The Small-Cap Investor
Secrets to Winning Big with Small Cap Stocks
by Ian Wyatt
Ian has discovered over the years that small-cap
stocks can provide the best long-term returns for investors. Small-caps are
the one area where individual investors can truly have a leg up on Wall
Street, due to the lack of analyst coverage and institutional ownership.
Dow 10,000 is less than 100 points away this morning. Who'd a thunk it? Just 6 months ago, when the Dow closed at 6,547 on March 9, it seemed as though the world was coming to an end.
You might have thought I had gone off the deep end when my Daily Profit from March 9, 2009 hit your inbox with the headline "Upside for Stocks?" And the following day, March 10, I even included a list of stocks you might have considered buying for the rally that was starting. Since then, Graham Corp (AMEX:GHM) has rallied 90% and SXC Health Solutions (Nasdaq:SXCI) is up 162%.
You might still think I'm a little nuts calling for the Dow to hit 10,500 before this year is over. But with money still cheap, economic data still improving and stock valuations that are reasonable if forward earnings estimates prove accurate, that there may be more upside isn't a crazy idea.
*****Of course, there's no guarantee that earnings will improve as much as forecast. As I wrote on October 5: According to Bloomberg, these folks (analysts and money managers) see earnings for the S&P 500 rising 26% in 2010 and another 22% in 2011. By that time, they say earnings for the S&P 500 will hit an all-time high at $92 a share.
*****Barron's currently has the P/E for the S&P 500 at 136 times trailing earnings. Sounds bad, downright absurd, even. But don't forget that investors are looking forward.
The P/E of 136 is based on current earnings of $7.60 a share. If the S&P 500 grows earnings at $92 a share, then we're looking at a much more reasonable P/E of 11.
It's clear from 2Q earnings season that earnings estimates were too pessimistic. And that is likely true for 3Q earnings season, as well. We've already heard from Alcoa (NYSE:AA) that demand is picking up as the company posted a solid upside surprise.
This week, we get earnings from Intel (Nasdaq:INTC) tomorrow, JPMorgan (NYSE:JPM) on Wednesday, followed by Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), Google (Nasdaq:GOOG) and IBM (NYSE:IBM) on Thursday and Bank of America (NYSE:BAC) on Friday.
I expect at least solid earnings from this entire group. And there's a good chance for upside surprises, especially from Goldman, Google and IBM. I still have a hard time getting behind the banks because we know that they still carry toxic assets on their books. But the accounting rules changes enacted in February have at least made them look better.
*****Bloomberg reports that central banks around the world added $413 billion in foreign currency reserves last quarter. And Barclay's reports that 63% of the foreign currency investments in the second quarter were in euros and yen. The U.S. dollar is apparently getting left behind as foreign central banks appear wary of the dollar's falling value. Some are even calling for the dollar to be replaced as the world's reserve currency.
We've been following the U.S. Dollar Index lately, and I'll include the chart again...
Clearly, the U.S. dollar has lost value. But it's interesting that its value has found support at 76, even as the "dump the dollar" rhetoric is hitting a fever pitch.
Investors aren't waiting for the next leg down. They are buying gold now to protect their wealth form further declines in the dollar's value. October gold futures hit 1,054 today.
Famed commodity investor Jim Rogers is out today saying that gold will hit $2,000 during the current rally. Even if gold gets close, profits for gold mining companies will hit some amazing levels, and their stock prices will hit some equally amazing highs. My Global Commodity Investing advisory service has 3 mining stocks poised to move significantly higher as gold prices rise. Click here to learn how you can profit from gold's rise.
*****As I wrote on Friday, I'm very glad I didn't take 128% profits on China Natural Gas (Nasdaq:CHNG) the last time it hit $14 a share. With today's move, SmallCapInvestor PROmembers are up 139%. I have a price target of $18.
Stocks were up today in reversing the downward trend from the week with leadership from financials and healthcare. Most notably blue chips JPMorgan Chase & Co. (NYSE:JP), Goldman Sachs (NYSE:GS), Pfizer (NYSE:PFE), and Merck (NYSE:MRK) were up. Rounding out the leaders in financial were Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC).
The Dow ended the day's trading session up 0.69% to close at 8,555 while the Nasdaq declined 0.02% and the S&P 500 saw gains, closing at 918, up 0.84%.
Small-cap bellwether Russell 2000 Index, representing the 2,000 largest small-cap stocks, closed up 0.36% to 509.
Leading small cap gainers reflected the broader push top leaders in financials including National Penn Bancshares (Nasdaq:NPBC) up 31.4%; American Capital (Nasdaq:ACAS) up 27.1%. Other gainers include Myriad Pharmaceuticals (Nasdaq:MYRXV) up 15.7%; Nelnet (NYSE:NNI) up 30.5%; and Talbots (NYSE:TLB) up 16%.
Small-cap decliners were lead by Liz Claiborne (NYSE:LIZ) down 25.9%, on forecasts of larger than expected losses. The company gave no indication for the larger losses other than the message from all apparel companies that consumers are cutting back on what they consider nonessential purchases. Liz Claiborne reported a loss of 37 cents per share in the first quarter, excluding one-time items. Analysts had forecast 33 cent loss per share for the second quarter. No guidance was provided by the company as to what the revised forecast might be. This played into investor concerns as sellers look to unload shares as reflected in higher than normal volume.
In other news concerning Liz Claiborne, the company announced yesterday that it intends to offer $75 million in convertible senior note due 2014. It is the company's intention to use the proceeds to pay down a portion of borrowings under an amended credit facility.
*****10 banks have paid back $68 billion in TARP loans. Including some smaller banks that have already repaid loans, the total is now over $70 billion. Even though the repaid money was raised from secondary stock offerings, which dilute shareholder value, it's still something of a positive sign, I suppose.
Now, what's going to happen to the money? Will it sit in the TARP fund? Will it be used to back other loans to small businesses?
This is an inflation issue. The money supply has increased by around $1 trillion in the last year (much of the bailout "funds" have been loan and asset guarantees that haven't increased the money supply, yet). It's the Fed's job to contract the money supply to keep price inflation in check.
This is the problem with creating money - you have to be willing to "uncreate" it at some point. With unemployment as high as it is, inflation is not yet a concern. But that will change eventually, and the Fed will have to have the resolve to contract the money supply when the economy starts showing signs of life.
As we've seen in the past, an economy that gets hooked on liquidity is very hard to wean. I personally have my doubts as to whether this Fed will be able to avoid the Greenspan legacy of allowing asset bubbles to form. So we want to be ready to profit form whatever asset bubbles arise in the future.
This is one of the topics we'll be discussing in next Wednesday's Video Conference. It's titled Inflation Busters: Discover the Stocks to Grow and Protect Your Wealth and will air on Wednesday, June 24 at 6:00 P.M. It's free to attend, you can sign up HERE
*****Stocks are trying to put an end to the sell-off that started with Monday's big decline. The S&P 500 is within a few points of its 200-day moving average. It's also less than 20 points from its 50-day moving average.
One of the simplest trend following systems focuses on the crossover of the 50-day and 200-day MA. When the 50-day MA crosses above the 200-day MA, it signals a trend change from bear to bull. When the 50-day MA falls below the 200-day MA, it signals a change from bull to bear.
So, the current trading is very significant to technical traders. The S&P 500 is flirting with a major buy signal. It should be noted that the Nasdaq flashed the moving average crossover buy signal a few days ago. I would view the moving average crossover on the S&P to be confirmation of the Nasdaq signal.
*****Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, isn't waiting. He's expecting a strong bounce and recommended 3 upside positions to his readers yesterday. One of them, the Direxion Technology Bull (NYSE:TYH), is a leveraged ETF that seeks triple the daily gains on the Russell 1000 Technology Index. That trade finished the day with a 3% gain.
Don't forget the new Daily Profit feature - Jason will give us another video chart analysis session tomorrow. In last Friday's edition he pretty much nailed this week's trading so I can't wait to see what he has to say about next week.
*****I'm itching to recommend a new stock to Daily Profit readers. We did pretty well with Graham Corp (AMEX:GHM) and Hovnanian (NYSE:HOV) earlier in this rally.
I can't say I feel comfortable recommending Molecular Insight Pharmaceutical (Nasdaq:MIPI), but the story that came out yesterday is pretty darned interesting. The biotech announced that it can both detect and treat prostate cancer with its imaging agent, Trofex. And instead of the usual 5 tests including MRI and ultrasound, Molecular Insight can collect the necessary data for diagnosis within 2 hours of the Trofex injection.
The stock was up 42% to $6.24 yesterday. Of course, like most small biotechs, Molecular Insight is burning through cash like a teenager at the mall. But if this technology is viable, the stock will go a lot higher than $6.24.
Just thought you'd like to know…talk to you tomorrow.
Investors saw lots of red in today’s trading session as regional manufacturing data suggested that economy is not picking up as much as had been hoped. Most economists had expected gains in the New York Fed’s manufacturing index but were instead treated to numbers indicating that the factory sector shrank at a more severe rate than expected.
A stronger U.S. dollar pulled oil below $70 away from its eight month high.
As of press time, 3:30 P.M. Eastern, the Dow was down -194.75 to 8,604.50; the Nasdaq was down -46.29 to 1,812.51, and the S&P 500 was down -23.25 at 922.96.
The Russell 2000 Index, comprised of the top 2,000 small-cap stocks, was down 16.77 at 510.06.
Bucking the downward trend today was pharma and financials. Two of the top percentage gainers were JazzPharma (Nasdaq:JAZZ) up 69.7% on positive news about it fibromyalgia drug and MAP Pharma (Nasdaq:MAPP) up 11.89%. MAPP has been on a tear since late May when it shot up to $11.39 from $3.15.
Other small-caps showing leadership today include QEP (Nasdaq:QEPC) up 39.07%, Tongxin Intl (Nasdaq:TXICU) up 24.75%, and two financials, American Capital (Nasdaq:ACAS) up 14.67% and New Century Bancorp (Nasdaq:NCBC) up 14.83%.
Small-cap decliners were lead by Oil-Dri Corp. of America (NYSE:ODC) down 23.24% following Friday’s news that it will lose its largest customer in the cat litter retail segment. Other leading decliners include Virgin Mobile USA (NYSE:VM) down 16.98%, book retailer Borders Group (NYSE:BGP) down 13.16%, and Integrated Electrical Services (Nasdaq:IESC) down 17.64%.
*****Summer doesn’t officially start for a few more days. Tell that to the parents who are now getting their kids off to camp or getting ready for vacation. For the standard two-income household, living easy in summertime is just a memory.
Including today, we have just 12 more trading days until the end of June and the end of the second quarter. I suspect we will have seen the highs for stock prices by then. That is, if we haven’t seen them already.
Oil backed off recent highs on Friday. And that’s likely to continue. Oil was too cheap at $33 a barrel. But $73 is too high, at least for now while much of the developed world is still mired in an economic downturn. We know demand is still weak. And we know there are looming supply issues when demand picks back up. However, the issue right now is the economy.
*****Oil has been rallying as the news cycle has been relentlessly optimistic about an imminent economic recovery. In fact, many leading economists expect U.S. GDP to actually grow in the third quarter.
Oil stocks that we’ve been following have been on a tear the market bottom, including Graham Corp. (AMEX:GHM) up 81%; Brigham Exploration (Nasdaq:BEXP) up 239%; Gulfport Energy Corp. (Nasdaq:GPOR) up 326%. Even the majors like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), and ConocoPhillips (NYSE:COP) are bringing investors some decent returns, though not as great as small-cap stocks in the same sector.
Investors have bought the rumor of economic recovery. We’ll see how they respond to the news. I’ll be watching oil as the leading indicator for economic expectations.
Right now, it seems like stock prices have priced in a modest recovery. And if investors perceive that there’s not much upside left for stock prices, it would makes sense to trim exposure, take profits, or however you want to put it.
*****We’ve seen anecdotal evidence that investors are moving funds out of the stocks that have led the market higher. Technology has been having trouble making headway. And we’ve seen strength in healthcare and consumer staple stocks. Plus, the Volatility Index (VIX), which measures the cost of put options (which rise in value as stocks or indices fall, thereby giving investors downside protection) has been on the rise.
This suggests that investors are preparing for a downside move for stock prices, or, at the very least, protecting gains they have made.
*****On Mondays, I’m going to start offering a look at the economic data coming out during the week ahead. This week is a bit unusual as all the economic data is out on Tuesday. Tomorrow we get Housing Starts, Building Permits and the Producer Price Index (PPI).
