While insider activity is often a helpful guide in the decision to buy or sell, it certainly shouldn’t be considered gospel. Just because the CEO or other key insiders are buying or selling their firm’s stock doesn’t necessarily mean you should. For instance, investors could be making a huge mistake by following insiders out of the stock of one of the world’s most successful discounters. In October, key insiders at this firm sold nearly $11 million of the company’s stock. But don’t take that as a bearish sign for Costco Wholesale Corp. (Nasdaq:… Read More

While insider activity is often a helpful guide in the decision to buy or sell, it certainly shouldn’t be considered gospel. Just because the CEO or other key insiders are buying or selling their firm’s stock doesn’t necessarily mean you should. For instance, investors could be making a huge mistake by following insiders out of the stock of one of the world’s most successful discounters. In October, key insiders at this firm sold nearly $11 million of the company’s stock. But don’t take that as a bearish sign for Costco Wholesale Corp. (Nasdaq: COST). My interpretation is insiders are simply taking some profits because Costco has done so well, rising around 13% year-to-date and more than 130% during the past five years. Insiders certainly aren’t abandoning the stock, not by a long shot. Overall, they still hold more than 2.2 million shares worth almost $300 million, and as a group they’ve actually increased their ownership a bit during the past 12 months. Indeed, there are plenty of reasons to remain bullish on Costco over the long-term, like very solid revenue growth despite the firm being on… Read More

Shares of online travel company Priceline Group (NASDAQ: PCLN) fell sharply on Tuesday, down 8.4% after the company reported better-than-expected third-quarter revenue and earnings but disappointed investors with its outlook.  Sales jumped 25% year over year in Q3 to $2.84 billion, beating analysts’ estimates for $2.83 billion. Adjusted earnings of $22.16 a share came in 28% higher than a year ago, easily topping expectations of $21.07. #-ad_banner-#​But the stock took a beating on the company’s guidance for the fourth quarter. Management forecasted 11% to 18% top-line growth and earnings of $9.40 to $10.10 a share excluding items. Analysts… Read More

Shares of online travel company Priceline Group (NASDAQ: PCLN) fell sharply on Tuesday, down 8.4% after the company reported better-than-expected third-quarter revenue and earnings but disappointed investors with its outlook.  Sales jumped 25% year over year in Q3 to $2.84 billion, beating analysts’ estimates for $2.83 billion. Adjusted earnings of $22.16 a share came in 28% higher than a year ago, easily topping expectations of $21.07. #-ad_banner-#​But the stock took a beating on the company’s guidance for the fourth quarter. Management forecasted 11% to 18% top-line growth and earnings of $9.40 to $10.10 a share excluding items. Analysts were expecting a much more robust 24% revenue increase and a $10.91 per-share profit. Priceline blamed the deterioration in European exchange rates, which it said is “indicative of weakening economic conditions in key markets.” On the charts, PCLN reversed down exactly where it should have from a technical perspective, and it now looks set to continue lower. Tuesday’s gap down puts the wind at short sellers’ backs, and further selling should provide quick profits. Because of the sharp rally in 2013, I am using a weekly logarithmic chart to smooth out the price action over the years. Looking at the… Read More

The restaurant sector has its share of winners and losers, often decided by changing diner whims. It may take an army of demographic experts to find the next big thing, but the stock market offers its own clues. And the chart of Noodles & Company (NASDAQ: NDLS) suggests it is ready to move. Noodles & Company is a casual restaurant chain focusing on noodle and pasta dishes from around the world from Pad Thai to mac and cheese.  The stock now looks ready to burst higher from its technical chart pattern. NDLS came public in… Read More

