Artic Cat ($ACAT) Surges 25%!!

On 12/7 I highlighted the recreational vehicle sector and $ACAT was mentioned as a stock that was attractive both fundamentally and technically. This morning the stock is surging 25%.

To read the article on $ACAT and other recreational vehicle stocks click below.

Read Article

My 2012 Market Outlook for Investors on CNN

This morning I sat down with Ali Velshi to talk about what investors should be doing heading int0 2012.

Here is the link:

Click to Watch

Weekly Market Wrap

The Week in Numbers

Major Indices

SPDRs S&P 500 ETF ($SPY): -3.5%
iShares Germany ETF ($EWG): -7.8%
iShares China 25 ETF ($FXI): -4.9%
iShares Italy ETF ($EWI): -9.1%
iShares Brazil ETF ($EWZ): -5.5%

S&P 500 Movers & Shakers

Vulcan Materials ($VMC): +15.4%
Novellus Systems ($NVLS): +8.0%
Edwards Life Sciences ($EW): +4.4%
First Solar ($FSLR): -30.1%
Best Buy ($BBY): -17.5%

Commodities

SPDR Gold ETF ($GLD): -6.7%
iShares Silver ETF ($SLV): -8.0%
US Oil Fund ($USO): -5.8%
Teucrium Corn Fund ($CORN): -1.7%

Stocks and Gold Pre-Market

Futures Point to a Higher Open - Stocks are modestly higher in pre-market trading with the investors looking to add to the gains from yesterday as the news out of Europe has subdued heading in to the weekend. Even a downgrade by Fitch to several large banks, including Goldman Sachs ($GS) and Bank of America ($BAC) was not enough to keep the bargain hunters from buying stocks this morning. Or it could be that any credibility the ratings agencies have left is gone - they are useless in my opinion.

Gold Finding a Bottom - After taking one of its worst week-long beatings in years the price of the yellow metal may have found a price where buyers once again find it an attractive investment. The shares of the SPDR Gold ETF ($GLD) fell from $170 last week to $152 yesterday. In pre-market the ETF is back near $155, an area that is important support (see earlier blog post). We continue to have a long position in gold and feel GLD will hold steady in the $150-$155 range for a couple of days.

Our Love-Hate With Europe

When it comes to Europe I believe Americans have a mixed view on the continent. We have a love-have relationship with the mishmash of countries.

We all love a good crepe from France, but hate that the rumors today that it may be downgraded from AAA rating put pressure on stocks. (Yes, France is still AAA and the US is not.)

We love Italian red wine, but hate the fact their bond yields spiked to new post-Euro levels today. This put pressure on the country and spread around the region and over the pond to the US.

We love Estonia for their fried pigs ears, but hate them for..... Nothing. Who could hate Estonia.

I think you get my point. I would be willing to give up my Italian wine, French crepes, and Estonian pigs ears for the Euro to disappear for a year. Because I believe without the problems in Europe and the attached rumors that go along with the situation that the stock market in the US would be at multi-year highs.

Fundamentally the numbers suggest much higher prices for stocks, but when you add in the "Europe" discount the end result is stocks priced down even though they may have no direct connection to what is happening in the region across the pond.

I am going to use this theory when I put together my 2012 Investment Outlook in the coming weeks. Stay tuned!!

Must-See Chart of Gold ETF - $GLD

The chart above is of the SPDR Gold ETF ($GLD), which has fallen by 12.6% in the last 5 weeks and is down 10% in the last 12 days. A sudden panic has taken a hold of gold as news and rumors swirl about the yellow metal.

A few of the factors moving gold lower: a higher US Dollar, rumors Paulson is selling gold in his large hedge fund, rumors of maneuvering by Central Banks around the globe, and the risk-on trade is not off and hurting hold and forcing many investors that were leveraged to sell.

Technically $GLD fell through important support at the $161 area and fell right down to the next and even more important support zone of $151 - $154.50. This area is highlighted by the two horizontal black lines on the chart. The ETF closed today at $152.88, still in the range.

So far, I am still on the side of gold, BUT I will watch the next 2 days very very close.

Muni Bonds Continue to Outperform - I Was Right!!

