April 30, 2010

Mark Mobius On Greece

“A default will help to plug the leak. A bailout at this stage does not make sense to me.”

Mark Mobius, Templeton Asset Management in Bloomberg Television

Related stocks: National Bank of Greece (ADR) (Public, NYSE:NBG), Hellenic Telecom Organization S.A. (ADR) (Public, NYSE:OTE)

Greece Is Just The Tip Of The Iceberg

“Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems.”

Nouriel Roubini, Bloomberg

Goldman Sachs (GS): US Reportedly Considering Criminal Charges

Federal prosecutors are looking into whether to charge Goldman Sachs Group Inc. or its employees with criminal securities fraud, according to a Wall Street Journal report.

The report cited unnamed sources familiar with the probe. Neither Goldman nor the office of U.S. Attorney Preet Bharara would comment for the report.

Goldman Sachs had managed to rally to 160 dollars per share as we predicted here on Decoding Wall Street a few days ago. Now the stocks are under pressure trading in the low 150`s.

Related Stocks: Goldman Sachs Group, Inc. (Public, NYSE:GS)

80% Of Stock Above The 50 Day SMA. Time For A Deeper Market Correction.

The percentage of stocks above their 50 day simple moving averages in the S&P 500 now stands at 80 percent. In the latest rally, the reading had gotten to as high as 93 percent.

Source: Bespoke Investment Group

Of the ten S&P 500 Index sectors, the Industrials has the highest percentage of stocks above their 50-days at 95 percent, while Health Care has the lowest reading of all sectors at 52%.

We are still at a relatively high reading and the market needs a healthy correction.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY), ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), Financial Select Sector SPDR (ETF) (Public, NYSE:XLF), Health Care SPDR (ETF) (Public, NYSE:XLV), Energy Select Sector SPDR (ETF) (Public, NYSE:XLE)

April 29, 2010

Martin Feldstein: Greece Is Going To Default

“Greece will default on its national debt. That default will be due in large part to its membership in the European Monetary Union. If it were not part of the euro system, Greece might not have gotten into its current predicament and, even if it had gotten into its current predicament, it could have avoided the need to default.

There simply is no way around the arithmetic implied by the scale of deficit reduction and the accompanying economic decline: Greece’s default on its debt is inevitable.

Greece might have been able to avoid that outcome if it were not in the eurozone. If Greece still had its own currency, the authorities could devalue it while tightening fiscal policy. A devalued currency would increase exports and would cause Greek households and firms to substitute domestic products for imported goods. The increased demand for Greek goods and services would raise Greece’s GDP, increasing tax revenue and reducing transfer payments. In short, fiscal consolidation would be both easier and less painful if Greece had its own monetary policy.

Greece’s membership in the eurozone was also a principal cause of its current large budget deficit. Because Greece has not had its own currency for more than a decade, there has been no market signal to warn Greece that its debt was growing unacceptably large.

If Greece had remained outside the eurozone and retained the drachma, the large increased supply of Greek bonds would cause the drachma to decline and the interest rate on the bonds to rise. But, because Greek euro bonds were regarded as a close substitute for other countries’ euro bonds, the interest rate on Greek bonds did not rise as Greece increased its borrowing – until the market began to fear a possible default.”

Martin Feldstein, Professor of Economics at Harvard University

April 28, 2010

Where Will The S&P 500 Index End The Year?


Source: Bespoke Investment Group Website

Wall Street market strategists expect the S&P 500 Index to end the year at 1264. That is just 7% above current prices. UBS, Bank of America, and Credit Suisse are the most recent firms to up their year-end targets.

UBS now has the highest year-end S&P 500 price target at 1350 points, followed by Deutsche Bank AG (USA) (Public, NYSE:DB) at 1325, and JPMorgan Chase & Co. (Public, NYSE:JPM), Oppenheimer, HSBC Holdings plc (ADR) (Public, NYSE:HBC), and Bank of America Corporation (Public, NYSE:BAC) all at 1300.

Three strategists now have year-end targets that are lower than the S&P 500's current level: Barclays PLC (ADR) (Public, NYSE:BCS) 1210, Morgan Stanley (Public, NYSE:MS) 1200, and Citigroup Inc. (Public, NYSE:C) 1175.

David Kostin from Goldman Sachs Group, Inc. (Public, NYSE:GS) expects the S&P to end the year at 1250.

Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), SPDR S&P 500 ETF (Public, NYSE:SPY)

April 27, 2010

Goldman Sachs (GS): 59% Of All Outstanding Shares Have Been Traded Since The Fraud Case Hit The Wires

Since the SEC`s fraud suit against Goldman Sachs Group, Inc. (Public, NYSE:GS) hit the wires, GS has traded 300 million shares, or 59% of all outstanding shares:

Apr 26, 2010 152.03 30,940,641
Apr 23, 2010 157.40 14,915,918
Apr 22, 2010 159.05 24,832,945
Apr 21, 2010 158.93 30,385,643
Apr 20, 2010 159.98 42,196,524
Apr 19, 2010 163.32 54,299,112
Apr 16, 2010 160.70 102,044,993

My view is this: everybody that wanted to sell on the news have already done so. The downside from here is in my view limited. (read this bullish case for GS)

But some pundits, as Meredith Whitney disagree. Whitney said yesterday after the close that Goldman Sachs Group, Inc. (Public, NYSE:GS) should trade at book value. That criteria values the company at 120 USD per share.

