Bill Ackman spent four hours last week defending his position in Valeant Pharmaceuticals (NYSE: VRX) after accusations of fraud more than halved the stock’s price in less than three months.  The activist investor, whose Pershing Square Capital owns a roughly 6% stake in Valeant, made a strong argument in favor of the Canadian pharmaceuticals giant. Evidently, investors weren’t quite convinced, though, as shares sold off another 16% on the day of the presentation.  But while the market can be fickle, especially when it comes to legal uncertainty in the pharmaceutical industry, there is a lot… Read More

Bill Ackman spent four hours last week defending his position in Valeant Pharmaceuticals (NYSE: VRX) after accusations of fraud more than halved the stock’s price in less than three months.  The activist investor, whose Pershing Square Capital owns a roughly 6% stake in Valeant, made a strong argument in favor of the Canadian pharmaceuticals giant. Evidently, investors weren’t quite convinced, though, as shares sold off another 16% on the day of the presentation.  But while the market can be fickle, especially when it comes to legal uncertainty in the pharmaceutical industry, there is a lot of value in VRX. In fact, traders have a chance to book a quick double-digit return while hedging their risk. Valeant Hit With A Media Firestorm Under the leadership of CEO Michael Pearson and his aggressive acquisition strategy, shares of Valeant surged nearly 25-fold in seven years. By acquiring what he considered to be mispriced drugs and folding them into Valeant’s distribution channel, he kept research and development (R&D) expenses low compared to other drug manufacturers.  The trouble for Valeant began in August. First, presidential hopeful Sen. Bernie Sanders publicly requested the company answer for its practice of raising prices on… Read More

As an avid motorcycle rider and Harley enthusiast, it almost feels like sacrilege to bet against Harley-Davidson (NYSE: HOG). But with a seasonal sales lull on the way, increasing competition and too-rich valuations, I’m expecting continued weakness from the iconic motorcycle manufacturer. The good news is I’ve got the perfect strategy to capitalize on it.  Harley is the world’s largest manufacturer of heavy motorcycles, but it’s hardly invincible. #-ad_banner-# Case in point: On Oct. 20, the company reported third-quarter net income… Read More

As an avid motorcycle rider and Harley enthusiast, it almost feels like sacrilege to bet against Harley-Davidson (NYSE: HOG). But with a seasonal sales lull on the way, increasing competition and too-rich valuations, I’m expecting continued weakness from the iconic motorcycle manufacturer. The good news is I’ve got the perfect strategy to capitalize on it.  Harley is the world’s largest manufacturer of heavy motorcycles, but it’s hardly invincible. #-ad_banner-# Case in point: On Oct. 20, the company reported third-quarter net income fell 6.5% year over year, while diluted earnings of $0.69 were flat and missed analysts’ estimates by 11.5%. Revenue also came up short and management lowered shipment guidance. Shares plunged 14% on the day as investors rushed for the exits. That day, the company also announced it would lay off 250 employees, about 4% of its workforce, increase marketing spend and work to expand its network of dealerships. While these tactics may pay off in the long run, they will cost money in the short term. Harley expects to spend $30 million to $35 million on the layoffs alone in… Read More

One of my favorite setups in the stock market takes advantage of the tendency for the sector tide to float most boats. Numerous studies have shown that a substantial percentage of a stock’s performance is linked to the performance of its sector or industry group.  In other words, if the group is doing well, then the odds that an individual stock within it will do well go up. Currently, technology, and semiconductors in particular, are doing very well.  Tech has led the market’s comeback in October, gaining 11.5% for the month compared with 8.9% for the S&P 500. Read More

One of my favorite setups in the stock market takes advantage of the tendency for the sector tide to float most boats. Numerous studies have shown that a substantial percentage of a stock’s performance is linked to the performance of its sector or industry group.  In other words, if the group is doing well, then the odds that an individual stock within it will do well go up. Currently, technology, and semiconductors in particular, are doing very well.  Tech has led the market’s comeback in October, gaining 11.5% for the month compared with 8.9% for the S&P 500. Semiconductor’s have done even better, up 12.4%. Talk about your rising tide. #-ad_banner-# The problem is that given the run in the past month, many stocks may have already delivered the majority of their short-term gains. My strategy is to find stocks in the group just starting to make their move, leaving them with plenty of upside potential as they play catch up.  Applied Materials (Nasdaq: AMAT) is one such stock. While the semiconductor equipment maker has been steadily moving higher since late September, it is much closer to its 52-week low than high.  Of course, we know the old… Read More

The yield on the 10-year Treasury note jumped to its highest close in two weeks Friday when a surprise rate cut by China’s central bank boosted markets and eased demand for safe haven assets. The People’s Bank of China cut its one-year lending and deposit rates by 0.25 percentage points to bolster economic growth. Fears over a rate hike by the Federal Reserve have subsided lately. Little is expected from today’s Federal Open Market Committee (FOMC) meeting announcement, and investors put the odds of a rate hike in December at 34%. #-ad_banner-# Yet, even without an… Read More

