Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Market Sector

Businesses are grouped in a market sector, which denotes that they all provide a similar good or service. Grouping businesses together allows investors an easier opportunity to research and investigate each company amongst its peers. An investor can then compare earnings ratios, price-to-book ratios, and other metrics all within one defined sector of the economy. It’s difficult to compare businesses in separate industries, as they would have unique growth prospects. A mature industry such as that of railroad companies can’t expand at the same rate as Internet companies and therefore the fundamental metrics are not the same and can’t be compared at face value.

Dow Jones Transports Leading the Market?

By for Profit Confidential

economic indicatorThis market is definitely looking tired after such a strong run since mid-October.

The performance of transportation stocks has been noticeable this year. The Dow Jones Transportation Average has actually outperformed the NASDAQ Composite year-to-date. In my mind, when there’s leadership from this group, it’s a compelling, traditional bull market indicator. Countless component companies are pushing record highs.

Equally as impressive is the performance of the Russell 2000 index, which has pretty much mimicked the NASDAQ Composite over the last two years.

A divergence became apparent in the beginning of July, as the Dow Jones Industrial Average began underperforming the other indices. It’s as if investors upped their risk tolerance, willing to bet on more risky equity assets as they felt more comfortable being bullish on a stock market that’s already gone up.

Over the last 12 months, the Dow Jones Transportation Average has been the leading index (excluding biotechnology stocks, which aren’t comparable). While outperforming the Russell 2000 by a slim margin and the Dow Jones Industrial quite significantly, I think the Dow Jones Transportation Average remains the leading index going into 2014 and a great indicator for the broader market.

Among the railroad stocks that are included in the Dow Jones Transportation Average, Union Pacific Corporation (UNP) bounced back nicely higher over the last five weeks after experiencing a lasting price consolidation the past six months. It will be interesting to see if the stock can hold above its all-time record-high of $165.18. Doing so will be meaningful.

CSX Corporation (CSX) is also a component of the Dow Jones Transportation Average, and it, too, seems to have broken … Read More

What Traders Love So Much About This Sector

By for Profit Confidential

Traders Love So Much About This SectorWhen we looked at Biogen Idec Inc. (BIIB) in late April, the biotechnology company was trading around $218.00 a share. Now, it’s trading between $230.00 and $240.00 or so and is still a big momentum bet.

The company recently raised its forecast as its multiple sclerosis (MS) drug, known as “TECFIDERA,” is now the leading MS therapy drug in the U.S. The drug is approved for use in the U.S., Canada, and Australia, and the company is working on approval from the European Medicines Agency (EMA).

The right drug company can defy prevailing stock market sentiment and make a lot of money for shareholders. While biotechnology stocks typically trade on their own material developments, they are often super high-risk and very volatile investments. They are perfect for risk-capital traders and momentum players.

Biogen Idec’s total revenues in its third quarter of 2013 grew 32% to $1.8 billion, with earnings growing 22% to $488 million. The company’s growth rate is slowing, but this could change significantly if more markets for its MS treatment open.

Another biotechnology stock that’s experienced major momentum in its operations and on the stock market is Alexion Pharmaceuticals, Inc. (ALXN). The stock has tripled over the last three years, and earnings estimates continue to rise for this year.

The company’s main drug offering is “Soliris,” which is a treatment for a debilitating blood disorder known as paroxysmal nocturnal hemoglobinuria.

Third-quarter net product sales grew 36% to $400 million. Non-GAAP earnings grew 39% to $168 million.

The company recently increased its 2013 revenue guidance, and the stock reaccelerated from a recent consolidation. (See “Why Momentum Traders Love Read More

Japan Not Home-Free Despite Strong GDP

By for Profit Confidential

Japan Not Home-Free Despite Strong GDPIn these pages, I recently discussed the amazing returns in the benchmark Nikkei 225 index in Japan and how the country is following America’s example, printing money to fuel the economy.

The fact is that Japan is finally beginning to see some results from Prime Minister Shinzo Abe’s aggressive strategy to inject $2.4 trillion into the Japanese economy over the next decade.