Chinese Stocks Keep Selling Off. A Warning Signal?

Stocks in China fell 2.3 percent and are now off 11% YTD:

"Despite touting the growth of China as the harbinger and a pillar of the global recovery as the rally began in 2009 U.S. investors are now firmly ignoring any action outside of U.S. borders as investors become enveloped in a cloud of “better than expected” earnings and economic data. Meanwhile, the Eurozone continues to slowly unravel in sovereign debt fears and China’s equity markets remain deeply in negative territory for the year. As we’ve noted before, Chinese equities served as a leading indicator into and out of the recession."

in The Pragmatic Capitalist

Is this a warning signal for global investors?

Related ETF`s: iShares MSCI Emerging Markets Indx (ETF), iShares FTSE/Xinhua China 25 Index (ETF)

April 26, 2010

Meredith Whitney: Goldman Sachs (GS), A Stock Investors Should Avoid

"They're going to lose market share and small players will gain market share. The momentum has clearly been taken away from Goldman."

Meredith Whitney, CEO of Whitney Advisory Group

Goldman Sachs Group, Inc. (Public, NYSE:GS) should trade around book value, Whitney added, which would place the price just above 120 USD.

Related Stock: Goldman Sachs Group, Inc. (Public, NYSE:GS)

Art Cashin: Markets Are Nowhere Near A Top

"The rally is long in the tooth, but we’re getting new high readings and new 52-week highs and so even if the rally’s a little old, the market technicals are quite strong and nowhere near signaling that you’re near a top."

Art Cashin, CNBC

Art Cashin has been mostly wrong since the very inception of this stock market rally. Is he really calling the top here? No, hard feelings Art. The truth, is the truth.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

SEC Fraud Suit Against Goldman Sachs (GS) Is a Buying Signal

John Dorfman, chairman of Thunderstorm Capital in Boston and a columnist for Bloomberg News thinks that Goldman Sachs (GS) stocks should be bought and he explains why:

"If it loses, Goldman might have to pay a substantial fine. But many firms, from Microsoft Corp. to the big tobacco companies, have taken legal blows and come back to perform well.

Consider Goldman’s record. Its revenue has climbed steadily: $4.5 billion in 1995, $16.6 billion in 2000, $25.2 billion in 2005 and $45.2 billion last year.

Profits have also moved up smartly: $1.3 billion in 1995, $3.1 billion in 2000, $5.6 billion in 2005 and $13.4 billion in 2009.

What earnings multiple would you expect to pay for this sort of growth? I think that in normal times many investors would be willing to pay 30 times earnings for it, or more. Yet today, nervous investors value Goldman shares at only six times earnings and 1.5 times revenue. This seems like a bargain to me.

At about $159, Goldman shares have declined more than a third from their 2007 high of about $247. Investors who don’t own the stock can thank the recession and bear market of 2007 to 2009, plus the SEC’s fraud complaint, for this buying opportunity."


Even though he is bullish on the stock he still shares some worries:

"To be sure, there are things to worry about. My biggest concern is Goldman’s debt, which is 823 percent of stockholders equity - way beyond my normal limit of 100 percent. High debt is commonplace for financial stocks, especially brokerage firms. That doesn’t mean it isn’t dangerous.

A second worry, of course, is the SEC’s lawsuit. Finally, some of Goldman’s profit centers - high-frequency trading, proprietary trading and collateralized debt obligations - are likely to be curbed by proposed financial reform legislation."


Related stock: Goldman Sachs Group, Inc. (Public, NYSE:GS)

Rogoff: Ireland, Spain And Portugal Look Conspicuously Vulnerable

Greece is unlikely to be the last euro nation to need an International Monetary Fund bailout, with Ireland, Spain and Portugal “conspicuously vulnerable,” said Harvard Professor Kenneth Rogoff.

“It’s more likely than not that we’ll need an IMF program in at least one more country in the euro area over the next two to three years”

in Bloomberg

Related stocks and Etf`s: iShares MSCI Spain Index (ETF) (Public, NYSE:EWP), Banco Santander, S.A. (ADR) (Public, NYSE:STD), Portugal Telecom, SGPS (ADR) (Public, NYSE:PT), Banco Bilbao Vizcaya Argentaria SA (ADR) (Public, NYSE:BBVA), Bank of Ireland (ADR) (Public, NYSE:IRE)

Mark Zandi: Don`t Believe The Housing Data

Mark Zandi of Moody’s says the recent strength in housing data is almost entirely due to seasonal factors and government intervention. Zandi added that housing data is likely to dip again after the April data is released.

Mark Zandi, chief economist and co-founder of Moody's Economy.com, talks with Bloomberg's Lori Rothman about the outlook for the U.S. housing market. Sales of new homes surged 27 percent in March, the biggest gain in 47 years, as buyers rushed to qualify for a government tax credit and the weather improved. (Source: Bloomberg)

Related stocks and ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), SPDR S&P 500 ETF (Public, NYSE:SPY), iShares Dow Jones US Home Const. (ETF) (Public, NYSE:ITB), Lennar Corporation (Public, NYSE:LEN), D.R. Horton, Inc. (Public, NYSE:DHI), KB Home (Public, NYSE:KBH)

April 25, 2010

Latest On The Goldman Sachs (GS) Story

Interesting reading: Pages Of Tourre Emails Released

"Goldman Sachs (GS), the most profitable securities firm in Wall Street history, released more than 70 pages of e-mail and other documents yesterday ahead of a U.S. Senate subcommittee hearing on the firm’s actions throughout the mortgage meltdown. The firm disputes the U.S. Securities and Exchange Commission’s claim that Goldman Sachs and Tourre, now 31, misled investors in a 2007 collateralized debt obligation about the role played by hedge fund Paulson & Co., which bet the CDO would collapse."

in Bloomberg

Goldman Sachs Group, Inc. (Public, NYSE:GS) is down 15% since the news hit the market on Friday, April 16th. The intraday low of the last 6 trading sessions was hit last Monday at around 155 dollars per share.

