Posts by Lawrence Lewitinn

  • Why a big Black Friday won’t actually boost retail stocks

    Lawrence Lewitinn at Talking Numbers 22 hrs ago

    Black Friday is here, and shoppers are packing stores with a little more money in their pockets this year.

    Both personal income and consumer spending increased 0.2 percent in October. Meanwhile, the Thomson Reuters/University of Michigan measure of consumer sentiment for November is at its highest level since 2007.

    These could both point the way to higher sales this holiday season. But according to one market participant, more sales may not translate into higher share prices for retail stocks.

    “I do expect consumers to spend more money this season since we do have more discretionary income available,” said Erin Gibbs, equity chief investment officer at S&P Capital IQ Global Market Intelligence. “However, because consumers are so price conscious, we see a lot of expectations of massive pressures on margins and, ultimately, pretty measly earnings and net income growth.”

    “Margins are really forcing [retail] net income down,” Gibbs added. “On top of it, I just see a lot of Black Friday sales that have been starting early. We’ve seen some warnings already about the net income coming in.”

    And the technician doesn’t see the trend waning anytime soon.

  • Why Switzerland holds the key to gold’s next move

    Lawrence Lewitinn at Talking Numbers 2 days ago

    Gold traders are keeping a close eye on Switzerland.

    This Sunday, the Swiss will vote on whether to mandate their central bank to boost its bullion reserves from 7.7 percent to 20 percent of its total reserve over the next five years. That would likely require the European country to buy a good deal of gold over the next few years.

    In fact, Bank of America predicts   a “yes” vote could push gold prices above $1,350 per ounce. However, the odds of the referendum actually passing may be low, with one recent poll showing that only 38 percent of the Swiss support such a measure.

    “It’s not going to end up in the ‘ yes ’ vote,” predicted David Seaburg, head of sales trading at Cowen and Company. “The odds of that occurring are very low.”

    In the meantime, Seaburg believes investors should avoid the yellow metal.

    “There’s no reason to own gold in the near term,” he said. “You own it for two main reasons: as a hedge against inflation – [but] inflation is benign – and a hedge against a decline in the dollar. The dollar is going stay strong. You have every central bank is trying to figure out a way to debase their currency.”

    “Stay away for the next six to 12 months,” he recommends.

  • This classic theory predicts incredible upside for stocks

    Lawrence Lewitinn at Talking Numbers 2 days ago

    Another day, another record. 

    Both the S&P 500 and the Dow Jones Transportation Average traded at record highs on Tuesday after revised GDP data showed the economy grew faster than expected in Q3.

    Based on one of the oldest theories of technical analysis, this is significant. Dow Theory holds that a bull market in the transportation sector confirms bullishness for the rest of the market.

    And the Dow Transports aren’t just in a bull market, they’re soaring even compared to the S&P 500. While the broad market index is up almost 12 percent year-to-date, the transports have enjoyed an astounding return of 24 percent.

    “It is suggesting that equities have further to rise,” said Ari Wald, head of technical analysis at Oppenheimer & Co. “When the Dow Jones Transports outperformed, it tends to be in the early to middle innings of a secular advance. So in terms of a secular outlook for stocks, we’ve got further to go in the years ahead.”

    Here’s where it gets really interesting: The relative price of the Dow transports just made peaks not seen since the mid-1930s.

    Though Sanchez acknowledges the economy is in a recovery, she believes it’s tepid.

  • Small fortune: Why history tells you to buy small caps now

    Lawrence Lewitinn at Talking Numbers 3 days ago

    This has been a small year for small caps.

    While the large-cap S&P 500 traded at record highs on Tuesday, the small-cap Russell 2000 is barely in the green, up a mere 2 percent on the year.

    But according to one technical analyst, the next three months could be very good for the Russell 2000, particularly against the S&P 500.

    Ari Wald, head of technical analysis at Oppenheimer & Co., analyzed 35 years of relative performance of the Russell 2000 compared with the S&P 500, and found that the small-cap index averaged over 1 percent higher returns in December than the large-cap benchmark.

    (Watch:November consumer confidence comes in at 88.7, down from October)

    What’s more, Wald determined that December through February were, on average, the three strongest months of outperformance for the Russell 2000 relative to the S&P 500.

    “That at least mitigates some of the trend concerns that we’re seeing,” he said. “They could start to perform in line with big caps.”

    (See:CNBC's Economics coverage)

  • History says to buy HP ahead of earnings

    Lawrence Lewitinn at Talking Numbers 3 days ago

    Hewlett-Packard is set to report earnings after the bell on Tuesday, its first quarterly report since announcing that it will split into two companies.

    And according to Robert Cihra, who covers the stock for Evercore ISI, Hewlett-Packard may lose something because of its split.

    “I actually would worry that HP loses some of the advantages they get from scale,” Cihra said Tuesday on CNBC. “One of the biggest things HP brings to the table right now is that they’re just enormous. That helps them on sales end and on the margins end. So I do think they risk a little of that.”

    Cih r a rates the stock “equal-weight” and has a price target of $38 per share, which is in line with where the stock is currently trading.

    Nonetheless, the charts may indicate a buying opportunity, according to Katie Stockton, chief technical strategist at BTIG.

    Much as it did before its November 2013 earnings release, Hewlett-Packard recently tested its 200-day moving average before breaking out to the upside. Likewise, Stockton’s chart shows that the stock faced resistance before its quarterly report a year ago. However, it broke above it and is now up 38 percent over the last 12 months.