Maybe this time it’s for real. Previous attempts to drive Japan’s economy out of its economic tailspin have failed. Of course, it will take some time, and success will depend on the continued weakness of the yen and a pickup in the global economy, especially with the country’s key trading partners in China.

If the first quarter was any indication, the despair in Japan may be finally coming to an end after decades of disappointment; but again, it’s only one quarter.

Japan saw its gross domestic product (GDP) surge 0.9% in the first quarter or an annualized rate of 3.5%, according to data from Japan’s Cabinet Office. (Source: “Japan GDP Rises 0.9% On Quarter In Q1,” RTTNews, May 15, 2103.)

What’s also interesting is the rise in private consumption in Japan, which contributed to 2.3% of the 3.5% GDP growth. The upward move in consumer spending is critical, as a large part of the economic renewal in Japan will be dependent on consumer spending as is the case in the United States. According to Trading Economics, consumer spending accounted for about 60% of GDP in Japan, so it’s essential.

While it’s still way too early to see if Japan is on the path to growth, the country’s first-quarter … Read More

It’s the Final Out: RIM Better Hit a Home Run

By for Profit Confidential

RIM Better Hit a Home RunResearch In Motion Limited (NASDAQ/RIMM; TSX/RIM) appears to be rising from the ashes, as investors dive back into the stock of the once-fabled maker of the “BlackBerry.” For Research In Motion (RIM), it has been quite the journey after the investment community, including myself, thought the end was near for this former Wall Street star.

Since the emergence of Apple Inc. (NASDAQ/AAPL), the BlackBerry and RIM’s “Playbook” tablet have proved to be horrible failures, based on my stock analysis.

But something strange is happening in the equities market, as RIM has surged 168% since trading at $6.43 on September 21, 2012; Apple, on the other hand, has declined 29% in the same period, according to my technical analysis.

My stock analysis shows an opening gap on the RIM stock chart on January 22 on a bullish moving average convergence/divergence (MACD) as indicated by the circles; while this is bullish, be wary of the stock’s overbought condition.

RIMM Research in Motion ltd, Nasdaq stock market chart

Chart courtesy of www.StockCharts.com

The smartphone and tablet markets continue to be extremely competitive, and I expect this competition will heat up further, based on my stock analysis.

My stock analysis suggests that Apple dominates the tablet market, but there is strong competition from Google Inc.’s (NASDAQ/GOOG) “Nexus” tablet and Samsung Electronics Co. Ltd.’s “Galaxy” series. (Read “Why Apple Needs to Refocus Its Energy.”)

Some believers are also surfacing as RIM gets ready to launch new its new line of devices, powered by its “BlackBerry 10” (BB10) operating system, on January 30. Based on what I have seen that has leaked out on the Internet, the new BlackBerry has the familiar … Read More

Will Housing Stocks Crash?

By for Profit Confidential

Housing Stocks CrashOne of the most often talked about parts of the economy is the real estate market sector. Because real estate is such a large and important part of the economy, naturally, many eyes are focused on whether or not this market sector can and will rebound from its deep decline.

While we have certainly seen a strong bounce off the bottom, there are still many concerns for the future of both the real estate market sector and housing stocks, specifically. Investors in housing stocks are definitely ahead of the curve, as many housing stocks have increased substantially. With gains in excess of 100%, the question on many people’s minds is: will the real estate market sector continue its upward trajectory or are housing stocks teetering on the edge of a massive decline?

I think recent comments by the CEO of D.R. Horton, Inc. (NYSE/DHI), Donald Tomnitz, can illuminate a lot. Tomnitz stated in a conference call that he was quite concerned that the lack of jobs might lead to lower home sales next year. D.R. Horton is, by volume, the largest homebuilder in America. One of the most sobering moments was when Tomnitz stated, “I also see the fact that there are potential layoffs in a number of industries, especially the defense industry.” (Source: “D.R. Horton Falls as CEO Cautions on Job Growth Next Year,” Bloomberg, November 12, 2012.)

