Posts by Jeff Macke
Jeff Macke at Yahoo Finance 7 hrs ago
If March comes in like a lion then where the hell is my roar? Futures are flattish after a weak close to February on Friday. Here's what you need to know as we head into March:
Stocks still closed higher for the week and had their best month since October 2011. For the record the S&P 500 (^GSPC) gained 5.5% and the Nasdaq (^IXIC) tacked on a glorious 7.1%. We're riding high and watching Naz 5000. Over the last 15 years March has been higher 10 times and down 5 with an average gain 1.8%.
And finally March features some anniversaries to keep in mind, especially in light of the annual Berkshire Hathaway (BRK-B) letter and it's traditional dismissal and embrace of market timing. March 10th is of course the 15th anniversary of the Nasdaq's all-time closing high of 5049. Before that though we have another important date in history: The worst mainstream media unintentionally ironic market bottom call EVER.
It's been a retail-heavy week of earnings, and if there's been a prevailing theme it's been the long overdue focus on merging the on- and offline shopping experiences. Obviously merchants have been talking about the move to so-called omni-channel sales for years but this was the quarter where shares really started moving based on how robust their non-brick and mortar efforts really are.
The turning point probably came at the end of last month when Amazon (AMZN) reported a surprise profit driven in large part by a surge in Prime customers. Don't underestimate the significance of that news, not just on Amazon's shares, which you can see ripping at the end of January, but in the mindset of other retailers. When the perception was that online sales meant nothing more than shipping headaches, the brick and mortar model still seemed ok. Once Wall Street and merchants a little slower on the uptake realized that Amazon was actually able to generate insanely high-margin revenues by improving incremental Prime offerings and charging more, lightbulbs started going off all over the place.
Weight Watchers International (WTW) shares are getting hit so hard that I'm resisting the urge to use a loss-related pun. Shares are off 30% after the weight loss club issued a stunning profit warning this morning. This is pretty bad, folks. Weight Watchers said meeting subscribers fell 13.3% for the quarter which was actually better than the 16.7% decline in online membership. For this year management says it will earn anywhere from 40 to 70 cents. Analysts were looking for $1.43. This is a mess. Lots of debt, no grip on the core business and looking very much like a typewriter ribbon manufacturer at this point.
Friends, our time together is coming to a close. I'm leaving Yahoo Finance next week. There isn't a mystery here. You won't find any hidden "car people" or conspiracies. This was my decision and it was made months ago. After four years, hundreds of segments and tens of millions of your clicks it's simply time for me to move along to other challenges.
I'm leaving you in good hands. In fact, as timing would have it, Warren Buffett, the unquestioned master of investing, both in practice and teaching others how to think about money, is releasing his annual letter to shareholders in the morning. I started teaching myself how to invest with Buffett's letters some 30 years ago. Tomorrow morning at 8am I'll be pouring a cup of joe and reading Buffett along with everyone else on Wall Street. If you have even a passing interest in finance I encourage you to do the same.
I'm watching a couple of CEO turnaround trades today.
I've touched on the idea briefly before, but I want to flesh it out ahead of a particular earnings report tonight. The idea isn't complicated but it's made me money pretty consistently over the years.
Obviously simple and profitable is the holy grail of trading.
I'm not talking about penny stocks in need of a superstar exec to save the day. This trade works best with blue chips where Wall Street, for whatever reason, has lost confidence in management. In those situations a change at the top can be a very bullish catalyst, sometimes even without a new executive waiting in the wings.
Microsoft (MSFT) is a great recent example. Here's a five year chart. I don't have to tell you much about Microsoft beyond the fact that it used to be a monopoly and now it's known mostly for so-so software and clunky tablets. But check this out.
More from Yahoo Finance
Taser (TASR) is getting tased by investors to the tune of 13% after 4Q profits missed by a penny coming in at 9 cents a share. However revenue of $47 million came in ahead of estimates. The 40% gain in the stock over the past year left little room for any negative news. On a more positive note, if you read the papers you know law enforcement is beefing up on taser like products including body cameras and so called smart weapons. Today CEO Rick Smith reminded investors the company has 13 major cities using its products and they are in active discussions or trials with an additional 28.
The Dow Jones Industrial Average (^DJI) made a fresh high, joining its cousin the S&P 500 (^GSPC) and now we await the Nasdaq (^IXIC) to push above 5,048. Instead of celebrating prosperity here's what the media is likely to do which is the wrong attitude.
Trot out the usual cast of fearmongers to tell everyone why a biblical crisis is in our immediate future. This week it was Nobel Prize winning Yale Professor Robert Shiller. Shiller is better known for his work on housing but he's also got a stock model called the Cyclically Adjusted Price-Earnings Ratio, or CAPE. According to Shiller's CAPE ratio stocks haven't been this expensive since the middle of last decade... that's right, before the Financial Crisis. In fact looking at the long-term CAPE you can see it peeking prior to the dot-com bubble bursting and the Great Depression.
Jeff Macke at Yahoo Finance 5 days ago
Investors have just about had it with Hewlett-Packard (HPQ). The Dow (^DJI) member is down 10% after revenue of $26.8 billion missed analyst forecasts. Although adjusted earnings per share of 92 cents narrowly beat forecasts CEO Meg Whitman did cut full year profit goals blaming the stronger U.S. dollar because HP does get over 60% of revenues from overseas. While we can let Ms. Whitman use the currency card this quarter, the problem is HP's multi-year turnaround is just taking too long for many investors who are reluctant to even call it a turnaround at this point.
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Jeff Macke at Yahoo Finance 5 days ago
World markets are sitting at or near generational highs, driven by pretty dang solid consumer news, a dash of animal spirits and Fed Chair Janet Yellen's ability to play the obfuscation game just as well as Greenspan and Bernanke before her. Here's some stuff to keep in mind as we cross the halfway point of the week.
You want to know what really scares the Fed? Interest rates. Check out the yield on the 10-year bond over the last few days. It's back down below 2% and still in a downtrend as tracked by the CBOE Interest Rate 10-Year (TNX). The Fed's biggest fear is that they try to raise rates and the bond market doesn't go with them. The Fed like all financial institutions survives on the trust of its customer base. The Fed can't get out of sync with the bond market. So far, they aren't. Whether or not they lost control once a hike cycle starts is a problem for later this summer.
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Jeff Macke at Yahoo Finance 6 days ago
Charts aren't the be-all end-all of trading or investing, but they are undeniable. Managers can fudge numbers and accounting standards can vary to the point of noise in the hands of a good CFO. A chart, on the other hand, is simply a historical record of the price of an asset at a particular date. Time runs left to right, price goes up and down. If you buy something that subsequently forms a pattern moving from the lower left to the upper right corner you win.
Everything else is just noise.
So while Fed Chair Janet Yellen blathers on and computers trade back and forth based on key words I think this is a good time to look at the number of good looking charts we have out there and how to play them.
Start with our buddy the S&P 500. The index for grown-ups is making yet another new high today. I'm starting with this one because it has the cleanest breakout. That means it also has the most obvious support. Remember when we broke out above the 2014 highs at 2090? That's now a bottom. That means technicians will be looking for buyers to come in if, and when, the S&P 500 pulls back to those old peaks.