Last year on 12/23 the world reacted to an extremely, uneducated call on the municipal bond market by pundit Meredith Whitney. She claimed there would be mass destruction in the muni bond market.... I was one of the first to come out and refute her ridiculous assumptions.

The NY Post, NY Times, Fox Biz, etc. all called me to get my insights and basically they thought I was crazy because Whitney was a known commodity after her call that the banking system had issues in 2007. I will give her credit where credit is due. She was spot-on on that call, but when it comes to munis she was simply trying to pump her new business.

Take a look at this paragraph from a story on www.bloomberg.com today:

Refuting Whitney’s forecast, which helped send borrowing costs to two-year highs in January, the $3.7 trillion municipal- bond market rebounded this year, generating an average total return of 10 percent through Dec. 12, better than U.S. Treasuries and corporate bonds, Bank of America Merrill Lynch indexes show. Munis also trounced equities as the Standard & Poor’s 500 Index lost (SPX) 0.6 percent in the same period.

YEP!! I was right!! But not only was I right - I own quite a bit of the iShares Muni Bond ETF ($MUB) and the Market Vectors Muni High Yield ETF ($HYD).

And yes, both ETFs are beating the S&P 500 since Whitney's fateful call on the muni bond market.

3 Top Stock Picks on Fox Business Yesterday

Every Monday at 1pm ET on Fox News Live I talk about the upcoming market week and share three top stocks and ETF picks.

Here are the 3 from Monday 12/12/11:

1. Oceaneering International ($OII) - A few days off an all-time high, the company concentrates on offshore and deepwater drilling for oil and gas. With large areas of untapped ocean available for drilling, OII should continue to prosper.

1. General Mills ($GIS) - The maker of Cheerios, Hamburger Helper, Progresso, Betty Crocker, etc. is also just off an all-time high. With a 3% dividend and the ability to hold up in volatile markets, GIS is a stable option.

1. SPDRs Utilities ETF ($XLU) - Invests in a basket of utility stocks, which have been very strong this year. Add in the 3.8% dividend yield and XLU becomes very attractive.

** PFG owns shares of $XLU for clients.

US Dollar Breaks Out - Currency Update

The PowerShares US Dollar Index Bullish ETF (NYSE: UUP) rallied to a new 2-month high late morning after negative news from the EU sent the Euro to the lowest level since January.

The Rydex CurrencyShares Japanese Yen ETF (NYSE: FXY) remains in the green, up 0.2%. As the "old" safe-haven Rydex CurrencyShares Swiss Franc ETF (NYSE: FXF) falls to the lowest level since February.

I will continue to watch $UUP closely as it approaches major resistance at $22.62. The last trade was $22.48 - up 0.6%.

Retail Sales Miss Expectations

The weekly retail sales numbers from several reporting agencies came in below expectations for the last week. A similar tone has been expressed, "shoppers are waiting until the last minute to buy gifts and are looking for discounts". This is no surprise to me and I expected the numbers the next 2 weeks to be much better than expected.

The SPDR S&P Retail ETF ($XRT) is up 10% in 2011 versus a loss for the S&P 500.

Some of my favorite retailers are the Discount Stores: Wal-Mart ($WMT), TJX Companies ($TJX), Ross Stores ($ROST).

Market Wrap - Gold Tumble, Dollar Rises on Euro Issues

More Europe

Both Fitch and Moody’s, the ratings agencies, weighed in today on the EU situation after the meeting last week. Neither agency seemed to be pleased with the outcome and the stiff warnings fueled a sell-off that began overnight in Europe. The day-to-day perception of the situation in Europe is not going to end anytime soon. So if you cannot take the triple-digit daily moves on the Dow you may want to close your eyes for a few weeks/months.

My analogy of Europe being a gaping wound in a patient remains. However, the governments of the EU and around the globe will continue to bandage it up to keep the economy and stock market from falling too hard. This is why I believe there is a good chance of a stock market rally into early next year based on the actions of the ECB, Fed, EU, IMF, and any other acronym you think of.

US Dollar Strength

One of the lone safe havens throughout the day was the Greenback. The PowerShares US Dollar Index Bullish ETF ($UUP) rose by 1.1% and is nearing a 2-month high. My argument is that when the risk-on trade is “off” that safety is the number one goal of investors and the US Dollar is perceived as the “safest” currency at this time. Even though the US has its own issues with a rising deficit, it is the best of the worst. Would you rather own the Euro or the Greenback?

