And considering only 397 of the stocks in the index pay a dividend, it suggests 68% of all dividend paying stocks in the S&P 500 pay a higher yield than the 10-year.
Market expert and TV personality Matt McCall blogs about what is really moving the markets. He will emphasize Exchange-Traded Funds (ETFs) and individual stocks throughout the trading day.
Wednesday, May 23, 2012
Searching for Yields - Look at Stocks Not Bonds
A chart by Bespoke Investment Group shows that 271 of the 500 stocks in the S&P 500 offer a dividend yield higher than the yield on the 10-Year Treasury.
And considering only 397 of the stocks in the index pay a dividend, it suggests 68% of all dividend paying stocks in the S&P 500 pay a higher yield than the 10-year.
And considering only 397 of the stocks in the index pay a dividend, it suggests 68% of all dividend paying stocks in the S&P 500 pay a higher yield than the 10-year.
Tuesday, May 22, 2012
Time to Rotate Back into Consumer Staples
Has the pullback in the market created an opportunity to get back into the Consumer Staples? Ready my article below to find out the answer.
CLICK HERE TO READ.
CLICK HERE TO READ.
Biotech ETFs Hitting Highs
The Biotech sector is highlighted as many of the ETFs are hitting new highs as the market pulls back. Click below to read the article.
CLICK HERE TO READ.
CLICK HERE TO READ.
Tuesday, May 15, 2012
Buy Signal on the S&P 500
The SPDR S&P 500 ETF ($SPY) that tracks the major US index is on the brink of generating an RSI Crossover Buy Signal. This occurs when the RSI reading crosses from oversold back into neutral territory. The last few times this has happened the $SPY and overall market rally for at least a week.
The odds are pointing to a short-term bottom in stocks and it could be a good time to pick up your favorite beaten down stock and ETF on your WishList.
How long such a rally lasts will be determined by the strength of the buying in the coming week.
The odds are pointing to a short-term bottom in stocks and it could be a good time to pick up your favorite beaten down stock and ETF on your WishList.
How long such a rally lasts will be determined by the strength of the buying in the coming week.
ETF Loser of the Day - Greece
The Global X FTSE Greece 20 ETF ($GREK) is falling another 4% today as the odds of the country pulling out of the EU to go at it solo increases. The Greece stock index is trading at the lowest level since 1990!
The ETF is now down 45% from the mid-February high, but is only down 20% for 2012 due to a big rally to begin the year. Investors hoping for the best out of Greece have been buying the ETF on the pullback, but have been getting burned.
This is one situation where I would step back and let the gamblers play with this ETF and let them have restless nights.
The ETF is now down 45% from the mid-February high, but is only down 20% for 2012 due to a big rally to begin the year. Investors hoping for the best out of Greece have been buying the ETF on the pullback, but have been getting burned.
This is one situation where I would step back and let the gamblers play with this ETF and let them have restless nights.
ETF of the Day - Social Networking
The Global X Social Networking ETF ($SOCL) is higher by 1.7% in early trading as the major stock indices are near breakeven. The move is driven by news last night that Facebook ($FB) raised its pricing range.
Even though Facebook is not yet publicly traded and now in the ETF, it gave a boost to some of its global competitors such as Renren ($RENN) and Quepasa ($QSPA). Another member of $SOCL that is rallying today is Groupon ($GRPN), which reported better than expected earnings and is up 17% this morning.
Investing in $SOCL is still risky because several of the major holdings have yet to even turn a profit, so be cautious if you choose to proceed.
Even though Facebook is not yet publicly traded and now in the ETF, it gave a boost to some of its global competitors such as Renren ($RENN) and Quepasa ($QSPA). Another member of $SOCL that is rallying today is Groupon ($GRPN), which reported better than expected earnings and is up 17% this morning.
Investing in $SOCL is still risky because several of the major holdings have yet to even turn a profit, so be cautious if you choose to proceed.
Monday, May 14, 2012
S&P 500 Yield is Bullish Signal
The yield on the S&P 500 is now 51 basis points higher than the yield on the 10-Year US Treasury Bond. The S&P 500 has only yielded more than the 10-Year once before in the last 50 years - at the 2009 low.
Could this be yet one more sign that investors should not be panicking and selling this week?
Friday, May 11, 2012
Short Interest Ratio - Calling a Market Top?
The short interest ratio on the NYSE hit 13.1 billion shares at the end of April, an increase of 3.9% from the previous month and the highest level of the year.
What is interesting to note is that last year at the end of April the short interest ratio was at the high for 2011. And the stock market topped out around that time before a pullback began.
Could the short interest ratio be calling for another top? Or should we take the contrarian view?
I am in the contrarian camp today!!
