The S&P 500 finally managed to close above the psychologically important round number of 2,000 last week. However, on both the daily and weekly chart, there is troublesome momentum divergence, with indicators such as Moving Average Convergence/Divergence (MACD) and the Relative Strength Index (RSI) at lower peaks than when previous new highs were reached. In other words, it is a challenging time to be a bull or a bear. One way to trade this kind of market is to search for pockets of strength. According to a recent… Read More

The S&P 500 finally managed to close above the psychologically important round number of 2,000 last week. However, on both the daily and weekly chart, there is troublesome momentum divergence, with indicators such as Moving Average Convergence/Divergence (MACD) and the Relative Strength Index (RSI) at lower peaks than when previous new highs were reached. In other words, it is a challenging time to be a bull or a bear. One way to trade this kind of market is to search for pockets of strength. According to a recent Commerce Department report, new home construction rose nearly 16% in July to a seasonally adjusted rate of 1.09 million houses. Applications for building permits increased 8.1% last month to an annual rate of 1.05 million. #-ad_banner-#In addition to more new homes being built, when people are feeling flush, they’re more likely to put money into fixing up their existing homes. Consumer confidence hit a seven-year high in August, with the Conference Board reporting an increase to 92.4 this month from 90.3 in July. That leads me the country’s leading home improvement retailers, Home Depot (NYSE: HD)… Read More

If there’s a single word I’d use to describe recent market activity it would be “volatile.” During the July 21 trading week, the S&P 500 hit an all-time high at 1,991. Within two weeks, the index shed more than 4%, dropping to a low of 1,905. This week, it surged to yet another new all-time high. While I am concerned about what could be negative momentum,divergence based on the Moving Average Convergence/Divergence (MACD) on the daily chart, I still have to respect… Read More

If there’s a single word I’d use to describe recent market activity it would be “volatile.” During the July 21 trading week, the S&P 500 hit an all-time high at 1,991. Within two weeks, the index shed more than 4%, dropping to a low of 1,905. This week, it surged to yet another new all-time high. While I am concerned about what could be negative momentum,divergence based on the Moving Average Convergence/Divergence (MACD) on the daily chart, I still have to respect the S&P’s ability to rally in the face of a dicey geopolitical environment. One sector I am excited about is tech. According to Morningstar, technology has been the top-performing sector in the past year with a 32% return. #-ad_banner-#Within the tech sector, memory chip supplier Micron Technology (Nasdaq: MU) is a leader. Over the past year, shares have brought traders outstanding returns of more than 135%! And the bullish technical and fundamental outlook makes the stock an attractive buy in my book. Strong demand for Micron’s specialized DRAM and NAND flash… Read More

Although Canadian bank stocks fared extremely well after the 2008-2009 financial meltdown, their current outlook is far less sanguine. One stock that seems particularly ripe for a sell-off is Canada’s fourth largest bank by market capitalization Bank of Montreal (NYSE: BMO). The shares are inter-listed on the New York and Toronto (TSX) stock exchanges and can be easily shorted by U.S. investors. BMO recently formed a bearish evening star candlestick pattern on the weekly chart and subsequently broke an important intermediate uptrend line. Both technical events imply the stock should correct substantially. In addition, the fundamental… Read More

Although Canadian bank stocks fared extremely well after the 2008-2009 financial meltdown, their current outlook is far less sanguine. One stock that seems particularly ripe for a sell-off is Canada’s fourth largest bank by market capitalization Bank of Montreal (NYSE: BMO). The shares are inter-listed on the New York and Toronto (TSX) stock exchanges and can be easily shorted by U.S. investors. BMO recently formed a bearish evening star candlestick pattern on the weekly chart and subsequently broke an important intermediate uptrend line. Both technical events imply the stock should correct substantially. In addition, the fundamental outlook for BMO is cloudy at best. Earlier this summer, Moody’s Investors Service lowered the outlook for Canadian banks as a whole on the assumption that the Canadian government would pass legislation that would restrict government support to banks in a future financial crisis.   #-ad_banner-#Under the legislation, senior bank debt would have to be convertible to equity if the bank were facing insolvency. According to Canadian Finance Minister Joe Oliver, the proposed legislation would help insure “bank shareholders and creditors bear losses, rather than taxpayers.”  On Aug. 8, S&P echoed Moody’s move, downgrading its ratings outlook to negative on… Read More

After a multi-year bull market, the S&P 500 looks ripe for an important correction. During the July 21 trading week, the index hit an all-time high just above 1,991. Now, two trading weeks later, it has dropped almost 4.3% to 1,909. More importantly, it has broken a three-year major uptrend line in the process. The break of this major uptrend line — which dates back to October 2011 — is highly significant and is potentially a very profitable signal for you as a trader to recognize. A broken major trendline… Read More