Gold Falls

Gold suffered one of its worst days in months today as it fell due to a rise in the US Dollar and a technical breakdown. There is also a lesser-known factor that could have affected gold today. India, the world’s largest consumer of gold, reported that industrial production in the country fell for the first time in over 2 years. Granted it is a secondary factor at best, it could have added fuel to the bears argument that gold needs to correct more. We continue to hold gold as our largest position via ETFs $GLD and $IAU.

Matt McCall's TV Reel

In case anyone was interested.

Weekend Update - Top Stocks on WatchList

Utilities

The Utility stocks are looking good heading into the new week. The Dow Jones Utility Index is 2.25% from a 3-year high and is up 10.4% year-to-date, easily beating the more broad-based benchmarks.

Investors could choose to go with the SPDRs Utilities ETF ($XLU) that invests in a basket of stocks in the sector and currently pays a 3.8% yield. Or there is always the option of individual utility stocks. A few on the PFG WatchList that are near buy points include Exelon ($EXC), American Water Works ($AWK), and Consolidated Edison ($ED). The three stocks pay dividends of 4.8%, 2.9%, and 4.1%, respectively.

More Dividends

Other than the utility stocks, the overwhelming theme this week when going through the PFG WatchList was stocks that pay above-average dividend yields. Some of the names near buy points are:

EV Energy Partners ($EVEP) – Oil and natural gas L.P. that has a 4.7% dividend yield.

Wal-Mart ($WMT) – Largest retailer in the U.S. that pays a 2.5% dividend yield.

Enbridge ($ENB) – Energy pipeline company with a 2.8% dividend yield.

iShares High Dividend Equity ETF ($HDV) – Invest mainly in heath care and consumer goods stocks and pays a 3.8% dividend yield.

More Energy

The niche energy equipment and services sector has been getting a boost from oil trading at or near the $100 level. Two names on the PFG WatchList are in this sector and are outperforming the market and their peers.

Hornbeck Offshore Services ($HOS) - provides marine services to exploration and production, oilfield service, offshore construction, and the United States military customers.

Oceaneering International ($OII) – Just off an all-time high, the name gives it away. It is an offshore, deepwater oil and gas service company.

Recreational Vehicles Unlikely Success

My story on how companies like Arctic Cat and Polaris are doing well in a rough economy.

Recreational Vehicles Unlikely Success

ETF of the Day - Market Vectors Junior Gold Miners ETF ($GDXJ)

If you follow by blog (as you should), you would know my thoughts on gold and the SPDR Gold ETF $GLD. The pullback in gold brought the precious metal and currency alternative down to support and it is now at an attractive level to move higher in the coming months.

While GLD tracks the price of Gold Bullion, there are other options for investors. One Niche ETF that is out there for the risk hunger investors is the Market Vectors Junior Gold Miners ETF ($GDXJ).

GLD is up 24% over the last 12 months with GDXJ down 30%. This is a major difference in such a short time period. A lot of it has to do with the "risk off" trade that saw money come out of perceived risky assets and into more safe haven areas such as physical gold or low volatility stocks.

BUT, if I am correct in my thinking that gold will continue to move higher and eventually get to the $2000/ounce level, GDXJ and the junior gold miners will be some of the biggest winners. The one risk is similar to the last year, if gold rises due to major issues with the global economy it could limit the upside for GDXJ.

Bullish Action in Gold Today - $GLD

My blog post last week regarding the SPDR Gold ETF ($GLD) highlighted how the ETF pulled back to support at the $164 area and bounced It ran up to $170 on Friday before pulling back yesterday and this morning. At one point $GLD was down to $165.53 and hitting a new one-week low. It appeared that support would be tested once again.

However, midday Gold began to rally and $GLD closed up 0.5% on the day at $168.18. The bullish one-day reversal today was another positive signal for the precious metal. I still believe that nearly every possible scenario in 2012 has Gold moving higher. I continue have believe $GLD and its competitor $IAU are buying opportunities at current levels.

