Bond Yields at 3-Month Low

The yield on the 10-year US note has fallen to 1.91%, the lowest level in nearly 3 months. This is a surprise for several reasons including the fact that stocks have performed well and the same time as US Treasuries.

Why is that?

One pretty simple explanation could be the Fed and "Operation Twist" that has the Fed buying Treasuries and artificially keeping interest rates low even as money goes into stocks. I cannot see this hand-in-hand movement continuing for the long-term and if stocks continue to make new highs it will be inevitable that Treasuries will fall and yields could skyrocket higher.

Natural Gas Set for a Rally

The number of rigs drilling for natural gas in the US fell to the lowest level in a decade as the low prices have forced companies to stop production. This could be the first step in the commodity ending its multi-year free fall.

The US Natural Gas ETF ($UNG) rallied over 10% in the last week from an all-time low. I am not suggesting the ultimate bottom has been formed. However, with less natural gas coming out of the ground it could create a bottom for the commodity as supplies drop.

The Real Jobs Numbers

My article and video on The Blaze that breaks down the "real" jobs numbers the country is facing.

Click here to watch and read.

Don't Be Scared to Own Stocks

My article in the International Business Times about why you should own stocks today.

Click here to read the article.

Peru Relies On Metals And China

My article on investing in Peru and their ties to China and metals.

Click here to read the article.

My 2 Favorite Value Stocks

My article on 2 Favorite Value Stocks - $CBI and $USNA

Click here to read the article.

Finding Value In The Market

My article on 3 stocks and 1 ETF for value investors.

Click here to read.

Fox News Clip Talking Jobs

Here is a 5-minute clip of me today on Fox News talking the jobs situation with Megyn Kelly.

Click here to watch the video clip.

Favorite 52-Week Highs

Brookfield Infrastructure Partners ($BIP) - Owns infrastructure facilities around the globe and pays a 4.9% dividend. PFG owns shares for clients.

MasterCard ($MA) - Makes money off transactions and the stats point to more and more swipes of the credit card.

Sturm Ruger & Co. ($RGR) - Sales of guns continues to flourish with most analysts pointing to potentially tougher gun rules in the future if Obama remains in office for another 4 years.

MWI Veterinary Supply ($MWIV) - People love their animals and will spend on them regardless of the economy.

DuPont Fabros Technology ($DFT) - A REIT that owns technology data centers. A play on cloud computing.

Investing in India Through ETFs

My latest article on Investopedia: "Investing in India Through ETFs"

Click here to read.

Why LINE is in the Portfolio

This is why Linn Energy ($LINE) is a holding for some of our clients at Penn Financial Group:

The company announces a 5% distribution increase to $2.90/unit, still maintaining a coverage ratio of 1.14X (1.15 a year ago). Natural gas production is 100% hedged through 2017. Average realized price for hedged natural gas in Q1 of $6.33/Mcf vs. $3.16 for unhedged.

The company is hedged through 2017!!!! Even with nat gas low, the company is locked in at higher prices. One reason the stock is hitting a multi-month high today!!

Prepping for QE3 - Buy Gold

Fed Chairman Ben Bernanke discussed the possibility of QE3 yesterday and he left the door not a little open, but wide open in my opinion. The news was good for gold, which turned around yesterday after the comments to close with a small gain. The bullish sentiment to the metal continued this morning as the SPDR Gold ETF ($GLD) remains higher.

Technically the ETF has been consolidating and could be close to a new breakout as long as it can continue to hold support at the $156 area. If you believe in QE3 as a real possibility in the coming months - either buy $GLD now or hold what you have.

Weekly Jobs Number Weak Again

Today the weekly initial claims number came in at 388,000, above the 375,000 estimate. The prior week was revised higher to 389,000. The most troubling of the stats was the 4-week moving average that is now at 381,750 - an increase of 6250 and at the highest level of 2012.

I will be on Fox News Channel at 1:15ET today talking with Megyn Kelly about the numbers and my view on the "real" employment situation.

Here is a long-term chart of the monthly numbers (next report on Friday next week). Clearly the trend higher is slowing, which could be troubling.

Five Value Stocks Flashing Buy Signals

One of our daily scans today produced 5 stocks that are undervalued based on fundamentals and in particular the PEG Ratio. All five also have bullish charts and have recently pulled back from highs to flash at least a low level buy signal.

