ETF of the Day - US Dollar ETF (UUP)

In theory the Federal Reserve pumping $85 billion into bonds each month would be negative for the US Dollar. However when the currency is compared to its peers around the world it is not surprising that the US Dollar Index is trading near a 9-month high.

The other major currencies around the world have been falling due to action that is outside the control of the US. The Japanese Yen (FXY) is at the lowest level in over 4 years versus the US Dollar as the Bank of Japan is devaluing its currency in hopes to fight deflation. And they are doing it in a bigger fashion that the Fed – believe it or not!!

The Euro (FXE), another major global currency has been struggling the last few months as there is talk of more action by the European Central Bank and the fears in that region remain elevated. The same can be said for the UK Pound (FXB) and the Swiss Franc (FXF).

The end result is the US Dollar becoming the best of the worst as far as currencies are considered around the globe.

The chart below shows the PowerShares US Dollar Index Bullish ETF (UUP) over the last year. You can see the action today (5/22/13) on the right-hand side and the turnaround it had during the trading session. This was due to the belief the Fed may stop their quantitative easing sooner rather than later and this would lead to even more strength in the greenback.

I view UUP as a hedge against the eventual end of the Fed easing. However, I do not think that will occur in the coming months.

Market Update: Japan, Housing, Buying Now

The US markets are trading with slight gains with about 60 minutes to go before the opening bell. Overseas last night the gains continued for Japan and China as Hong Kong closed with a modest loss. In Europe the indices are mostly trading with small losses after the Bank of England made some remarks.

Japan Rising: The Bank of Japan held its interest rate unchanged at 0.10% and maintained its current policy course. This means lower Yen and higher Japanese stocks in the future. The Nikkei closed with a gain of 1.6%. Year-to-date the iShares Japan ETF (EWJ) is up 26% and the WisdomTree Japan Hedged Equity ETF (DXJ) has surged 44%.

ETFs to Watch: EWJ, DXJ, FXY

Housing Market: Two stocks closely tied to the housing market reported earnings and they are moving in two different directions. Lowe’s Companies (LOW), the home improvement store missed earnings estimates and the stock is lower by 2.5% in premarket trading. Home builder Toll Brothers (TOL) is up over 2% after beating on both the top line and bottom line. Home prices continue to rise as does demand, solid signs for the housing market. Could LOW be an anomaly? Considering Home Depot (HD) had great numbers yesterday and is trading at an all-time high, I am going with a strong housing market!

ETFs to Watch: ITB, XHB, XRT, RTH

WHAT TO DO NOW?

If you are in the market – remain in the market and let the rising tide take up your portfolio. If you are looking to get into the market or have a few stocks/ETFs you want to add to your portfolio I suggest buying on weakness. That may be a day or two of selling in the market or the individual position. The pullbacks are not deep and do not be afraid to buy when you seem weakness.

Importance of Patience in Investing - MUST READ

Over the last 13 years I have bought and sold many stocks for clients and myself. Some I sold too soon and some I should have should have never bought. When it comes to investing there is no crystal ball and it is nearly impossible to buy at the low and sell at the high.
I have learned the hard way that one of the most important qualities of a successful investor is patience. As they say, “patience is a virtue”; and I cannot agree more.

I can go on and on about patience, but the best way to show you what I am referring to is to lay out real life examples of stocks we currently own for some of our clients.

Schweitzer Maudit International (SWM) was originally purchased on 2/5/13 at $40.40 per share. The stock was pulling back from an all-time high it hit two weeks earlier and I felt it was time to get into the stock. The PEG Ratio was 0.71 and both the fundamentals and technical were in our favor. That is until 2 days later the street was not kind to the stock after SWM reported fourth quarter earnings.

The stock fell dramatically the next day, but my view of the specialty paper company did not change and as hard as it was to hold onto the position, I decided it was the best move at that time. Thankfully I did hold because the 10% loss within three days has turned into the stock now sitting with a gain of 14% and at a new all-time high. Our stop-loss of 12% was never broken and the end result is another winner!



FMC Corp (FMC) was originally purchased on 6/25/09 for $23.75 per share (split adjusted). The stock fell by more than 10% after the purchase as it now appears the buy was a little premature. But, similar to SWM I felt FMC was a solid long-term buy that was undervalued and the chart was improving. So I stayed with my original analysis and it paid off handsomely.

On 6/20/12, nearly three years after the original purchase I sold half my clients shares at $52.55 with a gain of over 120%. The chart still looked good and the fundamentals were not flashing sell, therefore I felt it was prudent to let half the position go and be patient. At the same time taking a profit of that size is never a bad move. The patience has paid off as the stock continues to move higher and recently closed at a new all-time high and the original position is up 165%!

I will disclose that not all positions workout with patience and there is a fine line between patience and hope. If you are simply “hoping” a losing position comes back from negative territory you need to sell immediately and take the loss. Hope is not a strategy in investing or life.

Free Investing Webinar: How to Find Income/Dividends in ETFs

This Tuesday (5/12/13) I will be offering a

FREE Webinar via Marketfy.

The topic is "Finding ETF Income Opportunities in a Low Yield Market"

Here is a short outline of what you will learn:

1. Short Intro to Exchange-Traded Funds (ETFs)
2. Income and ETFs
1. Using ETFs to generate above average income
2. Explaining the various ETF options available (bond, international, equities, MLPs, etc.)
3. Building an Income Portfolio that Yields OVER 6%!!
4. 5 ETFs with Yields over 6%

To sign up today and reserve your seat please CLICK HERE!

Morning Market Update: Japan, Gold, Italy

Stocks head into Monday morning on a four-week winning streak, but the futures are showing small losses heading into the opening bell.

The Japanese stock market continues its unfathomable rally overnight with the Nikkei up 1.5% after positive remarks from the government and a better than expected manufacturing number. The Nikkei is now up 47% in 2013.

ETFs to Watch: EWJ, DXJ, FXY

Both Gold and Silver continue their ominous slide overnight with silver down as much as 3% at one point. Both metals have bounced well off the lows, but the trend is clearly not in the favor of precious metals. I continue to have steer clear of the sector until a bottom is formed and the end of the selling is evident.

ETFs to Watch: GLD, SLV, GDX, IAU

In another sign that investors are believing the Eurozone situation is improving, the yields on Italian debt fell as the country’s industrial orders number beat expectations. The spread between the 10-year German Bunds and the comparable Italian government debt has narrowed to the lowest level since January. Even Slovenia saw its yields fall overnight after a downgrade by Fitch.