ETF of the Day - IQ Canada Small Cap ETF $CNDA

The IQ Canada Small Cap ETF ($CNDA) has not garnered much attention since it began trading in March 2010. The ETF has approximately $40 million in assets and is composed of 100 Canadian small-cap stocks.

The ETF is heavily focused on Materials and Energy, which make up 73% of the portfolio. The expense ratio is 0.69%. So far in 2011, CNDA has lagged the iShares Canada ETF ($EWC) as the large-cap focused ETF has out performed. The main reason for the under performance was the weak performance of the commodity stocks earlier this year.

With the price of oil increasing and hanging around the $100 level and gold bouncing off support I once again turn to the commodity sector as a place to put money and $CNDA looks like an attractive option.

Today $CNDA was up 2% as $EWC was flat.

Attention All (Greek) Gamblers

Later this week ETF company Global X will be introducing the Global X FTSE Greek 20 ETF (NYSE: GREK). The ETF will track the FTSE/ATHEX 20 Capped Index, which is down 65% in the last 12 months.

If you believe that Greece and the rest of the European continent will find a way to get out of the current situation, the high-risk, high-reward play would be the new ETF. However, if Europe does not fair as well - look out below.

As they say, "I would not go there". Too much risk for not enough reward. Until the Greek population realizes they have to pay taxes, the upside will be limited to short-term rallies for Greek stocks.

A country in that region, Austria is another high-risk play, but has the ability to turn around and continue in the right direction if they ever figure out how to fix the European situation. The symbol for the iShares Austria ETF is $EWO.

Market Recap - Europe and Sector ETFs

All Europe, All the Time – The day began with a rally that was spurred by renewed talks of a large scale resolution for the European mess. That momentum came from Germany and France and by the way of new austerity measures passed by Italy. (See earlier blog about Italian and Spanish yields dropping.)

In the final hour of trading a rumor hit the wires concerning Standard & Poor’s putting 15 EU nations on credit watch negative. The 2 countries not included were Greece (already at CC) and Cyprus, which is already on negative credit watch. The official report was confirmed after the closing bell and the S&P futures are down 0.3% on the news.

I have little if any faith in S&P or any other ratings agency. They have been late to the game for years and it appears they are once again lagging the story. Therefore, I am not changing my outlook based on anything they have to say – it is old news.

There are meeting in Europe planned for Thursday and Friday and that will be the pivot point for how stocks trade for the remainder of the year. Obviously investors believe some type of backstop will be put in place for the region based on the buying of stocks the last week. If this fails to take shape, look for a heavy sell-off in stocks around the world. I will keep you up-to-date as we approach the meetings later this week.

Sector ETFs - Even after the late-day selling, the financial sector held onto gains of 2% with the SPDR Financial ETF ($XLF) closing at the best level in over 2 weeks. The SPDR Retail ETF ($XRT) continued its rally, gaining 1.5% and quickly approaching a new all-time high. The laggard was the SPDR Health Care ETF ($XLV) with a gain of 0.2%. The defensive sector does not attract big money when the "risk-on" trade is working.

ETF of the Day - Corporate Bond ETF $LQD

The iShares iBoxx Corporate Bond ETF ($LQD) has been perplexing lately to say the least, however a recent turnaround has the ETF back on my list of favorites for the next 1-2 years.

We made our first purchase of LQD on 3/6/09. This was the day the S&P 500 bottomed. Since that time the S&P 500 is up 82%. LQD is up 42% including dividends. The argument is that LQD is greatly under performing the broad equity market. And yes it sure is, however it is a bond ETF, not an equity ETF and it turned out to be a top steady performer for our clients.

The ETF fell from a multi-year high of $115.68 on 11/4 down to a low of 11/28 of $109.81. This is a big drop for a bond ETF. I began adding more LQD last week for clients that need to gain exposure to the sector and in the last few days the ETF has created a bottom at $110 and looks like a very attractive long-term option.

LQD currently pays a dividend of 4.5% and with corporate America not falling apart all we care about is the companies paying their quarterly interest payment. As long as that continues, which I feel it will, corporate bonds are priced to move higher!

Cloud Computing ETF - Playing More Mergers

The First Trust ISE Cloud Computing ETF ($SKYY) is a basket of 40 stocks that are related to the niche sector in some manner.