The question isn’t the current level of the real estate market sector. For the fourth quarter, which ended September 30, 2012, D.R. Horton reported net income of $100 million, a massive increase of 180% from the prior year’s quarter. Revenue … Read More

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Dow Jones Transports Leading the Market?

By for Profit Confidential

economic indicatorThis market is definitely looking tired after such a strong run since mid-October.

The performance of transportation stocks has been noticeable this year. The Dow Jones Transportation Average has actually outperformed the NASDAQ Composite year-to-date. In my mind, when there’s leadership from this group, it’s a compelling, traditional bull market indicator. Countless component companies are pushing record highs.

Equally as impressive is the performance of the Russell 2000 index, which has pretty much mimicked the NASDAQ Composite over the last two years.

A divergence became apparent in the beginning of July, as the Dow Jones Industrial Average began underperforming the other indices. It’s as if investors upped their risk tolerance, willing to bet on more risky equity assets as they felt more comfortable being bullish on a stock market that’s already gone up.

Over the last 12 months, the Dow Jones Transportation Average has been the leading index (excluding biotechnology stocks, which aren’t comparable). While outperforming the Russell 2000 by a slim margin and the Dow Jones Industrial quite significantly, I think the Dow Jones Transportation Average remains the leading index going into 2014 and a great indicator for the broader market.

Among the railroad stocks that are included in the Dow Jones Transportation Average, Union Pacific Corporation (UNP) bounced back nicely higher over the last five weeks after experiencing a lasting price consolidation the past six months. It will be interesting to see if the stock can hold above its all-time record-high of $165.18. Doing so will be meaningful.

CSX Corporation (CSX) is also a component of the Dow Jones Transportation Average, and it, too, seems to have broken … Read More

What Traders Love So Much About This Sector

By for Profit Confidential

Traders Love So Much About This SectorWhen we looked at Biogen Idec Inc. (BIIB) in late April, the biotechnology company was trading around $218.00 a share. Now, it’s trading between $230.00 and $240.00 or so and is still a big momentum bet.

The company recently raised its forecast as its multiple sclerosis (MS) drug, known as “TECFIDERA,” is now the leading MS therapy drug in the U.S. The drug is approved for use in the U.S., Canada, and Australia, and the company is working on approval from the European Medicines Agency (EMA).

The right drug company can defy prevailing stock market sentiment and make a lot of money for shareholders. While biotechnology stocks typically trade on their own material developments, they are often super high-risk and very volatile investments. They are perfect for risk-capital traders and momentum players.

Biogen Idec’s total revenues in its third quarter of 2013 grew 32% to $1.8 billion, with earnings growing 22% to $488 million. The company’s growth rate is slowing, but this could change significantly if more markets for its MS treatment open.

Another biotechnology stock that’s experienced major momentum in its operations and on the stock market is Alexion Pharmaceuticals, Inc. (ALXN). The stock has tripled over the last three years, and earnings estimates continue to rise for this year.

The company’s main drug offering is “Soliris,” which is a treatment for a debilitating blood disorder known as paroxysmal nocturnal hemoglobinuria.

Third-quarter net product sales grew 36% to $400 million. Non-GAAP earnings grew 39% to $168 million.

The company recently increased its 2013 revenue guidance, and the stock reaccelerated from a recent consolidation. (See “Why Momentum Traders Love Read More

Japan Not Home-Free Despite Strong GDP

By for Profit Confidential

Japan Not Home-Free Despite Strong GDPIn these pages, I recently discussed the amazing returns in the benchmark Nikkei 225 index in Japan and how the country is following America’s example, printing money to fuel the economy.

The fact is that Japan is finally beginning to see some results from Prime Minister Shinzo Abe’s aggressive strategy to inject $2.4 trillion into the Japanese economy over the next decade.

Maybe this time it’s for real. Previous attempts to drive Japan’s economy out of its economic tailspin have failed. Of course, it will take some time, and success will depend on the continued weakness of the yen and a pickup in the global economy, especially with the country’s key trading partners in China.

If the first quarter was any indication, the despair in Japan may be finally coming to an end after decades of disappointment; but again, it’s only one quarter.