ETFs to Watch: ITLY, BUND, BWX

Patience vs. Go-For-It – The market is sitting at an all-time go begin the new week and therefore chasing performance is never the best strategy. That being said, investors that have been waiting for a 10% pullback have been sitting on their hands for a long time and missing out on the stock market rally. My advice is to highlight the stocks/ETFs you want to buy and when there is a day or two of weakness – begin to build a position. A mix of go-for-it and patience.

Morning Market Outlook

The markets are near the flat line in early trading as investors digest mixed earnings reports from two big-name companies and Japan’s GDP that was released overnight.

The nation’s largest retailer, Wal-Mart (WMT), missed earnings expectations this morning and the stock is trading lower by over 2%. A former high-flyer, Cisco Systems (CSCO), beat their numbers last night and is surging in pre-market trading with a gain of 10%.
{ETFs to Watch: QQQ, RTH, XRT}

Japan reported growth of 3.5% during the first three quarters of the year, a possible signal that the stimulus package has been working for the country. The better than expected number did not lead to a rise in Japanese stocks because inside the number it showed that consumers are spending, but corporations are still hesitant. Also take into consideration that the Nikkei is already up 45% in 2013. Maybe time for a breather??
{ETFs to Watch: EWJ, DXJ, FXY}

Gold and Silver continue their downtrend with another loss in excess of 1% this morning. The trend is clearly not in the favor of the precious metal sector and I would continue to avoid it at all costs.
{ETFs to Watch: GLD, IAU, SLV}

I would not be shocked if the market experiences some profit-taking today after hitting yet another all-time high yesterday. My strategy will be to continue using weakness as a buying opportunity for higher stock prices later this year.

Morning Outlook: Malaysai, Oil, Top Stocks

Malaysia Leads Southeast Asia

The Malaysian stock market rose to its highest level ever this morning after trading higher by as much as 8% following yesterday’s election results. The ruling coalition Barisan Nasional extended their 56-year rule over the country and the “free money” approach they take helped stocks soar. The Ringgit (Malaysian currency) also had a strong day with an increase of 1.4%. Its neighboring countries are also enjoying some love as Vietnam is up 3% and Indonesia is rising by 1.4%.

ETFs to Watch: iShares Malaysia ($EWM), iShares Indonesia ($EIDO), Market Vectors Indonesia Small-Cap ($IDXJ), Global X FTSE ASEAN ($ASEA)

Oil Rises on Syria Fears

One of factors that moves the price of oil is geopolitical tension and over the weekend the tension has risen between Syria and Israel. Syria has vowed to retaliate after Israel bombed the area outside the capital of Damascus. Due to the potential for the conflict to escalate and the possibility of Iran getting involved, brent oil futures rose to their highest level in a month.

ETFs to Watch: iShares Israel ($EIS), US Brent Oil ETF ($BNO)
 
Market Flat

The futures are indicating a flat open for the major indices, with the NASDAQ up slightly – led by tech names Apple ($AAPL) and Intel ($INTC). After going through hundreds of charts this weekend I came up with a list of about 40 or so stocks/ETFs that were added to the PFG WatchList. There are mega-cap names, small unknown stocks, and high dividend-paying players on the list.

Here are 2 that I found intriguing:

·  Avis Budget Group (CAR) – Rental car company that trades with an ultra-low PEG Ratio of 0.39

·  Alaska Air Group (ALK) – Mid-sized airline company that is breaking out of a consolidation pattern and trades with a PEG Ratio of 0.74

Breaking Down the Jobs Number

April Non-Farm Payrolls increased by 165,000

Revisions to the February Number showed jobs increasing by 332,000 versus 268,000 – this is now the best month for job creation since November 2005 (not including months where census workers were added)

Revisions to the March Number showed jobs increasing by 138,000 versus 88,000
April Unemployment Rate fell to 7.5%, the lowest reading since it was 7.3% in December 2008 and below the 7.6% in March

Average Workweek down 0.2 hours to 34.4

Average Hourly Earnings +0.2% versus flat in March – but with an increase of only 1.9% in the last year it barely keeps up with inflation

Labor Force Participation Rate remained at 63.3% and still down from a reading of 63.6% last year – remains at a 34-year low.

The Unemployment Rate for people who want a full-time job and cannot find them (The U-6 Number) increased to 13.9% from 13.8% in March – This is the true barometer.

4.4 million: the number of people out of work for at least 6 months  – historically high for what many are calling a recovery.

150,000: the number of jobs that need to be created each month to keep up with population growth – April’s 165,000 will not get people back to work.

ETFs Up on a Big Down Day

Today the major US indices lost 0.9% and Gold fell by 1.2% as fears over Friday's jobs report and a slew of disappointing economic numbers caused the bulls to take a breather after pushing the S&P 500 to yet another all-time high yesterday.

There were a few bright spots in the world of ETFs today.

• PowerShares Build America Bonds (BAB) - Up 0.6% to a new historic high.
• First Trust High Yield Long/Short ETF (HYLS) - Up 0.2% today to a new high; the ETF has a yield of 6.5%.
• PowerShares Emerging Markets Sovereign Debt ETF (PCY) - Up 0.3% today to a new multi-month high; current yield of 4.8%.

Matt Talks Visa vs. Mastercard on BNN

Watch Matt discuss the better investment, Visa ($V) or MasterCard ($MA) today on Canada's BNN.

Morning Outlook: Jobs Report, Poor Econ Numbers, Stocks at Highs

Jobs Number Preview

The ADP April jobs number came in below expectations and showed the lowest monthly job growth in 7 months. The payroll processor said the private sector added only 119k jobs in April. And the March number was revised down to 131k from the original 158k reported last month.

The group of (oft-wrong) economics that come up with expectations believe the government number released on Friday will show an increase of 160k jobs. Last month the government number was disappointing and came in well below estimates and the ADP number.

All signs are pointing to yet another disappointing number on Friday morning when the government number is released. I am cautious in the very short-term heading into the report on Friday morning.

More Disappointing Economic News

The US April PMI Number fell to 52.1 from 54.6 in March and in-line with analysts expectations. The trend over the last two months as been the same for nearly all economic numbers - they are trending lower.

