stop the bleeding.” By late 2013, the company declared bankruptcy. Simply put, whenever you see a stock slip below the $3 mark, you may want to take a quick look at the balance sheet and cash flow statement. Falling levels of cash and persistently negative cash flow can often put a company out of business. So, what are the best companies to invest in the stock market? When I looked at biofuels provider Gevo, Inc. (Nasdaq: GEVO) back in 2012, I wrote that the company required serial capital infusions to stay afloat. At the time,… Read More

Note: Stay tuned at the end of this article for a bonus trade you can make immediately to turn a 16% stock move into 62% gains in the next eight and a half months. And if you’d like to receive more profit amplifying trades each week, you can sign up here. I’ll admit it. I’m an online video addict. I watch video highlights of virtually every Calgary Flames hockey game and hang on every word of Coach Bob Hartley’s taped post-game interviews on my computer. When I’m out, I watch live game footage on my iPhone. Read More

Note: Stay tuned at the end of this article for a bonus trade you can make immediately to turn a 16% stock move into 62% gains in the next eight and a half months. And if you’d like to receive more profit amplifying trades each week, you can sign up here. I’ll admit it. I’m an online video addict. I watch video highlights of virtually every Calgary Flames hockey game and hang on every word of Coach Bob Hartley’s taped post-game interviews on my computer. When I’m out, I watch live game footage on my iPhone. Back home, before I go bed, I check Yahoo and CNBC for market analysis. When I’ve caught up on stocks, I turn to geopolitical events. My appetite for video is diverse and omnivorous. Moreover, I’m far from alone, and that creates a trading opportunity. #-ad_banner-#One of the best ways to profit from the explosion in online video is Level 3 Communications (NYSE: LVLT).  The company provides one of the largest international Internet backbones and is instrumental in transmitting data, video and voice across the world. It operates in over 500 markets across 60 countries. Read More

I love earnings season. The tug-of-war between earnings beats and disappointments can set the stage for some serious profits on option trades.  I’ve used earnings announcements to make 40% in three weeks on Tesla Motors (Nasdaq: TSLA), 65% from Amazon (Nasdaq: AMZN) in 18 days and even 50% in Burlington Stores (NYSE: BURL) in just four days. Just this Wednesday, I told my readers about a limited-time opportunity in Southwest Airlines (NYSE: LUV). Most of you are probably familiar with Southwest, which has built a brand for itself as a low-cost airline. Today, it’s the largest domestic carrier in the… Read More

I love earnings season. The tug-of-war between earnings beats and disappointments can set the stage for some serious profits on option trades.  I’ve used earnings announcements to make 40% in three weeks on Tesla Motors (Nasdaq: TSLA), 65% from Amazon (Nasdaq: AMZN) in 18 days and even 50% in Burlington Stores (NYSE: BURL) in just four days. Just this Wednesday, I told my readers about a limited-time opportunity in Southwest Airlines (NYSE: LUV). Most of you are probably familiar with Southwest, which has built a brand for itself as a low-cost airline. Today, it’s the largest domestic carrier in the United States, based on number of passengers flown. The company was set to report earnings before the open last Thursday, but despite a strong track record of earnings beats, shares were down more than 3.5% for the month.  In fact, over the previous four quarters, the company had beaten expectations by an average of 10%. Better yet, in the week each of these earnings releases was announced, shares rose an average of 8%. We saw the biggest jump in January, with LUV rising 16% the week of fourth-quarter earnings on a surprise boost from lower fuel… Read More

Four years after it topped at $1,900 per ounce, gold has been languishing in a range closer to $1,200. With interest rates low and most measures registering no inflation, gold seemed to be a dead asset. Its role as a hedge was dismissed by almost everyone except for the gold sellers on TV. Sentiment naturally turned very bearish, and that is when contrarian ears perk up. #-ad_banner-# Monday and Tuesday were unusually bullish days for… Read More

Four years after it topped at $1,900 per ounce, gold has been languishing in a range closer to $1,200. With interest rates low and most measures registering no inflation, gold seemed to be a dead asset. Its role as a hedge was dismissed by almost everyone except for the gold sellers on TV. Sentiment naturally turned very bearish, and that is when contrarian ears perk up. #-ad_banner-# Monday and Tuesday were unusually bullish days for the metal. However, the patterns on gold charts remain choppy-but-flat trading ranges. When viewed with a long-term eye, the trend is officially still to the downside.  That is why it seems people have gotten blindsided by recent strength in select gold mining stocks, especially since it is not sector-wide. Only the largest by market capitalization are racking up big gains, far outstripping the performance of popular gold mining indices and exchange-traded funds.  My favorite right now is Barrick Gold (NYSE: ABX). This Toronto-based, international miner looks ready to break out from a double-bottom pattern that has been… Read More