Of course, consumers will focus on the housing numbers. But I’d expect any numbers will be interpreted with optimism. Investors seem to understand that the bottoming process for the housing market will be volatile and that wild swings in the data should be expected.
In my opinion, the PPI is the one to watch. The U.S. dollar rallied a bit last week, but there’s no doubt that massive Treasury bond sales have investors worried about a weaker dollar the potential for inflation to pick up. Add to that improving retail sales numbers, helped by higher gasoline prices, and you have the potential for a higher-than-expected PPI reading. Needless to say, that would not be good for stocks.
I’ll talk to you tomorrow.
Ian Wyatt
P.S. You’ll recall from Friday’s issue we start sharing charting analysis from TradeMaster’s technical analyst, Jason Cimpl. If you didn’t have a chance to catch, here’s the link. You’ll get his take on this week’s market direction. Since this is a new feature for Daily Profit I’d greatly appreciate receiving any feedback from you on it.
All major indices were trading down for much of today's session with the Nasdaq leading the losses by shedding 0.19% to close at 1,858.80. In late trading the Dow closed at 8,799.26 for a modest gain of 0.32% and the S&P 500 closed up 0.14% to finish the day at 946.21.
The Russell 2000, the widely followed index of the largest 2,000 small cap stocks, closed down today at 524.32 losing 0.33%.
Leading the small-cap gainers today was Savient Pharmaceuticals (Nasdaq:SVNT) up 56% to close at $9.26 on news that the Food and Drug Administration said that the firm's gout treatment drug, Krystexxa, works. Based in East Brunswick, NJ, Savient makes specialty biopharmaceuticals as was founded in 1980.
Other small-cap leading gainers include WSP Holdings (NYSE:WH) up 24.5%; Independent Bank Corporation (Nasdaq:IBCPO) up 22.4%; and AC Moore Arts & Crafts (Nasdaq:ACMR) up 16.4%.
Small-cap decliners were lead by Hawaii-based Hoku Scientific (Nasdaq:HOKU) down 30.3% to close at $3.05. Hoku, a raw materials provider for the solar industry, announced that it may be unable to fund its operations over the next year and stated that it will not provide guidance for fiscal year 2010.
The other small-cap stocks posting big share price drops include iPCS (Nasdaq:IPCS) down 21.6%; P&F Industries (Nasdaq:PFIN) down 19.9%; and one of Wednesday's big gainers, Corel (Nasdaq:CREL), which slid 18.4%.
*****Its worse in Europe than here in the U.S. Industrial production dropped 1.9% in a particularly cruel April, nearly double the 1% drop that was expected. First quarter GDP was also down 2.5% for the 16 Euro-zone countries.
The recession there seems far from over, and Europe's weakness might be contagious because it should act as a stark reminder just how tenuous global economic recovery is.
*****Oil prices may have just hit their blow-off highs above $72 yesterday. As you know, I was early to the oil stock party. My SmallCapInvestor PRO readers took a 142% gain on one stock, Gulfport Energy (Nasdaq:GPOR), and we're holding +60% on another. And of course, if you've been following closely over the past six months you know that I've been in and out of Graham (AMEX:GHM) several times.
Now, it's getting late and I suspect the party might be ending, at least for a brief pause. I'm not calling for oil prices to crash. And the $33 a barrel price we saw back in February may never be seen again. But oil stocks, and stocks in general, are due for a pullback.
The 2nd Quarter ends June 30. And it would be reasonable to expect institutional investors to lock in some gains. I'm sure they are using put options to do some hedging, which helps explain the recent rise in volatility. But I also won't be surprised to see some outright selling. And it might have started with yesterday's afternoon drop for the indices.
The Dow Industrials were up well over 100 points in the early afternoon, but couldn't hold it as a late wave of selling left it with a gain of just 30. That's the opposite pattern of what we've seen for much of this rally. Institutional investors have been buying late in the day, supporting prices and leaving stocks with daily gains.
Institutional activity usually occurs at the beginning and end of the trading day, so this is something to keep an eye on.
*****Brazil, Russia, China and India contribute 15% to global GDP, but they have 42% of the world's currency reserves. And they may be on the verge of throwing their liquidity weight around.
Bloomberg reports that these countries will hold their first summit next week, and it's widely expected that they will announce that they are increasing their holdings of IMF bonds. Yes, that comes at the expense of U.S. bond holdings.
Apparently, fears of rising deficits and the potential inflation from an expanded money supply in the U.S. are driving them to diversify a bit.
Investors should take note. While the U.S. muddles through, and Europe continues to be mired in recession, the BRIC countries (Brazil, Russia, India and China) are the only countries in the world that can support their economies without taking on debt.
Chinese stocks are the ones I'm bullish on right now. If there is a slight pullback later this month, then Chinese stocks will suffer the least and more importantly, present great buying opportunities before the next leg up. To get my top Chinese selections, click HERE.
*****Finally, as I announced yesterday, TradeMaster Daily Stock Alerts technical analyst Jason Cimpl has graciously agreed to give us a weekly forecast for the stock market. You can access his video analysis and commentary HERE.
Stocks are in the red today after new data did little to bolster investors’ spirits that the economy is slowly getting better.
At 2:51 pm ET, the Russell 2000 (NYSE:IWM) is down 1.43%, while the Dow is down 1.10% and the S&P 500 is down 1.44%.
Today the Labor Department said consumer prices in April were flat, as economists predicted, while New York-area manufacturing activity and industrial production contracted less than economists expected. Investors remain cautious ahead of several reports out next week on housing.
Small caps bucking the decline today include BioCryst Pharmaceuticals (Nasdaq:BCRX), up 30% after reporting encouraging results from its Phase II lymphoma trial, and Fuqi International (Nasdaq:FUQI), 20% higher following strong first-quarter results.
******You know over the course of the past few months I’ve not held Wall Street or the banking executives in high regard. I hold them almost — that’s almost — singularly accountable for our current recession (Uncle Sam and private citizens who borrowed too much are to blame as well), but the government is beginning to really stick its nose too far. For example, today’s headlines (those not about whether Nancy Pelosi knew about torture and when she knew it) are consumed with government pushing itself on private industry, most notably with the pressure on Bank of America (NYSE:BAC) to change its board.
Granted, “regime change” is a necessity for most of the companies receiving TARP money. After all, they’re the ones who got us into this mess. But shouldn’t it be shareholders forcing the issue? You saw how they forced Ken Lewis of Bank of America to give up his role as chairman. This was done at the shareholder level, not by some bureaucrats in a windowless office overlooking the National Mall.
But for many Beltway insiders this isn’t enough. Someone’s got to pay dearly for the bonuses paid out to Merrill Lynch just before B of A took them over. And since Merrill’s gone, guess who gets to play whipping boy? We’ll see how far this goes and which TARP recipient is next. Unfortunately, this is even more motivation for firms that received TARP money to pay it back as soon as possible, in some case, too soon.
A couple weeks ago the President and his Car Czar worked out a deal to “save” Chrysler. As part of that deal Chrysler is to come out as stronger, if leaner, automaker. We’ll see (ask Daimler Benz how their dance with Chrysler worked out).
But read the fine print on the ownership stake: the United Auto Workers (UAW) union will own 55% of the company with rest as U.S taxpayers, Canadian taxpayers, and Fiat somewhere in the mix, though it’s not 100% on board.
Let me rephrase this: the means of production will be controlled by the workers and the central government planners. They will control the production quotas and development of new products for the masses.
Does this sound familiar? Didn’t we spend 50 years and untold trillions to avoid this?
General Motors (NYSE:GM) is in the throes of its own bankruptcy deal. We’ll see how this plays out, but I’ll bet it won’t be too dissimilar from the fate of Chrysler, except Fiat won’t be at the party.
And this is rich … the UAW has graciously agreed to not strike Chrysler until September 2015. How magnanimous considering that as majority owner they’d be striking against themselves. But isn’t that kind of what they’ve done over the decades anyhow, just one degree removed?
So only Ford (NYSE:F) is left standing as a real company. In a sense, I’m proud of the management and decisions made at Ford to put them in this enviable position. I can only hope that their eventual fate is not that of Chrysler and GM.
*****Rising Gas Prices
While we’re on the subject of cars, I’ve been thinking about gas and oil prices. Have you checked the price at the pump lately? Here at our Washington, D.C. offices we’ve seen a gradual uptick in prices that if it happened overnight, or heck, even during one month, you’d do a double take.
After the markets collapsed last fall, regular gas was going for about a $1.70 a gallon. It was a nice reprieve just in time for the holiday season. But just yesterday I noticed the price at the local Shell station was $2.38, which also happens to be the local average.
So, let me get this straight: in the midst of the worst recession in a generation when we’re losing jobs at a pace of 600,000 and more PER MONTH, housing prices are falling, tax revenues are declining, retail sales are abysmal (unless you’re Wal-Mart), and businesses are failing, gas prices have increased by 40%? Something doesn’t jibe here.
Over the past few months Jason Cimpl and I have been doing a lot research on the oil sector. In fact, he’s been getting in and out of the ETF USO in the TradeMaster service to pick nice quick gains. One disturbing trend that we found was the rapid deceleration of oil field exploration and development. It’s virtually dried up. I’m not surprised given that according to the International Energy Agency current inventories are at all time highs. At current usage rates that equates to a stockpile of 62.4 days of consumption. That’s eight days higher than just one year ago.
So oil, and by extension, gasoline prices should be going down, right?
Not so fast, you see oil traders work off not the here and now, but the future (that’s why they buy oil futures). And they’re anticipating greater demand toward the end of this year as the world economies (particularly the U.S. and China) pick up again and they have readily available data suggesting that Big Oil and nationalized oil are not ready to pick up the slack.
There’s no way they can. They’ve cancelled nearly three dozen big projects. And their existing capabilities are looking rather dubious.
For example, production in the developed world is way off: Alaska’s North Slope is way off, Mexico’s famous Cantarell Field peaked in 2002 at 2.1 million barrels per day and is now on track to produce only 772,000 barrels per day for 2009 (that’s 66% drop off in seven years!), Britain became a net importer of oil last June — not from increased consumption but from depletion of its North Sea fields.
And then there are the other big players: Russia is having a tough time financing continued operations, let alone new projects; Iran, right, they peaked in 1976 at 6.6 million barrels per day and are now around 4 million; Saudi Arabia is well-known to be cooking the books on proven reserves numbers; Nigeria is constantly on the brink of implosion.
Then there’s Venezuela. What can I say? Chavez has done a great job in turning what was once one of the richest nations in South America into one of the poorest. He’s evicted Big Oil (not without stealing their assets first, just ask Exxon-Mobil and StatOil), used PDVSA as his own piggy bank for keeping the masses at bay, and is now in the process of stiffing little guys like Williams Cos. (NYSE:WMB) and Helmerich & Payne (NYSE:HP) out of what he owes them for development and extraction purposes.
In 1997 Venezuela produced 3.18 million barrels per day. Today that’s down to 2.24 million, and continues to plummet.
But the real kicker is that Venezuela supplies 1 in 5 barrels of imported oil to the U.S. Talk about a real bind for the U.S. Two of its biggest providers, Mexico and Venezuela, have oil sectors on the verge of collapse and it’s own oil fields are drying up.
The only bright spot is Canada. Our friends to the north are our largest provider of imported oil giving us 1.9 million barrels per day. The only problem is that Canada’s got a lot more callers for oil than it used to, particularly the Chinese who are willing to pay top dollar (literally top dollar, as in the dollars from the exports they sell to you and me at Wal-Mart as I mentioned earlier) and at some point Canada might find itself hard pressed to resist China’s offer.
So, there lies the problem: production is down almost everywhere, new projects put on hold will take years to bring back up, and when the world economy turns around the reserves will be quickly depleted. I don’t want to sound like a pessimist, but perhaps the oil futures traders are seeing something much more clearly than anyone else is.
For the moment, I’ve been following small oil sector plays like Graham (NYSE:GHM) and a few others. If you want to find out more about oil exploration and services companies that stand to deliver big profits in the coming months check out my new report HERE.
In the meantime, feel free to send in your questions, comments, jokes, rants, observations and anything else on your mind to editorial@247investor.com. I enjoy receiving your emails and really do read every one of them.
Despite opening lower this morning, small caps have shrugged off bad unemployment data and are trading higher this afternoon.
At 2:36 pm ET, the Russell 2000 (NYSE:IWM) is up 2.78% at 484.96, while the Dow is up 0.92% and the S&P 500 is up 1.42%.
