There’s a huge disconnect in the market right now… and it has created an even bigger opportunity. So far in 2015, oil prices have plunged 16%. Yet, during that same time period, fuel prices have jumped 6%. History shows we can make a 69% gain in the coming months thanks to this anomaly if you know where to invest. Let me explain… There’s a huge supply of oil in the market. The most recent EIA Petroleum Status Report showed an inventory build of 10.3 million barrels of oil, more than double analysts’ expectations for an increase of four million. As… Read More

There’s a huge disconnect in the market right now… and it has created an even bigger opportunity. So far in 2015, oil prices have plunged 16%. Yet, during that same time period, fuel prices have jumped 6%. History shows we can make a 69% gain in the coming months thanks to this anomaly if you know where to invest. Let me explain… There’s a huge supply of oil in the market. The most recent EIA Petroleum Status Report showed an inventory build of 10.3 million barrels of oil, more than double analysts’ expectations for an increase of four million. As you can see from the chart below, inventories (blue) have not just been growing… they’ve been consistently exceeding expectations (orange line) for most of 2015. Generally, oil producers slow production if they see a glut of supply, but that hasn’t been the case here. With nowhere for the crude to go, storage prices are at a premium, and one of the only ways to move that oil out of storage is for oil prices to fall. Well-respected analysts at both JP Morgan (NYSE: JPM) and Goldman Sachs (NYSE: GS) believe oil is likely to stay below $50 for… Read More

The market is overvalued and most near-term catalysts are bearish. Last week, I told you we could be weeks away from a 10%-plus correction. But there’s an easy way to profit when the correction arrives. The secret is buying puts. It’s a type of option that goes up in value when the underlying security drops. Some of the best opportunities I’m seeing right now involve buying puts on stocks likely to be hit the hardest in a correction.  High earnings multiples, slowing growth and a cyclical business model are all traits that make a… Read More

The market is overvalued and most near-term catalysts are bearish. Last week, I told you we could be weeks away from a 10%-plus correction. But there’s an easy way to profit when the correction arrives. The secret is buying puts. It’s a type of option that goes up in value when the underlying security drops. Some of the best opportunities I’m seeing right now involve buying puts on stocks likely to be hit the hardest in a correction.  High earnings multiples, slowing growth and a cyclical business model are all traits that make a stock especially susceptible to corrections. To that end, there is one popular stock in particular that’s looking frothy and ripe for a pullback. The best part is that no one seems to see it that way… yet. #-ad_banner-# You may be familiar with Keurig Green Mountain (NASDAQ: GMCR) and may even own one of its products. Keurig produces and sells single-serving countertop coffee brewers and beverage makers. Keurig also sells K-Cups — individual servings of coffee and tea that can be brewed with… Read More

I was fortunate to have begun my career during the dot-com boom. It taught me how to successfully navigate a market during a forming bubble… and its eventual bust. #-ad_banner-#The most important lessons I learned on the floor during those years were to watch closely for bubbles, be careful of crowded trades and always anticipate the crowd’s future movements. While they may seem obvious, all three can be extremely difficult to accomplish when you’re in the heat of the moment; especially if you tend to be an emotional trader. Following these tactics allowed me to make money during the late… Read More

I was fortunate to have begun my career during the dot-com boom. It taught me how to successfully navigate a market during a forming bubble… and its eventual bust. #-ad_banner-#The most important lessons I learned on the floor during those years were to watch closely for bubbles, be careful of crowded trades and always anticipate the crowd’s future movements. While they may seem obvious, all three can be extremely difficult to accomplish when you’re in the heat of the moment; especially if you tend to be an emotional trader. Following these tactics allowed me to make money during the late 1990s and 2000s, a historically turbulent time. I’m not bringing this up to pat myself in the back. It’s because what I’m seeing in the market today is eerily familiar. Specifically, one of my favorite indicators is pointing to a bubble in U.S. equities. As I mentioned previously, the forward price-to-earnings (P/E) ratio is at extreme levels. The last time it flashed its current reading was at the end of 2009, and within six months, the market had undergone a correction. The previous time it was even close to this high was in October 2007, when stocks began a 17-month,… Read More

The anomaly I see today has only occurred twice before in the past decade.  #-ad_banner-#The last time this indicator flashed its current reading was at the end of 2009, and within six months, the market had undergone a correction.  The previous time it was even close to this high was in October 2007, when stocks began a 17-month, 57% decline. Needless to say, I’m concerned. Under-promise and over-deliver has been the mantra on Wall Street for the past few years. Companies have done an excellent job setting the earnings bar low so they can leap over it and please investors. Read More