Breakout Stocks

A list of a few stocks breaking out that are on our PFG WatchList:

• CubeSmart (CUBE) 
• Oceaneering International (OII)
• Enbridge (ENB)
• Alliance Data (ADS)
• Ecolab (ECL)

Investing in 2013 Top Global Stock Markets

I would garner a wager that most investors have been missing out on the best performing stock markets in the world in 2013. Not only are they smaller countries that are often overlooked, a few of them are in regions of the world that many consider hotbeds for geopolitical turmoil.

The fourth best performer is Kuwait, with a gain of 23% year-to-date. The country is expected to finish 2013 with growth of 4.5% before accelerating to 5% growth in 2014. The stock index has been boosted by shares of small cap companies as well as plans to continue upgrading their infrastructure system. The Kuwait stock market recently traded at the best level in nearly 3 years.

The second top performer in 2013 is the United Arab Emirates (UAE) with a gain of 28%. The country is expected to grow by 3.3% in 2013 and tick up to 3.4% one year later. A boost to the country’s economy and stock market has been a rebound in the real estate market after a drop during the 2008 global recession.

So how does a US investor play the surge in the Middle East stock market prices?

One option is the WisdomTree Middle East Dividend Fund (GULF). The ETF invests in the UAE (35%), Qatar (28%), Kuwait (18%), Morocco (9%), Egypt (6%), Oman (3%), and Jordan (1%). The sectors most heavily weighted are the financials (48%), telecom services (31%), and industrials (17%).

Along with the Kuwait and UAE as top countries, Qatar also makes up a sizable portion of the allocation. Qatar is expected to grow by 5.0% in both 2013 and 2014 as it plans to spend $140 billion to upgrade its infrastructure before they host the 2022 World Cup soccer tournament.

The ETF is currently up 18% in 2013 and is trading at the best level since 2008. On top of strong capital gains are the quarterly dividend payouts to investors. The payouts can be erratic at best, however the last quarterly dividend payout was $0.21/share. Annualized out this is a yield of 4.8% if the dividend was to remain constant for the next 3 quarters and based on today’s price of $17.60.

The chart below shows the 1-year performance of GULF (+16%). I would look for a pullback in the $17 area for an opportunity to buy at a more attractive entry price.

Morning Market Outlook: New Highs, Asia, Technology

Market Easing off Highs:

The S&P 500 is down slightly premarket after closing at yet another all-time high yesterday. Investors are digesting a number of earnings reports from overseas and have decided to slow down the buying this morning. Remember that the market will not hit all-time highs everyday and that you must be prepared for pullbacks as buying opportunities. RELATED ETFs: SPDR S&P 500 ETF (SPY)

Southeast Asia Concerns:

The IMF is sounding the horn again about concerns over the potential bubble that could be forming in Southeast Asia. I find the entire situation comical because all the IMF and other agencies do these days is attempt to put a negative spin on everything. The region has been the strongest in the world recently with markets hitting highs and the economies growing at a robust pace. If the numbers were bad and the market was falling the IMF would also be concerned. So ignore the headlines and concentrate on the real story – Southeast Asia is strong and you should continue to ride the uptrend. RELATED ETFs: Global X FTSE ASEAN ETF (ASEA), iShares Thailand ETF (THD), iShares Philippines ETF (EPHE), iShares Singapore ETF (EWS), Market Vectors Indonesia ETF (IDX), iShares Malaysia ETF (EWM)

Technology Stocks Lead Rally:

The large-cap Technology stocks led the market rally yesterday with the SPDR Technology ETF (XLK) up 1.4% on the session and it is now up 4% from a mid-April low. Apple (AAPL) tagged on 3.1% and IBM (IBM) rallied 2.5% to lead the sector. The move in AAPL was significant because it closed above the $420 resistance level and if it can continue the rally and close above $433.50, the 50-day moving average, it will trigger more buying interest. Apple is currently trading at $432.50 in premarket action. RELATED ETFs: Apple (AAPL), IBM (IBM), SPDR Technology ETF (XLK)

Pre-Market Outlook Video

Highlights of today's 5-minute market primer:

• Analyzing the SPY
• UK GDP growth and EWU
• Spanish Unemployment and EWP
• Upcoming earnings: AMZN and SBUX
• 3 Stocks added to WatchList: BEN, NMR, IP

Morning Market Outlook

Today's 5-minute video includes:

• Analysis of S&P 500
• A look at two earnings plays: AAPL and BA
• 5 high income plays: HYEM, OAK, BX, INF, DPO

McCall's Call: Morning Maket Video

McCall's Call - Tuesday Morning Video

• The S&P 500
• Netflix Earnings
• Apple Earnings
• China, Germany PMI
• Italian Bond Yields
• Philippines ETF
• Gold ETF
• Today's favorite ETF

Market Recap: Commodities Rally, Indices Hold Support

The Dow and S&P 500 were able to close above their 50-day moving averages for the second consecutive session, calming fears of a major market sell-off on the horizon.

The Dow closed up 19 points (+0.1%) and the S&P 500 gained 7 points (0.5%).

The leading sectors were the commodity- related stocks. The iShares Natural Resources ETF (IGE) closed up 1.2%, the SPDRs Energy ETF (XLE) up 1.1%, and the Market Vectors Gold Miners ETF (GDX) up 1.4%.

Gold was able to rally as well with the SPDR Gold ETF (GLD) up 1.8%, logging its fifth consecutive up session after the thrashing last Monday. Even though the winning streak is at five, GLD has only recouped half of Monday's loss. We continue to look for a potential exit point for Gold and made the correct decision not to panic on Monday with the majority of helpless investors. GLD is up 5% from the close on Monday.

Other Notable Movers Today:

• USB E-Tracs Business Development Companies ETF (BDCS) - Up 1.7% after a mention in Barron's over the weekend comparing them to junk bonds and favoring BDCs.
• Intel (INTC) - Up 2.0% today to close at the best level since late September 2012. The breakout with a dividend over 4%, the stock is an interesting investment to watch.
• Biogen Idec (BIIB) - Up 5.9% to a new all-time high. The stock and its peers have pushed the entire biotech sector to the best levels ever.

Biotech ETF Outperforms

As the market suffered with a bought of anxiety disorder last week the shares of the iShares NASDAQ Biotech ETF (IBB) continued its climb higher and finished the week at the best level ever.