Related ETF`s: Financial Select Sector SPDR (ETF) (Public, NYSE:XLF)

April 23, 2010

Marc Faber: I Think Goldman Sachs (GS) Is A Very Honest Firm

Marc Faber gave CNBC his view on the Goldman Sachs Group, Inc. (Public, NYSE:GS) SEC`s accusation:

"I think Goldman Sachs is a very honest firm. They have a very strict compliance department compared to the others — they're like an angel. But they targeted Goldman as it stands as a symbol of Wall Street"

And Dr. Faber even added,

"Maybe the intention is not to hurt Goldman Sachs, but just to gain popularity with the middle class and the lower class of America, so they will perceive Mr. Obama to have done something against the evil of Wall Street."

With President Obama's ratings going down due to the health care reforms, the government is going after the investment bank to distract the attention of the people. That seems to be his view.

Related stock: Goldman Sachs Group, Inc. (Public, NYSE:GS)

April 22, 2010

Is Goldman Sachs (GS) Going To Lose Clients?

Very interesting article on how Germany and some other clients may stop doing business with Goldman Sachs (GS).

"Let's put it this way: The clouds are gathering over Goldman's head and at this point it is almost irrelevant whether the actual criminal allegations of the SEC will stick or not. Whatever happened to "innocent until proven guilty"? True. But it's not that simple, is it?

Somehow "innocent until proven guilty" does not work in the financial community and in the markets. The list of companies (or indeed countries) that rammed against icebergs of financial speculation and sank faster than the Titanic is long and getting longer every day. The bankers at Goldman should know that better than anybody else." Silvia Wadhwa


Another interesting view on Goldman Sachs`(GS) case is Peter Schiff`s:

"I don`t know if there is any validity to it or not, but it looks like Goldman Sachs (GS) has done something wrong" in Peter Schiff`s video blog

Related Stocks: Goldman Sachs Group, Inc. (Public, NYSE:GS)

April 21, 2010

Goldman Sachs (GS): Is Settlement An Option?

“You go to trial, which is what we’re doing, and you always have the option of, if there is an agreeable settlement to both sides, of settling at any point in time”

Greg Palm, Goldman Sachs’s co-general counsel

in Bloomberg.com

Related Stocks: Goldman Sachs Group, Inc. (Public, NYSE:GS)

Jim Chanos: Short China And US Treasuries

In a recent video interview, hedge fund manager and dedicated short-seller Jim Chanos from Kynikos Associates has recommended investors to short China and US Tresuries:

Kynikos Associates President James Chanos weighs in on the future of municipal debt and why you shouldn't invest in long-term treasuries.

Source: Fox Business

Related ETF`s: iShares FTSE/Xinhua China 25 Index (ETF) (Public, NYSE:FXI), iShares Lehman 20+ Year Treas.Bond (ETF) (Public, NYSE:TLT) and ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT)

Monday Has Been The Strongest Trading Day Of The Week


Source: Bespoke Investment Group

Historically Monday`s have been the worst performing day of the week. But this has changed in the last year or so. In the last 30 mondays, 27 have been up days on the S&P 500 Index. For how long can this pattern hold?

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

April 20, 2010

JPMorgan Chase: Markets Are Overbought

“Although the SEC fraud case does not have direct implications outside Financials, the rise in uncertainty is negative for equities at a time when equity markets are overbought. Technicals have been pointing to overbought equity markets for some time now and Friday’s correction has the potential to drag the S&P 500 down toward 1175 in the near term. But our technical strategists see very little chance of the S&P 500 falling below 1150, i.e., the January high, over the coming weeks.”

Source: JPMorgan Chase & Co. (Public, NYSE:JPM)

Please note that JPMorgan Chase & Co. (Public, NYSE:JPM) has been dead right on their market calls, as the Pragmatic Capitalist points out in his website, "few of the big banks have traded the recovery as well as JP Morgan. They nailed the reflation trade and they have subsequently been dead right about the reflation trade transforming into the recovery trade. They’ve recommended that investors pile into the highest risk names in the market and its been a winning trade since."

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

Goldman Sachs: Bullish On China


Goldman Sachs is still wildly bullish on Chinese equities despite last night’s 5.4% sell-off and the continuing concerns about an overheating economy. They believe the sharp sell-off was an overreaction to the downside and gives investors an opportunity to move into the market. They see enormous upside of over 35% by year-end:

“We reiterate our end-10 index target of 4,300 for CSI300 (35.4% potential upside) and see strong fundamental support at 2,900, which equates to around 16X forward P/E and translates into 8.7% potential downside from current levels.”

Their wildly bullish position is based on three primary reasons:

1) The macro and micro economy remains very robust. The latest reading of 11.9% GDP shows very strong growth with lower than expected inflation at 2.4%.