Top holdings include Netsuite ($N), Rightnow Technologies ($RNOW - recently agreed to be purchased by Oracle), Cisco ($CSCO), Google ($GOOG), and TIBCO Software ($TIBX).

From a low on 8/19/11 the ETF is up 23% versus a gain of 13% for the $SPY. Of all the technology niche sectors, Cloud Computing continues to be a favorite of mine.

European Bond Yields Fall - End of the European Trouble??

The yield on an Italian 10-year bond fell to 6.11% on Monday after hitting a high of 7.11% on 11/25. This is a dramatic drop in just over a week and even more telling is the fall from 6.56% on Friday.

Spain's 10-year bond yield had a similar drop. Falling to 5.18% on Monday from 5.56% on Friday and a record 6.67% on 11/25.

Since 11/25 the S&P 500 is up 9%.

Apparently investors are cheering the possibility of a European bailout after little talks this weekend.

Another Takeover - Cloud Computing Stocks to Watch

This weekend saw another Cloud Computing stock bought by a larger competitor and a high premium.

German software giant SAP ($SAP) has agreed to purchase cloud computing company SuccessFactors ($SFSF) for $3.4 billion or $40/share - a 52% premium from Friday's closing price.

The takeover follows Oracle's ($ORCL) purchase of Rightnow Technologies ($RNOW) in October.

Here are a list of other Cloud Computing names to watch:

Taleo Corp ($TLEO)
Concur Technologies ($CNQR)
Salesforce.com ($CRM)
Netsuite ($N)
Ultimate Software Group ($ULTI)
Liveperson ($LPSN)
Kenexa Corp ($KNXA)
Tangoe ($TNGO)

Today's Top WishList Stocks

Some of the stocks on our ever-changing WishList that are outperforming the last day of the week.

• Gulfmark Offshore ($GLF)
• Huron Consulting Group ($HURN)
• Colfax Corp ($CFX)
• Chipotle Mexican Grill ($CMG)
• True Religion ($TRLG)
  

3 Top Stock Picks on Fox Business at 120ET Today!!

Tune into Fox Business Network today at 1:20ET to here my three top stock picks of the day.

The include a precious metal? A bargain department store? And a railroad operator?

Two of the stocks I already have in some clients' accounts.

DO NOT MISS IT!

5 Stocks For A Stable, Dividend Portfolio

The link below to my article on building a portfolio with 5 solid, high dividend stocks.


5 Stocks For A Stable, Dividend Portfolio

Breaking Down the Jobs Number

The country added 120,000 jobs in the month of November.

The Unemployment Rate fell to 8.6%, the lowest since March 2009.

October and September jobs numbers were revised higher by 72,000 jobs.

Private Sector adds 140,000 jobs as Public (government) loses 20,000 jobs.

Average Hourly Earnings fall by 0.1% to $23.18.

Size of US Labor Force declines by 315,000.

Retailers add the most jobs in November - 50,000.

The widely watched broader unemployment reading the U6 Rate fell to 15.6% from 16.2%.

****** My initial reaction is HOW DID THE unemployment rate fall to 8.6%? Was it because the number of participants in the labor force fell by 315,000? Or just another way the government massages numbers to make them look better? I will look for more info on how this occurred.

Interesting Stocks Hitting New Highs

The S&P remains 9% below a multi-year high set in early May and down 1% for the year, but there is a growing number of stocks breaking out to new highs. A number of them are either in Portfolios of PFG Clients or on our WatchList.

Here are a few that are catching my eye:

• McDonald's ($MCD) - The stock closed down 2 cents today, but hit a new all-time high intraday. The company remains resilient in the face of volatility around the globe and the 3% dividend yield is attractive.

• Ross Stores ($ROST) - An apparel store that I have mentioned several times hitting a new all-time high today after strong November sales numbers.

• American Water Works ($AWK) - The country's largest water utility closed at the best price ever. Utilities are strong and it pays a 3% dividend.

• Core Laboratories ($CLB) - The energy play closed at the best level ever today as it continues to be a leader in the niche sector of utilizing oil and gas wells.

I never promote buying at highs, but rather wait for a pullback to initiate positions.

