Posts by Michael Santoli

  • Tired, narrow market could be nearing a top: Leuthold's Ramsey

    Michael Santoli at Yahoo Finance 3 days ago

    Market cycles don’t always unfold according to the familiar script, but they tend to trace similar story arcs.

    And right now, the U.S. stock market is moving through plenty of the plot points associated with a gradual, tantalizing topping process.

    This, at least, is the view of veteran market watcher Doug Ramsey, chief investment officer at the Minneapolis research and asset-management firm Leuthold Group.

    During the past several months of range-bound trading in the vicinity of its all-time high above 2100, the Standard & Poor’s index has been increasingly reliant on a narrowing group of strong stocks and has largely masked significant beneath its calm surface.

    “Over the last six months specifically,” Ramsey says in the attached video, “it’s been some of the usual characters that tend to tire out and start to lag late in a bull market.”

    Ramsey notes, in particular, the widely discussed drop of more than 10% in the transportation sector and similar damage to utility stocks as typical features of a “distribution” process that can precede a more important peak in the broad indexes.

    More from Michael Santoli: 

  • 'Nifty' growth stocks keep the bears at bay, for now

    Michael Santoli at Yahoo Finance 3 days ago

    It would be a nifty trick if the big stock indexes can keep holding their ground as asset markets around the world beat a retreat.

    We’re seeing a slow-motion crash in emerging markets currencies and their stocks, as partially gauged by the iShares MSCI Emerging Markets ETF (EEM).

    Global commodities prices are collapsing, in a move closely linked to the painful EM hangover. The fund under ticker GSG, which tracks the Goldman Sachs Commodity Index, is near a five-year low.

    The credit markets are looking wobbly, too, with yields on junk bonds stubbornly lifting, largely due to weakness in energy and commodity issuers.

    And energy and industrial stocks here are being tossed aside, too, with 3M Co. (MMM), Caterpillar Inc. (CAT) and Illinois Tool Works Inc. (ITW) joining United Technologies Corp. (UTX) in the market's field hospital.

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  • Big-name investors stand atop a welcome 'wall of worry'

    Michael Santoli at Yahoo Finance 4 days ago

    Will it really be the big, scary threats that important gray-haired investors see coming over the horizon that we should all expect to upend financial markets?

    The question is timely now that the largest hedge fund firm ever, Ray Dalio’s Bridgewater Associates, is on the front page of the markets’ newspaper of record turning negative on Chinese stocks, saying there is “no safe place” for clients’ money there.

    This alarmed - and alarming - message comes mere days after the brilliant billionaire investor Carl Icahn told us all that junk-bond ETFs were a disaster-in-waiting - tinderbox theaters just waiting to ignite and trap their customers.

    We also heard this week of a broader set of accomplished hedge-fund handicappers who are urgently hunting for the next “big short” focusing on various instruments catering to yield hogs and growth gluttons such as bank-loan funds and small-cap stocks.

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  • With Apple and others, stocks ran ahead of reality

    Michael Santoli at Yahoo Finance 5 days ago

    Companies closed their books for last quarter on June 30 – more than three weeks ago. So how did the story of the quarter change so much in the past week or two - going from “earnings are just good enough” to “earnings weren’t so good at all?”

    In the last couple of weeks, traders celebrated results from tech and growth-stock bellwethers Netflix (NFLX), eBay (EBAY), Intel (INTC), and especially Google (GOOGL, GOOG) that were modestly better than anticipated.

    This week so far, reports similarly in the zone of forecasts from Apple (AAPL) and Microsoft (MSFT) were met with disappointment and reflex selling after Tuesday’s close and early today.

    The fact is that the only thing that’s truly changed over that span is stock prices and the investor emotions and expectations that rose with them.

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  • Shanghai stock rout invites timely buyout bids for U.S.-listed Chinese firms

    Michael Santoli at Yahoo Finance 10 days ago

    It had the look of a brilliant, gutty trade.  

    Before the sun was up in New York on July 9, just as the Chinese stock market was rebounding hard from a savage weeks-long selloff, bold bidders emerged with an offer to buy all available American depositary receipts of E-Commerce China Dangdang Inc. (DANG) for $7.81 each – a 20% premium to its prior closing price but less than half its value of four months earlier.

    The Shanghai market's scary cascade, begun in mid-June, had washed the stock of Dangdang lower with it - despite the fact that it’s listed on the New York Stock Exchange. By the night of July 8, Dangdang shares had fallen 41% in less than four weeks to a two-year low of $6.51. The following day , the Shanghai market finally reversed higher, surging 7%, as government efforts to prop up stocks took hold.  Before the opening bell rang in New York, the bidding group made its buyout offer.

    It’s unclear how much traction these efforts might get. The company says it has put the offer to a special committee of independent board members and has authorized the committee to retain advisors.   