Although stocks are higher today, they are still down sharply for the week, no thanks to new data out. Today the Labor Department reported that more workers filed last week for benefits than anticipated. New claims jumped to 637,000, much more than what was forecasted. The overall number of people seeking unemployment benefits grew faster than expected, increasing to 6.6 million, while continuing claims hit a 15th straight weekly record.
Small caps on the rise today include Gildan Activewear Inc. (NYSE:GIL), up 21% after announcing second-quarter results, and Forest City Enterprises (NYSE:FCY), up 18% after guiding in line.
*****The selling got serious yesterday. But once again, as TradeMaster technical analyst Jason Cimpl forecast, the dip was a buying opportunity. Stocks are up this morning as if nothing happened…
But of course, something did happen. Cracks in the rally are beginning to show. And economic data is starting to weaken. Consider this morning’s Producer Price Index (PPI). This popular measure of inflation on the wholesale level came in stronger than expected. Prices for food are ticking upward.
No doubt the Fed is relieved to see a little strength in prices, as overall, prices have dropped 3.7% over the last 12 months. The only thing that scares the Fed more than inflation is deflation.
My question is: at what point do rising prices motivate the Fed to start sopping up the flood of liquidity it has released over the last eight months? Clearly, there will have to be stronger signs of recovery, but with the potential for full employment numbers to be higher than they’ve historically been, I can’t help but be concerned that the Fed will follow the Greenspan model and act too late.
*****However things play out, Jason has TradeMaster Daily Stock Alerts members taking profits this morning. They booked 12% on the US Oil Fund (USO) and 17% on Chinese hog farm and feed company AgFeed (Nasdaq:FEED).
One might have expected profits hard to come by with anything swine-related given the recent pork related pandemic. But a good read on a stock chart will beat conventional wisdom any day. Nice job, Jason.
By the way, if you’re interested in finding out more about TradeMaster Daily Stock Alerts and how Jason’s providing a steady stream of consistent winners to subscribers, go here. You’ll also learn about a special opportunity in three stocks he’s targeted as poised for big run-ups in the coming weeks (not months, not years, but weeks). Visit this link for more.
*****Even though we are looking at the potential for the current rally to peter out and give way to lower prices, I find it funny that certain analysts refer to it as a sucker’s rally.
After all, the S&P 500 has advanced 33% since March 10. Some stocks have done far better. Members of my advisory services SmallCapInvestor PRO and TradeMaster Daily Stock Alerts have had the opportunity to make some solid gains. If that makes us suckers, well, so be it.
*****It was reported by the Washington Post that many senior officials in the Fed and the Treasury were well aware that AIG (NYSE:AIG) was about to dole out billions in bonuses using TARP money months in advance.
Officials had even hired PR firms to examine how to sugar-coat the news so it could more easily be rammed down Americans’ throats.
Apparently, measures to keep AIG from plundering the Treasury were not on the table.
This is appalling news, and further demonstrates just how far up Wall Street’s patoot Tim Geithner is. Sure, there’s no evidence that Geithner had direct knowledge of the planned bonuses, but do you really think he didn’t know? If these Wall Street lapdogs were smart enough to hire PR firms, I think they could probably have figured out a way to give Geithner “plausible deniability.”
If I were President Obama, I’d be calling for Geithner’s resignation. Period.
*****In looking at 3-month chart for Graham Corp. (AMEX:GHM), a pattern emerges. The stock has consistently made solid runs to new short-term highs that are followed by sharp drops lower. Each and every drop has been bought and led to new short-term highs.
So in examining yesterday’s large drop, it appears we should see a quick recovery and a new high around $16 a share over the next 4-6 days. Will this be the high that we take profits on?
You’ll have to stay tuned…
P.S. I really love GHM as both a short term and long term opportunity. Short term for the reasons I mentioned above: long term because GHM is keyed into the oil refinery business and goes up every time oil does. Jason and I are both calling for oil to run up massively later this year. In fact, it’s already up about 60% from it’s lows a few months ago. We’ve found three more oil sector small cap stocks that will be big winners as oil climbs back. It’s in my new report called Oil Shock 2009. Click this link to find out more and to get your own copy.
Small caps are lower today following a drop in U.S. exports in March and multiple stock offerings across the board that doused enthusiasm.
At 2:04 pm ET, the Russell 2000 (NYSE:IWM) is down 2.46%, while the Dow is down 0.26% and the S&P 500 has fallen 0.97%.
New data out today showed that the U.S. trade gap widened in March for the first time in eight months and exports fell 2.4%, weighing on the market.
Small caps bucking the trend today include STEC, Inc. (Nasdaq:STEC), up 31% after reporting operating results, while small-cap Chinese seller of mobile phone ringtones and games Hurray! Holding Co., Ltd. (Nasdaq:HRAY) is up 28% on speculation that Shanda Interactive, China’s biggest online games provider, may acquire the company.
*****Oil is above $60 a barrel. Investors are buying on the expectation that the end of the recession is in sight. And hopefully, Daily Profit readers are benefiting via my recommendation of oil services company Graham Corp. (AMEX:GHM). Graham is breaking above $15 a share today. It’s now up 65% for those who have been following me for a while.
Of course, oil stocks are up on expectations. A dose of reality comes from the housing market today. It’s reported that home prices fell in 134 of the 152 metropolitan areas the National Association of Realtors tracks during the 1st quarter.
Sounds bad, but there is a silver lining. The number of homes sold more than doubled in Nevada, rose 81% in California and 50% in Arizona. These states were among the hottest real estate markets during the housing bubble, and they suffered mightily when the bubble popped. That homes are selling is far more important than the price they are selling for. Housing inventory must get turned over for the economy to improve.
*****Nobel prize winning economist Paul Krugman isn’t convinced the recession is nearing an end. He doesn’t believe economic fundamentals support the recent rally and warns that recent economic data could breed “a dangerous complacency.”
The fear, of course, is that we will have the proverbial “double dip” of recession once government stimulus money (and patience) runs out. Like in the housing market, first time buyers are assisted by an $8,000 credit. That will boost sales, but for how long? The credit expires December 1, 2009. And it’s likely that the momentum of the credit won’t last that long.
Remember too that the IMF (International Monetary Fund) believes that the world’s banks still have a lot of losses to take. In fact, according to the IMF report released in late-April, banks aren’t even halfway done writing off bad assets and loans. Look for more “surprise” write-offs and charges to come from banks during the course of the year. One thing that will be different from last year is, of course, that we now expect these write-offs and can build them into banks’ stock prices.
*****The old saw says “Sell in May, then go away.” Well, it’s May, and the rally we’ve enjoyed seems to be taking a little breather. I don’t know if that means you should sell everything. But I do think it’s time to be on heightened alert.
I’ll be monitoring the news flow closely. Investor confidence may seem pretty strong right now, but it can change fast. Right now, it’s tough to say
what might cause sentiment to shift. Some really bad news out of the banking sector is the most obvious negative catalyst. But it could be something completely new. My top candidates are insurance, commercial real estate, and inflation.
*****China appears to be a bargain shopper. Bloomberg is reporting that China’s government is stockpiling raw materials at what appear to be low prices. Oil imports rose 14% in April. China’s also buying record amounts of copper and aluminum. You’ll recall these were all resources that China was consuming voraciously before market bust. Now China’s not so stealthily trying to pick up those same materials on the cheap. Keep an eye out on commodities plays during the next couple months.
You can expect China to put these raw materials to work. China’s government is in the process of channeling $586 billion in stimulus money directly into its economy. And that’s ramping stock prices.
I told you about one such stock yesterday, Fushi Copperweld (Nasdaq:FSIN). To see TradeMaster analyst Jason Cimpl’s video chart analysis of Fushi, click HERE. You’ll also find an introductory offer for TradeMaster Daily Stock Alerts that includes a Chinese natural gas company. This company released stellar earnings last night and is moving higher as you read this.
P.S.: Yesterday I mentioned some sweet dividend stocks. A few of you wrote in to tell me you lost the link on how to get the report. Here’s that link again.
P.P.S: Graham’s a great oil sector play. If you’re interested in more profits from oil’s run up, check out my new report, “Oil Shock 2009: Strike It Rich with 3 Stocks Under $5. It’s available here.
Small caps are up nearly 3% this afternoon after the government reported this morning that fewer jobs were lost in April than expected.
At 2:06 pm ET, the Russell 2000 (NYSE:IWM) is up 2.81% at 506.81, while the Dow is up 1.56% and the S&P 500 is up 1.85%.
Employers cut 539,000 jobs last month. That is a big improvement from a revised 699,000 job losses in March and less than the loss of 610,000 jobs analysts had been expecting. Also, the federal government reported that 10 of the 19 largest U.S. banks must raise about $75 billion in new capital, which is less than some had feared.
Small caps on the rise today include MedQuist Inc. (Nasdaq:MEDQ), up 64% after announcing first-quarter 2009 results, and Huntington Bancshares Inc. (Nasdaq:HBAN), 36% higher after completing a $120 million stock issue. Fuel Systems Solutions (Nasdaq:FSYS) is also up 40% today after posting a Q1 net profit, while VNUS Medical Technologies (Nasdaq:VNUS) has popped 35% after news broke that Covidien Ltd. will be acquiring the small cap.
*****The headline reads “Bank Stress Tests Lifts Clouds of Uncertainty.” And bank stocks are rallying. Regional bank Fifth Third Bancorp (Nasdaq:FITB) is up 40% in the early going on the news that it needs to raise $1.1 billion.
In total, the government’s stress tests recommended that banks raise $75 billion to withstand further potential losses. I’m not sure how to reconcile the stress tests results with the IMF report on bank losses that was released in April.
In that report, the IMF said that total losses for banks and financial institutions would hit $4 trillion. The U.S. share of that is $1.6 trillion, of which $510 billion has already been written off. That leaves another $550 billion in write-offs to come.
Clearly, somebody’s got their numbers wrong.
*****TradeMaster Daily Stock Alerts members took a nice 22% gain on solar stock Solarfun (Nasdaq:SOLF) in four days this week. Despite the upside we’re seeing today, TradeMaster technical analyst Jason Cimpl thinks the rally may be nearing an end. From today’s morning missive:
“Yesterday was a significant bearish day. Everyone should take note of what occurred yesterday in the Nasdaq, which could signal the beginning of the end (we changed our intermediate forecast). We will get a video to [members] today reviewing the market, but specifically the Nasdaq. We think that the market has higher to move, but this run could be over by June.
Yesterday, the Nasdaq broke a multi-month support line in decent volume. This is a sell signal. Let's repeat that statement so we are all clear: this is a major sell signal.”
*****I’m hoping this rally can hold out until June as Jason suggests. Have you seen Graham Corp. (AMEX:GHM) today? It’s up 19% to $13.85.
After recommending that you sell out of Hovnanian (NYSE:HOV) right before it ran higher, I vowed not to make the same mistake with Graham. And it looks like that resolve is paying off. Graham is up around 50% from my original recommendation.
*****Business inventories took another plunge in March, falling by 1.6%. Businesses are scaling back inventory due to the weak economy. But economists say the aggressiveness with which businesses have cut inventory is a positive. When demand returns, inventories will have to be built up as quickly as they were cut. That, in turn, will lead to a quicker increase in production and hiring.
But the first step is to see job cuts slow, and that’s exactly what happened In April. The Labor Department said 539,000 jobs were lost last month. That’s the lowest number in six months, and significantly lower than the 620,000 job cuts analysts were expecting.
The unemployment rate moved higher to 8.9%. That’s very close to what some expect will be the peak for unemployment in this recession. Maybe, just maybe, the economy really is stabilizing.
Geokinetics Inc. (Nasdaq:GOK), Fuel Systems Solutions Inc. (Nasdaq:FSYS) and VNUS Medical Technologies Inc. (Nasdaq:VNUS) are among the biggest percentage gainers in Friday's trading among companies with market capitalizations under $1 billion.
Also included among the results: MGIC Investment Corp. (Nasdaq:MTG), LMI Aerospace Inc. (Nasdaq:LMIA), Rosetta Resources Inc. (Nasdaq:ROSE), Graham Corp. (Nasdaq:GHM), Central Pacific Financial Corp. (Nasdaq:CPF) and American Reprographics Co. (Nasdaq:ARP).
Here are the biggest percentage gainers among small caps:
Stocks are rallying during Monday trading, boosted by surprise increases in pending home sales and construction spending.
At 3:03 pm ET, the Russell 2000 (NYSE:IWM) is up 2.73% at 500.27, while the Dow is up 2.17% and the S&P 500 is up 2.61%.