Japan saw its gross domestic product (GDP) surge 0.9% in the first quarter or an annualized rate of 3.5%, according to data from Japan’s Cabinet Office. (Source: “Japan GDP Rises 0.9% On Quarter In Q1,” RTTNews, May 15, 2103.)

What’s also interesting is the rise in private consumption in Japan, which contributed to 2.3% of the 3.5% GDP growth. The upward move in consumer spending is critical, as a large part of the economic renewal in Japan will be dependent on consumer spending as is the case in the United States. According to Trading Economics, consumer spending accounted for about 60% of GDP in Japan, so it’s essential.

While it’s still way too early to see if Japan is on the path to growth, the country’s first-quarter … Read More

It’s the Final Out: RIM Better Hit a Home Run

By for Profit Confidential

RIM Better Hit a Home RunResearch In Motion Limited (NASDAQ/RIMM; TSX/RIM) appears to be rising from the ashes, as investors dive back into the stock of the once-fabled maker of the “BlackBerry.” For Research In Motion (RIM), it has been quite the journey after the investment community, including myself, thought the end was near for this former Wall Street star.

Since the emergence of Apple Inc. (NASDAQ/AAPL), the BlackBerry and RIM’s “Playbook” tablet have proved to be horrible failures, based on my stock analysis.

But something strange is happening in the equities market, as RIM has surged 168% since trading at $6.43 on September 21, 2012; Apple, on the other hand, has declined 29% in the same period, according to my technical analysis.

My stock analysis shows an opening gap on the RIM stock chart on January 22 on a bullish moving average convergence/divergence (MACD) as indicated by the circles; while this is bullish, be wary of the stock’s overbought condition.

RIMM Research in Motion ltd, Nasdaq stock market chart

Chart courtesy of www.StockCharts.com

The smartphone and tablet markets continue to be extremely competitive, and I expect this competition will heat up further, based on my stock analysis.

My stock analysis suggests that Apple dominates the tablet market, but there is strong competition from Google Inc.’s (NASDAQ/GOOG) “Nexus” tablet and Samsung Electronics Co. Ltd.’s “Galaxy” series. (Read “Why Apple Needs to Refocus Its Energy.”)

Some believers are also surfacing as RIM gets ready to launch new its new line of devices, powered by its “BlackBerry 10” (BB10) operating system, on January 30. Based on what I have seen that has leaked out on the Internet, the new BlackBerry has the familiar … Read More

Will Housing Stocks Crash?

By for Profit Confidential

Housing Stocks CrashOne of the most often talked about parts of the economy is the real estate market sector. Because real estate is such a large and important part of the economy, naturally, many eyes are focused on whether or not this market sector can and will rebound from its deep decline.

While we have certainly seen a strong bounce off the bottom, there are still many concerns for the future of both the real estate market sector and housing stocks, specifically. Investors in housing stocks are definitely ahead of the curve, as many housing stocks have increased substantially. With gains in excess of 100%, the question on many people’s minds is: will the real estate market sector continue its upward trajectory or are housing stocks teetering on the edge of a massive decline?

I think recent comments by the CEO of D.R. Horton, Inc. (NYSE/DHI), Donald Tomnitz, can illuminate a lot. Tomnitz stated in a conference call that he was quite concerned that the lack of jobs might lead to lower home sales next year. D.R. Horton is, by volume, the largest homebuilder in America. One of the most sobering moments was when Tomnitz stated, “I also see the fact that there are potential layoffs in a number of industries, especially the defense industry.” (Source: “D.R. Horton Falls as CEO Cautions on Job Growth Next Year,” Bloomberg, November 12, 2012.)

The question isn’t the current level of the real estate market sector. For the fourth quarter, which ended September 30, 2012, D.R. Horton reported net income of $100 million, a massive increase of 180% from the prior year’s quarter. Revenue … Read More

Hurricane Sandy, and the Stocks Helping Rebuild the East Coast

By for Profit Confidential

Helping Rebuild the East CoastThe tragic results from Hurricane Sandy are now starting to become apparent. With the death toll continuing to rise, both from the Caribbean nations as well as America, it is truly a sad event, and my hopes and prayers go to the families of those affected.

