The bellwether SP 500 traded completely inside of last Monday's trading range from Tuesday through Thursday of last week, indicating near-term investor indecision, before staging a tentative move to new all-time highs on Friday. Friday's move to new highs, despite a sharp downward revision in Q4 2014 GDP and amid worries about Russian intervention in Ukraine, was an impressive show of bullish investor conviction and is characteristic of a market that wants to go higher. Continue reading "Will These Obstacles Slow The Market's Bullish Trend?"
Tag: streetauthority.com
Rising Rates Are Coming -- Here's How To Prepare
If you racked up big gains in the stock market last year, you have Ben Bernanke and his cohorts at the Federal Reserve to thank.
The SP 500's 29.6% gain in 2013 (32.4% when dividends are included), which was the best year since 1997, was largely based on comments made by the Fed in December 2012.
Back then, the economy was so weak that the Fed committed to keep the federal funds rate at historic lows in place until at least the middle of 2015, even later than many economists had assumed. Against such a favorable interest rate backdrop, stocks faced little resistance.
Indeed, throughout 2013, the likelihood of an imminent increase in the federal funds rate remained off the table. And three Fed governors even suggested in December that interest rates would remain untouched into 2016.
But in the early months of 2014, the Fed playbook is starting to look different. The recently released minutes from the past Fed meeting in late January show that some Fed governors are getting anxious. As The Wall Street Journal noted recently, Fed governors have begun discussing "the possibility of rate hikes in the near future." Continue reading "Rising Rates Are Coming -- Here's How To Prepare"
Are We On The Brink Of A Retail Spending Boom?
Thanks, Old Man Winter. Consumers have already been in a sour mood, and you're not helping matters. Icy roads and bitter winds have left many people to stay at home -- and keep their cash in their pocket.
For companies that have been looking for signs that retail spending is finally ready to grow, this roadblock has been unwelcome. The bleak winter likely explains why retail spending on goods and services like cars, restaurants and gas stations slipped 0.4% in January on a seasonally adjusted basis, according to the National Retail Federation.
Yet before you conclude that the era of robust consumer spending will never return, consider an interesting stat offered up by J.P. Morgan: In just the past two years, consumers' net worth has expanded by $13 trillion. Continue reading "Are We On The Brink Of A Retail Spending Boom?"
Indicators Show Market at a Near-Term Decision Point
Last week, the bellwether SP 500 continued its rebound from a successful test of underlying support at 1,730 at the beginning of the month. The U.S. broad market index finished Friday's session at 1,839, 2.3% higher for the week and just off the all-time high at 1,851.
Year to date, however, the SP 500, along with the blue-chip Dow 30 and small-cap Russell 2000, are in negative territory. The tech-laden Nasdaq is the only major U.S. index in positive territory in 2014, up 1.6%, and it must continue to lead on the upside for the broad market advance to continue. Continue reading "Indicators Show Market at a Near-Term Decision Point"
Twitter: Should You Buy It?
Some stocks just never allow you to gain an edge through fundamental research -- even by the most rigorous analytical minds.
These stocks become so popular that they become disconnected from any sort of fundamental valuation, and you can simply hold your nose and buy along with the crowd. Or you can be gutsy and look to sell shares short.
Score one for the fundamental analysts. Heading into quarterly results, Twitter (NYSE: TWTR) was a major focus for short sellers, as I noted three weeks ago. The short interest has risen further since that article was published, to 32.7 million shares by mid-January.
And these short sellers may be tempted to lock in gains after shares plunged more than 20% this week. But they shouldn't close out those short positions just yet -- Twitter has an additional 20% to 25% downside from here.
Twitter faces two challenges: It needs to sharply boost its audience, and it needs to figure out how to make much more money off of that audience. These are concerns I spelled out late last month on our sister site ProfitableTrading.com. Among the reasons why this stock may be headed to just $40 (or lower): Continue reading "Twitter: Should You Buy It?"