After a multi-year bull market, the S&P 500 looks ripe for an important correction. During the July 21 trading week, the index hit an all-time high just above 1,991. Now, two trading weeks later, it has dropped almost 4.3% to 1,909. More importantly, it has broken a three-year major uptrend line in the process. The break of this major uptrend line — which dates back to October 2011 — is highly significant and is potentially a very profitable signal for you as a trader to recognize. A broken major trendline shows a reversal in trading psychology and illustrates investors are more interested in selling than buying. #-ad_banner-#​Choose your short trades carefully… and there could be a lot of money to be made. One stock that looks like it could be particularly vulnerable is America’s largest tire manufacturer, Goodyear Tire (NASDAQ: GT). Within the past two weeks, GT has broken a major uptrend line dating back to April 2013, and it has the weak fundamental outlook to back it up. On July 30, the… Read More

As an analyst who combines technical and fundamental analysis, I light up when I see a stock with solid fundamental growth on the verge of a technical breakout. That’s why I’m excited about the world’s largest coffee chain, Starbucks (Nasdaq: SBUX). A strong technical picture is backed by an upbeat revenue and earnings outlook and could provide double-digit returns. #-ad_banner-#Every week, Starbucks serves over 70 million customers in more than 21,000 stores in 65 countries around the world. Its global appeal, coupled with expanding food and beverage offerings, helped the company deliver better-than-expected third-quarter… Read More

As an analyst who combines technical and fundamental analysis, I light up when I see a stock with solid fundamental growth on the verge of a technical breakout. That’s why I’m excited about the world’s largest coffee chain, Starbucks (Nasdaq: SBUX). A strong technical picture is backed by an upbeat revenue and earnings outlook and could provide double-digit returns. #-ad_banner-#Every week, Starbucks serves over 70 million customers in more than 21,000 stores in 65 countries around the world. Its global appeal, coupled with expanding food and beverage offerings, helped the company deliver better-than-expected third-quarter results. Growth in the Asia-Pacific segment was the company’s strongest, with revenue in the region increasing 23% from a year ago. Europe, the Middle East and Africa (EMEA) are dramatically improving as well, rising from 1% sales growth in 2013 to a 13% increase during the quarter. The Americas saw a 10% rise in revenue from the year-earlier quarter. In total, Starbucks brought in $4.2 billion in revenue for the quarter, a solid 11% increase from the year-ago period. Starbucks’ worldwide store count is growing quickly. In the past year, it has opened the… Read More

Despite its pullback Friday, the S&P 500 continues marching to new all-time highs and is just a stone’s throw away from the psychologically significant 2,000 level.  #-ad_banner-#In this positive market environment, it is not difficult to find stocks that have moved higher. Finding the real winners, however, involves spotting stocks that have outperformed the strong market and have clear fundamental reasons for continuing to do so. That leads me to The Walt Disney Co. (NYSE: DIS). This blue-chip stock has significantly outperformed the S&P 500 over the past three years. (Indeed, my colleague Marshall Hargrave thinks the company… Read More

Despite its pullback Friday, the S&P 500 continues marching to new all-time highs and is just a stone’s throw away from the psychologically significant 2,000 level.  #-ad_banner-#In this positive market environment, it is not difficult to find stocks that have moved higher. Finding the real winners, however, involves spotting stocks that have outperformed the strong market and have clear fundamental reasons for continuing to do so. That leads me to The Walt Disney Co. (NYSE: DIS). This blue-chip stock has significantly outperformed the S&P 500 over the past three years. (Indeed, my colleague Marshall Hargrave thinks the company could do the same over the next century .) While the broader market bottomed in early 2009, it wasn’t until October 2011 when the index began its current almost straight-line advance. From its October 2011 lows near 1,075, the S&P 500 is up 85%. DIS has soared more than 200% during that time. As long as the market keeps rising, DIS should at least keep pace. There are several fundamental reasons why I think DIS could continue to outperform the index. The company operates in five segments, with consumer products representing the fastest growing one. This unit makes money by… Read More

One of the most profitable signals for traders to recognize is the break of a major downtrend line.  #-ad_banner-#A major downtrend is defined as one that has been in force a year or more. When this type of trendline is broken, it sends a strong signal that the stock has reversed course — meaning that traders are more interested in buying than selling. If you catch the bullish breakout from the downtrend line, quick profits should be yours. IBM (NYSE: IBM) has been in a major downtrend for the past 16 months but is currently flirting with a… Read More

One of the most profitable signals for traders to recognize is the break of a major downtrend line.  #-ad_banner-#A major downtrend is defined as one that has been in force a year or more. When this type of trendline is broken, it sends a strong signal that the stock has reversed course — meaning that traders are more interested in buying than selling. If you catch the bullish breakout from the downtrend line, quick profits should be yours. IBM (NYSE: IBM) has been in a major downtrend for the past 16 months but is currently flirting with a breakout at $195. The blue-chip stock reached an intraday peak of $195.95 last week, but fell with the overall market as concerns over a Gaza ground war and a Russian-Ukrainian escalation weighed on the major averages. In the midst of this anxiety, the company released mixed earnings results. After the close on Thursday, IBM beat second-quarter estimates with earnings per share (EPS) of $4.12, up from $2.91 in the year-ago period. However, the bulls were not happy that earnings growth resulted mainly from cost-cutting initiatives and share buybacks. While Big Blue didn’t blow anyone’s socks off with its earnings report,… Read More