When a natural disaster such as Hurricane Sandy occurs, it is a stark reminder of the fragility of life. With the damages running into the multibillion-dollar range, the rebuilding effort from Hurricane Sandy will be extensive and costly. Early estimates have the economic costs at over $20.0 billion. (Source: Bloomberg, October 30, 2012.)

Two of the main stocks in the rebuilding market sector that will help citizens and businesses damaged by Hurricane Sandy include Lowes Companies, Inc. (NYSE/LOW) and The Home Depot, Inc. (NYSE/HD).

While the immediate thought is to first rescue any individuals in harm’s way, the next step is rebuilding life along the East Coast and resuming some semblance of normalcy. The home and business repair market sector, epitomized by both Lowes and The Home Depot, will certainly see an influx of business.

In preparation for Hurricane Sandy, many people and businesses have bought generators, batteries, rope, and other essential supplies. Once Hurricane Sandy has passed, this could mean additional large-item sales to replace what has been damaged. This is one market sector that is truly needed in this time, helping people rebuild their lives following a devastating natural event.

Home Depot Inc Chart

Chart courtesy of www.StockCharts.com

In the home rebuilding market sector, even before Hurricane Sandy hit, The Home Depot is a clear outperformer. This is because of the rebound in the housing market … Read More

Why Investors Are Now Running to These Traditionally Safe Stocks

By for Profit Confidential

Why Investors Are Now Running to These Traditionally Safe StocksHistorically, when the economy is recovering from a recession and heading into a cyclical growth phase, the market sectors that traditionally do well are the technology and semiconductor industries.

Investors buy the stocks in these areas because earnings growth for these companies usually rises rapidly as the economy enters a growth phase. Yes, many argue that the U.S. economy is in a recovery phase. But the semiconductor and technology market sectors have been underperforming the general stock market. This underperformance is a key indicator.

Follow what the market does, not what people say.

Usually, when the economy is about to enter a recession, the defensive market sectors outperform other stock market sectors. Those defensive market sectors are utilities, consumer staples, and health-care stocks.

I highlighted recently how the defensive market sectors were outperforming the rest of the stock market. This key indicator is a strong sign that the U.S. economy and the stock market are in trouble and have more downside to them.

Last week, something happened with the defensive market sectors. You can see it in the following charts:

 

Chart courtesy of www.StockCharts.com

 

Chart courtesy of www.StockCharts.com

 

Chart courtesy of www.StockCharts.com

 

Not only are these market sectors outperforming, but they have also started hitting new highs!

I believe these key indicators are continuing to signal that the U.S. economy is headed into a recession (see: The 2013 U.S. Recession). The new highs suggest that more and more investors are worried about the recession in Europe and the slowdown in China hitting the U.S. economy hard, hence money is moving into utility, consumer staples, and health-care … Read More

Microsoft Takes $6.2-Billion Hit; What Happens Now?

By for Profit Confidential

Microsoft Takes $6.2-Billion Hit

Technology stocks move at an extremely fast pace with the continued development and innovation of software and hardware. When looking at the market sector for software, a few large names pop up that have a large percentage of market share compared to other technology stocks. Two of these giants are Microsoft Corporation (NASDAQ/MSFT) and Google Inc. (NASDAQ/GOOG).

While Microsoft controls the market sector for PCs, the online segment is certainly controlled by Google. The market share for Google in regards to the American Internet search market sector is approximately 67%, according to digital marketing and research firm comScore, as compared to Microsoft’s “Bing” search engine, which has only 15%. However, this market sector is extremely competitive and costly. That 15% for Microsoft, while double the market share from 2009, has cost the company a large amount of money.

In total, the online division for Microsoft has cost more than $5.0 billion since 2009. Technology stocks continually innovate and develop new methodologies. For those firms in the back of the pack, it is extremely expensive to try to overtake the leader. Usually technology stocks leapfrog over existing leaders through new innovations. This is how Google became the leader in the search engine market sector. However, Microsoft has not been able to innovate in-house. The latest results of some of its ideas have been costly, as we can see from a $6.2-billion write-down for the purchase of an online advertising agency made in 2007.

