Opinions | Expert Analysts Opinions

June 19, 2013| Profit Confidential

Xbox One vs. PS4: More Than Just a Battle of Consoles

Get ready gamers and those of you who love the idea of streaming video, listening to music, and connecting to the Internet on your television. The entertainment console market is getting set to welcome the new “Xbox One” by Microsoft Corporation (NASDAQ/MSFT) and the “PlayStation 4” (PS4) by Sony Corporation (NYSE/SNE). I just received an e-mail from Best Buy Co., Inc. (NYSE/BBY) to pre-buy the Xbox One for $499.00. I was going to pull the trigger on that deal—until Sony announced it...

June 19, 2013| Profit Confidential

U.S. Economy on the Mend; Small-Cap Stocks the Place to Be?

Make no mistake about it. The wealth in America continues to rise as it is in other parts of the world. Fueling the creation of wealth has been the easy monetary policy, which has essentially pushed up the stock market to its record-highs. Now the economy is also on the mend; albeit, it has largely been driven by the lure of easy money. Yet growth is growth. At this juncture, the growth, while somewhat muted, is there. Cyclical stocks are faring well...

June 19, 2013| Profit Confidential

Number of S&P 500 Companies Reporting Negative Guidance a Red Flag

Standard & Poor’s, the credit rating agency, believes the likelihood of the U.S. credit rating being downgraded in the near term is less than 33% (one in three) and it has decided to keep its credit rating on the U.S. economy at AA+, slightly lower than the best investment grade. (Source: Standards & Poor’s, June 10, 2013.) This may be good news to the politicians who continue to believe there is an economic recovery in the U.S. economy, but it’s not enough...

June 19, 2013| Profit Confidential

Housing Recovery Already Comes to an End?

The housing market simply isn’t improving at the rate many in the mainstream media are telling us. Home prices are still significantly lower than what they were during 2005 and 2006. On its own, there is no housing market recovery. All we are witnessing is the mere reflection of easy money provided by our central bank. As I often write, to see a real recovery in the housing market, we need to see first-time home buyers active in the market. Unfortunately, they...

June 19, 2013| Profit Confidential

Failed Projections or Just Another Government Lie? You Judge

Boy, were they wrong! Not so long ago, the Congressional Budget Office (CBO) said it expected the U.S. government to register a budget deficit in the current fiscal year of $642 billion. But hold on a minute… The budget deficit so far (as of May 31, 2013) has already hit $626.3 billion, and we still have four more months to go in the government’s current fiscal year! Since the beginning of the U.S. government’s current fiscal year 2013, which began in October...

June 19, 2013| Profit Confidential

Crash, Down Quarter, Major Correction—It’s All in the Cards

The appetite that institutional investors have had to bid the stock marketis diminishing. Earnings estimates for the second quarter are actually being trimmed by corporations and Wall Street. It makes for a genuinely peculiar environment for the stock market—share prices at their highs on declining expectations for corporate earnings. The lesson is clear: it doesn’t pay to fight the Fed. Being a leading indicator, the stock market went up after employment numbers came in just slightly below consensus last week. Share prices...

June 19, 2013| Profit Confidential

Buying High the New Winning Investment Strategy?

When I evaluate potential stocks to trade, not only do I examine how well the company has done and delivered, but I also look at the stock’s chart potential and technical analysis. In fact, I often will screen stocks based on my technical analysis system, and from there, I’ll take a closer look at the company’s underlying fundamentals. But the strategy I use for day trading and swing trading differ from the process I employ for longer-term buys. For trading, I...

June 19, 2013| Profit Confidential

Breakdown: U.S. Economy and Its Cycles in 18 Brief Points

In a fascinating work on long-run economic cycles, J. Anthony Boeckh’s book The Great Reflation offers up some poignant research on the U.S. economy and its cycles. The Great Reflation is a non-political, historical breakdown of inflation, monetary and fiscal policies, interest rates, and long-wave economic theory. It was completed in 2010 and made several predictions on the U.S. economy that have turned out to be correct so far. Boeckh, former publisher of the Bank Credit Analyst, delves into past financial manias, asset inflation bubbles,...

June 19, 2013| Profit Confidential

Action in Dow Jones Transports, Utilities Signaling Caution

The equity market and other capital markets are gyrating on the rise in 10-year Treasury yields. There’s been a lot of unusual movement in currencies as well. Speculation regarding what the Federal Reserve is going to do about quantitative easing and the lull between earnings seasons are definitely factors. There is always equity market uncertainty in the weeks before the end of a quarter (though the Dow Jones industrials have held up well). Investor sentiment reflects the collective ambiguity of whether earnings...

June 09, 2013| Profit Confidential

Online War Begins: Netflix vs. Amazon.com

The battle is on in the online streaming of videos and other shows, according to my stock analysis. Yet the main combatants include not only incumbent Netflix, Inc. (NASDAQ/NFLX) but also upstart Amazon.com, Inc. (NASDAQ/AMZN), which in two short years is likely causing some stir at Netflix’s corporate headquarters due to its own video streaming service. If I was Netflix CEO Reed Hastings, I would be more than worried about the aggressive push of Amazon.com into the video streaming market, based...