The ETF is now up over 26% in 2013 after a gain of 4% on Friday. The basket of 120 stocks has been a solid outperformer of the market since it began its lastest uptrend in November 2012.

The top ten holdings make up 60% of the portfolio, suggesting there is a concentration in the top stocks. Regeneron Pharmaceuticals (REGN) is the number one holding, making up 9% of the portfolio. Gilead Sciences (GILD) and Amgen (AMGN) round out the top three that account for 25% of the ETF. The fact all three are hitting new all-time highs this month is a big factor behind the performance of IBB.

The ETF could be considered overvalued in the short-term, however the outlook remains bullish for the biotech stocks and the overall health care sector. Potential buyers should wait for a pullback to the $165 area to increase the odds of a good reward-to-risk setup.

Chart of the Day - S&P 500

Today's chart of the day is one of the most important indices for investors - the S&P 500.

For the last three trading sessions the index has been teetering along the important 50-day moving average. On Thursday the index breached the trend line on the close, but was able to bounce back above it on Friday. This morning the index is down 0.2% and remains above the moving average by a few points. The last trade is 1553 and the 50-day simple moving average is at 1544.

As important as the moving average is to the index, there is a price support area at 1530, that is equally important. The green horizontal line represents the price support investors need to watch.

As long as the index can hold above 1530 in the short-term during any pullback it will bode well for the future of US stocks. With that being said we may become more aggressive buyers if the index continues to consolidate near the support zone of 1530-1544 throughout the next two weeks. Buying there represents a high reward-to-risk ratio.

Below is the daily chart of the S&P 500 over the last year.

Monday Morning Outlook

 

·      US Stock futures are set to open higher by about 0.3% after a rally in Asia and a bounce in Europe. The market will be attempting a successful rebound from one of the worst weeks in years and so far Monday morning it is off to a good start.

·      Gold has been able to move higher for four consecutive sessions after the beating it took early last week. The SPDR Gold ETF (GLD) finished the week at $135.47 and is rallying premarket to $138.06. The overreaction last Monday was evident, what is not so clear is how long the dead cat bounce can last. I am looking for the $141 area as a time to sell.

·      Southeast Asia remains a hotspot for the market. The Philippines market hit a new all-time high last night and the iShares Philippines ETF (EPHE) is set to break out of a bullish ascending triangle. Keep an eye on the ETF. The ETF that covers the entire region, Global X ASEAN 40 ETF (ASEA) closed at a new high on Friday.

·      Investors need to watch the 50-day moving averages on the S&P 500 and Dow this week as they continue to hold just above the trend lines. The level on the S&P 500 is 1543 and 14,354 on the Dow.

ETF of the Day - Malaysia EWM

The Malaysian stock market hit a new all-time high yesterday ahead of elections next month that appear to be heading in the direction of keeping the robust growth going.

The stock market really in the country has been boosted by large inflows of foreign cash. On Thursday alone the market saw a net inflow of $63.5 million and year-to-date the number stands at $3.6 billion.

The iShares Malaysia ETF (EWM) is also trading at a new all-time high and is up 4% in 2013, lagging many major markets. But in the last month the ETF is up 10% after some turmoil earlier in the year.

The growth expectation for the country this year is between 4.5% and 5.0% and with inflation near 2.4% the country is well positioned to continue attracting foreign investments. The election is on May 5 and if all goes well I expect Malaysia to continue hitting highs into the second half of 2013.

If you would like to know my alternative to investing in EWM you can email info@pennfinancialgroup.com. The ETF not only give investors exposure to Malaysia, but other high growth countries in the region!!

ETF of the Day - Playing Japan Rally with Financials

Interested in the Japanese market as the country's stocks break out to new highs amid more Central Bank intervention?

Other than the 2 ETFs that have been discussed in the news: iShares Japan ETF (EWJ) and WisdomTree Japan Hedged Equity ETF (DXJ), there is another option for investors willing to think outside the box.

The iShares MSCI Far East Financials Sector ETF (FEFN) has high exposure to the Japanese financials (63%) and the top holdings are Japanese banks. There is a total of 82 stocks in the ETF and the current 12-month yield is 3.12%.

I believe Japan will keep the pressure on the Yen and push their currency even lower and in turn it will be a positive for Japanese equities and in particular the financials.

The one issue I have with FEFN is the low volume and larger than average bid/ask spread, but as a longer-term play I feel it could be an option for investors willing to take above average risk for the devaluation of the Yen investment play.

Sector Watch - Market Breakout

The market is breaking out to new highs once again today on the back of the early release of the Fed meeting minutes and the start of the first quarter earnings season.

Leading the market higher are the technology stocks with the SPDR Technology ETF (XLK) up 1.8%, logging its best gain since early January. The stocks leading the way are Facebook (FB) +4.3% and Apple (AAPL) +2.1%. A close above $30.50 for XLK (currently at $30.60) would be a significant breakout for the technology sector that has been lagging.

The large semiconductor stock, Intel (INTC), is also breaking out today with a gain of 2.8% and could be a catalyst to lead the sector higher and help propel the entire market to more new highs.

The iShares NASDAQ Biotech ETF (IBB) is rallying 2.4% and is at a new all-time high. This has been a sector that has quietly been putting in big gains - up 20% in 2013!

The SPDR S&P Retail ETF (XRT) is breaking out of a one-month consolidation pattern to also hit a new all-time high. The media bashes the retail sector and consumers, yet the sector continues to outperform.

ETF of the Day - The Sun and Fun

When I think of a beautiful island and the best sunset I have ever witnessed one place comes to mind - the Greek Isles.

Today 2 ETFs with direct links to this image are rallying from lows.

The Guggenheim Solar ETF (TAN) is up 16% after First Solar (FSLR) reported better than expected earnings projections for the year. As great as it sounds to use the sun to power everything in the world, I do not look at it as an investment opportunity. The sector has been crushed the last few years and TAN is trading down over 90% from the 2008 high. So a pop today is nothing more than a chance for investors who never sold to get out. I would not get sucked into the one-day rally.

The Global X FTSE Greece 20 ETF (GREK) is up 8% today as the fears over Cyprus and the continued bailout of Greece subsides for a day. Similar to TAN, the Greek ETF is bouncing off lows and I would not be chasing the one-day rally. The situation in Greece is far from over and could be a solid long-term play at some point in the future, just not yet.