2) The tightening measures are a long-term positive. Despite near-term fears of a potential government induced slow-down Goldman says the tightening measures will not derail the recovery and are the prudent course of action.

3) Valuations are attractive. With the CI300 trading at 16.2X earnings the index is historically cheap compared to its 5 year average of 18.8X.

Source: Goldman Sachs Group, Inc. (Public, NYSE:GS)

Related ETF`s: iShares FTSE/Xinhua China 25 Index (ETF) (Public, NYSE:FXI), Morgan Stanley China A Share Fund, Inc. (Public, NYSE:CAF) and PowerShares Gld Drg Haltr USX China(ETF) (Public, NYSE:PGJ)

Goldman Sachs (GS): Split Vote Plus Earnings Will Send The Stock Higher

It seems that there was not a lot of consensus inside the Securities and Exchange Commission (SEC) to sue Goldman Sachs (GS):

April 20 (Bloomberg) -- The U.S. Securities and Exchange Commission split 3-2 along party lines to approve an enforcement case against Goldman Sachs Group Inc., according to two people with knowledge of the vote.
SEC Chairman Mary Schapiro sided with Democrats Luis Aguilar and Elisse Walter to approve the case filed on April 16, said the people, who declined to be identified because the vote wasn’t public. Republican commissioners Kathleen Casey and Troy Paredes voted against suing, the people said yesterday.


This is obviously very bullish for the stock. Don`t forget that Goldman Sachs (GS) reports its earnings before the opening bell. I would`t be surprised if it recoups most of its recent losses.

Related ETF`s: Financial Select Sector SPDR (ETF) (Public, NYSE:XLF)

April 19, 2010

Goldman Sachs` (GS) Impact On Oil Prices

Dan Dicker, a well known New York Merc floor trader believes that oil traders and speculators will run for the exits in the belief that Goldman Sachs Group, Inc. (Public, NYSE:GS) shrinking presence in the oil market will mean lower prices for the commodity:

Goldman Sachs Group, Inc. (Public, NYSE:GS) fraud charges are sure to affect oil prices too -- and I think crude will be a terrific short for the medium term. Of all the things surely affecting oil prices, it has been my theory that the financial player's perceptions of the market are the most important and telling.

And I've seen the pattern enough in the past before to know: If you can lever some of this speculative money out of the market, by hook or by crook, prices go down -- and sometimes they go down a lot.

Related Etf`s: United States Oil Fund LP (ETF) (Public, NYSE:USO), iPath S&P GSCI Crude Oil Total Return (Public, NYSE:OIL)

Related Stocks: Goldman Sachs Group, Inc. (Public, NYSE:GS) and Morgan Stanley (Public, NYSE:MS)

Today`s Market Movers: Citigroup`s (C) Earnings And Leading Indicators.

Citigroup (C) will report its earnings before the bell and so will Zions Bancorp (ZION), one of the most speculative stocks in the banking sector.

On the earnings front we have the Leading Indicators coming out at 10 am ET.

Of course, Goldman Sachs (GS) will still be the play du jour.

You can check Goldman Sachs (GS) past performances on a daily and weekly basis after a 10 percent sell off HERE.

Related ETF`s: Financial Select Sector SPDR (ETF) (Public, NYSE:XLF) and Direxion Daily Finan. Bear 3X Shs(ETF) (Public, NYSE:FAZ)

April 18, 2010

Goldman Sachs (GS): Former Regulator Explains What`s Ahead


William Black, a professor at the University of Missouri at Kansas City, talks with Bloomberg's Lori Rothman about the impact of a U.S. Securities and Exchange lawsuit against Goldman Sachs Group Inc. (GS) on legislation overhauling the financial regulatory system. Goldman Sachs created and sold CDOs tied to subprime mortgages in early 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against them, the SEC said in a statement today.

Related Stocks and ETF`s: Goldman Sachs Group, Inc. (Public, NYSE:GS), Bank of America Corporation (Public, NYSE:BAC), Fannie Mae (Public, NYSE:FNM), Morgan Stanley (Public, NYSE:MS), Financial Select Sector SPDR (ETF) (Public, NYSE:XLF)

How Will Goldman Sachs (GS) Affect Markets This Week?

Here is a very interesting view on Goldman Sachs` (GS) possible medium term impact on stocks in general and on banking shares in particular:

"Perhaps most alarming with regards to the Goldman news is the level of uncertainty it will create. At first glance the reaction to the Goldman news looks excessive, but this could have widespread ramifications. First, this lawsuit looks like a carefully crafted political move that will make financial reform far more stringent than bank investors had been expecting. President Obama was out Friday saying that he will veto any bill that does not contain derivatives reform. JP Morgan CEO Jamie Dimon has previously mentioned that this portion of the bill would cost the bank between $500MM – $700MM. The Goldman lawsuit appears to make derivatives reform a slam dunk. This would likely shave billions in easy profits from total S&P 500 earnings. The President has also expressed a willingness to drop the $50B bailout fund. Mr. Obama is flexing his muscles now and looking to slam thru his second big bill in a matter of months. That’s good news for Main Street. Harsh reform is necessary to protect us all from ever allowing these firms to put us in this position again. Unfortunately, what’s good for Main Street is not always good for Wall Street. I wouldn’t be surprised if bank stock puke all over themselves for several weeks until the dust settles." in The Pragmatic Capitalist

Related ETF`s: Financial Select Sector SPDR (ETF) (Public, NYSE:XLF), Direxion Daily Finan. Bear 3X Shs(ETF) (Public, NYSE:FAZ), ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS) and SPDR S&P 500 ETF (Public, NYSE:SPY)

Related Stocks: Goldman Sachs Group, Inc. (Public, NYSE:GS), Bank of America Corporation (Public, NYSE:BAC), JPMorgan Chase & Co. (Public, NYSE:JPM) and Morgan Stanley (Public, NYSE:MS)

April 17, 2010

Goldman Sachs` (GS) Collateral Damages

In this graph you can see how the Goldman Sachs` (GS) news has affected the major banks:

As you can see, Bank Of America (BAC), Citigroup (C) and Morgan Stanley (MS) were hit the hardest. The best performing stock among the big banks was Wells Fargo (WFC) with a drop of "only" 4%.