At the time, Microsoft spent $6.3 billion in cash to purchase aQuantive in an attempt to close the gap between it and Google. Since the purchase, the deal … Read More

Is This the Time to Buy JPMorgan?

By for Profit Confidential

Buy JPMorganThe recent testimony by Jamie Dimon, CEO of JPMorgan Chase & Co. (NYSE/JPM), in front of the Senate’s panel proves two things: 1) Dimon is quite cool under pressure; and 2) lawmakers know very little about the financial market sector and bank stocks. In response to the reported $2.0-billion loss at one of JPMorgan’s divisions based in London, lawmakers have decided to put the hammer down on bank stocks to try to reduce risk and volatility. Conversely, bank stocks want to keep as little regulation as possible to enable them to make profits. With all of this uncertainty, many investors have jumped ship, and it has made me question if an opportunity exists to get into bank stocks and the financial market sector while others are leaving it.

Dimon reiterated that these losses were hedged trades and not proprietary trades. The difficulty is differentiating one from the other with all bank stocks. To understand this better, think of bank stocks like a store selling clothing. Part of the requirements for bank stocks is to hold inventory for clients to make markets and facilitate trades. To not allow any flexibility in the system would be similar to having a clothing store with no clothes, while having any clothes might be viewed as proprietary speculation on how many shirts would actually sell. Of course, this is ridiculous, as is having handcuffs on bank stocks.

However, things do need to change in the financial market sector, as we’ve seen by the crisis in 2008. Obviously, the existing financial market sector is not perfect. Ultimately, the incentive and punishment system must be in … Read More

Is Research In Motion Preparing for a Sale?

By for Profit Confidential

technology stockWith technology stocks in the hot mobile sector active in developing new technologies, some companies like Research In Motion Limited (NASDAQ/RIMM) are being left behind. With market share for Research In Motion (RIM) in the first quarter 2012 in the smartphone market sector now estimated to be only 6.4%, down from 13.6% in the first quarter of 2011, the company is continuing a massive decline.

As I previously wrote in the article, Beginning of the End for RIM?, the “BlackBerry” maker has massive problems. Just released were reports that more job cuts are coming down the pipeline. Some estimates range from 2,000 to 6,000 layoffs out of a global workforce of 16,500. Technology stocks that aren’t growing and are bloated need to cut the excess fat, no question. These rumors helped the stock move up slightly, as many investors (myself included) believe the end goal for new CEO Thorsten Heins is to clean up the firm and sell it before it’s too late. The last thing other technology stocks want is to buy a bloated firm that’s only a small, marginal player in the market sector.

In addition to job cuts, there are reports of an additional write-down of $1.0 billion, due to a massive inventory glut, since no one is buying these phones. None of this has been confirmed by the company yet. In the mobile phone market sector, there is heavy competition, including the just-released “Galaxy S3” phone by Samsung Electronics Co. Ltd., a technological marvel, in addition to the upcoming “iPhone 5” by Apple Inc. (NASDAQ/AAPL). These phones put any RIM product far behind the … Read More

Goldman Sachs’ European Bet

By for Profit Confidential

European Central BankRecently, bank stocks have taken big hits following news of the trading debacle involving JPMorgan Chase & Co. (NYSE/JPM), causing the firm over $2.0 billion in losses. This has caused a market sector selloff across the entire investment banking space. But some interesting developments have occurred with some bank stocks.

The Goldman Sachs Group, Inc. (NYSE/GS) has recently disclosed that it actually increased its holdings of Italian sovereign debt. This was offset by selling Italian bank stocks. This is a very interesting trade. As of March 31, 2012, exposure to Italian government debt was over $8.0 billion, as opposed to just over $3.0 billion at the end of December 31, 2011. Conversely, Goldman reduced its holdings of Italian bank stocks to only $623 million, as opposed to almost $7.0 billion as of December 31, 2011.