Beyond the Headline: JCP CEO Out - More to the Story

J.C. Penney (JCP) ousted CEO Ron Johnson after less than 2 years into his turnaround plan for the ailing retailer. This is a big story, but there is a bigger story here.

Bill Ackman, the big hedge fund manager, which has been pushing JCP for the last couple of years as one of the best investments in the market is looking worse and worse every day. In July 2012 at a conference the fund manager said that JCP was the only stock he owned that could go up by 20 to 15 times its value in the next 5,6, to 7 years. How did that work out for you Ackman??

He is also the infamous guy that has been shorting Herbalife (HLF) and bashing the company publicly calling it a ponzi scheme. The stock has been holding up even though Ackman believes the company should be trading much lower.

The point here is not to bash Ackman, but to show that even the best of the best make bad calls. Remember Bill Miller the mutual fund manager that had a streak of a decade of gains and beating the market? Well in 2007 his fund lost nearly half its value.

I pick stocks and ETFs for a living and know how difficult it can be. So as an individual investor you need to set realistic goals for your portfolio. Whether doing it yourself or with a paid advisor like myself. Without goals that are attainable or realistic you will continue to chase your tail and never achieve your financial goals.

Breaking Down the Ugly Jobs Report

You can read the headline numbers for the March Jobs Report and depending on where you get your news it could lean towards the positive or negative side of the fence. Unfortunately the numbers were not good and it is very difficult to find a silver lining to the report.

Here is a bullet point breakdown:

• 88,000 jobs created in March - well below the estimates and smallest gain in 10 months

• February and January were revised higher by a total of 61k jobs - possibly a tiny silver lining

• Civilian Labor Force fell by 496k – at lowest level in 9 months

• Unemployment Rate dropping to 7.6% from 7.7% - This is laughable because the only reason it fell was because another 496k workers dropped out of the work force.

• The labor participation rate, which is a true number of how the jobs market is fell to 63.3%, the lowest since May 1979! The number has now spent 15 consecutive months under 64%: longest streak since 78-79

• Retailers lost 24k jobs - this could be directly affected the the payroll tax change in the beginning of the year

• The only silver lining is that it could lead to continued quantitative easing from the Fed for many more months.

• Sector Breakdown: Transports -27k, Postal -12k, Temp +20, Gov -7 (not sequester), Construction +18k, Health Care +23

• Only creating 169k jobs per month over the last 12 months

• March 2013 unemployment rate would be 10.9% if the labor force participation rate was the same as it was in January 2009 (65.7%)

• March's job gains were half the pace of the previous six months, when the economy added an average of 196,000 jobs a month.

Morning Market Update - Japan, France, Jobs

The futures are up slightly after a worse than expected weekly jobs number and a big rally overnight in Japan.

Stocks are looking to bounce on the open this morning after a sell-off yesterday that was fueled by fears out of North Korea and San Francisco Fed President Williams suggesting that the quantitative easing (QE) efforts by the Fed could end at some point this year.

Morning Notable Headlines

• The yield on a bond auction in France came in at a record low for their 10-year paper. The 2 billion Euro auction yielded 1.94%, down from 2.1% in the previous sale. This is surprising considering the French economy has yet to turn around. 
• Related ETFs: iShares France ETF ($EWQ)
• The Nikkei was last up over 3% after the BOJ meeting in which they are set on fighting deflation. The open-ended plan to buy government bonds of all maturities has the Yen falling and stocks rallying.
• Related ETFs: WisdomTree Japan Hedge Equity ETF ($DXJ) and Rydex CurrencyShares Japanese Yen ETF ($FXY)

ETF of the Day - ITA Defense Stocks

The market began selling off after the noon hour as rumors started circulating about North Korea and what their next move may be. I am sure most of it is pure rumors, but what isn't rumor is that the US is sending land-based missile defense systems to Guam to protect against a North Korean attack.

The fears were enough to give investors a reason to sell and take profits after one of the best quarters in a decade. But one sector was able to dodge the bullet (no pun intended) of heavy selling.

The iShares Dow Jones US Aerospace & Defense ETF (ITA) was last up 0.6% as money was going into the true defensive companies. The top three holdings in the ETF were all up with 30 minutes left in trading: United Technologies (UTX), Boeing (BA), and Lockheed Martin (LMT).

ETF Facts

• 34 stocks in ETF
• Expense ratio of 0.46%
• Dividend yield = 1.95%
• P/E ratio = 16.58
• Beta vs. S&P 500 = 0.79
• 12-month Return: +9.4%

ETF of the Day - IHF

Shares of U.S. health insurers rallied Tuesday, after the Center for Medicare and Medicaid Services announced plans to increase the amount the government pays to insurance firms for its Medicare Advantage plan.

The payments to insurers will increase by 3.3% in 2014 versus the original proposal of cutting the payments by 2.2%. This sent the stock soaring the last 2 days.

Big winners include Humana ($HUM), UnitedHealth Group ($UNH), and Cigna ($CI).

An ETF that concentrates on the health insurers is the iShares Dow Jones US Health Care Providers Index ETF ($IHF). The ETF is up 2.6% today and 6% in the last week.

IHF Notes:

• Total of 47 stocks
• Largest Holdings are $UNH, Express Scripts Holding ($ESRX), and Wellpoint ($WLP) and they make up 32% of the ETF.
• Expense ratio = 0.46%
• Dividend Yield = 0.86%
• Beta vs S&P 500 = 1.1
• P/E Ratio = 18.61
• 12 month return = 18% 

The chart below is $IHF over the last year. Clearly you do not want to chase after a 6% rally in one week, but a pullback to the $78 area could be the time to get in.

Midday Market Update: New Highs, Health Care ETFs, Apple

Today midday market update.

• Stocks at new highs
• Health care ETFs breaking out
• KBWD (dividend ETF) gapping higher
• Apple stock bottoming?

Morning Market Video - 6 ETFs to Watch

Monday morning video with 6 ETFs we are watching closely.

Discussing Cyprus on Fox

Today's Discussion on Cyprus on Fox News Live with host Lauren Simonetti and Financial Time columnist Liz Peek.

Click this link to view the video.

Video - Market Wrap

Short video to cover today's market and the end of the quarter - indices at all-time highs!

More on Water Investments

I recently posted an article on my favorite water investments based on infrastructure upgrades that are needed in the US and abroad.