The yield on the 10-year Treasury note jumped to its highest close in two weeks Friday when a surprise rate cut by China’s central bank boosted markets and eased demand for safe haven assets. The People’s Bank of China cut its one-year lending and deposit rates by 0.25 percentage points to bolster economic growth. Fears over a rate hike by the Federal Reserve have subsided lately. Little is expected from today’s Federal Open Market Committee (FOMC) meeting announcement, and investors put the odds of a rate hike in December at 34%. #-ad_banner-# Yet, even without an actual increase in the federal funds rate, several other factors are likely to drive interest rates higher through the end of the year. That’s bad news for bond investors because bond prices fall as interest rates increase. With today’s trade, you could turn their pain into a 79% gain in less than three months. Bonds Could Take A Hit Even If The Fed Does Nothing As the Federal Reserve increases the fed funds rate — the rate banks charge each other on loaned reserves — the rate on all interest products increases. However, that’s not the only thing that could… Read More

While companies like Google (Nasdaq: GOOGL) and Apple (Nasdaq: AAPL) are experimenting with the first self-driving cars, completely autonomous vehicles are probably at least a few years out. However, the technology that is making its way onto the road right now is still pretty amazing. For instance, with Tesla Motors’ (Nasdaq: TSLA) new autopilot system, its cars can brake, steer, accelerate, decelerate, change lanes and avoid obstacles by themselves. #-ad_banner-# Fully and partially self-driving cars rely on millions of miles of driving videos and data, which are fed into a computer’s data model. That’s where today’s stock pick… Read More

While companies like Google (Nasdaq: GOOGL) and Apple (Nasdaq: AAPL) are experimenting with the first self-driving cars, completely autonomous vehicles are probably at least a few years out. However, the technology that is making its way onto the road right now is still pretty amazing. For instance, with Tesla Motors’ (Nasdaq: TSLA) new autopilot system, its cars can brake, steer, accelerate, decelerate, change lanes and avoid obstacles by themselves. #-ad_banner-# Fully and partially self-driving cars rely on millions of miles of driving videos and data, which are fed into a computer’s data model. That’s where today’s stock pick comes in. Nvidia (Nasdaq: NVDA), best known for powering PCs and video games with graphic processors, has made the leap into driver assistance and display systems. The company makes high-performance chips that enable driver assistance systems to process massive amounts of data. It sells a Tegra X1 chip for automotive and gaming uses, and this summer started shipping its latest Drive PX computing system for self-driving cars and driver-assist applications.  Tesla uses Nvidia chips in the 17-inch screen and the instrument cluster for its Model S and might use the Drive PX in its Model X SUV. Meanwhile, Audi also… Read More

Once a stock market darling, Apple (Nasdaq: AAPL) has fallen into an undeserved funk. Earnings are expected to be reported Tuesday after market close, and even though my proprietary earnings algorithm is forecasting a beat for the tech giant, the stock has a reputation for being unpredictable following its reports. The good news is that with a little statistical analysis and the right strategy, we can greatly increase our chances of profiting from Apple’s post-earnings move — even if the stock doesn’t move higher. #-ad_banner-#​In fact, all AAPL has to do is stay above… Read More

Once a stock market darling, Apple (Nasdaq: AAPL) has fallen into an undeserved funk. Earnings are expected to be reported Tuesday after market close, and even though my proprietary earnings algorithm is forecasting a beat for the tech giant, the stock has a reputation for being unpredictable following its reports. The good news is that with a little statistical analysis and the right strategy, we can greatly increase our chances of profiting from Apple’s post-earnings move — even if the stock doesn’t move higher. #-ad_banner-#​In fact, all AAPL has to do is stay above $107 and today’s trade will deliver a return of more than 15% in less than a month’s time. Apple Skittish After Earnings After kicking off 2015 with a 20% rally to its late-February highs, AAPL traded in a sideways pattern for most of the spring and summer, unable to break to new highs.  During the late-September correction, shares fell below previous support and failed to bounce back. The stock now trades in a new channel with resistance around $117. Despite posting record iPhone sales and beating analysts’ estimates on both the top and bottom line in the most recently reported… Read More

Over the past week, I’ve been talking with two trusted friends who are traders based in China. One of these men, Naida, ran a hedge fund in Singapore and then moved it to China to be closer to his wife and take advantage of the rising need for good investment advice and futures trading skills in the mainland. The other is an old friend, Wu, who used to trade in New York with me back in the late 1990s and early 2000s. He’s one of the smartest guys I know and an expert in quantitative algorithms. Both lamented the hellacious… Read More

