- Lawrence Lewitinn at Talking Numbers1 day ago
A seemingly obscure indicator, the Traders Index is now at its highest levels in years. And it has Jonathan Krinsky, chief market technician at MKM Partners, quite a bit concerned.
That’s because the TRIN (or the “Arms Index” after its inventor, Richard W. Arms Jr.) is calculated by taking the ratio of the number of advancing stocks to declining stocks and dividing it by ratio of the volume of advancers to decliners. When the TRIN is above 1.0, the down stocks have more of an influence than up stocks. This past week, the TRIN spiked up to 3.5, its highest level in about four years.
"If you have a day where there is tons of volume trading in the down stocks, the TRIN would be elevated,” explained Krinsky. “And when you get to an extreme, that’s where we really pay attention.”
The TRIN has moved above 2.5 for a total of six times in the last two years. The first four times it happened, the jump in the TRIN turned out to be a buy signal. But the fifth time was something different, according to Krinsky.
- Lawrence Lewitinn at Talking Numbers2 days ago
The economy may be picking up ever so slightly, but there’s one segment of the population that still lives in their parents’ basement and that may crimp the future growth of a major sector in the economy.
According to the U.S. Census Bureau, 17.7 percent of men aged 25 to 34 years old and 11.7 percent of women in the same age group live at home with mom and/or pop. That’s the highest percentage since such records began being kept three decades ago.
And if millennials aren’t moving out of their parent’s home, that means there are fewer buyers or renters for apartments and homes in the United States. The fact that millennials are taking more time to start a household, and buy a home, is one of the reasons why Jeff Gundlach called on shorting the home builder ETFs last year.
With the stats further backing up Gundlach’s thesis, another portfolio manager is saying investors should sell the ETF tracking home construction companies (trading under the ticker symbol ITB).
“We would be sellers of ITB,” said Chad Morganlander, portfolio manager at Stifel Nicolaus. “We would avoid the sector altogether.”
- Lawrence Lewitinn at Talking Numbers2 days ago
What do the p resident and the Dow Jones industrial average have in common? They both have Boeing.
The aerospace giant received a no-bid contract to build the next version of Air Force One, which will be three souped-up 747-8 airliners. The Dow component has been making the commander-in-chief’s plane for over 50 years, although it will still have to compete for the planes’ internal systems.
But it’s not just POTUS, who has been jetting with Boeing. Investors in the company saw a 6 percent jump in shares to record highs on Thursday after the company’s latest earnings number beat Wall Street’s expectations. In the last 12 months, the stock is up more than 14 percent.
According to one portfolio manager, investors should get on board Boeing’s stock.
“What bodes well for Boeing is that their pipeline is quite robust,” said Chad Morganlander, portfolio manager at Washington Crossing Advisors. He notes the company’s backlog is now 5,500 aircraft valued at roughly $430 billion. Stifel Nicolaus, parent company of Washington Crossing Advisors, has a buy rating on the stock with a $160 price target, 8 percent higher than where it closed on Thursday, and makes a market in its shares.
- Lawrence Lewitinn at Talking Numbers3 days ago
Apple’s best product? How about iCash.
After Apple shocked the world with blowout iPhone sales, the world’s most valuable company also announced that it’s sitting on a mountain of cash.
How much? How about $178 billion.
To put that into perspective, that’s more than the market cap of 483 of the S&P 500 companies. In fact, Apple can use all that cash to buy 38 of those companies outright and have a few bucks to spare. Or, as S&P Dow Jones Indices senior index analyst Howard Silverblatt notes, Apple could pay $556 to every single person in the United States.
The massive cash has some investors clamoring.
One of the company’s larger shareholders thinks the best investment Apple can make is in its own stock. “When you have $178 billion, you should do a bigger buyback,” said Carl Icahn on CNBC’s “Fast Money Half Time Report” on Wednesday. Icahn owns nearly 53 million shares worth more than $5.3 billion based on his most recent regulatory filings.
Others think the horde of cash makes it impossible to bet against the company.
- Lawrence Lewitinn at Talking Numbers3 days ago
Oil prices have fallen and they won’t be getting up for a long time, according to two major banks.
A recent report by UBS says it will take at least five years before crude oil returns to $90 per barrel, where it traded as recently as last summer. Meanwhile, in a note released Tuesday, Goldman Sachs said it expected oil to stabilize around the $40 per barrel level and then head toward $65 to $70 per barrel by the end of the year.
West Texas Intermediate crude oil contracts settled at $44.45 on Wednesday, its lowest price since March 2009.
According to one trader, Goldman Sachs and UBS have it right. “We’re in a bottoming process,” said David Seaburg, head of sales trading at Cowen and Co. For oil prices to move higher, “it’s going to take significant time.”
Despite a reduction in capital expenditures by oil companies, supply is still projected to go up, said Seaburg. In fact, the U.S. Energy Information Agency reported that American stockpiles are at 407 million barrels, the highest since 1982, when such statistics began being compiled.
- Amanda Diaz at Talking Numbers4 days ago
Investors are being urged to get hooked on cigarette stocks.