Today the National Association of Realtors said its index of pending sales for previously occupied homes rose 3.2% to 84.6. Also out today was data from the Commerce Department that showed construction spending rose 0.3% -- the best showing since last September.
Small-cap natural gas company Crosstex Energy Inc. (Nasdaq:XTXI) is up 64% this afternoon amid rising natural gas prices and a rally in energy and commodities sectors. Meanwhile, small-cap footwear manufacturer Crocs, Inc. (Nasdaq:CROX) is climbing nearly 40% higher today on heavy volume ahead of its earnings release on Thursday.
*****Last week, the Baltimore Sun laid off 61 employees. I heard that a couple reporters were actually called on the phone while they were sitting in the press box covering an Orioles game and told they were no longer Sun reporters.
It’s no secret that the newspaper biz has gotten tough. The Sun’s parent, the Tribune Company, filed for bankruptcy protection in December of 2008 after its chairman, Sam Zell, took the company private. Analysts knew he was loading too much debt on the company, but the decline in advertising revenues at newspaper was the nail in the Tribune’s coffin.
It’s an industry-wide problem. Advertising dollars are harder to come by, especially for print media. So what happens to the reporters and bureau chiefs that are getting canned? There probably aren’t enough blogs to employ them all.
The same thing is happening to autoworkers and finance industry people, too.
*****Bloomberg reports that 257,000 autoworkers have lost jobs in the last 18 months. GM plans to do away with another 137,000 jobs by 2010. No telling how many more will lose their jobs from the Chrysler bankruptcy and merger with Fiat.
The chief economist at the Center for Automotive Research, Sean McAlinden estimates that half of the auto industry’s job cuts are permanent. I can’t help but wonder how safe Mr. McAlinden’s job is.
*****The housing bubble cost plenty of jobs, too. Obviously, Wall Street’s investment bank implosion left many out of work. Bloomberg also reports that the finance sector has dropped 376,000 jobs, and that there are more on the way. It’s pretty easy to imagine that many of these job cuts are permanent, too.
But consider, too, the number of mortgage brokers and real estate agents that jumped on board only to find the ship was already taking on water. You can add construction workers, too.
*****America has lost a lot of jobs that aren’t coming back. That’s got some wondering what “full employment” will look like when the economy recovers.
Full employment is an equilibrium point for inflation. When inflation hits wages, it sets in motion a very damaging cycle as prices rise quickly to offset. Increased productivity is the check that balances wage inflation, and that’s allowed full employment to be around 5% for the last decade.
Going forward, though, full employment may mean an unemployment rate around 7%.
*****According to Bloomberg, the Obama administration is still counting on a return to 5% unemployment when it forecasts its budget. The discrepancy will mean higher budget expenses and lower tax revenues. That’s a bad combination.
*****I can’t look at a chart for Hovnanian (NYSE:HOV) anymore. It’s over $3 a share. That’s a 100% gain from where I told SCI Daily readers to buy it. And we could have had it too, if I hadn’t recommended you take the 37% gains when it was available – but either way, you made a healthy gain in a few short weeks.
At least Graham Corp. (AMEX:GHM) is still chugging away. It’s up nearly a buck to the $13.50 a share range today.
Jason Cimpl just added a solar stock to the TradeMaster Daily Stock Alerts arsenal. And SmallCapInvestor PRO subscribers are getting a couple Chinese infrastructure stocks later today. I also loaded up on a corporate bond fund yielding 9% in my Recovery Portfolio - and the fund is low risk, not some junk bond fund. We’re staying busy.
Stocks are higher this afternoon despite mixed data on manufacturing and lackluster earnings reports.
At 2:34 pm ET, the Russell 2000 (NYSE:IWM) is up 0.31% at 489.08, while the Dow is up 0.32% and the S&P 500 is up 0.5%.
New data out today showed the manufacturing industry contracted slower in April than in March, but the government said orders to U.S. factories in March fell more than expected. Also, disappointing earnings from large-cap benchmark MasterCard Inc. and two major insurance companies also weighed on the market.
In small-cap stock news, beverage producer Cott Corp. (NYSE:COT) is up over 77% today on heavy volume after the company posted strong quarterly results this morning. The small-cap company is the world's largest maker of private-label soft drinks. Year-to-date, the company is up a whopping 184%.
*****On Wednesday, the Taiwan stock market posted its biggest gain in 17 years after China Mobile (NYSE:CHL) bought 12% of Taiwanese telecom Far EasTone. The deal was worth $529 million, but the ramifications are much bigger.
That’s because China and Taiwan just signed trade deals that allow Chinese institutional investors to buy Taiwanese stocks for the first time in 60 years.
China Mobile is a state-run company. That Taiwan has allowed it to buy into one of Taiwan’s largest telecom companies represents a dramatic shift in China-Taiwanese relations. And this new relationship could prove to be an economic powerhouse in the making.
*****The latest manufacturing data from China is showing improvement. That’s in part due to China’s stimulus efforts, which are more direct and immediate than those from the U.S. It also helps explain the strength we’ve seen lately in steel, copper and even oil.
From a commodities standpoint, China is helping lead the global economy out of recession.
The U.S. is doing its part, too. Manufacturing is still in decline, but is showing improvement for the third straight month. In fact, the ISM Manufacturing Survey is just one point away from moving out of recession territory.
Companies have done such a good job of cost-cutting and scaling back production that the chairman of the ISM says business inventories are too low. That means that even without an uptick in demand, manufacturing is likely to continue to improve.
*****If you guessed that good economic news from China and the U.S. would mean higher oil prices, then you won’t be surprised that oil is up over $53 a barrel.
That’s good news for Graham Corp. (AMEX:GHM). I recommended Graham Corp. to SCI Daily readers on March 19 at $9.33. It’s up 32% since.
And don’t forget that improvements in manufacturing are benefiting shipping companies, too.
News that Chrysler will be filing bankruptcy is causing stocks to seesaw through Thursday afternoon.
At 2:35 pm ET, the Russell 2000 (NYSE:IWM) is up 0.28%, while the Dow is up 0.25% and the S&P 500 is up 0.32%.
Small caps flying high today include Bare Escentuals (Nasdq:BARE), up 42% after its Q1 results topped the Street’s view. Also higher are Orexigen Therapeutics (Nasdaq:OREX), up 44% on heavy volume, and Green Mountain Coffee Roasters (Nasdaq:GMCR), up 37% after the small cap boosted its FY sales and EPS view.
On the downside, Build-A-Bear Workshop, Inc. (NYSE:BBW) is 20% lower today after posting a Q1 loss, and small-cap Oshkosh Corporation (NYSE:OSK) has falledn 19% after projecting a loss for 2009 and suspending its dividend.
******Bank of America (NYSE:BAC) shareholders voted to remove Ken Lewis as chairman of the board. But he remains CEO, at least for a little while. As much as I railed against Lewis, I must acknowledge that he is a something of a victim.
Now, don’t get me wrong. I have no sympathy for the CEOs who over-leveraged and mismanaged their companies during Wall Street’s greed bonanza. And Lewis was right there with the rest of them.
But when it comes to the Merrill Lynch acquisition and the surrounding events, it’s pretty clear that Fed Chief Ben Bernanke and former Treasury Secretary Paulson hung him out to dry. In other words, I believe Lewis’ assertion that Bernanke and Paulson strong-armed him into the Merrill acquisition and encouraged him to keep his mouth shut about Merrill’s $15 billion fourth-quarter loss.
The one question – and this gets right to the heart of the matter – is why did Lewis play ball? He had to know that his shareholders would be irate. And that’s the point – CEOs ultimately work for their shareholders. And bank CEOs for the most part forgot or conveniently ignored where their responsibilities lay.
*****I’m sure glad I recommended dumping Hovnanian (NYSE:HOV) for 30% gains right before it ran to $3, as I predicted. Forgive the sarcasm, but perhaps the most difficult aspect of investing is holding on to your expectations in an uncertain market.
You may recall when Hovnanian broke out above previously identified resistance at $2, I said $3 was coming soon. But then, I bit on Hovnanian’s head-fake move below $2, thinking the earlier breakout was a false one. Nope.
I’m not going to make the same mistake with Graham Corp (AMEX:GHM).
*****The most recent feature recommendation SmallCapInvestor Pro is a shipping company that’s making strong moves higher as the global economy recovers. The company is up 11% today on strong earnings, and SmallCapInvestor Pro readers are up 36% on this stock overall.
Shipping stocks are a very good gauge for the global economy because there’s not much room for these companies to improve their earnings through cost-cutting – they are either leasing ships or they are not.
Going forward, shipping stocks will track the global economy. If the recovery continues, there is a lot of upside. For more on my top shipping selections, click here.
*****Chrysler is headed for bankruptcy. While I’m sure there are other companies that we’d like to see in bankruptcy court (like AIG or Citigroup), there are issues with Chrysler that make bankruptcy inevitable.
First and foremost, there’s the fact that its debt-holders are unwilling to deal. Chrysler can’t make its interest payments without concessions, and that pretty much seals its fate.
*****I saw a brief note that the S&P 500 is concluding its best month since March of 2000. The high that month was 1,552. March of 2000, that was the year that the tech bubble started to implode. It took the S&P 500 seven years to get back to that level. On Oct. 11, 2007, the S&P 500 hit an intra-day high of 1,576.
Orient Express Hotels Ltd. (Nasdaq:OEH), Greenbrier Companies Inc. (Nasdaq:GBX) and UAL Corp. (Nasdaq:UAUA) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $1 billion.
Also included among the results:Graham Corp. (Nasdaq:GHM), M I Homes Inc. (Nasdaq:MHO), Heartland Financial USA Inc. (Nasdaq:HTLF), XenoPort Inc. (Nasdaq:XNPT) and Central Pacific Financial Corp. (Nasdaq:CPF).
Here are the biggest percentage losers among small caps:
Stocks are trading lower today as investors prepare for key company earnings later in the week and brace for a potential bankruptcy filing from General Motors.
At 12:36 pm ET, the Russell 2000 (NYSE:IWM) is down 7.71, or 1.65%, at 460.49. The Dow is down 0.92% and the S&P 500 is down 0.46%.
Key banks, which kicked off a rally in early March when several institutions said they were profitable in the first two months of the year, will report quarterly earnings this week. Asian markets also gained more ground Monday as Japan's new $150 billion stimulus plan and upbeat news about Chinese bank lending boosted hopes for recovery in the region's major economies.
Small caps on the rise this afternoon include AgFeed Industries (Nasdaq:FEED), up 31% on heavy volume, while Rosetta Genomics (Nasdaq:ROSG) is up nearly 20% after signing a license and collaboration agreement with Prometheus Laboratories.
*****Thank you, Wells Fargo. The S&P 500 ramped nearly 4% on Friday as Wells Fargo said it expects its first-quarter earnings to be nearly double what analysts were expecting. And it wasn’t even Wells Fargo’s earnings day – the company pre-announced earnings that will be released on April 22. These days, if you have something to crow about, you do it. ASAP.
Financials have been at the forefront of the current rally, and that’s as it should be. Any good rally has to have the financials out in front. Of course, the financials are moving off such low levels that even huge percentage gains, like the 12% Citigroup was up or the 31% Wells Fargo jumped, are barely a drop in the weighted index bucket.
Still, stocks are up and that’s good.
*****There is some concern that Wells Fargo’s earnings surprise is more about accounting than an actual uptick in business. Some are saying that Wells Fargo’s loss reserves (money it sets aside to account for future losses) are too low, considering the loan portfolio of its Wachovia acquisition.
If that’s true, Wells Fargo’s apparent health is just that: an appearance. We’ll find out down the road …
*****But really, this rally is less about financials leading as it is about government fixes for the financial sector’s problems. Bailouts and toxic asset programs are the reasons the financials are no longer standing at death’s door.
So the banks may have less debt. That doesn’t mean the debt has disappeared. It’s just been transferred. And it will have to be dealt with eventually.
*****JP Morgan, Goldman Sachs and Citigroup all report earnings this week. We’ll also hear from General Electric and Intel. We’re off to a good start with earnings, but there’s a long way to go.
*****SCI Daily recommendation Graham Corp (AMEX:GHM) jumped 8% to $12.22 on Thursday. That’s a 30% gain from my recommended entry at $9.44. Graham doesn’t report earnings until May 29, and that’s probably a good thing. There won’t be any dose of reality to undermine that “optimism effect” the rally is having on Graham’s share price.