1. Chicago Bridge & Iron Company ($CBI) - PEG ratio 0.86; engineering, procurement, and construction firm the energy and natural resources industry worldwide.
2. GeoResources ($GEOI) - PEG ratio 0.6; oil and natural gas company that acquires and re-engineers the fields.
3. AMERCO ($UHAL) - PEG ratio 0.8; better known as U-Haul.
4. Continental Resources ($CLR) - PEG ratio 0.95; oil and natural gas exploration company with operations throughout several parts of the US.
5. Flotek Industries ($FTK) - PEG ratio 0.8; supplies drilling and related products to the energy and mining sectors around the globe.

Four Overlooked Industrial Equipment Stocks

My article on four overlooked industrial equipment stocks below.

Click here to read.

Thusday Market Recap

Today saw the market continue it's short-term sell-off driven by a bevy of poor economic numbers and more news out of Europe.

Economic Numbers

• The March Philly Fed Business Outlook reading fell to 8.5 from 12.5 and below the estimate of 10.3. New Orders and Shipments also dropped from the prior month.
• March Existing Home Sales fell to 4.48 million, below the estimate of 4.62 million
• Weekly Initial Jobless Claims increased yet again to 386k, well above the estimate of 365k; last week revised to 388k from 380k; continuing claims jumped 26k to 3.27m

Europe Again

• Yields on Spanish bonds continued their ascent higher
• French yields also rose on rumors of a potential downgrade
• The Spanish stock index, the IBEX 35, broke below 7100 at one point for the first time since March 2009

In Perspective

• Putting everything that occurred this week and the last month into perspective is the only way for 99% of investors to succeed. Keep in mind the S&P 500 is less than 3% from a 4-year high and this has been in the face on continually negative news out of Europe.
• Earnings have not been blockbuster, but they are definitely good and that is one major reason the market has not fallen harder on the European news.
• Valuations based on no growth to modest growth this year for the S&P 500 has the market undervalued. If you want to be in the market in the next 10 years, you want to be in the market now!!
  

Comparing Metal Equity ETFs ($ALUM, $COPX, $SIL, $GDX, $GLD)

My latest article on Comparing Metal Equity ETFs

Click for article.

Buy Into Weakness ($EBAY, $AET, $FELE, $USB)

My latest article on Investopedia on buying stock on market weakness:

Click for article

Retailers That Flourish During Market Pullbacks

My article on Retailers That Flourish During Market Pullbacks.


Click Here for the article.

Top Sector ETFs Today

Top Performing Sector ETFs today:

1. SPDR Materials ETF ($XLB) - After closing at a 3-month low on Tuesday the sector is rebounding with the risk-on trade.
2. iShares Dow Jones Transportation Average ETF ($IYT) - Even though oil remains above $100/barrel the sector was able to rally 2.24% today.
3. SPDR Energy ETF ($XLE) - Rises on higher oil prices.
4. SPDR Industrials ($XLI) - Also up over 2% and fills gap left on Monday morning
   

My Fav 52-Week Highs

Today the New High list is growing as stocks tack on a 1% gain. Below is a list of some of my favorite stocks hitting highs that are either positions for PFG clients (will disclose) or stocks that are on the PFG WishList.

• Tennant Company ($TNC) - Manufactures cleaning solutions worldwide. PEG ratio of 0.99 and seeing an increase in volume on the breakout.
• Grupo Aeroportuario del Surest ($ASR) - Operates 9 airports in Southern Mexico, including Cancun. Stock breaking out of consolidation and volume has been extremely bullish. A little expensive at 2.2 PEG ratio. Pays 3.6% dividend.
• Alamo Group ($ALG) - Makes agriculture and industrial maintenance equipment. Hot sector, great chart, and a PEG ratio of 1.0 and 0.8% dividend.

Negative News - Stocks Rally

Stocks are rallying in the opening 30 minutes even though more negative news hit the wires in the last 12 hours.

The weekly jobless claims number rose by the largest amount in almost a year with the number coming in at 380,000, well above the 359,000 estimate. The number is starting to move in the wrong direction with the average of new claims over the last 4 months increasing by 4250 to 368,500 - the highest reading in a month.

In Italy a bond auction pushed yields to a 3-month high. Earlier in the week it was Spain and Portugal and now Italy. The fears of another European 2011 is increasing and we all need to keep an eye on the bond yields.

Investors Turn Negative - Time to Buy

The weekly American Association of Individual Investors (AAII) Sentiment Survey shows the percentage of bulls falling to 28.1%, a 10-point drop. On the flip side the bearish sentiment increased to 41.6% a gain of 14 points. The exiting bulls skipped the neutral reading and went straight to negative on the market and brought some neutrals with them.

Why is this significant?

Because the majority of individual investors are contrarian indicators. They sell when they should be buying and vice versa. The numbers indicate the current rally is not over yet!!