In a recent analyst note, Wells Fargo Securities reiterated its “overweight” rating on big tobacco, saying the “stars are aligned for the U.S. tobacco sector” and calling it the “place to be in consumer staples in 2015.” The firm cited five key tail winds; increased disposable income for the consumer, limited threat from emerging market exposure, strong fundamentals, multiple cost savings levers and upside potential from e-cigarettes.
Big tobacco companies like Altria, Reynolds American and Lorillard have posted smoking hot returns in the past 12 months, up 45 percent, 42 percent and 33 percent, respectively. So, will big tobacco continue to see big profits?
“The fundamental backdrop [for Altria] is pretty incredible,” said Cowen and Co.’s head of sales trading David Seaburg. “There are no currency risks, and the consumer is getting much stronger through savings, particularly with the cost of fuel,” he added.
- Lawrence Lewitinn at Talking Numbers5 days ago
Greece has spoken and now the markets are wondering if there will be loud echoes from other parts of the European Union.
On Sunday, Greece’s far-left Syriza party won 149 seats out of 300. In an odd coalition with a smaller conservative party, the new 40 year-old prime minister, Alexis Tsiparas, plans to lead the fight against austerity measures that were implemented to keep Greece in the euro zone. To be sure, Greece’s share of the EU’s economy is fairly minuscule; the country’s GDP was about $242 billion in 2013, smaller than Miami’s but a bit larger than Detroit’s. The whole EU’s GDP is $12 trillion.
Still, Greece’s great lurch leftward may embolden similar movements in larger, comparably troubled European states. Spain’s Podemos party leader Pablo Iglesias hailed Syriza’s victory. And there may be reason to believe Podemos and other Euro-skeptics could see a plain gains in Spain in a series of local and national elections expected throughout this year. In a recent poll by the country’s El Pais newspaper, Podemos was favored by 28 percent versus the governing PP party’s 19 percent.
- Alex Rosenberg at Talking Numbers5 days ago
Stocks are famously valued based on the expected stream of the companies’ future earnings. And that’s just what makes the latest earnings season trend so odd.
All of the sudden, corporate results appear to have taken a supporting role when it comes to the market moves, according to one market participant.
“I don’t think there’s a lot of baked-in big expectations for earnings right now,” said David Seaburg, head of sales trading at Cowen. “If you look at the options market and the individual stocks that are due to report, the [average expected] move on earnings is a lot less than it’s been in prior quarters.”
So if not earnings, what is moving equities now?
“It’s macro, it’s geopolitical, it’s what’s going on in Greece that is taking center stage,” Seaburg said, referring to Sunday’s Greek election. Other recent macro events have included the announcement of European quantitative easing and the continued plunge in crude oil prices.
Earnings expectations “are kind of muted now. I think we need to see some of the political stuff get out of the way and see some of the economic things within Europe change for the better for this market to really pick up pace,” Seaburg said.
- Lawrence Lewitinn at Talking Numbers6 days ago
This is the week Apple investors have been waiting for.
The tech giant is set to report its most-recent quarter’s earnings on Tuesday. And with the iPhone now grabbing more market share in China, Japan and South Korea, shareholders are hoping Apple surprises Wall Street. According to FactSet, the consensus is for earnings of $2.59 per share on $67.3 billion in revenues.
But according to some traders, there’s really only one thing that matters: iPhone 6 sales.
“The Apple iPhone 6 and 6 Plus, of course, are the key drivers for top line growth over the next 18 months,” said Chad Morganlander, portfolio manager at Washington Crossing Advisors. “We would be buyers here.” His firm’s parent company, Stifel Nicolaus, has a $130 price target on the stock. Monday morning, it was trading at $117.
Still, despite the bullishness, Morganlander believes investors should be prudent when buying Apple.
“Even though we are giving a bullish call here, we want investors to be able to be somewhat more pragmatic about their allocation over the course of the next 36 months,” he said. “We just want people to weigh Apple in their portfolio where it’s a 5 percent weighting not a 50 percent weighting.”
- Lawrence Lewitinn at Talking Numbers8 days ago
The dollar rally is continuing.
The U.S. dollar index, a basket of currencies versus the greenback, hit an eight-year high after the European Central Bank announced its monetary stimulus plan. With more euros floating around, each one is anticipated to be worth less compared to the dollar.
But with nearly half of all revenues for companies in the S&P 500 coming from overseas, some worry that a strong dollar may be a ticking time bomb for stocks in the U.S.
However, some traders say a dollar rally is a positive signal for shares.
“The dollar will continue to strengthen so investors want to be overweight U.S. equities,” said Chad Morganlander, portfolio manager at Washington Crossing Advisors. While he expects the greenback to be a slight drag on the revenue growth in 2015, Morganlander believes topline growth will nonetheless be around 2.7 percent while he forecasts earnings growth in a range between 4 and 5 percent.
“Dollar strength bodes well for the overall U.S. stock market,” he said. “We are anticipating 5 to 6 percent total returns for the S&P 500.”
“The rising dollar won’t kill this rally,” Morganlander added.