Related ETF`s: Financial Select Sector SPDR (ETF) (Public, NYSE:XLF) and Direxion Daily Finan. Bear 3X Shs(ETF) (Public, NYSE:FAZ)

Goldman Sachs (GS): History And Statistics Suggest A Rebound In Price Next Week

Bespoke Investment Group studied the worst one-day declines for Goldman Sachs (GS) stocks and here are their conclusions:

"Friday was the fifth worst day in Goldman Sachs' (GS) history as a publicly traded company. Its worst one-day decline came on January 20th, 2009 when it fell 18.96%. Below we highlight all one-day declines of 10% or more for Goldman since it went public in 1999. As shown, the average return on the day after 10%+ declines has been 3.06%. But the day after has been positive just 50% of the time. The stock has done extremely well in the week following these big down days. Of the twelve prior 10%+ one-day declines for GS, the stock has gone higher over the next week 10 times for an average gain of 11.37%." in Bespoke

History and statistics suggest a rebound in Goldman Sachs (GS) shares next week.

Bill Gross: Opportunities In Real Estate

Real estate is nearing a bottom and eventually could be a better bet for investors than stocks or bonds, Pimco's Bill Gross told CNBC. Both commercial and residential real estate are reaching a bottoming point and possibly even prepared to turn higher, said Gross, CIO of Pacific Investment Management Co., or PIMCO, the world's largest bond fund.

With stocks likely to return 5 to 6 percent and bonds 3 to 4 percent, he said, investors would be wise to start looking at real estate opportunities.

in CNBC.com

Related ETF`s: iShares Dow Jones US Real Estate (ETF) (Public, NYSE:IYR) and iShares Cohen & Steers Realty Maj. (ETF) (Public, NYSE:ICF)

Related Stocks: Simon Property Group, Inc (Public, NYSE:SPG), General Growth Properties, Inc (Public, NYSE:GGP), Vornado Realty Trust (Public, NYSE:VNO) and Boston Properties, Inc. (Public, NYSE:BXP)

April 16, 2010

Over The Last 2 Months 73 Percent Of The Trading Sessions Have Been Up Days. That Is Very Rare Over The Last 30 years.

Over the last 2 months, 73 percent of the trading sessions have been up days. That is very unnusual according to this Bespoke research:

"Over the last two months, 73% of the trading days have been up days. Since 1980, there have only been 3 other periods where this high of a reading was reached -- 6/1980, 4/1995, and 11/2006. Be sure to remember this trading period, because this kind of action does not happen often." in Bespoke Investment Group

Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), SPDR S&P 500 ETF (Public, NYSE:SPY) and PowerShares QQQ Trust, Series 1 (ETF) (Public, NASDAQ:QQQQ)

George Soros Warns Of New Bubbles Being Inflated

At an event hosted by The Economist magazine, George Soros warned investors that the methods used to resolve the 2008 financial crisis are no different than the methods that helped cause the crisis to begin with. Soros says we are blowing inevitable bubbles that will have similar dire results:

“The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods….Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble….We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.”

Source: The Pragmatic Capitalist

Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), SPDR S&P 500 ETF (Public, NYSE:SPY) and SPDR Gold Trust (ETF) (Public, NYSE:GLD)

April 15, 2010

Google (GOOG) Disappoints The Street. Is This The Catalyst For A Broad Based Market Correction?

Google (GOOG) reported profit that fell short of some analysts’ estimates and is selling off in after hours trading.

Net income in the first quarter rose 37 percent to 1.96 billion dollars, or $6.06 a share, from 1.42 billion dollars, or $4.49, a year earlier, the company said today in a statement.

After Hours: 566.70 -28.60 (-4.80%)
Apr 15, 6:11PM EDT

Will this be the catalyst for a market correction?

AAII Market Sentiment Signals A Pullback In Stocks

The latest Merrill Lynch Fund Manager Survey is showing the fund managers optimism on stocks. 71 percent of the respondents believe that earnings will jump 10 percent or more over the next 12 months. This is up dramatically from only 53 percent last month. The survey also showed that 52 percent of managers are now overweight equities versus just 33 percent in February. Michael Hartnett, Chief Equity Strategist at B of A Merrill Lynch says the Goldilocks scenario is priced into stocks:

“April’s survey shows a growing number of investors envisaging a Goldilocks scenario of above trend growth and benign inflation. The findings are consistent with the view that the US consumer, far from remaining in intensive care, is on the path back to good health.”