Goldman Sachs is building a large inventory of Italian debt in its thinking that clients will want further exposure to sovereign debt versus holding Italian bank stocks. Many bank stocks in Europe continue to need more recapitalization and this will weigh down their share price for some time. Short-term sovereign debt of less than three years is actually backed by the European Central Bank (ECB), so is seen as a safer trade than the bank stocks. In that regard, Goldman has made a shrewd decision to avoid bank stocks in Italy, as I definitely see more problems arising in the future.

Goldman Sachs has been hit recently as well as many other bank stocks in a selloff across the entire market sector. However, over the long run, Goldman Sachs has found a way to produce … Read More

Coal Stocks: Don’t Try to Catch This Falling Knife

By for Profit Confidential

market sectorOne of the basic problems for investors who aren’t successful over the long term is that they are trying to catch a falling knife. This means trying to pick the bottom of a market sector decline, hoping that future corporate earnings will turn around. I’ve been asked several times if I would recommend the coal industry, as it’s trading at such cheap levels. Yes, the prices of stocks in this market sector have fallen, but “cheap” is a relative word. They are cheap compared to their recent past, but the stock market looks forward and there are signs that this market sector will have substantial headwinds for the companies and their corporate earnings.

The first and most obvious problem is the low price of natural gas. The market sector of natural gas is trading at decade lows. Many of the power plants that generate electricity do have the facilities to use either gas or coal as an input. However, an electricity-generating pant would certainly choose the cheaper option of natural gas right now. With new technologies to extract natural gas in the U.S.booming, most analysts expect a ton of new supply to hit the market over the next decade, keeping prices low. More pain for coal producers and their corporate earnings, as they will have a tough time competing with a cheaper substitute.

Natural gas isn’t only cheaper, but also emits less pollution. The second major headwind is government regulation. President Obama is close to issuing new rules that may halt the production of new coal-fired plants. There are reports that the Environmental Protection Agency might set tougher emission … Read More

The Market Strategy You’ll Want to Use Later this Year

By for Profit Confidential

Market StrategyStock picking in a market with very little tailwind makes life much more difficult compared to a bull market. This is obvious. But in any market, there are opportunities in differing market sectors. There’s always the opportunity for short-selling and near-term momentum trading. There’s also the opportunity to build longer-term investments in good companies at attractive valuations. As an equity speculator, you can’t fight the stock market; you can only adapt to the current conditions.

If I were stock picking in this kind of lackluster market for stocks, I’d be focused on momentum plays. I’d rather bet on a stock that’s already gone up with a strong following than make a value trade or bet on a turnaround. This means that I would be consistently making lists of stocks that are hitting new 52-week highs and watching the news wires.

Last year, one of the best market sectors for speculators was gold and to a lesser extent other precious metals. As an investment theme, I think stock picking among gold and silver miners remains one of the best strategies over the next three years. The fundamentals for gold (and silver) are still very much intact. (See Central Bank and Inflation—the Top New Fundamentals for Gold Stocks.) Spot prices for gold and silver have been experiencing a well-deserved correction and, no matter what the individual story, these kinds of stocks always trade on spot prices. While I’d be trading momentum stocks this earnings season, I’d consider stock picking in gold and silver over the coming months with a 12- to 18-month time horizon for investment. The timing is almost right … Read More

What Recession? These Stocks Hitting
All-time Record Highs—a Great Indicator

By for Profit Confidential

Railroad stocks are always a good leading indicator on the economy and the stock market. The biggest companies in this group have seen their share prices move back up to their highs at a time when the rest of the stock market is stuck in a trading range. In fact, almost all of the large railroad stocks aren’t just back up to their 52-week highs on the stock market; they’re actually trading right close to their all-time highs and that’s significant.

Nobody Likes It, But this Market Sector Carries the Biggest Stick

By for Profit Confidential

It’s funny how investor sentiment can change on a dime. An expectation gets created for a solution to a problem, the action occurs, then it’s okay for investors to buy stocks. Institutional investors—or traders more particularly—always do this. It’s the game of the equity speculation business and it’s a reflection of human nature.

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.

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