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How Midterm Elections Could Lead To 17.5% Returns In Less Than A Year

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By: Christian Hudspeth of Street Authority

The most recent election was a good night for Republicans, but possibly even better for investors.

That's not necessarily because Republican wins lead to better stock returns, but because historically the market performs better in the year following midterm elections.

In fact, there's a 66% chance that the market will post positive gains for 2014, according to research by StockTradersAlmanac.com.

Looking at stock market movements from every midterm election from 1970 to 2010, their research found that 66% of the time the stock market ended higher from election day to year's end.

And for all midterms since 1970, the stock market gained an average of 2.1% from election day to the end of year. You can see for yourself in the table below:

If a 2.1% gain possibility over the next two months doesn't sound groundbreaking, then this might.

Holding stocks for a full year after a midterm has historically been very profitable, according to research by Chief Equity Strategist Sam Stovall of SP Capital IQ. Continue reading "How Midterm Elections Could Lead To 17.5% Returns In Less Than A Year" →

In the Week Ahead: Is A Market Bottom Finally In Place?

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By: John Kosar of Street Authority

All major U.S. stock indices finished in positive territory last week, for only the second time since Aug. 29, led by the Russell 2000, which gained 4.9%. This is good news for the market as small-cap stocks have lagged in a big way all year. The Russell 2000 is up just 0.9% year to date compared with 15.8% for the tech-heavy Nasdaq 100 and 9.2% for the broad market SP 500.

Another good sign is that, despite the Federal Open Market Committee (FOMC) announcing the end of its bond-buying program on Wednesday, the SP 500 rose by an additional 1.7% into Friday's close. This suggests that, despite a lot of investor apprehension beforehand, the market ultimately interpreted the Federal Reserve's action as evidence that it believes the U.S. economy is finally strong enough to stand on its own two feet.

From a sector standpoint, last week's rally was led by technology, up 3.3%, and financials, up 3.2%. This is another good sign for the overall market between now and year end as these sectors typically outperform amid expectations for a strengthening U.S. economy.

Technology Stocks at a Key Inflection Point

In the Aug. 25 Market Outlook, I discussed an important overhead resistance level at 4,147 in the Nasdaq 100. I said, "Major benchmark highs like this one are seldom meaningfully and sustainably broken without at least a multi-week corrective decline first."

The index peaked three and a half weeks later, at 4,119 on Sept. 19, and then subsequently declined by 10.2% into the Oct. 15 low. The SP 500 declined by 9.8% during the same period.

The Nasdaq 100 managed to edge slightly above 4,147 last week, which represents the September 2000 benchmark high, closing at 4,158 on Friday.

The more time this market-leading index spends above 4,147, the more likely that a major breakout is emerging that would clear the way for a continued rise into year end.

Investors Breathing a Sigh of Relief Continue reading "In the Week Ahead: Is A Market Bottom Finally In Place?" →

Oil Prices Are At Two-Year Lows - Should You Buy Now?

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By: Eric Winter of Street Authority

Stock exchanges are not alone in seeing prices pull back lately. In at least one case, however, that is actually a good thing.

Drivers both state-side and abroad have no doubt felt the pain at the pump subsiding this fall. In the United States, many gas stations are now hawking unleaded for under $3.00 a gallon -- a welcome sight in my eyes, at least.

Those lower prices have come at a cost to some portfolios, however.

Oil prices have been steadily declining since making highs in June, falling from north of $104 to around $81 at the time this article was written. Considering that nearly every industry is affected by oil in some way, this means there’s a good chance some of your holdings have fallen in tandem.

Naturally, oil explorers, producers, and those along the supply chain have been hit the hardest. Exxon Mobil Corp. (NYSE: XOM), the world’s largest oil company by revenue, has fallen 11% since July. In contrast, the SP 500 is only down 2.6% in the same time period. Continue reading "Oil Prices Are At Two-Year Lows - Should You Buy Now?" →

CF Cycle for Life - INO Cares

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It was a beautiful morning! Although chilly and very windy, it was still a great day for a bike ride. We bundled up, broke out the spandex and jumped on our bicycles to participate in the Cystic Fibrosis Ride for Life at Herrington Harbour in North Beach, Maryland. Our November INO Cares project was a great success. We helped the Cystic Fibrosis Foundation raise over $40K and we had two newbie cyclists each finish a 20 and 40 mile race! Family and friends came to cheer on our riders and join us for a great after-party.

The Cystic Fibrosis Foundation is a fantastic organization that funds research in hopes of finding a cure to this fatal genetic disorder. Learn more about the Cystic Fibrosis Foundation and the nationwide Cycle For Life events.

Best,

Lindsay Bittinger
The INO Cares Team

In The Week Ahead: No Clear Sign Of A Market Bottom

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All major U.S. stock indices finished in the red again last week except for the Russell 2000, which gained 2.8%, reversing the pattern that we have seen for most of this year where small-cap stocks lag the market. This emerging strength in small caps may be a good sign for the market between now and year end. But, for now, the broad market SP 500, blue-chip Dow industrials and tech bellwether Nasdaq 100 are all negative for 2014 with no clear sign of a bottom in sight.

All sectors of the SP 500 posted losses last week except for industrials, materials and utilities. One potential bright spot is that my own ETF-based metric shows the biggest inflow of investor assets last week went into energy. Should this continue, it may be a leading indication of a fourth-quarter buying opportunity in this downtrodden sector. Stay tuned.

Keep Your Eyes Focused on Europe

In last week's Market Outlook, I discussed a bearish head-and-shoulders formation in Germany's DAX index that targeted an additional 11% decline to 7,800. I said the positive long-term correlation between the DAX and the SP 500 implied that the broader U.S. market may also be vulnerable to more weakness.

Despite last week's modest rebound, the 7,800 downside target remains valid as long as the March 14 and Aug. 8 lows near 8,913 loosely contain the index on the upside.

The next chart shows the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) broke down last week below the $165.51 support level that I first identified in the May 12 Market Outlook. The ETF has key resistance at $165.63 to $168.78, which contains the 200-day moving average (major trend proxy), the 50% and 61.8% Fibonacci retracements of the Sept. 19 decline, and the 50-day moving average (minor trend proxy). Continue reading "In The Week Ahead: No Clear Sign Of A Market Bottom" →