Number One Reason to be Bullish - Earnings

The unofficial kickoff of earnings season was last night when Alcoa ($AA) reported better than expected numbers and helped push stocks higher today.

Even though earnings for the first quarter are not expected to show much of a gain, it is still an improvement and the number one reason I remain bullish on U.S. stocks.

Here are some numbers for you to ponder:

• In 2011 operating earnings for the S&P 500 were $96.44. At current levels the index is trading at a P/E ratio of 14.2, below the historical average of 15.5.
• The estimates are for earnings to increase to $105 in 2012, a 9% increase over last year. Based on 2012 estimates the S&P 500 is currently trading with a P/E ratio of 13.0.
• Year-over-year earnings growth numbers: 2009 +15%, 2010 +50%, 2011 +16%. The 9% increase expected is lower than the last three years and not a stretch.
• Assuming the S&P 500 achieves the earnings of $105 and the index trades at the historical P/E ratio of 15.5, the target for the S&P 500 is 1628 - a new all-time high.
• Now assume there is zero earnings growth for the year and the index is able to trade with a P/E ratio of 15.5, the target would be 1494. That is a gain of 9% from current levels and a fresh four-year high for the index.

Just for good measure I will throw in one more bullish tidbit. There have been 25 times since WWII that the S&P 500 was up both January and February. In all 25 times the index finished the year higher with an average increase of 24%. And, only 2 times did it not have at least a 10% gain for the year.

As of today the index is up 8.8%. If the index reaches the average gain of 24% it will put the S&P 500 at 1558, 18 points from the all-time high of 1576. To reach that goal the S&P 500 must rally another 14% from today's price.

High Oil Affecting Euro Zone

According to data from Moody's Analytics the GDP of European countries are taking a hit due to rising oil prices. A $10 increase in the price of a barrel of oil subtracts 0.28 percentage points or 28 basis points from the German GDP one year later.

Ireland and Italy take a hit that is twice as bad as Germany's and Greece is hit the hardest with a drop in 0.8 percentage points for every $10 rise in a barrel of oil.

Many skeptics will ignore the fact that rising oil prices hurt an economy - the truth is in the numbers. Unfortunately I feel oil will remain high and with anemic growth at best for the Euro Zone countries, it could be a major issue going forward.

ETFs to Watch: Italy ($EWI), Germany ($EWG), Greece ($GREK), Ireland ($EIRL)

Interesting New 52-Week Highs

Scanning the 52-week high list today has peaked my interest for the first time in a few days. There are a number of stocks I felt are worth mentioning.

Titan Machinery ($TITN) - Sells agriculture and construction equipment and reported blockbuster earnings. The company guided next fiscal year earnings between $2.55 and $2.75. Based on the median estimate the stock is trading with a forward P/E ratio of 12.1 even after the 15% rally today.

EPAM Systems ($EPAM) - An IT services outsourcing company that went public in early February continues to surge to new highs. The company trades with a PEG ratio of 0.67 - very attractive fundamentally and technically.

Companhia Energetica de Minas Gerais ($CIG) - The Brazilian electric utility company has one of the best charts in the country and is now reaching new highs. The 4.3% dividend is a major bonus.

Mattress Firm Holdings ($MFRM) - An operator or mattress stores the went public in November of last year. Up 20% today to a new high and is up well over 100% the close on its first day of trading. I just bought a new mattress - and they are not cheap!!

Coal Exports Surge to 1991 Highs

Exports of U.S. coal hit their highest level in over two decades as the demand from Asia and China soared. At the same time the demand for coal in the U.S. has been dropping the last several years.

Of the 107 million tons of coal that was exported, 10 million went to South Korea, an increase of 81% over last year. Japan bought 7 million tons, an increase of 119%. And India's imports jumped 65% to 4.5 million tons.

Coal's share of the U.S. power supply has fallen by over 20% in the last few years and is expected to drop once again in 2012. A major factor is increased regulation on the coal-burning industry from the green movement.

Imagine if the subsidies that the government is giving to failing solar companies went to clean burning coal? This country has so much coal, it would make sense, right? Then again it is the government.

On top of that, the environmentalists are now turning to stopping the building of ports that will allow the coal companies to increase exports. This will in turn help the coal companies and create jobs. If the U.S. does not want the coal, then let the rest of the world have it, and at least we can make some money off it.

Very perplexed here!

Finding the Next Apple

JPMorgan has released a list of 15 stocks that it feels could produce the next Apple ($AAPL).

