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

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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)
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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.