The restaurant sector has its share of winners and losers, often decided by changing diner whims. It may take an army of demographic experts to find the next big thing, but the stock market offers its own clues. And the chart of Noodles & Company (NASDAQ: NDLS) suggests it is ready to move. Noodles & Company is a casual restaurant chain focusing on noodle and pasta dishes from around the world from Pad Thai to mac and cheese.  The stock now looks ready to burst higher from its technical chart pattern. NDLS came public in June 2013, at $18 a share, and more than doubled on its first day of trading. Two days later, it topped out just under $52. Since then, the stock suffered a torturous decline, falling to a low of $17.15 two months ago, punctuated by a huge drop in August on an earnings miss. But trading has been looking up for several weeks with shares advancing to their current price above $22. #-ad_banner-#Even better, the pattern formed since August is an inverted or upside down head-and-shoulders. This pattern is marked by a set of lows surrounding a lower, and… Read More

Social media giant Twitter (NYSE: TWTR) cratered 10% Tuesday despite reporting that revenue more than doubled in the third quarter. Investors were much more concerned with its slowing user growth. TWTR is a stock that respects its technical parameters, making it ideal for swing traders. Now that earnings are in, there looks to be an opportunity to make quick profits on the short side.  #-ad_banner-#Revenue of $361 million for the quarter beat analysts’ estimates for $351.5 million. Adjusted earnings per share of $0.01 met expectations, and the company raised its guidance for the full year. But all investors seemed to… Read More

Social media giant Twitter (NYSE: TWTR) cratered 10% Tuesday despite reporting that revenue more than doubled in the third quarter. Investors were much more concerned with its slowing user growth. TWTR is a stock that respects its technical parameters, making it ideal for swing traders. Now that earnings are in, there looks to be an opportunity to make quick profits on the short side.  #-ad_banner-#Revenue of $361 million for the quarter beat analysts’ estimates for $351.5 million. Adjusted earnings per share of $0.01 met expectations, and the company raised its guidance for the full year. But all investors seemed to focus on was user growth. The company added 13 million monthly active users in the quarter, bringing the total to 284 million. This represented a 4.8% year-over-year increase, but was slower than the 6.3% growth seen in the second quarter. Twitter’s most direct competitor, Facebook (NASDAQ: FB), also got punished this week after reporting better-than-expected revenue and earnings but issuing a disappointing outlook. The fact that both social media stocks gapped down after earnings is noteworthy and portends more weakness in the group.  I don’t advise trading high-momentum stocks like Twitter or Facebook ahead of earnings precisely because of such gaps. Read More

For short sellers, October 22, 2014 may have marked a key turning point: Shares of Lumber Liquidators Holdings, Inc. (NYSE: LL), 3D Systems Corp. (NYSE: DDD) and Cree, Inc. (Nasdaq: CREE), all of which were heavily shorted, fell roughly 10% on the heels of disappointing quarterly results. These stocks had been falling far from their 52-week highs in recent months, and the sharp plunge on October 22 was just icing on the cake for short sellers. #-ad_banner-#Short sellers are now wondering if it’s safe to boost their positions in other stocks on their radar. In the past five years, the rising… Read More

For short sellers, October 22, 2014 may have marked a key turning point: Shares of Lumber Liquidators Holdings, Inc. (NYSE: LL), 3D Systems Corp. (NYSE: DDD) and Cree, Inc. (Nasdaq: CREE), all of which were heavily shorted, fell roughly 10% on the heels of disappointing quarterly results. These stocks had been falling far from their 52-week highs in recent months, and the sharp plunge on October 22 was just icing on the cake for short sellers. #-ad_banner-#Short sellers are now wondering if it’s safe to boost their positions in other stocks on their radar. In the past five years, the rising market managed to lift all boats, creating real pain for short sellers. The times are changing. The broader stock market may move up or down from current levels — nobody can say with certainty. The market is becoming more discriminating, and investors can no longer count on bad news being spun in a positive light. Case in point: Both Amazon.com, Inc. (Nasdaq: AMZN) and Netflix, Inc. (Nasdaq: NFLX) delivered uninspiring quarters and they subsequently plunged in value. These types of stocks had been given a free pass in the past, because short sellers were afraid to bet against them. Now… Read More