Today’s American Association of Individual Investors (AAII) poll showed the same trend in wild bullishness. Bullish sentiment surged to 48.5 percent. This is the highest bullish sentiment since the beginning of the year. Charles Rotblut at AAII notes that the current skew between bulls and bears is consistent with periods prior to a pull-back, but not representing “irrational exuberance”:

“The spread between bullish and bearish sentiment is at +19. This is a level that has correlated with the past few market pullbacks, though is not a level that suggests irrational exuberance.”

Related ETF`s: iPath S&P 500 VIX Short Term F (Public, NYSE:VXX), SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

April 14, 2010

John Mauldin: There Is Hope For The Bears


John Mauldin, president of Millennium Wave Advisors LLC and author of the weekly newsletter Thoughts From the Frontline, talks with Bloomberg's Julie Hyman about the outlook for the U.S. economy and stock market. (Source: Bloomberg)

Mauldin is predicting a 40% correction on the US stock market.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

The Easy Trend Remains Intact

"The easy trading trends remain well intact. Bad news is good news and good news is great news. Monday’s are always up days, the 10:30 AM bottom is always bought into and days ending in “Y” end on the plus side. This market has been a trader’s dream come true."

in The Pragmatic Capitalist

Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS) and SPDR S&P 500 ETF (Public, NYSE:SPY)

The volatility ETN, iPath S&P 500 VIX Short Term F (Public, NYSE:VXX) closed at a new all time low, as fear in this market is non-existent. For how long?

Best Trading Story Of The Day: "In A Kamikaze Move, I Have Tripled My Shorts. So Help Me God."

Can Google (GOOG) Breakout?

Google (GOOG) rallied sharply in yesterday`s session with no significant news:

"Google (GOOG) rallied 14 dollars today out of nowhere and took out its March closing highs. From a technical perspective, traders will now set their sights on the bull market closing high of 626.75 USD made on the first trading day of 2010. The stock does, however, have one huge speed bump in its way in the near term - earnings after the close this Thursday. Historically the stock has done well on its earnings report days, but if it continues to run up into Thursday, continued gains after even a strong report might be tough." in Bespoke Investment Group

JP Morgan: Still Bullish On Equities

JP Morgan (JPM) is reiterating their bullish outlook for equities despite the rally. They see the recovery broadening and further room for upside for equities:

“The important economic news of the last few weeks is the broadening of the recovery across sectors, regions, and types of spending. This increases confidence in the longevity of the recovery, but is now also making us recognise that data are running ahead of some of our forecasts.”

They believe three factors have kept investors on the sidelines in recent months and that skepticism has helped contribute to the rally in stocks:

“Three areas of uncertainty have kept investors from fully committing to risky assets –– the end of QE, Chinese tightening, and the Greek debt crisis.”

Their analysts say the end of QE is having almost no impact on markets, China’s concerns are slowly but surely being dealt with and the Greek crisis is unlikely to result in widespread economic damage.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

April 13, 2010

Intel`s CEO: This Was The Best First Quarter Ever

Intel Corp.'s (INTC) first-quarter profit nearly quadrupled as revenue jumped 44% and sharply higher margins amid strong demand for chips used in laptops and server computers.

Shares gained 3.7%, to $23.60 in after-hours trading, as the world's largest computer-chip maker's results topped Wall Street's expectations and issued a bullish outlook. The stock reached a 1 1/2-year high of $22.80 earlier Tuesday.

Other tech names as Microsoft (MSFT), Altera (ALTR) and Applied Materials (AMAT) also rallied in after hours trading.

"These leadership products combined with growing worldwide demand and continued outstanding execution resulted in Intel's best first quarter ever", said Paul Otellini, Intel president and CEO.

in WSJ.com

Historical Winners On Earnings Report Day: Intuitive Surgical (ISRG), Hanger Orthopedic (HGR), First Solar (FSLR) And Radian Group (RDN)

Some stocks typically go up on earnings and some typically go down. From our earnings database, below we highlight the Russell 3,000 stocks that have averaged the biggest gains on their earnings report days over the last ten years. As shown, Intuitive Surgical (ISRG) and Hanger Orthopedic (HGR) have been earnings season champions, both averaging gains of more than 8% on their report days. Not far behind are First Solar (FSLR), Radian Group (RDN), and Healthways (HWAY). Also included on the list of earnings season winners are ITT Education (ESI) and Mastercard (MA). Obviously, just because a stock has historically gone up on earnings doesn't mean it will do it this quarter, but we think there is something to be said for consistency.

These may very well be the winners again on this earnings season.

Source: Bespoke Investment Group

Boone Pickens: Oil Will Rally Further

T. Boone Pickens sees room for oil prices to rally another 10 percent, as supply isn’t keeping up with demand. Pickens also predicts President Barack Obama's offshore drilling plan will have little impact on prices and output.

"All the world can produce is 85 million barrels a day, projections are now that you’ll need 86 to 86.5 million barrels a day, this is going to move up."

Related ETF`s: United States Oil Fund LP (ETF) (Public, NYSE:USO) and iPath S&P GSCI Crude Oil Total Return (Public, NYSE:OIL)

Related Stocks: Murphy Oil Corporation (Public, NYSE:MUR), ConocoPhillips (Public, NYSE:COP), Marathon Oil Corporation (Public, NYSE:MRO) and Suncor Energy Inc. (USA) (Public, NYSE:SU)

April 12, 2010

This Rally Has Ignored Fundamentals, and Will Be Corrected Painfully

According to John Hussman of Hussman Funds, this rally has ignored fundamentals and will be corrected painfully:

Investors have gone through two massive loss periods in the past 12 years, and only gained 2.4% if they tracked the S&P.
Returns are going to be low over the next several years, and while there might have been a price low in March 2009, the valuation low has yet to be found. It may take another 6-8 years. This low return on the S&P is not the result of other potential crises looming in the system, including credit problems, but simple fundamentals. People are now buying into the market, relying on economic growth and the absence of another credit crisis, rather than on fundamentals.