Graham has resistance ahead at $13.40. That would be a 42% gain and I will be inclined to recommend you take that gain, if we get it.
The other stock I’ve recommended, Hovnanian (NYSE:HOV), jumped 10% Thursday. It still hasn’t made it back to recent highs and significant resistance near $2.
*****The International Energy Agency is saying that global oil consumption will be down 2.4 million barrels to 83.4 million barrels per day. That’s a 2.8% drop and it’s the worst demand destruction we’ve seen for oil in a long time.
OPEC has cut production by 4.2 million barrels per day. And even though that’s more than the drop in demand, oil prices are weak. Supply in being cut when, really, it should be increased. The current recession has put a temporary dent in oil use. But it won’t last.
When the world economy starts growing again will take up the slack in oil production quickly. Don’t be surprised to see the world go from oversupply to shortage in a few short years.
*****I hope you had a great Easter holiday. As always, I want to hear you questions, comments, and jokes. Email me at editorial@247investor.com.
Stocks are extending losses seen Monday as earnings week kicks off on a low note.
At 11:52 am ET, the Russell 2000 (NYSE:IWM) is down 7.3, or 1.63%, at 440.26, while the Dow is down 2.05% at 7,812.73 and the S&P 500 is down 1.75% at 820.82.
Aluminum giant Alcoa will kick off earnings season Tuesday after the close of the market. The company is expected to report a loss and set the tone for dismal results to come. Financial stocks helped push the market lower Monday, and are likely to remain under pressure in the coming days as investors brace for more losses.
But not everyone was in the red today. Small-cap restaurant chain Benihana Inc. (Nasdaq:BNHN) is up 9% after reporting an increase in total and comparable sales for Q4 and full year 2009, while First Niagara Financial Group (Nasdaq:FNFG) is up 13% on news the small cap will buy 57 branches from a unit of PNC Financial. Also rising today is biopharmaceutical company Oncothyreon Inc. (Nasdaq:ONTY), 14% higher on heavier-than-average volume.
******I sure hope SCI Daily readers bought some shares of Graham Corp. (AMEX:GHM) when I suggested it in the March 19 edition. Graham closed at $9.33 that day. Today, it’s pushing $11 a share for a 16% gain.
Graham is exactly the type of stock I love. It’s in an important sector (oil services), it has a pristine balance sheet with virtually no debt, it generates plenty of cash and it has a solid backlog.
Graham is rallying now because it is announcing new orders — $6 million worth in the last week. That may not sound like much, but when you’re doing around $100 million a year, $6 million is significant.
Among other things, Graham helps oil refiners retrofit their equipment so it can handle heavy or “sour” crude, like what comes from oil sands production. Oils sands production is more expensive than the oil we get from OPEC. Oil sands companies are break even with oil in the $50 range.
Graham hit $54 a share when oil prices were hitting their highs. Oil sands production was ramping up and refiners were investing to accommodate that supply. But when oil prices dropped, investors thought Graham’s business would drop. It has, but not as much as expected.
Now that oil prices have found some stability in the $50 range as expectations for economic recovery have improved, it appears that refiners may start investing again. And that’s great news for Graham.
(If you want another stock like Graham, check out SXC Health Solutions (Nasdaq:SXCI). I’ve discussed it here in SCI Daily before. It’s not oil services, obviously, but it’s got all the characteristics of a winning investment.)
*****Higher oil prices will also be good for perhaps the most beaten down sector in the stock market after financials – alternative energy. I haven’t talked much about alternative energy here for the last, well, six months at least. That’s because there hasn’t been much to say. At least, not much good.
Cheap oil is not good for alternative energy. Wind and solar power are too expensive to compete with oil at $40 a barrel. But now that oil prices have found a floor, alternative energy stocks have started showing signs of life.
I haven’t recommended any in SmallCapInvestor PRO yet, but I’m warming up to the idea. In fact, I already know which alternative energy stock will be the first to make the SmallCapInvestor PRO portfolio. It’s a solar energy company that does a lot of business in China.
That’s good, because alternative energy (like solar) in China doesn’t necessarily depend on market demand. China’s government is very motivated by its pollution problems to invest in clean energy. And the solar stock I’m watching just won a government contract to supply 1.6 Mw of solar power to 80,000 homes in China.
While I’m waiting for the right conditions to recommend this stock, you can get prepared for it with my SmallCapInvestor PRO Special Report titled Alternative Energy Investing 2009: 3 Top Stocks Set for Profits. Here’s a LINK where you can get more details.
*****Alcoa (NYSE:AA) reports after the bell today. The stock, and the overall market, are down ahead of the start of earnings season. And that’s actually a good thing.
Investors are taking some gains ahead of earnings and that means they are concerned the earnings and, more importantly, forward guidance will not be good. The last thing I’d like to see right now is high expectations for this earnings season. That would be a set up for a big drop.
As it is now, there’s actually room for some upside surprises. Not that I’m saying there will be. But at least there’s room for it. When stocks are extremely overbought, news has to be fantastic for them to move higher.
*****For some reason, I deleted my request for your comments, questions and jokes at the end of each SCI Daily. Now I find myself left out of your conversation. And I haven’t had a limerick from our resident poet John in over a month. I’ve been meaning to get my email address back in here, but sometimes my mental circuitry gets overloaded and I forget. So anyway, please send your questions, comments or jokes to editorial@247investor.com.
Stocks are higher Thursday afternoon, bolstered by fresh economic and corporate data.
At 12:21 pm ET, the Russell 2000 (NYSE:IWM) is up 10.18, or 2.39%, at 436.70, while the Dow is up 1.28% at 7,849.37 and the S&P 500 is up 1.34% at 824.76.
Investor sentiment was buoyed after Treasury Secretary Timothy Geithner unveiled a financial system plan before the House Financial Services Committee today to outline the Obama administration's proposal for extensive overhaul of financial regulations.
Small caps climbing higher today include Republic Airways Holdings (Nasdaq:RJET), which is up almost 40% on higher-than-average volume.
******Former Czech Prime Minister and European Union President Topolanek called the U.S. economic stimulus plan “a road to Hell.” He claims the Fed, Treasury and Administration of repeating the mistakes of the 1930s that sent the United States into the Great Depression.
Also attacked were the stimulus bill’s supposedly “protectionist” policies.
Now, as much as we may criticize our government’s plans, I’m a little defensive when we get flak from an E.U. president. Especially one that just lost a no-confidence vote and was removed from power in his own country. You know what they say about people in glass houses.
Topolanek no longer speaks for his own country. And apparently, he doesn’t speak for the E.U., either. European leaders were out in force trying to minimize the damage their Union president’s comments may have caused.
*****Final GDP numbers from Q4 2008 are in, and they’re essentially in line with the preliminary estimates. That’s being taken as good news in the stock market, index futures rallied on the news.
The economy shrank at a 6.3% annualized rate. The preliminary number was 6.2%. Economists are expecting Q1 2009 GDP to be in the range minus 5% to 6%. That’s something of an improvement and should be bad news as long as we can see the economy is not getting worse.
*****Unemployment is getting worse. But that should be expected. The unemployment rate is at 8.1%. Current expectations are that it will top out above 10%. I don’t advocate doing so, but it could be argued that the worst of the job losses has already occurred.
In fact, there are scattered signs that the economy is improving. Homebuilders are starting to build more new homes and existing home sales have picked up. Of course, the total numbers are still dismal, but you gotta start somewhere.
Retail sales have been improving. And yesterday’s Durable Goods report showed a surprise jump in sales for big-ticket items. The number doesn’t appear to be skewed by any airplane orders.
Perhaps most encouraging of all is the inventories number. Inventories for “long-lasting factory goods” fell 0.9% in February and 1.1% in January. Now, I haven’t found a good explanation for what exactly “long-lasting factory goods” are. But Bloomberg reports that the recent drop brought the inventory-to-sales ratio down for the first time in seven months.
That means factories may have to start making more stuff soon. As David Resler, chief economist at Nomura Securities International Inc., says “Inventories are getting low enough in some sectors that stocks might need to be replenished…It’s encouraging news that the economy may be starting to turn around a bit.”
I’d like to know, in specific economic terms, exactly how much “a bit” is. But it’s enough to get the stock market moving higher, so that’s a good start …
*****Also, Treasury Secretary Geithner and the Obama administration are unveiling their plans to overhaul the regulatory process for the financial market. That may sound like a purely administrative task, but it’s a critical detail for improving investor confidence in the financial markets.
Right now, many investors won’t put money into a system that see as flawed and corrupt, bargains be damned. Assurances in the form of new regulations are desperately needed for investors to feel confident that their investments are safe from fraud.
Some may not like Congress’ move to tax AIG bonuses at a 90% rate. But remember – they are reacting to people’s outrage at the very culture of greed at firms like AIG. One officer at AIG just resigned and blasted the CEO for promising bonuses and then calling them “distasteful.” What’s distasteful to Americans is the idea that an employee of a company driven to the point of bankruptcy and saved by taxpayer dollars is not only ungrateful to simply have a job, but is bitter because he doesn’t get a $1 million bonus, too. THAT’S distasteful. And probably a few other things as well.
In fact, I think Americans want to go as step further. I think we want to see many of the culprits face prosecution. And I’d include former Treasury Secretary and Goldman CEO Henry Paulson in investigations. His backroom dealings to make sure AIG was bailed out so it could make good on the $12 billion it owed Goldman is very suspicious. Why was the current CEO of Goldman-Sachs present at those meetings anyway?
*****Yesterday, I asked if any SCI Daily readers had bought Hovnanian (NYSE:HOV) or Graham Corp. (AMEX:GHM) on my recent recommendation. They’re both up nicely. Unfortunately, I gave you the wrong email address. If you have a minute, drop me a line at editorial@247profits.com and let me know how you’re doing with these stocks. Or feel free to leave any other comment or question you might have. I’m pretty sure that’s the right email.
*****Finally, the most recent recommendation from Top Stock Insights, which came out in Monday’s issue, is up around 5%. And there’s plenty more to come for this company with $3 billion in cash, zero debt and sales that are actually beating analysts’ expectations. Click HERE for more details.
Stocks are climbing higher during Wednesday trading on a new government reports that February brought increases in demand for big-ticket manufactured goods and higher sales of new homes.
At 1:44 pm ET, the Russell 2000 (NYSE:IWM) is up 3.89, or 0.93%, at 420.67, while the Dow is up 0.40% at 7,690.63 and the S&P 500 is up 0.12% at 807.20.
Orders at U.S. factories for cars, airplanes, household appliances, furniture and other large goods rose 3.4% last month, much better than analysts' predictions of a drop of 2%.
New home sales rose 4.7% in February to a seasonally adjusted annual rate of 337,000. The month was still the worst on records dating to 1963, but economists were expecting February sales to fall to a pace of 300,000 units.
Small caps on the move today include ARYx Therapeutics (Nasdaq:ARYX), up over 20% ahead of fourth-quarter and year-end 2008 results scheduled to be released on Thursday at 8 am ET.
******Yesterday, I suggested that this rally was unlikely to retrace much ground and give buyers an attractive entry point. I went on to recommend a position in homebuilder Hovnanian Enterprises (NYSE:HOV).
Well, today stocks are pushing higher and Hovnanian is up 20% from yesterday’s closing price of $1.52.
Graham Corp. (AMEX:GHM) is pushing higher, too. It’s up 7% today and 13% since last Thursday’s recommendation.
*****Durable goods came in better than expected this morning. It seems as though we have entered a positive news cycle that will keep stocks in rally mode. The S&P 500 could be headed to 900, adding another 80 points in short order.
*****The TradeMaster Daily Stock Alerts video conference airs tonight at 6 pm ET. There’s still time for you to register for this event. Click HERE for details.
*****Finally, it’s Newsletter Advisor Wednesday. This week, we’ve got an interview with Coby Lamson of Coby Lansom Capial Management. Enjoy:
Today’s installment of Investment Expert Insights comes courtesy of Ron Coby, CIO of Coby Lamson Capital Management and author of “The Upside of Down,” a Wiley-published book. Coby is a registered investment advisor (RIA) and a commodities trading advisor (CTA).
Last year was devastating for most sectors, if not most companies. Were you able to find any pockets of strength?
Gold and gold stocks as well as bonds were the only places to hide in the global bear market. Stocks, U.S. and foreign, and commodities were slaughtered.
Once some sense of normalcy resumes in the financial world, what sector(s) do you think will lead us out of the bear and why?
Nasdaq made a giant double-bottom and did not confirm the new lows in the S&P 500 or the DJIA. So, I would look to Nasdaq to lead us out. I like oil and gold as well.
