Tag: street authority

Run Your Portfolio Like A Hedge Fund Manager

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By: Chris Carson of Street Authority

As I was perusing my morning news feed, I came across an appalling amount of headlines about the ever-dreaded 'correction.' While there is value in some of these articles, the majority provide no unique insight.

Here's how one should think about a possible correction: How do I spot a correction? How do I protect against losing my shirt in a downturn? And how do I properly implement any suggested strategy?

First Question: How does one even know if a correction is coming? Continue reading "Run Your Portfolio Like A Hedge Fund Manager" →

The Worst Investing Mistake You're Probably Making Right Now

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By: Francisco Bermea

The moment the market opens, my inbox gets flooded with alerts I've set up to notify me when a holding makes a big move, hits a stop-loss, releases important news, etc.

The other week, I was inundated with messages telling me several of my holdings hit 52-week highs. In fact, in just one day, I received 11 different alerts of stocks hitting new highs.

To a huge portion of the investing community, a stock hitting 52-week highs strikes a Pavlovian response... they immediately start thinking about selling. After all, one of the first lessons investors are taught is to "buy low, sell high."

This can turn out to be a huge mistake. Continue reading "The Worst Investing Mistake You're Probably Making Right Now" →

The Most Important Stock To Watch This Month Is...

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By: John Kosar of Street Authority

All major U.S. indices closed higher for the fourth consecutive week, this time led by the small-cap Russell 2000, which was up 1.2%. Year to date, however, the Russell has by far been the weakest, up just 0.9%. This puts the burden for continued broad market leadership squarely on the other traditional market leader -- technology.

The tech-heavy Nasdaq 100 has been up to the challenge so far, posting a 13.7% gain year to date, and is a major reason why the SP 500 is up 8.4% in 2014. But with small caps already weak, if and when technology stocks stop leading, the overall market is likely to run into some serious problems.

My own metric, which is based on ETF asset flows, shows that the largest inflow of sector-related investor assets last week was into defensive utilities and out of industrials. Accordingly, last week's strongest sector was utilities, up 2%, with industrials the only sector to finish the week in negative territory.

Be Aware Of September Seasonal Weakness

As we move into September, a good place to begin this week's report is with monthly seasonality. The chart shows that September is the seasonally weakest month of the year in the SP 500 since 1957. On average, it closed 0.68% lower for the month and posted a negative monthly close 54% of the time.

This is one of several good reasons to pay particularly close attention to your stock market investments this month, and to have a defensive plan already in place in case this 56-year seasonal pattern emerges again this year.

We should also note the historical tendency for a strong fourth-quarter rebound, so even if the market does correct this month, we should be looking for near-term weakness to potentially provide better intermediate-term buying opportunities. Continue reading "The Most Important Stock To Watch This Month Is..." →

Major Bearish Trend Change Overseas May Spell Trouble for U.S. Market

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By: John Kosar of Street Authority

All major U.S. indices closed higher for the third consecutive week, led by the Dow Jones Industrial Average, which was up 2%. Year to date, by far the strongest major index has been the tech-heavy Nasdaq 100 (NDX), which is up 12.8%. This leadership by technology has been a key catalyst in the 2014 broad market advance, helping the SP 500 post a 7.6% gain despite a weak small cap sector. This strength in tech must continue to keep the broader market headed higher.

From a sector standpoint, last week's advance was led by financials, industrials and consumer discretionary, but all sectors of the SP 500 ended in positive territory.

Key Indices Held Major Support Levels in August

Many key indices, including the SP 500, Dow Jones Industrial Average and PHLX Semiconductor Index, have rebounded nicely from major support levels that were tested during the first week of August, and finished last week at or near their 2014 highs.

The SPDR Dow Jones Industrial Average (NYSE: DIA), which I first mentioned as a potential buying opportunity in the May 12 Market Outlook, closed out last week 3.7% above its Aug. 7 test of its 200-day moving average, a widely watched major trend proxy, and less than 1% below its July 17 all-time high of $171.32.

Although I remain cautiously positive on DIA heading into this week, I am still apprehensive about its more intermediate-term sustainability due to frothy investor sentiment, weak August-to-September seasonality, and major overhead resistance in the market-leading Nasdaq 100. Continue reading "Major Bearish Trend Change Overseas May Spell Trouble for U.S. Market" →

The Dirty-Little Secret Behind Corporate America's 'Buyback Frenzy'

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By: Christian Hudspeth of Street Authority

Corporate America's "wealth giveaway" continues.

Ever since America's largest corporations hunkered down and began hoarding unprecedented amounts of cash to protect themselves in the aftermath of the 2008 financial crisis, investors have been hounding companies to put that money to work.

Fortunately for investors, companies have responded. But not in the way you might expect.

You see, rather than putting their cash to work through expanding product lines, opening more stores and investing for growth, many large companies have been rewarding shareholders through record amounts of dividends and share repurchases.

For the most part, this is good news for investors. But there's a hidden element to share about buybacks that you need to be aware of... because behind the scenes some companies are actually using this effective tool to erode shareholder wealth.

Let me explain... Continue reading "The Dirty-Little Secret Behind Corporate America's 'Buyback Frenzy'" →