Steady, reliable growth — that’s what characterizes America’s biggest garbage collection and disposal company, Waste Management (NYSE: WM).  #-ad_banner-#Over the past five years, revenue has steadily risen, hitting $14 billion in 2013. During this same period, the annual dividend increased 29%, going from $1.16 to $1.50 per share, while shares rose more than 65%. What captures my attention right now is that technically the stock has broken out of a cup-and-handle pattern and is edging toward key resistance at $45. If WM breaks through this key resistance level, shares should quickly run to $50. This… Read More

Steady, reliable growth — that’s what characterizes America’s biggest garbage collection and disposal company, Waste Management (NYSE: WM).  #-ad_banner-#Over the past five years, revenue has steadily risen, hitting $14 billion in 2013. During this same period, the annual dividend increased 29%, going from $1.16 to $1.50 per share, while shares rose more than 65%. What captures my attention right now is that technically the stock has broken out of a cup-and-handle pattern and is edging toward key resistance at $45. If WM breaks through this key resistance level, shares should quickly run to $50. This consistent growth has caught the attention of Bill Gates. According to Nasdaq’s ownership summary, the Bill & Melinda Gates Foundation Trust is one of the top five holders of WM, with 18.6 million shares — a 4% stake in the company. As my colleague Marshall Hargrave said in his recent article on the company, “One of the richest men in the world is finding value in one of the dirtiest industries in the world.” But while WM is known for turning trash into cash, it’s the company’s innovation in green technology that is moving revenue forward. In 2013, Waste Management… Read More

If I had a nickel for every time I read the advice I should invest like Warren Buffett… I’d have a whole lot of nickels. The Oracle of Omaha is revered for good reason: The stocks he picks tend to go up. And today’s pick has been a Buffett favorite since 1964: credit card provider American Express (NYSE: AXP). As the stock’s outstanding performance shows, many of the stocks Buffett backs are likely to be good trades. Since its 2009 low, AXP is up nearly 900%, compared with roughly 200% for the S&P… Read More

If I had a nickel for every time I read the advice I should invest like Warren Buffett… I’d have a whole lot of nickels. The Oracle of Omaha is revered for good reason: The stocks he picks tend to go up. And today’s pick has been a Buffett favorite since 1964: credit card provider American Express (NYSE: AXP). As the stock’s outstanding performance shows, many of the stocks Buffett backs are likely to be good trades. Since its 2009 low, AXP is up nearly 900%, compared with roughly 200% for the S&P 500. One aspect that surely attracted Buffett to the stock is the company’s strong foothold in the credit card market, which is controlled by three major players. Visa (NYSE: V) has the largest share with roughly 45%. Next comes American Express with just over 25%, and then MasterCard (NYSE: MA) with just under 25%. The fourth player, Discover Financial Services (NYSE: DFS), lags far behind with just 5%. While Visa and MasterCard cast a wide customer net, American Express differentiates itself by appealing to the affluent consumer. For the privilege of being able to target the upper class, merchants pay… Read More

In the summer of 2012, this stock looked like yesterday’s news.  In less than a year, shares had crumbled from a high above $100 to $17, as traders jumped ship in advance of the company’s key patent expiring. They feared the market would be flooded with single-serve coffee brands. Yet, two years later, Keurig Green Mountain (Nasdaq: GMCR) and its K-Cups continue to reign supreme. And shares of the undisputed king of the single-serve coffee market are back in the triple digits and trading near their all-time highs. The competition still lags far behind, having penetrated only 13%… Read More

In the summer of 2012, this stock looked like yesterday’s news.  In less than a year, shares had crumbled from a high above $100 to $17, as traders jumped ship in advance of the company’s key patent expiring. They feared the market would be flooded with single-serve coffee brands. Yet, two years later, Keurig Green Mountain (Nasdaq: GMCR) and its K-Cups continue to reign supreme. And shares of the undisputed king of the single-serve coffee market are back in the triple digits and trading near their all-time highs. The competition still lags far behind, having penetrated only 13% of U.S. households. Keurig controls the other 87%, with an estimated 16 million of its coffee machines in U.S. homes. The company continues to grow by strategically partnering with major brands like Starbucks (Nasdaq: SBUX) and Dunkin’ Brands (Nasdaq: DNKN) to license its K-Cup technology. In its most recent quarter, sales of K-Cups increased 13% year over year, helping boost revenue 10% to $1.1 billion. Keurig recently inked a potentially mammoth deal — a 10-year partnership with Coca-Cola (NYSE: KO). Together the companies will produce Coca-Cola products in single-serve pods for the new Keurig… Read More