I would buy the QQQQ, the Nasdaq 100 ETF, as a diversified way to play Nasdaq.
Name three stocks you would buy today and why?
I would also say oil stocks will be a place to find excellent values. I would buy the Oil Service Holders, OIH, on the NYSE. This ETF is a great diversified way to play for a recovery in the oil sector.
I would buy the QQQQ, the Nasdaq 100 ETF, as a diversified way to play Nasdaq and the leadership in Nasdaq stocks.
I would buy the Gold ETF, GLD, as a protection from both deflation and inflation. Gold’s secular bull market is only half way done.
If you were face-to-face with President Obama, what unique perspective could you give him regarding the markets and challenges facing investors?
I would explain to him that this volcanic market eruption resulted in a lava flow of deflation, like lava flow destroys everything in its path. Throwing money at failed companies like GM, AIG and Citigroup is like throwing water on lava; it simply evaporates. I would tell him to stop throwing money away and to let the lava flow run its course. Have faith in the free market. Low prices bring in demand so let prices fall where they must as opposed to propping up assets artificially.
What areas of the market do you perceive as most safe today?
Nothing is safe, nothing. Bonds are a bubble so there’s no safety there. The economy is in a global deflationary death spiral so stocks are full of day traders and extreme volatility. Foreign countries are worse than the United States, so foreign stocks are not safe. There are no ‘crash proof’ stocks as all stocks can crash. I would say the best area to focus is commodities and commodity-related stocks, especially gold and oil.
What do you say to people who are tempted to buy technology, even financial stocks at these low, low prices?
Buying low and more importantly, selling high are the only ways to deal with a global secular bear market.
What investment advice would you give to someone with a 5-year horizon?
Buy severe corrections, and sell powerful rallies until the global de-leveraging fully runs its course.
Stocks navigated choppy trading Tuesday afternoon, following nearly two weeks of consistent gains.
At 1:55 pm ET, the Russell 2000 (NYSE:IWM) is down 8.48, or 1.96%, at 425.54, while the Dow is down 0.29% at 7,753.08 and the S&P 500 is down 0.60% at 817.97.
Investors watched as Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner testified in Congress today over bonuses at AIG. Geithner asked Congress for greater power to safely dismantle giant financial companies such as AIG that pose risks to the economy.
Oil is hovering around $52 per barrel, and has risen more than 30% this month.
******497? What, the Dow Industrials can’t crack 500 points?
I’m kidding, of course. That was some impressive rally. The biggest one-day rally since October 28, 2008. And on the heels of Geithner’s re-hashing of Paulson’s bank bailout plan, too.
In Monday’s Small-Cap Daily, I wrote that most economists thought Geithner’s Public-Private Investment Program was an important step in freeing up our banking system to start lending. The smattering of opinion that was available Sunday night seemed to be positive.
By Monday morning, it was decidedly negative. Here’s a quote from Paul Krugman from the NY Times:
“…the real problem with [Geithner’s] plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.”
His views are shared by other notable economists including John Galbraith and Mark Zandi.
But analysts and strategists are saying that the Public-Private Investment Program, as it’s apparently called, could work. Or at least it will help. PIMCO’s Bill Gross has said he will participate in the program, as will Blackstone Financial. Others will no doubt volunteer to buy toxic assets at discount prices with Treasury money in the hopes that they’ll recover some value over time. What do they have to lose?
The ultimate irony may prove to be that nothing helps these assets increase in value more than being sold.
*****Of course, what the economists and strategists think about Geithner’s plan is one thing. It’s what investors think that counts. Judging by the explosive rally, investors like it. So much so, in fact, that we may have an extended rally on our hands.
I hope everyone took advantage of the opportunity to buy Graham Corp. (AMEX:GHM) last week. We’re finally seeing oil services stocks confirm the recent move in oil prices.
Oil prices are now closely tied to economic growth. But there’s also OPEC to deal with. Supply cuts can affect prices.
Now, oil services stocks are dependent on oil companies for growth. If Exxon-Mobil (NYSE:XOM) isn’t spending, then oil services won’t move up. So the moves in oil services suggests that oil prices are moving more in concert with economic growth than with OPEC. And that, in turn, suggests that investors are buying in anticipation of economic recovery.
*****It seems clear to me (after talking with TradeMaster technical analyst Jason Cimpl) that we have a strong rally on our hands. And it could last for a few months.
Now, one of the hallmarks of a bull rally is that it doesn’t come back for buyers. In fact, that’s one of the things that keeps it moving higher. The market will show weakness enticing shorts and potential buyers that lower prices are coming.
Then, when the dip is short-lived the shorts have to cover, which sends prices higher. Buyers who want lower prices get sick of watching the market run higher and are forced to buy at higher prices.
That’s exactly what happened to us when this rally started. I recommended a few stocks just before the rally began. Then, I recommended selling at the first peak, in anticipation of a dip. It never happened and we watched those stocks move higher.
I don’t want to make that mistake again. So I recommended Graham Corp. last week. And I want to recommend another stock today, as the market looks to be moving a bit lower.
Homebuilders are so beaten down, I think there’s a good chance for more upside here. And with a close yesterday at $1.48 a share, Hovnanian Enterprsies (NYSE:HOV) could return a quick 20% to 30%. Try and catch it around $1.30 a share on the early going today.
Stocks are lower Friday as investors seemed unmoved by Fed Chairman Ben Bernanke’s call today for banking supervisors to pay “close attention” to compensation practices as they examine the soundness of financial institutions.
At 3:00 pm ET, the Russell 2000 (NYSE:IWM) is down 2.68% at 402.20, while the Dow is down 1.48% at 7,291.36, and the S&P 500 is down 1.82% at 769.77.
Small caps on the move today include Books-A-Million, Inc. (Nasdaq:BAMM), up 25% after declaring a dividend and reporting fourth-quarter and year-end results. Home retailer Kirkland’s, Inc. (Nasdaq:KIRK) is up 12% after providing revenue guidance and reporting Q4 results, and VIVUS, Inc. (Nasdaq:VVUS) is up over 11% following new data on its obesity drug.
*****Oil prices have moved over $50 a barrel. There are a few factors at work here. OPEC’s cut production. Of course, that’s been ongoing, and OPEC’s moves have done little to prop up prices as demand around the globe falls.
Crude started moving higher after the recent stock market rally began. Bernanke was out, attempting to soothe investors with his “Recovery in 09” campaign. And if there is to be an economic recovery, oil demand will rise. That’s as direct a relationship as there is in the financial markets.
Oil rallied again after Bernanke announced that the Fed would buy over $1 trillion in various kinds of debt. The market thinks the Fed’s move will help. We know, because oil moved higher.
Could it also be that investors think the increase in the money supply and consequent weaker dollar will cause prices to rise? Absolutely. And in fact, that’s part of Bernanke’s plan. The Fed is still concerned that deflation as a threat to the US economy.
*****Yesterday, I said it might be a good time to get back into Graham Corp. (AMEX:GHM). Graham is one of my favorite small-cap stocks. It’s in the oil and industrial services sector. Among other things, Graham retrofits refineries so they can handle sour crude.
Graham is profitable, has a large backlog of work orders, a solid cash position and reasonable valuation.
The stock has been very volatile as investors try to determine appropriate valuations for oil services stocks. Graham is hitting its 50-day moving average right now. A breakout will take it beyond $10 a share.
*****Two days ago, Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, saw a perfect set up for a downside trade on one of Wall Street’s biggest banks. This bank right at the center of the secret AIG payment scandal. The stock is down 10% since Jason recommended this trade, but he thinks it’s going to fall much further. For more, click HERE.
Stocks turned lower during Thursday trading after a new jobless claims report released today cast a pall on a rally that began days ago.
At 12:13 pm ET, the Russell 2000 (NYSE:IWM) is down 3.37, or 0.81%, at 414.26, while the Dow is down 1.12%, at 7,402.71, and S&P 500 is down 0.99% at 786.51.
Stocks opened higher this morning on lingering investor enthusiasm over Wednesday’s news that the Fed is planning to pump $1 trillion into the economy. The good news failed to last long though as new jobless claims data this morning showed a higher-than-expected drop of 646,000, while continuing claims set a new record.
Small caps making double-digit gains this afternoon include dry-bulk shipper DryShips (Nasdaq:DRYS), which is up 22% after announcing a $630 million three-year contract from Petrobras. Energy companies are also rising today as oil is climbing back above $50 per barrel. James River Coal (Nasdaq:JRCC) is up 19% on lower-than-average volume, while Rex Energy Corp. (Nasdaq:REXX) is up over 27%.
Rambo Bernanke
On Wednesday, the FOMC voted unanimously to buy over $1 trillion dollars in U.S. Treasury bills, corporate bonds, mortgages and consumer debt.
Chief economist at Bank of New York Mellon Corp. called it a “Rambo Fed” move in a Bloomberg interview.
Bonds immediately rallied, with the 10-year note putting in the biggest one-day gain since 1962. Stocks rallied, too, which is a bit unusual. Bond and stock prices tend to move in opposite directions. When stocks appear risky, money goes into the safe haven of bonds, and vice versa. But these are strange times, and with the Fed taking unprecedented steps to ward off deflation and get lending moving again, it’s not that surprising that some old relationships are being tested.
Bernanke’s intent is clear – he wants to make sure interest rates stay low. Overnight interest rates are already zero. Any more easing and the Fed would be paying banks to accept Fed money. So buying debt is the next best thing.
Inflation Coming?
Analysts are already saying that this move will lower mortgage rates by up to 50 basis points immediately. The hope is clearly that lower real mortgage rates will boost home buying and start to pull the economy out of recession.
Bank stocks loved the announcement. And so did the homebuilder stocks. SPDR Gold Shares (NYSE:GLD) also rallied on the potential for inflation. “Helicopter” Ben Bernanke is making good on his promise to flood the market with liquidity to avoid a depression-like scenario. He once vowed to drop money from a helicopter if necessary.
Of course, the fear is that a massive increase in the money supply will spark inflation down the road. At some point, the Fed will have to act quickly to raise interest rates and sop up liquidity. Otherwise, we’ll see more Greenspan-esque asset bubbles and runaway inflation.
*****In the meantime, I expect stocks to move higher. Investors should be consoled that much is being done to jumpstart the economy. If you’re looking for a trade, now should be a good time to buy some Graham Corp. (AMEX:GHM) or the US Oil Trust (NYSE:USO). Expectations for recovery should show up in oil prices. The potential for inflation should move oil higher, too.
The Fed’s timing couldn’t have been more perfect. The recent rally was extended. A reversal looked imminent. But now, I wouldn’t want to be short anything, except maybe the U.S. dollar, and even that would make me nervous.
TradeMaster Conference
This certainly gives us plenty to discuss at the upcoming TradeMaster video conference that will air on March 25. I’m sure we’ll also have a couple trading ideas for you. If you’d like to sit in, here’s a registration LINK. Plus, when you register, we’ll send you TradeMaster Daily Stock Alerts right up until video conference. That way, you’ll be able to make the most of the information and trading ideas we explore.
Stocks are holding their ground through Tuesday trading as financial and homebuilder stocks stayed firm following a positive housing starts report.
At 1:49 pm ET, the Russell 2000 (NYSE:IWM) is up 9.37, or 2.43%, at 395.73, while the Dow is up 1.29% at 7,309.76, and the S&P 500 is up 1.83% at 767.68.
This morning the Commerce Department reported that construction of new homes and apartments jumped 22.2% from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to a pace of around 450,000 units.
Small cap on the move today include Star Bulk (Nasdaq:SBLK), up 20% as the company’s Q4 net soars on bigger fleet. SkillSoft Public Limited Company (Nasdaq:SKIL) is also 24% higher today following a Q4 earnings boost.
Universally Reviled
I have never seen a company more determined to make itself universally reviled than AIG. It truly boggles the mind that anyone at AIG, especially those in the financial products division that lost $62 billion on credit default swaps in the fourth quarter alone, could think they should receive a bonus.
I don’t care what the contract says — if you’re party to losing $62 billion in a three-month span, you get no reward. Sorry. And if you even have to ask if bonuses can be paid with bailout money that’s keeping your business going, your moral compass is seriously out of whack.
And it doesn’t end with the bonuses. Of the $170 billion American taxpayers have dumped into the bottomless pit that is AIG, $106 billion was paid out in settlement for the credit default swaps that AIG guaranteed.