The anomaly I see today has only occurred twice before in the past decade.  #-ad_banner-#The last time this indicator flashed its current reading was at the end of 2009, and within six months, the market had undergone a correction.  The previous time it was even close to this high was in October 2007, when stocks began a 17-month, 57% decline. Needless to say, I’m concerned. Under-promise and over-deliver has been the mantra on Wall Street for the past few years. Companies have done an excellent job setting the earnings bar low so they can leap over it and please investors. But what happens when the bar can’t go any lower? What if valuations are richer than they were in 2007 when the bubble was about to burst? And what if estimates for earnings growth turn negative?  Pepper in an increasing interest rate environment and some global economic stress and you have a recipe for a correction. Now, I’m not forecasting the next recession, but there is cause for concern. Based on my research, I anticipate an 8% pullback in the S&P 500 over the next few months. In addition to using this knowledge to do some proactive portfolio… Read More

The Chinese government’s crackdown on corruption, increased high-roller scrutiny and a partial smoking ban have put a serious damper on the Asian gambling mecca of Macau. #-ad_banner-#Gaming revenue in the former Portuguese colony fell for the eighth consecutive month in January, down 17.4% year over year. February is expected to be much worse — the worst on record, in fact, with analysts anticipating a 35% to 42% decline over 2014 levels. U.S.-based casino operators are also seeing lower gaming revenue from Sin City. After four years of annual gains, gambling revenue on the Las Vegas Strip fell 2.1% in 2014,… Read More

The Chinese government’s crackdown on corruption, increased high-roller scrutiny and a partial smoking ban have put a serious damper on the Asian gambling mecca of Macau. #-ad_banner-#Gaming revenue in the former Portuguese colony fell for the eighth consecutive month in January, down 17.4% year over year. February is expected to be much worse — the worst on record, in fact, with analysts anticipating a 35% to 42% decline over 2014 levels. U.S.-based casino operators are also seeing lower gaming revenue from Sin City. After four years of annual gains, gambling revenue on the Las Vegas Strip fell 2.1% in 2014, according to the Gaming Control Board. While gaming stocks in general seem unattractive against this backdrop, one in particular already appears to be against the ropes with lofty valuations, high debt levels and poor technicals. This makes it a prime target for a sell-off after next week’s earnings report. MGM Resorts International (NYSE: MGM) currently trades at 40 times forward earnings, almost double its peer group average of 23. While companies that are growing earnings faster than their peers often deserve a higher P/E ratio, analysts are only forecasting EPS growth of 12.5% a year for MGM for the next… Read More

One of my favorite investing tactics is to target stocks that are fundamentally solid but get hit hard when investors overact to news stories. Russia’s ban on U.S. chicken and oversupply concerns helped knock the United States’ third-largest poultry processor 25% off its summer highs. #-ad_banner-#​I recommended a bullish options play on Sanderson Farms (NASDAQ: SAFM) in late June that quickly netted us 42% profits as the stock hit a 52-week high in mid-July. Shortly after, Vladimir Putin imposed a one-year embargo on U.S. agricultural products, including chicken, in response to Western economic sanctions stemming from… Read More

One of my favorite investing tactics is to target stocks that are fundamentally solid but get hit hard when investors overact to news stories. Russia’s ban on U.S. chicken and oversupply concerns helped knock the United States’ third-largest poultry processor 25% off its summer highs. #-ad_banner-#​I recommended a bullish options play on Sanderson Farms (NASDAQ: SAFM) in late June that quickly netted us 42% profits as the stock hit a 52-week high in mid-July. Shortly after, Vladimir Putin imposed a one-year embargo on U.S. agricultural products, including chicken, in response to Western economic sanctions stemming from the Ukrainian conflict. The news sent shockwaves through the American poultry industry. But its effects are being felt to a much greater extent in Russia, where I hear they are turning to crocodile meat to get their protein.  While Russia accounted for nearly 40% of U.S. chicken exports in the 1990s, that number has dropped to just 7% recently, according to the National Chicken Council.  With a number of bullish tailwinds, I think the sell-off in SAFM represents a chance to pocket another big profit over the next few months. What’s especially striking about the stock’s decline is that shares… Read More

From a quick glance at AutoNation’s (NYSE: AN) recent price action, you’d probably have no idea that the company has been killing it in the earnings department. With the automotive retailer scheduled to report next week, I think it could be setting up for one of the best plays of the entire earnings season.  #-ad_banner-#In October, AutoNation delivered its 16th consecutive quarter of double-digit, year-over-year earnings growth. The company reported record profits of $0.90 for the third quarter, up 20% from a year ago and beating Wall Street’s estimates.  Analysts expect new vehicle sales to reach nearly 17 million… Read More

From a quick glance at AutoNation’s (NYSE: AN) recent price action, you’d probably have no idea that the company has been killing it in the earnings department. With the automotive retailer scheduled to report next week, I think it could be setting up for one of the best plays of the entire earnings season.  #-ad_banner-#In October, AutoNation delivered its 16th consecutive quarter of double-digit, year-over-year earnings growth. The company reported record profits of $0.90 for the third quarter, up 20% from a year ago and beating Wall Street’s estimates.  Analysts expect new vehicle sales to reach nearly 17 million in 2015 for the first time since 2005, as consumers’ confidence in the economy grows and they enjoy the benefits of the nearly 40% decline in gasoline prices in the past year.   Despite this positive backdrop and the stock’s relatively inexpensive valuation — trading at 17.5 times earnings compared with an industry average of 22 — shares remain below their highs ahead of the company’s next earnings report, which is scheduled for Feb. 3.  Based on my research, there is a strong chance of another earnings beat and a subsequent rally to new all-time highs. That’s why I’m getting positioned… Read More

