Posts by Lawrence Lewitinn
Lawrence Lewitinn at Talking Numbers 1 day ago
Gold is starting to shine a little.
Throughout November, gold has had a bit of a comeback – rising 2 percent to mark its third-straight weekly gains as investors have bought bullion in response to massive central bank easing. China’s central bank cut its rates on Friday. Meanwhile, European Central Bank president Mario Draghi made comments signaling a willingness to use more monetary action to stimulate the e urozone economy. That has stocked inflation fears , which in turn ha ve made gold more attractive.
With gold above $1,200, should investors consider adding it to their portfolios?
“You might get to the $1,250 - $1,275 level in the near term,” said Daniel Stecich , senior vice president of economic research at Athena Advisor Services. “I don’t think it will last up there because I think the inflation fears right now are probably a little bit overinflated.”
On the technicals, g old’s short-term prospects also look positive, according to Todd Gordon, founder of TradingAnalysis.com. Looking at a 10-year logarithmic chart of gold, Gordon sees the metal as successfully holding a long-term support line despite its decline over the past three years.
Forget Dow 20K and Nasdaq 5K because after a recent investment conference, a new round number is captivating both Wall Street and Main Street: One trillion.
At Monday’s Reuters Global Investment Outlook Summit, a top executive for Leon Cooperman’s Omega hedge fund suggested that Apple could “eventually” hit the $1 trillion mark in market capitalization. The comments touched off a flurry of speculative reports and tweets detailing just what it would take to reach the trillion-dollar milestone.
Simple math suggests that the stock would need to jump 46 percent to about $170 a share to get to $1 trillion. Activist investor Carl Icahn, who owns 53 million shares, recently wrote, “Our valuation analysis tells us that Apple should trade at $203 per share today, and we believe the disconnect between that price and today’s price reflects an undervaluation anomaly that will soon disappear.”
Yet any hope that Apple could get to $170, let alone $203, anytime soon may be a stretch, according to one portfolio manager.
Disclosure: Stifel makes a market in the securities of Apple Inc.
It’s the ultimate game of chicken.
Stocks keep hitting fresh records seemingly by the d ay. But bond yields, which typically rise with a recovering economy, have barely budged and continue to hover below 2.4 percent. So what gives?
“Until you start to see the global disinflationary environment reverse itself, you’re going to be in a tight trading range for the 10-year,” said Chad Morganlander, portfolio manager at Stifel Nicolaus’ Washington Crossing Advisors. He expects the 10-year yield to stay within a range between 2.5 and 3.0 percent in 2015.
U.S. rates are highercompared with many European countries, he said . And inflation doesn’t seem like it will be a problem in the near future, he added.
Rates will hold steady for now and may even move down a little bit soon, according to the chart work of one highlyregarded technician.
“We’re not expecting rates to go meaningfully higher,” said Ari Wald, head of technical analysis at Oppenheimer & Co.
Falling oil prices and an improving economy have been a boon for airline stocks. Now one of them, JetBlue, is poised to rake in even more cash with a new plan to add seats and slap on additional fees for bags.
This year has been great for the transportation sector. While the S&P 500 is up 11 percent year-to-date, the Dow Jones Transportation Average is up twice as much – 22 percent. It helps when one input becomes a lot cheaper. Crude oil prices have fallen 23 percent since Jan . 1. And within transports, airlines have been in the cockpit piloting the sector to higher altitudes. One phenomenal performer has been JetBlue, which is up an astonishing 57 percent in 2014.
According to one senior Wall Street trader, JetBlue’s stock has more room to run, even if he believes these newly announced moves already were priced into the stock.
“Long term, I think it’s going a lot higher,” said David Seaburg, head of sales trading at Cowen and Company. He Cowen’s airline analyst, Helane Becker, increased her price target on JetBlue to $15 in August on the idea that the company would rework its business model.
Lawrence Lewitinn at Talking Numbers 3 days ago
Here’s a mind-blowing statistic: If the market is trading at the current level or higher at the end of the year, it will only be the fourth time in the past 100 years that the S&P 500 has enjoyed three consecutive years of double-digit percentage gains.
This is according to Howard Silverblatt, the senior index analyst at S&P Dow Jones Indices, who analyzed data going back to the S&P 500’s founding in 1957, and then earlier historical data extrapolated from the earlier 90-stock S&P index.
The last time the S&P 500 saw three straight years of double-digit returns was in the late 1990s. And, of course, we all know what happened next.
So does that give investors a reason to worry about the recent rally?
“I don’t think we’re in the same kind of bubble territory as we were in the beginning of ’99,” said Gina Sanchez, founder of Chantico Global. “However, we do have some bubbly elements happening within equities.”
Still, Sanchez says that American stocks are still much more attractive than other investment opportunities around the globe.