As the market has so rudely demonstrated recently, it can put the screws to investors at a moment’s notice. But that hasn’t stopped some big-name stocks from rocketing to new heights. One of the latest examples occurred on October 14. That day, while stock market indices seesawed violently, shares of a well-known restaurant chain jumped more than 11%. The move took the stock to $84.30 — at that point an all-time high, though the price has since moved a bit higher. The company pleased the Street yet again in Q3, reporting an 18.8% year-over-year gain in profits and earnings per… Read More

As the market has so rudely demonstrated recently, it can put the screws to investors at a moment’s notice. But that hasn’t stopped some big-name stocks from rocketing to new heights. One of the latest examples occurred on October 14. That day, while stock market indices seesawed violently, shares of a well-known restaurant chain jumped more than 11%. The move took the stock to $84.30 — at that point an all-time high, though the price has since moved a bit higher. The company pleased the Street yet again in Q3, reporting an 18.8% year-over-year gain in profits and earnings per share (EPS) of $0.63, besting analyst expectations of $0.61. Revenues were up 10.5% year-over-year to about $447 million, surpassing consensus estimates for sales of $436 million. What’s more, Q3 marked the fourth-straight quarter in which the company met or beat earnings projections. Since the bottom line typically drives stock prices, shares of the company have been doing very well, climbing about 23% so far this year, compared with barely a 3% gain for the S&P 500. And this has been the pattern for a while. Since 2010, Domino’s Pizza, Inc. (NYSE: DPZ) grew per-share profits 92%, from $1.45… Read More

A year ago, Profitable Trading developed a new indicator based on momentum. Using this indicator, we’ve been able to identify, and recommend to readers, some of 2014’s biggest winners. For example: — Hi-Crush Partners LP (NYSE: HCLP), 66.1% gain — ANI Pharmaceuticals (Nasdaq: ANIP), 114.1% gain — Bitauto Holdings (NYSE: BITA), 242.2% gain — Amkor Technology (Nasdaq: AMKR), 57.7% gain We locked in all of these gains in less than a year. But as you can see, these stocks don’t have much in common. Bitauto Holdings, for example, is a billion-dollar Chinese company focused on providing Internet… Read More

A year ago, Profitable Trading developed a new indicator based on momentum. Using this indicator, we’ve been able to identify, and recommend to readers, some of 2014’s biggest winners. For example: — Hi-Crush Partners LP (NYSE: HCLP), 66.1% gain — ANI Pharmaceuticals (Nasdaq: ANIP), 114.1% gain — Bitauto Holdings (NYSE: BITA), 242.2% gain — Amkor Technology (Nasdaq: AMKR), 57.7% gain We locked in all of these gains in less than a year. But as you can see, these stocks don’t have much in common. Bitauto Holdings, for example, is a billion-dollar Chinese company focused on providing Internet content for the auto industry. ANI Pharmaceuticals develops branded and generic drugs. And Hi-Crush produces a specialized mineral used to increase oil production. #-ad_banner-#Yet they were all identified by the same indicator before they went on to deliver huge gains. It’s a unique indicator that doesn’t rely on just one technical or fundamental tool to identify potential winners. Instead, this indicator is derived by combining two of the market’s most effective “triggers” — a technical trigger and a fundamental trigger. The technical indicator, or “Trigger #1,” has been proven to beat the market by traders and academics alike. You might… Read More

The small-cap Russell 2000 is officially in a correction, falling as much as 12% from its September high. Even after this big drop, my analysis uncovered three major indicators that point to another double-digit decline.  While any one of these on its own would be enough to justify a bearish trade, the fact that all three are in agreement makes for a uniquely compelling case. And with today’s strategy, traders can use the iShares Russell 2000 (NYSE: IWM) to leverage that decline into 87% potential profits in five months or less. Indicator No. 1: Stats are Not… Read More