Crude oil’s 58% drop from its June high is estimated to have shifted about $2.2 trillion from oil producers’ pockets into the hands of consumers. With the average American household consuming 97 gallons of gasoline a month and prices at the pump down almost $1.20 from a year ago, this translates in roughly $116 in monthly savings. #-ad_banner-#Lower oil prices are expected to persist, with Goldman Sachs (NYSE: GS) reducing its six-month prediction for West Texas Intermediate to $39 a barrel from $75. This will no doubt be one of the biggest investment themes of the year. In… Read More

Crude oil’s 58% drop from its June high is estimated to have shifted about $2.2 trillion from oil producers’ pockets into the hands of consumers. With the average American household consuming 97 gallons of gasoline a month and prices at the pump down almost $1.20 from a year ago, this translates in roughly $116 in monthly savings. #-ad_banner-#Lower oil prices are expected to persist, with Goldman Sachs (NYSE: GS) reducing its six-month prediction for West Texas Intermediate to $39 a barrel from $75. This will no doubt be one of the biggest investment themes of the year. In addition to the influx of consumer cash, which has helped boost U.S. consumer sentiment to nearly eight-year highs, the cost of travel is expected to fall. The average airline ticket price, for example, is estimated to decline by 5% in 2015.   Add to this the strengthening U.S. dollar, which makes foreign travel all the more appealing, and we have a confluence of bullish catalysts creating an amazing opportunity for the travel industry in coming quarters. Conventional wisdom might lead you to a company like Southwest Airlines (NYSE: LUV) or Hertz Global Holding (NYSE: HTZ). But rather than… Read More

Plummeting oil prices may have grabbed the most headlines in 2014, but across the board, commodity prices declined. And commodity-related stocks followed suit to the detriment of many traders. #-ad_banner-#Today’s pick is positioned to exploit growing global food consumption no matter what happens to commodity prices. Shares rallied 18% in the final six months of 2014, as the price of corn, wheat and soybeans fell, but they still look cheap. With a powerful chart pattern and chances of an upcoming earnings beat high, I think we can leverage a bullish move into nearly 90% profits in the next two and… Read More

Plummeting oil prices may have grabbed the most headlines in 2014, but across the board, commodity prices declined. And commodity-related stocks followed suit to the detriment of many traders. #-ad_banner-#Today’s pick is positioned to exploit growing global food consumption no matter what happens to commodity prices. Shares rallied 18% in the final six months of 2014, as the price of corn, wheat and soybeans fell, but they still look cheap. With a powerful chart pattern and chances of an upcoming earnings beat high, I think we can leverage a bullish move into nearly 90% profits in the next two and a half months.   Often referred to as the “Supermarket to the World,” Archer-Daniels-Midland (NYSE: ADM) is one of the largest agricultural processors and food ingredient providers. The company converts crops, including corn, oilseeds, wheat and cocoa, into food and animal feed. It also converts them into chemical and energy products for use in construction, household goods, mining and packaging materials. There’s a good chance you’ve touched something today that was processed by Archer-Daniels-Midland. This diversity helps the company weather price fluctuations in commodities.  Additionally, ADM is a commodities trading firm, which means it has influence in the commodities market. Read More

As analysts debate over when oil prices will find a bottom, crude continues to plunge. While traders are chasing the sell-off in “Texas Tea,” there is a perfect bearish storm brewing in another popular commodity. Traders who get positioned now stand to make 32% in the next few months. While oil officially entered a bear market in October, precious metals have been in a bear market for the past three years. Gold is 38% off its all-time high of $1,923, made in September 2011, while silver has fared even worse. It is down 68% from its April 2011 high just… Read More

As analysts debate over when oil prices will find a bottom, crude continues to plunge. While traders are chasing the sell-off in “Texas Tea,” there is a perfect bearish storm brewing in another popular commodity. Traders who get positioned now stand to make 32% in the next few months. While oil officially entered a bear market in October, precious metals have been in a bear market for the past three years. Gold is 38% off its all-time high of $1,923, made in September 2011, while silver has fared even worse. It is down 68% from its April 2011 high just shy of $50. Given a confluence of factors, the slide in precious metals, and in particular silver, is set to continue through at least the first part of 2015. Silver Is Not A Safe Haven Precious metals have long been touted as a safe haven. And in previous decades, investors did move into gold when times got tough in the equity markets. However, over the past 10 years or so, the inverse correlation between gold and stocks has broken down, which was evidenced during the recession of 2008-2009, when investors largely sold gold along with stocks. Silver… Read More