** PFG has ownership in $MCD and $CLB.

Time to Buy or Sell?

After a nearly 500-point rally for the Dow on Wednesday and a gain of 700 points in three days it has once again sparked a buzz on Wall Street. The big question is should investors be optimistic about the rally and move money from cash to stocks. Or should the rally be viewed as another chance to raise cash by selling stocks before another market sell-off.

This is not an easy question to answer because my view is based on a short-term and long-term time horizon. First of all, I remain optimistic in the short-term when looking at stocks and the overall market.

Artificial Rally

The move by the Fed and other Central Banks around the globe on Wednesday to flood the system with liquidity was the catalyst for the big rally. The money that has been injected into the system could be enough to create an artificial rally that lasts for several months and well into 2012.

Think back to QE2 when the Fed flooded the market with money as it bought up Treasuries in November 2010. The market rallied about 14% in the six months following the announcement. A similar rally would propel the major stock indices to multi-year highs.

Based on Wednesday’s action and the high probability of more action in the coming weeks from agencies around the globe, the “artificial rally” will likely continue. The reason refer to this rally as artificial has to do with the reason behind the rally. It is not based on the fact Europe finally figured out a way to fix its debt issues. The rally is based on this flood of liquidity that is only a short-term fix to a long-term problem.

I like to use the analogy of someone with a major flesh wound on his or her leg. To cure the issue the patient must receive serious medical attention. Instead, the doctor puts on a large Band-Aid and stops the bleeding for the time being. Eventually the Band-Aid will have to be removed and stiches will be required. But until the doctor is ready to put in stitches the Band-Aid will keep the patient alive and kicking.

The leaders of the EU are the doctors that continue to apply Band-Aids to the debt issue in the region, which is the flesh wound. Eventually the EU will have to realize things must change dramatically and fast or it will run out of Band-Aids and they may lose the patient. Losing the patient would be equivalent to the EU breaking up and the Euro no longer a currency.

I know this is very pessimistic from me, considering I typically take a cautiously optimistic view on the economy, world, and life in general. The reason for the change is because I do not believe the leaders of the world realize they are playing Russian Roulette with the world economy. But they are!!

Your Portfolio

Back to the original question about what to do now with you hard-earned money.

I will continue to ride the “artificial rally” that the Central Banks are creating and be long stocks. I would not suggest 100% of your money in stocks, but I would also not want to be 100% in cash either.

The exact mix of stocks, cash, gold, bonds, etc. will have to be determined by your risk tolerance, time horizon, and goals for the money in the portfolio. I cannot even throw out a number because I would not be doing you justice. If you want a Free Portfolio Review from Penn Financial Group, we will be offering just that during the month of December.

info@pennfinancialgroup.com or call 1-877-383-7366 for more information.>

Matt McCall

President, Penn Financial Group

ETF of the Day - iShares High Dividend ETF

ETF of the Day - iShares High Dividend Equity ETF ($HDV)

The ETF is a basket of 75 stocks, mainly health care (27%), consumer goods (23%), utilities (17%), and telecom (16%). The ETF invests in a basket of stocks that pay above-average dividends, that in this market are highly sought after. Considering the S&P 500 is down 1% through 11 months, the 3.8% dividend yield on $HDV is attractive.

The ETF began trading on 3/31 and since that time is up 6.2%. During the same time frame the SPDR S&P 500 ETF ($SPY) is down 5.6%. A MAJOR DIFFERENCE.

The expense ratio is 0.40%.

Technically the ETF is on the verge of a breakout and can be bought in the low-$50's. Keep in mind $HDV will likely lag during a strong bull market, but should hold up better in a sideways/volatile market that we are experiencing now.

4 Top Stocks This Week

Link to my article this week on Investopedia.com:

4 Top Stocks This Week

November Retail Sales Winners/Losers

November Retails Sales Numbers Hit the Wires Today

And here are the Winners and Losers.

WINNERS

• Ross Stores ($ROST)
• Nordstrom ($JWN)
• Limited ($LTD)
• Saks ($SKS)
• Buckle ($BKE)
• Macy's ($M)
  

LOSERS

• Kohl's ($KSS)
• JC Penney ($JCP)
• Target ($TGT)
• Gap ($GPS)