  • It's about to get rocky for stocks: Billion-dollar strategist

    Lawrence Lewitinn at Talking Numbers 3 days ago

    The U.S. market is breaking records, with the S&P 500 and the Dow Jones industrial average both at all-time highs. However, the road to even higher returns will be rocky, according to Dan Morris, global investment strategist for TIAA-CREF, which holds $840 billion in assets under management.

    To be sure, Morris sees the markets as being driven by central bank stimulus in addition to encouraging fundamentals.

    “Certainly, what’s going on with the central banks–the ECB and the Bank of Japan–increasing their own QE [quantitative easing] policies has helped,” he said. ”Secondarily, you’ve got better economic numbers out of the U.S. so that’s certainly encouraging for the U.S. market. Falling oil prices are obviously another key indicator that pretty much helps everyone–even if it does hurt some companies in the energy sector.”

    (Read: US economy expands strongly in Q3, ignoring uncertainty abroad)

    “It’s kind of one of these nice moments when the agglomeration of the data that you’re getting is, broadly speaking, positive,” Morris added.

    In the meantime, Morris prefers overseas equities.

  • Why the pros say that oil is headed way lower

    Lawrence Lewitinn at Talking Numbers 4 days ago

    A big meeting this week could determine oil’s next move. And while Americans sit down for Thanksgiving dinner on Thursday, OPEC ministers will be talking turkey about oil production.

    Oil prices have plunged 27 percent in the last six months. That means the oil cartel may look to cut production to boost prices when it meets at its headquarters in Vienna on Thursday.

    How should investors be positioned before the meeting?

    According to one oil market watcher, crude prices will likely head down because even some of the expected production cut proposals won’t be enough to offset North American shale oil production.

    “This is a game of chicken between Saudi Arabia and North America,” said Gina Sanchez, founder of Chantico Global. “North America is becoming far less dependent on Saudi Arabia. So Saudi Arabia is waiting to see where our cutoff point is.”

    Should OPEC not cut at all, Sanchez sees the price of West Texas Intermediate crude  falling to $60 per barrel.

    “And even if they cut by a million barrels –which is what is expected to be the proposal by Iran—that probably still takes us all the way down to $70,” she said.

  • Forget the S&P—why the Nasdaq could be your best bet

    Lawrence Lewitinn at Talking Numbers 4 days ago

    The bull market continues to charge ahead.

    The S&P 500 and the Dow Jones industrial average make fresh record highs nearly every day, while the Nasdaq composite is just 377.63 points away from its all-time intraday high of 5,132.52, set in March 2000.

    So will the Nasdaq soon gain another 8 percent to hit its record— or will the S&P 500 or the Dow rise 8 percent first? In other words, what’s the best index to hop onto right now?

    According to Gina Sanchez of Chantico Global , the Nasdaq is set to break its record before the others rise 8 percent.

    “I’d wager on the momentum,” Sanchez said. “The fastest-running horse in that group is the Nasdaq. It has been leading the stock market generally higher.”

    Sanchez, a CNBC contributor, expects the tech sector to push the rest of the index higher. The Nasdaq composite is more tech heavy than the other indexes.

    The technicals are also indicating a higher Nasdaq, according to the chart work of Todd Gordon, founder of TradingAnalysis.com. He is positive on the index because he sees some of its biggest sectors improving.

    “We actually have further to go if this is a tech-led rally,” Gordon added.

  • Don't look now, but Apple is approaching a major milestone

    Lawrence Lewitinn at Talking Numbers 4 days ago

    Apple is hitting all-time highs, and the tech giant’s market cap is quickly approaching a major milestone. In fact, based on Monday’s closing price, Apple shares only need to gain a dollar for the company’s market capitalization to rise to $700 billion.

    Given the stock has gained 57 percent year to date, a break above the $700 billion mark should seem easy for Apple to do. What’s more, a large majority of analysts are bullish on the stock. According to data compiled by FactSet, three-quarters of analysts following the company have a “buy” rating on Apple.

    However, not everyone is on board the Apple train. Pacific Crest analyst Andrew Hargreaves rates the stock a “hold.” Hargreaves estimates the stock’s 12-month fair value to be just $96.

    “The trouble spot that we continue to see is the potential lack of growth in iPhones beyond the ‘6’ cycle,” he said. “We don’t think that either the [anticipated] watch or Apple Pay or any other products can replace the hole that creates in your growth profile.”

    But the technicals are more bullish, according to the chart work of Todd Gordon, founder of TradingAnalysis.com.

  • Where are stocks headed? Look to the yen.

    Lawrence Lewitinn at Talking Numbers 4 days ago

    The yen is in free fall—and that could be good news for U.S. stocks.

    In the past month, the Japanese currency has tumbled around 10 percent versus the  dollar as a combination of bad economic numbers out of Japan and a growing U.S. economy has traders snapping up dollars and tossing out yen. Japan’s economy remains weak despite Prime Minister Shinzo Abe’s fiscal stimulus efforts. Abe has called for snap elections to gain support for his policies, dubbed “Abenomics.”

    “As long as there is divergent monetary policy between Japan and the U.S., this is going to continue,” said Gina Sanchez, founder Chantico Global. “We have a situation where we see continuing stimulus in Japan and we’re looking for the potential for the first rate hike coming in 2015 in the U.S. Those just don’t really support anything other than a weak yen.”

    (Read: Asian shares higher as Japan dissolves parliament)

    The technicals also are signaling the dollar gaining against the yen, based on the chart work of Todd Gordon, founder of TradingAnalysis.com.

    (See: CNBC's Asia-Pacific news)