The small-cap Russell 2000 is officially in a correction, falling as much as 12% from its September high. Even after this big drop, my analysis uncovered three major indicators that point to another double-digit decline.  While any one of these on its own would be enough to justify a bearish trade, the fact that all three are in agreement makes for a uniquely compelling case. And with today’s strategy, traders can use the iShares Russell 2000 (NYSE: IWM) to leverage that decline into 87% potential profits in five months or less. Indicator No. 1: Stats are Not on the Russell’s Side Bull markets are said to occur when equity indices climb at least 20% over a period of several months or more, usually during a period of economic expansion. Since the Great Depression, only one bull market has lasted more than a decade, with the average length around three years. The average return of the Dow during a bull market period is about 140%, and the median return is around 90%. #-ad_banner-#We are now five and a half years into the current bull market with the Dow up 151%, the S&P 500 up 180%, and the Russell… Read More

What’s the first rule of successful real estate investing? Of course, you just said to yourself, “location, location, location.” Well, when it comes successful equity trading, the first rule that should come to your mind is “price, price, price.” More specifically, it is the share price performance of a stock or ETF relative to other stocks and ETFs traded in the market that is the most important metric to put in your favor.  If a security you are looking to buy has a proven track record of outperforming others in the broad market, or within its specific industry group, then… Read More

What’s the first rule of successful real estate investing? Of course, you just said to yourself, “location, location, location.” Well, when it comes successful equity trading, the first rule that should come to your mind is “price, price, price.” More specifically, it is the share price performance of a stock or ETF relative to other stocks and ETFs traded in the market that is the most important metric to put in your favor.  If a security you are looking to buy has a proven track record of outperforming others in the broad market, or within its specific industry group, then that tells you others on Wall Street think there is something special about it that makes it worth buying. #-ad_banner-#This “something special” could be a variety of things, including a proven track record of strong revenue and earnings growth, e.g., Walt Disney (NYSE: DIS); a breakout product or game-changing service, e.g., Netflix (NASDAQ: NFLX); a high-demand personal technology product, e.g., Apple (NASDAQ: AAPL); or a brilliant CEO, e.g., Elon Musk of Tesla Motors (NASDAQ: TSLA).  Whatever the reason, or combination of reasons, the price performance relative to the… Read More

What do Wonder Bread, Avis Rent-A-Car, Sheraton Hotels and Hartford Insurance Group have in common? They were all held under the corporate umbrella of telecom firm ITT in the 1970’s. ITT was one of many companies that became convinced that operating a wide range of companies in a vast number of industries is the quickest way to wealth-building. Yet ITT and others eventually buckled under the weight of their unwieldy operations and many large companies subsequently began to “de-conglomerate.” #-ad_banner-#Now, Carl Icahn is taking the de-conglomeration theme one step further: He’s imploring companies to spin off key divisions as a… Read More

What do Wonder Bread, Avis Rent-A-Car, Sheraton Hotels and Hartford Insurance Group have in common? They were all held under the corporate umbrella of telecom firm ITT in the 1970’s. ITT was one of many companies that became convinced that operating a wide range of companies in a vast number of industries is the quickest way to wealth-building. Yet ITT and others eventually buckled under the weight of their unwieldy operations and many large companies subsequently began to “de-conglomerate.” #-ad_banner-#Now, Carl Icahn is taking the de-conglomeration theme one step further: He’s imploring companies to spin off key divisions as a way to boost shares. He rattled eBay, Inc.’s (Nasdaq: EBAY) cage for nearly nine months, pushing the e-commerce company to spin-off its PayPal division. When eBay relented on September 30, announcing such a plan, its shares rose nearly 8%. Other activist investors are getting their case heard. Ralph Whitworth, who has publicly pushed Hewlett-Packard (NYSE: HPQ) to spin off its printer business, applauded the company when such a plan was announced earlier this month. “Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates,” he… Read More