$11.92 billion to France’s SocGen, $11.8 billion to Deustche bank and $12 billion to Paulson’s own Goldman Sachs. Well, isn’t that nice. We’ve paid off foreign banks, and our former Treasury Secretary made sure his alma mater got its payoff, too.
This is dirty business. And if Paulson knew the extent of Goldman’s exposure to AIG, and it’s impossible to think he didn’t, he needs to be called to account for his actions.
*****I’m going to try not to obsess on AIG. I know it makes us all angry. And to paraphrase Jon Stewart in his now infamous interview with Jim Cramer, it feels as though we, the American taxpayers, are continuing to capitalize Wall Street’s “adventure.”
But there’s an ongoing rally in the stock markets, and our time will be better spent on ways to make some money.
S&P 500 Support
The S&P 500 has recovered nearly 95 points, or 14% from its recent lows. It seems highly likely that stocks are on the verge of a move lower to test some support levels. Jason Cimpl, the technical analyst from TradeMaster Daily Stock Alerts, is watching 740 as the first important support level for the S&P 500.
Jason is currently long the US Oil Trust (USO) since Monday and anticipating some downside with a short financial ETF.
I’ll be watching that 740 support point to re-enter a couple Small-Cap Daily stocks. CardioNet (Nasdaq:BEAT), SXC Health Solutions (Nasdaq:SXCI) and Graham Corp. (AMEX:GHM) are my top candidates.
TradeMaster Conference
Jason will be discussing the market’s current trading patterns in more detail, with charts and specific investment opportunities in an upcoming TradeMaster video conference that will air on March 25. Here’s a registration LINK if you’d like to sit in. Plus, when you register, we send you TradeMaster Daily Stock Alerts right up until video conference. That way, you’ll be able to make the most of the information and trading ideas we explore.
Stocks opened in the green and are continuing their positive trot through midday, buoyed by Tuesday’s news that beleaguered Citigroup (NYSE:C) is operating at a profit.
At 12:27 pm ET, the Russell 2000 (NYSE:IWM) was up 1.39, or 0.38%, at 369.14, while the Dow was up 0.02% at 6,927.77, and the S&P 500 was up 0.22% at 721.18.
Like Tuesday, financial stocks are leading the markets higher today on the Citigroup news, while tech stocks are also seeing a boost after large-cap benchmark Hewlett-Packard’s rating was upgraded.
While the market seems to be in recovery mode, don’t relax just yet. Analysts are warning that the rally will be short-lived and that there remain deep problems etched within the banking industry.
Small-cap stocks trending upward today include On Assignment, Inc. (Nasdaq:ASGN), 23% higher on lower-than-average volume, and YRC Worldwide Inc. (Nasdaq:YRCW), which is 11% higher despite making Moody’s “Bottom Rung List.” Axsys Technologies (Nasdaq:AXYS), a manufacturer of defense surveillance and imaging systems, is up 34% after the small cap put itself up for sale in an auction that drew a first round of bids earlier this week.
Global Markets Up …
Finally, early strength for stocks on Tuesday didn’t turn to weakness. In fact, stocks finished the day with a flourish to close at the highs. Textbook.
Maybe even a little too perfect …
Traders have been anticipating a rally for days. The shorts are all covered. Bloomberg reports that hedge fund-iteers Paulson & Co. (unrelated to Hank or Goldman) recently took the last of its 606 million pounds in profit from downside bets on English banks …
Paulson: “Let others fight over the crumbs of profit in banking.”
& Co.: “Right you are!”
No, a rally was coming. Who’d bet against the Dow after it hit 6,440, turning the clock back to 1996? But, more importantly, who’s going to bet that the rally keeps going now?
*****After all, the stock market was just led higher by Citigroup, of all companies. If only it could have been U.S. Steel (NYSE:X) telling us that orders were up. Why couldn’t General Electric (NYSE:GE) have said that credit card debt wasn’t so bad?
Sadly, it was dollar-a-year CEO Vikram Pandit reporting that his Citigroup was having the best year since 2007. 2007. Isn’t that when the housing market collapse spread to the banks?
Again, I suppose if you get billions in taxpayer money, you should be able to put it to work in loan modifications and loan principle “adjustments.” I’m not so sure that’s worth a 38% one-day jump in your stock price.
*****I hate to sound a sour tone. And I’m painfully aware that investment wisdom states that the weakest among them, the financials, must lead. But I have a hard time believing that other investors will believe that things are improving for banks and the entire lending market just because Citigroup said it had a good couple of months. They’ve been wrong before …
In other words, it’s not that I don’t think the financial sector is getting better … maybe it is, maybe it isn’t (and between you and me, this is definitely something I’ll be keeping a close eye on). It’s just that I wonder how many will take Turnaround Tuesday seriously over the next few days?
*****Europe’s biggest bank, HSBC, got in on the action and said it doesn’t need anymore government loans. Asian markets certainly seemed to love Citigroup’s news during overnight trading, too. Japan’s biggest bank, Mitsubishi Financial Group was up 6%. Never mind that machinery orders in Japan fell for the 4th straight month, even though the drop was less than expected.
And ignore the surprise 45% drop in exports in January while you’re at it.
Oil Down?
The one thing that’s missing is oil. Why, why, in the face of such a clear demonstration of the return of the global economy, did oil prices trade lower?
Fixed asset investments in China rose 25% in January and February. Surely a possible return to double-digit growth in China, the world’s second biggest oil consumer, would light at least a spark under oil prices? Nope, the U.S. Oil Trust (USO) fell 2.86%. Probably the only asset in the world that lost money Tuesday.
Strange times we live in …
*****I bring all this up for a reason. I’ve recommended a few stocks here in Small Cap Daily, and my SmallCapInvestor PRO subscription advisory letter is sitting on a 25% gain from a biotech stock we recommended last Monday, March 2.
I realize SXC Health Solutions (Nasdaq:SCXI), Graham Corp. (AMEX:GHM), CardioNet (Nasdaq:BEAT) and Emergent Biosciences (NYSE:EBS) aren’t up 25%, but you could have some gains to protect. And I won’t be at all surprised if you could buy them all back 10% to 15% cheaper in the next few days.
So let’s take advantage of any strength in prices today and get out of these stocks with an eye to re-enter, say, Monday.
*****As for the biotech stock, it’s called Arena Pharmaceuticals (Nasdaq:ARNA). It’s expected to release Phase III trial results for its obesity drug. Two other companies, Vivus (Nasdaq:VVUS) and Orexigen (Nasdaq:OREX) have already released less than stellar results. That leaves Arena carrying the easy weight-loss banner.
I have no plans to hold this stock into the trial results. That’s a recipe for disaster. But if the stock drops, there might be another 25% gain to be had in the next couple of weeks. And if the results are good, there could be significant gains coming for this stock.
Finally, the Recovery Portfolio video conference went great last night. We’re entering a trade that offers is highly likely to net 24%, and gives you 17% downside protection. You can view a replay of this even HERE.
Stocks are flying high at midday today on news that Citigroup (NYSE:C) reported it was profitable for the first two months of 2009.
At 1:27 pm ET, the Russell 2000 (NYSE:IWM) is up 19.94, or 5.81%, to 363.20. The Dow is up 4.27% to 6,826.77, and the S&P 500 is up 5.06% to 710.76.
Also helping stocks make large moves today was news that Congressman Barney Frank, chairman of the House financial services committee, said he expects the restoration of a rule that makes it harder to bet that a share's price will fall. Investors were encouraged by Frank's comments.
Financial stocks are in rally mode today following statements made by U.S. Treasury Secretary Timothy Geithner on Monday that the United States has taken more economic action in recent weeks than most countries have in years to ease strife.
Small caps seeing double-digit gains today include Gaylord Entertainment Company (NYSE:GET), up 33% after a proxy deal, and AM Castle (NYSE:CAS), which topped Q4 views and declared a $0.06 per share dividend, sending shares 42% higher.
Stocks up strong
Once again, early strength for stocks yesterday quickly turned to weakness. There is a battle going on between the bears and the bulls. Despite all time lows for consumer sentiment, there is a growing number of analysts and market strategists who believe a rally is at hand.
We’ve been seeing signs of a rally for a couple weeks now. That’s why I recommended taking a few positions in select stocks.
Even though we have yet to see a sustained move higher for the major indices, you could be flat to slightly up on SXC Health Solutions (Nasdaq:SCXI) recommended in my SmallCapInvestor PRO advisory service on February 18 and here on SmallCapInvestor.com on February 26. Graham Corp (AMEX:GHM), CardioNet (Nasdaq:BEAT) and Emergent Biosciences (NYSE:EBS) also appeared in the March 2 edition of Small-Cap Daily.
Of these stocks, SXC Health Solutions is probably my favorite. Its recent earnings report looks very good.
I’m most nervous about Graham. Given the recent strength in oil prices, this small oil services company should have advanced more than it has. But it’s up 7% as I write, so I’m willing to give it the benefit of the doubt, for now.
Citigroup's optimism
The most obvious catalyst for the strength in the stock market today comes from Citigroup. CEO Vikram Pandit is saying the bank is having its best quarter since 2007.
Of course, when you get $40 or so billion in cash, you ought to be able to find a way to make some money. But I suppose now is not the time to question the quality of Citi’s newfound optimism. The market likes it, stocks are higher, let’s enjoy it.
*****Earnings is one of the big wild cards right now. According to current estimates, the S&P 500 has a P/E of approximately 11. That number includes an expected $0.70 per share loss from Citigroup. And I’m sure that Citigroup isn’t the only company whose losses are weighing on valuations.
But suppose Citigroup is able to turn its losses around quicker than expected? That would instantly lower the P/E for the S&P 500 and make stocks more attractive.
Now, I want to emphasize that I’m not saying this will happen. Only that this is part of the bullish sentiment that is driving prices higher.
Recovery Portfolio
The next Recovery Portfolio video conference is coming up tonight, March 10, 2009 at 6 pm Eastern time. We’re entering a trade that offers is highly likely to net 24%, and gives you 17% downside protection. You can register HERE.
Stocks didn't exactly finish higher yesterday. In fact, they gave back all of Wednesday's gains, and then some. But now, in a particularly ironic move, stocks appear to be ready to move back to the upside after the unemployment rate is reported to have risen to 8.1%.
Of course, we know why stocks would rally under these seemingly negative circumstances….
Investors know unemployment is rising. Fed Chief Bernanke has called for the unemployment rate to peak somewhere in the 9% range during this recession. At 8.1%, we're almost there.
*****Back in 2002 and 2003, investors would cheer bad economic data, like rising unemployment, because they expected Greenspan to respond to any bad number with a bad number of his own, lower interest rates.
I can imagine a similar "bad is good" scenario starting to play out now. The worse the economy looks, the more money the government will throw at the problem. It didn't end well last time, as Greenspan's rate cuts ushered in an era of high risk taking by the financial sector that eventually led to the financial crisis of 2008 and the current recession.
SXC Health Solutions (Nasdaq:SXCI)is a featured recommendation from my small cap advisory service SmallCapInvestor PRO. I like the company so much I wanted to share it with SCI readers.
The company reported earnings before the bell yesterday, and the numbers were very good. SXCI made $0.20 per share in the latest quarter when analysts were expecting $0.14 in per share earnings. SXCI's fantastic results
launched the stock to a new 52-week high. There are probably more gains coming for this stock very soon.
After my recommendations here, Small Cap Investor readers could be up as much as 15% in just a few days. You can get more information about SmallCapInvestor PRO, SXCI, and healthcare sector stocks click here.
*****My lead equities research analyst Jason Cimpl still feels bullish. He thinks stocks should be at the start of a rally. We expect small cap stocks to outperform the broader markets. So there's still time to take positions in the other small cap stocks I've mentioned this week, Graham Corp (AMEX:GHM), CardioNet (Nasdaq:BEAT), and EmergentBioSolutions (NYSE:EBS).
Just doing my part to help you make some profits in these difficult times.
*****The next Recovery Portfolio video conference is coming up on March 10, 2009 at 6:00 P.M. Eastern time. We're entering a trade that offers is highly likely to net 24% in the coming months, and gives you 17% downside protection. Make sure there's a spot for you, register HERE.
Stocks extended losses during midday trading today, pushed down by poor housing data and by lackluster comments from Fed Chairman Ben Bernanke.
At 12:01 pm ET, the Russell 2000 (NYSE:IWM) was down 6.17, or 1.68%, at 361.63, while the S&P 500 is down 0.79% to 695.25 and the Dow is still below 7,000, currently down 0.46% at 6,732.23.