This outcome is not dependent on whether or not we observe a second set of credit strains, but is instead baked into the cake as a predictable result of prevailing valuations. The risk of further credit strains simply adds an additional layer of concern here. Investors have chased risky securities over the past year to the point where the risk premium for default risk has eroded to the levels we saw at the peak of the credit bubble in 2007. My sense is that this is a mistake that will be painfully corrected. Investors now rely on a sustained economic recovery and the absence of any additional credit strains - and even then would be likely to achieve only tepid long-term returns from these levels.


Related ETF`s: ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

Most Overbought ETF`s

According to TradingMarkets.com these are the most overbought ETF`s:

The following ETFs are the most overbought for Tuesday April 13, 2010 and are due for a short term reversal. This analysis is based on research published in Larry Connors' new book, High Probability ETF Trading:

iShares MSCI Spain Index Fund ( EWP)
iShares Barclays 20+Yr Treasury Bond Fund ( TLT)
CurrencyShares Euro Trust ( FXE)
iShares Barclays Short Treasury Bond Fund ( SHV)
iShares Barclays 7-10Yr Treasury Bond Fund ( IEF)
iShares Barclays 1-3Yr Treasury Bond Fund ( SHY)

China`s Credit Contraction

Lending by Chinese banks fell 43% in the 1Q from a year earlier as the government winds down its stimulus and tries to cool a credit boom, central bank data showed Monday. Banks lent 2.6 trillion yuan ($380.7 billion) in the January-March quarter, the People's Bank of China said on its Web site. That compared with 4.6 trillion yuan ($670.6 billion) in loans in the 1Q of 2009 as banks ramped up loans for construction and other projects as part of a 4 trillion yuan ($586 billion) stimulus.

Related ETF`s: iShares FTSE/Xinhua China 25 Index (ETF) (Public, NYSE:FXI) and PowerShares Gld Drg Haltr USX China(ETF) (Public, NYSE:PGJ)

April 9, 2010

UBS Called The Bottom And Now They Warn Investors Of Extreme Risks In The Market

UBS called the bottom of the recent downturn to the exact day on February 9th. They’ve been bullish since then, but are now warning of extreme risks in the market. According to their Risk Appetite Indicator, risks are surging as the market advances and investors turn increasingly complacent.

in The Pragmatic Capitalist

April 8, 2010

Standard & Poor's Expects a 10 Percent Correction In Stocks

Standard & Poor's has raised the price target for its benchmark index even though the firm thinks stocks are overdue for a 10 percent drop.

Bull market runs such as the current one off the March 2009 lows almost always come with a 10 percent correction along the way. But so far the S&P has only seen a series of five mini-corrections of 5 percent to 8 percent drops even as the index has gained 75 percent.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

April 7, 2010

Byron Wien: Oil Is Going Up

“The emerging markets are consuming more and more oil all the time. The developing world consumes a little over 20 million barrels a day and they’re going to add one million barrels a day every year for the next 20 years. I don’t know where it’s all going to come from—the price is going up.”

Byron Wien, CNBC
April 7th

Related ETF`s: United States Oil Fund LP (ETF) (Public, NYSE:USO) and iPath S&P GSCI Crude Oil Total Return (Public, NYSE:OIL)

Gold At 12 Week Highs

June gold closed up 17 dollars at 1,153, the highest in twelve weeks, after Federal Reserve minutes showed a continued commitment to keeping the federal funds rate low. There is also talk that Europeans are turning to gold to hedge their currency losses.

The gold ETF, SPDR Gold Trust (ETF) (Public, NYSE:GLD) closed at 112.49, rallying 1.31%.

Worst Performers On The S&P 500: Massey Energy, DR Horton And Prologis

The worst performers on the S&P 500 Index were Massey Energy Company (Public, NYSE:MEE) down 6.7%, D.R. Horton, Inc. (Public, NYSE:DHI) down 4.7% and ProLogis (Public, NYSE:PLD) down 4.3%.

REIT`s were among the worst performers with several names in the bottom 20 performing stocks of the S&P 500 Index.

Finally A Pullback In Stocks?

It has now been 42 days since the S&P 500 has had a pullback (one-day or multi-day) of 1%. Since 1990, there have been 10 other periods where the index went 40 days or more without a 1% pullback.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

Paul Volcker: We Should Raise Taxes

The Pragmatic Capitalist posted a very interesting article about Paul Volcker`s recent comments about tax hikes:

I have generally been a huge fan of Paul Volcker’s. Few men in government have been in favor of taking our medicine when we had to, but Volcker has always been willing to bite the bullet and take some pain in order to make some gains. His rules proposals on regulation and his hard monetary stance in the 70’s are two of the greatest contributions to this economy in the last 30 years. Unfortunately, his latest message is one of potential disaster. Just when the U.S. consumer is beginning to show brief signs of strength Volcker brings up the dreaded D word followed by the even more dreaded T word. Those of course are deficits and taxes. Speaking to the New York Historical Society, Volcker warned of potential tax hikes coming down the line. In reference to a question on the budget deficit Mr. Volcker said:

“(...)we should raise taxes.”


Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

April 6, 2010

Bob Doll: Still Bullish On Equities

Bob Doll, Blackrock`s chief market strategist remains firmly bullish on the recovery though many risks remain. In his latest strategy note Bob Doll highlighted several of the risks facing the stock market at this juncture, but maintains that equity markets have largely priced these risks in:

“All of this is not to say that the economy and the markets will experience smooth sailing from here. In recent weeks, we have been highlighting some of the down-side risks, including ongoing credit-related issues (chiefly in the euro region) and the possibilities of premature policy tightening (chiefly in China). To these, we would add a slowdown in the rate of economic growth in Asian economies. These markets have been key drivers of global economic growth in recent years, but have been foundering a bit over the last six months. Additionally, we remain concerned about protectionist sentiment from Washington, DC. In all, equity markets have not been overly concerned about all of these risks (an appropriate view, in our minds), but these are trends that continue to bear close monitoring.”

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

Despite the risks Doll says the U.S. recovery is coming along well and the recession is long behind us. The jobs market is healing and the end of government stimulus is no longer a fear. He expects full blown expansion to resume in the coming year and that this environment will continue to reward investors who are taking risks.

April 5, 2010

90% Of S&P 500 Index Stocks Are Above Their 50 Day Moving Average

90% of stocks in the S&P 500 are currently trading above their 50-day moving averages. This is at the top end of the indicator's range over the last year and indicates the extreme overbought nature of the stock market.

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

Insiders Aren`t Buying This Stock Rally

According to data from the Pragmatic Capitalist Blog, the insiders remain very skeptical of this rally and are selling into it:

"Insiders continue to display a remarkably low level of confidence in the stock market via the use of their own money. The latest data on insider buying and selling shows the continuing negative trends. For the week ending April 2nd, insiders sold $421MM while buying just $13.5MM. Both buying and selling were down substantially from last week, but the discrepancy between the two remains equally large."

Some of the stocks with most insider selling last week were, Anadarko Petroleum Corporation (Public, NYSE:APC) and Murphy Oil Corporation (Public, NYSE:MUR) on the energy sector, plus United Capital Corp. (Public, AMEX:AFP), Oracle Corporation (Public, NASDAQ:ORCL), FedEx Corporation (Public, NYSE:FDX) and Leucadia National Corp. (Public, NYSE:LUK).

You can check the full list of stocks here.

April 4, 2010

Alan Greenspan: There Is Momentum Building In The US Economy

“There is a momentum building up which is really just beginning, and it’s got a way to go. Corporate investment in new equipment is coming back in a fairly substantial way and that purchasing managers are building up product inventories for the first time in months. The momentum is very clearly there, and I doubt very much that we’re going to run out of that momentum until very late in the year, (...) the odds that the country would plunge anew into a recession have fallen significantly."

Alan Greenspan on ABC’s “This Week”

Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS)

Ukraine Is The Best Performing Stock Market This Year.

While Ukraine is the best performing stock market this year, Japan leads the way in the G7 group:

"The average year-to-date performance of the 81 countries listed below is 7%. With a YTD gain of 5%, the US is just below average. Only 12 of the countries shown are down so far in 2010. Three Eastern European countries are leading the way this year with the biggest gains -- Ukraine (58.87%), Estonia (41%), and Romania (30%). Bermuda is down the most with a YTD decline of 31%.

Looking at just the G-7 countries, Japan is up the most so far in 2010 with a gain of 6.6%. Japan is followed closely by Britain (+6.13%). The US ranks third out of G-7 countries, while Italy has been the worst of the group with a decline of 0.18%. Of the BRIC countries, only Russia is doing better than the US in 2010. Brazil, India, and China have all underperformed the US. China is one of the 12 countries that is down." in Bespoke


Related ETF`s: iShares MSCI Japan Index (ETF) (Public, NYSE:EWJ), SPDR S&P 500 ETF (Public, NYSE:SPY) , iShares MSCI Emerging Markets Indx (ETF) (Public, NYSE:EEM), iShares FTSE/Xinhua China 25 Index (ETF) (Public, NYSE:FXI), Market Vector Russia ETF Trust (Public, NYSE:RSX)

April 1, 2010

Best Stocks In Q1: Star Scientific, InterMune, Ruth`s Hospitality Group, Tuesday Morning Corp., Quicksilver And Radian Group

The first quarter was a fantastic three month period for holding stocks. The best performers in the US stock market were:

"Star Scientific, Inc. (Public, NASDAQ:CIGX) takes top honors with a gain of 264%. InterMune, Inc. (Public, NASDAQ:ITMN) isn't far behind with a gain of 242%. Star Scientific, Inc. and InterMune, Inc. are the only two Russell 3,000 stocks that gained more than 200% in the first quarter. After the top two places come three Consumer Discretionary stocks -- Ruth's Hospitality Group, Inc. (Public, NASDAQ:RUTH), Tuesday Morning Corporation (Public, NASDAQ:TUES), and Quiksilver, Inc. (Public, NYSE:ZQK). And after these three come four Financial sector stocks -- Strategic Hotels & Resorts Inc. (Public, NYSE:BEE), The PMI Group, Inc. (Public, NYSE:PMI), Radian Group Inc. (Public, NYSE:RDN), and American Capital Ltd. (Public, NASDAQ:ACAS)."

These overbought stocks can very well be a list of stocks to consider some short lines in the next few weeks.