Here is a link to the interesting story: Click Here

Potential Short Squeeze Candidates

My article highlighting 4 stocks with high short interest ratios that could be candidates for a short squeeze.

Click here for the article

USDA Agriculture Estimates

The USDA came out with inventory numbers and it sees corn ending stocks unchanged from last month at 810M bushels. The Teucrium Corn ETF ($CORN) had risen the last week as investors felt the stocks would fall; the ETF is down nearly 1% in early trading.

The estimates for soybeans and wheat both fell, which could be a boost to the prices of the two commodities. However early trading is mixed on the ETFs that trade the ags.

Teucrium Soybean ETF ($SOYB) is up slightly and has rallied 20% in the last few months as the Teucrium Wheat ETF ($WEAT) is down slightly.

The more widely followed iPath Grains ETN ($JJG) is down 0.5% on the news, however long-term the ETN and grains sector is one to watch and is on the PFG WishList.

Important Facts about Market Sell-off

When analyzing a prolonged market sell-off (4 consecutive sessions heading into Tuesday) it is imperative to look at it from the big picture view.

Here are a few factors that must be considered during the current pullback.

• The four days of selling has been on decreasing volume each day. This suggests there is not an overwhelming number of sellers, but rather the buyers are taking a breather and the pullback could be healthy in the long-term.
• The S&P 500 is down 2.8% from a four-year high, not exactly a reason to give up on stocks.
• The S&P 500 remains above its 50-day moving average at 1372. This is an important indicator to watch because the index has traded above it since mid-December.
• A large number of stocks are also holding above their support levels, suggesting the pullback is healthy as of today. And not only do they not flash sell signals, many look like buying opportunities based on the high reward-to-risk setups.
  
• The small-cap stocks, as measured by the Russell 2000, are struggling. The index is down 5.5% from the recent high and was unable to break above the 2011 highs. Many believe this is a leading indicator that the "risk on" trade is back off. It could also suggest that the long-term trend of small-caps outperforming large-caps is finally ending.

New Lows = Bad Omen for Stocks?

For the first time this year the number of New Lows outpaced the number of New Highs on the S&P 500 yesterday.

A total of 11 New Lows bested the 7 New Highs. With the index now 2.6% off a 4-year high it is not time to panic, but it is time to take notice to the recent action and watch individual stocks closely.

The 7 New Highs included: Apple ($APPL), Home Depot ($HD), Mastercard ($MA), Priceline.com ($PCLN), Chipotle ($CMG), Sempra Energy ($SRE), and The Lorillard Group ($LO).

The New Lows were represented by commodity and select utilities.

Four Stocks Flashing Buy Signals

One of our many Buy Signals is the RSI Crossover Buy Signal. Today there were nearly 100 stocks that made the list and four that made it onto the coveted PFG WishList are below:

• Skyworks Solutions ($SWKS) - pulling back to support after hitting a multi-month high. Price support and the 50-day moving average are in the $26 to $27 range.

• Plains Exploration & Productions ($PXP) - Pulling back to price support at $41 after topping out at $47 in March, which was a multi-year high.

• Clean Harbors ($CLH) - Down about 8% from an all-time high in February, the stock is now trying to find support in the $64-$66 area.

• Ebay ($EBAY) - Pulling back to both price support and the 50-day moving average at $35 after touching a multi-year high at $38 - My Favorite of the group!!
  

Retail Sales Winners

Here are some of the winners from this mornings same-store sales announcements:

Target ($TGT) +7.3% vs. +5.4%

Limited Brands ($LTD) +8.0% vs. +4.4%

Gap ($GPS) +5.4 vs. +2.6%

TJX Companies ($TJX) +10.0% vs. 5.3%

Saks ($SKS) +6.3% vs. +6.3%

Macy’s ($M) +7.3% vs. +4.8%

Nordstrom ($JWN) +8.6% vs. 5.8%

Kohl’s ($KSS) +3.6% vs. 2.1%

Market Outlook and Stocks Picks on BNN

Here is an 8-minute video clip of Matt's appearance on Canada's BNN this morning live from the NASDAQ.

Click for the video

The US versus Europe - The Winner is....

Since the start of 2011 the US start market as measured by the S&P 500 is up 12.4%.

The gain may not sound overly impressive, but considering the losses in the major European markets it should make most Americans smile.

When compared to Germany ($EWG), France ($EWQ), Italy ($EWI), and Spain ($EWP), the gains are impressive. Germany was the best of the group with a loss of 3%, while France is down 10% and Italy and Spain are down an embarrassing 22% each.

Click the chart below for a visual look of how the countries have performed.

Click for the chart.