June 09, 2013| Profit Confidential

How Extraordinary Growth in Bakken Oil Is Revitalizing Railroads

Change in the railroad business is not something you expect, but it is happening with Bakken oil. The Association of American Railroads (AAR) is the industry group for North American railroad stocks, and while all trade groups are to be taken with a grain of salt, you can garner insight on the U.S. economy by reading the AAR’s data. Even if you aren’t interested in railroad stocks, business conditions for railroads are still very relevant. They remain the backbone of North...

June 09, 2013| Profit Confidential

Equity Market Super Stock Adding Up to Solid Returns

One company I consistently like for long-term investors looking for dividend payments is PepsiCo, Inc. (NYSE/PEP). This is the kind of company that can be put into retirement accounts and held for long periods of time with dividend reinvestment. The equity market has been very kind to PepsiCo since the beginning of this year. Like many blue chips, it has ridden a wave of enthusiasm by institutional investors looking to bid the equity market with the safest names. PepsiCo offers safety as...

June 09, 2013| Profit Confidential

Don’t Read This if You Thought the Economy Was Improving

The Bureau of Labor Statistics reported this morning that the U.S. unemployment rate is now 7.6% percent, with 175,000 new jobs created in May. At the same time, the Bureau revised its April numbers down, saying 149,000 jobs were created in April, and not the initial 165,000 it reported. The unemployment situation in the U.S. in May was essentially the same as in April. (I wonder how the Federal Reserve looks at this. Does it say, “Wow, imagine what would...

June 09, 2013| Profit Confidential

Bull Market Not Over, but a Correction May Be on the Horizon

I was watching CNBC Asia two nights ago and marveled at the talk of how well Japan was doing, noting the obvious enthusiasm for the record level of the stock market. And just like it was back in late 1999, there are more bulls coming out on Wall Street and saying how high the Dow could run. I have heard talk of the Dow at 20,000 and the S&P 500 at 1,800. Then there’s the recent cheerleading on the stock market...

June 09, 2013| Profit Confidential | Comments (2)

Best Explanation on the Fake Housing Market Recovery I’ve Seen

The average American Joe isn’t participating in the U.S. housing market. As a matter of fact, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, investors purchased 69% of “damaged” properties in April 2013, while first-time home buyers accounted for only 16% of “damaged” purchases. It is very well documented in these pages how home prices in the U.S. economy are being driven upward by institutional investors. Affirming my stance on the U.S. housing market, Suzanne Mistretta, an analyst at Fitch...

June 06, 2013| Profit Confidential

Zero-Sum Game: Market Wizards Still Helping Traders

In the effervescent realm of books on business, there are the biographies on industry titans, the how-tos, the books on leadership (or lack thereof), the postulations on the next cycle, or books about “the secret” (the perpetual media premise about visualizing your success). But there are very few good books about trading capital markets. Two excellent works regarding capital markets that feature highly successful traders/investors are Market Wizards and The New Market Wizards, both written by Jack D. Schwager. These two books may be...

June 06, 2013| Profit Confidential

Why Tracking the Heavily Shorted Stocks Makes Sense

When I look at potential trading opportunities, I like to scan for stocks that have high short selling positions in them. These are the traders betting against the stock. Now, while there’s always some validity to why a stock becomes a short selling target, it’s not always the case; this is where I see contrarian trading opportunities. Going against the grain does work, but there have been cases where a contrarian strategy has blown up in my face. The key here, like...

June 06, 2013| Profit Confidential

Why Practicing Caution Best Strategy for Investors These Days

Economic conditions in the global economy are taking a quick turn in the wrong way! Consider the Purchasing Managers’ Index (PMI) of the U.S. economy tracked by the Institute of Supply Management. Last month it contracted for the first time since November of 2012 and only the second time since July of 2009! The PMI registered 49.0 in May, compared to 50.7 in April. (Source: Institute of Supply Management, June 3, 2013.) Any reading below 50 suggests the manufacturing sector is experiencing...

June 03, 2013| Profit Confidential

What Was Behind the Stock Market’s Massive Breakout?

Something big happened at the beginning of the year—Wall Street gave up on Washington. I’ve been trying to figure out how this incredible stock marketaction started at the beginning of the year. Things were trending fairly normally, and then institutional investors just started buying—blue chips first, a little break in February, then blue chips again, with a broadening out into the NASDAQ. But there wasn’t any big catalyst that suddenly galvanized a change in investor sentiment. There wasn’t anything new from...

June 03, 2013| Profit Confidential

This Year Solar Is Tops, Precious Metals the Dogs

As we approach the mid-point of the year, U.S. stocks continue to fare well with the annualized return of the Dow at 42% and the S&P 500 at 39%. While I have long been skeptical of the idea of stocks continuing at their current pace, you never know, as trading can be irrational, based on my stock analysis. Just think back to late 1999 and early 2000, prior to the technology implosion. As my stock analysis suggests, you know things...