Lawrence Lewitinn at Talking Numbers 3 days ago
Call it a commodities conundrum.
Over the last five trading sessions, the price of crude oil is down 3 percent, while the price of gold is up nearly 3 percent.
That’s a bit of an anomaly, because both commodities have been moving in the same direction over the past few months: Down. And while the fundamental pictures for the two differ, both have been harmed by the massive rise in the relative value of the U.S. dollar since July. As each dollar gains in value, it takes fewer of those dollars to buy an ounce of gold or a barrel of oil, so a strong dollar tends to be bad for commodities prices in general.
Still, that doesn’t mean that gold and oil need to travel together all of the time, contends Craig Johnson, senior technical analyst at Piper Jaffray.
“The dollar is up and to me, that’s ultimately the key driver for the whole commodity complex,” Johnson said. “But I don’t see any strong correlation between what you’re seeing happening with gold and what you’re seeing happening with oil.”
For oil, both supply and demand appear to be pointing to lower prices.
Gold may be inching its way back to $1,200 per troy ounce but one major bank is saying shorting the yellow metal is one of the best ideas for 2015.
In a recent report, Credit Suisse global head of technical analysis David Sneddon makes the case for gold to trade down to $950 by the end of next year. That would mean a 20 percent drop from Tuesday’s prices.
In the last two years, the price of bullion has declined 30 percent , and it’s 37 percent off its 2011 record high.
(Watch: Why is Putin buying gold?)
But can gold sink to $950 in the next 13 months? One trader believes so and has even taken a position on it.
“I am short gold long term,” said David Seaburg, head of sales trading at Cowen and Company. Though he did predict a short-term pop for gold on “Talking Numbers” two weeks ago, he believes the metal is headed down.
“You’re going to have little pockets of trades that occur as we get more global uncertainty,” Seaburg said. “But ultimately I think the trajectory for gold is down , and I do believe that being short it is the trade right now.”
Mega-mergers are grabbing the headlines this week, but are they signaling a top in stocks?
According to data compiled by Thomson Reuters, roughly $1.5 trillion (that’s with a “t”) in merger transactions involving U.S.-based companies have been done since the start of 2014. That’s the most since the tech bubble days of 2000.
And we all know what happened then.
With the S&P 500 now at all-time highs, some investors may be worried that a repeat of the market crashes of 2000 – or 2007 – may be in our sights. But one top trader says this time is different.
“It’s not a top,” said David Seaburg, head of sales trading at Cowen and Company. “It’s a very positive setup for a continuation of the secular bull market.”
Unlike a decade ago, the recent crop of mergers and acquisitions has been mostly strategic, Seaburg said. “You don’t have these venture firms … or private equity coming and taking companies at very high valuations.”
“It’s going to continue to make this market and push it to trend higher,” he added.
While some traders think the surge in tech stocks is reminiscent of the tech bubble of the late ‘90s, one leading technical analyst believes it’s going even higher.
Calling it one of his favorite ETFs, Ari Wald, head of technical analysis at Oppenheimer & Co., says the QQQ is a buy. The ETF, which tracks the Nasdaq 100 Index, is up nearly 18 percent year-to-date.
“I do love the QQQ here,” said Wald.
A 15-year chart of the relative strength of the QQQ makes the case to go long, according to Wald. That chart is made by taking the QQQ’s price and dividing it by the price of the S&P 500. When the chart move s higher, that means the QQQ is outperforming the broad market index. Likewise, when it moves down, the QQQ is a laggard.
From 2000 to 2002, the QQQ fell precipitously relative to the S&P 500. Wald sees the subsequent period as a time ETF built a base of support. “Now it’s really broken out to the upside, retracing that stark underperformance from 2000 to 2002,” he said. “Over the coming years, I think that it continues to retrace that. I think this remains leadership.”
“I think QQQ continues to lead the way higher,” he said.
Could the new aluminum F-150 help drive Ford’s stock another 30 percent higher?
That’s the argument being made in the latest issue of Barron’s. The cheaper, lighter-weight F-150 pickup combined with other cost-cutting measures could boost earnings which, in turn, might lift the stock higher. Wall Street liked what it read and on Monday, shares of Ford were up 2.6 percent.
Those who were looking for a bullish sign in Ford only had to look to the charts, according to Mark Newton , the head of technical analysis at Greywolf Execution Partners.
T he stock appears to be targeting a return to its 52-week highs at $18.12 per share , he said.
“Ford continues to look very bullish here technically,” Newton said. “It looks very good.”
Despite a large pullback in the stock over the summer, Ford’s stock held what Newton sees as a long-term uptrend in place since 2008. The stock’s low at $13.26 in October tested the uptrend and coincided with the 50 percent retracement level of the stock’s 2012 to 2014 rally. It subsequently bounced from there.