The most recent report from the American Society of Civil Engineers (ASCE) shows the ratings for the country's water system just above failing - a grade of a D. The one silver lining is that the drinking water and wastewater did improve slightly as they went from D- to D.

A big issue are the pipes that are carrying the water underground throughout the country. Many of them were originally buried over a century ago. The intention was not for the pipes to be in the ground for over 100 years when they were originally installed. But due to a lack of future planning and now more than ever a lack of funds this is the situation the US has to deal with.

Because of the age of the current infrastructure there are an estimated 240,000 water main breaks each year and nearly 14,000 dams (or 1 out of every 7) is rated "high hazard" by the ASCE. This implies that if one of the high hazard dams breaks it will likely kill people.

According to the American Water Works Association the price tag for upkeep and replacement of the outdated water systems is about $1 trillion over the next 25 years.

You can spin that any way, the bottom line is that water-related companies are well positioned to profit from a need for increased spending.

Click here to read my article on my Favorite Water Stocks and ETFs.

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Super Income ETF via Preferred Stocks

On 2/21/13 the Global X SuperIncome Preferred ETF (SPFF) was trading at $15.06 and today the ETF is trading at $15.13 - a minimal gain. But in that time there was a dividend of $0.082 paid. This is a net gain of $0.15 or 1%.

In the same timeframe the S&P 500 is up 2.1%. This may sound like a bad investment, but in reality SPFF is doing exactly what it should be doing.

• The goal of SPFF is to provide consistent, above-average income through a monthly dividend payout to investors. The current yield of SPFF is currently yielding 5.8% based on last months dividend payout (the monthly payout varies and could be higher in the coming months
• Low Correlation - the ETF moves a few pennies per day on average. Thus providing high income without the sleepless nights. Look at the chart below over the last week as an example - it compares SPFF to the SPDR S&P 500 ETF (SPY). The blue line is SPFF and the red line is SPY - notice the lack of volatility for SPFF versus the market.
• Diversification even in an Income-only portfolio.
• SPFF is a true income ETF and a great addition to any ETF Income Portfolio.

ETF of the Day - AMLP

The market is selling off on more negative news out of Cyprus, but that has not had an affect on the master limited partnerships (MLPs). The sector is moving higher in the face of a broad market sell-off and a 1% drop in the price of oil.

The Alerian MLP ETF (AMLP) is a basket of 25 market-cap weighted energy infrastructure MLPs that earn the majority of their revenue through the transportation, storage, and processing of energy commodities. The ETF is up 1.1% today and is breaking out of a two-month consolidation pattern to a new historic high.

Why AMLP?

• Current dividend yield = 6.1%
• Billions of dollars will be spent in upgrading and expanding the U.S. energy infrastructure system
• Low correlation to the S&P 50 offers portfolio diversification
• Inflation hedge
• No K-1's for tax reporting, only a 1099 (very important for many investors)
• AMLP is an ETF, not an ETN like many of its competitors

The chart below shows the breakout on the right-hand side of the chart. AMLP is flashing a buy signal today!!

Stocks for Improving Jobs Market

The weekly jobless claims number was out this morning and it came in better than expected once again. The number rose slightly to 336k from 334k last week, but was below the 340k expectation.

The 4-week moving average fell to 339,750, a decline of 7,500 from last week and it is now at the lowest level since February 2008.

This chart shows the a long-term snapshot of the weekly jobless claims.

As the numbers continue to improve it bodes well for the companies that will be involved in placing workers both temporary and permanent.

Here are a few to watch:

• Robert Half International ($RHI) - A staffing and risk management firm that offers both part-time, temporary, and full-time employees in a range of industries.
• Barrett Business Services ($BBSI) - Offer human resource outsourcing and professional management consulting along with staffing and recruiting services.
• Kelly Services ($KELYA) - Offers staffing services for various industries worldwide. The company offers trained employees in everything from word processing to maintenance workers to accountants.
• Team Health Holdings ($TMH) - Provides outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers.

Top 2 Water Stocks and ETFs

To find out why all investors should not be ignoring the water supply issue around the globe and 2 stocks and ETFs to play this long-term trend you must read my most recent article.

Click here to read the article and see the names of the stocks and ETFs.

More Bullish News for Materials Stocks

Today the American Institute of Architects (AIA) released their monthly Architecture Billings Index (ABI) for February. The score came in at 54.9, up from 54.2 in January. The new projects inquiry list came in at 64.8, up from 63.2 last month and at the highest level since January 2007.

“Conditions have been strengthening in all regions and construction sectors for the last several months,” said the AIA Chief Economist. This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions. 

What does this mean to you??

Well as the demand for large projects increases it suggests that "big" money is back in the game and committing large amounts of cash. It also suggests the demand for materials will be increasing. Everything from lumber to cement to steel. The numbers will also be a boost for firms that supply the equipment and architectural services.

Stocks and ETFs to Watch:

• iShares S&P Global Infrastructure ETF ($IGF)
• iShares S&P Global Timber & Forestry ETF ($WOOD)
• Beacon Roofing Supply ($BECN)
• USG Corporation ($USG)
• Cemex ($CX) - Cement

Time to Buy into China?

Overnight the Shanghai Composite rallied 2.7%, giving the Chinese stock index its biggest one-day surge in over 2 months. The rally comes after an 8% pullback in the index after testing a 52-week high in the middle of February.

The fears that China may be moving back into the "hard landing" scenario coupled with the government attempting to slowdown rising property values hurt the overall stock market. I find the hard landing argument tough to agree with considering growth should remain near 8% for China this year, one of the fastest growing nations on the planet. I do not find that anything more than a soft landing from even more robust growth.

Fundamentally the Shanghai Index is trading at 9.5x projected 12-month earnings, well below the seven-year average of 15.8, according to Bloomberg. The combo of an attractive valuation and a healthy pullback from the highs make the Chinese market extremely tempting at current levels.

ETFs to Play China:

• iShares FTSE/Xinhua China 25 Index ETF ($FXI)
• SPDR S&P China ETF ($GXC)
• Market Vectors China ETF ($PEK)

Gold Starting to Glitter Again

After testing long-term support near the $150 area, the SPDR Gold ETF ($GLD) has rallied over 3% in the last three weeks.

The ETF closed out today at the best level in two weeks and is not far from breaking out to a new monthly high if the influx of money continues. Gold has moved back into the spotlight this week due to the headlines surrounding Cyprus and the issues that the Eurozone continues to deal with.