  • Giant stocks lead a rally, as investors cry 'Get me in'

    Michael Santoli at Yahoo Finance 10 days ago

    The stock market spurt of the past week might not qualify as a huge rally, but it sure has been a rally of the huge.

    Shares of the very largest companies in America have outpaced the broad market by an impressive margin during the brisk rebound of the past several days.

    An exchange-traded fund called Guggenheim Russell Top 50 Mega Cap (XLG) tracks the 50 largest U.S.-listed companies and from a week ago Wednesday through last night it was up 4.7%. The S&P 500 (^GSPC) over that time was up 3.8% and the equal-weighted version of the S&P 500 – a proxy for the “average stock” that trades as Guggenheim S&P Equal-Weight ETF (RSP) – was ahead just 2.9%.

    This recent preference for the stocks of the bluest chips was hard to miss even in Thursday’s drowsy little rally. Apple Inc. (AAPL), on no news, gained 1.3% versus 0.8% for the broad market. Microsoft Corp. (MSFT) and IBM (IBM) were also clear leaders.

    So, what’s behind this sudden preference for the giants of the market?

  • Nasdaq is again answering the bulls wishes - for now

    Michael Santoli at Yahoo Finance 11 days ago

    If the early inklings prove true and this has become a Nasdaq (^IXIC) market again, the bulls should be relieved.

    When the focus turns from Syriza to Silicon Valley and from macro dramas to microprocessors, it usually means the Street has revived its interest in corporate particulars and rediscovered its willingness to believe.

    Following an afternoon of televised protests in Athens coinciding with a lethargic stock-market dip Wednesday, tech-industry beacons crucial to the Nasdaq commanded investor eyeballs after the close.

    Netflix Inc. (NFLX) surpassed forecasts for the one metric that matters to investors these days - net new subscriber growth - and its shares were sent higher following the first day after a 7-for-1 split.

    Intel Corp. (INTC) did OK on the revenue and per-share earnings lines, and that was good enough for traders to overlook the fact that a low tax rate and buybacks flattered the bottom line. That’s what happens when a stock loses 18% in half a year leading up to a key quarterly report: the bar is lowered.

  • Is Trump really the great stock picker he claims to be?

    Michael Santoli at Yahoo Finance 12 days ago

    Leave it to Donald J. Trump to turn a bureaucratic disclosure form into a chance to boast about how good he is even at things he doesn’t try hard at.

    Trump’s chest-thumpingstatement on his personal financial disclosure to the Federal Election Commission - after claiming in all-caps that he’s worth more than “TEN BILLION DOLLARS” – makes special note of his prowess at playing the stock market with his play money.

    The Republican presidential contender’s press release says: “Even though stock market purchases are not something that Mr. Trump has focused on in the past, and while only a small part of his net worth, 40 of the 45 stocks purchased went up in a relatively short period of time, creating a gain of $27,021,471, not including those stocks still remaining in the portfolio which currently have an unrealized gain of over $22 million.”

    Related: Donald Trump still has a money problem, no matter how rich he is

  • A 'hot hand' eludes investors at Wall Street's blackjack table

    Michael Santoli at Yahoo Finance 12 days ago

    It’s as if this market is a game of blackjack. It keeps going for 21. But when the cards add up to more, the hand is busted, bettors lose their money and a new set of cards is dealt.

    Since reaching 2100 for the first time in history on Feb. 17, the S&P 500 (^GSPC) index has crossed that level on 35 different days, or nearly twice a week.

    It did so again on Tuesday, as the rapid rebound of the prior two sessions was gently extended. The macro headlines slowed, oil prices gained on a “buy the bad news” reaction to the Iran deal and just-good-enough earnings reports arrived. A nitpicky observer might argue that it wasn't ideal for stocks to climb on light volume and on a day that saw soft economic data and a dip in Treasury yields. But these, for now, are forgivable shortcomings. 

    There is no particular cosmic or even technical significance to the 2100 line, necessarily. It’s just a level near the upper end of the longstanding trading range where – so far – the risk-reward bargain has turned against the bulls.

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  • For hot high-tech investment services, cash is trash

    Michael Santoli at Yahoo Finance 13 days ago

    Make a list of all your money worries. Where does “Too much spare cash” rank?

    If having surplus cash piling up uninvited doesn’t seem like a pressing concern, then the entrepreneurs running today’s leading automated investing services would like a word with you.

    Companies such as the pugnacious rivals Betterment and Wealthfront would apparently rather snipe at one another than express agreement. Yet these fast-growing services – which offer easy, low-cost online investment accounts – strike the same note when it comes to the “risks” of having too much cash uninvested in the markets.

    Betterment, in fact, is now launching a new feature that will constantly monitor a customer’s bank account and automatically move any cash above a preset target balance into his or her investment portfolio.

    Called SmartDeposit, the tool fits with this burgeoning industry’s focus on automating each individual’s retirement-savings plan and monitoring it for adherence to investment models steeped in long-term market simulations and behavioral-finance theory.