What is interesting to note is that last year at the end of April the short interest ratio was at the high for 2011. And the stock market topped out around that time before a pullback began.
Could the short interest ratio be calling for another top? Or should we take the contrarian view?
I am in the contrarian camp today!!
My favorite bank stock is....
US Bancorp ($USB) is my favorite bank stock due to its chart, its fundamentals, the dividend, and the fact it is not caught up in the same mess as many of the large international banks. More to come later, but wanted to share it with you as many people were asking.
Here is the chart below (and yes it is up today with $JPM down 9%).
Here is the chart below (and yes it is up today with $JPM down 9%).
Thursday, May 10, 2012
Special Market Update - Why I Remain Bullish
Special PFG Client Update
In the last five weeks the landscape has changed for investors due to the situation in Europe and the economic numbers in the U.S. The elections this past weekend in Greece and France have the market on edge as fears of more frivolous government spending arises along with fears of a continued collapse of sovereign debt.
I felt it was time to take a step back and analyze the big picture to help explain the situation to clients and subscribers.
1. Europe – The situation in Europe is ever-changing. In the last few weeks the elections in Greece in Europe have the potential to have anti-austerity as the platform versus cutting government spending. In Spain the government nationalized the 4th largest bank. The U.K. is officially in recession. The news is not positive and it has made its way across the pond and put a lid on the early 2012 stock market rally. This is a situation I consider a negative for the market, but that could change depending on several government decisions.
2. Employment – The unemployment number remains just above 8%, however the real number is likely much higher due to the manner in which the government tallies the numbers. The participation rate (percentage of working age people in the US that have jobs) is at its lowest rate since late 1981. This is not a good number. The one silver lining is that production remains decent despite the large amount of unemployed.
3. Technicals – The chart shows a 5% pullback from multi-years for the S&P500 and that has revealed some cracks in the foundation, but it is not yet falling apart. The 1343 level on the index on a closing basis is a level that must be watched closely in the short-term. That level is the closing low on 3/6/12 and the intraday low on Wednesday. Keep in mind the market is only 5% from a multi-year high – you must view the big picture.
4. US Economic Numbers – The economic numbers released by the government and independent firms have been mixed over the last five weeks. It is true that the majority are losing steam. It is also true that most are not at the point of pointing to a recession. The question that no one can answer today is if the slowdown is temporary or the beginning of a new trend. This is one area we watch closely every day.
5. The Fed – Do not fight the Fed is the mantra you have to take as an investor. You may not agree with the moves or lack thereof by Bernanke and his cohorts, but do you want to be right or make money? The likelihood of QE3 from the Fed continues to increase and if such an act takes place expect the market to rally to new highs. Our best guess is that QE3 occurs at some point this summer and stocks rally on the news.
6. Corporate Profits – The first quarter earnings season was a pleasant surprise and US corporate profits are at the best level ever. That statistic is touch to argue with and is one reason why stocks have the ability to move higher. At the end of the day, stocks move higher based on earnings.
7. Investor Sentiment – The latest AAII reading shows that investors are at the most bearish level since last October. So why is this bullish? Because we take the contrarian view. Similar to when our phone rings often with clients concerned about the market – it is often time to begin buying. With the internet, financial TV, and other media outlets it creates everyone to be on one side of the trade. Typically that trade is too late and it is better to go against the crowd.
8. Valuations – With our prediction for earnings of between $105 - $110/share for the S&P 500 in 2012 the P/E ratio based on the middle is 12.6. Well below the average of 15. For the S&P to get to the average P/E ratio it would put the index at 1612 – a new all-time high.
To make the update easier to understand I color-coded the 8 topics. The two red are negative, the two orange or moderate, and the four green are positive. The green outweigh the reds and therefore we continue to stand firm in the bullish camp today.
Sincerely,
Matthew D. McCall
Four Stocks with Bullish Charts
After combing through hundreds of charts this morning, a few were able to stick out and garnered more attention. Four of those stocks are highlighted below.
- McKesson Corp ($MCK) - Delivers medicines, pharmaceutical supplies, and care management products for the healthcare industry. Trades with a PEG of 0.88 and pays a 0.9% dividend.
- US Bancorp ($USB) - Banking and financial services center that has over 3000 branches in the U.S. PEG of 1.15 and 2.5% dividend.
- Cooper Companies ($COO) - Medical supplies for vision care as well as healthcare deliver for women. PEG ratio of 1.0 and dividend of 0.1%.
- Cerner Corp ($CERN) - Healthcare IT company with a PEG of 1.8 and no dividend.
REITs Set to Outperform - 3 Favorites
The recent 5% pullback in the S&P 500 brought down most sectors along for the ride lower. One sector that held up well is the REITS. The iShares REIT ETF ($ICF) only fell by 1% and is back near its multi-year high.