The combination of the "safe haven" trade and the technical bounce off of support in late February has put GLD back into a neutral status versus is bearish stance just a few weeks ago. I do like gold when looking out a few months and believe that GLD can get back into the mid-$160's where it will encounter some resistance.

The chart below is a daily chart of GLD over the last year. The blue line is the 50-day moving average and that will be the first major hurdle as you can see it has been resistance during the last few attempts to rally. The close above $158 is the first step, after that it should be clear sailing to the $160's.

Cyprus, The Market, and European ETFs

Today the small (and when I say small, I mean small) island of Cyprus rejected an amended bailout plan that would have levied a tax on bank deposits. This puts the country in a situation where it may default and this could lead to even bigger problems.

There is also the option that the Troika could offer a new bailout plan that will raise the lower end of the deposit tax that would be placed on accounts. The latest plan would not have put a tax on deposits under 20,000 Euros.

The market this morning was up before the news of the rejected vote and the S&P 500 immediately dropped several points on the news. The reason investors are spooked is because of the "unknown" outcome that lies ahead. The bank deposit tax or even worse, Cyprus leaving the EU is not the big fear. The big fear is that if Cyprus does it, what is stopping Spain or Italy from following their lead.

I truly believe the likelihood of Spain and Italy or any other major EU country getting itself into the mess that Cyprus is in is very small. Sure, it could happen and that is why stocks move lower on the Cyprus news, but they are two very different animals.

ETFs to Watch:

• iShares Spain ETF ($EWP) & iShares Italy ETF ($EWI) - Both countries are looked at as the next big trouble spots in Europe and when the news in the region turns negative they are typically the two that get hit the hardest. Both are down over 1.1% today.
• SPDR International Treasury Bond ETF ($BWX) - This ETF has large exposure to European bonds and if the situation gets worse it will lead to higher interest rates and thus bond prices fall.
• Global X FTSE Greece 20 ETF ($GREK) - Falling over 3.5% today to a new multi-month low as the Cyprus fears rekindle the issues in Greece.

Stocks Yielding Above 8%

3 Stock Yielding at least 8% and they have the ability to add capital appreciation.

Find out the 3 stocks here.

3 Stocks Flashing Buy Signals

Based on the charts and the fundamentals I came up with 3 stocks that are flashing buy signals.

Click here to find out the 3 stocks.

4 International ETFs Paying Big Dividends

My latest article on 4 International ETFs paying above-average dividends.

Click here to read.

Investing in Americas - Choose Mexico

My latest Seeking Alpha article on investing in Mexico.

Click here to read the article.

A 1980's Bull Market Repeating Itself

When looking back on history and the beginning of one of the greatest bull markets of all-time there are eerily similar circumstances today and the 1980's.

Beginning in 1982 the stock market began an unmatched bull market that did not end until 2000, 18 years later.

Richard Berstein put out in a recent note a list of the concerns we have today with the market and compared them to the 1980's. It was interesting to see the concerns we have today are basically identical to those of the 1980's.

Here are a few off the list:

• An out-of-control Federal Reserve - YES
• Slow growth economy - YES
• Iran causing geopolitical risk - YES
• Prior decades sub-par equity returns - YES
• Inflation - YES (at least for me it is a concern today)
• Federal Budget Deficits and Entitlements - YES
• Tax Reform - YES

It is tough to argue with the facts when laid out like that.

On another note, keep in mind that the concerns/issues you have now that are keeping you from being in the market are not the issues that will cause the next bear market. The issues that we all talk about are already priced into the stock market. The cause of the next bubble to burst is not in your mind right now. Did you think the 2007 financial collapse would happen based on what you knew a few months before it happened? Not at all.....

Talking Financial Stock on BNN Today (Video)

I was on Canada's BNN this morning discussing the US financial stocks and ETFs.

Investing in Mega Caps

The Mega Cap stocks are the names you recognize on a daily basis. They range from Apple ($AAPL) to Exxon Mobil ($XOM) to Coca-Cola ($KO). Typically most investors have exposure to the mega caps through mutual funds in their 401k's while others may actually own the individual stocks.

In my opinion investors (outside of their 401k) are typically underinvested in the mega cap stocks because it is much "sexier" to own a smaller company with promises of big returns.

During a prolonged bull market, similar to what we are experiencing now, the mega caps will lag in the early stages as investors pour money into speculative stocks. As the bull market matures it leads to money flowing into all asset classes. As the bull market gets into its later years the shift moves from the small caps to the mega caps as investors look for more safety in fears the bull market may be closer to the end.

Another potential factor for the mega caps pulling in more money near the end of a bull market is that the type of investor entering the market near the top is the average retail investor that wants to invest in stocks they "know".

Below is a graph that shows the difference in returns between the mega cap stocks and small cap stocks during bull markets. The first quarter of a bull market has the small cap stocks greatly outperforming the mega caps, but by the last quarter the mega caps take a sizable lead.

The bottom line is that maybe it is time to look at the mega cap ETFs as the play for the next year?

Vanguard offers three mega cap ETFs: Growth ($MGK), Value ($MGV), and Composite ($MGC).

Here is a chart of the performance over the last three years with Value leading the way and Growth lagging. Time to look at Growth, especially with investors looking for big returns after sitting on the sidelines.

New Article: 3 ETFs to Buy on a Market Pullback

To view my latest article on SeekingAlpha.com is "3 ETFs to Buy on a Market Pullback".

Click here to read the article.

3 ETFs to Hedge Inflation Article

Here is a link to my latest article on SeekingAlpha.com:

Click here to read "3 ETFs to Hedge Inflation"

New SuperDividend ETF

Tomorrow Global X will be launching a new "Super Dividend" ETF that will focus on the highest yielding US-based stocks.

The Global X SuperDividend US ETF ($DIV) will provide exposure to 50 companies that rank among the highest dividend yielding equity securities in the US. The ETF will have equal weighting across the 50 stocks and therefore will eliminate concentration risk into a small number of holdings. There are also filters that are used to lower the volatility of the stocks in the portfolio and to attempt to eliminate any stocks that may be at risk of lowering their dividend payments.

The ETF will compete with the PowerShares S&P 500 High Dividend ETF ($SPHD), which was launched late last year. The ETF is up 9.4% in 2013 and pays a dividend yield of 3.8%.