Over the past week, I’ve been talking with two trusted friends who are traders based in China. One of these men, Naida, ran a hedge fund in Singapore and then moved it to China to be closer to his wife and take advantage of the rising need for good investment advice and futures trading skills in the mainland. The other is an old friend, Wu, who used to trade in New York with me back in the late 1990s and early 2000s. He’s one of the smartest guys I know and an expert in quantitative algorithms. Both lamented the hellacious market controls implemented by the Chinese government to calm volatility and stop the flow of money out of stocks. In the past few months, Chinese authorities have threatened to throw short sellers in jail and have instituted a 100x increase on day-trading commissions and astronomical increases in margin costs. They reaffirmed my concerns over the country’s deteriorating fundamentals and mentioned that investors and banks had taken on extreme amounts of leverage. In short, according to the first-hand accounts of these gentlemen, China’s health and risks are way worse than the majority of American media lets on.  And they tell me… Read More

Last week I sat down with StreetAuthority’s income expert Michael Vodicka to talk about his free “safe money” seminar and how he collects income from stocks no matter what is going on with the market.  We shared this interview in full in StreetAuthority Insider — an exclusive publication for members of one of our premium services. Judging from the phone calls and emails we’ve received, many of them were absolutely thrilled by Mike’s informative and thought-provoking discussion. For those of you who do not have “Insider” status as one of our premium subscribers, I’d like to do something a little… Read More

Last week I sat down with StreetAuthority’s income expert Michael Vodicka to talk about his free “safe money” seminar and how he collects income from stocks no matter what is going on with the market.  We shared this interview in full in StreetAuthority Insider — an exclusive publication for members of one of our premium services. Judging from the phone calls and emails we’ve received, many of them were absolutely thrilled by Mike’s informative and thought-provoking discussion. For those of you who do not have “Insider” status as one of our premium subscribers, I’d like to do something a little different and share an edited, excerpted version of the interview.  Insider: Before we get to the details of your strategy, let’s start off by first telling readers a little bit about you… Mike: Sure. I like to call myself a “reformed day trader.” By that I mean I started my career as a day trader at a multibillion-dollar trading firm.  I saw lots of day traders taking huge risks and making big gambles on market-moving news with their money. They would win big one day, only to lose it all the next. I learned a valuable lesson: trading is no quick… Read More

Interest rates are at record lows across the globe. In the U.S., the S&P 500 offers a dividend yield of around 2%, barely enough to keep up with record low levels of inflation. Fixed-income securities are even worse. The iShares 10-20 Year Treasury Bond (NYSE: TLH) is yielding under 2%, close to an all-time low. CDs and savings accounts offer virtually no return. In this environment, investors are desperate for strategies that will help them generate consistent and reliable income. Most investors are content to stick with dividend-paying blue-chip stocks in defensive industries. This makes sense. Stocks like Verizon (NYSE:… Read More

Interest rates are at record lows across the globe. In the U.S., the S&P 500 offers a dividend yield of around 2%, barely enough to keep up with record low levels of inflation. Fixed-income securities are even worse. The iShares 10-20 Year Treasury Bond (NYSE: TLH) is yielding under 2%, close to an all-time low. CDs and savings accounts offer virtually no return. In this environment, investors are desperate for strategies that will help them generate consistent and reliable income. Most investors are content to stick with dividend-paying blue-chip stocks in defensive industries. This makes sense. Stocks like Verizon (NYSE: VZ) are not particularly sensitive to economic cycles. Even if the economy falls into a recession, very few people will cancel or change their mobile service. That’s why Verizon was just one of a few S&P 500 companies able to grow its dividend through the financial crisis in 2008 and 2009. Its current 5% yield ranks as one of the best dividends in the S&P 500 — well above the index’s average yield of 2%. I also consider Verizon to be one of the safest dividends in the S&P 500. But what if I told you there was a chance… Read More

As predictable as some market cycles are, they always seem to catch investors off guard. Mr. Market, senile old man that he is, just can’t seem to get past the euphoric buying around peaks and the panic selling around troughs. Smart investors know they don’t have to time a bottom perfectly. Sector leaders will always bounce back, and the wisest investors know how to pocket cash while they wait for a rebound. Some sectors are prone to extreme cycles. After a long period of high prices and capital investment, prices come crashing down and may take… Read More

As predictable as some market cycles are, they always seem to catch investors off guard. Mr. Market, senile old man that he is, just can’t seem to get past the euphoric buying around peaks and the panic selling around troughs. Smart investors know they don’t have to time a bottom perfectly. Sector leaders will always bounce back, and the wisest investors know how to pocket cash while they wait for a rebound. Some sectors are prone to extreme cycles. After a long period of high prices and capital investment, prices come crashing down and may take years to bottom. The best example of this is in agricultural commodities like corn and soybeans. Over the past 100 years, corn prices have peaked five times with the most recent at $8.54 per bushel in 2012. Each time it happened, prices soon plummeted as farmers planted as many acres as possible and supply went through the roof. Corn is now 55% off its 2012 highs, at $3.82 per bushel. Invariably, the drop in prices has led to a fall-off in planting and a drop in factors associated with increasing crop yields. And this, of course, takes a toll on… Read More