According to new data released by the National Association of Realtors this morning, the number of homebuyers purchasing existing homes fell 7.7% to a new low of 80.4 in January. Economists were predicting a January reading of 85.1.
Also this morning, Bernanke reiterated to Congress that any semblance of economic recovery hinges on the U.S. government’s ability to stabilize ailing financial markets. The comments did little to soothe investor fears.
Small caps seeing solid rises today included Bruker Corporation (Nasdaq:BRKR), up over 6% after releasing Q4 2008 results and issuing FY 2009 revenue guidance above analysts’ predictions. Also Southern Community Financial Corp. (Nasdaq:SCMF) is up 20% on very light volume, and Einstein Noah Restaurant Group (Nasdaq:BAGL) is up 18% after its Q4 EPS beat the Street.
On the downside, ICT Group careened 23% after rejecting Aegis’ acquisition offer.
Lending Profits
It is a strange sight to see the Dow Industrials trading at 6,700. That’s still a level from 1997. And it still indicates that people don’t want to own stocks. At this point, it seems to be as much about available capital for investment as a willingness to invest.
Valuations are low, the Dow is trading with a P/E of around 20. But that’s still not as low as it’s been during past recessions.
Still, it might be helpful to add some flavor to the current P/E ratio of the Dow. Consider that Citigroup and Bank of America don’t have earnings. Neither do Ford, GM, Alcoa. It’s safe to say that earnings at JP Morgan, American Express, Goldman Sachs and GE are hanging by a thread.
Obviously, any earnings associated with lending are seriously impaired, at best. But it’s also obvious that at some point, earnings from lending will return. And the P/E for the Dow and other indices will drop substantially.
It’s how long it will take to see a resurgence of lending earnings that’s the question.
Nationalization = Communism?
We’ve got a showdown of economic heavyweights brewing between PIMCO’s Bill Gross and NYU economics professor Nouriel Roubini. Roubini is the champion of nationalization of zombie banks. Gross is in favor if continued bailouts from the government.
The difference in opinion is fundamental. Gross is an investor. He prefers to see any solutions maintain current equity structures. It’s also no coincidence that Gross and Co. are advising the government on its handling of Bank of America.
Roubini is an economist. His perspective is not driven by any sympathy to current shareholders. He wants to see the economy moving again. And in his opinion, nationalization of zombie banks is the quickest means to that end.
To the “let ’em fail” crowd, nationalization should be your preferred solution. Nationalization removes current management, wipes out shareholders and puts the banks back in the hands of stronger private ownership. Zombie banks would likely be in government hands for a matter of a few days – just long enough to strip out the impaired assets. I guarantee there’s no shortage of private equity groups eager to buy a healthy bank with a strong brand name.
I’m starting to suspect that CEOs like Bank of America’s Ken Lewis would make pretty savvy politicians. It seems to me some of these execs have done a terrific job of inflaming the populist association of nationalization with communism.
By invoking the evils of nationalization, we now feel that sinking another $30 billion into AIG and $25 billion into Citigroup is a better alternative.
And maybe it is.
I also got to thinking that maybe it was all Paulson’s fault. That it was a mistake to bring the Wall Street perspective on deal-making into the government’s financial dealings with failing companies. Taking preferred stock and warrants in exchange for loans isn’t exactly laissez-faire capitalism.
Unless it’s acceptable for the government to think of itself as a capitalist entity, with taxpayers for shareholders.
As the lender of last resort in a broken capital market, maybe Americans would feel better if the government had kept its nose out of business and simply handed over the cash. Somehow, I doubt it.
I think, as taxpayers, we want to be compensated for the risk we believe we are assuming in bailing out AIG and Citigroup.
*****When the government lent Chrysler $1.3 billion in 1979, it received 14.4 million warrants for Chrysler stock in exchange. So Paulson had precedent on his side.
And it’s reported that Chrysler asked for the warrants back in 1983, but the adverse reaction from American taxpayers caused Chrysler to withdraw its request.
But through his calculated use of the “n” word – nationalization – Lewis has made sure that he won’t be taking any Iacocca-like $1 a year salary. Lewis destroyed billions in shareholder value, but he’s still getting his.
I should probably apologize for continuing to bring up the nationalization thing. I don’t advocate it is the only way out of this financial mess, even though I do think banks are holding onto impaired assets and delaying the recovery process because they think prices will eventually recover.
Besides, Obama and Geithner have made it pretty clear that they want the banks in private hands. Of course, that’s what Bush and Paulson said about Fannie Mae and Freddie Mac, too.
*****Finally, with the recent sell off, I simply have to think it’s a good idea to dip a toe in the stock market pool. On Monday I mentioned a few stocks that we like: Graham Corp. (AMEX:GHM), CardioNet (Nasdaq:BEAT), SXC Health Solutions (Nasdaq:SXCI) and Emergent BioSolutions (NYSE:EBS).
Recovery Portfolio
The next Recovery Portfolio video conference is coming up on March 10, 2009 at 6 pm Eastern time. Given the recent stock market declines, we thought it would be timely to update our outlook for 2009 and give you the latest on where we see opportunity. You can register at www.RecoveryPortfolio.tv.
Stocks were sharply lower at midday on news this morning that small-cap insurer American International Group Inc. (NYSE:AIG) posted the largest quarterly loss in U.S. corporate history, down $61.7 billion in Q4.
At noon the Russell 2000 (NYSE:IWM) was down 15.25, or nearly 4%, at 373.77, while the S&P 500 was down 3.66% to 708.15, and the Dow was down 3.25% to a staggering 6,833.54 — the first time the index has dipped below 7,000 in 11 years.
Myriad data reports out today showed personal spending rose about 0.6% in January and incomes rose 0.4%, while construction spending fell 3.3%, or more than twice as much as analysts predicted. Even though manufacturing contracted in February for the thirteenth straight month, the pace was slower than expected.
Small caps bucking the downward trend this morning included business service outsourcer ICT Group, Inc. (Nasdaq:ICTG), up nearly 70% after Aegis Limited made an acquisition proposal to ICT’s board. FGX International Holdings Limited (Nasdaq:FGXI) is seeing an 18% uptick following a strong sales and earning release late last week, and Noven Pharmaceuticals is up 10% ahead of its scheduled earnings release on Thursday.
On the downside, Ship Finance International(NYSE:SFL) is down over 23% after reporting a Q4 loss last week.
A Caveman could do it
*****Warren Buffett’s annual report for Berkshire Hathaway was released over the weekend. His letter to his shareholders is one of the most widely read investment documents there is. Buffett’s down home charm, inviting sense of humor and investment savvy are always a great read.
Perhaps the biggest surprise was that the net asset value of Berkshire Hathaway dropped by $11.5 billion. Buffett was not immune to the market’s drop. Despite well-publicized investments in General Electric (NYSE:GE) and Goldman Sachs (NYSE:GS) that are down considerably, the lion’s share of balance sheet loss has come from derivatives, what Buffett has called “financial weapons of mass destruction.”
Word is that Buffett sold a few billion in S&P 500 puts. Mark to market accounting forces him to show the loss. But that’s not going to give an accurate picture of his company’s true health. For one, those put options can come back to life and even enter the profit zone. And two, we don’t know what he did with the money. If the premiums he received from the options sales are used wisely, he’ll compound his returns.
*****Some of the more interesting tidbits from Buffett’s letter to shareholders:
We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond…
*****Buffett said one of his goals for 2008 was “…widening the ‘moats’ around our operating businesses that give them durable competitive
advantages…”
You may have noticed that “widening the moat” has meant that approximately 1 out of 5 commercials on TV these days is from Geico, a Buffett company. And the results?
“…the insurance group delivered an underwriting gain for the sixth consecutive year. This means that our $58.5 billion of insurance ‘float’ – money that doesn’t belong to us but that we hold and invest for our own benefit – cost us less than zero. In fact, we were paid $2.8 billion to hold our float during 2008. Charlie and I find this enjoyable.”
Paid to make money. He could have thrown that “float” money in a money-market account and been profitable. It’s so easy, even a caveman could do it.
*****Did you know that Buffett is investing in alternative energy? He said “…when we purchased PacifiCorp in 2006, we moved aggressively to expand wind generation. Wind capacity was then 33 megawatts. It’s now 794, with more coming... today the company is number one in the nation among regulated utilities in ownership of wind capacity.”
****“I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in
energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price.”
Buffett makes mistakes. Unthinkable! But his contention that oil prices will be higher in the future should be noted. At current levels, oil assets should be good investments.
*****“Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.” And “…the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.”
*****Of course, Buffett also sounds a pro-America refrain “…never forget that our country has faced far worse travails in the past. In the 20th Century alone, we dealt with two great wars (one of which we initially appeared to be losing); a dozen or so panics and recessions; virulent inflation that led to a 211⁄2% prime rate in 1980; and the Great Depression of the 1930s, when unemployment ranged between 15% and 25% for many years. America has had no shortage of challenges.
Without fail, however, we’ve overcome them. In the face of those obstacles – and many others – the real standard of living for Americans improved nearly seven-fold during the 1900s, while the Dow Jones Industrials rose from 66 to 11,497. Compare the record of this period with the dozens of centuries during which humans secured only tiny gains, if any, in how they lived. Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.”
It’s worth noting that, despite Buffett’s optimism, he hasn’t exactly gone hog wild buying stocks. He continues to prefer the preferred – stocks that pay a dividend.
And who can blame him? In these cash-lean days, his ability to inject liquidity is getting him favorable rates.
*****“…the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market. This does not bother Charlie and me. Indeed, we enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
Buy These Stocks
I’m not going to tell you to load up on stocks. But you should buy something. Past recommendations in this space have included: Graham Cop (AMEX:GHM); CardioNet (Nasdaq:BEAT); SXC Health Solutions (Nasdaq:SXCI), and Emergent BioSolutions (NYSE:EBS).
Ticketmaster Entertainment Inc. (Nasdaq:TKTM), Mentor Graphics Corp. (Nasdaq:MENT) and DryShips Inc. (Nasdaq:DRYS) are among the new 52-week lows in Tuesday's trading among companies with market capitalizations under $1 billion.
Also included among the results: Clean Energy Fuels Corp. (Nasdaq:CLNE), CrosstexEnergy LP (Nasdaq:XTEX), Crosstex Energy Inc. (Nasdaq:XTXI), Graham Corp. (Nasdaq:GHM), Epicor Software Corp. (Nasdaq:EPIC) and Park-Ohio Holdings Corp. (Nasdaq:PKOH).
NN Inc. (Nasdaq:NNBR), Graham Corp. (Nasdaq:GHM) and TNS Inc. (Nasdaq:TNS) are among the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $1 billion.
Also included among the results: iPCS Inc. (Nasdaq:IPCS), Sauer Danfoss Inc. (Nasdaq:SHS), Kenexa Corp. (Nasdaq:KNXA), Sun Hydraulics Corp. (Nasdaq:SNHY), Orient Express Hotels Ltd. (Nasdaq:OEH) and Headwaters Inc. (Nasdaq:HW).
Here are the biggest percentage losers among small caps:
Graham Corp (Nasdaq:GHM), Innophos Holdings Inc (Nasdaq:IPHS) and Luminex Corp (Nasdaq:LMNX) are among the new 52-week highs in Friday's trading among companies with market capitalizations under $1 billion.
Also included among the results: LTC Properties (Nasdaq:LTC), Emergent BioSolutions Inc (Nasdaq:EBS), PharMerica Corp (Nasdaq:PMC), Ness Technologies Inc (Nasdaq:NSTC), Met-Pro Corp (Nasdaq:MPR) and iGate Corp (Nasdaq:IGTE).
American Ecology Corp (Nasdaq:ECOL), Allos Therapeutics Inc (Nasdaq:ALTH) and Merit Medical Systems Inc (Nasdaq:MMSI) are among the new 52-week highs in Tuesday's trading among companies with market capitalizations under $1 billion.
Graham Corp (Nasdaq:GHM), Merit Medical Systems Inc (Nasdaq:MMSI) and PC-Tel Inc (Nasdaq:PCTI) are among the new 52-week highs in Monday's trading among companies with market capitalizations under $1 billion.
ArcSight Inc (Nasdaq:ARST), Westwood Holdings Group Inc (Nasdaq:WHG) and PC-Tel Inc (Nasdaq:PCTI) are among the new 52-week highs in Friday's trading among companies with market capitalizations under $1 billion.
Clearly, the U.S. dollar has lost value. But it's interesting that its value has found support at 76, even as the "dump the dollar" rhetoric is hitting a fever pitch.