Morning Market Update (Video)

This mornings video discusses the market, commodity ETFs, and 2 ETFs with dividend yields over 7%.

Indicator Suggests Dow 16,500 by Next Year

The Dow Theory has been around for years a many of the old schoolers on the Street like to follow the philosophy. The jist is that when the Dow Jones Industrials and the Dow Jones Transports both make new highs it is bullish for the market.

This occurred in the last few days and according to the research it shows that the median return for the market after this occurs is 16% over the next 12 months.

I follow the S&P 500 much closer than the Dow and a gain of 16% in that index would put it at 1791, well into record territory and based on 2013 earnings estimates the index would be trading with a P/E ratio of 15.8, slightly above the historical average.

When put into perspective it sounds like an achievable goal!

Pullback in Oil a Buying Opportunity

The Dow is hitting a new all-time high again today after a recent rally that has pushed stocks higher.

Until today the rally has left a notable commodity behind - oil.

The price of oil has drifted lower over the last month and the losses are now near the 10% level. This is not a cause for major concern, but rather an opportunity to buy into a commodity that is linked directly to the global economy. A stock market at new highs instills confidence into consumers that in turn increases demand for goods that rely on oil and other commodities.

Now how to play this pullback in oil?

• US Gasoline ETF ($UGA) - Tracks the price of gasoline futures; down 6.5% from the recent multi-year high and sitting on support at the $61.50 area.
• US Brent Oil ETF ($BNO) -Of the 2 oil ETFs, I prefer the one that tracks Brent vs. West Texas as it is a better gauge to global demand for the commodity. Also down approximately 6%, the ETF is on support at the $82 area.
• iShares Dow Jones US Oil Equipment & Services ETF ($IEZ) - Basket of the big name oil service stocks that have been following the price of oil lower in the last two weeks. The ETF is down 5% from a recent high and on support at the $56 area.
• Oasis Petroleum ($OAS) - An independent oil and gas play, OAS is bouncing off support at the $36 area and looks poised to hit a new record high in the near future.

CHART OF $UGA

The Right Way to Invest in Japan

The U.S. stock market was not the only one hitting new highs yesterday, the Tokyo Nikkei hit the highest level since 2008. Japan’s major stock index has been riding the back of the global market rally, however there is one major factor the country has that has been setting itself apart.

The precipitous slide of the country’s currency, the Yen, has been a boost to the value of stocks based in Japan. As the currency declines in value it makes their goods more affordable to the countries Japan exports to.

When Shinzo Abe, Japan’s newest Prime Minister, said last year that he would use “unlimited easing” to get the country out of a long-term deflationary period, investors took notice and the Yen is down over 15% since that statement.

Over the last year the iShares MSCI Japan ETF ($EWJ) is up 7% and the Rydex CurrencyShares Yen ETF ($FXY) is down 14%. The reason EWJ is not up more is because the stocks are priced in Yen and as the US Dollar rises versus the Yen it equates to less gains for the stocks that make up the ETF.

So if we could somehow invest in Japan without having to take on the currency risk of the Yen falling more it would be a better scenario. The answer to this quagmire is the WisdomTree Japan Hedged Equity ETF ($DXJ). The ETF invests in large-cap Japanese stocks, but at the same time is short the Yen - basically the stocks are priced in US Dollars. Therefore a rise in Japanese stocks and a drop in the Yen is exactly what owners of DXJ are hoping for.

If the Japanese government sticks by its plan to continue monetary easing it will be a boost to Japanese exporters as the Yen hits new lows. This will lead to higher stock prices and DXJ continuing its current trend.

Below is a chart of all three ETFs over the last year. The 21% gain for DXJ is triple that of EWJ in just 12 months.

3 Must-See Market Charts - Buy or Sell?

The Dow Jones Industrial Average closed Tuesday at the best level ever after breaking through the 14,200 area. The S&P 500 remains below its all-time high of 1576; it is currently trading at 1540 and therefore would need to rally another 1.7% to join the Dow at the best level ever.

Below is a one-year chart of the S&P 500. It shows the new yearly highs on the right hand side of the chart. What I find interesting about the last year is that every pullback (February, December 2012, November 2012, May 2012, etc.) were all met with the same response by the media and most investors, “the bubble is bursting”. But in reality, each pullback was a new buying opportunity to get in at discounted prices. The new high keeps intact the current uptrend of higher highs and higher lows.

The next chart is of the S&P 500 over the last 20 years. Each candlestick represents one month of trading action. There is a very distinct pattern forming – a Bearish Triple Top. In 2000 the index topped out at 1552, in 2007 the index hit a high of 1576, and as I mentioned above the S&P 500 is now at 1540. This is about as easy of a triple top there is to identify.

There are two ways this can go. One would be if the index continues its patterns of the past and fails to break above the horizontal red line at the top of the chart. This would lead to a sizable sell-off based on the past performance of the chart.

The second option for the index is to break above the resistance line and confirm the breakout by trading above 1576 for a few weeks. If this is the case it would mark a significant move and the start of a very strong next leg of the current bull market.

We will be watching the 1480 as initial support for the index and the 1576 as resistance. If the index consolidates between these two levels it could be seen as consolidation before a breakout. But, if the 1480 level is breached we need to focus on lightening up our exposure to equities.

The last chart is of the Dow Jones Industrial Average dating back to the 1920’s; each candlestick on the chart represents one year. The S&P 500 does not have data going back to the early 20^th century and this is why I turned to the Dow to illustrate my view.

It may be a little difficult to decipher, but you should be able to pick out cycles that take place on a regular basis for the Dow since the 1920’s. Here is a breakdown of the cycles:

·      1930-1948 – The early part of the cycle was selling from the Great Depression and the second half was a rebound to get the index unchanged for the 18-year period.

·      1948-1966 – Post-WW2 rally that lasted 18 years.

·      1966-1982 - the Dow again experienced a series of ups and down, however during that 16 year span the index was unchanged.

·      1982-2000 - The great technology rally began in 1982 and it lasted until the tech bubble burst in 2000, a total of 18 years.

·      2000-Present: Two major rallies were joined by two devastating sell-offs (tech bubble and financial crisis) and the current cycle is now at 13 years.

So? Are we in the midst of another sideways cycle that has a few years left in it? We very well could be if the major stock indices are unable to continue the current breakouts and rally at least another 10%. In that case we would be back into the grinding sideways cycle.