As the ETF lost a small portion of its value, a handful of REITs were able to continue the rally and recently hit new highs. Some of my favorites in the group are listed below.
As the ETF lost a small portion of its value, a handful of REITs were able to continue the rally and recently hit new highs. Some of my favorites in the group are listed below.
- Tanger Factory Outlet ($SKT) - Owns outlet stores around the country - 2.6% dividend.
- Post Properties ($PPS) - Owns multi-family apartment buildings - 1.8% dividend.
- Digital Realty Trust ($DLR) - Owns data centers and specialized tech centers - 3.9% dividend.
Wide Moat ETF vs. S&P 500
My article on comparing a new ETF based on the wide moat strategy and the S&P 500 - Guess who wins??
Click to Read
Click to Read
Consumer Comfort Waning
The Bloomberg Consumer Comfort Index fell again this past week and the downtrend that began in March remains intact. The trend shown in the index is eerily similar to many other economic indicators.
The question is, whether this is a normal pullback or the start of a more troubling economic time ahead?
The question is, whether this is a normal pullback or the start of a more troubling economic time ahead?
When Everyone is Bearish - Time to Buy
Below is the most recent AAII Sentiment numbers. As you can see, investors have turned dramatically bearish and away from the previous bullish stance. When this happens I go against the grain and look for buying opportunities. Keep your eye out for some stock/ETF ideas in the blog later today. The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period. | |||
Survey Results | |||
| Sentiment Survey Results Week ending 5/9/2012 Data represents what direction members feel the stock market will be in the next 6 months. | |||
| Bullish |  25.4%down 10 | ||
| Neutral | 32.5% down 3.6 | ||
| Bearish | 42.1% up 13.6 | ||
| Change from last week: Bullish: -10.0 Long-Term Average: Bullish: 39% | |||
Monday, May 7, 2012
Cost of Renting at an All-Time High
According to data firm RealFacts the average monthly rent in the US hit $1,008, the highest level ever, besting the old high set during the third quarter of 2008.
As the difficulty to obtain a loan increases and the number of unemployed Americans remains high, renting becomes the only alternative for many. As a NYer I am accustomed to high rents, but now parts of the country that in the past had the luxury of cheap rent are rising dramatically.
From an investment viewpoint there are a handful of apartment REITs available. They include:
As the difficulty to obtain a loan increases and the number of unemployed Americans remains high, renting becomes the only alternative for many. As a NYer I am accustomed to high rents, but now parts of the country that in the past had the luxury of cheap rent are rising dramatically.
From an investment viewpoint there are a handful of apartment REITs available. They include:
- $EQR
- $UDR
- $ESS
- $AIV
- $CPT
Rig Count Falls in April
Baker Hughes Incorporated ($BHI)
announced today that the international rig count for April 2012 was
1,178, down 14 from the 1,192 counted in March 2012, and up 49 from the
1,129 counted in April 2011.
The average U.S. rig count for April 2012 was 1,961, down 18 from the 1,979 counted in March 2012 and up 171 from the 1,790 counted in April 2011.
The worldwide rig count for April 2012 was 3,297, down 366 from the 3,663 counted in March 2012 and up 195 from the 3,102 counted in April 2011.
** The importance of this is that as more rigs come offline it lowers the supply of oil and natural gas in the market place. The less supply will lead to higher prices if demands does not drop.
Related ETFs: $USO $UNG $XLE
The average U.S. rig count for April 2012 was 1,961, down 18 from the 1,979 counted in March 2012 and up 171 from the 1,790 counted in April 2011.
The worldwide rig count for April 2012 was 3,297, down 366 from the 3,663 counted in March 2012 and up 195 from the 3,102 counted in April 2011.
** The importance of this is that as more rigs come offline it lowers the supply of oil and natural gas in the market place. The less supply will lead to higher prices if demands does not drop.
Related ETFs: $USO $UNG $XLE
Germany vs. Spain
German Factory Orders rose 2.2% in March vs. 0.6% previously, and sharply higher than estimates for 0.5%.
Meanwhile, Spanish Industrial Production declined today by dove 7.5% Y/Y in March vs a 5.3% decline the previous month, and a 4.4% contraction the month before that.
Two of the largest nations in the EU are moving in opposite directions. One saves as the other borrowers. Guess who is who?
Here is a troubling chart of the Spanish Industrial Production numbers.
Meanwhile, Spanish Industrial Production declined today by dove 7.5% Y/Y in March vs a 5.3% decline the previous month, and a 4.4% contraction the month before that.
Two of the largest nations in the EU are moving in opposite directions. One saves as the other borrowers. Guess who is who?
Here is a troubling chart of the Spanish Industrial Production numbers.
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