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According to the American Water Works Association the price tag for upkeep and replacement of the outdated water systems is about $1 trillion over the next 25 years.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

Morning Market Update - Video

Investing in the China Consumer

Today the Chinese government announced they will be targeting 7.5% GDP growth in 2013, down slightly from the 7.8% growth in 2012. I have always been a believer in China and do not get bent out of shape when the growth numbers fluctuate. Whether the growth in 2013 is 7.5% or 8.5%, it is still one of the best growth stories in the world.

The announcement also suggested the country will increase their budget deficit and that more money will be spend on domestic programs that will directly benefit the local Chinese consumer rather than concentrating on infrastructure and exports.

There are 2 ETFs that can give investors exposure to this niche area.

• Global X China Consumer ETF ($CHIQ) - The ETF is composed of 40 stocks mainly in the retail, consumer goods/services, automobiles, and food sectors. The ETF is popping today on the news (up1.9%), but has struggled recently. The ETF is above-average risk due to the lack of diversification.
• EG Shares Emerging Markets Consumer ETF ($ECON) - This is an ETF we have owned for clients for some time and it fits our long-term theme on the continued emergence for emerging market consumer. The ETF has been a top performer, but consolidation lately makes it attractive for long-term investors. The ETF is not a direct play on China because it is not a top five country holding, however if you like the theme in general ECON is the best way to play the emerging market consumer.

Below is the 6-month chart showing the performance of $CHIQ, $ECON, and the iShares Emerging Market ETF ($EEM).

Dow Hits High - More Room to Run

The Dow Jones Industrial Average traded above 14,200 early this morning for the first time EVER!

The index was last trading at 14,280, up 150 points on the day and near the highs of the session.

Looking back to October 2007 (when the Dow hit its previous high) I found it interesting to see which sector ETFs performed the best.

• iShares US Pharmaceutical ETF ($IHE) up 70%
• iShares NASDAQ Biotech ETF ($IBB) up 76%
• SPDR Consumer Staples ETF ($XLP) up 37%
• SPDR S&P Retail ETF ($SRT) up 69%
• iShares Gold ETF ($IAU) up 106%

Of the country ETFs, there are only a couple that have been able to outperform the US markets since October 2007. The iShares Mexico ETF ($EWW) and iShares Malaysia ETF ($EWM) are the two big winners.

Morning Market Video: New Highs, Dividends, China Consumer