You don’t have to agree with every aspect of “Dow Theory” to appreciate one of its most venerable features. In particular, the Dow Jones Transportation Index should lead the way higher for the Dow Jones Industrial Average. Why has this particular axiom maintained a level of popularity for more than a century? In essence, transporters “take” materials to [...] Continue Reading...
Financial stocks rocketed ahead in the first quarter and Bank of America (BAC) recently received a high-profile upgrade. So why is the SPDR Select Sector Financials Fund (XLF) one of the worst performers over the last 5 days? Aluminum giant, Alcoa, surprised Wall Street with its stronger-than anticipated earnings report. So why is the SPDR Select Sector [...] Continue Reading...
Month-over-month, most sector investments have provided investors with ample capital appreciation. Country ETFs with ties to technology, energy and infrastructure have all performed admirably. Yet there are a variety of areas of weakness that cannot be disregarded as inconsequential. For instance, in my February commentary on underachievement in the transportation arena, I highlighted the concerns with the Dow Industrials Average [...] Continue Reading...
Analysts have already lowered 2012 profit estimates for the S&P 500 from the 9% range down to the 6% range. Granted, profits may still be rising. But what could happen to stock prices when profits are climbing at a slower pace? And what happens if the manufacturers who are producing at a slower pace ultimately find themselves shipping less goods? In Dow Theory, [...] Continue Reading...
In my 10/27/11 commentary, “3 Reasons Stock ETF Investors Should Continue To Tread Lightly,” I pointed to the fact that the month-long stock surge had not come from the spectacular earnings season; in fact, the average return for individual securities on the session following a Q3 earnings report was -0.21%, suggesting that the entire October run-up emanated from enthusiasm for pan-European cooperation. It follows that articles [...] Continue Reading...
One of the “constant” declarations of the current earnings season? Of those reporting, roughly 3/4 of corporations exceeded profit-per-share estimates. On the other hand, it’s not uncommon for 2/3 to 3/4 of companies to beat lowered expectations; key executives help to create “beatable” numbers. In addition, each of 8 major economic sectors typically have corporations that, historically speaking, raise the earnings-per-share [...] Continue Reading...
Like IPOs, freshly launched ETFs receive prodigious praise out of the trading gate. And like many IPOs, many struggle to live up to the hype. Consider the First Trust Cloud Computing Fund (SKYY). After 9 trading sessions, SKYY currently rests at its lowest close since its July 6 debut. And that’s after an enormous amount of positive press. In reality, [...] Continue Reading...
Conventional commentary on Wednesday, 7/6/2011, described the trading as light and lackluster. Yet S&P SPDR Gold (GLD) climbed back above a critical trendline, PowerShares Developed Market Ex US (PXF) experienced 30x the normal trading volume and iShares DJ Transports (IYT) notched a new 52-week high. Beginning with the yellow metal, some surmised that the “risk-on” trade [...] Continue Reading...
Two of the most bullish voices in the mainstream media include money manager Ken Fisher and Bob Doll, the chief equity strategist at Blackrock. Fisher experienced an epic “fail” by completely missing the 2007-2009 bear/financial collapse; he had little choice but to stick with a never-ending bullish theme to claim credit for calling the “turnaround.” Bob Doll has always [...] Continue Reading...
Mainstream media reports have been weaving a positive spin into most of their features. Japan? The rebuilding process may actually increase worldwide economic growth. Libya? The ousting of Gaddafi may actually reduce geopolitical risk in the Middle East. The problem with these “maybes” is that there is equally compelling evidence for negative outcomes. While I have no doubt [...] Continue Reading...
